UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-07583
HSBC ADVISOR FUNDS TRUST
(Exact name of registrant as specified in charter)
452 FIFTH AVENUE
NEW YORK, NY 10018
(Address of principal executive offices) (Zip code)
BISYS FUND SERVICES
3435 STELZER ROAD
COLUMBUS, OH 43219
(Name and address of agent for service)
Registrant's telephone number, including area code: 1-800-782-8183
Date of fiscal year end: October 31, 2007
Date of reporting period: April 30, 2007
ITEM 1. REPORTS TO STOCKHOLDERS.
[GRAPHIC]
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HSBC Investments (USA) Inc.
HSBC Investor Family of Funds
Semi Annual Report
April 30, 2007
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FIXED INCOME FUNDS:
HSBC Investor Core Plus Fixed Income Fund (Advisor)
HSBC Investor Core Plus Fixed Income Fund
HSBC Investor High Yield Fixed Income Fund
HSBC Investor Intermediate Duration Fixed Income Fund
HSBC Investor New York Tax-Free Bond Fund
EQUITY FUNDS:
HSBC Investor Growth Fund
HSBC Investor Growth and Income Fund
HSBC International Equity Fund
HSBC Investor Mid-Cap Fund
HSBC Investor Opportunity Fund
HSBC Investor Opportunity Fund (Advisor)
HSBC Investor Overseas Equity Fund
HSBC Investor Value Fund
[HSBC LOGO]
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GLOSSARY OF TERMS
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CITIGROUP HIGH YIELD MARKET CAPPED INDEX is an unmanaged index of fixed income
securities with a maximum credit rating of BB+, a minimum amount outstanding of
$100 million, and at least 1 year to maturity. The total par amount outstanding
for each issuer in the Citigroup Capped Index is capped at $5 billion, which
results in a more diversified index of securities that more closely reflects the
Fund's issuer diversification.
GROSS DOMESTIC PRODUCT (GDP) is the measure of the market value of the goods and
services produced by labor and property in the United States.
LEHMAN BROTHERS U.S. AGGREGATE BOND INDEX is an unmanaged index generally
representative of the investment-grade debt issues with at least one year to
final maturity.
LEHMAN BROTHERS INTERMEDIATE U.S. AGGREGATE BOND INDEX is an unmanaged index
generally representative of investment-grade issues with maturities between
three and ten years.
LEHMAN BROTHERS NEW YORK TAX EXEMPT INDEX is an unmanaged index composed of
investment grade New York tax-exempt securities, all having a $50 million
minimum maturity value.
LIPPER HIGH CURRENT YIELD FUNDS AVERAGE Funds that aim at high (relative)
current yield from fixed income securities, have no quality or maturity
restrictions, and tend to invest in lower-grade debt issues.
LIPPER INTERMEDIATE INVESTMENT-GRADE DEBT FUNDS AVERAGE is an average of managed
funds that invest at least 65% of their assets in investment-grade debt issues
(rated in the top four grades) with dollar-weighted average maturities of five
to ten years.
LIPPER INTERNATIONAL LARGE-CAP CORE AVERAGE consists of funds that, by portfolio
practice, invest at least 75% of their equity assets in companies strictly
outside of the U.S. with market capitalizations (on a three-year weighted basis)
greater than the 250th largest company in the S&P/Citigroup World ex-U.S. Broad
Market Index.
LIPPER LARGE-CAP CORE FUNDS AVERAGE is comprised of managed funds that, by
portfolio practice, invest at least 75% of their equity assets in companies with
market capitalizations (on a three-year weighted basis) greater than 300% of the
dollar-weighted median market capitalization of the Standard & Poor's Mid-Cap
400 Index.
LIPPER LARGE-CAP GROWTH FUNDS AVERAGE Funds that, by portfolio practice, invest
at least 75% of their equity assets in companies with market capitalizations (on
a three-year weighted basis) greater than 300% of the dollar-weighted median
market capitalization of the middle 1,000 securities of the S&P SuperComposite
1500 Index. Large-cap growth funds typically have an above-average
price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share
growth value, compared to the S&P 500 Index.
LIPPER MID-CAP GROWTH FUNDS AVERAGE is comprised of managed funds that, by
portfolio practice, invest at least 75% of their equity assets in companies with
market capitalizations (on a three-year weighted basis) of less than 300% of the
dollar-weighted median market capitalization of the Standard & Poor's Mid-Cap
400 Index.
LIPPER MULTI-CAP VALUE FUNDS AVERAGE is comprised of managed funds that, by
portfolio practice, invest in a variety of market capitalization ranges, without
concentrating 75% of their equity assets in any one market capitalization range
over an extended period of time. Multi-Cap funds will generally have between 25%
to 75% of their assets invested in companies with market capitalizations (on a
three-year weighted basis) above 300% of the dollar-weighted median market
capitalization of the S&P MidCap 400 Index. Multi-Cap Value funds seek long-term
growth of capital by investing in companies that are considered to be
undervalued relative to a major unmanaged stock index based on price-to-current
earnings, book value, asset value, or other factors. These funds will normally
have a below-average price-to-earnings ratio, price-to-book ratio, and
three-year earnings growth figure, compared to the U S diversified multi-cap
funds universe average.
LIPPER NEW YORK MUNICIPAL DEBT FUNDS AVERAGE is an average of managed funds that
invest at least 65% of their assets in municipal debt issues that are exempt
from taxation in New York or a city in New York.
MERRILL LYNCH U.S. HIGH YIELD MASTER II INDEX consists of U.S. dollar
denominated bonds that are issued in countries having a BBB3 or higher debt
rating with at least one year remaining till maturity. All bonds must have a
credit rating below investment grade but not in default.
MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA AND FAR EAST ("MSCI
EAFE") INDEX is an unmanaged index that measures performance of a diverse range
of developed countries in the indicated regions.
THE RUSSELL UNIVERSE - In 1984, Russell created the Russell family of stock
indices as part of a more accurate and comprehensive system for evaluating the
performance of Certain partiess. Russell now maintains 21 U.S. stock indices and
has launched similar broad-market and style indices in Canada and Japan. Today,
more than $214 billion is invested in funds modeling Russell's U.S. indices, and
more than $1 trillion in funds is benchmarked against the global family of
Russell indices.
RUSSELL 1000(R) VALUE INDEX is unmanaged index which measures the performance of
the 1,000 largest of the 3,000 largest U.S.-domiciled companies (based on total
market capitalization) with lower price-to-book ratios and lower forecasted
growth values.
RUSSELL 2500(R) GROWTH INDEX is unmanaged index which represents the smallest
2500 securities found in the Russell Universe with higher price-to-book and
higher forecasted growth values.
STANDARD & POOR'S MIDCAP 400 INDEX ("S&P MIDCAP 400") is an unmanaged index
comprised of 400 domestic stocks chosen for market size (median market
capitalization of $676 million), liquidity and industry group representation.
STANDARD & POOR'S 500 INDEX ("S&P 500") is an unmanaged index that measures the
performance of the stock market as a whole.
LIPPER is an independent mutual fund performance monitor whose results are based
on total return and do not reflect a sales charge.
Securities indexes assume reinvestment of all distributions and interest
payments and do not take in account brokerage fees or expenses. Securities in
the Fund do not match those in the indexes and performance of the Fund will
differ. Investors cannot invest directly in an index, although they can invest
in the underlying funds or securities.
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TABLE OF CONTENTS
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HSBC INVESTOR FAMILY OF FUNDS
SEMI-ANNUAL REPORT - APRIL 30, 2007
Glossary of Terms
Chairman's Message .................................................... 1
Commentary from the Certain Parties ................................... 2
Portfolio Reviews ..................................................... 3
Schedules of Portfolio Investments
HSBC Investor New York Tax-Free Bond Fund .......................... 25
HSBC Investor Growth and Income Fund ............................... 27
HSBC Investor Mid-Cap Fund ......................................... 28
Statements of Assets and Liabilities .................................. 30
Statements of Operations .............................................. 33
Statements of Changes in Net Assets ................................... 36
Financial Highlights .................................................. 50
Notes to Financial Statements ......................................... 63
Investment Adviser Contract Approval .................................. 72
Table of Shareholder Expenses ......................................... 73
HSBC INVESTOR PORTFOLIOS
Schedules of Portfolio Investments
HSBC Investor Core Plus Fixed Income Portfolio ..................... 77
HSBC Investor High Yield Fixed Income Portfolio .................... 80
HSBC Investor Intermediate Duration Fixed Income Portfolio ......... 84
HSBC Investor Growth Portfolio ..................................... 86
HSBC Investor International Equity Portfolio ....................... 88
HSBC Investor Opportunity Portfolio ................................ 91
HSBC Investor Value Portfolio ...................................... 93
Statements of Assets and Liabilities .................................. 94
Statements of Operations .............................................. 96
Statements of Changes in Net Assets ................................... 98
Financial Highlights .................................................. 102
Notes to Financial Statements ......................................... 103
Investment Adviser Contract Approval .................................. 110
Table of Shareholder Expenses ......................................... 111
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CHAIRMAN'S MESSAGE
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DEAR SHAREHOLDERS:
As part of its ongoing responsibilities, the Board of Trustees closely monitors
the performance of the Funds' Adviser, HSBC Investments, and the Funds' various
sub-advisers. HSBC Investments, through its Multimanager unit, recommends
sub-advisers for the equity funds based on their investment philosophy,
performance record and adherence to a stated style discipline. While each Fund's
performance is reviewed at the quarterly board meetings, the Board also meets in
person with representatives from the Adviser at each meeting and from each of
the sub-advisers during the year. Typically, one or two of the sub-advisers
attend each quarterly board meeting to discuss their investment style, outlook
and performance. The questions the Board asks relate to how the sub-adviser
makes decisions about buying and selling, how they communicate internally and
externally and how closely they adhere to their stated investment philosophy.
HSBC Multimanager periodically visits each sub-adviser for the equity funds to
perform due diligence and maintain a relationship that will result in the most
efficient and complete information.
Good communication does not guarantee good performance, however. While the
sub-advisers under contract are closely monitored, HSBC Multimanager also tracks
alternative managers in each equity discipline in order to provide a current,
industry-specific comparison. If necessary, a sub-adviser may be replaced, but
not until all significant factors are weighed--including balancing an investment
track record against the cost of changing the sub-adviser.
When HSBC Multimanager reports this extensive information at quarterly meetings
(or between meetings if necessary), the Board can then make a decision about how
well the sub-advisers are performing on behalf of the shareholders.
In the investment arena good communication is essential. This philosophy applies
to communication between the shareholders and the Board as well. Please do not
hesitate to contact me to discuss how we can best serve your needs.
Sincerely,
/s/ Larry M. Robbins
Larry M. Robbins, Chairman, HSBC Investor Funds
1 HSBC INVESTOR FAMILY OF FUNDS
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COMMENTARY FROM THE CERTAIN PARTIES
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HSBC INVESTMENTS (USA) INC.
U.S. ECONOMIC REVIEW
The U.S. economy slowed but continued to expand during the six-month period
between November 1, 2006 and April 30, 2007. A substantial decline in the
residential housing market weakened growth, as did slowing business capital
investment. Likewise, a decline in global industrial activity, which stemmed
from a worldwide inventory correction, created a headwind for the U.S. economy.
Resilient consumer spending buttressed U.S. GDP growth, however. Employment and
wage growth strengthened, allowing consumers to increase spending despite the
housing slump. Declines in energy and commodity prices during the early months
of this period also supported solid consumer spending, but that trend reversed
itself later in the period.
The Federal Reserve maintained its target Federal Funds rate at 5.25% throughout
the six-month period. Inflation gradually softened, but remained slightly above
the Fed's comfort zone. The policy-setting board held a bias in favor of raising
interest rates between November and March, because its members believed that
inflation posed a greater threat than recession to the health of the economy.
Inflationary pressures appeared to ease as the economy slowed, however. The Fed
in March removed its tightening bias, and stated that the chance of recession
appeared as dangerous as the possibility of higher inflation.
Mortgage defaults among borrowers with poor credit records rose considerably
during the early months of 2007. That development led mortgage lenders to
tighten credit requirements, and raised concerns that weakness in the
"sub-prime" market could spill over to the rest of the financial system. Such
worries appeared unfounded as of the end of the period, however.
Global economic growth remained strong. The U.S. dollar weakened against most
foreign currencies during much of the period, but later strengthened. Strong
growth in China and other developing markets supported rising prices for
commodities.
MARKET REVIEW
Stocks generated strong gains during the period under review. The S&P 500
returned 8.60%, while the Russell 2000 Index of small-company stocks gained
6.86% and the MSCI EAFE Index of foreign equities returned 15.68%.
Corporations produced healthy profit growth, continuing a multi-year trend, but
the growth rate of corporate profits slowed from the torrid pace of recent
years. Corporations meanwhile retained exceptionally healthy balance sheets.
Companies' large cash surpluses allowed them to take a variety of
shareholder-friendly actions, such as boosting dividends, buying back shares and
engaging in mergers and acquisitions. The latter trend was especially powerful
during this period. Private equity firms in particular dramatically accelerated
their purchases of public firms--a trend that led to higher stock prices for
acquired companies and also boosted the overall market by reducing the supply of
outstanding equities available to investors.
The stock market endured a substantial correction in late February. Investors
worried that rising defaults on sub-prime mortgages could weaken the overall
financial system. Signs of rising inflation and slower-than-expected economic
growth also contributed to the sell-off, while a sudden drop in Asian markets
appeared to make investors nervous as well. The S&P 500 fell 3.5% on February
27, its largest one-day percentage drop in almost four years.
Value stocks generally outperformed growth stocks by a small margin. Value
stocks' market leadership may reflect the fact that private equity investors
generally seek characteristics that value shares are more likely to offer, such
as strong cash flows, high dividend payouts and attractive valuations.
All sectors of the economy contributed to the market's gains. Shares of
utilities, telecommunications, energy and materials stocks turned in some of the
period's strongest returns. Financial stocks were weak, due largely to the
fallout from the sub-prime mortgage crisis. Consumer discretionary shares also
lagged the broad market, as investors anticipated that the housing slump and
relatively high energy prices would take a toll on consumer spending. Technology
stocks posted relatively weak returns as well, as investors favored shares in
more-defensive sectors.
Foreign stocks continued to outperform the U.S. market. Strong global economic
growth prospects, attractive valuations and, during much of the period, foreign
currencies' appreciation against the dollar contributed to international
markets' gains.
HSBC INVESTOR FAMILY OF FUNDS 2
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PORTFOLIO REVIEWS
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HSBC INVESTOR CORE PLUS FIXED INCOME FUND
(ADVISOR, CLASS A SHARES, B SHARES AND C SHARES)
BY HSBC INVESTMENTS (USA) INC. U.S. CORE FIXED INCOME TEAM
The HSBC Investor Core Plus Fixed Income Fund (the "Fund") seeks to provide
investors with above-average total return, consistent with reasonable risk,
through investments in a diversified portfolio of fixed-income securities. The
Fund utilizes a two-tier structure, commonly known as a "master-feeder," in
which the Fund invest all of its investable assets in the HSBC Investor Core
Plus Fixed Income Portfolio (the "Portfolio").
INVESTMENT CONCERNS
Bonds offer a relatively stable level of income, although bond prices will
fluctuate providing the potential for principal gain or loss. Intermediate-term,
higher-quality bonds generally offer less risk than longer-term bonds and a
lower rate of return.
MARKET COMMENTARY
For the six month period ended April 30, 2007, the Advisor shares of the Fund
produced a 4.99% total return, and the Class A Shares returned 4.83% (without
sales charge). That compared to a total return of 2.64% and 2.53% for the Lehman
Brothers U.S. Aggregate Bond Index(1) and the Lipper Intermediate
Investment-Grade Debt Funds Average(1), respectively.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
Gross Domestic Product(1) grew at a well below trend pace over the past year.
The U.S. economy recorded four consecutive quarters of sub-trend growth. This
loss in momentum was driven by the sharp slowdown in the housing sector. In
addition, another major source of weakness was a decline in U.S. exports, a
somewhat surprising result given the resilience of most other major economies to
date.
The second half of 2006 was characterized by relatively low inflation despite an
oil price at $60 and above for much of the period. Inflation pressures increased
in the beginning of 2007, although readings have remained fairly stable in
recent months at 2.7%, a level that the U.S. Federal Reserve remains
uncomfortable with. Nevertheless, with the growth path remaining sub-trend,
inflationary pressures should ease going forward. Over the last year the Federal
Reserve Open Market Committee kept rates unchanged at 5.25%. We anticipate the
Fed easing later in 2007, given that given that inflation remains relatively
high and the labor market has not shown any convincing signs of weakening just
yet.
Interest rates were volatile during the year, as the 10-year Treasury rate ended
(4.62%) the period over 50bps (0.50%) lower then the point it began (5.13%). The
short-end of the yield curve rose an average of 5bps (0.05%) causing the yield
curve to invert. For the year under review, the Lehman Brothers U.S. Aggregate
Bond Index(1) returned 7.36%. Spreads tightened in most sectors over the period,
and all spread sectors had excess returns versus Treasury securities of similar
duration. Corporates were the best performing sector within the Aggregate Index,
outperforming Treasuries of comparable duration by 0.81%. Lower quality sectors
performed even better, with High Yield and Emerging Market Debt beating
comparable duration Treasuries by 5.52% and 4.09% respectively.
PORTFOLIO PERFORMANCE
The Fund outperformed the benchmark for the period under review. The key
component of that outperformance was select, off-benchmark holdings in high
yield and emerging market debt. An overweight in spread sectors generally
relative to the benchmark, particularly asset backed securities and
collateralized mortgage backed securities and individual security selection in
corporate credit also had a positive impact on performance.*
Going forward, we have positioned the portfolio defensively as we are cautious
about the current opportunities for fixed income investors particularly in
regard to credit. In the investment grade market, our concern primarily stems
from the risk of subordination by private equity investors while in the high
yield market our concerns are a function of both valuation and leverage.
As a result, we have positioned our credit weighting, including off-benchmark
investments, neutral to that of the index as measured on a
contribution-to-duration basis. Moreover, we have transitioned some of our
corporate bond holdings from fixed rate to floating rate notes as we believe
these securities will provide greater income and better price performance over
the short-to-intermediate term.*
The outlook for the term structure of interest rates is unclear in the
near-to-intermediate term. As a result, our duration and yield curve position is
neutral to that of our benchmark index. As in the credit markets, we believe
global liquidity has reduced the risk premium in longer term interest rates in
the U.S. However, this phenomenon may continue and we believe it is difficult to
reliably forecast the path of longer term interest rates in the near term. Over
the longer-term, however, we believe that the yield curve will steepen and
anticipate positioning the portfolio to take advantage of that trend during
2007.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
3 HSBC INVESTOR FAMILY OF FUNDS
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PORTFOLIO REVIEWS
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HSBC INVESTOR CORE PLUS FIXED INCOME FUND - AS OF APRIL 30, 2007
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AVERAGE ANNUAL EXPENSE
FUND PERFORMANCE TOTAL RETURN (%) RATIO (%)(5)
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INCEPTION SIX 1 5 10 SINCE
AS OF APRIL 30, 2007 DATE MONTHS+ YEAR YEAR YEAR INCEPTION GROSS NET
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HSBC Investor Core Plus Fixed Income Fund (Advisor) 1/9/95 4.99 9.86 5.56 6.38 6.97 0.80 0.45
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HSBC Investor Core Plus Fixed Income Fund Class A(1) 8/26/96 -0.12 4.46 4.17 5.30 5.53 1.44 0.70
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HSBC Investor Core Plus Fixed Income Fund Class B(2) 1/6/98 0.43 4.81 4.40 -- 4.82 2.19 1.45
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HSBC Investor Core Plus Fixed Income Fund Class C(3) 11/4/98 3.35 7.83 4.39 -- 4.67 2.19 1.45
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Lehman Brothers U.S. Aggregate Bond Index(4) -- 2.64 7.36 5.06 6.35 N/A N/A N/A
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Lipper Intermediate Investment-Grade Debt Funds Average(4) -- 2.53 6.80 4.62 5.64 N/A N/A N/A
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PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING
THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE
PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD
HAVE BEEN LOWER. CURRENTLY, CONTRACTUAL FEE WAIVERS ARE IN EFFECT FROM MARCH 1,
2007 THROUGH MARCH 1, 2008.
The total returns for Advisor Class, Class A shares, B Shares and Class C Shares
of the Fund for the period ended April 30, 2007 included the receipt of a
one-time payment in respect of a class action settlement. Without the receipt of
this payment, the returns for the Fund for the period ended April 30, 2007 would
have been lower.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 4.75%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
(5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY
28, 2007.
+ AGGREGATE TOTAL RETURN.
The Fund is measured against the Lehman Brothers U.S. Aggregate Bond Index, an
unmanaged market value-weighted performance benchmark for investment-grade
fixed-rate debt issues, including government, corporate, asset-backed, and
mortgage-backed securities, with maturities of at least one year. The
performance of the index does not reflect the deduction of expenses associated
with a mutual fund, such as investment management and fund accounting fees. The
Funds' performance reflects the deduction of fees for these value-added
services. Investors cannot invest directly in an index, although they can invest
in its underlying securities. During the period shown, certain parties waived
and/or reimbursed fees for various expenses. Had these waivers and/or
reimbursements not been in effect, performance quoted would have been lower.
HSBC INVESTOR FAMILY OF FUNDS 4
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PORTFOLIO REVIEWS
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HSBC INVESTOR HIGH YIELD FIXED INCOME FUND
(CLASS A SHARES, B SHARES, C SHARES AND I SHARES)
BY HSBC INVESTMENTS (USA) INC. HIGH YIELD TEAM
HSBC Investments (USA) Inc. serves as investment adviser to the Fund. The HSBC
High Yield Team provides the day to day management of the portfolio. The Team's
philosophy is focused on delivering sustainable value added performance in the
high yield fixed income market. The investment approach is a combination of
top-down sector/industry selection and bottom-up security/quality selection. The
team rotates sectors and themes within the high yield universe during different
market environments seeking to add value, endeavoring to take advantage of
market inefficiencies in order to outperform in both up and down markets.
INVESTMENT CONCERNS
Bond funds will tend to experience smaller fluctuations in value than stock
funds. However, investors in any bond fund should anticipate fluctuations in
price, especially for longer-term issues and in environments of rising interest
rates. High yield bonds are subject to greater risks than investment grade
bonds, such as the increased risk of default because of the lower credit quality
of the issues.
MARKET COMMENTARY
The Fund delivered a total return of 7.47% (without sales charge) for Class A
Shares and 7.60% for Class I Shares for the six month period ended April 30,
2007. That compared to 6.91% and 6.61% for the Fund's benchmarks, the Merrill
Lynch U.S. High Yield Master II Index(1) and the Lipper High Current Yield Funds
Average(1), respectively.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
Gross Domestic Product(1) grew at a well below trend pace over the past year.
The U.S. economy recorded four consecutive quarters of sub-trend growth. This
loss in momentum had been driven by the sharp slowdown in the housing sector. In
addition, another major source of weakness has been a decline in U.S. exports, a
somewhat surprising result given the resilience of most other major economies to
date.
The second half of 2006 was characterized by relatively low inflation despite an
oil price at $60 and above for much of the period. Inflation pressures increased
in the beginning of 2007, although readings have remained fairly stable in
recent months at 2.7%, a level that the U.S. Federal Reserve remains
uncomfortable with. Nevertheless, with the growth path remaining sub-trend,
inflationary pressures should ease going forward. Over the last year the Federal
Reserve Open Market Committee kept rates unchanged at 5.25%. We anticipate the
Fed easing later in 2007, given that given that inflation remains relatively
high and the labor market has not shown any convincing signs of weakening just
yet.
The U.S. High Yield market posted strong performance over the past 12 months.
Performance was driven by strong fundamentals in terms of good earnings and
declining defaults rates aided by strong technicals in the form of robust
liquidity. The healthy liquidity allowed the market to easily absorb a high
levels new issuance. From an industry perspective, strength in the market has
been broad based over the past 12-months. The Broadband (+20.07%), Airline
(+16.56%), Cable (+15.74%) and Automobile Manufacturing (+15.16%), industries
posted the strongest returns within the Citigroup High Yield Market Capped
Index(1). Over the past 12-months, lower quality issues outperformed high
quality issues as CCC-rated issuers returned 16.76%, B-rated bonds have returned
11.29%, and BB-rated bonds have returned 9.33%.
PORTFOLIO PERFORMANCE
The Fund (without fees) outperformed the benchmark for the period under review.
Performance has been driven by the Fund's overweight in Gaming and Energy
sectors which underperformed the market. These losses were somewhat mitigated by
an overweight in CCC-rated issuers and an overweight to the Cable & Broadband.*
Going forward, we will maintain duration that approximates that of the
benchmark. We continue to focus on security selection, including select
off-benchmark names that we think offer greater opportunities in value.*
Our outlook for the remainder of 2007 is cautiously optimistic. We continue to
be positive about sustained economic growth and low default rates. Although
wider spreads are an eventual certainty, we believe that sound fundamentals and
technicals will lead to a prolonged period of compressed spread levels. On an
industry front, we remain positive on the Energy, Gaming, Wireless, and Cable
sectors.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
5 HSBC INVESTOR FAMILY OF FUNDS
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PORTFOLIO REVIEWS
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HSBC INVESTOR HIGH YIELD FIXED INCOME FUND - AS OF APRIL 30, 2007
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AVERAGE ANNUAL EXPENSE
FUND PERFORMANCE TOTAL RETURN (%) RATIO (%)(5)
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INCEPTION SIX 1 SINCE
AS OF APRIL 30, 2007 DATE MONTHS+ YEAR INCEPTION GROSS NET
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HSBC Investor High Yield Fixed Income Fund Class A(1) 11/18/05 2.32 5.54 7.43 3.53 0.80
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HSBC Investor High Yield Fixed Income Fund Class B(2) 11/21/05 3.07 5.99 8.39 4.28 1.55
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HSBC Investor High Yield Fixed Income Fund Class C(3) 12/14/05 6.05 8.96 10.69 4.28 1.55
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HSBC Investor High Yield Fixed Income Fund Class I 11/18/05 7.60 11.20 11.46 3.28 0.55
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Merrill Lynch U.S. High Yield Master II Index(4) -- 6.91 12.36 N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------
Lipper High Current Yield Funds Average(4) -- 6.61 10.76 N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING
THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE
PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD
HAVE BEEN LOWER. CURRENTLY, CONTRACTUAL FEE WAIVERS ARE IN EFFECT FROM MARCH 1,
2007 THROUGH MARCH 1, 2008.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 4.75%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
(5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY
28, 2007.
+ AGGREGATE TOTAL RETURN.
The Fund is measured against the Merrill Lynch U.S. High Yield Master II Index
an unmanaged index which represents the broad high yield market. The performance
of the index does not reflect the deduction of expenses associated with a mutual
fund, such as investment management and fund accounting fees. The Fund's
performance reflects the deduction of fees for these value-added services.
Investors cannot invest directly in an index, although they can invest in its
underlying securities. During the period shown, certain parties waived and/or
reimbursed fees for various expenses. Had these waivers and/or reimbursements
not been in effect, performance quoted would have been lower.
HSBC INVESTOR FAMILY OF FUNDS 6
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME FUND
(CLASS A SHARES, B SHARES, C SHARES AND I SHARES)
BY HSBC INVESTMENTS (USA) INC. U.S. CORE FIXED INCOME TEAM
The HSBC Investor Intermediate Duration Fixed Income Fund (the "Fund") seeks to
realize above-average total return, consistent with reasonable risk, by
investing in a diversified investment grade portfolio of U.S. government
obligations, corporate bonds and mortgage-backed securities. The Fund utilizes a
two tier structure, commonly known as "master-feeder," in which the Fund invests
all of its investable assets in the HSBC Investor Intermediate Duration Fixed
Income Portfolio (the "Portfolio").
INVESTMENT CONCERNS
Bonds offer a relatively stable level of income, although bond prices will
fluctuate providing the potential for principal gain or loss. Intermediate-term,
higher-quality bonds generally offer less risk than longer-term bonds and a
lower rate of return.
MARKET COMMENTARY
The Fund returned 6.78% (without sales charge) for the Class A Shares and 7.01%
for the Class I Shares during the six month period ended April 30, 2007. That
compared to a total return of 2.72% for Lehman Brothers Intermediate U.S.
Aggregate Bond Index.(1)
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
Gross Domestic Product(1) grew at a well below trend pace over the past year.
The U.S. economy recorded 4 consecutive quarters of sub-trend growth. This loss
in momentum had been driven by the sharp slowdown in the housing sector. In
addition, another major source of weakness has been a decline in U.S. exports, a
somewhat surprising result given the resilience of most other major economies to
date.
The second half of 2006 was characterized by relatively low inflation despite an
oil price at $60 and above for much of the period. Inflation pressures increased
in the beginning of 2007, although readings have remained fairly stable in
recent months at 2.7%, a level that the US Federal Reserve remains uncomfortable
with. Nevertheless, with the growth path remaining sub-trend, inflationary
pressures should ease going forward. Over the last year the Federal Reserve Open
Market Committee kept rates unchanged at 5.25%. We anticipate the Fed easing
later in 2007, given that given that inflation remains relatively high and the
labor market has not shown any convincing signs of weakening just yet.
Interest rates were volatile during the year, as the 10-year Treasury rate ended
(4.62%) the period over 50bps (0.50%) lower then the point it began (5.13%). The
short-end of the yield curve rose an average of 5bps (0.05%) causing the yield
curve to invert. For the year under review, the Lehman Brothers U.S. Aggregate
Bond Index(1) returned 7.36%. Spreads tightened in most sectors over the period,
and all spread sectors had excess returns versus Treasury securities of similar
duration. Corporates were the best performing sector within the Aggregate Index,
outperforming Treasuries of comparable duration by 0.81%. Lower quality sectors
performed even better, with High Yield and Emerging Market Debt beating
comparable duration Treasuries by 5.52% and 4.09% respectively.
PORTFOLIO PERFORMANCE
The Fund outperformed the benchmark for the period under review. The key
component of that outperformance was select, off-benchmark holdings in high
yield and emerging market debt. An overweight in spread sectors generally
relative to the benchmark, particularly asset backed securities and
collateralized mortgage backed securities and individual security selection in
corporate credit also had a positive impact on performance.*
Going forward, we have positioned the portfolio defensively as we are cautious
about the current opportunities for fixed income investors particularly in
regard to credit. In the investment grade market, our concern primarily stems
from the risk of subordination by private equity investors while in the high
yield market our concerns are a function of both valuation and leverage.*
As a result, we have positioned our credit weighting, including off-benchmark
investments, neutral to that of the index as measured on a
contribution-to-duration basis. Moreover, we have transitioned some of our
corporate bond holdings from fixed rate to floating rate notes as we believe
these securities will provide greater income and better price performance over
the short-to intermediate term.*
The outlook for the term structure of interest rates is unclear in the
near-to-intermediate term. As a result, our duration and yield curve position is
neutral to that of our benchmark index. As in the credit markets, we believe
global liquidity has reduced the risk premium in longer term interest rates in
the U.S. However, this phenomenon may continue and we believe it is difficult to
reliably forecast the path of longer term interest rates in the near term. Over
the longer-term, however, we believe that the yield curve will steepen and
anticipate positioning the portfolio to take advantage of that trend during
2007.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
7 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME FUND - AS OF APRIL 30, 2007
AVERAGE ANNUAL EXPENSE
FUND PERFORMANCE TOTAL RETURN (%) RATIO (%)(5)
- ----------------------------------------------------------------------------------------------------------------------------------
INCEPTION SIX 1 5 SINCE
AS OF APRIL 30, 2007 DATE MONTHS+ YEAR YEAR INCEPTION GROSS NET
- ----------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Intermediate Duration Fixed Income Fund Class A(1) 2/7/01 1.76 6.20 3.98 4.36 1.65 0.65
- ----------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Intermediate Duration Fixed Income Fund Class B(2) 2/15/01 2.48 6.69 4.23 4.42 2.40 1.40
- ----------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Intermediate Duration Fixed Income Fund Class C(3) 2/13/01 5.48 9.81 4.26 4.38 2.40 1.40
- ----------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Intermediate Duration Fixed Income Fund Class I 1/23/01 7.01 11.91 5.28 5.54 1.40 0.40
- ----------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Intermediate U.S. Aggregate Bond Index(4) -- 2.72 6.96 4.68 N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------------------
Lipper Intermediate Investment-Grade Debt Funds Average(4) -- 2.53 6.80 4.62 N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH LEND, PLEASE CALL 1-800-782-8183.
THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING
THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE
PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD
HAVE BEEN LOWER. CURRENTLY, CONTRACTUAL FEE WAIVERS ARE IN EFFECT FROM MARCH 1,
2007 THROUGH MARCH 1, 2008.
The total returns for Class A shares, Class B Shares, Class C Shares and Class I
Shares of the Fund for the period ended April 30, 2007 included the receipt of a
one-time payment in respect of a class action settlement. Without the receipt of
this payment, the returns for the Fund for the period ended April 30, 2007 would
have been lower.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 4.75%.
(2) REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF
4.00%.
(3) REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF
1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
(5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY
28, 2007.
+ AGGREGATE TOTAL RETURN.
The Fund is measured against the Lehman Brothers Intermediate U.S. Aggregate
Bond Index, an unmanaged index generally representative of investment-grade
issues with maturities between three and ten years. The performance of the index
does not reflect the deduction of expenses associated with a mutual fund, such
as investment management and fund accounting fees. The Fund's performance
reflects the deduction of fees for these value-added services. Investors cannot
invest directly in an index, although they can invest in its underlying
securities. During the period shown, certain parties waived and/or reimbursed
fees for various expenses. Had these waivers and/or reimbursements not been in
effect, performance quoted would have been lower.
HSBC INVESTOR FAMILY OF FUNDS 8
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
(CLASS A SHARES, B SHARES, C SHARES AND I SHARES)
BY HSBC INVESTMENTS (USA) INC. U.S. CORE FIXED INCOME TEAM
The HSBC Investor New York Tax-Free Bond Fund (the "Fund") seeks to provide
shareholders with income exempt from regular, federal, New York state and New
York city personal income taxes.
INVESTMENT CONCERNS
Bonds offer a relatively stable level of income, although bond prices will
fluctuate providing the potential for principal gain or loss. Intermediate-term,
higher-quality bonds generally offer less risk than longer-term bonds and a
lower rate of return.
The Fund's income may be subject to certain state and local taxes and, depending
on your tax status, the federal alternative minimum tax. Regional funds may be
subject to additional risks, since the issues they invest in are located in one
geographical location.
MARKET COMMENTARY
The Fund delivered a total return of 1.18% (without sales charge) for Class A
Shares and 1.30% for Class I Shares for the six month period ended April 30,
2007. That compared to 1.58% and 1.26% for the Fund's benchmarks, the Lehman
Brothers New York Tax Exempt Index(1) and the Lipper New York Municipal Debt
Funds Average(1), respectively.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
Gross Domestic Product(1) grew at a well below trend pace over the past year.
The U.S. economy recorded four consecutive quarters of sub-trend growth. This
loss in momentum had been driven by the sharp slowdown in the housing sector. In
addition, another major source of weakness has been a decline in U.S. exports, a
somewhat surprising result given the resilience of most other major economies to
date.
The second half of 2006 was characterized by relatively low inflation despite an
oil price at $60 and above for much of the period. Inflation pressures increased
in the beginning of 2007, although readings have remained fairly stable in
recent months at 2.7%, a level that the U.S. Federal Reserve remains
uncomfortable with. Nevertheless, with the growth path remaining sub-trend,
inflationary pressures should ease going forward. Over the last year the Federal
Reserve Open Market Committee kept rates unchanged at 5.25%. We anticipate the
Fed easing later in 2007, given that given that inflation remains relatively
high and the labor market has not shown any convincing signs of weakening just
yet.
Interest rates were volatile during the year, as the 10-year Treasury rate ended
(4.62%) the period over 50bps (0.50%) lower then the point it began (5.13%). The
short-end of the yield curve rose an average of 5bps (0.05%) causing the yield
curve to invert. While the Municipal yield curve did not invert it did continue
to flatten. Ten year municipals declined by 32 basis points (0.32%) while two
year municpals declined by just 3 basis points. (0.03%)
PERFORMANCE REVIEW
The Fund outperformed the Lehman New York State index by one basis point (0.01%)
on a gross basis. Effective duration positioning during the course of the year
added to the performance of the the Fund. In addition, the portfolio was
overweight the 10-20 year portion of the yield curve which provided the
strongest returns along the yield curve. The portfolio's high quality profile
detracted from performance as lower quality sectors such as Hopitals and
Industrial Development Bonds provided the strongest returns from a sector
basis.*
Going forward, we will likely reduce our duration underweight as yields move
higher. We intend to add higher yielding insured paper and mixed collateral
pre-refunded bonds on a tactical basis. Additionally, we are considering various
bond strategies in light of the potential impact of the alternative minimum
tax.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
9 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND - AS OF APRIL 30, 2007
- -----------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL EXPENSE
FUND PERFORMANCE TOTAL RETURN (%) RATIO (%)(5)
- -----------------------------------------------------------------------------------------------------------------------------
INCEPTION SIX 1 5 10 SINCE
AS OF APRIL 30, 2007 DATE MONTHS+ YEAR YEAR YEAR INCEPTION GROSS NET
- -----------------------------------------------------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund Class A(1) 5/1/95 -3.65 -0.22 3.04 4.32 4.66 0.93 0.93
- -----------------------------------------------------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund Class B(2) 1/6/98 -3.17 0.00 3.28 -- 3.69 1.68 1.68
- -----------------------------------------------------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund Class C(3) 11/4/98 -0.19 2.99 3.27 -- 3.25 1.68 1.68
- -----------------------------------------------------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund Class I 7/1/96 1.30 4.94 4.31 5.09 5.11 0.68 0.68
- -----------------------------------------------------------------------------------------------------------------------------
Lehman Brothers New York Tax Exempt Index(4) -- 1.58 1.10 5.15 5.80 N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------
Lipper New York Municipal Debt Funds Average(4) -- 1.26 5.34 4.60 5.04 N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING
THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE
PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD
HAVE BEEN LOWER.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 4.75%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
(5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY
28, 2007.
+ AGGREGATE TOTAL RETURN.
The Fund is measured against the Lehman Brothers New York Tax Exempt Index, an
unmanaged index composed of investment grade New York tax-exempt securities, all
having a $50 million minimum maturity value. The performance of the index does
not reflect the deduction of expenses associated with a mutual fund, such as
investment management and fund accounting fees. The Fund's performance reflects
the deduction of fees for these value-added services. Investors cannot invest
directly in an index, although they can invest in its underlying securities.
During the period shown, certain parties waived and/or reimbursed fees for
various expenses. Had these waivers and/or reimbursements not been in effect,
performance quoted would have been lower.
HSBC INVESTOR FAMILY OF FUNDS 10
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH FUND
(CLASS A SHARES, B SHARES, C SHARES AND I SHARES)
BY PHILIP J. SANDERS, SENIOR VICE PRESIDENT/PORTFOLIO MANAGER, CFA AND
DANIEL P. BECKER, SENIOR VICE PRESIDENT/PORTFOLIO MANAGER, CFA
WADDELL & REED INVESTMENT MANAGEMENT COMPANY
The HSBC Investor Growth Fund (the "Fund") seeks long-term growth of capital by
investing primarily in U.S. and foreign equity securities of high quality
companies with market capitalization generally in excess of $2 billion, which
the sub-adviser believes have the potential to generate superior levels of
long-term profitability and growth. The Fund utilizes a two tier structure,
commonly known as a "master-feeder", and invests all of its assets in the HSBC
Investor Growth Portfolio (the "Portfolio"), which acts as the master fund. The
Portfolio employs Waddell & Reed Investment Management Company (Waddell & Reed)
as sub-adviser.
INVESTMENT CONCERNS
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes.
MARKET COMMENTARY
The Fund returned 8.03% (without sales charge) for the Class A Shares and 8.15%
for the Class I Shares for the six month period ended April 30, 2007. That
compared to a 8.60% return for the Standard & Poor's 500 Index(1), 8.42% for the
Russell 1000(R) Growth Index(1) and a 7.38% return for the Lipper Large-Cap
Growth Funds Average(1).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
PERFORMANCE REVIEW
Domestic equity markets performed very well during the period, bolstered by
investor optimism about job growth, healthy corporate balance sheets and
strength in emerging foreign economies. That optimism was partially offset by
weakness in the real estate market and early signs of softness in capital
spending, however.
Generally strong stock selection helped the Fund outperform its benchmark.
Relative returns particularly benefited from selection in the health care and
energy sectors. Certain holdings in the materials sector also boosted the Fund's
performance against its benchmark.*
Selection among information technology stocks weighed on returns relative to the
index. An overweight position in that sector also weakened relative performance,
as technology stocks lagged the market. The Fund's holdings in the consumer
discretionary sector detracted from relative returns as well. Consumer
discretionary stocks generally performed poorly, as investors worried that the
housing slump and high energy prices would dampen consumer spending. The
sub-advisor held a relatively small position in the sector, but the benefits of
that under-weighting were more than offset by weak returns among certain of the
Fund's consumer discretionary shares.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
11 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH FUND - AS OF APRIL 30, 2007
- -------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL EXPENSE
FUND PERFORMANCE TOTAL RETURN (%) RATIO (%)(5)
- -------------------------------------------------------------------------------------------------------
INCEPTION SIX 1 SINCE
AS OF APRIL 30, 2007 DATE MONTHS+ YEAR INCEPTION GROSS NET
- -------------------------------------------------------------------------------------------------------
HSBC Investor Growth Fund Class A(1) 5/10/04 2.64 1.54 7.48 1.44 1.20
- -------------------------------------------------------------------------------------------------------
HSBC Investor Growth Fund Class B(2) 5/10/04 3.65 2.21 7.94 2.19 1.95
- -------------------------------------------------------------------------------------------------------
HSBC Investor Growth Fund Class C(3) 5/10/04 6.66 5.11 8.52 2.19 1.95
- -------------------------------------------------------------------------------------------------------
HSBC Investor Growth Fund Class I 5/10/04 8.15 7.14 9.60 1.19 0.95
- -------------------------------------------------------------------------------------------------------
Russell 1000(R) Growth Index(4) -- 8.42 12.25 N/A N/A N/A
- -------------------------------------------------------------------------------------------------------
Standard & Poor's 500 Index(4) -- 8.60 15.23 N/A N/A N/A
- -------------------------------------------------------------------------------------------------------
Lipper Large-Cap Growth Funds Average(4) -- 7.38 7.56 N/A N/A N/A
- -------------------------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING
THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE
PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD
HAVE BEEN LOWER. CURRENTLY, CONTRACTUAL FEE WAIVERS ARE IN EFFECT FROM MARCH 1,
2007 THROUGH MARCH 1, 2008.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 5.00%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
(5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY
28, 2007.
+ AGGREGATE TOTAL RETURN
The Fund is measured against the Russell 1000(R) Growth Index and the Standard &
Poor's 500 Index. The Russell 1000(R) Growth Index measures the performance of
those Russell 1000 companies with higher price-to-book ratios and higher
forecasted growth values. The Standard & Poor's 500 Index is generally
representative of the U.S. stock market as a whole. The indices are unmanaged
and do not reflect the deduction of expenses associated with a mutual fund, such
as investment management and fund accounting fees. The Fund's performance
reflects the deduction of fees for these value-added services. Investors cannot
invest directly in an index, although they can invest in its underlying
securities. During the period shown, certain parties waived and/or reimbursed
fees for various expenses. Had these waivers and/or reimbursements not been in
effect, performance quoted would have been lower.
HSBC INVESTOR FAMILY OF FUNDS 12
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH AND INCOME FUND
(CLASS A SHARES, B SHARES, C SHARES AND I SHARES)
BY GARY U. ROLLE, CFA, PRINCIPAL/CHIEF INVESTMENT OFFICER AND
EDWARD S. HAN, PRINCIPAL/PORTFOLIO MANAGER AND
TRANSAMERICA INVESTMENT MANAGEMENT, LLC
The HSBC Investor Growth and Income Fund (the "Fund") normally invests at least
65% of its total assets in common stocks, preferred stocks, and convertible
securities. The Fund may invest the balance of its assets in various types of
fixed income securities and in money market instruments. The Fund employs
Transamerica Investment Management, LLC ("TIM") as the sub-adviser to the Fund.
INVESTMENT CONCERNS
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes.
Bonds offer a relatively stable level of income, although bond prices will
fluctuate providing the potential for principal gain or loss. Intermediate-term,
higher-quality bonds generally offer less risk than longer-term bonds and a
lower rate of return.
MARKET COMMENTARY
The Fund returned 8.20% (without sales charge) for the Class A Shares and 8.36%
for the Class I Shares for the six month period ended April 30, 2007. That
compared to a 8.60% return for the Standard & Poor's 500 Index(1) and a 8.25%
return for the Lipper Large-Cap Core Funds Average(1).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
PERFORMANCE REVIEW
The Federal Reserve Board (the "Fed") left its target federal funds rate
unchanged at 5.25% during the period, as economic data suggested that the
economy was likely to slow gradually and reduce inflationary pressures.
Investors responded positively to the stable rate environment and sustained
strength in corporate earnings by bidding up stock prices. Stocks swooned in
February as investors worried about how slowing in the housing market would
affect consumer spending, but subsequently strengthened.
The Fund held an overweight position relative to its benchmark index in shares
of consumer discretionary and industrial firms. Strong stock selection helped
both of those allocations significantly outperform the corresponding sectors in
the benchmark, boosting the Fund's overall relative return. The portfolio also
held a smaller stake in financials than did the benchmark. Financials performed
relatively poorly, in part because of investors' concerns about rising defaults
on sub-prime mortgages, so the Fund's underweight stake helped its returns
against the index. Stock selection in that sector also improved the Fund's
relative return: The Fund's financials allocation generated a 10.00% return,
compared to just a 4.00% gain for the financial stocks in the benchmark. A
significantly underweight position in health care increased the Fund's relative
gain as well, as health care stocks lagged the broad market.*
The Fund's security selection in the consumer staples, energy and materials
sectors weighed on the Fund's relative returns. In addition, an underweight
stake in energy stocks detracted from performance against the benchmark.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
13 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH AND INCOME FUND - AS OF APRIL 30, 2007
- -----------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL EXPENSE
FUND PERFORMANCE TOTAL RETURN (%) RATIO (%)(5)
- -----------------------------------------------------------------------------------------------------------------
INCEPTION SIX 1 5 SINCE
AS OF APRIL 30, 2007 DATE MONTHS+ YEAR YEAR INCEPTION GROSS NET
- -----------------------------------------------------------------------------------------------------------------
HSBC Investor Growth and Income Fund Class A(1) 4/12/01 2.77 3.13 5.76 2.08 1.47 1.20
- -----------------------------------------------------------------------------------------------------------------
HSBC Investor Growth and Income Fund Class B(2) 4/5/01 3.82 3.82 6.07 2.67 2.22 1.95
- -----------------------------------------------------------------------------------------------------------------
HSBC Investor Growth and Income Fund Class C(3) 11/3/03 6.85 6.85 -- 9.93 2.22 1.95
- -----------------------------------------------------------------------------------------------------------------
HSBC Investor Growth and Income Fund Class I 4/2/01 8.36 8.86 7.11 3.74 1.22 0.95
- -----------------------------------------------------------------------------------------------------------------
Standard & Poor's 500 Index(4) -- 8.60 15.23 8.54 N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------
Lipper Large-Cap Core Funds Average(4) -- 8.25 13.26 7.05 N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING
THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE
PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD
HAVE BEEN LOWER. CURRENTLY, CONTRACTUAL FEE WAIVERS ARE IN EFFECT FROM MARCH 1,
2007 THROUGH MARCH 1, 2008.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 5.00%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
(5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY
28, 2007.
+ AGGREGATE TOTAL RETURN
The Fund is measured against the Standard & Poor's 500 Index, an unmanaged index
that is generally representative of the U.S. stock market as a whole. The
performance of the index does not reflect the deduction of expenses associated
with a mutual fund, such as investment management and fund accounting fees. The
Fund's performance reflects the deduction of fees for these value-added
services. Investors cannot invest directly in an index, although they can invest
in its underlying securities. During the period shown, certain parties waived
and/or reimbursed fees for various expenses. Had these waivers and/or
reimbursements not been in effect, performance quoted would have been lower.
HSBC INVESTOR FAMILY OF FUNDS 14
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERNATIONAL EQUITY FUND
(ADVISOR, CLASS A SHARES, B SHARES, AND C SHARES)
BY KEVIN F. SIMMS
CO-CIO INTERNATIONAL VALUE EQUITIES AND DIRECTOR OF RESEARCH - GLOBAL AND
INTERNATIONAL VALUE EQUITIES
ALLIANCEBERNSTEIN INVESTMENT RESEARCH AND MANAGEMENT
The HSBC Investor International Equity Fund and the HSBC Investor Overseas
Equity Fund (the "Funds") seek to provide their shareholders with long-term
growth of capital and future income by investing primarily in securities of
non-U.S. issuers and securities of issuers whose principal markets are outside
of the United States. The Funds employ a two-tier fund structure, known as
"master-feeder," in which the Funds invest all of their investable assets
in the HSBC Investor International Equity Portfolio (the "Portfolio"). The
Portfolio employs AllianceBernstein Investment Research and Management
("AllianceBernstein"), a unit of AllianceBernstein Investment Research
and Management as sub-investment adviser.
The Portfolio invests primarily in equity securities of companies organized and
domiciled in developed nations outside the U.S., or for which the principal
trading market is outside the U.S., including Europe, Canada, Australia and the
Far East.
INVESTMENT CONCERNS
There are risks associated with investing in foreign companies, such as erratic
market conditions, economic and political instability and fluctuations in
currency and exchange rates.
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes.
MARKET COMMENTARY
For the six month period ended April 30, 2007, the Advisor shares of the HSBC
Investor International Equity Fund produced a 14.58% return and the Class A
Shares of the HSBC Investor Overseas Equity Fund returned 13.94% (without sales
charge). That compared to a total return of 15.68% and 13.91% for the Funds'
benchmarks, the MSCI EAFE Index(1) and the Lipper International Large-Cap Core
Funds Average(1), respectively.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
PERFORMANCE REVIEW
Good performance in international equity markets helped the Fund generate strong
absolute returns. A number of rallying stocks particularly boosted performance,
including shares of a Dutch financial firm, a North American steel producer and
French tire maker. Stocks that weighed on absolute performance included shares
of a Korean automobile manufacturer, a Japanese financial firm and a Japanese
capital equipment maker.*
Stock selection added 0.5 percentage points to the Fund's performance advantage
over its benchmark. The sub-advisor's selections within the consumer staples,
transportation and industrial commodities sectors especially contributed to
relative gains. In particular, shares of a U.K. supermarket chain benefited from
the company's strong financial results, and from investors' belief that a
private equity firm might acquire the company. A Japanese shipping stock also
boosted relative returns, as lower fuel prices and strong demand improved the
firm's profits. Likewise, shares of a Japanese steel producer surged after the
company raised its earnings projections due to burgeoning demand.*
Meanwhile, stock selection within the capital equipment sector detracted from
relative performance. Difficulties at merged French and Japanese auto companies
especially weakened returns in that sector. An overweight position in a Japanese
financial firm also weighed on relative performance.*
The Fund's overall sector weightings decreased relative returns by 0.37
percentage points. The portfolio's overweight stake in underperforming energy
and financial stocks hurt relative performance, as did underweight positions in
the strong consumer staples and construction and housing sectors.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
15 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERNATIONAL EQUITY FUND - AS OF APRIL 30, 2007
- ------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL EXPENSE
FUND PERFORMANCE TOTAL RETURN (%) RATIO (%)(5)
- ------------------------------------------------------------------------------------------------------------------------------
INCEPTION SIX 1 5 10 SINCE
AS OF APRIL 30, 2007 DATE MONTHS+ YEAR YEAR YEAR INCEPTION GROSS NET
- ------------------------------------------------------------------------------------------------------------------------------
HSBC Investor International Equity Fund (Advisor) 1/9/95 14.58 18.77 16.26 10.96 11.62 0.97 0.97
- ------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Overseas Equity Fund Class A(1) 8/26/96 8.25 11.75 14.60 9.60 10.07 1.67 1.67
- ------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Overseas Equity Fund Class B(2) 1/6/98 9.58 12.80 14.91 -- 9.91 2.42 2.42
- ------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Overseas Equity Fund Class C(3) 11/4/98 12.49 15.73 14.91 -- 10.23 2.42 2.42
- ------------------------------------------------------------------------------------------------------------------------------
MSCI EAFE Index(4) -- 15.68 20.32 17.10 9.09 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------
Lipper International Large-Cap Core Average(4) -- 13.91 16.25 13.68 7.77 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING
THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE
PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD
HAVE BEEN LOWER. CURRENTLY, FOR CLASS A, CLASS B AND CLASS C CONTRACTUAL FEE
WAIVERS ARE IN EFFECT FROM MARCH 1, 2007 THROUGH MARCH 1, 2008.
During the period ended April 30, 2007, the Fund received monies related to
certain nonrecurring litigation settlements. Without the receipt of this
payment, the returns for the Fund's Advisor Class shares, Class A Shares, Class
B shares and Class C shares for the period ended April 30, 2007 would have been
lower.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 5.00%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
(5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY
28, 2007.
+ AGGREGATE TOTAL RETURN
The Fund is measured against the Morgan Stanley Capital International (MSCI)
Europe, Australasia and Far East (EAFE) Index, which is an unmanaged index that
measures performance of a diverse range of developed countries in the indicated
regions. The performance of the index does not reflect the deduction of expenses
associated with a mutual fund, such as investment management and fund accounting
fees. The Funds' performance reflects the deduction of fees for these
value-added services. Investors cannot invest directly in an index, although
they can invest in its underlying securities. During the period shown, certain
parties waived and/or reimbursed fees for various expenses. Had these waivers
and/or reimbursements not been in effect, performance quoted would have been
lower.
HSBC INVESTOR FAMILY OF FUNDS 16
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR MID-CAP FUND
(CLASS A SHARES, B SHARES, C SHARES AND TRUST SHARES)
BY TONY Y. DONG, CFA, DIRECTOR, MID-CAP EQUITY AND SENIOR PORTFOLIO MANAGER AND
BRIAN S. MATUSZAK, CFA, SENIOR EQUITY ANALYST AND
ANDY Y. MUI, CPA, SENIOR EQUITY ANALYST
MUNDER CAPITAL MANAGEMENT
The HSBC Investor Mid-Cap Fund (the "Fund") seeks to achieve its objective by
investing in common or preferred stocks and convertible securities. The Fund
will normally invest at least 80% of its assets in equity securities of
mid-sized companies with market capitalizations falling within the range of the
S&P MidCap 400 Index (between $270 million and $8.6 billion as of March 31,
2005) at the time of acquisition. Investments are primarily in domestic common
stocks but also may include, to a limited degree, preferred stocks, and
convertible securities. The Portfolio employs Munder Capital Management
("Munder") as sub-investment adviser.
INVESTMENT CONCERNS
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes.
Mid capitalization funds typically carry additional risks since smaller
companies generally have a higher risk of failure, and historically, their
stocks have experienced a greater degree of market volatility than stocks on
average.
MARKET COMMENTARY
The Fund's Class A Shares posted a return of 12.40% (without sales charge) and
12.42% for the Trust Shares for the six month period ended April 30, 2007. That
compared to 11.98% and 11.45% for the Fund's benchmarks, the S&P MidCap 400
Index(1) and the Lipper Mid-Cap Growth Funds Average(1).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
PERFORMANCE REVIEW
Mid cap stocks surged during much of the period between November and April. The
Fund's benchmark was the strongest- performing major U.S. equity index during
that time, driven by medium-sized firms' powerful profit growth. The exception
to that generally strong environment came during late February, when all sectors
of the market suffered a sharp downturn. The market recovered quickly from that
setback, however. That environment helped the Fund generate strong gains, with
every economic sector but one posting positive returns. (The one exception,
consumer staples, declined less than one percent.)*
Very strong stock selection helped the Fund outperform its benchmark for the
period. Selection in the consumer discretionary sector proved especially
beneficial, as the Fund's holdings in that sector outperformed the benchmark's
consumer discretionary stake by 0.75 percentage points.*
The Fund's allocation to consumer staples stocks reduced its performance
relative to the benchmark, largely because of losses in two holdings in that
sector. The sub-advisor subsequently eliminated one of those positions from the
portfolio. The Fund's stakes in materials, information technology and industrial
stocks also weighed on performance against the benchmark, despite posting strong
absolute returns.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
17 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR MID-CAP FUND - AS OF APRIL 30, 2007
- ----------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL EXPENSE
FUND PERFORMANCE TOTAL RETURN (%) RATIO (%)(5)
- ----------------------------------------------------------------------------------------------------------------
INCEPTION SIX 1 5 10 SINCE
AS OF APRIL 30, 2007 DATE MONTHS+ YEAR YEAR YEAR INCEPTION GROSS NET
- ----------------------------------------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund Class A(1) 7/1/93 6.75 4.85 7.86 10.15 11.28 1.85 1.35
- ----------------------------------------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund Class B(2) 7/1/93 7.93 5.45 8.12 9.87 10.91 2.60 2.10
- ----------------------------------------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund Class C(3) 7/1/93 10.83 8.49 8.26 9.94 10.91 2.60 2.10
- ----------------------------------------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund Trust 7/1/93 12.42 10.58 9.19 10.93 11.96 1.60 1.10
- ----------------------------------------------------------------------------------------------------------------
Standard & Poor's MidCap 400 Index(4) -- 11.98 10.19 11.47 14.34 N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap Growth Funds Average(4) -- 11.45 6.75 8.73 9.11 N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING
THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE
PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD
HAVE BEEN LOWER. CURRENTLY, CONTRACTUAL FEE WAIVERS ARE IN EFFECT FROM MARCH 1,
2007 THROUGH MARCH 1, 2008.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 5.00%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
(5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY
28, 2007.
+ AGGREGATE TOTAL RETURN
+ For periods prior to July 1, 2000, the performance shown above includes
the total return (adjusted for Fund expenses) generated by HSBC
Investments (USA) Inc's management of a pooled investment vehicle called a
collective investment trust (CTF) with the same investment objective as
the Fund. The assets from that CTF were converted into the HSBC Investor
Mid-Cap Fund on July 1, 2000. The CTF was not registered with the
Securities & Exchange Commission (SEC) and thus was not subject to certain
investment restrictions that are imposed on the Fund. If the CTF had been
registered with the SEC, its performance might have been adversely
affected. Performance assumes reinvestment of dividends and distributions.
The S&P MidCap 400 Index is comprised of 400 domestic stocks chosen for market
size (median market capitalization of $676 million), liquidity and industry
group representation. The performance of the index does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management and fund accounting fees. The Fund's performance reflects the
deduction of fees for these value-added services. Investors cannot invest
directly in an index, although they can invest in its underlying securities.
During the period shown, certain parties waived and/or reimbursed fees for
various expenses. Had these waivers and/or reimbursements not been in effect,
performance quoted would have been lower.
HSBC INVESTOR FAMILY OF FUNDS 18
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR OPPORTUNITY FUND (FORMERLY KNOWN AS SMALL CAP EQUITY FUND)
(ADVISOR, CLASS A SHARES, B SHARES AND C SHARES)
BY WILLIAM A. MUGGIA
PRESIDENT-CHIEF INVESTMENT OFFICER
WESTFIELD CAPITAL MANAGEMENT
The HSBC Investor Opportunity Fund ("the Fund") seeks to provide its
shareholders with long-term growth of capital by investing in equity securities
of emerging small and medium-sized companies expected to deliver earnings growth
well above the growth rate of the economy and the rate of inflation. The Funds
employ a two-tier structure, commonly referred to as "master-feeder." The Fund
invest all of its investable assets in the HSBC Investor Small Cap Equity
Portfolio (the "Portfolio"). The Portfolio employs Westfield Capital Management
Company, LLC as sub-investment adviser.
The Portfolio invests primarily in common stocks of small and medium-sized
companies that may have the potential to become major enterprises.
INVESTMENT CONCERNS
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes.
Small-capitalization funds typically carry additional risks since smaller
companies generally have a higher risk of failure, and historically, their
stocks have experienced a greater degree of market volatility than stocks on
average.
MARKET COMMENTARY
For the six month period ended April 30, 2007, the Advisor shares and the Class
A Shares of the Fund produced a total return of 12.13% and 11.86% (without sales
charge), respectively. The Fund's benchmarks, the Russell 2500(R) Growth
Index(1) and the Lipper Mid-Cap Growth Funds Average(1), returned 10.62% and
11.45%, respectively.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
PERFORMANCE REVIEW
Small-cap stocks performed well, despite a broad market sell-off that began in
February. The market promptly regained its upward trajectory as concerns about
rising defaults on sub-prime mortgages, weakness in the housing market, Alan
Greenspan's comments about the possibility of recession and rising tensions in
the Mideast gave way to enthusiasm over corporate profit growth, low
unemployment and relatively benign inflation data. Traditionally defensive
sectors such as materials, utilities, energy and consumer staples drove the
index's performance.*
The Fund benefited from an underweight position relative to the benchmark in
financials, the worst performing sector in the index. The sub-advisor's stock
selection in that sector also added to relative gains, due to the Fund's
exposure to the healthy asset management industry and select real estate
investment trusts (REITs), as well as limited exposure to traditional lenders.*
Stock selection within the consumer discretionary sector also boosted relative
returns. The sub-advisor avoided the underperforming apparel retail industry,
and held significant exposure to the strong-performing specialty stores and
specialized consumer services industries.*
A combination of a significantly overweight position in energy stocks and strong
selection in that sector also helped the Fund outperform during the period. The
sub-advisor held a healthy stake in the oil and gas equipment and services
stocks, the top-performing industry in the sector.*
The Fund held investments in seven economic sectors, and experienced positive
stock selection and positive performance relative to the index in all of them.
Unfortunately, the Fund had no exposure to the Utilities and Materials sectors.
Lack of exposure to these sectors, the top-performing sectors in the benchmark,
hurt relative returns.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
19 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR OPPORTUNITY FUND - AS OF APRIL 30, 2007
- -------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL EXPENSE
FUND PERFORMANCE TOTAL RETURN (%) RATIO (%)(5)
- -------------------------------------------------------------------------------------------------------------------
INCEPTION SIX 1 5 10 SINCE
AS OF APRIL 30, 2007 DATE MONTHS+ YEAR YEAR YEAR INCEPTION GROSS NET
- -------------------------------------------------------------------------------------------------------------------
HSBC Investor Opportunity Fund (Advisor) 9/3/96 12.13 10.66 10.07 12.52 12.22 1.03 1.03
- -------------------------------------------------------------------------------------------------------------------
HSBC Investor Opportunity Fund Class A(1) 9/23/96 6.29 4.62 8.35 11.26 10.23 1.70 1.65
- -------------------------------------------------------------------------------------------------------------------
HSBC Investor Opportunity Fund Class B(2) 1/6/98 7.58 5.43 8.63 -- 9.56 2.45 2.40
- -------------------------------------------------------------------------------------------------------------------
HSBC Investor Opportunity Fund Class C(3) 11/4/98 10.46 8.27 8.63 -- 10.40 2.45 2.40
- -------------------------------------------------------------------------------------------------------------------
Russell 2500(R) Growth Index(4) -- 10.62 7.32 10.53 8.71 N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap Growth Funds Average(4) -- 11.45 6.75 8.73 9.11 N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING
THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE
PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD
HAVE BEEN LOWER. CURRENTLY, FOR CLASS A, CLASS B AND CLASS C CONTRACTUAL FEE
WAIVERS ARE IN EFFECT FROM MARCH 1, 2007 THROUGH MARCH 1, 2008.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 5.00%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
(5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY
28, 2007.
+ AGGREGATE TOTAL RETURN
The Fund is measured against the Russell 2500(R) Growth Index, an unmanaged
index that tracks the performance of 2500 securities found in the Russell
Universe(4) with higher price-to-book and higher forecasted growth values. The
performance for the index does not reflect the deduction of expenses associated
with a mutual fund, such as investment management and fund accounting fees. The
Funds' performance reflects the deduction of fees for these value-added
services. Investors cannot invest directly in an index, although they can invest
in its underlying securities. During the period shown, certain parties waived
and/or reimbursed fees for various expenses. Had these waivers and/or
reimbursements not been in effect, performance quoted would have been lower.
HSBC INVESTOR FAMILY OF FUNDS 20
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR VALUE FUND
(CLASS A SHARES, B SHARES, C SHARES AND I SHARES)
BY JON D. BOSSE, CFA
CHIEF INVESTMENT OFFICER
NWQ INVESTMENT MANAGEMENT CO., LLC
The HSBC Investor Value Fund (the "Fund") seeks long-term growth of capital and
income by investing primarily in U.S. and foreign companies with large and
medium capitalizations that possess hidden opportunities underpriced by the
market. The Fund utilizes a two tier structure, commonly known as a
"master-feeder" and invests all of its assets in the HSBC Investor Value
Portfolio (the "Portfolio"), which acts as the master fund. The Portfolio
employs NWQ Investment Management Company, LLC ("NWQ") as sub-adviser.
INVESTMENT CONCERNS
Value-based investments are subject to the risk that the broad market may not
recognize their intrinsic value.
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this fund will fluctuate as the
value of the securities in the Portfolio changes.
MARKET COMMENTARY
The Fund returned 8.93% (without sales charge) for the Class A Shares and 9.07%
for the Class I Shares for the six month period ended April 30, 2007. That
compared to a 9.79% return for the Russell 1000(R) Value Index(1) and a 9.70%
return for the Lipper Multi-Cap Value Funds Average(1).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
PERFORMANCE REVIEW
With the Federal Reserve leaving interest rates unchanged since last August, the
U.S. stock market marched to a series of multi-year year highs spurred by
better-than-expected corporate earnings. The equity market shrugged off concerns
about a slumping housing market, slowing economic growth and potentially weaker
consumer spending. Share buybacks and corporate acquisitions by both public
companies and private equity firms meanwhile reduced the supply of available
stocks, pushing prices higher. The Fund's absolute returns benefited from the
stock market's strong gains in that environment.
A continued overweight position in shares of oil and natural gas exploration and
production companies provided the greatest positive contribution to returns
relative to the Fund's benchmark. Those stocks benefited from sustained spending
on exploration, as well as investors' appreciation for their attractive
valuations. The Fund's overweight stakes in the materials and processing,
consumer staples and producer durables sectors also boosted relative
performance.*
The Fund's relatively large position in technology stocks hindered returns
against the benchmark. Investor concerns about business spending buffeted that
sector of the market, and certain portfolio holdings announced disappointing
earnings. An overweight stake in mortgage-related stocks in the financial sector
also dragged on relative performance, due to weakness in the housing market and
rising defaults on sub-prime mortgages.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
21 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR VALUE FUND - AS OF APRIL 30, 2007
- -------------------------------------------------------------------------------------------------
AVERAGE ANNUAL EXPENSE
FUND PERFORMANCE TOTAL RETURN (%) RATIO (%)(5)
- -------------------------------------------------------------------------------------------------
INCEPTION SIX 1 SINCE
AS OF APRIL 30, 2007 DATE MONTHS+ YEAR INCEPTION GROSS NET
- -------------------------------------------------------------------------------------------------
HSBC Investor Value Fund Class A(1) 5/10/04 3.48 11.07 15.73 1.43 1.20
- -------------------------------------------------------------------------------------------------
HSBC Investor Value Fund Class B(2) 5/10/04 4.60 12.04 16.38 2.18 1.95
- -------------------------------------------------------------------------------------------------
HSBC Investor Value Fund Class C(3) 5/10/04 7.56 15.00 16.86 2.18 1.95
- -------------------------------------------------------------------------------------------------
HSBC Investor Value Fund Class I 5/10/04 9.07 17.12 18.05 1.18 0.95
- -------------------------------------------------------------------------------------------------
Russell 1000(R) Value Index(4) -- 9.79 18.15 N/A N/A N/A
- -------------------------------------------------------------------------------------------------
Lipper Multi-Cap Value Funds Average(4) -- 9.70 15.16 N/A N/A N/A
- -------------------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING
THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE
PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD
HAVE BEEN LOWER. CURRENTLY, CONTRACTUAL FEE WAIVERS ARE IN EFFECT FROM MARCH 1,
2007 THROUGH MARCH 1, 2008.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 5.00%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
(5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY
28, 2007.
+ AGGREGATE TOTAL RETURN
The Fund is measured against the Russell 1000(R) Value Index, an unmanaged index
comprised of the 1000 securities found in the Russell Universe(4) with a
less-than-average growth orientation. Companies in this index generally have low
price-to-book and price-to-earning ratios, higher dividend yields, and lower
forecasted growth values. The performance of the index does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management and fund accounting fees. The Fund's performance reflects the
deduction of fees for these value-added services. Investors cannot invest
directly in an index, although they can invest in its underlying securities.
During the period shown, certain parties waived and/or reimbursed fees for
various expenses. Had these waivers and/or reimbursements not been in effect,
performance quoted would have been lower.
HSBC INVESTOR FAMILY OF FUNDS 22
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION*
APRIL 30, 2007
(UNAUDITED)
- --------------------------------------------------------------------------------
HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Mortgage Backed Securities 25.0%
- --------------------------------------------------------------------------------
Corporate Bonds 20.9%
- --------------------------------------------------------------------------------
U.S. Treasury Securities 15.9%
- --------------------------------------------------------------------------------
Collateralized Mortgage Obligations 11.0%
- --------------------------------------------------------------------------------
Asset Backed Securities 10.6%
- --------------------------------------------------------------------------------
Commercial Mortgage Backed Securities 7.4%
- --------------------------------------------------------------------------------
Foreign Bond 5.5%
- --------------------------------------------------------------------------------
Cash and Equivalents 3.7%
- --------------------------------------------------------------------------------
Total 100.0%
================================================================================
- --------------------------------------------------------------------------------
HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Corporate Bonds 96.6%
- --------------------------------------------------------------------------------
Cash and Equivalents 3.4%
- --------------------------------------------------------------------------------
Total 100.0%
================================================================================
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Mortgage Backed Securities 25.7%
- --------------------------------------------------------------------------------
Corporate Bond 24.4%
- --------------------------------------------------------------------------------
Collateralized Mortgage Obligations 12.0%
- --------------------------------------------------------------------------------
U.S. Treasury Securities 10.8%
- --------------------------------------------------------------------------------
Asset Backed Securities 10.5%
- --------------------------------------------------------------------------------
Commercial Mortgage Backed Securities 7.9%
- --------------------------------------------------------------------------------
Foreign Bond 6.7%
- --------------------------------------------------------------------------------
Cash and Equivalents 2.0%
- --------------------------------------------------------------------------------
Total 100.0%
================================================================================
- --------------------------------------------------------------------------------
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Municipal Bonds 97.1%
- --------------------------------------------------------------------------------
Cash and Equivalents 2.9%
- --------------------------------------------------------------------------------
Total 100.0%
================================================================================
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Information Technology 28.5%
- --------------------------------------------------------------------------------
Health Care 19.8%
- --------------------------------------------------------------------------------
Consumer Discretionary 12.5%
- --------------------------------------------------------------------------------
Industrials 11.9%
- --------------------------------------------------------------------------------
Financials 11.0%
- --------------------------------------------------------------------------------
Consumer Staples 7.7%
- --------------------------------------------------------------------------------
Energy 4.7%
- --------------------------------------------------------------------------------
Cash and Equivalents 3.9%
- --------------------------------------------------------------------------------
Total 100.0%
================================================================================
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Consumer Discretionary 23.3%
- --------------------------------------------------------------------------------
Industrials 21.7%
- --------------------------------------------------------------------------------
Information Technology 18.3%
- --------------------------------------------------------------------------------
Financials 16.0%
- --------------------------------------------------------------------------------
Consumer Staples 6.3%
- --------------------------------------------------------------------------------
Materials 5.1%
- --------------------------------------------------------------------------------
Energy 3.6%
- --------------------------------------------------------------------------------
Telecommunications 2.4%
- --------------------------------------------------------------------------------
Cash and Equivalents 1.7%
- --------------------------------------------------------------------------------
Health Care 1.6%
- --------------------------------------------------------------------------------
Total 100.0%
================================================================================
- --------------------------------------------------------------------------------
HSBC INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Europe 63.7%
- --------------------------------------------------------------------------------
Japan 18.9%
- --------------------------------------------------------------------------------
Australia & Far East 7.7%
- --------------------------------------------------------------------------------
Cash and Equivalents 4.7%
- --------------------------------------------------------------------------------
Other 2.6%
- --------------------------------------------------------------------------------
Canada 2.4%
- --------------------------------------------------------------------------------
Total 100.0%
================================================================================
* Portfolio composition is subject to change.
23 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION*
APRIL 30, 2007
(UNAUDITED)
- --------------------------------------------------------------------------------
HSBC INVESTOR MID-CAP FUND
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Industrials 18.9%
- --------------------------------------------------------------------------------
Financials 16.3%
- --------------------------------------------------------------------------------
Information Technology 14.7%
- --------------------------------------------------------------------------------
Consumer Discretionary 14.3%
- --------------------------------------------------------------------------------
Health Care 9.7%
- --------------------------------------------------------------------------------
Energy 8.6%
- --------------------------------------------------------------------------------
Utilities 7.1%
- --------------------------------------------------------------------------------
Materials 6.1%
- --------------------------------------------------------------------------------
Consumer Staples 2.4%
- --------------------------------------------------------------------------------
Telecommunications 1.4%
- --------------------------------------------------------------------------------
Cash and Equivalents 0.5%
- --------------------------------------------------------------------------------
Total 100.0%
================================================================================
- --------------------------------------------------------------------------------
HSBC INVESTOR OPPORTUNITY PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Health Care 26.3%
- --------------------------------------------------------------------------------
Information Technology 24.6%
- --------------------------------------------------------------------------------
Industrials 17.1%
- --------------------------------------------------------------------------------
Consumer Discretionary 13.6%
- --------------------------------------------------------------------------------
Energy 10.4%
- --------------------------------------------------------------------------------
Financials 5.5%
- --------------------------------------------------------------------------------
Consumer Staples 1.0%
- --------------------------------------------------------------------------------
Materials 1.0%
- --------------------------------------------------------------------------------
Cash and Equivalents 0.5%
- --------------------------------------------------------------------------------
Total 100.0%
================================================================================
- --------------------------------------------------------------------------------
HSBC INVESTOR VALUE PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Financials 30.7%
- --------------------------------------------------------------------------------
Information Technology 10.6%
- --------------------------------------------------------------------------------
Consumer Discretionary 10.5%
- --------------------------------------------------------------------------------
Energy 9.9%
- --------------------------------------------------------------------------------
Industrials 7.8%
- --------------------------------------------------------------------------------
Materials 7.5%
- --------------------------------------------------------------------------------
Cash and Equivalents 6.9%
- --------------------------------------------------------------------------------
Consumer Staples 6.8%
- --------------------------------------------------------------------------------
Telecommunication Services 3.7%
- --------------------------------------------------------------------------------
Miscellaneous 2.4%
- --------------------------------------------------------------------------------
Transportation 2.2%
- --------------------------------------------------------------------------------
Health Care 1.0%
- --------------------------------------------------------------------------------
Total 100.0%
================================================================================
* Portfolio composition is subject to change.
HSBC INVESTOR FAMILY OF FUNDS 24
- --------------------------------------------------------------------------------
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS--96.0%
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- -------------
NEW YORK - 87.0%
Buffalo, New York Fiscal Stability
Authority Revenue, 5.25%,
8/15/13, (MBIA Insured) ..................... 500,000 542,185
Corning City, New York School
District GO, 5.00%, 6/15/09, (FSA Insured) .. 790,000 811,749
Long Island Power Authority New
York Electric System, 5.00%,
12/1/22, Callable 12/01/16 @ 100 ............ 500,000 533,720
Metropolitan Transportation
Authority of New York Revenue
5.25%, 11/15/11 ............................. 1,000,000 1,061,790
5.75%, 7/1/13, Escrowed to
Maturity .................................... 285,000 304,266
5.50%, 1/1/19, (MBIA Insured),
Callable 7/1/12 @ 100 ....................... 480,000 519,586
5.50%, 11/15/19, (FGIC Insured) ............. 1,000,000 1,151,050
5.00%, 11/15/32, (FSA Insured),
Callable 11/15/12 @ 100 ..................... 1,625,000 1,695,996
Monroe County, New York, Airport
Authority Revenue
5.63%, 1/1/10, AMT, (MBIA Insured) .......... 1,240,000 1,294,622
5.75%, 1/1/14, AMT, (MBIA Insured) .......... 750,000 826,125
New York City GO
5.00%, 8/1/08 ............................... 990,000 1,005,434
5.00%, 12/1/13 .............................. 1,000,000 1,065,110
5.00%, 8/1/14 ............................... 200,000 213,614
6.00%, 8/1/14, Callable 8/1/07 @ 101 ........ 55,000 55,822
5.00%, 8/1/15 ............................... 325,000 348,270
New York City Housing
Development Corp. Revenue,
5.60%, 11/1/19, AMT, Callable
11/1/09 @101 ................................ 100,000 103,293
New York City Industrial
Development Agency Revenue,
Queens Baseball Stadium, 5.00%,
1/1/18, (AMBAC Insured),
Callable 1/1/17 @ 100 ....................... 550,000 596,475
New York City Industrial
Development Agency Revenue,
Terminal One Group Association,
5.00%, 1/1/09, AMT .......................... 1,000,000 1,018,370
New York City Industrial
Development Agency Revenue,
USTA National Tennis Center,
5.00%, 11/15/19, (FSA Insured),
Callable 5/1/13 @ 100 ....................... 1,000,000 1,063,110
New York City Municipal Water
Finance Authority
5.00%, 6/15/34, Callable 6/15/13 @ 100 ...... 1,250,000 1,301,737
5.00%, 6/15/36, Callable 12/15/14 @ 100 ..... 1,000,000 1,047,700
New York City Transitional Finance
Authority Building Aid Revenue
5.00%, 7/15/18, (FGIC Insured),
Callable 1/15/17 @ 100 ...................... 550,000 597,316
5.00%, 7/15/36, (FGIC Insured),
Callable 1/15/17 @ 100 ...................... 1,000,000 1,063,180
- --------------------------------------------------------------------------------
MUNICIPAL BONDS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- -------------
NEW YORK, CONTINUED
New York City Transitional Finance
Authority Revenue
5.25%, 5/1/17, Callable 5/1/11 @ 100 ........ 400,000 421,456
5.25%, 2/1/29, Callable 2/1/11 @ 100 ........ 1,540,000 1,620,080
New York State Dormitory Authority
Revenue, 5.50%, 8/15/17,
Callable 2/15/08 @ 101 ...................... 125,000 127,643
New York State Dormitory Authority
Revenue, Cooper Union, 6.00%,
7/1/19, (MBIA Insured), Callable
7/1/09 @ 101 ................................ 350,000 370,297
New York State Dormitory Authority
Revenue, Department of Health,
5.25%, 7/1/16, Callable 7/1/14 @ 100 ........ 500,000 539,725
New York State Dormitory Authority
Revenue, Master Boces PG, 5.25%,
8/15/19, (FSA Insured), Callable
8/15/12 @ 100 ............................... 1,000,000 1,071,330
New York State Dormitory Authority
Revenue, Mental Health
6.50%, 8/15/11 .............................. 225,000 248,533
5.00%, 2/15/15, (FGIC Insured) .............. 1,245,000 1,345,571
New York State Dormitory Authority
Revenue, New York Presbyterian
Hospital, 5.50%, 8/1/10, (AMBAC
Insured) .................................... 750,000 789,090
New York State Dormitory Authority
Revenue, New York University,
5.50%, 7/1/18, (AMBAC Insured) .............. 500,000 570,390
New York State Dormitory Authority
Revenue, NYSARC, 5.25%, 7/1/18,
(FSA Insured), Callable 7/1/12 @ 101 ........ 1,460,000 1,574,011
New York State Dormitory Authority
Revenue, Rockefeller University, 5.25%,
7/1/13, Callable 7/1/08 @ 101 ............... 500,000 513,845
New York State Dormitory Authority
Revenue, School District Board
Financing, 5.00%, 7/1/08 .................... 595,000 604,086
New York State Dormitory Authority
Revenue, Sloan Kettering Institute,
5.50%, 7/1/23, (MBIA Insured) ............... 1,300,000 1,506,817
New York State Dormitory Authority
Revenue, St. Johns University, 5.00%,
7/1/24, (MBIA Insured), Callable
7/1/17 @ 100 ................................ 1,000,000 1,075,900
New York State Dormitory Authority
Revenue, University of Rochester, 5.00%,
7/1/22, Callable 1/1/17 @100 ................ 500,000 534,360
New York State Dormitory Authority
State Personal Income Tax Revenue,
5.00%, 3/15/10 .............................. 1,000,000 1,036,760
New York State Dormitory Authority,
Personal Income Tax Revenue, 5.00%,
3/15/23, Callable 3/15/15 @ 100 ............. 1,000,000 1,060,700
New York State Environmental
Facscorp State Personal Income
Tax Revenue, 5.00%, 12/15/16 ................ 500,000 547,590
25 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR NEW YORK TAX - FREE BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- -------------
NEW YORK, CONTINUED
New York State Environmental
Facscorp. Revenue
5.70%, 1/15/14, Callable 7/15/09 @ 101 ...... 415,000 436,426
5.70%, 1/15/14 .............................. 15,000 15,804
5.70%, 1/15/14, Prerefunded
7/15/09 @ 101 ............................... 570,000 600,552
New York State Mortgage Agency
Revenue, 5.60%, 10/1/14, AMT,
Callable 9/1/07 @ 101.5 ..................... 1,000,000 1,018,480
New York State Municipal Bond
Bank Revenue, 5.50%, 12/1/12 ................ 850,000 923,066
New York State Thruway Authority
Revenue, Highway & Bridge
5.50%, 4/1/17, (FGIC Insured),
Callable 4/1/11 @ 101 ....................... 1,000,000 1,075,640
5.00%, 4/1/22, (MBIA Insured),
Callable 4/1/14 @ 100 ....................... 1,000,000 1,062,380
New York State Thruway Authority,
Personal Income Tax Revenue
5.00%, 3/15/13, (FSA Insured) ............... 645,000 687,834
5.00%, 3/15/19, (MBIA Insured),
Callable 3/15/13 @ 100 ...................... 1,400,000 1,486,142
5.50%, 3/15/20, Prerefunded
3/15/12 @ 100 ............................... 500,000 541,410
5.00%, 3/15/21, (MBIA Insured),
Callable 3/15/13 @ 100 ...................... 500,000 530,765
New York State Thruway Authority, Service
Contract Revenue, 5.50%, 4/1/11 ............. 1,000,000 1,065,080
New York State Urban Development
Corp. Correctional Facilities
Revenue, Series A, 6.50%, 1/1/09,
(MBIA Insured) .............................. 500,000 522,515
New York State Urban Development
Corp. Personal Income Tax Revenue,
Series B, 5.00%, 3/15/21, (FSA Insured),
Callable 3/15/15 @100 ....................... 1,000,000 1,068,210
New York State Urban Development
Corp. Revenue
5.75%, 4/1/12 ............................... 500,000 542,305
5.13%, 1/1/22, Callable 7/1/14 @ 100 ........ 885,000 939,675
5.13%, 1/1/25, Prerefunded
1/1/11 @ 100 ................................ 175,000 183,904
Onondaga County, New York Water
Authority Revenue
5.00%, 9/15/14, (FSA Insured),
Callable 9/15/10 @ 101 ...................... 300,000 315,393
5.00%, 9/15/15, (FSA Insured),
Callable 9/15/10 @ 101 ...................... 665,000 698,044
Port Authority of New York & New
Jersey Revenue
5.00%, 9/1/27, Callable 9/1/13 @ 100 ........ 795,000 838,399
5.38%, 3/1/28 ............................... 1,100,000 1,260,666
Port Authority of New York & New
Jersey Special Obligation
Revenue, 5.75%, 12/1/22, AMT,
(MBIA Insured), Callable
12/1/07 @ 102 ............................... 500,000 515,095
Suffolk County, New York GO
5.25%, 5/1/12, (FSA Insured) ................ 515,000 552,683
5.25%, 5/1/15, (FSA Insured) ................ 100,000 110,382
- --------------------------------------------------------------------------------
MUNICIPAL BONDS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- -------------
NEW YORK, CONTINUED
Syracuse New York Individual
Development Agency Pilot
Revenue, 5.00%, 1/1/36, AMT,
(Credit Support XLCA), Callable
1/1/17 @ 100 ................................ 1,000,000 1,044,380
Tobacco Settlement Corp., 5.50%,
6/1/21, Callable 6/1/13 @ 100 ............... 1,000,000 1,081,970
Webster, New York Central School
District GO, 5.00%, 6/15/14,
(FSA Insured) ............................... 500,000 538,125
White Plains New York, 5.00%,
5/15/17, (MBIA Insured) ..................... 300,000 329,184
Yonkers New York, Series E, 5.00%,
12/1/14, (MBIA Insured) ..................... 750,000 806,760
-------------
54,569,973
-------------
PUERTO RICO - 9.0%
Puerto Rico Commonwealth,
Highway and Transportation
Revenue, 5.00%, 9/15/17, (MBIA
Insured), Callable 3/15/14 @ 100 ............ 1,000,000 1,074,970
Puerto Rico Electric Power Authority
Revenue, 5.25%, 7/1/22,
(MBIA Insured) .............................. 1,000,000 1,131,310
Puerto Rico Municipal Finance
Agency Revenue, 5.00%, 8/1/12 ............... 995,000 1,044,451
Puerto Rico Public Buildings
Authority Revenue, 5.25%, 7/1/33,
Callable 7/1/14 @ 100 ....................... 700,000 743,274
Puerto Rico Public Finance Corp.
Revenue
5.38%, 6/1/18, (AMBAC Insured) .............. 500,000 564,885
5.25%, 8/1/29, (MBIA Insured),
Callable 7/1/10 @ 101 ....................... 1,000,000 1,062,450
-------------
5,621,340
-------------
TOTAL MUNICIPAL BONDS
(COST $58,138,983) .......................... 60,191,313
-------------
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES--2.9%
- --------------------------------------------------------------------------------
BlackRock Liquidity New York
Money Fund Portfolio Institutional
Shares, 3.68% (a) ........................... 1,802,734 1,802,734
Northern Institutional Diversified
Asset Portfolio, 5.01% (a) .................. 3,350 3,350
-------------
TOTAL INVESTMENT COMPANIES
(COST $1,806,084) ........................... 1,806,084
-------------
TOTAL INVESTMENTS
(COST $59,945,067) -- 98.9% ................. 61,997,397
=============
- ----------
Percentages indicated are based on net assets of $62,678,375.
(a) Variable rate security. The rates presented represent the annualized one
day yield that was in effect on April 30, 2007.
AMBAC -- American Municipal Bond Assurance Corp.
AMT -- Interest on security is subject to federal alternative minimum tax
FGIC -- Financial Guaranty Insurance Co.
FSA -- Financial Security Assurance
GO -- General Obligation
MBIA -- Municipal Bond Insurance Association
XLCA -- XL Capital Assurance
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 26
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED)
- --------------------------------------------------------------------------------
COMMON STOCKS--98.6%
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -------------
ADVERTISING - 1.5%
Lamar Advertising Co. .......................... 12,000 724,080
-------------
724,080
-------------
AEROSPACE & DEFENSE - 3.7%
The Boeing Co. ................................. 8,500 790,500
United Technologies Corp. ...................... 14,500 973,385
-------------
1,763,885
-------------
AUTOMOTIVE & TRANSPORT - 7.9%
BorgWarner, Inc. ............................... 12,900 1,005,039
FedEx Corp. .................................... 7,500 790,800
Johnson Controls, Inc. ......................... 5,000 511,650
PACCAR, Inc. ................................... 18,000 1,511,640
-------------
3,819,129
-------------
CHEMICALS - 5.1%
Ecolab, Inc. ................................... 28,000 1,203,720
Monsanto Co. ................................... 17,000 1,002,830
Sigma-Aldrich Corp. ............................ 6,000 252,480
-------------
2,459,030
-------------
COMPUTER SOFTWARE - 6.9%
CheckFree Corp. (a) ........................... 12,000 403,920
Electronic Arts, Inc. (a) ...................... 22,000 1,109,020
Intuit, Inc. (a) ............................... 16,000 455,200
Microsoft Corp. ................................ 45,000 1,347,300
-------------
3,315,440
-------------
COMPUTERS - 4.8%
Apple Computer, Inc. (a) ....................... 23,000 2,295,400
-------------
2,295,400
-------------
CONSUMER PRODUCTS - 5.3%
Nike, Inc., Class B ............................ 25,000 1,346,500
PepsiCo, Inc. .................................. 18,000 1,189,620
-------------
2,536,120
-------------
DIVERSIFIED MANUFACTURING OPERATIONS - 14.7%
Caterpillar, Inc. .............................. 20,000 1,452,400
Donaldson Co., Inc. ............................ 20,500 736,360
Jacobs Engineering Group, Inc. (a) ............. 28,500 1,437,255
Kennametal, Inc. ............................... 15,600 1,100,736
Plum Creek Timber Co., Inc. .................... 32,000 1,270,400
W. W. Grainger, Inc. ........................... 13,000 1,074,060
-------------
7,071,211
-------------
FINANCIAL SERVICES - 13.4%
American Express Co. ........................... 28,000 1,698,760
Ameriprise Financial, Inc. ..................... 18,000 1,070,460
Blackrock, Inc., Class A ....................... 4,500 673,650
J.P. Morgan Chase & Co. ........................ 17,500 911,750
T. Rowe Price Group, Inc. ...................... 14,000 695,520
The Chicago Mercantile Exchange
Holdings, Inc. .............................. 2,700 1,395,225
-------------
6,445,365
-------------
HEALTH CARE - 1.6%
Zimmer Holdings, Inc. (a) ...................... 8,500 769,080
-------------
769,080
-------------
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -------------
HOTELS & LODGING - 5.1%
Hilton Hotels Corp. ............................ 33,000 1,122,000
Host Hotels & Resorts, Inc. .................... 19,960 511,775
Las Vegas Sands Corp. (a) ...................... 9,500 809,305
-------------
2,443,080
-------------
INTERNET RELATED - 2.2%
Google, Inc., Class A (a) ...................... 2,250 1,060,604
-------------
1,060,604
-------------
LEISURE - 1.0%
Carnival Corp. ................................. 10,000 488,900
-------------
488,900
-------------
MEDIA - 5.9%
McGraw-Hill Cos., Inc. ......................... 25,000 1,638,250
The Walt Disney Co. ............................ 35,000 1,224,300
-------------
2,862,550
-------------
MOTOR VEHICLES - 1.7%
Harley-Davidson, Inc. .......................... 13,000 823,160
-------------
823,160
-------------
OIL & GAS - 3.6%
Schlumberger Ltd. .............................. 12,600 930,258
Suncor Energy, Inc. ADR ........................ 10,000 805,000
-------------
1,735,258
-------------
RESTAURANTS - 1.7%
Starbucks Corp. (a) ............................ 26,000 806,520
-------------
806,520
-------------
RETAIL - 5.9%
Nordstrom, Inc. ................................ 18,500 1,016,020
Walgreen Co. ................................... 26,000 1,141,400
Whole Foods Market, Inc. ....................... 15,000 701,850
-------------
2,859,270
-------------
TELECOMMUNICATIONS - 5.4%
QUALCOMM, Inc. ................................. 33,000 1,445,400
Verizon Communications, Inc. ................... 30,000 1,145,400
-------------
2,590,800
-------------
TRANSPORTATION - 1.2%
Expeditors International of Washington, Inc. ... 14,100 589,380
-------------
589,380
-------------
TOTAL COMMON STOCKS
(COST $36,202,506) .......................... 47,458,262
-------------
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES--1.7%
- --------------------------------------------------------------------------------
Northern Institutional Diversified
Asset Portfolio, 5.01% (b) .................. 835,589 835,589
-------------
TOTAL INVESTMENT COMPANIES
(COST $835,589) ............................. 835,589
-------------
TOTAL INVESTMENTS
(COST $37,038,095) -- 100.3% ................ 48,293,851
=============
- ----------
Percentages indicated are based on net assets of $48,145,235.
(a) Represents non-income producing security.
(b) Variable rate security. The rates presented represent the annualized one
day yield that was in effect on April 30, 2007.
ADR -- American Depositary Receipt
27 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR MID - CAP FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED)
- --------------------------------------------------------------------------------
COMMON STOCKS--98.9%
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -------------
ADVERTISING - 0.9%
Lamar Advertising Co. .......................... 4,450 268,513
-------------
268,513
-------------
AEROSPACE & DEFENSE - 2.2%
L-3 Communications Holdings, Inc. .............. 7,450 669,978
-------------
669,978
-------------
AGRICULTURAL CHEMICALS - 1.3%
Syngenta AG ADR ................................ 10,450 414,865
-------------
414,865
-------------
AUCTION HOUSE/ART DEALER - 0.5%
Ritchie Brothers Auctioneers, Inc. ADR ......... 2,500 147,700
-------------
147,700
-------------
BANKING - 2.4%
Compass Bancshares, Inc. ....................... 5,750 392,035
HDFC Bank Ltd. ADR ............................. 4,900 355,887
-------------
747,922
-------------
BIOTECHNOLOGY - 0.3%
Vertex Pharmaceuticals, Inc. (a) ............... 3,450 106,053
-------------
106,053
-------------
BUSINESS SERVICES - 0.9%
Fidelity National Information
Services, Inc. .............................. 5,600 282,968
-------------
282,968
-------------
COMMUNICATIONS - 1.8%
CommScope, Inc. (a) ............................ 11,850 552,803
-------------
552,803
-------------
COMPUTER SERVICES - 4.3%
aQuantive, Inc. (a) ............................ 13,300 407,113
Cognizant Technology Solutions Corp. (a) ....... 5,550 496,170
Wright Express Corp. (a) ....................... 14,100 444,291
-------------
1,347,574
-------------
COMPUTER SOFTWARE - 2.6%
Akamai Technologies, Inc. (a) .................. 6,350 279,908
Blackbaud, Inc. ................................ 16,700 368,736
NAVTEQ Corp. (a) ............................... 4,400 155,584
-------------
804,228
-------------
COMPUTERS - 1.1%
Logitech International S.A. (a) ................ 12,650 340,412
-------------
340,412
-------------
CONSTRUCTION & ENGINEERING - 1.9%
McDermott International, Inc. (a) .............. 10,925 586,236
-------------
586,236
-------------
CONSUMER DISCRETIONARY - 1.2%
Sotheby's Holdings, Inc. ....................... 7,400 381,988
-------------
381,988
-------------
CONSUMER PRODUCTS - 2.2%
Jarden Corp. (a) ............................... 8,600 362,404
Polo Ralph Lauren Corp. ........................ 3,300 303,963
-------------
666,367
-------------
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -------------
DIVERSIFIED MANUFACTURING OPERATIONS - 2.0%
Emcor Group, Inc. (a) .......................... 10,125 634,736
-------------
634,736
-------------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 4.3%
FormFactor, Inc. (a) ........................... 6,450 266,321
Itron, Inc. (a) ................................ 7,050 474,747
Microchip Technology, Inc. ..................... 7,825 315,660
Veeco Instruments, Inc. (a) .................... 15,475 282,883
-------------
1,339,611
-------------
ENERGY - 0.8%
Core Laboratories N.V. (a) ..................... 2,700 245,484
-------------
245,484
-------------
ENVIRONMENTAL SERVICES - 2.2%
Stericycle, Inc. (a) ........................... 7,950 692,763
-------------
692,763
-------------
FINANCIAL SERVICES - 10.8%
Affiliated Managers Group, Inc. (a) ............ 4,950 582,268
Axis Capital Holdings Ltd. ..................... 12,900 478,590
Blackrock, Inc., Class A ....................... 2,525 377,993
Eaton Vance Corp. .............................. 5,400 206,388
iStar Financial, Inc. .......................... 5,500 263,560
Jones Lang LaSalle, Inc. ....................... 3,900 419,211
RAIT Investment Trust .......................... 1,500 42,225
TD Ameritrade Holding Corp. (a) ................ 17,625 300,506
The Chicago Mercantile Exchange
Holdings, Inc. .............................. 800 413,400
Zions Bancorporation ........................... 3,350 274,030
-------------
3,358,171
-------------
FOOD & BEVERAGE - 2.4%
Flowers Foods, Inc. ............................ 13,950 435,100
United Natural Foods, Inc. (a) ................. 10,150 316,579
-------------
751,679
-------------
FUNERAL SERVICES - 1.1%
Service Corp. International .................... 28,850 350,528
-------------
350,528
-------------
HEALTH CARE - 9.3%
CYTYC Corp. (a) ................................ 8,975 316,189
DaVita, Inc. (a) ............................... 4,600 251,206
Express Scripts, Inc. (a) ...................... 2,100 200,655
Hologic, Inc. (a) .............................. 8,275 476,226
Laboratory Corp. of America Holdings (a) ....... 4,775 376,939
Psychiatric Solutions, Inc. (a) ................ 8,350 292,835
ResMed, Inc. (a) ............................... 7,600 321,176
Techne Corp. (a) ............................... 1,225 72,238
VCA Antech, Inc. (a) ........................... 14,800 583,564
-------------
2,891,028
-------------
INDUSTRIAL MANUFACTURING - 2.6%
FMC Corp. ...................................... 4,900 376,957
Mobile Mini, Inc. (a) .......................... 14,250 427,072
-------------
804,029
-------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 28
- --------------------------------------------------------------------------------
HSBC INVESTOR MID - CAP FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -------------
INSURANCE - 1.2%
Proassurance Corp. (a) ......................... 7,050 379,572
-------------
379,572
-------------
LEISURE - 2.2%
Penn National Gaming, Inc. (a) ................. 14,200 686,428
-------------
686,428
-------------
MACHINERY - 1.9%
Oshkosh Truck Corp. ............................ 10,775 602,753
-------------
602,753
-------------
MATERIALS - 2.4%
Airgas, Inc. ................................... 9,150 407,632
Praxair, Inc. .................................. 5,125 330,819
-------------
738,451
-------------
METAL PROCESSORS & FABRICATION - 1.2%
Carpenter Technology Corp. ..................... 3,100 376,247
-------------
376,247
-------------
MORTGAGE - 1.4%
The PMI Group, Inc. ............................ 9,175 444,712
-------------
444,712
-------------
OIL & GAS - 7.8%
Chesapeake Energy Corp. ........................ 10,975 370,406
National-Oilwell, Inc. (a) ..................... 7,450 632,132
Oil States International, Inc. (a) ............. 5,575 189,160
Superior Energy Services, Inc. (a) ............. 9,600 348,768
Tetra Technologies, Inc. (a) ................... 7,500 198,675
Weatherford International Ltd. (a) ............. 3,234 169,753
XTO Energy, Inc. ............................... 9,658 524,140
-------------
2,433,034
-------------
RETAIL - 5.0%
Dick's Sporting Goods, Inc. (a) ................ 9,325 523,039
GameStop Corp., Class A (a) .................... 19,850 658,424
Jos. A. Bank Clothiers, Inc. (a) ............... 9,287 358,850
-------------
1,540,313
-------------
SPECIALTY RETAIL - 1.8%
Tiffany & Co. .................................. 7,725 368,405
United Auto Group, Inc. ........................ 9,150 185,562
-------------
553,967
-------------
TELECOMMUNICATIONS - 3.7%
Crown Castle International Corp. (a) ........... 11,995 411,909
j2 Global Communications, Inc. (a) ............. 16,075 462,317
NII Holdings, Inc. Class B (a) ................. 3,375 259,031
-------------
1,133,257
-------------
TRANSPORTATION - 2.4%
American Commercial Lines, Inc. (a) ............ 14,150 417,000
Old Dominion Freight Line, Inc. (a) ............ 10,637 314,430
-------------
731,430
-------------
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -------------
UTILITIES - 7.1%
Dynegy Inc. (a) ................................ 6,753 63,546
Entergy Corp. .................................. 2,750 311,135
Equitable Resources, Inc. ...................... 13,275 690,433
ITC Holdings Corp. ............................. 9,800 412,384
Northeast Utilities ............................ 22,150 712,565
-------------
2,190,063
-------------
WIRE & CABLE PRODUCTS - 1.7%
General Cable Corp. (a) ........................ 9,000 516,960
-------------
516,960
-------------
TOTAL COMMON STOCKS
(COST $22,315,567) .......................... 30,712,823
-------------
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES--0.9%
- --------------------------------------------------------------------------------
MidCap S&P Depositary Receipt
Trust Series 1 .............................. 875 138,863
Northern Institutional Diversified
Asset Portfolio, 5.01% (b) .................. 161,944 161,944
-------------
TOTAL INVESTMENT COMPANIES
(COST $296,656) ............................. 300,807
-------------
TOTAL INVESTMENTS
(COST $22,612,223) -- 99.8% ................. 31,013,630
=============
- ----------
Percentages indicated are based on net assets of $31,062,539.
(a) Represents non-income producing security.
(b) Variable rate security. The rates presented represent the annualized one
day yield that was in effect on April 30, 2007.
ADR -- American Depositary Receipt
29 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES--APRIL 30, 2007 (UNAUDITED)
CORE PLUS INTERMEDIATE
FIXED INCOME CORE PLUS HIGH YIELD DURATION NEW YORK
FUND FIXED INCOME FIXED INCOME FIXED INCOME TAX-FREE
(ADVISOR) FUND FUND FUND BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in Portfolio $ 85,498,053 $ 19,190,713 $ 8,858,796 $ 18,113,217 $ --
Investments, at value
(non-affiliated) -- -- -- -- 61,997,397
Interest and dividends receivable -- -- -- -- 830,489
Receivable for capital shares
issued 52,600 5,685 12,532 10,550 30,224
Receivable from Investment Adviser 19,760 12,356 19,099 17,578 --
Prepaid expenses and other assets 10,012 6,052 6,524 4,570 9,391
--------------- -------------- --------------- -------------- --------------
TOTAL ASSETS 85,580,425 19,214,806 8,896,951 18,145,915 62,867,501
--------------- -------------- --------------- -------------- --------------
LIABILITIES:
Dividends payable 122,692 4,035 10,023 16,259 55,517
Payable for capital shares redeemed 145,623 48,303 11,869 19,439 73,701
Accrued expenses and other
liabilities:
Investment management -- -- -- -- 13,006
Administration 4,929 826 310 1,240 5,509
Accounting -- -- 152 -- 46
Transfer agent 11,487 9,520 10,975 10,051 11,272
Compliance service 78 13 12 19 112
Distribution -- 5,889 1,652 4,104 8,485
Shareholder servicing -- 3,924 1,345 986 9,886
Trustee 2 -- 18 10 23
Other 21,874 2,138 1,332 3,238 11,569
--------------- -------------- --------------- -------------- --------------
TOTAL LIABILITIES 306,685 74,648 37,688 55,346 189,126
--------------- -------------- --------------- -------------- --------------
NET ASSETS $ 85,273,740 $ 19,140,158 $ 8,859,263 $ 18,090,569 $ 62,678,375
=============== ============== =============== ============== ==============
- -----------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Capital $ 84,255,756 $ 19,612,397 $ 8,479,464 $ 17,939,287 $ 60,515,656
Accumulated net investment income 107,080 10,077 4,969 20,910 20,936
Accumulated net realized gain
(loss) from investment
transactions 736,767 (521,326) 59,700 117,496 89,453
Net unrealized
appreciation/depreciation from
investments 174,137 39,010 315,130 12,876 2,052,330
--------------- -------------- --------------- -------------- --------------
NET ASSETS $ 85,273,740 $ 19,140,158 $ 8,859,263 $ 18,090,569 $ 62,678,375
=============== ============== =============== ============== ==============
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Class A Shares $ -- $ 14,899,025 $ 3,976,332 $ 804,853 $ 35,174,969
Class B Shares -- 4,147,773 2,459,336 3,489,189 11,597,839
Class C Shares -- 93,360 267,674 502,042 977,413
Class I Shares -- -- 2,155,921 13,294,485 14,928,154
Advisor Shares 85,273,740 -- -- -- --
--------------- -------------- --------------- -------------- --------------
$ 85,273,740 $ 19,140,158 $ 8,859,263 $ 18,090,569 $ 62,678,375
=============== ============== =============== ============== ==============
- -----------------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING ($0.001 PAR VALUE,
UNLIMITED NUMBER OF SHARES
AUTHORIZED):
Class A Shares -- 1,414,236 380,371 79,443 3,163,709
Class B Shares -- 393,284 235,154 343,757 1,044,153
Class C Shares -- 8,870 25,539 49,485 87,662
Class I Shares -- -- 206,206 1,310,422 1,342,419
Advisor Shares 8,223,713 -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE:
Class A Shares $ -- $ 10.54 $ 10.45 $ 10.13 $ 11.12
Class B Shares* $ -- $ 10.55 $ 10.46 $ 10.15 $ 11.11
Class C Shares* $ -- $ 10.53 $ 10.48 $ 10.15 $ 11.15
Class I Shares $ -- $ -- $ 10.46 $ 10.15 $ 11.12
Advisor Shares $ 10.37 $ -- $ -- $ -- --
Maximum Sales Charge--Class A Shares -- 4.75% 4.75% 4.75% 4.75%
=============== ============== =============== ============== ==============
Maximum Offering Price per share (Net
Asset Value/(100%--maximum sales
charge))--Class A Shares $ -- $ 11.07 $ 10.97 $ 10.64 $ 11.67
=============== ============== =============== ============== ==============
Total Investments, at cost $ 59,945,067
==============
- ----------
* Redemption price per share varies by length of time shares are held.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 30
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
GROWTH GROWTH AND INTERNATIONAL MID-CAP OPPORTUNITY
FUND INCOME FUND EQUITY FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in Portfolio $ 52,498,194 $ -- $ 348,000,721 $ -- $ 23,483,204
Investments, at value
(non-affiliated) -- 48,293,851 -- 31,013,630 --
Interest and dividends receivable -- 25,459 -- 1,686 --
Receivable for capital shares
issued 56,773 20,264 144,951 102,268 26,351
Receivable for investments sold -- 148,517 -- -- --
Tax reclaims receivable -- -- 289,979 -- --
Receivable from Investment Adviser 4,347 7,565 -- 11,962 6,299
Prepaid expenses and other assets 13,259 22,293 7,709 6,617 6,234
--------------- -------------- --------------- -------------- --------------
TOTAL ASSETS 52,572,573 48,517,949 348,443,360 31,136,163 23,522,088
--------------- -------------- --------------- -------------- --------------
LIABILITIES:
Payable for investments purchased -- 215,583 -- -- --
Payable for capital shares redeemed 129,537 95,858 191,017 20,808 32,020
Accrued expenses and other
liabilities:
Investment management -- 23,729 -- 18,983 --
Administration 1,715 10,595 13,846 5,075 1,071
Distribution 1,022 3,032 -- 4,404 2,424
Shareholder servicing 6,204 1,288 -- 2,533 4,829
Compliance service 22 90 238 53 39
Transfer agent 16,001 12,213 6,843 15,403 15,540
Trustee -- -- -- 88 43
Custodian -- 1,337 -- 2,486 --
Other 5,456 8,989 58,646 3,791 828
--------------- -------------- --------------- -------------- --------------
TOTAL LIABILITIES 159,957 372,714 270,590 73,624 56,794
--------------- -------------- --------------- -------------- --------------
NET ASSETS $ 52,412,616 $ 48,145,235 $ 348,172,770 $ 31,062,539 $ 23,465,294
=============== ============== =============== ============== ==============
- -----------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Capital $ 44,934,700 $ 44,612,611 $ 245,727,259 $ 21,890,835 $ 16,304,225
Accumulated net investment income
(loss) 68,864 110,428 (328,405) (13,942) (144,510)
Accumulated net realized gain
(loss) from investment
transactions 1,559,617 (7,833,560) 16,002,132 784,239 2,418,546
Net unrealized
appreciation/depreciation from
investments 5,849,435 11,255,756 86,771,784 8,401,407 4,887,033
--------------- -------------- --------------- -------------- --------------
NET ASSETS $ 52,412,616 $ 48,145,235 $ 348,172,770 $ 31,062,539 $ 23,465,294
=============== ============== =============== ============== ==============
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Class A Shares $ 28,611,674 $ 1,469,453 $ -- $ 5,572,558 $ 18,240,355
Class B Shares 1,478,403 4,817,339 -- 6,681,663 4,912,122
Class C Shares 114,000 36,162 -- 87,178 312,817
Class I Shares 22,208,539 41,822,281 -- -- --
Advisor Shares -- -- 348,172,770 -- --
Trust Shares -- -- -- 18,721,140 --
--------------- -------------- --------------- -------------- --------------
$ 52,412,616 $ 48,145,235 $ 348,172,770 $ 31,062,539 $ 23,465,294
=============== ============== =============== ============== ==============
- -----------------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING ($0.001 PAR VALUE,
UNLIMITED NUMBER OF SHARES
AUTHORIZED):
Class A Shares 1,923,810 123,640 -- 598,837 1,294,552
Class B Shares 105,092 415,927 -- 767,966 381,306
Class C Shares 8,056 3,096 -- 9,929 24,022
Class I Shares 1,487,206 3,507,706 -- -- --
Advisor Shares -- -- 15,301,203 -- --
Trust Shares -- -- -- 1,974,345 --
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE:
Class A Shares $ 14.87 $ 11.88 $ -- $ 9.31 $ 14.09
Class B Shares* $ 14.07 $ 11.58 $ -- $ 8.70 $ 12.88
Class C Shares* $ 14.15 $ 11.68 $ -- $ 8.78 $ 13.02
Class I Shares $ 14.93 $ 11.92 $ -- $ -- $ --
Advisor Shares $ -- $ -- $ 22.75 $ -- $ --
Trust Shares $ -- $ -- $ -- $ 9.48 $ --
Maximum Sales Charge--Class A Shares 5.00% 5.00% -- 5.00% 5.00%
=============== ============== =============== ============== ==============
Maximum Offering Price per share
(Net Asset Value/(100%--maximum
sales charge))--Class A Shares $ 15.65 $ 12.51 $ -- $ 9.80 $ 14.83
=============== ============== =============== ============== ==============
Total Investments, at cost $ 37,038,095 $ 22,612,223
============== ==============
- ----------
* Redemption Price per share varies by length of time shares are held.
31 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
OPPORTUNITY OVERSEAS VALUE
FUND (ADVISOR) EQUITY FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in Portfolio $ 186,798,439 $ 19,681,867 $ 57,493,545
Receivable for capital shares issued 7,500 13,165 110,438
Tax reclaims receivable -- 58,901 --
Receivable from Investment Adviser -- 1,396 4,484
Prepaid expenses and other assets 17,297 9,469 13,656
-------------- --------------- --------------
TOTAL ASSETS 186,823,236 19,764,798 57,622,123
-------------- --------------- --------------
LIABILITIES:
Payable for capital shares redeemed 44,069 52,218 142,060
Accrued expenses and other liabilities:
Administration 9,328 850 1,888
Distribution -- 2,599 1,354
Shareholder servicing -- 4,029 6,586
Compliance service 214 36 32
Trustee 66 49 --
Transfer agent 6,140 12,075 15,881
Other 51,348 3,445 6,190
-------------- --------------- --------------
TOTAL LIABILITIES 111,165 75,301 173,991
-------------- --------------- --------------
NET ASSETS $ 186,712,071 $ 19,689,497 $ 57,448,132
============== =============== ==============
- -----------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Capital $ 134,035,443 $ 9,819,858 $ 43,672,375
Accumulated net investment income (loss) (365,372) (192,172) 177,943
Accumulated net realized gains (losses) from investment transactions
and foreign currency transactions 17,140,480 1,718,598 1,864,858
Unrealized appreciation/depreciation from investments foreign currencies 35,901,520 8,343,213 11,732,956
-------------- --------------- --------------
NET ASSETS $ 186,712,071 $ 19,689,497 $ 57,448,132
============== =============== ==============
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Class A Shares $ -- $ 15,945,448 $ 29,990,194
Class B Shares -- 3,571,268 1,969,991
Class C Shares -- 172,781 163,175
Class I Shares -- -- 25,324,772
Advisor Shares 186,712,071 -- --
-------------- --------------- --------------
$ 186,712,071 $ 19,689,497 $ 57,448,132
============== =============== ==============
- -----------------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING ($0.001 PAR VALUE, UNLIMITED NUMBER OF SHARES
AUTHORIZED):
Class A Shares -- 848,522 1,820,067
Class B Shares -- 199,639 124,860
Class C Shares -- 9,419 10,266
Class I Shares -- -- 1,538,431
Advisor Shares 11,377,803 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE:
Class A Shares $ -- $ 18.79 $ 16.48
Class B Shares* $ -- $ 17.89 $ 15.78
Class C Shares* $ -- $ 18.34 $ 15.90
Class I Shares $ -- $ -- $ 16.46
Advisor Shares $ 16.41 $ -- $ --
Maximum Sales Charge--Class A Shares -- 5.00% 5.00%
============== =============== ==============
Maximum Offering Price per share (Net Asset Value/(100%-- maximum sales
charge))--Class A Shares $ -- $ 19.78 $ 17.35
============== =============== ==============
- ----------
* Redemption Price per share varies by length of time shares are held.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 32
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF OPERATIONS--FOR THE SIX MONTHS ENDED APRIL 30, 2007 (UNAUDITED)
CORE PLUS INTERMEDIATE
FIXED INCOME CORE PLUS HIGH YIELD DURATION NEW YORK
FUND FIXED INCOME FIXED INCOME FIXED INCOME TAX-FREE
(ADVISOR) FUND FUND FUND BOND FUND
- ---------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ -- $ -- $ -- $ -- $ 1,325,582
Dividends -- -- -- -- 21,640
Investment income from Portfolios (a) 2,286,357 508,399 372,431 497,230 --
Expenses from Portfolios (a) (253,811) (56,423) (74,892) (79,527) --
------------ ------------ ------------ ------------ -----------
TOTAL INVESTMENT INCOME (LOSS) 2,032,546 451,976 297,539 417,703 1,347,222
------------ ------------ ------------ ------------ -----------
- ---------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment Management -- -- -- -- 77,905
Administration 14,662 3,257 1,586 3,243 22,275
Distribution:
Class B Shares -- 15,824 8,315 13,394 48,220
Class C Shares -- 594 940 1,874 4,089
Shareholder Servicing:
Class A Shares -- 17,329 5,206 1,088 42,498
Class B Shares -- 5,275 2,772 4,465 16,073
Class C Shares -- 198 313 625 1,363
Accounting 4,463 13,389 17,852 17,852 38,034
Compliance Service 476 99 57 108 704
Custodian -- -- -- -- 10,694
Transfer Agent 12,581 31,377 35,392 29,590 36,784
Trustee 1,020 212 129 232 1,547
Registration fees -- 21 104 19 67
Other 23,854 8,490 8,254 6,651 21,662
------------ ------------ ------------ ------------ -----------
Total expenses before fee reductions 57,056 96,065 80,920 79,141 321,915
Fees reduced by Investment Adviser
(See note 3) (126,339) (72,188) (113,959) (100,998) --
Expenses reimbursed by Investment Adviser
(See note 6) (80,258) (5,966) -- (21,743) (20,753)
------------ ------------ ------------ ------------ -----------
NET EXPENSES (149,541) 17,911 (33,039) (43,600) 301,162
------------ ------------ ------------ ------------ -----------
- ---------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 2,182,087 434,065 330,578 461,303 1,046,060
------------ ------------ ------------ ------------ -----------
- ---------------------------------------------------------------------------------------------------------------------------
NET REALIZED/UNREALIZED GAINS
(LOSSES) FROM INVESTMENTS: (a)
Net realized gains from investments and foreign
currency transactions 2,294,552 476,322 59,700 847,110 89,452
Change in unrealized appreciation/depreciation
from investments (484,920) (97,287) 245,398 (78,007) (434,499)
------------ ------------ ------------ ------------ -----------
- ---------------------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains
(losses) from investments 1,809,632 379,035 305,098 769,103 (345,047)
------------ ------------ ------------ ------------ -----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,991,719 $ 813,100 $ 635,676 $ 1,230,406 $ 701,013
============ ============ ============ ============ ===========
- ----------
(a) With the exception of New York Tax-Free Bond Fund, represents amounts
allocated from the respective Portfolios.
33 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF OPERATIONS--FOR THE SIX MONTHS ENDED APRIL 30, 2007 (UNAUDITED)
(CONTINUED)
GROWTH GROWTH AND INTERNATIONAL MID-CAP OPPORTUNITY
FUND INCOME FUND EQUITY FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ -- $ 297,042 $ -- $ 131,612 $ --
Dividend income from Affiliates -- 4,887 -- 3,206 --
Investment income from Portfolios(a) 283,739 -- 4,117,708 -- 64,407
Tax reclaims -- -- 84,154 -- --
Foreign tax withholding from Portfolios -- -- (469,807) -- --
Expenses from Portfolios (a) (151,315) -- (1,289,832) -- (116,470)
------------ ------------ ------------- ------------ ------------
TOTAL INVESTMENT INCOME (LOSS) 132,424 301,929 2,442,223 134,818 (52,063)
------------ ------------ ------------- ------------ ------------
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment Management -- 143,308 -- 108,732 --
Administration 8,262 17,080 55,202 10,361 4,588
Distribution:
Class B Shares 5,512 17,379 -- 26,593 18,170
Class C Shares 431 131 -- 341 1,134
Shareholder Servicing:
Class A Shares 32,461 1,772 -- 5,374 25,488
Class B Shares 1,837 5,793 -- 8,865 6,057
Class C Shares 144 44 -- 114 378
Accounting 17,852 33,328 4,463 32,836 13,389
Compliance Service 236 547 1,701 328 175
Custodian -- 9,607 -- 15,330 --
Transfer Agent 49,585 35,602 17,066 46,808 46,623
Trustee 506 1,209 3,637 723 375
Registration fees 58 -- -- -- 44
Other 16,667 27,641 72,526 12,967 12,668
------------ ------------ ------------- ------------ ------------
Total expenses before fee reductions 133,551 293,441 154,595 269,372 129,089
Fees reduced by Investment Adviser
(See note 3) (23,947) (41,360) -- (68,499) (28,571)
Expenses reimbursed by Investment Adviser
(See note 6) (46,044) (60,580) (90,294) (52,113) (8,071)
------------ ------------ ------------- ------------ ------------
NET EXPENSES 63,560 191,501 64,301 148,760 92,447
------------ ------------ ------------- ------------ ------------
- -----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 68,864 110,428 2,377,922 (13,942) (144,510)
------------ ------------ ------------- ------------ ------------
- -----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED/UNREALIZED GAINS
(LOSSES) FROM INVESTMENTS: (a)
Net realized gains from investments and foreign
currency transactions 1,608,337 2,307,855 16,207,061 796,655 2,507,317
Change in unrealized appreciation/depreciation
from investments 1,866,357 1,377,789 23,052,742 2,609,636 322,437
------------ ------------ ------------- ------------ ------------
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains (losses)
from investment transactions 3,474,694 3,685,644 39,259,803 3,406,291 2,829,754
------------ ------------ ------------- ------------ ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,543,558 $ 3,796,072 $ 41,637,725 $ 3,392,349 $ 2,685,244
============ ============ ============= ============ ============
- ----------
(a) With the exception of the Growth and Income Fund and Mid-Cap Fund,
represents amounts allocated from the respective Portfolios.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 34
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF OPERATIONS--FOR THE SIX MONTHS ENDED APRIL 30, 2007 (UNAUDITED)
(CONTINUED)
OPPORTUNITY OVERSEAS VALUE
FUND (ADVISOR) EQUITY FUND FUND
- -----------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Investment income from Portfolios (a) $ 460,144 $ 257,861 $ 515,089
Tax reclaims -- 4,702 --
Foreign tax withholding from Portfolios (a) -- (28,767) --
Expenses from Portfolios (a) (831,626) (91,430) (176,108)
-------------- ------------ ------------
TOTAL INVESTMENT INCOME (LOSS) (371,482) 142,366 338,981
-------------- ------------ ------------
- -----------------------------------------------------------------------------------------------------------------------
EXPENSES:
Administration 32,718 3,939 9,178
Distribution:
Class B Shares -- 12,655 7,305
Class C Shares -- 673 584
Shareholder Servicing:
Class A Shares -- 22,931 34,620
Class B Shares -- 4,218 2,435
Class C Shares -- 224 195
Accounting 4,463 13,389 17,852
Compliance Service 1,129 154 269
Transfer Agent 15,455 38,057 49,688
Trustee 2,428 329 577
24f-2 fees -- 37 58
Other 48,638 12,781 17,750
-------------- ------------ ------------
Total expenses before fee reductions 104,831 109,387 140,511
Fees reduced by Investment Adviser (See note 3) -- (1,636) (26,714)
Expenses reimbursed by Investment Adviser (See note 6) (110,941) (4,313) (46,043)
-------------- ------------ ------------
NET EXPENSES (6,110) 103,438 67,754
-------------- ------------ ------------
- -----------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (365,372) 38,928 271,227
-------------- ------------ ------------
- -----------------------------------------------------------------------------------------------------------------------
NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND FOREIGN
CURRENCIES: (a)
Net realized gains from investments and foreign currency transactions 17,842,455 1,731,740 1,657,994
Change in unrealized appreciation/depreciation from investments 3,353,957 1,080,513 2,587,057
-------------- ------------ ------------
- -----------------------------------------------------------------------------------------------------------------------
Net realized/unrealized gains (losses) from investment and foreign
currency transactions 21,196,412 2,812,253 4,245,051
-------------- ------------ ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 20,831,040 $ 2,851,181 $ 4,516,278
============== ============ ============
- ----------
(a) Represents amounts allocated from the respective Portfolios.
35 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
CORE PLUS CORE PLUS FIXED
FIXED INCOME FUND (ADVISOR) INCOME FUND
- --------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
APRIL 30, 2007 YEAR ENDED APRIL 30, 2007 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2006 (UNAUDITED) OCTOBER 31, 2006
- --------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 2,182,087 $ 4,105,465 $ 434,065 $ 843,851
Net realized gains (losses) from
investments and foreign currency
transactions 2,294,552 (1,501,702) 476,322 (377,777)
Change in unrealized
appreciation/depreciation from
investments and foreign currency (484,920) 1,816,915 (97,287) 452,867
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 3,991,719 4,420,678 813,100 918,941
---------------- ---------------- ---------------- ----------------
- --------------------------------------------------------------------------------------------------------------------
DIVIDENDS:
NET INVESTMENT INCOME:
Class A Shares -- -- (338,651) (622,411)
Class B Shares -- -- (87,154) (212,869)
Class C Shares -- -- (3,303) (10,246)
Advisor Shares (2,104,643) (4,104,585) -- --
NET REALIZED GAINS:
Class A Shares -- -- -- (73,046)
Class B Shares -- -- -- (29,921)
Class C Shares -- -- -- (1,351)
Advisor Shares -- (3,712,469) -- --
---------------- ---------------- ---------------- -----------------
CHANGE IN NET ASSETS FROM SHAREHOLDER
DIVIDENDS (2,104,643) (7,817,054) (429,108) (949,844)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS 2,410,509 (5,370,906) 2,004,331 (7,315,720)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS 4,297,585 (8,767,282) 2,388,323 (7,346,623)
- --------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 80,976,155 89,743,437 16,751,835 24,098,458
---------------- ---------------- ---------------- ----------------
End of period $ 85,273,740 $ 80,976,155 $ 19,140,158 $ 16,751,835
---------------- ---------------- ---------------- ----------------
Accumulated net investment income $ 107,080 $ 29,636 $ 10,077 $ 5,120
================ ================ ================ ================
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 36
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
CORE PLUS CORE PLUS
FIXED INCOME FUND (ADVISOR) FIXED INCOME FUND
- --------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
APRIL 30, 2007 YEAR ENDED APRIL 30, 2007 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2006 (UNAUDITED) OCTOBER 31, 2006
- --------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ -- $ -- $ 3,899,814 $ 1,922,955
Dividends reinvested -- -- 323,279 683,474
Cost of shares redeemed -- -- (1,857,402) (7,996,165)
---------------- ---------------- ---------------- -----------------
Class A Shares capital transactions -- -- 2,365,691 (5,389,736)
---------------- ---------------- ---------------- ----------------
- --------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Proceeds from shares issued -- -- 62,070 107,919
Dividends reinvested -- -- 77,358 219,337
Cost of shares redeemed -- -- (354,323) (2,205,242)
---------------- ---------------- ---------------- ----------------
Class B Shares capital transactions -- -- (214,895) (1,877,986)
---------------- ---------------- ---------------- ----------------
- --------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Proceeds from shares issued -- -- -- 5
Dividends reinvested -- -- 3,190 11,807
Cost of shares redeemed -- -- (149,655) (59,810)
---------------- ---------------- ---------------- ----------------
Class C Shares capital transactions -- -- (146,465) (47,998)
---------------- ---------------- ---------------- ----------------
- --------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES:
Proceeds from shares issued 9,762,475 18,068,509 -- --
Dividends reinvested 1,392,657 5,415,411 -- --
Cost of shares redeemed (8,744,623) (28,854,826) -- --
---------------- ---------------- ---------------- ----------------
Advisor Shares capital transactions 2,410,509 (5,370,906) -- --
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $ 2,410,509 $ (5,370,906) $ 2,004,331 $ (7,315,720)
================ ================ ================ ================
- --------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued -- -- 371,890 188,221
Reinvested -- -- 30,843 66,942
Redeemed -- -- (177,491) (779,053)
---------------- ---------------- ---------------- ----------------
Change in Class A Shares -- -- 225,242 (523,890)
---------------- ---------------- ---------------- ----------------
- --------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Issued -- -- 5,906 10,598
Reinvested -- -- 7,374 21,472
Redeemed -- -- (33,795) (216,292)
---------------- ---------------- ---------------- ----------------
Change in Class B Shares -- -- (20,515) (184,222)
---------------- ---------------- ---------------- ----------------
- --------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Reinvested -- -- 305 1,158
Redeemed -- -- (14,374) (5,866)
---------------- ---------------- ---------------- ----------------
Change in Class C Shares -- -- (14,069) (4,708)
---------------- ---------------- ---------------- ----------------
- --------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES:
Issued 948,211 1,788,443 -- --
Reinvested 135,063 536,720 -- --
Redeemed (850,138) (2,843,745) -- --
---------------- ---------------- ---------------- ----------------
Change in Advisor Shares 233,136 (518,582) -- --
---------------- ---------------- ---------------- ----------------
37 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
Statements of Changes in Net Assets (Continued)
HIGH YIELD INTERMEDIATE DURATION
FIXED INCOME FUND FIXED INCOME FUND
- ------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
APRIL 30, 2007 PERIOD ENDED APRIL 30, 2007 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2006 (a) (UNAUDITED) OCTOBER 31, 2006
- ------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 330,578 $ 575,859 $ 461,303 $ 987,322
Net realized gains (losses) from
investments and foreign currency
transactions 59,700 31,454 847,110 (420,155)
Change in unrealized appreciation/
depreciation from investments and
foreign currencies 245,398 69,732 (78,007) 480,307
---------------- ------------------- ---------------- ----------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 635,676 677,045 1,230,406 1,047,474
---------------- ------------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------
DIVIDENDS:
NET INVESTMENT INCOME:
Class A Shares (159,612) (301,928) (21,511) (46,821)
Class B Shares (76,511) (84,509) (74,668) (166,109)
Class C Shares (8,638) (8,755) (10,451) (19,885)
Class I Shares (87,332) (174,183) (340,834) (767,823)
NET REALIZED GAINS:
Class A Shares (15,636) -- -- --
Class B Shares (6,846) -- -- --
Class C Shares (757) -- -- --
Class I Shares (8,215) -- -- --
---------------- ------------------- ---------------- ----------------
CHANGE IN NET ASSETS FROM SHAREHOLDER
DIVIDENDS (363,547) (569,375) (447,464) (1,000,638)
---------------- ------------------- ---------------- ----------------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS (1,070,104) 9,549,568 (909,641) (13,008,376)
---------------- ------------------- ---------------- ----------------
CHANGE IN NET ASSETS (797,975) 9,657,238 (126,699) (12,961,540)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 9,657,238 -- 18,217,268 31,178,808
---------------- ------------------- ---------------- ----------------
End of period $ 8,859,263 $ 9,657,238 $ 18,090,569 $ 18,217,268
================ =================== ================ ================
Accumulated net investment income $ 4,969 $ 6,484 $ 20,910 $ 7,071
================ =================== ================ ================
- ----------
(a) The High Yield Fixed Income Fund commenced operations on November 18, 2005.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 38
HSBC INVESTOR FAMILY OF FUNDS
Statements of Changes in Net Assets (Continued)
HIGH YIELD INTERMEDIATE DURATION
FIXED INCOME FUND FIXED INCOME FUND
- ------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
APRIL 30, 2007 PERIOD ENDED APRIL 30, 2007 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2006 (a) (UNAUDITED) OCTOBER 31, 2006
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ 829,642 $ 5,577,211 $ 31,412 $ 25,306
Dividends reinvested 150,556 287,526 19,198 43,347
Cost of shares redeemed (1,872,944) (1,183,299) (262,140) (151,593)
---------------- ------------------- ---------------- ----------------
Class A Shares capital transactions (892,746) 4,681,438 (211,530) (82,940)
---------------- ------------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Proceeds from shares issued 375,902 2,078,468 42,663 75,008
Dividends reinvested 55,138 56,791 65,855 141,353
Cost of shares redeemed (147,917) (45,574) (511,200) (1,343,632)
---------------- ------------------- ---------------- ----------------
Class B Shares capital transactions 283,123 2,089,685 (402,682) (1,127,271)
---------------- ------------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Proceeds from shares issued 10,500 230,344 15,650 1,800
Dividends reinvested 8,692 8,113 10,349 20,272
Cost of shares redeemed -- (110) (47,836) (49,000)
---------------- ------------------- ---------------- ----------------
Class C Shares capital transactions 19,192 238,347 (21,837) (26,928)
---------------- ------------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES:
Proceeds from shares issued 506,235 2,775,374 1,498,900 908,462
Dividends reinvested 95,076 173,189 254,147 613,135
Cost of shares redeemed (1,080,984) (408,465) (2,026,639) (13,292,834)
---------------- ------------------- ---------------- ----------------
Class I Shares capital transactions (479,673) 2,540,098 (273,592) (11,771,237)
---------------- ------------------- ---------------- ----------------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $ (1,070,104) $ 9,549,568 $ (909,641) $ (13,008,376)
================ =================== ================ ================
- ------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued 80,570 557,001 3,123 2,635
Reinvested 14,614 28,555 1,917 4,508
Redeemed (182,726) (117,643) (26,089) (15,783)
---------------- ------------------- ---------------- ----------------
Change in Class A Shares (87,542) 467,913 (21,049) (8,640)
---------------- ------------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Issued 36,414 206,587 4,227 7,820
Reinvested 5,341 5,627 6,557 14,681
Redeemed (14,344) (4,471) (51,099) (139,306)
---------------- ------------------- ---------------- ----------------
Change in Class B Shares 27,411 207,743 (40,315) (116,805)
---------------- ------------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Issued 1,003 22,902 1,549 187
Reinvested 840 804 1,030 2,107
Redeemed -- (10) (4,765) (5,095)
---------------- ------------------- ---------------- ----------------
Change in Class C Shares 1,843 23,696 (2,186) (2,801)
---------------- ------------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES:
Issued 48,962 276,989 151,658 94,210
Reinvested 9,221 17,198 25,310 63,673
Redeemed (105,376) (40,788) (202,894) (1,377,269)
---------------- ------------------- ---------------- ----------------
Change in Class I Shares (47,193) 253,399 (25,926) (1,219,386)
---------------- ------------------- ---------------- ----------------
- ----------
(a) The High Yield Fixed Income Fund commenced operations on November 18, 2005.
39 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
NEW YORK TAX-FREE
BOND FUND
- ----------------------------------------------------------------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
APRIL 30, 2007 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2006
- ----------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 1,046,060 $ 2,082,496
Net realized gains (losses) from investment transactions 89,452 21,722
Change in unrealized appreciation/depreciation from investments (434,499) 641,574
--------------- ----------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 701,013 2,745,792
--------------- ----------------
- ----------------------------------------------------------------------------------------------------------
DIVIDENDS:
NET INVESTMENT INCOME:
Class A Shares (575,167) (1,102,509)
Class B Shares (169,348) (387,661)
Class C Shares (14,307) (37,439)
Class I Shares (260,913) (560,276)
NET REALIZED GAINS:
Class A Shares (11,494) (50,865)
Class B Shares (4,734) (23,139)
Class C Shares (438) (2,487)
Class I Shares (5,055) (24,240)
--------------- ----------------
CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (1,041,456) (2,188,616)
--------------- ----------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 1,565,499 (8,565,736)
--------------- ----------------
CHANGE IN NET ASSETS 1,225,056 (8,008,560)
- ----------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 61,453,319 69,461,879
--------------- ----------------
End of period $ 62,678,375 $ 61,453,319
=============== ================
Accumulated net investment income (loss) $ 20,936 $ (5,389)
=============== ================
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 40
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
NEW YORK TAX-FREE
BOND FUND
- ----------------------------------------------------------------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
APRIL 30, 2007 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2006
- ----------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ 4,969,769 $ 8,315,770
Dividends reinvested 535,043 1,100,289
Cost of shares redeemed (2,874,209) (11,409,207)
--------------- ----------------
Class A Shares capital transactions 2,630,603 (1,993,148)
--------------- ----------------
- ----------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Proceeds from shares issued 47,338 724,932
Dividends reinvested 129,248 316,025
Cost of shares redeemed (2,244,485) (3,683,709)
--------------- ----------------
Class B Shares capital transactions (2,067,899) (2,642,752)
--------------- ----------------
- ----------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Proceeds from shares issued 16,175 3,537
Dividends reinvested 8,271 24,112
Cost of shares redeemed (286,227) (575,373)
--------------- ----------------
Class C Shares capital transactions (261,781) (547,724)
--------------- ----------------
- ----------------------------------------------------------------------------------------------------------
CLASS I SHARES:
Proceeds from shares issued 2,055,022 1,615,824
Dividends reinvested 33,307 51,571
Cost of shares redeemed (823,753) (5,049,507)
--------------- ----------------
Class I Shares capital transactions 1,264,576 (3,382,112)
--------------- ----------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 1,565,499 $ (8,565,736)
=============== ================
- ----------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued 445,893 750,787
Reinvested 48,018 99,371
Redeemed (257,716) (1,031,733)
--------------- ----------------
Change in Class A Shares 236,195 (181,575)
--------------- ----------------
- ----------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Issued 4,243 65,596
Reinvested 11,608 28,569
Redeemed (201,623) (333,344)
--------------- ----------------
Change in Class B Shares (185,772) (239,179)
--------------- ----------------
- ----------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Issued 1,447 318
Reinvested 740 2,171
Redeemed (25,625) (51,822)
--------------- ----------------
Change in Class C Shares (23,438) (49,333)
--------------- ----------------
- ----------------------------------------------------------------------------------------------------------
CLASS I SHARES:
Issued 184,057 145,686
Reinvested 2,989 4,650
Redeemed (74,048) (453,581)
--------------- ----------------
Change in Class I Shares 112,998 (303,245)
--------------- ----------------
41 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
GROWTH FUND GROWTH AND INCOME FUND
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
APRIL 30, 2007 YEAR ENDED APRIL 30, 2007 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2006 (UNAUDITED) OCTOBER 31, 2006
- ------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 68,864 $ (28,434) $ 110,428 $ (30,297)
Net realized gains (losses) from
investment transactions 1,608,337 3,103,028 2,307,855 3,592,585
Change in unrealized appreciation/
depreciation from investments 1,866,357 (525,374) 1,377,789 2,346,553
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 3,543,558 2,549,220 3,796,072 5,908,841
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS:
NET INVESTMENT INCOME:
Class I Shares -- -- -- (25,548)
NET REALIZED GAINS:
Class A Shares (1,670,738) (357,021) -- --
Class B Shares (114,608) (22,246) -- --
Class C Shares (8,469) (5,635) -- --
Class I Shares (1,202,878) (219,862) -- --
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS FROM SHAREHOLDER
DIVIDENDS (2,996,693) (604,764) -- (25,548)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS 13,122,853 164,248 (2,541,801) (11,382,983)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS 13,669,718 2,108,704 1,254,271 (5,499,690)
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 38,742,898 36,634,194 46,890,964 52,390,654
---------------- ---------------- ---------------- ----------------
End of period $ 52,412,616 $ 38,742,898 $ 48,145,235 $ 46,890,964
================ ================ ================ ================
Accumulated net investment income $ 68,864 $ -- $ 110,428 $ --
================ ================ ================ ================
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 42
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
GROWTH FUND GROWTH AND INCOME FUND
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
APRIL 30, 2007 YEAR ENDED APRIL 30, 2007 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2006 (UNAUDITED) OCTOBER 31, 2006
- ------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ 7,477,019 $ 4,530,725 $ 60,565 $ 112,013
Dividends reinvested 1,658,428 354,352 -- --
Cost of shares redeemed (2,825,884) (5,905,203) (97,954) (135,477)
---------------- ---------------- ---------------- ----------------
Class A Shares capital transactions 6,309,563 (1,020,126) (37,389) (23,464)
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Proceeds from shares issued 36,165 233,048 197,564 398,426
Dividends reinvested 112,067 21,697 -- --
Cost of shares redeemed (109,553) (181,902) (268,516) (543,576)
---------------- ---------------- ---------------- ----------------
Class B Shares capital transactions 38,679 72,843 (70,952) (145,150)
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Proceeds from shares issued 54 1,004 1,300 19,650
Dividends reinvested 8,413 5,623 -- --
Cost of shares redeemed (162,753) (94,166) (2,690) (38,887)
---------------- ---------------- ---------------- ----------------
Class C Shares capital transactions (154,286) (87,539) (1,390) (19,237)
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES:
Proceeds from shares issued 8,115,481 4,081,210 3,361,371 4,960,323
Dividends reinvested 1,156,608 213,190 -- 1,654
Cost of shares redeemed (2,343,192) (3,095,330) (5,793,441) (16,157,109)
---------------- ---------------- ---------------- ----------------
Class I Shares capital transactions 6,928,897 1,199,070 (2,432,070) (11,195,132)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 13,122,853 $ 164,248 $ (2,541,801) $ (11,382,983)
================ ================ ================ ================
- ------------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued 521,785 306,676 5,283 10,618
Reinvested 116,545 24,254 -- --
Redeemed (193,683) (400,591) (8,580) (12,870)
---------------- ---------------- ---------------- ----------------
Change in Class A Shares 444,647 (69,661) (3,297) (2,252)
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Issued 2,598 16,381 17,612 38,279
Reinvested 8,307 1,549 -- --
Redeemed (7,881) (12,915) (24,111) (52,090)
---------------- ---------------- ---------------- ----------------
Change in Class B Shares 3,024 5,015 (6,499) (13,811)
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Issued 4 70 113 1,938
Reinvested 620 399 -- --
Redeemed (11,510) (6,716) (238) (3,743)
---------------- ---------------- ---------------- ----------------
Change in Class C Shares (10,886) (6,247) (125) (1,805)
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES:
Issued 558,182 276,028 290,568 465,603
Reinvested 81,052 14,592 -- 160
Redeemed (161,449) (209,584) (502,734) (1,552,705)
---------------- ---------------- ---------------- ----------------
Change in Class I Shares 477,785 81,036 (212,166) (1,086,942)
---------------- ---------------- ---------------- ----------------
43 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
INTERNATIONAL EQUITY FUND MID-CAP FUND
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
APRIL 30, 2007 YEAR ENDED APRIL 30, 2007 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2006 (UNAUDITED) OCTOBER 31, 2006
- ------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 2,377,922 $ 4,854,991 $ (13,942) $ (4,898)
Net realized gains (losses) from
investments and foreign currency
transactions 16,207,061 24,717,984 796,655 1,957,696
Change in unrealized appreciation/
depreciation from investments and
foreign currency transactions 23,052,742 35,300,745 2,609,636 1,800,748
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 41,637,725 64,873,720 3,392,349 3,753,546
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS:
NET INVESTMENT INCOME:
Advisor Shares (7,179,951) (4,030,977) -- --
NET REALIZED GAINS:
Class A Shares -- -- (258,695) (464,228)
Class B Shares -- -- (522,684) (1,688,238)
Class C Shares -- -- (6,914) (25,282)
Advisor Shares (24,089,605) (6,656,885) -- --
Trust Shares -- -- (1,159,580) (4,269,467)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS FROM SHAREHOLDER
DIVIDENDS (31,269,556) (10,687,862) (1,947,873) (6,447,215)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 54,055,996 36,418,624 1,884,311 1,132,987
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS 64,424,165 90,604,482 3,328,787 (1,560,682)
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 283,748,605 193,144,123 27,733,752 29,294,434
---------------- ---------------- ---------------- ----------------
End of period $ 348,172,770 $ 283,748,605 $ 31,062,539 $ 27,733,752
================ ================ ================ ================
Accumulated net investment income (loss) $ (328,405) $ 4,473,624 $ (13,942) $ --
================ ================ ================ ================
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 44
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
INTERNATIONAL EQUITY FUND MID-CAP FUND
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
APRIL 30, 2007 YEAR ENDED APRIL 30, 2007 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2006 (UNAUDITED) OCTOBER 31, 2006
- ------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ -- $ -- $ 2,123,599 $ 1,084,845
Dividends reinvested -- -- 256,489 455,929
Cost of shares redeemed -- -- (251,423) (371,463)
---------------- ---------------- ---------------- ----------------
Class A Shares capital transactions -- -- 2,128,665 1,169,311
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Proceeds from shares issued -- -- 184,047 437,454
Dividends reinvested -- -- 514,297 1,661,260
Cost of shares redeemed -- -- (1,705,323) (1,317,254)
---------------- ---------------- ---------------- ----------------
Class B Shares capital transactions -- -- (1,006,979) 781,460
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Proceeds from shares issued -- -- -- 4,002
Dividends reinvested -- -- 6,914 25,282
Cost of shares redeemed -- -- (17,990) (32,766)
---------------- ---------------- ---------------- ----------------
Class C Shares capital transactions -- -- (11,076) (3,482)
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
TRUST SHARES:
Proceeds from shares issued -- -- 2,449,762 2,741,624
Dividends reinvested -- -- 581,066 1,566,969
Cost of shares redeemed -- -- (2,257,127) (5,122,895)
---------------- ---------------- ---------------- ----------------
Trust Shares capital transactions -- -- 773,701 (814,302)
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES:
Proceeds from shares issued 52,913,237 58,467,386 -- --
Dividends reinvested 22,576,471 7,069,762 -- --
Cost of shares redeemed (21,433,712) (29,118,524) -- --
---------------- ---------------- ---------------- ----------------
Advisor Shares capital transactions 54,055,996 36,418,624 -- --
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 54,055,996 $ 36,418,624 $ 1,884,311 $ 1,132,987
================ ================ ================ ================
- ------------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued -- -- 238,358 126,901
Reinvested -- -- 29,999 54,997
Redeemed -- -- (27,980) (41,265)
---------------- ---------------- ---------------- ----------------
Change in Class A Shares -- -- 240,377 140,633
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Issued -- -- 21,989 52,031
Reinvested -- -- 64,127 211,250
Redeemed -- -- (204,730) (158,683)
---------------- ---------------- ---------------- ----------------
Change in Class B Shares -- -- (118,614) 104,598
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Issued -- -- -- 462
Reinvested -- -- 855 3,184
Redeemed -- -- (2,138) (4,014)
---------------- ---------------- ---------------- ----------------
Change in Class C Shares -- -- (1,283) (368)
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
TRUST SHARES:
Issued -- -- 267,236 305,751
Reinvested -- -- 66,712 186,322
Redeemed -- -- (245,312) (572,059)
---------------- ---------------- ---------------- ----------------
Change in Trust Shares -- -- 88,636 (79,986)
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES:
Issued 2,389,526 2,922,941 -- --
Reinvested 1,070,482 390,377 -- --
Redeemed (997,697) (1,488,865) -- --
---------------- ---------------- ---------------- ----------------
Change in Advisor Shares 2,462,311 1,824,453 -- --
---------------- ---------------- ---------------- ----------------
45 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
OPPORTUNITY FUND OPPORTUNITY FUND (ADVISOR)
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
APRIL 30, 2007 YEAR ENDED APRIL 30, 2007 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2006 (UNAUDITED) OCTOBER 31, 2006
- ------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ (144,510) $ (342,572) $ (365,372) $ (960,327)
Net realized gains (losses) from
investment and foreign currency
transactions 2,507,317 3,994,994 17,842,455 31,062,646
Change in unrealized appreciation/
depreciation from investments and
foreign currencies 322,437 1,342,022 3,353,957 2,986,040
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 2,685,244 4,994,444 20,831,040 33,088,359
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS:
NET INVESTMENT INCOME:
Class A Shares -- -- -- --
Class B Shares -- -- -- --
Class C Shares -- -- -- --
NET REALIZED GAINS:
Class A Shares (2,977,887) (711,320) -- --
Class B Shares (619,431) (150,813) -- --
Class C Shares (38,717) (10,198) -- --
Advisor Shares -- (29,938,816) (5,803,618)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS FROM SHAREHOLDER
DIVIDENDS (3,636,035) (872,331) (29,938,816) (5,803,618)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS (5,113,994) (2,312,697) 3,696,075 (12,679,647)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS (6,064,785) 1,809,416 (5,411,701) 14,605,094
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 29,530,079 27,720,663 192,123,772 177,518,678
---------------- ---------------- ---------------- ----------------
End of period $ 23,465,294 $ 29,530,079 $ 186,712,071 $ 192,123,772
---------------- ---------------- ---------------- ----------------
Accumulated net investment income (loss) $ (144,510) $ -- $ (365,372) $ --
================ ================ ================ ================
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 46
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
OPPORTUNITY FUND OPPORTUNITY FUND (ADVISOR)
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
APRIL 30, 2007 YEAR ENDED APRIL 30, 2007 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2006 (UNAUDITED) OCTOBER 31, 2006
- ------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ 1,182,625 $ 3,495,715 $ -- $ --
Dividends reinvested 2,944,516 703,432 -- --
Cost of shares redeemed (9,498,936) (6,056,187) -- --
---------------- ---------------- ---------------- ----------------
Class A Shares capital transactions (5,371,795) (1,857,040) -- --
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Proceeds from shares issued 121,112 253,088 -- --
Dividends reinvested 612,160 147,234 -- --
Cost of shares redeemed (494,737) (805,798) -- --
---------------- ---------------- ---------------- ----------------
Class B Shares capital transactions 238,535 (405,476) -- --
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Proceeds from shares issued -- 2,010 -- --
Dividends reinvested 38,284 10,101 -- --
Cost of shares redeemed (19,018) (62,292) -- --
---------------- ---------------- ---------------- ----------------
Class C Shares capital transactions 19,266 (50,181) -- --
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES:
Proceeds from shares issued -- -- 6,745,462 15,925,063
Dividends reinvested -- -- 12,322,958 4,071,601
Cost of shares redeemed -- -- (15,372,345) (32,676,311)
---------------- ---------------- ---------------- ----------------
Advisor Shares capital transactions -- -- 3,696,075 (12,679,647)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ (5,113,994) $ (2,312,697) $ 3,696,075 $ (12,679,647)
================ ================ ================ ================
- ------------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued 86,032 255,030 -- --
Reinvested 228,434 54,419 -- --
Redeemed (731,894) (443,567) -- --
---------------- ---------------- ---------------- ----------------
Change in Class A Shares (417,428) (134,118) -- --
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Issued 9,413 19,744 -- --
Reinvested 51,790 12,202 -- --
Redeemed (39,687) (63,328) -- --
---------------- ---------------- ---------------- ----------------
Change in Class B Shares 21,516 (31,382) -- --
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Issued -- 148 -- --
Reinvested 3,204 829 -- --
Redeemed (1,524) (4,807) -- --
---------------- ---------------- ---------------- ----------------
Change in Class C Shares 1,680 (3,830) -- --
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES:
Issued -- -- 423,137 962,234
Reinvested -- -- 822,079 262,486
Redeemed -- -- (984,219) (1,990,135)
---------------- ---------------- ---------------- ----------------
Change in Advisor Shares -- -- 260,997 (765,415)
================ ================ ================ ================
47 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
OVERSEAS EQUITY FUND VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
APRIL 30, 2007 YEAR ENDED APRIL 30, 2007 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2006 (UNAUDITED) OCTOBER 31, 2006
- ------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 38,928 $ 288,789 $ 271,227 $ 336,981
Net realized gains (losses) from
investment and foreign currency
transactions 1,731,740 3,038,364 1,657,994 4,265,780
Change in unrealized appreciation/
depreciation from investments and
foreign currencies 1,080,513 3,516,165 2,587,057 3,709,021
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 2,851,181 6,843,318 4,516,278 8,311,782
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS:
NET INVESTMENT INCOME:
Class A Shares (474,482) (326,916) (93,502) (284,513)
Class B Shares (48,615) (23,264) (989) (8,626)
Class C Shares (2,106) (1,601) -- (1,160)
Class I Shares -- -- (93,282) (229,486)
NET REALIZED GAINS:
Class A Shares (2,532,363) (1,507,747) (2,315,838) (1,923,289)
Class B Shares (377,205) (185,747) (187,844) (154,501)
Class C Shares (18,983) (12,624) (14,732) (29,129)
Class I Shares -- -- (1,767,244) (1,220,351)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS FROM SHAREHOLDER
DIVIDENDS (3,453,754) (2,057,899) (4,473,431) (3,851,055)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS (5,866,419) (1,874,669) 12,586,298 (155,652)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS (6,468,992) 2,910,750 12,629,145 4,305,075
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 26,158,489 23,247,739 44,818,987 40,513,912
---------------- ---------------- ---------------- ----------------
End of period $ 19,689,497 $ 26,158,489 $ 57,448,132 $ 44,818,987
================ ================ ================ ================
Accumulated net investment income (loss) $ (192,172) $ 294,103 $ 177,943 $ 94,489
================ ================ ================ ================
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 48
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
OVERSEAS EQUITY FUND VALUE FUND
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
APRIL 30, 2007 YEAR ENDED APRIL 30, 2007 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2006 (UNAUDITED) OCTOBER 31, 2006
- ------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ 1,113,119 $ 3,898,094 $ 5,863,831 $ 3,803,760
Dividends reinvested 2,979,338 1,818,046 2,385,909 2,187,527
Cost of shares redeemed (10,301,400) (7,848,982) (2,973,651) (7,101,747)
---------------- ---------------- ---------------- ----------------
Class A Shares capital transactions (6,208,943) (2,132,842) 5,276,089 (1,110,460)
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Proceeds from shares issued 169,519 426,797 39,359 108,230
Dividends reinvested 417,884 204,672 184,763 158,811
Cost of shares redeemed (253,513) (338,565) (163,822) (281,760)
---------------- ---------------- ---------------- ----------------
Class B Shares capital transactions 333,890 292,904 60,300 (14,719)
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Proceeds from shares issued 28,000 4,254 4 1,051
Dividends reinvested 20,910 14,125 14,633 30,205
Cost of shares redeemed (40,276) (53,110) (6,365) (287,134)
---------------- ---------------- ---------------- ----------------
Class C Shares capital transactions 8,634 (34,731) 8,272 (255,878)
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES:
Proceeds from shares issued -- -- 8,364,004 2,983,526
Dividends reinvested -- -- 1,788,862 1,363,115
Cost of shares redeemed -- -- (2,911,229) (3,121,236)
---------------- ---------------- ---------------- ----------------
Class I Shares capital transactions -- -- 7,241,637 1,225,405
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ (5,866,419) $ (1,874,669) $ 12,586,298 $ (155,652)
================ ================ ================ ================
- ------------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued 60,919 228,774 374,886 245,996
Reinvested 170,248 116,471 153,238 149,309
Redeemed (589,967) (464,081) (184,821) (459,025)
---------------- ---------------- ---------------- ----------------
Change in Class A Shares (358,800) (118,836) 343,303 (63,720)
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Issued 9,761 25,997 2,522 7,211
Reinvested 25,023 13,637 12,359 11,270
Redeemed (14,801) (20,687) (10,608) (18,887)
---------------- ---------------- ---------------- ----------------
Change in Class B Shares 19,983 18,947 4,273 (406)
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Issued 1,618 249 -- 69
Reinvested 1,221 922 972 2,131
Redeemed (2,315) (3,034) (398) (18,964)
---------------- ---------------- ---------------- ----------------
Change in Class C Shares 524 (1,863) 574 (16,764)
---------------- ---------------- ---------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES:
Issued -- -- 525,336 193,483
Reinvested -- -- 115,113 93,166
Redeemed -- -- (181,844) (201,427)
---------------- ---------------- ---------------- ----------------
Change in Class I Shares -- -- 458,605 85,222
---------------- ---------------- ---------------- ----------------
49 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC ADVISOR FUNDS TRUST--CORE PLUS FIXED INCOME FUND (ADVISOR)
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- -------------------------------------
NET REALIZED
AND UNREALIZED NET
GAINS REALIZED
NET ASSET NET (LOSSES) FROM GAINS FROM
VALUE, INVESTMENT INVESTMENT TOTAL FROM NET INVESTMENTS
BEGINNING INCOME AND FUTURES INVESTMENT INVESTMENT AND FUTURES TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- -------------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 2002 $10.81 0.55 (0.14) 0.41 (0.59) -- (0.59)
Year ended October 31, 2003 10.63 0.41 0.19 0.60 (0.50) -- (0.50)
Year ended October 31, 2004 10.73 0.45 0.12 0.57 (0.45) -- (0.45)
Year ended October 31, 2005 10.85 0.44 (0.27) 0.17 (0.47) -- (0.47)
Year ended October 31, 2006 10.55 0.53 0.02 0.55 (0.51) (0.46) (0.97)
Six months ended April 30, 2007
(Unaudited) 10.13 0.27 0.23 0.50 (0.26) -- (0.26)
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
----------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME TO EXPENSES TO
VALUE, END TOTAL PERIOD AVERAGE AVERAGE AVERAGE NET PORTFOLIO
OF PERIOD RETURN(b) (000'S) NET ASSETS(c) NET ASSETS(c) ASSETS(c)(d) TURNOVER(e)
- -----------------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 2002 $10.63 3.94% $284,841 0.56% 5.06% 0.56% 77.82%
Year ended October 31, 2003 10.73 5.71% 110,968 0.56% 4.30% 0.56% 70.91%
Year ended October 31, 2004 10.85 5.46% 109,518 0.64% 4.20% 0.64% 34.88%
Year ended October 31, 2005 10.55 1.55%(f) 89,743 0.52%(f) 4.15%(f) 0.52%(f) 176.60%
Year ended October 31, 2006 10.13 5.56% 80,976 0.56% 5.05% 0.80% 273.91%
Six months ended April 30, 2007
(Unaudited) 10.37 4.99%(g)(h) 85,274 0.25%(g) 5.32%(g) 0.76% 167.58%
- -----------------------------------------------------------------------------------------------------------------------------------
(a) The per share amounts and percentages reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor Core Plus Fixed Income Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all of its investable assets.
(f) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the respective Portfolio in which the Fund invests related to violation of
certain investment policies and limitations. The corresponding impact to
the net expense ratio, net income ratio, gross expense ratio and total
return were 0.11% for the Advisor Shares.
(g) During the period ended April 30, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total return were 0.20%
for the Advisor Shares.
(h) During the period ended April 30, 2007, the Fund received monies related
to certain nonrecurring litigation settlements. The corresponding impact
to the total return was 1.80%.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 50
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--CORE PLUS FIXED INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- -------------------------------------
NET REALIZED
AND UNREALIZED NET
GAINS REALIZED
NET ASSET NET (LOSSES) FROM GAINS FROM
VALUE, INVESTMENT INVESTMENT TOTAL FROM NET INVESTMENTS
BEGINNING INCOME AND FUTURES INVESTMENT INVESTMENT AND FUTURES TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $10.55 0.49 (0.14) 0.35 (0.52) -- (0.52)
Year ended October 31, 2003 10.38 0.40 0.13 0.53 (0.43) -- (0.43)
Year ended October 31, 2004 10.48 0.40 0.12 0.52 (0.40) -- (0.40)
Year ended October 31, 2005 10.60 0.39 (0.27) 0.12 (0.42) -- (0.42)
Year ended October 31, 2006 10.30 0.49* 0.05 0.54 (0.49) (0.05) (0.54)
Six months ended April 30, 2007
(Unaudited) 10.30 0.26 0.23 0.49 (0.25) -- (0.25)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $10.55 0.41 (0.13) 0.28 (0.44) -- (0.44)
Year ended October 31, 2003 10.39 0.32 0.13 0.45 (0.35) -- (0.35)
Year ended October 31, 2004 10.49 0.32 0.11 0.43 (0.32) -- (0.32)
Year ended October 31, 2005 10.60 0.32 (0.27) 0.05 (0.34) -- (0.34)
Year ended October 31, 2006 10.31 0.41* 0.06 0.47 (0.42) (0.05) (0.47)
Six months ended April 30, 2007
(Unaudited) 10.31 0.22 0.23 0.45 (0.21) -- (0.21)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $10.54 0.41 (0.13) 0.28 (0.44) -- (0.44)
Year ended October 31, 2003 10.38 0.32 0.13 0.45 (0.35) -- (0.35)
Year ended October 31, 2004 10.48 0.32 0.11 0.43 (0.32) -- (0.32)
Year ended October 31, 2005 10.59 0.32 (0.27) 0.05 (0.34) -- (0.34)
Year ended October 31, 2006 10.30 0.41* 0.06 0.47 (0.42) (0.05) (0.47)
Six months ended April 30, 2007
(Unaudited) 10.30 0.22 0.22 0.44 (0.21) -- (0.21)
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
----------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME TO EXPENSES TO
VALUE, END TOTAL PERIOD AVERAGE AVERAGE AVERAGE NET PORTFOLIO
OF PERIOD RETURN(b) (000'S) NET ASSETS(c) NET ASSETS(c) ASSETS(c)(d) TURNOVER(e)
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $10.38 3.44% $12,053 1.10% 4.52% 1.47% 77.82%
Year ended October 31, 2003 10.48 5.17% 14,143 1.10% 3.76% 1.21% 70.91%
Year ended October 31, 2004 10.60 5.07% 17,248 1.04% 3.78% 1.26% 34.88%
Year ended October 31, 2005 10.30 1.16%(f) 17,646 0.84%(f) 3.82%(f) 1.15%(f) 176.60%
Year ended October 31, 2006 10.30 5.45% 12,248 0.79% 4.82% 1.43% 273.91%
Six months ended April 30, 2007
(Unaudited) 10.54 4.83%(g)(h) 14,899 0.63%(g) 4.93%(g) 1.49% 167.58%
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $10.39 2.76% $ 6,124 1.85% 3.66% 2.18% 77.82%
Year ended October 31, 2003 10.49 4.38% 7,430 1.85% 3.01% 1.96% 70.91%
Year ended October 31, 2004 10.60 4.19% 7,017 1.79% 3.05% 2.01% 34.88%
Year ended October 31, 2005 10.31 0.50%(f) 6,168 1.59%(f) 3.08%(f) 1.90%(f) 176.60%
Year ended October 31, 2006 10.31 4.67% 4,267 1.54% 4.06% 2.19% 273.91%
Six months ended April 30, 2007
(Unaudited) 10.55 4.43%(g)(h) 4,148 1.39%(g) 4.19%(g) 2.24% 167.58%
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $10.38 2.77% $ 983 1.85% 3.75% 2.21% 77.82%
Year ended October 31, 2003 10.48 4.39% 606 1.85% 3.06% 1.97% 70.91%
Year ended October 31, 2004 10.59 4.20% 377 1.80% 3.07% 2.02% 34.88%
Year ended October 31, 2005 10.30 0.51%(f) 285 1.58%(f) 3.14%(f) 1.89%(f) 176.60%
Year ended October 31, 2006 10.30 4.67% 236 1.54% 4.07% 2.19% 273.91%
Six months ended April 30, 2007
(Unaudited) 10.53 4.35%(g)(h) 93 1.41%(g) 4.26%(g) 2.27% 167.58%
- -----------------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding.
(a) The per share amounts and percentages reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor Core Plus Fixed Income Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all of its investable assets.
(f) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the respective Portfolio in which the Fund invests related to violation of
certain investment policies and limitations. The corresponding impact to
the net expense ratio, net income ratio, gross expense ratio and total
return were 0.11%, 0.11% and 0.12% for Class A Shares, Class B Shares and
Class C Shares, respectively.
(g) During the period ended April 30, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total returns were 0.07%,
0.06%, and 0.04% for Class A Shares, Class B Shares, and Class C Shares,
respectively.
(h) During the period ended April 30, 2007, the Fund received monies related
to certain nonrecurring litigation settlements. The corresponding impact
to the total return was 1.77%, 1.76% and 1.77% for Class A Shares, Class B
Shares and Class C Shares, respectively.
51 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--HIGH YIELD FIXED INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- ------------------------------------
NET REALIZED
AND UNREALIZED
GAINS
NET ASSET NET (LOSSES) FROM
VALUE, INVESTMENT INVESTMENT TOTAL FROM NET NET
BEGINNING INCOME AND FUTURES INVESTMENT INVESTMENT REALIZED TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME GAINS DIVIDENDS
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period ended October 31, 2006(f) $10.00 0.69 0.12 0.81 (0.68) -- (0.68)
Six months ended April 30, 2007
(Unaudited) 10.13 0.39 0.35 0.74 (0.39) (0.03) (0.42)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 2006(g) $10.00 0.62 0.13 0.75 (0.61) -- (0.61)
Six months ended April 30, 2007
(Unaudited) 10.14 0.34 0.36 0.70 (0.35) (0.03) (0.38)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 2006(h) $10.01 0.58 0.15 0.73 (0.58) -- (0.58)
Six months ended April 30, 2007
(Unaudited) 10.16 0.34 0.36 0.70 (0.35) (0.03) (0.38)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Period ended October 31, 2006(i) $10.00 0.71 0.14 0.85 (0.71) -- (0.71)
Six months ended April 30, 2007
(Unaudited) 10.14 0.40 0.35 0.75 (0.40) (0.03) (0.43)
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
-----------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME TO EXPENSES TO
VALUE, END TOTAL PERIOD AVERAGE AVERAGE AVERAGE NET PORTFOLIO
OF PERIOD RETURN(b) (000'S) NET ASSETS(c) NET ASSETS(c) ASSETS(c)(d) TURNOVER(e)
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period ended October 31, 2006(f) $10.13 8.38% $4,742 0.80% 7.27% 3.53% 13.61%
Six months ended April 30, 2007
(Unaudited) 10.45 7.47% 3,976 0.80% 7.64% 3.37% 21.88%
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 2006(g) $10.14 7.68% $2,106 1.55% 6.65% 4.26% 13.61%
Six months ended April 30, 2007
(Unaudited) 10.46 7.07% 2,459 1.55% 6.86% 4.14% 21.88%
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 2006(h) $10.16 7.42% $ 241 1.55% 6.65% 4.29% 13.61%
Six months ended April 30, 2007
(Unaudited) 10.48 7.05% 268 1.55% 6.86% 4.15% 21.88%
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Period ended October 31, 2006(i) $10.14 8.73% $2,568 0.55% 7.53% 3.29% 13.61%
Six months ended April 30, 2007
(Unaudited) 10.46 7.60% 2,156 0.55% 7.88% 3.12% 21.88%
- ------------------------------------------------------------------------------------------------------------------------------------
(a) The per share amounts and percentages reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor High Yield Fixed Income Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all its investable assets.
(f) Class A Shares commenced operations on November 18, 2005.
(g) Class B Shares commenced operations on November 21, 2005.
(h) Class C Shares commenced operations on December 14, 2005.
(i) Class I Shares commenced operations on November 18, 2005.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 52
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--INTERMEDIATE DURATION FIXED INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- -------------------------------------
NET REALIZED
AND UNREALIZED NET
NET ASSET NET GAINS REALIZED
VALUE, INVESTMENT (LOSSES) FROM TOTAL FROM NET GAINS FROM
BEGINNING INCOME INVESTMENT INVESTMENT INVESTMENT INVESTMENTS TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $10.58 0.44 (0.10) 0.34 (0.44) (0.05) (0.49)
Year ended October 31, 2003 10.43 0.33 0.08 0.41 (0.37) -- (0.37)
Year ended October 31, 2004 10.47 0.32* 0.06 0.38 (0.33) (0.46) (0.79)
Year ended October 31, 2005 10.06 0.33 (0.29) 0.04 (0.37) (0.06) (0.43)
Year ended October 31, 2006 9.67 0.45 0.05 0.50 (0.45) -- (0.45)
Six months ended April 30, 2007
(Unaudited) 9.72 0.25 0.40 0.65 (0.24) -- (0.24)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $10.59 0.36 (0.09) 0.27 (0.36) (0.05) (0.41)
Year ended October 31, 2003 10.45 0.25 0.08 0.33 (0.29) -- (0.29)
Year ended October 31, 2004 10.49 0.23 0.08 0.31 (0.26) (0.46) (0.72)
Year ended October 31, 2005 10.08 0.25 (0.29) (0.04) (0.29) (0.06) (0.35)
Year ended October 31, 2006 9.69 0.38 0.04 0.42 (0.38) -- (0.38)
Six months ended April 30, 2007
(Unaudited) 9.73 0.22 0.41 0.63 (0.21) -- (0.21)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $10.58 0.36 (0.09) 0.27 (0.36) (0.05) (0.41)
Year ended October 31, 2003 10.44 0.25 0.09 0.34 (0.29) -- (0.29)
Year ended October 31, 2004 10.49 0.22* 0.08 0.30 (0.26) (0.46) (0.72)
Year ended October 31, 2005 10.07 0.25 (0.29) (0.04) (0.29) (0.06) (0.35)
Year ended October 31, 2006 9.68 0.38 0.05 0.43 (0.38) -- (0.38)
Six months ended April 30, 2007
(Unaudited) 9.73 0.22 0.41 0.63 (0.21) -- (0.21)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Year ended October 31, 2002 $10.59 0.46 (0.09) 0.37 (0.46) (0.05) (0.51)
Year ended October 31, 2003 10.45 0.33 0.10 0.43 (0.40) -- (0.40)
Year ended October 31, 2004 10.48 0.33 0.09 0.42 (0.36) (0.46) (0.82)
Year ended October 31, 2005 10.08 0.35 (0.30) 0.05 (0.39) (0.06) (0.45)
Year ended October 31, 2006 9.68 0.47 0.05 0.52 (0.47) -- (0.47)
Six months ended April 30, 2007
(Unaudited) 9.73 0.27 0.41 0.68 (0.26) -- (0.26)
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
-----------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME TO EXPENSES TO
VALUE, END TOTAL PERIOD AVERAGE AVERAGE AVERAGE NET PORTFOLIO
OF PERIOD RETURN(b) (000'S) NET ASSETS(c) NET ASSETS(c) ASSETS(c)(d) TURNOVER(e)
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $10.43 3.34% $ 1,608 0.96% 4.14% 0.96% 44.04%
Year ended October 31, 2003 10.47 3.97% 3,309 1.01% 2.99% 1.01% 98.42%
Year ended October 31, 2004 10.06 3.90% 1,558 1.10% 3.01% 1.21% 50.06%
Year ended October 31, 2005 9.67 0.31%(f) 1,055 1.01%(f) 3.37%(f) 1.10%(f) 107.26%
Year ended October 31, 2006 9.72 5.30% 976 0.80% 4.61% 1.65% 236.51%
Six months ended April 30, 2007
(Unaudited) 10.13 6.78%(g)(h) 805 0.42%(g) 5.09%(g) 1.77% 156.79%
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $10.45 2.65% $ 4,178 1.70% 3.30% 1.70% 44.04%
Year ended October 31, 2003 10.49 3.19% 6,443 1.73% 2.30% 1.73% 98.42%
Year ended October 31, 2004 10.08 3.11% 6,321 1.85% 2.28% 1.96% 50.06%
Year ended October 31, 2005 9.69 (0.44)%(f) 4,852 1.76%(f) 2.60%(f) 1.85%(f) 107.26%
Year ended October 31, 2006 9.73 4.40% 3,738 1.56% 3.84% 2.40% 236.51%
Six months ended April 30, 2007
(Unaudited) 10.15 6.48%(g)(h) 3,489 1.16%(g) 4.34%(g) 2.52% 156.79%
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $10.44 2.65% $ 1,759 1.70% 3.26% 1.70% 44.04%
Year ended October 31, 2003 10.49 3.29% 2,544 1.73% 2.31% 1.73% 98.42%
Year ended October 31, 2004 10.07 3.03% 679 1.85% 2.25% 1.96% 50.06%
Year ended October 31, 2005 9.68 (0.44)%(f) 527 1.77%(f) 2.60%(f) 1.86%(f) 107.26%
Year ended October 31, 2006 9.73 4.51% 503 1.55% 3.86% 2.40% 236.51%
Six months ended April 30, 2007
(Unaudited) 10.15 6.48%(g)(h) 502 1.16%(g) 4.34%(g) 2.52% 156.79%
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Year ended October 31, 2002 $10.45 3.69% $94,886 0.71% 4.42% 0.71% 44.04%
Year ended October 31, 2003 10.48 4.12% 31,368 0.69% 3.62% 0.69% 98.42%
Year ended October 31, 2004 10.08 4.25% 31,217 0.85% 3.28% 0.96% 50.06%
Year ended October 31, 2005 9.68 0.45%(f) 24,744 0.76%(f) 3.60%(f) 0.85%(f) 107.26%
Year ended October 31, 2006 9.73 5.56% 13,000 0.58% 4.77% 1.38% 236.51%
Six months ended April 30, 2007
(Unaudited) 10.15 7.01%(g)(h) 13,294 0.16%(g) 5.33%(g) 1.51% 156.79%
- ------------------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding
(a) The per share amounts and percentages reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor Intermediate Duration Fixed Income Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all of its investable assets.
(f) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the respective Portfolio in which the Fund invests related to violation of
certain investment policies and limitations. The corresponding impact to
the net expense ratio, net income ratio, gross expense ratio and total
return were 0.09%, 0.09%, 0.09% and 0.08% for Class A Shares, Class B
Shares, Class C Shares and Class I Shares, respectively.
(g) During the period ended April 30, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total returns were 0.23%,
0.24%, 0.24%, and 0.24% for Class A Shares, Class B Shares, Class C Shares
and Class I Shares, respectively.
(h) During the period ended April 30, 2007, the Fund received monies related
to certain nonrecurring litigation settlements. The corresponding impact
to the total return was 3.75%, 3.74%, 3.74% and 3.75% for Class A Shares,
Class B Shares, Class C Shares and Class I Shares, respectively.
53 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--NEW YORK TAX-FREE BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- -------------------------------------
NET REALIZED
AND UNREALIZED NET
GAINS REALIZED
NET ASSET NET (LOSSES) FROM GAINS FROM
VALUE, INVESTMENT INVESTMENT TOTAL FROM NET INVESTMENTS
BEGINNING INCOME AND FUTURES INVESTMENT INVESTMENT AND FUTURES TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $10.93 0.38 0.16 0.54 (0.38) -- (0.38)
Year ended October 31, 2003 11.09 0.38 0.12 0.50 (0.38) -- (0.38)
Year ended October 31, 2004 11.21 0.34 0.17 0.51 (0.34) (0.06) (0.40)
Year ended October 31, 2005 11.32 0.34 (0.22) 0.12 (0.34) (0.02) (0.36)
Year ended October 31, 2006 11.08 0.37 0.12 0.49 (0.37) (0.02) (0.39)
Six months ended April 30, 2007
(Unaudited) 11.18 0.19 (0.06) 0.13 (0.19) (0.00)> (0.19)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $10.92 0.30 0.16 0.46 (0.30) -- (0.30)
Year ended October 31, 2003 11.08 0.30 0.12 0.42 (0.30) -- (0.30)
Year ended October 31, 2004 11.20 0.25 0.17 0.42 (0.25) (0.06) (0.31)
Year ended October 31, 2005 11.31 0.25 (0.22) 0.03 (0.25) (0.02) (0.27)
Year ended October 31, 2006 11.07 0.28 0.12 0.40 (0.28) (0.02) (0.30)
Six months ended April 30, 2007
(Unaudited) 11.17 0.15 (0.06) 0.09 (0.15) (0.00)> (0.15)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $10.96 0.30 0.16 0.46 (0.30) -- (0.30)
Year ended October 31, 2003 11.12 0.30 0.13 0.43 (0.30) -- (0.30)
Year ended October 31, 2004 11.25 0.25 0.16 0.41 (0.25) (0.06) (0.31)
Year ended October 31, 2005 11.35 0.25 (0.22) 0.03 (0.25) (0.02) (0.27)
Year ended October 31, 2006 11.11 0.28 0.12 0.40 (0.28) (0.02) (0.30)
Six months ended April 30, 2007
(Unaudited) 11.21 0.15 (0.06) 0.09 (0.15) (0.00)> (0.15)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Year ended October 31, 2002 $10.93 0.41 0.16 0.57 (0.41) -- (0.41)
Year ended October 31, 2003 11.09 0.41 0.12 0.53 (0.41) -- (0.41)
Year ended October 31, 2004 11.21 0.37 0.17 0.54 (0.37) (0.06) (0.43)
Year ended October 31, 2005 11.32 0.37 (0.22) 0.15 (0.37) (0.02) (0.39)
Year ended October 31, 2006 11.08 0.39 0.12 0.51 (0.39) (0.02) (0.41)
Six months ended April 30, 2007
(Unaudited) 11.18 0.20 (0.06) 0.14 (0.20) (0.00)> (0.20)
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
-----------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME TO EXPENSES TO
VALUE, END TOTAL PERIOD AVERAGE AVERAGE AVERAGE NET PORTFOLIO
OF PERIOD RETURN(a) (000'S) NET ASSETS(b) NET ASSETS(b) ASSETS(b)(c) TURNOVER(d)
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $11.09 5.08% $16,341 0.95% 3.52% 0.95% 30.70%
Year ended October 31, 2003 11.21 4.57% 22,326 0.91% 3.39% 0.91% 29.79%
Year ended October 31, 2004 11.32 4.57% 32,889 0.87% 3.01% 0.87% 26.96%
Year ended October 31, 2005 11.08 1.03%(e) 34,441 0.88%(e) 3.02%(e) 0.89% 13.87%
Year ended October 31, 2006 11.18 4.45% 32,727 0.93% 3.30% 0.93% 12.69%
Six months ended April 30, 2007
(Unaudited) 11.12 1.18%(f) 35,175 0.85%(f) 3.47%(f) 0.92% 5.35%
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $11.08 4.30% $12,699 1.70% 2.74% 1.70% 30.70%
Year ended October 31, 2003 11.20 3.80% 18,352 1.66% 2.64% 1.66% 29.79%
Year ended October 31, 2004 11.31 3.80% 17,457 1.62% 2.27% 1.62% 26.96%
Year ended October 31, 2005 11.07 0.28%(e) 16,258 1.63%(e) 2.27%(e) 1.64% 13.87%
Year ended October 31, 2006 11.17 3.67% 13,735 1.68% 2.56% 1.68% 12.69%
Six months ended April 30, 2007
(Unaudited) 11.11 0.81%(f) 11,598 1.61%(f) 2.72%(f) 1.68% 5.35%
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $11.12 4.28% $ 2,608 1.70% 2.74% 1.70% 30.70%
Year ended October 31, 2003 11.25 3.87% 3,252 1.66% 2.64% 1.66% 29.79%
Year ended October 31, 2004 11.35 3.69% 2,340 1.62% 2.26% 1.62% 26.96%
Year ended October 31, 2005 11.11 0.28%(e) 1,782 1.63%(e) 2.26%(e) 1.64% 13.87%
Year ended October 31, 2006 11.21 3.66% 1,246 1.68% 2.55% 1.68% 12.69%
Six months ended April 30, 2007
(Unaudited) 11.15 0.80%(f) 977 1.62%(f) 2.71%(f) 1.68% 5.35%
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Year ended October 31, 2002 $11.09 5.34% $19,753 0.70% 3.76% 0.70% 30.70%
Year ended October 31, 2003 11.21 4.84% 20,290 0.67% 3.67% 0.67% 29.79%
Year ended October 31, 2004 11.32 4.83% 19,908 0.62% 3.27% 0.62% 26.96%
Year ended October 31, 2005 11.08 1.28%(e) 16,981 0.63%(e) 3.27%(e) 0.64% 13.87%
Year ended October 31, 2006 11.18 4.71% 13,746 0.68% 3.55% 0.68% 12.69%
Six months ended April 30, 2007
(Unaudited) 11.12 1.30%(f) 14,928 0.61%(f) 3.71%(f) 0.67% 5.35%
- ------------------------------------------------------------------------------------------------------------------------------------
> Less than $0.005 per share.
(a) Not Annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(b) Annualized for periods less than one year.
(c) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole,
without the distinguishing between the classes of shares issued.
(e) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the Fund related to violation of certain investment policies and
limitations. The corresponding impact to the net expense ratio, net income
ratio and total return were 0.01%, 0.01%, 0.01% and 0.01% for Class A
Shares, Class B Shares, Class C Shares and Class I Shares, respectively.
(f) During the period ended April 30, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total returns were 0.07%,
0.07%, 0.06%, and 0.06% for Class A Shares, Class B Shares, Class C Shares
and Class I Shares, respectively.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 54
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--GROWTH FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- -------------------------------------
NET REALIZED
AND UNREALIZED NET
NET ASSET NET GAINS REALIZED
VALUE, INVESTMENT (LOSSES) FROM TOTAL FROM NET GAINS FROM
BEGINNING INCOME INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period ended October 31, 2004(f) $12.68 (0.02) (0.11) (0.13) -- -- --
Year ended October 31, 2005 12.55 0.03 1.59 1.62 (0.05) -- (0.05)
Year ended October 31, 2006 14.12 (0.02)* 0.99 0.97 -- (0.23) (0.23)
Six months ended April 30, 2007
(Unaudited) 14.86 0.01 1.13 1.14 -- (1.13) (1.13)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 2004(f) $12.28 (0.07) (0.10) (0.17) -- -- --
Year ended October 31, 2005 12.11 (0.07) 1.53 1.46 -- -- --
Year ended October 31, 2006 13.57 (0.12)* 0.95 0.83 -- (0.23) (0.23)
Six months ended April 30, 2007
(Unaudited) 14.17 (0.04) 1.07 1.03 -- (1.13) (1.13)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 2004(f) $12.35 (0.06) (0.12) (0.18) -- -- --
Year ended October 31, 2005 12.17 (0.07) 1.54 1.47 -- -- --
Year ended October 31, 2006 13.64 (0.13)* 0.96 0.83 -- (0.23) (0.23)
Six months ended April 30, 2007
(Unaudited) 14.24 (0.04) 1.08 1.04 -- (1.13) (1.13)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Period ended October 31, 2004(f) $12.67 (0.01) (0.11) (0.12) -- -- --
Year ended October 31, 2005 12.55 0.06 1.59 1.65 (0.08) -- (0.08)
Year ended October 31, 2006 14.12 0.02* 0.99 1.01 -- (0.23) (0.23)
Six months ended April 30, 2007
(Unaudited) 14.90 0.03 1.13 1.16 (1.13) (1.13)
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
-----------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME (LOSS) EXPENSES TO
VALUE, END TOTAL PERIOD AVERAGE TO AVERAGE AVERAGE NET PORTFOLIO
OF PERIOD RETURN(b) (000'S) NET ASSETS(c) NET ASSETS(c) ASSETS(c)(d) TURNOVER(e)
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period ended October 31, 2004(f) $12.55 (1.03)% $17,372 1.20% (0.42)% 1.31% 53.08%
Year ended October 31, 2005 14.12 12.91%(g) 21,866 1.15%(g) 0.19%(g) 1.35%(g) 79.54%
Year ended October 31, 2006 14.86 6.92% 21,985 1.20% (0.14)% 1.44% 75.06%
Six months ended April 30, 2007
(Unaudited) 14.87 8.03%(h) 28,612 1.00%(h) 0.22%(h) 1.30% 30.99%
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 2004(f) $12.11 (1.38)% $ 1,402 1.95% (1.17)% 2.06% 53.08%
Year ended October 31, 2005 13.57 12.06%(g) 1,317 1.90%(g) (0.48)%(g) 2.09%(g) 79.54%
Year ended October 31, 2006 14.17 6.16% 1,446 1.95% (0.88)% 2.19% 75.06%
Six months ended April 30, 2007
(Unaudited) 14.07 7.63%(h) 1,478 1.77%(h) (0.54)%(h) 2.06% 30.99%
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 2004(f) $12.17 (1.46)% $ 309 1.95% (1.18)% 2.06% 53.08%
Year ended October 31, 2005 13.64 12.08%(g) 344 1.90%(g) (0.51)%(g) 2.10%(g) 79.54%
Year ended October 31, 2006 14.24 6.13% 270 1.95% (0.89)% 2.18% 75.06%
Six months ended April 30, 2007
(Unaudited) 14.15 7.66%(h) 114 1.77%(h) (0.59)%(h) 2.07% 30.99%
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Period ended October 31, 2004(f) $12.55 0.95% $19,115 0.95% (0.17)% 1.06% 53.08%
Year ended October 31, 2005 14.12 13.17%(g) 13,107 0.90%(g) 0.56%(g) 1.07%(g) 79.54%
Year ended October 31, 2006 14.90 7.21% 15,042 0.95% 0.12% 1.19% 75.06%
Six months ended April 30, 2007
(Unaudited) 14.93 8.15%(h) 22,209 0.75%(h) 0.48%(h) 1.05% 30.99%
- -----------------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding.
(a) The per share amounts and percentages reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor Growth Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all its investable assets.
(f) Class A Shares, Class B Shares, Class C Shares and Class I Shares
commenced operations on May 7, 2004.
(g) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the respective Portfolio in which the Fund invests related to violation of
certain investment policies and limitations. The corresponding impact to
the net expense ratio, net income ratio, gross expense ratio and total
return were 0.05%, 0.05%, 0.05% and 0.05% for Class A Shares, Class B
Shares, Class C Shares and Class I Shares, respectively.
(h) During the period ended April 30, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total returns were 0.20%,
0.18%, 0.18%, and 0.20% for Class A Shares, Class B Shares, Class C Shares
and Class I Shares, respectively.
55 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- ----------------------
NET REALIZED
AND UNREALIZED
NET ASSET NET GAINS
VALUE, INVESTMENT (LOSSES) FROM TOTAL FROM NET
BEGINNING INCOME INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME DIVIDENDS
- ----------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $ 8.91 0.04 (1.73) (1.69) (0.01) (0.01)
Year ended October 31, 2003 7.21 0.06 1.18 1.24 (0.06) (0.06)
Year ended October 31, 2004 8.39 0.05 0.36 0.41 (0.04) (0.04)
Year ended October 31, 2005 8.76 0.07 1.01 1.08 (0.09) (0.09)
Year ended October 31, 2006 9.75 (0.02)* 1.25 1.23 -- --
Six months ended April 30, 2007
(Unaudited) 10.98 0.02 0.88 0.90 -- --
- ----------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $ 8.88 (0.00)> (1.74) (1.74) -- --
Year ended October 31, 2003 7.14 (0.01) 1.18 1.17 (0.01) (0.01)
Year ended October 31, 2004 8.30 (0.02)* 0.36 0.34 (0.00)> (0.00)>
Year ended October 31, 2005 8.64 (0.01) 1.01 1.00 (0.03) (0.03)
Year ended October 31, 2006 9.61 (0.10)* 1.23 1.13 -- --
Six months ended April 30, 2007
(Unaudited) 10.74 (0.02) 0.86 0.84 -- --
- ----------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 2004(f) $ 8.40 (0.02)* 0.38 0.36 (0.03) (0.03)
Year ended October 31, 2005 8.73 (0.01) 1.02 1.01 (0.04) (0.04)
Year ended October 31, 2006 9.70 (0.09)* 1.22 1.13 -- --
Six months ended April 30, 2007
(Unaudited) 10.83 (0.02) 0.87 0.85 -- --
- ----------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Year ended October 31, 2002 $ 8.92 0.06 (1.73) (1.67) (0.03) (0.03)
Year ended October 31, 2003 7.22 0.07 1.19 1.26 (0.08) (0.08)
Year ended October 31, 2004 8.40 0.07 0.36 0.43 (0.06) (0.06)
Year ended October 31, 2005 8.77 0.10 0.99 1.10 (0.12) (0.12)
Year ended October 31, 2006 9.75 0.01* 1.25 1.26 (0.01) (0.01)
Six months ended April 30, 2007
(Unaudited) 11.00 0.03 0.89 0.92 -- --
- ----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
-----------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME (LOSS) EXPENSES TO
VALUE, END TOTAL PERIOD AVERAGE TO AVERAGE AVERAGE NET PORTFOLIO
OF PERIOD RETURN(a) (000'S) NET ASSETS(b) NET ASSETS(b) ASSETS(b)(c) TURNOVER(d)
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $ 7.21 (18.97)% $ 1,306 1.01% 0.39% 1.01% 59.85%
Year ended October 31, 2003 8.39 17.26% 1,827 1.04% 0.70% 1.04% 64.52%
Year ended October 31, 2004 8.76 4.94% 1,500 1.02% 0.50% 1.02% 73.68%
Year ended October 31, 2005 9.75 12.36%(e) 1,260 1.11%(e) 0.73%(e) 1.16% 106.49%
Year ended October 31, 2006 10.98 12.62% 1,394 1.26% (0.22)% 1.47% 34.85%
Six months ended April 30, 2007
(Unaudited) 11.88 8.20%(g) 1,469 0.94%(g) 0.32%(g) 1.37% 13.61%
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $ 7.14 (19.59)% $ 1,154 1.76% (0.30)% 1.76% 59.85%
Year ended October 31, 2003 8.30 16.40% 2,235 1.79% (0.07)% 1.79% 64.52%
Year ended October 31, 2004 8.64 4.13% 3,820 1.77% (0.25)% 1.77% 73.68%
Year ended October 31, 2005 9.61 11.61%(e) 4,194 1.87%(e) (0.10)%(e) 1.93% 106.49%
Year ended October 31, 2006 10.74 11.76% 4,537 2.01% (0.97)% 2.22% 34.85%
Six months ended April 30, 2007
(Unaudited) 11.58 7.82%(g) 4,817 1.69%(g) (0.43)%(g) 2.12% 13.61%
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 2004(f) $ 8.73 3.57% $ 41 1.77% (0.28)% 1.77% 73.68%
Year ended October 31, 2005 9.70 11.59%(e) 49 1.88%(e) (0.13)%(e) 1.93% 106.49%
Year ended October 31, 2006 10.83 11.65% 35 2.01% (0.90)% 2.22% 34.85%
Six months ended April 30, 2007
(Unaudited) 11.68 7.85%(g) 36 1.69%(g) (0.43)%(g) 2.12% 13.61%
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Year ended October 31, 2002 $ 7.22 (18.76)% $168,812 0.76% 0.66% 0.76% 59.85%
Year ended October 31, 2003 8.40 17.63% 203,458 0.79% 0.96% 0.79% 64.52%
Year ended October 31, 2004 8.77 5.18% 196,219 0.77% 0.77% 0.77% 73.68%
Year ended October 31, 2005 9.75 12.61%(e) 46,888 0.80%(e) 1.20%(e) 0.86% 106.49%
Year ended October 31, 2006 11.00 12.88% 40,925 1.01% 0.04% 1.22% 34.85%
Six months ended April 30, 2007
(Unaudited) 11.92 8.36%(g) 41,822 0.70%(g) 0.57%(g) 1.12% 13.61%
- -----------------------------------------------------------------------------------------------------------------------------------
> Less than $0.005 per share.
* Calculated based on average shares outstanding.
(a) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(b) Annualized for periods less than one year.
(c) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been indicated.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole,
without the distinguishing between the classes of shares issued.
(e) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the Fund related to violation of certain investment policies and
limitations. The corresponding impact to the net expense ratio, net income
ratio and total return were 0.02%, 0.02%, 0.02% and 0.03% for Class A
Shares, Class B Shares, Class C Shares and Class I Shares, respectively.
(f) Class C shares commenced operations on November 3, 2003.
(g) During the period ended April 30, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total returns were 0.26%,
0.26%, 0.26%, and 0.25% for Class A Shares, Class B Shares, Class C Shares
and Class I Shares, respectively.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 56
- --------------------------------------------------------------------------------
HSBC ADVISOR FUNDS TRUST--INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- -------------------------------------
NET REALIZED
AND UNREALIZED NET
GAINS REALIZED
(LOSSES) FROM GAINS FROM
NET ASSET NET INVESTMENT INVESTMENTS
VALUE, INVESTMENT AND FOREIGN TOTAL FROM NET AND FOREIGN
BEGINNING INCOME CURRENCY INVESTMENT INVESTMENT CURRENCY TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- -----------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 2002 $12.56 0.09 (1.73) (1.64) (0.19) -- (0.19)
Year ended October 31, 2003 10.73 0.20 2.02 2.22 (0.19) -- (0.19)
Year ended October 31, 2004 12.76 0.18 2.32 2.50 (0.39) -- (0.39)
Year ended October 31, 2005 14.87 0.31 2.59 2.90 (0.23) -- (0.23)
Year ended October 31, 2006 17.54 0.38 5.14 5.52 (0.36) (0.60) (0.96)
Six months ended April 30, 2007
(Unaudited) 22.10 0.18 2.86 3.04 (0.55) (1.84) (2.39)
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
-----------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME TO EXPENSES TO
VALUE, END TOTAL PERIOD AVERAGE AVERAGE AVERAGE NET PORTFOLIO
OF PERIOD RETURN(b) (000'S) NET ASSETS(c) NET ASSETS(c) ASSETS(c)(d) TURNOVER(e)
- ------------------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 2002 $10.73 (13.32)% $194,704 0.99% 0.70% 0.99% 31.63%
Year ended October 31, 2003 12.76 21.03% 123,658 1.07% 1.16% 1.07% 68.51%
Year ended October 31, 2004 14.87 20.06% 148,317 1.05% 1.39% 1.05% 106.11%
Year ended October 31, 2005 17.54 19.69% 193,144 0.92% 2.01% 0.92% 31.32%
Year ended October 31, 2006 22.10 32.70% 283,749 0.97% 2.02% 0.97% 33.39%
Six months ended April 30, 2007
(Unaudited) 22.75 14.58%(f)(g) 348,173 0.88%(f) 1.54%(f) 0.93% 15.44%
- ------------------------------------------------------------------------------------------------------------------------------------
(a) The per share amounts and percentages reflect income and expense assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor International Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all of its inevitable assets.
(f) During the period ended April 30, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total return were 0.05%
for the Advisor Shares.
(g) During the period ended April 30, 2007, the Fund received monies related
to certain nonrecurring litigation settlements. The corresponding impact
to the total return was 0.18%.
57 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--MID-CAP FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- ------------------------
NET REALIZED
AND UNREALIZED
GAINS NET REALIZED
NET ASSET NET (LOSSES) FROM GAINS FROM
VALUE, INVESTMENT INVESTMENTS TOTAL FROM INVESTMENTS
BEGINNING INCOME AND OPTIONS INVESTMENT AND OPTIONS TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS
- -----------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $7.90 (0.03) (1.57) (1.60) -- --
Year ended October 31, 2003 6.30 (0.03)* 1.68 1.65 -- --
Year ended October 31, 2004 7.95 (0.04)* 0.53 0.49 -- --
Year ended October 31, 2005 8.44 (0.06)* 1.49 1.43 -- --
Year ended October 31, 2006 9.87 (0.00)*> 1.19 1.19 (2.18) (2.18)
Six months ended April 30, 2007
(Unaudited) 8.88 (0.00)> 1.05 1.05 (0.62) (0.62)
- -----------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $7.82 (0.08) (1.55) (1.63) -- --
Year ended October 31, 2003 6.19 (0.08) 1.64 1.56 -- --
Year ended October 31, 2004 7.75 (0.10)* 0.51 0.41 -- --
Year ended October 31, 2005 8.16 (0.13)* 1.45 1.32 -- --
Year ended October 31, 2006 9.48 (0.06)* 1.13 1.07 (2.18) (2.18)
Six months ended April 30, 2007
(Unaudited) 8.37 (0.04) 0.99 0.95 (0.62) (0.62)
- -----------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $7.82 (0.08) (1.54) (1.62) -- --
Year ended October 31, 2003 6.20 (0.08) 1.68 1.60 -- --
Year ended October 31, 2004 7.80 (0.10)* 0.52 0.42 -- --
Year ended October 31, 2005 8.22 (0.13)* 1.45 1.32 -- --
Year ended October 31, 2006 9.54 (0.06)* 1.15 1.09 (2.18) (2.18)
Six months ended April 30, 2007
(Unaudited) 8.45 (0.04) 0.99 0.95 (0.62) (0.62)
- -----------------------------------------------------------------------------------------------------------------
TRUST SHARES
Year ended October 31, 2002 $7.91 (0.02) (1.56) (1.58) -- --
Year ended October 31, 2003 6.33 (0.01) 1.69 1.68 -- --
Year ended October 31, 2004 8.01 (0.02)* 0.53 0.51 -- --
Year ended October 31, 2005 8.52 (0.02)* 1.48 1.46 -- --
Year ended October 31, 2006 9.98 0.03* 1.20 1.23 (2.18) (2.18)
Six months ended April 30, 2007
(Unaudited) 9.03 0.01 1.06 1.07 (0.62) (0.62)
- -----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
-----------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME (LOSS) EXPENSES TO
VALUE, END TOTAL PERIOD AVERAGE TO AVERAGE AVERAGE NET PORTFOLIO
OF PERIOD RETURN(a) (000'S) NET ASSETS(b) NET ASSETS(b) ASSETS(b)(c) TURNOVER(d)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $6.30 (20.25)% $ 1,010 1.08% (0.46)% 1.08% 140.23%
Year ended October 31, 2003 7.95 26.19% 1,539 1.10% (0.43)% 1.10% 100.86%
Year ended October 31, 2004 8.44 6.16% 1,878 1.09% (0.54)% 1.09% 106.72%
Year ended October 31, 2005 9.87 16.94%(e) 2,151 1.38%(e) (0.65)%(e) 1.53% 169.62%
Year ended October 31, 2006 8.88 13.66% 3,185 1.48% (0.01)% 1.85% 53.16%
Six months ended April 30, 2007
(Unaudited) 9.31 12.40%(f) 5,573 0.95%(f) (0.01)%(f) 1.82% 32.11%
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $6.19 (20.84)% $ 4,391 1.83% (1.21)% 1.83% 140.23%
Year ended October 31, 2003 7.75 25.20% 6,009 1.85% (1.16)% 1.85% 100.86%
Year ended October 31, 2004 8.16 5.29% 7,037 1.84% (1.29)% 1.84% 106.72%
Year ended October 31, 2005 9.48 16.18%(e) 7,415 2.11%(e) (1.38)%(e) 2.27% 169.62%
Year ended October 31, 2006 8.37 12.78% 7,425 2.25% (0.72)% 2.60% 53.16%
Six months ended April 30, 2007
(Unaudited) 8.70 11.93%(f) 6,682 1.76%(f) (0.83)%(f) 2.57% 32.11%
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $6.20 (20.72)% $ 20 1.83% (1.20)% 1.83% 140.23%
Year ended October 31, 2003 7.80 25.81% 54 1.85% (1.23)% 1.85% 100.86%
Year ended October 31, 2004 8.22 5.38% 94 1.84% (1.29)% 1.84% 106.72%
Year ended October 31, 2005 9.54 16.06%(e) 111 2.13%(e) (1.40)%(e) 2.28% 169.62%
Year ended October 31, 2006 8.45 12.93% 95 2.25% (0.72)% 2.60% 53.16%
Six months ended April 30, 2007
(Unaudited) 8.78 11.83%(f) 87 1.77%(f) (0.86)%(f) 2.57% 32.11%
- ----------------------------------------------------------------------------------------------------------------------------------
TRUST SHARES
Year ended October 31, 2002 $6.33 (19.97)% $ 98,059 0.82% (0.18)% 0.82% 140.23%
Year ended October 31, 2003 8.01 26.54% 160,621 0.85% (0.17)% 0.85% 100.86%
Year ended October 31, 2004 8.52 6.37% 117,354 0.84% (0.28)% 0.84% 106.72%
Year ended October 31, 2005 9.98 17.14%(e) 19,618 0.89%(e) (0.19)%(e) 1.02% 169.62%
Year ended October 31, 2006 9.03 13.97% 17,029 1.26% 0.29% 1.60% 53.16%
Six months ended April 30, 2007
(Unaudited) 9.48 12.42%(f) 18,721 0.74%(f) 0.18%(f) 1.57% 32.11%
- ----------------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding.
> Less than $0.005 per share.
(a) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(b) Annualized for periods less than one year.
(c) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been indicated.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole,
without the distinguishing between the classes of shares issued.
(e) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the Fund related to violation of certain investment policies and
limitations. The corresponding impact to the net expense ratio and net
income ratio were 0.10%, 0.10%, 0.10% and 0.09% for Class A Shares, Class
B Shares, Class C Shares and Trust Shares, respectively. The corresponding
impact to the total return was 0.57%, 0.57%, 0.57% and 0.56% for Class A
(f) During the period ended April 30, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total returns were 0.40%,
0.34%, 0.33%, and 0.36% for Class A Shares, Class B Shares, Class C Shares
and Class Y Shares, respectively.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 58
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--OPPORTUNITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- --------------------------
NET REALIZED
AND UNREALIZED NET REALIZED
NET ASSET NET GAINS GAINS (LOSSES)
VALUE, INVESTMENT (LOSSES) FROM TOTAL FROM FROM
BEGINNING INCOME INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS
- -------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $ 9.60 (0.13) (1.64) (1.77) -- --
Year ended October 31, 2003 7.83 (0.10) 2.63 2.53 -- --
Year ended October 31, 2004 10.36 (0.13) 0.68 0.55 -- --
Year ended October 31, 2005 10.91 (0.14) 1.62 1.48 -- --
Year ended October 31, 2006 12.39 (0.14)* 2.43 2.29 (0.39) (0.39)
Six months ended April 30, 2007
(Unaudited) 14.29 (0.08) 1.61 1.53 (1.73) (1.73)
- -------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $ 9.27 (0.20)* (1.56) (1.76) -- --
Year ended October 31, 2003 7.51 (0.18)* 2.52 2.34 -- --
Year ended October 31, 2004 9.85 (0.20) 0.64 0.44 -- --
Year ended October 31, 2005 10.29 (0.22) 1.53 1.31 -- --
Year ended October 31, 2006 11.60 (0.23)* 2.27 2.04 (0.39) (0.39)
Six months ended April 30, 2007
(Unaudited) 13.25 (0.11) 1.47 1.36 (1.73) (1.73)
- -------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $ 9.35 (0.21)* (1.57) (1.78) -- --
Year ended October 31, 2003 7.57 (0.18) 2.55 2.37 -- --
Year ended October 31, 2004 9.94 (0.22) 0.67 0.45 -- --
Year ended October 31, 2005 10.39 (0.21) 1.53 1.32 -- --
Year ended October 31, 2006 11.71 (0.23)* 2.29 2.06 (0.39) (0.39)
Six months ended April 30, 2007
(Unaudited) 13.38 (0.11) 1.48 1.37 (1.73) (1.73)
- -------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
-----------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME (LOSS) EXPENSES TO
VALUE, END TOTAL PERIOD AVERAGE TO AVERAGE AVERAGE NET PORTFOLIO
OF PERIOD RETURN(b) (000'S) NET ASSETS(c) NET ASSETS(c) ASSETS(c)(d) TURNOVER(e)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $ 7.83 (18.44)% $11,384 1.65% (1.45)% 2.08% 103.90%
Year ended October 31, 2003 10.36 32.31% 16,695 1.65% (1.36)% 2.09% 152.05%
Year ended October 31, 2004 10.91 5.31% 20,902 1.61% (1.24)% 1.72% 81.75%
Year ended October 31, 2005 12.39 13.57%(f) 22,875 1.51%(f) (1.11)%(f) 1.69%(f) 63.95%
Year ended October 31, 2006 14.29 18.81% 24,463 1.55% (1.04)% 1.70% 60.83%
Six months ended April 30, 2007
(Unaudited) 14.09 11.86%(g) 18,240 1.49%(g) (0.98)%(g) 1.77% 25.63%
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $ 7.51 (18.99)% $ 2,374 2.40% (2.18)% 2.86% 103.90%
Year ended October 31, 2003 9.85 31.16% 3,952 2.40% (2.11)% 2.83% 152.05%
Year ended October 31, 2004 10.29 4.47% 4,611 2.36% (2.00)% 2.47% 81.75%
Year ended October 31, 2005 11.60 12.73%(f) 4,539 2.26%(f) (1.86)%(f) 2.44%(f) 63.95%
Year ended October 31, 2006 13.25 17.91% 4,768 2.30% (1.79)% 2.45% 60.83%
Six months ended April 30, 2007
(Unaudited) 12.88 11.47%(g) 4,912 2.23%(g) (1.73)%(g) 2.54% 25.63%
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $ 7.57 (19.04)% $ 329 2.40% (2.20)% 2.83% 103.90%
Year ended October 31, 2003 9.94 31.31% 395 2.40% (2.11)% 2.84% 152.05%
Year ended October 31, 2004 10.39 4.53% 344 2.37% (2.00)% 2.48% 81.75%
Year ended October 31, 2005 11.71 12.70%(f) 306 2.26%(f) (1.86)%(f) 2.44%(f) 63.95%
Year ended October 31, 2006 13.38 17.92% 299 2.30% (1.78)% 2.45% 60.83%
Six months ended April 30, 2007
(Unaudited) 13.02 11.43%(g) 313 2.23%(g) (1.73)%(g) 2.54% 25.63%
- ----------------------------------------------------------------------------------------------------------------------------------
* Calculated using average shares.
(a) The per share amounts and percentages reflect income and expense assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor Opportunity Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all of its investable assets.
(f) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the respective Portfolio in which the Fund invests related to violation of
certain investment policies and limitations. The corresponding impact to
the net expense ratio, net income ratio, gross expense ratio and total
return were 0.04%, 0.04% and 0.04% for Class A Shares, Class B Shares and
Class C Shares, respectively.
(g) During the period ended April 30, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total returns were 0.06%,
0.07%, and 0.07% for Class A Shares, Class B Shares, and Class C Shares,
respectively.
59 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--OPPORTUNITY FUND (ADVISOR)
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- -------------------------
NET REALIZED NET
AND UNREALIZED REALIZED
NET ASSET NET GAINS GAINS
VALUE, INVESTMENT (LOSSES) FROM TOTAL FROM (LOSSES) FROM
BEGINNING INCOME INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS
- ------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 2002 $11.32 (0.09) (1.96) (2.05) -- --
Year ended October 31, 2003 9.27 (0.06) 3.15 3.09 -- --
Year ended October 31, 2004 12.36 (0.08) 0.79 0.71 -- --
Year ended October 31, 2005 13.07 (0.10) 1.97 1.87 -- --
Year ended October 31, 2006 14.94 (0.09) 2.93 2.84 (0.50) (0.50)
Six months ended April 30, 2007
(Unaudited) 17.28 (0.03) 1.87 1.84 (2.71) (2.71)
- ------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
------------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME (LOSS) EXPENSES TO
VALUE, END TOTAL PERIOD AVERAGE TO AVERAGE AVERAGE NET PORTFOLIO
OF PERIOD RETURN(b) (000'S) NET ASSETS(c) NET ASSETS(c) ASSETS(c)(d) TURNOVER(e)
- ------------------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 2002 $ 9.27 (18.11)% $190,686 1.07% (0.87)% 1.07% 103.90%
Year ended October 31, 2003 12.36 33.33% 326,072 1.01% (0.72)% 1.01% 152.05%
Year ended October 31, 2004 13.07 5.74% 279,669 0.98% (0.62)% 0.98% 81.75%
Year ended October 31, 2005 14.94 14.31%(f) 177,519 0.94%(f) (0.54)%(f) 0.94%(f) 63.95%
Year ended October 31, 2006 17.28 19.40% 192,124 1.03% (0.51)% 1.03% 60.83%
Six months ended April 30, 2007
(Unaudited) 16.41 12.13%(g) 186,712 0.90%(g) (0.40)%(g) 1.03% 25.63%
- ------------------------------------------------------------------------------------------------------------------------------------
(a) The per share amounts and percentages reflect income and expense assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor Opportunity Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all of its investable assets.
(f) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the respective Portfolio in which the Fund invests related to violation of
certain investment policies and limitations. The corresponding impact to
the net expense ratio, net income ratio, gross expense ratio and total
return was 0.04% for the Advisor Shares.
(g) During the period ended April 30, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total return were 0.13%
for the Advisor Shares.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 60
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--OVERSEAS EQUITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- -------------------------------------
NET REALIZED
AND UNREALIZED NET
GAINS REALIZED
(LOSSES) FROM GAINS FROM
NET ASSET NET INVESTMENT INVESTMENT
VALUE, INVESTMENT AND FOREIGN TOTAL FROM NET AND FOREIGN
BEGINNING INCOME CURRENCY INVESTMENT INVESTMENT CURRENCY TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $11.66 (0.04) (1.34) (1.38) (0.12) (0.29) (0.41)
Year ended October 31, 2003 9.87 0.01 1.95 1.96 (0.10) -- (0.10)
Year ended October 31, 2004 11.73 0.08 2.19 2.27 (0.07) -- (0.07)
Year ended October 31, 2005 13.93 0.18 2.33 2.51 (0.06) (0.79) (0.85)
Year ended October 31, 2006 15.59 0.22 4.45 4.67 (0.25) (1.16) (1.41)
Six months ended April 30, 2007
(Unaudited) 18.85 0.02 2.43 2.45 (0.40) (2.11) (2.51)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $11.30 (0.08) (1.34) (1.42) (0.03) (0.29) (0.32)
Year ended October 31, 2003 9.56 (0.06) 1.89 1.83 (0.05) -- (0.05)
Year ended October 31, 2004 11.34 0.01* 2.08 2.09 -- -- --
Year ended October 31, 2005 13.43 0.07 2.24 2.31 -- (0.79) (0.79)
Year ended October 31, 2006 14.95 0.09 4.26 4.35 (0.14) (1.16) (1.30)
Six months ended April 30, 2007
(Unaudited) 18.00 (0.00)> 2.27 2.27 (0.27) (2.11) (2.38)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $11.41 (0.08) (1.36) (1.44) -- (0.29) (0.29)
Year ended October 31, 2003 9.68 (0.06) 1.93 1.87 (0.01) -- (0.01)
Year ended October 31, 2004 11.54 (0.01) 2.14 2.13 -- -- --
Year ended October 31, 2005 13.67 0.06 2.29 2.35 -- (0.79) (0.79)
Year ended October 31, 2006 15.23 0.11 4.33 4.44 (0.14) (1.16) (1.30)
Six months ended April 30, 2007
(Unaudited) 18.37 (0.02) 2.33 2.31 (0.23) (2.11) (2.34)
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
------------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME (LOSS) EXPENSES TO
VALUE, END TOTAL PERIOD AVERAGE TO AVERAGE AVERAGE NET PORTFOLIO
OF PERIOD RETURN(b) (000'S) NET ASSETS(c) NET ASSETS(c) ASSETS(c)(d) TURNOVER(e)
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year ended October 31, 2002 $ 9.87 (12.42)% $ 7,203 1.85% (0.18)% 2.28% 31.63%
Year ended October 31, 2003 11.73 20.09% 10,096 1.85% 0.07% 2.34% 68.51%
Year ended October 31, 2004 13.93 19.40% 17,721 1.78% 0.79% 1.88% 106.11%
Year ended October 31, 2005 15.59 18.64% 20,680 1.66% 1.21% 1.66% 31.32%
Year ended October 31, 2006 18.85 31.85% 22,761 1.67% 1.24% 1.67% 33.39%
Six months ended April 30, 2007
(Unaudited) 18.79 13.94%(f) 15,945 1.66%(f) 0.44%(f) 1.71% 15.44%
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31, 2002 $ 9.56 (13.07)% $ 588 2.60% (0.87)% 3.04% 31.63%
Year ended October 31, 2003 11.34 19.26% 1,076 2.60% (0.62)% 3.16% 68.51%
Year ended October 31, 2004 13.43 18.43% 2,061 2.53% 0.05% 2.63% 106.11%
Year ended October 31, 2005 14.95 17.72% 2,403 2.41% 0.47% 2.41% 31.32%
Year ended October 31, 2006 18.00 30.87% 3,234 2.42% 0.58% 2.42% 33.39%
Six months ended April 30, 2007
(Unaudited) 17.89 13.55%(f) 3,571 2.40%(f) (0.07)%(f) 2.49% 15.44%
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31, 2002 $ 9.68 (13.08)% $ 96 2.60% (1.00)% 3.04% 31.63%
Year ended October 31, 2003 11.54 19.28% 121 2.60% (0.64)% 3.17% 68.51%
Year ended October 31, 2004 13.67 18.46% 137 2.54% (0.10)% 2.66% 106.11%
Year ended October 31, 2005 15.23 17.70% 164 2.41% 0.48% 2.41% 31.32%
Year ended October 31, 2006 18.37 30.92% 163 2.41% 0.58% 2.41% 33.39%
Six months ended April 30, 2007
(Unaudited) 18.34 13.49%(f) 173 2.40%(f) (0.15)%(f) 2.49% 15.44%
- ------------------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding.
> Less than $0.005 per share.
(a) The per share amounts and percentages reflect income and expense assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor International Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all of its investable assets.
(f) During the period ended April 30, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total returns were 0.04%,
0.05%, and 0.05% for Class A Shares, Class B Shares, and Class C Shares,
respectively.
61 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--VALUE FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- -------------------------------------
NET REALIZED
AND UNREALIZED NET
NET ASSET NET GAINS REALIZED
VALUE, INVESTMENT (LOSSES) FROM TOTAL FROM NET GAINS FROM
BEGINNING INCOME INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period ended October 31, 2004(f) $12.68 0.05 0.69 0.74 (0.04) -- (0.04)
Year ended October 31, 2005 13.38 0.10 1.86 1.96 (0.08) (0.13) (0.21)
Year ended October 31, 2006 15.13 0.12* 2.95 3.07 (0.19) (1.29) (1.48)
Six months ended April 30, 2007
(Unaudited) 16.72 0.07 1.32 1.39 (0.06) (1.57) (1.63)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 2004(f) $12.28 -- 0.68 0.68 (0.01) -- (0.01)
Year ended October 31, 2005 12.95 (0.02) 1.80 1.78 -- (0.13) (0.13)
Year ended October 31, 2006 14.60 (0.00)>* 2.84 2.84 (0.07) (1.29) (1.36)
Six months ended April 30, 2007
(Unaudited) 16.08 0.01 1.27 1.28 (0.01) (1.57) (1.58)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 2004(f) $12.35 0.01 0.67 0.68 (0.02) -- (0.02)
Year ended October 31, 2005 13.01 (0.02) 1.82 1.80 (0.01) (0.13) (0.14)
Year ended October 31, 2006 14.67 0.00>* 2.85 2.85 (0.05) (1.29) (1.34)
Six months ended April 30, 2007
(Unaudited) 16.18 0.01 1.28 1.29 -- (1.57) (1.57)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Period ended October 31, 2004(f) $12.67 0.07 0.70 0.77 (0.06) -- (0.06)
Year ended October 31, 2005 13.38 0.13 1.86 1.99 (0.11) (0.13) (0.24)
Year ended October 31, 2006 15.13 0.15* 2.94 3.09 (0.23) (1.29) (1.52)
Six months ended April 30, 2007
(Unaudited) 16.70 0.09 1.32 1.41 (0.08) (1.57) (1.65)
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
-----------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME (LOSS) EXPENSES TO
VALUE, END TOTAL PERIOD AVERAGE TO AVERAGE AVERAGE NET PORTFOLIO
OF PERIOD RETURN(b) (000'S) NET ASSETS(c) NET ASSETS(c) ASSETS(c)(d) TURNOVER(e)
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period ended October 31, 2004(f) $13.38 7.79% $20,933 1.20% 0.81% 1.25% 10.33%
Year ended October 31, 2005 15.13 14.69%(g) 23,315 1.15%(g) 0.64%(g) 1.30%(g) 16.45%
Year ended October 31, 2006 16.72 21.70% 24,688 1.20% 0.74% 1.43% 20.63%
Six months ended April 30, 2007
(Unaudited) 16.48 8.93%(h) 29,990 1.02%(h) 0.98%(h) 1.30% 9.79%
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 2004(f) $12.95 9.06% $ 1,938 1.95% 0.05% 2.00% 10.33%
Year ended October 31, 2005 14.60 13.78%(g) 1,767 1.90%(g) (0.10)%(g) 2.04%(g) 16.45%
Year ended October 31, 2006 16.08 20.78% 1,939 1.95% (0.01)% 2.18% 20.63%
Six months ended April 30, 2007
(Unaudited) 15.78 8.52%(h) 1,970 1.78%(h) 0.23%(h) 2.06% 9.79%
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 2004(f) $13.01 8.47% $ 399 1.95% 0.04% 2.00% 10.33%
Year ended October 31, 2005 14.67 13.86%(g) 388 1.90%(g) (0.12)%(g) 2.05%(g) 16.45%
Year ended October 31, 2006 16.18 20.72% 157 1.95% 0.01% 2.17% 20.63%
Six months ended April 30, 2007
(Unaudited) 15.90 8.54%(h) 163 1.78%(h) 0.23%(h) 2.06% 9.79%
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Period ended October 31, 2004(f) $13.38 6.05% $25,600 0.95% 1.05% 1.00% 10.33%
Year ended October 31, 2005 15.13 14.96%(g) 15,044 0.90%(g) 0.91%(g) 1.02%(g) 16.45%
Year ended October 31, 2006 16.70 21.90% 18,036 0.95% 0.99% 1.18% 20.63%
Six months ended April 30, 2007
(Unaudited) 16.46 9.07%(h) 25,325 0.77%(h) 1.23%(h) 1.05% 9.79%
- -----------------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding.
> Less than $0.005 per share.
(a) The per share amounts and percentages reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor Value Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all its investable assets.
(f) Class A Shares, Class B Shares, Class C Shares and Class I Shares
commenced operations on May 7, 2004.
(g) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the respective Portfolio in which the Fund invests related to violation of
certain investment policies and limitations. The corresponding impact to
the net expense ratio, net income ratio, gross expense ratio and total
return were 0.05%, 0.05%, 0.05% and 0.05% for Class A Shares, Class B
Shares, Class C Shares and Class I Shares, respectively.
(h) During the period ended April 30, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total returns were 0.18%,
0.17%, 0.17%, and 0.18% for Class A Shares, Class B Shares, Class C Shares
and Class I Shares, respectively.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 62
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--APRIL 30, 2007 (UNAUDITED)
1. ORGANIZATION:
The HSBC Investor Funds (the "Trust"), a Massachusetts business
trust organized on April 22, 1987, and the HSBC Advisor Funds Trust (the
"Advisor Trust"), a Massachusetts business trust organized on April 5,
1996, are registered under the Investment Company Act of 1940, as amended
(the "Act"), as open-end management investment companies. As of April 30,
2007, the Trust is comprised of 24 separate funds and the Advisor Trust is
comprised of 3 separate funds, each a diversified series of the HSBC
Investor Family of Funds. The accompanying financial statements are
presented for the following 13 funds (individually a "Fund", collectively
the "Funds") of the Trust and Advisor Trust (collectively the "Trusts"):
FUND SHORT NAME TRUST
- ----- ----------- -------
HSBC Investor Core Plus Fixed Income Fund Core Plus Fixed Income Advisor Trust
(Advisor) Fund (Advisor)
HSBC Investor Core Plus Fixed Income Fund Core Plus Fixed Income Fund Trust
HSBC Investor High Yield Fixed Income Fund High Yield Fixed Income Fund Trust
HSBC Investor Intermediate Duration Fixed Intermediate Duration
Income Fund Fixed Income Fund Trust
HSBC Investor New York Tax-Free Bond Fund New York Tax-Free Bond Fund Trust
HSBC Investor Growth Fund Growth Fund Trust
HSBC Investor Growth and Income Fund Growth and Income Fund Trust
HSBC Investor International Equity Fund International Equity Fund Advisor Trust
HSBC Investor Mid-Cap Fund Mid-Cap Fund Trust
HSBC Investor Opportunity Fund Opportunity Fund Trust
HSBC Investor Opportunity Fund (Advisor) Opportunity Fund (Advisor) Advisor Trust
(formerly the HSBC Investor Small Cap
Equity Fund)
HSBC Investor Overseas Fund Overseas Fund Trust
HSBC Investor Value Fund Value Fund Trust
Financial statements for all other funds of the HSBC Investor Family
of Funds are published separately. The Core Plus Fixed Income Fund
(Advisor), Core Plus Fixed Income Fund, High Yield Fixed Income Fund,
Intermediate Duration Fixed Income Fund, Growth Fund, International Equity
Fund, Opportunity Fund, Opportunity Fund (Advisor), Overseas Equity Fund,
and the Value Fund (individually a "Feeder Fund", collectively the "Feeder
Funds") utilize the master-feeder fund structure and seek to achieve their
investment objectives by investing all of their investable assets in their
respective Portfolios (as defined below).
PROPORTIONATE
INTEREST ON
FUND RESPECTIVE PORTFOLIO APRIL 30, 2007
- ----- --------------------- ---------------
Core Plus Fixed Income Fund HSBC Investor Core Plus Fixed Income Portfolio 70.1%
Fund (Advisor)
Core Plus Fixed Income Fund HSBC Investor Core Plus Fixed Income Portfolio 15.7%
High Yield Fixed Income Fund HSBC Investor High Yield Fixed Income Portfolio 68.1%
Intermediate Duration HSBC Investor Intermediate Duration 92.4%
Fixed Income Fund Fixed Income Portfolio
Growth Fund HSBC Investor Growth Portfolio 71.2%
International Equity Fund HSBC Investor International Equity Portfolio 86.4%
Opportunity Fund HSBC Investor Opportunity Portfolio 10.1%
Opportunity Fund (Advisor) HSBC Investor Opportunity Portfolio 80.0%
Overseas Equity Fund HSBC Investor International Equity Portfolio 4.9%
Value Fund HSBC Investor Value Portfolio 73.7%
63 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
Financial statements for all other funds of the HSBC Investor Family
of Funds are published separately. The HSBC Investor Core Plus Fixed
Income Portfolio, HSBC Investor High Yield Fixed Income Portfolio, HSBC
Investor Intermediate Duration Fixed Income Portfolio, HSBC Investor
Growth Portfolio, HSBC Investor International Equity Portfolio, HSBC
Investor Opportunity Portfolio (formerly the HSBC Investor Small Cap
Equity Portfolio) and the HSBC Investor Value Portfolio (individually a
"Portfolio", collectively the "Portfolios") are diversified series of the
HSBC Investor Portfolios (the "Portfolio Trust"). The Portfolios operate
as master funds in master-feeder arrangements.
The financial statements of the Portfolios, including the Schedules
of Portfolio Investments, are included elsewhere in this report. The
financial statements of the Portfolios should be read in conjunction with
the financial statements of the Feeder Funds.
The Funds are authorized to issue an unlimited number of shares of
beneficial interest with a par value of $0.001 per share. The High Yield
Fixed Income Fund, Intermediate Duration Fixed Income Fund, New York
Tax-Free Bond Fund, Growth Fund, Growth and Income Fund, and the Value
Fund each offer four classes of shares: Class A Shares, Class B Shares,
Class C Shares, and Class I Shares. The Mid-Cap Fund offers four classes
of shares: Class A Shares, Class B Shares, Class C Shares, and Trust
Shares. The Core Plus Fixed Income Fund (Advisor), International Equity
Fund, and the Opportunity Fund (Advisor) each offer one class of shares:
Advisor Shares. The Core Plus Fixed Income Fund, Opportunity Fund, and the
Overseas Equity Fund each offer three classes of shares: Class A Shares,
Class B Shares, and Class C Shares. Class A Shares of the Growth Fund,
Growth and Income Fund, Mid-Cap Fund, Opportunity Fund, Overseas Fund, and
Value Fund have a maximum sales charge of 5.00% as a percentage of the
original purchase price while Class A Shares of the Core Plus Fixed Income
Fund, High Yield Fixed Income Fund, Intermediate Duration Fixed Income
Fund, and New York Tax-Free Bond Fund have a maximum sales charge of 4.75%
as a percentage of the original purchase price. The Class B Shares of the
Funds are offered without any front-end sales charge but will be subject
to a contingent deferred sales charge ("CDSC") ranging from a maximum of
4.00% if redeemed less than one year after purchase to 0.00% if redeemed
more than four years after purchase. Class C Shares of the Funds are
offered without any front-end sales charge but will be subject to a
maximum CDSC of 1.00% if redeemed less than one year after purchase. No
sales charges are assessed with respect to Advisor, Trust, Class I, or
Class Y Shares of the Funds. Each class of shares in the Funds has
identical rights and privileges except with respect to arrangements
pertaining to shareholder servicing or distribution, class-related
expenses, voting rights on matters affecting a single class of shares, and
the exchange privilege of each class of shares.
Under the Trusts' organizational documents, the Funds' officers and
trustees are indemnified against certain liabilities arising out of the
performance of their duties to the Funds. In addition, in the normal
course of business, the Funds enter into contracts with service providers,
which also provide for indemnifications by the Funds. The Funds' maximum
exposure under these arrangements is unknown, as this would involve any
future claims that may be made against the Funds. However, based on
experience, the Funds expect that risk of loss to be remote.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the significant accounting policies
followed by the Funds in the preparation of their financial statements.
The policies are in conformity with accounting principles generally
accepted in the United States of America ("GAAP"). The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses for the period.
Actual results could differ from those estimates.
SECURITIES VALUATION:
A. NEW YORK TAX-FREE BOND FUND, GROWTH AND INCOME FUND, AND MID-CAP FUND
Bonds and other fixed income securities (other than short-term
obligations but including listed issues) are valued on the basis of
valuations furnished by a pricing service, the use of which has been
approved by the Funds' Board of Trustees. In making such valuations, the
pricing service utilizes both dealer-supplied valuations and the use of
matrix techniques which take into account appropriate factors such as the
institutional-size trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading characteristics
other than market data and without exclusive reliance upon quoted prices
or exchanges or over-the-counter prices, since such valuations are
believed to reflect more accurately the fair value of such securities. All
debt portfolio securities with a remaining maturity of 60 days or less are
valued at amortized cost. Under the amortized cost method, premium or
discount, if any, is amortized or accreted, respectively, on a constant
(straight-line) basis to the maturity of the security.
HSBC INVESTOR FAMILY OF FUNDS 64
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HSBC INVESTOR FAMILY OF FUNDS
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NOTES TO FINANCIAL STATEMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
The value of each equity security is based either on the last sale
price on a national securities exchange, or in the absence of recorded
sales, at the closing bid prices on such exchanges, or at the quoted bid
price in the over-the-counter market. Securities or other assets for which
market quotations are not readily available, or are deemed unreliable due
to a significant event or otherwise, are valued by or at the direction of
the Funds' Board of Trustees. In addition, specific securities may need to
be valued by or at the direction of the Funds' Board of Trustees due to
potentially significant events. Examples of potentially significant events
that could affect the value of an individual security include corporate
actions by the issuer, announcements by the issuer relating to its
earnings or products, regulatory news, natural disasters and litigation.
Examples of potentially significant events that could affect multiple
securities held by a Fund include governmental actions, natural disasters
and armed conflicts.
B. FEEDER FUNDS
The Feeder Funds record their investments in their respective
Portfolios at fair value. Securities of the Portfolios are recorded at
fair value as more fully discussed in the notes to those financial
statements.
SECURITIES TRANSACTIONS AND RELATED INCOME:
A. NEW YORK TAX-FREE BOND FUND, GROWTH AND INCOME FUND, AND MID-CAP FUND
Security transactions are accounted for no later than one business
day following trade date. For financial reporting purposes, however,
changes in holdings are accounted for on trade date on the last business
day of the reporting period. Securities gains and losses are calculated on
the identified cost basis. Interest income is recognized on the accrual
basis and includes, where applicable, the amortization or accretion of
premium or discount. Dividend income is recorded on the ex-dividend date.
B. FEEDER FUNDS
The Feeder Funds record daily their pro-rata share of income,
expenses, changes in unrealized appreciation and depreciation and realized
gains and losses derived from their respective portfolios. In addition,
the Feeder Funds accrue their own expenses daily as incurred.
FUTURES CONTRACTS:
The New York Tax-Free Bond Fund, Growth and Income Fund, and Mid-Cap
Fund may invest in futures contracts for the purpose of hedging existing
portfolio securities or securities it intends to purchase against
fluctuations in fair value caused by changes in prevailing market interest
rates. Upon entering into a futures contract, a Fund is required to pledge
to the broker an amount of cash and/or other assets equal to a certain
percentage of the contract amount (initial margin deposit). Subsequent
payments, known as "variation margin," are made each day, depending on the
daily fluctuations in the fair value of the underlying security. A gain or
loss equal to the daily variation margin is recognized on a daily basis.
Should market conditions move unexpectedly, a Fund may not achieve
the anticipated benefits of the futures contracts and may realize a loss.
The use of futures transactions involves the risk of imperfect correlation
in movements in the price of futures contracts, interest rates and the
underlying hedged assets.
OPTIONS:
The Growth and Income Fund and the Mid-Cap Fund may write covered
call options against some of the securities in their portfolios provided
the securities are listed on a national securities exchange. A call option
is "covered" if the Fund owns the underlying securities covered by the
call. The premium received is recorded as a liability and is subsequently
adjusted to the current fair value of the option written. Premiums
received from writing options that expire unexercised are treated on the
expiration date as realized gains from investments. The difference between
the premium and the amount paid on effecting a closing purchase
transaction, including brokerage commissions, is also treated as a
realized gain or loss. If the call option is exercised, the premium is
added to the proceeds from the sale of the underlying security in
determining a realized gain or loss. For the period ended April 30, 2007,
the funds did not write any covered call options.
LINE OF CREDIT:
Prior to February 1, 2007, the Growth and Income Fund, and Mid-Cap
Fund, and prior to March 9, 2007, the New York Tax-Free Bond Fund
participated in a short-term, demand note agreement with HSBC Bank USA, an
affiliate of the Investment Adviser (defined below). Under the agreement,
these Funds were able to borrow up to $50 million. The purpose of the
agreement was to meet temporary or emergency cash needs, including
redemption requests that might otherwise require the untimely disposition
of securities.
65 HSBC INVESTOR FAMILY OF FUNDS
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HSBC INVESTOR FAMILY OF FUNDS
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NOTES TO FINANCIAL STATEMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
During the period ended April 30, 2007, the details of the borrowing
were as follows (based on the actual number of days in which the
respective Fund borrowed monies):
AVERAGE AVERAGE
AMOUNT INTEREST
FUND OUTSTANDING RATE
- ----- ----------- --------
Growth and Income Fund ............................... $ 184,343 5.82%
ALLOCATIONS:
Expenses directly attributable to a Fund are charged to that Fund.
Expenses not directly attributable to a Fund are allocated proportionately
among various or all Funds within the HSBC Investor Family of Funds in
relation to the net assets of each Fund or on another reasonable basis.
Expenses specific to a class are charged to that class. In addition,
income, expenses (other than class specific expenses), and
unrealized/realized gains and losses are allocated to each class based on
relative net assets on a daily basis.
DIVIDENDS TO SHAREHOLDERS:
The Core Plus Fixed Income Fund (Advisor), Core Plus Fixed Income
Fund, High Yield Fixed Income, Intermediate Duration Fixed Income Fund,
and the New York Tax-Free Bond Fund declare all net investment income
daily as dividends to their shareholders and distribute such dividends
monthly. Dividends from net investment income, if any, are declared and
distributed semi-annually in the case of the Growth Fund, Growth and
Income Fund, Opportunity Fund, Opportunity Fund (Advisor) and the Value
Fund, and annually in the case of the International Equity Fund, Mid-Cap
Fund, and Overseas Fund.
The Funds' net realized gains, if any, are distributed to
shareholders at least annually. Additional distributions are also made to
the Funds' shareholders to the extent necessary to avoid the federal
excise tax on certain undistributed income and net capital gains of
regulated investment companies.
The amount and character of net investment income and net realized
gains distributions are determined in accordance with federal income tax
regulations which may differ from GAAP. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature (e.g., reclassification of market
discounts, certain gain/loss, paydowns, and certain distributions), such
amounts are reclassified within the components of net assets; temporary
differences (e.g., wash losses and post-october loss deferrals) do not
require reclassification. The Funds may utilize equalization accounting
for tax purposes and designate earnings and profits, including net
realized gains distributed to shareholders on redemption of shares, as a
part of the dividends paid deduction for income tax purposes.
REDEMPTION FEE:
A redemption fee of 2.00% is charged and recorded as paid-in-capital
for any shares redeemed or exchanged after holding them for less than 30
days. This fee does not apply to shares purchased through reinvested
dividends or capital gains or shares held in certain omnibus accounts or
retirement plans that cannot implement the fee. For the period ended April
30, 2007, the following Funds collected redemption fees as follows:
FUND FEES COLLECTED
----- --------------
Intermediate Duration Fixed Income Fund ..................... $ 44
New York Tax-Free Bond Fund ................................. $ 251
Growth Fund ................................................. $ 456
International Equity Fund ................................... $ 5,332
Mid-Cap Fund ................................................ $ 14
Opportunity Fund ............................................ $ 90
Overseas Equity Fund ........................................ $ 99
Value Fund .................................................. $ 130
FEDERAL INCOME TAXES:
Each Fund is a separate taxable entity for federal income tax
purposes. Each Fund has qualified and intends to continue to qualify each
year as a "regulated investment company" under Subchapter M of the
Internal Revenue Code, as amended and to distribute substantially all of
their taxable net investment income and net realized gains, if any, to
their shareholders. Accordingly, no provision for federal income or excise
tax is required.
HSBC INVESTOR FAMILY OF FUNDS 66
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HSBC INVESTOR FAMILY OF FUNDS
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NOTES TO FINANCIAL STATEMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
NEW ACCOUNTING PRONOUNCEMENTS:
In September 2006 the Financial Accounting Standards Board (FASB)
issued Statement on Financial Accounting Standards (SFAS) No. 157, "Fair
Value Measurements." This standard establishes a single authoritative
definition of fair value, sets out a framework for measuring fair value
and requires additional disclosures about fair value measurements. SFAS
No. 157 applies to fair value measurements already required or permitted
by existing standards. SFAS No. 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years. The changes to current GAAP from the
application of this Statement relate to the definition of fair value, the
methods used to measure fair value, and the expanded disclosures about
fair value measurements. As of April 30, 2007, the Funds do not believe
the adoption of SFAS No. 157 will impact the financial statement amounts,
however, additional disclosures may be required about the inputs used to
develop the measurements and the effect of certain of the measurements on
changes in net assets for the period.
On July 13, 2006, the FASB released FASB Interpretation No. 48
"Accounting for Uncertainty in Income Taxes" (FIN 48). FIN 48 provides
guidance for how uncertain tax positions should be recognized, measured,
presented and disclosed in the financial statements. FIN 48 requires the
evaluation of tax positions taken or expected to be taken in the course of
preparing the Funds' tax return to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority.
Tax positions not deemed to meet the more-likely-than-not threshold would
be recorded as a tax benefit or expense in the year of determination.
Adoption of FIN 48 is required no later than the last business day of the
first financial reporting period for fiscal years beginning after December
15, 2006 and is to be applied to all open tax years as of the effective
date. Management is in the process of completing their analysis on whether
the adoption of FIN 48 will have an impact to the financial statements
upon adoption.
3. RELATED PARTY TRANSACTIONS
INVESTMENT MANAGEMENT:
HSBC Investments (USA) Inc. ("HSBC" or the "Investment Adviser"), a
wholly owned subsidiary of HSBC Bank USA, a New York State chartered bank,
acts as Investment Adviser to the New York Tax-Free Bond Fund, Growth and
Income Fund, and the Mid-Cap Fund. As Investment Adviser, HSBC manages the
investments of the Funds and continuously reviews, supervises, and
administers the Funds' investments. Sub-Investment adviser services are
provided by Transamerica Investment Management, LLC ("Transamerica") and
Munder Capital Management ("Munder") for the Growth and Income Fund and
Mid-Cap Fund, respectively.
For its services as Investment Adviser, HSBC is entitled to receive
a fee, accrued daily and paid monthly, at an annual rate of 0.25% of the
average daily net assets of the New York Tax-Free Bond Fund.
For its services as Investment Adviser and Sub-Investment Adviser,
respectively, HSBC and Transamerica receive, in the aggregate, a fee,
accrued daily and paid monthly at an annual rate of 0.60% of the Growth
and Income Fund's average daily net assets.
For its services as Investment Adviser and Sub-Investment Adviser,
respectively, HSBC and Munder receive, in the aggregate, a fee, accrued
daily and paid monthly at an annual rate of 0.75% of the Mid-Cap Fund's
average daily net assets.
Feeder Funds are not directly charged any investment management
fees.
ADMINISTRATION:
HSBC serves the Funds as Administrator. Under the terms of the
administration agreement effective April 1, 2007, HSBC receives from the
Funds a fee, accrued daily and paid monthly, at an annual rate of:
BASED ON AVERAGE DAILY NET ASSETS FEE RATE
--------------------------------- --------
Up to $12 billion .................................................. 0.0525%
In excess of $12 billion ........................................... 0.0350%
Prior to April 1, 2007, under the terms of the administration
agreement, the Funds paid fees under the following schedule:
BASED ON AVERAGE DAILY NET ASSETS FEE RATE
--------------------------------- --------
Up to $8 billion ................................................... 0.075%
In excess of $8 billion but not exceeding $9.25 billion ............ 0.070%
In excess of $9.25 billion but not exceeding $12 billion ........... 0.050%
In excess of $12 billion ........................................... 0.030%
67 HSBC INVESTOR FAMILY OF FUNDS
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HSBC INVESTOR FAMILY OF FUNDS
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NOTES TO FINANCIAL STATEMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
The fee breakpoints are determined on the basis of the aggregate
average daily net assets of the HSBC Investor Family of Funds. The fee is
allocated to each series of the HSBC Investor Family of Funds based upon
its pro-rata share of net assets for each class. For assets invested in
the underlying Portfolios by the Feeder Funds, the Portfolios pay half of
the administration fee and the Feeder Funds pay half, for a combination of
the total fee rate above.
The administration fees accrued for each class by fund, of which 50%
of such fees are deemed to be class specific, are as follows:
CORE PLUS INTERMEDIATE
FIXED CORE PLUS HIGH YIELD DURATION GROWTH
INCOME FIXED FIXED FIXED NEW YORK AND
FUND INCOME INCOME INCOME TAX-FREE GROWTH INCOME
(ADVISOR) FUND FUND FUND BOND FUND FUND FUND
--------- --------- ---------- ------------ --------- ------- --------
Class A ........... $ -- $ 2,473 $ 748 $ 157 $ 12,142 $ 4,629 $ 507
Class B ........... -- 755 396 640 4,609 263 1,657
Class C ........... -- 29 45 90 391 20 13
Advisor ........... 14,662 -- -- -- -- -- --
Class I ........... -- -- 397 2,356 5,133 3,350 14,903
--------- --------- ---------- ------------ --------- ------- --------
Total .......... $ 14,662 $ 3,257 $ 1,586 $ 3,243 $ 22,275 $ 8,262 $ 17,080
========= ========= ========== ============ ========= ======= ========
OPPORTUNITY
INTERNATIONAL MID-CAP OPPORTUNITY FUND OVERSEAS VALUE
EQUITY FUND FUND FUND (ADVISOR) FUND FUND
------------- -------- ----------- --------- -------- -------
Class A ...................... $ -- $ 1,535 $ 3,666 $ -- $ 3,302 $ 4,940
Class B ...................... -- 2,535 868 -- 605 348
Class C ...................... -- 32 54 -- 32 28
Advisor ...................... 55,202 -- -- 32,718 -- --
Class I ...................... -- -- -- -- -- 3,862
Trust ........................ -- 6,259 -- -- -- --
------------- -------- ----------- ----------- -------- -------
Total ..................... $ 55,202 $ 10,361 $ 4,588 $ 32,718 $ 3,939 $ 9,178
============= ======== =========== =========== ======== =======
Pursuant to a Sub-Administration Agreement with HSBC, BISYS Fund
Services Ohio, Inc. ("BISYS Ohio"), a wholly-owned subsidiary of The BISYS
Group, Inc., serves as sub-administrator to each Fund subject to the
general supervision of the Funds' Board of Trustees and HSBC. For these
services, BISYS Ohio is entitled to a fee, payable by HSBC, at an annual
rate equivalent to the fee rates set forth above minus 0.02% (2 basis
points) which is retained by HSBC.
Under a Compliance Services Agreement between the Funds and BISYS
Ohio (the "CCO Agreement"), BISYS Ohio makes an employee available to
serve as the Funds' Chief Compliance Officer (the "CCO"). Under the CCO
Agreement, BISYS Ohio also provides infrastructure and support in
implementing the written policies and procedures comprising the Funds'
compliance program, including support services to the CCO. For the
services provided under the CCO Agreement, the HSBC Investor Family of
Funds paid BISYS Ohio $125,400 for the period ended April 30, 2007, plus
reimbursement of certain expenses. Expenses incurred by each Fund are
reflected on the Statements of Operations as "Compliance Service." BISYS
Ohio pays the salary and other compensation earned by any such individuals
as employees of BISYS Ohio.
DISTRIBUTION PLAN:
BISYS Fund Services Limited Partnership ("BISYS"), a wholly-owned
subsidiary of BISYS Fund Services, Inc., serves the Funds as Distributor
(the "Distributor"). The Trusts have adopted a non-compensatory
Distribution Plan and Agreement (the "Plan") pursuant to Rule 12b-1 of the
Act. The Plan provides for reimbursement of expenses incurred by the
Distributor related to distribution and marketing, at a rate not to exceed
0.25%, 1.00%, and 1.00% of the average daily net assets of Class A Shares
(currently not being charged), Class B Shares (currently charging 0.75%),
and Class C Shares (currently charging 0.75%) of the Funds, respectively.
BISYS, as Distributor, also received $628,841, $317,220 and $9,887 in
commissions from sales of HSBC Investor Family of Funds, for Class A
Shares, Class B Shares, and Class C Shares, respectively of which
$627,519, $317,220 and $9,517 were reallowed to HSBC affiliated brokers
and dealers, for Class A Shares, Class B Shares, and Class C Shares,
respectively.
HSBC INVESTOR FAMILY OF FUNDS 68
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HSBC INVESTOR FAMILY OF FUNDS
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NOTES TO FINANCIAL STATEMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
SHAREHOLDER SERVICING:
The Trusts have adopted an Administrative Services Plan which
provides for payments to shareholder servicing agents (which currently
consist of HSBC and its affiliates) for providing various shareholder
services. For performing these services, the shareholder servicing agents
receive a fee up to 0.25%, 0.25%, and 0.25% that is computed daily and
paid monthly equal to a percentage of average daily net assets of Class A
Shares, Class B Shares, and Class C Shares of the Funds, respectively. The
aggregate fees paid to the Distributor pursuant to the Distribution Plan
and to shareholder servicing agents pursuant to the Administrative
Services Plans currently are not intended to exceed 0.25% of the average
daily net assets of Class A Shares, and 1.00% of the average daily net
assets of Class B Shares and Class C Shares.
FUND ACCOUNTING, TRANSFER AGENCY, CUSTODIAN AND TRUSTEE:
BISYS Ohio provides fund accounting and transfer agency services for
each Fund. As transfer agent for the Funds, BISYS receives a fee based on
the number of Funds and shareholder accounts, subject to certain minimums
and reimbursement of certain expenses. As fund accountant for the Funds,
BISYS receives an annual fee per Fund and share class, subject to certain
minimums and reimbursement of certain expenses.
Prior to February 1, 2007 for the Growth and Income Fund and Mid-Cap
Fund, and prior March 9, 2007 for the New York Tax-Free Bond Fund, HSBC
served as custodian for the Funds. As custodian for the Funds, HSBC Bank
received a fee based on the average daily net assets, number of
transactions, and reimbursements of certain expenses. Compensation paid to
HSBC for services to the Funds as custodian is as follows:
HSBC
CUSTODIAN
FUND FEES
-------- ---------
New York Tax Free Bond Fund ....................................... $ 7,699
Mid-Cap Fund ...................................................... 8,066
Growth and Income Fund ............................................ 5,041
---------
Total ............................................................. $ 20,806
---------
Effective February 1, 2007 for the Growth and Income Fund and
Mid-Cap Fund, and March 9, 2007 for the New York Tax-Free Bond Fund, The
Northern Trust Company began serving as custodian of the Funds.
Each of the six non-interested Trustees are compensated with a
$35,000 annual Board retainer, as well as a $3,000 annual retainer for
each Committee of the Board. Each non-interested Trustee also receives a
$5,000 and $3,000 meeting fee for each regular in-person Board meeting and
Committee meeting, respectively. Furthermore, each non-interested Trustee
receives compensation for attending special meetings and/or functioning as
a Committee Chairperson or Lead Trustee. In addition, the non-interested
Trustees are reimbursed for certain expenses incurred in connection with
their Board membership.
69 HSBC INVESTOR FAMILY OF FUNDS
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HSBC INVESTOR FAMILY OF FUNDS
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NOTES TO FINANCIAL STATEMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
FEE REDUCTIONS:
The Investment Adviser has agreed to contractually waive 0.05% of
its management fee, computed daily and paid monthly, and based on the
average daily net assets of the Growth and Income Fund and the Mid-Cap
Fund.
The Investment Adviser has also agreed to contractually limit,
through March 1, 2008, the total expenses, exclusive of interest, taxes,
brokerage commissions and extraordinary expenses, of certain Funds. Each
affected Fund Class has its own expense limitations based on the average
daily net assets for any full fiscal year as follows:
CURRENT CONTRACTUAL
EXPENSE
FUND CLASS LIMITATION
-------- ------- -------------------
Core Plus Fixed Income Fund ..................... A 0.70%
Core Plus Fixed Income Fund ..................... B 1.45%
Core Plus Fixed Income Fund ..................... C 1.45%
Core Plus Fixed Income Fund (Advisor) ........... Advisor 0.45%
High Yield Fixed Income Fund .................... A 0.80%
High Yield Fixed Income Fund .................... B 1.55%
High Yield Fixed Income Fund .................... C 1.55%
High Yield Fixed Income Fund .................... I 0.55%
Intermediate Duration Fixed Income Fund ......... A 0.65%
Intermediate Duration Fixed Income Fund ......... B 1.40%
Intermediate Duration Fixed Income Fund ......... C 1.40%
Intermediate Duration Fixed Income Fund ......... I 0.40%
Growth Fund ..................................... A 1.20%
Growth Fund ..................................... B 1.95%
Growth Fund ..................................... C 1.95%
Growth Fund ..................................... I 0.95%
Growth and Income Fund .......................... A 1.20%
Growth and Income Fund .......................... B 1.95%
Growth and Income Fund .......................... C 1.95%
Growth and Income Fund .......................... I 0.95%
Mid-Cap Fund .................................... A 1.35%
Mid-Cap Fund .................................... B 2.10%
Mid-Cap Fund .................................... C 2.10%
Mid-Cap Fund .................................... Trust 1.10%
Opportunity Fund ................................ A 1.65%
Opportunity Fund ................................ B 2.40%
Opportunity Fund ................................ C 2.40%
Overseas Equity Fund ............................ A 1.85%
Overseas Equity Fund ............................ B 2.60%
Overseas Equity Fund ............................ C 2.60%
Value Fund ...................................... A 1.20%
Value Fund ...................................... B 1.95%
Value Fund ...................................... C 1.95%
Value Fund ...................................... I 0.95%
The Administrator and BISYS Ohio may voluntarily waive/reimburse
fees to help support the expense limits of the Funds. In addition, the
Investment Adviser may waive/reimburse additional fees at their
discretion. Amounts waived/reimbursed by the Investment Adviser,
Administrator and BISYS Ohio are reported separately on the Statements of
Operations. All contractual and any voluntary fee waivers/reimbursements
are not subject to recoupment in subsequent fiscal periods. Voluntary
waivers/reimbursements may be stopped at any time.
HSBC INVESTOR FAMILY OF FUNDS 70
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HSBC INVESTOR FAMILY OF FUNDS
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NOTES TO FINANCIAL STATEMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
4. INVESTMENT TRANSACTIONS:
Purchases of and proceeds from sales, excluding short-term
securities, for the Funds for the period ended April 30, 2007 totaled:
FUND PURCHASES SALES
-------- ------------- ------------
New York Tax-Free Bond Fund .................... $ 7,360,323 $ 4,089,759
Growth and Income Fund ......................... 6,439,583 9,065,631
Mid-Cap Fund ................................... 9,362,128 9,334,841
There were no long-term U.S. Government securities held during the period
ended April 30, 2007.
Contributions and withdrawals of the respective Portfolios for the period
ended April 30, 2007 totaled:
FUND CONTRIBUTIONS WITHDRAWALS
-------- ------------- ------------
Core Plus Fixed Income Fund (Advisor) .......... $ 6,770,936 $ 6,156,149
Core Plus Fixed Income Fund .................... 3,261,454 1,675,396
High Yield Fixed Income Fund ................... 1,471,098 2,887,976
Intermediate Duration Fixed Income Fund ........ 1,360,468 2,686,336
Growth Fund .................................... 12,739,170 2,672,447
International Equity Fund ...................... 45,933,711 22,773,943
Opportunity Fund ............................... 648,546 9,587,235
Opportunity Fund (Advisor) ..................... 4,625,298 30,781,281
Overseas Equity Fund ........................... 612,631 10,117,287
Value Fund ..................................... 11,113,670 3,133,590
5. CONCENTRATION OF CREDIT RISK
The New York Tax-Free Bond Fund invests primarily in debt
obligations issued by the State of New York and its respective political
subdivisions, agencies, and public authorities. The Fund is more
susceptible to economic and political factors adversely affecting issuers
of New York specific municipal securities than are municipal bond funds
that are not concentrated in these issuers to the same extent.
6. LEGAL AND REGULATORY MATTERS AND PAYMENTS FROM AFFILIATE:
On September 26, 2006 BISYS Fund Services, Inc. ("BISYS"), an
affiliate of BISYS Fund Services Ohio, Inc. which provides various
services to the Funds as described in footnote 3, reached a settlement
with the Securities and Exchange Commission ("SEC") regarding the SEC's
investigation related to BISYS' past payment of certain marketing and
other expenses with respect to certain of its mutual fund clients.
Although BISYS has reached a settlement with the SEC, the Funds'
management is not aware that any determination has been made as to how the
BISYS settlement monies will be distributed. The SEC's examination of
BISYS' mutual fund clients and their advisers, including HSBC, has not
been completed. While the Funds' management is currently unable to
determine the impact, if any, of such matters on the Funds or the Funds'
financial statements, management does not anticipate a material, adverse
impact to the Funds or the Funds' financial statements.
During the period ended April 30, 2007, HSBC voluntarily reimbursed
amounts to certain Funds related to past marketing arrangements that
involved BISYS. The amounts reimbursed for the period ended April 30, 2007
are disclosed in the Statements of Operations as "Expenses reimbursed by
Investment Adviser". The corresponding impact to the net expense ratio,
net income ratio and total return for the period ended April 30, 2007 are
disclosed in the Funds' Financial Highlights.
7. FEDERAL INCOME TAX INFORMATION:
At April 30, 2007, the cost, unrealized appreciation and unrealized
depreciation of securities, for federal income tax purposes, were as
follows:
NET
TAX UNREALIZED
TAX UNREALIZED UNREALIZED APPRECIATION
PORTFOLIO NAME TAX COST APPRECIATION DEPRECIATION (DEPRECIATION)
-------------------- ------------ -------------- ------------ --------------
New York Tax-Free Bond Fund ........ $ 59,945,067 $ 2,092,987 $ (40,657) $ 2,052,330
Growth and Income Fund ............. 37,137,170 11,960,905 (804,224) 11,156,681
Mid-Cap Fund ....................... 22,642,420 8,667,286 (296,076) 8,371,210
71 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
INVESTMENT ADVISER CONTRACT APPROVAL (UNAUDITED)--APRIL 30, 2007
The Board of Trustees (the "Board of Trustees") of the HSBC Investor
Funds, HSBC Advisor Funds Trust and HSBC Investor Portfolios
(collectively, the "Trusts"), and the non-interested Trustees, voting
separately, approved the renewal of the Investment Advisory Contracts and,
where applicable, Sub-Advisory Contracts with respect to the respective
series of the Trusts then existing (collectively, the "Existing Funds") at
an in-person meeting held on December 4, 2006. Also, at their in-person
meeting held on December 4, 2006, the Board of Trustees reviewed and
approved the Investment Advisory Contracts and Sub-Advisory Contracts with
respect to the Core Plus Fixed Income Portfolio, the Intermediate Duration
Fixed Income Portfolio and the High Yield Fixed Income Portfolio (the
"Fixed Income Funds")(the Existing Funds and Fixed Income Funds are
collectively referred to as the "Funds" and the Investment Advisory
Contracts and Sub-Advisory Contracts are collectively referred to as the
"Agreements").
In determining whether it was appropriate to approve the Agreements
for the Funds, the Board of Trustees requested information from the
Adviser and the various Sub-Advisers that it believed to be reasonably
necessary to reach its conclusion. The Board of Trustees carefully
evaluated this information, and was advised by independent legal counsel
with respect to its deliberations. Based on its review of the information
requested and provided for each Fund, the Board of Trustees determined
that the relevant Agreement is consistent with the best interests of the
Funds and their shareholders, and enables the Funds to receive high
quality services at a cost that is appropriate and reasonable. The Board
of Trustees made these determinations on the basis of the following
considerations, among others:
- NATURE, EXTENT, AND QUALITY OF SERVICES PROVIDED BY ADVISER AND
SUB-ADVISERS. The Board of Trustees considered the nature, quality
and extent of the investment advisory services to be provided by the
Adviser (and, as applicable, the Sub-Advisers), in light of the high
quality services provided to the Funds, and each Fund's historic
performance. The Board considered the historical performance and the
commitment of the Adviser to the successful operations of the Funds
including the level of expenses of the Funds. With respect to the
Equity Funds, the Board considered the capabilities and performance
of the Adviser's Multimanager unit. The Board also considered the
use of expense limitation agreements in order to reduce the overall
operating expenses of certain funds. The Board of Trustees also took
note of the long term relationship between the Adviser and the Funds
and the efforts undertaken by the Adviser to foster the growth and
development of the Funds since the inception of each of the Funds.
For the Fixed Income Funds, the Board also considered the historical
performance and experience of the management team in managing other
accounts, and the reasonable expectation of achieving competitive
performance for these Funds. The Board also considered the extent to
which the investment advisers had achieved economies of scale and
the extent to which shareholders participated in those economies of
scale.
- INVESTMENT PERFORMANCE OF THE FUNDS, ADVISER AND SUB-ADVISERS. The
Board of Trustees considered short-term and long-term investment
performance of each Fund over various periods of time as compared to
a peer group of comparable funds. The Board members took note of
performance information for the one, three and five year periods and
since inception as relevant. In addition the Board compared expenses
of each Fund to the expenses of its peers, noting that the expenses
for each of the Funds compare favorably with industry averages for
other funds of similar size.
- COSTS OF SERVICES AND PROFITS REALIZED BY THE ADVISER. The Board of
Trustees considered the Adviser's overall profitability and costs
and an analysis of the estimated profitability to the Adviser from
its relationship with the Funds. The Board of Trustees considered
that the advisory fees under the Agreements were within the range of
those of similar funds, noting the high level of resources,
expertise and experience that was provided to the Funds by the
Adviser and Sub-Advisers. The Board of Trustees concluded that the
combined advisory fees payable to the Adviser and each of the Fund's
Sub-Advisers are fair and reasonable in light of the services to be
provided, the anticipated costs of these services, the profitability
of the Adviser's relationship with the Funds, and the comparability
of the advisory fee to similar fees paid by comparable mutual funds.
- OTHER RELEVANT CONSIDERATIONS. The Board of Trustees also considered
the overall high quality of the personnel, operations, financial
condition, investment management capabilities, methodologies, and
performance of the Adviser and Sub-Advisers. The Board also noted
the range of investment advisory and administrative services
provided by the Adviser to the Funds. In addition, the Board
considered the overall favorable investment performance of the
Funds.
Accordingly, in light of the above considerations and such other
factors and information it considered relevant, the Board of Trustees by a
unanimous vote of those present in person at the meetings (including a
separate vote of the Independent Trustees present in person at the
meeting) approved the Agreements.
HSBC INVESTOR FAMILY OF FUNDS 72
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--APRIL 30, 2007
As a shareholder of the HSBC Investor Funds, you incur two types of
costs: (1) transaction costs, including sales charges (loads) on
purchases; redemption fees; and exchange fees; (2) ongoing costs,
including management fees; distribution and shareholder servicing fees;
and other fund expenses. These examples are intended to help you
understand your ongoing costs (in dollars) of investing in the HSBC
Investor Funds and to compare these costs with the ongoing costs of
investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the
beginning of the period and held for the entire period from November 1,
2006 through April 30, 2007.
ACTUAL EXPENSES
The table below provides information about actual account values and
actual expenses. You may use the information below, together with the
amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the
number in the table under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this
period.
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
11/1/06 4/30/07 11/1/06 - 4/30/07 11/1/06 - 4/30/07
------------- ------------- ----------------- -----------------
Core Plus Fixed Income Fund (Advisor) ..... Advisor Shares $1,000.00 $1,049.90 $1.27 0.25%
Core Plus Fixed Income Fund ............... Class A 1,000.00 1,048.30 3.20 0.63%
Class B 1,000.00 1,044.30 7.05 1.39%
Class C 1,000.00 1,043.50 7.14 1.41%
High Yield Fixed Income Fund .............. Class A 1,000.00 1,074.70 4.12 0.80%
Class B 1,000.00 1,070.70 7.96 1.55%
Class C 1,000.00 1,070.50 7.96 1.55%
Class I 1,000.00 1,076.00 2.83 0.55%
Intermediate Duration Fixed Income Fund ... Class A 1,000.00 1,067.80 2.15 0.42%
Class B 1,000.00 1,064.80 5.94 1.16%
Class C 1,000.00 1,064.80 5.94 1.16%
Class I 1,000.00 1,070.10 0.82 0.16%
New York Tax-Free Bond Fund ............... Class A 1,000.00 1,011.80 4.24 0.85%
Class B 1,000.00 1,008.10 8.02 1.61%
Class C 1,000.00 1,008.00 8.07 1.62%
Class I 1,000.00 1,013.00 3.04 0.61%
Growth Fund ............................... Class A 1,000.00 1,080.30 5.16 1.00%
Class B 1,000.00 1,076.30 9.11 1.77%
Class C 1,000.00 1,076.60 9.11 1.77%
Class I 1,000.00 1,081.50 3.87 0.75%
Growth and Income Fund .................... Class A 1,000.00 1,082.00 4.85 0.94%
Class B 1,000.00 1,078.20 8.71 1.69%
Class C 1,000.00 1,078.50 8.71 1.69%
Class I 1,000.00 1,083.60 3.62 0.70%
73 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--APRIL 30, 2007 (CONTINUED)
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
11/1/06 4/30/07 11/1/06 - 4/30/07 11/1/06 - 4/30/07
------------- ------------- ----------------- -----------------
International Equity Fund ................. Advisor Shares $1,000.00 $1,145.80 $ 4.68 0.88%
Mid-Cap Fund .............................. Class A 1,000.00 1,124.00 5.00 0.95%
Class B 1,000.00 1,119.30 9.25 1.76%
Class C 1,000.00 1,118.30 9.30 1.77%
Trust Shares 1,000.00 1,124.20 3.90 0.74%
Overseas Fund ............................. Class A 1,000.00 1,139.40 8.81 1.66%
Class B 1,000.00 1,135.50 12.71 2.40%
Class C 1,000.00 1,134.90 12.70 2.40%
Opportunity Fund .......................... Class A 1,000.00 1,118.60 7.83 1.49%
Class B 1,000.00 1,114.70 11.69 2.23%
Class C 1,000.00 1,114.30 11.69 2.23%
Opportunity Fund (Advisor) ................ Advisor Shares 1,000.00 1,121.30 4.73 0.90%
Value Fund ................................ Class A 1,000.00 1,089.30 5.28 1.02%
Class B 1,000.00 1,085.20 9.20 1.78%
Class C 1,000.00 1,085.40 9.20 1.78%
Class I 1,000.00 1,090.70 3.99 0.77%
- ----------
* Expenses are equal to the average account value times the Fund's
annualized expense ratio multiplied by the number of days in the most
recent fiscal half-year divided by the number of days in the fiscal year.
HSBC INVESTOR FAMILY OF FUNDS 74
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--APRIL 30, 2007 (CONTINUED)
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below provides information about hypothetical account
values and hypothetical expenses based on each HSBC Investor Funds's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information
to compare this 5% hypothetical example with the 5% hypothetical examples
that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to
highlight your ongoing costs only and do not reflect any transactional
costs, such as sales charges (loads), redemption fees, or exchange fees.
Therefore, the table is useful in comparing ongoing costs only, and will
not help you determine the relative total costs of owning different funds.
In addition, if these transactional costs were included, your costs would
have been higher.
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
11/1/06 4/30/07 11/1/06 - 4/30/07 11/1/06 - 4/30/07
------------- ------------- ----------------- -----------------
Core Plus Fixed Income Fund (Advisor) ..... Advisor Shares $1,000.00 $1,023.55 $1.25 0.25%
Core Plus Fixed Income Fund ............... Class A 1,000.00 1,021.67 3.16 0.63%
Class B 1,000.00 1,017.90 6.95 1.39%
Class C 1,000.00 1,017.80 7.05 1.41%
High Yield Fixed Income Fund .............. Class A 1,000.00 1,020.83 4.01 0.80%
Class B 1,000.00 1,017.11 7.75 1.55%
Class C 1,000.00 1,017.11 7.75 1.55%
Class I 1,000.00 1,022.07 2.76 0.55%
Intermediate Duration Fixed Income Fund ... Class A 1,000.00 1,022.71 2.11 0.42%
Class B 1,000.00 1,019.04 5.81 1.16%
Class C 1,000.00 1,019.04 5.81 1.16%
Class I 1,000.00 1,024.00 0.80 0.16%
New York Tax-Free Bond Fund ............... Class A 1,000.00 1,020.58 4.26 0.85%
Class B 1,000.00 1,016.81 8.05 1.61%
Class C 1,000.00 1,016.76 8.10 1.62%
Class I 1,000.00 1,021.77 3.06 0.61%
Growth Fund ............................... Class A 1,000.00 1,019.84 5.01 1.00%
Class B 1,000.00 1,016.02 8.85 1.77%
Class C 1,000.00 1,016.02 8.85 1.77%
Class I 1,000.00 1,021.08 3.76 0.75%
Growth and Income Fund .................... Class A 1,000.00 1,020.13 4.71 0.94%
Class B 1,000.00 1,016.41 8.45 1.69%
Class C 1,000.00 1,016.41 8.45 1.69%
Class I 1,000.00 1,021.32 3.51 0.70%
International Equity Fund ................. Advisor Shares 1,000.00 1,020.43 4.41 0.88%
75 HSBC INVESTOR FAMILY OF FUNDS
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HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--APRIL 30, 2007 (CONTINUED)
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
11/1/06 4/30/07 11/1/06 - 4/30/07 11/1/06 - 4/30/07
------------- ------------- ----------------- -----------------
Mid-Cap Fund .............................. Class A $1,000.00 $1,020.08 $ 4.76 0.95%
Class B 1,000.00 1,016.07 8.80 1.76%
Class C 1,000.00 1,016.02 8.85 1.77%
Trust Shares 1,000.00 1,021.12 3.71 0.74%
Overseas Fund ............................. Class A 1,000.00 1,016.56 8.30 1.66%
Class B 1,000.00 1,012.89 11.98 2.40%
Class C 1,000.00 1,012.89 11.98 2.40%
Opportunity Fund .......................... Class A 1,000.00 1,017.41 7.45 1.49%
Class B 1,000.00 1,013.74 11.13 2.23%
Class C 1,000.00 1,013.74 11.13 2.23%
Opportunity Fund (Advisor) ................ Advisor Shares 1,000.00 1,020.33 4.51 0.90%
Value Fund ................................ Class A 1,000.00 1,019.74 5.11 1.02%
Class B 1,000.00 1,015.97 8.90 1.78%
Class C 1,000.00 1,015.97 8.90 1.78%
Class I 1,000.00 1,020.98 3.86 0.77%
- ----------
* Expenses are equal to the average account value times the Fund's
annualized expense ratio multiplied by the number of days in the most
recent fiscal half-year divided by the number of days in the fiscal year.
HSBC INVESTOR FAMILY OF FUNDS 76
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HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED)
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS--50.5%
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ------------
FEDERAL HOME LOAN MORTGAGE CORP. - 10.9%
Pool #1B2655 4.14%, 12/1/34 (a) .................... 1,302,806 1,306,984
Pool #1J1313 6.51%, 6/1/36 (a) ..................... 1,750,536 1,778,403
Pool #C00368 8.50%, 10/1/24 ........................ 29,696 31,903
Pool #C00922 8.00%, 2/1/30 ......................... 196,134 206,918
Pool #C54447 7.00%, 7/1/31 ......................... 39,106 40,692
Pool #C60712 6.50%, 11/1/31 ........................ 620,115 639,577
Pool #C80387 6.50%, 4/1/26 ......................... 31,412 32,329
Pool #D62926 6.50%, 8/1/25 ......................... 20,074 20,629
Pool #G01317 7.00%, 10/1/31 ........................ 154,077 160,325
Pool #G12317 5.50%, 8/1/21 ......................... 1,239,599 1,241,320
TBA May
5.50%, 5/15/37 .................................. 5,950,000 5,883,063
6.00%, 5/15/37 .................................. 1,900,000 1,915,438
------------
13,257,581
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 18.9%
Pool #253438 8.50%, 9/1/30 ......................... 47,352 51,033
Pool #329530 7.00%, 12/1/25 ........................ 82,375 86,045
Pool #329655 7.00%, 11/1/25 ........................ 39,840 41,615
Pool #356905 7.41%, 10/1/36 (a) .................... 200,439 202,909
Pool #398958 6.50%, 10/1/12 ........................ 62,067 63,567
Pool #535332 8.50%, 4/1/30 ......................... 44,800 48,261
Pool #535440 8.50%, 8/1/30 ......................... 50,554 54,485
Pool #548965 8.50%, 7/1/30 ......................... 51,214 55,197
Pool #568486 7.00%, 1/1/31 ......................... 39,494 41,320
Pool #573752 8.50%, 2/1/31 ......................... 42,505 45,810
Pool #575328 6.50%, 4/1/31 ......................... 50,045 51,604
Pool #781922 5.00%, 2/1/21 ......................... 2,532,059 2,496,248
TBA May
6.50%, 5/1/35 ................................... 1,910,000 1,949,992
6.00%, 5/15/36 .................................. 4,200,000 4,231,500
5.00%, 5/15/37 .................................. 7,370,000 7,118,963
5.50%, 5/15/37 .................................. 6,610,000 6,535,637
------------
23,074,186
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 20.7%
Pool #346406 7.50%, 2/15/23 ........................ 50,850 53,237
Pool #412530 7.50%, 12/15/25 ....................... 77,611 81,376
Pool #781300 7.00%, 6/15/31 ........................ 146,195 153,434
TBA May 6.00%, 5/15/37 ............................. 1,080,000 1,094,513
U.S. Treasury Bonds, 4.50%, 2/15/36 ................ 4,630,000 4,390,541
U.S. Treasury Notes
4.75%, 2/28/09 .................................. 3,000,000 3,004,452
4.75%, 2/15/10 .................................. 870,000 874,826
4.75%, 1/31/12 .................................. 1,480,000 1,494,396
4.63%, 2/29/12 .................................. 650,000 652,945
4.50%, 3/31/12 .................................. 1,520,000 1,518,754
4.25%, 8/15/14 .................................. 3,800,000 3,722,963
4.63%, 11/15/16 ................................. 6,485,000 6,480,947
4.63%, 2/15/17 .................................. 1,761,000 1,760,174
------------
25,282,558
------------
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS (COST $61,558,510) ................. 61,614,325
------------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS--25.7%
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ------------
BANKING - 0.3%
J.P. Morgan Chase Bank N.A., 2.53%,
1/3/12 (b)(c) ................................... 845,000 418,242
------------
418,242
------------
BUILDING & CONSTRUCTION PRODUCTS - 0.9%
Martin Marietta Materials, Inc.,
5.51%, 4/30/10 (a) .............................. 600,000 599,833
Masco Corp., 5.66%, 3/12/10 (a) .................... 550,000 551,075
------------
1,150,908
------------
COLLEGES & UNIVERSITIES - 1.8%
Tulane University of Louisiana, 6.16%,
11/15/12 (a)(d) ................................. 2,200,000 2,211,000
------------
2,211,000
------------
COSMETICS - 1.0%
Estee Lauder Co., Inc., 5.55%, 5/15/17 ............. 1,200,000 1,203,689
------------
1,203,689
------------
ELECTRIC - 0.8%
Progress Energy, Inc., 5.76%, 11/14/08,
Callable 5/14/07 @ 100 (a) ...................... 1,000,000 1,000,851
------------
1,000,851
------------
FINANCE - 9.2%
Ford Motor Credit Co., LLC
4.95%, 1/15/08 .................................. 2,000,000 1,977,918
5.80%, 1/12/09 .................................. 1,250,000 1,229,151
General Motors Acceptance Corp., 4.38%,
12/10/07 ........................................ 2,250,000 2,224,303
International Lease Finance Corp., 5.68%,
7/11/11 (a) ..................................... 1,000,000 1,007,175
J.P. Morgan Chase & Co., 5.45%,
2/22/12 (a) ..................................... 2,000,000 1,997,918
Preferred Term Securities XXII Ltd., 5.69%,
9/22/36, Callable 6/22/11 @ 100 (a)(d) .......... 1,100,000 1,099,450
Preferred Term Securities Ltd., 8.79%, 9/15/30,
Callable 9/15/10 @ 104.395 (d) .................. 895,548 1,010,850
Xtra Finance Corp., 5.15%, 4/1/17 (d) .............. 750,000 736,951
------------
11,283,716
------------
MEDIA - 0.5%
News America Holdings, 7.90%, 12/1/95. ............. 500,000 575,565
------------
575,565
------------
OFFICE EQUIPMENT & SERVICES - 0.5%
Xerox Corp., 6.10%, 12/18/09 (a) ................... 550,000 553,441
------------
553,441
------------
RESTAURANTS - 1.0%
Dominos Pizza Master Issuer LLC, 5.26%,
4/25/37 (d) ..................................... 1,200,000 1,199,813
------------
1,199,813
------------
RETAIL - 2.8%
Federated Retail Holdings, 6.38%, 3/15/37 .......... 1,250,000 1,234,247
Home Depot, Inc., 5.48%, 12/16/09,
Callable 6/16/08 @ 100 (a) ...................... 1,250,000 1,251,504
Wal-Mart Stores Inc., 5.88%, 4/5/27 ................ 900,000 906,802
------------
3,392,553
------------
77 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ------------
TELECOMMUNICATIONS - 3.8%
AOL Time Warner, Inc., 7.70%, 5/1/32 ............... 500,000 571,334
AT&T, Inc.
5.10%, 9/15/14 .................................. 1,150,000 1,129,183
5.46%, 2/5/10 (a) ............................... 1,250,000 1,251,045
Bellsouth Telecommunications, 7.00%,
12/1/95 ......................................... 700,000 727,519
Time Warner Entertainment Co., 8.38%,
3/15/23 ......................................... 800,000 952,878
------------
4,631,959
------------
TRANSPORTATION - 3.1%
Burlington North Santa Fe
5.65%, 5/1/17 ................................... 600,000 602,680
7.57%, 1/2/21 ................................... 298,615 332,072
Continental Airlines, Inc., 5.98%, 4/19/22.......... 1,000,000 995,000
Union Pacific Corp.
5.65%, 5/1/17 ................................... 600,000 602,661
6.85%, 1/2/19 ................................... 1,161,581 1,248,583
------------
3,780,996
------------
TOTAL CORPORATE OBLIGATIONS
(COST $31,313,691) .............................. 31,402,733
------------
- --------------------------------------------------------------------------------
ASSET BACKED SECURITIES--13.0%
- --------------------------------------------------------------------------------
Americredit Auto Receivables Trust,
Series 2005-CF, Class A3, 4.47%, 5/6/10.......... 1,452,139 1,447,406
Asset Backed Funding Certificates,
Series 2003-AHL1, Class A1, 3.68%,
3/25/33 ......................................... 738,743 726,280
Cairn Mezzanine plc, Series 2007-3A,
Class B1, 6.26%, 8/13/47 (a) .................... 905,000 887,890
Capital Auto Receivables Asset Trust,
Series 2006-1, Class A2A, 5.03%, 9/15/08......... 721,296 720,694
Capital One Auto Finance Trust, Series 2006-B,
Class A2, 5.53%, 5/15/09 ........................ 396,012 396,173
Citigroup Mortgage Loan Trust, Inc.,
Series 2005-WF2, Class AF2, 4.92%,
8/25/35 ......................................... 411,532 408,751
Countrywide Asset-Backed Certificates,
Series 2006-S4, Class A3, 5.80%, 7/25/34 ........ 1,060,000 1,059,566
GE Business Loan Trust, Series 2006-2A,
Class A, 5.50%, 11/15/34 (a)(d) ................. 1,501,782 1,499,564
GE Equipment Small Ticket LLC,
Series 2005-2A, Class A3, 4.88%,
10/22/09 (d) .................................... 2,000,000 1,993,511
GMAC Mortgage Corp. Loan Trust,
Series 2006-HE3, Class A3, 5.81%,
10/25/36 ........................................ 900,000 902,102
MBNA Credit Card Master Note Trust,
Series 2006-A4, Class A4, 5.31%,
9/15/11 (a) ..................................... 1,000,000 999,806
SLM Student Loan Trust, Series 2005-A,
Class A1, 5.39%, 6/15/18 (a) .................... 1,657,105 1,656,923
Target Credit Card Master Trust, Series 2002-1,
Class A, 5.47%, 6/27/11 (a) ..................... 3,200,000 3,200,353
------------
TOTAL ASSET BACKED SECURITIES
(COST $15,894,531) .............................. 15,899,019
------------
- --------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS--13.6%
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ------------
Banc of America Mortgage Securities,
Series 2005-D, Class 2A4, 4.78%,
5/25/35 (a) ..................................... 1,100,000 1,089,139
Countrywide Home Loans, Series 2003-8,
Class A2, 5.82%, 5/25/18 (a) .................... 1,035,349 1,043,988
Deutsche Mortgage Securities, Inc.,
Series 2006-WF1, Class 1A1, 5.05%,
6/26/35 (a)(d) .................................. 1,461,891 1,451,580
Fannie Mae, Series 2007-13, Class FA, 5.57%,
3/25/37 (a) ..................................... 1,969,871 1,974,560
Fannie Mae IO
Series 270, Class 2, 8.50%, 9/1/23 (e) .......... 50,495 11,927
Series 296, Class 2, 8.00%, 4/1/24 (e) .......... 60,423 13,579
Series 2000-16, Class PS, 3.28%,
10/25/29 (e) .................................... 44,704 1,416
Series 2000-32, Class SV, 3.28%, 3/18/30 (e) .... 10,140 200
Series 306, Class IO, 8.00%, 5/1/30 (e) ......... 71,720 17,273
Series 2001-4, Class SA, 2.23%, 2/17/31 (e) ..... 241,886 16,766
FHA Weyerhauser, 7.43%, 1/1/24 (f)(g) .............. 33,651 33,651
Freddie Mac
Series 2988, Class AF, 5.62%, 6/15/35 (a) ....... 1,244,590 1,242,941
Series 3212, Class BK, 5.40%, 9/15/36 ........... 900,000 891,395
Freddie Mac IO
Series 1534, Class K, 2.03%, 6/15/23 (e) ........ 155,152 9,930
Series 2141, Class SD, 2.83%, 4/15/29 (e) ....... 124,243 11,575
Series 2247, Class SC, 2.18%, 8/15/30 (e) ....... 73,620 3,863
Freddie Mac Reference Remic, Series R008,
Class FK, 5.72%, 7/15/23 (a) .................... 1,573,821 1,583,530
Government National Mortgage Association IO
Series 1999-32, Class SB, 2.68%,
7/16/27 (e) ..................................... 3,659 12
Series 1999-30, Class SA, 2.68%, 4/16/29 (e) .... 87,057 5,495
Series 1999-30, Class S, 3.28%, 8/16/29 (e) ..... 67,206 5,342
Morgan Stanley Mortgage Loan Trust, Series
2006-3AR, Class 2A3, 5.83%, 3/25/36 (a) ......... 1,357,145 1,374,661
Residential Accredit Loans, Inc.
Series 2007-QS1, Class 2A8, 5.62%, 1/25/37 (a) .. 2,216,640 2,213,404
Series 2007-QS2, Class A4, 6.25%, 1/25/37 ....... 1,107,727 1,104,631
Residential Asset Securitization Trust
Series 2003-A15, Class 1A2, 5.77%,
2/25/34 (a) ..................................... 1,813,645 1,819,151
Series 2006-A1, Class 1A3, 6.00%, 4/25/36 ....... 656,323 662,013
------------
TOTAL COLLATERALIZED
MORTGAGE OBLIGATIONS
(COST $16,529,876) .............................. 16,582,022
------------
- --------------------------------------------------------------------------------
COMMERCIAL MORTGAGE BACKED SECURITIES--9.2%
- --------------------------------------------------------------------------------
Bear Stearns Commercial Mortgage Securities,
Series 2006-T24, Class A4, 5.43%, 10/12/41 ...... 1,100,000 1,113,393
Citigroup Commercial Mortgage Trust,
Series 2006-C5, Class A2, 5.38%, 10/15/49 ....... 1,100,000 1,105,945
Citigroup/Deutsche Bank Commercial Mortgage
Trust, Series 2007-CD4, Class A2B, 5.21%,
12/11/49 ........................................ 1,300,000 1,300,192
Commercial Mortgage Pass-Through Certificate
Series 2005-FL11, Class A1, 5.47%,
11/15/17 (a)(d) ................................. 300,187 300,218
Series 2006-FL12, Class A2, 5.42%,
12/15/20 (a)(d) ................................. 2,041,893 2,041,883
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 78
- --------------------------------------------------------------------------------
HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
COMMERCIAL MORTGAGE BACKED SECURITIES, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ------------
CWCapital Cobalt, Series 2006-C1, Class A2,
5.17%, 8/15/48 .................................. 1,232,000 1,228,614
DLJ Mortgage Acceptance Corp. IO,
Series 1997-CF1, Class S, 0.90%,
5/15/30 (e) (g) ................................. 91,865 1,127
Greenwich Capital Commercial Funding Corp.,
Series 2007-GG9, Class AM, 5.48%,
3/10/39 ......................................... 970,000 971,925
GS Mortgage Securities Corp. IO,
Series 1997-GL, Class X2, 0.78%,
7/13/30 (e) (g) ................................. 136,256 799
LB-UBS Commercial Mortgage Trust,
Series 2006-C6, Class A4, 5.37%, 9/15/39 ........ 1,100,000 1,099,125
Morgan Stanley Capital I, Series 2006-HQ10,
Class A4, 5.33%, 11/12/41 ....................... 1,000,000 995,641
Washington Mutual Commercial Mortgage
Securities Trust, Series 2006-SL1, Class A,
5.30%, 11/23/43 (a)(d) .......................... 992,089 993,174
------------
TOTAL COMMERCIAL MORTGAGE
BACKED SECURITIES
(COST $11,179,743) .............................. 11,152,036
------------
- --------------------------------------------------------------------------------
FOREIGN BONDS--6.8%
- --------------------------------------------------------------------------------
DOMINICAN REPUBLIC - 0.2%
Dominican Republic Treasury Bill, 13.00%,
10/22/07 (c) .................................... 300,000 295,265
------------
295,265
------------
ICELAND - 1.9%
Glitnir Banki HF, 5.83%, 1/18/12 (a)(d) ............ 1,000,000 1,005,262
Kaupthing Bank, 6.06%, 1/15/10 (a)(d) .............. 1,250,000 1,260,857
------------
2,266,119
------------
NETHERLANDS - 1.1%
Shell International Finance BV, 5.20%, 3/22/17 ..... 1,100,000 1,090,721
ING Bank NV, 10.00%, 1/1/14 (b)(d) ................. 600,000 296,506
------------
1,387,227
------------
SOUTH KOREA - 1.2%
Citibank Korea Inc., 4.68%, 6/18/13, Callable
6/18/08 @ 100 (a) ............................... 1,400,000 1,406,552
------------
1,406,552
------------
UNITED KINGDOM - 2.4%
Barclays Bank plc, 5.93%, 12/31/49 (d) ............. 1,500,000 1,515,875
Granite Master Issuer plc, Series 2005-4,
Class A3, 5.43%, 12/20/54 (a) ................... 1,400,000 1,400,333
------------
2,916,208
------------
TOTAL FOREIGN BONDS
(COST $8,187,801) ............................... 8,271,371
------------
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES--4.6%
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ------------
Northern Institutional Diversified Asset
Portfolio, 5.01% (h) ............................ 5,624,890 5,624,890
------------
TOTAL INVESTMENT COMPANIES
(COST $5,624,890) ............................... 5,624,890
------------
TOTAL INVESTMENTS
(COST $150,289,042) -- 123.4% ................... 150,546,396
============
- ----------
Percentages indicated are based on net assets of $122,045,338.
(a) Variable rate security. The interest rates on these securities are
adjusted periodically to reflect then-current short-term interest rates.
The rates presented represent the rates in effect on April 30, 2007. The
maturity dates presented reflect the final maturity dates. However, some
of these securities may contain put or demand features that allow the fund
to require the issuer to repurchase the security from the fund within
various time periods, including daily, weekly, monthly, or semi-annually.
(b) The principal amount of each security is denominated in the local currency
of each respective country.
(c) Discount note. Rate presented represents the effective yield at time of
purchase.
(d) Security exempt from registration under Rule 144a of the Securities Act of
1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. This security
has been deemed liquid by the Investment Adviser based on procedures
approved by the Board of Trustees.
(e) Interest-Only represents securities that entitle holders to receive only
interest payments on the underlying mortgages. The yield to maturity of an
Interest-Only is extremely sensitive to the rate of principal payments on
the underlying mortgage assets. A rapid (slow) rate of principal
repayments may have an adverse (positive) effect on yield to maturity.
Interest rate adjusts periodically based on the pay off of the underlying
mortgage. The interest rate presented represents the rates in effect on
April 30, 2007. The principal amount shown is the notional amount of the
underlying mortgages.
(f) Security was fair valued as of April 30, 2007. Represents less than 0.1%
of net assets.
(g) Rule 144a, section 4(2) or other security which is restricted as to resale
to institutional investors. The Investment Adviser, using Board approved
procedures, has deemed these securities to be illiquid. Represents less
than 0.1% of net assets.
(h) Variable rate security. The rates presented represent the annualized one
day yield that was in effect on April 30, 2007.
FHA -- Federal Housing Administration
IO -- Interest-Only security. Represents 0.1% of net assets.
LLC -- Limited Liability Co.
PLC -- Public Limited Co.
TBA -- Security was traded on a "to be announced" basis. Represents 23.5% of
net assets.
79 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED)
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS--95.6%
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ------------
ADVERTISING - 2.2%
Iron Mountain, Inc., 8.63%, 4/1/13,
Callable 4/01/06 @ 104.31 ....................... 100,000 103,000
R.H. Donnelley Corp.
6.88%, 1/15/13, Callable 1/15/09 @ 103.44 ....... 100,000 99,125
6.88%, 1/15/13, Callable 1/15/09 @ 103.44 ....... 90,000 89,212
------------
291,337
------------
AEROSPACE & DEFENSE - 1.2%
DRS Technologies, Inc., 7.63%, 2/1/18,
Callable 2/01/11 @ 103.81 ....................... 100,000 104,750
Transdigm, Inc., 7.75%, 7/15/14, Callable
7/15/09 @ 105.81 (a) ............................ 50,000 51,875
------------
156,625
------------
APPAREL MANUFACTURERS - 1.5%
Levi Strauss & Co., 8.88%, 4/1/16, Callable
4/01/11 @ 104.44 ................................ 50,000 53,688
Quiksilver, Inc., 6.88%, 4/15/15, Callable
4/15/10 @ 103.44 ................................ 150,000 146,250
------------
199,938
------------
AUTO MANUFACTURERS - 1.8%
General Motors Corp., 7.13%, 7/15/13 ............... 175,000 161,656
Goodyear Tire & Rubber Co., 8.63%, 12/1/11,
Callable 12/01/09 @ 104.31 (a) .................. 25,000 27,000
United Auto Group, Inc., 7.75%, 12/15/16,
Callable 12/15/11 @ 103.88 (a) .................. 50,000 50,750
------------
239,406
------------
BUILDING & CONSTRUCTION PRODUCTS - 2.7%
Ainsworth Lumber Co., Ltd., 7.25%, 10/1/12,
Callable 10/01/08 @ 103.63 ...................... 150,000 110,062
Interline Brands, Inc., 8.13%, 6/15/14,
Callable 6/15/10 @ 104.06 ....................... 50,000 52,000
Ply Gem Industries, Inc., 9.00%, 2/15/12,
Callable 2/18/08 @ 104.50 ....................... 150,000 135,375
U.S. Concrete, Inc., 8.38%, 4/1/14, Callable
4/01/09 @ 104.19 ................................ 50,000 50,938
------------
348,375
------------
CABLE TELEVISION - 3.1%
Barrington Broadcasting Co., 10.50%, 8/15/14,
Callable 8/15/10 @ 105.25 (a) ................... 50,000 53,000
Cablevision Systems Corp., 8.00%, 4/15/12 .......... 100,000 102,500
General Cable Corp., 7.13%, 4/1/17, Callable
4/01/12 @ 103.56 (a) ............................ 50,000 50,750
Mediacom LLC, 7.88%, 2/15/11, Callable
2/15/06 @ 103.94 ................................ 200,000 201,000
------------
407,250
------------
CASINOS & GAMBLING - 6.9%
Choctaw Resort Development Entertainment,
7.25%, 11/15/19, Callable 11/15/11 @
103.63 (a) ...................................... 48,000 48,660
Great Canadian Gaming Co., 7.25%, 2/15/15,
Callable 2/15/11 @ 103.63 (a) ................... 50,000 50,813
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ------------
CASINOS & GAMBLING, CONTINUED
Greektown Holdings, Inc., 10.75%,
12/1/13, Callable 12/01/10 @ 105.38 (a) ......... 125,000 134,062
Inn of the Mountain Gods, 12.00%, 11/15/10,
Callable 11/15/07 @ 106 ......................... 50,000 54,437
Isle of Capri Casinos, Inc., 7.00%, 3/1/14,
Callable 3/01/09 @ 103.50 ....................... 150,000 147,750
MGM MIRAGE, Inc., 6.75%, 4/1/13 .................... 100,000 99,125
MTR Gaming Group, Inc., 9.00%, 6/1/12,
Callable 6/01/09 @ 104.50 ....................... 100,000 105,000
Pokagon Gaming Authority, 10.38%, 6/15/14,
Callable 6/15/10 @ 105.19 (a) ................... 75,000 84,000
San Pasqual Casino, 8.00%, 9/15/13,
Callable 9/15/09 @ 104 (a) ...................... 25,000 25,750
Seminole Hard Rock Entertainment, 7.85%,
3/15/14, Callable 3/15/09 @ 102 (a)(b) .......... 25,000 25,625
Seneca Gaming Corp., 7.25%, 5/1/12,
Callable 5/01/08 @ 103.63 ....................... 50,000 50,875
Turning Stone Resort Casino, 9.13%, 9/15/14,
Callable 09/15/10 @ 104.56 (a) .................. 75,000 76,500
------------
902,597
------------
CHEMICALS - 4.2%
Georgia Gulf Corp., 9.50%, 10/15/14,
Callable 10/15/10 @ 104.75 (a) .................. 75,000 75,000
Huntsman International LLC, 7.88%, 11/15/14,
Callable 11/15/10 @103.94 (a) ................... 35,000 36,575
Innophos, Inc., 8.88%, 8/15/14,
Callable 8/16/09 @ 104.44 ....................... 50,000 52,375
JohnsonDiversey, Inc., 9.63%, 5/15/12,
Callable 5/15/07 @ 104.81 ....................... 100,000 104,750
Lyondell Chemical Co.
8.00%, 9/15/14, Callable 9/15/10 @ 104 .......... 25,000 26,188
8.25%, 9/15/16, Callable 9/15/11 @ 104.13 ....... 25,000 26,750
Millennium America, Inc., 9.25%, 6/15/08 ........... 25,000 25,875
Mosaic Co., 7.63%, 12/1/16, Callable
12/01/11 @ 103.81 (a) ........................... 25,000 26,687
PQ Corp., 7.50%, 2/15/13, Callable
02/15/09 @ 103.75 ............................... 150,000 157,875
Terra Capital, Inc., 7.00%, 2/1/17,
Callable 2/01/12 @ 103.50 (a) ................... 15,000 14,700
------------
546,775
------------
COMPUTER SERVICES - 0.6%
Activant Solutions, Inc., 9.50%, 5/1/16,
Callable 5/01/11 @ 104.75 ....................... 50,000 49,500
Compucom Systems, Inc., 12.00%, 11/1/14,
Callable 11/01/10 @ 106 (a) ..................... 25,000 27,000
------------
76,500
------------
CONSUMER PRODUCTS - 0.4%
Yankee Acquistion Corp., 9.75%, 2/15/17,
Callable 2/15/12 @ 104.88 (a) ................... 50,000 51,500
------------
51,500
------------
CONTAINERS - PAPER AND PLASTIC - 2.5%
Owens-Brockway Glass Containers, 6.75%,
12/1/14, Callable 12/01/09 @ 103.38 ............. 50,000 50,312
Solo Cup Co., 8.50%, 2/15/14, Callable
2/15/09 @ 104.25 ................................ 150,000 130,875
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 80
- --------------------------------------------------------------------------------
HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ------------
CONTAINERS - PAPER AND PLASTIC, CONTINUED
Stone Container Finance Co. of Canada,
7.38%, 7/15/14, Callable 7/15/09 @
103.69 .......................................... 150,000 147,375
------------
328,562
------------
COSMETICS - 0.4%
Chattem, Inc., 7.00%, 3/1/14, Callable
3/01/09 @ 103.50 ................................ 50,000 50,000
------------
50,000
------------
DISTRIBUTION & WHOLESALE - 2.4%
Baker & Taylor, Inc., 11.50%, 7/1/13, Callable
7/01/10 @ 105.75 (a) ............................ 100,000 105,500
Beverages & More, Inc., 9.25%, 3/1/12,
Callable 9/01/09 @ 104.63 (a) ................... 50,000 50,625
Central Garden & Pet Co., 9.13%, 2/1/13,
Callable 2/01/08 @ 104.56 ....................... 50,000 52,125
Jarden Corp., 7.50%, 5/1/17, Callable 5/1/12 @
103.75 .......................................... 25,000 25,594
Pegasus Solutions, Inc, 10.50%, 4/15/15,
Callable 4/15/15 @ 105.25 (a) ................... 50,000 50,000
Pilgrim's Pride Corp., 8.38%, 5/1/17,
Callable 5/01/12 @ 104.19 ....................... 25,000 25,312
------------
309,156
------------
DIVERSIFIED OPERATIONS - 1.0%
Bombardier, Inc., 8.00%, 11/15/14, Callable
11/15/10 @ 104 (a) .............................. 25,000 26,250
Snoqualmie Entertainment Authority, 9.15%,
2/1/14, Callable 2/01/09 @ 103.00 (a)(b) ........ 25,000 25,531
Susser Holdings, 10.63%, 12/15/13, Callable
12/15/09 @ 105.31 ............................... 72,000 79,020
------------
130,801
------------
EDUCATION - 0.4%
Education Management LLC
8.75%, 6/1/14, Callable 6/01/10 @ 104.38 ........ 25,000 26,438
10.25%, 6/1/16, Callable 6/01/11 @ 105.13 ....... 25,000 27,312
------------
53,750
------------
ELECTRIC - 1.5%
AES Corp., 7.75%, 3/1/14 ........................... 60,000 63,450
Baldor Electric Co., 8.63%, 2/15/17, Callable
2/15/12 @ 104.31 ................................ 25,000 26,688
CMS Energy Corp., 6.88%, 12/15/15 .................. 100,000 104,000
------------
194,138
------------
ENERGY - 4.0%
Aventine Renewable Energy, 10.00%, 4/1/17,
Callable 4/01/12 @ 105 (a) ...................... 50,000 52,000
Copano Energy LLC, 8.13%, 3/1/16,
Callable 3/01/11 @ 104.06 ....................... 80,000 83,400
Massey Energy Co., 6.88%, 12/15/13,
Callable 12/15/09 @ 103.44 ...................... 100,000 96,500
Mirant North America LLC, 7.38%, 12/31/13,
Callable 12/31/09 @ 103.69 ...................... 50,000 52,875
NRG Energy, Inc., 7.38%, 2/1/16, Callable
2/01/11 @ 103.69 ................................ 50,000 51,937
Regency Energy Partners, 8.38%, 12/15/13,
Callable 12/15/10 @ 104.19 (a) .................. 25,000 25,750
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ------------
ENERGY, CONTINUED
Verasun Energy Corp., 9.88%, 12/15/12,
Callable 12/15/09 @ 104.94 ...................... 50,000 52,750
Williams Cos., Inc., 6.38%, 10/1/10 (a) ............ 100,000 101,875
------------
517,087
------------
FINANCE - 7.7%
Basell AF SCA, 8.38%, 8/15/15, Callable
8/15/10 @ 104.19 (a) ............................ 150,000 156,000
CCM Merger, Inc., 8.00%, 8/1/13, Callable
8/01/09 @ 104 (a) ............................... 150,000 151,875
Ford Motor Credit Co.
7.38%, 10/28/09 ................................. 250,000 250,193
7.38%, 2/1/11 ................................... 50,000 49,453
General Motors Acceptance Corp., 6.88%,
8/28/12 ......................................... 300,000 299,790
MSX International, 12.50%, 4/1/12, Callable
4/1/09 @ 110 (a) ................................ 25,000 25,188
Nalco Finance Holdings, Inc., 0.00%, 2/1/14,
Rate set to step up to 9.0% on 2/1/09,
Callable 2/01/09 @ 104.50 (c) ................... 75,000 66,000
------------
998,499
------------
HEALTH CARE - 0.2%
HCA, Inc., 9.25%, 11/15/16, Callable
11/15/11 @ 104.63 (a) ........................... 25,000 27,250
------------
27,250
------------
INTERNET RELATED - 0.4%
Atlantic Broadband Finance LLC, 9.38%,
1/15/14, Callable 1/15/09 @ 104.69 .............. 50,000 51,563
------------
51,563
------------
LEISURE - 1.8%
AMC Entertainment, Inc., 11.00%, 2/1/16,
Callable 2/01/11 @ 105.50 ....................... 100,000 114,750
K2, Inc., 7.38%, 7/1/14, Callable 7/01/09 @
103.69 .......................................... 108,000 113,940
------------
228,690
------------
MACHINERY - 0.8%
Case New Holland, Inc., 7.13%, 3/1/14,
Callable 3/01/10 @ 103.56 ....................... 50,000 52,500
Sensata Technologies, 8.00%, 5/1/14, Callable
5/01/10 @ 104 ................................... 50,000 50,125
------------
102,625
------------
MANUFACTURING - 1.8%
AGY Holding Corp., 11.00%, 11/15/14,
Callable 11/15/10 @ 105.50 (a) .................. 50,000 52,438
American Railcar, Inc., 7.50%, 3/1/14,
Callable 3/01/2011 @ 103.75 (a) ................. 25,000 25,906
Freescale Semiconductor, Inc., 10.13%,
12/15/16, Callable 12/15/11 @ 105.06 (a) ........ 50,000 50,500
Libbey Glass, Inc., 12.35%, 6/1/11, Callable
6/1/08 @ 107.50 (b) ............................. 25,000 27,500
Maax Corp., 9.75%, 6/15/12, Callable
6/15/08 @ 104.88 ................................ 50,000 32,625
Nutro Products, Inc., 10.75%, 4/15/14,
Callable 4/15/09 @ 108.06 (a) ................... 25,000 26,500
Tembec Industries, Inc., 7.75%, 3/15/12 ............ 25,000 13,969
------------
229,438
------------
81 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ------------
MEDICAL - 2.0%
Advanced Medical Optics, 7.50%, 5/1/17,
Callable 5/01/12 @ 103.75 (a) ................... 50,000 51,500
MultiPlan, Inc., 10.38%, 4/15/16, Callable
4/15/11 @ 105.19 (a) ............................ 100,000 106,750
Omnicare, Inc., 6.75%, 12/15/13, Callable
12/15/09 @ 103.38 ............................... 100,000 99,500
------------
257,750
------------
METAL PROCESSORS & FABRICATION - 0.8%
TriMas Corp., 9.88%, 6/15/12, Callable
6/15/07 @ 104.94 ................................ 100,000 103,750
------------
103,750
------------
METALS & MINING - 3.0%
AK Steel Corp., 7.75%, 6/15/12, Callable
6/15/07 @ 103.88 ................................ 100,000 103,250
Freeport-McMoran Copper & Gold, Inc.,
8.25%, 4/1/15, Callable 4/01/11 @ 104.13 ........ 50,000 54,062
Gibraltar Industries, Inc., 8.00%, 12/1/15,
Callable 12/01/15 @ 104 ......................... 150,000 151,125
International Coal Group, Inc., 10.25%,
7/15/14, Callable 7/15/10 @ 105.13 .............. 50,000 51,063
Tube City IMS Corp., 9.75%, 2/1/15, Callable
2/01/11 @ 104.88 (a) ............................ 25,000 26,375
------------
385,875
------------
OIL & GAS - 9.0%
Chaparral Energy, Inc., 8.50%, 12/1/15,
Callable 12/01/10 @ 104.25 ...................... 100,000 101,500
Chesapeake Energy Corp., 6.88%, 1/15/16,
Callable 1/15/09 @ 103.44 ....................... 100,000 101,750
Cimarex Energy Co., 7.13%, 5/1/17,
Callable 5/01/12 @ 103.56 ....................... 50,000 50,500
Clayton Williams Energy, Inc., 7.75%, 8/1/13,
Callable 8/01/09 @ 103.88 ....................... 200,000 189,000
Colorado Interstate Gas Co., 6.80%, 11/15/15 ....... 150,000 159,980
Compton Petroleum Finance Corp., 7.63%,
12/1/13, Callable 12/01/09 @ 103.81 ............. 100,000 99,250
El Paso Production Holdings, 7.75%, 6/1/13,
Callable 6/01/08 @ 103.88 ....................... 150,000 157,923
Energy Partners, Ltd., 9.75%, 4/15/14,
Callable 4/15/11 @ 104.88 (a) ................... 50,000 50,875
Inergy LP/Inergy Finance, 8.25%, 3/1/16,
Callable 3/01/11 @ 104.13 ....................... 100,000 106,000
Pogo Producing Co., 7.88%, 5/1/13, Callable
5/01/10 @ 103.94 ................................ 100,000 101,250
Swift Energy Co., 7.63%, 7/15/11, Callable
7/15/08 @ 103.81 ................................ 50,000 51,000
------------
1,169,028
------------
PAPER & RELATED PRODUCTS - 3.3%
Abitibi-Consolidated Co. of Canada, 8.38%,
4/1/15 .......................................... 25,000 23,375
Aleris International, Inc., 3,188.28%, 12/15/16,
Callable 12/15/11 @ 105 (a) ..................... 25,000 26,094
Exopack Holding Corp., 11.25%, 2/1/14,
Callable 2/01/10 @ 105.63 ....................... 50,000 54,125
Georgia-Pacific Corp., 7.70%, 6/15/15 .............. 150,000 153,750
Norampac, Inc., 6.75%, 6/1/13, Callable
6/01/08 @ 103.38 ................................ 100,000 99,000
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ------------
PAPER & RELATED PRODUCTS, CONTINUED
Pope & Talbot, 8.38%, 6/1/13 ....................... 25,000 20,500
Verso Paper Holdings LLC, 9.13%, 8/1/14,
Callable 8/01/10 @ 104.56 (a) ................... 50,000 52,625
------------
429,469
------------
PIPELINES - 2.0%
Dynegy Holdings, Inc., 8.38%, 5/1/16 ............... 150,000 158,062
Semgroup LP, 8.75%, 11/15/15, Callable
11/15/10 @ 104.38 (a) ........................... 50,000 51,625
Williams Partners LP, 7.25%, 2/1/17 (a) ............ 50,000 52,875
------------
262,562
------------
PRINTING & PUBLISHING - 2.6%
Block Communications, Inc., 8.25%, 12/15/15,
Callable 12/15/10 @ 104.13 (a) .................. 50,000 51,255
Medimedia USA, Inc., 11.38%, 11/15/14,
Callable 11/15/09 @ 105.69 (a) .................. 50,000 53,250
Morris Publishing, 7.00%, 8/1/13, Callable
8/01/08 @ 103.50 ................................ 100,000 95,000
Sheridan Group, Inc., 10.25%, 8/15/11,
Callable 8/15/07 @ 105.12 ....................... 100,000 104,125
Valassis Communication, 8.25%, 3/1/15,
Callable 3/01/11 @ 104.13 (a) ................... 35,000 34,388
------------
338,018
------------
RENTAL - AUTO AND EQUIPMENT - 2.3%
Avis Budget Car Rental, Inc., 7.63%, 5/15/14,
Callable 5/15/10 @ 103.81 (a) ................... 100,000 102,000
Hertz Corp., 8.88%, 1/1/14, Callable
1/01/10 @104.44 ................................. 100,000 107,750
Navios Martime Holdings, 9.50%, 12/15/14,
Callable 12/15/10 @ 104.75 (a) .................. 30,000 31,575
Rental Service Corp., 9.50%, 12/1/14,
Callable 12/01/10 @ 104.75 (a) .................. 50,000 53,125
------------
294,450
------------
RESTAURANTS - 3.1%
Buffets, Inc., 12.50%, 11/1/14, Callable
11/01/10 @ 106.25 ............................... 50,000 52,500
Dave & Busters, Inc., 11.25%, 3/15/14,
Callable 3/15/10 @ 105.62 ....................... 50,000 52,625
Landry's Restaurants, Inc., 7.50%, 12/15/14,
Callable 12/15/09 @ 103.75 ...................... 200,000 199,000
NPC International, Inc., 9.50%, 5/1/14,
Callable 5/01/10 @ 104.75 ....................... 50,000 52,500
Sbarro, Inc., 10.38%, 2/1/15, Callable
2/01/10 @ 107.78 (a) ............................ 50,000 52,375
------------
409,000
------------
RETAIL - 1.1%
Linens 'N Things, Inc., 10.98%, 1/15/14,
Callable 1/15/08 @ 102 (b) ...................... 50,000 47,063
Pep Boys, 7.50%, 12/15/14, Callable
12/15/09 @ 103.75 ............................... 50,000 49,000
Stater Brothers Holdings, 7.75%, 4/15/15,
Callable 4/15/11 @ 103.88 (a) ................... 50,000 51,375
------------
147,438
------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 82
- --------------------------------------------------------------------------------
HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ------------
SEISMIC DATA COLLECTION - 0.8%
CIE Gener de Geophysique, 7.50%, 5/15/15,
Callable 5/15/10 @ 103.75 ....................... 50,000 52,500
Seitel, Inc., 9.75%, 2/15/14, Callable
2/15/11 @ 104.88 (a) ............................ 50,000 50,875
------------
103,375
------------
SPECIAL PURPOSE ENTITY - 3.8%
Altra Industrial Motion, 9.00%, 12/1/11,
Callable 12/01/08 @ 104.50 (a) .................. 50,000 51,813
Buffalo Thunder Development Authority, 9.38%,
12/15/14, Callable 12/15/10 @ 104.69 (a) ........ 50,000 51,375
Cellu Tissue Holdings, Inc., 9.75%, 3/15/10,
Callable 3/15/07 @ 107.31 ....................... 50,000 50,125
Hawker Beechcraft Acquisition Co., 8.50%,
4/1/15, Callable 4/1/11 @ 104.25 (a) ............ 50,000 52,750
Idearc, Inc., 8.00%, 11/15/16, Callable
11/15/11 @ 104 (a) .............................. 50,000 52,125
Kar Holdings, Inc., 8.75%, 5/1/14, Callable
5/1/10 @ 104.38 (a) ............................. 50,000 51,375
Momentive Performance, 9.75%, 12/1/14,
Callable 12/01/10 @ 104.88 (a) .................. 50,000 52,875
Petroplus Finance, Ltd., 7.00%, 5/1/17,
Callable 5/01/12 @ 103.50 (a) ................... 75,000 75,656
UCI Holdco, Inc., 12.35%, 12/15/13,
Callable 12/15/07 @ 100 (a)(b) .................. 51,460 52,489
------------
490,583
------------
TELECOMMUNICATIONS - 10.9%
Centennial Communications Corp., 10.00%,
1/1/13, Callable 1/01/09 @ 107.50 ............... 100,000 108,250
Cincinnati Bell, Inc., 8.38%, 1/15/14, Callable
1/15/09 @ 104.19 ................................ 100,000 102,375
Cricket Communications I, 9.38%, 11/1/14,
Callable 11/01/10 @ 104.69 (a) .................. 50,000 53,375
Insight Midwest LP, 9.75%, 10/1/09, Callable
10/01/07 @ 100 .................................. 130,000 132,112
IPCS, Inc., 8.61%, 5/1/14, Callable 5/1/08 @
102 (a)(b) ...................................... 100,000 100,750
Level 3 Financing, Inc., 9.25%, 11/1/14,
Callable 11/01/10 @ 104.63 (a) .................. 50,000 51,938
Metropcs Wireless, Inc., 9.25%, 11/1/14,
Callable 11/01/10 @ 104.63 (a) .................. 50,000 53,375
Nordic Telephone Co., Holdings, 8.88%, 5/1/16,
Callable 5/01/11 @ 104.44 (a) ................... 50,000 53,750
NTL Cable plc, 9.13%, 8/15/16, Callable
8/15/11 @ 104.56 ................................ 125,000 133,437
Panamsat Corp., 9.00%, 6/15/16, Callable
6/15/11 @ 104.50 ................................ 50,000 54,812
Qwest Corp., 5.63%, 11/15/08 ....................... 150,000 150,000
Radio One, Inc., 6.38%, 2/15/13, Callable
2/15/09 @ 103.19 ................................ 50,000 48,688
Rural Cellular Corp., 9.75%, 1/15/10, Callable
1/15/07 @ 103.25 ................................ 50,000 51,625
Suncom Wireless Holdings, Inc., 8.50%, 6/1/13,
Callable 6/01/08 @ 104.25 ....................... 150,000 156,562
West Corp., 11.00%, 10/15/16, Callable
10/15/11 @ 105.50 (a) ........................... 25,000 27,188
Wind Acquisition Financial SA, 10.75%,
12/1/15, Callable 12/01/10 @ 105.38 (a) ......... 100,000 115,500
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ------------
TELECOMMUNICATIONS, CONTINUED
Windstream Corp., 8.63%, 8/1/16,
Callable 8/01/11 @ 104.31 ....................... 25,000 27,438
------------
1,421,175
------------
TOBACCO - 0.2%
Alliance One International, Inc., 8.50%,
5/15/12 (a) ..................................... 25,000 25,813
------------
25,813
------------
WASTE DISPOSAL - 1.2%
Allied Waste North America, Inc., 7.38%,
4/15/14, Callable 4/15/09 @ 103.69 .............. 150,000 152,250
------------
152,250
------------
TOTAL CORPORATE OBLIGATIONS
(COST $12,013,511) .............................. 12,432,398
------------
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES--3.3%
- --------------------------------------------------------------------------------
Northern Institutional Diversified Asset
Portfolio, 5.01% (d) ............................ 431,086 431,086
------------
TOTAL INVESTMENT COMPANIES
(COST $431,086) ................................. 431,086
------------
TOTAL INVESTMENTS
(COST $12,444,597) -- 98.9% ..................... 12,863,484
============
- ----------
Percentages indicated are based on net assets of $13,007,490.
(a) Security exempt from registration under Rule 144a of the Securities Act of
1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. This security
has been deemed liquid by the Investment Adviser based on procedures
approved by the Board of Trustees.
(b) Variable rate security. The interest rates on these securities are
adjusted periodically to reflect then-current short-term interest rates.
The rates presented represent the rates in effect on April 30, 2007. The
maturity dates presented reflect the final maturity dates. However, some
of these securities may contain put or demand features that allow the fund
to require the issuer to repurchase the security from the fund within
various time periods, including daily, weekly, monthly, or semi-annually.
(c) Step Bond. Income recognition is on the effective yield method for Step
Bonds.
(d) Variable rate security. The rates presented represent the annualized one
day yield that was in effect on April 30, 2007.
LLC -- Limited Liability Co.
LP -- Limited Partnership
PLC -- Public Limited Co.
83 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED)
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AND GOVERNMENT AGENCY
OBLIGATIONS--45.0%
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ------------
Federal Home Loan Mortgage Corp. - 8.8%
Pool #1B2655, 4.14%, 12/1/34(a) ................. 241,260 242,034
Pool #1J1313, 6.51%, 6/1/36(a) .................. 325,681 330,866
Pool #G12317, 5.50%, 8/1/21 ..................... 202,009 202,289
TBA May
5.50%, 5/15/37 ............................... 800,000 791,000
6.00%, 5/15/37 ............................... 150,000 151,219
------------
1,717,408
------------
Federal National Mortgage Association - 21.8%
Pool #740686, 6.50%, 10/1/33 .................... 464,539 478,643
Pool #781922, 5.00%, 2/1/21 ..................... 410,368 404,564
TBA May
6.00%, 5/15/36 ............................... 900,000 906,750
5.00%, 5/15/37 ............................... 1,300,000 1,255,719
5.50%, 5/15/37 ............................... 1,250,000 1,235,937
------------
4,281,613
------------
Government National Mortgage Association - 14.4%
TBA May, 6.00%, 5/15/37 ............................ 200,000 202,688
U.S. Treasury Notes
4.75%, 2/28/09 .................................. 700,000 701,039
4.75%, 2/15/10 .................................. 160,000 160,888
4.50%, 3/31/12 .................................. 295,000 294,758
4.25%, 8/15/14 .................................. 1,200,000 1,175,672
4.63%, 11/15/16 ................................. 115,000 114,928
4.63%, 2/15/17 .................................. 167,000 166,922
------------
2,816,895
------------
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY
OBLIGATIONS (COST $8,815,733) ................... 8,815,916
------------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS--30.0%
- --------------------------------------------------------------------------------
BUILDING & CONSTRUCTION PRODUCTS - 1.0%
Martin Marietta Materials, Inc., 5.51%,
4/30/10 (a) ..................................... 100,000 99,972
Masco Corp., 5.66%, 3/12/10 (a) .................... 100,000 100,195
------------
200,167
------------
COLLEGES & UNIVERSITIES - 2.1%
Tulane University of Louisiana, 6.16%,
11/15/12 (a)(b) ................................. 400,000 402,000
------------
402,000
------------
COSMETICS - 1.0%
Estee Lauder Co., Inc., 5.55%, 5/15/17 ............. 200,000 200,615
------------
200,615
------------
ELECTRIC - 1.3%
Progress Energy, Inc., 5.76%, 11/14/08,
Callable 5/14/07 @ 100 (a) ....................... 250,000 250,213
------------
250,213
------------
FINANCE - 9.5%
Ford Motor Credit Co., LLC
4.95%, 1/15/08 .................................. 250,000 247,240
5.80%, 1/12/09 .................................. 275,000 270,413
General Motors Acceptance Corp., 4.38%,
12/10/07 ........................................ 500,000 494,289
International Lease Finance Corp., 5.68%,
7/11/11 (a) ..................................... 200,000 201,435
J.P. Morgan Chase & Co., 5.45%, 2/22/12 (a) ........ 300,000 299,688
Preferred Term Securities XXII Ltd., 5.69%,
9/22/36, Callable 6/22/11 @ 100 (a)(b) .......... 200,000 199,900
Xtra Finance Corp., 5.15%, 4/1/17 (b) .............. 150,000 147,390
------------
1,860,355
------------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ------------
MEDIA - 2.8%
Time Warner Cable, Inc., 5.85%, 5/1/17 (b) ......... 150,000 150,901
Time Warner Entertainment, 8.88%, 10/1/12 .......... 350,000 403,799
------------
554,700
------------
OFFICE EQUIPMENT & SERVICES - 0.5%
Xerox Corp., 6.10%, 12/18/09 (a) ................... 100,000 100,626
------------
100,626
------------
RETAIL - 4.3%
Federated Retail, 5.35%, 3/15/12 ................... 300,000 299,850
Federated Retail Holdings, Inc., 5.90%, 12/1/16 .... 150,000 150,754
Home Depot, Inc.
5.48%, 12/16/09, Callable 6/16/08 @ 100 (a) ..... 200,000 200,240
5.25%, 12/16/13 ................................. 200,000 198,649
------------
849,493
------------
TELECOMMUNICATIONS - 4.0%
AT&T, Inc.
5.46%, 2/5/10 (a) ............................... 200,000 200,167
5.10%, 9/15/14 .................................. 300,000 294,569
Verizon Pennsylvania, Inc., 5.65%, 11/15/11 ........ 275,000 278,651
------------
773,387
------------
TRANSPORTATION - 3.5%
Burlington Northern Santa Fe Railway Co.,
4.83%, 1/15/23 .................................. 251,556 242,155
Continental Airlines, Inc., 5.98%, 4/19/22 ......... 150,000 149,250
Union Pacific Railroad, 5.08%, 1/2/29 .............. 299,958 291,067
------------
682,472
------------
TOTAL CORPORATE OBLIGATIONS
(COST $5,884,626) ............................... 5,874,028
------------
- --------------------------------------------------------------------------------
ASSET BACKED SECURITIES--12.9%
- --------------------------------------------------------------------------------
Americredit Auto Receivables Trust, Series
2005-CF, Class A3, 4.47%, 5/6/10 ................ 264,025 263,165
Asset Backed Funding Certificates, Series
2003-AHL1, Class A1, 3.68%, 3/25/33 ............. 210,318 206,770
Cairn Mezzanine plc, Series 2007-3A,
Class B1, 6.26%, 8/13/47 (a) .................... 145,000 142,258
Capital One Auto Finance Trust, Series 2006-B,
Class A2, 5.53%, 5/15/09 ........................ 72,602 72,632
Citigroup Mortgage Loan Trust, Inc., Series
2005-WF2, Class AF2, 4.92%, 8/25/35 ............. 72,199 71,711
Countrywide Asset-Backed Certificates,
Series 2006-S4, Class A3, 5.80%, 7/25/34 ........ 210,000 209,914
GE Business Loan Trust, Series 2006-2A,
Class A, 5.50%, 11/15/34 (a)(b) ................. 256,884 256,504
GMAC Mortgage Corp. Loan Trust, Series
2006-HE3, Class A3, 5.81%, 10/25/36 ............. 170,000 170,397
MBNA Credit Card Master Note Trust, Series
2006-A4, Class A4, 5.31%, 9/15/11 (a) ........... 300,000 299,942
SLM Student Loan Trust, Series 2005-A,
Class A1, 5.39%, 6/15/18 (a) .................... 288,192 288,160
Target Credit Card Master Trust, Series 2002-1,
Class A, 5.47%, 6/27/11 (a) ..................... 550,000 550,061
------------
TOTAL ASSET BACKED SECURITIES
(COST $2,530,946) ............................... 2,531,514
------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 84
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS--14.7%
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ------------
Banc of America Mortgage Securities,
Series 2005-D, Class 2A4, 4.78%, 5/25/35 (a) .... 200,000 198,025
Countrywide Home Loans, Series 2003-8, Class A2,
5.82%, 5/25/18 (a) .............................. 189,814 191,398
Deutsche Mortgage Securities, Inc., Series 2006-WF1,
Class 1A1, 5.05%, 6/26/35 (a)(b) ................ 222,462 220,893
Fannie Mae, Series 2007-13, Class FA, 5.57%,
3/25/37 (a) ..................................... 384,365 385,280
Freddie Mac
Series 2988, Class AF, 5.62%, 6/15/35 (a) ....... 186,689 186,441
Series 3212, Class BK, 5.40%, 9/15/36 ........... 150,000 148,566
Freddie Mac Reference Remic, Series R008, Class FK,
5.72%, 7/15/23 (a) .............................. 274,504 276,197
Morgan Stanley Mortgage Loan Trust, Series
2006-3AR, Class 2A3, 5.83%, 3/25/36 (a) ......... 290,817 294,570
Residential Accredit Loans, Inc.
Series 2007-QS1, Class 2A8, 5.62%, 1/25/37 (a) .. 385,503 384,940
Series 2007-QS2, Class A4, 6.25%, 1/25/37 ....... 184,621 184,105
Residential Asset Securitization Trust
Series 2003-A15, Class 1A2, 5.77%, 2/25/34 (a) .. 294,105 294,997
Series 2006-A1, Class 1A3, 6.00%, 4/25/36 ....... 116,879 117,893
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(COST $2,876,139) ................................ 2,883,305
------------
- --------------------------------------------------------------------------------
COMMERCIAL MORTGAGE BACKED SECURITIES--9.7%
- --------------------------------------------------------------------------------
Bear Stearns Commercial Mortgage Securities,
Series 2006-T24, Class A4, 5.43%, 10/12/41 ...... 200,000 202,435
Citigroup Commercial Mortgage Trust, Series
2006-C5, Class A2, 5.38%, 10/15/49 .............. 200,000 201,081
Citigroup/Deutsche Bank Commercial Mortgage
Trust, Series 2007-CD4, Class A2B, 5.21%,
12/11/49 ........................................ 200,000 200,030
Commercial Mortgage Pass - Through Certificate
Series 2005-FL11, Class A1, 5.47%, 11/15/17
(a)(b) ....................................... 73,816 73,824
Series 2006-FL12, Class A2, 5.42%,
12/15/20 (a)(b) .............................. 338,769 338,767
CWCapital Cobalt, Series 2006-C1, Class A2, 5.17%,
8/15/48 ......................................... 200,000 199,450
Greenwich Capital Commercial Funding Corp., Series
2007-GG9, Class AM, 5.48%, 3/10/39 .............. 160,000 160,318
LB-UBS Commercial Mortgage Trust, Series 2006-C6,
Class A4, 5.37%, 9/15/39 ........................ 200,000 199,841
Morgan Stanley Capital I, Series 2006-HQ10, Class
A4, 5.33%, 11/12/41 ............................. 180,000 179,215
Washington Mutual Commercial Mortgage Securities
Trust, Series 2006-SL1, Class A, 5.30%,
11/23/43 (a)(b) ................................. 148,813 148,976
------------
TOTAL COMMERCIAL MORTGAGE BACKED SECURITIES
(COST $1,908,227) ............................... 1,903,937
------------
- --------------------------------------------------------------------------------
FOREIGN BONDS--8.4%
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- ------------
DOMINICAN REPUBLIC - 0.3%
Dominican Republic Treasury Bill, 13.00%,
10/22/07 (c) .................................... 50,000 49,211
------------
49,211
------------
ICELAND - 1.9%
Glitnir Banki HF, 5.83%, 1/18/12 (a)(b) ............ 150,000 150,789
Kaupthing Bank, 6.06%, 1/15/10 (a)(b) .............. 225,000 226,955
------------
377,744
------------
NETHERLANDS - 2.3%
ING Bank NV, 10.00%, 1/1/14 (b)(d) ................. 200,000 98,836
Shell International Finance BV, 5.20%, 3/22/17 ..... 350,000 347,047
------------
445,883
------------
SOUTH KOREA - 1.3%
Citibank Korea Inc., 4.68%, 6/18/13, Callable
6/18/08 @ 100 (a) ............................... 250,000 251,170
------------
251,170
------------
UNITED KINGDOM - 2.6%
Barclays Bank plc, 5.93%, 12/31/49 (b) ............. 300,000 303,175
Granite Master Issuer plc, Series 2005-4, Class A3,
5.43%, 12/20/54 (a) ............................. 200,000 200,047
------------
503,222
------------
TOTAL FOREIGN BONDS
(COST $1,605,874) ............................... 1,627,230
------------
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES--2.5%
- --------------------------------------------------------------------------------
Northern Institutional Diversified Asset
Portfolio, 5.01% (e) ............................ 482,931 482,931
------------
TOTAL INVESTMENT COMPANIES
(COST $482,931) ................................. 482,931
------------
TOTAL INVESTMENTS
(COST $24,104,937) -- 123.1% .................... 24,118,861
============
- ----------
Percentages indicated are based on net assets of $19,602,046.
(a) Variable rate security. The interest rates on these securities are
adjusted periodically to reflect then-current short-term interest rates.
The rates presented represent the rates in effect on April 30, 2007. The
maturity dates presented reflect the final maturity dates. However, some
of these securities may contain put or demand features that allow the fund
to require the issuer to repurchase the security from the fund within
various time periods, including daily, weekly, monthly, or semi-annually.
(b) Security exempt from registration under Rule 144a of the Securities Act of
1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. This security
has been deemed liquid by the Investment Adviser based on procedures
approved by the Board of Trustees.
(c) Discount note. Rate presented represents the effective yield at time of
purchase.
(d) The principal amount of each security is denominated in the local currency
of each respective country.
(e) Variable rate security. The rates presented represent the annualized one
day yield that was in effect on April 30, 2007.
LLC -- Limited Liability Co.
PLC -- Public Limited Co.
TBA -- Security was traded on a "to be announced" basis. Represents 23.2% of net
assets.
85 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED)
- --------------------------------------------------------------------------------
COMMON STOCKS--96.5%
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- ------------
AEROSPACE & DEFENSE - 4.3%
General Dynamics Corp. ............................. 17,600 1,381,600
The Boeing Co. ..................................... 19,250 1,790,250
------------
3,171,850
------------
BIOTECHNOLOGY - 3.8%
Gilead Sciences, Inc. (a) .......................... 33,850 2,766,222
------------
2,766,222
------------
BUSINESS SERVICES - 0.3%
Paychex, Inc. ...................................... 5,800 215,180
------------
215,180
------------
CABLE TELEVISION - 1.1%
Comcast Corp., Class A (a) ......................... 31,500 839,790
------------
839,790
------------
CASINOS & GAMBLING - 1.9%
International Game Technology ...................... 36,600 1,395,924
------------
1,395,924
------------
CHEMICALS - 3.7%
Monsanto Co. ....................................... 46,800 2,760,732
------------
2,760,732
------------
COMPUTER SOFTWARE - 8.0%
Adobe Systems, Inc. (a) ............................ 58,650 2,437,494
Automatic Data Processing, Inc. .................... 4,200 187,992
Electronic Arts, Inc. (a) .......................... 35,700 1,799,637
Microsoft Corp. .................................... 50,300 1,505,982
------------
5,931,105
------------
COMPUTERS - 7.4%
Apple Computer, Inc. (a) ........................... 28,600 2,854,280
Hewlett-Packard Co. ................................ 20,250 853,335
Research In Motion Ltd. (a) ........................ 13,050 1,717,119
------------
5,424,734
------------
CONSUMER PRODUCTS - 10.8%
Colgate-Palmolive Co. .............................. 41,000 2,777,340
Harman International Industries, Inc. .............. 4,500 548,505
PepsiCo, Inc. ...................................... 35,450 2,342,890
The Procter & Gamble Co. ........................... 35,700 2,295,867
------------
7,964,602
------------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 3.4%
Broadcom Corp., Class A (a) ........................ 30,600 996,030
Emerson Electric Co. ............................... 15,200 714,248
Microchip Technology, Inc. ......................... 20,450 824,953
------------
2,535,231
------------
FARM MACHINERY & EQUIPMENT - 2.9%
Deere & Company .................................... 19,300 2,111,420
------------
2,111,420
------------
FINANCIAL SERVICES - 10.5%
Ambac Financial Group, Inc. ........................ 7,750 711,450
Goldman Sachs Group, Inc. .......................... 9,900 2,164,239
Nymex Holdings, Inc. (a) ........................... 1,700 220,507
The Chicago Mercantile Exchange
Holdings, Inc. .................................. 4,650 2,402,888
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- ------------
FINANCIAL SERVICES, CONTINUED
UBS AG-ADR ......................................... 34,900 2,265,010
------------
7,764,094
------------
FOOD & BEVERAGE - 0.7%
Wm. Wrigley Jr. Co. ................................ 8,300 488,704
------------
488,704
------------
HEALTH CARE - 5.2%
Baxter International, Inc. ......................... 20,150 1,141,095
DENTSPLY International, Inc. ....................... 20,200 674,882
Medtronic, Inc. .................................... 20,300 1,074,479
Zimmer Holdings, Inc. (a) .......................... 10,100 913,848
------------
3,804,304
------------
HOTELS & LODGING - 2.6%
Las Vegas Sands Corp. (a) .......................... 22,150 1,886,959
------------
1,886,959
------------
INSURANCE - 0.5%
AFLAC, Inc. ........................................ 7,700 395,318
------------
395,318
------------
INTERNET RELATED - 3.4%
Google, Inc., Class A (a) .......................... 4,350 2,050,503
Yahoo!, Inc. (a) ................................... 15,100 423,404
------------
2,473,907
------------
MOTOR VEHICLES - 0.4%
Harley-Davidson, Inc. .............................. 4,700 297,604
------------
297,604
------------
OIL & GAS - 4.7%
Schlumberger Ltd. .................................. 22,200 1,639,026
Smith International, Inc. .......................... 35,550 1,864,242
------------
3,503,268
------------
PHARMACEUTICALS - 11.0%
Abbott Laboratories ................................ 35,000 1,981,700
Alcon, Inc. ADR .................................... 6,750 910,777
Allergan, Inc. ..................................... 7,750 939,300
Genentech, Inc. (a) ................................ 23,729 1,898,083
Johnson & Johnson .................................. 11,300 725,686
Roche Holdings Ltd. - ADR .......................... 7,050 666,616
Schering-Plough Corp. .............................. 30,250 959,832
------------
8,081,994
------------
RETAIL - 3.9%
Kohl's Corp. (a) ................................... 18,600 1,377,144
Target Corp. ....................................... 16,700 991,479
Walgreen Co. ....................................... 12,317 540,716
------------
2,909,339
------------
TELECOMMUNICATIONS - 6.0%
Cisco Systems, Inc. (a) ............................ 119,650 3,199,441
QUALCOMM, Inc. ..................................... 27,800 1,217,640
------------
4,417,081
------------
TOTAL COMMON STOCKS
(COST $62,718,630) .............................. 71,139,362
------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 86
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES--3.9%
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- ------------
Northern Institutional Diversified Asset
Portfolio, 5.01% (b) ............................ 2,892,320 2,892,320
------------
TOTAL INVESTMENT COMPANIES
(COST $2,892,320) ............................... 2,892,320
------------
TOTAL INVESTMENTS
(COST $65,610,951) -- 100.4% .................... 74,031,682
============
- ----------
Percentages indicated are based on net assets of $73,755,828.
(a) Represents non-income producing security.
(b) Variable rate security. The rates presented represent the annualized one
day yield that was in effect on April 30, 2007.
ADR -- American Depositary Receipt
87 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED)
- --------------------------------------------------------------------------------
COMMON STOCKS--94.0%
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- -----------
AUSTRALIA - 4.3%
Coles Myer, Ltd. ................................... 148,900 2,124,257
Macquarie Airports ................................. 999,194 3,290,685
National Australia Bank Ltd. ....................... 128,900 4,577,465
QBE Insurance Group Ltd. ........................... 154,900 3,926,972
Zinifex Ltd. ....................................... 235,900 3,220,944
------------
17,140,323
------------
AUSTRIA - 1.8%
Omv AG ............................................. 49,300 3,120,094
Voestalpine AG ..................................... 59,600 4,003,057
------------
7,123,151
------------
BELGIUM - 1.2%
Fortis ............................................. 106,100 4,767,477
------------
BRAZIL - 1.5%
Gerdau SA ADR ...................................... 75,150 1,505,254
Petroleo Brasileiro SA ADR ......................... 27,700 2,471,394
Unibanco ADR ....................................... 8,100 786,186
Usinas Siderurgicas de Minas Gerais SA ............. 30,200 1,413,231
------------
6,176,065
------------
CANADA - 2.4%
Canadian Imperial Bank Of Commerce ................. 21,000 1,849,045
Encana Corp. ....................................... 59,500 3,115,492
Gerdau Ameristeel Corp. ............................ 161,000 1,973,324
IPSCO, Inc. ........................................ 1,349 198,958
Nexen, Inc. ........................................ 17 1,012
Teck Cominco, Ltd., B shares ....................... 32,300 2,447,825
------------
9,585,656
------------
CHINA - 0.3%
China Petroleum & Chemical Corp. ................... 592,000 516,220
China Telecom Corp., Ltd. .......................... 1,264,000 598,832
------------
1,115,052
------------
DENMARK - 1.7%
BASF AG ............................................ 48,300 5,764,075
Carlsberg AS, Class B .............................. 8,600 963,354
------------
6,727,429
------------
FINLAND - 0.3%
Nokia Oyj (a) ...................................... 52,100 1,314,131
------------
FRANCE - 13.4%
Air France-KLM ..................................... 28,700 1,463,541
BNP Paribas SA ..................................... 64,580 7,491,139
Credit Agricole SA ................................. 98,989 4,167,898
France Telecom SA .................................. 107,200 3,134,420
Lagardere S.C.A. ................................... 34,800 2,734,822
Michelin, B Shares ................................. 39,700 5,057,587
Renault SA ......................................... 62,300 8,086,581
Sanofi-Aventis ..................................... 68,900 6,306,199
Societe Generale ................................... 35,385 7,498,102
Total SA ........................................... 110,600 8,152,332
------------
54,092,621
------------
GERMANY - 9.8%
Allianz AG ......................................... 33,900 7,715,584
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- ------------
GERMANY, CONTINUED
Continental AG ..................................... 14,900 2,073,795
DaimlerChrysler AG ................................. 23,300 1,883,737
Deutsche Lufthansa AG .............................. 162,600 4,850,860
Deutsche Telekom AG ................................ 241,900 4,427,442
E.ON AG (a) ........................................ 41,000 6,160,480
Muenchener Rueckversicherungs-
Gesellschaft AG ................................. 43,400 7,697,305
RWE AG ............................................. 44,500 4,702,607
------------
39,511,810
------------
GREECE - 0.4%
Public Power Corp. ................................. 61,000 1,598,579
------------
HONG KONG - 0.5%
China Netcom Group Corp., Ltd. ..................... 462,000 1,134,609
Sino Land Co., Ltd. ................................ 406,695 852,957
------------
1,987,566
------------
HUNGARY - 0.2%
Mol Magyar OLAJ-ES Gazipari Rt. GDR ................ 6,500 806,000
------------
INDIA - 0.3%
State Bank of India GDR ............................ 17,600 1,205,600
------------
ITALY - 4.2%
Buzzi Unicem SpA ................................... 91,400 2,927,091
ENI SpA ............................................ 210,800 6,990,152
Fondiaria-SAI SpA .................................. 60,800 3,219,714
Fondiaria-SAI SpA-RNC .............................. 18,700 764,883
Italcementi SpA .................................... 91,700 2,929,284
------------
16,831,124
------------
JAPAN - 18.6%
Alps Electric Co., Ltd. ............................ 55,000 568,336
Canon, Inc. ........................................ 32,250 1,809,592
EDION Corp. ........................................ 67,800 939,787
Honda Motor Co., Ltd. .............................. 47,000 1,614,473
Isuzu Motors, Ltd. ................................. 342,000 1,797,326
Japan Tobacco, Inc. ................................ 818 3,995,850
JFE Holdings, Inc. ................................. 140,100 7,701,972
Kyushu Electric Power Co., Inc. .................... 70,800 1,994,575
Mitsubishi Chemical Holdings Corp. ................. 59,000 474,828
Mitsubishi Corp. ................................... 129,000 2,750,151
Mitsui Chemicals, Inc. ............................. 417,000 3,461,006
Mitsui O.S.K. Lines, Ltd. .......................... 327,000 4,121,525
Nippon Mining Holdings, Inc. ....................... 360,000 2,891,531
Nippon Telegraph & Telephone Corp. ................. 881 4,374,737
Nippon Yusen Kabushiki Kaisha ...................... 152,000 1,307,374
Nissan Motor Co., Ltd. ............................. 225,100 2,264,435
ORIX Corp. ......................................... 21,300 5,680,118
Sharp Corp. ........................................ 216,000 3,964,371
Sony Corp. ......................................... 12,510 665,330
Sumitomo Heavy Industries, Ltd. .................... 163,000 1,678,079
Sumitomo Mitsui Financial Group, Inc. .............. 731 6,386,870
The Tokyo Electric Power Co., Inc. ................. 90,600 3,011,537
Toshiba Corp. ...................................... 543,000 4,043,880
Toyota Motor Corp. ................................. 105,900 6,433,066
UNY Co., Ltd. ...................................... 90,000 1,076,419
------------
75,007,168
------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 88
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- ------------
NETHERLANDS - 7.7%
ABN AMRO Holding NV ................................ 75,883 3,681,355
Buhrmann NV ........................................ 107,400 1,442,893
European Aeronautic Defense and Space Co. .......... 125,160 4,005,541
ING Groep NV ....................................... 216,068 9,840,564
Mittal Steel Co. NV ................................ 107,652 5,753,481
Royal Dutch Shell plc, A Shares .................... 99,087 3,440,757
Wolters Kluwer NV .................................. 89,700 2,656,652
------------
30,821,243
------------
SOUTH AFRICA - 0.7%
Sanlam, Ltd. ....................................... 554,040 1,862,053
Standard Bank Group, Ltd. .......................... 34,900 544,215
Tiger Brands, Ltd. ................................. 20,100 561,981
------------
2,968,249
------------
SOUTH KOREA - 1.4%
Honam Petrochemical Corp. (a) ...................... 8,100 671,488
Hyundai Motors Co., Second Preferred ............... 15,950 518,521
Industrial Bank of Korea GDR (a) ................... 88,300 1,770,503
Kookmin Bank ADR (a) ............................... 14,600 1,311,372
POSCO ADR .......................................... 11,400 1,194,036
------------
5,465,920
------------
SPAIN - 1.2%
Repsol YPF SA ...................................... 141,100 4,648,115
------------
SWEDEN - 1.3%
Electrolux AB, B Shares (a) ........................ 118,500 3,081,806
Svenska Cellusoa AB, B Shares ...................... 44,800 2,305,047
------------
5,386,853
------------
SWITZERLAND - 1.9%
Credit Suisse Group ................................ 81,100 6,366,799
Novartis AG ........................................ 24,830 1,442,935
------------
7,809,734
------------
TAIWAN - 1.0%
China Steel Corp. GDR .............................. 37,746 860,231
Gigabyte Technology Co., Ltd. ...................... 11,112 7,391
Siliconware Precision Industries Co. ............... 694,000 1,306,139
Taiwan Semiconductor Manufacturing Co., Ltd. ....... 505,870 1,029,961
United Microelectronics Corp. ...................... 1,570,000 904,991
------------
4,108,713
------------
THAILAND - 0.2%
PTT Public Company Ltd. plc ........................ 121,400 763,634
------------
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- ------------
UNITED KINGDOM - 17.8%
AstraZeneca plc .................................... 110,300 5,998,192
Aviva plc .......................................... 346,270 5,432,028
Barclays plc ....................................... 410,200 5,921,347
BP Amoco plc ....................................... 125,000 1,402,186
British Aerospace plc .............................. 485,500 4,400,586
British American Tobacco plc ....................... 75,900 2,348,910
British Energy Group plc (a) ....................... 277,000 2,852,379
Centrica plc ....................................... 223,000 1,718,170
Friends Provident plc .............................. 782,500 2,945,869
George Wimpey plc .................................. 167,400 1,939,068
Glaxosmithkline plc ................................ 36,300 1,046,906
HBOS plc ........................................... 260,121 5,581,539
Punch Taverns plc .................................. 91,000 2,349,878
Royal & Sun Alliance Insurance Group plc ........... 762,188 2,513,114
Royal Bank of Scotland Group plc ................... 175,100 6,703,692
Royal Dutch Shell plc, B Shares .................... 45,973 1,618,789
Sabmiller plc ...................................... 102,000 2,410,853
Taylor Woodrow plc ................................. 235,300 2,266,876
Vodafone Group plc ................................. 2,512,958 7,148,542
Xstrata plc ........................................ 96,000 4,995,040
------------
71,593,964
------------
TOTAL COMMON STOCKS
(COST $273,631,511) ............................. 378,556,177
------------
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES--4.7%
- --------------------------------------------------------------------------------
Northern Institutional Diversified Asset
Portfolio, 5.01% (b) ............................ 18,790,698 18,790,698
------------
TOTAL INVESTMENT COMPANIES
(COST $18,790,698) .............................. 18,790,698
------------
- --------------------------------------------------------------------------------
RIGHTS & WARRANTS--0.0%
- --------------------------------------------------------------------------------
UNITED KINGDOM - 0.0%
TI Automotive Ltd., Class A (a) (c) ................ 190,000 0
------------
TOTAL RIGHTS & WARRANTS
(COST $0) ....................................... 0
------------
TOTAL INVESTMENTS
(COST $292,422,209) -- 98.7% .................... 397,346,875
============
- ----------
Percentages indicated are based on net assets of $402,597,155.
(a) Represents non-income producing security.
(b) Variable rate security. The rates presented represent the annualized one
day yield that was in effect on April 30, 2007.
(c) Illiquid security, representing 0.00% of net assets.
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt
PLC -- Public Limited Co.
SPA -- Standby Purchase Agreement
89 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
Aerospace & Defense .............................................. 2.1%
Automotive ....................................................... 7.4%
Banking & Financial Services ..................................... 21.4%
Building & Construction .......................................... 3.1%
Cash & Cash Equivalents .......................................... 4.7%
Chemicals ........................................................ 2.6%
Distribution/Wholesale ........................................... 0.4%
Drugs--Medical ................................................... 3.7%
Electrical ....................................................... 6.0%
Electronic Components & Semiconductors ........................... 2.1%
Food & Beverage .................................................. 0.9%
Insurance ........................................................ 9.0%
Manufacturing .................................................... 2.3%
Metals & Mining .................................................. 8.8%
Oil & Gas ........................................................ 10.3%
Publishing ....................................................... 1.3%
Real Estate ...................................................... 0.2%
Retail ........................................................... 1.6%
Telecommunications ............................................... 5.5%
Tobacco .......................................................... 1.6%
Transportation Services .......................................... 3.7%
---------
Total Investments ................................................ 98.7%
---------
Other assets in excess of liabilities ............................ 1.3%
---------
Net Assets ....................................................... 100.0%
=========
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 90
- --------------------------------------------------------------------------------
HSBC INVESTOR OPPORTUNITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED)
- --------------------------------------------------------------------------------
COMMON STOCKS--98.7%
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- ------------
ADVERTISING - 1.7%
Monster Worldwide, Inc. (a) ........................ 94,000 3,952,700
------------
3,952,700
------------
AEROSPACE & DEFENSE - 2.2%
Esterline Technologies Corp. (a) ................... 51,500 2,149,095
Hexcel Corp. (a) ................................... 139,300 3,022,810
------------
5,171,905
------------
BANKING - 2.0%
East West Bancorp, Inc. ............................ 114,800 4,575,928
------------
4,575,928
------------
BIOTECHNOLOGY - 1.5%
Invitrogen Corp. (a) ............................... 53,900 3,528,833
------------
3,528,833
------------
CASINOS & GAMBLING - 0.8%
Pinnacle Entertainment, Inc. (a) ................... 66,000 1,853,280
------------
1,853,280
------------
COMMERCIAL SERVICES - 3.0%
Alliance Data Systems Corp. (a) .................... 74,500 4,742,670
Schawk, Inc., Class A .............................. 129,900 2,342,097
------------
7,084,767
------------
COMPUTER SOFTWARE - 8.1%
Business Objects S.A. ADR (a) ...................... 91,800 3,443,418
Citrix Systems, Inc. (a) ........................... 76,300 2,487,380
Red Hat, Inc. (a) .................................. 127,200 2,689,008
Satyam Computer Services Ltd. ADR .................. 112,500 2,799,000
Sina Corp. (a) ..................................... 24,200 834,416
SRA International, Inc., Class A (a) ............... 78,700 1,922,641
Transaction Systems Architects, Inc.,
Class A (a) ..................................... 152,500 4,838,825
------------
19,014,688
------------
CONSUMER DISCRETIONARY - 2.1%
Sotheby's Holdings, Inc. ........................... 93,200 4,810,984
------------
4,810,984
------------
CONSUMER PRODUCTS - 1.4%
Jarden Corp. (a) ................................... 79,300 3,341,702
------------
3,341,702
------------
DIVERSIFIED MANUFACTURING OPERATIONS - 7.3%
Actuant Corp., Class A ............................. 35,400 1,876,200
AMETEK, Inc. ....................................... 186,300 6,758,964
IDEX Corp. ......................................... 115,600 6,065,532
Volcano Corp. (a) .................................. 119,500 2,411,510
------------
17,112,206
------------
EDUCATION - 1.0%
Corinthian Colleges, Inc. (a) ...................... 159,579 2,206,978
------------
2,206,978
------------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 9.0%
Atmel Corp. (a) .................................... 448,100 2,383,892
ATMI, Inc. (a) ..................................... 87,500 2,706,375
Cognos, Inc. (a) ................................... 164,500 7,091,595
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- ------------
ELECTRONIC COMPONENTS & SEMICONDUCTORS, CONTINUED
Silicon Laboratories, Inc. (a) ..................... 147,000 4,823,070
Varian Semiconductor Equipment
Associates, Inc. (a) ............................ 61,250 4,064,550
------------
21,069,482
------------
ENVIRONMENTAL SERVICES - 1.1%
Waste Connections, Inc. (a) ........................ 80,700 2,515,419
------------
2,515,419
------------
FINANCIAL SERVICES - 5.5%
Affiliated Managers Group, Inc. (a) ................ 48,900 5,752,107
eFunds Corp. (a) ................................... 166,400 4,642,560
Jefferies Group, Inc. .............................. 76,100 2,412,370
------------
12,807,037
------------
HEALTH CARE - 13.7%
Charles River Laboratories
International, Inc. (a) ......................... 52,900 2,505,344
CYTYC Corp. (a) .................................... 124,500 4,386,135
Gen-Probe, Inc. (a) ................................ 69,850 3,570,033
Manor Care, Inc. ................................... 77,300 5,015,997
Omnicare, Inc. ..................................... 96,800 3,210,856
Pediatrix Medical Group, Inc. (a) .................. 66,900 3,816,645
Respironics, Inc. (a) .............................. 172,900 7,047,404
Ventana Medical Systems, Inc. (a) .................. 52,300 2,541,257
------------
32,093,671
------------
INDUSTRIAL MANUFACTURING - 3.8%
Empresa Brasileira ADR ............................. 48,800 2,289,208
Gardner Denver, Inc. (a) ........................... 64,700 2,445,660
WESCO International, Inc. (a) ...................... 66,300 4,188,171
------------
8,923,039
------------
MEDIA - 2.8%
Dreamworks Animation SKG, Inc. (a) ................. 81,600 2,389,248
Meredith Corp. ..................................... 71,400 4,135,488
------------
6,524,736
------------
OIL & GAS - 11.3%
Chesapeake Energy Corp. ............................ 116,600 3,935,250
Consol Energy, Inc. ................................ 92,400 3,868,788
Denbury Resources, Inc. (a) ........................ 129,200 4,275,228
Grant Prideco, Inc. (a) ............................ 73,800 3,803,652
Massey Energy Co. .................................. 118,300 3,185,819
Range Resources Corp. .............................. 63,800 2,331,890
Smith International, Inc. .......................... 96,500 5,060,460
------------
26,461,087
------------
PHARMACEUTICALS - 9.8%
Alexion Pharmaceuticals, Inc. (a) .................. 72,504 3,035,017
Elan Corp. plc ADR (a) ............................. 531,500 7,377,220
MGI Pharma, Inc. (a) ............................... 182,200 4,012,044
OSI Pharmaceuticals, Inc. (a) ...................... 173,700 6,027,390
Santarus, Inc. (a) ................................. 328,900 2,512,796
------------
22,964,467
------------
PRINTING & PUBLISHING - 1.8%
Dow Jones & Co., Inc. .............................. 116,200 4,221,546
------------
4,221,546
------------
91 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR OPPORTUNITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- ------------
RETAIL - 4.7%
Dick's Sporting Goods, Inc. (a) .................... 67,300 3,774,857
PETsMART, Inc. ..................................... 144,500 4,795,955
Rite Aid Corp. (a) ................................. 389,700 2,392,758
------------
10,963,570
------------
TELECOMMUNICATIONS - 2.2%
Comverse Technology, Inc. (a) ...................... 100,300 2,274,804
Polycom, Inc. (a) .................................. 86,700 2,887,110
------------
5,161,914
------------
TRANSPORTATION - 1.9%
J.B. Hunt Transport Services, Inc. ................. 159,800 4,324,188
------------
4,324,188
------------
TOTAL COMMON STOCKS
(COST $185,690,752) ............................. 230,684,127
------------
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES--0.5%
- --------------------------------------------------------------------------------
Northern Institutional Government Select
Portfolio, 5.04% (b) ............................ 1,094,665 1,094,665
------------
TOTAL INVESTMENT COMPANIES
(COST $1,094,665) ............................... 1,094,665
------------
TOTAL INVESTMENTS
(COST $186,785,417) -- 99.2% .................... 231,778,792
============
- ----------
Percentages indicated are based on net assets of $233,625,667.
(a) Represents non-income producing security.
(b) Variable rate security. The rates presented represent the annualized one
day yield that was in effect on April 30, 2007.
ADR -- American Depositary Receipt
PLC -- Public Limited Co.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 92
- --------------------------------------------------------------------------------
HSBC INVESTOR VALUE PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--APRIL 30, 2007 (UNAUDITED)
- --------------------------------------------------------------------------------
COMMON STOCKS--93.0%
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- ------------
AEROSPACE & DEFENSE - 3.5%
Lockheed Martin Corp. .............................. 12,500 1,201,750
Raytheon Co. ....................................... 28,300 1,515,182
------------
2,716,932
------------
BANKING - 4.2%
Bank of America Corp. .............................. 29,100 1,481,190
Wells Fargo & Co. .................................. 50,700 1,819,623
------------
3,300,813
------------
BUSINESS SERVICES - 2.6%
Pitney Bowes, Inc. ................................. 42,100 2,020,800
------------
2,020,800
------------
COMPUTER SOFTWARE - 6.8%
CA, Inc. ........................................... 123,600 3,369,336
Microsoft Corp. .................................... 64,500 1,931,130
------------
5,300,466
------------
CONGLOMERATES - 2.4%
Loews Corp. ........................................ 39,000 1,845,480
------------
1,845,480
------------
CONSUMER PRODUCTS - 6.8%
Altria Group, Inc. ................................. 27,700 1,909,084
Kimberly-Clark Corp. ............................... 21,000 1,494,570
Kraft Foods, Inc. .................................. 19,169 641,586
Tyson Foods, Inc., Class A ......................... 58,900 1,234,544
------------
5,279,784
------------
DIVERSIFIED MANUFACTURING OPERATIONS - 1.7%
Ingersoll-Rand Co., Class A ........................ 29,800 1,330,570
------------
1,330,570
------------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 1.5%
Agilent Technologies, Inc. (a) ..................... 34,164 1,174,217
------------
1,174,217
------------
FINANCIAL SERVICES - 18.3%
Citigroup, Inc. .................................... 46,707 2,504,429
Countrywide Financial Corp. ........................ 76,600 2,840,328
Fannie Mae ......................................... 56,000 3,299,520
Genworth Financial, Inc., Class A .................. 66,900 2,441,181
J.P. Morgan Chase & Co. ............................ 39,950 2,081,395
MGIC Investment Corp. .............................. 18,400 1,133,624
------------
14,300,477
------------
INSURANCE - 9.0%
Aetna, Inc. ........................................ 16,700 782,896
AON Corp. .......................................... 54,400 2,108,000
Radian Group, Inc. ................................. 24,100 1,400,451
The Hartford Financial Services Group, Inc. ........ 27,100 2,742,520
------------
7,033,867
------------
MEDIA - 10.5%
CBS Corp., Class B ................................. 34,350 1,091,300
Clear Channel Communications, Inc. ................. 38,800 1,374,684
Comcast Corp., Class A (a) ......................... 48,450 1,279,080
Liberty Media Capital Group, Class A (a) ........... 5,017 566,770
Liberty Media Interactive Group, Class A (a) ....... 37,087 928,288
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
---------- ------------
MEDIA, CONTINUED
Viacom, Inc., Class B (a) .......................... 71,800 2,961,750
------------
8,201,872
------------
METALS & MINING - 5.8%
Barrick Gold Corp. ................................. 68,800 1,933,968
POSCO ADR .......................................... 8,800 921,712
Rio Tinto plc ADR .................................. 3,900 951,600
United States Steel Corp. .......................... 7,300 741,242
------------
4,548,522
------------
OIL & GAS - 9.9%
Apache Corp. ....................................... 31,400 2,276,500
ConocoPhillips ..................................... 23,471 1,627,714
Noble Energy, Inc. ................................. 65,500 3,852,055
------------
7,756,269
------------
PAPER & RELATED PRODUCTS - 1.7%
International Paper Co. ............................ 34,100 1,286,252
------------
1,286,252
------------
TELECOMMUNICATIONS - 6.1%
AT&T, Inc. ......................................... 51,791 2,005,348
Motorola, Inc. ..................................... 105,600 1,830,048
Sprint Nextel Corp. ................................ 45,600 913,368
------------
4,748,764
------------
TRANSPORTATION - 2.2%
Union Pacific Corp. ................................ 15,300 1,748,025
------------
1,748,025
------------
TOTAL COMMON STOCKS
(COST $56,392,620) .............................. 72,593,110
------------
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES--6.9%
- --------------------------------------------------------------------------------
Northern Institutional Government Select
Portfolio, 5.04% (b) ............................ 5,413,480 5,413,480
------------
TOTAL INVESTMENT COMPANIES
(COST $5,413,480) ............................... 5,413,480
------------
TOTAL INVESTMENTS
(COST $61,806,100) -- 99.9% ..................... 78,006,590
============
- ----------
Percentages indicated are based on net assets of $78,050,355.
(a) Represents non-income producing security.
(b) Variable rate security. The rates presented represent the annualized one
day yield that was in effect on April 30, 2007.
ADR -- American Depositary Receipt
PLC -- Public Limited Co.
93 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF ASSETS AND LIABILITIES--APRIL 30, 2007 (UNAUDITED)
INTERMEDIATE
CORE PLUS HIGH YIELD DURATION INTERNATIONAL
FIXED INCOME FIXED INCOME FIXED INCOME GROWTH EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments, at value $ 150,546,396 $ 12,863,484 $ 24,118,861 $ 74,031,682 $ 397,346,875
Cash -- -- -- -- 402,861
Foreign currency, at value -- -- -- -- 2,370,652
Interest and dividends receivable 924,603 279,807 141,587 64,653 1,824,389
Receivable for investments sold 3,567,584 -- 587,620 474,443 1,327,729
Prepaid expenses and other assets 2,488 4,059 1,650 1,686 1,077
------------- ------------ ------------ ------------ -------------
TOTAL ASSETS 155,041,071 13,147,350 24,849,718 74,572,464 403,273,583
------------- ------------ ------------ ------------ -------------
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 32,940,649 125,000 5,235,970 783,872 323,723
Accrued expenses and other liabilities:
Investment management 44,453 6,204 6,418 28,394 268,030
Administration 7,279 431 1,853 2,436 16,674
Accounting 146 -- -- -- 3,026
Custodian -- 8,024 2,830 230 55,377
Compliance service 104 14 20 44 292
Trustee 81 8 9 49 696
Other 3,021 179 572 1,611 8,610
------------- ------------ ------------ ------------ -------------
TOTAL LIABILITIES 32,995,733 139,860 5,247,672 816,636 676,428
------------- ------------ ------------ ------------ -------------
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Applicable to investors' beneficial interest $ 122,045,338 $ 13,007,490 $ 19,602,046 $ 73,755,828 $ 402,597,155
============= ============ ============ ============ =============
Investments, at cost $ 150,289,042 $ 12,444,597 $ 24,104,937 $ 65,610,951 $ 292,422,209
============= ============ ============ ============ =============
Foreign currency, at cost $ -- $ -- $ -- $ -- $ 2,357,855
============= ============ ============ ============ =============
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 94
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF ASSETS AND LIABILITIES--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
OPPORTUNITY VALUE
PORTFOLIO PORTFOLIO
- -------------------------------------------------------------------------------
ASSETS:
Investments, at value $ 231,778,792 $ 78,006,590
Interest and dividends receivable 57,058 80,332
Receivable for investments sold 2,179,463 --
Prepaid expenses and other assets 17,186 2,621
------------- ------------
TOTAL ASSETS 234,032,499 78,089,543
------------- ------------
- -------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 233,460 --
Accrued expenses and other liabilities:
Investment management 153,232 33,118
Administration 12,184 2,604
Custodian 4,192 1,869
Compliance service 269 57
Trustee 101 --
Other 3,394 1,540
------------- ------------
TOTAL LIABILITIES 406,832 39,188
------------- ------------
- -------------------------------------------------------------------------------
NET ASSETS:
Applicable to investors' beneficial interest $ 233,625,667 $ 78,050,355
============= ============
Investments, at cost $ 186,785,417 $ 61,806,100
============= ============
95 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF OPERATIONS--FOR THE SIX MONTHS ENDED APRIL 30, 2007 (UNAUDITED)
INTERMEDIATE
CORE PLUS HIGH YIELD DURATION INTERNATIONAL
FIXED INCOME FIXED INCOME FIXED INCOME GROWTH EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 3,145,986 $ 513,080 $ 523,743 $ -- $ 44,306
Dividends 20,512 4,948 4,108 408,012 4,726,306
Dividend income from affiliated investments 39,360 -- 6,707 -- --
Foreign tax withholding -- -- -- -- (544,309)
------------ ------------ ------------ ------------ -------------
TOTAL INVESTMENT INCOME 3,205,858 518,028 534,558 408,012 4,226,303
------------ ------------ ------------ ------------ -------------
- ------------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment Management 263,926 36,992 39,019 160,441 1,184,423
Administration 20,606 2,212 3,495 11,931 64,302
Accounting 37,246 32,989 32,734 27,604 48,819
Compliance Service 654 76 117 361 2,002
Custodian 25,118 31,517 8,669 13,406 175,705
Interest -- -- -- 401 --
Trustee 1,503 161 249 875 4,282
Other 6,827 574 1,228 3,369 20,592
------------ ------------ ------------ ------------ -------------
TOTAL EXPENSES 355,880 104,521 85,511 218,388 1,500,125
------------ ------------ ------------ ------------ -------------
- ------------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 2,849,978 413,507 449,047 189,624 2,726,178
------------ ------------ ------------ ------------ -------------
- ------------------------------------------------------------------------------------------------------------------------------------
NET REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gains (losses) from investments
and foreign currency transactions 3,163,470 70,612 907,436 2,354,799 19,883,572
Change in unrealized appreciation/depreciation
from investments and foreign currencies (664,644) 352,298 (83,246) 2,813,512 25,847,625
------------ ------------ ------------ ------------ -------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized\unrealized gains (losses) from
investments and foreign currency
transactions 2,498,826 422,910 824,190 5,168,311 45,731,197
------------ ------------ ------------ ------------ -------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS $ 5,348,804 $ 836,417 $ 1,273,237 $ 5,357,935 $ 48,457,375
============ ============ ============ ============ =============
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 96
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF OPERATIONS--FOR THE SIX MONTHS ENDED APRIL 30, 2007 (UNAUDITED)
(CONTINUED)
OPPORTUNITY VALUE
PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ -- $ --
Dividends 481,304 660,996
Dividend income from affiliated investments 95,866 62,866
Foreign tax withholding -- --
------------ ------------
TOTAL INVESTMENT INCOME 577,170 723,862
------------ ------------
- ------------------------------------------------------------------------------------------
EXPENSES:
Investment Management 919,419 188,808
Administration 41,214 12,866
Accounting 27,746 27,137
Compliance Service 1,426 403
Custodian 34,081 12,501
Interest 1,363 11
Trustee 3,064 864
Other 16,214 3,867
------------ ------------
TOTAL EXPENSES 1,044,527 246,457
------------ ------------
- ------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (467,357) 477,405
------------ ------------
- ------------------------------------------------------------------------------------------
NET REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gains (losses) from investments
and foreign currency transactions 22,407,450 2,287,848
Change in unrealized appreciation/depreciation
from investments and foreign currencies 4,139,128 3,630,777
------------ ------------
- ------------------------------------------------------------------------------------------
Net realized\unrealized gains (losses) from
investments and foreign currency
transactions 26,546,578 5,918,625
------------ ------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS $ 26,079,221 $ 6,396,030
============ ============
97 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF CHANGES IN NET ASSETS
CORE PLUS HIGH YIELD
FIXED INCOME FIXED INCOME
PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE IX MONTHS ENDED FOR THE
APRIL 30, 2007 YEAR ENDED APRIL 30, 2007 PERIOD ENDED
(UNAUDITED) OCTOBER 31, 2006 (UNAUDITED) OCTOBER 31, 2006 (a)
- ----------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 2,849,978 $ 5,487,117 $ 413,507 $ 599,770
Net realized gains (losses) from
investments and foreign currency
transactions 3,163,470 (2,015,195) 70,612 36,553
Change in unrealized
appreciation/depreciation from
investments and foreign currencies (664,644) 2,496,112 352,298 66,589
---------------- ---------------- ---------------- --------------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 5,348,804 5,968,034 836,417 702,912
---------------- ---------------- ---------------- --------------------
Proceeds from contributions 13,997,208 23,850,640 2,531,946 13,667,509
Value of withdrawals (8,492,605) (41,156,523) (3,079,638) (1,651,656)
---------------- ---------------- ---------------- --------------------
CHANGE IN NET ASSETS FROM TRANSACTIONS IN
INVESTORS' BENEFICIAL INTEREST 5,504,603 (17,305,883) (547,692) 12,015,853
---------------- ---------------- ---------------- --------------------
CHANGE IN NET ASSETS 10,853,407 (11,337,849) 288,725 12,718,765
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 111,191,931 122,529,780 12,718,765 --
---------------- ---------------- ---------------- --------------------
End of period $ 122,045,338 $ 111,191,931 $ 13,007,490 $ 12,718,765
================ ================ ================ ====================
- ----------
(a) The High Yield Fixed Income Portfolio commenced operations on November 18,
2005.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 98
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
INTERMEDIATE DURATION
FIXED INCOME
PORTFOLIO
- -----------------------------------------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
APRIL 30, 2007 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2006
- -----------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 449,047 $ 1,058,913
Net realized gains (losses) from
investments and foreign currency
transactions 907,436 (458,266)
Change in unrealized
appreciation/depreciation from
investments and foreign currencies (83,246) 518,623
---------------- ----------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 1,273,237 1,119,270
---------------- ----------------
Proceeds from contributions 1,634,408 1,801,738
Value of withdrawals (2,822,167) (16,214,126)
---------------- ----------------
CHANGE IN NET ASSETS FROM TRANSACTIONS IN
INVESTORS' BENEFICIAL INTEREST (1,187,759) (14,412,388)
---------------- ----------------
CHANGE IN NET ASSETS 85,478 (13,293,118)
- -----------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 19,516,568 32,809,686
---------------- ----------------
End of period $ 19,602,046 $ 19,516,568
================ ================
99 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
GROWTH INTERNATIONAL EQUITY
PORTFOLIO PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
APRIL 30, 2007 YEAR ENDED APRIL 30, 2007 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2006 (UNAUDITED) OCTOBER 31, 2006
- -------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 189,624 $ 210,246 $ 2,726,178 $ 5,767,764
Net realized gains (losses) from
investments and foreign currency
transactions 2,354,799 3,913,855 19,883,572 31,508,299
Change in unrealized
appreciation/depreciation from
investments and foreign currencies 2,813,512 (380,204) 25,847,625 39,700,669
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 5,357,935 3,743,897 48,457,375 76,976,732
---------------- ---------------- ---------------- ----------------
Proceeds from contributions 17,987,851 15,350,040 54,865,754 62,831,133
Value of withdrawals (9,417,722) (8,680,872) (34,480,667) (36,283,024)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS FROM TRANSACTIONS IN
INVESTORS' BENEFICIAL INTEREST 8,570,129 6,669,168 20,385,087 26,548,109
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS 13,928,064 10,413,065 68,842,462 103,524,841
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 59,827,764 49,414,699 333,754,693 230,229,852
---------------- ---------------- ---------------- ----------------
End of period $ 73,755,828 $ 59,827,764 $ 402,597,155 $ 333,754,693
================ ================ ================ ================
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 100
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
OPPORTUNITY VALUE
PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
APRIL 30, 2007 YEAR ENDED APRIL 30, 2007 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2006 (UNAUDITED) OCTOBER 31, 2006
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ (467,357) $ (937,617) $ 477,405 $ 741,017
Net realized gains (losses) from
investment transactions 22,407,450 38,504,562 2,287,848 5,586,911
Change in unrealized
appreciation/depreciation from
investments 4,139,128 3,658,201 3,630,777 5,704,297
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 26,079,221 41,225,146 6,396,030 12,032,225
---------------- ---------------- ---------------- ----------------
Proceeds from contributions 8,556,971 22,244,597 15,118,541 13,285,641
Value of withdrawals (42,505,368) (40,753,125) (10,896,311) (12,036,219)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS FROM TRANSACTIONS IN
INVESTORS' BENEFICIAL INTEREST (33,948,397) (18,508,528) 4,222,230 1,249,422
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS (7,869,176) 22,716,618 10,618,260 13,281,647
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 241,494,843 218,778,225 67,432,095 54,150,448
---------------- ---------------- ---------------- ----------------
End of period $ 233,625,667 $ 241,494,843 $ 78,050,355 $ 67,432,095
================ ================ ================ ================
101 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
RATIOS/SUPPLEMENTARY DATA
----------------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT RATIO OF
AT END OF EXPENSES INCOME (LOSS) EXPENSES
TOTAL PERIOD TO AVERAGE TO AVERAGE TO AVERAGE PORTFOLIO
RETURN(a) (000'S) NET ASSETS(b) NET ASSETS(b) NET ASSETS(b)(c) TURNOVER(a)
- ------------------------------------------------------------------------------------------------------------------------------------
CORE PLUS FIXED INCOME PORTFOLIO
Year Ended October 31, 2002 $ 385,802 0.48% 5.14% 0.48% 77.82%
Year Ended October 31, 2003 5.80% 203,551 0.48% 4.38% 0.48% 70.91%
Year Ended October 31, 2004 5.56% 169,459 0.52% 4.31% 0.52% 34.88%
Year Ended October 31, 2005 1.64% (d) 122,530 0.40% (d) 4.25% (d) 0.53% 176.60%
Year Ended October 31, 2006 5.55% 111,192 0.63% 4.96% 0.63% 273.91%
Six Months Ended April 30, 2007
(Unaudited) 4.77% (e) 122,045 0.62% 4.95% 0.62% 167.58%
- ------------------------------------------------------------------------------------------------------------------------------------
HIGH YIELD FIXED INCOME PORTFOLIO
Period Ended October 31, 2006 (f) 7.41% $ 12,719 1.86% 6.33% 1.86% 13.61%
Six Months Ended April 30, 2007
(Unaudited) 6.95% 13,007 1.70% 6.71% 1.70% 21.88%
- ------------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE DURATION FIXED INCOME
PORTFOLIO
Year Ended October 31, 2002 $ 149,815 0.51% 4.60% 0.51% 44.04%
Year Ended October 31, 2003 4.42% 84,488 0.53% 3.70% 0.53% 98.42%
Year Ended October 31, 2004 4.48% 63,697 0.57% 3.54% 0.57% 50.06%
Year Ended October 31, 2005 0.76% (d) 32,810 0.49% (d) 3.85% (d) 0.58% 107.26%
Year Ended October 31, 2006 5.29% 19,517 0.78% 4.58% 0.78% 236.51%
Six Months Ended April 30, 2007
(Unaudited) 6.62% (e) 19,602 0.88% 4.60% 0.88% 156.79%
- ------------------------------------------------------------------------------------------------------------------------------------
GROWTH PORTFOLIO
Period Ended October 31, 2004 (f) (0.86%) $ 49,680 0.72% 0.06% 0.72% 53.08%
Year Ended October 31, 2005 13.59% (d) 49,415 0.63% (d) 0.77% (d) 0.68% 79.54%
Year Ended October 31, 2006 7.53% 59,828 0.69% 0.38% 0.69% 75.06%
Six Months Ended April 30, 2007
(Unaudited) 8.31% 73,756 0.65% 0.57% 0.65% 30.99%
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
Year Ended October 31, 2002 $ 256,616 0.91% 0.63% 0.91% 31.63%
Year Ended October 31, 2003 23.70% 201,805 0.96% 1.00% 0.96% 68.51%
Year Ended October 31, 2004 20.29% 220,025 0.94% 1.53% 0.94% 106.11%
Year Ended October 31, 2005 19.54% 230,230 0.84% 1.92% 0.84% 31.32%
Year Ended October 31, 2006 32.79% 333,755 0.86% 2.03% 0.86% 33.39%
Six Months Ended April 30, 2007
(Unaudited) 14.38% 402,597 0.83% 1.52% 0.83% 15.44%
- ------------------------------------------------------------------------------------------------------------------------------------
OPPORTUNITY PORTFOLIO
Year Ended October 31, 2002 $ 266,217 0.99% (0.78%) 0.99% 103.90%
Year Ended October 31, 2003 33.30% 426,181 0.91% (0.62%) 0.91% 152.05%
Year Ended October 31, 2004 5.93% 359,333 0.88% (0.52%) 0.88% 81.75%
Year Ended October 31, 2005 14.35% (d) 218,778 0.85% (d) (0.45%) (d) 0.90% 63.95%
Year Ended October 31, 2006 19.54% 241,495 0.91% (0.40%) 0.91% 60.83%
Six Months Ended April 30, 2007
(Unaudited) 12.10% 233,626 0.91% (0.41%) 0.91% 25.63%
- ------------------------------------------------------------------------------------------------------------------------------------
VALUE PORTFOLIO
Period Ended October 31, 2004 (f) 6.12% $ 61,414 0.71% 1.28% 0.71% 10.33%
Year Ended October 31, 2005 15.23% (d) 54,150 0.64% (d) 1.15% (d) 0.69% 16.45%
Year Ended October 31, 2006 22.21% 67,432 0.71% 1.23% 0.71% 20.63%
Six Months Ended April 30, 2007
(Unaudited) 9.14% 78,050 0.68% 1.33% 0.68% 9.79%
- ------------------------------------------------------------------------------------------------------------------------------------
(a) Not annualized for periods less than one year.
(b) Annualized for periods less than one year.
(c) During the period, certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(d) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the Portfolios related to violations of certain investment policies and
limitations. The corresponding impact to the net expense ratio, net income
ratio and total return were 0.12%, 0.09%, 0.05%, 0.04% and 0.05% for the
Core Plus Fixed Income Portfolio, Intermediate Duration Fixed Income
Portfolio, Growth Portfolio, Opportunity Portfolio and Value Portfolio,
respectively.
(e) During the period ended April 30, 2007, the Portfolio received monies
related to certain nonrecurring litigation settlements. The corresponding
impact to the total return was 1.68% and 3.99% for Core Plus Fixed Income
Portfolio and Intermediate Duration Fixed Income Portfolio, respectively.
(f) High Yield Fixed Income Portfolio commenced operations on November 18,
2005.
Growth Portfolio commenced operations on May 7, 2004.
Value Portfolio commenced operations on May 7, 2004.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 102
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HSBC INVESTOR PORTFOLIOS
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NOTES TO FINANCIAL STATEMENTS--APRIL 30, 2007 (UNAUDITED)
1. ORGANIZATION:
The HSBC Investor Portfolios (the "Portfolio Trust"), is an open-end
management investment company organized as a New York trust under the laws
of the State of New York on November 1, 1994. The Portfolio Trust contains
the following master funds (individually a "Portfolio," collectively the
"Portfolios"):
PORTFOLIO SHORT NAME
- --------- ----------
HSBC Investor Core Plus Fixed Income Portfolio Core Plus Fixed Income Portfolio
HSBC Investor High Yield Fixed Income Portfolio High Yield Fixed Income Portfolio
HSBC Investor Intermediate Duration Fixed Income Portfolio Intermediate Duration Fixed Income Portfolio
HSBC Investor Growth Portfolio Growth Portfolio
HSBC Investor International Equity Portfolio International Equity Portfolio
HSBC Investor Opportunity Portfolio (formerly the HSBC Opportunity Portfolio
Small Cap Equity Portfolio)
HSBC Investor Value Portfolio Value Portfolio
The Portfolios operate as master funds in master-feeder
arrangements, in which other funds invest their assets in the Portfolios.
The Declaration of Trust permits the Board of Trustees to issue an
unlimited number of beneficial interests in the Portfolios.
The Portfolios are diversified series of the Portfolio Trust and are
part of the HSBC Investor Family of Funds. Financial statements for all
other funds of the HSBC Investor Family of Funds are published separately.
Under the Portfolio Trust's organizational documents, the
Portfolios' officers and trustees are indemnified against certain
liabilities arising out of the performance of their duties to the
Portfolios. In addition, in the normal course of business, the Portfolios
enter into contracts with their service providers, which also provide for
indemnifications by the Portfolios. The Portfolios' maximum exposure under
these arrangements is unknown as this would involve any future claims that
may be made against the Portfolios. However, based on experience, the
Portfolios expect that risk of loss to be remote.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the significant accounting policies
followed by the Funds in the preparation of their financial statements.
The policies are in conformity with accounting principles generally
accepted in the United States of America ("GAAP"). The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses for the period.
Actual results could differ from those estimates.
SECURITIES VALUATION:
Bonds and other fixed income securities (other than short-term
obligations but including listed issues) are valued on the basis of
valuations furnished by a pricing service, the use of which has been
approved by the Portfolios' Board of Trustees. In making such valuations,
the pricing service utilizes both dealer-supplied valuations and the use
of matrix techniques which take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading characteristics
other than market data and without exclusive reliance upon quoted prices
or exchanges or over-the-counter prices, since such valuations are
believed to reflect more accurately the fair value of such securities. All
debt portfolio securities with a remaining maturity of 60 days or less are
valued at amortized cost. Under the amortized cost method, premium or
discount, if any, is amortized or accreted, respectively, on a constant
(straight-line) basis to the maturity of the security.
The value of each equity security is based either on the last sale
price on a national securities exchange, or in the absence of recorded
sales, at the closing bid prices on such exchanges, or at the quoted bid
price in the over-the-counter market. Securities or other assets for which
market quotations are not readily available, or are deemed unreliable due
to a significant event or otherwise, are valued by or at the direction of
the Portfolios' Board of Trustees. Examples of potentially significant
events that could affect the value of an individual security include
corporate actions by the issuer, announcements by the issuer relating to
its earnings or products, regulatory news, natural disasters, and
litigation. Examples of
103 HSBC INVESTOR PORTFOLIOS
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HSBC INVESTOR PORTFOLIOS
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NOTES TO FINANCIAL STATEMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
potentially significant events that could affect multiple securities held
by a Portfolio include governmental actions, natural disasters, and armed
conflicts. In addition, if events materially affecting the value of
foreign securities occur between the time when the exchange on which they
are traded closes and the time when the Portfolios' net assets are
calculated, such securities may be valued using fair value pricing in
accordance with procedures adopted by the Board of Trustees. Management
identifies possible fluctuations in foreign securities by monitoring the
rise or fall in the value of a designated benchmark index. In the event of
a rise or fall greater than predetermined levels, the International Equity
Portfolio may use a systematic valuation model provided by an independent
third party to value its foreign securities, rather than local market
closing prices. When the International Equity Portfolio uses such a
valuation model, the value assigned to the International Equity
Portfolio's foreign securities may not be the quoted or published prices
of the investment on their primary markets or exchanges.
SECURITY TRANSACTIONS AND RELATED INCOME:
During the period, security transactions are accounted for no later
than one business day following trade date. For financial reporting
purposes, however, changes in holdings are accounted for on trade date on
the last business day of the reporting period. Securities gains and losses
are calculated on the identified cost basis. Interest income is recognized
on the accrual basis and includes, where applicable, the amortization or
accretion of premium or discount. Dividend income is recorded on the
ex-dividend date.
FOREIGN CURRENCY TRANSLATION:
The accounting records of the Portfolios are maintained in U.S.
dollars. Foreign currency amounts are translated into U.S. dollars at the
current rate of exchange to determine the value of investments, assets and
liabilities. Purchases and sales of securities, and income and expenses
are translated at the prevailing rate of exchange on the respective dates
of such transactions. The Portfolios do not isolate the portion of the
results of operations resulting from changes in foreign exchange rates on
investments from fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments and foreign currencies.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS:
The Portfolios may enter into forward foreign currency exchange
contracts in connection with planned purchases or sales of securities or
to hedge the U.S. dollar value of portfolio securities denominated in a
particular currency. The Portfolios could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their
contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The forward foreign currency
exchange contracts are adjusted by the daily exchange rate of the
underlying currency and any gains or losses are recorded for financial
statement purposes as unrealized gains or losses until the contract
settlement date.
FUTURES CONTRACTS:
Each Portfolio may invest in futures contracts for the purpose of
hedging their existing portfolio securities or securities it intends to
purchase against fluctuations in fair value caused by changes in
prevailing market interest rates. Upon entering into a futures contract,
the Portfolio is required to pledge to the broker an amount of cash and/or
other assets equal to a certain percentage of the contract amount (initial
margin deposit). Subsequent payments, known as "variation margin," are
made or received by the Portfolio each day, depending on the daily
fluctuations in the fair value of the underlying security. The Portfolio
recognizes a gain or loss equal to the daily variation margin. Should
market conditions move unexpectedly, the Portfolio may not achieve the
anticipated benefits of the futures contracts and may realize a loss. The
use of futures transactions involves the risk of imperfect correlation in
movements in the price of futures contracts, interest rates, and the
underlying hedged assets.
MORTGAGE DOLLAR ROLL TRANSACTIONS:
The Core Plus Fixed Income Portfolio, the High Yield Fixed Income
Portfolio and the Intermediate Duration Fixed Income Portfolio may engage
in dollar roll transactions with respect to mortgage securities issued by
the Government National Mortgage Association, the Federal National
Mortgage Association and the Federal Home Loan Mortgage Corporation. In a
dollar roll transaction, the Portfolio sells a mortgage-backed security
and simultaneously agrees to repurchase a similar security on a specified
future date at an agreed upon price. During the roll period, the Portfolio
will not be entitled to receive any interest or principal paid on the
securities sold. The Portfolio is compensated for the lost interest on the
securities sold by the difference between the sales price and the lower
price for the future repurchase as well as by the interest earned on the
reinvestment of the sales proceeds. The Portfolio may also be compensated
by receipt of a commitment fee.
HSBC INVESTOR PORTFOLIOS 104
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HSBC INVESTOR PORTFOLIOS
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NOTES TO FINANCIAL STATEMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
RESTRICTED AND ILLIQUID SECURITIES:
A restricted security is a security which has been purchased through
a private offering and cannot be resold to the general public without
prior registration under the Securities Act of 1933 (the "1933 Act") or
pursuant to the resale limitations provided by Rule 144 under the 1933
Act, or an exemption from the registration requirements of the 1933 Act.
Certain restricted securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers, and may be
deemed liquid by the investment adviser based on procedures established by
the Board of Trustees. Therefore, not all restricted securities are
considered illiquid. At April 30, 2007 the HSBC Core Plus Fixed Income
Portfolio held restricted securities that were illiquid, representing
0.03% of net assets, as follows:
ACQUISITION ACQUISITION PRINCIPAL
SECURITY NAME DATE COST($) AMOUNT($) VALUE($)
- ------------- ----------- ----------- --------- --------
FHA Weyerhauser, 7.43%, 1/1/24 ................................ 3/28/2002 32,060 33,651 33,651
DLJ Mortgage Acceptance Corp. IO, Series
1997-CFI, Class S, 0.90%, 5/15/30 ........................... 5/16/1997 1,984 91,865 1,127
GS Mortgage Securities Corp. IO, Series
1997-GL, Class X2, 0.78%, 7/13/30 ........................... 8/14/1997 1,956 136,256 799
REPURCHASE AGREEMENTS:
The Portfolios may enter into repurchase agreements with an entity
which is a member of the Federal Reserve System or which is a "primary
dealer" (as designated by the Federal Reserve Bank of New York) in U.S.
Government obligations. The repurchase price generally equals the price
paid by a Portfolio plus interest negotiated on the basis of current
short-term rates, which may be more or less than the rate on the
underlying portfolio securities. The seller, under a repurchase agreement,
is required to maintain the collateral held pursuant to the agreement,
with a fair value equal to or greater than the repurchase price (including
accrued interest). Collateral subject to repurchase agreements is held by
the Portfolios' custodian or another qualified custodian or in the Federal
Reserve/Treasury book-entry system. In the event of counterparty default,
the Portfolio has the right to use the collateral to offset losses
incurred. There is a potential for loss to the Portfolio in the event the
Portfolio is delayed or prevented from exercising its rights to dispose of
the collateral securities, including the risk of a possible decline in the
fair value of the underlying securities during the period while the
Portfolio seeks to assert its rights.
LINE OF CREDIT:
Prior to February 1, 2007 High Yield Fixed Income Portfolio, Growth
Portfolio, International Equity Portfolio, Opportunity Portfolio, and
Value Portfolio and prior to March 9, 2007 Core Plus Fixed Income
Portfolio and Intermediate Duration Fixed Income Portfolio were able to
borrow up to $50 million under the terms of a short-term, demand note
agreement with HSBC Bank. The purpose of the agreement was to meet
temporary or emergency cash needs, including redemption requests that
might otherwise require the untimely disposition of securities.
During the period ended April 30, 2007, the details of the
borrowings were as follows (based on actual number of days in which the
respective Portfolios borrowed monies):
AVERAGE AVERAGE
AMOUNT INTEREST
FUND OUTSTANDING RATE
- ---- ----------- --------
Growth Portfolio ...................................................................... $2,481,136 5.82%
Opportunity Portfolio ................................................................. $8,756,484 5.83%
Value Portfolio ....................................................................... $2,781,119 5.25%
EXPENSE ALLOCATIONS:
Expenses directly attributable to a Portfolio are charged to that
Portfolio. Expenses not directly attributable to a Portfolio are allocated
proportionally among various or all funds within the HSBC Investor Family
of Funds in relation to net assets or on another reasonable basis.
FEDERAL INCOME TAXES:
Each Fund is a separate taxable entity for federal income tax
purposes. Each Fund has qualified and intends to continue to qualify each
year as a "regulated investment company" under Subchapter M of the
Internal Revenue Code, as amended and to distribute substantially all of
their taxable net investment income and net realized gains, if any, to
their shareholders. Accordingly, no provision for federal income or excise
tax is required.
105 HSBC INVESTOR PORTFOLIOS
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HSBC INVESTOR PORTFOLIOS
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NOTES TO FINANCIAL STATEMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
NEW ACCOUNTING PRONOUNCEMENTS:
In September 2006 the Financial Accounting Standards Board (FASB)
issued Statement on Financial Accounting Standards (SFAS) No. 157, "Fair
Value Measurements." This standard establishes a single authoritative
definition of fair value, sets out a framework for measuring fair value
and requires additional disclosures about fair value measurements. SFAS
No. 157 applies to fair value measurements already required or permitted
by existing standards. SFAS No. 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years. The changes to current GAAP from the
application of this Statement relate to the definition of fair value, the
methods used to measure fair value, and the expanded disclosures about
fair value measurements. As of April 30, 2007, the Funds do not believe
the adoption of SFAS No. 157 will impact the financial statement amounts,
however, additional disclosures may be required about the inputs used to
develop the measurements and the effect of certain of the measurements on
changes in net assets for the period.
On July 13, 2006, the FASB released FASB Interpretation No. 48
"Accounting for Uncertainty in Income Taxes" (FIN 48). FIN 48 provides
guidance for how uncertain tax positions should be recognized, measured,
presented and disclosed in the financial statements. FIN 48 requires the
evaluation of tax positions taken or expected to be taken in the course of
preparing the Funds' tax return to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority.
Tax positions not deemed to meet the more-likely-than-not threshold would
be recorded as a tax benefit or expense in the year of determination.
Adoption of FIN 48 is required no later than the last business day of the
first financial reporting period for fiscal years beginning after December
15, 2006 and is to be applied to all open tax years as of the effective
date. Management is in the process of completing their analysis on whether
the adoption of FIN 48 will have an impact to the financial statements
upon adoption.
3. RELATED PARTY TRANSACTIONS:
INVESTMENT MANAGEMENT:
HSBC Investments (USA) Inc. ("HSBC" or the "Investment Adviser"), a
wholly owned subsidiary of HSBC Bank USA, a New York State chartered bank,
acts as the Investment Adviser to the Portfolios pursuant to an investment
management contract with the Portfolio Trust. As Investment Adviser, HSBC
manages the investments of the Portfolios and continuously reviews,
supervises, and administers the Portfolios' investments, except that
Waddell & Reed Investment Management Company, AllianceBernstein Investment
Research and Management, Westfield Capital Management, LLC and NWQ
Investment Management Co., LLC serve as sub-investment advisers for the
Growth Portfolio, International Equity Portfolio, Opportunity Portfolio,
and the Value Portfolio, respectively, and are paid for their services
directly by the respective Portfolios.
For its services, the Investment Adviser receives a fee, accrued
daily and paid monthly, at an annual rate of 0.60% of the High Yield Fixed
Income Portfolio's average daily net assets and 0.40% of the Intermediate
Duration Fixed Income Portfolio's average daily net assets.
For its services as Investment Adviser, HSBC receives, from the Core
Plus Fixed Income Portfolio, a fee, accrued daily and paid monthly, at an
annual rate of:
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE
- ------------------------------------ --------
Up to $50 million ..................................................................... 0.575%
In excess of $50 million but not exceeding $95 million ................................ 0.450%
In excess of $95 million but not exceeding $150 million ............................... 0.200%
In excess of $150 million but not exceeding $250 million .............................. 0.400%
In excess of $250 million ............................................................. 0.350%
For their services, the Investment Adviser and Waddell & Reed
Investment Management Company receive in aggregate, from the Growth
Portfolio, a fee, accrued daily and paid monthly, at an annual rate of:
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE
- ------------------------------------ --------
Up to $50 million ..................................................................... 0.500%
In excess of $50 million but not exceeding $100 million ............................... 0.425%
In excess of $100 million but not exceeding $200 million .............................. 0.375%
In excess of $200 million ............................................................. 0.325%
HSBC INVESTOR PORTFOLIOS 106
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HSBC INVESTOR PORTFOLIOS
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NOTES TO FINANCIAL STATEMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
For their services, the Investment Adviser and AllianceBernstein
Investment Research and Management receive in aggregate, from the
International Equity Portfolio, a fee, accrued daily and paid monthly, at
an annual rate of:
BASED ON AVERAGE DAILY NET ASSETS OF: FEE RATE
- ------------------------------------- --------
Up to $10 million ..................................................................... 1.015%
In excess of $10 million but not exceeding $25 million ................................ 0.925%
In excess of $25 million but not exceeding $50 million ................................ 0.79%
In excess of $50 million but not exceeding $100 million ............................... 0.70%
In excess of $100 million ............................................................. 0.61%
For their services, the Investment Adviser and Westfield Capital
Management, LLC receive in aggregate, a fee, accrued daily and paid
monthly, at an annual rate of 0.80% of the Opportunity Portfolio's average
daily net assets.
For their services, the Investment Adviser and NWQ Investment
Management Co., LLC receive in aggregate, from the Value Portfolio, a fee,
accrued daily and paid monthly, at an annual rate of:
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE
- ------------------------------------- --------
Up to $500 million .................................................................... 0.525%
In excess of $500 million but not exceeding $1 billion ................................ 0.475%
In excess of $1 billion ............................................................... 0.425%
ADMINISTRATION:
HSBC serves the Portfolios as Administrator. Under the terms of the
administration agreement effective April 1, 2007, HSBC receives from the
Portfolios a fee, accrued daily and paid monthly, at an annual rate of:
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE
- ------------------------------------ --------
Up to $12 billion ..................................................................... 0.0525%
In excess of $12 billion .............................................................. 0.0350%
Prior to April 1, 2007, under the terms of the administration
agreement, the Portfolios paid fees under the following schedule:
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE
- ------------------------------------ --------
Up to $8 billion ...................................................................... 0.075%
In excess of $8 billion but not exceeding $9.25 billion ............................... 0.070%
In excess of $9.25 billion but not exceeding $12 billion .............................. 0.050%
In excess of $12 billion .............................................................. 0.030%
The fee rates and breakpoints are determined on the basis of the
aggregate average daily net assets of the HSBC Investor Family of Funds,
however, the assets of the Portfolios and Feeder Funds that invest in the
Portfolios are not double-counted. The total administration fee paid to
BISYS is allocated to each series in the HSBC Investor Family of Funds
based upon its proportionate share of the aggregate net assets of the
Family of Funds. For assets invested in the Portfolios by Feeder Funds,
the Portfolios pay half of the administration fee and the Feeder Funds pay
half of the administration fee, for a combination of the total fee rate
set forth above.
Pursuant to a Sub-Administration Agreement with HSBC, BISYS Fund
Services Ohio, Inc. ("BISYS Ohio"), a wholly-owned subsidiary of The BISYS
Group, Inc., serves as the Portfolio Trust's sub-administrator subject to
the general supervision of the Portfolio Trust's Board of Trustees and
HSBC. For these services, BISYS Ohio is entitled to a fee, payable by
HSBC, at an annual rate equivalent to the fee rates set forth above, minus
0.02% (2 basis points) which is retained by HSBC.
Under a Compliance Services Agreement between the Portfolios and
BISYS Ohio (the "CCO Agreement"), BISYS Ohio makes an employee available
to serve as the Portfolios' Chief Compliance Officer (the "CCO"). Under
the CCO Agreement, BISYS Ohio also provides infrastructure and support in
implementing the written policies and procedures comprising the
Portfolios' compliance program, including support services to the CCO. For
the services provided under the CCO Agreement, the HSBC Investor Family of
Funds paid BISYS Ohio $125,400 for the period ended April 2007, plus
reimbursement of certain expenses. Expenses incurred by each Portfolio are
reflected on the Statements of Operations as "Compliance Service." BISYS
Ohio pays the salary and other compensation earned by any such individuals
as employees of BISYS Ohio.
107 HSBC INVESTOR PORTFOLIOS
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HSBC INVESTOR PORTFOLIOS
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NOTES TO FINANCIAL STATEMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
FUND ACCOUNTING, CUSTODIAN AND TRUSTEE:
BISYS Ohio provides fund accounting services for the Portfolios. For
its services to the Portfolios, BISYS Ohio receives an annual fee per
Portfolio, including reimbursement of certain expenses, that is accrued
daily and paid monthly.
Prior to February 1, 2007 Investor's Bank & Trust Company ("IBT")
served as custodian for the High Yield Fixed Income Portfolio and the
International Equity Portfolio. HSBC Bank served as custodian to the
Growth Portfolio, Opportunity Portfolio, and Value Portfolio prior to
February 1, 2007 and Core Plus Fixed Income Portfolio and Intermediate
Duration Fixed Income Portfolio prior to March 9, 2007. Compensation paid
to IBT and HSBC Bank for services to the Portfolios as custodian is as
follows:
HSBC IBT
CUSTODIAN CUSTODIAN
FUND FEES FEES
- ---- --------- ---------
Core Plus Fixed Income Portfolio ....................... $ 17,525 $ --
High Yield Fixed Income Portfolio ...................... -- 16,635
Intermediate Duration Fixed Income Portfolio ........... 6,308 --
Growth Portfolio ....................................... 6,553 --
International Equity Portfolio ......................... -- 78,641
Opportunity Portfolio .................................. 17,644 --
Value Portfolio ........................................ 6,553 --
--------- ---------
Total ............................................... $ 54,583 $ 95,276
--------- ---------
The Northern Trust Company began serving as custodian for the
Portfolios subsequent to the dates noted above.
Each of the six non-interested Trustees are compensated with a
$35,000 annual Board retainer, as well as a $3,000 annual retainer for
each Committee of the Board. Each non-interested Trustee also receives a
$5,000 and $3,000 meeting fee for each regular in-person Board meeting and
Committee meeting, respectively. Furthermore, each non-interested Trustee
receives compensation for attending special meetings and/or functioning as
a Committee Chairperson or Lead Trustee. In addition, the non-interested
Trustees are reimbursed for certain expenses incurred in connection with
their Board membership.
4. INVESTMENT TRANSACTIONS:
For the period ended April 30, 2007, each Portfolio purchased and
sold securities, excluding short-term securities, in the following
amounts:
PURCHASES SALES PURCHASES SALES
(EXCLUDING U.S. (EXCLUDING U.S. OF U.S. OF U.S.
PORTFOLIO NAME GOVERNMENT) GOVERNMENT) GOVERNMENT GOVERNMENT
- -------------- --------------- --------------- ----------- ----------
Core Plus Fixed Income Portfolio ....................... $ 63,341,521 $ 77,273,228 $60,481,105 55,825,459
High Yield Fixed Income Portfolio ...................... 2,457,633 2,665,344 -- --
Intermediate Duration Fixed
Income Portfolio .................................... 8,094,056 10,602,105 10,226,966 9,634,438
Growth Portfolio ....................................... 28,074,631 20,020,764 -- --
International Equity Portfolio ......................... 66,601,747 54,508,365 -- --
Opportunity Portfolio .................................. 57,765,239 83,218,833 -- --
Value Portfolio ........................................ 10,540,659 6,667,113 -- --
5. LEGAL AND REGULATORY MATTERS:
On September 26, 2006 BISYS Fund Services, Inc. ("BISYS"), an
affiliate of BISYS Fund Services Ohio, Inc. which provides various
services to the Portfolios as described in footnote 3, reached a
settlement with the Securities and Exchange Commission ("SEC") regarding
the SEC's investigation related to BISYS' past payment of certain
marketing and other expenses with respect to certain of its mutual fund
clients. Although BISYS has reached a settlement with the SEC, the
Portfolios' management is not aware that any determination has been made
as to how the BISYS settlement monies will be distributed. The SEC's
examination of BISYS' mutual fund clients and their advisers, including
HSBC, has not been completed. While the Portfolios' management is
currently unable to determine the impact, if any, of such matters on the
Portfolios or the Portfolios' financial statements, management does not
anticipate a material, adverse impact to the Portfolios or the Portfolios'
financial statements.
HSBC INVESTOR PORTFOLIOS 108
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HSBC INVESTOR PORTFOLIOS
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NOTES TO FINANCIAL STATEMENTS--APRIL 30, 2007 (UNAUDITED) (CONTINUED)
6. FEDERAL INCOME TAX INFORMATION:
As of April 30, 2007, the cost, gross unrealized appreciation and
gross unrealized depreciation on securities, for federal income tax
purposes, were as follows:
NET
TAX TAX UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
PORTFOLIO NAME TAX COST APPRECIATION DEPRECIATION (DEPRECIATION)
- -------------- ------------ ------------- ------------ -------------
Core Plus Fixed Income Portfolio ....................... $150,488,658 $ 547,088 $ (489,350) $ 57,738
High Yield Fixed Income Portfolio ...................... 12,444,597 478,062 (59,175) 418,887
Intermediate Duration Fixed
Income Portfolio .................................... 24,107,910 77,556 (66,605) 10,951
Growth Portfolio ....................................... 65,713,547 9,348,018 (1,029,883) 8,318,135
International Portfolio ................................ 292,724,805 109,934,193 (5,312,123) 104,622,070
Opportunity Portfolio .................................. 187,439,277 49,600,263 (5,260,748) 44,339,515
Value Portfolio ........................................ 61,483,545 17,204,693 (681,648) 16,523,045
109 HSBC INVESTOR PORTFOLIOS
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HSBC INVESTOR PORTFOLIOS
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INVESTMENT ADVISER CONTRACT APPROVAL (UNAUDITED)--APRIL 30, 2007
The Board of Trustees (the "Board of Trustees") of the HSBC Investor
Funds, HSBC Advisor Funds Trust and HSBC Investor Portfolios
(collectively, the "Trusts"), and the non-interested Trustees, voting
separately, approved the renewal of the Investment Advisory Contracts and,
where applicable, Sub-Advisory Contracts with respect to the respective
series of the Trusts then existing (collectively, the "Existing Funds") at
an in-person meeting held on December 4, 2006. Also, at their in-person
meeting held on December 4, 2006, the Board of Trustees reviewed and
approved the Investment Advisory Contracts and Sub-Advisory Contracts with
respect to the Core Plus Fixed Income Portfolio, the Intermediate Duration
Fixed Income Portfolio and the High Yield Fixed Income Portfolio (the
"Fixed Income Funds")(the Existing Funds and Fixed Income Funds are
collectively referred to as the "Funds" and the Investment Advisory
Contracts and Sub-Advisory Contracts are collectively referred to as the
"Agreements").
In determining whether it was appropriate to approve the Agreements
for the Funds, the Board of Trustees requested information from the
Adviser and the various Sub-Advisers that it believed to be reasonably
necessary to reach its conclusion. The Board of Trustees carefully
evaluated this information, and was advised by independent legal counsel
with respect to its deliberations. Based on its review of the information
requested and provided for each Fund, the Board of Trustees determined
that the relevant Agreement is consistent with the best interests of the
Funds and their shareholders, and enables the Funds to receive high
quality services at a cost that is appropriate and reasonable. The Board
of Trustees made these determinations on the basis of the following
considerations, among others:
- NATURE, EXTENT, AND QUALITY OF SERVICES PROVIDED BY ADVISER AND
SUB-ADVISERS. The Board of Trustees considered the nature, quality
and extent of the investment advisory services to be provided by the
Adviser (and, as applicable, the Sub-Advisers), in light of the high
quality services provided to the Funds, and each Fund's historic
performance. The Board considered the historical performance and the
commitment of the Adviser to the successful operations of the Funds
including the level of expenses of the Funds. With respect to the
Equity Funds, the Board considered the capabilities and performance
of the Adviser's Multimanager unit. The Board also considered the
use of expense limitation agreements in order to reduce the overall
operating expenses of certain funds. The Board of Trustees also took
note of the long term relationship between the Adviser and the Funds
and the efforts undertaken by the Adviser to foster the growth and
development of the Funds since the inception of each of the Funds.
For the Fixed Income Funds, the Board also considered the historical
performance and experience of the management team in managing other
accounts, and the reasonable expectation of achieving competitive
performance for these Funds. The Board also considered the extent to
which the investment advisers had achieved economies of scale and
the extent to which shareholders participated in those economies of
scale.
- INVESTMENT PERFORMANCE OF THE FUNDS, ADVISER AND SUB-ADVISERS. The
Board of Trustees considered short-term and long-term investment
performance of each Fund over various periods of time as compared to
a peer group of comparable funds. The Board members took note of
performance information for the one, three and five year periods and
since inception as relevant. In addition the Board compared expenses
of each Fund to the expenses of its peers, noting that the expenses
for each of the Funds compare favorably with industry averages for
other funds of similar size.
- COSTS OF SERVICES AND PROFITS REALIZED BY THE ADVISER. The Board of
Trustees considered the Adviser's overall profitability and costs
and an analysis of the estimated profitability to the Adviser from
its relationship with the Funds. The Board of Trustees considered
that the advisory fees under the Agreements were within the range of
those of similar funds, noting the high level of resources,
expertise and experience that was provided to the Funds by the
Adviser and Sub-Advisers. The Board of Trustees concluded that the
combined advisory fees payable to the Adviser and each of the Fund's
Sub-Advisers are fair and reasonable in light of the services to be
provided, the anticipated costs of these services, the profitability
of the Adviser's relationship with the Funds, and the comparability
of the advisory fee to similar fees paid by comparable mutual funds.
- OTHER RELEVANT CONSIDERATIONS. The Board of Trustees also considered
the overall high quality of the personnel, operations, financial
condition, investment management capabilities, methodologies, and
performance of the Adviser and Sub-Advisers. The Board also noted
the range of investment advisory and administrative services
provided by the Adviser to the Funds. In addition, the Board
considered the overall favorable investment performance of the
Funds.
Accordingly, in light of the above considerations and such other
factors and information it considered relevant, the Board of Trustees by a
unanimous vote of those present in person at the meetings (including a
separate vote of the Independent Trustees present in person at the
meeting) approved the Agreements.
HSBC INVESTOR PORTFOLIOS 110
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HSBC INVESTOR FAMILY OF FUNDS
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TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--APRIL 30, 2007
As a shareholder of the HSBC Investor Funds, you incur two types of
costs: (1) transaction costs, including sales charges (loads) on
purchases; redemption fees; and exchange fees; and (2) ongoing costs,
including management fees; distribution and/or shareholder servicing fees;
and other fund expenses. These examples are intended to help you
understand your ongoing costs (in dollars) of investing in the HSBC
Investor Funds and to compare these costs with the ongoing costs of
investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the
beginning of the period and held for the entire period from November 1,
2006 through April 30, 2007.
ACTUAL EXPENSES
The table below provides information about actual account values and
actual expenses. You may use the information below, together with the
amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the
number in the table under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this
period.
ANNUALIZED
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
11/1/06 4/30/07 11/1/06 - 4/30/07 11/1/06 - 4/30/07
------------- ------------- ----------------- -----------------
Core Plus Fixed Income Portfolio ................ $1,000.00 $1,047.70 $3.15 0.62%
High Yield Fixed Income Portfolio ............... 1,000.00 1,069.50 8.72 1.70%
Intermediate Duration Fixed Income Portfolio .... 1,000.00 1,066.20 4.51 0.88%
Growth Portfolio ................................ 1,000.00 1,083.10 3.36 0.65%
International Equity Portfolio .................. 1,000.00 1,143.80 4.41 0.83%
Opportunity Portfolio ........................... 1,000.00 1,121.00 4.79 0.91%
Value Portfolio ................................. 1,000.00 1,091.40 3.53 0.68%
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* Expenses are equal to the average account value times the Portfolio's
annualized expense ratio multiplied by the number of days in the most
recent fiscal half-year divided by the number of days in the fiscal year.
111 HSBC INVESTOR PORTFOLIOS
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HSBC INVESTOR PORTFOLIOS
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TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--APRIL 30, 2007 (CONTINUED)
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below provides information about hypothetical account
values and hypothetical expenses based on each HSBC Investor Funds's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information
to compare this 5% hypothetical example with the 5% hypothetical examples
that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to
highlight your ongoing costs only and do not reflect any transactional
costs, such as sales charges (loads), redemption fees, or exchange fees.
Therefore, the table is useful in comparing ongoing costs only, and will
not help you determine the relative total costs of owning different funds.
In addition, if these transactional costs were included, your costs would
have been higher.
ANNUALIZED
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
11/1/06 4/30/07 11/1/06 - 4/30/07 11/1/06 - 4/30/07
------------- ------------- ----------------- -----------------
Core Plus Fixed Income Portfolio ................ $1,000.00 $1,021.72 $3.11 0.62%
High Yield Fixed Income Portfolio ............... 1,000.00 1,016.36 8.50 1.70%
Intermediate Duration Fixed Income Portfolio .... 1,000.00 1,020.43 4.41 0.88%
Growth Portfolio ................................ 1,000.00 1,021.57 3.26 0.65%
International Equity Portfolio .................. 1,000.00 1,020.68 4.16 0.83%
Opportunity Portfolio ........................... 1,000.00 1,020.28 4.56 0.91%
Value Portfolio ................................. 1,000.00 1,021.42 3.41 0.68%
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* Expenses are equal to the average account value times the Portfolio's
annualized expense ratio multiplied by the number of days in the most
recent fiscal half-year divided by the number of days in the fiscal year.
HSBC INVESTOR PORTFOLIOS 112
A description of the policies and procedures that the Funds use to
determine how to vote proxies relating to the portfolio securities is available
without charge, upon request, by calling 1-800-525-5757 for HSBC Bank USA and
HSBC Brokerage (USA) Inc. clients and 1-800-782-8183 for all other shareholders
or on the Fund's website at WWW.INVESTORFUNDS.US.HSBC.COM and the Securities and
Exchange Commission's website at HTTP://WWW.SEC.GOV. A copy of the Fund's voting
record for the most recent 12 month period ending June 30 is available at the
Security and Exchange Commission's website at HTTP://WWW.SEC.GOV.
Schedules of Portfolio Investments for fiscal quarters ending January 31
and July 31 will be available no later than 60 days after each period end,
without charge, on the Fund's website at WWW.INVESTORFUNDS.US.HSBC.COM and on
the Securities and Exchange Commission's website at HTTP://WWW.SEC.GOV.
An investment in a Fund is not a deposit of HSBC Bank USA, National
Association, and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
HSBC INVESTOR FAMILY OF FUNDS:
INVESTMENT ADVISER AND ADMINISTRATOR
HSBC Investments (USA) Inc.
452 Fifth Avenue
New York, NY 10018
SUB-ADVISERS
HSBC INVESTOR GROWTH PORTFOLIO
Waddell & Reed Investment Management Company
6300 Lamar Avenue
Overland Park, KS 66202
HSBC GROWTH AND INCOME FUND
TransAmerica Investment Management, LLC
1150 S. Olive Street, Suite 2700
Los Angeles, CA 90015
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
AllianceBernstein Investment Research and Management
1345 Avenue of the Americas, 39th Floor
New York, NY 10105
HSBC INVESTOR MID-CAP FUND
Munder Capital Management
Munder Capital Center
480 Pierce Street
Birmingham, MI 48009-6063
HSBC INVESTOR OPPORTUNITY PORTFOLIO
Westfield Capital Management, LLC
One Financial Center
Boston, MA 02111
HSBC INVESTOR VALUE PORTFOLIO
NWQ Investment Management Co., LLC
2049 Century Park East, 16th Floor
Los Angeles, CA 90067
SHAREHOLDER SERVICING AGENTS
FOR HSBC BANK USA, N.A. AND
HSBC SECURITIES (USA) INC. CLIENTS
HSBC Bank USA, N.A.
452 Fifth Avenue
New York, NY 10018
1-888-525-5757
FOR ALL OTHER SHAREHOLDERS
HSBC Investor Funds
P.O. Box 182845
Columbus, OH 43218-2845
1-800-782-8183
TRANSFER AGENT,
DISTRIBUTOR AND SPONSOR
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
CUSTODIAN
HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
HSBC INVESTOR HIGH YIELD FIXED INCOME FUND
HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO
HSBC INVESTOR GROWTH PORTFOLIO
HSBC INVESTOR GROWTH AND INCOME FUND
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
HSBC INVESTOR MID-CAP FUND
HSBC INVESTOR OPPORTUNITY PORTFOLIO
HSBC INVESTOR VALUE PORTFOLIO
The Northern Trust Company
50 South LaSalle Street
Chicago, IL 60603
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KPMG LLP
191 West Nationwide Blvd., Suite 500
Columbus, OH 43215
LEGAL COUNSEL
Dechert LLP
1775 I Street, N.W.
Washington, D.C. 20006
The HSBC Investor Family of Funds are distributed by BISYS Fund Services. This
document must be preceded or accompanied by a current prospectus for the HSBC
Investor Funds, which you should read carefully before you invest or send money.
-- NOT FDIC INSURED -- NO BANK GUARANTEE -- MAY LOSE VALUE
HSB-0008 06/07
ITEM 2. CODE OF ETHICS.
NOT APPLICABLE - ONLY FOR ANNUAL REPORTS.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
NOT APPLICABLE - ONLY FOR ANNUAL REPORTS.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
NOT APPLICABLE - ONLY FOR ANNUAL REPORTS.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
NOT APPLICABLE.
ITEM 6. SCHEDULE OF INVESTMENTS.
NOT APPLICABLE.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
NOT APPLICABLE.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
NOT APPLICABLE.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
NOT APPLICABLE.
ITEM 11. CONTROLS AND PROCEDURES.
(a)THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
HAVE CONCLUDED, BASED ON THEIR EVALUATION OF THE REGISTRANT'S DISCLOSURE
CONTROLS AND PROCEDURES AS CONDUCTED WITHIN 90 DAYS OF THE FILING DATE OF THIS
REPORT, THAT THESE DISCLOSURE CONTROLS AND PROCEDURES ARE ADEQUATELY DESIGNED
AND ARE OPERATING EFFECTIVELY TO ENSURE THAT INFORMATION REQUIRED TO BE
DISCLOSED BY THE REGISTRANT ON FORM N-CSR IS RECORDED, PROCESSED, SUMMARIZED AND
REPORTED WITHIN THE TIME PERIODS SPECIFIED IN THE SECURITIES AND EXCHANGE
COMMISSION'S RULES AND FORMS.
(b) THERE WERE NO CHANGES IN THE REGISTRANT'S INTERNAL CONTROL OVER FINANCIAL
REPORTING (AS DEFINED IN RULE 30A-3(d) UNDER THE ACT (17 CFR 270.30A-3(d)) THAT
OCCURRED DURING THE SECOND FISCAL QUARTER OF THE PERIOD COVERED BY THIS REPORT
THAT HAVE MATERIALLY AFFECTED OR ARE REASONABLY LIKELY TO MATERIALLY AFFECT, THE
REGISTRANT'S INTERNAL CONTROL OVER FINANCIAL REPORTING.
ITEM 12. EXHIBITS.
(a)(1) NOT APPLICABLE - ONLY FOR ANNUAL REPORTS.
(a)(2) CERTIFICATIONS PURSUANT TO RULE 30A-2(a) ARE ATTACHED HERETO.
(a)(3) NOT APPLICABLE.
(b) CERTIFICATIONS PURSUANT TO RULE 30A-2(b) ARE FURNISHED HEREWITH.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) HSBC ADVISOR FUNDS TRUST
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By (Signature and Title)* /s/ Richard A. Fabietti
-------------------------------------------------------
Richard A. Fabietti
President
Date_____July 6, 2007_______________________________
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Richard A. Fabietti
-------------------------------------------------------
Richard A. Fabietti
President
Date_____July 6, 2007_______________________________
By (Signature and Title)* /s/ Troy A. Sheets
-------------------------------------------------------
Troy A. Sheets
Treasurer
Date_____July 6, 2007_______________________________
* Print the name and title of each signing officer under his or her signature.