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: 811-08928
HSBC INVESTOR PORTFOLIOS
(Exact name of registrant as specified in charter)
452 FIFTH AVENUE
NEW YORK, NY 10018
(Address of principal executive offices) (Zip code)
CITI 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
Date of reporting period: October 31, 2007
ITEM 1. REPORTS TO STOCKHOLDERS.
Annual Report
HSBC Investor LifeLine Funds(TM)
================================================================================
OCTOBER 31, 2007
HSBC INVESTOR AGGRESSIVE
GROWTH STRATEGY FUND
LifeLine
HSBC INVESTOR GROWTH
It's simple. STRATEGY FUND
It's easy. HSBC INVESTOR MODERATE
GROWTH STRATEGY FUND
It's affordable.
HSBC INVESTOR CONSERVATIVE
GROWTH STRATEGY FUND
HSBC INVESTOR LIFELINE FUNDS
HSBC [LOGO]
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TABLE OF CONTENTS
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HSBC INVESTOR LIFELINE FUNDS
ANNUAL REPORT - OCTOBER 31, 2007
Chairman's Message 1
Commentary From the Investment Manager 2
Portfolio Reviews 3
Statements of Assets and Liabilities 19
Statements of Operations 20
Statements of Changes in Net Assets 21
Financial Highlights 25
Notes to Financial Statements 29
Report of Independent Registered Public Accounting Firm 36
Other Federal Income Tax Information 37
Table of Shareholder Expenses 39
HSBC INVESTOR PORTFOLIOS
Schedules of Portfolio Investments
HSBC Investor Core Plus Fixed Income Portfolio 41
HSBC Investor High Yield Fixed Income Portfolio 45
HSBC Investor Intermediate Duration Fixed Income Portfolio 50
HSBC Investor Growth Portfolio 53
HSBC Investor International Equity Portfolio 54
HSBC Investor Opportunity Portfolio 56
HSBC Investor Value Portfolio 58
Statements of Assets and Liabilities 59
Statements of Operations 61
Statements of Changes in Net Assets 63
Financial Highlights 67
Notes to Financial Statements 68
Report of Independent Registered Public Accounting Firm 75
Investment Adviser Contract Approval 76
Table of Shareholder Expenses 77
Board of Trustees 79
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GLOSSARY OF TERMS
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CITIGROUP U.S. DOMESTIC THREE MONTH TREASURY BILL INDEX is government guaranteed
and offers a fixed rate of return. Return and principal of stocks and bonds will
vary with market conditions. Treasury bills are less volatile than longer-term
fixed-income securities and are guaranteed as to timely payment of principal and
interest by the U.S. Government.
LEHMAN BROTHERS U.S. AGGREGATE 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 INDEX is an unmanaged index 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.
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 YIELDS FUNDS AVERAGE is an average of managed funds that
aims at high (relative) current yield from fixed income securities, has no
quality or maturity restrictions, and tends to invest in lower grade debt
issues.
MERRILL LYNCH U.S. HIGH YIELD MASTER II INDEX is an unmanaged index which
measures the performance of the broad high yield market.
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 MIDCAP(R) GROWTH INDEX is an unmanaged index which measures the
performance of securities found in the Russell universe that fall in the
mid-range sector.
RUSSELL 1000(R) GROWTH INDEX is unmanaged index which measures the performance
of those Russell 1000 companies with higher price-to-book ratios and higher
forecasted growth values.
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.
SECURITIES INDUSTRY AND FINANCIAL MARKETS ASSOCIATION MUNICIPAL SWAP INDEX
("SIFMA") is produced by Municipal Market Data, is a 7-day high-grade market
index comprised of tax-exempt VRDOs from MMD's extensive MMD's extensive
database.
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.
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.
[This Page Intentionally Left Blank]
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CHAIRMAN'S MESSAGE
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DEAR SHAREHOLDERS,
It is no secret that in today's global economy, investing is extremely complex.
From the days when goods and services were bartered to the relatively modern
period of "exchanges," many people are involved with many chances for both
success and failure. The mutual fund industry of the 21st century exemplifies
the most complex of investment vehicles, with the result that government
agencies like the U.S. Securities and Exchange Commission and boards of mutual
funds must be vigilant on behalf of the private investor.
To protect and support their shareholders, mutual fund boards need to have the
most current information about general market trends and individual companies in
which the funds invest. Boards must also determine who will be the best
providers of this information and the best managers of the processes of the
funds.
Our board relies on the advice of the counsel to the fund and on its own counsel
to the independent trustees to analyze all the financial and managerial issues
related to operations. For example, when approving advisory agreements, the
board considers:
o Nature, extent and quality of services to be provided
o Cost of services and profits realized by the advisors
o Determination of equitable fees
o Comparison of fees and services provided by other advisors
o Performance of the funds and fund advisors
o Economies of scale as funds grow
This list generally represents the factors for approving advisory agreements. If
any of the service providers to the funds begins to fall short in its
performance, the board will find out the reasons, recommend remedial action or
make a change. This is an ongoing process, not limited to quarterly meetings.
The board and all its service providers work every day on behalf of the
shareholders. As always, as you read this report about the status of your
investment, if you have questions, concerns or ideas, please contact us.
Yours truly,
/s/ Larry M. Robbins
Larry M. Robbins, Chairman, HSBC Investor Funds
1 HSBC INVESTOR FAMILY OF FUNDS
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COMMENTARY FROM THE INVESTMENT MANAGER
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HSBC INVESTMENTS (USA) INC.
U.S. ECONOMIC REVIEW
The U.S. economy slowed during the year ended October 31, 2007. Less
consumption, housing weakness, subprime turmoil, and a recent slowing of
corporate profits marked the year. While overall inflation was fine,
inflationary pressures have been building through higher commodity prices.
The housing market has been a main drag on the U.S. economy and its growth.
Housing continues to deteriorate, as indicated by August's 4.4% year-over-year
decline in the Case-Shiller index of home prices and cyclical low in existing
home sales.
After record years, corporate profits have begun to weaken led by a summer
downturn in real estate, followed by subprime writedowns in Financials. A
booming technology sector has been an exception to the slowdown in most
industries. Employment is good, but growing anemically and matched with a
less-tight 4.7% unemployment rate.
Therefore, while the most recent quarterly economic growth was a strong 4.9%
annualized, that reading appears both high and unsustainable. In 2008, we
believe continued growth is an uncertainty as the country braces for more rounds
of mortgage resets, and increased defaults. The housing market has declined,
driven by tighter credit and slow underlying demand. Housing will likely remain
weak to allow time for underlying housing fundamentals to stabilize. Continued
tight credit, lower housing wealth, and slower job growth, all combine to
increase the downside risk to growth.
Our central scenario remains one of a soft-landing as indicators stay mixed, the
employment situation remains reasonably healthy, and we believe we see a Federal
Reserve Board (the "Fed") ready to support. However, we acknowledge downside
risks to growth have increased given the potential implications of the subprime
fallout for corporates and the economy at large.
According to our central scenario, growth is expected to slow moderately in
other developed markets like Europe, and remain strong in emerging markets.
MARKET REVIEW
Stocks posted strong returns in the year ended October 31, 2007. The S&P 500
Index (price only) gained 12.4%, the Russell 2000(R) Index (price only) gained
8.0%, and the MSCI EAFE gained 25.4%. International indexes created new highs,
and the S&P this year finally surpassed its 2000 peak.
The most significant market change in the past few months was due to the
subprime contagion. When borrowers began to default on mortgages connected to
souring housing investments, industries surrounding risky loan origination saw
losses accelerate. Losses also spread to companies exposed to this sector, and
tighter credit meant restrictive borrowing capacity for both consumers and
companies.
The subprime situation led to a spike in risk-aversion. This was evidenced by a
drop in financials stocks and a flight towards more safe-haven instruments like
gold and U.S. Treasuries. In the past three months, gold has rallied 19.9% to
$797/oz and 10-year bond yields dropped 26 basis points (0.26%) to 4.47%.
While the Fed has helpfully cut target rates, the situation remains critical.
Looking at 2008, we believe we see a soft landing for the U.S. economy but a
more difficult environment for corporate profits. We are therefore somewhat more
cautious on equities over the next 12 months. Among fixed income markets, we
prefer government debt to credit assets due to the market volatility and less
attractive credit valuations.
HSBC INVESTOR FAMILY OF FUNDS 2
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PORTFOLIO REVIEWS
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HSBC INVESTOR AGGRESSIVE GROWTH STRATEGY FUND
HSBC INVESTOR GROWTH STRATEGY FUND
HSBC INVESTOR MODERATE GROWTH STRATEGY FUND
HSBC INVESTOR CONSERVATIVE GROWTH STRATEGY 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 the Fund will fluctuate as the
value of the securities in the portfolio changes.
Common stocks, and funds investing in common stocks, generally provide greater
return potential when compared with other types of investments.
Value-based investments are subject to the risk that the broad market may not
recognize their intrinsic value.
Small capitalization funds typically carry additional risks, since smaller
companies generally have a higher risk of failure and historically have
experienced a greater degree of market volatility than average. There are risks
associated with investing in a fund that invests in securities of foreign
countries, such as erratic market conditions, economic and political
instabilities and fluctuations in currency exchanges.
AN INVESTMENT IN MONEY MARKET FUNDS IS NOT INSURED OR GUARANTEED BY THE FDIC OR
ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUNDS SEEK TO PRESERVE THE VALUE OF
YOUR INVESTMENT AT $1.00.
The HSBC Investor Funds feature a number of funds that are structured as
"master/feeder" funds. Under this two-tier structure, one fund (the "feeder
fund") invests all of its investable assets in a second fund (the "master
fund"). The LifeLine Funds, through this master/feeder structure, provide an
asset allocation option to investors who seek to diversify their investment
across a variety of asset classes. Each LifeLine Fund provides an asset
allocation option corresponding to different investment objectives and risk
tolerances. Each LifeLine Fund is a feeder fund. However, unlike most feeder
funds, a LifeLine Fund will not direct all of its assets to a single master
fund. Instead, the LifeLine Fund will allocate its assets to different master
funds in accordance with its asset allocation model. HSBC Investments (USA) Inc.
(the "Adviser"), according to specific target allocations, invested each
LifeLine Fund's assets in some or all of the following master funds ("underlying
Portfolios"):
HSBC Investor Growth Portfolio ("Growth Portfolio"); HSBC Investor Value
Portfolio ("Value Portfolio"); HSBC Investor Opportunity Portfolio ("Small Cap
Equity Portfolio"); HSBC Investor International Equity Portfolio ("International
Equity Portfolio"); HSBC Investor Core Plus Fixed Income Portfolio ("Core Plus
Fixed Income Portfolio"); HSBC Investor High Yield Fixed Income Portfolio (High
Yield Fixed Income Fund); HSBC Investor Intermediate Duration Fixed Income
Portfolio ("Intermediate Duration Fixed Income Portfolio"); and the HSBC
Investor Money Market Fund ("Money Market Fund").
3 HSBC INVESTOR FAMILY OF FUNDS
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PORTFOLIO REVIEWS
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During the last fiscal period, each LifeLine Fund invested in a different
combination of the underlying Portfolios according to the various target
percentage weightings selected by the Adviser, approximately as set forth in the
charts below.
----------------------------------------------------------------------------------
HSBC INVESTOR HSBC INVESTOR HSBC INVESTOR HSBC INVESTOR
AGGRESSIVE GROWTH GROWTH MODERATE GROWTH CONSERVATIVE GROWTH
STRATEGY STRATEGY STRATEGY STRATEGY
UNDERLYING PORTFOLIO FUND FUND FUND FUND
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Money Market Fund 1% 1% 6% 21%
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Core Plus Fixed Income Portfolio None 15% 26% 25%
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High Yield Fixed Income Portfolio None 2% 5% 8%
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Intermediate Duration Fixed Income Portfolio None None None 3%
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Growth Portfolio 21% 21% 19% 15%
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International Equity Portfolio 23% 20% 15% 10%
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Opportunity Portfolio 34% 20% 11% 4%
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Value Portfolio 21% 21% 18% 14%
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Total: 100% 100% 100% 100%
====================================================================================================================================
HSBC INVESTOR FAMILY OF FUNDS 4
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PORTFOLIO REVIEWS
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HSBC INVESTOR AGGRESSIVE GROWTH STRATEGY FUND
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VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[The following tables represent line charts in the printed piece.]
Citigroup HSBC Investor
Russell Russell Russell U.S. Domestic Aggressive
1000(R) 1000(R) MSCI 2500(R) Three Month Growth
Growth Value EAFE Growth Treasury Bill Strategy Fund
Index Index Index Index Index (B Shares)(2)
2/9/05 10000 10000 10000 10000 10000 10000
3/05 9922 10190 10176 9917 10039 9850
6/05 10167 10360 10100 10270 10108 10110
9/05 10575 10763 11154 10916 10188 10900
12/05 10889 10899 11614 11213 10282 11233
3/06 11226 11546 12714 12539 10387 12128
6/06 10788 11614 12834 11771 10507 11907
9/06 11213 12336 13345 11629 10638 12118
12/06 11878 13323 14733 12588 10771 12962
3/07 12019 13489 15344 13095.8 10904 13283
6/07 12843 14153 16367 14010.5 11039 14368
9/07 13383 14119 16732 14102.3 11171 14750
10/07 13839 14120 17392 14686.1 11211 15143
Aggressive HSBC Investor
Growth Aggressive
Blended Growth
Portfolio Strategy
Index(5) Fund (B Shares)(2)
2/9/05 10000 10000
3/05 10036 9850
6/05 10232 10110
9/05 10868 10900
12/05 11172 11233
3/06 12075 12128
6/06 11765 11907
9/06 12078 12118
12/06 13060 12962
3/07 13433 13283
6/07 14293 14368
9/07 14521 14750
10/07 14961 15143
The charts above represent a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Funds' benchmark
and represents the reinvestment of dividends and capital gains in the Funds.
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AVERAGE ANNUAL EXPENSE
FUND PERFORMANCE TOTAL RETURN (%) RATIO (%)(4)
- ------------------------------------------------------------------------------------------------------------------------------------
INCEPTION 1 SINCE
AS OF OCTOBER 31, 2007 DATE YEAR INCEPTION GROSS NET
- ------------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Aggressive Growth Strategy Fund Class A(1) 2/14/05 17.54 15.68 3.52 1.50
- ------------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Aggressive Growth Strategy Fund Class B(2) 2/9/05 18.75 16.46 4.27 2.25
- ------------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Aggressive Growth Strategy Fund Class C(3) 6/9/05 21.97 19.54 4.27 2.25
- ------------------------------------------------------------------------------------------------------------------------------------
Aggressive Growth Blended Portfolio Index(5) 19.11 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 APPLICABLE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY 28,
2007.
(5) THE AGGRESSIVE GROWTH BLENDED PORTFOLIO INDEX CONSISTS OF A BLEND BY
PERCENTAGE OF THE FOLLOWING INDICES. THE CITIGROUP U.S. DOMESTIC 3-MONTH
T-BILL (1%); RUSSELL 1000(R) GROWTH INDEX (21%); RUSSELL 1000(R) VALUE INDEX
(21%); RUSSELL 2500(R) GROWTH INDEX (34%) AND THE MSCI EAFE INDEX (23%). 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.
FOR A COMPLETE DEFINITION OF THE ABOVE REFERENCED INDICES, PLEASE REFER TO
THE GLOSSARY OF TERMS.
5 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH STRATEGY FUND
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[The following tables represent line charts in the printed piece.]
Citigroup
Russell Russell Russell U.S. Domestic Lehman Merrill Lynch
1000(R) 1000(R) 2500(R) MSCI Three Month Brothers U.S. High Yield HSBC Investor
Growth Value Growth EAFE Treasury U.S. Aggregate Master II Growth Strategy
Index Index Index Index Bill Index Index Index (B Shares)(2)
2/1/05 10000 10000 10000 10000 10000 10000 10000 10000
3/05 9922 10190 9917 10176 10039 9890 9866 10150
6/05 10167 10360 10270 10100 10108 10188 10124 10410
9/05 10575 10763 10916 11154 10188 10119 10217 11040
12/05 10889 10899 11213 11614 10282 10179 10284 11336
3/06 11226 11546 12539 12714 10387 10114 10579 12018
6/06 10788 11614 11771 12834 10507 10105 10600 11877
9/06 11213 12336 11629 13345 10638 10490 11030 12128
12/06 11878 13323 12588 14733 10771 10620 11494 12883
3/07 12019 13489 13095.8 15344 10904 10779 11807 13176
6/07 12843 14153 14010.5 16367 11039 10723 11845 13984
9/07 13383 14119 14102.3 16732 11171 11028 11885 14368
10/07 13839 14120 14686.1 17392 11211 11127 11957 14623
Growth Blended
Portfolio Index HSBC Investor Growth
(5) Strategy Fund (B Shares)2
2/1/05 10000 10000
3/05 10025 10150
6/05 10224 10410
9/05 10725 11040
12/05 10982 11336
3/06 11643 12018
6/06 11439 11877
9/06 11825 12128
12/06 12643 12883
3/07 12952 13176
6/07 13618 13984
9/07 13874 14368
10/07 14218 14623
The charts above represent a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Funds' benchmark
and represents the reinvestment of dividends and capital gains in the Funds.
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL EXPENSE
FUND PERFORMANCE TOTAL RETURN (%) RATIO (%)(4)
- ------------------------------------------------------------------------------------------------------------------------------------
INCEPTION 1 SINCE
AS OF OCTOBER 31, 2007 DATE YEAR INCEPTION GROSS NET
- ------------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Growth Strategy Fund Class A(1) 2/8/05 13.88 13.76 2.19 1.50
- ------------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Growth Strategy Fund Class B(2) 2/1/05 14.98 14.85 2.94 2.25
- ------------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Growth Strategy Fund Class C(3) 4/27/05 18.04 17.17 2.94 2.25
- ------------------------------------------------------------------------------------------------------------------------------------
Growth Blended Portfolio Index(5) 16.38 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 EACH CLASS OF SHARES OF THE FUND FOR THE YEAR ENDED
OCTOBER 31, 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 YEAR ENDED OCTOBER 31, 2007 WOULD HAVE BEEN LOWER.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 5.00%.
(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) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY 28,
2007.
(5) THE PERFORMANCE SHOWN FOR THE GROWTH BLENDED PORTFOLIO INDEX PRIOR TO APRIL
30, 2006 DOES NOT REFLECT THE 2.0% ALLOCATION TO THE MERRILL LYNCH U.S. HIGH
YIELD MASTER II INDEX. THE GROWTH BLENDED PORTFOLIO INDEX CONSISTS OF A
BLEND BY PERCENTAGE OF THE FOLLOWING INDICES. THE CITIGROUP U.S. DOMESTIC
3-MONTH T-BILL (1%); MERRILL LYNCH HIGH YIELD MASTER II INDEX (2.0%); LEHMAN
BROTHERS U.S. AGGREGATE FUND INDEX (15%); RUSSELL 1000(R) GROWTH INDEX
(21%); RUSSELL 1000(R) VALUE INDEX (21%); RUSSELL 2500(R) GROWTH INDEX
(20%), AND THE MSCI EAFE INDEX (20%). 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. FOR A COMPLETE DEFINITION OF THE ABOVE
REFERENCED INDICES, PLEASE REFER TO THE GLOSSARY OF TERMS.
HSBC INVESTOR FAMILY OF FUNDS 6
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR MODERATE GROWTH STRATEGY FUND
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[The following tables represent line charts in the printed piece.]
Russell Russell Russell Citigroup HSBC Investor
1000(R) 1000(R) 2500(R) MSCI U.S. Domestic Lehman Brothers Merrill Lynch Moderate Growth
Growth Value Growth EAFE Three Month U.S. Aggregate U.S. High Yield Strategy
Index Index Index Index Treasury Bill Index Index Master II Index (B Shares)(2)
2/1/05 10000 10000 10000 10000 10000 10000 10000 10000
3/05 9922 10190 9917 10176 10039 9890 9866 10032
6/05 10167 10360 10270 10100 10108 10188 10124 10263
9/05 10575 10763 10916 11154 10188 10119 10217 10693
12/05 10889 10899 11213 11614 10282 10179 10284 10935
3/06 11226 11546 12539 12714 10387 10114 10579 11391
6/06 10788 11614 11771 12834 10507 10105 10600 11302
9/06 11213 12336 11629 13345 10638 10490 11030 11553
12/06 11878 13323 12588 14733 10771 10620 11494 12170
3/07 12019 13489 13095.8 15344 10904 10779 11807 12400
6/07 12843 14153 14010.5 16367 11039 10723 11845 12947
9/07 13383 14119 14102.3 16732 11171 11028 11885 13283
10/07 13839 14120 14686.1 17392 11211 11127 11957 13412
Moderate Growth HSBC Investor
Blended Moderate Growth
Portfolio Strategy Fund
Index(5) (B Shares)(2)
2/1/05 10000 10000
3/05 10006 10032
6/05 10213 10263
9/05 10575 10693
12/05 10784 10935
3/06 11237 11391
6/06 11109 11302
9/06 11510 11553
12/06 12156 12170
3/07 12415 12400
6/07 12899 12947
9/07 13160 13283
10/07 13420 13412
The charts above represent a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Funds' benchmark
and represents the reinvestment of dividends and capital gains in the Funds.
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL EXPENSE
FUND PERFORMANCE TOTAL RETURN (%) RATIO (%)(4)
- ------------------------------------------------------------------------------------------------------------------------------------
INCEPTION 1 SINCE
AS OF OCTOBER 31, 2007 DATE YEAR INCEPTION GROSS NET
- ------------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Moderate Growth Strategy Fund Class A(1) 2/3/05 10.28 10.43 2.14 1.52
- ------------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Moderate Growth Strategy Fund Class B(2) 2/1/05 11.25 11.29 2.89 2.27
- ------------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Moderate Growth Strategy Fund Class C(3) 6/9/05 14.20 12.74 2.89 2.27
- ------------------------------------------------------------------------------------------------------------------------------------
Moerate Growth Blended Portfolio Index(5) -- 13.58 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 EACH CLASS OF SHARES OF THE FUND FOR THE YEAR ENDED
OCTOBER 31, 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 YEAR ENDED OCTOBER 31, 2007 WOULD HAVE BEEN LOWER.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 5.00%.
(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) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY 28,
2007.
(5) THE PERFORMANCE SHOWN FOR THE MODERATE GROWTH BLENDED PORTFOLIO INDEX PRIOR
TO APRIL 30, 2006 DOES NOT REFLECT THE 5.0% ALLOCATION TO THE MERRILL LYNCH
U.S. HIGH YIELD MASTER II INDEX. THE MODERATE GROWTH BLENDED PORTFOLIO INDEX
CONSISTS OF A BLEND BY PERCENTAGE OF THE FOLLOWING INDICES. THE CITIGROUP
U.S. DOMESTIC 3-MONTH T-BILL (6%); LEHMAN BROTHERS U.S. AGGREGATE FUND INDEX
(26%); MERRILL LYNCH HIGH YIELD MASTER II INDEX (5%); RUSSELL 1000(R) GROWTH
INDEX (19%); RUSSELL 1000(R) VALUE INDEX (18%); RUSSELL 2500(R) GROWTH INDEX
(11%) AND THE MSCI EAFE INDEX (15%). 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. FOR A COMPLETE DEFINITION OF THE ABOVE
REFERENCED INDICES, PLEASE REFER TO THE GLOSSARY OF TERMS.
7 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR CONSERVATIVE GROWTH STRATEGY FUND
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[The following tables represent line charts in the printed piece.]
HSBC
Merrill Investor
Citigroup Lehman Lehman Lynch Conservative
Russell Russell Russell U.S. Domestic Brothers Brothers U.S. High Growth
1000(R) 1000(R) 2500(R) MSCI Three Month U.S. Intermediate Yield Strategy
Growth Value Growth EAFE Treasury Bill Aggregate U.S. Aggregate Master II (B Shares)
Index Index Index Index Index Index Index Index (2)
2/17/05 10000 10000 10000 10000 10000 10000 10000 10000 10000
3/05 9922 10190 9917 10176 10039 9890 9910 9866 9872
6/05 10167 10360 10270 10100 10108 10188 10150 10124 10032
9/05 10575 10763 10916 11154 10188 10119 10110 10217 10312
12/05 10889 10899 11213 11614 10282 10179 10166 10284 10530
3/06 11226 11546 12539 12714 10387 10114 10140 10579 10809
6/06 10788 11614 11771 12834 10507 10105 10153 10600 10766
9/06 11213 12336 11629 13345 10638 10490 10499 11030 10998
12/06 11878 13323 12588 14733 10771 10620 10631 11494 11457
3/07 12019 13489 13096 15344 10904 10779 10798 11807 11639
6/07 12843 14153 14011 16367 11039 10723 10761 11845 11972
9/07 13383 14119 14102 16732 11171 11028 11058 11885 12243
10/07 13839 14120 14686 17392 11211 11127 11147 11957 12263
HSBC Investor
Conservative Growth Conservative Growth
Blended Portfolio Strategy Fund
Index(5) (B Shares)(2)
2/17/05 10000 10000
3/05 10004 9872
6/05 10189 10032
9/05 10444 10312
12/05 10611 10530
3/06 10918 10809
6/06 10873 10766
9/06 11249 10998
12/06 11732 11457
3/07 11948 11639
6/07 12283 11972
9/07 12522 12243
10/07 12703 12263
The charts above represent a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Funds' benchmark
and represents the reinvestment of dividends and capital gains in the Funds.
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL EXPENSE
FUND PERFORMANCE TOTAL RETURN (%) RATIO (%)(4)
- ------------------------------------------------------------------------------------------------------------------------------------
INCEPTION 1 SINCE
AS OF OCTOBER 31, 2007 DATE YEAR INCEPTION GROSS NET
- ------------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Conservative Growth Strategy Fund Class A(1) 2/23/05 6.57 7.40 3.26 1.54
- ------------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Conservative Growth Strategy Fund Class B(2) 2/17/05 7.51 7.84 4.01 2.29
- ------------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Conservative Growth Strategy Fund Class C(3) 4/19/05 10.97 10.17 4.01 2.29
- ------------------------------------------------------------------------------------------------------------------------------------
Conservative Growth Blended Portfolio Index(5) -- 10.75 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 EACH CLASS OF SHARES OF THE FUND FOR THE YEAR ENDED
OCTOBER 31, 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 YEAR ENDED OCTOBER 31, 2007 WOULD HAVE BEEN LOWER.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 5.00%.
(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) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY 28,
2007.
(5) THE PERFORMANCE SHOWN FOR THE CONSERVATIVE GROWTH BLENDED PORTFOLIO INDEX
PRIOR TO APRIL 30, 2006 DOES NOT REFLECT THE 8.0% ALLOCATION TO THE MERRILL
LYNCH U.S. HIGH YIELD MASTER II INDEX. THE CONSERVATIVE GROWTH BLENDED
PORTFOLIO INDEX CONSISTS OF A BLEND BY PERCENTAGE OF THE FOLLOWING INDICES.
THE CITIGROUP U.S. DOMESTIC 3-MONTH T-BILL (21%); MERRILL LYNCH HIGH YIELD
MASTER II INDEX (8%); LEHMAN BROTHERS U.S. AGGREGATE BOND FUND INDEX (25%);
LEHMAN BROTHERS INTERMEDIATE U.S. AGGREGATE BOND INDEX (3%); RUSSELL 1000(R)
GROWTH INDEX (15%); RUSSELL 1000(R) VALUE INDEX (14%); RUSSELL 2500(R)
GROWTH INDEX (4%) AND THE MSCI EAFE INDEX (10%). 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. FOR A COMPLETE DEFINITION OF
THE ABOVE REFERENCED INDICES, PLEASE REFER TO THE GLOSSARY OF TERMS.
HSBC INVESTOR FAMILY OF FUNDS 8
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
STANDARDIZED PERFORMANCE BENCHMARK INDICES FOR THE 1
YEAR ENDED OCTOBER 31, 2007 YEAR (%)
- --------------------------------------------------------------------------------
Citigroup U.S. Domestic 3-Month U.S. Treasury Bill Index 4.95
Lehman Brothers U.S. Aggregate Bond Index 7.36
Lehman Brothers Intermediate U.S. Aggregate Bond Index 6.96
Merrill Lynch High Yield Master II Index 12.36
MSCI EAFE Index 20.32
Russell 1000(R) Growth Index 12.25
Russell 1000(R) Value Index 18.15
Russell 2500(R) Growth Index 7.32
CITIGROUP U.S. DOMESTIC 3-MONTH U.S. TREASURY BILL INDEX reflects monthly return
equivalents of yield averages that are not marked to the market. The Index is an
average of the last three -month Treasury Bill issues. The three-month Treasury
Bills are the short-term debt obligations of the U.S. government.
LEHMAN BROTHERS U.S. AGGREGATE BOND INDEX is a 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.
LEHMAN BROTHERS INTERMEDIATE U.S. AGGREGATE BOND INDEX is generally
representative of investment-grade debt issues with maturities between three and
ten years.
THE MERRILL LYNCH 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 INDEX
(MSCI EAFE) is a market capitalization-weighted equity index comprising 20 of
the 48 countries in the MSCI universe and representing the developed world
outside of North America. Each MSCI country index is created separately, then
aggregated, without change, into regional MSCI indices. EAFE performance data is
calculated in U.S. dollars and in local currency.
RUSSELL 1000(R) GROWTH INDEX measures the performance of 1000 securities in the
Russell Universe with higher price-to-book ratios and higher forecasted growth
values.
RUSSELL 1000(R) VALUE INDEX measures the performance of 1000 securities in the
Russell Universe with a less-than-average growth orientation. Companies in this
index generally have low price-to-book and price-to-earnings ratios, higher
dividend yields, and lower forecasted growth values. Investors cannot invest
directly in an index.
RUSSELL 2500(R) GROWTH INDEX measures the performance of those 2500 securities
in the Russell Universe with higher price-to-book ratios and higher forecasted
growth values.
Investors cannot invest directly in an index, although they can invest in the
underlying securities.
9 HSBC INVESTOR FAMILY OF FUNDS
PORTFOLIO REVIEWS
MOODY'S HAS ASSIGNED AN "AAA"
RATING TO THE HSBC INVESTOR
MONEY MARKET FUND.(1)
HSBC INVESTOR MONEY MARKET FUND
BY THOMAS RIORDAN
SENIOR FIXED INCOME PORTFOLIO MANAGER
INVESTMENT CONCERNS
AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER
GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE
FUND.
During the third quarter of 2007 the fixed income markets were stressed due to
liquidity concerns. As home prices declined throughout 2007, investors became
increasingly concerned about the subprime mortgage market and certain related
securities. In response, investors shunned most structured securities including
asset backed commercial paper and structured investment vehicles ("SIV"). At
October 31, the HSBC Investor Money Market Fund owned SIVs issued by several
issuers, totaling $1.0 billion, which represented about 14% of the Fund's net
assets. Because of sales and maturities that occurred after the Fund's fiscal
year end, the Fund's SIV holdings were reduced to $558 million or about 7% of
its net assets by December 17, 2007.*
As Advisor to the HSBC Investor Money Market Fund, HSBC Investments believes
that the SIVs held by the Fund are high quality tranches of well-established
programs, many of which are bank-sponsored. HSBC Investments' credit teams
continue to monitor these SIV holdings and are in regular contact with SIV
sponsors and rating agencies. Management believes that the Fund has remained in
compliance with the relevant regulations for money market mutual funds.*
In terms of the broader market, in spite of the housing market woes, the economy
grew at close to 3.0% annual rate for much of 2007 and the third quarter Gross
Domestic Product(2) posted a surprisingly strong 3.9% growth rate. The broader
measures of inflation have remained largely within the Federal Reserve's ("the
Fed") target range of 1%-2%. Over the course of 2007, the core Producer Price
Index(2), which excludes food and energy costs, rose at a 1.8% annual rate. The
core Consumer Price Index(2) rose at a 2.3% annual rate. The core Personal
Consumption Expenditure(2) index rose an average of 2.1% for 2007. Recently,
there have been signs of inflation that have caused the Fed concern, including
oil and gold prices at historical highs and a weakening dollar.
The Fed has an unusually difficult job of late, as there have been mixed signals
on the economy, in addition to the ongoing liquidity issues. The Fed has taken
several actions to ease liquidity concerns in the markets. In a surprise move on
August 17, 2007, the Fed lowered the discount rate by 50 basis points (0.50%) to
5.75% and added massive amounts of cash reserves to the system to prevent a
seizing up of economic activity and attempt to restore confidence to the
markets. At the September 18, 2007 Federal Open Market Committee ("FOMC")
meeting they lowered the target fed funds and discount rates by a greater than
expected 50 basis points (0.50%) to 4.75% and 5.25% respectively. This gave
investors a boost of confidence as they saw the Fed aggressively taking steps to
add liquidity to the financial system.
The signs of a slowing economy, including layoffs in the financial services
industry, in addition to the housing collapse have been offset by concerns of
increased inflation. A statement from the October FOMC meeting highlighted these
concerns. After cutting the target federal funds and discount rates by 25 basis
points (0.25%) to 4.5% and 5.0% respectively, they issued a statement
identifying the risks to economic growth and inflation as roughly balanced.
*Portfolio composition is subject to change
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 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.
HSBC INVESTOR FAMILY OF FUNDS 10
PORTFOLIO REVIEWS
HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
BY HSBC INVESTMENTS (USA) INC. U.S. CORE FIXED INCOME TEAM
The HSBC Investor Fixed Income Portfolio (the "Portfolio") seeks to provide
investors with above-average total return, consistent with reasonable risk,
through investments in a diversified portfolio of fixed-income securities.
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 outperformed the benchmark for the period under review. The key
component of that outperformance was the Fund's defensive positioning. Early in
the year, exposure to select off-benchmark holdings in high yield and emerging
market debt contributed to positive performance. These gains were further
enhanced later in the year, as the Fund moved to an underweight in corporates,
as spread sectors underperformed duration adjusted treasuries. The Fund also
benefited from individual security selection within corporate credits and
mortgages.*
Going forward, we will continue to analyze the yield curve for pricing anomalies
and opportunistically add duration as higher yields reflect fair value. We look
to remain defensive as we believe that the fundamentals may continue to
deteriorate over the next 6-12 months eventually causing speculative grade
defaults to rise from current levels. If this occurs, we will see a much more
dramatic widening in credit spreads than we have seen in the current market
environment. We believe the excesses of the past several years have yet to be
resolved through short-term market volatility and central bank reaction.
Consequently, we believe these will continue to have an economic and market
impact.
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
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 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.
11 HSBC INVESTOR FAMILY OF FUNDS
PORTFOLIO REVIEWS
HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO
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 (Class I Shares) outperformed the benchmark for the period under
review. Performance was driven by the Fund's overweight exposure in CCC-rated
issuers and its underweight in the building products and home builders
industries.*
Going forward, we will maintain duration that approximates that of the
benchmark. We continue to analyze the yield curve for pricing anomalies. Our
outlook for the remainder of 2007 is cautiously optimistic. On an industry
front, we remain positive on the energy, gaming, wireless, and cable sectors.
Although we remain cautious on home builders, financials and autos.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
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 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.
HSBC INVESTOR FAMILY OF FUNDS 12
PORTFOLIO REVIEWS
HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO
BY HSBC INVESTMENTS (USA) INC. U.S. CORE FIXED INCOME TEAM
The HSBC Investor Intermediate Duration Fixed Income Portfolio (the "Portfolio")
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.
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 (Class I Shares) outperformed the benchmark for the period under
review. The key component of that outperformance was the Fund's defensive
positioning. Early in the year, exposure to select off-benchmark holdings in
high yield and emerging market debt contributed to positive performance. These
gains were further enhanced later in the year, as the Fund moved to an
underweight in corporates, as spread sectors underperformed duration adjusted
treasuries. The Fund also benefited from individual security selection within
corporate credits and mortgages.*
Going forward, we will continue to analyze the yield curve for pricing anomalies
and opportunistically add duration as higher yields reflect fair value. We look
to remain defensive as we believe that the fundamentals may continue to
deteriorate over the next 6-12 months eventually causing speculative grade
defaults to rise from current levels. If this occurs, we will see a much more
dramatic widening in credit spreads than we have seen in the current market
environment. We believe the excesses of the past several years have yet to be
resolved through short-term market volatility and central bank reaction.
Consequently, we believe these will continue to have an economic and market
impact.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
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 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.
13 HSBC INVESTOR FAMILY OF FUNDS
PORTFOLIO REVIEWS
HSBC INVESTOR GROWTH PORTFOLIO
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 Portfolio (the "Portfolio") 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 Portfolio employs Waddell & Reed
Investment Management Company (Waddell & Reed) as the 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
Equities in general performed well during the Fund's fiscal year ended October
31, 2007, and large-cap growth stocks in particular generated healthy returns.
Investors worried that the housing market's slump and the subprime mortgage
crisis would weaken economic growth, so they sought shares of firms that
appeared poised to deliver earnings growth in a slowing economy. Those trends
helped the Fund post a strong absolute gain for the 12-month period under
review.
The Fund outperformed its benchmark index largely due to strong stock selection.
In fact, security selection added to relative returns in seven of the eight
economic sectors in which the Fund invested during the period. The performance
of the Fund's holdings in the technology, consumer discretionary, materials and
energy sectors especially lifted its return relative to the benchmark.*
The Fund's holdings in the financial sector weighed on its relative performance.
The subprime mortgage crisis caused problems for many of the financial stocks in
the Fund's portfolio, as investors worried that a deteriorating credit
environment could eat into financial firms' profits.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
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 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.
HSBC INVESTOR FAMILY OF FUNDS 14
PORTFOLIO REVIEWS
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
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 Portfolio (the "Portfolio") seeks 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 Portfolio employs
AllianceBernstein L.P. ("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
International stocks performed well during the period. Investors encouraged by
solid global economic growth and generally low interest rates bid up stocks in
foreign markets, helping the Fund post strong absolute returns. Substantial
declines in the value of the U.S. dollar also boosted absolute returns, as they
increased the value of assets denominated in foreign currencies.
The Fund held an overweight position relative to its benchmark index in shares
of industrial commodities firms. Strong global demand, fueled by powerful
economic growth in China and elsewhere, pushed up prices on commodities and
bolstered the profits of commodities-related firms. Commodities stocks surged as
a result, helping the Fund to produce positive performance.
The Fund's holdings in the financial sector weighed on relative performance.
Global investors during the second half of the period became concerned about
rising mortgage defaults by U.S. homeowners with weak credit. Investors worried
that sub-prime mortgage defaults could undermine securities backed by such
loans, potentially leading to a global credit crunch. Financial stocks generally
declined as a result of those fears, so the Fund's overweight position in the
sector detracted from its returns relative to the benchmark which resulted with
the Fund's (Advisor Shares) slightly underperforming the MSCI EAFE Index.
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
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 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.
15 HSBC INVESTOR FAMILY OF FUNDS
PORTFOLIO REVIEWS
HSBC INVESTOR OPPORTUNITY PORTFOLIO
BY WILLIAM A. MUGGIA
PRESIDENT-CHIEF INVESTMENT OFFICER
WESTFIELD CAPITAL MANAGEMENT, LLC
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 Funds
invest all of their investable assets in the HSBC Investor Opportunity Portfolio
(the "Portfolio"). The Portfolio employs Westfield Capital Management, 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
In a period of slowing corporate profit growth, small- and mid-capitalization
growth stocks meaningfully outperformed value stocks as measured by Russell
indices. Materials, energy and industrial stocks were among the performance
leaders, as stocks in those sectors appeared to benefit from exposure to the
healthy pace of economic activity outside the U.S.
Broad participation within the health care sector helped the Fund outperform the
benchmark. Stocks from five different industries contributed to relative gains,
but the impact of stocks within pharmaceuticals & life science tools was most
significant. Maintaining a commitment to the energy sector yielded positive
results relative to the benchmark as well. Stock selection within energy
equipment and services was notable as companies with exposure to markets in the
eastern hemisphere performed well.*
The consumer discretionary sector also provided a source of superior performance
during the year. An underweight position in this lagging sector was of some
benefit, but the bulk of excess return against the benchmark stemmed from stock
selection. Our emphasis on shares of firms with unique franchises exposed to the
high-end consumer, particularly in apparel retail, publishing and specialized
consumer services, helped the Fund's consumer discretionary stake outperform
that of the benchmark.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
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 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.
HSBC INVESTOR FAMILY OF FUNDS 16
PORTFOLIO REVIEWS
HSBC INVESTOR VALUE PORTFOLIO
BY JON D. BOSSE, CFA
CHIEF INVESTMENT OFFICER
NWQ INVESTMENT MANAGEMENT COMPANY, LLC
The HSBC Investor Value Portfolio (the "Portfolio") 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 Portfolio employs NWQ Investment Management Company, LLC
("NWQ") as the 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
Strong performance by energy and basic materials stocks enhanced the Fund's
absolute return. Those sectors benefited as fast-expanding international
economies contributed to powerful demand for oil and other raw materials. Select
stocks in such diverse industries as insurance brokerage, railroads, tobacco,
technology and telecommunications also contributed to the Fund's absolute
return. The Fund's exposure to the financial sector negatively influenced
performance, as financial stocks--and particularly mortgage-related
stocks--suffered from investor concerns about the subprime mortgage crisis.*
Strong performance by the Fund's holdings in the oil and natural gas exploration
industry was the primary positive contributor to relative gains. Mining and
metals stocks also were significant contributors to the Fund's performance
against its benchmark, as those stocks benefited from strong global demand for
precious and base metals.*
The Fund held an underweight position in the lagging financial sector. Selection
among financial stocks caused the Fund's allocation to the sector to weigh on
relative returns, however. Shares of mortgage origination and service firms in
the portfolio suffered from the loss of investor confidence in the mortgage
business, while mortgage insurance-related holdings came under pressure as
investors became increasingly concerned about loan defaults.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
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 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.
17 HSBC INVESTOR FAMILY OF FUNDS
PORTFOLIO REVIEWS
PORTFOLIO COMPOSITION*
OCTOBER 31, 2007
(UNAUDITED)
- --------------------------------------------------------------------------------
HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Corporate Bonds 33.4%
- --------------------------------------------------------------------------------
Mortgage Backed Securities 23.2%
- --------------------------------------------------------------------------------
Commercial Mortgage
Backed Securities 15.8%
- --------------------------------------------------------------------------------
Collateralized Mortgage Obligations 7.6%
- --------------------------------------------------------------------------------
Asset Backed Securities 7.2%
- --------------------------------------------------------------------------------
U.S. Treasury Securities 6.3%
- --------------------------------------------------------------------------------
Cash and Equivalents 4.0%
- --------------------------------------------------------------------------------
Foreign Bond 2.5%
- --------------------------------------------------------------------------------
Total 100.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Corporate Bonds 97.5%
- --------------------------------------------------------------------------------
Cash and Equivalents 2.5%
- --------------------------------------------------------------------------------
Total 100.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERMEDIATE DURATION
FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Mortgage Backed Securities 24.3%
- --------------------------------------------------------------------------------
Corporate Bond 36.4%
- --------------------------------------------------------------------------------
Collateralized Mortgage Obligations 10.1%
- --------------------------------------------------------------------------------
Asset Backed Securities 7.2%
- --------------------------------------------------------------------------------
Commercial Mortgage
Backed Securities 16.6%
- --------------------------------------------------------------------------------
Foreign Bond 4.4%
- --------------------------------------------------------------------------------
Cash and Equivalents 1.0%
- --------------------------------------------------------------------------------
Total 100.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Information Technology 31.1%
- --------------------------------------------------------------------------------
Health Care 16.4%
- --------------------------------------------------------------------------------
Industrials 13.0%
- --------------------------------------------------------------------------------
Consumer Staples 10.1%
- --------------------------------------------------------------------------------
Consumer Discretionary 9.3%
- --------------------------------------------------------------------------------
Financials 8.4%
- --------------------------------------------------------------------------------
Energy 5.2%
- --------------------------------------------------------------------------------
Materials 4.2%
- --------------------------------------------------------------------------------
Cash and Equivalents 2.3%
- --------------------------------------------------------------------------------
Total 100.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HSBC INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Europe 62.6%
- --------------------------------------------------------------------------------
Japan 21.1%
- --------------------------------------------------------------------------------
Australia & Far East 7.4%
- --------------------------------------------------------------------------------
Cash and Equivalents 1.6%
- --------------------------------------------------------------------------------
Other 4.7%
- --------------------------------------------------------------------------------
Canada 2.6%
- --------------------------------------------------------------------------------
Total 100.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HSBC INVESTOR OPPORTUNITY PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Health Care 26.6%
- --------------------------------------------------------------------------------
Information Technology 17.6%
- --------------------------------------------------------------------------------
Industrials 15.4%
- --------------------------------------------------------------------------------
Energy 13.7%
- --------------------------------------------------------------------------------
Consumer Discretionary 12.2%
- --------------------------------------------------------------------------------
Financials 6.0%
- --------------------------------------------------------------------------------
Business Services 2.7%
- --------------------------------------------------------------------------------
Consumer Staples 2.7%
- --------------------------------------------------------------------------------
Cash and Equivalents 1.7%
- --------------------------------------------------------------------------------
Telecommunications 1.4%
- --------------------------------------------------------------------------------
Total 100.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HSBC INVESTOR VALUE PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Financials 25.1%
- --------------------------------------------------------------------------------
Information Technology 10.9%
- --------------------------------------------------------------------------------
Consumer Discretionary 9.3%
- --------------------------------------------------------------------------------
Energy 11.5%
- --------------------------------------------------------------------------------
Industrials 7.7%
- --------------------------------------------------------------------------------
Materials 6.6%
- --------------------------------------------------------------------------------
Cash 9.4%
- --------------------------------------------------------------------------------
Consumer Staples 6.7%
- --------------------------------------------------------------------------------
Telecommunication Services 3.5%
- --------------------------------------------------------------------------------
Miscellaneous 2.3%
- --------------------------------------------------------------------------------
Transportation 2.3%
- --------------------------------------------------------------------------------
Health Care 4.7%
- --------------------------------------------------------------------------------
Total 100.0%
- --------------------------------------------------------------------------------
* Portfolio composition is subject to change.
HSBC INVESTOR FAMILY OF FUNDS 18
HSBC INVESTOR LIFELINE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES--AS OF OCTOBER 31, 2007
AGGRESSIVE GROWTH MODERATE CONSERVATIVE
GROWTH STRATEGY GROWTH GROWTH
STRATEGY FUND FUND STRATEGY FUND STRATEGY FUND
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in Affiliated Portfolios $12,398,291 $36,289,798 $35,994,580 $ 9,506,832
Investments in Affiliated Fund, at value (a) 124,808 365,927 2,295,024 2,523,618
------------- ------------- ------------- -------------
Total Investments 12,523,099 36,655,725 38,289,604 12,030,450
------------- ------------- ------------- -------------
Receivable for capital shares issued 19,200 84,127 194,218 17,922
Receivable from Investment Adviser 5,992 1,512 1,583 609
Prepaid expenses and other assets 5,486 3,885 7,643 6,213
------------- ------------- ------------- -------------
TOTAL ASSETS 12,553,777 36,745,249 38,493,048 12,055,194
------------- ------------- ------------- -------------
LIABILITIES:
Payable for capital shares redeemed 20,328 163,711 14,489 3,696
Accrued expenses and other liabilities:
Investment Management 516 5,494 9,393 502
Administration 333 986 1,041 344
Distribution 3,377 9,356 11,376 3,240
Shareholder Servicing 2,590 7,594 7,968 2,527
Compliance Service 7 22 22 4
Transfer Agent 3,367 4,410 4,570 3,165
Trustee 19 58 59 14
Other 7,680 23,781 24,285 7,399
------------- ------------- ------------- -------------
TOTAL LIABILITIES 38,217 215,412 73,203 20,891
------------- ------------- ------------- -------------
NET ASSETS $12,515,560 $36,529,837 $38,419,845 $12,034,303
============= ============= ============= =============
COMPOSITION OF NET ASSETS:
Capital $ 9,805,279 $29,646,780 $32,895,252 $10,947,282
Accumulated net investment income (loss) (4,459) 112,089 14,138 18,083
Accumulated net realized gains( losses) from investment
and foreign currency transactions 757,521 1,874,813 1,482,315 265,540
Unrealized appreciation/depreciation from investments
and foreign currencies 1,957,219 4,896,155 4,028,140 803,398
------------- ------------- ------------- -------------
NET ASSETS $12,515,560 $36,529,837 $38,419,845 $12,034,303
============= ============= ============= =============
NET ASSETS:
Class A Shares $ 7,046,424 $21,351,615 $20,140,221 $ 6,669,226
Class B Shares 4,941,621 13,905,109 16,513,396 4,928,257
Class C Shares 527,515 1,273,113 1,766,228 436,820
------------- ------------- ------------- -------------
$12,515,560 $36,529,837 $38,419,845 $12,034,303
============= ============= ============= =============
SHARES OUTSTANDING
($0.001 par value, unlimited number of shares authorized):
Class A Shares 453,257 1,449,732 1,518,064 553,740
Class B Shares 323,671 947,939 1,244,290 412,831
Class C Shares 34,570 86,383 136,126 35,652
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE:
Class A Shares $ 15.55 $ 14.73 $ 13.27 $ 12.04
Class B Shares* $ 15.27 $ 14.67 $ 13.27 $ 11.94
Class C Shares* $ 15.26 $ 14.74 $ 12.97 $ 12.25
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 $ 16.37 $ 15.51 $ 13.97 $ 12.67
============= ============= ============= =============
Investments in Affiliated Fund, at cost $ 124,808 $ 365,927 $ 2,295,024 $ 2,523,618
============= ============= ============= =============
- ---------
* Redemption Price per share varies by length of time shares are held.
(a) The investment in the affiliated fund are holdings of the HSBC Investor
Money Market Fund Class Y Shares (see Note 1). The shares held in the Fund
are identical to value since it is at $1.00 net asset value per share. In
addition, value and cost for financial reporting and federal income tax
purposes are the same.
19 HSBC INVESTOR LIFELINE FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR LIFELINE FUNDS
STATEMENTS OF OPERATIONS--FOR THE YEAR ENDED OCTOBER 31, 2007
AGGRESSIVE GROWTH MODERATE CONSERVATIVE
GROWTH STRATEGY GROWTH GROWTH
STRATEGY FUND FUND STRATEGY FUND STRATEGY FUND
- ---------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Investment Income from Affiliated Portfolios (a) $ 148,417 $ 694,556 $ 905,275 $ 234,011
Investment Income from Affiliated Fund 4,920 14,702 92,324 82,458
Foreign tax withholding from Affiliated Portfolios (a) (7,822) (20,533) (16,040) (2,646)
Expenses from Affiliated Portfolios (a) (75,007) (212,990) (207,459) (45,260)
----------- ----------- ----------- ---------
TOTAL INVESTMENT INCOME 70,508 475,735 774,100 268,563
----------- ----------- ----------- ---------
EXPENSES:
Investment Management 4,939 14,697 15,332 3,893
Administration 2,884 8,581 8,960 2,260
Distribution:
Class B Shares 30,028 84,308 102,735 24,720
Class C Shares 2,255 6,809 8,526 2,941
Shareholder Servicing:
Class A Shares 13,922 43,066 39,499 10,179
Class B Shares 10,019 28,143 34,306 8,297
Class C Shares 753 2,274 2,853 987
Accounting 29,086 29,086 29,086 29,086
Compliance Service 107 319 332 82
Transfer Agent 54,054 75,886 76,585 44,039
Trustee 234 698 726 179
Printing 19,109 54,617 56,278 13,174
Registration fees 28 69 71 56
Other 14,669 15,735 18,968 3,991
----------- ----------- ----------- ---------
Total expenses before fee reductions 182,087 364,288 394,257 143,884
Fees reduced by Investment Adviser (76,364) (44,426) (29,557) (44,214)
----------- ----------- ----------- ---------
NET EXPENSES 105,723 319,862 364,700 99,670
----------- ----------- ----------- ---------
NET INVESTMENT INCOME (LOSS) (35,215) 155,873 409,400 168,893
----------- ----------- ----------- ---------
NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: (a)
Net realized gains (losses) from investments and foreign currency
transactions 810,981 1,888,561 1,499,302 267,881
Change in unrealized appreciation/depreciation from investments 1,335,250 3,251,636 2,609,124 433,433
----------- ----------- ----------- ---------
NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENT
TRANSACTIONS 2,146,231 5,140,197 4,108,426 701,314
----------- ----------- ----------- ---------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $2,111,016 $5,296,070 $4,517,826 $870,207
=========== =========== =========== =========
- ----------
(a) Represents amounts allocated from the respective Affiliated Portfolios.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR LIFELINE FUNDS 20
HSBC INVESTOR LIFELINE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
AGGRESSIVE GROWTH STRATEGY FUND GROWTH STATEGY FUND
- ---------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2007 OCTOBER 31, 2006 OCTOBER 31, 2007 OCTOBER 31, 2006
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ (35,215) $ (12,945) $ 155,873 $ 67,776
Net realized gains (losses) from
investment transactions 810,981 (17,813) 1,888,561 150,344
Change in unrealized appreciation/
depreciation from investments 1,335,250 557,180 3,251,636 1,449,423
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 2,111,016 526,422 5,296,070 1,667,543
---------------- ---------------- ---------------- ----------------
DIVIDENDS:
NET INVESTMENT INCOME:
Class A Shares -- -- (91,507) (22)
Class B Shares -- -- (11,110) --
Class C Shares -- -- (784) --
NET REALIZED GAINS:
Class A Shares -- (4,248) (94,565) (7,479)
Class B Shares -- (4,512) (64,734) (8,003)
Class C Shares -- (298) (5,227) (626)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS RESULTING FROM
SHAREHOLDER DIVIDENDS -- (9,058) (267,927) (16,130)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS RESULTING FROM
CAPITAL TRANSACTIONS 3,061,815 5,378,169 9,652,802 14,606,757
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS 5,172,831 5,895,533 14,680,945 16,258,170
NET ASSETS:
Beginning of period 7,342,729 1,447,196 21,848,892 5,590,722
---------------- ---------------- ---------------- ----------------
End of period $ 12,515,560 $ 7,342,729 $ 36,529,837 $ 21,848,892
================ ================ ================ ================
Accumulated net investment income
(loss) $ (4,459) $ (14,704) $ 112,089 $ 55,913
================ ================ ================ ================
21 HSBC INVESTOR LIFELINE FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR LIFELINE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
AGGRESSIVE GROWTH STRATEGY FUND GROWTH STATEGY FUND
- ----------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2007 OCTOBER 31, 2006 OCTOBER 31, 2007 OCTOBER 31, 2006
- ----------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ 2,836,042 $3,199,933 $ 7,969,359 $ 9,462,116
Dividends reinvested -- 4,248 185,652 7,500
Value of shares redeemed (1,111,410) (77,034) (2,339,143) (634,007)
-------------- ------------ ------------- -------------
Class A Shares capital transactions 1,724,632 3,127,147 5,815,868 8,835,609
-------------- ------------ ------------- -------------
CLASS B SHARES:
Proceeds from shares issued 1,516,999 2,171,105 4,252,061 5,742,896
Dividends reinvested -- 4,512 75,546 8,002
Value of shares redeemed (405,168) (116,411) (1,033,237) (412,505)
-------------- ------------ ------------- -------------
Class B Shares capital transactions 1,111,831 2,059,206 3,294,370 5,338,393
-------------- ------------ ------------- -------------
CLASS C SHARES:
Proceeds from shares issued 328,562 196,567 768,456 547,274
Dividends reinvested -- 298 6,011 627
Value of shares redeemed (103,210) (5,049) (231,903) (115,146)
-------------- ------------ ------------- -------------
Class C Shares capital transactions 225,352 191,816 542,564 432,755
-------------- ------------ ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM
CAPITAL TRANSACTIONS $ 3,061,815 $5,378,169 $ 9,652,802 $14,606,757
============== ============ ============= =============
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued 206,802 265,210 599,873 799,471
Reinvested -- 378 14,632 664
Redeemed (81,057) (6,528) (173,704) (53,747)
-------------- ------------ ------------- -------------
Change in Class A Shares 125,745 259,060 440,801 746,388
-------------- ------------ ------------- -------------
CLASS B SHARES:
Issued 112,606 183,959 318,815 486,469
Reinvested -- 405 5,949 705
Redeemed (29,929) (9,634) (77,193) (34,595)
-------------- ------------ ------------- -------------
Change in Class B Shares 82,677 174,730 247,571 452,579
-------------- ------------ ------------- -------------
CLASS C SHARES:
Issued 24,063 16,830 56,478 46,515
Reinvested -- 27 471 55
Redeemed (7,943) (407) (17,406) (9,539)
-------------- ------------ ------------- -------------
Change in Class C Shares 16,120 16,450 39,543 37,031
-------------- ------------ ------------- -------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR LIFELINE FUNDS 22
HSBC INVESTOR LIFELINE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
MODERATE GROWTH STRATEGY FUND CONSERVATIVE GROWTH STATEGY FUND
- ---------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2007 OCTOBER 31, 2006 OCTOBER 31, 2007 OCTOBER 31, 2006
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 409,400 $ 196,149 $ 168,893 $ 85,034
Net realized gains from investment
transactions 1,499,302 196,766 267,881 66,363
Change in unrealized appreciation/
depreciation from investments 2,609,124 1,241,590 433,433 247,105
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 4,517,826 1,634,505 870,207 398,502
---------------- ---------------- ---------------- ----------------
DIVIDENDS:
NET INVESTMENT INCOME:
Class A Shares (262,090) (125,404) (94,234) (51,938)
Class B Shares (132,843) (57,383) (56,207) (31,029)
Class C Shares (11,916) (5,807) (6,383) (4,345)
NET REALIZED GAINS:
Class A Shares (107,302) (3,616) (34,028) --
Class B Shares (94,696) (3,427) (29,598) --
Class C Shares (6,378) (500) (3,582) --
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS RESULTING FROM
SHAREHOLDER DIVIDENDS (615,225) (196,137) (224,032) (87,312)
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS RESULTING FROM
CAPITAL TRANSACTIONS 11,050,090 14,905,868 5,431,997 3,202,429
---------------- ---------------- ---------------- ----------------
CHANGE IN NET ASSETS 14,952,691 16,344,236 6,078,172 3,513,619
NET ASSETS:
Beginning of period 23,467,154 7,122,918 5,956,131 2,442,512
---------------- ---------------- ---------------- ----------------
End of period $ 38,419,845 $ 23,467,154 $ 12,034,303 $ 5,956,131
================ ================ ================ ================
Accumulated net investment income $ 14,138 $ 4,489 $ 18,083 $ 4,342
================ ================ ================ ================
23 HSBC INVESTOR LIFELINE FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR LIFELINE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
MODERATE GROWTH STRATEGY FUND CONSERVATIVE GROWTH STATEGY FUND
- ----------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2007 OCTOBER 31, 2006 OCTOBER 31, 2007 OCTOBER 31, 2006
- ----------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ 7,912,763 $ 8,904,235 $1,988,365 $2,584,751
Proceeds from shares issued in
conversion -- -- 1,774,237 --
Dividends reinvested 366,055 126,311 127,648 51,938
Value of shares redeemed (2,131,003) (1,004,146) (631,447) (773,807)
------------- ------------- ------------ ------------
Class A Shares capital transactions 6,147,815 8,026,400 3,258,803 1,862,882
------------- ------------- ------------ ------------
CLASS B SHARES:
Proceeds from shares issued 4,788,564 6,939,098 1,387,844 1,216,860
Proceeds from shares issued in
conversion -- -- 981,527 --
Dividends reinvested 226,308 60,467 84,374 30,500
Value of shares redeemed (966,698) (544,781) (366,939) (130,465)
------------- ------------- ------------ ------------
Class B Shares capital transactions 4,048,174 6,454,784 2,086,806 1,116,895
------------- ------------- ------------ ------------
CLASS C SHARES:
Proceeds from shares issued 1,158,749 574,091 109,629 285,040
Proceeds from shares issued in
conversion -- -- 23,289 --
Dividends reinvested 18,281 6,307 9,965 4,345
Value of shares redeemed (322,929) (155,714) (56,495) (66,733)
------------- ------------- ------------ ------------
Class C Shares capital transactions 854,101 424,684 86,388 222,652
------------- ------------- ------------ ------------
CHANGE IN NET ASSETS RESULTING FROM
CAPITAL TRANSACTIONS $11,050,090 $14,905,868 $5,431,997 $3,202,429
============= ============= ============ ============
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued 638,805 791,634 172,826 240,413
Issued in conversion -- -- 148,136 --
Reinvested 29,777 11,134 11,167 4,788
Redeemed (173,246) (89,017) (54,690) (71,416)
------------- ------------- ------------ ------------
Change in Class A Shares 495,336 713,751 277,439 173,785
------------- ------------- ------------ ------------
CLASS B SHARES:
Issued 387,531 615,692 121,528 114,343
Issued in conversion -- -- 82,738 --
Reinvested 18,521 5,311 7,465 2,841
Redeemed (77,311) (48,672) (31,991) (12,263)
------------- ------------- ------------ ------------
Change in Class B Shares 328,741 572,331 179,740 104,921
------------- ------------- ------------ ------------
CLASS C SHARES:
Issued 95,099 52,985 9,224 26,278
Issued in conversion -- -- 1,922 --
Reinvested 1,520 572 864 398
Redeemed (27,016) (14,028) (4,861) (6,091)
------------- ------------- ------------ ------------
Change in Class C Shares 69,603 39,529 7,149 20,585
------------- ------------- ------------ ------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR LIFELINE FUNDS 24
- --------------------------------------------------------------------------------
HSBC INVESTOR AGGRESSIVE GROWTH STRATEGY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- ------------------------
NET
REALIZED
AND UNREALIZED NET
NET GAINS REALIZED NET
ASSET NET (LOSSES) TOTAL GAINS ASSET
VALUE, INVESTMENT FROM FROM FROM VALUE,
BEGINNING INCOME INVESTMENT INVESTMENT INVESTMENT TOTAL END
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS OF PERIOD
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended October 31, 2005 (g) $10.00 (0.01) 0.61 0.60 -- -- $10.60
Year Ended October 31, 2006 10.60 0.01 2.01 2.02 (0.05) (0.05) 12.57
Year Ended October 31, 2007 12.57 0.00*(f) 2.98 2.98 -- -- 15.55
CLASS B SHARES
Period Ended October 31, 2005 (h) $10.00 (0.04) 0.61 0.57 -- -- $10.57
Year Ended October 31, 2006 10.57 (0.05) 1.97 1.92 (0.05) (0.05) 12.44
Year Ended October 31, 2007 12.44 (0.11)* 2.94 2.83 -- -- 15.27
CLASS C SHARES
Period Ended October 31, 2005 (i) $10.00 (0.05) 0.60 0.55 -- -- $10.55
Year Ended October 31, 2006 10.55 (0.04) 1.95 1.91 (0.05) (0.05) 12.41
Year Ended October 31, 2007 12.41 (0.11)* 2.96 2.85 -- -- 15.26
RATIOS/SUPPLEMENTARY DATA
---------------------------------------------------------------
RATIO
OF NET
RATIO INVESTMENT
OF NET INCOME RATIO OF
NET EXPENSES (LOSS) EXPENSES
ASSETS TO TO TO
AT END OF AVERAGE AVERAGE AVERAGE PORTFOLIO
TOTAL PERIOD NET NET NET TURNOVER
RETURN(b) (000'S) ASSETS(c) ASSETS(c) ASSETS(c)(d) RATE(e)
- ------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended October 31, 2005 (g) 6.00% $ 726 1.50% (0.20)% 11.72% 49.10%
Year Ended October 31, 2006 19.15% 4,116 1.50% 0.05% 3.52% 48.46%
Year Ended October 31, 2007 23.71% 7,046 1.50% (0.03)% 2.27% 45.50%
CLASS B SHARES
Period Ended October 31, 2005 (h) 5.70% $ 700 2.25% (1.01)% 11.63% 49.10%
Year Ended October 31, 2006 18.25% 2,998 2.25% (0.70)% 4.33% 48.46%
Year Ended October 31, 2007 22.75% 4,942 2.25% (0.77)% 3.02% 45.50%
CLASS C SHARES
Period Ended October 31, 2005 (i) 5.50% $ 21 2.25% (1.15)% 9.79% 49.10%
Year Ended October 31, 2006 18.19% 229 2.25% (0.69)% 4.20% 48.46%
Year Ended October 31, 2007 22.97% 528 2.25% (0.79)% 2.99% 45.50%
* 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 applicable HSBC Investor Portfolios.
(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 rate is calculated by aggregating the results of
multiplying the Fund's investment percentage in the respective Portfolios
by the corresponding Portfolio's portfolio turnover rates. Portfolio
turnover rate is calculated on the basis of the Fund as a whole without
distinguishing between classes of shares issued.
(f) Rounds to less than $0.01.
(g) Class A Shares commenced operations on February 14, 2005.
(h) Class B Shares commenced operations on February 9, 2005.
(i) Class C Shares commenced operations on June 9, 2005.
25 HSBC INVESTOR LIFELINE FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH STRATEGY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- -----------------------------------------
NET
REALIZED
AND UNREALIZED NET
NET GAINS REALIZED
ASSET NET (LOSSES) TOTAL GAINS
VALUE, INVESTMENT FROM FROM NET FROM
BEGINNING INCOME INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended October 31, 2005 (f) $10.00 0.02 0.70 0.72 -- -- --
Year Ended October 31, 2006 10.72 0.07 1.69 1.76 -- (0.03) (0.03)
Year Ended October 31, 2007 12.45 0.11* 2.34 2.45 (0.08) (0.09) (0.17)
CLASS B SHARES
Period Ended October 31, 2005 (h) $10.00 (0.01) 0.79 0.78 -- -- --
Year Ended October 31, 2006 10.78 0.02 1.66 1.68 -- (0.03) (0.03)
Year Ended October 31, 2007 12.43 0.01* 2.34 2.35 (0.02) (0.09) (0.11)
CLASS C SHARES
Period Ended October 31, 2005 (i) $10.00 (0.02) 0.84 0.82 -- -- --
Year Ended October 31, 2006 10.82 0.02 1.67 1.69 -- (0.03) (0.03)
Year Ended October 31, 2007 12.48 0.01* 2.35 2.36 (0.01) (0.09) (0.10)
RATIOS/SUPPLEMENTARY DATA
---------------------------------------------------------------
RATIO
OF NET
RATIO INVESTMENT
OF NET INCOME RATIO OF
NET NET EXPENSES (LOSS) EXPENSES
ASSET ASSETS TO TO TO
VALUE, AT END OF AVERAGE AVERAGE AVERAGE PORTFOLIO
END TOTAL PERIOD NET NET NET TURNOVER
OF PERIOD RETURN(b) (000'S) ASSETS(c) ASSETS(c) ASSETS(c)(d) RATE(e)
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended October 31, 2005 (f) $10.72 7.20% $ 2,814 1.50% 0.42% 5.19% 69.23%
Year Ended October 31, 2006 12.45 16.41% 12,562 1.50% 0.87% 2.19% 80.30%
Year Ended October 31, 2007 14.73 19.92%(g) 21,352 1.50% 0.84% 1.65% 73.45%
CLASS B SHARES
Period Ended October 31, 2005 (h) $10.78 7.80% $ 2,670 2.25% (0.38)% 5.74% 69.23%
Year Ended October 31, 2006 12.43 15.57% 8,702 2.25% 0.11% 2.94% 80.30%
Year Ended October 31, 2007 14.67 18.98%(g) 13,905 2.25% 0.09% 2.40% 73.45%
CLASS C SHARES
Period Ended October 31, 2005 (i) $10.82 8.20% $ 106 2.25% (0.55)% 5.24% 69.23%
Year Ended October 31, 2006 12.48 15.61% 585 2.25% 0.14% 2.90% 80.30%
Year Ended October 31, 2007 14.74 19.04%(g) 1,273 2.25% 0.07% 2.39% 73.45%
* 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 applicable HSBC Investor Portfolios.
(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 rate is calculated by aggregating the results of
multiplying the Fund's investment percentage in the respective Portfolios
by the corresponding Portfolio's portfolio turnover rates. Portfolio
turnover rate is calculated on the basis of the Fund as a whole without
distinguishing between classes of shares issued.
(f) Class A Shares commenced operations on February 8, 2005.
(g) During the year ended October 31, 2007, certain HSBC Investor Portfolios in
which the Fund invests in received monies related to certain nonrecurring
litigation settlements. The corresponding impact to the total return was
0.23%, 0.24% and 0.23% for Class A Shares, Class B Shares and Class C
Shares, respectively.
(h) Class B Shares commenced operations on February 1, 2005.
(i) Class C Shares commenced operations on April 27, 2005.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR LIFELINE FUNDS 26
- --------------------------------------------------------------------------------
HSBC INVESTOR MODERATE GROWTH STRATEGY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- -----------------------------------------
NET
REALIZED
AND UNREALIZED NET
NET GAINS REALIZED
ASSET (LOSSES) TOTAL GAINS
VALUE, NET FROM FROM NET FROM
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended October 31, 2005 (f) $10.00 0.04 0.45 0.49 --(g) -- --(g)
Year Ended October 31, 2006 10.49 0.17 1.23 1.40 (0.17) (0.01) (0.18)
Year Ended October 31, 2007 11.71 0.21* 1.65 1.86 (0.20) (0.10) (0.30)
CLASS B SHARES
Period Ended October 31, 2005 (i) $10.00 0.01 0.49 0.50 --(g) -- --(g)
Year Ended October 31, 2006 10.50 0.09 1.22 1.31 (0.08) (0.01) (0.09)
Year Ended October 31, 2007 11.72 0.12* 1.65 1.77 (0.12) (0.10) (0.22)
CLASS C SHARES
Period Ended October 31, 2005 (j) $10.00 --(g) 0.28 0.28 -- -- --
Year Ended October 31, 2006 10.28 0.09 1.19 1.28 (0.08) (0.01) (0.09)
Year Ended October 31, 2007 11.47 0.12* 1.60 1.72 (0.12) (0.10) (0.22)
RATIOS/SUPPLEMENTARY DATA
----------------------------------------------------------------------
RATIO
OF NET
RATIO INVESTMENT
OF NET INCOME RATIO OF
NET NET EXPENSES INCOME EXPENSES
ASSET ASSETS TO TO TO
VALUE, AT END OF AVERAGE AVERAGE AVERAGE PORTFOLIO
END TOTAL PERIOD NET NET NET TURNOVER
OF PERIOD RETUR00b) (000'S) ASSETS(c) ASSETS(c) ASSETS(c)(d) RATE(e)
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended October 31, 2005 (f) $10.49 4.94% $ 3,241 1.50% 0.95% 4.30% 84.55%
Year Ended October 31, 2006 11.71 13.40% 11,973 1.50% 1.65% 2.12% 101.57%
Year Ended October 31, 2007 13.27 16.12%(h) 20,140 1.50% 1.70% 1.60% 92.87%
CLASS B SHARES
Period Ended October 31, 2005 (i) $10.50 5.03% $ 3,604 2.25% 0.18% 5.01% 84.55%
Year Ended October 31, 2006 11.72 12.45% 10,731 2.25% 0.91% 2.87% 101.57%
Year Ended October 31, 2007 13.27 15.25%(h) 16,513 2.25% 0.95% 2.35% 92.87%
CLASS C SHARES
Period Ended October 31, 2005 (j) $10.28 2.80% $ 278 2.25% 0.05% 4.69% 84.55%
Year Ended October 31, 2006 11.47 12.53% 763 2.25% 0.87% 2.83% 101.57%
Year Ended October 31, 2007 12.97 15.20%(h) 1,766 2.25% 0.95% 2.33% 92.87%
* 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 applicable HSBC Investor Portfolios.
(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 rate is calculated by aggregating the results of
multiplying the Fund's investment percentage in the respective Portfolios
by the corresponding Portfolio's portfolio turnover rates. Portfolio
turnover rate is calculated on the basis of the Fund as a whole without
distinguishing between classes of shares issued.
(f) Class A Shares commenced operations on February 3, 2005.
(g) Rounds to less than $0.01.
(h) During the year ended October 31, 2007, certain HSBC Investor Portfolios in
which the Fund invests in received monies related to certain nonrecurring
litigation settlements. The corresponding impact to the total return was
0.41%, 0.41% and 0.33% for Class A Shares, Class B Shares and Class C
Shares, respectively.
(i) Class B Shares commenced operations on February 1, 2005.
(j) Class C Shares commenced operations on June 9, 2005.
27 HSBC INVESTOR LIFELINE FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR CONSERVATIVE GROWTH STRATEGY FUND
- --------------------------------------------------------------------------------
Financial Highlights
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- --------------------------------------
NET
REALIZED
AND UNREALIZED NET
NET GAINS REALIZED
ASSET (LOSSES) TOTAL GAINS
VALUE, NET FROM FROM NET FROM
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended October 31, 2005 (h) $10.00 0.04 0.26 0.30 (0.01) -- (0.01)
Year Ended October 31, 2006 10.29 0.22 0.85 1.07 (0.25) -- (0.25)
Year Ended October 31, 2007 11.11 0.29* 1.03 1.32 (0.27) (0.12) (0.39)
CLASS B SHARES
Period Ended October 31, 2005 (i) $10.00 0.03 0.16 0.19 --(f) -- --(f)
Year Ended October 31, 2006 10.19 0.15 0.83 0.98 (0.16) -- (0.16)
Year Ended October 31, 2007 11.01 0.20* 1.05 1.25 (0.20) (0.12) (0.32)
CLASS C SHARES
Period Ended October 31, 2005 (j) $10.00 0.03 0.38 0.41 -- -- --
Year Ended October 31, 2006 10.41 0.15 0.85 1.00 (0.17) -- (0.17)
Year Ended October 31, 2007 11.24 0.21* 1.11 1.32 (0.19) (0.12) (0.31)
RATIOS/SUPPLEMENTARY DATA
-----------------------------------------------------------
RATIO
RATIO OF NET
OF NET INVESTMENT RATIO OF
NET NET EXPENSES INCOME EXPENSES
ASSET ASSETS TO TO TO
VALUE, AT END OF AVERAGE AVERAGE AVEERAGE PORTFOLIO
END TOTAL PERIOD NET NET NET TURNOVER
OF PERIOD RETURN(b) (000'S) ASSETS(c) ASSETS(c) ASSETS(c)(d) RATE(e)
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended October 31, 2005 (h) $10.29 2.96% $1,054 1.50% 1.28% 8.01% 72.14%
Year Ended October 31, 2006 11.11 10.48% 3,069 1.50% 2.33% 3.22% 96.58%
Year Ended October 31, 2007 12.04 12.13%(g) 6,669 1.50% 2.52% 2.06% 88.67%
CLASS B SHARES
Period Ended October 31, 2005 (i) $10.19 1.92% $1,306 2.25% 0.53% 9.21% 72.14%
Year Ended October 31, 2006 11.01 9.65% 2,567 2.25% 1.54% 3.98% 96.58%
Year Ended October 31, 2007 11.94 11.51%(g) 4,928 2.25% 1.77% 2.82% 88.67%
CLASS C SHARES
Period Ended October 31, 2005 (j) $10.41 4.10% $ 82 2.25% 0.66% 7.94% 72.14%
Year Ended October 31, 2006 11.24 9.66% 320 2.25% 1.56% 3.92% 96.58%
Year Ended October 31, 2007 12.25 11.97%(g) 437 2.25% 1.78% 2.85% 88.67%
* 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 applicable HSBC Investor Portfolios. (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 rate is calculated by aggregating the results of
multiplying the Fund's investment percentage in the respective Portfolios
by the corresponding Portfolio's portfolio turnover rates. Portfolio
turnover rate is calculated on the basis of the Fund as a whole without
distinguishing between classes of shares issued.
(f) Rounds to less than $0.01.
(g) During the year ended October 31, 2007, certain HSBC Investor Portfolios in
which the Fund invests in received monies related to certain nonrecurring
litigation settlements. The corresponding impact to the total return was
0.44%, 0.47% and 0.48% for Class A Shares, Class B Shares and Class C
Shares, respectively.
(h) Class A Shares commenced operations on February 23, 2005.
(i) Class B Shares commenced operations on February 17, 2005.
(j) Class C Shares commenced operations on April 19, 2005.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR LIFELINE FUNDS 28
- --------------------------------------------------------------------------------
HSBC INVESTOR LIFELINE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007
1. ORGANIZATION:
The HSBC Investor Funds (the "Trust"), a Massachusetts business trust
organized on April 22, 1987, is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end management investment
company. As of October 31, 2007, the Trust is comprised of 20 separate
operational funds, each a diversified series of the HSBC Investor Family of
Funds. The accompanying financial statements are presented for the
following 4 funds (individually a "Fund", collectively the "LifeLine
Funds"):
FUND SHORT NAME
-------- --------------------
HSBC Investor Aggressive Growth Strategy Fund Aggressive Growth Fund
HSBC Investor Growth Strategy Fund Growth Strategy Fund
HSBC Investor Moderate Growth Strategy Fund Moderate Growth Fund
HSBC Investor Conservative Growth Strategy Fund Conservative Growth Fund
Financial statements for all other funds of the HSBC Investor Family
of Funds are published separately.
The LifeLine Funds utilize a master-feeder fund structure and seek to
achieve their investment objectives by investing all of their investable assets
in the Portfolios and the Money Market Fund (collectively the "Underlying
Portfolios") per the following schedule from November 1, 2006 to October 31,
2007:
LIFELINE FUNDS PORTFOLIO WEIGHTINGS
AGGRESSIVE GROWTH MODERATE CONSERVATIVE
GROWTH STRATEGY GROWTH GROWTH
UNDERLYING PORTFOLIOS FUND FUND FUND FUND
------------------------------------ ------------- ----------- ----------- ------------
Core Plus Fixed Income Portfolio None 15% 26% 25%
High Yield Fixed Income Portfolio None 2% 5% 8%
Intermediate Duration Fixed Income Portfolio None None None 3%
Growth Portfolio 21% 21% 19% 15%
International Equity Portfolio 23% 20% 15% 10%
Opportunity Portfolio 34% 20% 11% 4%
Value Portfolio 21% 21% 18% 14%
Money Market Fund 1% 1% 6% 21%
---------- ---------- ---------- ----------
Total 100% 100% 100% 100%
---------- ---------- ---------- ----------
LIFELINE FUNDS PORTFOLIO INVESTMENTS
AGGRESSIVE GROWTH MODERATE CONSERVATIVE
GROWTH STRATEGY GROWTH GROWTH
UNDERLYING PORTFOLIOS FUND FUND FUND FUND
------------------------------------ ------------- ----------- ----------- ------------
Core Plus Fixed Income Portfolio $ -- $ 5,455,857 $ 9,894,446 $ 2,993,564
High Yield Fixed Income Portfolio -- 731,032 1,912,153 962,520
Intermediate Duration Fixed Income Portfolio -- -- -- 358,749
Growth Portfolio 2,629,654 7,713,239 7,301,611 1,813,801
International Equity Portfolio 2,878,352 7,341,529 5,760,979 1,208,503
Opportunity Portfolio 4,274,319 7,374,952 4,243,955 485,645
Value Portfolio 2,615,966 7,673,189 6,881,436 1,684,050
Money Market Fund 124,808 365,927 2,295,024 2,523,618
----------- ----------- ----------- -----------
Total $12,523,099 $36,655,725 $38,289,604 $12,030,450
=========== =========== =========== ===========
29 HSBC INVESTOR LIFELINE FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR LIFELINE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
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 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 HSBC Investor Money Market Fund (the "Money Market Fund") is an
open-end management investment company and, like each LifeLine Fund, is a
diversified series of the Trust.
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 LifeLine Funds.
The LifeLine Funds are authorized to issue an unlimited number of
shares of beneficial interest with a par value of $0.001 per share. Each
Fund offers four classes of shares: Class A Shares, Class B Shares, Class C
Shares, and Class R Shares (currently not operational with assets). Class A
Shares of the Aggressive Growth Fund, Growth Strategy Fund, Moderate Growth
Fund, and the Conservative Growth Fund have a maximum sales charge of 5.00%
as a percentage of the original purchase price. The Class B Shares of the
LifeLine 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
LifeLine 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 Class R Shares of
the Funds. Each class of shares in the LifeLine 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
privileges of each class of shares.
Under the Trust's organizational documents, the LifeLine Funds'
officers and trustees are indemnified against certain liabilities arising
out of the performance of their duties to the LifeLine Funds. In addition,
in the normal course of business, the LifeLine Funds enter into contracts
with its service providers, which also provide for indemnifications by the
LifeLine Funds. The LifeLine Funds' maximum exposure under these
arrangements is unknown as this would involve any future claims that may be
made against the LifeLine Funds. However, based on experience, the LifeLine
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 LifeLine Funds in the preparation of their financial
statements. The policies are in conformity with U.S. generally accepted
accounting principles ("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:
The LifeLine Funds record their investments in the Underlying
Portfolios at fair value. The LifeLine Funds record their investments in
the Money Market Fund at the respective net asset value reported by the
fund. The underlying securities of the Portfolios and the Money Market Fund
are recorded at fair value and at amortized cost, respectively, as more
fully discussed in the notes to those financial statements.
INVESTMENT TRANSACTIONS AND RELATED INCOME:
The LifeLine Funds record daily their pro-rata income, expenses and
unrealized/realized gains and losses derived from their respective
Portfolio. Dividend income is recorded on the ex-dividend date for the
Money Market Fund. Changes in holdings of the Money Market Fund for each
LifeLine Fund are reflected no later than the first business day following
trade date. However, for financial reporting purposes, changes in holdings
of the Money Market Fund are reflected as of trade date. In addition, the
LifeLine Funds accrue their own expenses daily as incurred.
HSBC INVESTOR LIFELINE FUNDS 30
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HSBC INVESTOR LIFELINE FUNDS
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NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
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 LifeLine Funds within the HSBC Investor Family of
Funds in relation to the net assets of each Fund or on another reasonable
basis. Class specific expenses are charged directly to the class incurring
the expense. 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:
Dividends from net investment income, if any, are declared and
distributed quarterly in the case of the Moderate Growth Fund and
Conservative Growth Fund, and annually in the case of the Aggressive Growth
Fund and Growth Strategy Fund.
The LifeLine Funds' net realized gains, if any, are distributed to
shareholders at least annually. Additional distributions are also made to
the LifeLine 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 composition of net assets; temporary
differences (e.g., wash losses and post-october loss deferrals) do not
require reclassification. The LifeLine 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% will be 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 year
ended October 31, 2007, the following LifeLine Funds collected redemption
fees as follows:
FUND FEES COLLECTED
---- --------------
Aggressive Growth Fund.............................. $1,573
Growth Strategy Fund................................ 729
Moderate Growth Fund................................ 515
Conservative Growth Fund............................ 1,305
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.
NEW ACCOUNTING PRONOUNCEMENTS:
In September 2006, the Financial Accounting Standards Board (FASB)
issued Statement on Financial Accounting Standards SFAS No. 157, "Fair
Value Measurements"("SFAS No. 157") 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. Management does not believe the
adoption of SFAS No. 157 will materially impact the LifeLine Funds'
financial statements; however, additional disclosures will 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.
31 HSBC INVESTOR LIFELINE FUNDS
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HSBC INVESTOR LIFELINE FUNDS
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NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
In July 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
LifeLine Funds' tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority
based on technical merits of the position. 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 statement reporting
period for fiscal years beginning after December 15, 2006 and is applied to
all open tax years as of the effective date. Management is currently in the
process of evaluating the impact that will result from adopting FIN 48. At
this time, management does not believe the adoption of FIN 48 will have a
material impact to the financial statements.
3. RELATED PARTY TRANSACTIONS:
INVESTMENT MANAGEMENT:
HSBC Investments (USA) Inc. ("HSBC" or the "Investment Adviser"), a
wholly owned subsidiary of HSBC Bank USA, N.A., a national bank organized
under the laws of the United States, acts as Investment Adviser to the
LifeLine Funds. As Investment Adviser, HSBC manages the investments of the
LifeLine Funds and continuously reviews, supervises and administers the
LifeLine Funds' investments. For its services as Investment Adviser, HSBC
is entitled to receive a fee, computed daily and paid monthly, based on
average daily net assets, at an annual rate of 0.05% for each Fund.
ADMINISTRATION:
HSBC serves the Lifeline Funds as Administrator. Under the terms of
the Administration Agreement effective April 1, 2007, HSBC receives from
the Lifeline Funds 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 Lifeline Funds 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 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 assets invested in Underlying
Portfolios by LifeLine Funds, the Portfolios pay half of the administration
fee and the LifeLine 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:
MODERATE CONSERVATIVE
AGGRESSIVE GROWTH GROWTH
GROWTH GROWTH STRATEGY STRATEGY
STRATEGY FUND STRATEGY FUND FUND FUND
------------- ------------- --------- -----------
Class A Shares..................... $1,625 $5,019 $4,615 $1,177
Class B Shares..................... 1,174 3,302 4,021 966
Class C Shares..................... 85 260 324 117
--------- --------- --------- ---------
Total......................... $2,884 $8,581 $8,960 $2,260
========= ========= ========= =========
Pursuant to a Sub-Administration Agreement with HSBC, Citi Fund
Services Ohio, Inc. ("Citi Ohio "), a wholly-owned subsidiary of Citigroup,
Inc. (Citigroup, Inc. acquired The BISYS Group, Inc. effective August 1,
2007), serves as the Trust's sub-administrator, subject to the general
supervision of the Trusts' Board of Trustees and HSBC. For these
HSBC INVESTOR LIFELINE FUNDS 32
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HSBC INVESTOR LIFELINE FUNDS
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NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
services, Citi 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 Trusts and Citi Ohio
(the "CCO Agreement"), Citi Ohio makes an employee available to serve as
the Trusts' Chief Compliance Officer (the "CCO"). Under the CCO Agreement,
Citi Ohio also provides infrastructure and support in implementing the
written policies and procedures comprising the Trusts' compliance program,
including support services to the CCO. For the services provided under the
CCO Agreement, the HSBC Investor Family of Funds paid Citi Ohio $251,569
for the year ended October 31, 2007, plus reimbursement of certain out of
pocket expenses. Expenses incurred are reflected on the Statements of
Operations as "Compliance Service." Citi Ohio pays the salary and other
compensation earned by any such individuals as employees of Citi Ohio.
DISTRIBUTION PLAN:
Prior to August 1, 2007 BISYS Fund Services Limited Partnership
("BISYS"), a wholly-owned subsidiary of BISYS Fund Services, Inc., served
the Trust as Distributor. Since August 1, 2007 Foreside Distribution
Services, L.P. ("Foreside"), a wholly-owned subsidiary of Foreside
Financial Group LLC, serves the Trust as Distributor (the "Distributor").
The Trust has 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 LifeLine Funds, respectively. The
Distributor also received $1,050,424, $522,962 and $24,364 in commissions
from sales of HSBC Investor Family of Funds for Class A Shares, Class B
Shares, and Class C Shares, respectively, of which $1,047,148, $522,574 and
$23,905 were reallowed to affiliated brokers and dealers, for Class A
Shares, Class B Shares, and Class C Shares, respectively.
SHAREHOLDER SERVICING:
The Trust has adopted an Shareholder Services Plan, formerly known as
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%, 0.25%, and
0.75% 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 Lifeline Funds, respectively. The fees paid to the
Distributor pursuant to the Distribution Plan and to shareholder servicing
agents pursuant to the Shareholder Services Plan currently are not intended
to exceed, in the aggregate, 0.25% of the average daily net assets of Class
A Shares, 1.00% of the average daily net assets of Class B Shares and Class
C Shares.
FUND ACCOUNTING, TRANSFER AGENCY, CUSTODIAN AND TRUSTEE:
Citi Ohio provides fund accounting and transfer agency services for
each Fund. As transfer agent for the LifeLine Funds, Citi Ohio receives a
fee based on the number of LifeLine Funds and shareholder accounts, subject
to certain minimums and reimbursement of certain expenses. As fund
accountant for the LifeLine Funds, Citi Ohio receives an annual fee per
Fund and share class, subject to minimums and reimbursement of certain
expenses. Prior to April 6, 2007, HSBC Bank was the named Custodian for the
LifeLine Funds, however, the LifeLine Funds maintained no securities for
which such services were rendered during the period. The Northern Trust
Company serves as custodian effective April 6, 2007.
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.
FEE REDUCTIONS:
The Investment Adviser has agreed to contractually limit through March
1, 2008 the total expenses, exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses of the LifeLine Funds. Each Fund
Class has its own expense limitations based on the average daily net assets
for any full fiscal year as follows: Class A Shares 1.50%, Class B Shares
2.25%, and Class C Shares 2.25%.
33 HSBC INVESTOR LIFELINE FUNDS
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HSBC INVESTOR LIFELINE FUNDS
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NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
The Administrator and Citi Ohio may voluntarily waive/reimburse fees
to help support the expense limits of each Fund. In addition, the
Investment Adviser may waive/reimburse additional fees at their discretion.
Amounts waived/reimbursed by the Investment Adviser, Administrator, and
Citi Ohio are reported separately on the Statements of Operations, as
applicable. 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.
4. INVESTMENT TRANSACTIONS:
Aggregate contributions and withdrawals of the Underlying Portfolios
for the year ended October 31, 2007 totaled:
CONTRIBUTIONS WITHDRAWALS
------------- -----------
Aggressive Growth Fund............... $ 4,380,255 $1,360,204
Growth Strategy Fund................. 11,987,208 2,880,662
Moderate Growth Fund................. 12,015,477 2,835,077
Conservative Growth Fund............. 4,958,499 1,118,694
5. MERGER OF THE CONSERVATIVE INCOME FUND AND THE CONSERVATIVE GROWTH FUND
On October 5, 2007 net assets of the HSBC Investor Conservative Income
Fund were exchanged in a tax-free conversion for shares of the Conservative
Growth Fund and the Adviser incurred all merger related expenses. The
following is a summary of shares issued, net assets converted, net asset
value per share issued and unrealized appreciation/depreciations of assets
acquired as of the conversion date:
NET ASSET VALUE NET ASSETS UNREALIZED
PER SHARE ISSUED SHARES ISSUED CONVERTED APPRECIATION
---------------- ------------- ------------ ------------
Conservative Growth Fund
A Shares....................... $11.98 148,136 $1,774,237 $49,220
B Shares....................... 11.86 82,738 981,527 31,630
C Shares....................... 12.12 1,922 23,289 4,125
6. 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 LifeLine Funds as described in footnote 3, reached a settlement with
the Securities and Exchange Commission ("the 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 LifeLine 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 LifeLine Funds' management is currently unable to
determine the impact, if any, of such matters on the Portfolios or the
LifeLine Funds' financial statements, management does not anticipate a
material, adverse impact to the LifeLine Funds or the LifeLine Funds'
financial statements.
7. FEDERAL TAX INFORMATION:
The tax characteristics of dividends paid by the LifeLine Funds during
the year ended October 31, 2007 were as follows:
Dividends paid from
--------------------------
Total Tax Total
Ordinary Net Long Term Taxable Exempt Dividends
Income Capital Gains Dividends Distributions Paid(1)
----------- ----------- ----------- ----------- -----------
Growth Strategy Fund $ 103,401 $ 164,526 $ 267,927 $ -- $ 267,927
Moderate Growth Fund 406,849 208,376 615,225 -- 615,225
Conservative Growth Fund 156,824 67,208 224,032 -- 224,032
The tax characteristics of dividends paid by the LifeLine Funds during
the year ended October 31, 2006 were as follows:
Dividends paid from
--------------------------
Total Tax Total
Ordinary Net Long Term Taxable Exempt Dividends
Income Capital Gains Dividends Distributions Paid(1)
----------- ------------ ----------- ------------- ----------
Aggressive Growth Fund $ -- $ 9,058 $ 9,058 $ -- $ 9,058
Growth Strategy Fund 22 16,108 16,130 -- 16,130
Moderate Growth Fund 188,594 7,543 196,137 -- 196,137
Conservative Growth Fund 87,312 -- 87,312 -- 87,312
HSBC INVESTOR LIFELINE FUNDS 34
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HSBC INVESTOR LIFELINE FUNDS
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NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
As of October 31, 2007, the components of accumulated
earnings/(deficit) on a tax basis for the LifeLine Funds were as follows:
Total
Undistributed Undistributed Undistributed Accumulated Unrealized Accumulated
Ordinary Tax Exempt Long Term Accumulated Dividends Capital and Appreciation/ Earnings/
Income Income Capital Gains Earnings Payable Other Losses (Depreciation)(2) (Deficit)
------------ ------------- ------------- ----------- --------- ------------ ----------------- -----------
Aggressive Growth
Fund $ 87,226 $ -- $ 667,264 $ 754,490 $ -- $ -- $ 1,955,791 $ 2,710,281
Growth Strategy
Fund 417,995 -- 1,575,493 1,993,488 -- -- 4,889,569 6,883,057
Moderate Growth
Fund 246,714 -- 1,257,947 1,504,661 -- -- 4,019,932 5,524,593
Conservative Growth
Fund 57,735 -- 228,458 286,193 -- -- 800,828 1,087,021
(1) Total dividends paid may differ from the amount reported in the Statement
of Changes in Net Assets because dividends are recognized when actually
paid for tax purposes.
(2) The differences between book-basis and tax-basis unrealized
appreciation/depreciation are attributable primarily to: tax deferral of
losses on wash sales, the realization for tax purposes of unrealized
gains/losses on certain derivative instruments, the difference between book
and taxamortization methods for premium and market discount, the
realization for tax purposes of unrealized gains/losses on investments in
passive foreign investment companies, and the return of capital adjustments
from real estate investment trusts.
35 HSBC INVESTOR LIFELINE FUNDS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of
HSBC Investor LifeLine Funds:
We have audited the accompanying statements of assets and liabilities
of HSBC Investor Aggressive Growth Strategy Fund, HSBC Investor Growth
Strategy Fund, HSBC Investor Moderate Growth Strategy Fund and HSBC
Investor Conservative Growth Strategy Fund (the Funds), including the
related statements of operations for the year then ended, the statements of
changes in net assets for each year in the two-year period then ended and
the financial highlights for each period in the three-year period then
ended. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the Funds as of October 31, 2007, the results of their
operations for the year then ended, the changes in their net assets for
each year in the two-year period then ended and the financial highlights
for each period in the three-year period then ended, in conformity with
U.S. generally accepted accounting principles.
KPMG LLP
Columbus, Ohio
December 27, 2007
HSBC INVESTOR LIFELINE FUNDS 36
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HSBC INVESTOR LIFELINE FUNDS
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OTHER FEDERAL INCOME TAX INFORMATION (UNAUDITED):
For the year ended October 31, 2007, the following percentages of the
total ordinary income dividends paid by the LifeLine Funds qualify for the
corporate dividends received deduction available to corporate shareholders:
DIVIDENDS
FUND RECEIVED DEDUCTION
---- ------------------
Growth Strategy Fund............................... 78.79%
Moderate Growth Strategy Fund...................... 24.17%
Conservative Growth Strategy Fund.................. 13.86%
For the year ended October 31, 2007, dividends paid by the LifeLine
Funds may be subject to a maximum tax rate of 15%, as provided for by the
Jobs and Growth Tax Relief Reconciliation Act of 2003. The LifeLine Funds
intend to designate the maximum amount allowable as taxed at a maximum rate
of 15%. Complete information will be reported in conjunction with your 2007
Form 1099-DIV.
QUALIFIED
DIVIDEND
FUND INCOME
---- -----------
Growth Strategy Fund................................ 95.50%
Moderate Growth Strategy Fund....................... 42.74%
Conservative Growth Strategy Fund................... 23.10%
During the year ended October 31, 2007, the following LifeLine Funds
declared net long term capital gain distributions:
FUND AMOUNT
---- -----------
Growth Strategy Fund................................ $164,526
Moderate Growth Strategy Fund....................... 208,376
Conservative Growth Strategy Fund................... 67,208
HSBC INVESTOR LIFELINE FUNDS
37 HSBC INVESTOR LIFELINE FUNDS
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HSBC INVESTOR LIFELINE FUNDS
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SPECIAL MEETING OF SHAREHOLDERS (UNAUDITED)
At a Special Meeting of Shareholders of the HSBC Conservative Income
Strategy Fund (the "Acquired Fund"), a series of the HSBC Family of Funds,
held on September 24, 2007, shareholders of the Acquired Fund voted to
approve a Plan of Reorganization for (1) the acquisition of all the assets
and liabilities the Acquired Fund in exchange for shares of the HSBC
Conservative Growth Fund and (2) subsequent termination and liquidation of
the Acquired Fund. The results of the voting are as follows:
Affirmative Against Abstain
------------ ------- -------
129,444 -- 939
HSBC INVESTOR LIFELINE FUNDS 38
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HSBC INVESTOR LIFELINE FUNDS
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TABLE OF SHAREHOLDERS EXPENSES (UNAUDITED)--AS OF OCTOBER 31, 2007
As a shareholder of the HSBC Investor LifeLine Funds ("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/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 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 May 1, 2007
through October 31, 2007.
ACTUAL EXAMPLE
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 ACCOUNT EXPENSES PAID EXPENSE RATIO
ACCOUNT VALUE VALUE DURING PERIOD* DURING PERIOD
5/1/07 10/31/07 5/1/07 - 10/31/07 5/1/07 - 10/31/07
------------- -------------- ----------------- -----------------
Aggressive Growth
Strategy Fund Class A Shares $1,000.00 $1,119.50 $ 8.01 1.50%
Class B Shares 1,000.00 1,115.40 12.00 2.25%
Class C Shares 1,000.00 1,115.50 12.00 2.25%
Growth Strategy Fund Class A Shares 1,000.00 1,096.00 7.92 1.50%
Class B Shares 1,000.00 1,092.30 11.87 2.25%
Class C Shares 1,000.00 1,092.70 11.87 2.25%
Moderate Growth Strategy
Fund Class A Shares 1,000.00 1,075.20 7.85 1.50%
Class B Shares 1,000.00 1,071.30 11.75 2.25%
Class C Shares 1,000.00 1,070.80 11.74 2.25%
Conservative Growth
Strategy Fund Class A Shares 1,000.00 1,053.40 7.71 1.49%
Class B Shares 1,000.00 1,052.00 11.59 2.24%
Class C Shares 1,000.00 1,055.90 11.66 2.25%
- ----------
* Expenses are equal to the average account value over the period multiplied
by the Funds' 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 (to reflect the one half year period).
39 HSBC INVESTOR LIFELINE FUNDS
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HSBC INVESTOR LIFELINE FUNDS
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TABLE OF SHAREHOLDERS EXPENSES (UNAUDITED)--AS OF OCTOBER 31, 2007 (CONTINUED)
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below provides information about hypothetical account values
and hypothetical expenses based on the Fund'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 EXPENSES PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
5/1/07 10/31/07 5/1/07 - 10/31/07 5/1/07 - 10/31/07
------------- ------------- ----------------- -----------------
Aggressive Growth
Strategy Fund Class A Shares $1,000.00 $1,017.64 $ 7.63 1.50%
Class B Shares 1,000.00 1,013.86 11.42 2.25%
Class C Shares 1,000.00 1,013.86 11.42 2.25%
Growth Strategy Fund Class A Shares 1,000.00 1,017.64 7.63 1.50%
Class B Shares 1,000.00 1,013.86 11.42 2.25%
Class C Shares 1,000.00 1,013.86 11.42 2.25%
Moderate Growth Strategy
Fund Class A Shares 1,000.00 1,017.64 7.63 1.50%
Class B Shares 1,000.00 1,013.86 11.42 2.25%
Class C Shares 1,000.00 1,013.86 11.42 2.25%
Conservative Growth
Strategy Fund Class A Shares 1,000.00 1,017.69 7.58 1.49%
Class B Shares 1,000.00 1,013.91 11.37 2.24%
Class C Shares 1,000.00 1,013.86 11.42 2.25%
- ----------
* Expenses are equal to the average account value over the period multiplied
by the Funds' 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 (to reflect the one half year period).
HSBC INVESTOR LIFELINE FUNDS 40
- --------------------------------------------------------------------------------
HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS--33.6%
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
FEDERAL HOME LOAN MORTGAGE CORP. - 13.8%
Pool #G12317, 5.50%, 8/1/21.................... 1,148,078 1,149,893
Pool #C00368, 8.50%, 10/1/24................... 26,564 28,499
Pool #D62926, 6.50%, 8/1/25.................... 19,734 20,362
Pool #C80387, 6.50%, 4/1/26.................... 28,536 29,454
Pool #C00922, 8.00%, 2/1/30.................... 175,764 186,601
Pool #C54447, 7.00%, 7/1/31.................... 38,797 40,521
Pool #G01317, 7.00%, 10/1/31................... 137,821 143,943
Pool #C60712, 6.50%, 11/1/31................... 577,337 595,163
Pool #847557, 5.54%, 7/1/34(a)(g).............. 1,092,079 1,111,816
Pool #1B2655, 4.20%, 12/1/34(a)(g)............. 1,075,301 1,081,051
Pool #1J1313, 6.43%, 6/1/36(a)................. 1,469,028 1,501,168
Pool #G02981, 6.00%, 6/1/37.................... 1,204,623 1,212,448
TBA November, 6.00%, 11/11/37.................. 1,900,000 1,911,875
TBA November, 5.50%, 11/15/37.................. 7,650,000 7,530,469
-----------
16,543,263
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 11.5%
Pool #398958, 6.50%, 10/1/12................... 53,807 55,298
Pool #781922, 5.00%, 2/1/21.................... 2,339,252 2,303,419
Pool #329655, 7.00%, 11/1/25................... 38,924 40,745
Pool #329530, 7.00%, 12/1/25................... 81,301 85,106
Pool #535332, 8.50%, 4/1/30.................... 39,881 42,836
Pool #548965, 8.50%, 7/1/30.................... 44,326 47,620
Pool #535440, 8.50%, 8/1/30.................... 45,119 48,473
Pool #253438, 8.50%, 9/1/30.................... 39,581 42,522
Pool #568486, 7.00%, 1/1/31.................... 39,026 40,894
Pool #573752, 8.50%, 2/1/31.................... 33,580 36,076
Pool #575328, 6.50%, 4/1/31.................... 49,521 51,020
Pool #356905, 7.23%, 10/1/36(a)................ 166,247 167,193
Pool #922090, 5.90%, 3/1/37(a)................. 2,054,764 2,077,199
Pool #256723, 6.50%, 5/1/37.................... 1,155,184 1,182,401
TBA November. 5.00%, 11/15/36.................. 1,000,000 959,688
TBA November, 5.50%, 11/15/36.................. 3,710,000 3,655,508
TBA December, 6.00%, 12/15/36.................. 2,900,000 2,918,125
-----------
13,754,123
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 1.2%
Pool #346406, 7.50%, 2/15/23................... 45,999 48,654
Pool #412530, 7.50%, 12/15/25.................. 71,981 76,226
Pool #781300, 7.00%, 6/15/31................... 132,432 139,479
TBA November, 6.00%, 11/15/36.................. 1,080,000 1,093,500
-----------
1,357,859
-----------
U.S. TREASURY NOTES - 7.1%
4.75%, 2/28/09................................. 1,750,000 1,766,954
3.88%, 5/15/09................................. 1,500,000 1,498,008
4.75%, 1/31/12................................. 1,480,000 1,517,000
4.13%, 8/31/12................................. 2,270,000 2,267,694
4.75%, 8/15/17................................. 305,000 311,719
6.38%, 8/15/27................................. 1,000,000 1,199,922
-----------
8,561,297
-----------
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS, CONT'D
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS (COST $40,014,893)................. 40,216,542
-----------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS--38.0%
- --------------------------------------------------------------------------------
AGRICULTURAL CHEMICALS - 0.5%
Cargill, Inc., 5.60%, 9/15/12 (b)................. 600,000 606,040
-----------
606,040
-----------
AUTO MANUFACTURERS - 0.4%
General Motors, 8.25%, 7/15/23.................... 550,000 496,375
-----------
496,375
-----------
BANKING - 2.2%
American Express Centurion Bank,
5.95%, 6/12/17................................. 700,000 704,174
Bank of America N.A., 6.10%, 6/15/17.............. 1,000,000 1,023,475
Washington Mutual Bank, 5.56%, 2/4/11 (a)......... 400,000 386,686
Washington Mutual, Inc., 6.09%, 9/17/12 (a)....... 500,000 476,609
-----------
2,590,944
-----------
BUILDING & CONSTRUCTION PRODUCTS - 1.8%
Martin Marietta Materials, Inc.,
5.13%, 4/30/10 (a)............................. 600,000 593,218
Masco Corp., 6.00%, 3/12/10 (a)(g)................ 550,000 540,293
USG Corp., 7.75%, 1/15/18......................... 1,000,000 1,012,681
-----------
2,146,192
-----------
CONSUMER PRODUCTS - 1.2%
Clorox Co., 5.45%, 10/15/12....................... 900,000 901,106
VF Corp., 5.95%, 11/1/17.......................... 550,000 555,314
-----------
1,456,420
-----------
ELECTRIC - 3.8%
MidAmerican Energy Co., 5.95%, 7/15/17............ 2,900,000 2,999,197
Progress Energy, Inc., 5.98%, 11/14/08,
Callable 2/14/08 @ 100 (a)(g).................. 1,000,000 1,001,266
Puget Sound Energy, Inc., 6.97%, 6/1/67,
Callable 6/1/17 @ 100.......................... 600,000 567,594
-----------
4,568,057
-----------
FINANCE - 8.7%
First Data Corp., 9.88%, 9/24/15,
Callable 9/30/11 @ 105 (b)..................... 300,000 287,250
Ford Motor Credit Co., LLC
4.95%, 1/15/08................................. 2,000,000 1,991,342
5.80%, 1/12/09................................. 1,550,000 1,495,369
7.25%, 10/25/11................................ 150,000 139,532
General Motors Acceptance Corp.
4.38%, 12/10/07................................ 2,250,000 2,246,413
7.25%, 3/2/11.................................. 600,000 567,353
41 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
FINANCE, CONTINUED
Preferred Term Securities Ltd., 8.79%,
9/15/30, Callable 9/15/10 @ 104 (b)............ 787,500 858,375
SLM Corp.
4.00%, 1/15/10................................. 1,000,000 937,762
4.50%, 7/26/10................................. 1,300,000 1,217,176
XTRA Finance Corp., 5.15%, 4/1/17 (b)............. 750,000 724,342
-----------
10,464,914
-----------
HOSPITALS - 1.8%
Covidien International Finance SA,
5.45%, 10/15/12 (b)............................ 550,000 552,059
HCA, Inc., 8.75%, 9/1/10.......................... 1,525,000 1,551,687
-----------
2,103,746
-----------
MEDIA - 0.4%
News America Holdings, 7.90%, 12/1/95............. 500,000 545,450
-----------
545,450
-----------
MEDICAL - 1.9%
Astrazeneca plc, 5.90%, 9/15/17................... 1,000,000 1,022,492
Schering-Plough, 6.00%, 9/15/17................... 1,200,000 1,220,524
-----------
2,243,016
-----------
OFFICE EQUIPMENT & SERVICES - 1.3%
IBM Corp., 5.70%, 9/14/17......................... 950,000 964,237
Xerox Corp., 6.40%, 12/18/09 (a)(g)............... 550,000 549,627
-----------
1,513,864
-----------
RETAIL - 5.7%
Home Depot, Inc., 5.88%, 12/16/36................. 2,700,000 2,357,362
Kohl's Corp., 6.25%, 12/15/17..................... 1,100,000 1,101,233
Kroger Co., 6.40%, 8/15/17........................ 850,000 884,343
Wal-Mart Stores, Inc., 5.88%, 4/5/27.............. 900,000 882,095
Wal-Mart Stores, Inc., 6.50%, 8/15/37............. 1,500,000 1,577,524
-----------
6,802,557
-----------
TELECOMMUNICATIONS - 3.4%
AOL Time Warner, Inc., 7.70%, 5/1/32.............. 1,150,000 1,292,260
BellSouth Telecommunications,
7.00%, 12/1/95................................. 700,000 704,163
Motorola, Inc., 6.00%, 11/15/17................... 1,200,000 1,184,972
Time Warner Entertainment Co.,
8.38%, 3/15/23................................. 800,000 943,585
-----------
4,124,980
-----------
TRANSPORTATION - 4.9%
American Airlines, Inc.
6.98%, 4/1/11.................................. 530,195 530,195
7.86%, 10/1/11................................. 1,250,000 1,320,312
Burlington North Santa Fe
5.65%, 5/1/17.................................. 600,000 593,497
7.57%, 1/2/21.................................. 294,292 332,826
Continental Airlines, Inc., 5.98%, 4/19/22........ 750,000 737,303
Union Pacific Corp.,
5.75%, 11/15/17................................ 1,200,000 1,189,475
6.85%, 1/2/19.................................. 1,161,581 1,220,589
-----------
5,924,197
-----------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
TOTAL CORPORATE OBLIGATIONS
(COST $45,236,536)............................. 45,586,752
-----------
- --------------------------------------------------------------------------------
ASSET BACKED SECURITIES--8.2%
- --------------------------------------------------------------------------------
Americredit Automobile Receivables
Trust, Series 2005-CF, Class A3,
4.47%, 5/6/10 (g).............................. 735,608 734,160
Asset Backed Funding Certificates,
Series 2003-AHL1, Class A1,
3.68%, 3/25/33................................. 738,743 727,109
Cairn Mezzanine plc, Series 2007-3A,
Class B1, 6.40%, 8/13/47 (a)(b)................ 905,000 497,750
Capital Auto Receivables Asset Trust,
Series 2006-1, Class A2A,
5.03%, 9/15/08 (g)............................. 79,632 79,620
Citigroup Mortgage Loan Trust, Inc.,
Series 2005-WF2, Class AF2,
4.92%, 8/25/35................................. 87,464 87,197
Countrywide Asset-Backed Certificates,
Series 2006-S4, Class A3,
5.80%, 7/25/34................................. 1,060,000 1,029,076
Dominos Pizza Master Issuer LLC,
Series 2007-1, Class A2,
5.26%, 4/25/37 (b)............................. 1,200,000 1,193,272
Duane Street CLO, Series 2007-4A,
Class C, 6.36%, 11/14/21 (a)(b)................ 850,000 735,250
GE Business Loan Trust, Series 2006-2A,
Class A, 5.27%, 11/15/34 (a)(b)(g)............. 1,455,232 1,450,429
GE Equipment Small Ticket LLC,
Series 2005-2A, Class A3,
4.88%, 10/22/09 (b)(g)......................... 1,430,147 1,430,469
GMAC Mortgage Corp., Loan Trust,
Series 2006-HE3, Class A3,
5.81%, 10/25/36................................ 900,000 852,865
Preferred Term Securities XXII Ltd.,
6.03%, 9/22/36, Callable
6/22/11 @ 100 (a)(b)(g)........................ 1,096,250 1,048,563
-----------
TOTAL ASSET BACKED SECURITIES
(COST $10,380,701)............................. 9,865,760
-----------
- --------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS--8.6%
- --------------------------------------------------------------------------------
Banc of America Mortgage Securities,
Series 2005-D, Class 2A4,
4.78%, 5/25/35 (a)............................. 1,100,000 1,093,289
Deutsche Mortgage Securities, Inc.,
Series 2006-WF1, Class 1A1,
5.07%, 6/26/35 (a)(b).......................... 1,179,355 1,174,846
Fannie Mae IO
Series 270, Class 2, 8.50%, 9/1/23 (c)......... 45,063 10,612
Series 296, Class 2, 8.00%, 4/1/24 (c)......... 54,506 13,553
Series 2000-16, Class PS, 3.73%,
10/25/29 (a)(c)................................ 35,357 1,652
Series 2000-32, Class SV,
3.57%, 3/18/30 (a)(c).......................... 7,911 134
Series 306, Class IO, 8.00%, 5/1/30 (c)........ 61,771 15,329
Series 2001-4, Class SA,
2.51%, 2/17/31 (a)(c).......................... 219,630 16,222
FHA Weyerhauser, 7.43%, 1/1/24 (d)(f)............. 33,082 33,082
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 42
- --------------------------------------------------------------------------------
HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
- --------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
Freddie Mac
Series 2988, Class AF, 5.39%, 6/15/35 (a)(g)... 1,131,947 1,115,057
Series 3212, Class BK, 5.40%, 9/15/36.......... 900,000 864,162
Freddie Mac IO
Series 1534, Class K, 2.28%,
6/15/23 (a)(c)................................. 143,843 7,739
Series 2141, Class SD, 3.06%, 4/15/29 (c)...... 115,816 11,584
Series 2247, Class SC, 2.41%,
8/15/30 (a)(c)................................. 58,785 4,096
Government National Mortgage
Association IO, Series 1999-30
Class SA, 2.94%, 4/16/29 (a)(c)................ 76,287 4,944
Class S, 3.54%, 8/16/29 (a)(c)................. 58,536 4,757
Morgan Stanley Mortgage Loan Trust,
Series 2006-3AR, Class 2A3,
5.71%, 3/25/36 (a)............................. 1,268,533 1,286,552
Residential Accredit Loans, Inc.
Series 2007-QS1, Class 2A8,
5.17%, 1/25/37 (a)(g).......................... 2,070,680 2,053,205
Series 2007-QS2, Class A4,
6.25%, 1/25/37................................. 1,019,245 1,018,629
Residential Asset Securitization Trust,
Series 2003-A15, Class 1A2,
5.32%, 2/25/34 (a)(g).......................... 1,600,199 1,594,059
-----------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS (COST $10,337,795)................. 10,323,503
-----------
- --------------------------------------------------------------------------------
COMMERCIAL MORTGAGE BACKED SECURITIES--18.0%
- --------------------------------------------------------------------------------
Banc of America Commercial Mortgage, Inc.,
Series 2006-4, Class A4,
5.63%, 7/10/46................................. 1,540,000 1,540,750
Bear Stearns Commercial Mortgage
Securities, Inc.
Series 2006-T24, Class A4,
5.43%, 10/12/41................................ 1,100,000 1,094,316
Series 2007-T28, Class AJ,
6.18%, 9/11/42................................. 620,000 615,607
Citigroup Commercial Mortgage Trust
Series 2006-C4, Class A3,
5.72%, 3/15/49 (a)............................. 1,550,000 1,568,583
Series 2006-C5, Class A2,
5.38%, 10/15/49................................ 1,100,000 1,100,090
Citigroup/Deutsche Bank Commercial
Mortgage Trust, Series 2007-CD4,
Class A2B, 5.21%, 12/11/49..................... 1,300,000 1,290,118
Commercial Mortgage Pass - Through
Certificate Series 2005-FL11, Class A1,
5.24%, 11/15/17 (a)(b)(g)...................... 139,247 139,008
Series 2006-FL12, Class A2, 5.19%,
12/15/20 (a)(b)(g)............................. 1,514,909 1,510,064
Series 2005-LP5, Class AJ,
5.05%, 5/10/43................................. 1,550,000 1,457,240
CWCapital Cobalt
Series 2007-C3, Class AJ, 6.02%, 5/15/46....... 1,240,000 1,217,107
Series 2006-C1, Class A2, 5.17%, 8/15/48....... 1,232,000 1,222,746
DLJ Mortgage Acceptance Corp., IO,
Series 1997-CF1, Class S, 0.94%,
5/15/30 (a)(b)(c).............................. 50,186 692
- --------------------------------------------------------------------------------
COMMERCIAL MORTGAGE BACKED SECURITIES, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
GS Mortgage Securities Corp. II
Series 2006-GG8, Class AJ,
5.62%, 11/10/39................................ 1,300,000 1,258,923
Series 2007-GG10, Class AJ, 5.80%,
8/10/45 (a).................................... 1,550,000 1,522,156
GS Mortgage Securities Corp., IO,
Series 1997-GL, Class X2, 0.29%,
7/13/30 (a)(c)................................. 36,505 597
JP Morgan Chase Commercial Mortgage
Securities Corp., Series 2007-CB20,
Class AJ, 6.10%, 2/12/51....................... 1,440,000 1,444,714
LB-UBS Commercial Mortgage Trust,
Series 2007-C6, Class AM, 6.11%,
7/15/40 (a).................................... 1,180,000 1,207,103
Morgan Stanley Capital I
Series 2006-HQ10, Class A4,
5.33%, 11/12/41................................ 1,000,000 978,950
Series 2007-IQ14, Class A2,
5.61%, 4/15/49................................. 1,380,000 1,387,575
Washington Mutual Commercial Mortgage
Securities Trust, Series 2006-SL1,
Class A, 5.30%, 11/23/43 (a)(b)................ 982,905 971,199
-----------
TOTAL COMMERCIAL MORTGAGE
BACKED SECURITIES
(COST $21,612,767)............................. 21,527,538
-----------
- --------------------------------------------------------------------------------
FOREIGN BONDS--2.9%
- --------------------------------------------------------------------------------
ICELAND - 1.0%
Kaupthing Bank, 5.94%, 1/15/10 (a)(b)(g).......... 1,250,000 1,245,746
-----------
1,245,746
-----------
SOUTH KOREA - 1.2%
Citibank Korea, Inc., 4.68%, 6/18/13,
Callable 6/18/08 @ 100 (a)..................... 1,400,000 1,396,206
-----------
1,396,206
-----------
UNITED KINGDOM - 0.7%
Barclays Bank plc, 5.93%, 12/31/49 (b)............ 850,000 804,549
-----------
804,549
-----------
TOTAL FOREIGN BONDS
(COST $3,503,008).............................. 3,446,501
-----------
43 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
- --------------------------------------------------------------------------------
INVESTMENT COMPANY--4.7%
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
Northern Institutional Diversified Assets
Portfolio, Shares class, 4.80% (e)............. 5,641,041 5,641,041
------------
TOTAL INVESTMENT COMPANY
(COST $5,641,041).............................. 5,641,041
------------
TOTAL INVESTMENTS
(COST $136,726,741) -- 114.0%................... 136,607,637
============
- -----------------
Percentages indicated are based on net assets of $119,811,908.
(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 October 31, 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) 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 October 31, 2007.
The principal amount shown is the notional amount of the underlying
mortgages.
(d) 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 0.03% of
net assets.
(e) Variable rate security. The rates presented represent the annualized one
day yield that was in effect on October 31, 2007.
(f) Fair valued security. Represents 0.03% of net assets.
(g) Security held as collateral for to be announced securities.
FHA -- Federal Housing Administration
IO -- Interest-Only security. Represents 0.001% of net assets.
LLC -- Limited Liability Co.
PLC -- Public Limited Co.
TBA -- Security was traded on a "to be announced" basis. Represents 15.08% of
net assets.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 44
- --------------------------------------------------------------------------------
HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS--95.6%
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
ADVERTISING - 1.9%
Iron Mountain, Inc., 8.63%, 4/1/13,
Callable 4/1/08 @ 101.......................... 100,000 101,750
R.H. Donnelley Corp.
6.88%, 1/15/13, Callable 1/15/09 @ 103......... 100,000 94,000
6.88%, 1/15/13, Callable 1/15/09 @ 103......... 90,000 84,600
-----------
280,350
-----------
AEROSPACE & DEFENSE - 1.1%
DRS Technologies, Inc., 7.63%, 2/1/18,
Callable 2/1/11 @ 104.......................... 100,000 102,250
Transdigm, Inc., 7.75%, 7/15/14,
Callable 7/15/09 @ 106......................... 50,000 50,875
-----------
153,125
-----------
APPAREL MANUFACTURERS - 1.7%
Hanesbrands, Inc., 8.78%, 12/15/14,
Callable 12/15/08@ 102 (a)..................... 50,000 50,250
Levi Strauss & Co., 8.88%, 4/1/16,
Callable 4/1/11 @ 104.......................... 50,000 51,250
Quiksilver, Inc., 6.88%, 4/15/15,
Callable 4/15/10 @ 103......................... 150,000 139,875
-----------
241,375
-----------
AUTO MANUFACTURERS - 1.9%
Cooper Standard Automotive, Inc.,
8.38%, 12/15/14, Callable
12/15/09 @ 104................................. 50,000 44,500
General Motors Corp.
7.70%, 4/15/16................................. 50,000 46,000
7.13%, 7/15/13................................. 175,000 162,313
Goodyear Tire & Rubber Co., 8.63%,
12/1/11, Callable 12/1/09 @ 104................ 17,000 18,105
-----------
270,918
-----------
BUILDING & CONSTRUCTION PRODUCTS - 2.2%
Ainsworth Lumber Co., Ltd., 7.25%,
10/1/12, Callable 10/1/08 @ 104................ 150,000 103,125
Interline Brands, Inc., 8.13%, 6/15/14,
Callable 6/15/10 @ 104......................... 50,000 49,875
Ply Gem Industries, Inc., 9.00%, 2/15/12,
Callable 2/18/08 @ 105......................... 150,000 122,250
U.S. Concrete, Inc., 8.38%, 4/1/14,
Callable 4/1/09 @ 104.......................... 50,000 45,500
-----------
320,750
-----------
CABLE TELEVISION - 3.0%
Barrington Broadcasting Co. LLC, 10.50%,
8/15/14, Callable 8/15/10 @ 105................ 50,000 51,875
Bonten Media Acquisition, 9.00%, 6/1/15,
Callable 6/1/11@ 105(b)........................ 75,000 68,906
Cablevision Systems Corp., 8.00%, 4/15/12......... 100,000 97,750
Mediacom LLC, 7.88%, 2/15/11,
Callable 2/15/08 @ 100......................... 200,000 193,500
Quebecor Media, Inc., 7.75%, 3/15/16,
Callable 3/15/11 @ 104(b)...................... 25,000 24,125
-----------
436,156
-----------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
CASINOS & GAMBLING - 8.4%
Choctaw Resort Development Entertainment,
7.25%, 11/15/19,
Callable 11/15/11 @ 104(b)..................... 48,000 46,800
Fontainebleau Las Vegas, 10.25%, 6/15/15,
Callable 6/15/11@ 105(b)....................... 100,000 93,500
Great Canadian Gaming Co., 7.25%, 2/15/15,
Callable 2/15/11 @ 104(b)...................... 50,000 49,750
Greektown Holdings, Inc., 10.75%, 12/1/13,
Callable 12/1/10 @ 105(b)...................... 125,000 124,375
Herbst Gaming, Inc., 7.00%, 11/15/14,
Callable 11/15/09 @ 104........................ 50,000 40,500
Indianapolis Downs LLC, 11.00%, 11/1/12,
Callable 11/1/10 @ 106(b)...................... 25,000 25,125
Inn of the Mountain Gods, 12.00%, 11/15/10,
Callable 11/15/07 @ 106........................ 50,000 52,750
Isle of Capri Casinos, Inc., 7.00%, 3/1/14,
Callable 3/1/09 @ 103.50....................... 150,000 133,125
MGM MIRAGE, Inc., 6.75%, 4/1/13................... 100,000 97,500
Mohegan Tribal Gaming, 7.13%, 8/15/14,
Callable 8/15/09 @ 104......................... 50,000 49,000
MTR Gaming Group, Inc., 9.00%, 6/1/12,
Callable 6/1/09 @ 105.......................... 100,000 100,000
Pinnacle Entertainment, 7.50%, 6/15/15,
Callable 6/15/10 @ 104(b)...................... 50,000 48,250
Pokagon Gaming Authority, 10.38%, 6/15/14,
Callable 6/15/10 @ 105(b)...................... 75,000 82,875
San Pasqual Casino, 8.00%, 9/15/13,
Callable 9/15/09 @ 104(b)...................... 25,000 25,250
Seminole Hard Rock Entertainment, 8.19%,
3/15/14, Callable 3/15/09 @ 102 (a)(b)......... 50,000 48,875
Seneca Gaming Corp., 7.25%, 5/1/12,
Callable 5/1/08 @ 104.......................... 50,000 50,375
Shingle Springs, 9.38%, 6/15/15,
Callable 6/15/11@ 105(b)....................... 50,000 50,250
Turning Stone Resort Casino, 9.13%, 9/15/14,
Callable 9/15/10 @ 105(b)...................... 75,000 77,625
Waterford Gaming LLC, 8.63%, 9/15/14(b)........... 25,000 25,000
-----------
1,220,925
-----------
CHEMICALS - 3.6%
Georgia Gulf Corp., 9.50%, 10/15/14,
Callable 10/15/10 @ 105........................ 100,000 86,500
Huntsman International LLC, 7.88%,
11/15/14, Callable 11/15/10 @ 104.............. 35,000 37,625
Innophos, Inc., 8.88%, 8/15/14,
Callable 8/16/09 @ 104......................... 50,000 50,375
JohnsonDiversey, Inc., 9.63%, 5/15/12,
Callable 11/23/07 @ 105........................ 100,000 103,750
Lyondell Chemical Co.
6.88%, 6/15/17, Callable 6/15/12 @ 103......... 50,000 55,000
8.25%, 9/15/16, Callable 9/15/11 @ 104......... 25,000 28,562
8.00%, 9/15/14, Callable 9/15/10 @ 104......... 25,000 27,687
45 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
CHEMICALS, CONTINUED
Mosaic Co., 7.63%, 12/1/16,
Callable 12/1/11 @ 104(b)...................... 25,000 26,938
Nova Chemicals Corp., 6.50%, 1/15/12.............. 50,000 48,000
Terra Capital, Inc., 7.00%, 2/1/17,
Callable 2/1/12@ 104........................... 50,000 50,000
-----------
514,437
-----------
COMPUTER SERVICES - 0.3%
Activant Solutions, Inc., 9.50%, 5/1/16,
Callable 5/1/11 @ 105.......................... 50,000 45,625
-----------
45,625
-----------
CONSUMER PRODUCTS - 1.4%
Sealy Mattress Co., 8.25%, 6/15/14,
Callable 6/15/09 @ 104......................... 50,000 49,750
Smithfield Foods, Inc., 7.75%, 7/1/17............. 50,000 51,500
Spectrum Brands, Inc., 7.38%, 2/1/15,
Callable 2/1/10@ 104........................... 75,000 54,188
Yankee Acquisition Corp., 9.75%, 2/15/17,
Callable 2/15/12@ 105.......................... 50,000 46,250
-----------
201,688
-----------
CONTAINERS - PAPER AND PLASTIC - 2.6%
Owens-Brockway Glass Containers, 6.75%,
12/1/14, Callable 12/1/09 @ 103................ 50,000 50,125
Solo Cup Co., 8.50%, 2/15/14,
Callable 2/15/09 @ 104......................... 200,000 180,000
Stone Container Finance Co. of Canada,
7.38%, 7/15/14, Callable 7/15/09 @ 104......... 150,000 145,125
-----------
375,250
-----------
COSMETICS - 0.3%
Chattem, Inc., 7.00%, 3/1/14,
Callable 3/1/09 @ 104.......................... 50,000 49,500
-----------
49,500
-----------
DISTRIBUTION & WHOLESALE - 2.0%
Baker & Taylor, Inc., 11.50%, 7/1/13,
Callable 7/1/10 @ 106(b)....................... 100,000 98,500
Beverages & More, Inc., 9.25%, 3/1/12,
Callable 9/1/09 @ 105(b)....................... 50,000 51,500
Central Garden & Pet Co., 9.13%, 2/1/13,
Callable 2/1/08 @ 105.......................... 50,000 47,750
Jarden Corp., 7.50%, 5/1/17,
Callable 5/1/12 @ 104.......................... 25,000 23,750
Pegasus Solutions, Inc., 10.50%, 4/15/15,
Callable 4/15/11 @ 105(b)...................... 50,000 45,000
Pilgrim's Pride Corp., 8.38%, 5/1/17,
Callable 5/1/12 @ 104.......................... 25,000 25,187
-----------
291,687
-----------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
DIVERSIFIED OPERATIONS - 1.4%
Bombardier, Inc., 8.00%, 11/15/14,
Callable 11/15/10 @ 104(b)..................... 25,000 26,000
Koppers Holdings, Inc., 0.00%,
11/15/14, Callable 11/15/09 @ 105 (c).......... 25,000 21,437
Snoqualmie Entertainment Authority,
9.06%, 2/1/14,
Callable 2/1/09 @ 103 (a)(b)................... 25,000 24,094
Susser Holdings LLC
10.63%, 12/15/13, Callable
12/15/09 @ 105................................. 50,000 52,000
10.63%, 12/15/13, Callable
12/15/09 @ 105................................. 72,000 74,880
-----------
198,411
-----------
EDUCATION - 0.4%
Education Management LLC
10.25%, 6/1/16, Callable 6/1/11 @ 105.......... 25,000 26,250
8.75%, 6/1/14, Callable 6/1/10 @ 104........... 25,000 25,813
-----------
52,063
-----------
ELECTRIC - 2.5%
AES Corp.
7.75%, 3/1/14.................................. 60,000 60,000
7.75%, 10/15/15(b)............................. 50,000 50,062
Baldor Electic Co., 8.63%, 2/15/17,
Callable 2/15/12 @ 104......................... 50,000 52,125
CMS Energy Corp., 6.88%, 12/15/15................. 100,000 100,458
Edison Mission Energy, 7.20%, 5/15/19............. 50,000 48,875
General Cable Corp., 7.13%, 4/1/17,
Callable 4/1/12 @ 104.......................... 50,000 50,000
-----------
361,520
-----------
ENERGY - 3.6%
Aventine Renewable Energy, Inc.,
10.00%, 4/1/17, Callable
4/1/12 @ 105................................... 50,000 44,500
Copano Energy LLC, 8.13%, 3/1/16,
Callable 3/1/11 @ 104.......................... 80,000 82,200
Massey Energy Co., 6.88%, 12/15/13,
Callable 12/15/09 @ 103........................ 100,000 94,500
Mirant North America LLC, 7.38%,
12/31/13, Callable 12/31/09 @ 104.............. 50,000 50,687
NRG Energy, Inc., 7.38%, 2/1/16,
Callable 2/1/11 @ 104.......................... 50,000 49,875
Reliant Energy, Inc., 7.63%, 6/15/14.............. 50,000 50,437
Verasun Energy Corp., 9.88%, 12/15/12,
Callable 12/15/09 @ 105........................ 50,000 49,563
Williams Cos., Inc., 6.38%, 10/1/10 (b)........... 100,000 101,250
-----------
523,012
-----------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 46
- --------------------------------------------------------------------------------
HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
FINANCE - 6.8%
Basell AF SCA, 8.38%, 8/15/15,
Callable 8/15/10 @ 104 (b)..................... 150,000 134,250
CCM Merger, Inc., 8.00%, 8/1/13,
Callable 8/1/09 @ 104(b)....................... 150,000 144,000
Ford Motor Credit Co.
7.38%, 2/1/11.................................. 50,000 47,160
7.38%, 10/28/09................................ 250,000 241,113
General Motors Acceptance Corp.,
6.88%, 8/28/12................................. 300,000 270,448
MSX International, 12.50%, 4/1/12,
Callable 4/1/09 @ 110(b)....................... 25,000 23,750
Nalco Finance Holdings, Inc., 0.00%,
2/1/14, Callable 2/1/09 @ 105 (c).............. 75,000 68,250
Nuveen Investments, Inc., 10.50%, 11/15/15,
Callable 11/15/11 @ 105(b)..................... 50,000 50,000
-----------
978,971
-----------
HEALTH CARE - 0.2%
HCA, Inc., 9.25%, 11/15/16, Callable
11/15/11 @ 105................................. 25,000 26,313
-----------
26,313
-----------
INTERNET RELATED - 0.3%
Atlantic Broadband Finance LLC, 9.38%,
1/15/14, Callable 1/15/09 @ 105................ 50,000 49,000
-----------
49,000
-----------
LEISURE - 0.7%
AMC Entertainment, Inc., 11.00%, 2/1/16,
Callable 2/1/11@ 106........................... 100,000 108,250
-----------
108,250
-----------
MACHINERY - 0.7%
Case New Holland, Inc., 7.13%, 3/1/14,
Callable 3/1/10 @ 104.......................... 50,000 51,750
Sensata Technologies, 8.00%, 5/1/14,
Callable 5/1/10 @ 104.......................... 50,000 49,063
-----------
100,813
-----------
MANUFACTURING - 1.7%
AGY Holding Corp., 11.00%, 11/15/14,
Callable 11/15/10 @ 106(b)..................... 50,000 49,250
American Railcar Industries, 7.50%, 3/1/14,
Callable 3/1/11 @ 104.......................... 25,000 24,688
Coleman Cable, Inc., 9.88%, 10/1/12,
Callable 10/1/08 @ 105......................... 50,000 49,250
Freescale Semiconductor, Inc., 10.13%,
12/15/16, Callable 12/15/11 @ 105.............. 50,000 45,312
Libbey Glass, Inc., 12.38%, 6/1/11,
Callable 6/1/08 @ 108 (a)...................... 25,000 27,187
Maax Corp., 9.75%, 6/15/12,
Callable 6/15/08 @ 105......................... 50,000 17,000
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
MANUFACTURING, CONTINUED
Ryerson, Inc., 12.00%, 11/1/15,
Callable 11/1/11 @ 106(b)...................... 25,000 25,688
Tembec Industries, Inc., 7.75%, 3/15/12........... 25,000 10,344
-----------
248,719
-----------
MEDICAL - 2.7%
Advanced Medical Optics, 7.50%, 5/1/17,
Callable 5/1/12 @ 104.......................... 50,000 47,125
Community Health, 8.88%, 7/15/15,
Callable 7/15/11 @ 104......................... 50,000 50,625
MQ Associates, Inc., 0.00%, 8/15/12,
Callable 8/15/08 @ 109 (c)..................... 100,000 90,000
MultiPlan, Inc., 10.38%, 4/15/16,
Callable 4/15/11 @ 105(b)...................... 100,000 102,250
Omnicare, Inc., 6.75%, 12/15/13,
Callable 12/15/09 @ 103........................ 100,000 96,500
-----------
386,500
-----------
METAL PROCESSORS & FABRICATION - 0.5%
TriMas Corp., 9.88%, 6/15/12,
Callable 12/10/07 @ 105........................ 77,000 79,118
-----------
79,118
-----------
METALS & MINING - 3.0%
AK Steel Corp., 7.75%, 6/15/12,
Callable 11/23/07 @ 104........................ 100,000 102,000
Freeport-McMoran Copper & Gold, Inc.,
8.25%, 4/1/15, Callable 4/1/11 @ 104........... 50,000 54,000
Gibraltar Industries, Inc., 8.00%, 12/1/15,
Callable 12/1/10 @ 104......................... 150,000 141,000
International Coal Group, Inc., 10.25%,
7/15/14, Callable 7/15/10 @ 105................ 50,000 48,500
Noranda Aluminium Acquisition,
9.36%, 5/15/15, Callable
5/15/08 @ 102 (a)(b)........................... 50,000 46,125
Tube City IMS Corp., 9.75%, 2/1/15,
Callable 2/1/11 @ 105.......................... 50,000 49,125
-----------
440,750
-----------
OIL & GAS - 8.7%
Chaparral Energy, Inc., 8.50%, 12/1/15,
Callable 12/1/10 @ 104......................... 100,000 93,250
Chesapeake Energy Corp., 6.88%, 1/15/16,
Callable 1/15/09 @ 103......................... 100,000 99,500
Cimarex Energy Co., 7.13%, 5/1/17,
Callable 5/1/12 @ 104.......................... 50,000 49,938
Clayton Williams Energy, Inc., 7.75%, 8/1/13,
Callable 8/1/09 @ 104.......................... 200,000 187,500
Colorado Interstate Gas Co.,
6.80%, 11/15/15................................ 150,000 155,726
Compton Petroleum Finance Corp.,
7.63%, 12/1/13, Callable 12/1/09 @ 104......... 100,000 95,750
47 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
OIL & GAS, CONTINUED
Energy Partners Ltd., 9.75%, 4/15/14,
Callable 4/15/11 @ 105......................... 50,000 49,500
Forest Oil Corp., 7.25%, 6/15/19,
Callable 6/15/12 @ 104(b)...................... 50,000 50,000
Grant Prideco, Inc., 6.13%, 8/15/15,
Callable 8/15/10 @ 103......................... 25,000 25,125
Inergy LP/Inergy Finance, 8.25%, 3/1/16,
Callable 3/1/11 @ 104.......................... 100,000 104,500
Newfield Exploration Co., 6.63%, 9/1/14,
Callable 9/1/09 @ 103.......................... 100,000 98,250
Opti Canada, Inc., 7.88%, 12/15/14,
Callable 12/15/10 @ 104(b)..................... 50,000 49,625
Pogo Producing Co., 7.88%, 5/1/13,
Callable 5/1/10 @ 104.......................... 100,000 102,000
Swift Energy Co., 7.63%, 7/15/11,
Callable 7/15/08 @ 104......................... 50,000 50,500
Tesoro Corp., 6.50%, 6/1/17,
Callable 6/1/12 @ 103.......................... 50,000 49,375
-----------
1,260,539
-----------
PAPER & RELATED PRODUCTS - 2.5%
Aleris International, Inc., 10.00%, 12/15/16,
Callable 12/15/11 @ 105........................ 25,000 22,000
Catalyst Paper Corp., 8.63%, 6/15/11,
Callable 12/6/07 @ 103......................... 50,000 39,500
Exopack Holding Corp., 11.25%, 2/1/14,
Callable 2/1/10 @ 106.......................... 50,000 50,625
Georgia-Pacific Corp., 7.70%, 6/15/15............. 100,000 98,500
Norampac, Inc., 6.75%, 6/1/13,
Callable 6/1/08 @ 103.......................... 100,000 95,250
Verso Paper Holdings LLC, 9.13%, 8/1/14,
Callable 8/1/10 @ 105.......................... 50,000 51,625
-----------
357,500
-----------
PIPELINES - 3.1%
Atlas Pipeline Partners LP, 8.13%, 12/15/15,
Callable 12/15/10 @ 104........................ 50,000 49,750
Dynegy Holdings, Inc., 8.38%, 5/1/16.............. 150,000 150,375
El Paso Corp., 7.00%, 6/15/17..................... 100,000 100,204
Mueller Water Products, Inc., 7.38%, 6/1/17,
Callable 6/1/12 @ 104.......................... 50,000 46,500
Semgroup LP, 8.75%, 11/15/15,
Callable 11/15/10 @ 104(b)..................... 50,000 48,000
Williams Partners LP, 7.25%, 2/1/17............... 50,000 51,563
-----------
446,392
-----------
PRINTING & PUBLISHING - 2.8%
Block Communications, Inc., 8.25%,
12/15/15, Callable 12/15/10 @ 104(b)........... 50,000 50,250
Canwest Mediaworks LP, 9.25%, 8/1/15,
Callable 8/1/11 @ 105(b)....................... 50,000 50,750
Idearc, Inc., 8.00%, 11/15/16,
Callable 11/15/11 @ 104........................ 50,000 50,125
Medimedia USA, Inc., 11.38%, 11/15/14,
Callable 11/15/09 @ 106(b)..................... 50,000 52,250
Morris Publishing, 7.00%, 8/1/13,
Callable 8/1/08 @ 103.......................... 100,000 76,750
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
PRINTING & PUBLISHING, CONTINUED
Sheridan Group, Inc., 10.25%, 8/15/11,
Callable 11/23/07 @ 105........................ 100,000 102,500
Valassis Communications, Inc., 8.25%, 3/1/15,
Callable 3/1/11 @ 104.......................... 35,000 29,487
-----------
412,112
-----------
RENTAL - AUTO AND EQUIPMENT - 1.7%
Avis Budget Car Rental, Inc., 7.63%, 5/15/14,
Callable 5/15/10 @ 104......................... 100,000 99,000
Hertz Corp., 8.88%, 1/1/14,
Callable 1/1/10 @ 104.......................... 100,000 103,000
Rental Service Corp., 9.50%, 12/1/14,
Callable 12/1/10 @ 105......................... 50,000 48,063
-----------
250,063
-----------
RESTAURANTS - 3.0%
Buffets, Inc., 12.50%, 11/1/14,
Callable 11/1/10 @ 106......................... 50,000 32,375
Dave & Buster's, Inc., 11.25%, 3/15/14,
Callable 3/15/10 @ 106......................... 50,000 50,875
Landry's Restaurants, Inc., 9.50%, 12/15/14,
Callable 2/28/09 @ 101 ........................ 200,000 200,000
NPC International, Inc., 9.50%, 5/1/14,
Callable 5/1/10 @ 105.......................... 50,000 46,750
Outback Steakhouse, Inc., 10.00%, 6/15/15,
Callable 6/15/11 @ 105(b)...................... 75,000 64,500
Sbarro, Inc., 10.38%, 2/1/15,
Callable 2/1/10 @ 108.......................... 50,000 45,187
-----------
439,687
-----------
RETAIL - 1.9%
Claire's Stores, Inc., 9.63%, 6/1/15,
Callable 6/1/11 @ 105(b)....................... 50,000 40,875
Linens `N' Things, Inc., 10.87%, 1/15/14,
Callable 1/15/08 @ 102 (a)..................... 50,000 33,000
Pep Boys, 7.50%, 12/15/14,
Callable 12/15/09 @ 104........................ 50,000 48,125
Stater Bros. Holdings, Inc., 7.75%, 4/15/15,
Callable 4/15/11 @ 104......................... 50,000 49,875
Suburban Propane Partners LP, 6.88%,
12/15/13, Callable 12/15/08 @ 103.............. 50,000 48,750
United Auto Group, Inc., 7.75%, 12/15/16,
Callable 12/15/11 @ 104........................ 50,000 48,625
-----------
269,250
-----------
SEISMIC DATA COLLECTION - 0.7%
CIE Gener de Geophysique, 7.50%, 5/15/15,
Callable 5/15/10 @ 104......................... 50,000 51,000
Seitel, Inc., 9.75%, 2/15/14,
Callable 2/15/11 @ 105......................... 50,000 46,375
-----------
97,375
-----------
SPECIAL PURPOSE ENTITY - 4.2%
Altra Industrial Motion, Inc., 9.00%,
12/1/11, Callable 12/1/08 @ 105................ 50,000 50,250
Buffalo Thunder Development Authority,
9.38%, 12/15/14,
Callable 12/15/10 @ 105(b)..................... 50,000 46,750
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 48
- --------------------------------------------------------------------------------
HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
SPECIAL PURPOSE ENTITY, CONTINUED
Cellu Tissue Holdings, Inc., 9.75%, 3/15/10,
Callable 11/23/07 @ 107........................ 50,000 49,125
Chukchansi Economic Development
Authority, 8.00%, 11/15/13,
Callable 11/15/09 @ 104(b)..................... 25,000 25,188
Hawker Beechcraft Acquisition Co.
9.75%, 4/1/17, Callable 4/1/12 @ 105(b)........ 25,000 25,437
8.50%, 4/1/15, Callable 4/1/11 @ 104(b)........ 50,000 50,875
Kar Holdings, Inc., 8.75%, 5/1/14,
Callable 5/1/10 @ 104(b)....................... 50,000 48,250
Local TV Finance LLC, 9.25%, 6/15/15,
Callable 6/15/11 @ 105(b)...................... 50,000 47,875
MCBC Holdings, Inc., 11.52%, 10/15/14,
Callable 10/15/09 @ 103 (a)(b)................. 25,000 25,000
Momentive Performance, 9.75%, 12/1/14,
Callable 12/1/10 @ 105(b)...................... 50,000 48,750
Petroplus Finance Ltd., 7.00%, 5/1/17,
Callable 5/1/12 @ 104(b)....................... 75,000 70,500
Rare Restaurant Group Ll, 9.25%, 5/15/14,
Callable 5/15/11 @ 105(b)...................... 50,000 48,500
Regency Energy Partners LP, 8.38%,
12/15/13, Callable 12/15/10 @ 104.19........... 17,000 17,893
UCI Holdco, Inc., 12.69%, 12/15/13,
Callable 12/15/07 @ 100 (a)(b)................. 54,687 53,593
-----------
607,986
-----------
TELECOMMUNICATIONS - 10.1%
Broadview Network Holdings, 11.38%, 9/1/12,
Callable 9/1/09 @ 106(b)....................... 25,000 26,500
Centennial Communications Corp., 10.00%,
1/1/13, Callable 1/1/09 @ 108.................. 100,000 106,000
Cincinnati Bell, Inc., 8.38%, 1/15/14,
Callable 1/15/09 @ 104......................... 100,000 100,250
Cricket Communications, 9.38%, 11/1/14,
Callable 11/1/10 @ 105......................... 50,000 49,625
Insight Midwest LP, 9.75%, 10/1/09,
Callable 11/23/07 @ 100........................ 130,000 130,162
IPCS, Inc., 8.61%, 5/1/14,
Callable 5/1/08 @ 102 (a)...................... 100,000 97,000
Level 3 Financing, Inc., 9.25%, 11/1/14,
Callable 11/1/10 @ 105......................... 50,000 47,125
Metropcs Wireless, Inc.
9.25%, 11/1/14, Callable
11/1/10 @ 105.................................. 50,000 49,625
9.25%, 11/1/14, Callable
11/1/10 @ 105.................................. 50,000 49,625
Nordic Telephone Co., Holdings, 8.88%,
5/1/16, Callable 5/1/11 @ 104 (b).............. 50,000 52,875
NTL Cable plc, 9.13%, 8/15/16,
Callable 8/15/11 @ 105......................... 125,000 131,875
Paetec Holding Corp., 9.50%, 7/15/15,
Callable 7/15/11 @ 105(b)...................... 50,000 51,250
Panamsat Corp., 9.00%, 6/15/16,
Callable 6/15/11 @ 105......................... 50,000 51,125
Qwest Corp., 5.63%, 11/15/08...................... 150,000 149,250
Radio One, Inc., 6.38%, 2/15/13,
Callable 2/15/09 @ 103......................... 50,000 44,000
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
TELECOMMUNICATIONS, CONTINUED
Suncom Wireless Holdings, Inc., 8.50%,
6/1/13, Callable 6/1/08 @ 104.................. 150,000 157,312
West Corp., 11.00%, 10/15/16,
Callable 10/15/11 @ 106........................ 25,000 26,188
Wind Acquisition Financial SA, 10.75%,
12/1/15, Callable 12/1/10 @ 105(b)............. 100,000 111,250
Windstream Corp., 8.63%, 8/1/16,
Callable 8/1/11 @ 104.......................... 25,000 26,750
-----------
1,457,787
-----------
TOBACCO - 0.2%
Alliance One International, Inc.,
8.50%, 5/15/12................................. 25,000 24,875
-----------
24,875
-----------
TRANSPORTATION - 0.8%
Bristow Group, Inc., 7.50%, 9/15/17,
Callable 9/15/12 @ 104(b)...................... 50,000 51,500
Navios Maritime Holdings, Inc., 9.50%,
12/15/14, Callable 12/15/10 @ 105.............. 30,000 31,725
Saint Acquisition Corp., 13.31%, 5/15/15,
Callable 5/15/09 @ 102 (a)(b).................. 50,000 31,875
-----------
115,100
-----------
WASTE DISPOSAL - 1.0%
Allied Waste North America, Inc., 7.38%,
4/15/14, Callable 4/15/09 @ 104................ 150,000 151,500
-----------
151,500
-----------
TOTAL CORPORATE OBLIGATIONS
(COST $14,058,455)............................. 13,845,392
-----------
- --------------------------------------------------------------------------------
INVESTMENT COMPANY--2.4%
- --------------------------------------------------------------------------------
Northern Institutional Diversified Assets
Portfolio, Shares class, 4.80% (d)............. 355,288 355,288
-----------
TOTAL INVESTMENT COMPANY
(COST $355,288)................................ 355,288
-----------
TOTAL INVESTMENTS
(COST $14,413,743) -- 98.0%..................... 14,200,680
===========
- -------------
Percentages indicated are based on net assets of $14,487,263.
(a) Variable rate security. The interest rates on these securities are adjusted
periodically to reflect then-current short-term interest rates. The rates
presented represent the rates in effect on October 31, 2007. The maturity
dates presented reflect the final maturity dates. However, some of these
securities may contain put or demand features that allow the fund to
require the issuer to repurchase the security from the fund within various
time periods, including daily, weekly, monthly, or semi-annually.
(b) Security exempt from registration under Rule 144a of the Securities Act of
1933. This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers. This security has been deemed
liquid by the Investment Adviser based on procedures approved by the Board
of Trustees.
(c) Step Bond. Income recognition is on the effective yield method for Step
Bonds.
(d) The rate presented represents the annualized one day yield that was in
effect on October 31, 2007.
LLC -- Limited Liability Co.
LP -- Limited Partnership
PLC -- Public Limited Co.
49 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AND GOVERNMENT AGENCY
OBLIGATIONS--28.0%
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
Federal Home Loan Mortgage Corp. - 12.5%
Pool #1B2655, 4.20%, 12/1/34(a)(d)............. 199,130 200,195
Pool #1J1313, 6.43%, 6/1/36(a)................. 273,308 279,287
Pool #847557, 5.54%, 7/1/34(a)(d).............. 173,761 176,901
Pool #G02981, 6.00%, 6/1/37.................... 194,294 195,556
Pool #G12317, 5.50%, 8/1/21.................... 187,094 187,390
TBA November, 6.00%, 11/11/37.................. 150,000 150,938
TBA November, 5.50%, 11/15/37.................. 700,000 689,062
-----------
1,879,329
-----------
Federal National Mortgage Association - 14.5%
Pool #781922, 5.00%, 2/1/21.................... 379,120 373,313
Pool #922090, 5.90%, 3/1/37(a)................. 329,112 332,705
TBA December 2007
6.50%, 12/1/35............................... 850,000 870,027
6.00%, 12/15/36.............................. 600,000 603,750
-----------
2,179,795
-----------
Government National Mortgage Association - 1.0%
6.00%, 11/15/36................................ 150,000 151,875
-----------
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS (COST $4,198,134).................. 4,210,999
-----------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS--41.8%
- --------------------------------------------------------------------------------
AUTO MANUFACTURERS - 0.6%
General Motors, 8.25%, 7/15/23.................... 100,000 90,250
-----------
90,250
-----------
BANKING - 2.5%
American Express Centurion Bank,
5.95%, 6/12/17................................. 100,000 100,596
Bank of America N.A., 6.10%, 6/15/17.............. 150,000 153,521
Washington Mutual, Inc., 6.09%,
9/17/12 (a).................................... 75,000 71,492
Washington Mutual Bank, 5.56%,
2/4/11 (a)..................................... 50,000 48,336
-----------
373,945
-----------
BUILDING & CONSTRUCTION PRODUCTS - 1.3%
Martin Marietta Materials, Inc.,
5.13%, 4/30/10 (a)............................. 100,000 98,870
Masco Corp., 6.00%, 3/12/10 (a)(d)................ 100,000 98,235
-----------
197,105
-----------
ELECTRIC - 5.4%
MidAmerican Energy Co., 5.95%, 7/15/17............ 450,000 465,393
Progress Energy, Inc., 5.98%, 11/14/08,
Callable 2/14/08 @ 100 (a)(d).................. 250,000 250,316
Puget Sound Energy, Inc., 6.97%, 6/1/67,
Callable 6/1/17 @ 100.......................... 100,000 94,599
-----------
810,308
-----------
FINANCE - 9.9%
Ford Motor Credit Co., LLC
4.95%, 1/15/08................................. 250,000 248,918
5.80%, 1/12/09................................. 300,000 289,426
7.25%, 10/25/11................................ 25,000 23,255
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
FINANCE, CONTINUED
General Motors Acceptance Corp.
4.38%, 12/10/07................................ 500,000 499,203
7.25%, 3/2/11.................................. 100,000 94,559
SLM Corp.
4.00%, 1/15/10................................. 150,000 140,664
4.50%, 7/26/10................................. 50,000 46,814
XTRA Finance Corp., 5.15%, 4/1/17................. 150,000 144,869
-----------
1,487,708
-----------
HOSPITALS - 1.4%
HCA, Inc., 8.75%, 9/1/10.......................... 200,000 203,500
-----------
203,500
-----------
MEDIA - 3.6%
Time Warner Cable, Inc., 5.85%, 5/1/17............ 150,000 148,720
Time Warner Entertainment,
8.88%, 10/1/12................................. 350,000 398,354
-----------
547,074
-----------
MEDICAL - 2.0%
Astrazeneca plc, 5.90%, 9/15/17................... 150,000 153,374
Schering-Plough, 6.00%, 9/15/17................... 150,000 152,565
-----------
305,939
-----------
OFFICE EQUIPMENT & SERVICES - 1.7%
IBM Corp., 5.70%, 9/14/17......................... 150,000 152,248
Xerox Corp., 6.40%, 12/18/09 (a)(d)............... 100,000 99,932
-----------
252,180
-----------
RETAIL - 3.5%
Federated Retail Holdings, Inc.,
5.90%, 12/1/16................................. 150,000 143,204
Home Depot, Inc., 5.25%, 12/16/13................. 400,000 387,331
-----------
530,535
-----------
TELECOMMUNICATIONS - 2.8%
Motorola, Inc., 6.00%, 11/15/17................... 150,000 148,122
Verizon Pennsylvania, Inc., 5.65%, 11/15/11....... 275,000 279,320
-----------
427,442
-----------
TRANSPORTATION - 7.1%
American Airlines, Inc.
6.98%, 4/1/11.................................. 77,970 77,970
7.86%, 10/1/11................................. 200,000 211,250
Burlington Northern Santa Fe Railway Co.,
4.83%, 1/15/23................................. 251,263 242,328
Continental Airlines, Inc., 5.98%, 4/19/22........ 100,000 98,307
Union Pacific Corp., 5.75%, 11/15/17.............. 150,000 148,684
Union Pacific Railroad, 5.08%, 1/2/29............. 299,279 288,622
-----------
1,067,161
-----------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 50
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
TOTAL CORPORATE OBLIGATIONS
(COST $6,284,555).............................. 6,293,147
-----------
- --------------------------------------------------------------------------------
ASSET BACKED SECURITIES--8.2%
- --------------------------------------------------------------------------------
Americredit Automobile Receivables Trust,
Series 2005-CF, Class A3,
4.47%, 5/6/10 (d).............................. 133,747 133,484
Asset Backed Funding Certificates,
Series 2003-AHL1, Class A1,
3.68%, 3/25/33................................. 210,318 207,006
Cairn Mezzanine plc, Series 2007-3A,
Class B1, 6.40%, 8/13/47 (a)(b)................ 145,000 79,750
Citigroup Mortgage Loan Trust, Inc.,
Series 2005-WF2, Class AF2,
4.92%, 8/25/35................................. 15,345 15,297
Countrywide Asset-Backed Certificates,
Series 2006-S4, Class A3,
5.80%, 7/25/34................................. 210,000 203,873
GE Business Loan Trust, Series 2006-2A,
Class A, 5.27%, 11/15/34 (a)(b)(d)............. 248,921 248,100
GMAC Mortgage Corp., Loan Trust,
Series 2006-HE3, Class A3,
5.81%, 10/25/36................................ 170,000 161,097
Preferred Term Securities XXII Ltd.,
6.03%, 9/22/36, Callable
6/22/11 @ 100 (a)(b)(d)........................ 199,318 190,648
-----------
TOTAL ASSET BACKED SECURITIES
(COST $1,324,232).............................. 1,239,255
-----------
- --------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS--11.6%
- --------------------------------------------------------------------------------
Banc of America Mortgage Securities,
Series 2005-D, Class 2A4,
4.78%, 5/25/35 (a)............................. 200,000 198,780
Deutsche Mortgage Securities, Inc.,
Series 2006-WF1, Class 1A1, 5.07%,
6/26/35 (a)(b)................................. 179,467 178,781
Freddie Mac
Series 2988, Class AF, 5.39%, 6/15/35 (a)(d)... 169,792 167,259
Series 3212, Class BK, 5.40%, 9/15/36.......... 150,000 144,027
Morgan Stanley Mortgage Loan Trust,
Series 2006-3AR, Class 2A3, 5.71%,
3/25/36 (a).................................... 271,828 275,690
Residential Accredit Loans, Inc.
Series 2007-QS1, Class 2A8, 5.17%,
1/25/37 (a)(d)................................. 360,118 357,079
Series 2007-QS2, Class A4,
6.25%, 1/25/37................................. 169,876 169,773
Residential Asset Securitization Trust,
Series 2003-A15, Class 1A2,
5.32%, 2/25/34 (a)(d).......................... 259,492 258,496
-----------
TOTAL COLLATERALIZED
MORTGAGE OBLIGATIONS
(COST $1,754,762).............................. 1,749,885
-----------
- --------------------------------------------------------------------------------
COMMERCIAL MORTGAGE BACKED SECURITIES--19.1%
- --------------------------------------------------------------------------------
Banc of America Commercial Mortgage, Inc.,
Series 2006-4, Class A4, 5.63%,
7/10/46 (a).................................... 230,000 230,112
- --------------------------------------------------------------------------------
COMMERCIAL MORTGAGE BACKED SECURITIES, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
Bear Stearns Commercial Mortgage
Securities, Inc.
Series 2006-T24, Class A4,
5.43%, 10/12/41................................ 200,000 198,967
Series 2007-T28, Class AJ, 6.18%,
9/11/42........................................ 80,000 79,433
Citigroup Commercial Mortgage Trust,
Series 2006-C4, Class A3,
5.72%, 3/15/49 (a)............................. 240,000 242,877
Citigroup/Deutsche Bank Commercial
Mortgage Trust, Series 2007-CD4,
Class A2B, 5.21%, 12/11/49..................... 200,000 198,480
Commercial Mortgage Pass - Through
Certificate
Series 2005-FL11, Class A1, 5.24%,
11/15/17 (a)(b)(d)............................. 34,241 34,182
Series 2006-FL12, Class A2, 5.19%,
12/15/20 (a)(d)................................ 251,337 250,533
Series 2005-LP5, Class AJ, 5.05%,
5/10/43........................................ 200,000 188,031
CWCapital Cobalt, Series 2007-C3,
Class AJ, 6.02%, 5/15/46....................... 160,000 157,046
GS Mortgage Securities Corp. II
Series 2006-GG8, Class AJ,
5.62%, 11/10/39................................ 180,000 174,312
Series 2007-GG10, Class AJ,
5.80%, 8/10/45 (a)............................. 210,000 206,228
JP Morgan Chase Commercial Mortgage
Securities Corp., Series 2007-CB20,
Class AJ, 6.10%, 2/12/51....................... 190,000 190,622
LB-UBS Commercial Mortgage Trust,
Series 2007-C6, Class AM,
6.11%, 7/15/40 (a)............................. 180,000 184,134
Morgan Stanley Capital I
Series 2006-HQ10, Class A4,
5.33%, 11/12/41................................ 180,000 176,211
Series 2007-IQ14, Class A2,
5.61%, 4/15/49................................. 220,000 221,208
Washington Mutual Commercial Mortgage
Securities Trust, Series 2006-SL1,
Class A, 5.30%, 11/23/43 (a)(b)................ 147,436 145,680
-----------
TOTAL COMMERCIAL MORTGAGE
BACKED SECURITIES
(COST $2,886,901).............................. 2,878,056
-----------
- --------------------------------------------------------------------------------
FOREIGN BONDS--5.1%
- --------------------------------------------------------------------------------
ICELAND - 1.5%
Kaupthing Bank, 5.94%, 1/15/10 (a)(b)(d).......... 225,000 224,234
-----------
224,234
-----------
NETHERLANDS - 1.0%
Shell International Finance BV,
5.20%, 3/22/17................................. 150,000 149,342
-----------
149,342
-----------
51 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
- --------------------------------------------------------------------------------
FOREIGN BONDS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- --------
SOUTH KOREA - 1.7%
Citibank Korea, Inc., 4.68%, 6/18/13,
Callable 6/18/08 @ 100 (a)..................... 250,000 249,323
-----------
249,323
-----------
UNITED KINGDOM - 0.9%
Barclays Bank plc, 5.93%, 12/31/49 (b)............ 150,000 141,979
-----------
141,979
-----------
TOTAL FOREIGN BONDS
(COST $773,460)................................ 764,878
-----------
- --------------------------------------------------------------------------------
INVESTMENT COMPANY--1.1%
- --------------------------------------------------------------------------------
Northern Institutional Diversified Assets
Portfolio, Shares class, 4.80% (c)............. 169,259 169,259
-----------
TOTAL INVESTMENT COMPANY
(COST $169,259)................................ 169,259
-----------
TOTAL INVESTMENTS
(COST $17,391,303) -- 114.9%.................... 17,305,479
===========
- ------------
Percentages indicated are based on net assets of $15,058,569.
(a) Variable rate security. The interest rates on these securities are adjusted
periodically to reflect then-current short-term interest rates. The rates
presented represent the rates in effect on October 31, 2007. The maturity
dates presented reflect the final maturity dates. However, some of these
securities may contain put or demand features that allow the fund to
require the issuer to repurchase the security from the fund within various
time periods, including daily, weekly, monthly, or semi-annually.
(b) Security exempt from registration under Rule 144a of the Securities Act of
1933. This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers. This security has been deemed
liquid by the Investment Adviser based on procedures approved by the Board
of Trustees.
(c) The rate presented represents the annualized one day yield that was in
effect on October 31, 2007.
(d) Security held as collateral for to be announced securities.
LLC -- Limited Liability Co.
PLC -- Public Limited Co.
TBA -- Security was traded on a "to be announced" basis. Represents 15.37% of
net assets.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 52
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
COMMON STOCKS--97.7%
- --------------------------------------------------------------------------------
SHARES VALUE($)
--------- --------
AEROSPACE & DEFENSE - 6.1%
General Dynamics Corp............................. 25,400 2,310,384
The Boeing Co..................................... 19,750 1,947,153
United Technologies Corp.......................... 15,900 1,217,781
-----------
5,475,318
-----------
BIOTECHNOLOGY - 3.6%
Gilead Sciences, Inc. (a)......................... 70,500 3,256,395
-----------
3,256,395
-----------
BUSINESS SERVICES - 1.1%
Fluor Corp........................................ 6,450 1,019,100
-----------
1,019,100
-----------
CASINOS & GAMBLING - 1.0%
International Game Technology..................... 19,950 870,020
-----------
870,020
-----------
CHEMICALS - 4.2%
Monsanto Co....................................... 38,400 3,748,992
-----------
3,748,992
-----------
COMPUTER SOFTWARE - 5.8%
Adobe Systems, Inc. (a)........................... 74,600 3,573,340
Electronic Arts, Inc. (a)......................... 26,750 1,634,960
-----------
5,208,300
-----------
COMPUTERS - 12.4%
Apple Computer, Inc. (a).......................... 23,700 4,501,815
Hewlett-Packard Co................................ 47,150 2,436,712
Research In Motion Ltd. (a)....................... 33,450 4,164,859
-----------
11,103,386
-----------
CONSUMER PRODUCTS - 7.4%
Colgate-Palmolive Co.............................. 47,300 3,607,571
PepsiCo, Inc...................................... 40,900 3,015,148
-----------
6,622,719
-----------
DIVERSIFIED MANUFACTURING OPERATIONS - 2.5%
Joy Global, Inc................................... 18,600 1,079,916
Thermo Fisher Scientific, Inc. (a)................ 19,500 1,146,795
-----------
2,226,711
-----------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 1.7%
Emerson Electric Co............................... 15,600 815,412
Microchip Technology, Inc......................... 21,000 696,570
-----------
1,511,982
-----------
FARM MACHINERY & EQUIPMENT - 3.7%
Deere & Co........................................ 21,500 3,330,350
-----------
3,330,350
-----------
FINANCIAL SERVICES - 6.6%
Ambac Financial Group, Inc........................ 7,900 290,957
CME Group, Inc.................................... 5,175 3,447,844
Goldman Sachs Group, Inc.......................... 4,500 1,115,640
Nymex Holdings, Inc............................... 2,800 359,856
UBS AG-ADR........................................ 12,550 673,809
-----------
5,888,106
-----------
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
--------- --------
FOOD & BEVERAGE - 4.4%
The Coca-Cola Co.................................. 29,000 1,791,040
Wm. Wrigley Jr. Co................................ 10,850 669,120
Yum! Brands, Inc.................................. 36,900 1,485,963
-----------
3,946,123
-----------
HEALTH CARE - 2.9%
Baxter International, Inc......................... 22,300 1,338,223
DENTSPLY International, Inc....................... 20,800 862,784
Zimmer Holdings, Inc. (a)......................... 5,700 396,093
-----------
2,597,100
-----------
HOTELS & LODGING - 4.3%
Las Vegas Sands Corp. (a)......................... 29,200 3,885,936
-----------
3,885,936
-----------
INSURANCE - 1.8%
AFLAC, Inc........................................ 25,850 1,622,863
-----------
1,622,863
-----------
INTERNET RELATED - 4.4%
Google, Inc., Class A (a)......................... 5,600 3,959,200
-----------
3,959,200
-----------
OIL & GAS - 5.2%
Schlumberger Ltd.................................. 23,050 2,225,939
Smith International, Inc.......................... 36,450 2,407,522
-----------
4,633,461
-----------
PHARMACEUTICALS - 8.6%
Abbott Laboratories............................... 54,200 2,960,404
Alcon, Inc. ADR................................... 6,950 1,057,859
Allergan, Inc..................................... 16,000 1,081,280
Genentech, Inc. (a)............................... 22,329 1,655,249
Schering-Plough Corp.............................. 32,100 979,692
-----------
7,734,484
-----------
RETAIL - 2.4%
Kohl's Corp. (a).................................. 19,900 1,093,903
Target Corp....................................... 17,100 1,049,256
-----------
2,143,159
-----------
TELECOMMUNICATIONS - 7.6%
Cisco Systems, Inc. (a)........................... 110,450 3,651,477
Nokia Corp. ADR................................... 57,150 2,269,998
QUALCOMM, Inc..................................... 20,900 893,057
-----------
6,814,532
-----------
TOTAL COMMON STOCKS
(COST $65,379,364)............................. 87,598,237
-----------
- --------------------------------------------------------------------------------
INVESTMENT COMPANY--2.3%
- --------------------------------------------------------------------------------
Northern Institutional Diversified Assets
Portfolio, Shares class, 4.80% (b)............. 2,057,774 2,057,774
-----------
TOTAL INVESTMENT COMPANY
(COST $2,057,774).............................. 2,057,774
-----------
TOTAL INVESTMENTS
(COST $67,437,138) -- 100.0%.................... 89,656,011
===========
- ------------
Percentages indicated are based on net assets of $89,685,877.
(a) Represents non-income producing security.
(b) The rate presented represents the annualized one day yield that was in
effect on October 31, 2007.
ADR -- American Depositary Receipt
53 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
COMMON STOCKS--96.9%
- --------------------------------------------------------------------------------
SHARES VALUE($)
--------- --------
AUSTRALIA - 3.2%
Macquarie Airports................................ 579,924 2,382,795
National Australia Bank Ltd....................... 131,665 5,325,753
QBE Insurance Group Ltd........................... 102,500 3,136,099
Zinifex Ltd....................................... 235,900 3,732,463
-------------
14,577,110
-------------
AUSTRIA - 1.0%
Voestalpine AG.................................... 51,400 4,643,784
-------------
BELGIUM - 1.3%
Fortis............................................ 176,832 5,678,420
Fortis - Strip WPR................................ 70,732 707
-------------
5,679,127
-------------
BRAZIL - 2.6%
Banco Do Brasil SA................................ 60,000 1,087,062
Gerdau SA ADR..................................... 75,150 2,337,165
Petroleo Brasileiro SA ADR........................ 55,400 4,608,726
Unibanco ADR...................................... 8,100 1,280,124
Usinas Siderurgicas de Minas Gerais SA............ 30,200 2,368,966
-------------
11,682,043
-------------
CANADA - 2.6%
Canadian Imperial Bank of Commerce................ 21,000 2,268,107
Encana Corp....................................... 59,500 4,164,496
Gerdau Ameristeel Corp............................ 161,000 2,200,879
Nexen, Inc........................................ 34 1,152
Teck Cominco Ltd., B Shares....................... 64,600 3,236,156
-------------
11,870,790
-------------
CHINA - 0.5%
China Petroleum & Chemical Corp................... 592,000 942,622
China Telecom Corp., Ltd.......................... 1,264,000 1,092,937
-------------
2,035,559
-------------
FINLAND - 1.0%
Nokia Oyj......................................... 52,100 2,068,954
Stora Enso Oyj, R Shares.......................... 123,400 2,276,027
-------------
4,344,981
-------------
FRANCE - 12.3%
Air France-KLM.................................... 28,700 1,095,055
BNP Paribas SA.................................... 64,580 7,156,768
Compagnie Generale des Establissements
Michelin, B Shares............................. 39,700 5,346,150
Credit Agricole SA................................ 142,779 5,656,125
France Telecom SA................................. 107,200 3,963,857
Lagardere S.C.A................................... 34,800 2,950,824
Renault SA........................................ 62,300 10,521,374
Sanofi-Aventis.................................... 68,900 6,060,101
Societe Generale.................................. 35,385 5,977,343
Total SA.......................................... 92,000 7,423,280
-------------
56,150,877
-------------
GERMANY - 11.7%
Allianz SE........................................ 39,800 8,978,500
BASF AG........................................... 48,300 6,704,660
Daimler AG........................................ 10,100 1,113,722
Deutsche Bank AG.................................. 43,200 5,770,810
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
--------- --------
GERMANY, CONTINUED
Deutsche Lufthansa AG............................. 162,600 4,804,736
Deutsche Telekom AG............................... 241,900 4,969,293
E.ON AG........................................... 41,000 8,024,178
Muenchener Rueckversicherungs-
Gesellschaft AG................................ 35,000 6,696,622
RWE AG............................................ 44,500 6,069,450
-------------
53,131,971
-------------
GREECE - 0.4%
Public Power Corp................................. 49,210 1,999,075
-------------
HONG KONG - 0.3%
China Netcom Group Corp., Ltd..................... 462,000 1,419,925
-------------
INDIA - 0.5%
State Bank of India GDR........................... 17,600 2,182,400
-------------
ITALY - 3.5%
Buzzi Unicem SpA.................................. 91,400 2,598,343
ENI SpA........................................... 210,800 7,696,173
Fondiaria-SAI SpA................................. 60,800 2,960,054
Fondiaria-SAI SpA-RNC............................. 18,700 637,951
Italcementi SpA................................... 91,700 2,112,133
-------------
16,004,654
-------------
JAPAN - 20.8%
Alps Electric Co., Ltd............................ 55,000 688,675
Canon, Inc........................................ 32,250 1,632,043
EDION Corp........................................ 67,800 778,870
FUJITSU Ltd....................................... 573,000 4,499,634
Honda Motor Co., Ltd.............................. 47,000 1,760,231
Isuzu Motors Ltd.................................. 570,000 2,841,996
JFE Holdings, Inc................................. 101,600 5,948,279
Kyushu Electric Power Co., Inc.................... 101,300 2,470,261
Mitsubishi Chemical Holdings Corp................. 303,000 2,507,365
Mitsubishi Corp................................... 129,000 4,016,987
Mitsubishi UFJ Financial Group, Inc............... 645,000 6,454,802
Mitsui & Co., Ltd................................. 209,000 5,421,760
Mitsui Chemicals, Inc............................. 417,000 3,922,589
Mitsui O.S.K. Lines Ltd........................... 327,000 5,405,205
NAMCO BANDAI Holdings, Inc........................ 123,800 1,908,955
Nippon Mining Holdings, Inc....................... 360,000 3,405,454
Nippon Telegraph & Telephone Corp................. 881 4,032,546
Nippon Yusen Kabushiki Kaisha..................... 152,000 1,569,480
Nissan Motor Co., Ltd............................. 534,700 6,135,284
ORIX Corp......................................... 21,300 4,369,758
Sharp Corp........................................ 261,000 4,117,518
Sony Corp......................................... 12,510 617,905
Sumitomo Heavy Industries Ltd..................... 163,000 2,153,647
Sumitomo Mitsui Financial Group, Inc.............. 731 5,988,637
The Tokyo Electric Power Co., Inc................. 165,200 4,192,466
Toshiba Corp...................................... 543,000 4,598,873
Toyota Motor Corp................................. 56,700 3,246,168
-------------
94,685,388
-------------
NETHERLANDS - 5.8%
ArcelorMittal..................................... 107,652 8,685,755
Corporate Express NV.............................. 107,400 1,202,178
ING Groep NV...................................... 216,068 9,764,998
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 54
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
--------- --------
NETHERLANDS, CONTINUED
Koninklijke Ahold NV (a).......................... 266,720 4,018,278
Wolters Kluwer NV................................. 89,700 2,817,023
-------------
26,488,232
-------------
SINGAPORE - 0.3%
Neptune Orient Lines Ltd.......................... 427,000 1,529,966
-------------
SOUTH AFRICA - 0.6%
Sanlam Ltd........................................ 554,040 2,036,446
Standard Bank Group Ltd........................... 34,900 634,141
-------------
2,670,587
-------------
SOUTH KOREA - 1.7%
Honam Petrochemical Corp.......................... 8,100 1,236,892
Hynix Semiconductor, Inc. (a)..................... 24,700 693,102
Hyundai Motors Co. Ltd., Second Preferred......... 15,950 612,766
Industrial Bank of Korea GDR...................... 88,300 1,735,095
Kookmin Bank ADR.................................. 14,600 1,192,674
POSCO ADR......................................... 11,400 2,094,750
-------------
7,565,279
-------------
SPAIN - 1.2%
Repsol YPF SA..................................... 141,100 5,573,895
-------------
SWEDEN - 1.0%
Electrolux AB, B Shares........................... 118,500 2,302,821
Svenska Cellusoa AB (SCA), B Shares............... 134,400 2,375,563
-------------
4,678,384
-------------
SWITZERLAND - 1.5%
Credit Suisse Group............................... 81,100 5,481,917
Novartis AG....................................... 24,830 1,321,158
-------------
6,803,075
-------------
TAIWAN - 1.0%
China Steel Corp. GDR............................. 38,878 1,098,303
Gigabyte Technology Co., Ltd...................... 11,112 9,298
Siliconware Precision Industries Co............... 707,691 1,485,923
Taiwan Semiconductor Manufacturing
Co., Ltd....................................... 508,398 1,016,208
United Microelectronics Corp...................... 1,094,551 718,098
-------------
4,327,830
-------------
THAILAND - 0.3%
PTT Public Company Ltd. plc....................... 121,400 1,498,281
-------------
UNITED KINGDOM - 21.8%
Associated British Foods plc...................... 45,800 871,288
AstraZeneca plc................................... 110,300 5,431,176
Aviva plc......................................... 346,270 5,455,083
BAE Systems plc................................... 485,500 5,043,387
Barclays plc...................................... 457,700 5,792,255
BP plc............................................ 125,000 1,626,084
British American Tobacco plc...................... 111,100 4,232,209
British Energy Group plc.......................... 277,000 3,076,454
GlaxoSmithKline plc............................... 259,600 6,667,396
HBOS plc.......................................... 373,041 6,799,121
Home Retail Group plc............................. 358,100 3,255,319
ITV plc........................................... 879,270 1,817,421
Kazakhmys plc..................................... 143,300 4,408,193
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
--------- --------
UNITED KINGDOM, CONTINUED
Punch Taverns plc................................. 91,000 1,907,859
Royal & Sun Alliance Insurance
Group plc...................................... 762,188 2,511,165
Royal Bank of Scotland Group plc.................. 635,724 6,865,117
Royal Dutch Shell plc, A Shares................... 232,387 10,195,009
Royal Dutch Shell plc, B Shares................... 45,973 2,005,584
SABMiller plc..................................... 48,100 1,448,682
Taylor Wimpey plc................................. 468,220 2,421,936
Vodafone Group plc................................ 2,879,158 11,344,276
Xstrata plc....................................... 85,950 6,196,853
-------------
99,371,867
-------------
TOTAL COMMON STOCKS
(COST $319,304,574)............................ 440,915,080
-------------
- --------------------------------------------------------------------------------
INVESTMENT COMPANY--1.6%
- --------------------------------------------------------------------------------
Northern Institutional Diversified Assets
Portfolio, Shares class, 4.80% (b)............. 7,328,500 7,328,500
-------------
TOTAL INVESTMENT COMPANY
(COST $7,328,500).............................. 7,328,500
-------------
TOTAL INVESTMENTS
(COST $326,633,074) -- 98.5%.................... 448,243,580
=============
- ---------------
Percentages indicated are based on net assets of $455,061,609.
(a) Represents non-income producing security.
(b) The rate presented represents the annualized one day yield that was in
effect on October 31, 2007.
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt
PLC -- Public Limited Co.
SPA -- Societa Per Azioni
55 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR OPPORTUNITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
COMMON STOCKS--98.0%
- --------------------------------------------------------------------------------
SHARES VALUE($)
--------- --------
AEROSPACE & DEFENSE - 3.7%
Empresa Brasileira de Aeronautica S.A.
ADR............................................ 63,600 3,101,772
Esterline Technologies Corp. (a).................. 43,300 2,371,974
Hexcel Corp. (a).................................. 115,400 2,888,462
-------------
8,362,208
-------------
BANKING - 1.4%
East West Bancorp, Inc............................ 95,000 3,205,300
-------------
3,205,300
-------------
BIOTECHNOLOGY - 1.8%
Invitrogen Corp. (a).............................. 44,100 4,007,367
-------------
4,007,367
-------------
COMMERCIAL SERVICES - 1.1%
Schawk, Inc., Class A............................. 108,600 2,467,392
-------------
2,467,392
-------------
COMPUTER SOFTWARE - 8.8%
ACI Worldwide, Inc. (a)........................... 125,100 2,861,037
BMC Software, Inc. (a)............................ 65,900 2,230,056
Brocade Communications Systems, Inc. (a).......... 434,400 4,131,144
Nuance Communications, Inc. (a)................... 200,200 4,426,422
Red Hat, Inc. (a)................................. 151,900 3,279,521
Satyam Computer Services Ltd. ADR................. 93,300 2,831,655
-------------
19,759,835
-------------
CONSUMER PRODUCTS - 3.7%
Church & Dwight Co., Inc.......................... 83,100 3,931,461
Jarden Corp. (a).................................. 125,600 4,461,312
-------------
8,392,773
-------------
DIVERSIFIED MANUFACTURING OPERATIONS - 3.6%
Actuant Corp., Class A............................ 47,500 3,276,550
AMETEK, Inc....................................... 100,100 4,704,700
-------------
7,981,250
-------------
EDUCATION - 1.4%
Corinthian Colleges, Inc. (a)..................... 131,229 2,150,843
DeVry, Inc........................................ 19,000 1,039,110
-------------
3,189,953
-------------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 8.1%
Atmel Corp. (a)................................... 497,200 2,431,308
ATMI, Inc. (a).................................... 67,900 2,182,306
Cognos, Inc. (a).................................. 136,200 6,854,946
Silicon Laboratories, Inc. (a).................... 80,600 3,522,220
Thomas & Betts Corp. (a).......................... 55,800 3,125,358
-------------
18,116,138
-------------
FINANCIAL SERVICES - 4.5%
Affiliated Managers Group, Inc. (a)............... 40,700 5,354,085
MF Global Ltd. (a)................................ 163,700 4,838,972
-------------
10,193,057
-------------
HEALTH CARE - 12.9%
Gen-Probe, Inc. (a)............................... 75,500 5,286,510
Manor Care, Inc................................... 63,600 4,234,488
Pediatrix Medical Group, Inc. (a)................. 56,800 3,720,400
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
--------- --------
HEALTH CARE, CONTINUED
ResMed, Inc. (a).................................. 84,000 3,480,120
Respironics, Inc. (a)............................. 129,000 6,457,740
Ventana Medical Systems, Inc. (a)................. 44,100 3,880,800
Volcano Corp. (a)................................. 108,600 1,855,974
-------------
28,916,032
-------------
INDUSTRIAL MANUFACTURING - 7.1%
Gardner Denver, Inc. (a).......................... 104,400 3,771,972
IDEX Corp......................................... 134,900 4,778,158
Manitowoc Co., Inc................................ 70,500 3,472,830
WESCO International, Inc. (a)..................... 83,100 3,876,615
-------------
15,899,575
-------------
MEDIA - 4.0%
DreamWorks Animation SKG, Inc. (a)................ 100,100 3,259,256
Meredith Corp..................................... 91,600 5,702,100
-------------
8,961,356
-------------
OIL & GAS - 13.7%
Chesapeake Energy Corp............................ 96,700 3,817,716
Consol Energy, Inc................................ 101,000 5,706,500
Denbury Resources, Inc. (a)....................... 94,100 5,326,060
Grant Prideco, Inc. (a)........................... 61,100 3,003,676
Massey Energy Co.................................. 124,700 3,950,496
Range Resources Corp.............................. 78,900 3,544,977
Smith International, Inc.......................... 79,700 5,264,185
-------------
30,613,610
-------------
PHARMACEUTICALS - 11.8%
Alexion Pharmaceuticals, Inc. (a)................. 60,850 4,655,025
Elan Corp. plc ADR (a)............................ 442,900 10,541,020
MGI Pharma, Inc. (a).............................. 144,200 4,698,036
OSI Pharmaceuticals, Inc. (a)..................... 144,200 5,994,394
Santarus, Inc. (a)................................ 272,300 593,614
-------------
26,482,089
-------------
RETAIL - 5.7%
Dick's Sporting Goods, Inc. (a)................... 76,400 2,549,468
PETsMART, Inc..................................... 157,800 4,726,110
Rite Aid Corp. (a)................................ 534,100 2,088,331
Urban Outfitters, Inc. (a)........................ 136,600 3,451,882
-------------
12,815,791
-------------
TELECOMMUNICATIONS - 3.5%
Comverse Technology, Inc. (a)..................... 111,100 2,135,342
NeuStar, Inc. (a)................................. 93,300 3,190,860
Polycom, Inc. (a)................................. 90,100 2,520,998
-------------
7,847,200
-------------
TRANSPORTATION - 1.2%
Aircastle Ltd..................................... 79,700 2,575,107
-------------
2,575,107
-------------
TOTAL COMMON STOCKS
(COST $177,041,397)............................ 219,786,033
------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 56
- --------------------------------------------------------------------------------
HSBC INVESTOR OPPORTUNITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
- --------------------------------------------------------------------------------
INVESTMENT COMPANY--1.7%
- --------------------------------------------------------------------------------
SHARES VALUE($)
--------- --------
Northern Institutional Government
Select Portfolio, Shares class, 4.65%, (b)..... 3,918,791 3,918,791
------------
TOTAL INVESTMENT COMPANY
(COST $3,918,791).............................. 3,918,791
------------
TOTAL INVESTMENTS
(COST $180,960,188) -- 99.7%................... 223,704,824
============
- ------------
Percentages indicated are based on net assets of $224,268,466.
(a) Represents non-income producing security.
(b) The rate presented represents the annualized one day yield that was in
effect on October 31, 2007.
ADR -- American Depositary Receipt
PLC -- Public Limited Co.
57 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR VALUE PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
COMMON STOCKS--92.2%
- --------------------------------------------------------------------------------
SHARES VALUE($)
--------- --------
AEROSPACE & DEFENSE - 3.9%
Lockheed Martin Corp.............................. 12,500 1,375,500
Raytheon Co....................................... 28,300 1,800,163
-----------
3,175,663
-----------
BANKING - 3.8%
Bank of America Corp.............................. 29,100 1,404,948
Wells Fargo & Co.................................. 50,700 1,724,307
-----------
3,129,255
-----------
BUSINESS SERVICES - 2.0%
Pitney Bowes, Inc................................. 42,100 1,685,684
-----------
1,685,684
-----------
COMPUTER SOFTWARE - 7.2%
CA, Inc........................................... 135,600 3,586,620
Microsoft Corp.................................... 64,500 2,374,245
-----------
5,960,865
-----------
CONGLOMERATES - 2.3%
Loews Corp........................................ 39,000 1,914,510
-----------
1,914,510
-----------
CONSUMER PRODUCTS - 6.8%
Altria Group, Inc................................. 30,800 2,246,244
Kimberly-Clark Corp............................... 27,500 1,949,475
Kraft Foods, Inc.................................. 25,069 837,555
Tyson Foods, Inc., Class A........................ 35,600 562,480
-----------
5,595,754
-----------
DIVERSIFIED MANUFACTURING OPERATIONS - 2.0%
Ingersoll-Rand Co., Class A....................... 32,400 1,631,340
-----------
1,631,340
-----------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 0.8%
Agilent Technologies, Inc. (a).................... 17,464 643,548
-----------
643,548
-----------
FINANCIAL SERVICES - 11.7%
Citigroup, Inc.................................... 77,307 3,239,163
Countrywide Financial Corp........................ 89,600 1,390,592
Fannie Mae........................................ 56,000 3,194,240
JP Morgan Chase & Co.............................. 39,950 1,877,650
-----------
9,701,645
-----------
INSURANCE - 11.1%
Aetna, Inc........................................ 16,700 938,039
Aon Corp.......................................... 36,800 1,667,776
Genworth Financial, Inc., Class A................. 80,800 2,205,840
MGIC Investment Corp.............................. 18,400 356,224
Radian Group, Inc................................. 32,100 404,139
The Hartford Financial Services Group, Inc........ 37,300 3,619,219
-----------
9,191,237
-----------
MEDIA - 9.5%
CBS Corp., Class B................................ 34,350 985,845
Clear Channel Communications, Inc................. 38,800 1,465,476
Comcast Corp., Class A (a)........................ 48,450 1,011,152
Liberty Media Corp. Interactive, Class A (a)...... 37,087 787,357
Viacom, Inc., Class B (a)......................... 87,000 3,592,230
-----------
7,842,060
-----------
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
--------- --------
METALS & MINING - 5.2%
Barrick Gold Corp................................. 80,000 3,530,400
United States Steel Corp.......................... 7,300 787,670
-----------
4,318,070
-----------
OIL & GAS - 11.7%
Apache Corp....................................... 31,400 3,259,634
ConocoPhillips.................................... 15,771 1,339,904
Hess Corp......................................... 13,600 973,896
Noble Energy, Inc................................. 53,300 4,079,582
-----------
9,653,016
-----------
PAPER & RELATED PRODUCTS - 1.5%
International Paper Co............................ 34,100 1,260,336
-----------
1,260,336
-----------
PHARMACEUTICALS - 3.7%
Amgen, Inc. (a)................................... 23,000 1,336,530
Sanofi-Aventis ADR................................ 38,500 1,694,385
-----------
3,030,915
-----------
TELECOMMUNICATIONS - 6.6%
AT&T, Inc......................................... 51,791 2,164,346
Motorola, Inc..................................... 134,600 2,529,134
Sprint Nextel Corp................................ 45,600 779,760
-----------
5,473,240
-----------
TRANSPORTATION - 2.4%
Union Pacific Corp................................ 15,300 1,959,012
-----------
1,959,012
-----------
TOTAL COMMON STOCKS
(COST $63,525,197)............................. 76,166,150
-----------
- --------------------------------------------------------------------------------
INVESTMENT COMPANY--9.5%
- --------------------------------------------------------------------------------
Northern Institutional Government
Select Portfolio, Shares class, 4.65% (b)...... 7,879,803 7,879,803
-----------
TOTAL INVESTMENT COMPANY
(COST $7,879,803).............................. 7,879,803
-----------
TOTAL INVESTMENTS
(COST $71,405,000) -- 101.7%................... 84,045,953
===========
- ------------
Percentages indicated are based on net assets of $82,658,240.
(a) Represents non-income producing security.
(b) The rate presented represents the annualized one day yield that was in
effect on October 31, 2007.
ADR -- American Depositary Receipt
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 58
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF ASSETS AND LIABILITIES--AS OF OCTOBER 31, 2007
INTERMEDIATE
CORE PLUS HIGH YIELD DURATION INTERNATIONAL
FIXED INCOME FIXED INCOME FIXED INCOME GROWTH EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in non-affiliates, at value $136,607,637 $ 14,200,680 $ 17,305,479 $ 89,656,011 $448,243,580
Foreign currency, at value -- -- -- -- 3,204,996
Interest and dividends receivable 1,081,970 343,043 139,809 72,962 1,225,858
Receivable for investments sold 6,916,275 49,875 2,334,516 -- 2,827,732
Prepaid expenses and other assets 1,219 3,527 433 786 4,328
------------ ------------ ------------ ------------ ------------
TOTAL ASSETS 144,607,101 14,597,125 19,780,237 89,729,759 455,506,494
------------ ------------ ------------ ------------ ------------
LIABILITIES:
Payable for investments purchased 24,731,970 101,250 4,711,705 -- 52,605
Accrued expenses and other liabilities:
Investment Management 45,982 7,230 5,255 35,078 299,629
Administration 6,716 407 1,680 2,424 15,779
Compliance Service 86 10 14 49 295
Trustee 222 27 37 135 757
Other 10,217 938 2,977 6,196 75,820
------------ ------------ ------------ ------------ ------------
TOTAL LIABILITIES 24,795,193 109,862 4,721,668 43,882 444,885
------------ ------------ ------------ ------------ ------------
NET ASSETS:
Applicable to investors' beneficial interest $119,811,908 $ 14,487,263 $ 15,058,569 $ 89,685,877 $455,061,609
============ ============ ============ ============ ============
Total Investments, at cost $136,726,741 $ 14,413,743 $ 17,391,303 $ 67,437,138 $326,633,074
------------ ------------ ------------ ------------ ------------
Foreign Currency, at cost $ -- $ -- $ -- $ -- $ 3,140,535
============ ============ ============ ============ ============
59 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF ASSETS AND LIABILITIES--AS OF OCTOBER 31, 2007 (CONTINUED)
OPPORTUNITY VALUE
PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------
ASSETS:
Investments in non-affiliates, at value $223,704,824 $ 84,045,953
Interest and dividends receivable 33,168 95,209
Receivable for investments sold 704,385 --
Prepaid expenses and other assets 11,273 970
------------ ------------
TOTAL ASSETS 224,453,650 84,142,132
------------ ------------
LIABILITIES:
Payable for investments purchased -- 1,439,086
Accrued expenses and other liabilities:
Investment Management 148,016 36,376
Administration 10,509 2,344
Compliance Service 272 65
Trustee 673 159
Other 25,714 5,862
------------ ------------
TOTAL LIABILITIES 185,184 1,483,892
------------ ------------
NET ASSETS:
Applicable to investors' beneficial interest $224,268,466 $ 82,658,240
============ ============
Total Investments, at cost $180,960,188 $ 71,405,000
============ ============
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 60
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF OPERATIONS--FOR THE YEAR ENDED OCTOBER 31, 2007
INTERMEDIATE
CORE PLUS HIGH YIELD DURATION INTERNATIONAL
FIXED INCOME FIXED INCOME FIXED INCOME GROWTH EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 6,435,643 $ 1,099,982 $ 1,012,039 $ -- $ 84,293
Dividends 132,498 11,350 23,668 757,173 12,919,538
Dividend income from affiliated investments 39,360 -- 6,707 36,044 --
Foreign tax withholding -- -- -- -- (1,354,165)
------------ ------------ ------------ ------------ ------------
TOTAL INVESTMENT INCOME 6,607,501 1,111,332 1,042,414 793,217 11,649,666
------------ ------------ ------------ ------------ ------------
EXPENSES:
Investment Management 536,695 78,518 75,588 350,983 2,579,245
Administration 35,282 3,889 5,704 21,700 116,088
Accounting 72,903 70,851 65,598 55,756 94,354
Compliance Service 1,328 148 220 801 4,355
Custodian 33,382 24,596 9,078 18,158 265,711
Interest -- -- -- 401 --
Printing 454 48 78 257 1,395
Trustee 2,919 319 478 1,761 8,716
Other 15,162 1,520 2,696 9,387 52,078
------------ ------------ ------------ ------------ ------------
TOTAL EXPENSES 698,125 179,889 159,440 459,204 3,121,942
------------ ------------ ------------ ------------ ------------
NET INVESTMENT INCOME (LOSS) 5,909,376 931,443 882,974 334,013 8,527,724
------------ ------------ ------------ ------------ ------------
NET REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gains (losses) from investments and
foreign currency transactions 2,910,717 119,132 848,391 4,271,356 36,079,080
Change in unrealized appreciation/depreciation
from investments and foreign currencies (1,031,793) (279,652) (182,994) 16,611,654 42,586,569
------------ ------------ ------------ ------------ ------------
Net realized\unrealized gains (losses) from
investment transactions and foreign currency
transactions 1,878,924 (160,520) 665,397 20,883,010 78,665,649
------------ ------------ ------------ ------------ ------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS $ 7,788,300 $ 770,923 $ 1,548,371 $ 21,217,023 $ 87,193,373
============ ============ ============ ============ ============
61 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF OPERATIONS--FOR THE YEAR ENDED OCTOBER 31, 2007 (CONTINUED)
OPPORTUNITY VALUE
PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 691,128 $ 1,438,654
Dividend income from affiliated investments 95,891 62,866
------------ ------------
Total Investment Income 787,019 1,501,520
------------ ------------
EXPENSES:
Investment Management 1,751,650 403,225
Administration 66,103 22,758
Accounting 57,017 55,785
Compliance Service 2,660 866
Custodian 53,663 14,389
Interest 15,603 400
Printing 1,191 153
Trustee 5,867 1,894
Other 34,773 9,619
------------ ------------
TOTAL EXPENSES 1,988,527 509,089
------------ ------------
NET INVESTMENT INCOME (LOSS) (1,201,508) 992,431
------------ ------------
NET REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gains (losses) from investments
and foreign currency transactions 58,390,322 6,083,399
Change in unrealized appreciation/depreciation
from investments and foreign currencies 1,890,389 71,241
------------ ------------
Net realized\unrealized gains (losses) from
investment and foreign currency
transactions 60,280,711 6,154,640
------------ ------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS $ 59,079,203 $ 7,147,071
============ ============
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 62
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF CHANGES IN NET ASSETS
CORE PLUS HIGH YIELD
FIXED INCOME FIXED INCOME
PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2007 OCTOBER 31, 2006 OCTOBER 31, 2007 OCTOBER 31, 2006 (A)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 5,909,376 $ 5,487,117 $ 931,443 $ 599,770
Net realized gains (losses) from
investment of foreign currency
transactions 2,910,717 (2,015,195) 119,132 36,553
Change in unrealized
appreciation/depreciation from
investments and foreign currencies (1,031,793) 2,496,112 (279,652) 66,589
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 7,788,300 5,968,034 770,923 702,912
------------- ------------- ------------- -------------
Proceeds from contributions 24,166,324 23,850,640 5,258,548 13,667,509
Value of withdrawals (23,334,647) (41,156,523) (4,260,973) (1,651,656)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM
TRANSACTIONS IN INVESTORS'
BENEFICIAL INTEREST 831,677 (17,305,883) 997,575 12,015,853
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS 8,619,977 (11,337,849) 1,768,498 12,718,765
NET ASSETS:
Beginning of period 111,191,931 122,529,780 12,718,765 --
------------- ------------- ------------- -------------
End of period $ 119,811,908 $ 111,191,931 $ 14,487,263 $ 12,718,765
============= ============= ============= =============
- -----------
(a) The High Yield Fixed Income Portfolio commenced operations on November 18,
2005.
63 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
INTERMEDIATE DURATION
FIXED INCOME
PORTFOLIO
- --------------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
OCTOBER 31, 2007 OCTOBER 31, 2006
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 882,974 $ 1,058,913
Net realized gains (losses) from
investment of foreign currency
transactions 848,391 (458,266)
Change in unrealized
appreciation/depreciation from
investments and foreign currencies (182,994) 518,623
------------ ------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 1,548,371 1,119,270
------------ ------------
Proceeds from contributions 2,605,895 1,801,738
Value of withdrawals (8,612,265) (16,214,126)
------------ ------------
CHANGE IN NET ASSETS RESULTING FROM
TRANSACTIONS IN INVESTORS'
BENEFICIAL INTEREST (6,006,370) (14,412,388)
------------ ------------
CHANGE IN NET ASSETS (4,457,999) (13,293,118)
NET ASSETS:
Beginning of period 19,516,568 32,809,686
------------ ------------
End of period $ 15,058,569 $ 19,516,568
============ ============
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 64
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
GROWTH INTERNATIONAL EQUITY
PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2007 OCTOBER 31, 2006 OCTOBER 31, 2007 OCTOBER 31, 2006
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 334,013 $ 210,246 $ 8,527,724 $ 5,767,764
Net realized gains (losses) from
investment of foreign currency
transactions 4,271,356 3,913,855 36,079,080 31,508,299
Change in unrealized
appreciation/depreciation from
investments and foreign currencies 16,611,654 (380,204) 42,586,569 39,700,669
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 21,217,023 3,743,897 87,193,373 76,976,732
------------- ------------- ------------- -------------
Proceeds from contributions 25,944,124 15,350,040 90,634,524 62,831,133
Value of withdrawals (17,303,034) (8,680,872) (56,520,981) (36,283,024)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM
TRANSACTIONS IN INVESTORS'
BENEFICIAL INTEREST 8,641,090 6,669,168 34,113,543 26,548,109
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS 29,858,113 10,413,065 121,306,916 103,524,841
NET ASSETS:
Beginning of period 59,827,764 49,414,699 333,754,693 230,229,852
------------- ------------- ------------- -------------
End of period $ 89,685,877 $ 59,827,764 $ 455,061,609 $ 333,754,693
============= ============= ============= =============
65 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
OPPORTUNITY VALUE
PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 2007 OCTOBER 31, 2006 OCTOBER 31, 2007 OCTOBER 31, 2006
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ (1,201,508) $ (937,617) $ 992,431 $ 741,017
Net realized gains (losses) from
investment of foreign currency
transactions 58,390,322 38,504,562 6,083,399 5,586,911
Change in unrealized
appreciation/depreciation from
investments and foreign currencies 1,890,389 3,658,201 71,241 5,704,297
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 59,079,203 41,225,146 7,147,071 12,032,225
------------- ------------- ------------- -------------
Proceeds from contributions 77,393,032 22,244,597 23,927,675 13,285,641
Value of withdrawals (153,698,612) (40,753,125) (15,848,601) (12,036,219)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING
FROM TRANSACTIONS IN INVESTORS'
BENEFICIAL INTEREST (76,305,580) (18,508,528) 8,079,074 1,249,422
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS (17,226,377) 22,716,618 15,226,145 13,281,647
NET ASSETS:
Beginning of period 241,494,843 218,778,225 67,432,095 54,150,448
------------- ------------- ------------- -------------
End of period $ 224,268,466 $ 241,494,843 $ 82,658,240 $ 67,432,095
============= ============= ============= =============
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 66
HSBC INVESTOR PORTFOLIOS
FINANCIAL HIGHLIGHTS
RATIOS/SUPPLEMENTARY DATA
------------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF NET INVESTMENT RATIO OF
AT END OF EXPENSES INCOME (LOSS) EXPENSES PORTFOLIO
TOTAL PERIOD TO AVERAGE TO AVERAGE TO AVERAGE TURNOVER
RETURN(a) (000'S) NET ASSETS(b) NET ASSETS(b) NET ASSETS(b)(c) RATE(a)
- ------------------------------------------------------------------------------------------------------------------------------------
CORE PLUS FIXED INCOME PORTFOLIO
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%
Year Ended October 31, 2007 6.94% 119,812 0.59% 4.99% 0.59% 252.56%
- ------------------------------------------------------------------------------------------------------------------------------------
HIGH YIELD FIXED INCOME PORTFOLIO
Period Ended October 31, 2006 (e) 7.41% $ 12,719 1.86% 6.33% 1.86% 13.61%
Year Ended October 31, 2007 6.41% 14,487 1.37% 7.12% 1.37% 30.77%
- ------------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE DURATION FIXED INCOME PORTFOLIO
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%
Year Ended October 31, 2007 8.38% 15,059 0.84% 4.68% 0.84% 219.76%
- ------------------------------------------------------------------------------------------------------------------------------------
GROWTH PORTFOLIO
Period Ended October 31, 2004 (e) (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%
Year Ended October 31, 2007 31.11% 89,686 0.62% 0.45% 0.62% 57.04%
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
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%
Year Ended October 31, 2007 25.17% 455,062 0.79% 2.16% 0.79% 26.08%
- ------------------------------------------------------------------------------------------------------------------------------------
OPPORTUNITY PORTFOLIO
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%
Year Ended October 31, 2007 30.54% 224,268 0.91% (0.55%) 0.91% 69.41%
- ------------------------------------------------------------------------------------------------------------------------------------
VALUE PORTFOLIO
Period Ended October 31, 2004 (e) 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%
Year Ended October 31, 2007 10.28% 82,658 0.66% 1.29% 0.66% 18.67%
- ------------------------------------------------------------------------------------------------------------------------------------
(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) 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.
67 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007
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 Opportunity Portfolio
HSBC Investor Value Portfolio Value Portfolio
The Portfolios operate as master funds in master-feeder arrangements, in
which other funds invest their investable 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 may 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 Portfolios in the preparation of their financial statements.
The policies are in conformity with U.S. generally accepted accounting
principles ("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
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
HSBC INVESTOR PORTFOLIOS 68
HSBC INVESTOR PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
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.
INVESTMENT TRANSACTIONS AND RELATED INCOME:
Investment transactions are accounted for no later than one business day
after trade date. For financial reporting purposes, changes in holdings are
accounted for on trade date on the last business day of the reporting period.
Investments 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.
69 HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (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 October
31, 2007 the HSBC Core Plus Fixed Income Portfolio held restricted securities
ACQUISITION ACQUISITION PRINCIPAL
SECURITY NAME DATE COST($) AMOUNT($) VALUE($)
------------- ---------- ---------- --------- -------
FHA Weyerhauser, 7.43%, 1/1/24......... 3/28/2002 32,060 33,082 33,082
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 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 November 1, 2006 through February 1, 2007, the details
of the borrowings were as follows (based on actual number of days in which
the respective Portfolios borrowed monies):
AVERAGE NUMBER AVERAGE
AMOUNT OF DAYS INTEREST
FUND OUTSTANDING OUTSTANDING RATE
----- ----------- ----------- -------
Growth Portfolio.............. $2,481,136 1 5.82%
Opportunity Portfolio......... $8,756,484 11 5.83%
Value Portfolio............... $2,781,119 1 5.25%
The Core Plus Fixed Income Portfolio, Intermediate Duration Fixed Income
Portfolio, High Yield Fixed Income Portfolio and International Portfolio did
not have such borrowings during the period.
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 Portfolio will be treated as a partnership for U.S. Federal income
tax purposes. Accordingly, each Portfolio passes through all of its net
investment income and gains and losses to its feeder funds, and is therefore
not subject to U.S. Federal income tax. As such, investors in the Portfolios
will be taxed on their respective share of the Portfolios' ordinary income
and realized gains. It is intended that the Portfolios will be managed in
such a way that an investor will be able to satisfy the requirements of the
Internal Revenue Code applicable to regulated investment companies.
HSBC INVESTOR PORTFOLIOS 70
HSBC INVESTOR PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (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" ("SFAS No. 157") 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. Management does not believe the adoption of SFAS No. 157
will materially impact the Portfolios' financial statements; however,
additional disclosures will 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.
In July 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
Portfolios' tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority
based on technical merits of the position. 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 statement reporting period
for fiscal years beginning after December 15, 2006 and is applied to all open
tax years as of the effective date. Management is currently in the process of
evaluating the impact that will result from adopting FIN 48. At this time,
management does not believe the adoption of FIN 48 will have a material
impact to the financial statements.
3. RELATED PARTY TRANSACTIONS:
INVESTMENT MANAGEMENT:
HSBC Investments (USA) Inc. ("HSBC" or the "Investment Adviser"), a
wholly owned subsidiary of HSBC Bank USA, N.A., a national bank organized
under the laws of the United States, 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%
71 HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (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 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 HSBC
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, Citi Fund Services
Ohio, Inc. ("Citi Ohio"), a wholly-owned subsidiary of The Citigroup, Inc.
(Citigroup, Inc. acquired The BISYS Group, Inc. effective August 1, 2007),
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, Citi 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 Citi
Ohio (the "CCO Agreement"), Citi Ohio makes an employee available to serve as
the Portfolios' Chief Compliance Officer (the "CCO"). Under the CCO
Agreement, Citi 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 Citi Ohio
$251,569 for the period ended October 31, 2007, plus reimbursement of certain
expenses. Expenses incurred by each Portfolio are reflected on the Statements
of Operations as "Compliance Service." Citi Ohio pays the salary and other
compensation earned by any such individuals as employees of Citi Ohio.
HSBC INVESTOR PORTFOLIOS 72
HSBC INVESTOR PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
FUND ACCOUNTING, CUSTODIAN AND TRUSTEE:
Citi Ohio provides fund accounting services for the Portfolios. For its
services to the Portfolios, Citi 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 of 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:
Purchases and sales of securities (excluding securities maturing less
than one year from acquisition) for the year ended October 31, 2007 were as
follows:
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 $173,677,320 $154,916,609 $121,417,074 $133,139,816
High Yield Fixed Income Portfolio 5,571,345 3,905,400 -- --
Intermediate Duration Fixed
Income Portfolio 23,042,241 24,133,204 17,532,833 19,533,301
Growth Portfolio 49,476,307 40,564,430 -- --
International Equity Portfolio 142,051,687 100,370,820 -- --
Opportunity Portfolio 146,616,170 216,533,261 -- --
Value Portfolio 20,643,270 13,432,353 -- --
73 HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
5. FEDERAL INCOME TAX INFORMATION:
At October 31, 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.............. $136,842,084 $ 947,826 $(1,182,273) $ (234,447)
High Yield Fixed Income Portfolio............. 14,413,743 212,662 (425,725) (213,063)
Intermediate Duration Fixed
Income Portfolio......................... 17,395,840 100,254 (190,615) (90,361)
Growth Portfolio.............................. 67,459,229 23,556,912 (1,360,130) 22,196,782
International Equity Portfolio................ 327,640,578 128,724,821 (8,121,819) 120,603,002
Opportunity Portfolio......................... 181,452,366 47,927,197 (5,674,739) 42,252,458
Value Portfolio............................... 71,153,479 17,505,536 (4,613,062) 12,892,474
6. 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 ("the 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 74
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of
HSBC Investor Portfolios:
We have audited the accompanying statements of assets and liabilities of
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 and HSBC Investor Value Portfolio (the
Funds), including the schedules of portfolio investments, as of October 31,
2007, and the related statements of operations for the year then ended, the
changes in net assets for each period in the two-year period then ended, and the
financial highlights for each period in the five-year period then ended. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of October 31, 2007, by correspondence with
custodians and brokers; or other appropriate auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Funds as of October 31, 2007, the results of their operations for the year then
ended, the changes in their net assets for each period in the two-year period
then ended, and the financial highlights for each period in the five-year period
then ended, in conformity with U.S. generally accepted accounting principles.
KPMG LLP
Columbus, Ohio
December 27, 2007
75 HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR PORTFOLIOS
INVESTMENT ADVISER CONTRACT APPROVAL (UNAUDITED)--OCTOBER 31, 2007
NWQ Investment Management Co. LLC, a wholly owned subsidiary of Nuveen
Investments. Inc. ("Nuveen Investments"), a publicly traded company and a
Sub-Adviser to the HSBC Investor Value Portfolio Fund, (the master portfolio
into which the HSBC Investor Value Fund (the "Value Fund") invests all their
assets), announced in June 2007 its intention to be acquired by investors led by
Madison Dearborn Partners LLC. As a result, Nuveen Investments has experienced a
change in control. Consequently, the Board of Trustees (the "Board of Trustees")
of the HSBC Investor Trust, HSBC Advisor Trust and HSBC Portfolio Trust
(collectively, the "Trusts"), and the non-interested Trustees, voting
separately, reviewed and approved at their in person meeting held on September
17-18, 2007, the new Sub-Advisery Contract with respect to the Value Fund. The
Value Fund and Sub-Advisery Contract are collectively referred to as the
"Agreement".
The Board of Trustees, including the Independent Trustees, at a meeting
held on September 17-18, 2007, unanimously approved a new Sub-Advisory agreement
between HSBC Investments (USA) Inc. and NWQ Investment management Company, LLC
(the "New Agreement"). In determining whether it was appropriate to approve the
New Agreement, the Board requested information, provided by HSBC and NWQ, that
it believed to be reasonably necessary to reach its conclusion. The Board also
took note of its comprehensive review of the performance of the Fund and NWQ in
connection with the continuance of the prior Sub-Advisory Agreement for the Fund
at its December 4-5, 2006 meeting pursuant to the requirements of Section 15(c)
of the 1940 Act. In addition to any materials prepared specifically for Section
15(c) contract renewal analysis, on an ongoing basis the Trustees receive
information and reports from HSBC and its Multimanager unit and other service
providers to the Fund on investment performance as well as operational,
compliance and other matters.
The Board 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, the Board determined that the New
Agreement was consistent with the best interests of the Fund and its
shareholders, and enables the Fund to receive a high quality of services at a
cost that is appropriate, reasonable, and in the best interests of the Fund and
its shareholders. The Board made these determinations and approved the New
Agreement on the basis of the following considerations, among others:
NATURE, EXTENT, AND QUALITY OF SERVICES PROVIDED BY NWQ. The Trustees
considered the nature, quality and extent of the investment advisory
services provided by NWQ and its historic performance managing accounts
having similar investment objectives as the Fund. The Trustees concluded
that the services to be provided by NWQ are extensive and that NWQ would
deliver a high level of service to the Fund.
INVESTMENT PERFORMANCE OF THE FUND AND NWQ. The Trustees took note of
their comprehensive review of the Fund's short- and long-term investment
performance during the Board's December 4-5, 2006 meeting, at which the
Board approved the continuance of the Old Agreement for the Fund pursuant
to the requirements of Section 15(c) of the 1940 Act. In this regard, the
Trustees had considered short- and long-term investment performance of the
Fund over various periods of time as compared to a peer group of
comparable funds, as well as NWQ's historic performance managing accounts
having similar investment objectives as the Fund. Additionally, the
Trustees considered fee and expense information regarding the Fund's peer
groups. The Trustees compared expenses of the Fund to the expenses of its
peers, noting that the expenses for the Fund compared favorably with
industry averages for other funds of similar size.
COSTS OF SERVICES AND PROFITS REALIZED BY NWQ. The Trustees took note of
their comprehensive review of the costs of services and profits realized
by NWQ during the Board's December 4-5, 2006 meeting, at which the Board
approved the continuance of the Old Agreement for the Fund pursuant to the
requirements of Section 15(c) of the 1940 Act. The Trustees also
considered that the Transaction had no material effect upon the analysis
of NWQ's overall profitability and costs that had been prepared in
connection with the continuance of the Old Agreement, and would not change
any factors bearing upon the profitability to NWQ from its relationship
with the Fund.
ADVISER PERSONNEL. The Trustees considered NWQ's representations regarding
staffing and capabilities to manage the assets of the HSBC Investor Value
Portfolio (the "master fund" into which the Fund invests all its assets).
The Trustees also considered the overall high quality of the personnel,
operations, financial condition, investment management capabilities,
methodologies, and performance of NWQ.
HSBC INVESTOR PORTFOLIOS 76
HSBC INVESTOR PORTFOLIOS
TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--AS OF OCTOBER 31, 2007
As a shareholder of the HSBC Investor Portfolios ("Portfolios"), you
incur ongoing costs, including management fees; and other Fund expenses.
These examples are intended to help you understand your ongoing costs (in
dollars) of investing in the Portfolios 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 May 1, 2007
through October 31, 2007.
ACTUAL EXAMPLE
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 EXPENSES PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
5/1/07 10/31/07 5/1/07 - 10/31/07 5/1/07 - 10/31/07
----------- ------------ ----------------- ---------------
Core Plus Fixed Income Portfolio..................... $1,000.00 $1,048.30 $2.89 0.56%
High Yield Fixed Income Portfolio.................... 1,000.00 1,029.40 5.58 1.09%
Intermediate Duration Fixed Income Portfolio......... 1,000.00 1,039.20 4.16 0.81%
Growth Portfolio..................................... 1,000.00 1,215.90 3.35 0.60%
International Equity Portfolio....................... 1,000.00 1,111.50 4.04 0.76%
Opportunity Portfolio................................ 1,000.00 1,161.60 4.96 0.91%
Value Portfolio...................................... 1,000.00 1,018.80 3.26 0.64%
- ----------------
* Expenses are equal to the average account value over the period multiplied by
the Portfolios' 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 (to reflect the one half year period).
77 HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR PORTFOLIOS
TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--AS OF OCTOBER 31, 2007 (CONTINUED)
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below provides information about hypothetical account values
and hypothetical expenses based on each Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the
Portfolios' 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 EXPENSES PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
5/1/07 10/31/07 5/1/07 - 10/31/07 5/1/07 - 10/31/07
----------- ------------ ---------------- -----------------
Core Plus Fixed Income Portfolio.......................... $1,000.00 $1,022.38 $2.85 0.56%
High Yield Fixed Income Portfolio......................... 1,000.00 1,019.71 5.55 1.09%
Intermediate Duration Fixed Income Portfolio.............. 1,000.00 1,021.12 4.13 0.81%
Growth Portfolio.......................................... 1,000.00 1,022.18 3.06 0.60%
International Equity Portfolio............................ 1,000.00 1,021.37 3.87 0.76%
Opportunity Portfolio..................................... 1,000.00 1,020.62 4.63 0.91%
Value Portfolio........................................... 1,000.00 1,021.98 3.26 0.64%
- -----------
* Expenses are equal to the average account value over the period multiplied
by the Portfolios' 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 (to reflect the one half year period).
HSBC INVESTOR PORTFOLIOS 78
HSBC INVESTOR FAMILY OF FUNDS
BOARD OF TRUSTEES AND OFFICERS (UNAUDITED)
MANAGEMENT OF THE TRUST
The following table contains information regarding HSBC Investor Family of Funds
Board of Trustees ("Trustees"). Asterisks indicate those Trustees who are
"interested persons," as defined in the Investment Company Act of 1940, as
amended, of the Funds. The Funds' Statement of Additional Information includes
additional information about the Trustees and is available by calling (888)
525-5757.
NUMBER OF
PORTFOLIOS
IN FUND
POSITION(S) TERM OF OFFICE AND COMPLEX OTHER
NAME, ADDRESS, HELD WITH LENGTH OF TIME SERVED PRINCIPAL OCCUPATION(S) OVERSEEN DIRECTORSHIPS
AND AGE FUNDS WITH THE FUNDS DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
- -----------------------------------------------------------------------------------------------------------------------------------
NON-INTERESTED
TRUSTEES
Richard A. Brealey Trustee Indefinite; March 2005 Emeritus Professor, London Business 41 None
P.O. Box 182845 to present School (1968 to present); Deputy
Columbus, OH 43218 Chairman, Balancing and Settlement
Age: 71 Code Panel (September 2000 to present)
- -----------------------------------------------------------------------------------------------------------------------------------
Alan S. Parsow Trustee Indefinite; 1987 General Partner of Elkhorn Partners, 41 None
P.O. Box 182845 to present L.P. (a private investment partnership)
Columbus, OH 43218 (since 1989)
Age: 57
- -----------------------------------------------------------------------------------------------------------------------------------
Larry M. Robbins Trustee Indefinite; 1987 Private Investor; Director, Center for 41 None
P.O. Box 182845 to present Teaching and Learning, University of
Columbus, OH 43218 Pennsylvania (1999-2006)
Age: 68
- -----------------------------------------------------------------------------------------------------------------------------------
Michael Seely Trustee Indefinite; 1987 Private Investor; General Partner of Global 41 None
P.O. Box 182845 to present Multi Manager Partners (1999-2003);
Columbus, OH 43218 President of Investor Access Corporation
Age: 62 (1981-2003)
- -----------------------------------------------------------------------------------------------------------------------------------
Thomas F. Robards Trustee Indefinite; March 2005 Partner, Robards & Co. LLC (2005-present); 41 Overseas
P.O. Box 182845 to present Chief Financial Officer, American Museum Shipholding
Columbus, OH 43218 of Natural History (2003 to 2004); Chief Group
Age: 61 Financial Officer, Datek Online Inc.
(2000 to 2002)
- -----------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
Stephen J. Baker* Trustee Indefinite; 2004 Chief Executive Officer, HSBC Investments 41 None
P.O. Box 182845 to present (USA) Inc. and Executive Vice President,
Columbus, OH 43218 HSBC (USA), N.A. (2003 to present); Chief
Age: 51 Executive Officer, HSBC Asset Management
(Canada) Limited (1998 to 2003)
- -----------------------------------------------------------------------------------------------------------------------------------
EMERITUS TRUSTEE
Frederick C. Chen Emeritus Until March 31, 2009; Management Consultant (1988 to present) 41 None
P.O. Box 182845 Trustee Trustee from 1990
Columbus, OH 43218 to June, 2005
Age: 80
- -----------------------------------------------------------------------------------------------------------------------------------
79 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
BOARD OF TRUSTEES AND OFFICERS (UNAUDITED) (CONTINUED)
The names of the officers, their addresses, ages, position(s) held with the
Trust, and principal occupation(s) during the past five years are described in
the table below.
NAME, ADDRESS, POSITION(S)
AND AGE/DATE HELD WITH TERM OF OFFICE AND PRINCIPAL OCCUPATION(S)
OF BIRTH FUND LENGTH OF TIME SERVED DURING PAST 5 YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
Richard A. Fabietti President Indefinite; March 2004 Senior Vice President, Head of Product Management,
452 Fifth Avenue to present HSBC Investments (USA) Inc. (1998 to present).
New York, NY 10018
Age: 49
- ------------------------------------------------------------------------------------------------------------------------------------
Elba Vasquez Vice President Indefinite; March 2006 Vice President of Product Administration, HSBC
452 Fifth Avenue to present Investments (USA) Inc. (2005 to present); Vice
New York, NY 10018 President of Client Services, Citi Fund Services
Age: 45 Ohio, Inc. (1996 to 2005).
- ------------------------------------------------------------------------------------------------------------------------------------
Troy Sheets* Treasurer Indefinite; 2004 Vice President of Citi Fund Services Ohio, Inc.
3435 Stelzer Road to present (2002 to present); Senior Manager, KPMG LLP (1993 to
Columbus, OH 43219-3035 2002).
Age: 36
- ------------------------------------------------------------------------------------------------------------------------------------
Gary A. Ashjian* Secretary Indefinite; June 2007 Manager, Citi Fund Services (November 2006 -
100 Summer Street to present Present); Senior Legal Product Manager, Pioneer
Suite 1500 Investments (June 2004 - November 2006); Putnam
Boston, MA 02110 Investments, Legal Product Manager (September 1993 -
Age: 48 June 2004).
- ------------------------------------------------------------------------------------------------------------------------------------
Frederick J. Schmidt* Chief Term expires 2007; Senior Vice President and Chief Compliance Officer,
585 Stewart Avenue Compliance Officer 2004 to present CCO Services of Citi Fund Services (2004 to
Garden City, NY 11530 present); President, FJS Associates (2002 to 2004);
Age: 48 Vice President Credit Agricole Asset Management,
U.S. (1987 to 2002).
- ------------------------------------------------------------------------------------------------------------------------------------
* Messrs. Sheets, Schmidt and Ashjian also are officers of certain other
investment companies of which Citi or an affiliate is the administrator or
sub-administrator.
HSBC INVESTOR FAMILY OF FUNDS 80
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 LIFELINE FUNDS: TRANSFER AGENT AND SPONSOR
Citi Fund Services
INVESTMENT ADVISER AND ADMINISTRATOR 3435 Stelzer Road
HSBC Investments (USA) Inc. Columbus, OH 43219
452 Fifth Avenue
New York, NY 10018 DISTRIBUTOR
Foreside Distribution Services, L.P.
SUB-ADVISERS 3435 Stelzer Road
HSBC INVESTOR GROWTH PORTFOLIO Columbus, OH 43219
Waddell & Reed Investment Management Company
6300 Lamar Avenue CUSTODIAN
Overland Park, KS 66202 HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
HSBC INVESTOR HIGH YIELD FIXED INCOME FUND
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO
AllianceBerstein Investment Research and Management HSBC INVESTOR GROWTH PORTFOLIO
1345 Avenue of the Americas, 39th Floor HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
New York, NY 10105 HSBC INVESTOR OPPORTUNITY PORTFOLIO
HSBC INVESTOR VALUE PORTFOLIO
HSBC INVESTOR SMALL CAP EQUITY PORTFOLIO The Northern Trust Company
Westfield Capital Management, LLC 50 South LaSalle Street
One Financial Center Chicago, IL 60603
Boston, MA 02111
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
HSBC INVESTOR VALUE PORTFOLIO KPMG LLP
NWQ Investment Management Co., LLC 191 West Nationwide Blvd. Suite 500
2049 Century Park East, 16th Floor Columbus, OH 43215
Los Angeles, CA 90067
LEGAL COUNSEL
SHAREHOLDER SERVICING AGENTS Dechert LLP
FOR HSBC BANK USA, N.A. AND 1775 Eye Street, N.W.
HSBC SECURITIES (USA) INC. CLIENTS: Washington, D.C. 20006
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
The HSBC Lifeline Funds are distributed by Foreside Distribution Services, L.P.
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-SR-LL 12/07
ITEM 2. CODE OF ETHICS.
(A) THE REGISTRANT HAS ADOPTED A CODE OF ETHICS THAT APPLIES TO THE
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICER, PRINCIPAL FINANCIAL OFFICER,
PRINCIPAL ACCOUNTING OFFICER OR CONTROLLER, OR PERSONS PERFORMING SIMILAR
FUNCTIONS. THIS CODE OF ETHICS IS INCLUDED AS EXHIBIT 12(A)(I).
(B)DURING THE PERIOD COVERED BY THE REPORT, WITH RESPECT TO THE
REGISTRANT'S CODE OF ETHICS THAT APPLIES TO ITS PRINCIPAL EXECUTIVE
OFFICER, PRINCIPAL FINANCIAL OFFICER, PRINCIPAL ACCOUNTING OFFICER OR
CONTROLLER, OR PERSONS PERFORMING SIMILAR FUNCTIONS; THERE HAVE BEEN NO
AMENDMENTS TO, NOR ANY WAIVERS GRANTED FROM, A PROVISION THAT RELATES TO
ANY ELEMENT OF THE CODE OF ETHICS DEFINITION ENUMERATED IN PARAGRAPH (B) OF
THIS ITEM 2.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
3(a)(1) THE REGISTRANT'S BOARD OF DIRECTORS HAS DETERMINED THAT THE REGISTRANT
HAS AT LEAST ONE AUDIT COMMITTEE FINANCIAL EXPERT SERVING ON ITS AUDIT
COMMITTEE.
3(a)(2) THE AUDIT COMMITTEE FINANCIAL EXPERT IS THOMAS ROBARDS, WHO IS
"INDEPENDENT" FOR PURPOSES OF THIS ITEM 3 OF FORM N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) AUDIT FEES,
2006 $284,700
2007 $305,380
(b) AUDIT-RELATED FEES,
2006 $41,600
2007 $14,000
2006 - Fees of $5,200 relate to the consent of N-1A filing and $36,400
relate to the performance of the Funds' 17f-2 examinations.
2007 - Fees of $14,000 relate to the consent of N-1A filing and the
consent of the N-14 filing for the Conservative Income Strategy Fund
and the Conservative Growth Strategy Fund.
(c) TAX FEES,
2006 $154,800
2007 $162,068
Fees for both 2006 and 2007 relate to the preparation of federal income
and excise tax returns and the review of excise tax distributions.
(d) ALL OTHER FEES,
2006 $0
2007 $0
(e) None of the services summarized in (b) - (d), above, were approved
by the audit Committee pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X.
(f) Not applicable.
(g) Aggregate non-audit fees
2006 $238,800
2007 $176,068
(h) THE AUDIT COMMITTEE CONSIDERED THE NONAUDIT SERVICES RENDERED TO
THE REGISTRANT'S INVESTMENT ADVISER AND ANY ENTITY CONTROLLING, CONTROLLED BY,
OR UNDER COMMON CONTROL WITH THE INVESTMENT ADVISER, AND BELIEVES THE SERVICES
ARE COMPATIBLE WITH THE PRINCIPAL ACCOUNTANT'S INDEPENDENCE.
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 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) THE CODE OF ETHICS THAT IS THE SUBJECT OF THE DISCLOSURE REQUIRED BY ITEM
2 IS ATTACHED HERETO.
(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 INVESTOR PORTFOLIOS
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By (Signature and Title)* /s/ Richard A. Fabietti
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Richard A. Fabietti
President
Date December 21, 2007
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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
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Richard A. Fabietti
President
Date December 21, 2007
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By (Signature and Title)* /s/ Troy A. Sheets
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Troy A. Sheets
Treasurer
Date December 21, 2007
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* Print the name and title of each signing officer under his or her signature.