---------------------------------
OMB APPROVAL
OMB Number: 3235-0570
Expires: November 30, 2005
Estimated average burden
hours per response. . . . . 5.0
---------------------------------
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)
3435 STELZER ROAD
COLUMBUS, OH 43219
(Address of principal executive offices)
BISYS FUND SERVICES
3435 STELZER ROAD
COLUMBUS, OH 43219
(Name and address of agent for service)
Registrant's telephone number, including area code: 1-800-782-8183
Date of fiscal year end: October 31, 2003
Date of reporting period: April 30, 2003
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form
N-CSR, and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. 'SS' 3507.
Item 1. Reports to Stockholders.
Semi-Annual Report
HSBC Investor Family of Funds
April 30, 2003
HSBC INVESTOR LIMITED MATURITY FUND
HSBC INVESTOR FIXED INCOME FUND
HSBC INVESTOR BOND FUND
HSBC INVESTOR NEW YORK
TAX-FREE BOND FUND
[LOGO: PICTURE]
HSBC INVESTOR BALANCED FUND
HSBC INVESTOR EQUITY FUND
HSBC INVESTOR GROWTH AND INCOME FUND
HSBC INVESTOR MID-CAP FUND
HSBC INVESTOR INTERNATIONAL EQUITY FUND
HSBC INVESTOR OVERSEAS EQUITY FUND
HSBC INVESTOR SMALL CAP EQUITY FUND
HSBC INVESTOR OPPORTUNITY FUND
[HSBC LOGO]
Table of Contents
- --------------------------------------------------------------------------------
HSBC Investor Family of Funds
Semi-Annual Report - April 30, 2003
Glossary of Terms
President's Message ........................................... 1
Commentary From the Investment Manager ........................ 2
Portfolio Reviews ............................................. 4
Schedules of Portfolio Investments
HSBC Investor New York Tax-Free Bond Fund ............. 13
HSBC Investor Balanced Fund ........................... 15
HSBC Investor Equity Fund ............................. 17
HSBC Investor Growth and Income Fund .................. 19
HSBC Investor Mid-Cap Fund ............................ 20
Statements of Assets and Liabilities .......................... 22
Statements of Operations ...................................... 24
Statements of Changes in Net Assets ........................... 26
Financial Highlights .......................................... 38
Notes to Financial Statements ................................. 50
HSBC Investor Portfolios
Schedules of Portfolio Investments
HSBC Investor Limited Maturity Portfolio .............. 57
HSBC Investor Fixed Income Portfolio .................. 59
HSBC Investor International Equity Portfolio .......... 63
HSBC Investor Small Cap Equity Portfolio .............. 68
Statements of Assets and Liabilities .......................... 70
Statements of Operations ...................................... 71
Statements of Changes in Net Assets ........................... 72
Financial Highlights .......................................... 74
Notes to Financial Statements ................................. 75
Glossary of Terms
Beta is a coefficient measuring a stock's relative volatility. The beta is the
covariance of a stock in relation to the rest of the stock market. The S&P 500
Index has a beta coefficient of 1. Therefore, any stock with a higher beta is
more volatile than the market, and any with a lower beta can be expected to rise
and fall more slowly than the market.
Citigroup Broad Investment-Grade Bond Fund Index is an unmanaged market
capitalization-weighted index that includes fixed-rate Treasury,
government-sponsored, corporate and mortgage securities. All issues mature in
one year or more and have at least $50 million face amount outstanding for entry
into the index. Gross Domestic Product Growth (GDP) is the measure of the market
value of the goods and services produced by labor and property in the United
States.
Lehman Brothers 7-Year Municipal Bond Index is an unmanaged broad based index
comprised of investment grade, fixed-rate and tax-exempt securities with a
remaining maturity of at least 7 years.
Lehman Brothers Aggregate Bond Index is an unmanaged index generally
representative of the investment-grade debt issues with at least one year to
final maturity.
Lehman Brothers Intermediate Aggregate Bond Index is an unmanaged index
generally representative of investment-grade issues with maturities between
three and ten years.
Lipper Balanced Funds Average is comprised of managed funds that primarily
conserve principal by maintaining at all times a balanced portfolio of both
stocks and bonds. Typically the stock/bond ratio ranges around 60%/40%.
Lipper General Bond Funds Average is comprised of managed funds that do not have
quality or maturity restrictions. The Funds primary goal is to keep the bulk of
the portfolio's assets in corporate and government 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 Funds Average is comprised of managed funds that invest
their assets in securities whose primary trading markets are outside of the
United States.
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 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 N.Y. Municipal Bond 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.
Morgan Stanley 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.
NASDAQ is a market price only index that tracks the performance of domestic
common stocks traded on the regular Nasdaq market as well as National Market
System traded foreign common stocks and American Depository Recipts.
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 investment managers. Russell now maintains 21 U.S. sotck indices
and has launched similar broad-market and style indices in Canada and Japan.
today, more than $214 billion is invested in funds modeling Russell's U.S.
indices, and more than $1 trillion in funds is benchmarked against the global
family of Russell indices.
Russell MidCap Growth Index is an unmanaged index which measures the performance
of securities found in the Russell universe that fall in the mid-range sector.
Russell 1000 Index is an unmanaged index which measures the performance of the
1,000 larges securities found in the Russell 3000 Index, which represents
approximately 92% of the total market capitalization of the Russell 3000 Index.
Russell 1000 Growth Index is an unmanaged index which measures the performance
of 1,000 securitities found in the Russell universe with higher price-to-book
ratios and higher forecasted growth values.
Russell 1000 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 capitalizatin) with lower price-to-book ratios and lower forecasted
growth values.
Russell 2000 Index is an unmanaged index that generally representative of the
performance of small-capitalization stocks.
Russell 2000 Growth Index is an unmanaged index which tracks the performance of
domestically traded common stocks of small- to mid-sized companies with higher
price-to-book ratios and higher forecasted growth values.
Russell 2000 Value Index is unmanaged index which measures the performance of
those Russell 2000 companies with lower price-to-book ratios and lower
forecasted growth values.
Standard & Poor's 500 Index is an unmanaged index that measures the performance
of the stock market as a whole.
Standard & Poor's Mid Cap 400 Index is an unmanaged index that consists of 400
domestic stocks chosen for market size, liquidity and industry group
representation.
Lipper is an independent mutual fund performance monitor whose results are based
on total return and do not reflect a sales charge.
Securities indexes assume reinvestment of all distributions and interest
payments and do not take in account brokerage fees or expenses. Securities in
the Fund do not match those in the indexes and performance of the Fund will
differ. Investors cannot invest directly in an index, although they can invest
in the underlying funds or securities.
President's Message
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to present you with the semi-annual reports for the HSBC Investor
Family of Funds for the six months ended April 30, 2003. The report contains the
following features:
* Commentary From the Investment Manager
* Portfolio Reviews--investment strategy, performance overview and outlook for
the coming months
* Schedules of Portfolio Investments--listing of the security holdings in each
Fund
* Statements of Assets and Liabilities--summary of the assets and liabilities
of each Fund
* Statements of Operations--summary of operations and its effect on the assets
of each Fund
* Statements of Changes in Net Assets--summary of changes in net assets during
the period
* Financial Highlights--per share summary of activity affecting net asset
value per share
* Notes to Financial Statements
Finally, we thank you for your continued confidence in us. We look forward to
providing you with investment management services to meet your needs now and in
the years ahead.
Sincerely,
Walter B. Grimm
Walter B. Grimm
President
June 2003
HSBC INVESTOR FAMILY OF FUNDS 1
Commentary From the Investment Manager
- --------------------------------------------------------------------------------
HSBC Asset Management (Americas) Inc.
U.S. Economic Review
The United States economy struggled through a difficult environment during the
six-months ended April 30, 2003. Corporate spending was weak, as companies cut
costs and continued to pay down the heavy debt they built up during the economic
expansion of the 1990s. The run-up to war with Iraq hurt already-weak corporate
spending by clouding economic predictions and causing businesses to delay
investments. The Federal Reserve Board (the "Fed") in early November tried to
stimulate the economy by lowering short-term interest rates from 1.75% to 1.25%.
However, rapidly rising oil prices, growing unemployment and sluggish corporate
spending helped to stoke fears that the economy could fall back into a
recession.
Consumer spending played an essential role in keeping the economy growing.
Rising unemployment threatened to weaken consumer spending, but that trend was
offset by solid wage increases made possible by strong productivity growth. In
addition, low interest rates encouraged homeowners to refinance their mortgages,
boosting their cash flow and spending.
Corporate profit growth improved during the period. Those gains came largely
because of cost cutting, as revenue growth remained anemic. Many corporations
also benefited from low interest rates as well as a weaker dollar, which allowed
them to sell more products overseas.
Global Economic Review
Many of the same factors that plagued the U.S. influenced economies around the
world. Like the Fed, the European Central Bank reduced short-term interest rates
in an effort to boost economic growth. High unemployment, labor costs and taxes
contributed to slow growth in many European countries, most notably Germany. A
soaring housing market buoyed the United Kingdom's economy, keeping it stronger
than continental Europe's. Japan continued to suffer from more than $300 billion
in bad loans and a banking system that lacks transparency.
Some emerging economies fared well, while others struggled. Brazil's economy
appears to have stabilized, as the new president has taken moderate positions on
economic matters. An export-based economy such as Taiwan's, that sells a great
deal of technology equipment to developed countries suffered from weak capital
spending in developed economies.
Nevertheless, countries with strong domestic demand, such as South Korea,
remained well insulated from the global downturn and fared relatively well.
China benefited from its position as the low-cost producer of many of the
world's goods, although the economy in its rural provinces is still dominated by
inefficient and corrupt state-controlled industries. Many Asian countries near
the end of the period suffered from the outbreak of severe acute respiratory
syndrome (SARS), which dramatically reduced tourism and other economic activity
in those areas.
Market Environment
The U.S. equity market began November with a rally, as investors were encouraged
by the Fed's interest-rate cut, improved corporate profits and the prospect for
an economic recovery. The rally proved short-lived, however. Investors sold
stocks in December after tensions between the U.S., and Iraq increased, and
economic indicators suggested that a strong economic recovery was unlikely.
Concerns about an approaching war with Iraq and mixed signals about the
direction of the economy led to stock market volatility during the first quarter
of 2003. The conclusion of the war with Iraq removed a major source of
uncertainty and led to a broad rally in the equity markets during April. Stocks
began the year strongly and then fluctuated with the daily news from Iraq,
ending the first quarter in negative territory. Growth stocks led the market
during the first three months of 2003, and technology was the top-performing
sector for the second consecutive quarter, as investors responded to signs of
more stable capital spending. Strong returns from pharmaceutical stocks boosted
health care shares, while solid earnings from large retailers helped consumer
discretionary stocks. Financial services stocks lagged the market, as investors
anticipated rising interest rates.
Shares of larger companies outperformed small-company stocks during the period,
as small retailers and media companies suffered from the perception that
consumers might reduce spending going forward. Small-cap financial-services
companies outperformed their larger brethren, however, due to strong performance
from small banks and realtors. Meanwhile, small-cap health care stocks fared
relatively well, due to a revitalized biotechnology sector.
European markets outperformed U.S. equities early in the period, aided by the
euro's strength versus the dollar. That trend reversed itself in early 2003
however, as the dollar strengthened and boosted the relative performance of the
U.S. stock market.
2 HSBC INVESTOR FAMILY OF FUNDS
Commentary From the Investment Manager - (continued)
- --------------------------------------------------------------------------------
HSBC Asset Management (Americas) Inc.
Australia and New Zealand were relatively immune from the global economic
slowdown, and their stock markets were two of the best-performing markets during
the period. Japan performed poorly throughout the period, as that country
continued to suffer the effects of a poorly managed and regulated banking
sector. Markets in the Pacific Rim were hurt late in the period by investor
fears about the implications of the SARS virus.
Fixed-income securities benefited as investors concerned about the war and
uncertain about the direction of the economy sought safety in bonds. Investors
favored corporate bonds, which offered historically high yields relative to
Treasury securities. High-yielding bonds with low credit ratings particularly
benefited from investors' pursuit of higher yields. Municipal bonds and
mortgage-backed bonds lagged other fixed-income sectors.
Short-term bonds led the Treasury markets early in the period as they benefited
from the Fed's interest-rate cuts, while investors sold longer-term bonds to
participate in the short-lived stock rally. That trend reversed itself in early
2003, however, as skittish investors moved money back out of the stock market
and into longer-term Treasuries.
HSBC INVESTOR FAMILY OF FUNDS 3
Portfolio Reviews
- --------------------------------------------------------------------------------
HSBC Investor Limited Maturity Fund
(Class A (Investor) Shares, B Shares, C Shares and Y Shares)
by John B. Cuccia
Portfolio Manager
HSBC Asset Management (Americas) Inc.
The HSBC Investor Limited Maturity 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 Limited Maturity Portfolio (the
"Portfolio").
The Fund returned 3.44%, (without sales charge) for the Class A (Investor)
Shares and 3.47% for the Class Y shares during the six-month period ended April
30, 2003. That compared to a return of 3.52% for the Lehman Brothers
Intermediate Aggregate Bonds Index.(1)
The U.S. markets were taken by surprise on November 6, 2002 when the Fed decided
to lower its target interest rate by a larger than expected 50 basis points to a
rate of 1.25% at their scheduled FOMC meeting. They also decided to change their
bias to neutral, indicating no further anticipated moves in the near term. The
U.S. bond market initially responded with higher yields as the U.S. equity
market rallied. However, as 2002 ended the fixed income market finished on a
high note as yields declined. Additionally, investment-grade corporate bond
spread's generated their best performance in many quarters.
With the start of the new year, the U.S. economy proved weaker than previously
anticipated as initial estimates for fourth quarter Gross Domestic Product(1)
(the "GDP") grew at only a 0.7% pace. The U.S. dollar declined against a broad
index of currencies. Bond yields moved higher as many investors abroad reduced
their investments in dollar denominated assets. As the year progressed, the
economy did show some signs of strength, mainly in the housing sector and in
retail sales. Fourth quarter GDP was later revised upward to a reading of 1.4%,
but many investors began to question whether the consumer would continue to
spend in an economy with a deteriorating labor market, weakening consumer
confidence and contracting manufacturing.
Toward the end of the first quarter, heightened geo-political risk became the
main driver as the countdown to and inception of the war in Iraq diminished
economic expectations. The Fed again met and similar to their previous meeting
at the beginning of year, decided to leave their target interest rate unchanged.
However, this time they did not express an opinion on the balance of risk facing
the economy. Through the remainder of the six-month review period ended April
2003, financial markets remained volatile, economic data remained weak as the
war and severe winter weather hindered the consumer. Many investors felt the
military campaign in Iraq would last two to four months, but then by the second
week of April, Baghdad fell. Nonetheless, despite a swift conclusion to the war,
not all was well. The economy did not get the instant post war bounce investors
were hoping for.
At the beginning of the review period, the Fund slightly increased its exposure
to the corporate sector and to U.S. Treasury's, while decreasing its exposure to
mortgage-backed-securities. The Fund also increased its duration profile in
longer dated securities. Throughout the period, the Fund maintained an
overweight in the corporate sector as well as a higher duration profile versus
the benchmark. Both strategies helped to enhance the Fund's performance as the
corporate sector outperformed and bond yields in general, finished the review
period lower.*
We feel the Fed will keep its target on the federal funds rates at current
accommodative levels for an extended period. We believe that inflation may
remain subdued and economic growth should pickup and return to around trend
during the second half of 2003. In addition, the technical factors that drove
significant spread contraction in the corporate market may continue, as they
show no near terms signs of abatement. Over the longer term, we are likely to
see pressure on yields rise as the economy is expected to show signs of
improvement. We also anticipate an increase to the U.S. Treasury supply. As
such, we feel the Fund's interest rate profile and credit exposure is positioned
accordingly.
Average Annual Total Return
Inception Six 1 Since
As of April 30, 2003 Date Months Year Inception
- ----------------------------------------------------------------------------------------------------------
HSBC Investor Limited Maturity Fund Class A (Investor)(2) 2/7/01 -1.47% 3.21% 4.71%
HSBC Investor Limited Maturity Fund Class B(3) 2/15/01 -1.04% 3.58% 5.35%
HSBC Investor Limited Maturity Fund Class C(4) 2/13/01 2.06% 6.68% 6.13%
HSBC Investor Limited Maturity Fund Class Y 1/23/01 3.47% 8.65% 7.49%
- ----------------------------------------------------------------------------------------------------------
(2) Reflects the maximum sales charge of 4.75%.
(3) Reflects the contingent deferred sales charge maximum of 4.00%.
(4) Reflects the contingent deferred sales charge maximum of 1.00%.
- --------------------------------------------------------------------------------
(1) For additional information, please refer to the Glossary of Terms.
* Portfolio composition is subject to change.
The performance data quoted represents past performance and is not an indication
of future results. The investment return and net asset value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost.
4 HSBC INVESTOR FAMILY OF FUNDS
Portfolio Reviews
- --------------------------------------------------------------------------------
HSBC Investor Fixed Income Fund
HSBC Investor Bond Fund (Class A (Investor) Shares, B Shares and C Shares)
by Edward Merkle
Senior Portfolio Manager, Managing Director
HSBC Asset Management (Americas) Inc.
The HSBC Investor Fixed Income Fund and the HSBC Investor Bond Fund (the
"Funds") seek to provide investors with above-average total return, consistent
with reasonable risk, through investments in a diversified portfolio of
fixed-income securities. The Funds utilize a two-tier structure, commonly known
as a "master-feeder,"in which the Funds invest all of their investable assets in
the HSBC Investor Fixed Income Portfolio (the "Portfolio").
For the six-months ended April 30, 2003, the shares of the HSBC Investor Fixed
Inome Fund produced a 5.19% total return, and the Class A (Investor) Shares of
the HSBC Investor Bond Fund returned 4.98% (without sales charge). That compared
to 4.41% and 5.40% total return for the Funds' benchmarks, the Citigroup Broad
Investment-Grade Bond Fund Index and the Lipper General Bond Funds Average,
respectively.(1)
The past six-month period saw a number of monetary and geo-political events that
caused both the stock and bond markets to react significantly. First off, the
Fed's November 6, 2002 meeting ended with an announcement that they were
lowering the fed funds rate by 50 basis points to a target of 1.25%. This
decision caught most market observers by surprise as most were expecting either
no change in rates or a 25 basis point increase. As 2003 began, it was more of
the same as economic conditions continued mixed, unemployment stayed at high
levels, consumer confidence remained muted and manufacturing did not break out
of its slump. In the first quarter of 2003, the bond markets were driven by two
significant events, namely the start of the war in Iraq and the Fed's meeting on
March 18. The Federal Reserve meeting ended with no change in interest rates or
a change in bias, which remained at neutral. However, what was unique was the
Fed's statement that they decided not to express an opinion on the balance of
risks facing the economy. In our opinion, the Fed was not sure which way the
economy was headed because of the war in Iraq. As of April 30, 2003, the Fed
changed its bias to weakness and the markets remained divided whether or not the
Fed would ease further.
Fund activity during this period touched on most sectors of the fixed income
markets as we purchased U.S. Treasuries, U.S. agencies, corporate bonds and
mortgage-backed securities. During this period, we maintained an overweight in
investment-grade corporate bonds and an underweight in U.S. Treasury securities.
We believe this strategy proved quite successful as corporate bonds had an
outstanding six-month run. In the credit markets, we selectively reduced our
holdings in BBB rated corporate securities during the rally as we felt that
spread compression had pretty much run its course. Lastly, in the mortgage
sector, we purchased 5.5% 30-year coupons that brought down our average coupon
weighting. It also afforded the portfolio some relief from the rapid pace of
monthly principal and interest payments that have effected this sector given the
historic number of consumer refinancing over the past few years.*
We believe no Fed activity will occur over the next 12 months, as
economic data remains mixed with weakness continuing in unemployment
data and strength remaining in the housing sector.
Average Annual Total Return
- --------------------------------------------------------------------------------
Inception Six 1 5 Since
As of April 30, 2003 Date Months Year Year Inception
- ----------------------------------------------------------------------------------------------------
HSBC Investor Fixed Income Fund 1/9/95 5.19% 9.88% 7.02% 8.18%
HSBC Investor Bond Fund Class A (Investor)(2) 8/26/96 -0.03% 4.19% 5.37% 6.36%
HSBC Investor Bond Fund Class B(3) 1/6/98 0.49% 4.47% 5.60% 5.41%
HSBC Investor Bond Fund Class C(4) 11/4/98 3.50% 7.49% N/A 5.83%
- ----------------------------------------------------------------------------------------------------
(2) Reflects the maximum sales charge of 4.75%.
(3) Reflects the contingent deferred sales charge maximum of 4.00%.
(4) Reflects the contingent deferred sales charge maximum of 1.00%.
- --------------------------------------------------------------------------------
(1) For additional information, please refer to the Glossary of Terms.
* Portfolio composition is subject to change.
The performance data quoted represents past performance and is not an indication
of future results. The investment return and net asset value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost.
HSBC INVESTOR FAMILY OF FUNDS 5
Portfolio Reviews
- --------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund'D'
(Class A (Investor) Shares, B Shares, C Shares and Y Shares)
by Jerry Samet
Senior Fixed Income Portfolio Manager
HSBC Asset Management (Americas) Inc.
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.
The HSBC Investor New York Tax-Free Bond Fund (the "Fund") delivered a total
return of 3.69% (without sales charge) for Class A (Investor) Shares and 3.82%
for Class Y Shares for the period ended April 30, 2003. That compared to 3.71%
and 3.14% for the Fund's benchmarks, the Lehman Brothers 7-Year Municipal Bond
Index and the Lipper New York Municipal Bond Funds Average, respectively.(1)
During the period ended April 30, 2003, municipals performed firmly as the fixed
income markets rallied with yields moving lower. In the process municipals
underperformed taxable fixed income on a pretax basis by 72 basis points.
Relative underperformance in the municipal market was a result of the strong
market performance of the corporate bond sector, which outperformed municipals
by an overwhelming 518 basis points. In fact, municipals were able to outperform
all other investment-grade taxable fixed income sectors. Furthermore, yields in
the municipal market were able to actually move lower than U.S. Treasury yields
which is most unusual during a bond rally where municipals typically lag
Treasury yields in a rallying market.
The Fund's duration during the period began approximating the benchmark but over
the period adapted a positioning that was about 15% longer than our benchmark
and was one of the key factors that helped drive the Fund's performance. The
portfolio also maintained a barbelled position, which helped performance as the
long and short end of the curve outperformed the intermediate portion of the
curve. Additionally the portfolio maintained its high credit quality profile as
lower rated and high yield municipal credits continue to come under pressure due
to reduced revenues at various municipal entities.*
The outlook for the municipal market remains somewhat positive. Flow of funds
into the asset class continues to remain strong although we would suspect that
'sticker shock' might set in if rates move lower from current low historical
yields. However, we believe investor risk appetites are likely to remain
tempered, as a return to the speculative investor of the late 1990's is not
likely to occur. Currently, the municipal market continues to perform well
despite budgetary concerns, record amounts of new issuance, and of course very
low absolute yield levels.
We believe credit selection, as well as sector selection could be the key driver
of performance for the remainder of the year, as the spread between higher
quality and lower quality paper should remain volatile. The tax-exempt market is
feeling pressure from a credit standpoint from declining state and local
revenues. The prospects of a Federal aid package remains uninspiring. However,
many states have already adapted increases in taxes and fees that have helped
increase their revenue base.
The yield spread between 5 and 10-year municipals currently narrowed a bit to
110 basis points. This still remains relatively steep as the spread within the
Treasury market stands at just 108 basis points. Going forward the Fund will
continue to barbell along the yield curve as the incremental yield pick up
remains near decade highs. Duration-wise we will approximate our benchmarks. The
Funds will underweight the 10-year portion of the curve, as that portion is
highly susceptible to large crossover selling while over weighing 'sweet spot'
which we see as the 7-8 year portion. From a quality standpoint, the Funds will
continue to overweigh insured paper.*
Average Annual Total Return
- --------------------------------------------------------------------------------
Inception Six 1 5 Since
As of April 30, 2003 Date Months Year Year Inception
- ----------------------------------------------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund Class A (Investor)(2) 5/1/95 -1.21% 3.15% 4.44% 5.48%
HSBC Investor New York Tax-Free Bond Fund Class B(3) 1/6/98 -0.69% 3.52% 4.69% 4.30%
HSBC Investor New York Tax-Free Bond Fund Class C(4) 11/4/98 2.29% 6.48% N/A 4.16%
HSBC Investor New York Tax-Free Bond Fund Class Y 7/1/96 3.82% 8.58% 5.73% 6.20%
- ----------------------------------------------------------------------------------------------------------------------
(2) Reflects the maximum sales charge of 4.75%.
(3) Reflects the contingent deferred sales charge maximum of 4.00%.
(4) Reflects the contingent deferred sales charge maximum of 1.00%.
- --------------------------------------------------------------------------------
'D' A 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.
(1) For additional information, please refer to the Glossary of Terms.
* Portfolio composition is subject to change.
The performance data quoted represents past performance and is not an indication
of future results. The investment return and net asset value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost.
6 HSBC INVESTOR FAMILY OF FUNDS
Portfolio Reviews
- --------------------------------------------------------------------------------
HSBC Investor Balanced Fund
(Class A (Investor) Shares, B Shares, C Shares and Y Shares)
by Thomas D'Auria, CFA and Edward Merkle
Chief Investment Officer and Senior Portfolio Manager, Managing Director
HSBC Asset Management (Americas) Inc.
The HSBC Investor Balanced Fund (the "Fund") seeks to provide current income and
long-term growth of capital consistent with reasonable risk by investing in a
broadly diversified portfolio of U.S. government securities, common stocks,
preferred stocks and high-quality bonds.
The Fund produced a total return of 3.66% (without sales charge) for Class A
(Investor) Shares and 3.91% for the Class Y Shares for the six-months ended
April 30, 2003. That compared to a 4.31%, 4.47% and 4.25% return for the Fund's
benchmarks, the Lehman Brothers Aggregate Bond Index, the S&P 500 Index and the
Lipper Balanced Funds Average, respectively.(1)
The past six-month period saw a number of monetary and geo-political events that
caused both the stock and bond markets to react significantly. First off, the
Fed's November 6, 2002 meeting ended with an announcement that they were
lowering the fed funds rate by 50 basis points to a target of 1.25%. This
decision caught most market observers by surprise as most were expecting either
no change in rates or a 25 basis point increase. As 2003 began, it was more of
the same as economic conditions continued mixed, unemployment stayed at high
levels, consumer confidence remained muted and manufacturing did not break out
of its slump. In the first quarter of 2003, the bond markets were driven by two
significant events, namely the start of the war in Iraq and the Fed's meeting on
March 18. The Fed meeting ended with no change in interest rates or a change in
bias, which remained at neutral. However, what was unique was the Fed's
statement that they decided not to express an opinion on the balance of risks
facing the economy. Simply put, the Fed was not sure which way the economy was
headed because of the war in Iraq. As of April 30, 2003, the Fed changed their
bias to weakness and the markets remained divided whether or not the Fed would
ease further.
Fund activity during this period touched on most sectors of the Fixed Income
markets as we purchased U.S. Treasuries, U.S. agencies, corporate bonds and
mortgage-backed securities. During this period, we maintained an overweight in
investment-grade corporate bonds and an underweight in U.S. Treasury securities.
This strategy proved quite successful as corporate bonds had an outstanding
six-month run. In the credit markets, we selectively reduced our holdings in BBB
rated corporate securities during the rally as we felt that spread compression
had pretty much run its course. In the near future, we will look to purchase
5.5% 30-year coupons that will bring down our average coupon weighting. It also
could afford the portfolio some relief from the rapid pace of monthly principal
and interest payments that have effected this sector given the historic number
of consumer refinancing over the past few years.*
We belive no Fed activity will occur over the next 12 months, as economic data
remains mixed with weakness continuing in unemployment data and strength
remaining in the housing sector.
The economic data has been mixed, shifting between positive and negative, and we
do not anticipate clarity on the direction of the economy in the short-term.
Consumer confidence has rebounded significantly with the end of the military
conflict in Iraq, however, jobless claims remain high and unemployment has
ticked up again. We believe lower energy prices could give the consumer a needed
boost, and interest rates have remained quite low during the last month, which
is giving some hope of yet another refinancing wave along with continued support
to the housing industry.
The significant rally since mid-March has brought valuations close to fair
levels. High beta1 stocks have led the market rally and we think many stocks may
be ahead of their fundamentals (particularly in Technology). With the first
quarter earnings reporting season over, the next few weeks could be an
"information void" that could lead to some volatility and the markets could pare
some of the recent gains.
We believe there is modest upside to the market from current levels. We have not
made significant changes in the portfolio, after raising the beta to just above
1.0 earlier in the year. We continue to position the portfolio for a 12-18 month
forecast, which we believe may include a rebound in global economies. However,
we feel it is clear that volatility will continue and this should allow for
moneymaking entry and exit points from individual stocks.*
Average Annual Total Return
- --------------------------------------------------------------------------------
Inception Six 1 Since
As of April 30, 2003 Date Months Year Inception
- ------------------------------------------------------------------------------------------------
HSBC Investor Balanced Fund Class A (Investor)(2) 2/20/01 -1.46% -9.00% -8.95%
HSBC Investor Balanced Fund Class B(3) 2/9/01 -0.71% -8.67% -9.15%
HSBC Investor Balanced Fund Class C(4) 2/13/01 2.39% -5.76% -8.33%
HSBC Investor Balanced Fund Class Y 1/18/01 3.91% -3.90% -8.19%
- ------------------------------------------------------------------------------------------------
(2) Reflects the maximum sales charge of 5.00%.
(3) Reflects the contingent deferred sales charge maximum of 4.00%.
(4) Reflects the contingent deferred sales charge maximum of 1.00%.
- --------------------------------------------------------------------------------
(1) For additional information, please refer to the Glossary of Terms.
* Portfolio composition is subject to change.
The performance data quoted represents past performance and is not an indication
of future results. The investment return and net asset value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost.
HSBC INVESTOR FAMILY OF FUNDS 7
Portfolio Reviews
- --------------------------------------------------------------------------------
HSBC Investor Equity Fund
(Class A (Investor) Shares, B Shares, C Shares and Y Shares)
by John L. Blundin
Portfolio Manager, Alliance Capital Management, L.P. and
Robert H. Lyon
Portfolio Manager, Institutional Capital Corporation
The HSBC Investor Equity Fund (the "Fund") seeks to provide its shareholders
with long-term growth of capital and income without excessive fluctuations in
market value. The Fund invests at least 80% of its assets in equity securities
of seasoned mid-sized and large companies whose shares are expected to show
above-average price appreciation. The Fund employs two sub-investment advisers
to achieve its investment objective. Each sub-investment adviser pursues a
different investment style, and receives a fee for their services.
Alliance Capital Management, L.P. pursues a growth style of investing, focusing
on financially secure firms that have established operating histories and are
proven leaders in their industries or market sectors. These companies may
possess characteristics such as participation in expanding markets, increasing
unit sales volume, growth in revenues and earnings per share or increasing
return on investments.
Institutional Capital Corporation pursues a value style of investing, focusing
on shares of companies that are undervalued relative to the stock market as a
whole. The firm employs a fundamentals-based, bottom-up stock-picking method to
find these companies.
The Fund returned 4.85% (without sales charge) for Class A (Investor) Shares and
4.91% for the Class Y Shares for the six-months ended April 30, 2003. That
compared to a 4.28%, 4.75% and 2.96% return forthe Fund's benchmarks, the
Russell 1000 Growth Index, the Russell 1000 Index and the Lipper Large-Cap Core
Funds Average.(1)
The economy during the period continued to experience a sluggish recovery
characterized by weak corporate spending. Investors hopes for stronger economic
growth fueled a stock-market rally in the beginning of the period, but weak
corporate earnings at the end of 2002 caused stocks to give back much of those
gains. The stock market remained volatile through the rest of the period, moving
higher through April on positive news regarding the U.S. war with Iraq.
Value stocks outperformed growth stocks, though both asset classes posted
positive returns during the period. Although investors remained fairly
risk-averse for much of the period, higher-beta(1) stocks performed well
during the market rally in late 2002 as investors betting on a market
rebound found the return potential of such stocks attractive.
The Fund benefited from its consumer staples position, as many of its holdings
delivered solid earnings growth. The Fund's technology holdings also performed
well due to improved earnings and earnings forecasts in the sector. The Fund's
health-care holdings hurt performance, as the Tenet Healthcare accounting
scandal cast a pallor over such stocks. Among financial-services stocks, the
Fund's brokerage holdings suffered from slow merger and acquisition activity, as
well as weak brokerage commissions caused by low trading volume.*
The value-oriented portion of the Fund's portfolio also benefited from
individual stock selection during the period. The Fund's managers continued to
invest in attractively valued shares of high-quality companies with strong and
improving balance sheets. The Fund's investment in Citigroup boosted
performance, and we found an attractive opportunity in February in shares of
financial firm AIG.*
The Fund's value allocation also benefited from its investments in drug
manufacturer Wyeth and General Electric Co. Historically, General Electric,
pegged by investors as a growth stock, had been beaten down during the past
year. Therefore, its valuation had become much more attractive.*
ICAP will maintain its emphasis on attractively valued shares of high-quality
firms with strong and improving balance sheets, and will avoid large investments
in companies that are dependent on a global economic recovery. Instead, ICAP
will look for opportunities among shares of franchises that should benefit from
a domestic economic recovery.*
Average Annual Total Return
- --------------------------------------------------------------------------------
Inception Six 1 5 Since
As of April 30, 2003 Date Months Year Year Inception
- ---------------------------------------------------------------------------------------------------------
HSBC Investor Equity Fund Class A (Investor)(2) 8/1/95 -0.38% -20.47% -7.40% 3.42%
HSBC Investor Equity Fund Class B(3) 1/6/98 0.48% -20.27% -7.14% -4.12%
HSBC Investor Equity Fund Class C(4) 11/4/98 3.36% -17.84% N/A -7.64%
HSBC Investor Equity Fund Class Y 7/1/96 4.91% -16.12% -6.22% 2.60%
- ---------------------------------------------------------------------------------------------------------
(2) Reflects the maximum sales charge of 5.00%.
(3) Reflects the contingent deferred sales charge maximum of 4.00%.
(4) Reflects the contingent deferred sales charge maximum of 1.00%.
- --------------------------------------------------------------------------------
(1) For additional information, please refer to the Glossary of Terms. The Fund
was formerly compared with the Russell 1000 Growth Index. The Fund is now
compared to the Russell 1000 Index, which better represents the type of
securities in which the Fund may invest.
* Portfolio composition is subject to change.
The performance data quoted represents past performance and is not an indication
of future results. The investment return and net asset value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost.
8 HSBC INVESTOR FAMILY OF FUNDS
Portfolio Reviews
- --------------------------------------------------------------------------------
HSBC Investor Growth and Income Fund
(Class A (Investor) Shares, B Shares, C Shares and Y Shares)
by Thomas D'Auria, CFA
Chief Investment Officer
HSBC Asset Management (Americas) Inc.
The HSBC Investor Growth and Income Fund (the "Fund") normally invests at least
65% of its total assets in common stocks, preferred stocks, and convertible
securities. The Fund may invest the balance ofits assets in various types of
fixed income securities and in money market instruments.
The Fund returned 4.07% (without sales charge) for the Class A (Investor) Shares
and 4.30% for the Class Y Shares for the six months ended April 30, 2003. That
compared to a 4.47% return for the S&P 500 Index and a 2.96% return for the
Lipper Large Cap Core Funds Average.(1)
The U.S. equity markets rose during a volatile six-month period ended April 30,
2003, with the S&P 500 rising 4.5% on a total return basis, while the NASDAQ(1)
increased 10.4%. Eight of the ten economic sectors in the S&P 500 advanced
during the period, led by utilities (+12.4%), materials (+9.0%), and information
technology (+7.9%). The consumer staples (-3.1%) and telecommunication services
(-2.2%) sectors declined during the period.
The U.S. equity markets began 2003 strongly, with the S&P rising 3.3% on the
first trading day of the year, and increasing almost 6% by mid month.
Encouraging economic data drove the market gains and news of President Bush's
proposed economic package, which would accelerate tax cuts and eliminate the tax
on dividends for individuals. However, the equity markets reversed course over
the remainder of January as lingering concerns over a looming military conflict
with Iraq, lackluster earnings results, and cautious comments from a few
companies drove the equity markets lower. A successful beginning to the war in
Iraq proved to be a catalyst for the equity markets during this stretch, and
crude oil prices dropped significantly from a 12-year high reached in February,
as coalition forces secured major oil fields in Iraq.
The U.S. equity markets ended the period strongly due to optimism regarding the
war in Iraq, as coalition forces quickly approached Baghdad. Above consensus
first quarter corporate profit, growth also propelled the equity markets higher
during April, with the S&P 500 reaching its highest level since mid-January by
the latter part of the month.
The economic data has been mixed, shifting between positive and negative, and we
do not anticipate clarity on the direction of the economy short-term. Consumer
confidence has rebounded significantly with the end of the military conflict in
Iraq, however, jobless claims remain high and unemployment has ticked up again.
We believe lower energy prices could give the consumer a needed boost, and
interest rates have remained quite low during the last month, which is giving
some hope of yet another refinancing wave along with continued support to the
housing industry.
The significant rally since mid-March has brought valuations close to
fair levels. High-beta(1) stocks have led the market rally and we think
many stocks may be ahead of their fundamentals (particularly in
technology). With the first quarter earnings reporting season over,
the next few weeks could be an "information void" that could lead to
some volatility and the markets could pare some of the recent gains.
We believe there is modest upside to the market from current levels. We have not
made significant changes in the portfolio, after raising the beta to just above
1.0 earlier in the year. We continue to position the portfolio for a 12-18 month
forecast, which includes a rebound in global economies. However, we believe that
volatility will continue and this should allow for moneymaking entry and exit
points from individual stocks.*
Average Annual Total Return
- --------------------------------------------------------------------------------
Inception Six 1 Since
As of April 30, 2003 Date Months Year Inception
- ------------------------------------------------------------------------------------------------------
HSBC Investor Growth and Income Fund Class A (Investor)(2) 4/12/01 -1.14% -18.26% -16.00%
HSBC Investor Growth and Income Fund Class B(3) 4/5/01 -0.29% -18.00% -14.04%
HSBC Investor Growth and Income Fund Class Y 4/2/01 4.30% -13.73% -12.10%
- ------------------------------------------------------------------------------------------------------
(2) Reflects the maximum sales charge of 5.00%.
(3) Reflects the contingent deferred sales charge maximum of 4.00%.
- --------------------------------------------------------------------------------
(1) For additional information, please refer to the Glossary of Terms.
* Portfolio composition is subject to change.
The performance data quoted represents past performance and is not an indication
of future results. The investment return and net asset value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost.
HSBC INVESTOR FAMILY OF FUNDS 9
Portfolio Reviews
- --------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund (Class A Shares, B Shares, C Shares and Trust Shares)
by Thomas D'Auria, CFA
Chief Investment Officer
HSBC Asset Management (Americas) Inc.
The HSBC Investor Mid-Cap Fund (the "Fund") seeks to achieve a higher rate of
return than that generated by the Russell MidCap Growth Index by investing at
least 80% of its total assets in stocks of mid-sized companies with market
capitalization, at the time of acquisition, falling within the range of the
Russell MidCap Growth ($190 million to $13.3 billion).
The Fund's Class A Shares posted a return of 2.70% (without sales charge) and
2.84% for the Trust Shares for the six months ended April 30, 2003. That
compares to 3.98% and 4.04% for the Fund's benchmarks, the S&P Mid Cap 400, and
the Lipper Mid-Cap Growth Funds Average.(1)
The U.S. equity markets rose during a volatile six-month period ended April 30,
2003, with the S&P 500 rising 4.5% on a total return basis, while the NASDAQ(1)
increased 10.4%. The U.S. equity markets began the period moving higher due to a
larger than expected reduction in short-term interest rates by the Fed, and an
election day victory by the Republican party, which gained control of both
houses of Congress. We note that the market rally early in the period was narrow
in breadth and concentrated in lower quality companies.
The U.S. equity markets began 2003 strongly, with the S&P(1) rising 3.3% on
the first trading day of the year, and increasing almost 6% by mid month.
Encouraging economic data drove the market gains and news of President Bush's
proposed economic package, which would accelerate tax, cuts and eliminate the
tax on dividends for individuals. However, the equity markets reversed course
over the remainder of January as lingering concerns over a looming military
conflict with Iraq, lackluster earnings results, and cautious comments from a
few companies drove the equity markets lower. A successful beginning to the war
in Iraq proved to be a catalyst for the equity markets during this stretch, and
crude oil prices dropped significantly from a 12-year high reached in February,
as coalition forces secured major oil fields in Iraq.
The U.S. equity markets ended the period strongly due to optimism regarding the
war in Iraq, as coalition forces quickly approached Baghdad. Above consensus
first quarter corporate profit growth also propelled the equity markets higher
during April, with the S&P 500 reaching its highest level since mid-January by
the latter part of the month.
The economic data has been mixed, shifting between positive and negative, and we
do not anticipate clarity on the direction of the economy short-term. Consumer
confidence has rebounded significantly with the end of the military conflict in
Iraq, however, jobless claims remain high and unemployment has ticked up again.
We believe lower energy prices could give the consumer a needed boost, and
interest rates have remained quite low during the last month, which is giving
some hope of yet another refinancing wave along with continued support to the
housing industry.
The significant rally since mid-March has brought valuations close to fair
levels. High-beta1 stocks have led the market rally and we think many stocks may
be ahead of their fundamentals (particularly in technology). With the first
quarter earnings reporting season over, the next few weeks could be an
"information void" that could lead to some volatility and the markets could pare
some of the recent gains.
We believe there is modest upside to the market from current levels. We have not
made significant changes in the portfolio, still maintaining an overweight
position in financials, and an underweight position in information technology.
Recent meaningful changes include an increase in the industrials weighting
through the purchase of Tyco, while eliminating the exposure to the
telecommunications industry. We continue to position the portfolio for a 12-18
month forecast, which, we believe may include a rebound in global economies.
However, we feel it is clear that volatility may continue and this could allow
for moneymaking entry and exit points from individual stocks.*
Average Annual Total Return
- --------------------------------------------------------------------------------
Inception Six 1 5 Since
As of April 30, 2003 Date'D' Months Year Year Inception
- ---------------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund Class A2 7/1/93 -2.41% -25.12% -0.55% 8.60%
HSBC Investor Mid-Cap Fund Class B3 7/1/93 -1.58% -24.86% -0.26% 8.37%
HSBC Investor Mid-Cap Fund Class C4 7/1/93 1.26% -22.51% -0.26% 8.37%
HSBC Investor Mid-Cap Fund Trust 7/1/93 2.84% -21.00% 0.71% 9.45%
- ---------------------------------------------------------------------------------------
(2) Reflects the maximum sales charge of 5.00%.
(3) Reflects the contingent deferred sales charge maximum of 4.00%.
(4) Reflects the contingent deferred sales charge maximum of 1.00%.
- --------------------------------------------------------------------------------
'D' Prior to July 1, 2000, HSBC Asset Management (Americas), Inc. managed
another pooled investment vehicle called a collective investment trust (CTF)
with the same investment objective as the Fund since 1993. The assets from that
CTF were converted into the HSBC Investor Mid-Cap Fund on July 1. 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.
(1) For additional information, please refer to the Glossary of Terms. The Fund
was formerly compared with the S&P MidCap 400 Index. The Fund is now compared to
the Russell MidCap Growth Index, which better represents the type of securities
in which the Fund may invest.
* Portfolio composition is subject to change.
The performance data quoted represents past performance and is not an
indication of future results. The investment return and net asset
value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
10 HSBC INVESTOR FAMILY OF FUNDS
Portfolio Reviews
- --------------------------------------------------------------------------------
HSBC Investor International Equity Fund
HSBC Investor Overseas Equity Fund'D' (Class A (Investor) Shares, B Shares
and C Shares)
by David Fisher
Portfolio Manager
Capital Guardian Trust Company
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 Capital Guardian Trust Company 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.
For the six months ended April 30, 2003, the shares of the HSBC
Investor International Equity Fund produced a -0.22% return, and the
Class A (Investor) Shares of the HSBC Investor Overseas Equity Fund
returned -1.51% (without sales charge). That compared to a total
return of 1.81% and 0.92% for the Funds' benchmarks, the Morgan
Stanley Capital International, Europe, Australasia and Far East Index
and the Lipper International Funds Average.(1)
The global economy during the period continued its tentative recovery
from the downturn that followed the 1990s economic expansion.
Economic growth early in the period was relatively weak due to
declining industrial production, high unemployment and low business
confidence. Low valuations among battered technology,
telecommunications, media and financial stocks fueled a November
stock market rally. However, concerns about an U.S.-led invasion of
Iraq contributed to investors' uncertainty, and international stock
markets remained volatile for much of the period.
The U.S. dollar weakened against most other major currencies. That
development boosted the relative performance of foreign stock
markets. European markets particularly benefited from the strong euro.
The European Central Bank (ECB) cut key short-term interest rates
twice during the period in an attempt to boost European economies.
That strategy did not have the desired effect, as many of the large
euro-zone economies, particularly Germany remained weak.
Japan's GDP grew slightly in the fourth quarter of 2002, but the
country's economy remained weak during the recent six-month period as
the country's banking crisis continued. Poor-performing bank stocks
led the Japanese equity market lower.
We believe that the global economy will continue its halting recovery
from the post-expansion downturn. We expect stronger corporate growth
and improved economic conditions going forward, and we anticipate
that corporate balance sheets could improve and earnings growth may
accelerate.
We will attempt to focus on attractively valued shares of
high-quality firms that we feel are positioned to benefit from an
improvement in economic growth. The bottom-up process allows us to
find attractive investment opportunities in a variety of sectors and
markets-including countries, such as Japan and Germany that face
severe challenges.
Average Annual Total Return
- --------------------------------------------------------------------------------
Inception Six 1 5 Since
As of April 30, 2003 Date Months Year Year Inception
- --------------------------------------------------------------------------------------------------------
HSBC Investor International Equity Fund 1/9/95 -0.22% -19.86% -2.65% 4.66%
HSBC Investor Overseas Equity Fund Class A
(Investor)(2) 8/26/96 -6.44% -23.82% -4.43% 1.07%
HSBC Investor Overseas Equity Fund
Class B(3) 1/6/98 -5.68% -23.52% -4.21% -1.27%
HSBC Investor Overseas Equity Fund
Class C(4) 11/4/98 -2.68% -21.10% N/A -2.10%
- --------------------------------------------------------------------------------------------------------
(2) Reflects the maximum sales charge of 5.00%.
(3) Reflects the contingent deferred sales charge maximum of 4.00%.
(4) Reflects the contingent deferred sales charge maximum of 1.00%.
- --------------------------------------------------------------------------------
'D' International investing involves increased risk and volatility.
(1) For additional information, please refer to the Glossary of Terms.
* Portfolio composition is subject to change.
The performance data quoted represents past performance and is not an indication
of future results. The investment return and net asset value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost.
HSBC INVESTOR FAMILY OF FUNDS 11
Portfolio Reviews
- --------------------------------------------------------------------------------
HSBC Investor Small Cap Equity Fund
HSBC Investor Opportunity Fund'D' (Class A (Investor) Shares, B Shares
and C Shares)
by William A. Muggia
President-Chief Investment Officer
Westfield Capital Managment
The HSBC Investor Small Cap Equity Fund and the HSBC Investor
Opportunity Fund ("the Funds") seek to provide their shareholders
with long-term growth of capital by investing in equity securities of
emerging small and medium-sized companies expected to deliver
earnings growth well above the growth rate of the economy and the
rate of inflation. The Funds employ a two-tier structure, commonly
referred to as "master-feeder." The Funds invest all of their
investable assets in the HSBC Investor Small Cap Equity Portfolio
(the "Portfolio"). The Portfolio employs Westfield Capital
Management, 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.
For the six months ended April 30, 2003, the shares of the HSBC
Investor Small Cap Equity Fund produced a 2.80% return and the Class
A (Investor) Shares of the HSBC Investor Opportunity Fund produced a
2.43% return (without sales charge). The Funds' benchmarks, the
Russell 2000 Index and the Lipper Mid Cap Growth Funds Average,
returned 7.55% and 4.04%, respectively.(1)
Small-capitalization stocks lagged large-cap stocks during the
period, and were highly volatile. Small-company shares rallied in
November, as investors bought technology and telecommunications
stocks on the hope that an economic recovery would boosts the
prospects for firms in those industries. However, weak economic data
in December, combined with the growing prospect of war with Iraq,
clouded investors' outlooks. Investors became more cautious and moved
money out of both small- and large-cap stocks.
Early in the period the Portfolio held an underweight allocation in
the technology sector and an overweight allocation in consumer
discretionary stocks. Those positions caused the Fund to lag its
benchmarks during November and December. As of January 19 Westfield
Capital Management assumed management duties of the Fund. Westfield
employs a fundamentals-based, bottom-up stock picking process to
identify attractively valued shares of companies with the potential
to produce strong earnings growth.
Our investment process helped us take advantage of small-caps'
volatility during the last several months of the period. We invested
in a number of stocks that had declined significantly but still
offered attractive business fundamentals. We also worked to position
the portfolio to do well in an environment favorable for growth
stocks. We avoided speculative stocks and instead focused on shares
of solid, fast-growing medical-device makers and biotechnology
companies.
We added to the Fund's technology allocation during the period. We
bought shares of promising firms such as technology-services company
SRA International, videoconferencing company Polycom, video-game
maker Electronic Arts and Internet advertiser Doubleclick. The Fund's
technology stake underperformed the benchmark's technology position,
but we continue to believe that the Fund's technology stocks have
strong potential for gains.*
We believe that the economy is likely to improve going forward.
Companies have become much more efficient by reducing inventory and
cutting costs. Those changes have increased corporate profits, and
will help firms to benefit significantly from any increase in revenue
growth. We believe that small-cap stocks offer more attractive
valuations than large caps, as well as greater potential earnings
growth.
That said, we do not know which sectors are likely to lead the market
during the coming months. We will continue to focus on company
fundamentals, seeking out opportunities for growth at reasonable
prices. That strategy is especially beneficial in the small-cap
sector, which includes more overlooked or emerging companies with
strong growth prospects than the more heavily followed large-cap
sector.
Average Annual Total Return
- --------------------------------------------------------------------------------
Inception Six 1 5 Since
As of April 30, 2003 Date Months Year Year Inception
- --------------------------------------------------------------------------------------------------------
HSBC Investor Small Cap Equity Fund 9/3/96 2.80% -23.02% 0.67% 7.59%
HSBC Investor Opportunity Fund Class A
(Investor)(2) 9/23/96 -2.67% -27.29% -0.99% 4.85%
HSBC Investor Opportunity Fund Class B(3) 1/6/98 -2.00% -27.05% -0.69% 2.61%
HSBC Investor Opportunity Fund Class C(4) 11/4/98 0.98% -24.85% N/A 3.40%
- --------------------------------------------------------------------------------------------------------
(2) Reflects the maximum sales charge of 5.00%.
(3) Reflects the contingent deferred sales charge maximum of 4.00%.
(4) Reflects the contingent deferred sales charge maximum of 1.00%.
- --------------------------------------------------------------------------------
'D' Small-capitalization funds typically carry additional risks, since smaller
companies generally have a higher risk of failure. Historically, smaller
companies' stocks have experienced a greater degree of market volatility
than average.
(1) For additional information, please refer to the Glossary of Terms.
* Portfolio composition is subject to change.
The performance data quoted represents past performance and is not an
indication of future results. The investment return and net asset
value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
12 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2003 (UNAUDITED)
.................................................................................
<Table>
<Caption>
- ---------------------------------------------------------------
MUNICIPAL BONDS - 96.7%
PRINCIPAL
AMOUNT($) VALUE($)
--------- ----------
GUAM - 0.1%
Guam Economic Development Authority
Revenue, 5.50%, 5/15/41............... 100,000 79,586
----------
NEW YORK - 86.8%
Brookhaven, New York GO (FGIC Insured),
5.50%, 10/1/12........................ 500,000 562,450
Corning City, New York School District
GO (FSA Insured), 4.00%, 6/15/08...... 930,000 997,155
Corning City, New York School District
GO (FSA Insured), 5.00%, 6/15/09...... 980,000 1,098,502
Erie County, New York GO (FGIC
Insured), 5.375%, 6/15/07............. 250,000 270,150
Guilderland, New York Central School
District GO (FSA Insured), 3.50%,
6/15/05............................... 250,000 261,140
Holland Patent, New York Central School
District GO (FSA Insured), 2.625%,
6/15/03............................... 210,000 210,405
Honeoye, New York Central School
District GO (FGIC Insured), 3.00%,
6/15/04............................... 310,000 316,439
Liverpool, New York Central School
District GO (FSA Insured), 2.50%,
7/15/03............................... 55,000 55,163
Long Island, New York Power Authority
Revenue (MBIA Insured), 4.50%, 4/1/11,
Mandatory Tender 4/1/05 @ 100......... 1,075,000 1,135,157
Metropolitan Transportation Authority
of New York Revenue (FGIC Insured),
5.25%, 7/1/17, Prerefunded 7/1/08 @
100.5................................. 800,000 913,736
Metropolitan Transportation Authority
of New York Revenue (FSA Insured),
5.00%, 11/15/32....................... 1,500,000 1,537,725
Metropolitan Transportation Authority
of New York Revenue (MBIA Insured),
5.50%, 1/1/19......................... 480,000 532,450
Metropolitan Transportation Authority
of New York Revenue, Escrowed to
Maturity, 5.75%, 7/1/13............... 285,000 331,421
Monroe County, New York, Airport
Authority Revenue, AMT (MBIA Insured),
5.625%, 1/1/10........................ 1,240,000 1,389,197
Monroe County, New York, Airport
Authority Revenue, AMT (MBIA Insured),
5.75%, 1/1/14......................... 750,000 857,423
New Paltz, New York Central School
District GO (FGIC Insured), 4.00%,
6/1/10................................ 200,000 210,432
New York City GO, Series G, 5.00%,
8/1/05................................ 1,000,000 1,065,800
New York City GO, Series H, 6.00%,
8/1/14................................ 1,000,000 1,112,520
New York City Housing Development Corp.
Revenue (FHA Insured), 5.70%,
11/1/13............................... 330,000 336,640
New York City Housing Development Corp.
Revenue, AMT, 5.60%, 11/1/19.......... 100,000 104,991
New York City Municipal Assistance
Corp. Revenue, 6.00%, 7/1/06.......... 1,000,000 1,131,440
New York City Municipal Water Finance
Authority Revenue, 5.00%, 6/15/34..... 1,300,000 1,323,933
New York City Municipal Water Finance
Authority Revenue (FGIC Insured),
5.94%, 6/15/19 (b).................... 2,000,000 974,320
New York City Transitional Finance
Authority Revenue, 6.00%, 8/15/15,
Prerefunded 8/15/09 @ 101............. 1,000,000 1,198,169
New York City Transitional Finance
Authority Revenue, 5.25%, 5/1/17...... 400,000 433,100
</Table>
<Table>
<Caption>
- ---------------------------------------------------------------
MUNICIPAL BONDS, CONTINUED
PRINCIPAL
AMOUNT($) VALUE($)
--------- ----------
New York City Transitional Finance
Authority Revenue, 5.25%, 2/1/29...... 1,500,000 1,634,265
New York City Transitional Finance
Authority Revenue, 5.00%, 5/1/30...... 1,500,000 1,528,410
New York State Dormitory Authority
Revenue, 5.00%, 4/1/07................ 500,000 550,510
New York State Dormitory Authority
Revenue, 6.50%, 8/15/11............... 225,000 270,293
New York State Dormitory Authority
Revenue, 5.25%, 7/1/13................ 500,000 556,635
New York State Dormitory Authority
Revenue, 6.25%, 5/15/17, Prerefunded
5/15/03 @ 102......................... 375,000 383,303
New York State Dormitory Authority
Revenue, 5.50%, 8/15/17, Prerefunded
2/15/07 @ 102......................... 10,000 11,459
New York State Dormitory Authority
Revenue, 5.50%, 8/15/17............... 990,000 1,053,320
New York State Dormitory Authority
Revenue, 6.00%, 7/1/19................ 350,000 406,746
New York State Dormitory Authority
Revenue, 5.25%, 8/15/19............... 1,000,000 1,087,250
New York State Dormitory Authority
Revenue (AMBAC Insured), 4.00%,
7/1/04................................ 975,000 1,006,599
New York State Dormitory Authority
Revenue (AMBAC Insured), 5.50%,
8/1/10................................ 750,000 856,290
New York State Dormitory Authority
Revenue (AMBAC Insured), 5.625%,
7/1/16................................ 1,000,000 1,180,820
New York State Dormitory Authority
Revenue (AMBAC Insured), 5.50%,
7/1/18................................ 500,000 582,780
New York State Dormitory Authority
Revenue (FSA Insured), 5.25%,
7/1/18................................ 1,460,000 1,605,460
New York State Dormitory Authority
Revenue (MBIA Insured), 5.50%,
7/1/23................................ 1,300,000 1,472,925
New York State Dormitory Authority
Revenue, Series A (FSA Insured),
5.00%, 7/1/26......................... 500,000 515,250
New York State Environmental Facscorp,
5.70%, 1/15/14, Prerefunded 7/15/09 @
101................................... 985,000 1,126,859
New York State Environmental Facscorp,
5.70%, 1/15/14, Prerefunded 7/15/09 @
101................................... 15,000 17,699
New York State Housing Finance Agency
Service Contract Obligation Revenue,
5.875%, 9/15/14....................... 840,000 862,025
New York State Housing Finance Agency
Service Contract Obligation Revenue,
5.875%, 9/15/14, Prefunded 9/15/03 @
102................................... 160,000 166,042
New York State Local Government
Assistance Corp. Revenue, 6.00%,
4/1/16, Prerefunded 4/1/05 @ 102...... 1,000,000 1,108,510
New York State Mortgage Agency Revenue,
AMT, 5.60%, 10/1/14................... 1,000,000 1,056,410
New York State Thruway Authority
Revenue, 5.50%, 4/1/11................ 1,000,000 1,139,860
New York State Thruway Authority
Revenue, 5.50%, 3/15/20............... 500,000 548,105
New York State Thruway Authority
Revenue, Highway & Bridge (FGIC
Insured), 5.25%, 4/1/07............... 300,000 334,413
</Table>
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 13
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2003 (UNAUDITED) (CONTINUED)
.................................................................................
<Table>
<Caption>
- ---------------------------------------------------------------
MUNICIPAL BONDS, CONTINUED
PRINCIPAL
AMOUNT($) VALUE($)
--------- ----------
New York State Thruway Authority
Revenue, Highway & Bridge (FGIC
Insured), 5.50%, 4/1/17............... 1,000,000 1,113,270
New York State Urban Development Corp.,
5.00%, 3/15/33........................ 500,000 509,735
New York State Urban Development Corp.
Revenue, 5.75%, 4/1/12................ 500,000 573,770
New York State Urban Development Corp.
Revenue, 5.75%, 4/1/12................ 1,000,000 1,119,020
New York State Urban Development Corp.
Revenue, Series A (MBIA Insured),
6.50%, 1/1/09......................... 500,000 592,590
Onondaga County, New York Water
Authority Revenue (FSA Insured),
5.00%, 9/15/14........................ 300,000 327,249
Onondaga County, New York Water
Authority Revenue (FSA Insured),
5.00%, 9/15/15........................ 665,000 720,913
Peru, New York Central School District
(FGIC Insured), 4.00%, 6/15/04........ 225,000 232,180
Port Authority of New York & New Jersey
Revenue, 5.375%, 3/1/28............... 1,100,000 1,207,722
Port Authority of New York & New Jersey
Special Obligation Revenue, AMT,
5.75%, 12/1/22........................ 500,000 544,495
Triborough, New York Bridge & Tunnel
Authority Revenue (MBIA Insured),
5.00%, 11/15/32....................... 2,600,000 2,670,746
----------
49,033,786
----------
PUERTO RICO - 9.8%
Puerto Rico Commonwealth (FGIC
Insured), 5.25%, 7/1/17............... 500,000 557,970
Puerto Rico Commonwealth, Public
Improvement, Series A (MBIA Insured),
5.125%, 7/1/31........................ 1,650,000 1,715,389
Puerto Rico Electric Power Authority
Revenue, Series HH (FSA Insured),
5.25%, 7/1/29......................... 1,430,000 1,514,184
Puerto Rico Municipal Financial Agency
(FSA Insured), 5.00%, 8/1/27.......... 250,000 259,513
Puerto Rico Public Buildings Authority
Revenue, Government Facilities,
Series D, 5.375%, 7/1/33.............. 900,000 931,212
Puerto Rico Publishing Finance Corp.
Revenue (AMBAC Insured), 5.375%,
6/1/18................................ 500,000 576,060
----------
5,554,328
----------
TOTAL MUNICIPAL BONDS.................. 54,667,700
----------
<Table>
<Caption>
- ---------------------------------------------------------------
VARIABLE RATE DEMAND NOTES* - 0.5%
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- ----------
NEW YORK - 0.5%
New York City GO (LOC Morgan Guaranty
Trust), 1.26%, 8/1/20................. 300,000 300,000
----------
TOTAL VARIABLE RATE DEMAND NOTES*...... 300,000
----------
- ---------------------------------------------------------------
INVESTMENT COMPANIES - 1.5%
Provident New York Tax-Free Money
Market Fund........................... 833,658 833,658
----------
TOTAL INVESTMENT COMPANIES............. 833,658
----------
TOTAL INVESTMENTS
(COST $52,235,724) (A) - 98.7%....... 55,801,358
----------
----------
</Table>
- --------------
Percentages indicated are based on net assets of $56,560,891.
(a) Cost differs from value by net unrealized appreciation of securities as
follows:
Unrealized appreciation.......... $3,586,048
Unrealized depreciation.......... (20,414)
----------
Net unrealized appreciation...... $3,565,634
----------
----------
(b) Zero coupon bond. Rate presented represents the effective yield at time of
purchase.
* Variable rate security. The interest rate on these securities are adjusted
periodically to reflect then-current short-term interest rates. The rate
presented in this report represents the rate that was in effect on April 30,
2003. Each of these securities contains put or demand features that allow the
fund to require the issuer to repurchase the security from the fund within
various time periods, including daily, weekly, monthly, or semi-annually.
AMT -- Interest on security is subject to Federal
Alternative Minimum Tax
FGIC -- Federal Guaranty Insurance Corporation
FHA -- Federal Housing Administration
FSA -- Financial Security Assurance
GO -- General Obligation
LOC -- Letter of Credit
14 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR BALANCED FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2003 (UNAUDITED)
.................................................................................
<Table>
<Caption>
- ---------------------------------------------------------------
COMMON STOCKS - 60.2%
SHARES VALUE($)
--------- ----------
AEROSPACE & DEFENSE - 0.7%
Honeywell International, Inc........... 4,660 109,976
----------
AIR FREIGHT & LOGISTICS - 0.5%
United Parcel Service, Inc............. 1,190 73,923
----------
BANKING - 3.6%
Bank of America Corp................... 3,605 266,950
FleetBoston Financial Corp............. 4,040 107,141
Wells Fargo & Co....................... 3,800 183,388
----------
557,479
----------
BIOTECHNOLOGY - 1.1%
Amgen, Inc. (b)........................ 2,890 177,186
----------
CHEMICALS - 1.3%
Dow Chemical Co........................ 6,020 196,493
----------
COMMERCIAL SERVICES - 0.5%
Cendant Corp. (b)...................... 5,820 83,110
----------
COMPUTER SOFTWARE - 4.4%
Affiliated Computer Services, Inc.
(b)................................... 2,180 103,986
First Data Corp........................ 2,290 89,837
Microsoft Corp......................... 12,920 330,365
Oracle Corp. (b)....................... 14,130 167,864
----------
692,052
----------
COMPUTERS - 2.2%
Dell Computer Corp. (b)................ 4,400 127,204
Hewlett-Packard Co..................... 6,500 105,950
International Business Machines
Corp.................................. 1,300 110,370
----------
343,524
----------
CONSUMER PRODUCTS - 4.7%
Altria Group, Inc...................... 5,770 177,485
Anheuser-Busch Cos., Inc............... 1,674 83,499
PepsiCo, Inc........................... 4,450 192,596
The Coca-Cola Co....................... 2,570 103,828
The Pepsi Bottling Group, Inc.......... 2,841 58,354
The Procter & Gamble Co................ 1,400 125,790
----------
741,552
----------
DIVERSIFIED MANUFACTURING OPERATIONS - 4.3%
3M Co.................................. 1,410 177,716
General Electric Co.................... 11,180 329,251
ITT Industries, Inc.................... 1,740 101,442
Tyco International Ltd................. 3,800 59,280
----------
667,689
----------
ELECTRIC UTILITIES - 1.4%
Consolidated Edison, Inc............... 1,560 60,637
Southern Co............................ 5,600 162,904
----------
223,541
----------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 1.7%
Applied Materials, Inc. (b)............ 6,000 87,600
Intel Corp............................. 10,000 184,000
----------
271,600
----------
ENERGY EQUIPMENT & SERVICES - 0.5%
Nabors Industries Ltd. (b)............. 2,120 83,104
----------
</Table>
<Table>
<Caption>
- ---------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE($)
--------- ----------
FINANCIAL SERVICES - 5.4%
Citigroup, Inc......................... 7,349 288,449
Fannie Mae............................. 2,148 155,494
J.P. Morgan Chase & Co................. 5,980 175,513
Lehman Brothers Holdings, Inc.......... 1,521 95,777
Merrill Lynch & Co., Inc............... 2,866 117,649
----------
832,882
----------
FOREST PRODUCTS & PAPER - 0.6%
International Paper Co................. 2,450 87,588
----------
HEALTH CARE - 3.2%
Cardinal Health, Inc................... 3,410 188,505
Caremark Rx, Inc. (b).................. 6,720 133,795
Laboratory Corp. of America Holdings
(b)................................... 2,260 66,580
Medtronic, Inc......................... 2,480 118,395
----------
507,275
----------
HOTELS & LODGING - 0.8%
Starwood Hotels & Resorts Worldwide,
Inc................................... 4,697 126,067
----------
INSURANCE - 3.2%
American International Group........... 3,050 176,747
The Allstate Corp...................... 4,520 170,811
The Hartford Financial Services Group,
Inc................................... 1,130 46,059
Willis Group Holdings Ltd.............. 3,600 112,284
----------
505,901
----------
LEISURE EQUIPMENT & PRODUCTS - 0.9%
Mattel, Inc............................ 6,660 144,788
----------
MEDIA - 2.0%
AOL Time Warner, Inc. (b).............. 8,470 115,870
Viacom, Inc. Class B (b)............... 4,430 192,306
----------
308,176
----------
METALS & MINING - 0.3%
Alcoa, Inc............................. 2,110 48,382
----------
OIL & GAS - 3.6%
Exxon Mobil Corp....................... 11,600 408,320
Occidental Petroleum Corp.............. 5,210 155,519
----------
563,839
----------
PHARMACEUTICALS - 5.2%
Johnson & Johnson...................... 3,750 211,350
Merck & Co., Inc....................... 1,568 91,226
Pfizer, Inc............................ 11,960 367,770
Wyeth.................................. 3,208 139,644
----------
809,990
----------
RETAIL - 5.0%
Costco Wholesale Corp. (b)............. 2,620 90,731
CVS Corp............................... 3,510 84,977
Home Depot, Inc........................ 4,110 115,614
The Gap, Inc........................... 8,330 138,528
Wal-Mart Stores, Inc................... 6,160 346,931
----------
776,781
----------
TELECOMMUNICATIONS - 3.1%
BellSouth Corp......................... 4,200 107,058
Cisco Systems, Inc. (b)................ 10,740 161,530
Verizon Communications, Inc............ 5,580 208,580
----------
477,168
----------
TOTAL COMMON STOCKS.................... 9,410,066
----------
</Table>
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 15
HSBC INVESTOR BALANCED FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2003 (UNAUDITED) (CONTINUED)
.................................................................................
<Table>
<Caption>
- ---------------------------------------------------------------
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 19.3%
PRINCIPAL
AMOUNT($) VALUE($)
--------- ----------
FEDERAL FARM CREDIT BANK - 4.5%
6.30%, 12/20/10........................ 600,000 696,530
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 3.4%
7.00%, 1/1/31.......................... 506,208 535,064
----------
U.S. TREASURY BONDS - 2.8%
8.00%, 11/15/21........................ 75,000 105,208
6.125%, 11/15/27....................... 110,000 129,409
5.25%, 11/15/28........................ 200,000 210,219
----------
444,836
----------
U.S. TREASURY NOTES - 8.6%
3.00%, 1/31/04......................... 1,125,000 1,140,732
4.00%, 11/15/12........................ 200,000 202,555
----------
1,343,287
----------
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS.................... 3,019,717
----------
</Table>
<Table>
<Caption>
- ---------------------------------------------------------------
CORPORATE OBLIGATIONS - 15.1%
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- ----------
BANKING - 2.8%
Bank of America Corp., 5.25%, 2/1/07... 400,000 434,366
----------
FINANCE - 12.3%
Countrywide Home Loan, 5.50%, 2/1/07... 400,000 431,761
General Electric Capital Corp., 7.375%,
1/19/10............................... 1,000,000 1,180,808
General Motors Acceptance Corp.,
6.125%, 9/15/06....................... 300,000 311,366
----------
1,923,935
----------
TOTAL CORPORATE OBLIGATIONS............ 2,358,301
----------
- ---------------------------------------------------------------
INVESTMENT COMPANIES - 5.3%
Dreyfus Cash Management Fund........... 612,207 612,207
Provident Temp Fund.................... 218,046 218,046
----------
TOTAL INVESTMENT COMPANIES............. 830,253
----------
TOTAL INVESTMENTS
(COST $16,125,750) (a) - 99.9%....... 15,618,337
----------
----------
</Table>
- --------------
Percentages indicated are based on net assets of $15,633,199.
(a) Cost differs from value by net unrealized depreciation as follows:
Unrealized appreciation............. $ 734,916
Unrealized depreciation............. (1,242,329)
------------
Net unrealized depreciation......... $ (507,413)
------------
------------
(b) Represents non-income producing security.
16 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR EQUITY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2003 (UNAUDITED)
.................................................................................
<Table>
<Caption>
- ---------------------------------------------------------------
COMMON STOCKS - 97.7%
SHARES VALUE($)
--------- -----------
AEROSPACE & DEFENSE - 1.9%
Northrop Grumman Corp. ............... 28,338 2,492,327
United Technologies Corp. ............ 27,369 1,691,678
-----------
4,184,005
-----------
AUTO PARTS & EQUIPMENT - 0.2%
Johnson Controls, Inc. ............... 6,250 514,000
-----------
BANKING - 6.0%
Bank of America Corp. ................ 64,050 4,742,903
Bank One Corp. ....................... 136,900 4,935,245
Wells Fargo & Co. .................... 72,700 3,508,502
-----------
13,186,650
-----------
BIOTECHNOLOGY - 1.5%
Amgen, Inc. (b)....................... 55,500 3,402,705
-----------
CHEMICALS - 0.6%
Air Products and Chemicals, Inc. ..... 30,500 1,313,635
-----------
COMMERCIAL SERVICES - 1.8%
Accenture Ltd. Class A (b)............ 86,450 1,384,929
Cendant Corp. (b)..................... 185,000 2,641,800
-----------
4,026,729
-----------
COMPUTER SOFTWARE - 5.2%
Affiliated Computer Services, Inc.
(b).................................. 11,400 543,780
First Data Corp. ..................... 43,600 1,710,428
Intuit, Inc. (b)...................... 7,800 302,484
Microsoft Corp. ...................... 235,500 6,021,735
PeopleSoft, Inc. (b).................. 17,300 260,019
Symantec Corp. (b).................... 10,605 466,090
Veritas Software Corp. (b)............ 99,400 2,187,794
-----------
11,492,330
-----------
COMPUTERS - 2.5%
Dell Computer Corp. (b)............... 120,000 3,469,200
Hewlett-Packard Co. .................. 121,000 1,972,300
-----------
5,441,500
-----------
CONSUMER MANUFACTURING - 1.4%
American Standard Cos., Inc. (b)...... 6,900 491,211
Harley-Davidson, Inc. ................ 59,500 2,644,180
-----------
3,135,391
-----------
CONSUMER PRODUCTS - 7.6%
Anheuser-Busch Cos., Inc. ............ 25,100 1,251,988
Avon Products, Inc. .................. 32,500 1,890,525
Colgate-Palmolive Co. ................ 32,250 1,843,733
Diageo PLC ADR........................ 77,750 3,460,652
Newell Rubbermaid, Inc. .............. 10,660 324,917
PepsiCo, Inc. ........................ 76,350 3,304,427
The Clorox Co. ....................... 23,100 1,044,582
The Estee Lauder Cos., Inc. Class A... 22,850 742,625
The Procter & Gamble Co. ............. 28,150 2,529,278
Tiffany & Co. ........................ 10,500 291,270
-----------
16,683,997
-----------
<Caption>
- ---------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE($)
--------- -----------
DIVERSIFIED MANUFACTURING OPERATIONS - 4.1%
Danaher Corp. ........................ 23,000 1,586,540
General Electric Co. ................. 223,513 6,582,458
SPX Corp. (b)......................... 27,250 921,050
-----------
9,090,048
-----------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 4.1%
Altera Corp. (b)...................... 42,100 665,601
Applied Materials, Inc. (b)........... 31,100 454,060
Flextronics International Ltd. (b).... 96,290 842,538
Intel Corp. .......................... 118,540 2,181,136
Koninklijke (Royal) Philips
Electronics NV ADR................... 169,781 3,171,508
Linear Technology Corp. .............. 10,900 375,723
Maxim Integrated Products, Inc. ...... 30,400 1,194,416
Texas Instruments, Inc. .............. 5,950 110,016
-----------
8,994,998
-----------
FINANCIAL SERVICES - 10.5%
Citigroup, Inc. ...................... 239,074 9,383,654
Fannie Mae............................ 67,450 4,882,705
Goldman Sachs Group, Inc. ............ 26,050 1,977,195
MBNA Corp. ........................... 165,050 3,119,445
Merrill Lynch & Co., Inc. ............ 17,900 734,795
Morgan Stanley Dean Witter & Co. ..... 64,700 2,895,325
-----------
22,993,119
-----------
FOREST PRODUCTS & PAPER - 0.7%
Weyerhaeuser Co. ..................... 30,900 1,532,331
-----------
GAS & ELECTRIC UTILITY - 1.8%
Entergy Corp. ........................ 42,500 1,980,925
Public Service Enterprise Group,
Inc. ................................ 49,950 1,921,577
-----------
3,902,502
-----------
HEALTH CARE - 6.4%
Anthem, Inc. (b)...................... 18,650 1,280,136
Boston Scientific Corp. (b)........... 23,900 1,028,895
Cardinal Health, Inc. ................ 38,650 2,136,572
Express Scripts, Inc. (b)............. 3,700 218,152
HCA, Inc. ............................ 80,750 2,592,075
Health Management Associates, Inc. ... 86,200 1,470,572
Medtronic, Inc. ...................... 54,500 2,601,830
St. Jude Medical, Inc. (b)............ 14,600 765,916
UnitedHealth Group, Inc. ............. 7,000 644,910
Wellpoint Health Networks, Inc. (b)... 16,500 1,253,010
-----------
13,992,068
-----------
INSURANCE - 6.2%
ACE Ltd. ............................. 12,300 406,884
American International Group.......... 134,600 7,800,069
Loews Corp. .......................... 2,700 111,429
MetLife, Inc. ........................ 94,450 2,713,549
Travelers Property Casualty Corp. .... 161,268 2,617,380
-----------
13,649,311
-----------
INTERNET RELATED - 0.0%
Ebay, Inc. (b)........................ 1,100 102,047
-----------
</Table>
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 17
HSBC INVESTOR EQUITY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2003 (UNAUDITED) (CONTINUED)
.................................................................................
<Table>
<Caption>
- ---------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE($)
--------- -----------
LEISURE - 0.3%
Carnival Corp. ....................... 26,400 728,376
-----------
MACHINERY & EQUIPMENT - 0.8%
Caterpillar, Inc. .................... 31,550 1,659,530
-----------
MEDIA - 5.8%
Clear Channel Communications, Inc.
(b).................................. 72,100 2,819,831
Cox Communications, Inc. Class A
(b).................................. 37,000 1,224,700
Gannett Co., Inc. .................... 23,040 1,744,589
Liberty Media Corp. Class A (b)....... 353,800 3,891,800
Viacom, Inc. Class B (b).............. 73,500 3,190,635
-----------
12,871,555
-----------
OIL & GAS - 4.7%
Apache Corp. ......................... 3,600 206,100
ConocoPhillips........................ 56,712 2,852,614
Devon Energy Corp. ................... 4,400 207,900
EnCana Corp. ......................... 63,627 2,093,328
Occidental Petroleum Corp. ........... 53,600 1,599,960
Total Fina Elf SA ADR................. 36,900 2,424,330
Transocean, Inc. ..................... 52,700 1,003,935
-----------
10,388,167
-----------
PHARMACEUTICALS - 9.2%
Allergan, Inc. ....................... 14,380 1,010,195
Forest Laboratories, Inc. (b)......... 20,900 1,080,948
Johnson & Johnson..................... 75,700 4,266,452
Pfizer, Inc. ......................... 293,500 9,025,124
Wyeth................................. 108,250 4,712,123
-----------
20,094,842
-----------
REAL ESTATE - 0.1%
Centex Corp. ......................... 1,700 112,234
Lennar Corp. ......................... 2,000 108,480
-----------
220,714
-----------
<Caption>
- ---------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE($)
--------- -----------
RETAIL - 6.2%
Bed Bath & Beyond, Inc. (b)........... 26,600 1,050,966
Kohl's Corp. (b)...................... 48,470 2,753,096
Lowe's Cos., Inc. .................... 32,200 1,413,258
Target Corp. ......................... 88,300 2,952,752
Wal-Mart Stores, Inc. ................ 61,800 3,480,576
Walgreen Co. ......................... 66,200 2,042,932
-----------
13,693,580
-----------
TELECOMMUNICATIONS - 7.1%
Cisco Systems, Inc. (b)............... 128,500 1,932,640
Comcast Corp. Class A (b)............. 97,152 3,100,120
Comcast Corp. Special Class A (b)..... 102,600 3,084,156
EchoStar Communications Corp. Class A
(b).................................. 16,400 491,344
Juniper Networks, Inc. (b)............ 50,400 515,088
Nokia Oyj ADR......................... 160,070 2,652,360
Verizon Communications, Inc. ......... 104,746 3,915,406
-----------
15,691,114
-----------
TRANSPORTATION - 1.0%
Union Pacific Corp. .................. 36,450 2,169,504
-----------
TOTAL COMMON STOCKS................... 215,154,748
-----------
- ---------------------------------------------------------------
INVESTMENT COMPANIES - 2.2%
Dreyfus Cash Management Fund.......... 4,746,979 4,746,979
-----------
TOTAL INVESTMENT COMPANIES............ 4,746,979
-----------
TOTAL INVESTMENTS
(COST $227,006,280) (a) - 99.9%...... 219,901,727
-----------
-----------
</Table>
- --------------
Percentages indicated are based on net assets of $220,122,961.
(a) Cost differs from value by net unrealized depreciation as follows:
<Table>
Unrealized appreciation............. $ 8,778,116
Unrealized depreciation............. (15,882,669)
------------
Net unrealized depreciation......... $ (7,104,553)
------------
------------
</Table>
(b) Represents non-income producing security.
ADR -- American Depositary Receipt
18 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2003 (UNAUDITED)
.................................................................................
<Table>
<Caption>
- ---------------------------------------------------------------
COMMON STOCKS - 99.5%
SHARES VALUE($)
--------- -----------
AEROSPACE & DEFENSE - 1.1%
Honeywell International, Inc.......... 88,730 2,094,028
-----------
AIR FREIGHT & LOGISTICS - 0.7%
United Parcel Service, Inc............ 20,300 1,261,036
-----------
BANKING - 5.8%
Bank of America Corp.................. 69,420 5,140,551
FleetBoston Financial Corp............ 74,800 1,983,696
Wells Fargo & Co...................... 73,330 3,538,906
-----------
10,663,153
-----------
BIOTECHNOLOGY - 1.9%
Amgen, Inc. (b)....................... 55,680 3,413,741
-----------
CHEMICALS - 2.1%
Dow Chemical Co....................... 117,520 3,835,853
-----------
COMMERCIAL SERVICES - 1.0%
Cendant Corp. (b)..................... 126,420 1,805,278
-----------
COMPUTER SOFTWARE - 7.5%
Affiliated Computer Services, Inc.
(b).................................. 42,680 2,035,836
First Data Corp....................... 46,110 1,808,895
Microsoft Corp........................ 252,430 6,454,635
Oracle Corp. (b)...................... 278,720 3,311,194
-----------
13,610,560
-----------
COMPUTERS - 3.7%
Dell Computer Corp. (b)............... 87,200 2,520,952
Hewlett-Packard Co.................... 125,930 2,052,659
International Business Machines
Corp................................. 25,200 2,139,480
-----------
6,713,091
-----------
CONSUMER PRODUCTS - 7.8%
Altria Group, Inc..................... 112,770 3,468,805
Anheuser-Busch Cos., Inc.............. 30,300 1,511,364
PepsiCo, Inc.......................... 87,130 3,770,987
The Coca-Cola Co...................... 50,300 2,032,120
The Pepsi Bottling Group, Inc......... 48,600 998,244
The Procter & Gamble Co............... 26,680 2,397,198
-----------
14,178,718
-----------
DIVERSIFIED MANUFACTURING OPERATIONS - 7.0%
3M Co................................. 29,370 3,701,795
General Electric Co................... 201,490 5,933,880
ITT Industries, Inc................... 33,110 1,930,313
Tyco International Ltd................ 76,970 1,200,732
-----------
12,766,720
-----------
ELECTRIC UTILITIES - 2.4%
Consolidated Edison, Inc.............. 28,760 1,117,901
Southern Co........................... 110,200 3,205,718
-----------
4,323,619
-----------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 2.9%
Applied Materials, Inc. (b)........... 117,782 1,719,617
Intel Corp............................ 189,500 3,486,800
-----------
5,206,417
-----------
ENERGY EQUIPMENT & SERVICES - 0.9%
Nabors Industries Ltd. (b)............ 43,440 1,702,848
-----------
FINANCIAL SERVICES - 8.8%
Citigroup, Inc........................ 141,408 5,550,263
Fannie Mae............................ 41,071 2,973,130
J.P. Morgan Chase & Co................ 113,640 3,335,334
Lehman Brothers Holdings, Inc......... 30,419 1,915,484
Merrill Lynch & Co., Inc.............. 56,855 2,333,898
-----------
16,108,109
-----------
FOREST PRODUCTS & PAPER - 0.9%
International Paper Co................ 47,030 1,681,323
-----------
<Caption>
- ---------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE($)
--------- -----------
HEALTH CARE - 5.4%
Cardinal Health, Inc.................. 66,620 3,682,753
Caremark Rx, Inc. (b)................. 131,690 2,621,948
Laboratory Corp. of America Holdings
(b).................................. 43,863 1,292,204
Medtronic, Inc........................ 48,600 2,320,164
-----------
9,917,069
-----------
HOTELS & LODGING - 1.3%
Starwood Hotels & Resorts Worldwide,
Inc.................................. 85,660 2,299,114
-----------
INSURANCE - 5.4%
American International Group.......... 57,990 3,360,521
The Allstate Corp..................... 90,950 3,437,000
The Hartford Financial Services Group,
Inc.................................. 21,980 895,905
Willis Group Holdings Ltd............. 69,430 2,165,522
-----------
9,858,948
-----------
LEISURE EQUIPMENT & PRODUCTS - 1.6%
Mattel, Inc........................... 130,580 2,838,809
-----------
MEDIA - 3.2%
AOL Time Warner, Inc. (b)............. 161,540 2,209,867
Viacom, Inc. Class B (b).............. 83,800 3,637,758
-----------
5,847,625
-----------
METALS & MINING - 0.5%
Alcoa, Inc............................ 41,150 943,570
-----------
OIL & GAS - 6.0%
Exxon Mobil Corp...................... 225,810 7,948,512
Occidental Petroleum Corp............. 101,630 3,033,656
-----------
10,982,168
-----------
PHARMACEUTICALS - 8.4%
Johnson & Johnson..................... 72,400 4,080,464
Merck & Co., Inc...................... 28,400 1,652,312
Pfizer, Inc........................... 230,700 7,094,024
Wyeth................................. 59,530 2,591,341
-----------
15,418,141
-----------
RETAIL - 8.2%
Costco Wholesale Corp. (b)............ 51,490 1,783,099
CVS Corp.............................. 65,010 1,573,892
Home Depot, Inc....................... 79,130 2,225,927
The Gap, Inc.......................... 161,580 2,687,075
Wal-Mart Stores, Inc.................. 118,680 6,684,058
-----------
14,954,051
-----------
TELECOMMUNICATIONS - 5.0%
BellSouth Corp........................ 84,000 2,141,160
Cisco Systems, Inc. (b)............... 200,200 3,011,008
Verizon Communications, Inc........... 105,200 3,932,376
-----------
9,084,544
-----------
TOTAL COMMON STOCKS................... 181,508,533
-----------
- ---------------------------------------------------------------
INVESTMENT COMPANIES - 0.7%
Dreyfus Cash Management Fund.......... 1,285,765 1,285,765
-----------
TOTAL INVESTMENT COMPANIES............ 1,285,765
-----------
TOTAL INVESTMENTS (COST $175,138,321)
(a) - 100.2%........................ 182,794,298
-----------
-----------
</Table>
- --------------
Percentages indicated are based on net assets of $182,511,464.
(a) Cost differs from value by net unrealized appreciation of securities as
follows:
<Table>
Unrealized appreciation............. $ 20,129,803
Unrealized depreciation............. (12,473,826)
------------
Net unrealized appreciation......... $ 7,655,977
------------
------------
</Table>
(b) Represents non-income producing security.
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 19
HSBC INVESTOR MID CAP FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2003 (UNAUDITED)
.................................................................................
<Table>
<Caption>
- ---------------------------------------------------------------
COMMON STOCKS - 88.6%
SHARES VALUE($)
--------- -----------
AEROSPACE & DEFENSE - 1.2%
Level 3 Communications, Inc. (b)...... 35,000 1,554,000
-----------
BANKING - 2.5%
Astoria Financial Corp................ 44,000 1,100,880
New York Community Bancorp, Inc....... 35,000 1,215,200
TCF Financial Corp.................... 25,000 990,000
-----------
3,306,080
-----------
BIOTECHNOLOGY - 5.8%
Cephalon, Inc. (b).................... 20,000 816,800
Genzyme Corp. (b)..................... 50,000 2,014,000
Gilead Sciences, Inc. (b)............. 35,000 1,614,900
IDEC Pharmaceuticals Corp. (b)........ 42,500 1,391,875
Medimmune, Inc. (b)................... 50,000 1,763,500
-----------
7,601,075
-----------
CHEMICALS - 2.1%
Hercules, Inc. (b).................... 110,000 1,116,500
Lyondell Chemical Co.................. 110,000 1,600,500
-----------
2,717,000
-----------
COMMERCIAL SERVICES - 2.3%
Cendant Corp. (b)..................... 145,000 2,070,600
H & R Block, Inc...................... 25,000 965,500
-----------
3,036,100
-----------
COMPUTER SERVICES - 1.4%
SunGard Data Systems, Inc. (b)........ 85,000 1,827,500
-----------
COMPUTER SOFTWARE - 9.3%
Affiliated Computer Services, Inc.
(b).................................. 55,000 2,623,500
BEA Systems, Inc. (b)................. 95,000 1,017,450
Electronic Arts, Inc. (b)............. 15,000 889,050
Factset Research Systems, Inc......... 40,000 1,392,000
Intuit, Inc. (b)...................... 45,000 1,745,100
Mercury Interactive Corp. (b)......... 11,000 373,340
Network Associates, Inc. (b).......... 60,000 685,800
Symantec Corp. (b).................... 50,000 2,197,500
Veritas Software Corp. (b)............ 45,000 990,450
-----------
11,914,190
-----------
COMPUTERS - 1.4%
Lexmark International Group, Inc.
(b).................................. 18,000 1,341,180
Network Appliance, Inc. (b)........... 40,000 531,200
-----------
1,872,380
-----------
CONSUMER MANUFACTURING - 2.4%
Harley-Davidson, Inc.................. 70,000 3,110,800
-----------
CONSUMER PRODUCTS - 3.0%
Constellation Brands, Inc. (b)........ 50,000 1,340,500
RJ Reynolds Tobacco Holdings, Inc..... 92,000 2,591,640
-----------
3,932,140
-----------
DIVERSIFIED MANUFACTURING OPERATIONS - 3.8%
Danaher Corp.......................... 12,000 827,760
SPX Corp. (b)......................... 39,000 1,318,200
Textron, Inc.......................... 30,000 884,700
Tyco International Ltd................ 125,000 1,950,000
-----------
4,980,660
-----------
</Table>
<Table>
<Caption>
- ---------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE($)
--------- -----------
ELECTRIC UTILITIES - 1.1%
Southern Co........................... 50,000 1,454,500
-----------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 6.0%
Altera Corp. (b)...................... 45,000 711,450
American Power Conversion Corp. (b)... 120,000 1,869,600
Arrow Electronics, Inc. (b)........... 60,000 1,012,800
Jabil Circuit, Inc. (b)............... 60,000 1,122,000
Microchip Technology, Inc............. 50,000 1,039,500
Novellus Systems, Inc. (b)............ 35,000 981,400
Tech Data Corp. (b)................... 45,000 1,080,000
-----------
7,816,750
-----------
ENERGY EQUIPMENT & SERVICES - 2.9%
Nabors Industries Ltd. (b)............ 50,000 1,960,000
Weatherford International Ltd. (b).... 45,000 1,810,350
-----------
3,770,350
-----------
FINANCIAL SERVICES - 3.2%
J.P. Morgan Chase & Co................ 48,000 1,408,800
Lehman Brothers Holdings, Inc......... 25,000 1,574,250
MBNA Corp............................. 65,000 1,228,500
-----------
4,211,550
-----------
HEALTH CARE - 15.9%
Cardinal Health, Inc.................. 95,000 5,251,600
Caremark Rx, Inc. (b)................. 245,000 4,877,950
DENTSPLY International, Inc........... 43,000 1,610,350
Edwards Lifesciences Corp. (b)........ 20,000 577,400
Health Management Associates, Inc..... 75,000 1,279,500
Laboratory Corp. of America Holdings
(b).................................. 100,000 2,946,000
Oxford Health Plans, Inc. (b)......... 25,000 731,750
STERIS Corp. (b)...................... 26,000 590,200
Wellpoint Health Networks, Inc. (b)... 20,000 1,518,800
Zimmer Holdings, Inc. (b)............. 25,000 1,172,500
-----------
20,556,050
-----------
HOTELS & LODGING - 1.0%
Starwood Hotels & Resorts Worldwide,
Inc.................................. 50,000 1,342,000
-----------
HOUSEHOLD DURABLES - 2.0%
Black & Decker Corp................... 45,000 1,856,250
Furniture Brands International, Inc.
(b).................................. 30,000 712,500
-----------
2,568,750
-----------
INSURANCE - 1.4%
Willis Group Holdings Ltd............. 60,000 1,871,400
-----------
LEISURE EQUIPMENT & PRODUCTS - 1.7%
Mattel, Inc........................... 100,000 2,174,000
-----------
MEDIA - 4.3%
Liberty Media Corp. Class A (b)....... 170,000 1,870,000
New York Times Co..................... 20,000 927,600
Scholastic Corp. (b).................. 55,000 1,562,550
Westwood One, Inc. (b)................ 35,000 1,221,500
-----------
5,581,650
-----------
OIL & GAS - 1.0%
Occidental Petroleum Corp............. 42,000 1,253,700
-----------
</Table>
20 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR MID CAP FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2003 (UNAUDITED) (CONTINUED)
.................................................................................
<Table>
<Caption>
- ---------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE($)
--------- -----------
PHARMACEUTICALS - 1.2%
Forest Laboratories, Inc. (b)......... 30,000 1,551,600
-----------
RETAIL - 9.9%
Abercrombie & Fitch Co. (b)........... 40,000 1,315,200
Barnes & Noble, Inc. (b).............. 75,000 1,477,500
Brinker International, Inc. (b)....... 50,000 1,587,500
Chico's FAS, Inc. (b)................. 105,000 2,555,700
Micheal Stores, Inc. (b).............. 50,000 1,562,000
Office Depot, Inc. (b)................ 125,000 1,582,500
PETsMART, Inc. (b).................... 90,000 1,361,700
The Gap, Inc.......................... 75,000 1,247,250
-----------
12,689,350
-----------
TELECOMMUNICATIONS - 0.5%
Adelphia Business Solutions, Inc.
(b).................................. 19,923 518
Netscreen Technologies, Inc. (b)...... 35,000 709,800
-----------
710,318
-----------
TEXTILES APPAREL & LUXURY GOODS - 1.3%
Coach, Inc. (b)....................... 40,000 1,740,400
-----------
TOTAL COMMON STOCKS................... 115,144,293
-----------
</Table>
<Table>
<Caption>
- ---------------------------------------------------------------
COMMERCIAL PAPER - 4.6%
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- -----------
Long Lane Master Trust, 1.34%,
5/1/03............................... 6,000,000 5,999,777
-----------
TOTAL COMMERCIAL PAPER................ 5,999,777
-----------
- ---------------------------------------------------------------
INVESTMENT COMPANIES - 9.7%
Dreyfus Cash Management Fund.......... 4,194,236 4,194,236
MidCap S&P Depositary Receipt Trust
Series 1............................. 30,000 2,406,300
Provident Temp Fund................... 6,000,000 6,000,000
-----------
TOTAL INVESTMENT COMPANIES............ 12,600,536
-----------
TOTAL INVESTMENTS
(COST $128,143,363) (A) - 102.9%.... 133,744,606
-----------
-----------
</Table>
- --------------
Percentages indicated are based on net assets of $130,033,499.
(a) Cost differs from value by net unrealized appreciation as follows:
<Table>
Unrealized appreciation......... $14,678,011
Unrealized depreciation......... (9,111,773)
-----------
Net unrealized appreciation..... $ 5,566,238
-----------
-----------
</Table>
(b) Represents non-income producing security.
(c) Rate presented indicates the effective yield at time of purchase.
Written call options open at April 30, 2003:
<Table>
<Caption>
SHARES
EXPIRATION EXERCISE SUBJECT
DESCRIPTION DATE PRICE TO CALL VALUE($)
----------- ---- ----- ------- --------
Genzyme Corp. ............... May 37.50 20,000 (78,000)
Harley-Davidson, Inc. ....... May 40.00 15,000 (67,500)
Medimmune, Inc. ............. June 35.00 20,000 (44,000)
Nabors Industries Ltd. ...... June 42.50 15,000 (12,750)
--------
Total (premiums received
$167,245)................... (202,250)
--------
--------
</Table>
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 21
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- APRIL 30, 2003 (UNAUDITED)
.................................................................................
<Table>
<Caption>
LIMITED FIXED NEW YORK
MATURITY INCOME TAX-FREE
FUND FUND BOND FUND BOND FUND
-------------- -------------- --------------- ---------------
ASSETS:
Investments, at value (Note 2) $130,162,270 $342,846,940 $21,665,273 $55,801,358
Cash -- -- -- --
Interest and dividends receivable -- -- -- 674,817
Receivable for capital shares issued 60,708 514,614 159,284 204,321
Receivable for investments sold -- -- -- --
Receivable from Investment Adviser -- -- 1,214 --
Prepaid expenses 8,250 6,669 10,286 5,949
------------ ------------ ----------- -----------
TOTAL ASSETS 130,231,228 343,368,223 21,836,057 56,686,445
------------ ------------ ----------- -----------
LIABILITIES:
Dividends payable 207,374 655,210 33,924 77,216
Payable for investments purchased -- -- -- --
Payable for capital shares redeemed 16,203 490,369 1,950 --
Accrued expenses and other
liabilities:
Investment management -- -- -- 11,581
Administration 4,278 11,756 725 3,980
Distribution 6,360 -- 7,936 11,403
Shareholder servicing 2,039 -- 4,380 7,562
Other 7,254 28,162 25,467 13,812
------------ ------------ ----------- -----------
TOTAL LIABILITIES 243,508 1,185,497 74,382 125,554
------------ ------------ ----------- -----------
NET ASSETS $129,987,720 $342,182,726 $21,761,675 $56,560,891
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
...................................................................................................................
COMPOSITION OF NET ASSETS:
Capital $125,946,885 $328,028,259 $21,196,630 $53,143,058
Accumulated net investment income (80,919) (706,161) (45,799) 10,749
Accumulated net realized losses from
investment and futures transactions (232,995) (3,283,429) (427,450) (158,550)
Unrealized appreciation
(depreciation) from investments 4,354,749 18,144,057 1,038,294 3,565,634
------------ ------------ ----------- -----------
NET ASSETS $129,987,720 $342,182,726 $21,761,675 $56,560,891
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
...................................................................................................................
CLASS A (INVESTOR) SHARES
Net Assets $ 1,735,067 $ -- $13,707,254 $18,745,012
Shares Outstanding 163,888 -- 1,284,986 1,658,759
Net Asset Value and Redemption Price
per share $ 10.59 $ -- $ 10.67 $ 11.30
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
Maximum sales charge 4.75% -- 4.75% 4.75%
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
Maximum Offering Price per share
(Net Asset Value/(100%-maximum
sales charge)) $ 11.12 $ -- $ 11.20 $ 11.86
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
.................................................................................................................
CLASS B SHARES
Net Assets $ 5,908,110 $ -- $ 7,193,913 $15,973,762
Shares Outstanding 557,267 -- 674,106 1,414,721
Net Asset Value, Offering Price and
Redemption Price per share* $ 10.60 $ -- $ 10.67 $ 11.29
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
.................................................................................................................
CLASS C SHARES
Net Assets $ 2,431,835 $ -- $ 860,508 $ 3,339,836
Shares Outstanding 229,455 -- 80,712 294,661
Net Asset Value, Offering Price and
Redemption Price per share* $ 10.60 $ -- $ 10.66 $ 11.33
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
.................................................................................................................
CLASS Y SHARES
Net Assets $119,912,708 $ -- $ -- $18,502,281
Shares Outstanding 11,309,229 -- -- 1,637,278
Net Asset Value, Offering Price and
Redemption Price per share $ 10.60 $ -- $ -- $ 11.30
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
..................................................................................................................
ADVISOR SHARES
Net Assets $ -- $342,182,726 $ -- $ --
Shares Outstanding -- 31,328,984 -- --
Net Asset Value, Offering Price and
Redemption Price per share $ -- $ 10.92 $ -- $ --
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
Investments, at cost $ -- $ -- $ -- $52,235,724
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
<Caption>
BALANCED EQUITY
FUND FUND
-------------- --------------
ASSETS:
Investments, at value (Note 2) $15,618,337 $219,901,727
Cash -- 131,915
Interest and dividends receivable 78,902 145,721
Receivable for capital shares issued 65 164,372
Receivable for investments sold 91,883 959,313
Receivable from Investment Adviser 13,709 --
Prepaid expenses 7,952 16,290
----------- ------------
TOTAL ASSETS 15,810,848 221,319,338
----------- ------------
LIABILITIES:
Dividends payable -- --
Payable for investments purchased 154,394 1,094,104
Payable for capital shares redeemed 49 12,636
Accrued expenses and other
liabilities:
Investment management 9,203 44,791
Administration 1,097 15,800
Distribution 1,342 1,469
Shareholder servicing 466 3,852
Other 11,098 23,725
----------- ------------
TOTAL LIABILITIES 177,649 1,196,377
----------- ------------
NET ASSETS $15,633,199 $220,122,961
----------- ------------
----------- ------------
.............................................................................
COMPOSITION OF NET ASSETS:
Capital $19,714,837 $280,225,429
Accumulated net investment income 84,267 64,981
Accumulated net realized losses from
investment and futures transactions (3,658,492) (53,062,896)
Unrealized appreciation
(depreciation) from investments (507,413) (7,104,553)
----------- ------------
NET ASSETS $15,633,199 $220,122,961
----------- ------------
----------- ------------
...........................................................................
CLASS A (INVESTOR) SHARES
Net Assets $ 484,062 $ 17,153,898
Shares Outstanding 61,900 1,594,809
Net Asset Value and Redemption Price
per share $ 7.82 $ 10.76
----------- ------------
----------- ------------
Maximum sales charge 5.00% 5.00%
----------- ------------
----------- ------------
Maximum Offering Price per share
(Net Asset Value/(100%-maximum
sales charge)) $ 8.23 $ 11.33
----------- ------------
----------- ------------
...........................................................................
CLASS B SHARES
Net Assets $ 1,760,226 $ 1,875,468
Shares Outstanding 226,479 178,803
Net Asset Value, Offering Price and
Redemption Price per share* $ 7.77 $ 10.49
----------- ------------
----------- ------------
...........................................................................
CLASS C SHARES
Net Assets $ 100,752 $ 493,442
Shares Outstanding 12,933 46,798
Net Asset Value, Offering Price and
Redemption Price per share* $ 7.79 $ 10.54
----------- ------------
----------- ------------
...........................................................................
CLASS Y SHARES
Net Assets $13,288,159 $200,600,153
Shares Outstanding 1,685,057 18,660,542
Net Asset Value, Offering Price and
Redemption Price per share $ 7.89 $ 10.75
----------- ------------
----------- ------------
...........................................................................
ADVISOR SHARES
Net Assets $ -- $ --
Shares Outstanding -- --
Net Asset Value, Offering Price and
Redemption Price per share $ -- $ --
----------- ------------
----------- ------------
Investments, at cost $16,125,750 $227,006,280
----------- ------------
----------- ------------
</Table>
- --------------
* Redemption Price per share varies by length of time shares are held.
22 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- APRIL 30, 2003 (UNAUDITED) (CONTINUED)
.................................................................................
<Table>
<Caption>
GROWTH AND MID-CAP INTERNATIONAL OVERSEAS
INCOME FUND FUND EQUITY FUND EQUITY FUND
-------------- -------------- -------------- ---------------
ASSETS:
Investments, at value (Note 2) $182,794,298 $133,744,606 $257,942,398 $ 7,552,694
Cash 110 -- -- --
Interest and dividends receivable 101,769 12,000 -- --
Receivable for capital shares issued 1,016 431,535 7,817,747 1,770,777
Receivable for investments sold 1,780,812 1,692,068 -- --
Receivable from Investment Adviser -- -- -- 7,346
Tax reclaims receivable -- -- 364,821 18,759
Prepaid expenses 16,298 7,799 14,775 10,194
------------ ------------ ------------ -----------
TOTAL ASSETS 184,694,303 135,888,008 266,139,741 9,359,770
------------ ------------ ------------ -----------
LIABILITIES:
Call options written, at value
(premium received $167,245) -- 202,250 -- --
Payable for investments purchased 2,075,019 5,572,276 -- --
Payable for capital shares redeemed 4,652 550 -- 7,212
Accrued expenses and other
liabilities:
Investment management 79,941 50,111 -- --
Administration 16,068 8,294 7,818 293
Distribution 970 2,807 -- 759
Shareholder servicing 521 1,122 -- 1,571
Other 5,668 17,099 22,426 12,552
------------ ------------ ------------ -----------
TOTAL LIABILITIES 2,182,839 5,854,509 30,244 22,387
------------ ------------ ------------ -----------
NET ASSETS $182,511,464 $130,033,499 $266,109,497 $ 9,337,383
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
...................................................................................................................
COMPOSITION OF NET ASSETS:
Capital $231,918,849 $163,540,369 $315,120,518 $11,384,536
Accumulated net investment income 474,540 (7,067) 647,837 (13,335)
Accumulated net realized losses from
investment, option and foreign
currency transactions (57,537,902) (39,066,041) (23,293,294) (901,144)
Unrealized appreciation
(depreciation) from investments,
options and foreign currencies 7,655,977 5,566,238 (26,365,564) (1,132,674)
------------ ------------ ------------ -----------
NET ASSETS $182,511,464 $130,033,499 $266,109,497 $ 9,337,383
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
...................................................................................................................
CLASS A (INVESTOR) SHARES
Net Assets $ 1,083,330 $ 1,075,795 $ -- $ 8,545,177
Shares Outstanding 145,013 166,168 -- 888,710
Net Asset Value and Redemption Price
per share $ 7.47 $ 6.47 $ -- $ 9.62
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
Maximum sales charge 5.00% 5.00% -- 5.00%
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
Maximum Offering Price per share
(Net Asset Value/(100%-maximum
sales charge)) $ 7.86 $ 6.81 $ -- $ 10.13
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
...................................................................................................................
CLASS B SHARES
Net Assets $ 1,577,627 $ 4,647,136 $ -- $ 698,829
Shares Outstanding 213,140 733,316 -- 74,822
Net Asset Value, Offering Price and
Redemption Price per share* $ 7.40 $ 6.34 $ -- $ 9.34
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
...................................................................................................................
CLASS C SHARES
Net Assets $ 7** $ 20,830 $ -- $ 93,377
Shares Outstanding 1 3,286 -- 9,823
Net Asset Value, Offering Price and
Redemption Price per share* $ 7.46*** $ 6.34 $ -- $ 9.51
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
...................................................................................................................
CLASS Y SHARES
Net Assets $179,850,500 $ -- $ -- $ --
Shares Outstanding 24,052,419 -- -- --
Net Asset Value, Offering Price and
Redemption Price per share $ 7.48 $ -- $ -- $ --
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
...................................................................................................................
ADVISOR SHARES
Net Assets $ -- $ -- $266,109,497 $ --
Shares Outstanding -- -- 25,284,712 --
Net Asset Value, Offering Price and
Redemption Price per share $ -- $ -- $ 10.52 $ --
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
...................................................................................................................
TRUST SHARES
Net Assets $ -- $124,289,738 $ -- $ --
Shares Outstanding -- 19,087,638 -- --
Net Asset Value, Offering Price and
Redemption Price per share $ -- $ 6.51 $ -- $ --
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
Investments, at cost $175,138,321 $128,143,363 $ -- $ --
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
<Caption>
SMALL-CAP OPPORTUNITY
EQUITY FUND FUND
-------------- --------------
ASSETS:
Investments, at value (Note 2) $211,687,880 $13,837,376
Cash -- --
Interest and dividends receivable -- --
Receivable for capital shares issued 708,927 43,862
Receivable for investments sold -- --
Receivable from Investment Adviser -- 9,854
Tax reclaims receivable --
Prepaid expenses 14,795 10,467
------------ -----------
TOTAL ASSETS 212,411,602 13,901,559
------------ -----------
LIABILITIES:
Call options written, at value
(premium received $167,245) -- --
Payable for investments purchased -- --
Payable for capital shares redeemed -- 3,021
Accrued expenses and other
liabilities:
Investment management -- --
Administration 6,831 510
Distribution -- 814
Shareholder servicing -- 2,697
Other 18,769 16,064
------------ -----------
TOTAL LIABILITIES 25,600 23,106
------------ -----------
NET ASSETS $212,386,002 $13,878,453
------------ -----------
------------ -----------
.............................................................................
COMPOSITION OF NET ASSETS:
Capital $284,066,999 $18,486,570
Accumulated net investment income (645,256) (96,757)
Accumulated net realized losses from
investment, option and foreign
currency transactions (77,211,524) (4,957,773)
Unrealized appreciation
(depreciation) from investments,
options and foreign currencies 6,175,783 446,413
------------ -----------
NET ASSETS $212,386,002 $13,878,453
------------ -----------
------------ -----------
.............................................................................
CLASS A (INVESTOR) SHARES
Net Assets $ -- $10,952,888
Shares Outstanding -- 1,365,187
Net Asset Value and Redemption Price
per share $ -- $ 8.02
------------ -----------
------------ -----------
Maximum sales charge -- 5.00%
------------ -----------
------------ -----------
Maximum Offering Price per share
(Net Asset Value/(100%-maximum
sales charge)) $ -- $ 8.44
------------ -----------
------------ -----------
.............................................................................
CLASS B SHARES
Net Assets $ -- $ 2,632,665
Shares Outstanding -- 343,660
Net Asset Value, Offering Price and
Redemption Price per share* $ -- $ 7.66
------------ -----------
------------ -----------
.............................................................................
CLASS C SHARES
Net Assets $ -- $ 292,900
Shares Outstanding -- 37,918
Net Asset Value, Offering Price and
Redemption Price per share* $ -- $ 7.72
------------ -----------
------------ -----------
.............................................................................
CLASS Y SHARES
Net Assets $ -- $ --
Shares Outstanding -- --
Net Asset Value, Offering Price and
Redemption Price per share $ -- $ --
------------ -----------
------------ -----------
.............................................................................
ADVISOR SHARES
Net Assets $212,386,002 $ --
Shares Outstanding 22,277,231 --
Net Asset Value, Offering Price and
Redemption Price per share $ 9.53 $ --
------------ -----------
------------ -----------
.............................................................................
TRUST SHARES
Net Assets $ -- $ --
Shares Outstanding -- --
Net Asset Value, Offering Price and
Redemption Price per share $ -- $ --
------------ -----------
------------ -----------
Investments, at cost $ -- $ --
------------ -----------
------------ -----------
</Table>
- --------------
* Redemption Price per share varies by length of time shares are held.
** Net assets of the Growth and Income Fund Class C Shares represent seed money
only. As of April 30, 2003 the class has not commenced operations.
*** Due to rounding, Net Assets divided by Shares Outstanding does not equal the
NAV.
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 23
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED APRIL 30, 2003 (UNAUDITED)
.................................................................................
<Table>
<Caption>
NEW YORK
LIMITED FIXED INCOME BOND TAX-FREE
MATURITY FUND FUND FUND BOND FUND
--------------- --------------- ---------------- ---------------
INVESTMENT INCOME:
Interest $ -- $ -- $ -- $1,195,249
Dividend -- -- -- 5,677
Investment income from portfolio 2,641,602 7,734,988 493,689 --
Expenses from portfolio (297,434) (735,039) (46,846) --
---------- ----------- -------- ----------
TOTAL INVESTMENT INCOME 2,344,168 6,999,949 446,843 1,200,926
---------- ----------- -------- ----------
---------- ----------- -------- ----------
...................................................................................................................
EXPENSES:
Investment management -- -- -- 66,990
Administration 21,744 58,811 3,748 20,076
Distribution:
Class B Shares 18,203 -- 24,641 51,701
Class C Shares 7,473 -- 3,369 11,070
Shareholder servicing:
Class A (Investor) Shares 2,540 -- 15,675 21,343
Class B Shares 6,068 -- 8,214 17,234
Class C Shares 2,491 -- 1,123 3,690
Accounting 17,878 4,469 13,405 34,414
Custodian -- -- -- 8,031
Registration 5,318 5,432 7,078 3,496
Transfer agent 29,407 14,410 24,384 33,590
Trustee 718 1,912 130 403
Other 14,504 40,466 2,395 9,192
---------- ----------- -------- ----------
Total expenses before fee
reductions 126,344 125,500 104,162 281,230
Fees reduced by Investment Adviser -- -- (12,853) --
---------- ----------- -------- ----------
NET EXPENSES 126,344 125,500 91,309 281,230
---------- ----------- -------- ----------
...................................................................................................................
NET INVESTMENT INCOME 2,217,824 6,874,449 355,534 919,696
---------- ----------- -------- ----------
.................................................................................................................
NET REALIZED/UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS:
Net realized gains (losses) from
investment transactions 534,064 275,508 8,976 235,153
Change in unrealized
appreciation/depreciation from
investments 1,257,412 8,834,121 576,416 804,807
---------- ----------- -------- ----------
...................................................................................................................
Net realized/unrealized gains from
investment transactions 1,791,476 9,109,629 585,392 1,039,960
---------- ----------- -------- ----------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS $4,009,300 $15,984,078 $940,926 $1,959,656
---------- ----------- -------- ----------
---------- ----------- -------- ----------
<Caption>
BALANCED
FUND EQUITY FUND
--------------- ---------------
INVESTMENT INCOME:
Interest $131,311 $ --
Dividend 79,793 1,423,239
Investment income from portfolio -- --
Expenses from portfolio -- --
-------- ------------
TOTAL INVESTMENT INCOME 211,104 1,423,239
-------- ------------
-------- ------------
.............................................................................
EXPENSES:
Investment management 40,062 473,515
Administration 5,457 77,311
Distribution:
Class B Shares 5,748 6,413
Class C Shares 365 2,019
Shareholder servicing:
Class A (Investor) Shares 545 20,394
Class B Shares 1,916 2,138
Class C Shares 122 673
Accounting 31,818 41,880
Custodian 5,783 42,501
Registration 5,041 8,141
Transfer agent 31,297 44,757
Trustee 110 1,493
Other 2,216 28,829
-------- ------------
Total expenses before fee
reductions 130,480 750,064
Fees reduced by Investment Adviser (52,552) --
-------- ------------
NET EXPENSES 77,928 750,064
-------- ------------
.............................................................................
NET INVESTMENT INCOME 133,176 673,175
-------- ------------
.............................................................................
NET REALIZED/UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS:
Net realized gains (losses) from
investment transactions (496,450) (15,784,545)
Change in unrealized
appreciation/depreciation from
investments 926,208 25,021,365
-------- ------------
.............................................................................
Net realized/unrealized gains from
investment transactions 429,758 9,236,820
-------- ------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS $562,934 $ 9,909,995
-------- ------------
-------- ------------
</Table>
24 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED APRIL 30, 2003 (UNAUDITED)
(CONTINUED)
.................................................................................
<Table>
<Caption>
GROWTH AND
INCOME MID-CAP INTERNATIONAL OVERSEAS
FUND FUND EQUITY FUND EQUITY FUND
--------------- --------------- --------------- ----------------
- -------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ -- $ 223 $ -- $ --
Dividend 1,535,007 491,519 -- --
Investment income from portfolio -- -- 2,413,394 88,334
Tax reclaims -- -- 163,108 5,325
Foreign tax withholding from portfolio -- -- (385,199) (14,030)
Expenses from portfolio -- -- (984,270) (36,282)
---------- ----------- ---------- --------
TOTAL INVESTMENT INCOME 1,535,007 491,742 1,207,033 43,347
---------- ----------- ---------- --------
..............................................................................................................
EXPENSES:
Investment management 475,388 300,087 -- --
Administration 64,756 40,877 38,530 1,420
Distribution:
Class B Shares 4,791 16,246 -- 2,338
Class C Shares -- 75 -- 347
Shareholder servicing:
Class A (Investor) Shares 1,471 1,216 -- 8,583
Class B Shares 1,597 5,415 -- 779
Class C Shares -- 25 -- 116
Accounting 31,850 31,217 4,469 13,406
Custodian 27,062 27,888 -- --
Registration 8,823 4,537 10,808 6,189
Transfer agent 33,167 52,939 15,155 29,167
Trustee 1,285 799 1,178 49
Other 28,057 17,488 27,021 940
---------- ----------- ---------- --------
Total expenses before fee reductions 678,247 498,809 97,161 63,334
Fees reduced by Investment Adviser -- -- -- (25,026)
---------- ----------- ---------- --------
NET EXPENSES 678,247 498,809 97,161 38,308
---------- ----------- ---------- --------
..............................................................................................................
NET INVESTMENT INCOME (LOSS) 856,760 (7,067) 1,109,872 5,039
---------- ----------- ---------- --------
..............................................................................................................
NET REALIZED/UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS, OPTIONS AND FOREIGN
CURRENCIES:
Net realized losses from investment,
option and foreign currency
transactions (9,385,152) (7,418,038) (4,732,884) (222,407)
Change in unrealized
appreciation/depreciation from
investments, options and foreign
currencies 15,858,895 10,352,889 5,801,392 237,467
---------- ----------- ---------- --------
..............................................................................................................
Net realized/unrealized gains from
investment, options and foreign
currency transactions 6,473,743 2,934,851 1,068,508 15,060
---------- ----------- ---------- --------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS $7,330,503 $ 2,927,784 $2,178,380 $ 20,099
---------- ----------- ---------- --------
---------- ----------- ---------- --------
</Table>
<Table>
<Caption>
SMALL CAP OPPORTUNITY
EQUITY FUND FUND
--------------- ---------------
INVESTMENT INCOME:
Interest $ -- $ --
Dividend -- --
Investment income from portfolio 308,736 22,686
Tax reclaims -- --
Foreign tax withholding from portfolio -- --
Expenses from portfolio (866,189) (63,525)
----------- ----------
TOTAL INVESTMENT INCOME (557,453) (40,839)
----------- ----------
..........................................................................
EXPENSES:
Investment management -- --
Administration 33,796 2,484
Distribution:
Class B Shares -- 8,927
Class C Shares -- 1,123
Shareholder servicing:
Class A (Investor) Shares -- 13,226
Class B Shares -- 2,976
Class C Shares -- 374
Accounting 4,469 13,405
Custodian -- --
Registration 9,120 6,501
Transfer agent 14,967 42,946
Trustee 1,102 73
Other 24,349 2,216
----------- ----------
Total expenses before fee reductions 87,803 94,251
Fees reduced by Investment Adviser -- (38,333)
----------- ----------
NET EXPENSES 87,803 55,918
----------- ----------
..........................................................................
NET INVESTMENT INCOME (LOSS) (645,256) (96,757)
----------- ----------
..........................................................................
NET REALIZED/UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS, OPTIONS AND FOREIGN
CURRENCIES:
Net realized losses from investment,
option and foreign currency
transactions (13,078,484) (877,423)
Change in unrealized
appreciation/depreciation from
investments, options and foreign
currencies 18,585,304 1,290,340
----------- ----------
.........................................................................
Net realized/unrealized gains from
investment, options and foreign
currency transactions 5,506,820 412,917
----------- ----------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS $ 4,861,564 $ 316,160
----------- ----------
----------- ----------
</Table>
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 25
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
.................................................................................
<Table>
<Caption>
LIMITED MATURITY FUND FIXED INCOME FUND
--------------------------------- ---------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2003 YEAR ENDED APRIL 30, 2003 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2002 (UNAUDITED) OCTOBER 31, 2002
- ---------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 2,217,824 $ 3,687,229 $ 6,874,449 $ 12,199,896
Net realized gains (losses) from
investment transactions 534,064 (696,711) 275,508 877,629
Change in unrealized
appreciation/depreciation from
investments 1,257,412 526,764 8,834,121 1,637,228
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS 4,009,300 3,517,282 15,984,078 14,714,753
------------ ------------ ------------ ------------
...........................................................................................................................
DIVIDENDS:
NET INVESTMENT INCOME:
Class A (Investor) Shares (38,192) (51,982) -- --
Class B Shares (72,686) (82,791) -- --
Class C Shares (29,910) (29,109) -- --
Class Y Shares (2,151,678) (3,587,497) -- --
Advisor Shares -- -- (7,506,438) (13,256,763)
NET REALIZED GAINS:
Class A (Investor) Shares -- (4,520) -- --
Class B Shares -- (4,356) -- --
Class C Shares -- (718) -- --
Class Y (Adviser) Shares -- (302,276) -- --
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS FROM
SHAREHOLDER DIVIDENDS (2,292,466) (4,063,249) (7,506,438) (13,256,763)
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS 25,839,689 33,628,772 48,864,424 132,803,103
CHANGE IN NET ASSETS 27,556,523 33,082,805 57,342,064 134,261,093
...........................................................................................................................
NET ASSETS:
Beginning of period 102,431,197 69,348,392 284,840,662 150,579,569
------------ ------------ ------------ ------------
End of period $129,987,720 $102,431,197 $342,182,726 $284,840,662
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Accumulated net investment
income $ (80,919) $ (6,277) $ (706,161) $ (74,172)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</Table>
26 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
.................................................................................
<Table>
<Caption>
LIMITED MATURITY FUND FIXED INCOME FUND
------------------------------ ------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2003 YEAR ENDED APRIL 30, 2003 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2002 (UNAUDITED) OCTOBER 31, 2002
- ------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Proceeds from shares issued $ 2,119,568 $ 690,236 $ -- $ --
Dividends reinvested 35,739 53,853 -- --
Cost of shares redeemed (2,063,596) (110,071) -- --
----------- ----------- ------------ -------------
Class A (Investor) Shares capital
transactions 91,711 634,018 -- --
----------- ----------- ------------ -------------
...............................................................................................................................
CLASS B SHARES:
Proceeds from shares issued 2,070,094 3,542,800 -- --
Dividends reinvested 60,984 72,882 -- --
Cost of shares redeemed (472,729) (377,321) -- --
----------- ----------- ------------ -------------
Class B Shares capital transactions 1,658,349 3,238,361 -- --
----------- ----------- ------------ -------------
...............................................................................................................................
CLASS C SHARES:
Proceeds from shares issued 893,634 1,659,670 -- --
Dividends reinvested 26,453 26,924 -- --
Cost of shares redeemed (277,892) (118,452) -- --
----------- ----------- ------------ -------------
Class C Shares capital transactions 642,195 1,568,142 -- --
----------- ----------- ------------ -------------
...............................................................................................................................
CLASS Y SHARES:
Proceeds from shares issued 26,856,828 32,116,873 -- --
Dividends reinvested 1,962,347 3,764,345 -- --
Cost of shares redeemed (5,371,741) (7,692,967) -- --
----------- ----------- ------------ -------------
Class Y Shares capital transactions 23,447,434 28,188,251 -- --
----------- ----------- ------------ -------------
...............................................................................................................................
ADVISOR SHARES:
Proceeds from shares issued -- -- 99,078,031 312,915,542
Dividends reinvested -- -- 1,627,859 4,745,964
Cost of shares redeemed -- -- (51,841,466) (184,858,403)
----------- ----------- ------------ -------------
Advisor Shares capital transactions -- -- 48,864,424 132,803,103
----------- ----------- ------------ -------------
Change in net assets from capital
transactions $25,839,689 $33,628,772 $ 48,864,424 $ 132,803,103
----------- ----------- ------------ -------------
----------- ----------- ------------ -------------
...............................................................................................................................
SHARE TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Issued 202,852 67,284 -- --
Reinvested 3,407 5,236 -- --
Redeemed (196,493) (10,737) -- --
----------- ----------- ------------ -------------
Change in Class A (Investor) Shares 9,766 61,783 -- --
----------- ----------- ------------ -------------
...............................................................................................................................
CLASS B SHARES:
Issued 196,348 344,798 -- --
Reinvested 5,805 7,140 -- --
Redeemed (44,843) (36,553) -- --
----------- ----------- ------------ -------------
Change in Class B Shares 157,310 315,385 -- --
----------- ----------- ------------ -------------
...............................................................................................................................
CLASS C SHARES:
Issued 84,863 162,291 -- --
Reinvested 2,518 2,611 -- --
Redeemed (26,392) (11,656) -- --
----------- ----------- ------------ -------------
Change in Class C Shares 60,989 153,246 -- --
----------- ----------- ------------ -------------
...............................................................................................................................
CLASS Y SHARES:
Issued 2,553,959 3,107,329 -- --
Reinvested 186,707 365,786 -- --
Redeemed (512,843) (746,625) -- --
----------- ----------- ------------ -------------
Change in Class Y Shares 2,227,823 2,726,490 -- --
----------- ----------- ------------ -------------
...............................................................................................................................
ADVISOR SHARES:
Issued -- -- 9,182,271 29,905,358
Reinvested -- -- 151,037 449,538
Redeemed -- -- (4,803,093) (17,491,684)
----------- ----------- ------------ -------------
Change in Advisor Shares -- -- 4,530,215 12,863,212
----------- ----------- ------------ -------------
</Table>
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 27
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
.................................................................................
<Table>
<Caption>
NEW YORK
BOND FUND TAX-FREE BOND FUND
------------------------------ ------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2003 YEAR ENDED APRIL 30, 2003 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2002 (UNAUDITED) OCTOBER 31, 2002
- ------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 355,534 $ 609,977 $ 919,696 $ 1,523,914
Net realized gains (losses) from
investment transactions 8,976 (125,841) 235,153 230,884
Change in unrealized
appreciation/depreciation
from investments 576,416 134,884 804,807 606,908
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 940,926 619,020 1,959,656 2,361,706
------------ ------------ ------------ ------------
...............................................................................................................................
DIVIDENDS:
NET INVESTMENT INCOME:
Class A (Investor) Shares (266,890) (476,334) (301,724) (536,951)
Class B Shares (114,821) (161,790) (191,766) (249,302)
Class C Shares (15,908) (35,707) (40,812) (52,534)
Class Y Shares -- -- (375,528) (684,658)
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS FROM SHAREHOLDER
DIVIDENDS (397,619) (673,831) (909,830) (1,523,445)
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS FROM CAPITAL SHARE
TRANSACTIONS 2,058,174 10,511,328 4,109,707 10,709,100
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS 2,601,481 10,456,517 5,159,533 11,547,361
...............................................................................................................................
NET ASSETS:
Beginning of period 19,160,194 8,703,677 51,401,358 39,853,997
------------ ------------ ------------ ------------
End of period $ 21,761,675 $ 19,160,194 $ 56,560,891 $ 51,401,358
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Accumulated net investment income $ (45,799) $ (3,714) $ 10,749 $ 883
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</Table>
28 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
.................................................................................
<Table>
<Caption>
NEW YORK
BOND FUND TAX-FREE BOND FUND
------------------------------ ------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2003 YEAR ENDED APRIL 30, 2003 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2002 (UNAUDITED) OCTOBER 31, 2002
- ------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Proceeds from shares issued $ 2,944,859 $ 8,793,395 $ 3,377,292 $ 8,641,241
Dividends reinvested 247,670 438,217 279,922 517,840
Cost of shares redeemed (1,878,059) (3,793,983) (1,604,444) (10,712,477)
----------- ----------- ----------- ------------
Class A (Investor) Shares capital
transactions 1,314,470 5,437,629 2,052,770 (1,553,396)
----------- ----------- ----------- ------------
...............................................................................................................................
CLASS B SHARES:
Proceeds from shares issued 1,191,168 4,883,502 3,384,218 7,565,354
Dividends reinvested 95,760 130,482 148,896 189,995
Cost of shares redeemed (396,268) (402,978) (537,129) (866,052)
----------- ----------- ----------- ------------
Class B Shares capital transactions 890,660 4,611,006 2,995,985 6,889,297
----------- ----------- ----------- ------------
...............................................................................................................................
CLASS C SHARES:
Proceeds from shares issued 3,000 789,595 764,079 1,745,774
Dividends reinvested 11,644 32,561 31,522 44,081
Cost of shares redeemed (161,600) (359,463) (123,413) (743,128)
----------- ----------- ----------- ------------
Class C Shares capital transactions (146,956) 462,693 672,188 1,046,727
----------- ----------- ----------- ------------
...............................................................................................................................
CLASS Y SHARES:
Proceeds from shares issued -- -- 4,900,632 15,051,732
Dividends reinvested -- -- 118,645 258,502
Cost of shares redeemed -- -- (6,630,513) (10,983,762)
----------- ----------- ----------- ------------
Class Y Shares capital transactions -- -- (1,611,236) 4,326,472
----------- ----------- ----------- ------------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $ 2,058,174 $10,511,328 $ 4,109,707 $ 10,709,100
----------- ----------- ----------- ------------
----------- ----------- ----------- ------------
...............................................................................................................................
SHARE TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Issued 279,438 852,357 303,548 793,327
Reinvested 23,526 42,473 25,095 47,508
Redeemed (178,972) (367,469) (143,937) (988,665)
----------- ----------- ----------- ------------
Change in Class A (Investor) Shares 123,992 527,361 184,706 (147,830)
----------- ----------- ----------- ------------
...............................................................................................................................
CLASS B SHARES:
Issued 112,909 474,356 303,223 693,973
Reinvested 9,093 12,636 13,356 17,430
Redeemed (37,532) (38,903) (48,310) (79,697)
----------- ----------- ----------- ------------
Change in Class B Shares 84,470 448,089 268,269 631,706
----------- ----------- ----------- ------------
...............................................................................................................................
CLASS C SHARES:
Issued 284 76,684 68,280 159,355
Reinvested 1,108 3,159 2,817 4,018
Redeemed (15,400) (35,037) (10,972) (67,865)
----------- ----------- ----------- ------------
Change in Class C Shares (14,008) 44,806 60,125 95,508
----------- ----------- ----------- ------------
...............................................................................................................................
CLASS Y SHARES:
Issued -- -- 439,011 1,388,804
Reinvested -- -- 10,643 23,646
Redeemed -- -- (594,005) (1,002,656)
----------- ----------- ----------- ------------
Change in Class Y Shares -- -- (144,351) 409,794
----------- ----------- ----------- ------------
</Table>
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 29
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
................................................................................
<Table>
<Caption>
BALANCED FUND EQUITY FUND
------------------------------ ------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2003 YEAR ENDED APRIL 30, 2003 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2002 (UNAUDITED) OCTOBER 31, 2002
- ------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 133,176 $ 296,118 $ 673,175 $ 1,072,599
Net realized losses from investment
transactions (496,450) (1,733,733) (15,784,545) (29,117,568)
Change in unrealized
appreciation/depreciation from
investments 926,208 (90,459) 25,021,365 (27,338,527)
----------- ----------- ------------ ------------
CHANGE IN NET ASSETS FROM OPERATIONS 562,934 (1,528,074) 9,909,995 (55,383,496)
----------- ----------- ------------ ------------
...............................................................................................................................
DIVIDENDS:
NET INVESTMENT INCOME:
Class A (Investor) Shares (7,857) (3,748) (42,980) (36,107)
Class B Shares (23,037) (5,763) -- --
Class C Shares (1,471) (813) -- --
Class Y Shares (257,635) (179,777) (793,658) (842,473)
----------- ----------- ------------ ------------
CHANGE IN NET ASSETS FROM SHAREHOLDER
DIVIDENDS (290,000) (190,101) (836,638) (878,580)
----------- ----------- ------------ ------------
CHANGE IN NET ASSETS FROM CAPITAL SHARE
TRANSACTIONS 775,680 90,197 18,155,544 102,470,636
----------- ----------- ------------ ------------
CHANGE IN NET ASSETS 1,048,614 (1,627,978) 27,228,901 46,208,560
...............................................................................................................................
NET ASSETS:
Beginning of period 14,584,585 16,212,563 192,894,060 146,685,500
----------- ----------- ------------ ------------
End of period $15,633,199 $14,584,585 $220,122,961 $192,894,060
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
Accumulated net investment income $ 84,267 $ 241,091 $ 64,981 $ 228,444
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
</Table>
30 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
................................................................................
<Table>
<Caption>
BALANCED FUND EQUITY FUND
------------------------------ ------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2003 YEAR ENDED APRIL 30, 2003 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2002 (UNAUDITED) OCTOBER 31, 2002
- ------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Proceeds from shares issued $ 71,578 $ 254,543 $ 1,969,117 $ 11,957,002
Dividends reinvested 6,663 3,367 41,888 35,456
Cost of shares redeemed (23,646) (103,414) (2,464,949) (8,621,362)
------------ ------------ ------------ ------------
Class A (Investor) Shares capital
transactions 54,595 154,496 (453,944) 3,371,096
------------ ------------ ------------ ------------
...............................................................................................................................
CLASS B SHARES:
Proceeds from shares issued 359,251 1,077,745 259,302 1,081,923
Dividends reinvested 22,644 5,589 -- --
Cost of shares redeemed (136,576) (97,724) (169,447) (279,702)
------------ ------------ ------------ ------------
Class B Shares capital transactions 245,319 985,610 89,855 802,221
------------ ------------ ------------ ------------
...............................................................................................................................
CLASS C SHARES:
Proceeds from shares issued 2,498 2,500 5,340 31,580
Dividends reinvested 1,471 813 -- --
Cost of shares redeemed (2,501) (821) (99,717) (63,795)
------------ ------------ ------------ ------------
Class C Shares capital transactions 1,468 2,492 (94,377) (32,215)
------------ ------------ ------------ ------------
...............................................................................................................................
CLASS Y SHARES:
Proceeds from shares issued 1,218,205 2,172,114 36,807,407 120,030,391
Dividends reinvested 257,635 179,778 743,937 769,198
Cost of shares redeemed (1,001,542) (3,404,293) (18,937,334) (22,470,055)
------------ ------------ ------------ ------------
Class Y Shares capital transactions 474,298 (1,052,401) 18,614,010 98,329,534
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $ 775,680 $ 90,197 $ 18,155,544 $102,470,636
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
...............................................................................................................................
SHARE TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Issued 9,550 30,620 190,708 986,765
Reinvested 881 390 4,170 3,050
Redeemed (3,096) (13,028) (240,701) (672,658)
------------ ------------ ------------ ------------
Change in Class A (Investor) Shares 7,335 17,982 (45,823) 317,157
------------ ------------ ------------ ------------
...............................................................................................................................
CLASS B SHARES:
Issued 48,108 130,189 25,970 86,551
Reinvested 3,003 647 -- --
Redeemed (18,160) (12,342) (17,234) (25,209)
------------ ------------ ------------ ------------
Change in Class B Shares 32,951 118,494 8,736 61,342
------------ ------------ ------------ ------------
...............................................................................................................................
CLASS C SHARES:
Issued 328 298 530 2,531
Reinvested 195 94 -- --
Redeemed (328) (108) (9,933) (6,145)
------------ ------------ ------------ ------------
Change in Class C Shares 195 284 (9,403) (3,614)
------------ ------------ ------------ ------------
...............................................................................................................................
CLASS Y SHARES:
Issued 159,780 261,958 3,535,548 8,983,553
Reinvested 33,766 20,688 74,035 64,275
Redeemed (132,506) (417,055) (1,838,877) (1,940,804)
------------ ------------ ------------ ------------
Change in Class Y Shares 61,040 (134,409) 1,770,706 7,107,024
------------ ------------ ------------ ------------
</Table>
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 31
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
................................................................................
<Table>
<Caption>
GROWTH AND INCOME FUND MID-CAP FUND
------------------------------ ------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2003 YEAR ENDED APRIL 30, 2003 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2002 (UNAUDITED) OCTOBER 31, 2002
- ------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 856,760 $ 1,337,897 $ (7,067) $ (304,696)
Net realized losses from investment and
options transactions (9,385,152) (24,672,615) (7,418,038) (18,552,349)
Change in unrealized
appreciation/depreciation
from investments and options 15,858,895 (17,117,988) 10,352,889 (8,355,049)
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS FROM OPERATIONS 7,330,503 (40,452,706) 2,927,784 (27,212,094)
------------ ------------ ------------ ------------
...............................................................................................................................
DIVIDENDS:
NET INVESTMENT INCOME:
Class A (Investor) Shares (5,810) (2,986) -- --
Class B Shares (858) -- -- --
Class Y Shares (1,197,478) (799,787) -- --
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS FROM SHAREHOLDER
DIVIDENDS (1,204,146) (802,773) -- --
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS FROM CAPITAL SHARE
TRANSACTIONS 5,113,568 (8,951,741) 23,625,496 (3,472,044)
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS 11,239,925 (50,207,220) 26,553,280 (30,684,138)
...............................................................................................................................
NET ASSETS:
Beginning of period 171,271,539 221,478,759 103,480,219 134,164,357
------------ ------------ ------------ ------------
End of period $182,511,464 $171,271,539 $130,033,499 $103,480,219
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Accumulated net investment income $ 474,540 $ 821,926 $ (7,067) $ --
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</Table>
32 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
................................................................................
<Table>
<Caption>
GROWTH AND INCOME FUND MID-CAP FUND
------------------------------ ------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2003 YEAR ENDED APRIL 30, 2003 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2002 (UNAUDITED) OCTOBER 31, 2002
- ------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Proceeds from shares issued $ 167,324 $ 601,471 $ 163,280 $ 577,280
Dividends reinvested 5,561 2,897 -- --
Cost of shares redeemed (426,714) (899,525) (124,298) (212,541)
------------ ------------ ------------ ------------
Class A (Investor) Shares capital
transactions (253,829) (295,157) 38,982 364,739
------------ ------------ ------------ ------------
...............................................................................................................................
CLASS B SHARES:
Proceeds from shares issued 425,669 1,229,558 396,254 2,417,457
Dividends reinvested 846 -- -- --
Cost of shares redeemed (64,532) (120,487) (251,106) (592,594)
------------ ------------ ------------ ------------
Class B Shares capital transactions 361,983 1,109,071 145,148 1,824,863
------------ ------------ ------------ ------------
...............................................................................................................................
CLASS C SHARES:
Proceeds from shares issued -- -- -- 26,336
Cost of shares redeemed -- -- -- (21,556)
------------ ------------ ------------ ------------
Class C Shares capital transactions -- -- -- 4,780
------------ ------------ ------------ ------------
...............................................................................................................................
CLASS Y SHARES:
Proceeds from shares issued 21,305,230 16,872,208 -- --
Dividends reinvested 242,845 178,816 -- --
Cost of shares redeemed (16,542,661) (26,816,679) -- --
------------ ------------ ------------ ------------
Class Y Shares capital transactions 5,005,414 (9,765,655) -- --
------------ ------------ ------------ ------------
...............................................................................................................................
TRUST SHARES:
Proceeds from shares issued -- -- 32,176,483 42,412,795
Cost of shares redeemed -- -- (8,735,117) (48,079,221)
------------ ------------ ------------ ------------
Trust Shares capital transactions -- -- 23,441,366 (5,666,426)
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $ 5,113,568 $ (8,951,741) $ 23,625,496 $ (3,472,044)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
...............................................................................................................................
SHARE TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Issued 23,560 69,737 26,086 71,687
Reinvested 775 308 -- --
Redeemed (60,421) (105,318) (20,083) (28,927)
------------ ------------ ------------ ------------
Change in Class A (Investor) Shares (36,086) (35,273) 6,003 42,760
------------ ------------ ------------ ------------
...............................................................................................................................
CLASS B SHARES:
Issued 60,530 140,389 65,246 305,404
Reinvested 119 -- -- --
Redeemed (9,057) (16,034) (40,904) (85,941)
------------ ------------ ------------ ------------
Change in Class B Shares 51,592 124,355 24,342 219,463
------------ ------------ ------------ ------------
...............................................................................................................................
CLASS C SHARES:
Issued -- -- -- 3,391
Redeemed -- -- -- (2,753)
------------ ------------ ------------ ------------
Change in Class C Shares -- -- -- 638
------------ ------------ ------------ ------------
...............................................................................................................................
CLASS Y SHARES:
Issued 2,981,498 1,990,822 -- --
Reinvested 33,922 19,925 -- --
Redeemed (2,328,268) (3,209,191) -- --
------------ ------------ ------------ ------------
Change in Class Y Shares 687,152 (1,198,444) -- --
------------ ------------ ------------ ------------
...............................................................................................................................
TRUST SHARES:
Issued -- -- 5,003,203 5,158,172
Redeemed -- -- (1,402,123) (6,022,361)
------------ ------------ ------------ ------------
Change in Trust Shares -- -- 3,601,080 (864,189)
------------ ------------ ------------ ------------
</Table>
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 33
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
................................................................................
<Table>
<Caption>
INTERNATIONAL EQUITY FUND OVERSEAS EQUITY FUND
------------------------------ ------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2003 YEAR ENDED APRIL 30, 2003 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2002 (UNAUDITED) OCTOBER 31, 2002
- ------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 1,109,872 $ 1,520,651 $ 5,039 $ (20,655)
Net realized losses from investment
and foreign currency transactions (4,732,884) (14,464,908) (222,407) (570,945)
Change in unrealized
appreciation/depreciation
from investments and foreign currencies 5,801,392 (13,761,843) 237,467 (753,586)
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 2,178,380 (26,706,100) 20,099 (1,345,186)
------------ ------------ ------------ ------------
...............................................................................................................................
DIVIDENDS:
NET INVESTMENT INCOME:
Class A (Investor) Shares -- -- (71,236) (83,152)
Class B Shares -- -- (3,341) (894)
Class C Shares -- -- (54) --
Advisor Shares (3,705,000) (2,797,529) -- --
NET REALIZED GAINS FROM INVESTMENT AND
FOREIGN CURRENCY TRANSACTIONS:
Class A (Investor) Shares -- -- -- (189,407)
Class B Shares -- -- -- (7,926)
Class C Shares -- -- -- (3,527)
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS FROM SHAREHOLDER
DIVIDENDS (3,705,000) (2,797,529) (74,631) (284,906)
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS FROM CAPITAL SHARE
TRANSACTIONS 72,932,384 39,713,366 1,505,116 2,143,644
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS 71,405,764 10,209,737 1,450,584 513,552
...............................................................................................................................
NET ASSETS:
Beginning of period 194,703,733 184,493,996 7,886,799 7,373,247
------------ ------------ ------------ ------------
End of period $266,109,497 $194,703,733 $ 9,337,383 $ 7,886,799
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Accumulated net investment income $ 647,837 $ 3,242,965 $ (13,335) $ 56,257
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</Table>
34 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
.................................................................................
<Table>
<Caption>
INTERNATIONAL EQUITY FUND OVERSEAS EQUITY FUND
--------------------------------- ---------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2003 YEAR ENDED APRIL 30, 2003 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2002 (UNAUDITED) OCTOBER 31, 2002
- ------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Proceeds from shares issued $ -- $ -- $ 9,170,601 $ 6,142,944
Dividends reinvested -- -- 69,478 270,064
Cost of shares redeemed -- -- (7,856,543) (4,650,406)
------------ ------------ ----------- -----------
Class A (Investor) Shares capital
transactions -- -- 1,383,536 1,762,602
------------ ------------ ----------- -----------
...............................................................................................................................
CLASS B SHARES:
Proceeds from shares issued -- -- 167,672 436,595
Dividends reinvested -- -- 3,234 8,694
Cost of shares redeemed -- -- (48,642) (40,890)
------------ ------------ ----------- -----------
Class B Shares capital
transactions -- -- 122,264 404,399
------------ ------------ ----------- -----------
...............................................................................................................................
CLASS C SHARES:
Proceeds from shares issued -- -- 2,420 8,840
Dividends reinvested -- -- 54 3,527
Cost of shares redeemed -- -- (3,158) (35,724)
------------ ------------ ----------- -----------
Class C Shares capital
transactions -- -- (684) (23,357)
------------ ------------ ----------- -----------
...............................................................................................................................
ADVISOR SHARES:
Proceeds from shares issued 278,663,298 638,506,248 -- --
Dividends reinvested 2,711,050 1,765,422 -- --
Cost of shares redeemed (208,441,964) (600,558,304) -- --
------------ ------------ ----------- -----------
Advisor Shares capital
transactions 72,932,384 39,713,366 -- --
------------ ------------ ----------- -----------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $ 72,932,384 $ 39,713,366 $ 1,505,116 $ 2,143,644
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
...............................................................................................................................
SHARE TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Issued -- -- 982,813 534,842
Reinvested -- -- 7,075 22,454
Redeemed -- -- (831,239) (422,514)
------------ ------------ ----------- -----------
Change in Class A (Investor)
Shares -- -- 158,649 134,782
------------ ------------ ----------- -----------
...............................................................................................................................
CLASS B SHARES:
Issued -- -- 18,399 38,648
Reinvested -- -- 339 744
Redeemed -- -- (5,463) (3,888)
------------ ------------ ----------- -----------
Change in Class B Shares -- -- 13,275 35,504
------------ ------------ ----------- -----------
...............................................................................................................................
CLASS C SHARES:
Issued -- -- 248 885
Reinvested -- -- 6 299
Redeemed -- -- (326) (3,453)
------------ ------------ ----------- -----------
Change in Class C Shares -- -- (72) (2,269)
------------ ------------ ----------- -----------
...............................................................................................................................
ADVISOR SHARES:
Issued 27,195,678 53,518,520 -- --
Reinvested 255,518 134,868 -- --
Redeemed (20,310,668) (50,202,271) -- --
------------ ------------ ----------- -----------
Change in Advisor Shares 7,140,528 3,451,117 -- --
------------ ------------ ----------- -----------
</Table>
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 35
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
.................................................................................
<Table>
<Caption>
SMALL CAP EQUITY FUND OPPORTUNITY FUND
--------------------------------- ---------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2003 YEAR ENDED APRIL 30, 2003 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2002 (UNAUDITED) OCTOBER 31, 2002
- ------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment loss $ (645,256) $ (1,827,171) $ (96,757) $ (244,098)
Net realized losses from
investment transactions (13,078,484) (49,966,937) (877,423) (3,360,778)
Change in unrealized
appreciation/depreciation from
investments 18,585,304 2,106,990 1,290,340 230,012
------------ ------------ ----------- -----------
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS 4,861,564 (49,687,118) 316,160 (3,374,864)
------------ ------------ ----------- -----------
CHANGE IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS 16,838,779 60,107,797 (524,132) 3,847,236
------------ ------------ ----------- -----------
CHANGE IN NET ASSETS 21,700,343 10,420,679 (207,972) 472,372
------------ ------------ ----------- -----------
...............................................................................................................................
NET ASSETS:
Beginning of period 190,685,659 180,264,980 14,086,425 13,614,053
------------ ------------ ----------- -----------
End of period $212,386,002 $190,685,659 $13,878,453 $14,086,425
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
Accumulated net investment
income $ (645,256) $ -- $ (96,757) $ --
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
</Table>
36 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
.................................................................................
<Table>
<Caption>
SMALL CAP EQUITY FUND OPPORTUNITY FUND
------------------------------ ------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2003 YEAR ENDED APRIL 30, 2003 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2002 (UNAUDITED) OCTOBER 31, 2002
- ------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Proceeds from shares issued $ -- $ -- $ 878,737 $ 4,308,030
Cost of shares redeemed -- -- (1,563,954) (2,279,481)
------------ ------------- ----------- -----------
Class A (Investor) Shares capital
transactions -- -- (685,217) 2,028,549
------------ ------------- ----------- -----------
...............................................................................................................................
CLASS B SHARES:
Proceeds from shares issued -- -- 337,799 2,185,532
Cost of shares redeemed -- -- (136,474) (368,574)
------------ ------------- ----------- -----------
Class B Shares capital transactions -- -- 201,325 1,816,958
------------ ------------- ----------- -----------
...............................................................................................................................
CLASS C SHARES:
Proceeds from shares issued -- -- 6,418 109,966
Cost of shares redeemed -- -- (46,658) (108,237)
------------ ------------- ----------- -----------
Class C Shares capital transactions -- -- (40,240) 1,729
------------ ------------- ----------- -----------
...............................................................................................................................
ADVISOR SHARES:
Proceeds from shares issued 87,810,677 166,252,280 -- --
Cost of shares redeemed (70,971,898) (106,144,483) -- --
------------ ------------- ----------- -----------
Advisor Shares capital transactions 16,838,779 60,107,797 -- --
------------ ------------- ----------- -----------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $ 16,838,779 $ 60,107,797 $ (524,132) $ 3,847,236
------------ ------------- ----------- -----------
------------ ------------- ----------- -----------
...............................................................................................................................
SHARE TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Issued -- -- 114,387 456,632
Redeemed -- -- (202,361) (241,867)
------------ ------------- ----------- -----------
Change in Class A (Investor) Shares -- -- (87,974) 214,765
------------ ------------- ----------- -----------
...............................................................................................................................
CLASS B SHARES:
Issued -- -- 46,285 217,277
Redeemed -- -- (18,851) (42,806)
------------ ------------- ----------- -----------
Change in Class B Shares -- -- 27,434 174,471
------------ ------------- ----------- -----------
...............................................................................................................................
CLASS C SHARES:
Issued -- -- 829 10,963
Redeemed -- -- (6,342) (11,072)
------------ ------------- ----------- -----------
Change in Class C Shares -- -- (5,513) (109)
------------ ------------- ----------- -----------
...............................................................................................................................
ADVISOR SHARES:
Issued 9,532,361 14,288,390 -- --
Redeemed (7,823,619) (9,644,921) -- --
------------ ------------- ----------- -----------
Change in Advisor Shares 1,708,742 4,643,469 -- --
------------ ------------- ----------- -----------
</Table>
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 37
HSBC INVESTOR FUNDS -- LIMITED MATURITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
.................................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
INVESTMENT ACTIVITIES
------------------------------------------
NET REALIZED AND
NET ASSET UNREALIZED GAINS TOTAL
VALUE, NET (LOSSES) FROM FROM
BEGINNING INVESTMENT INVESTMENT INVESTMENT
OF PERIOD INCOME TRANSACTIONS ACTIVITIES
- --------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Period ended October 31, 2001 (b) $10.04 0.33 0.54 0.87
Year ended October 31, 2002 10.58 0.44 (0.10) 0.34
Six months ended April 30, 2003
(Unaudited) 10.43 0.19 0.17 0.36
- --------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 2001 (g) $10.07 0.25 0.52 0.77
Year ended October 31, 2002 10.59 0.36 (0.09) 0.27
Six months ended April 30, 2003
(Unaudited) 10.45 0.15 0.16 0.31
- --------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 2001 (i) $10.07 0.26 0.51 0.77
Year ended October 31, 2002 10.58 0.36 (0.09) 0.27
Six months ended April 30, 2003
(Unaudited) 10.44 0.15 0.17 0.32
- --------------------------------------------------------------------------------------------
CLASS Y SHARES
Period ended October 31, 2001 (j) $10.00 0.37 0.59 0.96
Year ended October 31, 2002 10.59 0.46 (0.09) 0.37
Six months ended April 30, 2003
(Unaudited) 10.45 0.20 0.16 0.36
- --------------------------------------------------------------------------------------------
<Caption>
DIVIDENDS
-------------------------------------
NET
REALIZED
NET GAINS FROM
INVESTMENT INVESTMENT TOTAL
INCOME TRANSACTIONS DIVIDENDS
- ---------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Period ended October 31, 2001 (b) (0.33) -- (0.33)
Year ended October 31, 2002 (0.44) (0.05) (0.49)
Six months ended April 30, 2003
(Unaudited) (0.20) -- (0.20)
- ---------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 2001 (g) (0.25) -- (0.25)
Year ended October 31, 2002 (0.36) (0.05) (0.41)
Six months ended April 30, 2003
(Unaudited) (0.16) -- (0.16)
- ---------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 2001 (i) (0.26) -- (0.26)
Year ended October 31, 2002 (0.36) (0.05) (0.41)
Six months ended April 30, 2003
(Unaudited) (0.16) -- (0.16)
- ---------------------------------------------------------------------------
CLASS Y SHARES
Period ended October 31, 2001 (j) (0.37) -- (0.37)
Year ended October 31, 2002 (0.46) (0.05) (0.51)
Six months ended April 30, 2003
(Unaudited) (0.21) -- (0.21)
- ---------------------------------------------------------------------------
<Caption>
NET ASSET
VALUE, END TOTAL
OF PERIOD RETURN
- --------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Period ended October 31, 2001 (b) $10.58 8.78%(c)(d)
Year ended October 31, 2002 10.43 3.34%(d)
Six months ended April 30, 2003
(Unaudited) 10.59 3.44%(c)(d)
- --------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 2001 (g) $10.59 8.02%(c)(h)
Year ended October 31, 2002 10.45 2.65%(h)
Six months ended April 30, 2003
(Unaudited) 10.60 2.96%(c)(h)
- --------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 2001 (i) $10.58 7.80%(c)(h)
Year ended October 31, 2002 10.44 2.65%(h)
Six months ended April 30, 2003
(Unaudited) 10.60 3.06%(c)(h)
- --------------------------------------------------------------
CLASS Y SHARES
Period ended October 31, 2001 (j) $10.59 9.78%(c)
Year ended October 31, 2002 10.45 3.69%
Six months ended April 30, 2003
(Unaudited) 10.60 3.47%(c)
- --------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
------------------------------------------------------------------------
RATIO OF
NET
RATIO OF INVESTMENT RATIO OF
NET ASSETS AT EXPENSES INCOME TO EXPENSES
END OF TO AVERAGE AVERAGE TO AVERAGE PORTFOLIO
PERIOD(000'S) NET ASSETS NET ASSETS NET ASSETS TURNOVER(a)
- ------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Period ended October 31, 2001 (b) $ 977 1.10%(e) 4.27%(e) 1.49%(e)(f) 102.01%
Year ended October 31, 2002 1,608 0.96% 4.14% 0.96% 44.04%
Six months ended April 30, 2003
(Unaudited) 1,735 0.92%(e) 3.64%(e) 0.92%(e) 32.10%
- ------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 2001 (g) $ 896 1.85%(e) 3.52%(e) 7.59%(e)(f) 102.01%
Year ended October 31, 2002 4,178 1.70% 3.30% 1.70% 44.04%
Six months ended April 30, 2003
(Unaudited) 5,908 1.66%(e) 2.86%(e) 1.66%(e) 32.10%
- ------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 2001 (i) $ 161 1.85%(e) 3.60%(e) 17.61%(e)(f) 102.01%
Year ended October 31, 2002 1,759 1.70% 3.26% 1.70% 44.04%
Six months ended April 30, 2003
(Unaudited) 2,432 1.66%(e) 2.87%(e) 1.66%(e) 32.10%
- ------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Period ended October 31, 2001 (j) $ 67,315 0.85%(e) 4.59%(e) 0.85%(e) 102.01%
Year ended October 31, 2002 94,886 0.71% 4.42% 0.71% 44.04%
Six months ended April 30, 2003
(Unaudited) 119,913 0.67%(e) 3.88%(e) 0.67%(e) 32.10%
- ------------------------------------------------------------------------------------------------------------
</Table>
(a) Portfolio turnover is calculated on the basis of the respective Portfolio in
which the Fund invests all of its investable assets.
(b) Class A (Investor) Shares commenced operations on February 7, 2001.
(c) Not annualized.
(d) Excludes sales charge.
(e) Annualized.
(f) During the period certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(g) Class B Shares commenced operations on February 15, 2001.
(h) Excludes redemption charge.
(i) Class C Shares commenced operations on February 13, 2001.
(j) Class Y Shares commenced operations on January 23, 2001.
See notes to financial statements.
38 HSBC INVESTOR FAMILY OF FUNDS
HSBC ADVISOR FUNDS TRUST -- FIXED INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
.................................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
INVESTMENT ACTIVITIES
------------------------------------------
NET REALIZED AND
NET ASSET UNREALIZED GAINS
PERIOD (LOSSES) FROM TOTAL
VALUE, NET INVESTMENT AND FROM
BEGINNING OF INVESTMENT FUTURES INVESTMENT
PERIOD INCOME TRANSACTIONS ACTIVITIES
- ----------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 1998 $10.92 0.65 0.02 0.67
Year ended October 31, 1999 10.81 0.62 (0.51) 0.11
Year ended October 31, 2000 10.01 0.69 (0.02) 0.67
Year ended October 31, 2001 9.99 0.67 0.80 1.47
Year ended October 31, 2002 10.81 0.55 (0.14) 0.41
Six months ended April 30, 2003
(Unaudited) 10.63 0.24 0.31 0.55
- ----------------------------------------------------------------------------------------------
<Caption>
DIVIDENDS
---------------------------------------
NET REALIZED
GAINS FROM NET ASSET
NET INVESTMENT VALUE,
INVESTMENT AND FUTURES TOTAL END OF TOTAL
INCOME TRANSACTIONS DIVIDENDS PERIOD RETURN
- --------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 1998 (0.65) (0.13) (0.78) $10.81 6.26%
Year ended October 31, 1999 (0.62) (0.29) (0.91) 10.01 1.01%
Year ended October 31, 2000 (0.69) -- (0.69) 9.99 6.98%
Year ended October 31, 2001 (0.65) -- (0.65) 10.81 15.11%
Year ended October 31, 2002 (0.59) -- (0.59) 10.63 3.94%
Six months ended April 30, 2003
(Unaudited) (0.26) -- (0.26) 10.92 5.19%(b)
- --------------------------------------------------------------------------------------------------
<Caption>
RATIOS/SUPPLEMENTARY DATA
--------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT
AT END OF EXPENSES INCOME TO
PERIOD TO AVERAGE AVERAGE NET PORTFOLIO
(000'S) NET ASSETS ASSETS TURNOVER(a)
- ---------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 1998 $97,728 0.78% 5.87% 126.40%
Year ended October 31, 1999 114,405 0.69% 6.31% 433.26%
Year ended October 31, 2000 134,458 0.61% 6.66% 440.49%
Year ended October 31, 2001 150,580 0.63% 6.45% 341.26%
Year ended October 31, 2002 284,841 0.56% 5.06% 77.82%
Six months ended April 30, 2003
(Unaudited) 342,183 0.55%(c) 4.37%(c) 30.68%
- ---------------------------------------------------------------------------------------------
</Table>
(a) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all of its investable assets.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS 39
HSBC INVESTOR FUNDS -- BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
.................................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
INVESTMENT ACTIVITIES DIVIDENDS
------------------------------------------ ----------
NET REALIZED AND
UNREALIZED GAINS
NET ASSET (LOSSES) FROM TOTAL
VALUE, NET INVESTMENT AND FROM NET
BEGINNING INVESTMENT FUTURES INVESTMENT INVESTMENT
OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME
- --------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31, 1998 $10.50 0.59 0.01 0.60 (0.59)
Year ended October 31, 1999 10.51 0.57 (0.49) 0.08 (0.57)
Year ended October 31, 2000 9.78 0.61 (0.01) 0.60 (0.62)
Year ended October 31, 2001 9.76 0.60 0.77 1.37 (0.58)
Year ended October 31, 2002 10.55 0.49 (0.14) 0.35 (0.52)
Six months ended April 30, 2003
(Unaudited) 10.38 0.20 0.31 0.51 (0.22)
- --------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 1998 (f) $10.63 0.41 (0.12) 0.29 (0.41)
Year ended October 31, 1999 10.51 0.49 (0.49) -- (0.49)
Year ended October 31, 2000 9.78 0.54 (0.01) 0.53 (0.54)
Year ended October 31, 2001 9.77 0.52 0.76 1.28 (0.50)
Year ended October 31, 2002 10.55 0.41 (0.13) 0.28 (0.44)
Six months ended April 30, 2003
(Unaudited) 10.39 0.16 0.30 0.46 (0.18)
- --------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 1999 (h) $10.46 0.47 (0.45) 0.02 (0.47)
Year ended October 31, 2000 9.77 0.55 (0.01) 0.54 (0.55)
Year ended October 31, 2001 9.76 0.51 0.77 1.28 (0.50)
Year ended October 31, 2002 10.54 0.41 (0.13) 0.28 (0.44)
Six months ended April 30, 2003
(Unaudited) 10.38 0.16 0.30 0.46 (0.18)
- --------------------------------------------------------------------------------------------------------
<Caption>
DIVIDENDS
--------------------------
NET REALIZED
GAINS FROM
INVESTMENT AND
FUTURES TOTAL
TRANSACTIONS DIVIDENDS
- ----------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31, 1998 -- (0.59)
Year ended October 31, 1999 (0.24) (0.81)
Year ended October 31, 2000 -- (0.62)
Year ended October 31, 2001 -- (0.58)
Year ended October 31, 2002 -- (0.52)
Six months ended April 30, 2003
(Unaudited) -- (0.22)
- ----------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 1998 (f) -- (0.41)
Year ended October 31, 1999 (0.24) (0.73)
Year ended October 31, 2000 -- (0.54)
Year ended October 31, 2001 -- (0.50)
Year ended October 31, 2002 -- (0.44)
Six months ended April 30, 2003
(Unaudited) -- (0.18)
- ----------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 1999 (h) (0.24) (0.71)
Year ended October 31, 2000 -- (0.55)
Year ended October 31, 2001 -- (0.50)
Year ended October 31, 2002 -- (0.44)
Six months ended April 30, 2003
(Unaudited) -- (0.18)
- ----------------------------------------------------------------
<Caption>
NET ASSET
VALUE,
END OF TOTAL
PERIOD RETURN
- ----------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31, 1998 $10.51 5.83 %(c)
Year ended October 31, 1999 9.78 0.68 %(c)
Year ended October 31, 2000 9.76 6.39 %(c)
Year ended October 31, 2001 10.55 14.41 %(c)
Year ended October 31, 2002 10.38 3.44 %(c)
Six months ended April 30, 2003
(Unaudited) 10.67 4.98 %(c)(d)
- ----------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 1998 (f) $10.51 2.84 %(d)(g)
Year ended October 31, 1999 9.78 (0.01)%(f)
Year ended October 31, 2000 9.77 5.67 %(f)
Year ended October 31, 2001 10.55 13.43 %(f)
Year ended October 31, 2002 10.39 2.76 %(f)
Six months ended April 30, 2003
(Unaudited) 10.67 4.49 %(d)(f)
- ----------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 1999 (h) $ 9.77 0.11 %(d)(f)
Year ended October 31, 2000 9.76 5.71 %(f)
Year ended October 31, 2001 10.54 13.44 %(f)
Year ended October 31, 2002 10.38 2.77 %(f)
Six months ended April 30, 2003
(Unaudited) 10.66 4.50 %(d)(f)
- ----------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
----------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT RATIO OF
AT END OF EXPENSES INCOME TO EXPENSES TO
PERIOD TO AVERAGE AVERAGE NET AVERAGE NET PORTFOLIO
(000'S) NET ASSETS ASSETS ASSETS(a) TURNOVER(b)
- -----------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31, 1998 $ 4,826 1.10% 5.51% 1.61% 126.40%
Year ended October 31, 1999 4,331 1.07% 5.84% 2.62% 433.26%
Year ended October 31, 2000 3,828 1.10% 6.13% 3.31% 440.49%
Year ended October 31, 2001 6,683 1.10% 5.92% 2.61% 341.26%
Year ended October 31, 2002 12,053 1.10% 4.52% 1.47% 77.82%
Six months ended April 30, 2003
(Unaudited) 13,707 1.10%(e) 3.83%(e) 1.23%(e) 30.68%
- -----------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 1998 (f) $ 364 1.85%(e) 4.76%(e) 2.36%(e) 126.40%
Year ended October 31, 1999 345 1.79% 5.13% 3.37% 433.26%
Year ended October 31, 2000 279 1.85% 5.38% 4.03% 440.49%
Year ended October 31, 2001 1,494 1.85% 5.04% 3.32% 341.26%
Year ended October 31, 2002 6,124 1.85% 3.66% 2.18% 77.82%
Six months ended April 30, 2003
(Unaudited) 7,194 1.85%(e) 3.07%(e) 1.98%(e) 30.68%
- -----------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 1999 (h) $ 152 1.95%(e) 4.96%(e) 3.50%(e) 433.26%
Year ended October 31, 2000 138 1.85% 5.38% 4.05% 440.49%
Year ended October 31, 2001 526 1.85% 5.11% 3.34% 341.26%
Year ended October 31, 2002 983 1.85% 3.75% 2.21% 77.82%
Six months ended April 30, 2003
(Unaudited) 861 1.85%(e) 3.13%(e) 1.99%(e) 30.68%
- -----------------------------------------------------------------------------------------------------------
</Table>
(a) During the period certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(b) Portfolio turnover is calculated on the basis of the respective Portfolio in
which the Fund invests all of its investable assets.
(c) Excludes sales charge.
(d) Not annualized.
(e) Annualized.
(f) Class B Shares commenced operations on January 6, 1998.
(g) Excludes redemption charge.
(h) Class C Shares commenced operations on November 4, 1998.
See notes to financial statements.
40 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR FUNDS -- NEW YORK TAX-FREE BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
.................................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
INVESTMENT ACTIVITIES
------------------------------------------
NET REALIZED AND
UNREALIZED GAINS
NET ASSET (LOSSES) FROM
VALUE, NET INVESTMENT AND TOTAL FROM
BEGINNING OF INVESTMENT FUTURES INVESTMENT
PERIOD INCOME TRANSACTIONS ACTIVITIES
- ----------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31, 1998 $10.64 0.47 0.33 0.80
Year ended October 31, 1999 10.93 0.46 (0.83) (0.37)
Year ended October 31, 2000 10.08 0.46 0.33 0.79
Year ended October 31, 2001 10.39 0.41 0.54 0.95
Year ended October 31, 2002 10.93 0.38 0.16 0.54
Six months ended April 30, 2003
(Unaudited) 11.09 0.20 0.21 0.41
- ----------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 1998 (f) $10.81 0.37 0.11 0.48
Year ended October 31, 1999 10.92 0.38 (0.83) (0.45)
Year ended October 31, 2000 10.07 0.39 0.33 0.72
Year ended October 31, 2001 10.38 0.33 0.54 0.87
Year ended October 31, 2002 10.92 0.30 0.16 0.46
Six months ended April 30, 2003
(Unaudited) 11.08 0.15 0.21 0.36
- ----------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 1999 (h) $10.90 0.34 (0.77) (0.43)
Year ended October 31, 2000 10.11 0.39 0.33 0.72
Year ended October 31, 2001 10.42 0.33 0.54 0.87
Year ended October 31, 2002 10.96 0.30 0.16 0.46
Six months ended April 30, 2003
(Unaudited) 11.12 0.15 0.21 0.36
- ----------------------------------------------------------------------------------------------
CLASS Y SHARES
Year ended October 31, 1998 $10.64 0.49 0.33 0.82
Year ended October 31, 1999 10.93 0.48 (0.84) (0.36)
Year ended October 31, 2000 10.07 0.49 0.34 0.83
Year ended October 31, 2001 10.39 0.44 0.54 0.98
Year ended October 31, 2002 10.93 0.41 0.16 0.57
Six months ended April 30, 2003
(Unaudited) 11.09 0.21 0.21 0.42
- ----------------------------------------------------------------------------------------------
<Caption>
DIVIDENDS
---------------------------------------
NET REALIZED
GAINS FROM NET ASSET
NET INVESTMENT AND VALUE,
INVESTMENT FUTURES TOTAL END OF TOTAL
INCOME TRANSACTIONS DIVIDENDS PERIOD RETURN
- -------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31, 1998 (0.47) (0.04) (0.51) $10.93 7.65 %(b)
Year ended October 31, 1999 (0.46) (0.02) (0.48) 10.08 (3.62)%(b)
Year ended October 31, 2000 (0.46) (0.02) (0.48) 10.39 8.03 %(b)
Year ended October 31, 2001 (0.41) -- (0.41) 10.93 9.26 %(b)
Year ended October 31, 2002 (0.38) -- (0.38) 11.09 5.08 %(b)
Six months ended April 30, 2003
(Unaudited) (0.20) -- (0.20) 11.30 3.69 %(b)(d)
- -------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 1998 (f) (0.37) -- (0.37) $10.92 4.50 %(d)(g)
Year ended October 31, 1999 (0.38) (0.02) (0.40) 10.07 (4.30)%(g)
Year ended October 31, 2000 (0.39) (0.02) (0.41) 10.38 7.27 %(g)
Year ended October 31, 2001 (0.33) -- (0.33) 10.92 8.44 %(g)
Year ended October 31, 2002 (0.30) -- (0.30) 11.08 4.30 %(g)
Six months ended April 30, 2003
(Unaudited) (0.15) -- (0.15) 11.29 3.31 %(d)(g)
- -------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 1999 (h) (0.34) (0.02) (0.36) $10.11 (4.10)%(d)(g)
Year ended October 31, 2000 (0.39) (0.02) (0.41) 10.42 7.23 %(g)
Year ended October 31, 2001 (0.33) -- (0.33) 10.96 8.40 %(g)
Year ended October 31, 2002 (0.30) -- (0.30) 11.12 4.28 %(g)
Six months ended April 30, 2003
(Unaudited) (0.15) -- (0.15) 11.33 3.29 %(d)(g)
- -------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Year ended October 31, 1998 (0.49) (0.04) (0.53) $10.93 7.87 %
Year ended October 31, 1999 (0.48) (0.02) (0.50) 10.07 (3.45)%
Year ended October 31, 2000 (0.49) (0.02) (0.51) 10.39 8.41 %
Year ended October 31, 2001 (0.44) -- (0.44) 10.93 9.53 %
Year ended October 31, 2002 (0.41) -- (0.41) 11.09 5.34 %
Six months ended April 30, 2003
(Unaudited) (0.21) -- (0.21) 11.30 3.82 %(d)
- -------------------------------------------------------------------------------------------------------
<Caption>
RATIOS/SUPPLEMENTARY DATA
---------------------------------------------------------------------------
RATIO OF
NET
NET ASSETS RATIO OF INVESTMENT RATIO OF
AT END OF EXPENSES INCOME EXPENSES TO
PERIOD TO AVERAGE TO AVERAGE AVERAGE NET PORTFOLIO
(000'S) NET ASSETS NET ASSETS ASSETS TURNOVER(a)
- ----------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31, 1998 $23,153 0.95% 4.28% 1.20%(c) 100.35%
Year ended October 31, 1999 17,568 0.96% 4.22% 1.21%(c) 46.56%
Year ended October 31, 2000 12,401 0.93% 4.60% 1.06%(c) 34.12%
Year ended October 31, 2001 17,722 0.95% 3.91% 1.07%(c) 0.00%
Year ended October 31, 2002 16,341 0.95% 3.52% 0.95% 30.70%
Six months ended April 30, 2003
(Unaudited) 18,745 0.91%(e) 3.57%(e) 0.91%(e) 12.42%
- ----------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 1998 (f) $ 618 1.70%(e) 3.53%(e) 1.95%(c)(e) 100.35%
Year ended October 31, 1999 564 1.71% 3.48% 1.96%(c) 46.56%
Year ended October 31, 2000 828 1.70% 3.81% 1.74%(c) 34.12%
Year ended October 31, 2001 5,619 1.70% 3.05% 1.82%(c) 0.00%
Year ended October 31, 2002 12,699 1.70% 2.74% 1.70% 30.70%
Six months ended April 30, 2003
(Unaudited) 15,974 1.65%(e) 2.82%(e) 1.65%(e) 12.42%
- ----------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 1999 (h) $ 256 1.70%(e) 3.46%(e) 2.02%(c)(e) 46.56%
Year ended October 31, 2000 416 1.71% 3.77% 1.73%(c) 34.12%
Year ended October 31, 2001 1,523 1.70% 3.04% 1.83%(c) 0.00%
Year ended October 31, 2002 2,608 1.70% 2.74% 1.70% 30.70%
Six months ended April 30, 2003
(Unaudited) 3,340 1.65%(e) 2.80%(e) 1.65%(e) 12.42%
- ----------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Year ended October 31, 1998 $ 8,641 0.70% 4.53% 0.95%(c) 100.35%
Year ended October 31, 1999 8,619 0.71% 4.49% 0.96%(c) 46.56%
Year ended October 31, 2000 9,514 0.69% 4.82% 0.78%(c) 34.12%
Year ended October 31, 2001 14,989 0.70% 4.19% 0.83%(c) 0.00%
Year ended October 31, 2002 19,753 0.70% 3.76% 0.70% 30.70%
Six months ended April 30, 2003
(Unaudited) 18,502 0.66%(e) 3.83%(e) 0.66%(e) 12.42%
- ----------------------------------------------------------------------------------------------------------------
</Table>
(a) Portfolio turnover is calculated on the basis of the fund as a whole,
without the distinguishing between the classes of shares issued.
(b) Excludes sales charge.
(c) During the period certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(d) Not annualized.
(e) Annualized.
(f) Class B Shares commenced operations on January 6, 1998.
(g) Excludes redemption charge.
(h) Class C Shares commenced operations on November 4, 1998.
See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS 41
HSBC INVESTOR FUNDS -- BALANCED FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
.................................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- ----------------------
NET REALIZED
AND UNREALIZED
NET ASSET GAINS (LOSSES) TOTAL NET ASSET
VALUE, NET FROM FROM NET VALUE,
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL END OF
OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME DIVIDENDS PERIOD
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Period ended October 31, 2001 (c) $ 9.55 0.11 (1.02) (0.91) (0.09) (0.09) $8.55
Year ended October 31, 2002 8.55 0.15 (0.92) (0.77) (0.09) (0.09) 7.69
Six months ended April 30, 2003
(Unaudited) 7.69 0.06 0.22 0.28 (0.15) (0.15) 7.82
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 2001 (g) $ 9.80 0.08 (1.25) (1.17) (0.08) (0.08) $8.55
Year ended October 31, 2002 8.55 0.13 (0.97) (0.84) (0.07) (0.07) 7.64
Six months ended April 30, 2003
(Unaudited) 7.64 0.03 0.22 0.25 (0.12) (0.12) 7.77
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 2001 (i) $ 9.78 0.07 (1.24) (1.17) (0.06) (0.06) $8.55
Year ended October 31, 2002 8.55 0.12 (0.96) (0.84) (0.06) (0.06) 7.65
Six months ended April 30, 2003
(Unaudited) 7.65 0.04 0.22 0.26 (0.12) (0.12) 7.79
- ------------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Period ended October 31, 2001 (j) $10.00 0.16 (1.45) (1.29) (0.09) (0.09) $8.62
Year ended October 31, 2002 8.62 0.16 (0.93) (0.77) (0.10) (0.10) 7.75
Six months ended April 30, 2003
(Unaudited) 7.75 0.07 0.23 0.30 (0.16) (0.16) 7.89
- ------------------------------------------------------------------------------------------------------------------------------
<Caption>
RATIOS/SUPPLEMENTARY DATA
--------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT RATIO OF
AT END OF EXPENSES TO INCOME TO EXPENSES TO
PERIOD AVERAGE NET AVERAGE NET AVERAGE NET PORTFOLIO
TOTAL RETURN (000'S) ASSETS ASSETS ASSETS(a) TURNOVER(b)
- -------------------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Period ended October 31, 2001 (c) (9.04)%(d)(e) $ 313 1.20%(f) 1.88%(f) 2.05%(f) 39.95%
Year ended October 31, 2002 (9.07)%(e) 419 1.20% 1.71% 1.88% 58.06%
Six months ended April 30, 2003
(Unaudited) 3.66 %(d)(e) 484 1.20%(f) 1.69%(f) 1.92%(f) 21.99%
- -------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 2001 (g) (11.41)%(d)(h) $ 641 1.95%(f) 1.14%(f) 2.78%(f) 39.95%
Year ended October 31, 2002 (9.93)%(h) 1,479 1.95% 0.97% 2.63% 58.06%
Six months ended April 30, 2003
(Unaudited) 3.29 %(d)(h) 1,760 1.95%(f) 0.94%(f) 2.67%(f) 21.99%
- -------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 2001 (i) (11.46)%(d)(h) $ 107 1.95%(f) 1.19%(f) 2.71%(f) 39.95%
Year ended October 31, 2002 (9.85)%(h) 97 1.95% 0.96% 2.63% 58.06%
Six months ended April 30, 2003
(Unaudited) 3.39 %(d)(h) 101 1.95%(f) 0.95%(f) 2.67%(f) 21.99%
- -------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Period ended October 31, 2001 (j) (12.95)%(d) $15,152 0.95%(f) 2.29%(f) 1.58%(f) 39.95%
Year ended October 31, 2002 (9.02)% 12,589 0.95% 1.96% 1.63% 58.06%
Six months ended April 30, 2003
(Unaudited) 3.91 %(d) 13,288 0.95%(f) 1.95%(f) 1.67%(f) 21.99%
- -------------------------------------------------------------------------------------------------------------------------
</Table>
(a) During the period certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(b) Portfolio turnover is calculated on the basis of the fund as a whole,
without the distinguishing between the classes of shares issued.
(c) Class A (Investor) Shares commenced operations on February 20, 2001.
(d) Not annualized.
(e) Excludes sales charge.
(f) Annualized.
(g) Class B Shares commenced operations on February 9, 2001.
(h) Excludes redemption charge.
(i) Class C Shares commenced operations on February 13, 2001.
(j) Class Y Shares commenced operations on January 18, 2001.
See notes to financial statements.
42 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR FUNDS -- EQUITY FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
.................................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
INVESTMENT ACTIVITIES
----------------------------------------
NET REALIZED
AND UNREALIZED
GAINS (LOSSES)
NET ASSET FROM TOTAL
VALUE, NET INVESTMENT FROM
BEGINNING INVESTMENT AND FUTURES INVESTMENT
OF PERIOD INCOME TRANSACTIONS ACTIVITIES
- ------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31, 1998 $15.00 0.05 2.80 2.85
Year ended October 31, 1999 16.95 0.05 3.32 3.37
Year ended October 31, 2000 19.89 0.06 (0.51) (0.45)
Year ended October 31, 2001 17.48 0.03 (4.48) (4.45)
Year ended October 31, 2002 13.01 0.07 (2.76) (2.69)
Six months ended April 30, 2003
(Unaudited) 10.29 0.03 0.47 0.50
- ------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 1998 (e) $14.88 (0.01) 2.07 2.06
Year ended October 31, 1999 16.92 (0.08) 3.30 3.22
Year ended October 31, 2000 19.74 (0.07) (0.52) (0.59)
Year ended October 31, 2001 17.26 (0.08) (4.40) (4.48)
Year ended October 31, 2002 12.78 (0.04) (2.70) (2.74)
Six months ended April 30, 2003
(Unaudited) 10.04 (0.01) 0.46 0.45
- ------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 1999 (g) $17.08 -- 3.19 3.19
Year ended October 31, 2000 19.83 (0.07) (0.51) (0.58)
Year ended October 31, 2001 17.36 (0.10) (4.42) (4.52)
Year ended October 31, 2002 12.84 (0.05) (2.69) (2.74)
Six months ended April 30, 2003
(Unaudited) 10.10 (0.01) 0.45 0.44
- ------------------------------------------------------------------------------------------
CLASS Y SHARES
Year ended October 31, 1998 $15.01 0.08 2.79 2.87
Year ended October 31, 1999 16.95 0.10 3.32 3.42
Year ended October 31, 2000 19.89 0.10 (0.51) (0.41)
Year ended October 31, 2001 17.48 0.06 (4.47) (4.41)
Year ended October 31, 2002 13.01 0.12 (2.78) (2.66)
Six months ended April 30, 2003
(Unaudited) 10.29 0.03 0.47 0.50
- ------------------------------------------------------------------------------------------
DIVIDENDS
-------------------------------------
NET
REALIZED
GAINS FROM NET ASSET
NET INVESTMENT VALUE,
INVESTMENT AND FUTURES TOTAL END OF
INCOME TRANSACTIONS DIVIDENDS PERIOD
- --------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31, 1998 (0.05) (0.85) (0.90) $16.95
Year ended October 31, 1999 (0.04) (0.39) (0.43) 19.89
Year ended October 31, 2000 (0.07) (1.89) (1.96) 17.48
Year ended October 31, 2001 (0.02) -- (0.02) 13.01
Year ended October 31, 2002 (0.03) -- (0.03) 10.29
Six months ended April 30, 2003
(Unaudited) (0.03) -- (0.03) 10.76
- --------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 1998 (e) (0.02) -- (0.02) $16.92
Year ended October 31, 1999 (0.01) (0.39) (0.40) 19.74
Year ended October 31, 2000 -- (1.89) (1.89) 17.26
Year ended October 31, 2001 -- -- -- 12.78
Year ended October 31, 2002 -- -- -- 10.04
Six months ended April 30, 2003
(Unaudited) -- -- -- 10.49
- --------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 1999 (g) (0.05) (0.39) (0.44) $19.83
Year ended October 31, 2000 -- (1.89) (1.89) 17.36
Year ended October 31, 2001 -- -- -- 12.84
Year ended October 31, 2002 -- -- -- 10.10
Six months ended April 30, 2003
(Unaudited) -- -- -- 10.54
- --------------------------------------------------------------------------------------
CLASS Y SHARES
Year ended October 31, 1998 (0.08) (0.85) (0.93) $16.95
Year ended October 31, 1999 (0.09) (0.39) (0.48) 19.89
Year ended October 31, 2000 (0.11) (1.89) (2.00) 17.48
Year ended October 31, 2001 (0.06) -- (0.06) 13.01
Year ended October 31, 2002 (0.06) -- (0.06) 10.29
Six months ended April 30, 2003
(Unaudited) (0.04) -- (0.04) 10.75
- --------------------------------------------------------------------------------------
<Caption>
RATIOS/SUPPLEMENTARY DATA
-----------------------------------------------------------------------
RATIO OF
NET
INVESTMENT
NET ASSETS RATIO OF INCOME RATIO OF
AT END OF EXPENSES TO (LOSS) TO EXPENSES TO
PERIOD AVERAGE AVERAGE AVERAGE NET PORTFOLIO
TOTAL RETURN (000'S) NET ASSETS NET ASSETS ASSETS TURNOVER(a)
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31, 1998 19.98 %(b) $ 23,559 1.03% 0.30% 1.03% 176.34%
Year ended October 31, 1999 20.23 %(b) 27,942 0.94% 0.26% 0.94% 70.85%
Year ended October 31, 2000 (2.38)%(b) 22,558 0.93% 0.34% 0.93% 91.81%
Year ended October 31, 2001 (25.49)%(b) 17,223 1.01% 0.14% 1.01% 51.65%
Year ended October 31, 2002 (20.74)%(b) 16,881 0.96% 0.34% 0.96% 62.60%
Six months ended April 30, 2003
(Unaudited) 4.85 %(b)(c) 17,154 0.95%(d) 0.44%(d) 0.95%(d) 32.49%
- ----------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 1998 (e) 13.84 %(c)(f) $ 956 1.78%(d) (0.45)%(d) 1.78%(d) 176.34%
Year ended October 31, 1999 19.32 %(f) 1,775 1.69% (0.50)% 1.69% 70.85%
Year ended October 31, 2000 (3.13)%(f) 1,604 1.65% (0.40)% 1.65% 91.81%
Year ended October 31, 2001 (25.96)%(f) 1,389 1.76% (0.61)% 1.76% 51.65%
Year ended October 31, 2002 (21.44)%(f) 1,708 1.70% (0.41)% 1.70% 62.60%
Six months ended April 30, 2003
(Unaudited) 4.48 %(c)(f) 1,875 1.70%(d) (0.31)%(d) 1.70%(d) 32.49%
- ----------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 1999 (g) 19.05 %(c)(f) $ 1,626 1.33%(d) (0.16)%(d) 1.33%(d) 70.85%
Year ended October 31, 2000 (3.11)%(f) 1,204 1.65% (0.37)% 1.65% 91.81%
Year ended October 31, 2001 (26.04)%(f) 768 1.75% (0.60)% 1.75% 51.65%
Year ended October 31, 2002 (21.34)%(f) 568 1.71% (0.43)% 1.71% 62.60%
Six months ended April 30, 2003
(Unaudited) 4.36 %(c)(f) 493 1.70%(d) (0.31)%(d) 1.70%(d) 32.49%
- ----------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Year ended October 31, 1998 20.16 % $210,498 0.78% 0.55% 0.78% 176.34%
Year ended October 31, 1999 20.59 % 245,342 0.69% 0.51% 0.69% 70.85%
Year ended October 31, 2000 (2.19)% 204,772 0.68% 0.58% 0.68% 91.81%
Year ended October 31, 2001 (25.27)% 127,306 0.75% 0.40% 0.75% 51.65%
Year ended October 31, 2002 (20.53)% 173,738 0.70% 0.60% 0.70% 62.60%
Six months ended April 30, 2003
(Unaudited) 4.91 %(c) 200,600 0.70%(d) 0.68%(d) 0.70%(d) 32.49%
- ----------------------------------------------------------------------------------------------------------------------------
</Table>
(a) Portfolio turnover is calculated on the basis of the fund as a whole,
without the distinguishing between the classes of shares issued.
(b) Excludes sales charge.
(c) Not annualized.
(d) Annualized.
(e) Class B Shares commenced operations on January 6, 1998.
(f) Excludes redemption charge.
(g) Class C Shares commenced operations on November 4, 1998.
See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS 43
HSBC INVESTOR FUNDS -- GROWTH AND INCOME FUND
- ------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
...............................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
INVESTMENT ACTIVITIES
------------------------------------------
NET REALIZED AND
NET ASSET NET UNREALIZED GAINS
VALUE, INVESTMENT (LOSSES) FROM TOTAL FROM
BEGINNING OF INCOME INVESTMENT INVESTMENT
PERIOD (LOSS) TRANSACTIONS ACTIVITIES
- ------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Period ended October 31, 2001 (b) $10.06 0.01 (1.15) (1.14)
Year ended October 31, 2002 8.91 0.04 (1.73) (1.69)
Six months ended April 30, 2003
(Unaudited) 7.21 0.03 0.26 0.29
- ------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 2001 (f) $ 9.54 (0.01) (0.64) (0.65)
Year ended October 31, 2002 8.88 (0.00)* (1.74) (1.74)
Six months ended April 30, 2003
(Unaudited) 7.14 (0.01) 0.27 0.26
- ------------------------------------------------------------------------------------------------
CLASS Y SHARES
Period ended October 31, 2001 (h) $10.00 0.02 (1.09) (1.07)
Year ended October 31, 2002 8.92 0.06 (1.73) (1.67)
Six months ended April 30, 2003
(Unaudited) 7.22 0.04 0.27 0.31
- ------------------------------------------------------------------------------------------------
DIVIDENDS
----------------------
NET ASSET
NET VALUE,
INVESTMENT TOTAL END OF
INCOME DIVIDENDS PERIOD
- ------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Period ended October 31, 2001 (b) (0.01) (0.01) $8.91
Year ended October 31, 2002 (0.01) (0.01) 7.21
Six months ended April 30, 2003
(Unaudited) (0.03) (0.03) 7.47
- ------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 2001 (f) (0.01) (0.01) $8.88
Year ended October 31, 2002 -- -- 7.14
Six months ended April 30, 2003
(Unaudited) (0.00)* (0.00)* 7.40
- ------------------------------------------------------------------------
CLASS Y SHARES
Period ended October 31, 2001 (h) (0.01) (0.01) $8.92
Year ended October 31, 2002 (0.03) (0.03) 7.22
Six months ended April 30, 2003
(Unaudited) (0.05) (0.05) 7.48
- ------------------------------------------------------------------------
<Caption>
RATIOS/SUPPLEMENTARY DATA
---------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT
AT END OF EXPENSES TO INCOME (LOSS)
PERIOD AVERAGE NET TO AVERAGE PORTFOLIO
TOTAL RETURN (000'S) ASSETS NET ASSETS TURNOVER(a)
- -----------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Period ended October 31, 2001 (b) (12.65)%(c)(d) $ 1,927 1.11%(e) 0.15 %(e) 43.13%
Year ended October 31, 2002 (18.97)%(d) 1,306 1.01% 0.39 % 59.85%
Six months ended April 30, 2003
(Unaudited) 4.07 %(c)(d) 1,083 1.02%(e) 0.76 %(e) 31.60%
- -----------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 2001 (f) (10.52)%(c)(g) $ 330 1.84%(e) (0.64)%(e) 43.13%
Year ended October 31, 2002 (19.59)%(g) 1,154 1.76% (0.30)% 59.85%
Six months ended April 30, 2003
(Unaudited) 3.71 %(c)(g) 1,578 1.77%(e) (0.03)%(e) 31.60%
- -----------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Period ended October 31, 2001 (h) (9.71)%(c) $219,221 0.82%(e) 0.38 %(e) 43.13%
Year ended October 31, 2002 (18.76)% 168,812 0.76% 0.66 % 59.85%
Six months ended April 30, 2003
(Unaudited) 4.30 %(c) 179,851 0.78%(e) 1.00 %(e) 31.60%
- -----------------------------------------------------------------------------------------------------------------
</Table>
* Less than $0.005 per share.
(a) Portfolio turnover is calculated on the basis of the fund as a whole,
without the distinguishing between the classes of shares issued.
(b) Class A (Investor) Shares commenced operations on April 12, 2001.
(c) Not annualized.
(d) Excludes sales charge.
(e) Annualized.
(f) Class B Shares commenced operations on April 5, 2001.
(g) Excludes redemption charge.
(h) Class Y Shares commenced operations on April 2, 2001.
See notes to financial statements.
44 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR FUNDS -- MID-CAP FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
.................................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
INVESTMENT ACTIVITIES DIVIDENDS
------------------------------------------ -------------------------
NET REALIZED
AND
UNREALIZED
GAINS (LOSSES) NET REALIZED
NET ASSET FROM TOTAL GAINS FROM
VALUE, NET INVESTMENT FROM INVESTMENT
BEGINNING INVESTMENT AND OPTION INVESTMENT AND OPTION TOTAL
OF PERIOD LOSS TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS
- -------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Period ended October 31,
2000 (b) $10.27 (0.01) (0.19) (0.20) -- --
Year ended October 31,
2001 10.07 (0.03) (2.00) (2.03) (0.14) (0.14)
Year ended October 31,
2002 7.90 (0.03) (1.57) (1.60) -- --
Six months ended April
30, 2003 (Unaudited) 6.30 (0.01) 0.18 0.17 -- --
- -------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31,
2000 (f) $10.72 (0.02) (0.64) (0.66) -- --
Year ended October 31,
2001 10.06 (0.08) (2.02) (2.10) (0.14) (0.14)
Year ended October 31,
2002 7.82 (0.08) (1.55) (1.63) -- --
Six months ended April
30, 2003 (Unaudited) 6.19 (0.03) 0.18 0.15 -- --
- -------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31,
2000 (h) $10.04 (0.01) 0.03 (j) 0.02 -- --
Year ended October 31,
2001 10.06 (0.09) (2.01) (2.10) (0.14) (0.14)
Year ended October 31,
2002 7.82 (0.08) (1.54) (1.62) -- --
Six months ended April
30, 2003 (Unaudited) 6.20 (0.03) 0.17 0.14 -- --
- -------------------------------------------------------------------------------------------------------------
TRUST SHARES
Period ended October 31,
2000 (i) $10.00 (0.01) 0.09 (j) 0.08 -- --
Year ended October 31,
2001 10.08 (0.01) (2.02) (2.03) (0.14) (0.14)
Year ended October 31,
2002 7.91 (0.02) (1.56) (1.58) -- --
Six months ended April
30, 2003 (Unaudited) 6.33 -- 0.18 0.18 -- --
<Caption>
RATIOS/SUPPLEMENTARY DATA
------------------------------------------------------------
RATIO OF NET
NET ASSET NET ASSETS RATIO OF INVESTMENT
VALUE, AT END OF EXPENSES LOSS TO
END OF TOTAL PERIOD TO AVERAGE AVERAGE NET PORTFOLIO
PERIOD RETURN (000'S) NET ASSETS ASSETS TURNOVER(a)
- ------------------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Period ended October 31,
2000 (b) $10.07 (1.95)%(c)(d) $ 445 1.28%(e) (0.42)%(e) 57.69%
Year ended October 31,
2001 7.90 (20.37)%(d) 927 1.13% (0.40)% 112.67%
Year ended October 31,
2002 6.30 (20.25)%(d) 1,010 1.08% (0.46)% 140.23%
Six months ended April
30, 2003 (Unaudited) 6.47 2.70 %(c)(d) 1,076 1.12%(e) (0.22)%(e) 53.50%
- ------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31,
2000 (f) $10.06 (6.16)%(c)(g) $ 1,557 2.02%(e) (1.17)%(e) 57.69%
Year ended October 31,
2001 7.82 (21.09)%(g) 3,827 1.88% (1.16)% 112.67%
Year ended October 31,
2002 6.19 (20.84)%(g) 4,391 1.83% (1.21)% 140.23%
Six months ended April
30, 2003 (Unaudited) 6.34 2.42 %(c)(g) 4,647 1.87%(e) (0.97)%(e) 53.50%
- ------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31,
2000 (h) $10.06 0.20 %(c)(g) $ 18 2.11%(e) (1.29)%(e) 57.69%
Year ended October 31,
2001 7.82 (21.09)%(g) 21 1.87% (1.13)% 112.67%
Year ended October 31,
2002 6.20 (20.72)%(g) 20 1.83% (1.20)% 140.23%
Six months ended April
30, 2003 (Unaudited) 6.34 2.26 %(c)(g) 21 1.87%(e) (0.98)%(e) 53.50%
- ------------------------------------------------------------------------------------------------------------------------
TRUST SHARES
Period ended October 31,
2000 (i) $10.08 0.80 % $108,487 1.01%(e) (0.22)%(e) 57.69%
Year ended October 31,
2001 7.91 (20.34)% 129,390 0.87% (0.13)% 112.67%
Year ended
October 31, 2002 6.33 (19.97)% 98,059 0.82% (0.18)% 140.23%
Six months ended April
30, 2003 (Unaudited) 6.51 2.84 %(c) 124,290 0.87%(e) 0.03%(e) 53.50%
- ------------------------------------------------------------------------------------------------------------------------
</Table>
(a) Portfolio turnover is calculated on the basis of the fund as a whole,
without the distinguishing between the classes of shares issued.
(b) Class A (Investor) Shares commenced operations on July 10, 2000.
(c) Not annualized.
(d) Excludes sales charge.
(e) Annualized.
(f) Class B Shares commenced operations on July 17, 2000.
(g) Excludes redemption charge.
(h) Class C Shares commenced operations on August 9, 2000.
(i) Trust Shares commenced operations on July 1, 2000.
(j) The amount shown for a share outstanding throughout the period does not
accord with the change in aggregate gains and losses in the portfolio of
securities during the period because of the timing of sales and purchases of
fund shares in relation to fluctuating market values during the period.
See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS 45
HSBC ADVISOR FUNDS TRUST -- INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
.................................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
INVESTMENT ACTIVITIES
---------------------------------------------
NET REALIZED AND
UNREALIZED GAINS
(LOSSES) FROM
NET ASSET INVESTMENT TOTAL
VALUE, NET AND FOREIGN FROM
BEGINNING INVESTMENT CURRENCY INVESTMENT
OF PERIOD INCOME TRANSACTIONS ACTIVITIES
- ------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 1998 $13.76 0.11 0.32 0.43
Year ended October 31, 1999 13.24 0.09 5.87 5.96
Year ended October 31, 2000 18.58 0.11 0.75 (b) 0.86
Year ended October 31, 2001 18.13 0.09 (4.38) (4.29)
Year ended October 31, 2002 12.56 0.07 (1.72) (1.65)
Six months ended April 30, 2003
(Unaudited) 10.73 0.04 (0.06)(b) (0.02)
- ------------------------------------------------------------------------------------------------
<Caption>
DIVIDENDS
-----------------------------------------------------------------------
NET REALIZED
GAINS FROM
INVESTMENT NET ASSET
NET AND FOREIGN VALUE,
INVESTMENT CURRENCY TOTAL END OF TOTAL
INCOME TRANSACTIONS DIVIDENDS PERIOD RETURN
- -------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 1998 (0.27) (0.68) (0.95) $13.24 3.49 %
Year ended October 31, 1999 (0.15) (0.47) (0.62) 18.58 46.92 %
Year ended October 31, 2000 (0.11) (1.20) (1.31) 18.13 4.05 %
Year ended October 31, 2001 -- (1.28) (1.28) 12.56 (25.42)%
Year ended October 31, 2002 (0.19) -- (0.19) 10.73 (13.32)%
Six months ended April 30, 2003
(Unaudited) (0.19) -- (0.19) 10.52 (0.22)%(c)
- -------------------------------------------------------------------------------------------------
<Caption>
RATIOS/SUPPLEMENTARY DATA
-------------------------------------------------------
RATIO OF
NET
NET ASSETS RATIO OF INVESTMENT
AT END OF EXPENSES INCOME TO
PERIOD TO AVERAGE AVERAGE NET PORTFOLIO
(000'S) NET ASSETS ASSETS TURNOVER(a)
- --------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 1998 $120,250 1.09% 0.75% 40.47%
Year ended October 31, 1999 172,004 1.05% 0.54% 34.26%
Year ended October 31, 2000 219,837 0.90% 0.51% 27.81%
Year ended October 31, 2001 184,494 0.99% 0.51% 26.90%
Year ended October 31, 2002 194,704 0.99% 0.70% 31.63%
Six months ended April 30, 2003
(Unaudited) 266,109 0.89%(d) 1.08%(d) 8.88%
- --------------------------------------------------------------------------------------------
</Table>
(a) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all of its investable assets.
(b) The amount shown for a share outstanding throughout the period does not
accord with the change in aggregate gains and losses in the portfolio of
securities during the period because of the timing of sales and purchases of
fund shares in relation to fluctuating market values during the period.
(c) Not annualized.
(d) Annualized.
See notes to financial statements.
46 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR FUNDS -- OVERSEAS EQUITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
.................................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
INDICATED.
<Table>
<Caption>
INVESTMENT ACTIVITIES
-----------------------------------------
NET REALIZED
AND UNREALIZED
GAINS (LOSSES)
NET ASSET NET FROM INVESTMENT
VALUE, INVESTMENT AND FOREIGN TOTAL FROM
BEGINNING INCOME CURRENCY INVESTMENT
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES
- ------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31, 1998 $11.57 (0.01) 0.23 0.22
Year ended October 31, 1999 11.64 (0.04) 5.32 5.28
Year ended October 31, 2000 16.90 (0.11) 0.64 0.53
Year ended October 31, 2001 17.21 (0.04) (4.05) (4.09)
Year ended October 31, 2002 11.66 (0.04) (1.34) (1.38)
Six months ended April 30, 2003
(Unaudited) 9.87 0.01 (0.16) (0.15)
- ------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 1998 (f) $11.45 (0.07) 0.19 0.12
Year ended October 31, 1999 11.57 (0.12) 5.24 5.12
Year ended October 31, 2000 16.69 (0.10) 0.48 0.38
Year ended October 31, 2001 16.85 (0.14) (3.95) (4.09)
Year ended October 31, 2002 11.30 (0.08) (1.34) (1.42)
Six months ended April 30, 2003
(Unaudited) 9.56 (0.03) (0.14) (0.17)
- ------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 1999 (h) $11.88 (0.08) 5.04 4.96
Year ended October 31, 2000 16.84 (0.14) 0.52 0.38
Year ended October 31, 2001 17.00 (0.18) (3.95) (4.13)
Year ended October 31, 2002 11.41 (0.08) (1.36) (1.44)
Six months ended April 30, 2003
(Unaudited) 9.68 (0.02) (0.14) (0.16)
- ------------------------------------------------------------------------------------------
<Caption>
DIVIDENDS
---------------------------
NET REALIZED
GAINS FROM
INVESTMENT
NET AND FOREIGN
INVESTMENT CURRENCY
INCOME TRANSACTIONS
---------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31, 1998 (0.08) (0.07)
Year ended October 31, 1999 (0.02) --
Year ended October 31, 2000 -- (0.22)
Year ended October 31, 2001 -- (1.46)
Year ended October 31, 2002 (0.12) (0.29)
Six months ended April 30, 2003
(Unaudited) (0.10) --
- -------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 1998 (f) -- --
Year ended October 31, 1999 -- --
Year ended October 31, 2000 -- (0.22)
Year ended October 31, 2001 -- (1.46)
Year ended October 31, 2002 (0.03) (0.29)
Six months ended April 30, 2003
(Unaudited) (0.05) --
- -------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 1999 (h) -- --
Year ended October 31, 2000 -- (0.22)
Year ended October 31, 2001 -- (1.46)
Year ended October 31, 2002 -- (0.29)
Six months ended April 30, 2003
(Unaudited) (0.01) --
- -------------------------------------------------------------
<Caption>
DIVIDENDS RATIOS/SUPPLEMENTARY DATA
--------- ----------------------------------------------
RATIO OF NET
RATIO OF INVESTMENT
NET ASSET NET ASSETS EXPENSES TO LOSS TO
TOTAL VALUE, END TOTAL AT END OF AVERAGE NET AVERAGE NET
DIVIDENDS OF PERIOD RETURN PERIOD (000'S) ASSETS ASSETS
---------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31, 1998 (0.15) $11.64 1.96 %(c) $6,070 1.77% (0.08)%
Year ended October 31, 1999 (0.02) 16.90 45.41 %(c) 8,138 1.86% (0.30)%
Year ended October 31, 2000 (0.22) 17.21 3.05 %(c) 7,252 1.85% (0.49)%
Year ended October 31, 2001 (1.46) 11.66 (25.93)%(c) 6,940 1.85% (0.35)%
Year ended October 31, 2002 (0.41) 9.87 (12.42)%(c) 7,203 1.85% (0.18)%
Six months ended April 30, 2003
(Unaudited) (0.10) 9.62 (1.51)%(c)(d) 8,545 1.85%(e) 0.20%(e)
- ----------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 1998 (f) -- $11.57 1.05 %(d)(g) $ 42 2.52%(e) (0.83)%(e)
Year ended October 31, 1999 -- 16.69 44.25 %(g) 90 2.59% (1.04)%
Year ended October 31, 2000 (0.22) 16.85 2.18 %(g) 358 2.60% (1.17)%
Year ended October 31, 2001 (1.46) 11.30 (26.52)%(g) 294 2.60% (1.09)%
Year ended October 31, 2002 (0.32) 9.56 (13.07)%(g) 588 2.60% (0.87)%
Six months ended April 30, 2003
(Unaudited) (0.05) 9.34 (1.77)%(d)(g) 699 2.60%(e) (0.48)%(e)
- ----------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 1999 (h) -- $16.84 41.84 %(d)(g) $ 98 2.57%(e) (1.01)%(e)
Year ended October 31, 2000 (0.22) 17.00 2.10 %(g) 248 2.60% (1.14)%
Year ended October 31, 2001 (1.46) 11.41 (26.53)%(g) 139 2.60% (1.10)%
Year ended October 31, 2002 (0.29) 9.68 (13.08)%(g) 96 2.60% (1.00)%
Six months ended April 30, 2003
(Unaudited) (0.01) 9.51 (1.70)%(d)(g) 93 2.60%(e) (0.57)%(e)
- ----------------------------------------------------------------------------------------------------------------------------
<Caption>
RATIOS/SUPPLEMENTARY DATA
---------------------------------------------
RATIO OF
EXPENSES TO
AVERAGE NET PORTFOLIO
ASSETS(a) TURNOVER(b)
----------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31, 1998 1.86% 40.47%
Year ended October 31, 1999 2.44% 34.26%
Year ended October 31, 2000 2.43% 27.81%
Year ended October 31, 2001 2.44% 26.90%
Year ended October 31, 2002 2.28% 31.63%
Six months ended April 30, 2003
(Unaudited) 2.55%(e) 8.88%
- ---------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 1998 (f) 2.61%(e) 40.47%
Year ended October 31, 1999 3.24% 34.26%
Year ended October 31, 2000 2.96% 27.81%
Year ended October 31, 2001 3.18% 26.90%
Year ended October 31, 2002 3.04% 31.63%
Six months ended April 30, 2003
(Unaudited) 3.31%(e) 8.88%
- ---------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 1999 (h) 3.15%(e) 34.26%
Year ended October 31, 2000 2.96% 27.81%
Year ended October 31, 2001 3.16% 26.90%
Year ended October 31, 2002 3.04% 31.63%
Six months ended April 30, 2003
(Unaudited) 3.31%(e) 8.88%
- ---------------------------------------------------------------------
</Table>
(a) During the period certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(b) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all of its investable assets.
(c) Excludes sales charge.
(d) Not annualized.
(e) Annualized.
(f) Class B Shares commenced operations on January 6, 1998.
(g) Excludes redemption charge.
(h) Class C Shares commenced operations on November 4, 1998.
See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS 47
HSBC ADVISOR FUNDS TRUST -- SMALL CAP EQUITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
.................................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
INDICATED.
<Table>
<Caption>
INVESTMENT ACTIVITIES
------------------------------
NET REALIZED AND
NET ASSET UNREALIZED GAINS
VALUE, NET (LOSSES) FROM
BEGINNING OF INVESTMENT INVESTMENT
PERIOD INCOME TRANSACTIONS
- ----------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 1998 $13.44 (0.09) (0.49)
Year ended October 31, 1999 11.48 (0.09) 2.65
Year ended October 31, 2000 12.56 (0.10) 6.73
Year ended October 31, 2001 17.81 (0.10) (3.65)
Year ended October 31, 2002 11.32 (0.09) (1.96)
Six months ended April 30, 2003
(Unaudited) 9.27 (0.03) 0.29
- ----------------------------------------------------------------------------------
<Caption>
INVESTMENT ACTIVITIES DIVIDENDS
---------------------- -----------------------
TOTAL NET REALIZED NET ASSET
FROM GAINS FROM VALUE,
INVESTMENT INVESTMENT TOTAL END OF TOTAL
ACTIVITIES TRANSACTIONS DIVIDENDS PERIOD RETURN
----------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 1998 (0.58) (1.38) (1.38) $11.48 (4.27)%
Year ended October 31, 1999 2.56 (1.48) (1.48) 12.56 24.63 %
Year ended October 31, 2000 6.63 (1.38) (1.38) 17.81 55.59 %
Year ended October 31, 2001 (3.75) (2.74) (2.74) 11.32 (22.98)%
Year ended October 31, 2002 (2.05) -- -- 9.27 (18.11)%
Six months ended April 30, 2003
(Unaudited) 0.26 -- -- 9.53 2.80 %(c)
- -----------------------------------------------------------------------------------------------------
<Caption>
RATIOS/SUPPLEMENTARY DATA
-------------------------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT RATIO OF
AT END OF EXPENSES LOSS TO EXPENSES
PERIOD TO AVERAGE AVERAGE NET TO AVERAGE PORTFOLIO
(000'S) NET ASSETS ASSETS NET ASSETS TURNOVER(a)
-------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 1998 $112,935 1.14% (0.68)% 1.16%(b) 154.69%
Year ended October 31, 1999 148,538 1.18% (0.81)% 1.18% 77.74%
Year ended October 31, 2000 253,724 1.05% (0.68)% 1.05% 79.51%
Year ended October 31, 2001 180,265 1.07% (0.74)% 1.07% 52.47%
Year ended October 31, 2002 190,686 1.07% (0.87)% 1.07% 103.90%
Six months ended April 30, 2003
(Unaudited) 212,386 1.06%(d) (0.71)%(d) 1.06%(d) 124.49%
- ---------------------------------------------------------------------------------------------------------------
</Table>
(a) Portfolio turnover is calculated on the basis of the respective Portfolio
in which the Fund invests all of its investable assets.
(b) During the period certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(c) Not annualized.
(d) Annualized.
See notes to financial statements.
48 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR FUNDS -- OPPORTUNITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
.................................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
INVESTMENT ACTIVITIES
------------------------------------------
NET REALIZED AND
NET ASSET UNREALIZED GAINS TOTAL
VALUE, NET (LOSSES) FROM FROM
BEGINNING INVESTMENT INVESTMENT INVESTMENT
OF PERIOD LOSS TRANSACTIONS ACTIVITIES
- -------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31, 1998 $12.37 (0.13) (0.46) (0.59)
Year ended October 31, 1999 11.33 (0.19) 2.78 2.59
Year ended October 31, 2000 13.19 (0.26) 7.13 6.87
Year ended October 31, 2001 18.75 (0.14) (3.58) (3.72)
Year ended October 31, 2002 9.60 (0.13) (1.64) (1.77)
Six months ended April 30, 2003
(Unaudited) 7.83 (0.05) 0.24 0.19
- -------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 1998 (f) $11.65 (0.09) (0.25) (0.34)
Year ended October 31, 1999 11.31 (0.23) 2.71 2.48
Year ended October 31, 2000 13.06 (0.28) 6.93 6.65
Year ended October 31, 2001 18.40 (0.23)* (3.47) (3.70)
Year ended October 31, 2002 9.27 (0.20)* (1.56) (1.76)
Six months ended April 30, 2003
(Unaudited) 7.51 (0.07) 0.22 0.15
- -------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 1999 (h) $11.55 (0.10) 2.41 2.31
Year ended October 31, 2000 13.13 (0.32) 7.01 6.69
Year ended October 31, 2001 18.51 (0.24)* (3.49) (3.73)
Year ended October 31, 2002 9.35 (0.21)* (1.57) (1.78)
Six months ended April 30, 2003
(Unaudited) 7.57 (0.08) 0.23 0.15
<Caption>
DIVIDENDS
------------------------
NET REALIZED
GAINS FROM
INVESTMENT TOTAL
TRANSACTIONS DIVIDENDS
------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31, 1998 (0.45) (0.45)
Year ended October 31, 1999 (0.73) (0.73)
Year ended October 31, 2000 (1.31) (1.31)
Year ended October 31, 2001 (5.43) (5.43)
Year ended October 31, 2002 -- --
Six months ended April 30, 2003
(Unaudited) -- --
- -------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 1998 (f) -- --
Year ended October 31, 1999 (0.73) (0.73)
Year ended October 31, 2000 (1.31) (1.31)
Year ended October 31, 2001 (5.43) (5.43)
Year ended October 31, 2002 -- --
Six months ended April 30, 2003
(Unaudited) -- --
- -------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 1999 (h) (0.73) (0.73)
Year ended October 31, 2000 (1.31) (1.31)
Year ended October 31, 2002 (5.43) (5.43)
Year ended October 31, 2002 -- --
Six months ended April 30, 2003
(Unaudited) -- --
<Caption>
RATIOS/SUPPLEMENTARY DATA
---------------------------------------------------------------------
RATIO OF NET
NET ASSET NET ASSETS RATIO OF INVESTMENT RATIO OF
VALUE, AT END OF EXPENSES LOSS TO EXPENSES TO
END OF TOTAL PERIOD TO AVERAGE AVERAGE NET AVERAGE NET PORTFOLIO
PERIOD RETURN (000'S) NET ASSETS ASSETS ASSETS(a) TURNOVER(b)
----------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31, 1998 $11.33 (4.68)%(c) $ 13,137 1.63% (1.17)% 1.64% 154.69%
Year ended October 31, 1999 13.19 23.80 %(c) 13,015 1.75% (1.38)% 2.14% 77.74%
Year ended October 31, 2000 18.75 54.54 %(c) 15,415 1.65% (1.29)% 1.84% 79.51%
Year ended October 31, 2001 9.60 (23.65)%(c) 11,892 1.65% (1.32)% 1.97% 52.47%
Year ended October 31, 2002 7.83 (18.44)%(c) 11,384 1.65% (1.45)% 2.08% 103.90%
Six months ended April 30, 2003
(Unaudited) 8.02 2.43 %(c)(d) 10,953 1.65%(e) (1.31)%(e) 2.23%(e) 124.49%
- -----------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31, 1998 (f) $11.31 (2.92)%(d)(g) $ 349 2.38%(e) (1.92)%(e) 2.39%(e) 154.69%
Year ended October 31, 1999 13.06 22.93 %(g) 536 2.48% (2.12)% 2.92% 77.74%
Year ended October 31, 2000 18.40 53.30 %(g) 1,273 2.40% (2.02)% 2.49% 79.51%
Year ended October 31, 2001 9.27 (24.16)%(g) 1,315 2.40% (2.08)% 2.73% 52.47%
Year ended October 31, 2002 7.51 (18.99)%(g) 2,374 2.40% (2.18)% 2.86% 103.90%
Six months ended April 30, 2003
(Unaudited) 7.66 2.00 %(d)(g) 2,633 2.40%(e) (2.06)%(e) 2.97%(e) 124.49%
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31, 1999 (h) $13.13 21.00 %(d)(g) $ 289 2.38%(e) (2.02)%(e) 2.77%(e) 77.74%
Year ended October 31, 2000 18.51 53.32 %(g) 707 2.40% (2.02)% 2.46% 79.51%
Year ended October 31, 2001 9.35 (24.17)%(g) 407 2.40% (2.06)% 2.71% 52.47%
Year ended October 31, 2002 7.57 (19.04)%(g) 329 2.40% (2.20)% 2.83% 103.90%
Six months ended April 30, 2003
(Unaudited) 7.72 1.98 %(d)(g) 293 2.40%(e) (2.06)%(e) 2.98%(e) 124.49%
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Calculated using average shares.
(a) During the period certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(b) Portfolio turnover is calculated on the basis of the respective Portfolio in
which the Fund invests all of its investable assets.
(c) Excludes sales charge.
(d) Not annualized.
(e) Annualized.
(f) Class B Shares commenced operations on January 6, 1998.
(g) Excludes redemption charge.
(h) Class C Shares commenced operations on November 4, 1998.
See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS 49
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2003 (UNAUDITED)
.................................................................................
1. ORGANIZATION:
The HSBC Investor Funds (the 'Trust'), a Massachusetts business trust
organized on April 22, 1987, and the HSBC Advisor Funds Trust (the 'Advisor
Trust'), a Massachusetts business trust organized on April 5, 1996, are
registered under the Investment Company Act of 1940, as amended (the 'Act'),
as open-end management investment companies. The Trust and Advisor Trust
(collectively the 'Trusts') contain the following funds (individually a
'Fund,' collectively the 'Funds'):
<Table>
<Caption>
FUND SHORT NAME TRUST
- ---- ---------- -----
HSBC Investor Limited Maturity Fund Limited Maturity Fund Trust
HSBC Investor Fixed Income Fund Fixed Income Fund Advisor Trust
HSBC Investor Bond Fund Bond Fund Trust
HSBC Investor New York Tax-Free Bond Fund New York Tax-Free Bond Fund Trust
HSBC Investor Balanced Fund Balanced Fund Trust
HSBC Investor Equity Fund Equity Fund Trust
HSBC Investor Growth and Income Fund Growth and Income Fund Trust
HSBC Investor Mid-Cap Fund Mid-Cap Fund Trust
HSBC Investor International Equity Fund International Equity Fund Advisor Trust
HSBC Investor Overseas Equity Fund Overseas Equity Fund Trust
HSBC Investor Small Cap Equity Fund Small Cap Equity Fund Advisor Trust
HSBC Investor Opportunity Fund Opportunity Fund Trust
</Table>
The Funds are separate series of the Trusts and are part of the HSBC
Investor Family of Funds. Financial statements for all other series of HSBC
Investor Family of Funds are published separately.
The Limited Maturity Fund, Fixed Income Fund, Bond Fund, International
Equity Fund, Overseas Equity Fund, Small Cap Equity Fund, and the
Opportunity 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), per the following schedule:
<Table>
<Caption>
PROPORTIONATE
INTEREST ON
FUND RESPECTIVE PORTFOLIO APRIL 30, 2003
- ---- -------------------- --------------
Limited Maturity Fund HSBC Investor Limited Maturity Portfolio 74.4%
Fixed Income Fund HSBC Investor Fixed Income Portfolio 77.7%
Bond Fund HSBC Investor Fixed Income Portfolio 4.9%
International Equity Fund HSBC Investor International Equity Portfolio 80.6%
Overseas Equity Fund HSBC Investor International Equity Portfolio 2.4%
Small Cap Equity Fund HSBC Investor Small Cap Equity Portfolio 74.3%
Opportunity Fund HSBC Investor Small Cap Equity Portfolio 4.8%
</Table>
The HSBC Investor Limited Maturity Portfolio, HSBC Investor Fixed Income
Portfolio, HSBC Investor International Equity Portfolio, and the HSBC
Investor Small Cap Equity Portfolio (individually a 'Portfolio,'
collectively the 'Portfolios'), are diversified series of the HSBC Investor
Portfolio Trust (the 'Portfolio Trust'), and like each Feeder Fund, are
open-end management investment companies. The financial statements of the
Portfolios, including the Schedules of Portfolio Investments, are included
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 Limited
Maturity Fund, New York Tax-Free Bond Fund, Balanced Fund, Equity Fund, and
the Growth and Income Fund each offers four classes of shares, Class A
(Investor) Shares, Class B Shares, Class C Shares and Class Y Shares. The
Mid-Cap Fund offers four classes of shares, Class A Shares, Class B Shares,
Class C Shares, and Trust Shares. The Fixed Income Fund, International
Equity Fund, and the Small Cap Equity Fund each offers one class of shares.
The Bond Fund, Overseas Equity Fund, and the Opportunity Fund each offers
three classes of shares,
50 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2003 (UNAUDITED) (CONTINUED)
.................................................................................
Class A (Investor) Shares, Class B Shares and Class C Shares. Each class of
shares in the Funds has identical rights and privileges except with respect
to fees paid under shareholder servicing or distribution plans, voting
rights on matters affecting a single class of shares, and the exchange
privilege of each class of shares.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the significant accounting policies
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with accounting principles generally accepted in
the United States of America ('GAAP'). The preparation of financial
statements requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of income and expenses for the period. Actual results could
differ from those estimates.
SECURITIES VALUATION:
A. NEW YORK TAX-FREE BOND FUND, BALANCED FUND, EQUITY 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
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 are valued by or at the direction of
the Funds' Board of Trustees.
B. FEEDER FUNDS
The Feeder Funds record their investments in their respective Portfolios
at value. Securities of the Portfolios are recorded at value as more fully
discussed in the notes to those financial statements.
SECURITIES TRANSACTIONS AND RELATED INCOME:
A. NEW YORK TAX-FREE BOND FUND, BALANCED FUND, EQUITY FUND, GROWTH AND
INCOME FUND, AND MID-CAP FUND
Security transactions are accounted for on the date the security is
purchased or sold. 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 their respective
Portfolio's income, expenses and realized and unrealized gains and losses.
In addition, the Feeder Funds accrue their own expenses daily as incurred.
Realized gains or losses and changes in unrealized appreciation or
depreciation represent the Feeder Fund's share of such elements allocated
from the Portfolio.
HSBC INVESTOR FAMILY OF FUNDS 51
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2003 (UNAUDITED) (CONTINUED)
.................................................................................
FUTURES CONTRACTS:
The New York Tax-Free Bond Fund and Equity Fund invest in financial
futures contracts for the purpose of hedging their existing portfolio
securities or securities they intend to purchase against fluctuations in
fair value caused by changes in prevailing market interest rates. Upon
entering into a financial futures contract, the New York Tax-Free Bond Fund
and Equity Fund are 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.
Futures contracts may also be entered into for non-hedging purposes. A
'sale' of futures contract means a contractual obligation to deliver the
securities or foreign currency called for by the contract at a fixed price
at a specified time in the future. A 'purchase' of a futures contract means
a contractual obligation to acquire the securities or foreign currency at a
fixed price at a specified time in the future.
Should market conditions move unexpectedly, the New York Tax-Free Bond
Fund and the Equity Fund may not achieve the anticipated benefits of the
financial futures contracts and may realize a loss. The use of futures
transactions involves the risk of imperfect correlation in movements in the
price of futures contracts, interest rates and the underlying hedged assets.
OPTIONS:
The Growth and Income Fund and the Mid-Cap Fund 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.
EXPENSE ALLOCATION:
Expenses directly attributable to a Fund are charged to that Fund.
Expenses not directly attributable to a Fund are allocated proportionately
among various or all Funds within the HSBC Investor Family of Funds in
relation to the net assets of each Fund or on another reasonable basis.
Expenses specific to a class are charged to that class.
DIVIDENDS TO SHAREHOLDERS:
The Limited Maturity Fund, Fixed Income Fund, Bond 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 quarterly in the
case of the Equity Fund, semiannually in the case of the Balanced Fund,
Growth and Income Fund, Small Cap Equity Fund, and the Opportunity Fund and
annually in the case of the Mid-Cap Fund, International Equity Fund and
Overseas Equity 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 of dividends from net investment income and net realized
gains 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 (i.e. reclassification of market discounts, gain/loss,
paydowns, and distributions), such amounts are reclassified to paid-in
capital; temporary differences 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.
52 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2003 (UNAUDITED) (CONTINUED)
.................................................................................
FEDERAL INCOME TAXES:
Each Fund is a separate taxable entity for federal income tax purposes.
Each Fund has qualified and intends 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.
3. CALL OPTIONS WRITTEN:
The following is a summary of covered call option activity for the Growth
and Income Fund for the six months ended April 30, 2003:
<Table>
<Caption>
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- --------
Options outstanding at October 31, 2002..................... 252 $ 45,988
Options written............................................. 252 87,567
Options terminated in closing purchase transactions......... (504) (133,555)
---- ---------
Options outstanding at April 30, 2003....................... -- $ --
---- ---------
---- ---------
</Table>
The following is a summary of covered call option activity for the
Mid-Cap Fund for six months ended April 30, 2003:
<Table>
<Caption>
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- --------
Options outstanding at October 31, 2002..................... 1,700 $ 297,713
Options written............................................. 3,090 662,215
Options terminated in closing purchase transactions......... (4,090) (792,683)
------ ---------
Options outstanding at April 30, 2003....................... 700 $ 167,245
------ ---------
------ ---------
</Table>
4. RELATED PARTY TRANSACTIONS:
INVESTMENT MANAGEMENT:
HSBC Asset Management (Americas) Inc. ('HSBC' or the 'Investment
Adviser'), a wholly owned subsidiary of HSBC Bank USA, a New York State
chartered bank, acts as Investment Adviser to the New York Tax-Free Bond
Fund, Balanced Fund, Growth and Income Fund and Mid-Cap Fund. As Investment
Adviser, HSBC manages the investments of the Funds and continuously reviews,
supervises and administers the Funds' investments. For its services as
Investment Adviser, HSBC is entitled to receive a fee, computed daily and
paid monthly, based on average daily net assets, at an annual rate of:
<Table>
<Caption>
FUND FEE RATE
- ---- --------
New York Tax-Free Bond Fund................................. 0.25%
Balanced Fund............................................... 0.55%
Growth and Income Fund...................................... 0.55%
Mid-Cap Fund................................................ 0.55%
</Table>
HSBC also serves as Investment Adviser to the Equity Fund. Alliance
Capital Management L.P. and Institutional Capital Corporation serve as
Sub-Investment Advisers to the Equity Fund and are paid for their services
directly by HSBC. For their services as Investment Adviser and
Sub-Investment Advisers to the Equity Fund, HSBC, Alliance
HSBC INVESTOR FAMILY OF FUNDS 53
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2003 (UNAUDITED) (CONTINUED)
.................................................................................
Capital Management and Institutional Capital Corporation receive in
aggregate a fee accrued daily and paid monthly at an annual rate of:
<Table>
<Caption>
BASED ON AVERAGE DAILY NET ASSETS 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%
</Table>
ADMINISTRATION:
BISYS Fund Services Ohio, Inc. ('BISYS Ohio'), who serves the Trusts as
Administrator, is a wholly-owned subsidiary of The BISYS Group, Inc., with
whom certain officers of the Trusts are affiliated. Such officers are paid
no fees directly by the Funds for serving as officers of the Trusts. Under
the terms of the administration agreement, BISYS Ohio receives from the
Funds a fee accrued daily and paid monthly at an annual rate of:
<Table>
<Caption>
BASED ON AVERAGE DAILY NET ASSETS FEE RATE
- --------------------------------- --------
Up to $8 billion............................................ 0.075%
In excess of $8 billion but not exceeding $9.25 billion..... 0.070%
In excess of $9.25 billion but not exceeding $12 billion.... 0.050%
In excess of $12 billion.................................... 0.030%
</Table>
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 of the HSBC Investor Family of Funds based upon its pro-rata share
of net assets.
DISTRIBUTION PLAN:
BISYS Fund Services Limited Partnership ('BISYS'), a wholly-owned subsidiary
of The BISYS Group, Inc., serves the Funds as Distributor (the 'Distributor').
The Trusts have adopted a non-compensatory Distribution Plan and Agreement (the
'Plan') pursuant to Rule 12b-1 of the Act. The Plan provides for a monthly
payment of actual expenses by the Funds to the Distributor at a rate not to
exceed 0.25% of the average daily net assets of Class A (Investor) Shares
(currently not being charged) and 0.75% of the average daily net assets of
Class B Shares and Class C Shares of the Funds. This payment represents expenses
incurred by the Distributor for marketing costs and services rendered in
distributing the Funds' shares. BISYS, as the Funds' distributor, recovered
$506,409 in commissions from sales of the funds of which $345 was reallowed to
affiliated brokers and dealers. The Distributor also receives the proceeds of
any CDSC imposed on redemptions of Class B Shares and Class C Shares. In
addition, the Distributor retains a portion of the front-end sales charge of
Class A (Investor) Shares. For the six months ended April 30, 2003, the
Distributor retained $87 from dealer commissions.
SHAREHOLDER SERVICING:
The Trusts have entered into a Shareholder Servicing Agreement with its
shareholder servicing agents (which currently consists of HSBC and its
affiliates) for providing various shareholder services. The aggregate fees
paid to the Distributor pursuant to the Distribution Plan and to shareholder
servicing agents pursuant to the Shareholder Servicing Agreement may not
exceed 0.25% of the average daily net assets of Class A (Investor) Shares,
and 1.00% of the average daily net assets of Class B Shares and Class C
Shares.
FEE REDUCTIONS:
The Investment Adviser has agreed to limit the total expenses, exclusive
of taxes, brokerage commissions and extraordinary expenses, of the Limited
Maturity Fund, Bond Fund, New York Tax-Free Bond Fund, Balanced Fund,
54 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2003 (UNAUDITED) (CONTINUED)
.................................................................................
Overseas Equity Fund and Opportunity Fund. Each Fund Class has it's own
expense limitations based on average daily net assets for any full fiscal
year as follows:
<Table>
<Caption>
EXPENSE
FUND CLASS LIMITATION
- ---- ----- ----------
Limited Maturity Fund....................................... A 1.10%
Limited Maturity Fund....................................... B 1.85
Limited Maturity Fund....................................... C 1.85
Limited Maturity Fund....................................... Y 0.85
Bond Fund................................................... A 1.10
Bond Fund................................................... B 1.85
Bond Fund................................................... C 1.85
New York Tax-Free Bond Fund................................. A 0.95
New York Tax-Free Bond Fund................................. B 1.70
New York Tax-Free Bond Fund................................. C 1.70
New York Tax-Free Bond Fund................................. Y 0.70
Balanced Fund............................................... A 1.20
Balanced Fund............................................... B 1.95
Balanced Fund............................................... C 1.95
Balanced Fund............................................... Y 0.95
Overseas Equity Fund........................................ A 1.85
Overseas Equity Fund........................................ B 2.60
Overseas Equity Fund........................................ C 2.60
Opportunity Fund............................................ A 1.65
Opportunity Fund............................................ B 2.40
Opportunity Fund............................................ C 2.40
</Table>
FUND ACCOUNTING, TRANSFER AGENCY AND CUSTODIAN:
BISYS Ohio provides fund accounting and transfer agency services for all
classes of each Fund. In addition, HSBC serves as custodian for the New York
Tax-Free Bond Fund, Equity Fund, Balanced Fund and Growth and Income Fund.
For services to the Funds, BISYS Ohio receives an annual fee from each fund
accrued daily and paid monthly.
5. INVESTMENT TRANSACTIONS:
Purchases of and proceeds from sales, excluding short-term securities,
for the Funds for the six months ended April 30, 2003, totaled:
<Table>
<Caption>
PURCHASES SALES
--------- -----
New York Tax-Free Bond Fund................................. $10,620,526 $ 6,461,706
Balanced Fund............................................... 3,243,508 3,121,695
Equity Fund................................................. 83,480,277 65,793,153
Growth and Income Fund...................................... 60,214,787 54,388,796
Mid-Cap Fund................................................ 68,002,979 57,977,681
</Table>
HSBC INVESTOR FAMILY OF FUNDS 55
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2003 (UNAUDITED) (CONTINUED)
.................................................................................
Contributions and withdrawals of the respective Portfolios for the six
months ended April 30, 2003, totaled:
<Table>
<Caption>
CONTRIBUTIONS WITHDRAWALS
------------- -----------
Limited Maturity Fund..................................... $ 31,881,430 $ 8,481,511
Fixed Income Fund......................................... 99,245,786 57,371,603
Bond Fund................................................. 4,008,430 2,565,022
International Equity Fund................................. 272,291,718 209,383,802
Overseas Equity Fund...................................... 7,601,775 7,959,901
Small Cap Equity Fund..................................... 87,108,478 71,074,035
Opportunity Fund.......................................... 1,231,458 1,836,932
</Table>
6. 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.
56 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR LIMITED MATURITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2003 (UNAUDITED)
.................................................................................
<Table>
<Caption>
- ---------------------------------------------------------------
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 64.9%
PRINCIPAL
AMOUNT($) VALUE($)
--------- -----------
FEDERAL HOME LOAN BANK - 9.4%
1.625%, 4/15/05....................... 5,000,000 5,000,080
3.25%, 8/15/05........................ 3,000,000 3,095,928
5.125%, 3/6/06........................ 4,000,000 4,327,640
4.50%, 11/15/12....................... 4,000,000 4,091,088
-----------
16,514,736
-----------
FEDERAL HOME LOAN MORTGAGE CORP. - 16.4%
6.875%, 1/15/05....................... 2,000,000 2,178,826
6.00%, 6/15/11........................ 3,000,000 3,422,448
Pool #E92282, 5.50%, 11/1/17.......... 7,199,933 7,486,217
Pool #C01188, 7.00%, 6/1/31........... 3,244,492 3,421,794
Pool #C75371, 6.00%, 1/1/33........... 4,899,537 5,102,084
Series 40 HA, 6.50%, 8/17/21.......... 6,800,000 7,112,709
-----------
28,724,078
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 17.7%
5.75%, 2/15/08........................ 3,500,000 3,928,106
6.40%, 5/14/09........................ 2,000,000 2,091,110
4.625%, 5/1/13........................ 2,500,000 2,514,810
Pool #535063, 6.50%, 12/1/14.......... 2,071,284 2,195,999
Pool #535933, 6.50%, 5/1/31........... 2,528,958 2,642,319
Pool #593187, 7.00%, 11/1/31.......... 5,923,685 6,258,781
Pool #695204, 5.50%, 3/1/33........... 3,980,531 4,095,717
Pool #694985, 6.00%, 3/1/33........... 6,992,441 7,286,707
-----------
31,013,549
-----------
U.S. TREASURY BONDS - 3.2%
8.00%, 11/15/21....................... 4,000,000 5,611,092
-----------
U.S. TREASURY NOTES - 18.2%
5.875%, 11/15/04...................... 3,000,000 3,207,069
1.625%, 1/31/05....................... 5,000,000 5,018,945
5.625%, 2/15/06....................... 5,400,000 5,952,657
3.25%, 8/15/07........................ 2,000,000 2,054,532
4.75%, 11/15/08....................... 5,000,000 5,436,915
5.00%, 2/15/11........................ 4,000,000 4,388,124
4.375%, 8/15/12....................... 2,500,000 2,610,255
4.00%, 11/15/12....................... 3,000,000 3,038,319
-----------
31,706,816
-----------
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS................... 113,570,271
-----------
- ---------------------------------------------------------------
CORPORATE OBLIGATIONS - 28.9%
AEROSPACE & DEFENSE - 0.9%
Honeywell International, Inc., 5.125%,
11/1/06.............................. 1,500,000 1,621,551
-----------
AUTO MANUFACTURERS - 0.9%
General Motors Corp., 7.20%,
1/15/11.............................. 1,500,000 1,537,934
-----------
BANKING - 3.1%
Bank of America Corp., 4.875%,
1/15/13.............................. 2,000,000 2,053,323
Citigroup, Inc., 6.50%, 1/18/11....... 1,500,000 1,714,862
Washington Mutual, Inc., 6.25%,
5/15/06.............................. 1,500,000 1,649,324
-----------
5,417,509
-----------
<Caption>
- ---------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
PRINCIPAL
AMOUNT($) VALUE($)
--------- -----------
BROKERAGE SERVICES - 5.1%
Goldman Sachs Group, Inc., 5.70%,
9/1/12............................... 2,000,000 2,130,196
Goldman Sachs Group, Inc., 6.125%,
2/15/33.............................. 1,500,000 1,551,200
Lehman Brothers Holdings Inc., 4.00%,
1/22/08.............................. 2,000,000 2,042,782
Lehman Brothers Holdings, Inc., 6.25%,
5/15/06.............................. 1,000,000 1,108,454
Merrill Lynch & Co., 5.70%, 2/6/04.... 2,000,000 2,064,198
-----------
8,896,830
-----------
CONSUMER PRODUCTS - 4.0%
Anheuser-Busch Cos, Inc., 6.00%,
4/15/11.............................. 1,500,000 1,674,452
Archer Daniels Midland Co., 5.935%,
10/1/32.............................. 1,000,000 1,047,968
PepsiCo, Inc., 5.75%, 1/15/08......... 1,500,000 1,650,309
The Procter & Gamble Co., 4.00%,
4/30/05.............................. 2,500,000 2,616,302
-----------
6,989,031
-----------
FINANCE - 8.9%
CIT Group, Inc., 4.125%, 2/21/06...... 2,000,000 2,041,934
Countrywide Home Loan, Inc., 5.50%,
8/1/06............................... 2,500,000 2,690,579
Ford Motor Credit Co., 6.50%,
1/25/07.............................. 2,500,000 2,555,482
General Electric Capital Corp., 3.50%,
5/1/08............................... 2,000,000 2,009,100
General Electric Capital Corp., 6.75%,
3/15/32.............................. 1,500,000 1,735,781
General Electric Co., 5.00%, 2/1/13... 1,000,000 1,033,579
Household Finance Corp., 6.50%,
1/24/06.............................. 500,000 556,279
Household Finance Corp., 6.375%,
10/15/11............................. 1,000,000 1,095,250
John Deere Capital Corp., 5.10%,
1/15/13.............................. 2,000,000 2,054,846
-----------
15,772,830
-----------
GOVERNMENTS (FOREIGN) - 0.6%
United Mexican States, 4.625%,
10/8/08.............................. 1,000,000 1,014,000
-----------
HEALTH CARE - 0.3%
United Healthcare Corp., 5.20%,
7/17/07.............................. 500,000 533,698
-----------
INSURANCE - 0.3%
Travelers Property Casualty Corp.,
6.375%, 3/15/33 (b).................. 500,000 532,376
-----------
MEDIA - 0.6%
AOL Time Warner, Inc., 6.125%,
4/15/06.............................. 1,000,000 1,064,509
-----------
PHARMACEUTICALS - 1.2%
Pfizer, Inc., 3.625%, 11/1/04......... 2,000,000 2,054,538
-----------
RETAIL - 1.8%
Wal-Mart Stores, Inc., 3.25%,
9/29/03.............................. 2,000,000 2,015,968
Wal-Mart Stores, Inc., 4.375%,
7/12/07.............................. 1,000,000 1,057,228
-----------
3,073,196
-----------
TELECOMMUNICATIONS - 1.2%
Verizon Virginia, Inc., 4.625%,
3/15/13.............................. 1,000,000 993,458
Vodafone Group PLC, 5.375%, 1/30/15... 1,000,000 1,042,116
-----------
2,035,574
-----------
TOTAL CORPORATE OBLIGATIONS........... 50,543,576
-----------
</Table>
See notes to financial statements. HSBC INVESTOR PORTFOLIOS 57
HSBC INVESTOR LIMITED MATURITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2003 (UNAUDITED) (CONTINUED)
.................................................................................
<Table>
<Caption>
- ---------------------------------------------------------------
ASSET BACKED SECURITIES - 4.7%
PRINCIPAL
AMOUNT($) VALUE($)
--------- -----------
American Express Credit Account Master
Trust 99 2 A, 5.95%, 12/15/06........ 1,500,000 1,570,975
CIT Equipment Collateral 01 A A3,
4.32%, 5/20/05....................... 1,578,452 1,599,959
Honda Auto Receivables Owner Trust 03
1 A4, 2.48%, 7/18/08................. 5,000,000 5,037,837
-----------
TOTAL ASSET BACKED SECURITIES......... 8,208,771
-----------
- ---------------------------------------------------------------
COMMERCIAL PAPER - 2.9%
FINANCE - 2.9%
ED&F Treasury Management, 1.27%,
5/6/03*.............................. 2,500,000 2,499,383
UBS Finance, 1.26%, 5/5/03*........... 2,500,000 2,499,475
-----------
TOTAL COMMERCIAL PAPER................ 4,998,858
-----------
<Caption>
- ---------------------------------------------------------------
INVESTMENT COMPANIES - 1.7%
PRINCIPAL
AMOUNT($) VALUE($)
--------- -----------
Dreyfus Cash Management Fund.......... 3,050,008 3,050,008
-----------
TOTAL INVESTMENT COMPANIES............ 3,050,008
-----------
TOTAL INVESTMENTS
(COST $173,713,092) (a) - 103.1%.... 180,371,484
-----------
-----------
</Table>
- --------------
Percentages indicated are based on net assets of $174,929,213.
(a) Cost differs from value by net unrealized appreciation as follows:
<Table>
Unrealized appreciation............ $6,658,743
Unrealized depreciation............ (351)
----------
Net unrealized appreciation........ $6,658,392
----------
----------
</Table>
(b) Security exempt from registration under Rule 144a of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. These securities
have been deemed liquid by the investment manager based on procedures
approved by the Board of Trustees.
* Rate presented indicates the effective yield at time of purchase.
58 HSBC INVESTOR PORTFOLIOS See notes to financial statements.
HSBC INVESTOR FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2003 (UNAUDITED)
.................................................................................
<Table>
<Caption>
- ----------------------------------------------------------------
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 52.8%
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
FEDERAL HOME LOAN BANK - 12.5%
4.40%, 11/20/06....................... 9,000,000 9,577,890
3.85%, 1/17/08........................ 8,000,000 8,043,536
5.05%, 2/6/13......................... 11,585,000 11,783,474
5.00%, 2/7/13......................... 12,165,000 12,476,996
5.10%, 4/24/13........................ 8,000,000 7,976,000
6.20%, 8/21/17........................ 5,000,000 5,058,975
-----------
54,916,871
-----------
FEDERAL HOME LOAN MORTGAGE CORP. - 10.5%
2.625%, 5/13/05....................... 10,000,000 10,004,351
4.125%, 1/17/06....................... 5,000,000 5,080,460
5.75%, 9/15/10........................ 4,910,000* 6,112,482
Pool #180881, 10.50%, 10/1/11......... 16,860 19,164
Pool #308433, 10.50%, 11/1/18......... 9,226 10,671
Pool #555201, 11.00%, 9/1/16.......... 12,382 14,295
Pool #555283, 10.00%, 9/1/17.......... 55,742 62,695
Pool #A00814, 10.00%, 11/1/20......... 107,948 122,904
Pool #A01417, 10.00%, 3/1/21.......... 93,247 105,675
Pool #A01521, 9.50%, 12/1/16.......... 31,208 34,829
Pool #A01663, 10.00%, 11/1/16......... 111,595 126,084
Pool #A01706, 10.00%, 6/1/17.......... 144,831 164,134
Pool #C00368, 8.50%, 10/1/24.......... 285,166 310,511
Pool #C00922, 8.00%, 2/1/30........... 2,803,363 3,029,254
Pool #C01081, 8.50%, 10/1/30.......... 214,061 230,478
Pool #C38572, 8.00%, 5/1/30........... 288,959 311,959
Pool #C39168, 8.00%, 6/1/30........... 94,510 102,033
Pool #C39291, 8.00%, 6/1/30........... 51,253 55,332
Pool #C39320, 8.00%, 6/1/30........... 193,924 209,360
Pool #C39745, 8.00%, 6/1/30........... 96,609 104,299
Pool #C41005, 8.50%, 8/1/30........... 197,041 212,152
Pool #C41562, 8.00%, 8/1/30........... 156,610 169,076
Pool #C41674, 8.00%, 8/1/30........... 122,852 132,631
Pool #C41797, 8.00%, 9/1/30........... 129,169 139,451
Pool #C42016, 8.00%, 9/1/30........... 78,656 84,916
Pool #C42095, 8.00%, 9/1/30........... 233,236 251,801
Pool #C42343, 8.00%, 9/1/30........... 91,448 98,727
Pool #C43224, 8.50%, 10/1/30.......... 30,425 32,759
Pool #C43803, 8.50%, 10/1/30.......... 74,145 79,832
Pool #C54447, 7.00%, 7/1/31........... 1,144,234 1,206,763
Pool #C60712, 6.50%, 11/1/31.......... 9,016,529 9,413,792
Pool #C80387, 6.50%, 4/1/26........... 362,345 379,363
Pool #D18976, 10.00%, 3/1/20.......... 133,415 150,201
Pool #D57038, 9.00%, 10/1/24.......... 24,153 26,937
Pool #G00951, 6.00%, 7/1/28........... 3,309,739 3,450,908
Pool #G01317, 7.00%, 10/1/31.......... 3,818,050 4,026,696
Pool# D62926, 6.50%, 8/1/25........... 339,113 355,329
-----------
46,422,304
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 16.8%
6.75%, 1/25/08........................ 4,926,091 5,080,330
4.625%, 5/1/13........................ 6,600,000 6,639,098
6.25%, 5/15/29........................ 5,995,000 6,822,718
7.25%, 5/15/30........................ 1,730,000 2,224,046
Pool #124783, 10.50%, 12/1/16......... 13,360 15,138
Pool #250202, 8.50%, 11/1/14.......... 207,503 226,606
Pool #250282, 8.50%, 3/1/15........... 60,389 65,878
Pool #253438, 8.50%, 9/1/30........... 695,639 750,780
Pool #253461, 8.50%, 7/1/20........... 82,673 89,271
<Caption>
- ----------------------------------------------------------------
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS, CONT'D.
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
Pool #253517, 8.50%, 11/1/30.......... 90,000 97,134
Pool #253576, 8.50%, 10/1/20.......... 129,543 139,882
Pool #253774, 8.50%, 4/1/31........... 192,490 207,438
Pool #253872, 8.50%, 5/1/31........... 101,642 109,535
Pool #303157, 10.00%, 5/1/22.......... 14,189 16,137
Pool #323073, 10.50%, 10/1/18......... 90,625 104,393
Pool #323166, 9.50%, 8/1/22........... 189,300 210,984
Pool #323559, 10.00%, 6/1/20.......... 154,222 176,816
Pool #328970, 7.00%, 11/1/25.......... 170,033 180,461
Pool #329530, 7.00%, 12/1/25.......... 711,747 755,399
Pool #329655, 7.00%, 11/1/25.......... 563,209 597,751
Pool #356905, 4.32%, 10/1/36 (b)...... 1,312,239 1,343,671
Pool #398509, 6.50%, 10/1/12.......... 35,176 37,359
Pool #398958, 6.50%, 10/1/12.......... 575,065 610,747
Pool #418458, 10.00%, 11/1/18......... 263,168 300,325
Pool #427683, 10.50%, 6/1/09.......... 285,854 318,540
Pool #44176, 10.00%, 6/1/20........... 22,342 25,640
Pool #513942, 8.50%, 9/1/29........... 253,054 273,259
Pool #535332, 8.50%, 4/1/30........... 579,418 625,682
Pool #535440, 8.50%, 8/1/30........... 712,364 768,830
Pool #535608, 9.50%, 4/1/30........... 862,270 961,501
Pool #536285, 8.50%, 8/1/30........... 5,157 5,566
Pool #548965, 8.50%, 7/1/30........... 427,532 461,420
Pool #551989, 8.50%, 10/1/30.......... 168,931 182,321
Pool #556565, 8.50%, 10/1/30.......... 51,008 55,051
Pool #559452, 8.50%, 1/1/31........... 41,078 44,334
Pool #560796, 8.50%, 10/1/30.......... 38,706 41,774
Pool #560880, 8.50%, 3/1/31........... 87,924 94,752
Pool #562204, 8.50%, 12/1/30.......... 30,730 33,166
Pool #562338, 8.50%, 1/1/31........... 120,063 129,579
Pool #563935, 8.50%, 1/1/31........... 10,796 11,651
Pool #568486, 7.00%, 1/1/31........... 643,272 679,941
Pool #572688, 8.50%, 2/1/31........... 32,489 35,012
Pool #573601, 8.50%, 3/1/31........... 234,318 252,513
Pool #573718, 8.50%, 2/1/31........... 79,304 85,590
Pool #573752, 8.50%, 2/1/31........... 587,211 633,757
Pool #575328, 6.50%, 4/1/31........... 1,476,614 1,542,804
Pool #575689, 8.50%, 10/1/30.......... 15,253 16,471
Pool #576146, 8.50%, 1/1/31........... 64,498 69,610
Pool #577306, 8.50%, 4/1/31........... 77,165 83,157
Pool #583128, 8.50%, 2/1/31........... 98,645 106,465
Pool #623129, 6.50%, 1/1/32........... 7,363,576 7,693,651
Pool #651901, 6.00%, 8/1/32........... 10,187,110 10,615,692
Pool #694655, 5.50%, 4/1/33........... 15,000,003 15,434,066
Pool #695777, 5.50%, 4/1/33........... 5,500,000 5,659,156
Pool #83435, 10.00%, 11/1/19.......... 18,021 20,661
Pool #83880, 10.00%, 11/1/19.......... 1,788 2,050
Pool #84964, 10.00%, 11/1/19.......... 5,860 6,709
Pool #87291, 10.00%, 1/1/20........... 1,405 1,612
-----------
73,773,880
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 6.2%
Pool #120587, 13.50%, 11/15/14........ 11,791 14,335
Pool #136224, 10.00%, 11/15/15........ 18,574 21,284
Pool #150312, 11.50%, 2/15/16......... 9,551 11,249
Pool #164353, 10.50%, 6/15/16......... 20,545 23,827
Pool #164356, 10.50%, 6/15/16......... 29,489 34,200
Pool #199010, 10.00%, 1/15/17......... 13,506 15,506
</Table>
See notes to financial statements. HSBC INVESTOR PORTFOLIOS 59
HSBC INVESTOR FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2003 (UNAUDITED)
.................................................................................
<Table>
<Caption>
- ----------------------------------------------------------------
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS, CONT'D.
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
Pool #208701, 9.50%, 4/15/20.......... 6,507 7,345
Pool #227192, 10.00%, 6/15/19......... 6,289 7,226
Pool #253821, 10.00%, 10/15/18........ 11,299 12,977
Pool #257153, 10.00%, 11/15/18........ 6,936 7,967
Pool #265085, 10.00%, 4/15/19......... 6,305 7,244
Pool #271874, 10.00%, 4/15/19......... 6,157 7,074
Pool #278742, 10.50%, 9/15/19......... 37,202 43,312
Pool #282210, 10.50%, 11/15/19........ 13,323 15,511
Pool #301274, 10.00%, 1/15/21......... 18,194 20,912
Pool #346406, 7.50%, 2/15/23.......... 717,801 771,369
Pool #39798, 11.00%, 6/15/10.......... 12,807 14,682
Pool #412530, 7.50%, 12/15/25......... 900,591 965,973
Pool #587112, 6.00%, 6/15/32.......... 13,555,950 14,198,696
Pool #780047, 9.00%, 12/15/17......... 255,007 288,243
Pool #780066, 10.50%, 12/15/20........ 110,393 128,206
Pool #780081, 10.00%, 2/15/25......... 34,446 39,550
Pool #780127, 10.50%, 4/15/25......... 31,939 37,066
Pool #780164, 10.00%, 12/15/17........ 65,175 74,691
Pool #780203, 9.50%, 12/15/17......... 174,740 196,826
Pool #780311, 9.50%, 12/15/21......... 118,872 134,147
Pool #780377, 9.00%, 12/15/19......... 229,815 256,636
Pool #780378, 11.00%, 1/15/19......... 65,532 76,310
Pool #780384, 11.00%, 12/15/17........ 74,114 86,251
Pool #780472, 10.00%, 3/15/25......... 104,599 120,105
Pool #780517, 10.50%, 1/15/18......... 22,921 26,552
Pool #780614, 11.00%, 3/15/18......... 178,038 208,686
Pool #780784, 10.00%, 8/15/21......... 166,342 191,098
Pool #780804, 10.00%, 12/15/20........ 481,941 553,298
Pool #780826, 9.50%, 5/15/18.......... 293,174 330,320
Pool #780904, 9.50%, 7/15/18.......... 214,194 241,216
Pool #780991, 9.00%, 11/15/24......... 217,663 243,044
Pool #781300, 7.00%, 6/15/31.......... 2,655,503 2,818,158
Pool #781345, 6.00%, 10/15/31......... 3,205,215 3,359,499
Pool #80094, 5.75%, 7/20/27 (b)....... 39,516 40,352
Pool #80106, 5.75%, 8/20/27 (b)....... 112,411 114,787
Pool #80114, 5.75%, 9/20/27 (b)....... 73,481 75,034
Pool #80123, 5.625%, 10/20/27 (b)..... 131,670 134,575
Pool #80137, 5.625%, 11/20/27 (b)..... 135,107 138,081
Pool #80145, 5.625%, 12/20/27 (b)..... 32,812 33,534
Pool #80156, 5.375%, 1/20/28 (b)...... 43,988 44,840
Pool #8599, 5.375%, 2/20/25 (b)....... 56,576 57,882
Pool #8613, 5.375%, 3/20/25 (b)....... 146,223 149,601
Pool #8619, 5.375%, 4/20/25 (b)....... 33,980 34,825
Pool #8621, 5.375%, 4/20/25 (b)....... 163,757 167,830
Pool #8623, 5.375%, 4/20/25 (b)....... 120,499 123,255
Pool #8624, 5.375%, 4/20/25 (b)....... 267,104 274,579
Pool #8628, 5.375%, 5/20/25 (b)....... 34,095 34,943
Pool #8631, 5.375%, 5/20/25 (b)....... 75,327 77,201
Pool #8634, 5.375%, 5/20/25 (b)....... 42,958 44,161
Pool #8643, 5.375%, 6/20/25 (b)....... 107,182 109,849
Pool #8646, 5.375%, 6/20/25 (b)....... 70,201 72,167
Pool #8663, 5.75%, 7/20/25 (b)........ 36,011 36,809
Pool #8686, 5.75%, 8/20/25 (b)........ 131,351 134,257
-----------
27,509,153
-----------
U.S. TREASURY BONDS - 1.9%
5.25%, 11/15/28....................... 8,100,000 8,513,861
-----------
<Caption>
- ----------------------------------------------------------------
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS, CONT'D.
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
U.S. TREASURY NOTES - 4.9%
5.75%, 8/15/03........................ 2,000,000 2,026,876
3.00%, 11/15/07....................... 5,000,000 5,068,555
5.00%, 8/15/11........................ 2,400,000 2,628,000
4.375%, 8/15/12....................... 11,400,000 11,902,763
-----------
21,626,194
-----------
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS................... 232,762,263
-----------
- ----------------------------------------------------------------
CORPORATE OBLIGATIONS - 35.1%
AEROSPACE & DEFENSE - 1.4%
Lockheed Martin Corp., 8.20%,
12/1/09.............................. 2,500,000 3,102,782
Lockheed Martin Corp., 7.75%,
5/1/26............................... 1,750,000 2,146,921
Lockheed Martin Corp., 8.50%,
12/1/29.............................. 600,000 804,952
-----------
6,054,655
-----------
COMPUTER SOFTWARE & SYSTEMS - 0.0%
Hyundai Semiconductor, 8.25%, 5/15/04
(c).................................. 75,000 60,883
Hyundai Semiconductor, 8.625%,
5/15/07 (c).......................... 220,000 148,334
-----------
209,217
-----------
DIVERSIFIED OPERATIONS - 1.5%
Hertz Corp., 1.88%, 8/13/04 (b)....... 7,000,000 6,745,389
-----------
ELECTRIC - INTEGRATED - 1.3%
Ontario Electricity Financial, 6.10%,
1/30/08.............................. 5,000,000 5,670,340
-----------
FINANCE - 21.1%
AIG SunAmerica Global Financing VI,
6.30%, 5/10/11 (c)................... 1,285,000 1,445,823
Anthem Insurance, 9.125%, 4/1/10
(c).................................. 410,000 499,322
Anthem Insurance, 9.00%, 4/1/27 (c)... 610,000 793,883
Associates Corp. NA, 5.75%, 11/1/03... 5,000,000 5,107,805
AXA Financial, Inc., 6.50%, 4/1/08.... 330,000 362,492
CIT Group, Inc., 7.375%, 4/2/07....... 9,450,000 10,584,519
Citigroup Inc., 5.625%, 8/27/12....... 5,000,000 5,396,300
Citigroup, Inc., 7.25%, 10/1/10....... 1,315,000 1,558,918
EOP Operating LP, 7.50%, 4/19/29...... 325,000 370,860
Farmers Exchange Capital, 7.05%,
7/15/28 (c).......................... 775,000 600,400
Farmers Insurance Exchange, 8.625%,
5/1/24 (c)........................... 475,000 418,000
Florida Property & Casualty, 7.375%,
7/1/03 (c)........................... 250,000 252,341
Florida Windstorm, 7.125%, 2/25/19
(c).................................. 1,215,000 1,415,820
General Electric Capital Corp., 8.75%,
5/21/07.............................. 2,600,000 3,140,678
General Electric Capital Corp.,
7.375%, 1/19/10...................... 895,000 1,056,823
General Electric Capital Corp.,
6.875%, 11/15/10..................... 4,000,000 4,656,596
General Electric Capital Corp., 6.75%,
3/15/32.............................. 10,800,000 12,497,619
General Motors Acceptance Corp.,
8.00%, 11/1/31....................... 6,000,000 6,249,228
Goldman Sachs Group, Inc., 6.875%,
1/15/11.............................. 6,160,000 7,082,528
Hutchison Whampoa Ltd., 7.45%,
8/1/17 (c)........................... 805,000 849,865
</Table>
60 HSBC INVESTOR PORTFOLIOS See notes to financial statements.
HSBC INVESTOR FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2003 (UNAUDITED)
.................................................................................
<Table>
<Caption>
- ----------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
J.P. Morgan Chase & Co., 5.25%,
5/30/07.............................. 7,000,000 7,595,035
Jet Equipment Trust, 10.00%, 6/15/12
(c).................................. 175,000 54,250
Lehman Brothers, 7.875%, 8/15/10...... 7,500,000 9,020,843
Metropolitan Life Insurance Co.,
7.45%, 11/1/23 (c)................... 625,000 678,436
Metropolitan Life Insurance Co.,
7.80%, 11/1/25 (c)................... 550,000 639,090
Morgan Stanley, 5.80%, 4/1/07......... 5,000,000 5,450,045
New York Life Insurance, 7.50%,
12/15/23 (c)......................... 500,000 520,551
Oil Purchase Co. II, 10.73%, 1/31/04
(c).................................. 60,967 60,928
PNC Institutional Capital Trust A,
7.95%, 12/15/26 (c).................. 375,000 421,564
Prime Property Funding II, 7.00%,
8/15/04 (c).......................... 420,000 445,129
Prudential Insurance Co., 8.30%,
7/1/25 (c)........................... 1,095,000 1,335,238
Travelers Property Casualty Corp.,
7.75%, 4/15/26....................... 2,000,000 2,330,378
-----------
92,891,307
-----------
FOOD - DIVERSIFIED - 1.7%
Kellogg Co., 6.60%, 4/1/11............ 6,500,000 7,432,393
-----------
GOVERNMENTS (FOREIGN) - 1.1%
United Mexican States, 8.125%,
12/30/19............................. 495,000 558,608
United Mexican States, 7.50%,
4/8/33............................... 4,000,000 4,170,000
-----------
4,728,608
-----------
HEALTH CARE - 0.7%
American Home Products Corp., 6.70%,
3/15/11.............................. 960,000 1,102,272
Health Net, Inc., 8.375%, 4/15/11..... 590,000 694,277
Pharmacia Corp., 6.60%, 12/1/28....... 1,025,000 1,213,604
-----------
3,010,153
-----------
HOTELS & LODGING - 0.1%
Harrahs Operating Co., Inc., 8.00%,
2/1/11............................... 575,000 661,227
-----------
MEDIA - 0.2%
CSC Holdings, Inc., 8.125%, 7/15/09... 110,000 116,600
Viacom, Inc., 6.625%, 5/15/11......... 785,000 904,335
-----------
1,020,935
-----------
OIL & GAS - 0.9%
Anadarko Finance Co., 6.75%,
5/1/11 (c)(f)........................ 2,500,000 2,847,940
Conoco, Inc., 6.95%, 4/15/29.......... 1,130,000 1,321,807
-----------
4,169,747
-----------
REFUSE SYSTEMS - 0.1%
Waste Management, Inc., 7.375%,
5/15/29.............................. 320,000 370,095
-----------
RETAIL - 3.2%
Sears Roebuck Acceptance, 4.23%,
1/7/04 (b)........................... 10,160,000 10,229,972
Wal-Mart Stores, Inc., 5.45%,
8/1/06............................... 3,700,000 4,055,485
-----------
14,285,457
-----------
TELECOMMUNICATIONS - 1.4%
AT&T Broadband Corp., 8.375%,
3/15/13.............................. 4,400,000 5,368,312
Lenfest Communications, 7.625%,
2/15/08.............................. 660,000 747,778
-----------
6,116,090
-----------
<Caption>
- ----------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
TRANSPORTATION - 0.1%
Continental Airlines, 6.65%,
9/15/17.............................. 326,805 279,107
-----------
UTILITIES - 0.3%
PSEG Energy Holdings, 9.125%,
2/10/04.............................. 430,000 445,050
RAS Laffan Liquid Natural Gas, 8.29%,
3/15/14 (c).......................... 695,000 753,658
-----------
1,198,708
-----------
TOTAL CORPORATE OBLIGATIONS........... 154,843,428
-----------
- ----------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 3.4%
American Southwest Financial
Securities Corp. 93 2 A1, 7.30%,
1/18/09.............................. 60,322 67,683
Banc of America Commercial Mortgage,
Inc. 00 2 A2, 7.20%, 5/15/10......... 1,350,000 1,591,944
Chase Commercial Mortgage Securities
Corp. 99 2 A2, 7.20%, 11/15/09....... 1,400,000 1,643,643
DLJ Mortgage Acceptance Corp. IO
97 CF1 S, 0.98%, 5/15/30 (b) (c)..... 2,025,064 48,854
Fannie Mae IE 92 89 SQ, 18.31%,
7/25/22 (e).......................... 99 13,525
Fannie Mae IE 97 30 SP, 22.18%,
4/25/22 (e).......................... 292 40,419
Fannie Mae IO 00 16 PS, 7.28%,
10/25/29 (b)......................... 1,011,049 84,971
Fannie Mae IO 01 4 SA, 6.23%,
2/17/31 (b).......................... 1,900,821 207,482
Fannie Mae IO 200 32 SV, 7.27%,
3/18/30 (b).......................... 635,426 61,213
Fannie Mae IO 270 2, 8.50%, 9/1/23.... 495,240 89,232
Fannie Mae IO 296 2, 8.00%, 4/1/24.... 586,665 94,513
Fannie Mae IO 306, 8.00%, 5/1/30...... 1,053,239 162,134
Fannie Mae IO 307, 8.00%, 6/1/30...... 60,633 8,913
FHA Weyerhauser, 7.43%, 1/1/24 (f).... 184,269 184,844
First Union-Chase Commercial Mortgage
99 C2 A2, 6.645%, 6/15/31............ 1,195,000 1,363,737
Freddie Mac IO 1534 K, 6.09%,
6/15/23 (b).......................... 1,861,570 139,489
Freddie Mac IO 207, 7.00%, 4/1/30..... 276,294 31,781
Freddie Mac IO 2141 SD, 6.84%,
4/15/29 (b).......................... 1,397,164 132,631
Freddie Mac IO 2247 SC, 6.19%,
8/15/30 (b).......................... 889,755 70,002
GE Capital Commercial Mortgage Corp.
01 1 A1, 6.08%, 5/15/33.............. 619,268 675,796
GMAC Commercial Mortgage Securities,
Inc. 98 C2 A2, 6.42%, 5/15/35........ 1,175,000 1,329,084
GMAC Commercial Mortgage Securities,
Inc. IO 97 C2 X, 1.80%, 10/15/28
(b).................................. 1,073,606 44,555
Government National Mortgage
Association IO 99 29 SD, 6.69%,
3/16/26 (b).......................... 1,012,167 68,932
Government National Mortgage
Association IO 99 30 S, 7.29%,
8/16/29 (b).......................... 1,065,671 95,308
Government National Mortgage
Association IO 99 30 SA, 6.69%,
4/16/29 (b).......................... 1,295,727 117,286
Government National Mortgage
Association IO 99 32 SB, 6.69%,
7/16/27 (b).......................... 937,688 76,802
Government National Mortgage
Association IO 99 44 SA, 7.24%,
12/16/29 (b)......................... 1,068,909 135,629
GS Mortgage Securities Corp. IO 97 GL
X2, 1.01%, 7/13/30 (b)............... 1,118,799 25,260
</Table>
See notes to financial statements. HSBC INVESTOR PORTFOLIOS 61
HSBC INVESTOR FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2003 (UNAUDITED)
.................................................................................
<Table>
<Caption>
- ----------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS, CONTINUED
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
LB-UBS Commercial Mortgage Trust 00 C3
A1, 7.95%, 7/15/09................... 646,253 732,690
LB-UBS Commercial Mortgage Trust 00 C4
A2, 7.37%, 8/15/26................... 1,200,000 1,426,787
Morserv, Inc. 96 2 1A1, 2.17%,
11/25/26 (b)......................... 529 529
Norwest Mortgage, 13.25%, 12/1/03
(f).................................. 261 261
PNC Mortgage Acceptance Corp. 00 C2
A2, 7.30%, 9/12/10................... 1,200,000 1,420,785
Ryland Mortgage Securities Corp. 94 4
C1 4.84%, 9/25/30.................... 1,265,494 1,263,836
Salomon Brothers Mortgage Securities
VII 00 C3 A2, 6.59%, 10/18/10........ 1,300,000 1,486,919
-----------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS.......................... 14,937,469
-----------
- ----------------------------------------------------------------
ASSET BACKED SECURITIES - 3.9%
Citibank Credit Card Issuance Trust 00
A3 A3, 6.875%, 11/15/09.............. 2,230,000 2,567,980
Connecticut RRB Special Purpose Trust
CL&P-1 01 1 A5, 6.21%, 12/30/11...... 1,400,000 1,595,150
Detroit Edison Securitization Funding
LLC 01 1 A3, 5.875%, 3/1/10.......... 715,000 792,734
Detroit Edison Securitization Funding
LLC 01 1 A5, 6.42%, 3/1/15........... 835,000 959,881
Global Rated Eligible Asset Trust
1998-A, 7.33%, 3/16/06 (d)........... 234,399 0
MBNA Master Credit Card Trust 00 E A
7.80%, 10/15/12...................... 1,200,000 1,447,503
MBNA Master Credit Card Trust 99 B A
5.90%, 8/15/11....................... 1,055,000 1,178,115
Peco Energy Transition Trust 00 A A3
7.625%, 3/1/10....................... 1,200,000 1,435,749
Peco Energy Transition Trust 01 A A1
6.52%, 12/31/10...................... 1,100,000 1,265,801
PSE&G Transition Funding LLC 01 1 A6
6.61%, 6/15/15....................... 710,000 826,494
Smart (CFS) 97 6 A1, 7.71%, 4/15/06
(d).................................. 250,136 0
Union Acceptance Corp. 01 C B, 4.73%,
11/9/09.............................. 5,000,000 5,201,173
-----------
TOTAL ASSET BACKED SECURITIES......... 17,270,580
-----------
<Caption>
- ----------------------------------------------------------------
RIGHTS & WARRANTS - 0.0%
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
GOVERNMENTS (FOREIGN) - 0.0%
United Mexican States Value Recovery,
0.00%, 6/30/03....................... 1,046,000 0
-----------
TOTAL RIGHTS AND WARRANTS............. 0
-----------
- ----------------------------------------------------------------
INVESTMENT COMPANIES - 3.8%
Dreyfus Cash Management Fund.......... 16,789,475 16,789,475
-----------
TOTAL INVESTMENT COMPANIES............ 16,789,475
-----------
TOTAL INVESTMENTS
(COST $412,604,152) (a) - 99.0%..... 436,603,215
-----------
-----------
</Table>
- ---------
Percentages indicated are based on net assets of $441,136,239.
(a) Cost differs from value by net unrealized appreciation of securities as
follows:
<Table>
Unrealized appreciation......... $26,805,392
Unrealized depreciation......... (2,806,329)
-----------
Net unrealized appreciation..... $23,999,063
-----------
-----------
</Table>
(b) Variable rate security. The interest rate on these securities is adjusted
periodically to reflect then-current short-term interest rates. The rate
presented in this report represents the rate that was in effect on
April 30, 2003. Each of these securities contains put or demand features
that allow the fund to require the issuer to repurchase the security from
the fund within various time periods, including daily, weekly, monthly, or
semi-annually.
(c) Security exempt from registration under Rule 144a of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. These securities
have been deemed liquid by the investment manager based on procedures
approved by the Board of Trustees.
(d) Represents an illiquid security, valued in good faith by the investment
manager. The Portfolio has received partial payment for this security.
(e) Rate presented indicates the effective yield at time of purchase.
(f) Security valued at fair value as determined in good faith under procedures
applied under the general supervision of the Board of Trustees.
* The principal amount of the security is denominated in Euro.
IE -- ('IOette') Represents the right to receive interest payments on an
underlying pool of mortgages with similar risks as those associated with
IO securities. Unlike IO's, the owner also has a right to receive a very
small portion of principal.
IO -- Interest Only security
62 HSBC INVESTOR PORTFOLIOS See notes to financial statements.
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2003 (UNAUDITED)
.................................................................................
<Table>
<Caption>
- -----------------------------------------------------------------
COMMON STOCKS - 81.7%
SHARES VALUE($)
--------- -----------
AUSTRALIA - 2.6%
Australia & New Zealand Bank Group
Ltd.................................... 101,921 1,189,062
BHP Billiton Ltd........................ 611 3,455
BHP Billiton Ltd. ADR................... 90,055 1,004,113
Brambles Industries Ltd................. 69,300 223,256
Fosters Brewing Group Ltd............... 305,394 855,856
National Australia Bank Ltd............. 53,106 1,079,665
News Corp. Ltd.......................... 97,369 693,146
QBE Insurance Group Ltd................. 120,000 641,064
WMC Ltd................................. 189,200 516,024
WMC Resources Ltd. (b).................. 189,200 473,416
Woolworths Ltd.......................... 221,300 1,788,570
-----------
8,467,627
-----------
BRAZIL - 0.5%
Companhia Vale do Rio Doce ADR.......... 29,000 810,840
Companhia Vale do Rio Doce ADR.......... 31,800 839,520
-----------
1,650,360
-----------
CANADA - 3.1%
Abitibi-Consolidated, Inc............... 93,100 652,206
BCE, Inc................................ 115,700 2,286,418
Bombardier, Inc. Class B................ 457,000 1,105,388
Placer Dome, Inc........................ 49,000 490,137
Suncor Energy, Inc...................... 45,600 750,120
TELUS Corp.............................. 94,500 1,271,330
The Thomson Corp........................ 46,800 1,382,861
The Thomson Corp. ADR................... 68,300 2,012,118
-----------
9,950,578
-----------
DENMARK - 0.1%
Novo Nordisk A/S Class B................ 12,800 463,695
-----------
FINLAND - 1.7%
Nokia Oyj............................... 265,000 4,483,418
UPM-Kymmene Oyj......................... 75,000 1,096,470
-----------
5,579,888
-----------
FRANCE - 9.8%
Accor SA................................ 16,400 540,470
BNP Paribas SA.......................... 94,600 4,440,426
Bouygues SA............................. 104,390 2,553,663
Essilor International SA................ 21,900 896,718
France Telecom SA....................... 35,900 829,333
France Telecom SA (b)................... 32,000 736,024
Groupe Danone........................... 11,900 1,683,955
L'Air Liquide SA........................ 13,150 1,991,452
L'Oreal SA.............................. 16,200 1,157,973
Pechiney SA Class A..................... 11,500 331,759
Renault SA.............................. 48,100 2,080,085
Sanofi-Synthelabo SA.................... 143,120 8,537,136
Schneider Electric SA................... 42,200 1,997,778
Societe Generale Class A................ 9,500 580,990
Societe Television Francaise............ 4,400 123,595
Vivendi Universal SA.................... 167,200 2,724,290
-----------
31,205,647
-----------
GERMANY - 3.8%
Aixtron AG.............................. 8,400 28,498
Allianz Holdings AG..................... 14,100 991,343
Bayerische Motoren Werke AG............. 23,672 789,897
Daimler Chrysler AG..................... 32,400 1,044,978
Deutsche Telekom AG..................... 157,700 2,108,398
<Caption>
- -----------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE($)
--------- -----------
Epcos AG (b)............................ 20,600 314,958
Infineon Technologies AG (b)............ 57,900 426,468
Metro AG................................ 30,000 823,608
MG Technologies......................... 34,000 314,176
Muenchener Rueckversicher AG............ 10,400 1,035,291
SAP AG.................................. 8,500 864,175
SAP AG ADR.............................. 6,500 165,815
Siemens AG.............................. 67,900 3,356,894
-----------
12,264,499
-----------
HONG KONG - 2.4%
Cheung Kong Holdings Ltd................ 208,000 1,149,473
China Mobile Ltd........................ 209,000 419,391
Hang Lung Properties Ltd................ 619,000 535,738
Hang Seng Bank Ltd...................... 130,200 1,289,637
Hong Kong Land Holdings Ltd............. 356,000 398,720
Hutchison Whampoa Ltd................... 209,600 1,166,378
Johnson Electric Holdings............... 919,000 989,813
Li & Fung Ltd........................... 836,000 937,935
Sun Hung Kai Properties................. 78,000 366,045
Swire Pacific Ltd. Class A.............. 125,500 497,234
-----------
7,750,364
-----------
IRELAND - 0.5%
CRH PLC................................. 101,675 1,560,203
-----------
ITALY - 1.3%
Assicurazioni Generali SpA.............. 28,000 643,396
ENI SpA................................. 240,400 3,426,018
-----------
4,069,414
-----------
JAPAN - 12.9%
Acom Co., Ltd........................... 4,050 113,764
Advantest Corp.......................... 25,000 838,504
AEON Co., Ltd........................... 104,000 2,363,241
Aiful Corp.............................. 12,945 486,279
Canon, Inc.............................. 30,000 1,212,477
Chugai Pharmaceutical Co., Ltd.......... 74,500 780,857
Dai Nippon Printing Co., Ltd............ 55,000 534,043
Daiwa Securities Group, Inc............. 205,000 806,180
Hirose Electronics Co., Ltd............. 29,400 2,102,817
Hitachi, Ltd............................ 131,000 437,179
Hoya Corp............................... 19,000 1,123,176
Japan Airlines System Corp. (b)......... 260,000 462,183
Japan Telecom Co., Ltd.................. 226 617,776
Kansai Electric Power Co., Inc.......... 43,400 726,002
Keyence Corp............................ 3,993 641,840
Mitsubishi Estate Co.................... 130,000 760,859
Mitsubishi Heavy Industries, Ltd........ 496,000 1,102,130
Mitsubishi Motors Corp. (b)............. 368,000 783,767
Mitsui Fudosan Co., Ltd................. 196,000 1,055,106
Mitsui Sumitomo Insurance Co., Ltd...... 127,370 598,082
Murata Manufacturing Co., Ltd........... 10,800 384,873
NEC Corp................................ 243,000 760,012
Nikko Cordial Securities Co., Ltd....... 299,000 802,281
Nikon Corp. (b)......................... 76,000 506,624
Nissan Motor Co., Ltd................... 380,000 2,915,480
Nitto Denko Corp........................ 22,000 632,735
Nomura Holdings, Inc.................... 117,000 1,158,620
NTT DoCoMo, Inc......................... 532 1,097,367
Orix Corp............................... 26,100 1,192,730
Rohm Co., Ltd........................... 18,300 1,885,854
</Table>
See notes to financial statements. HSBC INVESTOR PORTFOLIOS 63
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2003 (UNAUDITED) (CONTINUED)
.................................................................................
<Table>
<Caption>
- -----------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE($)
--------- -----------
Sekisui House, Ltd...................... 167,000 1,226,664
Shimamura Co., Ltd...................... 7,900 437,196
Shionogi & Co., Ltd..................... 130,000 1,543,518
Sony Corp............................... 48,010 1,167,441
Suzuki Motor Corp....................... 166,000 1,965,387
TDK Corp................................ 22,500 781,067
Tokyo Electron, Ltd..................... 61,200 2,293,845
Tokyu Corp.............................. 213,000 576,882
Toray Industries, Inc................... 390,000 941,808
Tostem Inax Holding Corp................ 17,000 181,318
Yahoo Japan Corp. (b)................... 43 483,146
Yamato Transport Co., Ltd............... 33,000 369,126
-----------
40,850,236
-----------
LUXEMBOURG - 0.1%
SES Global FDR.......................... 57,400 336,307
-----------
MEXICO (1.3%)
America Movil........................... 81,800 1,371,786
Telefonos De Mexico ADR................. 91,400 2,761,194
-----------
4,132,980
-----------
NETHERLANDS - 9.0%
ABN Amro Holding NV..................... 183,300 3,097,081
Aegon NV................................ 394,576 4,011,560
ASM Lithography Holding NV (b).......... 75,800 654,748
Hagemeyer NV............................ 7,000 33,904
Heineken Holding NV..................... 33,375 968,037
Heineken NV............................. 91,625 3,401,974
ING Groep NV............................ 105,600 1,714,712
Koninklijke (Royal) KPN NV (b).......... 395,400 2,629,948
Koninklijke (Royal) Philips Electronics
NV..................................... 61,300 1,140,408
Koninklijke Numico NV................... 24,800 231,378
Royal Dutch Petroleum Co................ 172,200 7,043,221
Royal Dutch Petroleum Co. ADR........... 10,500 429,240
STMicroelectronics NV................... 95,700 1,977,958
STMicroelectronics NV ADR............... 2,000 41,180
Unilever NV -- CVA...................... 10,600 667,781
VNU..................................... 29,839 865,808
-----------
28,908,938
-----------
NEW ZEALAND - 0.2%
Telecom Corporation of New Zealand
Ltd.................................... 276,769 741,543
-----------
NORWAY - 1.0%
Norsk Hydro ASA......................... 33,300 1,408,557
Statoil ASA............................. 215,900 1,712,317
-----------
3,120,874
-----------
PORTUGAL - 0.2%
Portugal Telecom SA..................... 82,400 589,453
-----------
RUSSIA - 0.2%
LUKOIL ADR.............................. 9,000 619,200
-----------
SINGAPORE - 1.8%
DBS Group Holdings Ltd. ADR (c)......... 375,000 1,838,250
Singapore Airlines Ltd.................. 73,000 388,517
Singapore Press Holdings Ltd............ 64,370 598,167
Singapore Telecommunications Ltd........ 3,466,520 2,830,848
-----------
5,655,782
-----------
SOUTH KOREA - 1.1%
Samsung Electronics Ltd................. 28,475 3,559,375
-----------
<Caption>
- -----------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE($)
--------- -----------
SPAIN - 2.4%
Altadis SA.............................. 18,800 484,447
Banco Bilbao Vizcaya Argentina.......... 309,700 3,117,539
Industria de Diseno Textil, SA
(Inditex).............................. 106,400 2,120,739
Repsol YPF SA........................... 53,500 779,163
Telefonica SA (b)....................... 106,427 1,177,036
-----------
7,678,924
-----------
SWEDEN - 1.3%
Assa Abloy AB Class B................... 131,900 1,257,772
ForeningsSparbanken AB.................. 129,200 1,753,267
Sandvik AB.............................. 22,000 559,434
Svenska Handelsbanken Class A........... 44,500 707,239
-----------
4,277,712
-----------
SWITZERLAND - 8.0%
Compagnie Financiere Richemont AG
Class A................................ 166,715 2,464,525
Credit Suisse Group (b)................. 85,411 2,040,342
Holcim Ltd. Class B..................... 12,173 2,284,176
Nestle SA............................... 16,157 3,293,822
Novartis AG............................. 112,955 4,455,573
Roche Holding AG........................ 17,700 1,126,233
Swiss Reinsurance....................... 66,838 4,366,178
Swisscom AG............................. 11,447 3,540,527
Synthes-Stratec, Inc.................... 918 578,699
UBS AG.................................. 33,300 1,579,927
-----------
25,730,002
-----------
TAIWAN - 0.3%
Taiwan Semiconductor Manufacturing Co.
Ltd. ADR (b)........................... 119,057 996,507
-----------
UNITED KINGDOM - 16.1%
ARM Holdings PLC (b).................... 278,000 284,361
AstraZeneca PLC......................... 58,800 2,307,138
AstraZeneca PLC......................... 191,851 7,599,266
Barclays PLC............................ 188,000 1,298,786
BG Group PLC............................ 462,000 1,847,825
BHP Billiton PLC........................ 312,804 1,599,805
BOC Group PLC........................... 64,700 815,879
Brambles Industries PLC................. 165,400 491,692
British Aerospace PLC................... 910,062 1,847,223
Centrica PLC............................ 244,500 649,659
Compass Group PLC....................... 108,000 497,120
Glaxosmithkline PLC..................... 25,200 505,060
HBOC PLC................................ 127,800 1,497,199
Marks & Spencer Group PLC............... 127,904 595,892
mm02 PLC (b)............................ 830,000 739,550
National Grid Group PLC................. 222,900 1,464,187
Pearson PLC............................. 251,400 2,095,387
Prudential Corp. PLC.................... 226,200 1,384,638
Reckitt Benckiser PLC................... 29,600 522,046
Reuters Group PLC....................... 298,266 643,550
Royal Bank Of Scotland Group PLC........ 174,500 4,576,660
Smiths Group PLC........................ 254,900 2,725,465
Standard Chartered PLC.................. 172,000 1,918,795
Unilever PLC............................ 179,800 1,767,297
Vodafone Group PLC...................... 5,807,653 11,463,370
-----------
51,137,850
-----------
TOTAL COMMON STOCKS..................... 261,297,958
-----------
</Table>
64 HSBC INVESTOR PORTFOLIOS See notes to financial statements.
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2003 (UNAUDITED) (CONTINUED)
.................................................................................
<Table>
<Caption>
- -----------------------------------------------------------------
CONVERTIBLE BONDS - 0.3%
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
----------- -----------
JAPAN - 0.2%
SMFG Finance (Cayman) Ltd., 2.25%,
7/11/05 (c)(d)(e).................... 36,000,000 206,020
SMFG Finance (Cayman) Ltd., 2.25%,
7/11/05 (c)(e)....................... 81,000,000 463,547
-----------
SWITZERLAND -- 0.1%
Credit Suisse Group Finance
(Guernsey), 6.00%, 12/23/05.......... 461,000 355,700
-----------
TOTAL CONVERTIBLE BONDS............... 1,025,267
-----------
- -----------------------------------------------------------------
RIGHTS & WARRANTS - 0.0%
UNITED KINGDOM -- 0.0%
TI Automotive Ltd. (b)................ 190,000 0
-----------
TOTAL RIGHTS & WARRANTS............... 0
-----------
- -----------------------------------------------------------------
INVESTMENT COMPANIES - 17.7%
UNITED STATES - 17.7%
Investors Cash Reserve................ 56,637,776 56,637,776
-----------
TOTAL INVESTMENT COMPANIES............ 56,637,776
-----------
TOTAL INVESTMENTS
(COST $355,092,629) (a) - 99.7%..... 318,961,001
-----------
-----------
</Table>
Percentages indicated are based on net assets of $319,798,405.
(a) Cost differs from value by net unrealized depreciation as follows:
<Table>
Unrealized appreciation........... $ 21,177,166
Unrealized depreciation........... (57,308,794)
------------
Net unrealized depreciation....... $(36,131,628)
------------
------------
</Table>
(b) Represents non-income producing security.
(c) Security valued at fair value as determined in good faith under procedures
applied under the general supervision of the Board of Trustees.
(d) Security exempt from registration under Rule 144a of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. These securities
have been deemed liquid by the investment manager based on procedures
approved by the Board of Trustees.
(e) Step-up bond; coupon rate is zero until step-up date. Step-up rate is
provided.
* The principle amount of each security is denominated in the local currency of
each respective country.
ADR -- American Depositary Receipt
CVA -- Certificate van aandelen (share certificates)
FDR -- Fiduciary Depositary Receipt
See notes to financial statements. HSBC INVESTOR PORTFOLIOS 65
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2003 (UNAUDITED)
.................................................................................
<Table>
<Caption>
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
Aerospace & Defense......................................... 0.6%
Airlines.................................................... 0.3%
Automotive.................................................. 4.1%
Banking & Financial Services................................ 12.0%
Building Materials.......................................... 1.6%
Business Services........................................... 0.2%
Chemicals................................................... 1.5%
Computer Related............................................ 1.5%
Diversified Manufacturing Operations........................ 8.5%
Drugs -- Medical............................................ 2.7%
Electrical.................................................. 0.2%
Electronic Components & Semiconductors...................... 4.2%
Food & Beverage............................................. 4.4%
Insurance................................................... 4.4%
Leisure..................................................... 1.4%
Metals & Mining............................................. 1.8%
Manufacturing............................................... 4.2%
Multimedia.................................................. 7.5%
Oil & Gas................................................... 6.5%
Paper Products.............................................. 0.5%
Real Estate................................................. 1.5%
Retail...................................................... 3.1%
Telecommunications.......................................... 8.4%
Textiles.................................................... 0.1%
Tobacco..................................................... 0.2%
Transportation.............................................. 0.3%
Wholesale Distribution...................................... 0.3%
Investment Companies........................................ 17.7%
------
Total Investments........................................... 99.7%
Other assets in excess of liabilities....................... 0.3%
------
Net Assets.................................................. 100.0%
------
------
</Table>
66 HSBC INVESTOR PORTFOLIOS See notes to financial statements.
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2003 (UNAUDITED)
(CONTINUED)
.................................................................................
At April 30, 2003, the portfolio's open forward currency contracts were as
follows:
<Table>
<Caption>
CURRENCY CONTRACT UNREALIZED
DELIVERY AMOUNT VALUE APPRECIATION/
CURRENCY DATE (LOCAL CURRENCY) (U.S. DOLLAR) VALUE (DEPRECIATION)
- -------- ---- ---------------- ------------- ----- --------------
LONG CONTRACTS
Canadian Dollar.................................. 7/14/2003 2,289,265 $ 1,564,022 $ 1,588,897 $ 24,875
Canadian Dollar.................................. 7/17/2003 3,054,126 2,086,141 2,119,374 33,233
Euro............................................. 5/2/2003 24,593 26,999 27,446 447
Euro............................................. 5/5/2003 24,725 27,261 27,587 326
Euro............................................. 5/5/2003 33,620 37,180 37,512 332
Euro............................................. 5/21/2003 1,365,105 1,461,012 1,522,090 61,078
Euro............................................. 5/27/2003 16,382 17,323 18,261 938
Euro............................................. 6/4/2003 1,254,774 1,347,822 1,398,284 50,462
Euro............................................. 6/9/2003 1,141,468 1,133,614 1,271,792 138,178
Euro............................................. 9/12/2003 343,457 377,198 381,496 4,298
Euro............................................. 9/30/2003 4,811,181 5,124,918 5,341,012 216,094
Euro............................................. 10/16/2003 1,651,085 1,736,016 1,831,986 95,970
----------- ----------- ---------
TOTAL LONG CONTRACTS............................................................ $14,939,506 $15,565,737 $ 626,231
----------- ----------- ---------
----------- ----------- ---------
SHORT CONTRACTS
British Pound.................................... 5/2/2003 6,361 $ 10,137 $ 10,167 $ (30)
British Pound.................................... 5/2/2003 43,611 69,288 69,702 (414)
Canadian Dollar.................................. 5/21/2003 2,223,483 1,461,012 1,548,047 (87,035)
Euro............................................. 5/2/2003 26,087 28,639 29,113 (474)
Euro............................................. 5/5/2003 15,634 17,290 17,444 (154)
Hong Kong Dollar................................. 10/16/2003 13,488,043 1,736,016 1,727,287 8,729
Japanese Yen..................................... 6/9/2003 140,571,760 1,133,614 1,180,677 (47,063)
Japanese Yen..................................... 7/17/2003 248,941,800 2,086,142 2,093,796 (7,654)
Japanese Yen..................................... 9/12/2003 43,735,770 377,198 368,586 8,612
Japanese Yen..................................... 9/30/2003 609,576,660 5,124,918 5,140,408 (15,490)
Mexican Nuevo Peso............................... 6/4/2003 15,198,700 1,347,822 1,469,876 (122,054)
Swiss Franc...................................... 7/14/2003 2,166,789 1,564,022 1,601,530 (37,508)
----------- ----------- ---------
TOTAL SHORT CONTRACTS........................................................... $14,956,097 $15,256,632 $(300,535)
----------- ----------- ---------
----------- ----------- ---------
</Table>
See notes to financial statements. HSBC INVESTOR PORTFOLIOS 67
HSBC INVESTOR SMALL CAP EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2003 (UNAUDITED)
.................................................................................
<Table>
<Caption>
- -----------------------------------------------------------------
COMMON STOCKS - 87.0%
SHARES VALUE($)
---------- -----------
BANKING - 4.5%
East West Bancorp, Inc................. 199,700 6,759,845
Southwest Bancorporation of Texas, Inc.
(b)................................... 175,400 5,960,092
-----------
12,719,937
-----------
BIOTECHNOLOGY - 2.3%
Celgene Corp. (b)...................... 248,200 6,604,602
-----------
COMPUTER SOFTWARE - 5.7%
Electronic Arts, Inc. (b).............. 102,700 6,087,029
SRA International, Inc. (b)............ 218,500 5,167,525
Synopsys, Inc. (b)..................... 103,300 5,024,512
-----------
16,279,066
-----------
EDUCATIONAL SERVICES - 4.4%
Apollo Group, Inc. (b)................. 105,700 4,665,598
Career Education Corp. (b)............. 129,800 7,804,874
-----------
12,470,472
-----------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 6.9%
Power Integrations, Inc. (b)........... 211,800 4,687,558
Semtech Corp. (b)...................... 243,200 3,866,880
Thermo Electron Corp. (b).............. 280,400 5,094,868
Varian Semiconductor Equipment
Associates, Inc. (b).................. 263,800 6,080,590
-----------
19,729,896
-----------
E-MARKETING & INFORMATION - 0.3%
DoubleClick, Inc. (b).................. 111,100 955,460
-----------
ENVIRONMENTAL SERVICES - 3.6%
Republic Services, Inc. (b)............ 251,800 5,403,628
Waste Connections, Inc. (b)............ 145,500 4,894,620
-----------
10,298,248
-----------
FINANCIAL SERVICES - 2.8%
CheckFree Corp. (b).................... 285,400 7,868,478
-----------
HEALTH CARE - 17.2%
Becton Dickinson & Co.................. 196,000 6,938,400
Cross Country, Inc. (b)................ 465,500 5,274,115
CTI Molecular Imaging, Inc. (b)........ 260,200 4,777,272
Express Scripts, Inc. (b).............. 102,600 6,049,296
Humana, Inc. (b)....................... 548,200 6,057,610
Integra LifeSciences Holdings Corp.
(b)................................... 187,200 4,996,368
Lincare Holdings, Inc. (b)............. 169,690 5,153,485
Manor Care, Inc. (b)................... 270,500 5,261,225
NDCHealth Corp......................... 229,400 4,415,950
-----------
48,923,721
-----------
HOSPITALS - 2.1%
Community Health Systems, Inc. (b)..... 308,800 5,867,200
-----------
HUMAN RESOURCES - 0.0%
Employee Solutions, Inc. (b)........... 2,483 0
-----------
</Table>
COMMON STOCKS, CONTINUED
<Table>
<Caption>
SHARES VALUE($)
---------- -----------
INSURANCE - 5.5%
Philadelphia Consolidated Holding Corp.
(b)................................... 148,800 5,804,688
Platinum Underwriter Holdings Ltd...... 185,300 4,901,185
RenaissanceRe Holdings Ltd............. 56,600 2,506,814
Willis Group Holdings Ltd.............. 80,400 2,507,676
-----------
15,720,363
-----------
MEDIA - 2.9%
Entravision Communications Corp. (b)... 503,400 3,830,874
The E.W. Scripps Co. Class A........... 57,500 4,556,875
-----------
8,387,749
-----------
OIL & GAS - 6.1%
Chesapeake Energy Corp................. 815,400 6,572,124
Helmerich & Payne, Inc................. 193,900 4,989,047
Varco International, Inc. (b).......... 338,200 5,948,938
-----------
17,510,109
-----------
PHARMACEUTICALS - 8.6%
Biogen, Inc. (b)....................... 123,800 4,703,162
Caremark Rx, Inc. (b).................. 409,900 8,161,109
King Pharmaceuticals, Inc. (b)......... 446,400 5,629,104
United Therapeutics Corp. (b).......... 341,900 6,136,763
-----------
24,630,138
-----------
RETAIL - 10.3%
Abercrombie & Fitch Co. (b)............ 204,800 6,733,824
Cost Plus, Inc. (b).................... 202,900 6,235,117
Dollar Tree Stores, Inc. (b)........... 227,500 5,789,875
P.F. Chang's China Bistro, Inc. (b).... 120,000 5,028,000
Williams-Sonoma, Inc. (b).............. 214,300 5,546,084
-----------
29,332,900
-----------
TELECOMMUNICATIONS EQUIPMENT - 3.8%
Advanced Fibre Communications, Inc.
(b)................................... 353,080 5,402,124
Polycom, Inc. (b)...................... 546,300 5,364,666
-----------
10,766,790
-----------
TOTAL COMMON STOCKS.................... 248,065,129
-----------
- -----------------------------------------------------------------
INVESTMENT COMPANIES - 5.3%
Dreyfus Cash Management Fund........... 15,025,272 15,025,272
-----------
TOTAL INVESTMENT COMPANIES............. 15,025,272
-----------
TOTAL INVESTMENTS
(COST $254,578,660) (a) - 92.3%...... 263,090,401
-----------
-----------
</Table>
- ---------
Percentages indicated are based on net assets of $285,009,643.
(a) Cost differs from value by net unrealized appreciation
<Table>
Unrealized appreciation.......... $ 20,298,937
Unrealized depreciation.......... (11,787,196)
------------
Net unrealized appreciation...... $ 8,511,741
------------
------------
</Table>
(b) Represents non-income producing security.
68 HSBC INVESTOR PORTFOLIOS See notes to financial statements.
[THIS PAGE INTENTIONALLY LEFT BLANK]
HSBC INVESTOR PORTFOLIOS 69
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF ASSETS AND LIABILITIES -- APRIL 30, 2003 (UNAUDITED)
<Table>
<Caption>
INTERNATIONAL
LIMITED MATURITY FIXED INCOME EQUITY SMALL CAP EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------------ ------------------ ------------------ -----------------
ASSETS:
Investments, at value $180,371,484 $436,603,215 $318,961,001 $263,090,401
Cash -- -- -- 24,840,953
Foreign currency -- -- 237,460 --
Interest and dividends receivable 1,710,707 4,706,544 1,122,479 30,093
Receivable for investments sold 2,206,588 1,698 211,837 2,587,339
Unrealized appreciation on forward
foreign currency contracts -- -- 643,572 --
Prepaid expenses 38 111 144 141
------------ ------------ ------------ ------------
TOTAL ASSETS 184,288,817 441,311,568 321,176,493 290,548,927
------------ ------------ ------------ ------------
...............................................................................................................................
LIABILITIES:
Payable for investments purchased 9,294,030 -- 794,863 5,342,061
Unrealized depreciation on forward
foreign currency contracts -- -- 317,876 --
Accrued expenses and other liabilities:
Investment management 57,279 136,426 155,420 161,054
Administration 5,995 15,420 10,272 9,637
Other 2,300 23,483 99,657 26,532
------------ ------------ ------------ ------------
TOTAL LIABILITIES 9,359,604 175,329 1,378,088 5,539,284
------------ ------------ ------------ ------------
..............................................................................................................................
NET ASSETS:
Applicable to investors' beneficial
interest $174,929,213 $441,136,239 $319,798,405 $285,009,643
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Investments, at cost $173,713,092 $412,604,152 $355,092,629 $254,578,660
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</Table>
70 HSBC INVESTOR PORTFOLIOS See notes to financial statements.
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED APRIL 30, 2003
(UNAUDITED)
................................................................................
<Table>
<Caption>
LIMITED MATURITY FIXED INCOME INTERNATIONAL SMALL CAP EQUITY
PORTFOLIO PORTFOLIO EQUITY PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $3,638,163 $10,074,185 $ 29,944 $ 18,005
Dividend 51,898 120,986 3,086,637 410,911
Foreign tax withholding -- -- (496,935) --
---------- ----------- ----------- ------------
TOTAL INVESTMENT INCOME 3,690,061 10,195,171 2,619,646 428,916
---------- ----------- ----------- ------------
............................................................................................................................
EXPENSES:
Investment management 324,672 786,608 945,045 1,048,294
Administration 30,373 77,472 49,909 46,902
Accounting 28,263 43,162 42,446 30,410
Custodian 25,713 44,268 226,107 69,227
Trustee 1,005 2,571 1,537 1,506
Other 5,243 13,987 13,344 6,447
---------- ----------- ----------- ------------
TOTAL EXPENSES 415,269 968,068 1,278,388 1,202,786
---------- ----------- ----------- ------------
............................................................................................................................
NET INVESTMENT INCOME (LOSS) 3,274,792 9,227,103 1,341,258 (773,870)
---------- ----------- ----------- ------------
............................................................................................................................
NET REALIZED/UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS, FUTURES AND FOREIGN
CURRENCIES:
Net realized gains (losses) from
investment, futures and foreign currency
transactions 837,977 385,177 (6,578,235) (18,162,085)
Change in unrealized
appreciation/depreciation from
investments, futures and foreign
currencies 1,647,156 11,623,042 7,550,053 25,721,387
---------- ----------- ----------- ------------
............................................................................................................................
Net realized/unrealized gains from
investment, futures and foreign currency
transactions 2,485,133 12,008,219 971,818 7,559,302
---------- ----------- ----------- ------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS $5,759,925 $21,235,322 $ 2,313,076 $ 6,785,432
---------- ----------- ----------- ------------
---------- ----------- ----------- ------------
</Table>
See notes to financial statements. HSBC INVESTOR PORTFOLIOS 71
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF CHANGES IN NET ASSETS
.................................................................................
<Table>
<Caption>
LIMITED MATURITY PORTFOLIO FIXED INCOME PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2003 YEAR ENDED APRIL 30, 2003 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2002 (UNAUDITED) OCTOBER 31, 2002
- -----------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 3,274,792 $ 6,131,946 $ 9,227,103 $ 17,602,568
Net realized gains (losses) from
investment and futures transactions 837,977 (787,558) 385,177 1,531,345
Change in unrealized
appreciation/depreciation from
investments and futures 1,647,156 429,535 11,623,042 215,590
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 5,759,925 5,773,923 21,235,322 19,349,503
------------ ------------ ------------ ------------
............................................................................................................................
Proceeds from contributions 34,205,629 53,476,926 105,516,797 353,082,260
Fair value of withdrawals (14,851,232) (24,615,925) (71,418,157) (229,543,187)
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS FROM TRANSACTIONS IN
INVESTORS' BENEFICIAL INTEREST 19,354,397 28,861,001 34,098,640 123,539,073
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS 25,114,322 34,634,924 55,333,962 142,888,576
............................................................................................................................
NET ASSETS:
Beginning of period 149,814,891 115,179,967 385,802,277 242,913,701
------------ ------------ ------------ ------------
End of period $174,929,213 $149,814,891 $441,136,239 $385,802,277
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</Table>
72 HSBC INVESTOR PORTFOLIOS See notes to financial statements.
HSBC INVESTOR PORTFOLIOS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
.................................................................................
<Table>
<Caption>
INTERNATIONAL EQUITY SMALL CAP EQUITY
PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2003 YEAR ENDED APRIL 30, 2003 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2002 (UNAUDITED) OCTOBER 31, 2002
- -----------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 1,341,258 $ 1,884,444 $ (773,870) $ (2,357,766)
Net realized losses from investment and
foreign currency transactions (6,578,235) (20,223,366) (18,162,085) (68,582,200)
Change in unrealized
appreciation/depreciation from
investments and foreign currencies 7,550,053 (17,088,070) 25,721,387 4,212,403
------------- ------------- ------------ -------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 2,313,076 (35,426,992) 6,785,432 (66,727,563)
------------- ------------- ------------ -------------
............................................................................................................................
Proceeds from contributions 282,479,379 651,096,825 91,978,150 187,109,547
Fair value of withdrawals (221,609,772) (634,901,691) (79,971,330) (119,737,618)
------------- ------------- ------------ -------------
CHANGE IN NET ASSETS FROM TRANSACTIONS IN
INVESTORS' BENEFICIAL INTEREST 60,869,607 16,195,134 12,006,820 67,371,929
------------- ------------- ------------ -------------
CHANGE IN NET ASSETS 63,182,683 (19,231,858) 18,792,252 644,366
............................................................................................................................
NET ASSETS:
Beginning of period 256,615,722 275,847,580 266,217,391 265,573,025
------------- ------------- ------------ -------------
End of period $ 319,798,405 $ 256,615,722 $285,009,643 $ 266,217,391
------------- ------------- ------------ -------------
------------- ------------- ------------ -------------
</Table>
See notes to financial statements. HSBC INVESTOR PORTFOLIOS 73
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
.................................................................................
<Table>
<Caption>
RATIOS/SUPPLEMENTARY DATA
--------------------------------------------------------------------------------
RATIO OF NET
NET ASSETS AT RATIO OF INVESTMENT
END OF EXPENSES INCOME (LOSS) RATIO OF EXPENSES
PERIOD TO AVERAGE TO AVERAGE TO AVERAGE PORTFOLIO
(000'S) NET ASSETS NET ASSETS NET ASSETS TURNOVER
- -----------------------------------------------------------------------------------------------------------------------------
LIMITED MATURITY PORTFOLIO
Period ended October 31, 2001 (a) $115,180 0.55%(b) 4.97%(b) 0.55%(b) 102.01%
Year ended October 31, 2002 149,815 0.51% 4.60% 0.51% 44.04%
Six months ended April 30, 2003 (Unaudited) 174,929 0.51%(b) 4.03%(b) 0.51%(b) 32.10%
- -----------------------------------------------------------------------------------------------------------------------------
FIXED INCOME PORTFOLIO
Year ended October 31, 1998 $173,073 0.62% 6.03% 0.62% 126.40%
Year ended October 31, 1999 196,871 0.56% 6.43% 0.56% 433.26%
Year ended October 31, 2000 226,366 0.51% 6.74% 0.51% 440.49%
Year ended October 31, 2001 242,914 0.53% 6.53% 0.53% 341.26%
Year ended October 31, 2002 385,802 0.48% 5.14% 0.48% 77.82%
Six months ended April 30, 2003 (Unaudited) 441,136 0.47%(b) 4.45%(b) 0.47%(b) 30.68%
- -----------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
Year ended October 31, 1998 $205,737 0.97% 0.80% 0.97% 40.47%
Year ended October 31, 1999 288,830 0.91% 0.61% 0.91% 34.26%
Year ended October 31, 2000 332,325 0.84% 0.53% 0.84% 27.81%
Year ended October 31, 2001 275,848 0.90% 0.54% 0.90% 26.90%
Year ended October 31, 2002 256,616 0.91% 0.63% 0.91% 31.63%
Six months ended April 30, 2003 (Unaudited) 319,798 0.96%(b) 1.00%(b) 0.96%(b) 8.88%
- -----------------------------------------------------------------------------------------------------------------------------
SMALL CAP EQUITY PORTFOLIO
Year ended October 31, 1998 $186,517 1.03% (0.57%) 1.06%(c) 154.69%
Year ended October 31, 1999 237,305 1.04% (0.68%) 1.04% 77.74%
Year ended October 31, 2000 369,166 0.97% (0.60%) 0.97% 79.51%
Year ended October 31, 2001 265,573 0.98% (0.65%) 0.98% 52.47%
Year ended October 31, 2002 266,217 0.99% (0.78%) 0.99% 103.90%
Six months ended April 30, 2003 (Unaudited) 285,010 0.96%(b) (0.62%)(b) 0.96%(b) 124.49%
- -----------------------------------------------------------------------------------------------------------------------------
</Table>
(a) Limited Maturity Portfolio commenced operations on January 24, 2001.
(b) Annualized.
(c) During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratio would have been as indicated.
See notes to financial statements.
74 HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2003 (UNAUDITED)
.................................................................................
1. ORGANIZATION:
The HSBC Investor Portfolios (the 'Portfolio Trust'), is an open-end
management investment company organized as a master trust fund under the
laws of the State of New York on November 1, 1994. The Portfolios operate as
master funds in master-feeder arrangements. The Declaration of Trust permits
the Board of Trustees to issue an unlimited number of beneficial interests
in the Portfolios. The Portfolio Trust contains the following (individually
a 'Portfolio,' collectively the 'Portfolios'):
<Table>
<Caption>
PORTFOLIO SHORT NAME
- --------- ----------
HSBC Investor Limited Maturity Portfolio Limited Maturity Portfolio
HSBC Investor Fixed Income Portfolio Fixed Income Portfolio
HSBC Investor International Equity Portfolio International Equity Portfolio
HSBC Investor Small Cap Equity Portfolio Small Cap Equity Portfolio
</Table>
The Portfolios are diversified series of the Portfolio Trust and are
part of the HSBC Investor Family of Funds. Financial Statements for all
other series of the HSBC Investor Family of Funds are published separately.
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 accounting principles generally accepted
in the United States of America ('U.S.'). 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 are valued by or at the direction of
the Portfolios' Board of Trustees.
SECURITIES TRANSACTIONS AND RELATED INCOME:
Security transactions are accounted for on the date the security is
purchased or sold. Securities gains and losses are calculated on the
identified cost basis. Interest income is recognized on the accrual basis
and includes, where applicable, the amortization or accretion of premium or
discount. Dividend income is recorded on the ex-dividend date.
FOREIGN CURRENCY TRANSLATION:
The accounting records of the Portfolios are maintained in U.S. dollars.
Foreign currency amounts are translated into U.S. dollars at the current
rate of exchange to determine the value of investments, assets and
liabilities. Purchases and sales of securities, and income and expenses are
translated at the prevailing rate of exchange on the respective dates of
such transactions. The Portfolios do not isolate that portion of the results
of operations resulting from changes
HSBC INVESTOR PORTFOLIOS 75
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2003 (UNAUDITED)
(CONTINUED)
.................................................................................
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
counter-parties 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 financial 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 financial 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
financial 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 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. When the Portfolio
enters into a mortgage dollar roll transaction, liquid assets in an amount
sufficient to pay for the future repurchase are segregated with the
custodian.
EXPENSE ALLOCATION:
Expenses incurred by the HSBC Investor Family of Funds with respect to
any two or more funds within the HSBC Investor Family of Funds are allocated
in proportion to the net assets of each fund within the HSBC Investor Family
of Funds, except when allocations of direct expenses to each Portfolio can
otherwise be made fairly. Expenses directly attributable to a Portfolio are
charged to that Portfolio.
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 Feeders, and is therefore not
subject to U.S. Federal income tax. As such, an investor in the Portfolios
will be taxed on their 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.
76 HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2003 (UNAUDITED) (CONTINUED)
.................................................................................
3. RELATED PARTY TRANSACTIONS:
INVESTMENT MANAGEMENT:
HSBC Asset Management (Americas) Inc. ('HSBC' or the 'Investment
Adviser'), a wholly owned subsidiary of HSBC Bank USA, a New York State
chartered bank, acts as the Investment Adviser to the Portfolios pursuant to
an investment management contract with the Portfolio Trust. As Investment
Adviser, HSBC manages the investments of the Portfolios and continuously
reviews, supervises and administers the Portfolios' investments. Capital
Guardian Trust Company and Westfield Capital Management, LLC serve as
Sub-Investment Advisers for the International Equity Portfolio and the Small
Cap Equity Portfolio, respectively, and are paid for their services directly
by HSBC. On January 20, 2003, Westfield Capital Management replaced MFS
Institutional Advisors, Inc. as Sub-Investment Adviser for the Small Cap
Equity Portfolio.
For its services as Investment Adviser, HSBC receives a fee, accrued
daily and paid monthly, at an annual rate of 0.40% of the Limited Maturity
Portfolio's average daily net assets.
For its services as Investment Adviser, HSBC receives, from the Fixed
Income Portfolio, a fee accrued daily and paid monthly at an annual rate of:
<Table>
<Caption>
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%
</Table>
For their services as Investment Adviser and Sub-Investment Adviser,
respectively, HSBC and Capital Guardian Trust Company receive in aggregate,
from the International Equity Portfolio, a fee accrued daily and paid
monthly at an annual rate of:
<Table>
<Caption>
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE
- ------------------------------------ --------
Up to $25 million........................................... 0.950%
In excess of $25 million but not exceeding $50 million...... 0.800%
In excess of $50 million but not exceeding $250 million..... 0.675%
In excess of $250 million................................... 0.625%
</Table>
For their services as Investment Adviser and Sub-Investment Adviser,
respectively, HSBC and Westfield Capital Management LLC receive in
aggregate, a fee accrued daily and paid monthly at an annual rate of 0.80%
of the Small Cap Equity Portfolio's average daily net assets.
ADMINISTRATION:
BISYS Fund Services Ohio, Inc. ('BISYS Ohio'), a wholly-owned subsidiary
of The BISYS Group, Inc., with whom certain officers of the Portfolio Trust
are affiliated, serves the Portfolio Trust as Administrator. Such officers
are paid no fees directly by the Portfolios for serving as officers of the
Portfolio Trust. Under the terms of the administration agreement with the
Portfolios, BISYS Ohio receives, from the Portfolios, a fee accrued daily
and paid monthly at an annual rate of:
<Table>
<Caption>
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE
- ------------------------------------ --------
Up to $8 billion............................................ 0.0375%
In excess of $8 billion but not exceeding $9.25 billion..... 0.0350%
In excess of $9.25 billion but not exceeding $12 billion.... 0.0250%
In excess of $12 billion.................................... 0.0150%
</Table>
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 of the Portfolios based upon its pro-rata share of net assets.
HSBC INVESTOR PORTFOLIOS 77
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2003 (UNAUDITED) (CONTINUED)
.................................................................................
FUND ACCOUNTING AND CUSTODIAN:
BISYS provides fund accounting services for the Portfolios. For its
services to the Portfolios, BISYS receives an annual fee from each Portfolio
accrued daily and paid monthly. HSBC serves as custodian to the Fixed Income
Portfolio, Small Cap Equity Portfolio and Limited Maturity Portfolio.
Investor's Bank & Trust Company serves as custodian to the International
Equity Portfolio.
4. INVESTMENT TRANSACTIONS:
For the six months ended April 30, 2003, each Portfolio purchased and
sold securities, excluding short-term securities, in the following amounts:
<Table>
<Caption>
PURCHASES SALES
--------- -----
Limited Maturity Portfolio................................ $ 77,587,064 $ 49,921,307
Fixed Income Portfolio.................................... 157,199,029 115,724,450
International Equity Portfolio............................ 31,322,244 22,485,382
Small Cap Equity Portfolio................................ 304,914,855 321,482,905
</Table>
78 HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR FAMILY OF FUNDS:
INVESTMENT ADVISER
HSBC Asset Management (Americas) Inc.
452 Fifth Avenue
New York, NY 10018
SUB-ADVISERS
HSBC Investor Equity Fund
Alliance Capital Management, L.P.
1345 Avenue of the Americas
New York, NY 10105
Institutional Capital Corporation
225 West Wacker Drive
Chicago, IL 60606
HSBC Investor International Equity Portfolio
Capital Guardian Trust Company
11100 Santa Monica Boulevard
Los Angeles, CA 90025
HSBC Investor Small Cap Equity Portfolio
Westfield Capital Management
One Financial Center
Boston, MA 02111
SHAREHOLDER SERVICING AGENTS
For HSBC Bank USA and
HSBC Brokerage (USA) Inc. Clients
HSBC Bank USA
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
ADMINISTRATOR, TRANSFER AGENT,
DISTRIBUTOR, AND SPONSOR
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
CUSTODIANS
HSBC Investor Limited Maturity Portfolio
HSBC Investor Fixed Income Portfolio
HSBC Investor New York Tax-Free Bond Fund
HSBC Investor Balanced Fund
HSBC Investor Equity Fund
HSBC Investor Growth and Income Fund
HSBC Investor Mid-Cap Fund
HSBC Investor Small Cap Equity Portfolio
HSBC Bank USA
452 Fifth Avenue
New York, NY 10018
HSBC Investor International Equity Portfolio
Investors Bank & Trust Company
200 Clarendon Street - 16th Floor
Boston, MA 02116
INDEPENDENT AUDITORS
KPMG LLP
191 West Nationwide Blvd., Suite 500
Columbus, OH 43215
LEGAL COUNSEL
Dechert
1775 Eye Street, N.W.
Washington, D.C. 20006
The HSBC Investor Family of Funds are distributed by BISYS Fund Services. This
document must be preceded or accompanied by a current prospectus for the HSBC
Investor Funds, which you should read carefully before you invest or send money.
6/03
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Items 5-6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies. Not applicable.
Item 8. [Reserved]
Item 9. Controls and Procedures.
(a) In the opinion of the principal executive officer and principal
financial officer, based on their evaluation, the registrant's disclosure
controls and procedures are adequately designed and are operating effectively to
ensure (i) that material information relating to the registrant, including its
consolidated subsidiaries, is made known to them by others within those
entities, particularly during the period in which this report is being prepared;
and (ii) that information required to be disclosed by the registrant in the
reports it files or submits under the Securities Exchange Act of 1934 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 significant changes in the registrant's internal
controls or in other factors that could significantly affect these controls
subsequent to the date of the evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Item 10. Exhibits.
(a) Not applicable.
(b) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2 under
the Act (17 CFR 270.30a-2) in the exact form set forth below: Attached hereto.
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.
HSBC Advisor Funds Trust
By: /s/ Walter B. Grimm
-----------------------------------------------------------------------
Walter B. Grimm
President
Date: July 7, 2003
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: /s/ Nadeem Yousaf
-----------------------------------------------------------------------
Nadeem Yousaf
Treasurer
Date: July 7, 2003
By: /s/ Walter B. Grimm
-----------------------------------------------------------------------
Walter B. Grimm
President
Date: July 7, 2003
STATEMENT OF DIFFERENCES
The dagger symbol shall be expressed as....................................'D'
The section symbol shall be expressed as....................................'SS'