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] - -------------------------------------------------------------------------------- HSBC Investments (USA) Inc. HSBC Investor Family of Funds Semi Annual Report April 30, 2007 - -------------------------------------------------------------------------------- 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] - -------------------------------------------------------------------------------- GLOSSARY OF TERMS - -------------------------------------------------------------------------------- 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. - -------------------------------------------------------------------------------- TABLE OF CONTENTS - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- CHAIRMAN'S MESSAGE - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- COMMENTARY FROM THE CERTAIN PARTIES - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- HSBC INVESTOR CORE PLUS FIXED INCOME 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 Core Plus Fixed Income Fund (Advisor) 1/9/95 4.99 9.86 5.56 6.38 6.97 0.80 0.45 - ------------------------------------------------------------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------------------------------------------------------------ Lehman Brothers U.S. Aggregate Bond Index(4) -- 2.64 7.36 5.06 6.35 N/A N/A N/A - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Intermediate Investment-Grade Debt Funds Average(4) -- 2.53 6.80 4.62 5.64 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. 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 - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- HSBC INVESTOR HIGH YIELD FIXED INCOME 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 High Yield Fixed Income Fund Class A(1) 11/18/05 2.32 5.54 7.43 3.53 0.80 - ---------------------------------------------------------------------------------------------------------------- HSBC Investor High Yield Fixed Income Fund Class B(2) 11/21/05 3.07 5.99 8.39 4.28 1.55 - ---------------------------------------------------------------------------------------------------------------- HSBC Investor High Yield Fixed Income Fund Class C(3) 12/14/05 6.05 8.96 10.69 4.28 1.55 - ---------------------------------------------------------------------------------------------------------------- HSBC Investor High Yield Fixed Income Fund Class I 11/18/05 7.60 11.20 11.46 3.28 0.55 - ---------------------------------------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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; 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% - ---------- * 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 - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- 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% - ---------- * 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 -------------------------------------------------------------------- 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.