UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-07583
HSBC ADVISOR FUNDS TRUST
(Exact name of registrant as specified in charter)
452 FIFTH AVENUE
NEW YORK, NY 10018
(Address of principal executive offices) (Zip code)
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.
[GRAPHIC]
HSBC Investments (USA) Inc.
HSBC Investor Family of Funds
Annual Report
October 31, 2007
FIXED INCOME FUNDS: EQUITY FUNDS:
HSBC Investor Core Plus Fixed Income Fund HSBC Investor Growth Fund
(Advisor)
HSBC Investor Growth and Income
HSBC Investor Core Plus Fixed Income Fund Fund
HSBC Investor High Yield Fixed Income Fund HSBC International Equity Fund
HSBC Investor Intermediate Duration HSBC Investor Mid-Cap Fund
Fixed Income Fund
HSBC Investor Opportunity Fund
HSBC Investor New York Tax-Free Bond Fund
HSBC Investor Opportunity Fund
(Advisor)
HSBC Investor Overseas Equity
Fund
HSBC Investor Value Fund
[HSBC LOGO]
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
ANNUAL REPORT - OCTOBER 31, 2007
Glossary of Terms
Chairman's Message ...................................................... 1
Commentary From the Certain parties ..................................... 2
Portfolio Reviews ....................................................... 3
Portfolio Composition ................................................... 23
Schedules of Portfolio Investments
HSBC Investor New York Tax-Free Bond Fund ............................ 25
HSBC Investor Growth and Income Fund ................................. 27
HSBC Investor Mid-Cap Fund ........................................... 29
Statements of Assets and Liabilities .................................... 31
Statements of Operations ................................................ 34
Statements of Changes in Net Assets ..................................... 37
Financial Highlights .................................................... 51
Notes to Financial Statements ........................................... 64
Report of Independent Registered Public Accounting Firm ................. 75
Other Federal Income Tax Information .................................... 76
Table of Shareholder Expenses ........................................... 77
HSBC INVESTOR PORTFOLIOS
Schedules of Portfolio Investments
HSBC Investor Core Plus Fixed Income Portfolio ....................... 81
HSBC Investor High Yield Fixed Income Portfolio ...................... 85
HSBC Investor Intermediate Duration Fixed Income Portfolio ........... 90
HSBC Investor Growth Portfolio ....................................... 93
HSBC Investor International Equity Portfolio ......................... 94
HSBC Investor Opportunity Portfolio .................................. 96
HSBC Investor Value Portfolio ........................................ 98
Statements of Assets and Liabilities .................................... 99
Statements of Operations ................................................ 101
Statements of Changes in Net Assets ..................................... 103
Financial Highlights .................................................... 107
Notes to Financial Statements ........................................... 108
Report of Independent Registered Public Accounting Firm ................. 115
Investment Adviser Contract Approval .................................... 116
Table of Shareholder Expenses ........................................... 117
Board of Trustees ....................................................... 119
- --------------------------------------------------------------------------------
GLOSSARY OF TERMS
- --------------------------------------------------------------------------------
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.
LIPPER INTERMEDIATE INVESTMENT-GRADE DEBT FUNDS AVERAGE is an average of managed
funds that invest at least 65% of their assets in investment-grade debt issues
(rated in the top four grades) with dollar-weighted average maturities of five
to ten years.
LIPPER INTERNATIONAL LARGE-CAP CORE FUNDS AVERAGE consists of funds that, by
portfolio practice, invest at least 75% of their equity assets in companies
strictly outside of the U.S. with market capitalizations (on a three-year
weighted basis) greater than the 250th largest company in the S&P/Citigroup
World ex-U.S. Broad Market Index.
LIPPER LARGE-CAP CORE FUNDS AVERAGE is comprised of managed funds that, by
portfolio practice, invest at least 75% of their equity assets in companies with
market capitalizations (on a three-year weighted basis) greater than 300% of the
dollar-weighted median market capitalization of the Standard & Poor's Mid-Cap
400 Index.
LIPPER LARGE-CAP GROWTH FUNDS AVERAGE Funds that, by portfolio practice, invest
at least 75% of their equity assets in companies with market capitalizations (on
a three-year weighted basis) greater than 300% of the dollar-weighted median
market capitalization of the middle 1,000 securities of the S&P SuperComposite
1500 Index. Large-cap growth funds typically have an above-average
price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share
growth value, compared to the S&P 500 Index.
LIPPER MID-CAP GROWTH FUNDS AVERAGE is comprised of managed funds that, by
portfolio practice, invest at least 75% of their equity assets in companies with
market capitalizations (on a three-year weighted basis) of less than 300% of the
dollar-weighted median market capitalization of the Standard & Poor's Mid-Cap
400 Index.
LIPPER MULTI-CAP VALUE FUNDS AVERAGE is comprised of managed funds that, by
portfolio practice, invest in a variety of market capitalization ranges, without
concentrating 75% of their equity assets in any one market capitalization range
over an extended period of time. Multi-Cap funds will generally have between 25%
to 75% of their assets invested in companies with market capitalizations (on a
three-year weighted basis) above 300% of the dollar-weighted median market
capitalization of the S&P MidCap 400 Index. Multi-Cap Value funds seek long-term
growth of capital by investing in companies that are considered to be
undervalued relative to a major unmanaged stock index based on price-to-current
earnings, book value, asset value, or other factors. These funds will normally
have a below-average price-to-earnings ratio, price-to-book ratio, and
three-year earnings growth figure, compared to the U.S. diversified multi-cap
funds universe average.
LIPPER NEW YORK MUNICIPAL DEBT FUNDS AVERAGE is an average of managed funds that
invest at least 65% of their assets in municipal debt issues that are exempt
from taxation in New York or a city in New York.
MERRILL LYNCH U.S. HIGH YIELD MASTER II INDEX 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 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.
Lipper is an independent mutual fund performance monitor whose results are based
on total return and do not reflect a sales charge.
Securities indexes assume reinvestment of all distributions and interest
payments and do not take in account brokerage fees or expenses. Securities in
the Fund do not match those in the indexes and performance of the Fund will
differ. Investors cannot invest directly in an index.
- --------------------------------------------------------------------------------
CHAIRMAN'S MESSAGE
- --------------------------------------------------------------------------------
DEAR SHAREHOLDER,
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
- --------------------------------------------------------------------------------
COMMENTARY FROM THE CERTAIN PARTIES
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR CORE PLUS FIXED INCOME FUND
(ADVISOR, CLASS A SHARES, B SHARES AND C SHARES)
BY HSBC INVESTMENTS (USA) INC. U.S. CORE FIXED INCOME TEAM
The HSBC Investor Core Plus Fixed Income Fund (the "Fund") seeks to provide
investors with above-average total return, consistent with reasonable risk,
through investments in a diversified portfolio of fixed-income securities. The
Fund utilizes a two-tier structure, commonly known as a "master-feeder," in
which the Fund invest all of its investable assets in the HSBC Investor Core
Plus Fixed Income Portfolio (the "Portfolio").
INVESTMENT CONCERNS
Bonds offer a relatively stable level of income, although bond prices will
fluctuate providing the potential for principal gain or loss. Intermediate-term,
higher-quality bonds generally offer less risk than longer-term bonds and a
lower rate of return.
MARKET COMMENTARY
For the 12-month period ended October 31, 2007, the Advisor shares of the Fund
produced a 7.20% total return, and the Class A Shares returned 6.90% (without
sales charge). That compared to a total return of 5.38% and 4.08% for the Lehman
Brothers U.S. Aggregate Index(1) and the Lipper Intermediate Investment-Grade
Debt Funds Average(1), respectively.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
PORTFOLIO PERFORMANCE
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.
3 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR CORE PLUS FIXED INCOME FUND - AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Lehman Brothers U.S. HSBC Investor Core Plus
Aggregate Index Fixed Income Fund (Advisor)
10/97 $ 10,000 $ 10,000
12/97 $ 10,147 $ 10,130
$ 10,305 $ 10,278
$ 10,546 $ 10,455
$ 10,992 $ 10,707
12/98 $ 11,029 $ 10,824
$ 11,107 $ 10,829
$ 10,878 $ 10,670
$ 10,951 $ 10,710
12/99 $ 10,938 $ 10,707
$ 11,179 $ 10,906
$ 11,374 $ 11,070
$ 11,717 $ 11,441
12/00 $ 12,210 $ 11,909
$ 12,580 $ 12,320
$ 12,651 $ 12,445
$ 13,235 $ 12,885
12/01 $ 13,241 $ 12,993
$ 13,253 $ 12,954
$ 13,743 $ 13,313
$ 14,372 $ 13,874
12/02 $ 14,598 $ 14,106
$ 14,802 $ 14,307
$ 15,172 $ 14,708
$ 15,150 $ 14,686
12/03 $ 15,198 $ 14,745
$ 15,602 $ 15,095
$ 15,220 $ 14,761
$ 15,707 $ 15,198
12/04 $ 15,857 $ 15,373
$ 15,781 $ 15,307
$ 16,256 $ 15,748
$ 16,146 $ 15,675
12/05 $ 16,242 $ 15,742
$ 16,137 $ 15,694
$ 16,125 $ 15,722
$ 16,739 $ 16,287
12/06 $ 16,946 $ 16,842
$ 17,201 $ 17,123
$ 17,112 $ 17,058
$ 17,598 $ 17,474
12/07 $ 17,757 $ 17,606
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Lehman Brothers U.S. HSBC Investor Core Plus
Aggregate Index Fixed Income Fund Class A(1)
10/97 $ 10,000 $ 9,528
12/97 $ 10,147 $ 9,637
$ 10,305 $ 9,781
$ 10,546 $ 9,933
$ 10,992 $ 10,183
12/98 $ 11,029 $ 10,254
$ 11,107 $ 10,256
$ 10,878 $ 10,096
$ 10,951 $ 10,120
12/99 $ 10,938 $ 10,123
$ 11,179 $ 10,273
$ 11,374 $ 10,435
$ 11,717 $ 10,764
12/00 $ 12,210 $ 11,196
$ 12,580 $ 11,549
$ 12,651 $ 11,660
$ 13,235 $ 12,051
12/01 $ 13,241 $ 12,136
$ 13,253 $ 12,092
$ 13,743 $ 12,413
$ 14,372 $ 12,901
12/02 $ 14,598 $ 13,113
$ 14,802 $ 13,283
$ 15,172 $ 13,642
$ 15,150 $ 13,600
12/03 $ 15,198 $ 13,634
$ 15,602 $ 13,946
$ 15,220 $ 13,612
$ 15,707 $ 14,011
12/04 $ 15,857 $ 14,162
$ 15,781 $ 14,099
$ 16,256 $ 14,484
$ 16,146 $ 14,400
12/05 $ 16,242 $ 14,466
$ 16,137 $ 14,406
$ 16,125 $ 14,425
$ 16,739 $ 14,929
12/06 $ 16,946 $ 15,438
$ 17,201 $ 15,685
$ 17,112 $ 15,605
$ 17,598 $ 15,989
10/07 $ 17,757 $ 16,105
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.
- -----------------------------------------------------------------------------------------------------------------------
EXPENSE
FUND PERFORMANCE AVERAGE ANNUAL TOTAL RETURN (%) RATIO (%)(5)
- -----------------------------------------------------------------------------------------------------------------------
INCEPTION 1 5 10 SINCE
AS OF OCTOBER 31, 2007 DATE YEAR YEAR YEAR INCEPTION GROSS NET
- -----------------------------------------------------------------------------------------------------------------------
HSBC Investor Core Plus Fixed Income Fund (Advisor) 1/9/95 7.20 5.08 5.82 6.86 0.80 0.45
- -----------------------------------------------------------------------------------------------------------------------
HSBC Investor Core Plus Fixed Income Fund Class A(1) 8/26/96 1.86 3.72 4.88 5.46 1.44 0.70
- -----------------------------------------------------------------------------------------------------------------------
HSBC Investor Core Plus Fixed Income Fund Class B(2) 1/6/98 2.10 3.95 -- 4.77 2.19 1.45
- -----------------------------------------------------------------------------------------------------------------------
HSBC Investor Core Plus Fixed Income Fund Class C(3) 11/4/98 4.92 3.92 -- 4.58 2.19 1.45
- -----------------------------------------------------------------------------------------------------------------------
Lehman Brothers U.S. Aggregate Index(4) -- 5.38 4.41 5.91 N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------
Lipper Intermediate Investment-Grade Debt Funds Average(4) -- 4.08 4.11 5.15 N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING
THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE
PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD
HAVE BEEN LOWER. CURRENTLY, CONTRACTUAL FEE WAIVERS ARE IN EFFECT FROM MARCH 1,
2007 THROUGH MARCH 1, 2008.
The total returns for Advisor Class, Class A Shares, B Shares and Class C Shares
of the Fund for the 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 4.75%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
EFFECTIVE JULY 2006, THE FUND WAS RECLASSIFIED FROM THE LIPPER GENERAL
BOND FUNDS AVERAGE TO THE LIPPER INTERMEDIATE INVESTMENT-GRADE DEBT FUNDS
AVERAGE.
(5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY
28, 2007.
The Fund is measured against the Lehman Brothers U.S. Aggregate Index, an
unmanaged market value-weighted performance benchmark for investment-grade
fixed-rate debt issues, including government, corporate, asset-backed, and
mortgage-backed securities, with maturities of at least one year. The
performance of the index does not reflect the deduction of expenses associated
with a mutual fund, such as investment management and fund accounting fees. The
Fund's performance reflects the deduction of fees for these value-added
services. Investors cannot invest directly in an index
HSBC INVESTOR FAMILY OF FUNDS 4
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR HIGH YIELD FIXED INCOME FUND
(CLASS A SHARES, B SHARES, C SHARES AND I SHARES)
BY HSBC INVESTMENTS (USA) INC. HIGH YIELD TEAM
HSBC Investments (USA) Inc. serves as investment adviser to the Fund. The HSBC
High Yield Team provides the day to day management of the portfolio. The Team's
philosophy is focused on delivering sustainable value added performance in the
high yield fixed income market. The investment approach is a combination of
top-down sector/industry selection and bottom-up security/quality selection. The
team rotates sectors and themes within the high yield universe during different
market environments seeking to add value, endeavoring to take advantage of
market inefficiencies in order to outperform in both up and down markets.
INVESTMENT CONCERNS
Bond funds will tend to experience smaller fluctuations in value than stock
funds. However, investors in any bond fund should anticipate fluctuations in
price, especially for longer-term issues and in environments of rising interest
rates. High yield bonds are subject to greater risks than investment grade
bonds, such as the increased risk of default because of the lower credit quality
of the issues.
MARKET COMMENTARY
The Fund delivered a total return of 7.13% (without sales charge) for Class A
Shares and 7.29% for Class I Shares for the period ended October 31, 2007. That
compared to 6.85% and 6.21% total return for the Fund's benchmarks, the Merrill
Lynch U.S. High Yield Master II Index(1) and the Lipper High Current Yield Funds
Average(1), respectively.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
PORTFOLIO PERFORMANCE
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.
5 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR HIGH YIELD FIXED INCOME FUND - AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
HSBC Investor High Yield Merrill Lynch
Fixed Income Fund Class I U.S. High Yield Master II Index
11/18/2005 $10,000 $10,000
12/05 $10,064 $10,150
3/06 $10,436 $10,443
6/06 $10,352 $10,464
9/06 $10,717 $10,885
12/06 $11,148 $11,347
3/07 $11,525 $11,653
6/07 $11,582 $11,693
9/07 $11,597 $11,727
10/07 $11,666 $11,803
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
HSBC Investor High Yield Merrill Lynch
Fixed Income Fund Class A(1) U.S. High Yield Master II Index
11/18/2005 $ 9,524 $10,000
12/05 $ 9,583 $10,150
3/06 $ 9,931 $10,443
6/06 $ 9,845 $10,464
9/06 $10,185 $10,885
12/06 $10,588 $11,347
3/07 $10,929 $11,653
6/07 $10,988 $11,693
9/07 $10,994 $11,727
10/07 $11,058 $11,803
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 (%)(5)
- -----------------------------------------------------------------------------------------------------------------
INCEPTION 1 SINCE
AS OF OCTOBER 31, 2007 DATE YEAR INCEPTION GROSS NET
- -----------------------------------------------------------------------------------------------------------------
HSBC Investor High Yield Fixed Income Fund Class A(1) 11/18/05 2.00 5.29 3.53 0.80
- -----------------------------------------------------------------------------------------------------------------
HSBC Investor High Yield Fixed Income Fund Class B(2) 11/21/05 2.28 5.71 4.28 1.55
- -----------------------------------------------------------------------------------------------------------------
HSBC Investor High Yield Fixed Income Fund Class C(3) 12/14/05 5.21 7.26 4.28 1.55
- -----------------------------------------------------------------------------------------------------------------
HSBC Investor High Yield Fixed Income Fund Class I 11/18/05 7.29 8.22 3.28 0.55
- -----------------------------------------------------------------------------------------------------------------
Merrill Lynch U.S. High Yield Master II Index(4) -- 6.85 N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------
Lipper High Current Yield Funds Average(4) -- 6.21 N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING
THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE
PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD
HAVE BEEN LOWER. CURRENTLY, CONTRACTUAL FEE WAIVERS ARE IN EFFECT FROM MARCH 1,
2007 THROUGH MARCH 1, 2008.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 4.75%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
(5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY
28, 2007.
The Fund is measured against the Merrill Lynch U.S. High Yield Master II Index,
an unmanaged index which measures the performance of the broad high yield
market. The performance of the index does not reflect the deduction of expenses
associated with a mutual fund, such as investment management and fund accounting
fees. The Fund's performance reflects the deduction of fees for these
value-added services. Investors cannot invest directly in an index.
HSBC INVESTOR FAMILY OF FUNDS 6
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME FUND
(CLASS A SHARES, B SHARES, C SHARES AND I SHARES)
BY HSBC INVESTMENTS (USA) INC. U.S. CORE FIXED INCOME TEAM
The HSBC Investor Intermediate Duration Fixed Income Fund (the "Fund") seeks to
realize above-average total return, consistent with reasonable risk, by
investing in a diversified investment grade portfolio of U.S. government
obligations, corporate bonds and mortgage-backed securities. The Fund utilizes a
two tier structure, commonly known as "master-feeder," in which the Fund invests
all of its investable assets in the HSBC Investor Intermediate Duration Fixed
Income Portfolio (the "Portfolio").
INVESTMENT CONCERNS
Bonds offer a relatively stable level of income, although bond prices will
fluctuate providing the potential for principal gain or loss. Intermediate-term,
higher-quality bonds generally offer less risk than longer-term bonds and a
lower rate of return.
MARKET COMMENTARY
The Fund returned 8.67% (without sales charge) for the Class A Shares and 8.93%
for the Class I Shares during the 12-month period ended October 31, 2007. That
compared to a total return of 5.53% and 4.08% for Lehman Brothers Intermediate
U.S. Aggregate Index(1) and the Lipper Intermediate Investment-Grade Debt Funds
Average(1).
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
PORTFOLIO PERFORMANCE
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.
7 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME FUND - AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Lehman Brothers HSBC Investor Intermediate
Intermediate U.S. Duration Fixed
Aggregate Index Income Fund Class I
1/23/01 $ 10,000 $ 10,000
$ 10,147 $ 10,237
$ 10,230 $ 10,278
$ 10,690 $ 10,813
12/01 $ 10,696 $ 10,767
$ 10,731 $ 10,701
$ 11,115 $ 10,988
$ 11,535 $ 11,451
12/02 $ 11,711 $ 11,581
$ 11,860 $ 11,705
$ 12,084 $ 11,974
$ 12,106 $ 11,953
12/03 $ 12,157 $ 11,969
$ 12,433 $ 12,214
$ 12,188 $ 11,969
$ 12,515 $ 12,268
12/04 $ 12,612 $ 12,355
$ 12,542 $ 12,260
$ 12,845 $ 12,534
$ 12,795 $ 12,483
12/05 $ 12,866 $ 12,514
$ 12,833 $ 12,514
$ 12,848 $ 12,555
$ 13,286 $ 13,003
12/06 $ 13,454 $ 13,660
$ 13,666 $ 13,905
$ 13,618 $ 13,877
$ 13,994 $ 14,177
10/07 $ 14,107 $ 14,271
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Lehman Brothers HSBC Investor Intermediate
Intermediate U.S. Duration Fixed
Aggregate Index Income Fund Class A(1)
2/7/01 $ 10,000 $ 9,526
$ 10,147 $ 9,691
$ 10,230 $ 9,732
$ 10,690 $ 10,198
12/01 $ 10,696 $ 10,159
$ 10,731 $ 10,080
$ 11,115 $ 10,355
$ 11,535 $ 10,775
12/02 $ 11,711 $ 10,900
$ 11,860 $ 11,001
$ 12,084 $ 11,257
$ 12,106 $ 11,230
12/03 $ 12,157 $ 11,238
$ 12,433 $ 11,461
$ 12,188 $ 11,214
$ 12,515 $ 11,499
12/04 $ 12,612 $ 11,573
$ 12,542 $ 11,477
$ 12,845 $ 11,727
$ 12,795 $ 11,671
12/05 $ 12,866 $ 11,694
$ 12,833 $ 11,687
$ 12,848 $ 11,717
$ 13,286 $ 12,128
12/06 $ 13,454 $ 12,721
$ 13,666 $ 12,955
$ 13,618 $ 12,921
$ 13,994 $ 13,192
10/07 $ 14,107 $ 13,277
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 (%)(5)
- ------------------------------------------------------------------------------------------------------------------------
INCEPTION 1 5 SINCE
AS OF OCTOBER 31, 2007 DATE YEAR YEAR INCEPTION GROSS NET
- ------------------------------------------------------------------------------------------------------------------------
HSBC Investor Intermediate Duration Fixed Income Fund Class A(1) 2/7/01 3.56 3.38 4.30 1.65 0.65
- ------------------------------------------------------------------------------------------------------------------------
HSBC Investor Intermediate Duration Fixed Income Fund Class B(2) 2/15/01 3.96 3.61 4.36 2.40 1.40
- ------------------------------------------------------------------------------------------------------------------------
HSBC Investor Intermediate Duration Fixed Income Fund Class C(3) 2/13/01 6.86 3.61 4.24 2.40 1.40
- ------------------------------------------------------------------------------------------------------------------------
HSBC Investor Intermediate Duration Fixed Income Fund Class I 1/23/01 8.93 4.63 5.39 1.40 0.40
- ------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Intermediate U.S. Aggregate Index(4) -- 5.53 4.12 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------
Lipper Intermediate Investment-Grade Debt Funds Average(4) -- 4,08 4.11 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.
The total returns for Class A shares, Class B Shares, Class C Shares and Class I
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 4.75%.
(2) REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF
4.00%.
(3) REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF
1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
(5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY
28, 2007.
The Fund is measured against the Lehman Brothers Intermediate U.S. Aggregate
Index, an unmanaged index generally representative of investment-grade issues
with maturities between three- and ten-years. The performance of the index does
not reflect the deduction of expenses associated with a mutual fund, such as
investment management and fund accounting fees. The Fund's performance reflects
the deduction of fees for these value-added services. Investors cannot invest
directly in an index.
HSBC INVESTOR FAMILY OF FUNDS 8
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
(CLASS A SHARES, B SHARES, C SHARES AND I SHARES)
BY HSBC INVESTMENTS (USA) INC. U.S. CORE FIXED INCOME TEAM
The HSBC Investor New York Tax-Free Bond Fund (the "Fund") seeks to provide
shareholders with income exempt from regular, federal, New York state and New
York city personal income taxes.
INVESTMENT CONCERNS
Bonds offer a relatively stable level of income, although bond prices will
fluctuate providing the potential for principal gain or loss. Intermediate-term,
higher-quality bonds generally offer less risk than longer-term bonds and a
lower rate of return.
The Fund's income may be subject to certain state and local taxes and, depending
on your tax status, the federal alternative minimum tax. Regional funds may be
subject to additional risks, since the issues they invest in are located in one
geographical location.
MARKET COMMENTARY
The Fund delivered a total return of 2.34% (without sales charge) for Class A
Shares and 2.59% for Class I Shares for the 12-month period ended October 31,
2007. That compared to 3.09% and 1.62% for the Fund's benchmarks, the Lehman
Brothers New York Tax Exempt Index(1) and the Lipper New York Municipal Debt
Funds Average(1), respectively.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
Fiscal conditions for state and local governments were mostly positive, but as
the housing recession continues to worsen, the trend of strong revenue growth
has weakened as well. Realty revenue has dramatically declined in states such as
California, Florida and Nevada that had the strongest housing appreciation in
recent years. At the same time, spending on Medicaid, pensions, infrastructure
and security continues to grow. Most state and local governments though have
rebuilt their reserves and should aid in weathering challenging times ahead.
Back in June and July, New York City received another credit upgrade from rating
agencies, due to continued fiscal discipline and strong revenue growth. Standard
& Poor's, Moody's and Fitch rate the city as AA, Aa3 and A- respectively.
However, the subprime crisis has started to take its toll on Wall Street
profits, and coupled with an expected decline in housing prices, will crimp city
and state revenues as well.
Tax-free money markets were primarily influenced by technical supply and demand
factors. Ample supply of variable rate demand notes (VRDN's) and tender option
bonds exerted upward pressure on yields in the front end of the short municipal
yield curve. In general, VRDN's provided higher returns than longer dated
maturities. The SIFMA Muni Swap Index(1) of high grade VRDN's during the six
month period ranged from a low of 3.58% in July, with heavy reinvestments of
coupons and maturities, to 3.95% in August, the peak of the subprime liquidity
crisis. One year note yields averaged 3.70% during June and July as new issuance
flooded the market, but readjusted to an average of 3.40% as the Federal Reserve
cut fed funds by 50 basis points (0.50%) to 4.75% in September with the
additional 25 basis points (0.25%) cut at the end of October the one year note
averaged 3.30% for the end of October.
PERFORMANCE REVIEW
The Fund endeavored to maintain a weighted average maturity slightly longer than
the industry average over the last six months, as we expected the Federal
Reserve to ease monetary policy. With a mostly flat to inverted short municipal
yield curve, the fund was overweight in VRDN's. When the opportunities arose, we
extended maturity buying commercial paper and notes from three months out to one
year to help lock in yields, which may outperform VRDN's in a declining rate
environment. As we wind down 2007, we will maintain our current maturity stance.
The housing sector has yet to bottom, which may cause further credit turmoil and
increase likelihood of additional monetary easing. However, higher commodity
prices and a weaker dollar in recent days could push inflation higher. We will
continue to monitor future data and adjust our strategy accordingly.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
9 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND - AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Lehman Brothers New HSBC Investor New York
York Tax Exempt Index Tax-Free Bond Fund Class I
10/97 $ 10,000 $ 10,000
12/97 $ 10,211 $ 10,217
$ 10,347 $ 10,325
$ 10,516 $ 10,472
$ 10,839 $ 10,845
12/98 $ 10,914 $ 10,875
$ 11,012 $ 10,943
$ 10,817 $ 10,702
$ 10,776 $ 10,579
12/99 $ 10,692 $ 10,540
$ 11,016 $ 10,849
$ 11,187 $ 10,933
$ 11,449 $ 11,190
12/00 $ 11,976 $ 11,681
$ 12,240 $ 11,932
$ 12,341 $ 11,996
$ 12,617 $ 12,284
12/01 $ 12,556 $ 12,156
$ 12,710 $ 12,285
$ 13,143 $ 12,650
$ 13,766 $ 13,296
12/02 $ 13,770 $ 13,280
$ 13,939 $ 13,417
$ 14,285 $ 13,781
$ 14,314 $ 13,734
12/03 $ 14,497 $ 13,903
$ 14,735 $ 14,079
$ 14,391 $ 13,793
$ 14,944 $ 14,247
12/04 $ 15,115 $ 14,361
$ 15,107 $ 14,296
$ 15,530 $ 14,660
$ 15,504 $ 14,611
12/05 $ 15,618 $ 14,691
$ 15,664 $ 14,687
$ 15,666 $ 14,659
$ 16,183 $ 15,132
12/06 $ 16,358 $ 15,245
$ 16,490 $ 15,370
$ 16,401 $ 15,261
$ 16,698 $ 15,548
10/07 $ 16,783 $ 15,599
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Lehman Brothers New HSBC Investor New York
York Tax Exempt Index Tax-Free Bond Fund Class A(1)
10/97 $ 10,000 $ 9,526
12/97 $ 10,211 $ 9,730
$ 10,347 $ 9,819
$ 10,516 $ 9,953
$ 10,839 $ 10,303
12/98 $ 10,914 $ 10,324
$ 11,012 $ 10,382
$ 10,817 $ 10,146
$ 10,776 $ 10,023
12/99 $ 10,692 $ 9,978
$ 11,016 $ 10,265
$ 11,187 $ 10,339
$ 11,449 $ 10,575
12/00 $ 11,976 $ 11,032
$ 12,240 $ 11,261
$ 12,341 $ 11,315
$ 12,617 $ 11,579
12/01 $ 12,556 $ 11,452
$ 12,710 $ 11,566
$ 13,143 $ 11,902
$ 13,766 $ 12,502
12/02 $ 13,770 $ 12,479
$ 13,939 $ 12,600
$ 14,285 $ 12,934
$ 14,314 $ 12,881
12/03 $ 14,497 $ 13,032
$ 14,735 $ 13,189
$ 14,391 $ 12,913
$ 14,944 $ 13,330
12/04 $ 15,115 $ 13,428
$ 15,107 $ 13,359
$ 15,530 $ 13,690
$ 15,504 $ 13,636
12/05 $ 15,618 $ 13,702
$ 15,664 $ 13,690
$ 15,666 $ 13,655
$ 16,183 $ 14,087
12/06 $ 16,358 $ 14,184
$ 16,490 $ 14,278
$ 16,401 $ 14,168
$ 16,698 $ 14,439
10/07 $ 16,783 $ 14,483
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.
- ---------------------------------------------------------------------------------------------------------------------
EXPENSE
FUND PERFORMANCE AVERAGE ANNUAL TOTAL RETURN (%) RATIO (%)(5)
- ---------------------------------------------------------------------------------------------------------------------
INCEPTION 1 5 10 SINCE
AS OF OCTOBER 31, 2007 DATE YEAR YEAR YEAR INCEPTION GROSS NET
- ---------------------------------------------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund Class A(1) 5/1/95 -2.54 2.39 3.77 4.56 0.93 0.93
- ---------------------------------------------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund Class B(2) 1/6/98 -2.37 2.62 -- 3.62 1.68 1.68
- ---------------------------------------------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund Class C(3) 11/4/98 0.58 2.61 -- 3.16 1.68 1.68
- ---------------------------------------------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund Class I 7/1/96 2.59 3.64 4.55 5.00 0.68 0.68
- ---------------------------------------------------------------------------------------------------------------------
Lehman Brothers New York Tax Exempt Index(4) -- 3.09 4.37 5.31 N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
Lipper New York Municipal Debt Funds Average(4) -- 1.62 3.86 4.43 N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING
THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE
PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD
HAVE BEEN LOWER.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 4.75%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
(5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY
28, 2007.
The Fund is measured against the Lehman Brothers New York Tax Exempt Index, an
unmanaged index composed of investment-grade New York tax-exempt securities, all
having a $50 million minimum maturity value. The performance of the index does
not reflect the deduction of expenses associated with a mutual fund, such as
investment management and fund accounting fees. The Fund's performance reflects
the deduction of fees for these value-added services. Investors cannot invest
directly in an index.
HSBC INVESTOR FAMILY OF FUNDS 10
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH FUND
(CLASS A SHARES, B SHARES, C SHARES AND I SHARES)
BY PHILIP J. SANDERS, SENIOR VICE PRESIDENT/PORTFOLIO MANAGER, CFA AND
DANIEL P. BECKER, SENIOR VICE PRESIDENT/PORTFOLIO MANAGER, CFA
WADDELL & REED INVESTMENT MANAGEMENT COMPANY
The HSBC Investor Growth Fund (the "Fund") seeks long-term growth of capital by
investing primarily in U.S. and foreign equity securities of high quality
companies with market capitalization generally in excess of $2 billion, which
the sub-adviser believes have the potential to generate superior levels of
long-term profitability and growth. The Fund utilizes a two tier structure,
commonly known as a "master-feeder", and invests all of its investable assets in
the HSBC Investor Growth Portfolio (the "Portfolio"), which acts as the master
fund. The Portfolio employs Waddell & Reed Investment Management Company
(Waddell & Reed) as sub-adviser.
INVESTMENT CONCERNS
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes.
MARKET COMMENTARY
The Fund returned 30.45% (without sales charge) for the Class A Shares and
30.73% for the Class I Shares for the 12-month period ended October 31, 2007.
That compared to a 19.23% for the Russell 1000(R) Growth Index(1) and a 21.72%
return for the Lipper Large-Cap Growth Funds Average(1).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
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.
11 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH FUND - AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Russell 1000(R) Growth Index HSBC Investor Growth Fund Class I
5/10/04 $10,000 $10,000
$10,314 $10,486
$ 9,775 $ 9,944
12/04 $10,671 $10,629
$10,235 $10,340
$10,487 $10,805
$10,908 $11,190
12/05 $11,233 $11,849
$11,580 $12,248
$11,129 $12,012
$11,567 $11,898
12/06 $12,252 $12,490
$12,398 $12,701
$13,248 $13,381
$13,805 $15,046
10/07 $14,275 $15,874
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Russell 1000(R) Growth Index HSBC Investor Growth Fund Class A(1)
5/10/04 $10,000 $ 9,500
$10,314 $ 9,962
$ 9,775 $ 9,440
12/04 $10,671 $10,085
$10,235 $ 9,805
$10,487 $10,241
$10,908 $10,598
12/05 $11,233 $11,222
$11,580 $11,593
$11,129 $11,361
$11,567 $11,246
12/06 $12,252 $11,798
$12,398 $11,982
$13,248 $12,619
$13,805 $14,186
10/07 $14,275 $14,962
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 (%)(5)
- -----------------------------------------------------------------------------------------------
INCEPTION 1 3 SINCE
AS OF OCTOBER 31, 2007 DATE YEAR YEAR INCEPTION GROSS NET
- -----------------------------------------------------------------------------------------------
HSBC Investor Growth Fund Class A(1) 5/10/04 23.94 14.37 12.29 1.44 1.20
- -----------------------------------------------------------------------------------------------
HSBC Investor Growth Fund Class B(2) 5/10/04 25.43 14.97 12.87 2.19 1.95
- -----------------------------------------------------------------------------------------------
HSBC Investor Growth Fund Class C(3) 5/10/04 28.49 15.49 13.09 2.19 1.95
- -----------------------------------------------------------------------------------------------
HSBC Investor Growth Fund Class I 5/10/04 30.73 16.62 14.21 1.19 0.95
- -----------------------------------------------------------------------------------------------
Russell 1000(R) Growth Index(4) -- 19.23 12.87 N/A N/A N/A
- -----------------------------------------------------------------------------------------------
Lipper Large-Cap Growth funds Average(4) -- 21.72 12.94 N/A N/A N/A
- -----------------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING
THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE
PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD
HAVE BEEN LOWER. CURRENTLY, CONTRACTUAL FEE WAIVERS ARE IN EFFECT FROM MARCH 1,
2007 THROUGH MARCH 1, 2008.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 5.00%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
(5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY
28, 2007.
The Fund is measured against the Russell 1000(R) Growth Index an unmanaged index
that measures the performance of those Russell 1000 companies with higher
price-to-book ratios and higher forecasted growth values. 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.
HSBC INVESTOR FAMILY OF FUNDS 12
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH AND INCOME FUND
(CLASS A SHARES, B SHARES, C SHARES AND I SHARES)
BY GARY U. ROLLE, CFA, PRINCIPAL/CHIEF INVESTMENT OFFICER AND
EDWARD S. HAN, PRINCIPAL/PORTFOLIO MANAGER AND
TRANSAMERICA INVESTMENT MANAGEMENT, LLC
The HSBC Investor Growth and Income Fund (the "Fund") normally invests at least
65% of its assets in common stocks, preferred stocks, and convertible
securities. The Fund may invest the balance of its assets in various types of
fixed income securities and in money market instruments. The Fund employs
Transamerica Investment Management, LLC ("TIM") as the sub-adviser to the Fund.
INVESTMENT CONCERNS
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes.
Bonds offer a relatively stable level of income, although bond prices will
fluctuate providing the potential for principal gain or loss. Intermediate-term,
higher-quality bonds generally offer less risk than longer-term bonds and a
lower rate of return.
MARKET COMMENTARY
The Fund returned 28.09% (without sales charge) for the Class A Shares and
28.46% for the Class I Shares for the 12-month period ended October 31, 2007.
That compared to a 14.55% return for the Standard & Poor's 500 Index(1) and a
14.56% return for the Lipper Large-Cap Core Funds Average(1).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
Stocks performed well during the period under review, despite a slowdown in the
U.S. economy and market volatility related to the subprime mortgage crisis.
Global economic growth and its positive impact on U.S. companies with
international exposure helped lift the stock market, benefiting the Fund's
absolute returns.
The Fund held an overweight position relative to its index in shares of
information technology and industrial firms. These sectors posted some of the
market's strongest gains during the 12-month period, helping the Fund outperform
its benchmark. Conversely, an underweight stake in the financial sector boosted
relative performance, as investors concerned about the potential effects of the
subprime mortgage crisis sold stocks in that sector. Selection among consumer
discretionary sector stocks also contributed to the Fund's substantial relative
gain.*
An underweight position in the energy sector detracted from performance against
the index, as energy stocks generated strong returns. The Fund's holdings in the
consumer staples and health care sectors weighed on relative performance as
well.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
13 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH AND INCOME FUND - AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
HSBC Investor Growth and
Standard & Poor's 500 Index Income Fund Class I
4/2/01 $10,000 $10,000
$10,585 $10,588
$ 9,032 $ 9,019
12/01 $ 9,997 $ 9,598
$10,024 $ 9,436
$ 8,682 $ 8,138
$ 7,183 $ 6,675
12/02 $ 7,788 $ 7,180
$ 7,543 $ 7,067
$ 8,704 $ 8,114
$ 8,934 $ 8,227
12/03 $10,021 $ 9,091
$10,191 $ 9,174
$10,366 $ 9,178
$10,172 $ 8,940
12/04 $11,111 $ 9,784
$10,872 $ 9,492
$11,021 $ 9,590
$11,418 $10,355
12/05 $11,656 $10,780
$12,146 $11,357
$11,971 $11,105
$12,649 $11,126
12/06 $13,495 $11,829
$13,582 $12,112
$14,434 $12,999
$14,727 $13,987
10/07 $14,961 $14,818
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
HSBC Investor Growth and
Standard & Poor's 500 Index Income Fund Class A(1)
4/12/01 $10,000 $ 9,498
$10,585 $ 9,730
$ 9,032 $ 8,277
12/01 $ 9,997 $ 8,811
$10,024 $ 8,653
$ 8,682 $ 7,459
$ 7,183 $ 6,117
12/02 $ 7,788 $ 6,575
$ 7,543 $ 6,462
$ 8,704 $ 7,423
$ 8,934 $ 7,517
12/03 $10,021 $ 8,299
$10,191 $ 8,365
$10,366 $ 8,377
$10,172 $ 8,150
12/04 $11,111 $ 8,922
$10,872 $ 8,646
$11,021 $ 8,733
$11,418 $ 9,419
12/05 $11,656 $ 9,801
$12,146 $10,316
$11,971 $10,077
$12,649 $10,096
12/06 $13,495 $10,726
$13,582 $10,983
$14,434 $11,775
$14,727 $12,664
10/07 $14,961 $13,409
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 (%)(5)
- ----------------------------------------------------------------------------------------------------------
INCEPTION 1 5 SINCE
AS OF OCTOBER 31, 2007 DATE YEAR YEAR INCEPTION GROSS NET
- ----------------------------------------------------------------------------------------------------------
HSBC Investor Growth and Income Fund Class A(1) 4/12/01 21.66 13.63 4.58 1.47 1.20
- ----------------------------------------------------------------------------------------------------------
HSBC Investor Growth and Income Fund Class B(2) 4/5/01 23.19 13.97 5.13 2.22 1.95
- ----------------------------------------------------------------------------------------------------------
HSBC Investor Growth and Income Fund Class C(3) 11/3/03 26.15 -- 13.20 2.22 1.95
- ----------------------------------------------------------------------------------------------------------
HSBC Investor Growth and Income Fund Class I 4/2/01 28.46 15.10 6.16 1.22 0.95
- ----------------------------------------------------------------------------------------------------------
Standard & Poor's 500 Index(4) -- 14.55 13.87 N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------
Lipper Large-Cap Core Funds Average(4) -- 14.56 12.58 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.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 5.00%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
(5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY
28, 2007.
The Fund is measured against the Standard & Poor's 500 Index, an unmanaged index
that is generally representative of the U.S. stock market as a whole. The
performance of the index does not reflect the deduction of expenses associated
with a mutual fund, such as investment management and fund accounting fees. The
Fund's performance reflects the deduction of fees for these value-added
services. Investors cannot invest directly in an index.
HSBC INVESTOR FAMILY OF FUNDS 14
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERNATIONAL EQUITY FUND
HSBC INVESTOR OVERSEAS EQUITY FUND (ADVISOR, CLASS A SHARES, B SHARES, AND
C SHARES)
BY KEVIN F. SIMMS
CO-CIO INTERNATIONAL VALUE EQUITIES AND DIRECTOR OF RESEARCH - GLOBAL AND
INTERNATIONAL VALUE EQUITIES ALLIANCEBERNSTEIN INVESTMENT RESEARCH AND
MANAGEMENT
The HSBC Investor International Equity Fund and the HSBC Investor Overseas
Equity Fund (the "Funds") seek to provide their shareholders with long-term
growth of capital and future income by investing primarily in securities of
non-U.S. issuers and securities of issuers whose principal markets are outside
of the United States. The Funds employ a two-tier fund structure, known as
"master-feeder," in which the Funds invest all of their investable assets in the
HSBC Investor International Equity Portfolio (the "Portfolio"). The Portfolio
employs AllianceBernstein 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
For the 12-month period ended October 31, 2007, the Advisor shares of the HSBC
Investor International Equity Fund produced a 25.41% return and the Class A
Shares of the HSBC Investor Overseas Equity Fund returned 24.19% (without sales
charge). That compared to a total return of 25.43% and 26.23% for the Funds'
benchmarks, the MSCI EAFE Index(1) and the Lipper International Large-Cap Core
Funds Average(1).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
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.
15 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERNATIONAL EQUITY FUND
HSBC INVESTOR OVERSEAS EQUITY FUND - AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH]
HSBC Investor International
MSCI EAFE Index Equity Fund (Advisor)
10/97 $ 10,000 $ 10,000
12/97 $ 99,89 $ 9,935
$ 11,466 $ 11,514
$ 11,595 $ 11,318
$ 99,55 $ 9,528
12/98 $ 12,020 $ 11,170
$ 11,987 $ 12,136
$ 12,514 $ 13,437
$ 13,072 $ 14,599
12/99 $ 15,301 $ 19,102
$ 15,294 $ 19,800
$ 14,697 $ 18,779
$ 13,520 $ 16,528
12/00 $ 13,166 $ 15,349
$ 11,368 $ 13,574
$ 11,269 $ 13,574
$ 9,697 $ 11,291
12/01 $ 10,374 $ 12,667
$ 10,481 $ 12,762
$ 10,231 $ 12,133
$ 8,217 $ 9,493
12/02 $ 8,750 $ 10,340
$ 8,038 $ 9,341
$ 9,611 $ 10,971
$ 10,398 $ 11,592
12/03 $ 12,176 $ 13,376
$ 12,713 $ 13,915
$ 12,768 $ 13,995
$ 12,739 $ 14,480
12/04 $ 14,697 $ 16,549
$ 14,682 $ 16,661
$ 14,572 $ 16,438
$ 16,093 $ 18,506
12/05 $ 16,756 $ 19,256
$ 18,344 $ 21,670
$ 18,516 $ 21,606
$ 19,254 $ 22,631
12/06 $ 21,257 $ 25,261
$ 22,138 $ 26,046
$ 23,615 $ 28,399
$ 24,142 $ 28,744
10/07 $ 25,093 $ 29,600
[LINE GRAPH]
HSBC Investor Overseas Equity
MSCI EAFE Index Fund Class A(1)
10/97 $ 10,000 $ 9,499
12/97 $ 9,989 $ 9,444
$ 11,466 $ 10,908
$ 11,595 $ 10,700
$ 9,955 $ 8,978
12/98 $ 12,020 $ 10,441
$ 11,987 $ 11,308
$ 12,514 $ 12,491
$ 13,072 $ 13,524
12/99 $ 15,301 $ 17,615
$ 15,294 $ 18,189
$ 14,697 $ 17,270
$ 13,520 $ 15,170
12/00 $ 13,166 $ 14,060
$ 11,368 $ 12,409
$ 11,269 $ 12,382
$ 9,697 $ 10,289
12/01 $ 10,374 $ 11,523
$ 10,481 $ 11,599
$ 10,231 $ 11036
$ 8,217 $ 8,737
12/02 $ 8,750 $ 9,514
$ 8,038 $ 8,521
$ 9,611 $ 9,870
$ 10,398 $ 10,593
12/03 $ 12,176 $ 12,213
$ 12,713 $ 12,687
$ 12,768 $ 12,745
$ 12,739 $ 13,160
12/04 $ 14,697 $ 15,009
$ 14,682 $ 15,092
$ 14,572 $ 14,855
$ 16,093 $ 16,694
12/05 $ 16,756 $ 17,331
$ 18,344 $ 19,482
$ 18,516 $ 19,381
$ 19,254 $ 20,266
12/06 $ 21,257 $ 22,576
$ 22,138 $ 23,191
$ 23,615 $ 25,214
$ 24,142 $ 25,483
10/07 $ 25,093 $ 26,226
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.
- --------------------------------------------------------------------------------------------------------------------------------
EXPENSE
FUND PERFORMANCE AVERAGE ANNUAL TOTAL RETURN (%) RATIO (%)(5)
- --------------------------------------------------------------------------------------------------------------------------------
INCEPTION 1 5 10 SINCE
AS OF OCTOBER 31, 2007 DATE YEAR YEAR YEAR INCEPTION GROSS NET
- --------------------------------------------------------------------------------------------------------------------------------
HSBC Investor International Equity Fund (Advisor) 1/9/95 25.41 23.68 11.46 11.93 0.97 0.97
- --------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Overseas Equity Fund Class A(1) 8/26/96 17.99 21.49 10.12 10.44 1.67 1.67
- --------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Overseas Equity Fund Class B(2) 1/6/98 19.26 21.82 -- 10.34 2.42 2.42
- --------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Overseas Equity Fund Class C(3) 11/4/98 22.39 21.85 -- 10.66 2.42 2.42
- --------------------------------------------------------------------------------------------------------------------------------
MSCI EAFE Index(4) -- 25.43 23.71 9.64 N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
Lipper International Large-Cap Core Average(4) -- 26.23 20.94 8.40 N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING
THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE
PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD
HAVE BEEN LOWER.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 5.00%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
(5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY
28, 2007.
The Fund is measured against the Morgan Stanley Capital International ("MSCI")
Europe, Australasia and Far East ("EAFE") Index, an unmanaged index that
measures performance of a diverse range of developed countries in the indicated
regions. The performance of the index does not reflect the deduction of expenses
associated with a mutual fund, such as investment management and fund accounting
fees. The Funds' performance reflects the deduction of fees for these
value-added services. Investors cannot invest directly in an index.
HSBC INVESTOR FAMILY OF FUNDS 16
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR MID-CAP FUND
(CLASS A SHARES, B SHARES, C SHARES AND TRUST SHARES)
BY TONY Y. DONG, CFA, DIRECTOR, MID-CAP EQUITY AND SENIOR PORTFOLIO MANAGER AND
BRIAN S. MATUSZAK, CFA, SENIOR EQUITY ANALYST AND
ANDY Y. MUI, CPA, SENIOR EQUITY ANALYST
MUNDER CAPITAL MANAGEMENT
The HSBC Investor Mid-Cap Fund (the "Fund") seeks to achieve its objective by
investing in common or preferred stocks and convertible securities. The Fund
will normally invest at least 80% of its assets in equity securities of
mid-sized companies with market capitalizations falling within the range of the
S&P MidCap 400 Index (between $600 million and $12 billion as of January 31,
2007) at the time of acquisition. Investments are primarily in domestic common
stocks but also may include, to a limited degree, preferred stocks, and
convertible securities. The Portfolio employs Munder Capital Management
("Munder") as sub-investment adviser.
INVESTMENT CONCERNS
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes.
Mid capitalization funds typically carry additional risks since smaller
companies generally have a higher risk of failure, and historically, their
stocks have experienced a greater degree of market volatility than stocks on
average.
MARKET COMMENTARY
The Fund's Class A Shares posted a return of 30.51% (without sales charge) and
30.80 % for the Trust Shares for the 12-month period ended October 31, 2007.
That compares to 17.02% and 26.07% for the Fund's benchmarks, the S&P MidCap 400
Index(1) and the Lipper Mid-Cap Growth Funds Average(1).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
Stock selection was the most prominent driver of strong absolute returns. The
Fund produced double-digit gains in eight of the ten economic sectors
represented in the index, while approximately 60% of the stocks in the portfolio
generated double- or triple-digit gains. Mid-cap growth stocks performed
especially well during this period. Investors moved up the market cap scale from
more economically sensitive small cap stocks in favor of shares of somewhat
larger companies that could produce above-average earnings in a weakening
economy.*
Stock selection was also key in helping the Fund outperform the benchmark index.
Selection was beneficial across most sectors. For example, shares of a
video-game retailer, a bank, an energy services and equipment provider and an
engineering and construction firm all tripled in value during the 12-month
period. Likewise, the stock of an online advertising firm, a digital mapping
company, a utilities software enterprise and a medical devices maker tripled as
well. A larger-than-benchmark position in industrials and an underweight stake
in financials also boosted relative performance.*
Stock selection within the consumer staples sector represented the largest drag
on relative performance, as two of the four consumer staples stocks in the
portfolio posted negative returns. Losses of those two stocks reduced the Fund's
relative gain by only 0.74 percentage points.*
* Portfolio composition is subject to change.
(1) For additional information, please refer to the Glossary of Terms.
17 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR MID-CAP FUND - AS OF OCTOBER 31, 2007
[LINE GRAPH]
HSBC Investor Mid-Cap HSBC Investor Mid-Cap
S&P MidCap 400 Index Fund Trust Fund Class A(1)
10/97 $ 10,000 $ 10,000 $ 9,507
12/97 $ 10,542 $ 10,270 $ 9,762
$ 11,703 $ 11,259 $ 10,697
$ 11,452 $ 11,511 $ 10,935
$ 9,796 $ 9,406 $ 8,929
12/98 $ 12,557 $ 11,241 $ 10,663
$ 12,068 $ 11,727 $ 11,122
$ 13,420 $ 13,147 $ 12,449
$ 12,293 $ 12,230 $ 11,599
12/99 $ 14,406 $ 15,558 $ 14,728
$ 16,233 $ 18,363 $ 17,381
$ 15,698 $ 17,986 $ 17,007
$ 17,605 $ 19,209 $ 18,146
12/00 $ 16,927 $ 172,89 $ 16,331
$ 15,104 $ 15,756 $ 14,881
$ 17,091 $ 17,417 $ 16,452
$ 14,260 $ 14,259 $ 13,448
12/01 $ 16,825 $ 15,683 $ 14,795
$ 17,956 $ 15,610 $ 14,708
$ 16,285 $ 13,419 $ 12,637
$ 13,591 $ 11,009 $ 10,358
12/02 $ 14,383 $ 11,447 $ 10,772
$ 13,746 $ 11,173 $ 10,496
$ 16,169 $ 12,871 $ 12,084
$ 17,234 $ 13,455 $ 12,637
12/03 $ 19,507 $ 15,117 $ 14,191
$ 20,495 $ 15,646 $ 14,674
$ 20,694 $ 15,883 $ 14,898
$ 20,259 $ 15,135 $ 14,173
12/04 $ 22,722 $ 17,271 $ 16,176
$ 22,632 $ 17,034 $ 15,951
$ 23,597 $ 18,074 $ 16,918
$ 24,748 $ 18,987 $ 17,764
12/05 $ 25,575 $ 19,087 $ 17,841
$ 27,526 $ 21,156 $ 19,760
$ 26,660 $ 20,283 $ 18,953
$ 26,372 $ 20,076 $ 18,735
12/06 $ 28,214 $ 21,423 $ 19,992
$ 29,850 $ 22,630 $ 21,091
$ 31,594 $ 25,215 $ 23,476
$ 31,319 $ 26,052 $ 24,248
10/07 $ 32,143 $ 27,161 $ 25,277
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.
- --------------------------------------------------------------------------------------------------------------------------------
EXPENSE
FUND PERFORMANCE AVERAGE ANNUAL TOTAL RETURN+ (%) RATIO (%)(5)
- --------------------------------------------------------------------------------------------------------------------------------
INCEPTION 1 5 10 SINCE
AS OF OCTOBER 31, 2007 DATE YEAR YEAR YEAR INCEPTION GROSS NET
- --------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund Class A(1) 7/1/93 23.95 17.17 9.72 12.02 1.85 1.35
- --------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund Class B(2) 7/1/93 25.56 17.48 9.45 11.67 2.60 2.10
- --------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund Class C(3) 7/1/93 28.40 17.59 9.52 11.64 2.60 2.10
- --------------------------------------------------------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund Trust 7/1/93 30.80 18.64 10.51 12.70 1.60 1.10
- --------------------------------------------------------------------------------------------------------------------------------
S&P MidCap 400 Index(4) -- 17.02 17.78 12.39 N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap Growth Funds Average(4) -- 26.07 17.33 8.39 N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING
THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE
PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD
HAVE BEEN LOWER.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 5.00%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
(5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY
28, 2007.
+ For periods prior to July 1, 2000, the performance shown above includes
the total return (adjusted for Fund expenses) generated by HSBC
Investments (USA) Inc's management of a pooled investment vehicle called a
collective investment trust (CTF) with the same investment objective as
the Fund. The assets from that CTF were converted into the HSBC Investor
Mid-Cap Fund on July 1, 2000. The CTF was not registered with the
Securities & Exchange Commission (SEC) and thus was not subject to certain
investment restrictions that are imposed on the Fund. If the CTF had been
registered with the SEC, its performance might have been adversely
affected. Performance assumes reinvestment of dividends and distributions.
The S&P MidCap 400 Index is an unmanaged index comprised of 400 domestic stocks
chosen for market size (median market capitalization of $676 million), liquidity
and industry group representation. The performance of the index does not reflect
the deduction of expenses associated with a mutual fund, such as investment
management and fund accounting fees. The Fund's performance reflects the
deduction of fees for these value-added services. Investors cannot invest
directly in an index.
HSBC INVESTOR FAMILY OF FUNDS 18
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR OPPORTUNITY FUND (FORMERLY KNOWN AS SMALL CAP EQUITY FUND)
(ADVISOR, CLASS A SHARES, B SHARES AND C SHARES)
BY WILLIAM A. MUGGIA
PRESIDENT-CHIEF INVESTMENT OFFICER
WESTFIELD CAPITAL MANAGEMENT
The HSBC Investor Opportunity Fund ("the Fund") seeks to provide its
shareholders with long-term growth of capital by investing in equity securities
of emerging small and medium-sized companies expected to deliver earnings growth
well above the growth rate of the economy and the rate of inflation. The Funds
employ a two-tier structure, commonly referred to as "master-feeder." The Fund
invest all of its investable assets in the HSBC Investor Small Cap Equity
Portfolio (the "Portfolio"). The Portfolio employs Westfield Capital Management
Company, LLC as sub-investment adviser.
The Portfolio invests primarily in common stocks of small and medium-sized
companies that may have the potential to become major enterprises.
INVESTMENT CONCERNS
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the portfolio changes.
Small-capitalization funds typically carry additional risks since smaller
companies generally have a higher risk of failure, and historically, their
stocks have experienced a greater degree of market volatility than stocks on
average.
MARKET COMMENTARY
For the 12-month period ended October 31, 2007, the Advisor shares of the HSBC
Investor Opportunity Fund produced a 29.42% return and the Class A Shares of the
Fund produced a 30.28% return (without sales charge). The Funds' benchmarks, the
Russell 2500(R) Growth Index(1) and the Lipper Mid-Cap Growth Funds Average(1),
returned 20.36% and 26.07%, respectively.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
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.
19 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR OPPORTUNITY FUND - AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH]
HSBC Investor
Russell 2500(R) Opportunity Fund
Growth Index (Advisor)
10/97 $10,000 $10,000
12/97 $ 9,812 $ 9,865
$10,905 $11,357
$10,373 $11,357
$ 8,070 $ 9,081
12/98 $10,116 $11,189
$10,408 $10,230
$11,691 $11,959
$11,286 $11,303
12/99 $15,728 $16,582
$18,110 $18,500
$16,859 $18,521
$16,363 $18,990
12/00 $13,197 $17,417
$10,569 $15,005
$12,817 $17,796
$ 9,347 $13,401
12/01 $11,767 $17,190
$11,420 $16,836
$ 9,521 $13,742
$ 7,706 $11,393
12/02 $ 8,344 $11,494
$ 8,077 $11,203
$ 9,912 $13,578
$10,900 $14,613
12/03 $12,208 $15,990
$12,880 $16,634
$12,897 $16,660
$12,174 $15,864
12/04 $13,989 $17,897
$13,384 $17,316
$13,860 $18,163
$14,732 $19,943
12/05 $15,133 $20,222
$16,922 $22,517
$15,886 $21,708
$15,695 $21,787
12/06 $16,989 $23,201
$17,674 $24,340
$18,909 $26,942
$19,033 $27,419
10/07 $19,821 $29,159
[LINE GRAPH]
HSBC Investor
Russell 2500(R) Opportunity Fund
Growth Index Class A (1)
10/97 $10,000 $ 9,501
12/97 $ 9,812 $ 9,360
$10,905 $10,765
$10,373 $10,765
$ 8,070 $ 8,593
12/98 $10,116 $10,574
$10,408 $ 9,647
$11,691 $11,262
$11,286 $10,625
12/99 $15,728 $15,551
$18,110 $17,316
$16,859 $17,353
$16,363 $17,760
12/00 $13,197 $16,218
$10,569 $13,944
$12,817 $16,507
$ 93,47 $12,415
12/01 $11,767 $15,901
$11,420 $15,556
$ 9,521 $12,677
$ 7,706 $10,513
12/02 $ 8,344 $10,596
$ 8,077 $10,293
$ 9,912 $12,442
$10,900 $13,379
12/03 $12,208 $14,606
$12,880 $15,184
$12,897 $15,198
$12,174 $14,454
12/04 $13,989 $16,273
$13,384 $15,722
$13,860 $16,466
$14,732 $18,064
12/05 $15,133 $18,282
$16,922 $20,340
$15,886 $19,574
$15,695 $19,616
12/06 $16,989 $20,870
$17,674 $21,869
$18,909 $24,445
$19,033 $24,848
10/07 $19,821 $26,426
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.
- ------------------------------------------------------------------------------------------------------------
EXPENSE
FUND PERFORMANCE AVERAGE ANNUAL TOTAL RETURN (%) RATIO (%) (5)
- ------------------------------------------------------------------------------------------------------------
INCEPTION 1 5 10 SINCE
AS OF OCTOBER 31, 2007 DATE YEAR YEAR YEAR INCEPTION GROSS NET
- ------------------------------------------------------------------------------------------------------------
HSBC Investor Opportunity Fund (Advisor) 9/3/96 29.42 20.02 11.30 13.08 1.03 1.03
- ------------------------------------------------------------------------------------------------------------
HSBC Investor Opportunity Fund Class A (1) 9/23/96 23.79 18.41 10.21 11.26 1.70 1.65
- ------------------------------------------------------------------------------------------------------------
HSBC Investor Opportunity Fund Class B (2) 1/6/98 25.30 18.68 -- 10.76 2.45 2.40
- ------------------------------------------------------------------------------------------------------------
HSBC Investor Opportunity Fund Class C (3) 11/4/98 28.32 18.72 -- 11.62 2.45 2.40
- ------------------------------------------------------------------------------------------------------------
Russell 2500(R) Growth Index (4) -- 20.36 19.45 7.08 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap Growth Funds Average(4) -- 26.07 17.33 8.39 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING
THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE
PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD
HAVE BEEN LOWER. CURRENTLY, CONTRACTUAL FEE WAIVERS ARE IN EFFECT FROM MARCH 1,
2007 THROUGH MARCH 1, 2008.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 5.00%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
(5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY
28, 2007.
The Fund is measured against the Russell 2500(R) Growth Index, an unmanaged
index that tracks the performance of 2500 securities found in the Russell
Universe(4) with higher price-to-book and higher forecasted growth values. The
performance for the index does not reflect the deduction of expenses associated
with a mutual fund, such as investment management and fund accounting fees. The
Fund's performance reflects the deduction of fees for these value-added
services. Investors cannot invest directly in an index.
HSBC INVESTOR FAMILY OF FUNDS 20
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR VALUE FUND
(CLASS A SHARES, B SHARES, C SHARES AND I SHARES)
BY JON D. BOSSE, CFA
CHIEF INVESTMENT OFFICER
NWQ INVESTMENT MANAGEMENT CO., LLC
The HSBC Investor Value Fund (the "Fund") seeks long-term growth of capital and
income by investing primarily in U.S. and foreign companies with large and
medium capitalizations that possess hidden opportunities underpriced by the
market. The Fund utilizes a two tier structure, commonly known as a
"master-feeder" and invests all of its assets in the HSBC Investor Value
Portfolio (the "Portfolio"), which acts as the master fund. The Portfolio
employs NWQ Investment Management Company, LLC ("NWQ") as sub-adviser.
INVESTMENT CONCERNS
Value-based investments are subject to the risk that the broad market may not
recognize their intrinsic value.
Equity securities (stocks) are more volatile and carry more risk than other
forms of investments, including investments in high-grade fixed income
securities. The net asset value per share of this Fund will fluctuate as the
value of the securities in the Portfolio changes.
MARKET COMMENTARY
The Fund returned 9.77% (without sales charge) for the Class A Shares and 10.04%
for the Class I Shares for the 12-month period ended October 31, 2007. That
compared to a 10.83% return for the Russell 1000(R) Value Index(1) and a 10.94%
return for the Lipper Multi-Cap Value Funds Average(1).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
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.
21 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
HSBC INVESTOR VALUE FUND - AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
VALUE OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[LINE GRAPH]
HSBC Investor
Russell 1000(R) Value Fund
Value Index Class I
5/10/04 $10,000 $10,000
$10,341 $10,774
$10,500 $10,819
12/04 $11,590 $11,697
$11,600 $11,519
$11,794 $11,894
$12,253 $12,660
12/05 $12,408 $13,026
$13,144 $13,617
$13,221 $13,856
$14,044 $14,530
12/06 $15,168 $15,502
$15,356 $15,821
$16,112 $16,814
$16,073 $16,454
10/07 $16,075 $16,524
[LINE GRAPH]
HSBC Investor
Russell 1000(R) Value Fund
Value Index Class A (1)
5/10/04 $10,000 $ 9,501
$10,341 $10,226
$10,500 $10,262
12/04 $11,590 $11,088
$11,600 $10,911
$11,794 $11,261
$12,253 $11,985
12/05 $12,408 $12,322
$13,144 $12,871
$13,221 $13,089
$14,044 $13,716
12/06 $15,168 $14,624
$15,356 $14,906
$16,112 $15,841
$16,073 $15,493
10/07 $16,075 $15,558
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 (%) (5)
- ---------------------------------------------------------------------------------------------------
INCEPTION 1 3 SINCE
AS OF OCTOBER 31, 2007 DATE YEAR YEAR INCEPTION GROSS NET
- ---------------------------------------------------------------------------------------------------
HSBC Investor Value Fund Class A (1) 5/10/04 4.28 13.34 13.56 1.43 1.20
- ---------------------------------------------------------------------------------------------------
HSBC Investor Value Fund Class B (2) 5/10/04 4.98 13.88 14.17 2.18 1.95
- ---------------------------------------------------------------------------------------------------
HSBC Investor Value Fund Class C (3) 5/10/04 7.97 14.41 14.37 2.18 1.95
- ---------------------------------------------------------------------------------------------------
HSBC Investor Value Fund Class I 5/10/04 10.04 15.53 15.54 1.18 0.95
- ---------------------------------------------------------------------------------------------------
Russell 1000(R) Value Index (4) -- 10.83 14.62 N/A N/A N/A
- ---------------------------------------------------------------------------------------------------
Lipper Multi-Cap Value Funds Average (4) -- 10.94 13.37 N/A N/A N/A
- ---------------------------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS AND DO NOT REFLECT THE TAXES THAT A SHAREHOLDER WOULD PAY ON FUND
DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. THE INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL COST. TO OBTAIN PERFORMANCE INFORMATION
CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 1-800-782-8183.
THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING
THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE
PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD
HAVE BEEN LOWER. CURRENTLY, CONTRACTUAL FEE WAIVERS ARE IN EFFECT FROM MARCH 1,
2007 THROUGH MARCH 1, 2008.
(1) REFLECTS THE MAXIMUM SALES CHARGE OF 5.00%.
(2) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 4.00%.
(3) REFLECTS THE CONTINGENT DEFERRED SALES CHARGE, MAXIMUM OF 1.00%.
(4) FOR ADDITIONAL INFORMATION, PLEASE REFER TO THE GLOSSARY OF TERMS.
(5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY
28, 2007.
The Fund is measured against the Russell 1000(R) Value Index, an unmanaged index
comprised of the 1000 securities found in the Russell Universe(4) with a
less-than-average growth orientation. Companies in this index generally have low
price-to-book and price-to-earning ratios, higher dividend yields, and lower
forecasted growth values. The performance of the index does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management and fund accounting fees. The Fund's performance reflects the
deduction of fees for these value-added services. Investors cannot invest
directly in an index.
HSBC INVESTOR FAMILY OF FUNDS 22
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION*
OCTOBER 31, 2007
- --------------------------------------------------------------------------------
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 Bonds 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 Bonds 4.4%
- --------------------------------------------------------------------------------
Cash and Equivalents 1.0%
- --------------------------------------------------------------------------------
Total 100.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Municipal Bonds 98.6%
- --------------------------------------------------------------------------------
Cash and Equivalents 1.4%
- --------------------------------------------------------------------------------
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 INVESTOR GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Information Technology 24.2%
- --------------------------------------------------------------------------------
Industrials 22.0%
- --------------------------------------------------------------------------------
Consumer Discretionary 21.5%
- --------------------------------------------------------------------------------
Financials 14.7%
- --------------------------------------------------------------------------------
Materials 6.3%
- --------------------------------------------------------------------------------
Energy 4.1%
- --------------------------------------------------------------------------------
Consumer Staples 3.4%
- --------------------------------------------------------------------------------
Telecommunications 2.6%
- --------------------------------------------------------------------------------
Health Care 1.1%
- --------------------------------------------------------------------------------
Cash and Equivalents 0.1%
- --------------------------------------------------------------------------------
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%
- --------------------------------------------------------------------------------
* Portfolio composition is subject to change.
23 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION*
OCTOBER 31, 2007
- --------------------------------------------------------------------------------
HSBC INVESTOR MID-CAP FUND
- --------------------------------------------------------------------------------
INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE
- --------------------------------------------------------------------------------
Industrials 17.8%
- --------------------------------------------------------------------------------
Information Technology 14.9%
- --------------------------------------------------------------------------------
Consumer Discretionary 14.0%
- --------------------------------------------------------------------------------
Financials 13.9%
- --------------------------------------------------------------------------------
Health Care 10.4%
- --------------------------------------------------------------------------------
Materials 7.3%
- --------------------------------------------------------------------------------
Energy 6.6%
- --------------------------------------------------------------------------------
Utilities 5.8%
- --------------------------------------------------------------------------------
Consumer Staples 3.3%
- --------------------------------------------------------------------------------
Business Services 2.4%
- --------------------------------------------------------------------------------
Cash & Equivalents 2.3%
- --------------------------------------------------------------------------------
Telecommunications 1.3%
- --------------------------------------------------------------------------------
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 24
- --------------------------------------------------------------------------------
HSBC INVESTOR NEW YORK TAX - FREE BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - 97.4%
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT($) VALUE($)
------------- ------------
NEW YORK - 85.9%
Buffalo, New York Fiscal Stability
Authority Sales Tax & State Aid
Revenue, 5.25%, 8/15/13, (MBIA
Insured) .................................... 500,000 542,195
Long Island Power Authority
Electrical Systems Revenue,
5.00%, 12/1/22, Callable 12/1/16 @ 100 ...... 500,000 526,455
Metropolitan Transportation
Authority Revenue
5.25%, 11/15/11 ............................. 1,000,000 1,064,590
5.75%, 7/1/13, Escrowed to
Maturity .................................... 285,000 303,328
5.50%, 1/1/19, (MBIA Insured),
Callable 7/1/12 @ 100 ....................... 480,000 516,269
5.50%, 11/15/19, (FGIC Insured) ............. 1,000,000 1,131,960
5.00%, 11/15/32, (FSA Insured),
Callable 11/15/12 @ 100 ..................... 1,625,000 1,669,622
Monroe County Airport Authority
Revenue
5.63%, 1/1/10, AMT, (MBIA Insured) .......... 1,240,000 1,288,930
5.75%, 1/1/14, AMT, (MBIA Insured) .......... 750,000 820,200
New York City GO
5.25%, 8/1/11 ............................... 1,000,000 1,057,340
5.00%, 8/1/14 ............................... 200,000 214,136
5.00%, 8/1/15 ............................... 325,000 348,852
5.00%, 8/1/16, (Credit Support
MBIA), Callable 8/1/15 @ 100 ................ 500,000 537,770
5.00%, 8/1/17 ............................... 500,000 535,755
New York City Housing
Development Corp. Revenue,
5.60%, 11/1/19, AMT, Callable
11/1/09 @ 101 ............................... 100,000 103,159
New York City IDA Civic Facility
Revenue, USTA National Tennis
Center, 5.00%, 11/15/19, (FSA
Insured), Callable 5/1/13 @ 100 ............. 1,000,000 1,053,290
New York City IDA Revenue,
Queens Baseball Stadium, 5.00%,
1/1/18, (AMBAC Insured),
Callable 1/1/17 @ 100 ....................... 550,000 590,959
New York City IDA Special Facility
Revenue, Terminal One Group
Association, 5.00%, 1/1/09, AMT ............. 1,000,000 1,012,030
New York City Municipal Water
Finance Authority
5.00%, 6/15/34, Callable 6/15/13
@ 100 ....................................... 1,250,000 1,277,875
5.00%, 6/15/36, Callable 12/15/14
@ 100 ....................................... 1,000,000 1,026,450
New York City Transitional Finance
Authority Building Aid Revenue
5.00%, 7/15/18, (FGIC Insured),
Callable 1/15/17 @ 100 ...................... 550,000 591,756
5.00%, 7/15/36, (FGIC Insured),
Callable 1/15/17 @ 100 ...................... 1,000,000 1,036,520
New York City Transitional Finance
Authority Revenue
5.25%, 5/1/17, Callable 5/1/11 @ 100 ........ 400,000 420,852
5.25%, 2/1/29, Callable 2/1/11 @ 100 ........ 1,540,000 1,614,782
- --------------------------------------------------------------------------------
MUNICIPAL BONDS, CONTINUED
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT($) VALUE($)
------------- ------------
NEW YORK, CONTINUED
New York State Dormitory Authority
Revenue, Cooper Union, 6.00%,
7/1/19, (MBIA Insured), Callable
7/1/09 @ 101 ................................ 350,000 367,679
New York State Dormitory Authority
Revenue, Department of Health, 5.25%,
7/1/16, Callable 7/1/14 @ 100 ............... 500,000 536,530
New York State Dormitory Authority
Revenue, Department of Mental
Hygiene, 5.50%, 8/15/17,
Callable 12/7/07 @ 102 ...................... 125,000 127,466
New York State Dormitory Authority
Revenue, Fashion Institute, 5.25%,
7/1/22, (FGIC Insured) ...................... 1,250,000 1,386,762
New York State Dormitory Authority
Revenue, Master Boces PG, 5.25%,
8/15/19, (FSA Insured),
Callable 8/15/12 @ 100 ...................... 1,000,000 1,062,430
New York State Dormitory Authority
Revenue, Mental Health
6.50%, 8/15/11 .............................. 225,000 247,568
5.00%, 2/15/15, (FGIC Insured) .............. 1,245,000 1,335,412
New York State Dormitory Authority
Revenue, New York Presbyterian
Hospital, 5.50%, 8/1/10, (AMBAC
Insured) .................................... 750,000 788,153
New York State Dormitory Authority
Revenue, New York University, 5.50%,
7/1/18, (AMBAC Insured) ..................... 500,000 563,185
New York State Dormitory Authority
Revenue, NYSARC, Inc., 5.25%,
7/1/18, (FSA Insured), Callable
7/1/12 @ 101 ................................ 1,460,000 1,561,280
New York State Dormitory Authority
Revenue, Rockefeller University, 5.25%,
7/1/13, Callable 7/1/08 @ 101 ............... 500,000 510,575
New York State Dormitory Authority
Revenue, Sloan Kettering Institute,
5.50%, 7/1/23, (MBIA Insured) ............... 1,300,000 1,446,497
New York State Dormitory Authority
Revenue, St. Johns University, 5.00%,
7/1/24, (MBIA Insured), Callable
7/1/17 @ 100 ................................ 1,000,000 1,057,260
New York State Dormitory Authority
Revenue, State Personal Income Tax
Revenue, 5.00%, 3/15/23, Callable
3/15/15 @ 100 ............................... 1,000,000 1,048,280
New York State Dormitory Authority
Revenue, University of Rochester, 5.00%,
7/1/22, Callable 1/1/17 @100 ................ 500,000 527,030
New York State Environmental Facilities Corp.
5.70%, 1/15/14, Callable 7/15/09 @ 101 ...... 415,000 433,592
5.70%, 1/15/14 .............................. 15,000 15,713
New York State Environmental Facilities Corp.
State Personal Income Tax Revenue,
5.00%, 12/15/16 ............................. 500,000 543,495
New York State Mortgage Agency Revenue,
5.60%, 10/1/14, AMT, Callable
11/23/07 @ 102 .............................. 1,000,000 1,015,830
25 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR NEW YORK TAX - FREE BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS, CONTINUED
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT($) VALUE($)
------------- ------------
NEW YORK, CONTINUED
New York State Municipal Bond Bank
Revenue, 5.50%, 12/1/12 ..................... 850,000 923,644
New York State Thruway Authority
Revenue, Personal Income Tax
Revenue
5.00%, 3/15/13, (FSA Insured) ............... 645,000 688,273
5.00%, 3/15/19, (MBIA Insured),
Callable 3/15/13 @ 100 ...................... 1,400,000 1,471,162
5.50%, 3/15/20, Prerefunded 3/15/12 @ 100 ... 500,000 540,615
5.00%, 3/15/21, (MBIA Insured),
Callable 3/15/13 @ 100 ...................... 500,000 525,415
New York State Thruway Authority Revenue,
Second General Highway & Bridge
5.50%, 4/1/17, (FGIC Insured),
Callable 4/1/11 @ 101 ....................... 1,000,000 1,074,400
5.00%, 4/1/22, (MBIA Insured),
Callable 4/1/14 @ 100 ....................... 1,000,000 1,052,580
New York State Thruway Authority
Revenue, Service Contract Revenue,
5.50%, 4/1/11 ............................... 1,000,000 1,063,850
New York State Urban Development
Corp. Revenue
6.50%, 1/1/09, (MBIA Insured) ............... 500,000 517,380
5.75%, 4/1/12 ............................... 500,000 541,605
5.00%, 3/15/21, (FSA Insured),
Callable 3/15/15 @100 ....................... 1,000,000 1,054,930
5.13%, 1/1/22, Callable 7/1/14 @ 100 ........ 885,000 926,356
5.13%, 1/1/25, Prerefunded 1/1/11 @ 100 ..... 175,000 183,713
Onondaga County, Water Authority Revenue
5.00%, 9/15/14, (FSA Insured),
Callable 9/15/10 @ 101 ...................... 300,000 314,898
5.00%, 9/15/15, (FSA Insured),
Callable 9/15/10 @ 101 ...................... 665,000 697,093
Port Authority of New York &
New Jersey Revenue
5.00%, 9/1/27, Callable 9/1/13 @ 100 ........ 795,000 824,598
5.38%, 3/1/28 ............................... 1,100,000 1,230,350
Port Authority of New York & New Jersey
Special Obligation Revenue, 5.75%,
12/1/22, AMT, (MBIA Insured),
Callable 12/1/07 @ 102 ...................... 500,000 510,680
Suffolk County, New York GO
5.25%, 5/1/12, (FSA Insured) ................ 515,000 552,379
5.25%, 5/1/15, (FSA Insured) ................ 100,000 110,071
Syracuse Industrial Development Agency
Revenue, 5.00%, 1/1/36, AMT, (Credit
Support XLCA), Callable 1/1/17 @ 100 ........ 1,000,000 1,009,450
Tobacco Settlement Financing Corp.,
5.50%, 6/1/21, Callable 6/1/13 @ 100 ........ 1,000,000 1,067,650
Webster, Central School District GO, 5.00%,
6/15/14, (FSA Insured) ...................... 500,000 537,910
White Plains, New York, 5.00%, 5/15/17,
(MBIA Insured) .............................. 300,000 326,721
Yonkers, New York, 5.00%, 12/1/14,
(MBIA Insured) .............................. 750,000 808,402
------------
52,413,937
------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
------------- ------------
PUERTO RICO - 11.5%
Puerto Rico Commonwealth, Highway &
Transportation Authority Grant Antic Revenue
5.00%, 9/15/17, (MBIA Insured),
Callable 3/15/14 @ 100 ...................... 1,000,000 1,070,690
5.00%, 7/1/35, Prerefunded 7/1/15 @ 100 ..... 1,340,000 1,461,833
Puerto Rico Electric Power Authority Power
Revenue, 5.25%, 7/1/22, (MBIA Insured) ...... 1,000,000 1,112,890
Puerto Rico Municipal Finance Agency
Revenue, 5.00%, 8/1/12 ...................... 995,000 1,040,571
Puerto Rico Public Buildings Authority
Revenue Guaranteed, 5.25%, 7/1/33,
Callable 7/1/14 @ 100 ....................... 700,000 720,153
Puerto Rico Public Finance Corp. Revenue,
5.25%, 8/1/29, (MBIA Insured),
Callable 7/1/10 @ 101 ....................... 1,000,000 1,062,810
Puerto Rico Public Finance Corp.
Revenue, 5.38%, 6/1/18,
(AMBAC Insured) ............................. 500,000 562,970
------------
7,031,917
------------
TOTAL MUNICIPAL BONDS
(COST $57,791,224) .......................... 59,445,854
------------
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES - 1.4%
- --------------------------------------------------------------------------------
BlackRock Liquidity New York Money Fund
Portfolio Institutional Shares, 3.28% (a) ... 861,220 861,220
Northern Institutional Diversified Assets
Portfolio, Shares class, 4.80% (a) .......... 10,000 10,000
------------
TOTAL INVESTMENT COMPANIES
(COST $871,220) ............................. 871,220
------------
TOTAL INVESTMENTS
(COST $58,662,444) -- 98.8% ................. 60,317,074
============
- ----------
Percentages indicated are based on net assets of $61,029,554.
(a) The rates presented represent the annualized one day yield that was in
effect on October 31, 2007.
AMBAC -- American Municipal Bond Assurance Corp.
AMT -- Interest on security is subject to Federal Alternative Minimum Tax
FGIC -- Financial Guaranty Insurance Co.
FSA -- Financial Security Assurance
GO -- General Obligation
IDA -- Industrial Development Agency
MBIA -- Municipal Bond Insurance Association
XLCA -- XL Capital Assurance
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 26
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
COMMON STOCKS - 100.0%
- --------------------------------------------------------------------------------
SHARES VALUE($)
------------- ------------
ADVERTISING - 1.2%
Lamar Advertising Co. .......................... 12,000 641,520
------------
641,520
------------
AEROSPACE & DEFENSE - 4.1%
Boeing Co. ..................................... 10,500 1,035,195
United Technologies Corp. ...................... 14,500 1,110,555
------------
2,145,750
------------
AUTOMOTIVE & TRANSPORT - 10.7%
BorgWarner, Inc. ............................... 17,000 1,797,070
DaimlerChrysler AG ............................. 8,500 936,275
FedEx Corp. .................................... 2,500 258,350
Johnson Controls, Inc. ......................... 25,500 1,114,860
PACCAR, Inc. ................................... 27,000 1,500,120
------------
5,606,675
------------
CHEMICALS - 6.3%
Ecolab, Inc. ................................... 22,000 1,037,740
Monsanto Co. ................................... 17,000 1,659,710
Sigma-Aldrich Corp. ............................ 12,000 620,040
------------
3,317,490
------------
COMPUTER SOFTWARE - 6.4%
Electronic Arts, Inc. (a) ...................... 22,000 1,344,640
Intuit, Inc. (a) ............................... 16,000 514,720
Microsoft Corp. ................................ 34,000 1,251,540
Salesforce.com, Inc. (a) ....................... 4,900 276,213
------------
3,387,113
------------
COMPUTERS - 10.0%
Apple Computer, Inc. (a) ....................... 19,000 3,609,050
Hewlett-Packard Co. ............................ 16,000 826,880
Intel Corp. .................................... 31,000 833,900
------------
5,269,830
------------
CONSUMER PRODUCTS - 3.9%
Nike, Inc., Class B ............................ 22,000 1,457,720
PepsiCo, Inc. .................................. 8,000 589,760
------------
2,047,480
------------
DIVERSIFIED MANUFACTURING OPERATIONS - 16.3%
Caterpillar, Inc. .............................. 18,000 1,342,980
Donaldson Co., Inc. ............................ 17,500 750,050
Jacobs Engineering Group, Inc. (a) ............. 26,000 2,265,900
Kennametal, Inc. ............................... 15,600 1,422,876
Plum Creek Timber Co., Inc. .................... 20,700 924,669
Tyco Electronics Ltd. .......................... 19,000 677,730
W. W. Grainger, Inc. ........................... 13,000 1,168,960
------------
8,553,165
------------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 2.1%
NVIDIA Corp. (a) ............................... 14,000 495,320
Trimble Navigation Ltd. (a) .................... 14,000 583,800
------------
1,079,120
------------
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
------------- ------------
FINANCIAL SERVICES - 12.9%
American Express Co. ........................... 17,700 1,078,815
Ameriprise Financial, Inc. ..................... 18,000 1,133,640
BlackRock, Inc., Class A ....................... 2,790 577,390
CME Group, Inc. ................................ 2,700 1,798,875
JP Morgan Chase & Co. .......................... 10,000 470,000
T. Rowe Price Group, Inc. ...................... 14,000 899,360
The Charles Schwab Corp. ....................... 36,000 836,640
------------
6,794,720
------------
HEALTH CARE - 1.1%
Zimmer Holdings, Inc. (a) ...................... 8,500 590,665
------------
590,665
------------
HOTELS & LODGING - 2.9%
Host Hotels & Resorts, Inc. .................... 19,960 442,314
Las Vegas Sands Corp. (a) ...................... 8,300 1,104,564
------------
1,546,878
------------
INTERNET RELATED - 3.0%
Google, Inc., Class A (a) ...................... 2,250 1,590,750
------------
1,590,750
------------
MEDIA - 4.3%
McGraw-Hill Cos., Inc. ......................... 25,000 1,251,000
The Walt Disney Co. ............................ 29,000 1,004,270
------------
2,255,270
------------
MOTOR VEHICLES - 1.0%
Harley-Davidson, Inc. .......................... 10,500 540,750
------------
540,750
------------
OIL & GAS - 4.1%
Schlumberger Ltd. .............................. 11,000 1,062,270
Suncor Energy, Inc. ADR. ....................... 10,000 1,092,300
------------
2,154,570
------------
RESTAURANTS - 0.5%
Starbucks Corp. (a) ............................ 10,000 266,800
------------
266,800
------------
RETAIL - 3.7%
Nordstrom, Inc. ................................ 18,500 729,640
Walgreen Co. ................................... 17,000 674,050
Whole Foods Market, Inc. ....................... 10,400 515,216
------------
1,918,906
------------
TELECOMMUNICATIONS - 4.1%
QUALCOMM, Inc. ................................. 17,500 747,775
Verizon Communications, Inc. ................... 30,000 1,382,100
------------
2,129,875
------------
TRANSPORTATION - 1.4%
Expeditors International of Washington, Inc. ... 14,100 714,165
------------
714,165
------------
TOTAL COMMON STOCKS
(COST $34,876,971) .......................... 52,551,492
------------
27 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
- --------------------------------------------------------------------------------
INVESTMENT COMPANY - 0.1%
- --------------------------------------------------------------------------------
SHARES VALUE($)
------------- ------------
Northern Institutional Diversified
Assets Portfolio, Shares class, 4.80% (b) ... 33,830 33,830
------------
TOTAL INVESTMENT COMPANY
(COST $33,830) .............................. 33,830
------------
TOTAL INVESTMENTS
(COST $34,910,801) -- 100.1% ................ 52,585,322
============
- ----------
Percentages indicated are based on net assets of $52,556,144.
(a) Represents non-income producing security.
(b) The rates presented represent the annualized one day yield that was in
effect on October 31, 2007.
ADR--American Depositary Receipt
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 28
- --------------------------------------------------------------------------------
HSBC INVESTOR MID - CAP FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
COMMON STOCKS - 98.0%
- --------------------------------------------------------------------------------
SHARES VALUE($)
------------- ------------
ADVERTISING - 0.7%
Lamar Advertising Co. .......................... 4,350 232,551
------------
232,551
------------
AEROSPACE & DEFENSE - 2.2%
L-3 Communications Holdings, Inc. .............. 6,600 723,624
------------
723,624
------------
AGRICULTURAL CHEMICALS - 1.3%
Syngenta AG ADR ................................ 9,100 441,077
------------
441,077
------------
AUCTION HOUSE/ART DEALER - 0.6%
Ritchie Brothers Auctioneers, Inc. ADR ......... 2,550 190,817
------------
190,817
------------
AUTOMOTIVE & TRANSPORT - 1.4%
LKQ Corp. (a) .................................. 12,200 470,432
------------
470,432
------------
BANKING - 1.7%
HDFC Bank Ltd. ADR ............................. 4,000 556,000
------------
556,000
------------
BIOTECHNOLOGY - 1.8%
BioMarin Pharmaceuticals, Inc. (a) ............. 17,200 476,956
Vertex Pharmaceuticals, Inc. (a) ............... 4,050 130,977
------------
607,933
------------
BUSINESS SERVICES - 0.8%
Fidelity National Information Services, Inc. ... 5,550 255,966
------------
255,966
------------
COMMERCIAL SERVICES - 1.8%
IHS, Inc. (a) .................................. 7,050 444,503
Interface, Inc., Class A........................ 7,700 147,301
------------
591,804
------------
COMMUNICATIONS - 1.5%
CommScope, Inc. (a) ............................ 10,750 507,078
------------
507,078
------------
COMPUTER SERVICES - 4.4%
Cognizant Technology Solutions Corp. (a) ....... 9,900 410,454
j2 Global Communications, Inc. (a) ............. 15,425 519,668
Wright Express Corp. (a) ....................... 13,500 522,450
------------
1,452,572
------------
COMPUTER SOFTWARE - 4.0%
Akamai Technologies, Inc. (a) .................. 5,750 225,342
Blackbaud, Inc. ................................ 16,100 433,895
NAVTEQ Corp. (a) ............................... 4,300 331,960
VASCO Data Security International, Inc. (a) .... 12,900 341,076
------------
1,332,273
------------
COMPUTERS - 2.3%
Logitech International S.A. (a) ................ 12,150 429,138
VeriFone Holdings, Inc. (a) .................... 6,700 331,181
------------
760,319
------------
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
------------- ------------
CONSTRUCTION & ENGINEERING - 2.5%
McDermott International, Inc. (a) .............. 13,500 824,310
------------
824,310
------------
CONSUMER DISCRETIONARY - 0.8%
Sotheby's Holdings, Inc. ....................... 4,600 249,182
------------
249,182
------------
CONSUMER PRODUCTS - 1.6%
Gildan Activewear, Inc. (a) .................... 7,100 319,003
Polo Ralph Lauren Corp. ........................ 3,000 206,400
------------
525,403
------------
CORRECTIONAL INSTITUTIONS - 1.1%
Corrections Corp. of America (a) ............... 12,850 363,527
------------
363,527
------------
DIVERSIFIED MANUFACTURING OPERATIONS - 1.1%
Emcor Group, Inc. (a) .......................... 10,400 358,072
------------
358,072
------------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 3.0%
FormFactor, Inc. (a) ........................... 6,400 250,304
Itron, Inc. (a) ................................ 4,400 472,956
Microchip Technology, Inc. ..................... 7,675 254,580
------------
977,840
------------
ENERGY - 1.1%
Core Laboratories NV (a) ....................... 2,500 364,850
------------
364,850
------------
ENVIRONMENTAL SERVICES - 1.7%
Stericycle, Inc. (a) ........................... 9,700 565,801
------------
565,801
------------
FINANCIAL SERVICES - 8.0%
Affiliated Managers Group, Inc. (a) ............ 4,550 598,552
BlackRock, Inc., Class A ....................... 2,025 419,074
CME Group, Inc. ................................ 700 466,375
Eaton Vance Corp. .............................. 8,250 412,747
iStar Financial, Inc. .......................... 4,950 151,025
Jones Lang LaSalle, Inc. ....................... 3,850 367,020
Zions Bancorporation ........................... 3,450 203,930
------------
2,618,723
------------
FOOD & BEVERAGE - 3.4%
Central European Distribution Corp. (a) ........ 7,800 414,804
Flowers Foods, Inc. ............................ 19,600 430,024
United Natural Foods, Inc. (a) ................. 9,150 264,801
------------
1,109,629
------------
FUNERAL SERVICES - 1.1%
Service Corp. International .................... 25,950 375,497
------------
375,497
------------
HEALTH CARE - 8.7%
DaVita, Inc. (a) ............................... 4,800 312,912
Express Scripts, Inc. (a) ...................... 3,700 233,470
Hologic, Inc. (a) .............................. 9,588 651,313
Laboratory Corp. of America Holdings (a) ....... 4,675 321,406
Psychiatric Solutions, Inc. (a) ................ 7,550 298,980
29 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR MID - CAP FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
------------- ------------
HEALTH CARE, CONTINUED
ResMed, Inc. (a) ............................... 6,800 281,724
Techne Corp. (a) ............................... 1,025 66,871
VCA Antech, Inc. (a) ........................... 15,200 699,960
------------
2,866,636
------------
INSURANCE - 3.6%
Assurant, Inc. ................................. 5,600 327,264
Axis Capital Holdings Ltd. ..................... 12,350 490,789
Proassurance Corp. (a) ......................... 6,800 374,952
------------
1,193,005
------------
LEISURE - 2.7%
Penn National Gaming, Inc. (a) ................. 14,200 876,850
------------
876,850
------------
MACHINERY - 1.6%
Oshkosh Truck Corp. ............................ 9,675 524,385
------------
524,385
------------
MATERIALS - 4.8%
Airgas, Inc. ................................... 10,950 552,646
FMC Corp. ...................................... 11,150 641,125
Praxair, Inc. .................................. 4,475 382,523
------------
1,576,294
------------
METAL PROCESSORS & FABRICATION - 1.2%
Carpenter Technology Corp. ..................... 2,750 398,503
------------
398,503
------------
OIL & GAS - 7.1%
Atlas America, Inc. ............................ 3,100 178,870
Chesapeake Energy Corp. ........................ 9,625 379,995
FMC Technologies, Inc. (a) ..................... 8,500 515,355
Oil States International, Inc. (a) ............. 5,525 238,625
Superior Energy Services, Inc. (a) ............. 8,750 324,450
Weatherford International Ltd. (a) ............. 2,134 138,518
XTO Energy, Inc. ............................... 8,558 568,080
------------
2,343,893
------------
RETAIL - 4.0%
Dick's Sporting Goods, Inc. (a) ................ 16,650 555,610
GameStop Corp., Class A (a) .................... 12,950 766,899
------------
1,322,509
------------
SPECIALTY RETAIL - 1.9%
Penske Automotive Group, Inc. .................. 9,250 206,090
Tiffany & Co. .................................. 7,525 407,704
------------
613,794
------------
TELECOMMUNICATIONS - 1.8%
Crown Castle International Corp. (a) ........... 10,595 435,137
NII Holdings, Inc., Class B (a) ................ 2,975 172,550
------------
607,687
------------
TRANSPORTATION - 1.3%
American Commercial Lines, Inc. (a) ............ 8,800 131,208
Expeditors International of Washington, Inc. ... 5,600 283,640
------------
414,848
------------
- --------------------------------------------------------------------------------
COMMON STOCKS, CONTINUED
- --------------------------------------------------------------------------------
SHARES VALUE($)
------------- ------------
UTILITIES - 5.9%
Equitable Resources, Inc. ...................... 12,775 719,488
ITC Holdings Corp. ............................. 9,550 546,642
Northeast Utilities ............................ 21,450 661,303
------------
1,927,433
------------
WIRE & CABLE PRODUCTS - 3.5%
Belden, Inc. ................................... 6,100 355,447
General Cable Corp. (a) ........................ 10,950 788,290
------------
1,143,737
------------
TOTAL COMMON STOCKS
(COST $21,788,116) .......................... 32,264,854
------------
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES - 3.0%
- --------------------------------------------------------------------------------
MidCap S&P Depositary Receipt Trust
Series 1 .................................... 1,500 247,410
Northern Institutional Diversified Assets
Portfolio, Shares class, 4.80% (b) .......... 755,396 755,396
------------
TOTAL INVESTMENT COMPANIES
(COST $992,905) ............................. 1,002,806
------------
TOTAL INVESTMENTS
(COST $22,781,021) -- 101.0% ................ 33,267,660
============
- ----------
Percentages indicated are based on net assets of $32,931,699.
(a) Represents non-income producing security.
(b) The rates presented represent the annualized one day yield that was in
effect on October 31, 2007.
ADR--American Depositary Receipt
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 30
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES--AS OF OCTOBER 31, 2007
------------ ------------ ------------ ------------ -------------
CORE PLUS INTERMEDIATE
FIXED INCOME CORE PLUS HIGH YIELD DURATION NEW YORK
FUND FIXED INCOME FIXED INCOME FIXED INCOME TAX-FREE
(ADVISOR) FUND FUND FUND BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in Affiliated Portfolios $ 81,537,056 $ 17,462,262 $ 9,002,580 $ 14,107,726 $ --
Investments in non-affiliates, at value -- -- -- -- 60,317,074
Interest and dividends receivable -- -- -- -- 843,675
Receivable for capital shares issued 314,684 76,249 72,894 57,055 146,392
Receivable from Investment Adviser 15,806 7,763 11,787 12,672 --
Prepaid expenses and other assets 7,256 4,673 7,805 843 3,711
------------ ------------ ------------ ------------ ------------
TOTAL ASSETS 81,874,802 17,550,947 9,095,066 14,178,296 61,310,852
------------ ------------ ------------ ------------ ------------
LIABILITIES:
Dividends payable 382,197 76,447 58,530 64,168 184,067
Payable for capital shares redeemed 65,768 42,200 8,938 55,346 36,154
Accrued expenses and other liabilities:
Investment Management -- -- -- -- 13,037
Administration 4,519 718 275 1,088 4,922
Distribution -- 3,619 1,672 3,529 6,129
Shareholder Servicing -- 3,800 1,344 878 8,935
Compliance Service 60 14 6 13 90
Transfer Agent 3,036 4,580 9,407 3,870 4,718
Trustee 156 35 46 34 239
Other 26,595 5,233 2,358 3,834 23,007
------------ ------------ ------------ ------------ ------------
TOTAL LIABILITIES 482,331 136,646 82,576 132,760 281,298
------------ ------------ ------------ ------------ ------------
NET ASSETS $ 81,392,471 $ 17,414,301 $ 9,012,490 $ 14,045,536 $ 61,029,554
============ ============ ============ ============ ============
- ------------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Capital $ 80,876,747 $ 17,996,171 $ 9,015,817 $ 14,052,287 $ 59,273,888
Accumulated net investment income (loss) 120,218 13,008 328 23,112 21,541
Accumulated net realized gains (losses) from
investment and foreign currency transactions 476,947 (578,198) 94,442 49,296 79,495
Unrealized appreciation/depreciation from
investments and foreign currencies (81,441) (16,680) (98,097) (79,159) 1,654,630
------------ ------------ ------------ ------------ ------------
NET ASSETS $ 81,392,471 $ 17,414,301 $ 9,012,490 $ 14,045,536 $ 61,029,554
============ ============ ============ ============ ============
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Class A Shares $ -- $ 13,592,441 $ 3,706,420 $ 803,142 $ 32,304,801
Class B Shares -- 3,791,523 2,447,144 2,982,142 8,635,324
Class C Shares -- 30,337 217,372 305,239 806,965
Class I Shares -- -- 2,641,554 9,955,013 19,282,464
Advisor Shares 81,392,471 -- -- -- --
------------ ------------ ------------ ------------ ------------
$ 81,392,471 $ 17,414,301 $ 9,012,490 $ 14,045,536 $ 61,029,554
============ ============ ============ ============ ============
- ------------------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING ($0.001 PAR VALUE, UNLIMITED NUMBER
OF SHARES AUTHORIZED):
Class A Shares -- 1,297,385 370,321 79,931 2,923,293
Class B Shares -- 361,508 244,399 296,228 782,191
Class C Shares -- 2,900 21,665 30,331 72,820
Class I Shares -- -- 263,890 989,282 1,744,701
Advisor Shares 7,892,674 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE:
Class A Shares $ -- $ 10.48 $ 10.01 $ 10.05 $ 11.05
Class B Shares* $ -- $ 10.49 $ 10.01 $ 10.07 $ 11.04
Class C Shares* $ -- $ 10.46 $ 10.03 $ 10.06 $ 11.08
Class I Shares $ -- $ -- $ 10.01 $ 10.06 $ 11.05
Advisor Shares $ 10.31 $ -- $ -- $ -- $ --
Maximum Sales Charge--Class A Shares --% 4.75% 4.75% 4.75% 4.75%
============ ============ ============ ============ ============
Maximum Offering Price per share (Net Asset
Value/(100%-maximum sales charge))--Class A Shares $ -- $ 11.00 $ 10.51 $ 10.55 $ 11.60
============ ============ ============ ============ ============
Total Investments, at cost $ 58,662,444
============
- ----------
* Redemption Price per share varies by length of time shares are held.
31 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES--AS OF OCTOBER 31, 2007 (CONTINUED)
------------ ------------ ------------- ------------ -------------
GROWTH GROWTH AND INTERNATIONAL MID-CAP OPPORTUNITY
FUND INCOME FUND EQUITY FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in Affiliated Portfolios $ 62,980,032 $ -- $ 386,023,336 $ -- $ 20,654,692
Investments in non-affiliates, at value -- 52,585,322 -- 33,267,660 --
Interest and dividends receivable -- 27,858 -- 3,121 --
Receivable for capital shares issued 56,250 47 152,091 5,542 1,048
Receivable for investments sold -- -- -- 276,142 --
Reclaims receivable -- -- 357,552 -- --
Receivable from Investment Adviser -- -- -- -- 1,871
Prepaid expenses and other assets 6,196 12,495 13,645 5,021 5,479
------------ ------------ ------------- ------------ ------------
TOTAL ASSETS 63,042,478 52,625,722 386,546,624 33,557,486 20,663,090
------------ ------------ ------------- ------------ ------------
LIABILITIES:
Payable for investments purchased -- -- -- 557,655 --
Payable for capital shares redeemed 106,708 6,756 688,699 17,836 324,001
Payable to Investment Adviser 21,550 -- -- -- --
Accrued expenses and other liabilities:
Investment Management -- 24,477 -- 20,696 --
Administration 1,685 10,292 13,072 4,861 885
Distribution 1,073 3,181 -- 3,988 2,491
Shareholder Servicing 6,742 1,481 -- 2,575 4,277
Compliance Service 36 70 267 50 16
Transfer Agent 6,366 4,379 4,116 6,031 6,152
Trustee 98 180 658 119 39
Other 16,266 18,762 122,705 11,976 6,470
------------ ------------ ------------- ------------ ------------
TOTAL LIABILITIES 160,524 69,578 829,517 625,787 344,331
------------ ------------ ------------- ------------ ------------
NET ASSETS $ 62,881,954 $ 52,556,144 $ 385,717,107 $ 32,931,699 $ 20,318,759
============ ============ ============= ============ ============
- ------------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Capital $ 44,479,644 $ 40,627,351 $ 250,411,836 $ 19,007,456 $ 9,945,246
Accumulated net investment income (loss) -- 5,574 5,187,203 -- --
Accumulated net realized gains (losses) from
investment and foreign currency transactions 2,872,186 (5,751,302) 28,775,413 3,437,604 5,989,770
Unrealized appreciation/depreciation from
investments and foreign currencies 15,530,124 17,674,521 101,342,655 10,486,639 4,383,743
------------ ------------ ------------- ------------ ------------
NET ASSETS $ 62,881,954 $ 52,556,144 $ 385,717,107 $ 32,931,699 $ 20,318,759
============ ============ ============= ============ ============
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Class A Shares $ 30,858,484 $ 2,048,013 $ -- $ 5,896,882 $ 15,057,289
Class B Shares 1,629,791 5,051,015 -- 6,285,063 4,927,584
Class C Shares 98,258 57,727 -- 78,745 333,886
Class I Shares 30,295,421 45,399,389 -- -- --
Advisor Shares -- -- 385,717,107 -- --
Trust Shares -- -- -- 20,671,009 --
------------ ------------ ------------- ------------ ------------
$ 62,881,954 $ 52,556,144 $ 385,717,107 $ 32,931,699 $ 20,318,759
============ ============ ============= ============ ============
- ------------------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING ($0.001 PAR VALUE, UNLIMITED NUMBER
OF SHARES AUTHORIZED):
Class A Shares 1,719,287 145,834 -- 545,473 917,662
Class B Shares 96,329 369,841 -- 624,161 329,740
Class C Shares 5,774 4,191 -- 7,748 22,103
Class I Shares 1,680,993 3,222,187 -- -- --
Advisor Shares -- -- 15,493,191 -- --
Trust Shares -- -- -- 1,874,100 --
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE:
Class A Shares $ 17.95 $ 14.04 $ -- $ 10.81 $ 16.41
Class B Shares $ 16.92 $ 13.66 $ -- $ 10.07 $ 14.94
Class C Shares* $ 17.02 $ 13.77 $ -- $ 10.16 $ 15.11
Class I Shares $ 18.02 $ 14.09 $ -- $ -- $ --
Advisor Shares $ -- $ -- $ 24.90 $ -- $ --
Trust Shares $ -- $ -- $ -- $ 11.03 $ --
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 $ 18.89 $ 14.78 $ -- $ 11.38 $ 17.27
============ ============ ============= ============ ============
Total Investments, at cost $ 34,910,801 $ 22,781,021
============ ============
- ----------
* Redemption Price per share varies by length of time shares are held.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 32
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES--AS OF OCTOBER 31, 2007 (CONTINUED)
------------- ------------ -------------
OPPORTUNITY
FUND OVERSEAS VALUE
(ADVISOR) EQUITY FUND FUND
- --------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in Affiliated Portfolios $ 176,674,531 $ 19,879,757 $ 57,849,714
Receivable for capital shares issued 32,000 2,642 72,045
Reclaims receivable -- 64,196 --
Prepaid expenses and other assets 7,708 5,263 6,311
------------- ------------ ------------
TOTAL ASSETS 176,714,239 19,951,858 57,928,070
------------- ------------ ------------
LIABILITIES:
Payable for capital shares redeemed 48,080 8,089 68,804
Payable to Investment Adviser -- 1,842 10,120
Accrued expenses and other liabilities:
Administration 7,959 758 1,662
Distribution -- 2,408 1,217
Shareholder Servicing -- 4,135 6,202
Compliance Service 218 16 50
Transfer Agent 3,289 5,011 6,352
Trustee 538 38 119
Other 61,277 6,798 18,229
------------- ------------ ------------
TOTAL LIABILITIES 121,361 29,095 112,755
------------- ------------ ------------
NET ASSETS $ 176,592,878 $ 19,922,763 $ 57,815,315
============= ============ ============
- --------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Capital $ 98,069,819 $ 8,381,228 $ 43,896,071
Accumulated net investment income (loss) -- 79,109 131,577
Accumulated net realized gains (losses) from investment and foreign
currency transactions 44,802,636 2,926,830 4,629,502
Unrealized appreciation/depreciation from investments and foreign currencies 33,720,423 8,535,596 9,158,165
------------- ------------ ------------
NET ASSETS $ 176,592,878 $ 19,922,763 $ 57,815,315
============= ============ ============
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Class A Shares $ -- $ 16,077,619 $ 27,224,571
Class B Shares -- 3,698,455 1,772,292
Class C Shares -- 146,689 126,119
Class I Shares -- -- 28,692,333
Advisor Shares 176,592,878 -- --
------------- ------------ ------------
$ 176,592,878 $ 19,922,763 $ 57,815,315
============= ============ ============
- --------------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING ($0.001 PAR VALUE, UNLIMITED NUMBER OF SHARES AUTHORIZED):
Class A Shares -- 784,884 1,646,362
Class B Shares -- 190,415 111,962
Class C Shares -- 7,358 7,910
Class I Shares -- -- 1,736,751
Advisor Shares 9,323,396 -- --
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE:
Class A Shares $ -- $ 20.48 $ 16.54
Class B Shares* $ -- $ 19.42 $ 15.83
Class C Shares* $ -- $ 19.94 $ 15.94
Class I Shares $ -- $ -- $ 16.52
Advisor Shares $ 18.94 $ -- $ --
Maximum Sales Charge--Class A Shares --% 5.00% 5.00%
============= ============ ============
Maximum Offering Price per share (Net Asset Value/(100%-maximum sales
charge))--Class A Shares $ -- $ 21.56 $ 17.41
============= ============ ============
- ----------
* Redemption Price per share varies by length of time shares are held.
33 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF OPERATIONS--FOR THE YEAR ENDED OCTOBER 31, 2007
------------ ------------ ------------ ------------ ------------
CORE PLUS INTERMEDIATE
FIXED INCOME CORE PLUS HIGH YIELD DURATION NEW YORK
FUND FIXED INCOME FIXED INCOME FIXED INCOME TAX-FREE
(ADVISOR) FUND FUND FUND BOND FUND
- --------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ -- $ -- $ -- $ -- $ 2,679,374
Dividends -- -- -- -- 48,398
Investment Income from Affiliated Portfolios (a) 4,642,335 1,030,610 748,864 964,858 --
Expenses from Affiliated Portfolios (a) (490,903) (108,987) (122,821) (147,601) --
------------ ------------ ------------ ------------ -----------
TOTAL INVESTMENT INCOME (LOSS) 4,151,432 921,623 626,043 817,257 2,727,772
------------ ------------ ------------ ------------ -----------
- --------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment Management -- -- -- -- 156,682
Administration 24,811 5,504 2,646 5,271 37,550
Distribution:
Class B Shares -- 28,645 17,449 25,527 84,284
Class C Shares -- 883 1,932 3,377 7,156
Shareholder Servicing:
Class A Shares -- 35,494 9,902 2,078 84,933
Class B Shares -- 10,258 5,818 8,598 28,257
Class C Shares -- 302 647 1,126 2,446
Accounting 9,000 22,336 28,700 29,000 75,650
Compliance Service 940 208 101 203 1,389
Custodian -- -- -- -- 13,497
Printing 24,741 8,140 4,063 7,018 25,053
Transfer Agent 20,263 55,447 65,378 49,002 62,171
Trustee 2,065 457 248 442 3,097
Registration fees -- 108 416 84 339
Other 25,889 13,157 13,418 8,696 25,794
------------ ------------ ------------ ------------ -----------
Total expenses before fee reductions 107,709 180,939 150,718 140,422 608,298
Fees reduced by Investment Adviser (225,085) (129,294) (189,345) (177,310) --
Expenses reimbursed by Investment Adviser (80,258) (5,966) -- (21,743) (20,753)
------------ ------------ ------------ ------------ -----------
NET EXPENSES (197,634) 45,679 (38,627) (58,631) 587,545
------------ ------------ ------------ ------------ -----------
- --------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 4,349,066 875,944 664,670 875,888 2,140,227
------------ ------------ ------------ ------------ -----------
- --------------------------------------------------------------------------------------------------------------------------------
NET REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS AND FOREIGN CURRENCIES: (a)
Net realized gains (losses) from investments and
foreign currency transactions 2,097,739 433,571 94,442 792,234 79,494
Change in unrealized appreciation/depreciation
from investments and foreign currencies (740,498) (152,977) (167,829) (170,042) (832,199)
------------ ------------ ------------ ------------ -----------
- --------------------------------------------------------------------------------------------------------------------------------
Net realized\unrealized gains (losses) from
investment and foreign currency transactions 1,357,241 280,594 (73,387) 622,192 (752,705)
------------ ------------ ------------ ------------ -----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 5,706,307 $ 1,156,538 $ 591,283 $ 1,498,080 $ 1,387,522
============ ============ ============ ============ ===========
- ----------
(a) With the exception of the New York Tax-Free Bond Fund, represents amounts
allocated from the respective Affiliated Portfolios.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 34
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF OPERATIONS--FOR THE YEAR ENDED OCTOBER 31, 2007 (CONTINUED)
------------ ------------ ------------- ----------- ------------
GROWTH GROWTH AND INTERNATIONAL MID-CAP OPPORTUNITY
FUND INCOME FUND EQUITY FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ -- $ 588,114 $ -- $ 227,876 $ --
Dividend income from affiliated investments -- -- -- 3,207 --
Investment Income from Affiliated Portfolios (a) 555,038 -- 11,195,558 -- 87,148
Tax reclaims (a) -- -- 187,869 -- --
Foreign tax withholding from Affiliated Portfolios (a) -- -- (1,167,907) -- --
Expenses from Affiliated Portfolios (a) (321,014) -- (2,681,619) -- (211,232)
------------ ------------ ------------- ----------- -----------
TOTAL INVESTMENT INCOME (LOSS) 234,024 588,114 7,533,901 231,083 (124,084)
------------ ------------ ------------- ----------- -----------
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment Management -- 293,414 -- 230,741 --
Administration 15,144 29,180 99,740 18,245 7,075
Distribution:
Class B Shares 11,100 35,664 -- 50,304 36,681
Class C Shares 823 258 -- 664 2,321
Shareholder Servicing:
Class A Shares 68,809 3,930 -- 13,349 44,816
Class B Shares 3,706 11,914 -- 16,837 12,227
Class C Shares 282 87 -- 224 791
Accounting 29,000 67,750 9,000 67,420 22,336
Compliance Service 559 1,076 3,760 681 276
Custodian -- 10,679 -- 18,965 --
Interest -- 60 -- -- --
Printing 23,658 20,698 130,484 18,652 12,349
Transfer Agent 85,271 58,952 33,321 80,480 80,014
Trustee 1,235 2,439 8,206 1,437 604
Registration fees 352 333 -- -- 152
Other 23,467 40,711 58,638 14,435 16,367
------------ ------------ ------------- ----------- -----------
Total expenses before fee reductions 263,406 577,145 343,149 532,434 236,009
Fees reduced by Investment Adviser (46,044) (60,503) -- (112,291) (50,013)
Expenses reimbursed by Investment Adviser (8,757) (60,580) (90,294) (52,113) (8,071)
------------ ------------ ------------- ----------- -----------
NET EXPENSES 208,605 456,062 252,855 368,030 177,925
------------ ------------ ------------- ----------- -----------
- -----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 25,419 132,052 7,281,046 (136,947) (302,009)
------------ ------------ ------------- ----------- -----------
- -----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED/UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS: (A)
Net realized gains (losses) from investments and foreign
currency transactions 2,943,213 4,390,113 29,592,826 3,529,981 6,380,550
Change in unrealized appreciation/depreciation from
investments and foreign currencies 11,547,046 7,796,554 37,623,613 4,694,868 (180,853)
------------ ------------ ------------- ----------- -----------
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized\unrealized gains (losses) from investment
and foreign currency transactions 14,490,259 12,186,667 67,216,439 8,224,849 6,199,697
------------ ------------ ------------- ----------- -----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 14,515,678 $ 12,318,719 $ 74,497,485 $ 8,087,902 $ 5,897,688
============ ============ ============= =========== ===========
- ----------
(a) With the exception of the Growth and Income Fund and the Mid-Cap Fund,
represents amounts allocated from the respective Affiliated Portfolios.
35 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF OPERATIONS--FOR THE YEAR ENDED OCTOBER 31, 2007 (CONTINUED)
------------ ----------- ------------
OPPORTUNITY
FUND OVERSEAS VALUE
(ADVISOR) EQUITY FUND FUND
- --------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Investment Income from Affiliated Portfolios (a) $ 622,456 $ 640,463 $ 1,078,143
Tax reclaims (a) -- 9,996 --
Foreign tax withholding from Affiliated Portfolios (a) -- (67,018) --
Expenses from Affiliated Portfolios (a) (1,569,198) (165,900) (366,118)
------------ ----------- -----------
TOTAL INVESTMENT INCOME (LOSS) (946,742) 417,541 712,025
------------ ----------- -----------
- --------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Administration 51,982 6,322 16,335
Distribution:
Class B Shares -- 26,013 14,368
Class C Shares -- 1,109 1,144
Shareholder Servicing:
Class A Shares -- 42,880 70,903
Class B Shares -- 8,726 4,799
Class C Shares -- 420 388
Accounting 9,000 22,336 29,000
Compliance Service 2,099 246 621
Printing 53,454 10,814 26,451
Transfer Agent 30,509 66,348 85,728
Trustee 4,646 528 1,371
Registration fees -- 137 363
Other 46,324 17,471 24,500
------------ ----------- -----------
Total expenses before fee reductions 198,014 203,350 275,971
Fees reduced by Investment Adviser -- -- (25,112)
Expenses reimbursed by Investment Adviser (110,941) (4,313) (46,044)
------------ ----------- -----------
NET EXPENSES 87,073 199,037 204,815
------------ ----------- -----------
- --------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (1,033,815) 218,504 507,210
------------ ----------- -----------
- --------------------------------------------------------------------------------------------------------------------------
NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: (A)
Net realized gains (losses) from investments and foreign currency transactions 46,538,426 3,031,889 4,408,682
Change in unrealized appreciation/depreciation from investments 1,172,860 1,272,896 12,266
------------ ----------- -----------
- --------------------------------------------------------------------------------------------------------------------------
Net realized\unrealized gains (losses) from investment transactions 47,711,286 4,304,785 4,420,948
------------ ----------- -----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 46,677,471 $ 4,523,289 $ 4,928,158
============ =========== ===========
- ----------
(a) Represents amounts allocated from the respective Affiliated Portfolios.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 36
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------- ----------------------------
CORE PLUS CORE PLUS FIXED
FIXED INCOME FUND (ADVISOR) INCOME FUND
- --------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2007 2006 2007 2006
- --------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 4,349,066 $ 4,105,465 $ 875,944 $ 843,851
Net realized gains (losses) from
investment transactions 2,097,739 (1,501,702) 433,571 (377,777)
Change in unrealized appreciation/
depreciation from investments
and foreign currencies (740,498) 1,816,915 (152,977) 452,867
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 5,706,307 4,420,678 1,156,538 918,941
------------ ------------ ------------ ------------
- --------------------------------------------------------------------------------------------------------
DIVIDENDS:
NET INVESTMENT INCOME:
Class A Shares -- -- (704,651) (622,411)
Class B Shares -- -- (172,434) (212,869)
Class C Shares -- -- (5,092) (10,246)
Advisor Shares (4,321,491) (4,104,585) -- --
NET REALIZED GAINS:
Class A Shares -- -- -- (73,046)
Class B Shares -- -- -- (29,921)
Class C Shares -- -- -- (1,351)
Advisor Shares -- (3,712,469) -- --
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS RESULTING FROM
SHAREHOLDER DIVIDENDS (4,321,491) (7,817,054) (882,177) (949,844)
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS RESULTING FROM
CAPITAL TRANSACTIONS (968,500) (5,370,906) 388,105 (7,315,720)
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS 416,316 (8,767,282) 662,466 (7,346,623)
- --------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 80,976,155 89,743,437 16,751,835 24,098,458
------------ ------------ ------------ ------------
End of period $ 81,392,471 $ 80,976,155 $ 17,414,301 $ 16,751,835
============ ============ ============ ============
Accumulated net investment income (loss) $ 120,218 $ 29,636 $ 13,008 $ 5,120
============ ============ ============ ============
37 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
----------------------------- ----------------------------
CORE PLUS CORE PLUS FIXED
FIXED INCOME FUND (ADVISOR) INCOME FUND
- ---------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2007 2006 2007 2006
- ---------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ -- $ -- $ 4,557,268 $ 1,922,955
Dividends reinvested -- -- 673,120 683,474
Value of shares redeemed -- -- (4,086,990) (7,996,165)
------------- ------------- ------------ ------------
Class A Shares capital transactions -- -- 1,143,398 (5,389,736)
------------- ------------- ------------ ------------
- ---------------------------------------------------------------------------------------------------
CLASS B SHARES:
Proceeds from shares issued -- -- 133,221 107,919
Dividends reinvested -- -- 152,515 219,337
Value of shares redeemed -- -- (832,273) (2,205,242)
------------- ------------- ------------ ------------
Class B Shares capital transactions -- -- (546,537) (1,877,986)
------------- ------------- ------------ ------------
- ---------------------------------------------------------------------------------------------------
CLASS C SHARES:
Proceeds from shares issued -- -- 16,800 5
Dividends reinvested -- -- 4,727 11,807
Value of shares redeemed -- -- (230,283) (59,810)
------------- ------------- ------------ ------------
Class C Shares capital transactions -- -- (208,756) (47,998)
------------- ------------- ------------ ------------
- ---------------------------------------------------------------------------------------------------
ADVISOR SHARES:
Proceeds from shares issued 16,414,081 18,068,509 -- --
Dividends reinvested 2,820,496 5,415,411 -- --
Value of shares redeemed (20,203,077) (28,854,826) -- --
------------- ------------- ------------ ------------
Advisor Shares capital transactions (968,500) (5,370,906) -- --
------------- ------------- ------------ ------------
CHANGE IN NET ASSETS RESULTING FROM
CAPITAL TRANSACTIONS $ (968,500) $ (5,370,906) $ 388,105 $ (7,315,720)
============= ============= ============ ============
- ---------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued -- -- 435,107 188,221
Reinvested -- -- 64,455 66,942
Redeemed -- -- (391,171) (779,053)
------------- ------------- ------------ ------------
Change in Class A Shares -- -- 108,391 (523,890)
------------- ------------- ------------ ------------
- ---------------------------------------------------------------------------------------------------
CLASS B SHARES:
Issued -- -- 12,712 10,598
Reinvested -- -- 14,586 21,472
Redeemed -- -- (79,589) (216,292)
------------- ------------- ------------ ------------
Change in Class B Shares -- -- (52,291) (184,222)
------------- ------------- ------------ ------------
- ---------------------------------------------------------------------------------------------------
CLASS C SHARES:
Issued -- -- 1,628 --
Reinvested -- -- 453 1,158
Redeemed -- -- (22,120) (5,866)
------------- ------------- ------------ ------------
Change in Class C Shares -- -- (20,039) (4,708)
------------- ------------- ------------ ------------
- ---------------------------------------------------------------------------------------------------
ADVISOR SHARES:
Issued 1,596,631 1,788,443 -- --
Reinvested 274,454 536,720 -- --
Redeemed (1,968,988) (2,843,745) -- --
------------- ------------- ------------ ------------
Change in Advisor Shares (97,903) (518,582) -- --
------------- ------------- ------------ ------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 38
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
--------------------------- ----------------------------
HIGH YIELD INTERMEDIATE DURATION
FIXED INCOME FUND FIXED INCOME FUND
- ----------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2007 2006 (a) 2007 2006
- ----------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 664,670 $ 575,859 $ 875,888 $ 987,322
Net realized gains (losses) from 94,442 31,454 792,234 (420,155)
investment transactions
Change in unrealized appreciation/
depreciation from investments and
foreign currencies (167,829) 69,732 (170,042) 480,307
------------ ------------ ----------- ------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 591,283 677,045 1,498,080 1,047,474
------------ ------------ ----------- ------------
- ----------------------------------------------------------------------------------------------------------
DIVIDENDS:
NET INVESTMENT INCOME:
Class A Shares (307,911) (301,928) (41,612) (46,821)
Class B Shares (163,518) (84,509) (145,985) (166,109)
Class C Shares (18,030) (8,755) (19,081) (19,885)
Class I Shares (181,367) (174,183) (666,493) (767,823)
NET REALIZED GAINS:
Class A Shares (15,636) -- -- --
Class B Shares (6,846) -- -- --
Class C Shares (757) -- -- --
Class I Shares (8,215) -- -- --
------------ ------------ ----------- ------------
CHANGE IN NET ASSETS RESULTING FROM
SHAREHOLDER DIVIDENDS (702,280) (569,375) (873,171) (1,000,638)
------------ ------------ ----------- ------------
CHANGE IN NET ASSETS RESULTING FROM CAPITAL
TRANSACTIONS (533,751) 9,549,568 (4,796,641) (13,008,376)
------------ ------------ ----------- ------------
CHANGE IN NET ASSETS (644,748) 9,657,238 (4,171,732) (12,961,540)
- ----------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 9,657,238 -- 18,217,268 31,178,808
------------ ------------ ----------- ------------
End of period $ 9,012,490 $ 9,657,238 $14,045,536 $ 18,217,268
============ ============ =========== ============
Accumulated net investment income (loss) $ 328 $ 6,484 $ 23,112 $ 7,071
============ ============ =========== ============
- ----------
(a) The High Yield Fixed Income Fund commenced operations on November 18,
2005.
39 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
--------------------------- --------------------------
HIGH YIELD INTERMEDIATE DURATION
FIXED INCOME FUND FIXED INCOME FUND
- ----------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2007 2006 (a) 2007 2006
- ----------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ 1,101,456 $ 5,577,211 $ 91,672 $ 25,306
Dividends reinvested 261,982 287,526 37,106 43,347
Value of shares redeemed (2,360,652) (1,183,299) (335,287) (151,593)
------------ ------------ ----------- ------------
Class A Shares capital transactions (997,214) 4,681,438 (206,509) (82,940)
------------ ------------ ----------- ------------
- ----------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Proceeds from shares issued 542,167 2,078,468 53,039 75,008
Dividends reinvested 113,890 56,791 129,255 141,353
Value of shares redeemed (279,180) (45,574) (1,060,828) (1,343,632)
------------ ------------ ----------- ------------
Class B Shares capital transactions 376,877 2,089,685 (878,534) (1,127,271)
------------ ------------ ----------- ------------
- ----------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Proceeds from shares issued 83,515 230,344 16,250 1,800
Dividends reinvested 15,343 8,113 18,729 20,272
Value of shares redeemed (112,155) (110) (248,148) (49,000)
------------ ------------ ----------- ------------
Class C Shares capital transactions (13,297) 238,347 (213,169) (26,928)
------------ ------------ ----------- ------------
- ----------------------------------------------------------------------------------------------------------
CLASS I SHARES:
Proceeds from shares issued 1,158,432 2,775,374 2,137,921 908,462
Dividends reinvested 188,601 173,189 500,994 613,135
Value of shares redeemed (1,247,150) (408,465) (6,137,344) (13,292,834)
------------ ------------ ----------- ------------
Class I Shares capital transactions 99,883 2,540,098 (3,498,429) (11,771,237)
------------ ------------ ----------- ------------
CHANGE IN NET ASSETS RESULTING FROM
CAPITAL TRANSACTIONS $ (533,751) $ 9,549,568 $(4,796,641) $(13,008,376)
============ ============ =========== ============
- ----------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued 107,567 557,001 9,160 2,635
Reinvested 25,689 28,555 3,707 4,508
Redeemed (230,848) (117,643) (33,428) (15,783)
------------ ------------ ----------- ------------
Change in Class A Shares (97,592) 467,913 (20,561) (8,640)
------------ ------------ ----------- ------------
- ----------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Issued 52,978 206,587 5,264 7,820
Reinvested 11,185 5,627 12,882 14,681
Redeemed (27,507) (4,471) (105,990) (139,306)
------------ ------------ ----------- ------------
Change in Class B Shares 36,656 207,743 (87,844) (116,805)
------------ ------------ ----------- ------------
- ----------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Issued 7,961 22,902 1,608 187
Reinvested 1,498 804 1,868 2,107
Redeemed (11,490) (10) (24,816) (5,095)
------------ ------------ ----------- ------------
Change in Class C Shares (2,031) 23,696 (21,340) (2,801)
------------ ------------ ----------- ------------
- ----------------------------------------------------------------------------------------------------------
Class I Shares:
Issued 113,787 276,989 215,480 94,210
Reinvested 18,529 17,198 49,957 63,673
Redeemed (121,825) (40,788) (612,503) (1,377,269)
------------ ------------ ----------- ------------
Change in Class I Shares 10,491 253,399 (347,066) (1,219,386)
------------ ------------ ----------- ------------
- ----------
(a) The High Yield Fixed Income Fund commenced operations on November 18,
2005.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 40
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
--------------------------
NEW YORK TAX-FREE
BOND FUND
- ----------------------------------------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
2007 2006
- ----------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 2,140,227 $ 2,082,496
Net realized gains (losses) from investment transactions 79,494 21,722
Change in unrealized appreciation/depreciation from investments
and foreign currencies (832,199) 641,574
----------- ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 1,387,522 2,745,792
----------- ------------
- ----------------------------------------------------------------------------------------------------------
DIVIDENDS:
NET INVESTMENT INCOME:
Class A Shares (1,173,859) (1,102,509)
Class B Shares (304,650) (387,661)
Class C Shares (26,272) (37,439)
Class I Shares (608,516) (560,276)
NET REALIZED GAINS:
Class A Shares (11,494) (50,865)
Class B Shares (4,734) (23,139)
Class C Shares (438) (2,487)
Class I Shares (5,055) (24,240)
----------- ------------
CHANGE IN NET ASSETS RESULTING FROM SHAREHOLDER DIVIDENDS (2,135,018) ( 2,188,616)
----------- ------------
CHANGE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS 323,731 (8,565,736)
----------- ------------
CHANGE IN NET ASSETS (423,765) (8,008,560)
- ----------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 61,453,319 69,461,879
----------- ------------
End of period $61,029,554 $ 61,453,319
=========== ============
Accumulated net investment income (loss) $ 21,541 $ (5,389)
=========== ============
41 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
--------------------------
NEW YORK TAX-FREE
BOND FUND
- ----------------------------------------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
2007 2006
- ----------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ 7,409,045 $ 8,315,770
Dividends reinvested 1,075,105 1,100,289
Value of shares redeemed (8,495,178) (11,409,207)
----------- ------------
Class A Shares capital transactions (11,028) (1,993,148)
----------- ------------
- ----------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Proceeds from shares issued 141,720 724,932
Dividends reinvested 227,620 316,025
Value of shares redeemed (5,321,458) (3,683,709)
----------- ------------
Class B Shares capital transactions (4,952,118) (2,642,752)
----------- ------------
- ----------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Proceeds from shares issued 17,375 3,537
Dividends reinvested 14,700 24,112
Value of shares redeemed (456,298) (575,373)
----------- ------------
Class C Shares capital transactions (424,223) (547,724)
----------- ------------
- ----------------------------------------------------------------------------------------------------------
CLASS I SHARES:
Proceeds from shares issued 7,546,678 1,615,824
Dividends reinvested 144,401 51,571
Value of shares redeemed (1,979,979) (5,049,507)
----------- ------------
Class I Shares capital transactions 5,711,100 (3,382,112)
----------- ------------
CHANGE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS $ 323,731 $ (8,565,736)
=========== ============
- ----------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued 667,129 750,787
Reinvested 97,101 99,371
Redeemed (768,451) (1,031,733)
----------- ------------
Change in Class A Shares (4,221) (181,575)
----------- ------------
- ----------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Issued 12,842 65,596
Reinvested 20,557 28,569
Redeemed (481,133) (333,344)
----------- ------------
Change in Class B Shares (447,734) (239,179)
----------- ------------
- ----------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Issued 1,555 318
Reinvested 1,336 2,171
Redeemed (41,171) (51,822)
----------- ------------
Change in Class C Shares (38,280) (49,333)
----------- ------------
- ----------------------------------------------------------------------------------------------------------
CLASS I SHARES:
Issued 681,820 145,686
Reinvested 13,084 4,650
Redeemed (179,624) (453,581)
----------- ------------
Change in Class I Shares 515,280 (303,245)
----------- ------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 42
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
----------------------------- ------------------------------
GROWTH FUND GROWTH AND INCOME FUND
- ---------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2007 2006 2007 2006
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 25,419 $ (28,434) $ 132,052 $ (30,297)
Net realized gains from investment
transactions 2,943,213 3,103,028 4,390,113 3,592,585
Change in unrealized appreciation/
depreciation from investments and
foreign currencies 11,547,046 (525,374) 7,796,554 2,346,553
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 14,515,678 2,549,220 12,318,719 5,908,841
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------------
DIVIDENDS:
NET INVESTMENT INCOME:
Class A Shares (9,938) -- (2,732) --
Class I Shares (37,788) -- (123,746) (25,548)
NET REALIZED GAINS:
Class A Shares (1,670,738) (357,021) -- --
Class B Shares (114,608) (22,246) -- --
Class C Shares (8,469) (5,635) -- --
Class I Shares (1,202,878) (219,862) -- --
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM
SHAREHOLDER DIVIDENDS (3,044,419) (604,764) (126,478) (25,548)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM
CAPITAL TRANSACTIONS 12,667,797 164,248 (6,527,061) (11,382,983)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS 24,139,056 2,108,704 5,665,180 (5,499,690)
- --------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 38,742,898 36,634,194 46,890,964 52,390,654
------------- ------------- ------------- -------------
End of period $ 62,881,954 $ 38,742,898 $ 52,556,144 $ 46,890,964
============= ============= ============= =============
Accumulated net investment income (loss) $ -- $ -- $ 5,574 $ --
============= ============= ============= =============
43 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
----------------------------- ------------------------------
GROWTH FUND GROWTH AND INCOME FUND
- ---------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2007 2006 2007 2006
- ---------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ 8,418,213 $ 4,530,725 $ 395,680 $ 112,013
Dividends reinvested 1,668,294 354,352 2,678 --
Value of shares redeemed (7,016,198) (5,905,203) (160,534) (135,477)
------------- ------------- ------------- -------------
Class A Shares capital transactions 3,070,309 (1,020,126) 237,824 (23,464)
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Proceeds from shares issued 61,125 233,048 255,981 398,426
Dividends reinvested 112,067 21,697 -- --
Value of shares redeemed (260,768) (181,902) (894,133) (543,576)
------------- ------------- ------------- -------------
Class B Shares capital transactions (87,576) 72,843 (638,152) (145,150)
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Proceeds from shares issued 54 1,004 32,070 19,650
Dividends reinvested 8,413 5,623 -- --
Value of shares redeemed (197,005) (94,166) (17,991) (38,887)
------------- ------------- ------------- -------------
Class C Shares capital transactions (188,538) (87,539) 14,079 (19,237)
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------------
CLASS I SHARES:
Proceeds from shares issued 13,457,915 4,081,210 4,767,318 4,960,323
Dividends reinvested 1,190,246 213,190 8,085 1,654
Value of shares redeemed (4,774,559) (3,095,330) (10,916,215) (16,157,109)
------------- ------------- ------------- -------------
Class I Shares capital transactions 9,873,602 1,199,070 (6,140,812) (11,195,132)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM
CAPITAL TRANSACTIONS $ 12,667,797 $ 164,248 $ (6,527,061) $ (11,382,983)
============= ============= ============= =============
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued 581,862 306,676 32,198 10,618
Reinvested 117,196 24,254 217 --
Redeemed (458,934) (400,591) (13,518) (12,870)
------------- ------------- ------------- -------------
Change in Class A Shares 240,124 (69,661) 18,897 (2,252)
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Issued 4,219 16,381 22,376 38,279
Reinvested 8,307 1,549 -- --
Redeemed (18,265) (12,915) (74,961) (52,090)
------------- ------------- ------------- -------------
Change in Class B Shares (5,739) 5,015 (52,585) (13,811)
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Issued 4 70 2,459 1,938
Reinvested 620 399 -- --
Redeemed (13,792) (6,716) (1,489) (3,743)
------------- ------------- ------------- -------------
Change in Class C Shares (13,168) (6,247) 970 (1,805)
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------------
CLASS I SHARES:
Issued 901,736 276,028 403,086 465,603
Reinvested 83,266 14,592 654 160
Redeemed (313,430) (209,584) (901,425) (1,552,705)
------------- ------------- ------------- -------------
Change in Class I Shares 671,572 81,036 (497,685) (1,086,942)
------------- ------------- ------------- -------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 44
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
----------------------------- ------------------------------
INTERNATIONAL EQUITY FUND MID-CAP FUND
- ---------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2007 2006 2007 2006
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 7,281,046 $ 4,854,991 $ (136,947) $ (4,898)
Net realized gains (losses) from
investment transactions 29,592,826 24,717,984 3,529,981 1,957,696
Change in unrealized appreciation/
depreciation from investments
and foreign currencies 37,623,613 35,300,745 4,694,868 1,800,748
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 74,497,485 64,873,720 8,087,902 3,753,546
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------------
DIVIDENDS:
NET INVESTMENT INCOME:
Advisor Shares (7,179,951) (4,030,977) -- --
NET REALIZED GAINS:
Class A Shares -- -- (258,695) (464,228)
Class B Shares -- -- (522,684) (1,688,238)
Class C Shares -- -- (6,914) (25,282)
Advisor Shares (24,089,605) (6,656,885) -- --
Trust Shares -- -- (1,159,580) (4,269,467)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM
SHAREHOLDER DIVIDENDS (31,269,556) (10,687,862) (1,947,873) (6,447,215)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM
CAPITAL TRANSACTIONS 58,740,573 36,418,624 (942,082) 1,132,987
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS 101,968,502 90,604,482 5,197,947 (1,560,682)
- ---------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 283,748,605 193,144,123 27,733,752 29,294,434
------------- ------------- ------------- -------------
End of period $ 385,717,107 $ 283,748,605 $ 32,931,699 $ 27,733,752
============= ============= ============= =============
Accumulated net investment income (loss) $ 5,187,203 $ 4,473,624 $ -- $ --
============= ============= ============= =============
45 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
----------------------------- ------------------------------
INTERNATIONAL EQUITY FUND MID-CAP FUND
- ---------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2007 2006 2007 2006
- ---------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ -- $ -- $ 3,918,143 $ 1,084,845
Dividends reinvested -- -- 256,489 455,929
Value of shares redeemed -- -- (2,634,591) (371,463)
------------- ------------- ------------- -------------
Class A Shares capital transactions -- -- 1,540,041 1,169,311
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Proceeds from shares issued -- -- 235,774 437,454
Dividends reinvested -- -- 514,297 1,661,260
Value of shares redeemed -- -- (3,072,777) (1,317,254)
------------- ------------- ------------- -------------
Class B Shares capital transactions -- -- (2,322,706) 781,460
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Proceeds from shares issued -- -- 11,496 4,002
Dividends reinvested -- -- 6,914 25,282
Value of shares redeemed -- -- (49,388) (32,766)
------------- ------------- ------------- -------------
Class C Shares capital transactions -- -- (30,978) (3,482)
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES:
Proceeds from shares issued 84,946,485 58,467,386 -- --
Dividends reinvested 22,576,471 7,069,762 -- --
Value of shares redeemed (48,782,383) (29,118,524) -- --
------------- ------------- ------------- -------------
Advisor Shares capital transactions 58,740,573 36,418,624 -- --
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------------
TRUST SHARES:
Proceeds from shares issued -- -- 5,100,905 2,741,624
Dividends reinvested -- -- 581,066 1,566,969
Value of shares redeemed -- -- (5,810,410) (5,122,895)
------------- ------------- ------------- -------------
Trust Shares capital transactions -- -- (128,439) (814,302)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM
CAPITAL TRANSACTIONS $ 58,740,573 $ 36,418,624 $ (942,082) $ 1,132,987
============= ============= ============= =============
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued -- -- 421,403 126,901
Reinvested -- -- 29,999 54,997
Redeemed -- -- (264,389) (41,265)
------------- ------------- ------------- -------------
Change in Class A Shares -- -- 187,013 140,633
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Issued -- -- 27,574 52,031
Reinvested -- -- 64,127 211,250
Redeemed -- -- (354,120) (158,683)
------------- ------------- ------------- -------------
Change in Class B Shares -- -- (262,419) 104,598
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Issued -- -- 1,231 462
Reinvested -- -- 855 3,184
Redeemed -- -- (5,550) (4,014)
------------- ------------- ------------- -------------
Change in Class C Shares -- -- (3,464) (368)
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES:
Issued 3,750,486 2,922,941 -- --
Reinvested 1,070,482 390,377 -- --
Redeemed (2,166,669) (1,488,865) -- --
------------- ------------- ------------- -------------
Change in Advisor Shares 2,654,299 1,824,453 -- --
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------------
TRUST SHARES:
Issued -- -- 522,495 305,751
Reinvested -- -- 66,712 186,322
Redeemed -- -- (600,816) (572,059)
------------- ------------- ------------- -------------
Change in Trust Shares -- -- (11,609) (79,986)
------------- ------------- ------------- -------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 46
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
------------------------------ -------------------------------
OPPORTUNITY FUND OPPORTUNITY FUND (ADVISOR)
- ---------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2007 2006 2007 2006
- ---------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ (302,009) $ (342,572) $ (1,033,815) $ (960,327)
Net realized gains (losses) from
investment transactions 6,380,550 3,994,994 46,538,426 31,062,646
Change in unrealized appreciation/
depreciation from investments
and foreign currencies (180,853) 1,342,022 1,172,860 2,986,040
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 5,897,688 4,994,444 46,677,471 33,088,359
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------
DIVIDENDS:
NET REALIZED GAINS:
Class A Shares (2,977,887) (711,320) -- --
Class B Shares (619,431) (150,813) -- --
Class C Shares (38,717) (10,198) -- --
Advisor Shares -- -- (29,938,816) (5,803,618)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM
SHAREHOLDER DIVIDENDS (3,636,035) (872,331) (29,938,816) (5,803,618)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM CAPITAL
TRANSACTIONS (11,472,973) (2,312,697) (32,269,549) (12,679,647)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS (9,211,320) 1,809,416 (15,530,894) 14,605,094
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 29,530,079 27,720,663 192,123,772 177,518,678
------------- ------------- ------------- -------------
End of period $ 20,318,759 $ 29,530,079 $ 176,592,878 $ 192,123,772
============= ============= ============= =============
Accumulated net investment income (loss) $ -- $ -- $ -- $ --
============= ============= ============= =============
47 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
------------------------------ -------------------------------
OPPORTUNITY FUND OPPORTUNITY FUND (ADVISOR)
- ---------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2007 2006 2007 2006
- ---------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ 1,869,751 $ 3,495,715 $ -- $ --
Dividends reinvested 2,944,516 703,432 -- --
Value of shares redeemed (15,806,644) (6,056,187) -- --
------------- ------------- ------------- -------------
Class A Shares capital transactions (10,992,377) (1,857,040) -- --
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Proceeds from shares issued 187,082 253,088 -- --
Dividends reinvested 612,160 147,234 -- --
Value of shares redeemed (1,272,389) (805,798) -- --
------------- ------------- ------------- -------------
Class B Shares capital transactions (473,147) (405,476) -- --
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Proceeds from shares issued -- 2,010 -- --
Dividends reinvested 38,284 10,101 -- --
Value of shares redeemed (45,733) (62,292) -- --
------------- ------------- ------------- -------------
Class C Shares capital transactions (7,449) (50,181) -- --
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------
ADVISOR SHARES:
Proceeds from shares issued -- -- 43,767,538 15,925,063
Dividends reinvested -- -- 12,322,958 4,071,601
Value of shares redeemed -- -- (88,360,045) (32,676,311)
------------- ------------- ------------- -------------
Advisor Shares capital transactions -- -- (32,269,549) (12,679,647)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM CAPITAL
TRANSACTIONS $ (11,472,973) $ (2,312,697) $ (32,269,549) $ (12,679,647)
============= ============= ============= =============
- ---------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued 131,660 255,030 -- --
Reinvested 228,434 54,419 -- --
Redeemed (1,154,412) (443,567) -- --
------------- ------------- ------------- -------------
Change in Class A Shares (794,318) (134,118) -- --
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Issued 14,236 19,744 -- --
Reinvested 51,790 12,202 -- --
Redeemed (96,076) (63,328) -- --
------------- ------------- ------------- -------------
Change in Class B Shares (30,050) (31,382) -- --
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Issued -- 148 -- --
Reinvested 3,204 829 -- --
Redeemed (3,443) (4,807) -- --
------------- ------------- ------------- -------------
Change in Class C Shares (239) (3,830) -- --
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------
ADVISOR SHARES:
Issued -- -- 2,507,207 962,234
Reinvested -- -- 822,079 262,486
Redeemed -- -- (5,122,696) (1,990,135)
------------- ------------- ------------- -------------
Change in Advisor Shares -- -- (1,793,410) (765,415)
------------- ------------- ------------- -------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 48
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
------------------------------ -------------------------------
OVERSEAS EQUITY FUND VALUE FUND
- ---------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2007 2006 2007 2006
- ---------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 218,504 $ 288,789 $ 507,210 $ 336,981
Net realized gains (losses) from
investment transactions 3,031,889 3,038,364 4,408,682 4,265,780
Change in unrealized appreciation/
depreciation from investments
and foreign currencies 1,272,896 3,516,165 12,266 3,709,021
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 4,523,289 6,843,318 4,928,158 8,311,782
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------
DIVIDENDS:
NET INVESTMENT INCOME:
Class A Shares (474,482) (326,916) (213,752) (284,513)
Class B Shares (48,615) (23,264) (1,937) (8,626)
Class C Shares (2,106) (1,601) (113) (1,160)
Class I Shares -- -- (240,365) (229,486)
NET REALIZED GAINS:
Class A Shares (2,532,363) (1,507,747) (2,315,837) (1,923,289)
Class B Shares (377,205) (185,747) (187,844) (154,501)
Class C Shares (18,983) (12,624) (14,732) (29,129)
Class I Shares -- -- (1,767,244) (1,220,351)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM
SHAREHOLDER DIVIDENDS (3,453,754) (2,057,899) (4,741,824) (3,851,055)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM CAPITAL
TRANSACTIONS (7,305,261) (1,874,669) 12,809,994 (155,652)
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS (6,235,726) 2,910,750 12,996,328 4,305,075
- --------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 26,158,489 23,247,739 44,818,987 40,513,912
------------- ------------- ------------- -------------
End of period $ 19,922,763 $ 26,158,489 $ 57,815,315 $ 44,818,987
============= ============= ============= =============
Accumulated net investment income (loss) $ 79,109 $ 294,103 $ 131,577 $ 94,489
============= ============= ============= =============
49 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
------------------------------ -------------------------------
OVERSEAS EQUITY FUND VALUE FUND
- ---------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2007 2006 2007 2006
- ---------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued $ 1,927,533 $ 3,898,094 $ 6,834,608 $ 3,803,760
Dividends reinvested 2,979,338 1,818,046 2,504,967 2,187,527
Value of shares redeemed (12,347,048) (7,848,982) (6,945,162) (7,101,747)
------------- ------------- ------------- -------------
Class A Shares capital transactions (7,440,177) (2,132,842) 2,394,413 (1,110,460)
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Proceeds from shares issued 299,816 426,797 81,743 108,230
Dividends reinvested 417,884 204,672 185,697 158,811
Value of shares redeemed (551,790) (338,565) (410,699) (281,760)
------------- ------------- ------------- -------------
Class B Shares capital transactions 165,910 292,904 (143,259) (14,719)
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Proceeds from shares issued 28,000 4,254 -- 1,051
Dividends reinvested 20,910 14,125 14,746 30,205
Value of shares redeemed (79,904) (53,110) (42,494) (287,134)
------------- ------------- ------------- -------------
Class C Shares capital transactions (30,994) (34,731) (27,748) (255,878)
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------
CLASS I SHARES:
Proceeds from shares issued -- -- 13,481,595 2,983,526
Dividends reinvested -- -- 1,920,064 1,363,115
Value of shares redeemed -- -- (4,815,071) (3,121,236)
------------- ------------- ------------- -------------
Class I Shares capital transactions -- -- 10,586,588 1,225,405
------------- ------------- ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM CAPITAL
TRANSACTIONS $ (7,305,261) $ (1,874,669) $ 12,809,994 $ (155,652)
============= ============= ============= =============
- ---------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued 102,880 228,774 433,376 245,996
Reinvested 170,248 116,471 160,308 149,309
Redeemed (695,566) (464,081) (424,086) (459,025)
------------- ------------- ------------- -------------
Change in Class A Shares (422,438) (118,836) 169,598 (63,720)
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Issued 16,784 25,997 5,175 7,211
Reinvested 25,023 13,637 12,417 11,270
Redeemed (31,048) (20,687) (26,217) (18,887)
------------- ------------- ------------- -------------
Change in Class B Shares 10,759 18,947 (8,625) (406)
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Issued 1,618 249 -- 69
Reinvested 1,221 922 979 2,131
Redeemed (4,376) (3,034) (2,761) (18,964)
------------- ------------- ------------- -------------
Change in Class C Shares (1,537) (1,863) (1,782) (16,764)
------------- ------------- ------------- -------------
- ---------------------------------------------------------------------------------------------------------------
CLASS I SHARES:
Issued -- -- 831,134 193,483
Reinvested -- -- 122,918 93,166
Redeemed -- -- (297,127) (201,427)
------------- ------------- ------------- -------------
Change in Class I Shares -- -- 656,925 85,222
------------- ------------- ------------- -------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 50
- --------------------------------------------------------------------------------
HSBC ADVISOR FUNDS TRUST--CORE PLUS FIXED INCOME FUND (ADVISOR)
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
----------------------------------------- -------------------------------------
NET REALIZED
AND UNREALIZED NET
NET ASSET GAINS REALIZED
VALUE, NET (LOSSES) FROM TOTAL FROM NET GAINS FROM
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- ---------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year Ended October 31, 2003 $10.63 0.41 0.19 0.60 (0.50) -- (0.50)
Year Ended October 31, 2004 10.73 0.45 0.12 0.57 (0.45) -- (0.45)
Year Ended October 31, 2005 10.85 0.44 (0.27) 0.17 (0.47) -- (0.47)
Year Ended October 31, 2006 10.55 0.53 0.02 0.55 (0.51) (0.46) (0.97)
Year Ended October 31, 2007 10.13 0.54 0.17 0.71 (0.53) -- (0.53)
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
-------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF NET INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME TO EXPENSES TO PORTFOLIO
VALUE, END TOTAL PERIOD AVERAGE NET AVERAGE AVERAGE NET TURNOVER
OF PERIOD RETURN(b) (000'S) ASSETS(c) NET ASSETS(c) ASSETS(c)(d) RATE(e)
- ---------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year Ended October 31, 2003 $10.73 5.71% $110,968 0.56% 4.30% 0.56% 70.91%
Year Ended October 31, 2004 10.85 5.46% 109,518 0.64% 4.20% 0.64% 34.88%
Year Ended October 31, 2005 10.55 1.55%(f) 89,743 0.52%(f) 4.15%(f) 0.52%(f) 176.60%
Year Ended October 31, 2006 10.13 5.56% 80,976 0.56% 5.05% 0.80% 273.91%
Year Ended October 31, 2007 10.31 7.20%(g)(h) 81,392 0.35%(g) 5.24%(g) 0.72% 252.26%
- ---------------------------------------------------------------------------------------------------------------------------
(a) The per share amounts and percentages reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor Core Plus Fixed Income Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover rate is calculated on the basis of the respective
Portfolio in which the Fund invests all of its investable assets.
(f) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the respective Portfolio in which the Fund invests related to violation of
certain investment policies and limitations. The corresponding impact to
the net expense ratio, net income ratio, gross expense ratio and total
return were 0.11% for the Advisor Shares.
(g) During the year ended October 31, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total return were 0.10%
for the Advisor Shares.
(h) During the year ended October 31, 2007, the respective Portfolio in which
the Fund invests received monies related to certain nonrecurring
litigation settlements. The corresponding impact to total return was
1.80%.
51 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--CORE PLUS FIXED INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
------------------------------------------ -------------------------------------
NET REALIZED
AND UNREALIZED NET
NET ASSET GAINS REALIZED
VALUE, NET (LOSSES) FROM TOTAL FROM NET GAINS FROM
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year Ended October 31, 2003 $10.38 0.40 0.13 0.53 (0.43) -- (0.43)
Year Ended October 31, 2004 10.48 0.40 0.12 0.52 (0.40) -- (0.40)
Year Ended October 31, 2005 10.60 0.39 (0.27) 0.12 (0.42) -- (0.42)
Year Ended October 31, 2006 10.30 0.49* 0.05 0.54 (0.49) (0.05) (0.54)
Year Ended October 31, 2007 10.30 0.51* 0.19 0.70 (0.52) -- (0.52)
- ----------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year Ended October 31, 2003 $10.39 0.32 0.13 0.45 (0.35) -- (0.35)
Year Ended October 31, 2004 10.49 0.32 0.11 0.43 (0.32) -- (0.32)
Year Ended October 31, 2005 10.60 0.32 (0.27) 0.05 (0.34) -- (0.34)
Year Ended October 31, 2006 10.31 0.41* 0.06 0.47 (0.42) (0.05) (0.47)
Year Ended October 31, 2007 10.31 0.44* 0.18 0.62 (0.44) -- (0.44)
- ----------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year Ended October 31, 2003 $10.38 0.32 0.13 0.45 (0.35) -- (0.35)
Year Ended October 31, 2004 10.48 0.32 0.11 0.43 (0.32) -- (0.32)
Year Ended October 31, 2005 10.59 0.32 (0.27) 0.05 (0.34) -- (0.34)
Year Ended October 31, 2006 10.30 0.41* 0.06 0.47 (0.42) (0.05) (0.47)
Year Ended October 31, 2007 10.30 0.44* 0.16 0.60 (0.44) -- (0.44)
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF NET INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME TO EXPENSES TO PORTFOLIO
VALUE, END TOTAL PERIOD AVERAGE NET AVERAGE AVERAGE NET TURNOVER
OF PERIOD RETURN(b) (000'S) ASSETS(c) NET ASSETS(c) ASSETS(c)(d) RATE(e)
- --------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year Ended October 31, 2003 $10.48 5.17% $14,143 1.10% 3.76% 1.21% 70.91%
Year Ended October 31, 2004 10.60 5.07% 17,248 1.04% 3.78% 1.26% 34.88%
Year Ended October 31, 2005 10.30 1.16%(f) 17,646 0.84%(f) 3.82%(f) 1.15%(f) 176.60%
Year Ended October 31, 2006 10.30 5.45% 12,248 0.79% 4.82% 1.43% 273.91%
Year Ended October 31, 2007 10.48 6.90%(g)(h) 13,592 0.67%(g) 4.93%(g) 1.41% 252.26%
- --------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year Ended October 31, 2003 $10.49 4.38% $ 7,430 1.85% 3.01% 1.96% 70.91%
Year Ended October 31, 2004 10.60 4.19% 7,017 1.79% 3.05% 2.01% 34.88%
Year Ended October 31, 2005 10.31 0.50%(f) 6,168 1.59%(f) 3.08%(f) 1.90%(f) 176.90%
Year Ended October 31, 2006 10.31 4.67% 4,267 1.54% 4.06% 2.19% 273.91%
Year Ended October 31, 2007 10.49 6.10%(g)(h) 3,792 1.42%(g) 4.18%(g) 2.12% 252.26%
- --------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year Ended October 31, 2003 $10.48 4.39% $ 606 1.85% 3.06% 1.97% 70.91%
Year Ended October 31, 2004 10.59 4.20% 377 1.80% 3.07% 2.02% 34.88%
Year Ended October 31, 2005 10.30 0.51%(f) 285 1.58%(f) 3.14%(f) 1.89%(f) 176.90%
Year Ended October 31, 2006 10.30 4.67% 236 1.54% 4.07% 2.19% 273.91%
Year Ended October 31, 2007 10.46 5.92%(g)(h) 30 1.43%(g) 4.24%(g) 2.19% 252.26%
- --------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding.
(a) The per share amounts and percentages reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor Core Plus Fixed Income Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover rate is calculated on the basis of the respective
Portfolio in which the Fund invests all of its investable assets.
(f) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the respective Portfolio in which the Fund invests related to violation of
certain investment policies and limitations. The corresponding impact to
the net expense ratio, net income ratio, gross expense ratio and total
return were 0.11%, 0.11% and 0.12% for Class A Shares, Class B Shares and
Class C Shares, respectively.
(g) During the year ended October 31, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total returns were 0.03%,
0.03%, and 0.02% for Class A Shares, Class B Shares, and Class C Shares,
respectively.
(h) During the year ended October 31, 2007, the respective Portfolio in which
the Fund invests received monies related to certain nonrecurring
litigation settlements. The corresponding impact to the total return was
1.77%, 1.76% and 1.77% for Class A Shares, Class B Shares and Class C
Shares, respectively.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 52
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--HIGH YIELD FIXED INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- -------------------------------------
NET REALIZED
AND UNREALIZED NET
NET ASSET GAINS REALIZED
VALUE, NET (LOSSES) FROM TOTAL FROM NET GAINS FROM
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended October 31, 2006(f) $ 10.00 0.69 0.12 0.81 (0.68) -- (0.68)
Year Ended October 31, 2007 10.13 0.79* (0.09) 0.70 (0.79) (0.03) (0.82)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period Ended October 31, 2006(g) $ 10.00 0.62 0.13 0.75 (0.61) -- (0.61)
Year Ended October 31, 2007 10.14 0.71* (0.09) 0.62 (0.72) (0.03) (0.75)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period Ended October 31, 2006(h) $ 10.01 0.58 0.15 0.73 (0.58) -- (0.58)
Year Ended October 31, 2007 10.16 0.71* (0.09) 0.62 (0.72) (0.03) (0.75)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Period Ended October 31, 2006(i) $ 10.00 0.71 0.14 0.85 (0.71) -- (0.71)
Year Ended October 31, 2007 10.14 0.81* (0.09) 0.72 (0.82) (0.03) (0.85)
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
-------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF NET INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME TO EXPENSES TO PORTFOLIO
VALUE, END TOTAL PERIOD AVERAGE NET AVERAGE AVERAGE NET TURNOVER
OF PERIOD RETURN(b) (000'S) ASSETS(c) NET ASSETS(c) ASSETS(c)(d) RATE(e)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended October 31, 2006(f) $ 10.13 8.38% $ 4,742 0.80% 7.27% 3.53% 13.61%
Year Ended October 31, 2007 10.01 7.13% 3,706 0.80% 7.71% 2.97% 30.77%
- -------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period Ended October 31, 2006(g) $ 10.14 7.68% $ 2,106 1.55% 6.65% 4.26% 13.61%
Year Ended October 31, 2007 10.01 6.22% 2,447 1.55% 6.95% 3.69% 30.77%
- -------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period Ended October 31, 2006(h) $ 10.16 7.42% $ 241 1.55% 6.65% 4.29% 13.61%
Year Ended October 31, 2007 10.03 6.20% 217 1.55% 6.90% 3.69% 30.77%
- -------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Period Ended October 31, 2006(i) $ 10.14 8.73% $ 2,568 0.55% 7.53% 3.29% 13.61%
Year Ended October 31, 2007 10.01 7.29% 2,642 0.55% 7.95% 2.68% 30.77%
- -------------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding.
(a) The per share amounts and percentages reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor High Yield Fixed Income Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover rate is calculated on the basis of the respective
Portfolio in which the Fund invests all its investable assets.
(f) Class A Shares commenced operations on November 18, 2005.
(g) Class B Shares commenced operations on November 21, 2005.
(h) Class C Shares commenced operations on December 14, 2005.
(i) Class I Shares commenced operations on November 18, 2005.
53 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--INTERMEDIATE DURATION FIXED INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- -------------------------------------
NET REALIZED
AND UNREALIZED NET
NET ASSET GAINS REALIZED
VALUE, NET (LOSSES) FROM TOTAL FROM NET GAINS FROM
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- --------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year Ended October 31, 2003 $ 10.43 0.33 0.08 0.41 (0.37) -- (0.37)
Year Ended October 31, 2004 10.47 0.32* 0.06 0.38 (0.33) (0.46) (0.79)
Year Ended October 31, 2005 10.06 0.33 (0.29) 0.04 (0.37) (0.06) (0.43)
Year Ended October 31, 2006 9.67 0.45 0.05 0.50 (0.45) -- (0.45)
Year Ended October 31, 2007 9.72 0.50* 0.33 0.83 (0.50) -- (0.50)
- --------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year Ended October 31, 2003 $ 10.45 0.25 0.08 0.33 (0.29) -- (0.29)
Year Ended October 31, 2004 10.49 0.23 0.08 0.31 (0.26) (0.46) (0.72)
Year Ended October 31, 2005 10.08 0.25 (0.29) (0.04) (0.29) (0.06) (0.35)
Year Ended October 31, 2006 9.69 0.38 0.04 0.42 (0.38) -- (0.38)
Year Ended October 31, 2007 9.73 0.43* 0.33 0.76 (0.42) -- (0.42)
- --------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year Ended October 31, 2003 $ 10.44 0.25 0.09 0.34 (0.29) -- (0.29)
Year Ended October 31, 2004 10.49 0.22* 0.08 0.30 (0.26) (0.46) (0.72)
Year Ended October 31, 2005 10.07 0.25 (0.29) (0.04) (0.29) (0.06) (0.35)
Year Ended October 31, 2006 9.68 0.38 0.05 0.43 (0.38) -- (0.38)
Year Ended October 31, 2007 9.73 0.43* 0.33 0.76 (0.43) -- (0.43)
- --------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Year Ended October 31, 2003 $ 10.45 0.33 0.10 0.43 (0.40) -- (0.40)
Year Ended October 31, 2004 10.48 0.33 0.09 0.42 (0.36) (0.46) (0.82)
Year Ended October 31, 2005 10.08 0.35 (0.30) 0.05 (0.39) (0.06) (0.45)
Year Ended October 31, 2006 9.68 0.47 0.05 0.52 (0.47) -- (0.47)
Year Ended October 31, 2007 9.73 0.53* 0.32 0.85 (0.52) -- (0.52)
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
---------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF NET INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME TO EXPENSES TO PORTFOLIO
VALUE, END TOTAL PERIOD AVERAGE NET AVERAGE AVERAGE NET TURNOVER
OF PERIOD RETURN(b) (000'S) ASSETS(c) NET ASSETS(c) ASSETS(c)(d) RATE(e)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year Ended October 31, 2003 $ 10.47 3.97% $ 3,309 1.01% 2.99% 1.01% 98.42%
Year Ended October 31, 2004 10.06 3.90% 1,558 1.10% 3.01% 1.21% 50.06%
Year Ended October 31, 2005 9.67 0.31%(f) 1,055 1.01%(f) 3.37%(f) 1.10%(f) 107.26%
Year Ended October 31, 2006 9.72 5.30% 976 0.80% 4.61% 1.65% 236.51%
Year Ended October 31, 2007 10.05 8.67%(g)(h) 803 0.53%(g) 5.02%(g) 1.67% 219.76%
- -------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year Ended October 31, 2003 $ 10.49 3.19% $ 6,443 1.73% 2.30% 1.73% 98.42%
Year Ended October 31, 2004 10.08 3.11% 6,321 1.85% 2.28% 1.96% 50.06%
Year Ended October 31, 2005 9.69 (0.44)%(f) 4,852 1.76%(f) 2.60%(f) 1.85%(f) 107.26%
Year Ended October 31, 2006 9.73 4.40% 3,738 1.56% 3.84% 2.40% 236.51%
Year Ended October 31, 2007 10.07 7.96%(g)(h) 2,982 1.28%(g) 4.26%(g) 2.41% 219.76%
- -------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year Ended October 31, 2003 $ 10.49 3.29% $ 2,544 1.73% 2.31% 1.73% 98.42%
Year Ended October 31, 2004 10.07 3.03% 679 1.85% 2.25% 1.96% 50.06%
Year Ended October 31, 2005 9.68 (0.44)%(f) 527 1.77%(f) 2.60%(f) 1.86%(f) 107.26%
Year Ended October 31, 2006 9.73 4.51% 503 1.55% 3.86% 2.40% 236.51%
Year Ended October 31, 2007 10.06 7.86%(g)(h) 305 1.27%(g) 4.27%(g) 2.43% 219.76%
- -------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Year Ended October 31, 2003 $ 10.48 4.12% $ 31,368 0.69% 3.62% 0.69% 98.42%
Year Ended October 31, 2004 10.08 4.25% 31,217 0.85% 3.28% 0.96% 50.06%
Year Ended October 31, 2005 9.68 0.45%(f) 24,744(f) 0.76%(f) 3.60%(f) 0.85%(f) 107.26%
Year Ended October 31, 2006 9.73 5.56% 13,000 0.58% 4.77% 1.38% 236.51%
Year Ended October 31, 2007 10.06 8.93%(g)(h) 9,955 0.28%(g) 5.25%(g) 1.42% 219.76%
- -------------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding.
(a) The per share amounts and percentages reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor Intermediate Duration Fixed Income Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover rate is calculated on the basis of the respective
Portfolio in which the Fund invests all of its investable assets.
(f) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the respective Portfolio in which the Fund invests related to violation of
certain investment policies and limitations. The corresponding impact to
the net expense ratio, net income ratio, gross expense ratio and total
return were 0.09%, 0.09%, 0.09% and 0.08% for Class A Shares, Class B
Shares, Class C Shares and Class I Shares, respectively.
(g) During the year ended October 31, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total returns were 0.12%,
0.12%, 0.13%, and 0.12% for Class A Shares, Class B Shares, Class C Shares
and Class I Shares, respectively.
(h) During the year ended October 31, 2007, the respective Portfolio in which
the Fund invests received monies related to certain nonrecurring
litigation settlements. The corresponding impact to the total return was
3.75%, 3.74%, 3.74% and 3.75% for Class A Shares, Class B Shares, Class C
Shares and Class I Shares, respectively.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 54
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--NEW YORK TAX-FREE BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- -------------------------------------
NET REALIZED
AND UNREALIZED NET
NET ASSET GAINS REALIZED
VALUE, NET (LOSSES) FROM TOTAL FROM NET GAINS FROM
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- --------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year Ended October 31, 2003 $ 11.09 0.38 0.12 0.50 (0.38) -- (0.38)
Year Ended October 31, 2004 11.21 0.34 0.17 0.51 (0.34) (0.06) (0.40)
Year Ended October 31, 2005 11.32 0.34 (0.22) 0.12 (0.34) (0.02) (0.36)
Year Ended October 31, 2006 11.08 0.37 0.12 0.49 (0.37) (0.02) (0.39)
Year Ended October 31, 2007 11.18 0.39* (0.14) 0.25 (0.38) -- (0.38)
- --------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year Ended October 31, 2003 $ 11.08 0.30 0.12 0.42 (0.30) -- (0.30)
Year Ended October 31, 2004 11.20 0.25 0.17 0.42 (0.25) (0.06) (0.31)
Year Ended October 31, 2005 11.31 0.25 (0.22) 0.03 (0.25) (0.02) (0.27)
Year Ended October 31, 2006 11.07 0.28 0.12 0.40 (0.28) (0.02) (0.30)
Year Ended October 31, 2007 11.17 0.30* (0.13) 0.17 (0.30) -- (0.30)
- --------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year Ended October 31, 2003 $ 11.12 0.30 0.13 0.43 (0.30) -- (0.30)
Year Ended October 31, 2004 11.25 0.25 0.16 0.41 (0.25) (0.06) (0.31)
Year Ended October 31, 2005 11.35 0.25 (0.22) 0.03 (0.25) (0.02) (0.27)
Year Ended October 31, 2006 11.11 0.28 0.12 0.40 (0.28) (0.02) (0.30)
Year Ended October 31, 2007 11.21 0.31* (0.14) 0.17 (0.30) -- (0.30)
- --------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Year Ended October 31, 2003 $ 11.09 0.41 0.12 0.53 (0.41) -- (0.41)
Year Ended October 31, 2004 11.21 0.37 0.17 0.54 (0.37) (0.06) (0.43)
Year Ended October 31, 2005 11.32 0.37 (0.22) 0.15 (0.37) (0.02) (0.39)
Year Ended October 31, 2006 11.08 0.39 0.12 0.51 (0.39) (0.02) (0.41)
Year Ended October 31, 2007 11.18 0.41* (0.13) 0.28 (0.41) -- (0.41)
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
--------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF NET INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME TO EXPENSES TO PORTFOLIO
VALUE, END TOTAL PERIOD AVERAGE NET AVERAGE AVERAGE NET TURNOVER
OF PERIOD RETURN(a) (000'S) ASSETS(b) NET ASSETS(b) ASSETS(b)(c) RATE(d)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year Ended October 31, 2003 $ 11.21 4.57% $ 22,326 0.91% 3.39% 0.91% 29.79%
Year Ended October 31, 2004 11.32 4.57% 32,889 0.87% 3.01% 0.87% 26.96%
Year Ended October 31, 2005 11.08 1.03%(e) 34,441 0.88%(e) 3.02%(e) 0.89% 13.87%
Year Ended October 31, 2006 11.18 4.45% 32,727 0.93% 3.30% 0.93% 12.69%
Year Ended October 31, 2007 11.05 2.34%(f) 32,305 0.86%(f) 3.50%(f) 0.89% 17.03%
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year Ended October 31, 2003 $ 11.20 3.80% $ 18,352 1.66% 2.64% 1.66% 29.79%
Year Ended October 31, 2004 11.31 3.80% 17,457 1.62% 2.27% 1.62% 26.96%
Year Ended October 31, 2005 11.07 0.28%(e) 16,258 1.63%(e) 2.27%(e) 1.64% 13.87%
Year Ended October 31, 2006 11.17 3.67% 13,735 1.68% 2.56% 1.68% 12.69%
Year Ended October 31, 2007 11.04 1.58%(f) 8,635 1.61%(f) 2.75%(f) 1.64% 17.03%
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year Ended October 31, 2003 $ 11.25 3.87% $ 3,252 1.66% 2.64% 1.66% 29.79%
Year Ended October 31, 2004 11.35 3.69% 2,340 1.62% 2.26% 1.62% 26.96%
Year Ended October 31, 2005 11.11 0.28%(e) 1,782 1.63%(e) 2.26%(e) 1.64% 13.87%
Year Ended October 31, 2006 11.21 3.66% 1,246 1.68% 2.55% 1.68% 12.69%
Year Ended October 31, 2007 11.08 1.57%(f) 807 1.60%(f) 2.75%(f) 1.63% 17.03%
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Year Ended October 31, 2003 $ 11.21 4.84% $ 20,290 0.67% 3.67% 0.67% 29.79%
Year Ended October 31, 2004 11.32 4.83% 19,908 0.62% 3.27% 0.62% 26.96%
Year Ended October 31, 2005 11.08 1.28%(e) 16,981 0.63%(e) 3.27%(e) 0.64% 13.87%
Year Ended October 31, 2006 11.18 4.71% 13,746 0.68% 3.55% 0.68% 12.69%
Year Ended October 31, 2007 11.05 2.59%(f) 19,282 0.60%(f) 3.74%(f) 0.63% 17.03%
- ----------------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding.
(a) Not Annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(b) Annualized for periods less than one year.
(c) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(d) Portfolio turnover rate is calculated on the basis of the Fund as a whole,
without the distinguishing between the classes of shares issued.
(e) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the Fund related to violation of certain investment policies and
limitations. The corresponding impact to the net expense ratio, net income
ratio and total return were 0.01%, 0.01%, 0.01% and 0.01% for Class A
Shares, Class B Shares, Class C Shares and Class I Shares, respectively.
(f) During the year ended October 31, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total returns were 0.03%,
0.04%, 0.03%, and 0.03% for Class A Shares, Class B Shares, Class C Shares
and Class I Shares, respectively.
55 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--GROWTH FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
----------------------------------------- -------------------------------------
NET REALIZED
AND UNREALIZED NET
NET ASSET GAINS REALIZED
VALUE, NET (LOSSES) FROM TOTAL FROM NET GAINS FROM
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended October 31, 2004(f) $ 12.68 (0.02) (0.11) (0.13) -- -- --
Year Ended October 31, 2005 12.55 0.03 1.59 1.62 (0.05) -- (0.05)
Year Ended October 31, 2006 14.12 (0.02)* 0.99 0.97 -- (0.23) (0.23)
Year Ended October 31, 2007 14.86 --*(i) 4.23 4.23 (0.01) (1.13) (1.14)
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period Ended October 31, 2004(f) $ 12.28 (0.07) (0.10) (0.17) -- -- --
Year Ended October 31, 2005 12.11 (0.07) 1.53 1.46 -- -- --
Year Ended October 31, 2006 13.57 (0.12)* 0.95 0.83 -- (0.23) (0.23)
Year Ended October 31, 2007 14.17 (0.11)* 3.99 3.88 -- (1.13) (1.13)
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period Ended October 31, 2004(f) $ 12.35 (0.06) (0.12) (0.18) -- -- --
Year Ended October 31, 2005 12.17 (0.07) 1.54 1.47 -- -- --
Year Ended October 31, 2006 13.64 (0.13)* 0.99 0.83 -- (0.23) (0.23)
Year Ended October 31, 2007 14.24 (0.11)* 4.02 3.91 -- (1.13) (1.13)
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Period Ended October 31, 2004(f) $ 12.67 (0.01) (0.11) (0.12) -- -- --
Year Ended October 31, 2005 12.55 0.06 1.59 1.65 (0.08) -- (0.08)
Year Ended October 31, 2006 14.12 0.02* 0.99 1.01 -- (0.23) (0.23)
Year Ended October 31, 2007 14.90 0.03* 4.24 4.27 (0.02) (1.13) (1.15)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
--------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF NET INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME (LOSS) EXPENSES TO PORTFOLIO
VALUE, END TOTAL PERIOD AVERAGE NET TO AVERAGE AVERAGE NET TURNOVER
OF PERIOD RETURN(b) (000'S) ASSETS(c) NET ASSETS(c) ASSETS(c)(d) RATE(e)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended October 31, 2004(f) $ 12.55 (1.03)% $ 17,372 1.20% (0.42)% 1.31% 53.08%
Year Ended October 31, 2005 14.12 12.91%(g) 21,866 1.15%(g) 0.19%(g) 1.35%(g) 79.54%
Year Ended October 31, 2006 14.86 6.92% 21,985 1.20% (0.14)% 1.44% 75.06%
Year Ended October 31, 2007 17.95 30.45%(h) 30,858 1.11%(h) (0.03)%(h) 1.22% 57.04%
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period Ended October 31, 2004(f) $ 12.11 (1.38)% $ 1,402 1.95% (1.17)% 2.06% 53.08%
Year Ended October 31, 2005 13.57 12.06%(g) 1,317 1.90%(g) (0.48)%(g) 2.09%(g) 79.54%
Year Ended October 31, 2006 14.17 6.16% 1,446 1.95% (0.88)% 2.19% 75.06%
Year Ended October 31, 2007 16.92 29.43%(h) 1,630 1.86%(h) (0.78)%(h) 1.98% 57.04%
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period Ended October 31, 2004(f) $ 12.17 (1.46)% $ 309 1.95% (1.18)% 2.06% 53.08%
Year Ended October 31, 2005 13.64 12.08%(g) 344 1.90%(g) (0.51)%(g) 2.10%(g) 79.54%
Year Ended October 31, 2006 14.24 6.13% 270 1.95% (0.89)% 2.18% 75.06%
Year Ended October 31, 2007 17.02 29.49%(h) 98 1.86%(h) (0.79)%(h) 1.96% 57.04%
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Period Ended October 31, 2004(f) $ 12.55 0.95% $ 19,115 0.95% (0.17)% 1.06% 53.08%
Year Ended October 31, 2005 14.12 13.17%(g) 13,107 0.90%(g) 0.56%(g) 1.07%(g) 79.54%
Year Ended October 31, 2006 14.90 7.21% 15,042 0.95% 0.12% 1.19% 75.06%
Year Ended October 31, 2007 18.02 30.73%(h) 30,295 0.87%(h) 0.20%(h) 0.96% 57.04%
- ----------------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding.
(a) The per share amounts and percentages reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor Growth Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover rate is calculated on the basis of the respective
Portfolio in which the Fund invests all its investable assets.
(f) Class A Shares, Class B Shares, Class C Shares and Class I Shares
commenced operations on May 10, 2004.
(g) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the respective Portfolio in which the Fund invests related to violation of
certain investment policies and limitations. The corresponding impact to
the net expense ratio, net income ratio, gross expense ratio and total
return were 0.05%, 0.05%, 0.05% and 0.05% for Class A Shares, Class B
Shares, Class C Shares and Class I Shares, respectively.
(h) During the year ended October 31, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total returns were 0.09%,
0.09%, 0.09%, and 0.08% for Class A Shares, Class B Shares, Class C Shares
and Class I Shares, respectively.
(i) Represents less than $0.005.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 56
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- ----------------------
NET REALIZED
AND UNREALIZED
NET ASSET GAINS
VALUE, NET (LOSSES) FROM TOTAL FROM NET
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME DIVIDENDS
- -----------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year Ended October 31, 2003 $ 7.21 0.06 1.18 1.24 (0.06) (0.06)
Year Ended October 31, 2004 8.39 0.05 0.36 0.41 (0.04) (0.04)
Year Ended October 31, 2005 8.76 0.07 1.01 1.08 (0.09) (0.09)
Year Ended October 31, 2006 9.75 (0.02)* 1.25 1.23 -- --
Year Ended October 31, 2007 10.98 0.01* 3.07 3.08 (0.02) (0.02)
- -----------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year Ended October 31, 2003 $ 7.14 (0.01) 1.18 1.17 (0.01) (0.01)
Year Ended October 31, 2004 8.30 (0.02)* 0.36 0.34 (0.00)> (0.00)>
Year Ended October 31, 2005 8.64 (0.01) 1.01 1.00 (0.03) (0.03)
Year Ended October 31, 2006 9.61 (0.10)* 1.23 1.13 -- --
Year Ended October 31, 2007 10.74 (0.07)* 2.99 2.92 -- --
- -----------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period Ended October 31, 2004(f) $ 8.40 (0.02)* 0.38 0.36 (0.03) (0.03)
Year Ended October 31, 2005 8.73 (0.01) 1.02 1.01 (0.04) (0.04)
Year Ended October 31, 2006 9.70 (0.09) 1.22 1.13 -- --
Year Ended October 31, 2007 10.83 (0.08)* 3.02 2.94 -- --
- -----------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Year Ended October 31, 2003 $ 7.22 0.07 1.19 1.26 (0.08) (0.08)
Year Ended October 31, 2004 8.40 0.07 0.36 0.43 (0.06) (0.06)
Year Ended October 31, 2005 8.77 0.10 0.99 1.10 (0.12) (0.12)
Year Ended October 31, 2006 9.75 0.01* 1.25 1.26 (0.01) (0.01)
Year Ended October 31, 2007 11.00 0.05* 3.08 3.13 (0.04) (0.04)
- -----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
--------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF NET INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME (LOSS) EXPENSES TO PORTFOLIO
VALUE, END TOTAL PERIOD AVERAGE NET TO AVERAGE AVERAGE NET TURNOVER
OF PERIOD RETURN(a) (000'S) ASSETS(b) NET ASSETS(b) ASSETS(b)(c) RATE(d)
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year Ended October 31, 2003 $ 8.39 17.26% $ 1,827 1.04% 0.70% 1.04% 64.52%
Year Ended October 31, 2004 8.76 4.94% 1,500 1.02% 0.50% 1.02% 73.68%
Year Ended October 31, 2005 9.75 12.36%(e) 1,260 1.11%(e) 0.73%(e) 1.16% 106.49%
Year Ended October 31, 2006 10.98 12.62% 1,394 1.26% (0.22)% 1.47% 34.85%
Year Ended October 31, 2007 14.04 28.09%(g) 2,048 1.08%(g) 0.10%(g) 1.32% 26.76%
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year Ended October 31, 2003 $ 8.30 16.40% $ 2,235 1.79% (0.07)% 1.79% 64.52%
Year Ended October 31, 2004 8.64 4.13% 3,820 1.77% (0.25)% 1.77% 73.68%
Year Ended October 31, 2005 9.61 11.61%(e) 4,194 1.87%(e) (0.10)%(e) 1.93% 106.49%
Year Ended October 31, 2006 10.74 11.76% 4,537 2.01% (0.97)% 2.22% 34.85%
Year Ended October 31, 2007 13.66 27.19%(g) 5,051 1.83%(g) (0.62)%(g) 2.07% 26.76%
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period Ended October 31, 2004(f) $ 8.73 3.57% $ 41 1.77% (0.28)% 1.77% 73.68%
Year Ended October 31, 2005 9.70 11.59%(e) 49 1.88%(e) (0.13)%(e) 1.93% 106.49%
Year Ended October 31, 2006 10.83 11.65% 35 2.01% (0.90)% 2.22% 34.85%
Year Ended October 31, 2007 13.77 27.15%(g) 58 1.82%(g) (0.64)%(g) 2.07% 26.76%
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Year Ended October 31, 2003 $ 8.40 17.63% $203,458 0.79% 0.96% 0.79% 64.52%
Year Ended October 31, 2004 8.77 5.18% 196,219 0.77% 0.77% 0.77% 73.68%
Year Ended October 31, 2005 9.75 12.61%(e) 46,888 0.80%(e) 1.20%(e) 0.86% 106.49%
Year Ended October 31, 2006 11.00 12.88% 40,925 1.01% 0.04% 1.22% 34.85%
Year Ended October 31, 2007 14.09 28.46%(g) 45,399 0.83%(g) 0.38%(g) 1.07% 26.76%
- -----------------------------------------------------------------------------------------------------------------------------------
> Less than $0.005 per share.
* Calculated based on average shares outstanding.
(a) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(b) Annualized for periods less than one year.
(c) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been indicated.
(d) Portfolio turnover rate is calculated on the basis of the Fund as a whole,
without the distinguishing between the classes of shares issued.
(e) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the Fund related to violation of certain investment policies and
limitations. The corresponding impact to the net expense ratio, net income
ratio and total return were 0.02%, 0.02%, 0.02% and 0.03% for Class A
Shares, Class B Shares, Class C Shares and Class I Shares, respectively.
(f) Class C shares commenced operations on November 3, 2003.
(g) During the year ended October 31, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total returns were 0.12%,
0.12%, 0.13%, and 0.12% for Class A Shares, Class B Shares, Class C Shares
and Class I Shares, respectively.
57 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC ADVISOR FUNDS TRUST--INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- -------------------------------------
NET REALIZED
AND UNREALIZED NET
GAINS REALIZED
(LOSSES) FROM GAINS FROM
NET ASSET INVESTMENT INVESTMENT
VALUE, NET AND FOREIGN TOTAL FROM NET AND FOREIGN
BEGINNING INVESTMENT CURRENCY INVESTMENT INVESTMENT CURRENCY TOTAL
OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- --------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year Ended October 31, 2003 $ 10.73 0.20 2.02 2.22 (0.19) -- (0.19)
Year Ended October 31, 2004 12.76 0.18 2.32 2.50 (0.39) -- (0.39)
Year Ended October 31, 2005 14.87 0.31 2.59 2.90 (0.23) -- (0.23)
Year Ended October 31, 2006 17.54 0.38 5.14 5.52 (0.36) (0.60) (0.96)
Year Ended October 31, 2007 22.10 0.50 4.69 5.19 (0.55) (1.84) (2.39)
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF NET INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME TO EXPENSES TO PORTFOLIO
VALUE, END TOTAL PERIOD AVERAGE NET AVERAGE AVERAGE NET TURNOVER
OF PERIOD RETURN(b) (000'S) ASSETS NET ASSETS ASSETS(c) RATE(d)
- -----------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year Ended October 31, 2003 $ 12.76 21.03% $ 123,658 1.07% 1.16% 1.07% 68.51%
Year Ended October 31, 2004 14.87 20.06% 148,317 1.05% 1.39% 1.05% 106.11%
Year Ended October 31, 2005 17.54 19.69% 193,144 0.92% 2.01% 0.92% 31.32%
Year Ended October 31, 2006 22.10 32.70% 283,749 0.97% 2.02% 0.97% 33.39%
Year Ended October 31, 2007 24.90 25.41%(e)(f) 385,717 0.87%(e) 2.15%(e) 0.89% 26.08%
- -----------------------------------------------------------------------------------------------------------------------------
(a) The per share amounts and percentages reflect income and expense assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor International Portfolio.
(b) Total return calculations do not include any sales or redemption charges.
(c) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(d) Portfolio turnover rate is calculated on the basis of the respective
Portfolio in which the Fund invests all of its investable assets.
(e) During the year ended October 31, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total return were 0.02%
for the Advisor Shares.
(f) During the year ended October 31, 2007, the Fund received monies related
to certain nonrecurring litigation settlements. The corresponding impact
to the total return was 0.18%.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 58
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--MID-CAP FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- ------------------------
NET REALIZED
AND UNREALIZED NET
NET ASSET GAINS REALIZED
VALUE, NET (LOSSES) FROM TOTAL FROM GAINS FROM
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD INCOME TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS
- -------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year Ended October 31, 2003 $ 6.30 (0.03)* 1.68 1.65 -- --
Year Ended October 31, 2004 7.95 (0.04)* 0.53 0.49 -- --
Year Ended October 31, 2005 8.44 (0.06)* 1.49 1.43 -- --
Year Ended October 31, 2006 9.87 (0.00)> 1.19 1.19 (2.18) (2.18)
Year Ended October 31, 2007 8.88 (0.04)* 2.59 2.55 (0.62) (0.62)
- -------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year Ended October 31, 2003 $ 6.19 (0.08) 1.64 1.56 -- --
Year Ended October 31, 2004 7.75 (0.10)* 0.51 0.41 -- --
Year Ended October 31, 2005 8.16 (0.13)* 1.45 1.32 -- --
Year Ended October 31, 2006 9.48 (0.06)* 1.13 1.07 (2.18) (2.18)
Year Ended October 31, 2007 8.37 (0.10)* 2.42 2.32 (0.62) (0.62)
- -------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year Ended October 31, 2003 $ 6.20 (0.08) 1.68 1.60 -- --
Year Ended October 31, 2004 7.80 (0.10)* 0.52 0.42 -- --
Year Ended October 31, 2005 8.22 (0.13)* 1.45 1.32 -- --
Year Ended October 31, 2006 9.54 (0.06)* 1.15 1.09 (2.18) (2.18)
Year Ended October 31, 2007 8.45 (0.10)* 2.43 2.33 (0.62) (0.62)
- -------------------------------------------------------------------------------------------------------------
TRUST SHARES
Year Ended October 31, 2003 $ 6.33 (0.01) 1.69 1.68
Year Ended October 31, 2004 8.01 (0.02)* 0.53 0.51
Year Ended October 31, 2005 8.52 (0.02)* 1.48 1.46
Year Ended October 31, 2006 9.98 0.03* 1.20 1.23 (2.18) (2.18)
Year Ended October 31, 2007 9.03 (0.02)* 2.64 2.62 (0.62) (0.62)
- -------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
--------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF NET INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME (LOSS) EXPENSES TO PORTFOLIO
VALUE, END TOTAL PERIOD AVERAGE NET TO AVERAGE AVERAGE NET TURNOVER
OF PERIOD RETURN(a) (000'S) ASSETS(b) NET ASSETS(b) ASSETS(b)(c) RATE(d)
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year Ended October 31, 2003 $ 7.95 26.19% $ 1,539 1.10% (0.43)% 1.10% 100.86%
Year Ended October 31, 2004 8.44 6.16% 1,878 1.09% (0.54)% 1.09% 106.72%
Year Ended October 31, 2005 9.87 16.94%(e) 2,151 1.38%(e) (0.65)%(e) 1.53% 169.62%
Year Ended October 31, 2006 8.88 13.66% 3,185 1.48% (0.01)% 1.85% 53.16%
Year Ended October 31, 2007 10.81 30.51%(f) 5,897 1.19%(f) (0.45)%(f) 1.70% 66.16%
- ----------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year Ended October 31, 2003 $ 7.75 25.20% $ 6,009 1.85% (1.16)% 1.85% 100.86%
Year Ended October 31, 2004 8.16 5.29% 7,037 1.84% (1.29)% 1.84% 106.72%
Year Ended October 31, 2005 9.48 16.18%(e) 7,415 2.11%(e) (1.38)%(e) 2.27% 169.62%
Year Ended October 31, 2006 8.37 12.78% 7,425 2.25% (0.72)% 2.60% 53.16%
Year Ended October 31, 2007 10.07 29.56%(f) 6,285 1.92%(f) (1.15)%(f) 2.48% 66.16%
- ----------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year Ended October 31, 2003 $ 7.80 25.81% $ 54 1.85% (1.23)% 1.85% 100.86%
Year Ended October 31, 2004 8.22 5.38% 94 1.84% (1.29)% 1.84% 106.72%
Year Ended October 31, 2005 9.54 16.06%(e) 111 2.13%(e) (1.40)%(e) 2.28% 169.62%
Year Ended October 31, 2006 8.45 12.93% 95 2.25% (0.72)% 2.60% 53.16%
Year Ended October 31, 2007 10.16 29.40%(f) 79 1.93%(f) (1.16)%(f) 2.46% 66.16%
- ----------------------------------------------------------------------------------------------------------------------------
TRUST SHARES
Year Ended October 31, 2003 $ 8.01 26.54% $ 160,621 0.85% (0.17)% 0.85% 100.86%
Year Ended October 31, 2004 8.52 6.37% 117,354 0.84% (0.28)% 0.84% 106.72%
Year Ended October 31, 2005 9.98 17.14%(e) 19,618 0.89%(e) (0.19)%(e) 1.02% 169.62%
Year Ended October 31, 2006 9.03 13.97% 17,029 1.26% 0.29% 1.60% 53.16%
Year Ended October 31, 2007 11.03 30.80%(f) 20,671 0.93%(f) (0.19)%(f) 1.47% 66.16%
- ----------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding.
> Less than $0.005 per share.
(a) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(b) Annualized for periods less than one year.
(c) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been indicated.
(d) Portfolio turnover rate is calculated on the basis of the Fund as a whole,
without the distinguishing between the classes of shares issued.
(e) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the Fund related to violation of certain investment policies and
limitations. The corresponding impact to the net expense ratio and net
income ratio were 0.10%, 0.10%, 0.10% and 0.09% for Class A Shares, Class
B Shares, Class C Shares and Trust Shares, respectively. The corresponding
impact to the total return was 0.57%, 0.57%, 0.57% and 0.56% for Class A.
(f) During the year ended October 31, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total returns were 0.16%,
0.18%, 0.17%, and 0.17% for Class A Shares, Class B Shares, Class C Shares
and Class Y Shares, respectively.
59 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--OPPORTUNITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- ------------------------
NET REALIZED
AND UNREALIZED NET
NET ASSET GAINS REALIZED
VALUE, NET (LOSSES) FROM TOTAL FROM GAINS FROM
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD INCOME TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS
- -------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year Ended October 31, 2003 $ 7.83 (0.10) 2.63 2.53 -- --
Year Ended October 31, 2004 10.36 (0.13) 0.68 0.55 -- --
Year Ended October 31, 2005 10.91 (0.14) 1.62 1.48 -- --
Year Ended October 31, 2006 12.39 (0.14)* 2.43 2.29 (0.39) (0.39)
Year Ended October 31, 2007 14.29 (0.16)* 4.01 3.85 (1.73) (1.73)
- -------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year Ended October 31, 2003 $ 7.51 (0.18)* 2.52 2.34 -- --
Year Ended October 31, 2004 9.85 (0.20) 0.64 0.44 -- --
Year Ended October 31, 2005 10.29 (0.22) 1.53 1.31 -- --
Year Ended October 31, 2006 11.60 (0.23)* 2.27 2.04 (0.39) (0.39)
Year Ended October 31, 2007 13.25 (0.25)* 3.67 3.42 (1.73) (1.73)
- -------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year Ended October 31, 2003 $ 7.57 (0.18) 2.55 2.37 -- --
Year Ended October 31, 2004 9.94 (0.22) 0.67 0.45 -- --
Year Ended October 31, 2005 10.39 (0.21) 1.53 1.32 -- --
Year Ended October 31, 2006 11.71 (0.23)* 2.29 2.06 (0.39) (0.39)
Year Ended October 31, 2007 13.38 (0.26)* 3.72 3.46 (1.73) (1.73)
- -------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
--------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF NET INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME (LOSS) EXPENSES TO PORTFOLIO
VALUE, END TOTAL PERIOD AVERAGE NET TO AVERAGE AVERAGE NET TURNOVER
OF PERIOD RETURN(b) (000'S) ASSETS(c) NET ASSETS(c) ASSETS(c)(d) RATE(e)
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year Ended October 31, 2003 $ 10.36 32.31% $ 16,695 1.65% (1.36)% 2.09% 152.05%
Year Ended October 31, 2004 10.91 5.31% 20,902 1.61% (1.24)% 1.72% 81.75%
Year Ended October 31, 2005 12.39 13.57%(f) 22,875 1.51%(f) (1.11)%(f) 1.69%(f) 63.95%
Year Ended October 31, 2006 14.29 18.81% 24,463 1.55% (1.04)% 1.70% 60.83%
Year Ended October 31, 2007 16.41 30.28%(g) 15,057 1.52%(g) (1.13)%(g) 1.77% 69.41%
- ----------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year Ended October 31, 2003 $ 9.85 31.16% $ 3,952 2.40% (2.11)% 2.83% 152.05%
Year Ended October 31, 2004 10.29 4.47% 4,611 2.36% (2.00)% 2.47% 81.75%
Year Ended October 31, 2005 11.60 12.73%(f) 4,539 2.26%(f) (1.86)%(f) 2.44%(f) 63.95%
Year Ended October 31, 2006 13.25 17.91% 4,768 2.30% (1.79)% 2.45% 60.83%
Year Ended October 31, 2007 14.94 29.30%(g) 4,928 2.26%(g) (1.91)%(g) 2.52% 69.41%
- ----------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year Ended October 31, 2003 $ 9.94 31.31% $ 395 2.40% (2.11)% 2.84% 152.05%
Year Ended October 31, 2004 10.39 4.53% 344 2.37% (2.00)% 2.48% 81.75%
Year Ended October 31, 2005 11.71 12.70%(f) 306 2.26%(f) (1.86)%(f) 2.44%(f) 63.95%
Year Ended October 31, 2006 13.38 17.92% 299 2.30% (1.78)% 2.45% 60.83%
Year Ended October 31, 2007 15.11 29.32%(g) 334 2.27%(g) (1.91)%(g) 2.50% 69.41%
- ----------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding.
(a) The per share amounts and percentages reflect income and expense assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor Opportunity Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover rate is calculated on the basis of the respective
Portfolio in which the Fund invests all of its investable assets.
(f) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the respective Portfolio in which the Fund invests related to violation of
certain investment policies and limitations. The corresponding impact to
the net expense ratio, net income ratio, gross expense ratio and total
return were 0.04%, 0.04% and 0.04% for Class A Shares, Class B Shares and
Class C Shares, respectively.
(g) During the year ended October 31, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total returns were 0.03%,
0.04%, and 0.03% for Class A Shares, Class B Shares, and Class C Shares,
respectively.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 60
- --------------------------------------------------------------------------------
HSBC ADVISOR FUNDS TRUST--OPPORTUNITY FUND (ADVISOR)
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
----------------------------------------- ----------------------------
NET REALIZED
AND UNREALIZED NET
GAINS REALIZED
(LOSSES) FROM GAINS FROM
NET ASSET INVESTMENT INVESTMENT
VALUE, NET AND FOREIGN TOTAL FROM AND FOREIGN
BEGINNING INVESTMENT CURRENCY INVESTMENT CURRENCY TOTAL
OF PERIOD INCOME TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS
- ----------------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year Ended October 31, 2003 $ 9.27 (0.06) 3.15 3.09 -- --
Year Ended October 31, 2004 12.36 (0.08) 0.79 0.71 -- --
Year Ended October 31, 2005 13.07 (0.10) 1.97 1.87 -- --
Year Ended October 31, 2006 14.94 (0.09) 2.93 2.84 (0.50) (0.50)
Year Ended October 31, 2007 17.28 (0.11) 4.48 4.37 (2.71) (2.71)
- ----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF NET INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME (LOSS) EXPENSES TO PORTFOLIO
VALUE, END TOTAL PERIOD AVERAGE NET TO AVERAGE AVERAGE NET TURNOVER
OF PERIOD RETURN(b) (000'S) ASSETS(c) NET ASSETS(c) ASSETS(c)(d) RATE(e)
- ---------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year Ended October 31, 2003 $12.36 33.33% $326,072 1.01% (0.72)% 1.01% 152.05%
Year Ended October 31, 2004 13.07 5.74% 279,669 0.98% (0.62)% 0.98% 81.75%
Year Ended October 31, 2005 14.94 14.31%(f) 177,519 0.94%(f) (0.54)%(f) 0.94%(f) 63.95%
Year Ended October 31, 2006 17.28 19.40% 192,124 1.03% (0.51)% 1.03% 60.83%
Year Ended October 31, 2007 18.94 29.42%(g) 176,593 0.96%(g) (0.60)%(g) 1.03% 69.41%
- ---------------------------------------------------------------------------------------------------------------------------
(a) The per share amounts and percentages reflect income and expense assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor Opportunity Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover rate is calculated on the basis of the respective
Portfolio in which the Fund invests all of its investable assets.
(f) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the respective Portfolio in which the Fund invests related to violation of
certain investment policies and limitations. The corresponding impact to
the net expense ratio, net income ratio, gross expense ratio and total
return was 0.04% for the Advisor Shares.
(g) During the year ended October 31, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total return were 0.07%
for the Advisor Shares.
61 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--OVERSEAS EQUITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
----------------------------------------- -------------------------------------
NET REALIZED
AND UNREALIZED NET
GAINS REALIZED
(LOSSES) FROM GAINS FROM
NET ASSET INVESTMENT INVESTMENT
VALUE, NET AND FOREIGN TOTAL FROM NET AND FOREIGN
BEGINNING INVESTMENT CURRENCY INVESTMENT INVESTMENT CURRENCY TOTAL
OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year Ended October 31, 2003 $ 9.87 0.01 1.95 1.96 (0.10) -- (0.10)
Year Ended October 31, 2004 11.73 0.08 2.19 2.27 (0.07) -- (0.07)
Year Ended October 31, 2005 13.93 0.18 2.33 2.51 (0.06) (0.79) (0.85)
Year Ended October 31, 2006 15.59 0.22 4.45 4.67 (0.25) (1.16) (1.41)
Year Ended October 31, 2007 18.85 0.22* 3.92 4.14 (0.40) (2.11) (2.51)
- ----------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year Ended October 31, 2003 $ 9.56 (0.06) 1.89 1.83 (0.05) -- (0.05)
Year Ended October 31, 2004 11.34 0.01* 2.08 2.09 -- -- --
Year Ended October 31, 2005 13.43 0.07 2.24 2.31 -- (0.79) (0.79)
Year Ended October 31, 2006 14.95 0.09 4.26 4.35 (0.14) (1.16) (1.30)
Year Ended October 31, 2007 18.00 0.10* 3.70 3.80 (0.27) (2.11) (2.38)
- ----------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year Ended October 31, 2003 $ 9.68 (0.06) 1.93 1.87 (0.01) -- (0.01)
Year Ended October 31, 2004 11.54 (0.01) 2.14 2.13 -- -- --
Year Ended October 31, 2005 13.67 0.06 2.29 2.35 -- (0.79) (0.79)
Year Ended October 31, 2006 15.23 0.11 4.33 4.44 (0.14) (1.16) (1.30)
Year Ended October 31, 2007 18.37 0.11* 3.80 3.91 (0.23) (2.11) (2.34)
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF NET INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME (LOSS) EXPENSES TO PORTFOLIO
VALUE, END TOTAL PERIOD AVERAGE NET TO AVERAGE AVERAGE NET TURNOVER
OF PERIOD RETURN(b) (000's) ASSETS(c) NET ASSETS(c) ASSETS(c)(d) RATE(e)
- ---------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Year Ended October 31, 2003 $11.73 20.09% $10,096 1.85% 0.07% 2.34% 68.51%
Year Ended October 31, 2004 13.93 19.40% 17,721 1.78% 0.79% 1.88% 106.11%
Year Ended October 31, 2005 15.59 18.64% 20,680 1.66% 1.21% 1.66% 31.32%
Year Ended October 31, 2006 18.85 31.85% 22,761 1.67% 1.24% 1.67% 33.39%
Year Ended October 31, 2007 20.48 24.19%(f) 16,078 1.62%(f) 1.15%(f) 1.64% 26.08%
- ---------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year Ended October 31, 2003 $11.34 19.26% $ 1,076 2.60% (0.62)% 3.16% 68.51%
Year Ended October 31, 2004 13.43 18.43% 2,061 2.53% 0.05% 2.63% 106.11%
Year Ended October 31, 2005 14.95 17.72% 2,403 2.41% 0.47% 2.41% 31.32%
Year Ended October 31, 2006 18.00 30.87% 3,234 2.42% 0.58% 2.42% 33.39%
Year Ended October 31, 2007 19.42 23.26%(f) 3,698 2.37%(f) 0.59%(f) 2.40% 26.08%
- ---------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year Ended October 31, 2003 $11.54 19.28% $ 121 2.60% (0.64)% 3.17% 68.51%
Year Ended October 31, 2004 13.67 18.46% 137 2.54% (0.10)% 2.66% 106.11%
Year Ended October 31, 2005 15.23 17.70% 164 2.41% 0.48% 2.41% 31.32%
Year Ended October 31, 2006 18.37 30.92% 163 2.41% 0.58% 2.41% 33.39%
Year Ended October 31, 2007 19.94 23.39%(f) 147 2.30%(f) 0.59%(f) 2.32% 26.08%
- ---------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding.
(a) The per share amounts and percentages reflect income and expense assuming
inclusion of the Fund's proportionate share of the income and expenses of
the HSBC Investor International Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover rate is calculated on the basis of the respective
Portfolio in which the Fund invests all of its investable assets.
(f) During the year ended October 31, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total returns were 0.02%,
0.03%, and 0.02% for Class A Shares, Class B Shares, and Class C Shares,
respectively.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 62
- --------------------------------------------------------------------------------
HSBC INVESTOR FUNDS--VALUE FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS
----------------------------------------- -------------------------------------
NET REALIZED
AND UNREALIZED NET
NET ASSET GAINS REALIZED
VALUE, NET (LOSSES) FROM TOTAL FROM NET GAINS FROM
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- --------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended October 31, 2004(f) $12.68 0.05 0.69 0.74 (0.04) -- (0.04)
Year Ended October 31, 2005 13.38 0.10 1.86 1.96 (0.08) (0.13) (0.21)
Year Ended October 31, 2006 15.13 0.12* 2.95 3.07 (0.19) (1.29) (1.48)
Year Ended October 31, 2007 16.72 0.14* 1.38 1.52 (0.13) (1.57) (1.70)
- --------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period Ended October 31, 2004(f) $12.28 -- 0.68 0.68 (0.01) -- (0.01)
Year Ended October 31, 2005 12.95 (0.02) 1.80 1.78 -- (0.13) (0.13)
Year Ended October 31, 2006 14.60 --* 2.84 2.84 (0.07) (1.29) (1.36)
Year Ended October 31, 2007 16.08 0.02* 1.32 1.34 (0.02) (1.57) (1.59)
- --------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period Ended October 31, 2004(f) $12.35 0.01 0.67 0.68 (0.02) -- (0.02)
Year Ended October 31, 2005 13.01 (0.02) 1.82 1.80 (0.01) (0.13) (0.14)
Year Ended October 31, 2006 14.67 --* 2.85 2.85 (0.05) (1.29) (1.34)
Year Ended October 31, 2007 16.18 0.02* 1.32 1.34 (0.01) (1.57) (1.58)
- --------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Period Ended October 31, 2004(f) $12.67 0.07 0.70 0.77 (0.06) (0.06)
Year Ended October 31, 2005 13.38 0.13 1.86 1.99 (0.11) (0.13) (0.24)
Year Ended October 31, 2006 15.13 0.15* 2.94 3.09 (0.23) (1.29) (1.52)
Year Ended October 31, 2007 16.70 0.18* 1.38 1.56 (0.17) (1.57) (1.74)
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
----------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF NET INVESTMENT RATIO OF
NET ASSET AT END OF EXPENSES TO INCOME (LOSS) EXPENSES TO PORTFOLIO
VALUE, END TOTAL PERIOD AVERAGE NET TO AVERAGE AVERAGE NET TURNOVER
OF PERIOD RETURN(b) (000'S) ASSETS(c) NET ASSETS(c) ASSETS(c)(d) RATE(e)
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended October 31, 2004(f) $13.38 7.79% $20,933 1.20% 0.81% 1.25% 10.33%
Year Ended October 31, 2005 15.13 14.69%(g) 23,315 1.15%(g) 0.64%(g) 1.30%(g) 16.45%
Year Ended October 31, 2006 16.72 21.70% 24,688 1.20% 0.74% 1.43% 20.63%
Year Ended October 31, 2007 16.54 9.77%(h) 27,225 1.11%(h) 0.84%(h) 1.25% 18.67%
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period Ended October 31, 2004(f) $12.95 9.06% $ 1,938 1.95% 0.05% 2.00% 10.33%
Year Ended October 31, 2005 14.60 13.78%(g) 1,767 1.90%(g) (0.10)%(g) 2.04%(g) 16.45%
Year Ended October 31, 2006 16.08 20.78% 1,939 1.95% (0.01)% 2.18% 20.63%
Year Ended October 31, 2007 15.83 8.92%(h) 1,772 1.87%(h) 0.10%(h) 2.00% 18.67%
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period Ended October 31, 2004(f) $13.01 8.47% $ 399 1.95% 0.04% 2.00% 10.33%
Year Ended October 31, 2005 14.67 13.86%(g) 388 1.90%(g) (0.12)%(g) 2.05%(g) 16.45%
Year Ended October 31, 2006 16.18 20.72% 157 1.95% 0.01% 2.17% 20.63%
Year Ended October 31, 2007 15.94 8.95%(h) 126 1.87%(h) 0.11%(h) 1.99% 18.67%
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS I SHARES
Period Ended October 31, 2004(f) $13.38 6.05% $25,600 0.95% 1.05% 1.00% 10.33%
Year Ended October 31, 2005 15.13 14.96%(g) 15,044 0.90%(g) 0.91%(g) 1.02%(g) 16.45%
Year Ended October 31, 2006 16.70 21.90% 18,036 0.95% 0.99% 1.18% 20.63%
Year Ended October 31, 2007 16.52 10.04%(h) 28,692 0.87%(h) 1.07%(h) 0.99% 18.67%
- ---------------------------------------------------------------------------------------------------------------------------------
* 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 HSBC Investor Value Portfolio.
(b) Not annualized for periods less than one year. Total return calculations
do not include any sales or redemption charges.
(c) Annualized for periods less than one year.
(d) During the period certain fees were reduced. If such fee reductions had
not occurred, the ratio would have been as indicated.
(e) Portfolio turnover rate is calculated on the basis of the respective
Portfolio in which the Fund invests all its investable assets.
(f) Class A Shares, Class B Shares, Class C Shares and Class I Shares
commenced operations on May 10, 2004.
(g) During the year ended October 31, 2005, HSBC reimbursed certain amounts to
the respective Portfolio in which the Fund invests related to violation of
certain investment policies and limitations. The corresponding impact to
the net expense ratio, net income ratio, gross expense ratio and total
return were 0.05%, 0.05%, 0.05% and 0.05% for Class A Shares, Class B
Shares, Class C Shares and Class I Shares, respectively.
(h) During the year ended October 31, 2007, HSBC reimbursed amounts to certain
Funds related to past marketing arrangements. The corresponding impact to
the net expense ratio, net income ratio, and the total returns were 0.09%,
0.08%, 0.08%, and 0.08% for Class A Shares, Class B Shares, Class C Shares
and Class I Shares, respectively.
63 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF 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, and the HSBC Advisor Funds Trust (the "Advisor
Trust"), a Massachusetts business trust organized on April 5, 1996, are
registered under the Investment Company Act of 1940, as amended (the "Act"),
as open-end management investment companies. As of October 31, 2007, the
Trust is comprised of 20 separate operational funds and the Advisor Trust is
comprised of 3 separate operational funds, each a diversified series of the
HSBC Investor Family of Funds. The accompanying financial statements are
presented for the following 13 funds (individually a "Fund", collectively the
"Funds") of the Trust and Advisor Trust (collectively the "Trusts"):
FUND SHORT NAME TRUST
---- ---------- -----
HSBC Investor Core Plus Fixed Income Fund Core Plus Fixed Income Advisor Trust
(Advisor) Fund (Advisor)
HSBC Investor Core Plus Fixed Income Fund Core Plus Fixed Income Fund Trust
HSBC Investor High Yield Fixed Income Fund High Yield Fixed Trust
Income Fund
HSBC Investor Intermediate Duration Fixed Intermediate Duration
Income Fund Fixed Income Fund Trust
HSBC Investor New York Tax-Free Bond Fund New York Tax-Free Trust
Bond Fund
HSBC Investor Growth Fund Growth Fund Trust
HSBC Investor Growth and Income Fund Growth and Income Fund Trust
HSBC Investor International Equity Fund International Equity Fund Advisor Trust
HSBC Investor Mid-Cap Fund Mid-Cap Fund Trust
HSBC Investor Opportunity Fund Opportunity Fund Trust
HSBC Investor Opportunity Fund (Advisor) Opportunity Fund (Advisor) Advisor Trust
HSBC Investor Overseas Equity Fund Overseas Fund Trust
HSBC Investor Value Fund Value Fund Trust
Financial statements for all other funds of the HSBC Investor Family of
Funds are published separately. The Core Plus Fixed Income Fund (Advisor),
Core Plus Fixed Income Fund, High Yield Fixed Income Fund, Intermediate
Duration Fixed Income Fund, Growth Fund, International Equity Fund,
Opportunity Fund, Opportunity Fund (Advisor), Overseas Fund, and the Value
Fund (individually a "Feeder Fund", collectively the "Feeder Funds") utilize
the master-feeder fund structure and seek to achieve their investment
objectives by investing all of their investable assets in their respective
Portfolios (as defined below).
PROPORTIONATE
INTEREST ON
FUND RESPECTIVE PORTFOLIO OCTOBER 31, 2007
- ---- -------------------- ----------------
Core Plus Fixed Income Fund HSBC Investor Core Plus Fixed Income Portfolio 68.1%
Fund (Advisor)
Core Plus Fixed Income Fund HSBC Investor Core Plus Fixed Income Portfolio 14.6%
High Yield Fixed Income Fund HSBC Investor High Yield Fixed Income Portfolio 62.1%
Intermediate Duration HSBC Investor Intermediate Duration 93.7%
Fixed Income Fund Fixed Income Portfolio
Growth Fund HSBC Investor Growth Portfolio 70.2%
International Equity Fund HSBC Investor International Equity Portfolio 84.8%
Opportunity Fund HSBC Investor Opportunity Portfolio 78.8%
Opportunity Fund (Advisor) HSBC Investor Opportunity Portfolio 9.2%
Overseas Equity Fund HSBC Investor International Equity Portfolio 4.4%
Value Fund HSBC Investor Value Portfolio 70.0%
HSBC INVESTOR FAMILY OF FUNDS 64
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
Financial statements for all other funds of the HSBC Investor Family
of Funds are published separately. The HSBC Investor Core Plus Fixed
Income Portfolio, HSBC Investor High Yield Fixed Income Portfolio, HSBC
Investor Intermediate Duration Fixed Income Portfolio, HSBC Investor
Growth Portfolio, HSBC Investor International Equity Portfolio, HSBC
Investor Opportunity Portfolio and the HSBC Investor Value Portfolio
(individually a "Portfolio", collectively the "Portfolios") are
diversified series of the HSBC Investor Portfolios (the "Portfolio
Trust"). The Portfolios operate as master funds in master-feeder
arrangements.
The financial statements of the Portfolios, including the Schedules
of Portfolio Investments, are included elsewhere in this report. The
financial statements of the Portfolios should be read in conjunction with
the financial statements of the Feeder Funds.
The Funds are authorized to issue an unlimited number of shares of
beneficial interest with a par value of $0.001 per share. The High Yield
Fixed Income Fund, Intermediate Duration Fixed Income Fund, New York
Tax-Free Bond Fund, Growth Fund, Growth and Income Fund, and the Value
Fund each offer four classes of shares: Class A Shares, Class B Shares,
Class C Shares, and Class I Shares. The Mid-Cap Fund offers four classes
of shares: Class A Shares, Class B Shares, Class C Shares, and Trust
Shares. The Core Plus Fixed Income Fund (Advisor), International Equity
Fund, and the Opportunity Fund (Advisor) each offer one class of shares:
Advisor Shares. The Core Plus Fixed Income Fund, Opportunity Fund, and the
Overseas Equity Fund each offer three classes of shares: Class A Shares,
Class B Shares, and Class C Shares. Class A Shares of the Growth Fund,
Growth and Income Fund, Mid-Cap Fund, Opportunity Fund, Overseas Fund, and
Value Fund have a maximum sales charge of 5.00% as a percentage of the
original purchase price while Class A Shares of the Core Plus Fixed Income
Fund, High Yield Fixed Income Fund, Intermediate Duration Fixed Income
Fund, and New York Tax-Free Bond Fund have a maximum sales charge of 4.75%
as a percentage of the original purchase price. The Class B Shares of the
Funds are offered without any front-end sales charge but will be subject
to a contingent deferred sales charge ("CDSC") ranging from a maximum of
4.00% if redeemed less than one year after purchase to 0.00% if redeemed
more than four years after purchase. Class C Shares of the Funds are
offered without any front-end sales charge but will be subject to a
maximum CDSC of 1.00% if redeemed less than one year after purchase. No
sales charges are assessed with respect to Advisor, Trust, Class I, or
Class Y Shares of the Funds. Each class of shares in the Funds has
identical rights and privileges except with respect to arrangements
pertaining to shareholder servicing or distribution, class-related
expenses, voting rights on matters affecting a single class of shares, and
the exchange privilege of each class of shares.
Under the Trusts' organizational documents, the Funds' officers and
trustees are indemnified against certain liabilities arising out of the
performance of their duties to the Funds. In addition, in the normal
course of business, the Funds enter into contracts with service providers,
which also provide for indemnifications by the Funds. The Funds' maximum
exposure under these arrangements is unknown, as this would involve any
future claims that may be made against the Funds. However, based on
experience, the Funds expect that risk of loss to be remote.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the significant accounting policies
followed by the Funds in the preparation of their financial statements.
The policies are in conformity with 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:
A. NEW YORK TAX-FREE BOND FUND, GROWTH AND INCOME FUND, AND MID-CAP FUND
Bonds and other fixed income securities (other than short-term
obligations but including listed issues) are valued on the basis of
valuations furnished by a pricing service, the use of which has been
approved by the Funds' Board of Trustees. In making such valuations, the
pricing service utilizes both dealer-supplied valuations and the use of
matrix techniques which take into account appropriate factors such as the
institutional-size trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading characteristics
other than market data and without exclusive reliance upon quoted prices
or exchanges or over-the-counter prices, since such valuations are
believed to reflect more accurately the fair value of such securities. All
debt portfolio securities with a remaining maturity of 60 days or less are
valued at amortized cost. Under the amortized cost method, premium or
discount, if any, is amortized or accreted, respectively, on a constant
(straight-line) basis to the maturity of the security.
65 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
The value of each equity security is based either on the last sale
price on a national securities exchange, or in the absence of recorded
sales, at the closing bid prices on such exchanges, or at the quoted bid
price in the over-the-counter market. Securities or other assets for which
market quotations are not readily available, or are deemed unreliable due
to a significant event or otherwise, are valued by or at the direction of
the Funds' Board of Trustees. In addition, specific securities may need to
be valued by or at the direction of the Funds' Board of Trustees due to
potentially significant events. Examples of potentially significant events
that could affect the value of an individual security include corporate
actions by the issuer, announcements by the issuer relating to its
earnings or products, regulatory news, natural disasters and litigation.
Examples of potentially significant events that could affect multiple
securities held by a Fund include governmental actions, natural disasters
and armed conflicts.
B. FEEDER FUNDS
The Feeder Funds record their investments in their respective
Portfolios at fair value. Securities of the Portfolios are recorded at
fair value as more fully discussed in the notes to those financial
statements.
SECURITIES TRANSACTIONS AND RELATED INCOME:
A. NEW YORK TAX-FREE BOND FUND, GROWTH AND INCOME FUND, AND MID-CAP FUND
During the fiscal year, security transactions are accounted for no
later than one business day following trade date. For financial reporting
purposes, however, changes in holdings are accounted for on trade date on
the last business day of the reporting period. Securities gains and losses
are calculated on the identified cost basis. Interest income is recognized
on the accrual basis and includes, where applicable, the amortization or
accretion of premium or discount. Dividend income is recorded on the
ex-dividend date.
B. FEEDER FUNDS
The Feeder Funds record daily their pro-rata share of income,
expenses, changes in unrealized appreciation and depreciation and realized
gains and losses derived from their respective portfolios. In addition,
the Feeder Funds accrue their own expenses daily as incurred.
FUTURES CONTRACTS:
The New York Tax-Free Bond Fund, Growth and Income Fund, and Mid-Cap
Fund may invest in futures contracts for the purpose of hedging existing
portfolio securities or securities it intends to purchase against
fluctuations in fair value caused by changes in prevailing market interest
rates. Upon entering into a futures contract, a Fund is required to pledge
to the broker an amount of cash and/or other assets equal to a certain
percentage of the contract amount (initial margin deposit). Subsequent
payments, known as "variation margin," are made each day, depending on the
daily fluctuations in the fair value of the underlying security. A gain or
loss equal to the daily variation margin is recognized on a daily basis.
Should market conditions move unexpectedly, a Fund may not achieve
the anticipated benefits of the futures contracts and may realize a loss.
The use of futures transactions involves the risk of imperfect correlation
in movements in the price of futures contracts, interest rates and the
underlying hedged assets. As of October 31, 2007, the Funds did not hold
any investments in futures conracts.
OPTIONS:
The Growth and Income Fund and the Mid-Cap Fund may write covered
call options against some of the securities in their portfolios provided
the securities are listed on a national securities exchange. A call option
is "covered" if the Fund owns the underlying securities covered by the
call. The premium received is recorded as a liability and is subsequently
adjusted to the current fair value of the option written. Premiums
received from writing options that expire unexercised are treated on the
expiration date as realized gains from investments. The difference between
the premium and the amount paid on effecting a closing purchase
transaction, including brokerage commissions, is also treated as a
realized gain or loss. If the call option is exercised, the premium is
added to the proceeds from the sale of the underlying security in
determining a realized gain or loss. For the year ended October 31, 2007,
the Funds did not write any covered call options.
LINE OF CREDIT:
Prior to February 1, 2007, the Growth and Income Fund, and Mid-Cap
Fund, and prior to March 9, 2007, the New York Tax-Free Bond Fund
participated in a short-term, demand note agreement with HSBC Bank USA, an
affiliate of the Investment Adviser (defined below). Under the agreement,
these Funds were able to borrow up to $50 million. The pur-
HSBC INVESTOR FAMILY OF FUNDS 66
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
pose 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 borrowing were as follows (based on the actual number of days in
which the respective Fund borrowed monies):
AVERAGE NUMBER AVERAGE
AMOUNT OF DAYS INTEREST
FUND OUTSTANDING OUTSTANDING RATE
- ---- ----------- ----------- --------
Growth and Income Fund ..... $ 184,343 2 5.82%
ALLOCATIONS:
Expenses directly attributable to a Fund are charged to that Fund.
Expenses not directly attributable to a Fund are allocated proportionately
among various or all Funds within the HSBC Investor Family of Funds in
relation to the net assets of each Fund or on another reasonable basis.
Class specific expenses are charged directly to the class incurring the
expense. In addition, income, expenses (other than class specific
expenses), and realized and unrealized gains and losses are allocated to
each class of shares based on its relative net assets on a daily basis.
DIVIDENDS TO SHAREHOLDERS:
The Core Plus Fixed Income Fund (Advisor), Core Plus Fixed Income
Fund, High Yield Fixed Income, Intermediate Duration Fixed Income Fund,
and the New York Tax-Free Bond Fund declare all net investment income
daily as dividends to their shareholders and distribute such dividends
monthly. Dividends from net investment income, if any, are declared and
distributed semi-annually in the case of the Growth Fund, Growth and
Income Fund, Opportunity Fund, Opportunity (Advisor) and the Value Fund,
and annually in the case of the International Equity Fund, Mid-Cap Fund,
and Overseas Fund.
The Funds' net realized gains, if any, are distributed to
shareholders at least annually. Additional distributions are also made to
the Funds' shareholders to the extent necessary to avoid the federal
excise tax on certain undistributed income and net capital gains of
regulated investment companies.
The amount and character of net investment income and net realized
gains distributions are determined in accordance with federal income tax
regulations which may differ from GAAP. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature (e.g., reclassification of market
discounts, certain gain/loss, paydowns, and certain distributions), such
amounts are reclassified within the composition of net assets; temporary
differences (e.g., wash losses and post-october loss deferrals) do not
require reclassification. The Funds may utilize equalization accounting
for tax purposes and designate earnings and profits, including net
realized gains distributed to shareholders on redemption of shares, as a
part of the dividends paid deduction for income tax purposes. To the
extent distributions from net investment income and net realized gains
exceed net investment income and net realized gains for tax purposes, they
are reported as distributions of capital.
REDEMPTION FEE:
A redemption fee of 2.00% is charged and recorded as paid-in-capital
for any shares redeemed or exchanged after holding them for less than 30
days. This fee does not apply to shares purchased through reinvested
dividends or capital gains or shares held in certain omnibus accounts or
retirement plans that cannot implement the fee. For the year ended October
31, 2007, the following Funds collected redemption fees as follows:
FUND FEES COLLECTED
---- --------------
Core Plus Fixed Income Fund (Advisor) ....... $ 12
Core Plus Fixed Income Fund ................. 356
High Yield Fixed Income Fund ................ 66
Intermediate Duration Fixed Income Fund ..... 46
New York Tax-Free Bond ...................... 2,570
Growth Fund ................................. 1,191
Growth & Income Fund ........................ 14
International Equity Fund ................... 9,912
Mid-Cap Fund ................................ 110
Opportunity Fund ............................ 158
Overseas Equity Fund ........................ 396
Value Fund .................................. 550
67 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
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 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.
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 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 New
York Tax-Free Bond Fund, Growth and Income Fund, and the Mid-Cap Fund. As
Investment Adviser, HSBC manages the investments of the Funds and
continuously reviews, supervises, and administers the Funds' investments.
Sub-Investment Adviser services are provided by Transamerica Investment
Management, LLC ("Transamerica") and Munder Capital Management ("Munder")
for the Growth and Income Fund and Mid-Cap Fund, respectively.
For its services as Investment Adviser, HSBC is entitled to receive
a fee, accrued daily and paid monthly, at an annual rate of 0.25% of the
average daily net assets of the New York Tax-Free Bond Fund.
For its services as Investment Adviser and Sub-Investment Adviser,
respectively, HSBC and Transamerica receive, in the aggregate, a fee,
accrued daily and paid monthly at an annual rate of 0.60% of the Growth
and Income Fund's average daily net assets.
For its services as Investment Adviser and Sub-Investment Adviser,
respectively, HSBC and Munder receive, in the aggregate, a fee, accrued
daily and paid monthly at an annual rate of 0.75% of the Mid-Cap Fund's
average daily net assets.
Feeder Funds are not directly charged any investment management
fees.
ADMINISTRATION:
HSBC serves the Funds as Administrator. Under the terms of the
Administration Agreement effective April 1, 2007, HSBC receives from the
Funds a fee, accrued daily and paid monthly, at an annual rate of:
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE
------------------------------------ --------
Up to $12 billion ............................... 0.0525%
In excess of $12 billion ........................ 0.0350%
HSBC INVESTOR FAMILY OF FUNDS 68
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
Prior to April 1, 2007, under the terms of the Administration
Agreement, the Funds paid fees under the following schedule:
BASED ON AVERAGE DAILY NET ASSETS 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 each class. For assets invested in
the underlying Portfolios by the Feeder Funds, the Portfolios pay half of
the administration fee and the Feeder Funds pay half, for a combination of
the total fee rate above.
The administration fees accrued for each class by fund, of which 50%
of such fees are deemed to be class specific, are as follows:
CORE PLUS INTERMEDIATE
FIXED CORE PLUS HIGH YIELD DURATION GROWTH
INCOME FIXED FIXED FIXED NEW YORK AND
FUND INCOME INCOME INCOME TAX-FREE GROWTH INCOME
(ADVISOR) FUND FUND FUND BOND FUND FUND FUND
--------- --------- ---------- ------------ --------- -------- --------
Class A ......... $ -- $ 4,238 $ 1,337 $ 353 $ 20,386 $ 8,162 $ 920
Class B ......... -- 1,228 627 1,019 7,011 444 2,842
Class C ......... -- 38 68 137 604 34 21
Advisor ......... 24,811 -- -- -- -- -- --
Class I ......... -- -- -- 3,762 9,549 6,504 25,397
--------- --------- ---------- ------------ --------- -------- --------
Total ........ $ 24,811 $ 5,504 $ 2,646 $ 5,271 $ 37,550 $ 15,144 $ 29,180
========= ========= ========== ============ ========= ======== ========
OPPORTUNITY OVERSEAS
INTERNATIONAL MID-CAP OPPORTUNITY FUND EQUITY VALUE
EQUITY FUND FUND FUND (ADVISOR) FUND FUND
------------- -------- ----------- ----------- -------- --------
Class A ......... $ -- $ 3,074 $ 5,528 $ -- $ 5,228 $ 8,469
Class B ......... -- 4,091 1,454 -- 1,042 578
Class C ......... -- 54 93 -- 52 47
Advisor ......... 99,740 -- -- 51,982 -- --
Class I ......... -- -- -- -- -- 7,241
Trust ........... -- 11,026 -- -- -- --
------------- -------- ----------- ----------- -------- --------
Total ........ $ 99,740 $ 18,245 $ 7,075 $ 51,982 $ 6,322 $ 16,335
============= ======== =========== =========== ======== ========
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 Funds' 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 Funds and Citi
Ohio (the "CCO Agreement"), Citi Ohio makes an employee available to serve
as the Funds' 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 Funds'
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 expenses. Expenses incurred by each fund 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.
69 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
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 Trusts have adopted a non-compensatory Distribution Plan and Agreement
(the "Plan") pursuant to Rule 12b-1 of the Act. The Plan provides for
reimbursement of expenses incurred by the Distributor related to
distribution and marketing, at a rate not to exceed 0.25%, 1.00%, and
1.00% of the average daily net assets of Class A Shares (currently not
being charged), Class B Shares (currently charging 0.75%), and Class C
Shares (currently charging 0.75%) of the Funds, respectively. Foreside, as
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 HSBC affiliated brokers and dealers, for Class A
Shares, Class B Shares, and Class C Shares, respectively.
SHAREHOLDER SERVICING:
The Trusts have 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%, and 0.25% that is computed daily and paid monthly equal to a
percentage of average daily net assets of Class A Shares, Class B Shares,
and Class C Shares of the Funds, respectively. The aggregate fees paid to
the Distributor pursuant to the Distribution Plan and to shareholder
servicing agents pursuant to the Shareholder Services Plan currently are
not intended to exceed 0.25% of the average daily net assets of Class A
Shares, and 1.00% of the average daily net assets of Class B Shares and
Class C Shares.
FUND ACCOUNTING, TRANSFER AGENCY, CUSTODIAN AND TRUSTEE:
Citi Ohio provides fund accounting and transfer agency services for
each Fund. As transfer agent for the Funds, Citi Ohio receives a fee based
on the number of Funds and shareholder accounts, subject to certain
minimums and reimbursement of certain expenses. As fund accountant for the
Funds, Citi Ohio receives an annual fee per Fund and share class, subject
to certain minimums and reimbursement of certain expenses.
Prior to February 1, 2007 for the Growth and Income Fund and Mid-Cap
Fund, and prior to March 9, 2007 for the New York Tax-Free Bond Fund, HSBC
served as custodian for the Funds. As custodian for the Funds, HSBC Bank
received a fee based on the average daily net assets, number of
transactions, and reimbursements of certain expenses. Compensation paid to
HSBC for services to the Funds as custodian is as follows:
HSBC
CUSTODIAN
FUND FEES
---- ---------
New York Tax Free Bond Fund ................. $ 7,699
Mid-Cap Fund ................................ 8,066
Growth and Income Fund ...................... 5,041
---------
Total ....................................... $ 20,806
---------
Effective February 1, 2007 for the Growth and Income Fund and
Mid-Cap Fund, and March 9, 2007 for the New York Tax-Free Bond Fund, The
Northern Trust Company began serving as custodian of the Funds.
Each of the six non-interested Trustees are compensated with a
$35,000 annual Board retainer, as well as a $3,000 annual retainer for
each Committee of the Board. Each non-interested Trustee also receives a
$5,000 and $3,000 meeting fee for each regular in-person Board meeting and
Committee meeting, respectively. Furthermore, each non-interested Trustee
receives compensation for attending special meetings and/or functioning as
a Committee Chairperson or Lead Trustee. In addition, the non-interested
Trustees are reimbursed for certain expenses incurred in connection with
their Board membership.
HSBC INVESTOR FAMILY OF FUNDS 70
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
FEE REDUCTIONS:
The Investment Adviser has agreed to contractually waive 0.05% of
its management fee, computed daily and paid monthly, and based on the
average daily net assets of the Growth and Income Fund and the Mid-Cap
Fund.
The Investment Adviser has also agreed to contractually limit,
through March 1, 2008, the total expenses, exclusive of interest, taxes,
brokerage commissions and extraordinary expenses, of certain Funds. Each
affected Fund Class has its own expense limitations based on the average
daily net assets for any full fiscal year as follows:
CURRENT CONTRACTUAL
EXPENSE
FUND CLASS LIMITATION
---- ------- -------------------
Core Plus Fixed Income Fund (Advisor) ............... Advisor 0.45%
Core Plus Fixed Income Fund ......................... A 0.70%
Core Plus Fixed Income Fund ......................... B 1.45%
Core Plus Fixed Income Fund ......................... C 1.45%
High Yield Fixed Income Fund ........................ A 0.80%
High Yield Fixed Income Fund ........................ B 1.55%
High Yield Fixed Income Fund ........................ C 1.55%
High Yield Fixed Income Fund ........................ I 0.55%
Intermediate Duration Fixed Income Fund ............. A 0.65%
Intermediate Duration Fixed Income Fund ............. B 1.40%
Intermediate Duration Fixed Income Fund ............. C 1.40%
Intermediate Duration Fixed Income Fund ............. I 0.40%
Growth Fund ......................................... A 1.20%
Growth Fund ......................................... B 1.95%
Growth Fund ......................................... C 1.95%
Growth Fund ......................................... I 0.95%
Growth and Income Fund .............................. A 1.20%
Growth and Income Fund .............................. B 1.95%
Growth and Income Fund .............................. C 1.95%
Growth and Income Fund .............................. I 0.95%
Mid-Cap Fund ........................................ A 1.35%
Mid-Cap Fund ........................................ B 2.10%
Mid-Cap Fund ........................................ C 2.10%
Mid-Cap Fund ........................................ Trust 1.10%
Opportunity Fund .................................... A 1.65%
Opportunity Fund .................................... B 2.40%
Opportunity Fund .................................... C 2.40%
Value Fund .......................................... A 1.20%
Value Fund .......................................... B 1.95%
Value Fund .......................................... C 1.95%
Value Fund .......................................... I 0.95%
The Administrator and Citi Ohio may voluntarily waive/reimburse fees
to help support the expense limits of the Funds. In addition, the
Investment Adviser may waive/reimburse additional fees at their
discretion. Amounts waived/reimbursed by the Investment Adviser,
Administrator and 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.
71 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
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:
FUND PURCHASES SALES
---- -------------- ------------
New York Tax-Free Bond Fund .............. $ 13,358,035 $ 10,273,920
Growth and Income Fund ................... 12,946,329 18,938,140
Mid-Cap Fund ............................. 20,245,392 23,362,903
There were no long-term U.S. Government securities held during the year
ended October 31, 2007.
Contributions and withdrawals of the respective Portfolios for the year
ended October 31, 2007 totaled:
FUND CONTRIBUTIONS WITHDRAWALS
---- -------------- ------------
Core Plus Fixed Income Fund (Advisor) .... $ 12,028,152 $ 17,040,858
Core Plus Fixed Income Fund .............. 3,683,251 4,196,848
High Yield Fixed Income Fund ............. 2,387,955 3,611,070
Intermediate Duration Fixed Income Fund .. 2,036,842 7,620,843
Growth Fund .............................. 16,438,930 7,007,535
International Equity Fund ................ 67,373,638 39,135,855
Opportunity Fund (Advisor) ............... 69,968,165 132,187,671
Opportunity Fund ......................... 892,380 15,957,501
Overseas Equity Fund ..................... 1,066,812 12,135,990
Value Fund ............................... 14,371,230 6,583,921
5. CONCENTRATION OF CREDIT RISK
The New York Tax-Free Bond Fund invests primarily in debt
obligations issued by the State of New York and its respective political
subdivisions, agencies, and public authorities. The Fund is more
susceptible to economic and political factors adversely affecting issuers
of New York specific municipal securities than are municipal bond funds
that are not concentrated in these issuers to the same extent.
6. FEDERAL INCOME TAX INFORMATION:
At October 31, 2007, the cost basis for federal income tax purposes,
gross unrealized appreciation, gross unrealized depreciation and net
unrealized appreciation/depreciation were as follows:
NET
TAX TAX UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
FUND TAX COST APPRECIATION DEPRECIATION (DEPRECIATION)
- ---- ----------- ------------ ------------ --------------
New York Tax-Free Bond Fund ...... $58,662,444 $ 1,762,270 $ (107,640) $ 1,654,630
Growth and Income Fund ........... 34,936,174 18,190,670 (541,522) 17,649,148
Mid-Cap Fund ..................... 22,873,701 10,836,350 (442,391) 10,393,959
HSBC INVESTOR FAMILY OF FUNDS 72
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
The tax characteristics of dividends paid by the Funds during the
year ended October 31, 2007 were as follows:
DIVIDENDS PAID FROM
-----------------------------------------------------------------------
NET
LONG
TERM TOTAL TAX TOTAL
ORDINARY CAPITAL TAXABLE EXEMPT DIVIDENDS
INCOME GAINS DIVIDENDS DISTRIBUTIONS PAID(1)
------------ ----------- ------------ -------------- ----------
Core Plus Fixed Income (Advisor) ......... $ 4,297,819 $ -- $ 4,297,819 $ -- $4,297,819
Core Plus Fixed Income Fund .............. 873,677 -- 873,677 -- 873,677
High Yield Fixed Income Fund ............. 704,138 -- 704,138 -- 704,138
Intermediate Duration Fixed Income Fund .. 886,868 -- 886,868 -- 886,868
New York Tax-Free Bond Fund .............. 19,599 9,094 28,693 2,085,602 2,114,295
Growth Fund .............................. 25,419 3,019,000 3,044,419 -- 3,044,419
Growth and Income Fund ................... 126,478 -- 126,478 -- 126,478
International Equity Fund ................ 8,337,987 22,931,569 31,269,556 -- 31,269,556
Mid-Cap Fund ............................. 647,121 1,300,752 1,947,873 -- 1,947,873
Opportunity Fund ......................... 75,818 3,560,217 3,636,035 -- 3,636,035
Opportunity Fund (Advisor) ............... 3,149,480 26,789,336 29,938,816 -- 29,938,816
Overseas Equity Fund ..................... 667,589 2,786,165 3,453,754 -- 3,453,754
Value Fund ............................... 677,034 4,064,790 4,741,824 -- 4,741,824
The tax characteristics of dividends paid by the Funds during the
year ended October 31, 2006 were as follows:
DIVIDENDS PAID FROM
-----------------------------------------------------------------------
NET
LONG
TERM TOTAL TAX TOTAL
ORDINARY CAPITAL TAXABLE EXEMPT DIVIDENDS
INCOME GAINS DIVIDENDS DISTRIBUTIONS PAID(1)
------------ ----------- ------------ -------------- ----------
Core Plus Fixed Income (Advisor) ......... $ 5,304,945 $ 2,329,061 $ 7,634,006 $ -- $7,634,006
Core Plus Fixed Income Fund .............. 922,409 -- 922,409 -- 922,409
High Yield Fixed Income Fund ............. 508,987 -- 508,987 -- 508,987
Intermediate Duration Fixed Income Fund .. 973,678 -- 973,678 -- 973,678
New York Tax-Free Bond Fund .............. 4,399 100,731 105,130 2,003,584 2,108,714
Growth Fund .............................. -- 604,764 604,764 -- 604,764
Growth and Income Fund ................... 25,548 -- 25,548 -- 25,548
International Equity Fund ................ 4,030,977 6,656,885 10,687,862 -- 10,687,862
Mid-Cap Fund ............................. -- 6,447,215 6,447,215 -- 6,447,215
Opportunity Fund ......................... -- 872,331 872,331 -- 872,331
Opportunity Fund (Advisor) ............... -- 5,803,618 5,803,618 -- 5,803,618
Overseas Equity Fund ..................... 754,636 1,303,263 2,057,899 -- 2,057,899
Value Fund ............................... 523,785 3,327,270 3,851,055 -- 3,851,055
73 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
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 Funds were as follows:
UNDISTRIBUTED ACCUMULATED
UNDISTRIBUTED LONG CAPITAL TOTAL
UNDISTRIBUTED TAX TERM AND UNREALIZED ACCUMULATED
ORDINARY EXEMPT CAPITAL ACCUMULATED DIVIDENDS OTHER APPRECIATION/ EARNINGS/
INCOME INCOME GAINS EARNINGS PAYABLE LOSSES (DEPRECIATION)(2) (DEFICIT)
------------- ------------- ------------- ----------- ---------- ------------ ----------------- -------------
Core Plus Fixed
Income Fund
(Advisor) ...... $ 502,414 $ -- $ 562,425 $ 1,064,839 $(382,197) $ -- $ (166,918) $ 515,724
Core Plus Fixed
Income Fund .... 89,455 -- -- 89,455 (76,447) (557,978) (36,900) (581,870)
High Yield Fixed
Income Fund .... 84,276 -- 69,024 153,300 (58,530) -- (98,097) (3,327)
Intermediate
Duration Fixed
Income Fund .... 87,279 -- 53,298 140,577 (64,168) -- (83,160) (6,751)
New York Tax-Free
Bond Fund ...... 23,394 205,608 56,101 285,103 (184,067) -- 1,654,630 1,755,666
Growth Fund ...... -- -- 2,892,354 2,892,354 -- -- 15,509,956 18,402,310
Growth and Income
Fund ........... 5,574 -- -- 5,574 -- (5,725,929) 17,649,148 11,928,793
International
Equity Fund .... 10,638,534 -- 24,126,978 34,765,512 -- -- 100,539,759 135,305,271
Mid-Cap Fund ..... -- -- 3,530,284 3,530,284 -- -- 10,393,959 13,924,243
Opportunity
Fund ........... 1,084,596 -- 4,953,733 6,038,329 -- -- 4,335,184 10,373,513
Opportunity Fund
(Advisor) ...... 9,223,734 -- 35,976,501 45,200,235 -- -- 33,322,824 78,523,059
Overseas Equity
Fund ........... 562,242 -- 2,487,633 3,049,875 -- -- 8,491,660 11,541,535
Value Fund ....... 503,590 -- 4,085,539 4,589,129 -- -- 9,330,115 13,919,244
(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 tax amortization 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.
As of October 31, 2007, the following Funds have net capital loss
carryforwards, which are available to offset future realized gains.
FUND AMOUNT EXPIRES
---- ---------- --------
Core Plus Fixed Income Fund ...... $ 185,453 2012
372,525 2014
Growth and Income Fund ........... 5,725,929 2011
7. LEGAL AND REGULATORY MATTERS AND PAYMENTS FROM AFFILIATE:
On September 26, 2006 BISYS Fund Services, Inc. ("BISYS"), an
affiliate of BISYS Fund Services Ohio, Inc. which provides various
services to the Funds as described in footnote 3, reached a settlement
with the Securities and Exchange Commission ("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 Funds'
management is not aware that any determination has been made as to how the
BISYS settlement monies will be distributed. The SEC's examination of
BISYS' mutual fund clients and their advisers, including HSBC, has not
been completed. While the Funds' management is currently unable to
determine the impact, if any, of such matters on the Funds or the Funds'
financial statements, management does not anticipate a material, adverse
impact to the Funds or the Funds' financial statements.
During the year ended October 31, 2007, HSBC voluntarily reimbursed
amounts to certain Funds related to past marketing arrangements that
involved BISYS. The amounts reimbursed for the year ended October 31, 2007
are disclosed in the Statements of Operations as "Expenses reimbursed by
Investment Adviser." The corresponding impact to the net expense ratio,
net income ratio and total return for the year ended October 31, 2007 are
disclosed in the Funds' Financial Highlights.
HSBC INVESTOR FAMILY OF FUNDS 74
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of
HSBC Investor Funds:
We have audited the accompanying statements of assets and liabilities of
HSBC Investor Core Plus Fixed Income Fund (Advisor), HSBC Investor Core Plus
Fixed Income Fund, HSBC Investor High Yield Fixed Income Fund, HSBC Investor
Intermediate Duration Fixed Income Fund, HSBC Investor New York Tax-Free Bond
Fund, HSBC Investor Growth Fund, HSBC Investor Growth and Income Fund, HSBC
Investor International Equity Fund, HSBC Investor Mid-Cap Fund, HSBC Investor
Opportunity Fund, HSBC Investor Overseas Equity Fund, HSBC Investor Opportunity
Fund (Advisor) and HSBC Investor Value Fund (the Funds), including the schedules
of portfolio investments of HSBC Investor New York Tax-Free Bond Fund, HSBC
Investor Growth and Income Fund and HSBC Investor Mid-Cap Fund, as of October
31, 2007, and the related statements of operations for the year then ended, the
statements of 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 FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
OTHER FEDERAL INCOME TAX INFORMATION (UNAUDITED)--AS OF OCTOBER 31, 2007
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 Funds qualify for the
corporate dividends received deduction available to corporate
shareholders:
DIVIDENDS
RECEIVED
FUND DEDUCTION
---- ----------
Growth Fund .......................................... 100.00%
Growth and Income Fund ............................... 100.00%
Mid-Cap Fund ......................................... 52.21%
Opportunity Fund ..................................... 100.00%
Value Fund ........................................... 100.00%
The International Equity Fund and the Overseas Equity Fund intend to
elect to pass through to shareholders the income tax credit for taxes paid
to foreign countries. Foreign source income and foreign tax expense per
outstanding share on October 31, 2007 are as follows:
FOREIGN FOREIGN TAX
FUND SOURCE INCOME EXPENSE
---- ------------- -----------
International Equity Fund ........... $ 0.63 $ 0.06
Overseas Equity Fund ................ 0.44 0.04
The pass-through of the foreign tax credit will only affect those
persons who are shareholders on the dividend record date in December 2007.
These shareholders will receive more detailed information along with their
2007 Form 1099-DIV.
For the year ended October 31, 2007, dividends paid by the 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 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 Fund .......................................... 100.00%
Growth and Income Fund ............................... 100.00%
International Equity Fund ............................ 75.24%
Mid-Cap Fund ......................................... 52.20%
Opportunity Fund ..................................... 100.00%
Overseas Equity Fund ................................. 92.64%
Value Fund ........................................... 100.00%
The New York Tax-Free Bond Fund designated 98.7% of its income
dividends as exempt-interest dividends for the year ended October 31,
2007.
During the year ended October 31, 2007 the following Fund declared
tax-exempt income distributions:
FUND AMOUNT
---- ----------
New York Tax-Free Bond Fund .......................... $2,085,602
During the year ended October 31, 2007, the following Funds declared net
long term capital gain distributions:
FUND AMOUNT
---- -----------
New York Tax-Free Bond Fund .......................... $ 9,094
Growth Fund .......................................... 3,019,000
International Equity Fund ............................ 22,931,569
Mid-Cap Fund ......................................... 1,300,752
Opportunity Fund ..................................... 3,560,217
Opportunity Fund (Advisor) ........................... 26,789,336
Overseas Equity Fund ................................. 2,786,165
Value Fund ........................................... 4,064,790
HSBC INVESTOR FAMILY OF FUNDS 76
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--AS OF OCTOBER 31, 2007
As a shareholder of the HSBC Investor 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.
ENDING ANNUALIZED
BEGINNING ENDING 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
------------- --------- ----------------- -----------------
Core Plus Fixed Income
Fund (Advisor) ............... Advisor Shares $1,000.00 $1,021.00 $ 2.29 0.45%
Core Plus Fixed Income Fund ..... Class A Shares 1,000.00 1,019.80 3.56 0.70%
Class B Shares 1,000.00 1,015.90 7.37 1.45%
Class C Shares 1,000.00 1,015.10 7.36 1.45%
Class I Shares 1,000.00 1,107.50 6.64 1.25%
High Yield Fixed Income Fund .... Class A Shares 1,000.00 996.90 4.03 0.80%
Class B Shares 1,000.00 992.10 7.78 1.55%
Class C Shares 1,000.00 992.10 7.78 1.55%
Class I Shares 1,000.00 997.20 2.77 0.55%
Intermediate Duration Fixed
Income Fund .................. Class A Shares 1,000.00 1,017.70 3.31 0.65%
Class B Shares 1,000.00 1,013.90 7.11 1.40%
Class C Shares 1,000.00 1,012.90 7.10 1.40%
Class I Shares 1,000.00 1,018.00 2.03 0.40%
New York Tax-Free Bond Fund ..... Class A Shares 1,000.00 1,011.50 4.36 0.86%
Class B Shares 1,000.00 1,007.70 8.10 1.60%
Class C Shares 1,000.00 1,007.60 7.94 1.57%
Class I Shares 1,000.00 1,012.70 3.04 0.60%
Growth Fund ..................... Class A Shares 1,000.00 1,207.60 6.68 1.20%
Class B Shares 1,000.00 1,202.60 10.83 1.95%
Class C Shares 1,000.00 1,202.80 10.83 1.95%
Class I Shares 1,000.00 1,208.80 5.29 0.95%
Growth and Income Fund .......... Class A Shares 1,000.00 1,183.80 6.61 1.20%
Class B Shares 1,000.00 1,179.60 10.71 1.95%
Class C Shares 1,000.00 1,178.90 10.71 1.95%
Class I Shares 1,000.00 1,185.50 5.23 0.95%
International Equity Fund ....... Advisor Shares 1,000.00 1,094.50 4.22 0.80%
77 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--AS OF OCTOBER 31, 2007 (CONTINUED)
ENDING ANNUALIZED
BEGINNING ENDING 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
------------- --------- ----------------- -----------------
Mid-Cap Fund .................... Class A Shares $1,000.00 $1,161.10 $ 7.35 1.35%
Class B Shares 1,000.00 1,157.50 11.42 2.10%
Class C Shares 1,000.00 1,157.20 11.42 2.10%
Trust Shares 1,000.00 1,163.50 6.00 1.10%
Overseas Equity Fund ............ Class A Shares 1,000.00 1,089.90 8.06 1.53%
Class B Shares 1,000.00 1,085.50 12.04 2.29%
Class C Shares 1,000.00 1,087.20 11.15 2.12%
Opportunity Fund ................ Class A Shares 1,000.00 1,164.70 8.46 1.55%
Class B Shares 1,000.00 1,159.90 12.52 2.30%
Class C Shares 1,000.00 1,160.50 12.52 2.30%
Opportunity Fund (Advisor) ...... Advisor Shares 1,000.00 1,154.20 5.59 1.03%
Value Fund ...................... Class A Shares 1,000.00 1,007.70 6.07 1.20%
Class B Shares 1,000.00 1,003.70 9.85 1.95%
Class C Shares 1,000.00 1,003.20 9.85 1.95%
Class I Shares 1,000.00 1,008.90 4.81 0.95%
- ----------
* 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 FAMILY OF FUNDS 78
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
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 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.
ENDING ANNUALIZED
BEGINNING 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
------------- --------- ----------------- -----------------
Core Plus Fixed Income
Fund (Advisor) ............... Advisor Shares $1,000.00 $1,022.94 $ 2.29 0.45%
Core Plus Fixed Income Fund ..... Class A Shares 1,000.00 1,021.68 3.57 0.70%
Class B Shares 1,000.00 1,017.90 7.37 1.45%
Class C Shares 1,000.00 1,017.90 7.37 1.45%
High Yield Fixed Income Fund .... Class A Shares 1,000.00 1,021.17 4.08 0.80%
Class B Shares 1,000.00 1,017.39 7.88 1.55%
Class C Shares 1,000.00 1,017.39 7.88 1.55%
Class I Shares 1,000.00 1,022.43 2.80 0.55%
Intermediate Duration Fixed
Income Fund .................. Class A Shares 1,000.00 1,021.93 3.31 0.65%
Class B Shares 1,000.00 1,018.15 7.12 1.40%
Class C Shares 1,000.00 1,018.15 7.12 1.40%
Class I Shares 1,000.00 1,023.19 2.04 0.40%
New York Tax-Free Bond Fund ..... Class A Shares 1,000.00 1,020.87 4.38 0.86%
Class B Shares 1,000.00 1,017.14 8.13 1.60%
Class C Shares 1,000.00 1,017.29 7.98 1.57%
Class I Shares 1,000.00 1,022.18 3.06 0.60%
Growth Fund ..................... Class A Shares 1,000.00 1,019.16 6.11 1.20%
Class B Shares 1,000.00 1,015.38 9.91 1.95%
Class C Shares 1,000.00 1,015.38 9.91 1.95%
Class I Shares 1,000.00 1,020.42 4.84 0.95%
Growth and Income Fund .......... Class A Shares 1,000.00 1,019.16 6.11 1.20%
Class B Shares 1,000.00 1,015.38 9.91 1.95%
Class C Shares 1,000.00 1,015.38 9.91 1.95%
Class I Shares 1,000.00 1,020.42 4.84 0.95%
International Equity Fund ....... Advisor Shares 1,000.00 1,021.17 4.08 0.80%
Mid-Cap Fund .................... Class A Shares 1,000.00 1,018.40 6.87 1.35%
Class B Shares 1,000.00 1,014.62 10.66 2.10%
Class C Shares 1,000.00 1,014.62 10.66 2.10%
Trust Shares 1,000.00 1,019.66 5.60 1.10%
79 HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--AS OF OCTOBER 31, 2007 (CONTINUED)
ENDING ANNUALIZED
BEGINNING 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
------------- --------- ----------------- -----------------
Overseas Equity Fund ............ Class A Shares $1,000.00 $1,017.49 $ 7.78 1.53%
Class B Shares 1,000.00 1,013.66 11.62 2.29%
Class C Shares 1,000.00 1,014.52 10.76 2.12%
Opportunity Fund ................ Class A Shares 1,000.00 1,017.39 7.88 1.55%
Class B Shares 1,000.00 1,013.61 11.67 2.30%
Class C Shares 1,000.00 1,013.61 11.67 2.30%
Opportunity Fund (Advisor) ...... Advisor Shares 1,000.00 1,020.01 5.24 1.03%
Value Fund ...................... Class A Shares 1,000.00 1,019.16 6.11 1.20%
Class B Shares 1,000.00 1,015.38 9.91 1.95%
Class C Shares 1,000.00 1,015.38 9.91 1.95%
Class I Shares 1,000.00 1,020.42 4.84 0.95%
- ----------
* 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 FAMILY OF FUNDS 80
- --------------------------------------------------------------------------------
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
81 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 $10,380,701) ............................ 9,865,760
------------
- --------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS--8.6%
- --------------------------------------------------------------------------------
Banc of America Mortgage Securities,
Series 2005-D, Class 2A4,
4.78%, 5/25/35 (a) ............................ 1,100,000 1,093,289
Deutsche Mortgage Securities, Inc.,
Series 2006-WF1, Class 1A1,
5.07%, 6/26/35 (a)(b) ......................... 1,179,355 1,174,846
Fannie Mae IO
Series 270, Class 2, 8.50%, 9/1/23 (c) ........ 45,063 10,612
Series 296, Class 2, 8.00%, 4/1/24 (c) ........ 54,506 13,553
Series 2000-16, Class PS,3.73%,
10/25/29 (a)(c) ............................... 35,357 1,652
Series 2000-32, Class SV,
3.57%, 3/18/30 (a)(c) ......................... 7,911 134
Series 306, Class IO, 8.00%, 5/1/30 (c) ....... 61,771 15,329
Series 2001-4, Class SA,
2.51%, 2/17/31 (a)(c) ......................... 219,630 16,222
FHA Weyerhauser, 7.43%, 1/1/24 (d)(f) ............ 33,082 33,082
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 82
- --------------------------------------------------------------------------------
HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
- --------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) 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 $3,503,008) ............................. 3,446,501
------------
83 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
- --------------------------------------------------------------------------------
INVESTMENT COMPANY--4.7%
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) 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 84
- --------------------------------------------------------------------------------
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
85 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 86
- --------------------------------------------------------------------------------
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
87 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 88
- --------------------------------------------------------------------------------
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 $14,487,263.
(a) Variable rate security. The interest rates on these securities are
adjusted periodically to reflect then-current short-term interest rates.
The rates presented represent the rates in effect on October 31, 2007. The
maturity dates presented reflect the final maturity dates. However, some
of these securities may contain put or demand features that allow the fund
to require the issuer to repurchase the security from the fund within
various time periods, including daily, weekly, monthly, or semi-annually.
(b) Security exempt from registration under Rule 144a of the Securities Act of
1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. This security
has been deemed liquid by the Investment Adviser based on procedures
approved by the Board of Trustees.
(c) Step Bond. Income recognition is on the effective yield method for Step
Bonds.
(d) The rate presented represents the annualized one day yield that was in
effect on October 31, 2007.
LLC -- Limited Liability Co.
LP -- Limited Partnership
PLC -- Public Limited Co.
89 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AND GOVERNMENT AGENCY
OBLIGATIONS--28.0%
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) 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 90
- --------------------------------------------------------------------------------
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 $2,886,901) ........................... 2,878,056
------------
- --------------------------------------------------------------------------------
FOREIGN BONDS--5.1%
- --------------------------------------------------------------------------------
ICELAND - 1.5%
Kaupthing Bank, 5.94%, 1/15/10 (a)(b)(d) ....... 225,000 224,234
------------
224,234
------------
NETHERLANDS - 1.0%
Shell International Finance BV,
5.20%, 3/22/17 .............................. 150,000 149,342
------------
149,342
------------
91 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
- --------------------------------------------------------------------------------
FOREIGN BONDS, CONTINUED
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT($) 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 $15,058,569.
(a) Variable rate security. The interest rates on these securities are
adjusted periodically to reflect then-current short-term interest rates.
The rates presented represent the rates in effect on October 31, 2007. The
maturity dates presented reflect the final maturity dates. However, some
of these securities may contain put or demand features that allow the fund
to require the issuer to repurchase the security from the fund within
various time periods, including daily, weekly, monthly, or semi-annually.
(b) Security exempt from registration under Rule 144a of the Securities Act of
1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. This security
has been deemed liquid by the Investment Adviser based on procedures
approved by the Board of Trustees.
(c) The rate presented represents the annualized one day yield that was in
effect on October 31, 2007.
(d) Security held as collateral for to be announced securities.
LLC -- Limited Liability Co.
PLC -- Public Limited Co.
TBA -- Security was traded on a "to be announced" basis. Represents 15.37% of
net assets.
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 92
- --------------------------------------------------------------------------------
HSBC INVESTOR GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
COMMON STOCKS--97.7%
- --------------------------------------------------------------------------------
SHARES VALUE($)
------------- ------------
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 $89,685,877.
(a) Represents non-income producing security.
(b) The rate presented represents the annualized one day yield that was in
effect on October 31, 2007.
ADR -- American Depositary Receipt
93 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
COMMON STOCKS--96.9%
- --------------------------------------------------------------------------------
SHARES VALUE($)
------------- ------------
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 94
- --------------------------------------------------------------------------------
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 $455,061,609.
(a) Represents non-income producing security.
(b) The rate presented represents the annualized one day yield that was in
effect on October 31, 2007.
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt
PLC -- Public Limited Co.
SPA -- Societa Per Azioni
95 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR OPPORTUNITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
COMMON STOCKS--98.0%
- --------------------------------------------------------------------------------
SHARES VALUE($)
------------- ------------
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 $177,041,397) ......................... 219,786,033
------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 96
- --------------------------------------------------------------------------------
HSBC INVESTOR OPPORTUNITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED)
- --------------------------------------------------------------------------------
INVESTMENT COMPANY--1.7%
- --------------------------------------------------------------------------------
SHARES VALUE($)
------------- ------------
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 $224,268,466.
(a) Represents non-income producing security.
(b) The rate presented represents the annualized one day yield that was in
effect on October 31, 2007.
ADR -- American Depositary Receipt
PLC -- Public Limited Co.
97 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
HSBC INVESTOR VALUE PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007
- --------------------------------------------------------------------------------
COMMON STOCKS--92.2%
- --------------------------------------------------------------------------------
SHARES VALUE($)
------------- ------------
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 98
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
============= ============ ============ ============ =============
99 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 100
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
============= ============ ============ ============ =============
101 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 102
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.
103 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 104
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
============ ============ ============= =============
105 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 106
- --------------------------------------------------------------------------------
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.
107 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 108
- --------------------------------------------------------------------------------
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.
109 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 that were illiquid, representing
0.03% of net assets, as follows:
ACQUISITION ACQUISITION PRINCIPAL
SECURITY NAME DATE COST($) AMOUNT($) VALUE($)
- ------------- ----------- ----------- --------- --------
FHA Weyerhauser, 7.43%, 1/1/24 ............... 3/28/2002 32,060 33,082 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 110
- --------------------------------------------------------------------------------
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%
111 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 Capital
Management, LLC receive in aggregate, a fee, accrued daily and paid
monthly, at an annual rate of 0.80% of the Opportunity Portfolio's average
daily net assets.
For their services, the Investment Adviser and NWQ Investment
Management Co., LLC receive in aggregate, from the Value Portfolio, a fee,
accrued daily and paid monthly, at an annual rate of:
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE
- ------------------------------------ --------
Up to $500 million ....................................................... 0.525%
In excess of $500 million but not exceeding $1 billion ................... 0.475%
In excess of $1 billion .................................................. 0.425%
ADMINISTRATION:
HSBC serves the Portfolios as Administrator. Under the terms of the
Administration Agreement effective April 1, 2007, HSBC receives from the
Portfolios a fee, accrued daily and paid monthly, at an annual rate of:
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE
- ------------------------------------ --------
Up to $12 billion ........................................................ 0.0525%
In excess of $12 billion ................................................. 0.0350%
Prior to April 1, 2007, under the terms of the Administration
Agreement, the Portfolios paid fees under the following schedule:
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE
- ------------------------------------ --------
Up to $8 billion ......................................................... 0.075%
In excess of $8 billion but not exceeding $9.25 billion .................. 0.070%
In excess of $9.25 billion but not exceeding $12 billion ................. 0.050%
In excess of $12 billion ................................................. 0.030%
The fee rates and breakpoints are determined on the basis of the
aggregate average daily net assets of the HSBC Investor Family of Funds,
however, the assets of the Portfolios and Feeder Funds that invest in the
Portfolios are not double-counted. The total administration fee paid to
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 112
- --------------------------------------------------------------------------------
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 -- --
113 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 114
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
115 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
Multi-manager 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 116
- --------------------------------------------------------------------------------
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).
117 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 118
- --------------------------------------------------------------------------------
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
POSITION(S) TERM OF OFFICE AND PORTFOLIOS IN FUND OTHER
NAME, ADDRESS, HELD WITH LENGTH OF TIME SERVED PRINCIPAL OCCUPATION(S) COMPLEX 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 Emeritus Professor, London Business 41 None
P.O. Box 182845 2005 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 41 None
P.O. Box 182845 to present Partners, L.P. (a private
Columbus, OH 43218 investment partnership) (since
Age: 57 1989)
- ------------------------------------------------------------------------------------------------------------------------------------
Larry M. Robbins Trustee Indefinite; 1987 Private Investor; Director, Center 41 None
P.O. Box 182845 to present for Teaching and Learning,
Columbus, OH 43218 University of Pennsylvania
Age: 68 (1999-2006)
- ------------------------------------------------------------------------------------------------------------------------------------
Michael Seely Trustee Indefinite; 1987 Private Investor; General Partner 41 None
P.O. Box 182845 to present of Global Multi Manager Partners
Columbus, OH 43218 (1999-2003); President of Investor
Age: 62 Access Corporation (1981-2003)
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas F. Robards Trustee Indefinite; March Partner, Robards & Co. LLC 41 Overseas
P.O. Box 182845 2005 to present (2005-present); Chief Financial Shipholding
Columbus, OH 43218 Officer, American Museum of Natural Group
Age: 61 History (2003 to 2004); Chief
Financial Officer, Datek Online
Inc. (2000 to 2002)
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
Stephen J. Baker* Trustee Indefinite; 2004 Chief Executive Officer, HSBC 41 None
P.O. Box 182845 to present Investments (USA) Inc. and
Columbus, OH 43218 Executive Vice President, HSBC
Age: 51 (USA), N.A. (2003 to present);
Chief Executive Officer, HSBC Asset
Management (Canada) Limited (1998
to 2003)
- ------------------------------------------------------------------------------------------------------------------------------------
EMERITUS TRUSTEE
Frederick C. Chen Emeritus Until March 31, 2009; Management Consultant (1988 to 41 None
P.O. Box 182845 Trustee Trustee from 1990 present)
Columbus, OH 43218 to June, 2005
Age: 80
- ------------------------------------------------------------------------------------------------------------------------------------
119 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, HSBC
452 Fifth Avenue to present 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 Investments
452 Fifth Avenue to present (USA) Inc. (2005 to present); Vice President of Client
New York, NY 10018 Services, Citi Fund Services Ohio, Inc. (1996 to 2005).
Age: 45
- ------------------------------------------------------------------------------------------------------------------------------------
Troy Sheets* Treasurer Indefinite; 2004 Vice President of Citi Fund Services Ohio, Inc. (2002 to
3435 Stelzer Road to present present); Senior Manager, KPMG LLP (1993 to 2002).
Columbus, OH 43219-3035
Age: 36
- ------------------------------------------------------------------------------------------------------------------------------------
Gary A. Ashjian* Secretary Indefinite; June 2007 Manager, Citi Fund Services (November 2006 - Present);
100 Summer Street to present Senior Legal Product Manager, Pioneer Investments (June 2004
Suite 1500 - November 2006); Putnam Investments, Legal Product Manager
Boston, MA 02110 (September 1993 - June 2004).
Age: 48
- ------------------------------------------------------------------------------------------------------------------------------------
Frederick J. Schmidt* Chief Term expires 2007; Senior Vice President and Chief Compliance Officer, CCO
585 Stewart Avenue Compliance Officer 2004 to present Services of Citi Fund Services (2004 to present); President,
Garden City, NY 11530 FJS Associates (2002 to 2004); Vice President Credit
Age: 48 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 120
A description of the policies and procedures that the Funds use to
determine how to vote proxies relating to the portfolio securities is available
without charge, upon request, by calling 1-800-525-5757 for HSBC Bank USA and
HSBC Brokerage (USA) Inc. clients and 1-800-782-8183 for all other shareholders
or on the Fund's website at WWW.INVESTORFUNDS.US.HSBC.COM and the Securities and
Exchange Commission's website at HTTP://WWW.SEC.GOV. A copy of the Fund's voting
record for the most recent 12 month period ending June 30 is available at the
Security and Exchange Commission's website at HTTP://WWW.SEC.GOV.
Schedules of Portfolio Investments for fiscal quarters ending January 31
and July 31 will be available no later than 60 days after each period end,
without charge, on the Fund's website at WWW.INVESTORFUNDS.US.HSBC.COM and on
the Securities and Exchange Commission's website at HTTP://WWW.SEC.GOV.
An investment in a Fund is not a deposit of HSBC Bank USA, National
Association, and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
HSBC INVESTOR FAMILY OF FUNDS:
INVESTMENT ADVISER AND ADMINISTRATOR
HSBC Investments (USA) Inc.
452 Fifth Avenue
New York, NY 10018
SUB-ADVISERS
HSBC INVESTOR GROWTH PORTFOLIO
Waddell & Reed Investment Management Company
6300 Lamar Avenue
Overland Park, KS 66202
HSBC GROWTH AND INCOME FUND
TransAmerica Investment Management, LLC
1150 S. Olive Street, Suite 2700
Los Angeles, CA 90015
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
AllianceBernstein Investment Research and Management
1345 Avenue of the Americas, 39th Floor
New York, NY 10105
HSBC INVESTOR MID-CAP FUND
Munder Capital Management
Munder Capital Center
480 Pierce Street
Birmingham, MI 48009-6063
HSBC INVESTOR OPPORTUNITY PORTFOLIO
Westfield Capital Management, LLC
One Financial Center
Boston, MA 02111
HSBC INVESTOR VALUE PORTFOLIO
NWQ Investment Management Co., LLC
2049 Century Park East, 16th Floor
Los Angeles, CA 90067
SHAREHOLDER SERVICING AGENTS
FOR HSBC BANK USA, N.A. AND
HSBC SECURITIES (USA) INC. CLIENTS
HSBC Bank USA, N.A.
452 Fifth Avenue
New York, NY 10018
1-888-525-5757
FOR ALL OTHER SHAREHOLDERS
HSBC Investor Funds
P.O. Box 182845
Columbus, OH 43218-2845
1-800-782-8183
TRANSFER AGENT AND SPONSOR
Citi Fund Services
3435 Stelzer Road
Columbus, OH 43219
DISTRIBUTOR
Foreside Distribution Services, L.P.
3435 Stelzer Road
Columbus, OH 43219
CUSTODIAN
HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
HSBC INVESTOR HIGH YIELD FIXED INCOME FUND
HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME
PORTFOLIO
HSBC INVESTOR GROWTH PORTFOLIO
HSBC INVESTOR GROWTH AND INCOME FUND
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
HSBC INVESTOR MID-CAP FUND
HSBC INVESTOR OPPORTUNITY PORTFOLIO
HSBC INVESTOR VALUE PORTFOLIO
The Northern Trust Company
50 South LaSalle Street
Chicago, IL 60603
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
KPMG LLP
191 West Nationwide Blvd., Suite 500
Columbus, OH 43215
LEGAL COUNSEL
Dechert LLP
1775 Eye Street, N.W.
Washington, D.C. 20006
The HSBC Investor Family of 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-0008 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) 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 ADVISOR FUNDS TRUST
-----------------------------------------------------------------
By (Signature and Title)* /s/ RICHARD A. FABIETTI
-------------------------------------------------------
Richard A. Fabietti
President
Date December 21, 2007
---------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ RICHARD A. FABIETTI
-------------------------------------------------------
Richard A. Fabietti
President
Date December 21, 2007
---------------------------------
By (Signature and Title)* /s/ TROY A. SHEETS
-------------------------------------------------------
Troy A. Sheets
Treasurer
Date December 21, 2007
---------------------------------
* Print the name and title of each signing officer under his or her signature.