------------------------------------ OMB APPROVAL OMB Number: 3235-0570 Expires: October 31, 2006 Estimated average burden hours per response. . . . . . .19.3 ------------------------------------ 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, 2004 Date of reporting period: October 31, 2004 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. Include a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Act (17 CFR 270.30e-1). Annual Report [GRAPHIC] HSBC Investor Family of Funds October 31, 2004 HSBC Investor Limited Maturity Fund HSBC Investor Fixed Income Fund HSBC Investor Bond Fund HSBC Investor New York Tax-Free Bond Fund HSBC Investor Growth Fund HSBC Investor Value 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 Annual Report - October 31, 2004 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............................ 20 HSBC Investor Growth and Income Fund................................. 23 HSBC Investor Mid-Cap Fund........................................... 25 Statements of Assets and Liabilities................................... 27 Statements of Operations............................................... 29 Statements of Changes in Net Assets.................................... 31 Financial Highlights................................................... 43 Notes to Financial Statements.......................................... 55 Report of Independent Registered Public Accounting Firm................ 63 Table of Shareholder Expenses.......................................... 64 Special Meeting of Shareholders........................................ 66 Board of Trustees...................................................... 67 HSBC Investor Portfolios Schedules of Portfolio Investments HSBC Investor Limited Maturity Portfolio............................ 69 HSBC Investor Fixed Income Portfolio................................ 71 HSBC Investor Growth Portfolio...................................... 74 HSBC Investor Value Portfolio....................................... 75 HSBC Investor International Equity Portfolio........................ 76 HSBC Investor Small Cap Equity Portfolio............................ 79 Statements of Assets and Liabilities................................... 80 Statements of Operations............................................... 81 Statements of Changes in Net Assets.................................... 82 Financial Highlights................................................... 85 Notes to Financial Statements.......................................... 86 Report of Independent Registered Public Accounting Firm................ 91 Table of Shareholder Expenses.......................................... 92 Board of Trustees...................................................... 94 Privacy Policy......................................................... 96 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. Consumer Price Index (CPI) A measure of price changes in consumer goods and services such as gasoline, food, and automobiles. Sometimes referred to as "headline inflation." Institute for Supply Management (ISM) exists to educate, develop, and advance the purchasing and supply management profession. 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 Large-Cap Core Average consists of funds that, by portfolio practice, invest at least 75% of their equity assets in companies strictly outside of the U.S. with market capitalizations (on a three-year weighted basis) greater than the 250th largest company in the S&P/Citigroup World ex-U.S. Broad Market Index. Lipper Large-Cap Core Funds Average is comprised of managed funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) greater than 300% of the dollar-weighted median market capitalization of the Standard & Poor's Mid-Cap 400 Index. Lipper 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 Composite Index 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 Receipts. Price/Earnings (P/E) Ratio is the price of a stock divided by its historical earnings per share. Price-to-Book Ratio (P/B) is used to compare a stock's market value to its book value. This ratio gives some idea of whether you're paying too much for what would be left if the company went bankrupt immediately. Price-to-Cash Flow (P/C) is the price per share divided by cash flow per share. It's used as a measure of the market's expectations regarding a firm's future financial health. Producer Price Index (PPI) A family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller. 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. stock indices and has launched similar broad-market and style indices in Canada and Japan. Today, more than $214 billion is invested in funds modeling Russell's U.S. indices, and more than $1 trillion in funds is benchmarked against the global family of Russell indices. Russell MidCap 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 largest 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 securities 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 capitalization) 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 (S&P 500) 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. Volatility Index (VIX) measures market expectation of near term volatility conveyed by stock index option prizes. 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 annual reports for the HSBC Investor Family of Funds for the twelve months ended October 31, 2004. The report contains the following features: o Commentary From the Investment Manager o Portfolio Reviews--investment strategy, performance overview and outlook for the coming months o Schedules of Portfolio Investments--listing of the security holdings in each Fund o Statements of Assets and Liabilities--summary of the assets and liabilities of each Fund o Statements of Operations--summary of operations and its effect on the assets of each Fund o Statements of Changes in Net Assets--summary of changes in net assets during the period o Financial Highlights--per share summary of activity affecting net asset value per share o 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, Richard A. Fabietti Richard A. Fabietti President December 2004 See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 1 Commentary From the Investment Manager HSBC Asset Management (Americas) Inc. U.S. Economic Review The United States economy produced sustained growth during the 12-month period ended October 31, 2004. Stronger capital spending helped support an economic recovery despite high oil prices and sporadic job growth. The Federal Reserve Board (the "Fed") kept short-term interest rates at the historically low level of 1% during the first seven months of the period. That accommodative monetary policy encouraged businesses and consumers to spend, helping support an economic expansion that began in early 2003. The Fed raised the federal funds rate three times during the second half of the period, bringing the rate to 1.75% in an effort to restrain inflation as the economy grew. Inflation showed signs of picking up during 2004, after a long period of disinflation. Expanding economies in the U.S., China, India and other countries boosted demand for oil and other commodities, and prices on those items climbed as a result. Hurricanes led to disruptions in the oil supply, which also boosted oil prices, as did fears about terrorism and instability in the Middle East. Crude oil prices climbed past $50 per barrel--very high by historical standards. Higher oil and commodity prices pushed inflation higher, but that effect was partially offset by increases in productivity. High costs for oil and commodities weighed on the economy by forcing consumers and businesses to curtail investment and spending in other areas. Meanwhile, the rate of job growth fluctuated considerably from month to month, as cautious businesses struggled with an uncertain economic and political outlook. Consumer confidence and spending also fluctuated. Consumer spending benefited early in the period from low mortgage rates, which allowed homeowners to free up cash by refinancing loans. That trend abated during 2004, after most eligible consumers had taken advantage of refinancing opportunities. Manufacturing activity grew strongly. Exporters got a boost from weakness in the dollar, which made their prices more attractive to foreign consumers. Corporate profits came in higher than expected throughout the period, although some firms began warning of a likely earnings slowdown in 2005. Global Economic Review The global economy produced strong growth during the 12-month period. The International Monetary Fund projected that the global economy would grow 5% in 2004, which would be the fastest rate in 30 years. Asia's surging economies led the worldwide economic expansion. China and India grew rapidly, and demand from those countries boosted growth in surrounding nations such as Taiwan, South Korea and Australia. For example, China's growth created demand for goods and services from Japan, bolstering that country's economic recovery. Unemployment in Japan fell, while exports, profits and capital spending grew. Europe's economy improved moderately. Industrial activity increased significantly, and the services sector also gained. But unemployment remained high throughout the period, at approximately 9%, weighing down consumer spending. A strong euro early in the period hurt exports, which had been a primary driver of growth. European companies in response cut costs and limited job growth. The U.K.'s economy continued to strengthen, powered by rising employment and solid retail and housing markets. Emerging economies in Latin America benefited from rising commodity prices and growing exports. Mexico's peso weakened early in the period, boosting its exports. Meanwhile, Brazil's trade surplus pushed up the value of that country's currency, the real, and its central bank was able to reduce its high interest rates. Market environment U.S. equities generated sizable gains during the first third of the 12-month period, then declined significantly. The market was characterized by a great deal of volatility, as investors tried to weigh the potential impacts of positive factors, such as economic growth and corporate profits, with negative factors including problems in Iraq, rising energy prices, uneven job growth, political uncertainty and the risk of terrorism. Value stocks outperformed growth stocks throughout much of the period. Energy stocks led the market, supported by rising energy prices. 2 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. Commentary From the Investment Manager - (continued) HSBC Asset Management (Americas) Inc. The stock market's early rally was broad-based, as many sectors benefited from signs of sustainable economic growth. Small-cap stocks led the market during this period, due to investors' belief that small companies' earnings would benefit the most from an improving economy. The market began to stagnate in spring, as slower-than-expected job growth and the prospect of rising interest rates caused many investors to revise their expectations. Investors shifted their emphasis to large-cap stocks, which typically fare best during periods of rising interest rates. Financial stocks lagged during this period, due to fears that rising rates and regulatory difficulties would eat into profit margins. Stocks fell during the summer, led by large losses among technology shares. High oil prices seemed likely to slow economic growth, causing investors to question their assumptions about earnings growth and stock valuations. Shares of semiconductor firms suffered especially poor performance, as demand weakened and inventories climbed. The market rebounded in early fall. Technology stocks improved, led by a strong recovery in semiconductor stocks, and energy stocks continued their strong run. Those sectors helped offset weak performance by health care stocks, which suffered from fears about weak drug pipelines, patent expirations, and the prospect for increased government regulation. International markets outperformed U.S. equities during the period. European stocks generated solid gains, as investors came to believe that the region's economic recovery was sustainable. Japan's market continued to benefit from the country's improving economy. Emerging markets were very volatile: They climbed early in the period, then fell dramatically during summer, and then rebounded strongly during early fall. Value stocks generally led international markets during the 12-month period. Bond yields fluctuated as investors tried to gauge the strength of job growth and the economy. Treasury yields fell early in the period on weak job-growth data, and then rose in anticipation of a rate increase by the Federal Reserve. High oil prices during the summer seemed likely to slow the economy, and yields fell as a result. Investment-grade corporate bonds performed well during much of the period. Investors found corporate yields attractive, given the low yields offered by Treasury bonds and very strong corporate balance sheets. New in 2004 HSBC introduced the HSBC Investor Growth Fund and the HSBC Investor Value Fund on May 7, 2004. The objective of the Growth Fund is long-term growth of capital, primarily investing in U.S. and foreign equity securities of high quality companies. The objective of the Value Fund is long-term growth of capital and income primarily investing in U.S. and foreign equity securities of companies with large and medium capitalizations. The HSBC Investor Growth Fund is sub-advised by Waddell & Reed Investment Management Company. The HSBC Investor Value Fund is sub-advised by NWQ Investment Management Company, LLC. To obtain performance information current to the most recent month end, please call 1-800-782-8183. See notes to financial statements. 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 Fixed Income 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 Omaster-feeder,O in which the Fund invests all of its investable assets in the HSBC Investor Limited Maturity Portfolio (the "Portfolio"). Investment Concerns Bonds offer a relatively stable level of income, although bond prices will fluctuate providing the potential for principal gain or loss. Intermediate-term, higher-quality bonds generally offer less risk than longer-term bonds and a lower rate of return. The Fund returned 3.90%, (without sales charge) for the Class A (Investor) Shares and 4.25%, for the Class Y Shares during the twelve-month period ended October 31, 2004. That compared to a return of 4.88% for Lehman Brothers Intermediate Aggregate Bond Index. Past performance is no guarantee of future results. The Fund was overweight the Corporate and U.S. Agency sectors while under-weight the U.S. Treasury sector during the review period. In addition, the Fund maintained a "barbell" position along the yield curve. These strategies enhanced the Fund's performance overall however the Fund did slightly underperform its benchmark for the period. For a majority of the review period, the Fed left the target on the federal funds rate unchanged at 1.00%. Then on June 30th, at their scheduled Federal Open Market Committee ("FOMC") meeting they raised the funds rate to 1.25% and continued on that course with their next scheduled meetings. At earlier FOMC meetings, their comments were surprisingly dovish with respect to the timing of the beginning of any tightening cycle, despite much firmer economic data released during the period. As 2003 drew to a close, third-quarter Gross Domestic Product(4) (the "GDP") was revised higher to 8.2% from an initially reported 7.2%. Non-farm productivity was revised higher to 9.4%, giving emphasis to a strong cyclical economic recovery. In addition, manufacturing soared to twenty-year highs, according to the Institute for Supply Management. Investment-grade corporate bond spreads continued to contract generating positive returns. The Fed reiterated that policy would remain accommodative for a "considerable period of time." With the start of the new year, the U.S. economy continued to thrive. The GDP for the fourth quarter of 2003 grew 4.0%. Manufacturing continued to soar while Capacity Utilization and Industrial Production both inched higher. With respect to the consumer, their assessment of the economy was strong. Overall Retail Sales were off to a robust start, consistent with an increase in personal spending. All the housing data released still pointed to a robust housing market. Then at their first FOMC meeting of the year, the Fed changed the wording of their statement in which they discussed the removal of accommodation. Nonetheless, it was clear that no moves in rates were imminent. The bond market took that news in stride, as it rallied through the end of the first quarter. All appeared to be going well except for the employment picture, it was gloomy. The economy had failed to create the number of jobs necessary to support the economic recovery. Towards the end the review period, the job data had dramatically improved as evident from the latest reading in the Unemployment Rate of 5.4% from 6% a year earlier. It appeared that the economy was firing on all cylinders. Manufacturing cooled slightly from mid-year levels, but remained above 50 for the remainder of period according to the Institute for Supply Management. A reading above 50 suggests expansion in manufacturing activity. The consumer sectors such as housing, retail sales, personal income and personal spending remained solid. On the inflation front, the year-over-year change in the overall Producer Price Index(4) declined slightly to 3.3% from 3.4%, while the Consumer Price Index(4) fell to 2.5% from 2.7% for the same period. At the end of the review period, text from the Federal Reserve Board's Summary of Commentary on Current Economic Conditions (Beige Book) was released. Reports from the twelve federal districts generally suggested that economic activity continued to expand in September and early October. Capital spending and hiring appeared to pick up modestly, with hiring varied by region and industry. The report also indicated that wage pressures remained stable and that firms across the nation expressed concern regarding higher input costs, especially for petroleum-based products, energy, metals and construction materials. We are convinced that downside risk is significantly greater than upside risk for bonds and we maintain a defensive outlook. Relative valuations and our monetary policy forecast both provide substantial support for the current outlook. Hence, we believe the Fed will tighten policy over a 12-month time horizon as the FOMC continues its `measured' removal of monetary stimulus. Recent economic releases are more positive than previously observed indicating the economy's possible emergence from the summer `soft patch'. Uncertainties surrounding the growth implications of China's interest rate increase, and oil volatility continues to keep a bid in bonds. Our view on corporate credit is neutral. We feel that the stable credit environment will maintain spreads near current levels but are focused on the carry benefits of credit exposure. As such, the Fund's interest rate profile and sector exposure will be positioned accordingly. 4 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. Portfolio Reviews HSBC Investor Limited Maturity Fund - As of October 31, 2004 Value of a $10,000 Investment HSBC Investor Limited Lehman Brothers Maturity Fund Intermediate Aggregate Class Y (Adviser) Bond Funds Index --------------------- ----------------------- 1/23/01.............................. 10,000 10,000 12/31/01.............................. 10,769 10,695 12/31/02.............................. 11,581 11,712 12/31/03.............................. 11,969 12,157 10/31/04.............................. 12,356 12,608 Value of a $10,000 Investment HSBC Investor Limited Lehman Brothers Maturity Fund Intermediate Aggregate Class A (Investor)(1) Bond Funds Index --------------------- ----------------------- 2/7/01............................. 9,526 10,000 12/31/01............................. 10,160 10,695 12/31/02............................. 10,901 11,712 12/31/03............................. 11,238 12,157 10/31/04............................. 11,567 12,608 The charts above represent a comparison of a hypothetical $10,000 investment in the indicated share class versus a similar investment in the Fund's benchmark and represents the reinvestment of dividends and capital gains in the Fund. Average Annual Total Return (%) Inception 1 3 Since AS of October 31, 2004 Date Year Year Inception HSBC Investor Limited Maturity Fund Class A (Investor)(1) 2/7/01 -1.02 2.06 3.98 HSBC Investor Limited Maturity Fund Class B(2) 2/15/01 -0.73 2.38 4.32 HSBC Investor Limited Maturity Fund Class C(3) 2/13/01 2.07 2.99 4.50 HSBC Investor Limited Maturity Fund Class Y 1/23/01 4.25 4.02 5.77 Lehman Brothers Intermediate Aggregate Bond Index -- 4.88 5.12 -- Lipper Intermediate Investment-Grade Funds Average(4) -- 4.88 4.74 -- - -------------------------------------------------------------------------------- Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains and do not reflect the taxes that a shareholder would pay on fund distributions or on the redemption of fund shares. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 4.75%. (2) Reflects the contingent deferred sales charge maximum of 4.00%. (3) Reflects the contingent deferred sales charge maximum of 1.00%. (4) For additional information, please refer to the Glossary of Terms. The Fund is measured against the Lehman Brothers Intermediate Aggregate Bond Index, an unmanaged index generally representative of investment-grade issues with maturities between three and ten years. The performance of the index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Fund's performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, although they can invest in its underlying securities. During the period shown, the Investment Manager waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 5 Portfolio Reviews HSBC Investor Fixed Income Fund HSBC Investor Bond Fund (Class A (Investor) Shares, B Shares and C Shares) by Robert Lee Fixed Income Portfolio Manager 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"). Investment Concerns Bonds offer a relatively stable level of income, although bond prices will fluctuate providing the potential for principal gain or loss. Intermediate-term, higher-quality bonds generally offer less risk than longer-term bonds and a lower rate of return. For the 12-month period ended October 31, 2004, the shares of the HSBC Investor Fixed Income Fund produced a 5.46% total return, and the Class A (Investor) Shares of the HSBC Investor Bond Fund returned 5.07%, (without sales charge). That compared to a return of 5.53% and 4.79% for the Lehman Brothers Aggregate Bond Index and the Lipper General Bond Funds Average(4), respectively. Past performance is no guarantee of future results. The Fund only slightly underperformed its benchmark index for the ?12-month period. While outperforming its peer group and benchmark on a gross basis the Fund underperformed the index on a net basis. For a majority of the review period, the Fed left the target on the federal funds rate unchanged at 1.00%. Then on June 30th, at their scheduled Federal Open Market Committee ("FOMC") meeting they raised the funds rate and continued on that course over their next scheduled meetings. At earlier FOMC meetings, their comments were surprisingly dovish with respect to the timing of the beginning of any tightening cycle, despite much firmer economic data released during the period. As 2003 drew to a close, third-quarter Gross Domestic Product(4) ("GDP") was revised higher to 8.2% from an initially reported 7.2%. Non-farm productivity was revised higher to 9.4%, giving emphasis to a strong cyclical economic recovery. In addition, manufacturing soared to twenty-year highs, according to the Institute for Supply Management. Investment-grade corporate bond spreads continued to contract generating positive returns. The Fed reiterated that policy would remain accommodative for a "considerable period of time." With the start of the new year, the U.S. economy continued to thrive. The GDP for the fourth quarter of 2003 grew 4.0%. Manufacturing continued to soar while Capacity Utilization and Industrial Production both inched higher. With respect to the consumer, their assessment of the economy was strong. Overall Retail Sales were off to a robust start, consistent with an increase in personal spending. All the housing data released still pointed to a robust housing market. Then at their first FOMC meeting of the year, the Fed changed the wording of their statement in which they discussed the removal of accommodation. Nonetheless, it was clear that no moves in rates were imminent. The bond market took that news in stride, as it rallied through the end of the first quarter. All appeared to be going well except for the employment picture, which was gloomy. The economy had failed to create the number of jobs necessary to support the economic recovery. Towards the end the review period, the job data had dramatically improved as evident from the latest reading in the Unemployment Rate of 5.4% from 6% a year earlier. It appeared that the economy was firing on all cylinders. Manufacturing cooled slightly from mid-year levels, but remained above 50 for the remainder of period according to the Institute for Supply Management. A reading above 50 suggests expansion in manufacturing activity. The consumer sectors such as housing, retail sales, personal income and personal spending remained solid. On the inflation front, the year-over-year change in the overall Producer Price Index declined slightly to 3.3% from 3.4%, while the Consumer Price index fell to 2.5% from 2.7% for the same period. At the end of the review period, text from the Federal Reserve Board's Summary of Commentary on Current Economic Conditions (Beige Book) was released. Reports from the twelve federal districts generally suggested that economic activity continued to expand in September and early October. Capital spending and hiring appeared to pick up modestly, with hiring varied by region and industry. The report also indicated that wage pressures remained stable and that firms across the nation expressed concern regarding higher input costs, especially for petroleum-based products, energy, metals and construction materials. We are convinced that downside risk is significantly greater than upside risk for bonds and we maintain a defensive outlook. Relative valuations and our monetary policy forecast both provide substantial support for the current outlook. Hence, we believe the Fed will tighten policy over a 12-month time horizon as the FOMC continues its `measured' removal of monetary stimulus. Recent economic releases are more positive than previously observed indicating the economy's possible emergence from the summer's `soft patch'. Uncertainties surrounding the growth implications of China's interest rate increase, and oil volatility continues to keep a bid in bonds. Our view on corporate credit is neutral. We feel that the stable credit environment will maintain spreads near current levels but are focused on the carry benefits of credit exposure. As such, the Fund's interest rate profile and sector exposure will be positioned accordingly. At the beginning of the review period, the Fund approximated 103% of the duration of its benchmark index. Slowly the Fund began to reduce duration and by mid October reached a low of 87% of benchmark before closing out the review period at 91% of benchmark. On a duration weighted basis we decreased our weighting in the Mortgage Backed sector by approximately 5% in the in the third quarter of calendar 2005. This was reallocated to the Corporate and taxable municipal bond sector. Additionally, we increased the portfolio's exposure to low grade credit (A/BBB) by approximately 10% and rotating out of higher quality credit (AAA/AA)'D' and into sectors that stood to benefit most from the sustained economic rebound. These strategies as well as a barbelled yield curve allocation added performance to the portfolio relative to the benchmark.* 'D' Standard and Poor or Moody's Fund Ratings represent an opinion only, not a recommendation to buy or sell. * Portfolio composition is subject to change. 6 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. Portfolio Reviews HSBC Investor Fixed Income Fund HSBC Investor Bond Fund - As of October 31, 2004 Value of a $10,000 Investment Citigroup Broad Lehman Brothers HSBC Investor Investment-Grade Aggregate Fixed Income Fund Bond Fund Index Bond Index ----------------- ---------------- --------------- 1/9/95................. 10,000 10,000 10,000 12/31/95................. 11,847 11,742 11,855 12/31/96................. 12,278 12,433 12,284 12/31/97................. 13,463 13,463 13,468 12/31/98................. 14,632 14,384 14,642 12/31/99................. 14,512 14,229 14,520 12/31/00................. 16,199 15,827 16,203 12/31/01................. 17,567 17,269 17,584 12/31/02................. 19,369 18,744 19,358 12/31/03................. 20,164 19,594 20,171 10/31/04................. 21,014 20,358 21,049 Value of a $10,000 Investment HSBC Investor Citigroup Broad Lehman Brothers Bond Fund Investment-Grade Aggregate Class A (Investor)(1) Bond Fund Index Bond Index --------------------- ---------------- --------------- 8/26/96................. 9,524 10,000 10,000 12/31/96................. 9,997 10,481 10,479 12/31/97................. 10,845 11,491 11,491 12/31/98................. 11,539 12,493 12,489 12/31/99................. 11,391 12,389 12,387 12/31/00................. 12,599 13,825 13,827 12/31/01................. 13,659 15,003 14,994 12/31/02................. 14,756 16,516 16,532 12/31/03................. 15,342 17,211 17,211 10/31/04................. 15,892 17,960 17,937 The charts above represent a comparison of a hypothetical $10,000 investment in the indicated share class versus a similar investment in the Funds' benchmark and represents the reinvestment of dividends and capital gains in the Funds. Average Annual Total Return (%) Inception 1 5 Since As of October 31, 2004 Date Year Year Inception HSBC Investor Fixed Income Fund 1/9/95 5.46 7.37 7.52 HSBC Investor Bond Fund Class A (Investor)(1) 8/26/96 0.10 5.79 5.83 HSBC Investor Bond Fund Class B(2) 1/6/98 0.19 6.02 4.90 HSBC Investor Bond Fund Class C(3) 11/4/98 3.20 6.04 5.04 Lehman Brothers Aggregate Bond Index -- 5.53 7.58 -- Lipper General Bond Funds Average(4) 4.79 5.91 -- - -------------------------------------------------------------------------------- Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains and do not reflect the taxes that a shareholder would pay on fund distributions or on the redemption of fund shares. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 4.75%. (2) Reflects the contingent deferred sales charge maximum of 4.00%. (3) Reflects the contingent deferred sales charge maximum of 1.00%. (4) For additional information, please refer to the Glossary of Terms. The Funds have changed their standardized benchmark from the Citigroup Broad Investment-Grade Bond Fund Index to the Lehman Brothers Aggregate Bond Index to provide a more appropriate market comparison for the Fund's performance. The Citigroup Broad Investment-Grade Bond Index is a 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. The Lehman Brothers Aggregate Bond Index is a market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities, with maturities of at least one year. The indices are unmanaged and do not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Funds' performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, although they can invest in its underlying securities. During the period shown, the Investment Manager waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 7 Portfolio Reviews HSBC Investor New York Tax-Free Bond Fund (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. Investment Concerns Bonds offer a relatively stable level of income, although bond prices will fluctuate providing the potential for principal gain or loss. Intermediate-term, higher-quality bonds generally offer less risk than longer-term bonds and a lower rate of return. 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. The HSBC Investor New York Tax-Free Bond Fund (the "Fund") delivered a total return of 4.57% (without sales charge) for Class A (Investor) Shares and 4.83% for Class Y Shares for the period ended October 31, 2004. That compared to 5.79% and 5.03% for the Fund's benchmarks, the Lehman Brothers New York Exempt Index and the Lipper New York Municipal Debt Funds Average(4), respectively. The Fund underperformed its benchmark index due to its higher quality profile than the index as well as expenses to the fund. Over the period lower quality paper and sectors such as tobacco significantly outperformed higher quality sectors. In addition, one of the standout performers in the New York market was New York City General Obligation debt which makes up approximately 15% of the benchmark index. By fund diversification rules the fund attempts to maintain a limit of 5% per issuer and as such was significantly underweight New York City bonds. Past performance does not guarantee future results. For the year, the broader municipal market outperformed the taxable market on an absolute basis. The return of the Lehman Brothers Muni Bond Index(4) was 6.03% while the return of the Lehman Brothers Aggregate Bond Index(4) was 5.53%. Relative outperformance in the municipal market was a result of the municipal market having a duration that on average was approximately 12% longer than that of the Lehman Aggregate index over the course of the year. Thus, on a duration-adjusted basis the municipal market actually marginally underperformed the taxable market on a pretax basis. Both yield curves flattened quite dramatically with yields on two-year and five-year Treasuries moving 73 (0.73%) and 4 (0.04%) basis points higher. In contrast, Ten-year and thirty year bonds were 27 (0.27%) and 34 (0.34%) basis points lower. In tax exempts, two-year municipal yields were just 48 (0.48%) basis points higher; five-year munis were 15 (0.15%) basis points higher. Ten-year munis were 36 (0.36%) basis points lower while thirty-year bonds were 24 (0.24%) basis points lower. The Fund's duration at the beginning of the 12-month period approximated 115% of benchmark but over the period adapted a positioning that moved to approximate 94% of benchmark and was one of the key factors that helped drive the Fund's strong performance relative to benchmark. The Fund 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 Fund maintained its high credit quality profile. This tended to take away from performance as many lower rated credits outperformed due to increased revenue flows and a positive upgrade to downgrade ratio from the rating agencies. The State of New York is representative of what is symptomatic of many state credits across the nation. From a credit perspective states continued to improve. Moodys put the state's rating as well as its appropriated debt on positive outlook while S&P revised its outlook from negative to stable. At A2 by Moodys and AA by S&P, New York is the lowest rated state in the nation with the sole exception being the lower rated California. The average rating of states across the country stand at Aa2 according to Moodys'D'. As a result of higher than expected tax revenue a $290 million dollar budget gap narrowed to just $224 million. It now appears that the worst of the states economic stress of 2002 is behind it.* There has been very little change to our outlook over the past few months as we continue to trade in a very narrow range with low volatility. The portfolio remains positioned for a rising yield environment and a flattening yield curve. In fact in October municipals did flatten at a greater pace than Treasuries. While the tightening trend remains intact we do not believe that the pace of municipal flattening is likely to outpace Treasury flattening going forward. We would suspect that over the next three to four months the spread between five and ten year municipals is likely to flatten from the present 79 to an approximate spread range of 50-60. The spread between 2 and 5-year municipals flattened by 33 (0.33%) basis points point to 78 (0.78%). However, the spread between 5 and 10-year municipals narrowed by 51 (0.51%) basis points and now stands at 79 (0.79%) basis points while the 10-30 year spread actually steepened by another 12 (0.12%) basis points. The portfolio will continue to barbell. We will continue to overweigh the 10-20 year portion of the yield curve, which we believe should perform well in a rising yield environment on a duration-adjusted basis relative to the five-year portion of the yield curve. From a quality standpoint the portfolio will continue to overweigh insured and higher quality paper.* 'D' Standard and Poor or Moody's Fund Ratings represent an opinion only, not a recommendation to buy or sell. * Portfolio composition is subject to change. 8 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. Portfolio Reviews HSBC Investor New York Tax-Free Bond Fund - As of October 31, 2004 Value of a $10,000 Investment HSBC Investor N.Y. Lehman Brothers Lehman Brothers Tax Free Bond Fund 7-Year Municipal NY Exempt Class Y (Adviser) Bond Index Index ------------------ ---------------- --------------- 7/1/96................. 10,000 10,000 10,000 12/31/96................. 10,411 10,428 10,520 12/31/97................. 11,384 11,228 11,555 12/31/98................. 12,117 11,927 12,350 12/31/99................. 11,743 11,910 12,099 12/31/00................. 13,015 12,990 13,552 12/31/01................. 13,542 13,663 14,208 12/31/02................. 14,791 15,077 15,581 12/31/03................. 15,486 15,899 16,407 10/31/04................. 15,967 16,382 17,057 Value of a $10,000 Investment HSBC Investor N.Y. Lehman Brothers Lehman Brothers Tax Free Bond Fund 7-Year Municipal NY Exempt Class A (Investor)(1) Bond Index Index --------------------- ---------------- --------------- 5/1/95................. 9,524 10,000 10,000 12/31/95................. 10,415 10,816 10,979 12/31/96................. 10,745 11,288 11,499 12/31/97................. 11,735 12,154 12,630 12/31/98................. 12,449 12,910 13,499 12/31/99................. 12,033 12,892 13,225 12/31/00................. 13,303 14,061 14,813 12/31/01................. 13,808 14,790 15,529 12/31/02................. 15,044 16,321 17,031 12/31/03................. 15,711 17,210 17,933 10/31/04................. 16,166 17,732 18,644 The charts above represent a comparison of a hypothetical $10,000 investment in the indicated share class versus a similar investment in the Fund's benchmark, and represents the reinvestment of dividends and capital gains in the Fund. Average Annual Total Return (%) Inception 1 5 Since As of October 31, 2004 Date Year Year Inception HSBC Investor New York Tax-Free Bond Fund Class A (Investor)(1) 5/1/95 -0.41 5.26 5.19 HSBC Investor New York Tax-Free Bond Fund Class B(2) 1/6/98 -0.20 5.50 4.07 HSBC Investor New York Tax-Free Bond Fund Class C(3) 11/4/98 2.69 5.48 3.82 HSBC Investor New York Tax-Free Bond Fund Class Y 7/1/96 4.83 6.57 5.78 Lehman Brothers NY Exempt Index -- 5.79 0.74 -- Lipper New York Municipal Debt Funds Average(4) -- 5.03 6.42 -- - -------------------------------------------------------------------------------- Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains and do not reflect the taxes that a shareholder would pay on fund distributions or on the redemption of fund shares. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 4.75%. (2) Reflects the contingent deferred sales charge maximum of 4.00%. (3) Reflects the contingent deferred sales charge maximum of 1.00%. (4) For additional information, please refer to the Glossary of Terms. The Fund has changed its standardized benchmark from the Lehman Brothers 7-Year Municipal Bond Index to the Lehman Brothers NY Exempt Index to provide a more appropriate market comparison for the Fund's performance. The Fund is measured against the Lehman Brothers NY Exempt Index, a index composed of investment grade New York tax-exempt securities, all having a $50 million minimum maturity value and the Lehman Brothers 7-Year Municipal Bond Fund Index, a broad based index comprised of investment grade, fixed-rate and tax-exempt securities with a remaining maturity of at least 7 years. The indices are unmanaged and the performance of the index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Fund's performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, although they can invest in its underlying securities. During the period shown, the Investment Manager waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 9 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 - U.S. Equities 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 of its assets in various types of fixed income securities and in money market instruments. Investment Concerns Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. Common stocks, and funds investing in common stocks, generally provide greater return potential when compared with other types of investments. Bonds offer a relatively stable level of income, although bond prices will fluctuate providing the potential for principal gain or loss. Intermediate-term, higher-quality bonds generally offer less risk than longer-term bonds and a lower rate of return. The Fund returned 4.94% (without sales charge) for the Class A (Investor) Shares and 5.18% for the Class Y Shares for the year ended October 31, 2004. That compared to a 9.41% return for the S&P 500 Index and a 5.87% return for the Lipper Large-Cap Core Funds Average(4) The Fund underperformed its benchmark primarily due to its underweight positioning in the Energy sector during the year, along with poor stock selection in the Financial and Technology sectors. Past performance does not guarantee future results. The U.S. equity markets produced modest gains over the 12-month period ending October 31, 2004, with the S&P 500 and NASDAQ Composite Index(4) returning 9.41% and 2.21%, respectively. After a strong rally from late November 2003 through late January 2004, that took markets up by nearly 10%, the S&P 500 traded in a very narrow range for the balance of the period. The market was essentially trendless for much of this period with sharp movements higher or lower based on the latest economic or geopolitical news events. The major equity indices have remained listless and harder to forecast with many stocks trading in ranges without established trends. Volatility levels as proxied by the VIX index(4), have drifted to their lowest levels in several years. Geopolitical events continue to plague the markets, resulting in oil touching record levels near $55 a barrel. Not surprisingly, investors have stampeded into Energy stocks, pushing them even higher, their phenomenal returns over the past year notwithstanding. Interest rates also trended higher despite seasonally adjusted core inflation ex energy remaining tame. With rising rates and the beginnings of inflation fears surfacing, value stocks outperformed growth for most of the period. Throughout the summer, investors were confronted by softer readings of a gamut of indicators measuring employment, consumer sentiment, and manufacturing activity and leading economic activity. In addressing the weak numbers, the Federal Open Market Committee characterized the economy as going through a "soft patch", and maintained their expectations of strong economic growth for quarters ahead. Like many other investors, we too anticipated interest rate increases by the Fed. However, we still view the absolute levels of rates to be far from being restrictive. In addition, we find the tame inflation outside of energy costs to be encouraging. Similar to our interest rate view, we think the levels in the Institutional Supply Management ("ISM")(4) indicator of manufacturing activity to be more encouraging than recent changes. With levels still above 50, the ISM index is still portending further expansion in the manufacturing sector, although the extent of any growth remains admittedly the main point of controversy. Geopolitical events stubbornly show no signs of improving with violence flaring again as insurgency rises before anticipated elections in Iraq. In addition, the conditions in Israel, Sudan, Afghanistan and Nigeria are still volatile. Russia is also locking down with the abolition of gubernatorial elections and Iran and North Korea continue to cause nuclear tension, regionally and globally. Unchanged for the past several quarters, our optimism in improved company balance sheets and strong cash flows lead us to believe continued improvement in capital spending should materialize. With rising rates and ISM numbers having peaked, we continue to expect the moderation in earnings growth to continue into 2005. We are closely watching for issues with corporate pensions (returns & rates lower than expected) and the potential slowing in China as key issues. We do think that the recent increase in Chinese lending rates was a positive step as it signals prudent caution among Chinese leaders about the rate of growth and speculation. We continue to believe that higher energy prices are helping do the Fed's job, dampening consumer demand and allowing the Fed to move at a slower pace than it may otherwise have done. Although likely to nudge rates up a bit more in coming months, Fed policy is a long way from restrictive. Oil prices, in conjunction with tame inflation argue against any aggressive tightening by the Fed. The recent rally has taken the markets to the higher end of its fair valuation band, so we only see modest gains for stocks in the coming year. Current overweight positions include Healthcare, Industrials and Materials. Underweights include Consumer Discretionary and Utilities. The portfolios remain positioned with a focus on valuation, sustainable competitive advantages, consistent growth and earnings predictability, which leads to a preference for larger-cap stocks at this point in the cycle. * Portfolio composition is subject to change. 10 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. Portfolio Reviews HSBC Investor Growth and Income Fund - As of October 31, 2004 Value of a $10,000 Investment HSBC Investor Growth Standard & and Income Fund Poor's 500 Class Y (Adviser) Stock Index -------------------- ----------- 4/2/01................... 10,000 10,000 12/31/01................... 9,598 9,997 12/31/02................... 7,180 7,788 12/31/03................... 9,091 10,021 10/31/04................... 9,075 10,327 Value of a $10,000 Investment HSBC Investor Growth Standard & and Income Fund Poor's 500 Class A (Investor)(1) Stock Index --------------------- ----------- 4/12/01................... 9,498 10,000 12/31/01................... 8,811 9,997 12/31/02................... 6,575 7,788 12/31/03................... 8,299 10,021 10/31/04................... 8,273 10,327 The charts above represent a comparison of a hypothetical $10,000 investment in the indicated share class versus a similar investment in the Fund's benchmark, and represents the reinvestment of dividends and capital gains in the Fund. Average Annual Total Return (%) Inception 1 Since As of October 31, 2004 Date Year Inception HSBC Investor Growth and Income Fund Class A (Investor)(1) 4/12/01 -0.29 -5.20 HSBC Investor Growth and Income Fund Class B(2) 4/5/01 0.13 -4.03 HSBC Investor Growth and Income Fund Class C(3) 11/3/03 N/A 2.57 HSBC Investor Growth and Income Fund Class Y 4/2/01 5.18 -2.68 S&P 500 Index -- 9.41 -- Lipper Large-Cap Core Funds Average(4) -- 5.87 -- - -------------------------------------------------------------------------------- Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains and do not reflect the taxes that a shareholder would pay on fund distributions or on the redemption of fund shares. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 5.00%. (2) Reflects the contingent deferred sales charge maximum of 4.00%. (3) Reflects the contingent deferred sales charge maximum of 1.00%. (4) For additional information, please refer to the Glossary of Terms. The Fund is measured against the Standard & Poor's 500 Index, an unmanaged index that is generally representative of the U.S. stock market as a whole. The performance of the index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Fund's performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, although they can invest in its underlying securities. During the period shown, the Investment Manager waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 11 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 - U.S. Equities 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). Investment Concerns Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. Common stocks, and funds investing in common stocks, generally provide greater return potential when compared with other types of investments. Mid capitalization funds typically carry additional risks since smaller companies generally have a higher risk of failure, and historically, their stocks have experienced a greater degree of market volatility than stocks on average. The Fund's Class A Shares posted a return of 6.16% (without sales charge) and 6.37% for the Trust Shares for the 12-months ended October 31, 2004. That compares to 8.77% and 5.30% for the Fund's benchmarks, the Russell MidCap'r' Growth Index, and the Lipper Mid-Cap Growth Funds Average.(4) The Fund underperformed its benchmark primarily due to its underweight positioning in the Energy sector during the year, along with poor stock selection in the Financial sector. Past performance does not guarantee future results. The U.S. equity markets produced modest gains over the one-year period ending October 31, 2004, with the Russell MidCap'r' Growth Index returning 8.77% during the period. The Midcap Index moved sideways from early November 2003 until mid-December 2003, before embarking on an 11% upwards move which ended in early March 2004. From that point on the markets moved sideways to lower, particularly during a swift downwards plunge in July and August when the market shed 12% in about six weeks. From mid-August through the end of October, the markets regained what they had lost during the summer decline, ending the 12-month period 8.77% higher. The equity indices have remained listless and harder to forecast with many stocks trading in ranges without established trends. Volatility levels as proxied by the VIX(4) index, have drifted to their lowest levels in several year. Geopolitical events continue to plague the markets, resulting in oil touching record levels near $55 a barrel. Not surprisingly, investors have stampeded into Energy stocks, pushing them even higher, their phenomenal returns over the past year notwithstanding. Interest rates also trended higher despite seasonally adjusted core inflation ex energy remaining tame. With rising rates and the beginnings of inflation fears surfacing, value stocks outperformed growth for most of the period. Throughout the summer, investors were confronted by softer readings of a gamut of indicators measuring employment, consumer sentiment, and manufacturing activity and leading economic activity. In addressing the weak numbers, the FOMC characterized the economy as going through a "soft patch", and maintained their expectations of strong economic growth for quarters ahead. Like many other investors, we too anticipated interest rate increases by the Fed. However, we still view the absolute levels of rates to be far from being restrictive. In addition, we find the tame inflation outside of energy costs to be encouraging. Similar to our interest rate view, we think the levels in the Institute Supply Management4 ("ISM") indicator of manufacturing activity to be more encouraging than recent changes. With levels still above 50, the ISM index is still portending further expansion in the manufacturing sector, although the extent of any growth remains admittedly the main point of controversy. Geopolitical events stubbornly show no signs of improving with violence flaring again as insurgency rises before anticipated elections in Iraq. In addition, the conditions in Israel, Sudan, Afghanistan and Nigeria are still volatile. Russia is also locking down with the abolition of gubernatorial elections and Iran and North Korea continue to cause nuclear tension, regionally and globally. Unchanged for the past several quarters, our optimism in improved company balance sheets and strong cash flows lead us to believe continued improvement in capital spending should materialize. With rising rates and ISM numbers having peaked, we continue to expect the moderation in earnings growth to continue into 2005. We are closely watching for issues with corporate pensions (returns & rates lower than expected) and the potential slowing in China as key issues. We do think that the recent increase in Chinese lending rates was a positive step as it signals prudent caution among Chinese leaders about the rate of growth and speculation. We continue to believe that higher energy prices are helping do the Fed's job, dampening consumer demand and allowing the Fed to move at a slower pace than it may otherwise have done. Although likely to nudge rates up a bit more in coming months, Fed policy is a long way from restrictive. Oil prices, in conjunction with tame inflation argue against any aggressive tightening by the Fed. The recent rally has taken the markets to the higher end of its fair valuation band, so we only see modest gains for stocks in the coming year. Current overweight positions include Healthcare, Industrials and Materials. Underweights include Consumer Discretionary and Technology. The portfolios remain positioned with a focus on valuation, sustainable competitive advantages, consistent growth and earnings predictability, which leads to a preference for leading companies and those with above-average market-caps versus the benchmark.* * Portfolio composition is subject to change. 12 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. Portfolio Reviews HSBC Investor Mid-Cap Fund - As of October 31, 2004 Value of a $10,000 Investment HSBC Investor HSBC Investor Russell Mid-Cap Fund Mid-Cap Mid-Cap Class A(1) Fund Trust Growth Index ------------- ------------- ------------ 10/31/94..................... 9,490 10,000 10,000 12/31/94..................... 9,045 9,524 9,693 12/31/95..................... 12,006 12,687 12,986 12/31/96..................... 13,981 14,830 15,256 12/31/97..................... 18,280 19,422 18,695 12/31/98..................... 19,968 21,259 22,035 12/31/99..................... 27,580 29,422 33,337 12/31/00..................... 30,582 32,697 29,420 12/31/01..................... 27,705 29,658 23,492 12/31/02..................... 20,173 21,648 17,054 12/31/03..................... 26,573 28,588 24,338 10/31/04..................... 27,285 29,417 25,503 The chart above represents a comparison of a hypothetical $10,000 investment in the indicated share class versus a similar investment in the Fund's benchmark, and represents the reinvestment of dividends and capital gains in the Fund. Average Annual Total Return (%) Inception 1 5 10 Since As of October 31, 2004 Date'D' Year Year Year Inception HSBC Investor Mid-Cap Fund Class A(1) 7/1/93 0.84 2.53 10.56 9.96 HSBC Investor Mid-Cap Fund Class B(2) 7/1/93 1.29 2.81 10.29 9.64 HSBC Investor Mid-Cap Fund Class C(3) 7/1/93 4.38 2.97 10.37 9.71 HSBC Investor Mid-Cap Fund Trust 7/1/93 6.37 3.82 11.39 10.74 Russell MidCap Growth Index -- 8.77 -0.19 9.81 -- Lipper Mid-Cap Growth Funds Average(4) -- 5.30 -0.46 8.30 -- - -------------------------------------------------------------------------------- Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains and do not reflect the taxes that a shareholder would pay on fund distributions or on the redemption of fund shares. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 5.00%. (2) Reflects the contingent deferred sales charge maximum of 4.00%. (3) Reflects the contingent deferred sales charge maximum of 1.00%. (4) For additional information, please refer to the Glossary of Terms. '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. The Fund is measured against the Russell Midcap Growth Index, which measures the performance of those Russell securities in the Russell universe with higher price-to-book ratios and higher forecasted growth values. The indices are unmanaged and do not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Fund's performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, although they can invest in its underlying securities. During the period shown, the Investment Manager waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 13 Portfolio Reviews HSBC Investor International Equity Fund HSBC Investor Overseas Equity Fund (Class A (Investor) Shares, B Shares and C Shares) by Kevin F. Simms Co-CIO International Value Equities and Director of Research - Global and International Value Equities AllianceBernstein Investment Research and Management The HSBC Investor International Equity Fund and the HSBC Investor Overseas Equity Fund (the "Funds") seek to provide their shareholders with long-term growth of capital and future income by investing primarily in securities of non-U.S. issuers and securities of issuers whose principal markets are outside of the United States. The Funds employ a two-tier fund structure, known as "master-feeder," in which the Funds invest all of their investable assets in the HSBC Investor International Equity Portfolio (the "Portfolio"). The Portfolio employs Bernstein Investment Research and Management ("AllianceBernstein"), a unit of AllianceBernstein Investment Research and Management as sub-investment adviser. The Portfolio invests primarily in equity securities of companies organized and domiciled in developed nations outside the U.S., or for which the principal trading market is outside the U.S., including Europe, Canada, Australia and the Far East. Investment Concerns There are risks associated with investing in foreign companies, such as erratic market conditions, economic and political instability and fluctuations in currency and exchange rates. Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. Common stocks, and funds investing in common stocks, generally provide greater return potential when compared with other types of investments. For the 12-months ended October 31, 2004, the shares of the HSBC Investor International Equity Fund produced a 20.06% return, and the Class A (Investor) Shares of the HSBC Investor Overseas Equity Fund returned 19.40% (without sales charge). That compared to a total return of 18.84% and 14.63% for the Funds' benchmarks, the Morgan Stanley Capital International, Europe, Australasia and Far East Index and the Lipper International Large-Cap Core Funds Average.(4) Past performance does not guarantee future results. Foreign markets generally moved higher, due in part to an improving environment for corporate earnings. That environment helped the Fund and its benchmark produce moderate gains during the period. Strong stock selection was the primary reason that the Fund out-gained the benchmark. Sector and regional allocations had little effect on relative returns during most of the period. AllianceBerstein, which assumed management of this Fund in January, seeks undervalued stocks of firms with attractive characteristics, such as higher-than-average profitability. That approach particularly helped the Funds' stake in consumer discretionary stocks. For example, shares of a Japanese gaming-machines maker, a Japanese carmaker and a German auto-parts supplier performed especially well. Stock selection also helped the Fund's allocations to the materials, financial services and consumer staples sectors outperform the benchmark's holdings in those sectors. Stock selection in the technology sector hurt the Funds' relative returns. The Funds' managers emphasized shares of contract manufacturers and other stocks they considered reasonably valued. Such stocks suffered because corporate and consumer spending on technology did not rebound as quickly as it has during previous economic recoveries. Foreign value stocks outperformed foreign growth stocks, so the Fund benefited from its value-oriented investment style. That advantage was offset by the Funds' tilt toward large-capitalization stocks within the value universe, however, as small caps led the market for the 12-month period. The Funds as of October 31, 2004 held 8.5% of their assets in emerging markets. Emerging markets performed poorly early in 2004, but surged from May through October. The Fund's emerging markets stake helped returns against the benchmark, largely because of strong stock selection. The Funds will not hold more than 10% of assets in emerging markets stocks.* * Portfolio composition is subject to change. 14 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. Portfolio Reviews HSBC Investor International Equity Fund HSBC Investor Overseas Equity Fund - As of October 31, 2003 Value of a $10,000 Investment HSBC Investor MSCI International EAFE Equity Fund Index ------------- ----- 1/9/95................... 10,000 10,000 12/31/95................... 11,254 11,121 12/31/96................... 12,950 11,793 12/31/97................... 14,208 12,003 12/31/98................... 15,975 14,403 12/31/99................... 27,319 18,287 12/31/00................... 21,952 15,696 12/31/01................... 18,116 12,330 12/31/02................... 14,788 10,365 12/31/03................... 19,130 14,364 10/31/04................... 21,252 15,489 Value of a $10,000 Investment HSBC Investor MSCI Overseas Equity Fund EAFE Class A (Investor)(1) Index --------------------- ----- 8/26/96................... 9,497 10,000 12/31/96................... 10,132 10,429 12/31/97................... 10,932 10,614 12/31/98................... 12,087 12,737 12/31/99................... 20,392 16,171 12/31/00................... 16,276 13,880 12/31/01................... 13,339 10,904 12/31/02................... 11,013 9,166 12/31/03................... 14,138 12,703 10/31/04................... 15,627 13,697 The charts above represent a comparison of a hypothetical $10,000 investment in the indicated share classes versus a similar investment in the Funds' benchmark and represents the reinvestment of dividends and capital gains in the Funds. Average Annual Total Return Inception 1 5 Since As of October 31, 2004 Date Year Year Inception HSBC Investor International Equity Fund 1/9/95 20.06 -0.46 7.99 HSBC Investor Overseas Equity Fund Class A (Investor)(1) 8/26/96 13.40 -1.86 5.61 HSBC Investor Overseas Equity Fund Class B(2) 1/6/98 14.43 -1.61 4.53 HSBC Investor Overseas Equity Fund Class C(3) 11/4/98 17.46 -1.62 4.57 MSCI EAFE Index -- 18.84 -0.92 -- Lipper International Large-Cap Core Average(4) -- 14.63 -2.42 -- Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains and do not reflect the taxes that a shareholder would pay on fund distributions or on the redemption of fund shares. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 5.00%. (2) Reflects the contingent deferred sales charge maximum of 4.00%. (3) Reflects the contingent deferred sales charge maximum of 1.00%. (4) For additional information, please refer to the Glossary of Terms. The Funds are measured against the Morgan Stanley Capital International (MSCI) Europe, Australasia and Far East (EAFE) Index, which is an unmanaged index that measures performance of a diverse range of developed countries in the indicated regions. The performance of the index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Funds' performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, although they can invest in its underlying securities. During the period shown, the Investment Manager waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 15 Portfolio Reviews HSBC Investor Small Cap Equity Fund HSBC Investor Opportunity Fund (Class A (Investor) Shares, B Shares and C Shares) by William A. Muggia President-Chief Investment Officer Westfield Capital Management Company 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, LLC as sub-investment adviser. The Portfolio invests primarily in common stocks of small and medium-sized companies that may have the potential to become major enterprises. Investment Concerns Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. Common stocks, and funds investing in common stocks, generally provide greater return potential when compared with other types of investments. Small-capitalization funds typically carry additional risks since smaller companies generally have a higher risk of failure, and historically, their stocks have experienced a greater degree of market volatility than stocks on average. For the 12-months ended October 31, 2004, the shares of the HSBC Investor Small Cap Equity Fund produced a 5.74% return and the Class A (Investor) Shares of the HSBC Investor Opportunity Fund produced a 5.31% return (without sales charge). The Funds' benchmarks, the Russell 2500'r' Growth Index and the Lipper Mid Cap Growth Funds Average, returned 6.14% and 5.30%, respectively.(4) Small cap stocks produced positive returns, helping the Fund and its benchmark generate moderate gains. Investors during 2004 focused on small-cap shares with strong current earnings and clear potential for future earnings growth. This focus was in contrast to the more speculative rally that occurred during 2003. The portfolio's largest gains came from the industrials, materials, financials and energy sectors. While the Fund underperformed the benchmark, stock selection within the technology sector contributed positively. Technology was among the index's weakest sectors during the period, with a loss of 12%. The Funds' technology holdings lost just 3%, however. The Fund's focus on stocks with strong earnings in the security services, information technology services, storage and software industries helped it avoid many of the sector's largest declines. Management's decision to reduce holdings among the most interest-rate sensitive financial service stocks boosted the portfolio's performance in that sector. Meanwhile, a focus on industrial shares with improving pricing power and cyclical earnings growth helped the Funds' stake in that sector significantly outperform the benchmark's industrial holdings. Increasing the Fund's overweight position in energy stocks also boosted relative performance, as energy stocks produced some of the period's strongest returns. The Funds' health care stake dragged on performance against the benchmark, as some of the stocks in the portfolio suffered from weaker-than-expected earnings and investor concerns about potential regulatory issues. In the consumer-discretionary sector, management's emphasis on media stocks hampered relative returns. The expected pick-up in advertising spending due to the improving economy, the Olympics and the election did not meet expectations, and media stocks performed poorly as a result. The Funds' management in response trimmed its media stake in favor of stocks that are less dependent on the U.S. consumer. 16 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. Portfolio Reviews HSBC Investor Small Cap Equity Fund HSBC Investor Opportunity Fund - As of October 31, 2003 Value of a $10,000 Investment HSBC Investor Russell 2000 Russell 2500 Small Cap Stock Growth Equity Fund Index Index ------------- ------------ ------------ 9/3/96................. 10,000 10,000 10,000 12/31/96................. 10,864 10,931 10,629 12/31/97................. 13,336 13,376 12,197 12/31/98................. 15,127 13,036 12,575 12/31/99................. 22,418 15,806 19,552 12/31/00................. 23,547 15,329 16,406 12/31/01................. 23,240 15,710 14,629 12/31/02................. 15,539 12,492 10,373 12/31/03................. 21,618 18,395 15,177 10/31/04................. 22,318 19,453 15,564 Value of a $10,000 Investment HSBC Investor Russell 2000 Russell 2500 Opportunity Fund Stock Growth Class A (Investor)(1) Index Index --------------------- ------------ ------------ 9/23/96................. 9,497 10,000 10,000 12/31/96................. 9,501 10,520 10,093 12/31/97................. 11,579 12,873 11,583 12/31/98................. 13,080 12,545 11,942 12/31/99................. 19,238 15,212 18,567 12/31/00................. 20,062 14,752 15,579 12/31/01................. 19,670 15,119 13,892 12/31/02................. 13,108 12,022 9,850 12/31/03................. 18,068 17,703 14,412 10/31/04................. 18,596 18,722 14,780 The charts above represent a comparison of a hypothetical $10,000 investment in the indicated share classes versus a similar investment in the Funds' benchmark and represents the reinvestment of dividends and capital gains in the Funds. Average Annual Total Return (%) Inception 1 5 Since As of October 31, 2004 Date Year Year Inception HSBC Investor Small Cap Equity Fund 9/3/96 5.74 6.71 10.34 HSBC Investor Opportunity Fund Class A (Investor)(1) 9/23/96 0.00 4.97 7.96 HSBC Investor Opportunity Fund Class B(2) 1/6/98 0.47 5.23 6.65 HSBC Investor Opportunity Fund Class C(3) 11/4/98 3.53 5.26 7.75 Russell 2500 Growth Index -- 6.14 1.13 -- Lipper Mid-Cap Growth Funds Average(4) -- 5.30 -0.46 -- Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains and do not reflect the taxes that a shareholder would pay on fund distributions or on the redemption of fund shares. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 5.00%. (2) Reflects the contingent deferred sales charge maximum of 4.00%. (3) Reflects the contingent deferred sales charge maximum of 1.00%. (4) For additional information, please refer to the Glossary of Terms. The Funds have changed their standardized benchmark from the Russell 2000 Index to the Russell 2500 Growth Index which is a better representative of the types of securities in which the Funds invest and will provide a better performance comparison. The Russell 2000 Index is generally representative of the performance of small-capitalization stocks, and the Russell 2500 Growth Index represents the smallest 2500 securities found in the Russell universe with higher price-to-book and higher forecasted growth values. The indices are unmanaged and the performance for the indices does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Funds' performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, although they can invest in its underlying securities. During the period shown, the Investment Manager waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 17 Portfolio Reviews Portfolio Composition October 31, 2004 (Unaudited) HSBC Investor Limited Maturity Portfolio Security Allocation Percentage of Investments at Value ------------------- ---------------------------------- U.S. Government Agencies 60.7 Corporate Bond 26.0 U.S. Treasury Notes 7.5 Asset Backed Securities 4.3 Sovereign 1.2 Cash Equivalents 0.3 Total 100.0 HSBC Investor Fixed Income Portfolio Security Allocation Percentage of Investments at Value ------------------- ---------------------------------- U.S. Government Agencies 43.7 Corporate Bond 23.5 U.S. Treasury Notes 16.5 Asset Backed Securities 6.2 Cash Equivalents 4.2 Collateralized Mortgage Obligations 3.6 Municipal Bond 1.5 Sovereign 0.7 Total 100.0 HSBC Investor New York Tax Free Fund Security Allocation Percentage of Investments at Value ------------------- ---------------------------------- Municipal Bonds 94.5 Cash Equivalents 3.3 Variable Rate Notes 2.2 Total 100.0 HSBC Investor Growth Portfolio Security Allocation Percentage of Investments at Value ------------------- ---------------------------------- Financials 33.3 Industrials 11.3 Information Technology 10.1 Cash Equivalents 9.5 Energy 8.9 Materials 7.6 Consumer Discretionary 6.4 Consumer Staples 5.2 Telecommunication Services 4.5 Health Care 1.8 Utilities 1.4 Total 100.0 HSBC Investor Growth and Income Fund Security Allocation Percentage of Investments at Value ------------------- ---------------------------------- Financials 20.3 Information Technology 14.7 Consumer Discretionary 14.3 Health Care 13.8 Industrials 10.9 Energy 7.5 Consumer Staples 6.8 Telecommunication Services 5.9 Materials 4.7 Utilities 1.1 Total 100.0 HSBC Investor Mid-Cap Fund Security Allocation Percentage of Investments at Value ------------------- ---------------------------------- Consumer Discretionary 23.2 Health Care 19.6 Information Technology 18.5 Financials 13.2 Industrials 12.4 Energy 5.6 Telecommunication Services 2.8 Consumer Staples 2.7 Materials 1.9 Cash Equivalents 0.1 Total 100.0 HSBC Investor International Equity Portfolio Security Allocation Percentage of Investments at Value ------------------- ---------------------------------- Europe 61.6 Japan 24.5 Other 8.9 Australia and Far East 5.0 Total 100.0 * Portfolio composition is subject to change. 18 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. Portfolio Reviews Portfolio Composition October 31, 2004 (Unaudited) HSBC Investor Small Cap Equity Portfolio Security Allocation Percentage of Investments at Value ------------------- ---------------------------------- Health Care 22.0 Information Technology 21.4 Industrials 19.6 Energy 14.5 Consumer Discretionary 10.6 Financials 8.9 Materials 2.2 Cash Equivalents 0.8 Total 100.0 * Portfolio composition is subject to change. HSBC Investor Value Portfolio Security Allocation Percentage of Investments at Value ------------------- ---------------------------------- Financials 33.3 Industrials 11.3 Information Technology 10.1 Cash Equivalents 9.5 Energy 8.9 Materials 7.6 Consumer Discretionary 6.4 Consumer Staples 5.2 Telecommunication Services 4.5 Health Care 1.8 Utilities 1.4 Total 100.0 See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 19 <Page> HSBC INVESTOR NEW YORK TAX-FREE BOND FUND - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- OCTOBER 31, 2004 ...................................................................... <Table> <Caption> - --------------------------------------------------------------- MUNICIPAL BONDS - 93.2% PRINCIPAL AMOUNT($) VALUE($) --------- ---------- NEW YORK - 83.9% Brookhaven, New York GO (FGIC Insured), 5.50%, 10/1/12, Callable 10/1/06 @ 102................................... 500,000 544,050 Buffalo, New York Fiscal Stability Authority (FSA Insured), 5.25%, 8/15/13............................... 500,000 570,595 Corning City, New York School District GO (FSA Insured), 4.00%, 6/15/08...... 930,000 983,773 Corning City, New York School District GO (FSA Insured), 5.00%, 6/15/09...... 790,000 872,468 Erie County, New York GO (FGIC Insured), 5.375%, 6/15/07............. 250,000 258,883 Grand Central New York District Management, 3.00%, 1/1/06............. 400,000 404,652 Grand Central New York District Management, 4.00%, 1/1/07............. 400,000 415,960 Guilderland, New York Central School District GO (FSA Insured), 3.50%, 6/15/05............................... 250,000 252,720 Long Island, New York Power Authority Revenue (MBIA Insured), 4.50%, 4/1/11, Mandatory Tender 4/1/05 @ 100......... 1,075,000 1,087,363 Metropolitan Transportation Authority of New York Revenue (FGIC Insured), 5.25%, 7/1/17, Prerefunded 7/1/08 @ 100.5................................. 1,145,000 1,272,369 Metropolitan Transportation Authority of New York Revenue (FGIC Insured), 5.50%, 11/15/19....................... 1,000,000 1,183,300 Metropolitan Transportation Authority of New York Revenue (FSA Insured), 5.00%, 11/15/32, Callable 11/15/12 @ 100................................... 1,625,000 1,669,362 Metropolitan Transportation Authority of New York Revenue (MBIA Insured), 5.50%, 1/1/19......................... 480,000 542,808 Metropolitan Transportation Authority of New York Revenue, Escrowed to Maturity, 5.75%, 7/1/13............... 285,000 325,866 Monroe County, New York, Airport Authority Revenue, AMT (MBIA Insured), 5.625%, 1/1/10........................ 1,240,000 1,374,131 Monroe County, New York, Airport Authority Revenue, AMT (MBIA Insured), 5.75%, 1/1/14......................... 750,000 854,843 New York City GO, 5.00%, 8/1/05........ 1,000,000 1,022,790 New York City GO, 5.00%, 8/1/08........ 990,000 1,074,863 New York City GO, 5.00%, 8/1/14........ 200,000 220,326 New York City GO, 6.00%, 8/1/14, Prerefunded 8/1/07 @ 101.............. 20,000 22,321 New York City GO, 6.00%, 8/1/14, Callable 8/1/07 @ 101................. 980,000 1,075,207 New York City Housing Development Corp. Revenue, AMT, 5.60%, 11/1/19.......... 100,000 105,902 New York City Industrial Development Agency (FSA Insured), 5.00%, 11/15/19.............................. 1,000,000 1,078,510 New York City Municipal Assistance Corp. Revenue, 6.00%, 7/1/06.......... 735,000 785,730 New York City Municipal Water Authority Revenue, 5.00%, 6/15/34, Callable 6/15/13 @ 100......................... 1,250,000 1,276,463 New York City Transitional Finance Authority Revenue, 5.00%, 11/1/07..... 1,000,000 1,081,790 New York City Transitional Finance Authority Revenue, 5.25%, 5/1/17, Callable 5/1/11 @ 100................. 400,000 438,460 New York City Transitional Finance Authority Revenue, 5.25%, 2/1/29, Callable 2/1/11 @ 100................. 1,540,000 1,699,374 </Table> <Table> - --------------------------------------------------------------- MUNICIPAL BONDS, CONTINUED PRINCIPAL AMOUNT($) VALUE($) --------- ---------- New York State Dormitory Authority Revenue (CIFG Group Insured), 4.00%, 7/1/06................................ 1,120,000 1,155,885 New York State Dormitory Authority Revenue, Columbia University, 4.00%, 7/1/06................................ 1,000,000 1,035,390 New York State Dormitory Authority Revenue, Columbia University, 5.00%, 7/1/29, Mandatory put 7/1/07 @ 100.... 1,000,000 1,067,220 New York State Dormitory Authority Revenue, Cooper Union (MBIA Insured), 6.00%, 7/1/19, Callable 7/1/09 @ 101................................... 350,000 400,960 New York State Dormitory Authority Revenue, Department of Health, 5.25%, 7/1/16................................ 500,000 553,075 New York State Dormitory Authority Revenue, Master Boces PG, 5.25%, 8/15/19, (FSA Insured)................ 1,000,000 1,094,150 New York State Dormitory Authority Revenue, Mental Health, 4.00%, 2/15/06............................... 1,140,000 1,167,486 New York State Dormitory Authority Revenue, Mental Health, 6.50%, 8/15/11............................... 225,000 266,805 New York State Dormitory Authority Revenue, Mental Health, 5.50%, 8/15/17, Prerefunded 2/15/07 @ 102.... 15,000 16,469 New York State Dormitory Authority Revenue, Mental Health, 5.50%, 8/15/17, Callable 2/15/07 @ 102....... 985,000 1,057,466 New York State Dormitory Authority Revenue, New York Presbyterian Hospital (AMBAC Insured), 5.50%, 8/1/10................................ 750,000 845,948 New York State Dormitory Authority Revenue, New York State Rehabilitation Association (CIFG Group Insured), 3.00%, 7/1/05......................... 1,025,000 1,033,169 New York State Dormitory Authority Revenue, New York University (AMBAC Insured), 5.50%, 7/1/18............... 500,000 588,785 New York State Dormitory Authority Revenue, NYSARC (FSA Insured), 2.00%, 7/1/05................................ 785,000 786,036 New York State Dormitory Authority Revenue, NYSARC (FSA Insured), 2.00%, 7/1/06................................ 475,000 474,995 New York State Dormitory Authority Revenue, NYSARC(FSA Insured), 5.25%, 7/1/18, Callable 7/1/12 @ 101......... 1,460,000 1,612,658 New York State Dormitory Authority Revenue, Rockefeller University, 5.25%, 7/1/13, Callable 7/1/08 @ 101................................... 500,000 551,760 New York State Dormitory Authority Revenue, School District Board Financing, 5.00%, 7/1/08.............. 595,000 646,426 New York State Dormitory Authority Revenue, School District Rescue, 5.00%, 4/1/07......................... 500,000 532,230 New York State Dormitory Authority Revenue, Sloan Kettering Institute (MBIA Insured), 5.50%, 7/1/23......... 1,300,000 1,506,075 New York State Environmental Facscorp, 5.70%, 1/15/14, Callable 7/15/09 @ 101................................... 415,000 470,037 New York State Environmental Facscorp, 5.70%, 1/15/14, Prerefunded 7/15/09 @ 101................................... 570,000 655,472 New York State Environmental Facscorp, 5.70%, 1/15/14, Prerefunded 7/15/09 @ 101................................... 15,000 17,249 </Table> 20 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. <Page> HSBC INVESTOR NEW YORK TAX-FREE BOND FUND - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- OCTOBER 31, 2004 (CONTINUED) ...................................................................... <Table> <Caption> - --------------------------------------------------------------- MUNICIPAL BONDS, CONTINUED PRINCIPAL AMOUNT($) VALUE($) --------- ---------- New York State Local Government Assistance Corp., 6.00%, 4/1/16, Prerefunded 4/1/05 @ 102.............. 1,000,000 1,037,810 New York State Mortgage Agency Revenue, AMT, 5.60%, 10/1/14, Callable 9/1/07 @ 101.5................................. 1,000,000 1,052,020 New York State Municipal Bond Bank Revenue, 5.50%, 12/1/12............... 850,000 970,122 New York State Thruway Authority Revenue, Highway & Bridge (FGIC Insured), 5.25%, 4/1/07............... 300,000 322,938 New York State Thruway Authority Revenue, Highway & Bridge (FGIC Insured), 5.50%, 4/1/17, Callable 4/1/11 @ 101.......................... 1,000,000 1,126,420 New York State Thruway Authority Revenue, Highway & Bridge (MBIA Insured), 5.00%, 4/1/22, Callable 4/1/14 @ 100.......................... 1,000,000 1,068,110 New York State Thruway Authority, Personal Income Tax Revenue, 5.00%, 3/15/13............................... 645,000 719,865 New York State Thruway Authority, Personal Income Tax Revenue, 5.50%, 3/15/20, Callable 3/15/12 @ 100....... 500,000 563,960 New York State Thruway Authority, Personal Income Tax Revenue (MBIA Insured), 5.00%, 3/15/19, Callable 3/15/12 @ 100......................... 1,400,000 1,511,174 New York State Thruway Authority, Personal Income Tax Revenue (MBIA Insured), 5.00%, 3/15/21, Callable 3/15/13 @ 100......................... 500,000 533,805 New York State Thruway Authority, Service Contract Revenue, 5.50%, 4/1/11................................ 1,000,000 1,133,780 New York State Urban Development Corp., 5.125%, 1/1/22, Callable 7/1/14 @ 100................................... 885,000 940,065 New York State Urban Development Corp. Revenue, 5.75%, 4/1/12, Prerefunded 4/1/07 @ 102.......................... 1,000,000 1,108,290 New York State Urban Development Corp. Revenue, 5.75%, 4/1/12................ 500,000 576,490 New York State Urban Development Corp. Revenue, 5.125%, 1/1/25, Prerefunded 1/1/11 @ 100.......................... 175,000 196,014 New York State Urban Development Corp. Revenue, Series A (MBIA Insured), 6.50%, 1/1/09......................... 500,000 577,035 Niagara Falls New York Bridge Common Toll Revenue (MBIA Insured), 2.00%, 10/1/05............................... 400,000 400,800 Onondaga County, New York Water Authority Revenue (FSA Insured), 5.00%, 9/15/14, Callable 9/15/10 @ 101................................... 300,000 332,763 </Table> <Table> <Caption> - --------------------------------------------------------------- MUNICIPAL BONDS, CONTINUED PRINCIPAL AMOUNT($) VALUE($) --------- ---------- Onondaga County, New York Water Authority Revenue (FSA Insured), 5.00%, 9/15/15, Callable 9/15/10 @ 101................................... 665,000 727,862 Port Authority of New York & New Jersey Revenue, 5.00%, 9/1/27................ 795,000 823,024 Port Authority of New York & New Jersey Revenue, 5.375%, 3/1/28............... 1,100,000 1,215,774 Port Authority of New York & New Jersey Special Obligation Revenue (MBIA Insured), AMT, 5.75%, 12/1/22, Callable 12/1/07 @ 102................ 500,000 544,560 Suffolk County, New York (FSA Insured), 5.25%, 5/1/12......................... 515,000 582,012 Suffolk County, New York (FSA Insured), 5.25%, 5/1/15......................... 100,000 114,233 Tobacco Settlement Corp., 5.00%, 6/1/06................................ 1,000,000 1,046,690 Tobacco Settlement Corp. Series C-1, 5.50%, 6/1/21, Callable 6/1/13 @ 100................................... 1,000,000 1,093,640 Webster, New York Central School District GO (FSA Insured), 5.00%, 6/15/14............................... 500,000 559,750 ---------- 60,909,631 ---------- PUERTO RICO - 9.3% Puerto Rico Commonwealth (FSA Insured), 5.50%, 7/1/15......................... 500,000 588,395 Puerto Rico Commonwealth, Highway and Transportation (MBIA Insured), 5.00%, 9/15/17, Callable 3/15/14 @ 100....... 1,000,000 1,105,520 Puerto Rico Electric Power Authority Revenue (MBIA Insured), 5.25%, 7/1/22................................ 1,000,000 1,143,520 Puerto Rico Electric Power Authority Revenue, Series HH (FSA Insured), 5.25%, 7/1/29, Callable 7/1/10 @ 101................................... 1,430,000 1,515,943 Puerto Rico Public Buildings Authority Revenue, 5.25%, 7/1/33, Callable 7/1/14 @ 100.......................... 700,000 732,368 Puerto Rico Public Finance Corp. Revenue (MBIA Insured), 5.25%, 8/1/29, Callable 7/1/10 @ 101................. 1,000,000 1,115,090 Puerto Rico Publishing Finance Corp. Revenue (AMBAC Insured), 5.375%, 6/1/18................................ 500,000 583,545 ---------- 6,784,381 ---------- TOTAL MUNICIPAL BONDS.................. 67,694,012 ---------- - --------------------------------------------------------------- INVESTMENT COMPANIES - 3.3% Provident New York Tax-Free Money Market Fund Institutional Shares...... 2,385,031 2,385,031 ---------- TOTAL INVESTMENT COMPANIES............. 2,385,031 ---------- </Table> See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 21 <Page> HSBC INVESTOR NEW YORK TAX-FREE BOND FUND - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- OCTOBER 31, 2004 (CONTINUED) ...................................................................... <Table> <Caption> - --------------------------------------------------------------- VARIABLE RATE DEMAND NOTES* - 2.2% PRINCIPAL AMOUNT($) VALUE($) --------- ---------- NEW YORK - 2.2% New York State Job Development Authority, 1.74%, 3/1/05, AMT......... 1,600,000 1,600,000 ---------- TOTAL VARIABLE RATE DEMAND NOTES*...... 1,600,000 ---------- TOTAL INVESTMENTS (COST $68,301,929) (a) - 98.7%....... 71,679,043 ---------- ---------- </Table> - -------------- Percentages indicated are based on net assets of $72,593,311. (a) Represents cost for financial reporting and federal income tax purposes, and differs from value by net unrealized appreciation of securities as follows: <Table> Unrealized appreciation.......... $3,406,092 Unrealized depreciation.......... (28,978) ---------- Net unrealized appreciation...... $3,377,114 ---------- ---------- </Table> * Variable rate security. The interest rates on these securities are adjusted periodically to reflect then-current short-term interest rates. The rates presented in this report represent the rates that were in effect on October 31, 2004. However, each of these securities contains put or demand features that allow the fund to require the issuer to repurchase the security from the fund within various time periods, including daily, weekly, monthly, or semi-annually. <Table> AMBAC -- American Municipal Bond Assurance Corporation AMT -- Interest on security is subject to Federal Alternative Minimum Tax FGIC -- Federal Guaranty Insurance Corporation FSA -- Financial Security Assurance GO -- General Obligation MBIA -- Municipal Bond Insurance Association </Table> 22 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. <Page> HSBC INVESTOR GROWTH AND INCOME FUND - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- OCTOBER 31, 2004 ...................................................................... <Table> <Caption> - --------------------------------------------------------------- COMMON STOCKS - 99.9% SHARES VALUE($) ------- ----------- AEROSPACE & DEFENSE - 1.0% United Technologies Corp.............. 21,900 2,032,758 ----------- BANKING - 6.4% Bank of America Corp.................. 113,300 5,074,707 BB&T Corp............................. 33,300 1,368,963 National City Corp.................... 52,300 2,038,131 Wachovia Corp......................... 38,400 1,889,664 Wells Fargo & Co...................... 42,100 2,514,212 ----------- 12,885,677 ----------- BIOTECHNOLOGY - 1.3% Amgen, Inc. (b)....................... 46,000 2,612,800 ----------- CHEMICALS - 3.2% Du Pont (E.I) de Nemours and Co....... 35,750 1,532,603 Lyondell Chemical Co.................. 51,500 1,183,470 The Dow Chemical Co................... 80,900 3,635,646 ----------- 6,351,719 ----------- COMMERCIAL SERVICES - 1.6% Cendant Corp.......................... 155,150 3,194,539 ----------- COMPUTER SOFTWARE - 6.3% Adobe Systems, Inc.................... 17,300 969,319 Affiliated Computer Services, Inc. (b).................................. 23,700 1,292,835 Avaya, Inc. (b)....................... 63,800 918,720 Lexmark International, Inc. (b)....... 10,000 831,100 Microsoft Corp........................ 220,450 6,170,396 Oracle Corp. (b)...................... 196,900 2,492,754 ----------- 12,675,124 ----------- COMPUTERS - 3.1% Dell, Inc. (b)........................ 59,900 2,100,094 Hewlett-Packard Co.................... 103,800 1,936,908 International Business Machines Corp................................. 25,300 2,270,675 ----------- 6,307,677 ----------- CONSUMER PRODUCTS - 8.2% Altria Group, Inc..................... 54,600 2,645,916 Anheuser-Busch Cos., Inc.............. 27,700 1,383,615 Black & Decker Corp................... 19,900 1,597,572 Colgate-Palmolive Co.................. 43,600 1,945,432 Harley-Davidson, Inc.................. 21,000 1,208,970 PepsiCo, Inc.......................... 86,000 4,263,880 The Coca-Cola Co...................... 48,300 1,963,878 The Procter & Gamble Co............... 30,900 1,581,462 ----------- 16,590,725 ----------- DIVERSIFIED MANUFACTURING OPERATIONS - 9.9% Eaton Corp............................ 44,600 2,852,170 General Electric Co................... 269,200 9,185,103 ITT Industries, Inc................... 30,590 2,482,073 Tyco International Ltd................ 143,300 4,463,795 Whirlpool Corp........................ 17,200 1,010,500 ----------- 19,993,641 ----------- ELECTRIC UTILITIES - 1.1% Exelon Corp........................... 55,400 2,194,948 ----------- </Table> <Table> <Caption> - --------------------------------------------------------------- COMMON STOCKS, CONTINUED SHARES VALUE($) ------- ----------- ELECTRONIC COMPONENTS & SEMICONDUCTORS - 3.1% Analog Devices........................ 23,200 934,032 Intel Corp............................ 160,000 3,561,600 KLA-Tencor Corp. (b).................. 16,200 737,586 Texas Instruments, Inc................ 40,200 982,890 ----------- 6,216,108 ----------- FINANCIAL SERVICES - 10.0% Capital One Financial Corp............ 15,400 1,135,904 Citigroup, Inc........................ 107,200 4,756,463 Countrywide Financial Corp............ 21,400 683,302 Fannie Mae............................ 47,600 3,339,140 Goldman Sachs Group, Inc.............. 23,900 2,351,282 J.P. Morgan Chase & Co................ 94,700 3,655,420 Merrill Lynch & Co., Inc.............. 35,800 1,931,052 Prudential Financial, Inc............. 46,400 2,156,208 ----------- 20,008,771 ----------- HEALTH CARE - 5.2% Anthem, Inc. (b)...................... 18,600 1,495,440 Cardinal Health, Inc.................. 58,800 2,748,900 Caremark Rx, Inc. (b)................. 106,800 3,200,796 Guidant Corp.......................... 45,200 3,011,224 ----------- 10,456,360 ----------- INSURANCE - 3.9% American International Group, Inc..... 57,400 3,484,754 Chubb Corp............................ 29,200 2,106,196 Lincoln National Corp................. 23,500 1,029,300 MetLife, Inc.......................... 34,200 1,311,570 ----------- 7,931,820 ----------- INTERNET RELATED - 1.0% eBay, Inc. (b)........................ 11,200 1,093,232 Yahoo!, Inc. (b)...................... 27,500 995,225 ----------- 2,088,457 ----------- MEDIA - 2.9% Gannett Co., Inc...................... 21,900 1,816,605 McGraw-Hill Cos., Inc................. 15,500 1,336,875 Viacom, Inc., Class B................. 73,000 2,663,770 ----------- 5,817,250 ----------- METALS & MINING - 1.5% Alcoa, Inc............................ 41,150 1,337,375 Phelps Dodge Corp..................... 20,250 1,772,685 ----------- 3,110,060 ----------- OIL & GAS - 7.5% ChevronTexaco Corp.................... 44,000 2,334,640 Exxon Mobil Corp...................... 184,400 9,076,168 Nabors Industries Ltd. (b)............ 43,150 2,119,528 Occidental Petroleum Corp............. 28,450 1,588,364 ----------- 15,118,700 ----------- PHARMACEUTICALS - 7.3% Abbott Laboratories................... 49,800 2,122,974 Johnson & Johnson..................... 53,950 3,149,601 Pfizer, Inc........................... 221,200 6,403,740 Wyeth................................. 74,400 2,949,960 ----------- 14,626,275 ----------- </Table> See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 23 <Page> HSBC INVESTOR GROWTH AND INCOME FUND - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- OCTOBER 31, 2004 (CONTINUED) ...................................................................... <Table> <Caption> - --------------------------------------------------------------- COMMON STOCKS, CONTINUED SHARES VALUE($) ------- ----------- RETAIL - 8.4% Best Buy Co., Inc..................... 37,900 2,244,438 Home Depot, Inc....................... 61,000 2,505,880 Lowe's Cos., Inc...................... 20,900 1,176,252 McDonald's Corp....................... 76,900 2,241,635 Target Corp........................... 34,800 1,740,696 Wal-Mart Stores, Inc.................. 130,550 7,039,256 ----------- 16,948,157 ----------- TECHNOLOGY - 1.1% Computer Sciences Corp. (b)........... 19,000 943,730 QUALCOMM, Inc......................... 31,600 1,321,196 ----------- 2,264,926 ----------- TELECOMMUNICATIONS - 5.9% Cisco Systems, Inc. (b)............... 151,400 2,908,394 Comcast Corp. Class A (b)............. 55,400 1,634,300 Motorola, Inc......................... 91,900 1,586,194 SBC Communications, Inc............... 74,550 1,883,133 Verizon Communications, Inc........... 99,600 3,894,360 ----------- 11,906,381 ----------- TOTAL COMMON STOCKS................... 201,332,873 ----------- TOTAL INVESTMENTS (COST $171,040,225) (a) - 99.9%..... 201,332,873 ----------- ----------- </Table> - -------------- Percentages indicated are based on net assets of $201,580,819. (a) Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting of approximately $1,390,610. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: <Table> Unrealized appreciation............ $32,354,300 Unrealized depreciation............ (3,452,262) ----------- Net unrealized appreciation........ $28,902,038 ----------- ----------- </Table> (b) Represents non-income producing security. 24 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. <Page> HSBC INVESTOR MID-CAP FUND - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- OCTOBER 31, 2004 ...................................................................... <Table> <Caption> - ---------------------------------------------------------------- COMMON STOCKS - 99.6% SHARES VALUE($) ------- ----------- ADVERTISING SERVICES - 0.7% Getty Images, Inc. (b) .................. 15,600 922,428 ----------- AEROSPACE & DEFENSE - 1.1% L-3 Communications Holdings, Inc. ....... 21,500 1,417,495 ----------- BIOTECHNOLOGY - 1.6% Genzyme Corp. (b) ....................... 27,500 1,442,925 Medimmune, Inc. (b) ..................... 21,000 596,820 ----------- 2,039,745 ----------- CHEMICALS - 1.9% Lyondell Chemical Co. ................... 52,500 1,206,450 The Dow Chemical Co. .................... 25,700 1,154,958 ----------- 2,361,408 ----------- COMMERCIAL SERVICES - 3.2% Cendant Corp. ........................... 94,100 1,937,519 H & R Block, Inc. ....................... 17,700 841,635 Weight Watchers International, Inc. (b) .................................... 34,200 1,228,464 ----------- 4,007,618 ----------- COMMUNICATIONS - 1.0% Harris Corp. ............................ 20,000 1,230,600 ----------- COMPUTER HARDWARE - 1.1% Western Digital Corp. (b) ............... 168,100 1,400,273 ----------- COMPUTER SOFTWARE - 12.8% Adobe Systems, Inc. ..................... 20,100 1,126,203 Affiliated Computer Services, Inc., Class A (b) .................................. 31,500 1,718,325 Avaya, Inc. (b) ......................... 85,800 1,235,520 BMC Software, Inc. (b) .................. 42,500 804,100 Citrix Systems, Inc. (b) ................ 59,700 1,440,561 Factset Research Systems, Inc. .......... 37,800 1,883,952 Intuit, Inc. (b) ........................ 28,400 1,288,224 Lexmark International, Inc. (b) ......... 20,700 1,720,377 SunGard Data Systems, Inc. (b) .......... 40,000 1,059,600 Symantec Corp. (b) ...................... 19,900 1,133,106 Synopsys, Inc. (b) ...................... 34,700 563,528 VeriSign, Inc. (b) ...................... 48,800 1,309,304 Veritas Software Corp. (b) .............. 40,300 881,764 ----------- 16,164,564 ----------- CONSUMER PRODUCTS - 6.2% American Standard Cos., Inc. (b) ........ 22,800 833,796 Black & Decker Corp. .................... 17,500 1,404,900 Coach, Inc. (b) ......................... 37,400 1,743,962 Constellation Brands, Inc. (b) .......... 43,500 1,706,505 Fortune Brands, Inc. .................... 18,000 1,310,760 The Clorox Co. .......................... 14,500 791,700 ----------- 7,791,623 ----------- DIVERSIFIED MANUFACTURING OPERATIONS - 9.5% Danaher Corp. ........................... 26,200 1,444,406 Eaton Corp. ............................. 27,900 1,784,205 ITT Industries, Inc. .................... 17,400 1,411,836 Pentair, Inc. ........................... 56,900 2,126,922 Textron, Inc. ........................... 25,700 1,751,455 Tyco International Ltd. ................. 111,800 3,482,570 ----------- 12,001,394 ----------- </Table> <Table> <Caption> - ---------------------------------------------------------------- COMMON STOCKS, CONTINUED SHARES VALUE($) ------- ----------- ELECTRONIC COMPONENTS & SEMICONDUCTORS - 4.6% Arrow Electronics, Inc. (b) ............. 55,000 1,317,800 Fisher Scientific International, Inc. (b) .................................... 17,600 1,009,536 Jabil Circuit, Inc. (b) ................. 88,800 2,158,728 Linear Technology Corp. ................. 35,000 1,325,800 ----------- 5,811,864 ----------- FINANCIAL SERVICES - 13.2% Capital One Financial Corp. ............. 15,900 1,172,784 Countrywide Financial Corp. ............. 28,100 897,233 E*Trade Group, Inc. (b) ................. 69,000 890,100 Legg Mason, Inc. ........................ 16,650 1,060,772 Lehman Brothers Holdings, Inc. .......... 22,100 1,815,515 MGIC Investment Corp. ................... 10,400 668,824 Moody's, Corp. .......................... 12,000 933,720 National Financial Partners Corp. ....... 32,000 983,680 Semicondutor Holders Trust .............. 176,000 5,684,800 Synovus Financial Corp. ................. 43,000 1,169,170 TCF Financial Corp. ..................... 44,100 1,390,032 ----------- 16,666,630 ----------- HEALTH CARE - 13.5% Bausch & Lomb, Inc. ..................... 18,900 1,152,144 Beckman Coulter, Inc. ................... 17,100 1,017,450 Becton Dickinson & Co. .................. 23,800 1,249,500 Cardinal Health, Inc. ................... 34,900 1,631,575 Caremark Rx, Inc. (b) ................... 80,400 2,409,587 DENTSPLY International, Inc. ............ 26,200 1,362,662 Express Scripts, Inc. (b) ............... 13,200 844,800 Guidant Corp. ........................... 30,500 2,031,910 Laboratory Corp. of America Holdings (b) .................................... 35,200 1,612,160 Neurocrine Biosciences, Inc. (b) ........ 29,900 1,391,845 Varian Medical Systems, Inc. (b) ........ 18,800 754,820 Wellpoint Health Networks, Inc. (b) ..... 17,100 1,669,986 ----------- 17,128,439 ----------- HOTELS & LODGING - 1.0% Marriott International, Inc., Class A ... 24,000 1,307,760 ----------- MEDIA - 2.4% Liberty Media Corp., Class A (b) ........ 131,200 1,170,304 New York Times Co., Class A ............. 14,800 592,740 The Washington Post Company, Class B .... 1,400 1,281,000 ----------- 3,044,044 ----------- METALS & MINING - 1.8% Phelps Dodge Corp. ...................... 25,600 2,241,024 ----------- OIL & GAS - 5.6% Baker Hughes, Inc. ...................... 31,900 1,366,277 BJ Services Co. ......................... 11,200 571,200 EOG Resources, Inc. ..................... 10,000 665,600 Nabors Industries Ltd. (b) .............. 25,000 1,228,000 Newfield Exploration Co. (b) ............ 12,900 750,780 Patterson-UTI Energy, Inc. .............. 50,800 976,884 Peabody Energy Corp. .................... 10,000 637,800 XTO Energy, Inc. ........................ 25,300 844,514 ----------- 7,041,055 ----------- </Table> See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 25 <Page> HSBC INVESTOR MID-CAP FUND - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- OCTOBER 31, 2004 (CONTINUED) ...................................................................... <Table> <Caption> - ---------------------------------------------------------------- COMMON STOCKS, CONTINUED SHARES VALUE($) ------- ----------- PHARMACEUTICALS - 4.3% Allergan, Inc. .......................... 16,800 1,202,208 McKesson Corp. .......................... 53,200 1,418,312 Mylan Laboratories, Inc. ................ 88,900 1,530,858 Teva Pharmaceutical Industries Ltd. ADR .................................... 50,700 1,318,200 ----------- 5,469,578 ----------- REAL ESTATE - 0.7% The St. Joe Co. ......................... 17,800 906,020 ----------- RESIDENTIAL BUILDING CONSTRUCTION - 1.1% Toll Brothers, Inc. (b) ................. 29,800 1,381,230 ----------- RESTAURANTS - 1.3% YUM! Brands, Inc. ....................... 37,900 1,648,650 ----------- RETAIL - 9.2% Bed Bath & Beyond, Inc. (b) ............. 49,300 2,010,947 Best Buy Co., Inc. ...................... 30,000 1,776,600 Brinker International, Inc. (b) ......... 37,600 1,214,480 Chico's FAS, Inc. (b) ................... 33,500 1,341,005 Dollar Tree Stores, Inc. (b) ............ 26,900 777,410 Michaels Stores, Inc. ................... 39,800 1,158,180 PETsMART, Inc. .......................... 48,900 1,563,822 Radioshack Corp. ........................ 30,300 906,879 Reynolds American, Inc. ................. 12,900 888,294 ----------- 11,637,617 ----------- <Caption> - ---------------------------------------------------------------- COMMON STOCKS, CONTINUED SHARES VALUE($) ------- ----------- TELECOMMUNICATIONS - 1.8% Adelphia Business Solutions, Inc. (b) ... 19,923 319 Juniper Networks, Inc. (b) .............. 68,900 1,833,429 Lucent Technologies, Inc. (b) ........... 130,100 461,855 ----------- 2,295,603 ----------- TOTAL COMMON STOCKS...................... 125,916,662 ----------- - ---------------------------------------------------------------- INVESTMENT COMPANIES - 0.1% HSBC Investor Money Market Fund Class I Shares*................................. 104,768 104,768 ----------- TOTAL INVESTMENT COMPANIES............... 104,768 ----------- TOTAL INVESTMENTS (COST $108,369,244) (a) - 99.7%........ 126,021,430 ----------- ----------- </Table> - -------------- Percentages indicated are based on net assets of $126,362,380. (a) Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting of approximately $155,182. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: <Table> Unrealized appreciation.............. $20,708,105 Unrealized depreciation.............. (3,211,101) ----------- Net unrealized appreciation.......... $17,497,004 ----------- ----------- </Table> (b) Represents non-income producing security. * Investment in affiliate. 26 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. <Page> HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF ASSETS AND LIABILITIES -- OCTOBER 31, 2004 ...................................................................... <Table> <Caption> LIMITED FIXED NEW YORK MATURITY INCOME BOND TAX-FREE FUND FUND FUND BOND FUND - -------------------------------------------------------------------------------------------------------------- ASSETS: Investments in master $39,840,773 $109,719,844 $24,704,441 Investments, at value (non affiliated) $71,679,043 Interest and dividends receivable -- -- -- 883,271 Receivable for capital shares issued 550 9,796 23,776 200,313 Receivable from Investment Adviser 9,956 -- 15,022 -- Prepaid expenses 867 6,909 321 3,177 ----------- ------------ ----------- ----------- TOTAL ASSETS 39,852,146 109,736,549 24,743,560 72,765,804 ----------- ------------ ----------- ----------- LIABILITIES: Cash overdraft -- -- -- 11,151 Dividends payable 53,515 171,584 33,824 77,219 Payable for capital shares redeemed 4,000 4,724 44,518 22,264 Accrued expenses and other liabilities: Investment management -- -- -- 15,169 Administration 1,890 5,575 967 5,694 Distribution 5,930 -- 7,827 12,732 Shareholder servicing 1,811 -- 5,241 10,982 Other 10,858 36,357 9,080 17,282 ----------- ------------ ----------- ----------- TOTAL LIABILITIES 78,004 218,240 101,457 172,493 ----------- ------------ ----------- ----------- NET ASSETS $39,774,142 $109,518,309 $24,642,103 $72,593,311 ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- ............................................................................................................... COMPOSITION OF NET ASSETS: Capital $39,042,242 $104,276,286 $24,765,493 $69,102,282 Accumulated undistributed (overdistributed) net investment income (2,273) 61,426 11,787 3 Accumulated net realized gains (losses) from investment transactions 214,250 (1,586,160) (829,218) 113,912 Unrealized appreciation/depreciation from investments 519,923 6,766,757 694,041 3,377,114 ----------- ------------ ----------- ----------- NET ASSETS $39,774,142 $109,518,309 $24,642,103 $72,593,311 ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- ............................................................................................................... CLASS A (INVESTOR) SHARES Net Assets $ 1,557,501 $ -- $17,248,098 $32,889,203 Shares Outstanding 154,753 -- 1,627,563 2,905,302 Net Asset Value and Redemption Price per share $ 10.06 $ -- $ 10.60 $ 11.32 ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- Maximum sales charge 4.75% -- 4.75% 4.75% ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- Maximum Offering Price per share (Net Asset Value/(100%-maximum sales charge)) $ 10.56 $ -- $ 11.13 $ 11.88 ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- ............................................................................................................... CLASS B SHARES Net Assets $ 6,320,623 $ -- $ 7,017,191 $17,456,645 Shares Outstanding 626,786 -- 662,130 1,543,667 Net Asset Value, Offering Price and Redemption Price per share* $ 10.08 $ -- $ 10.60 $ 11.31 ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- ............................................................................................................... CLASS C SHARES Net Assets $ 679,403 $ -- $ 376,814 $ 2,339,677 Shares Outstanding 67,445 -- 35,585 206,100 Net Asset Value, Offering Price and Redemption Price per share* $ 10.07 $ -- $ 10.59 $ 11.35 ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- ............................................................................................................... CLASS Y SHARES Net Assets $31,216,615 $ -- $ -- $19,907,786 Shares Outstanding 3,097,720 -- -- 1,758,285 Net Asset Value, Offering Price and Redemption Price per share $ 10.08 $ -- $ -- $ 11.32 ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- ............................................................................................................... ADVISOR SHARES Net Assets $ -- $109,518,309 $ -- $ -- Shares Outstanding -- 10,095,786 -- -- Net Asset Value, Offering Price and Redemption Price per share $ -- $ 10.85 $ -- $ -- ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- Investments, at cost $68,301,929 ----------- ----------- </Table> <Table> <Caption> GROWTH VALUE FUND FUND --------------- --------------- ASSETS: Investments in master $38,195,749 $48,959,543 Investments, at value (non affiliated) Interest and dividends receivable -- -- Receivable for capital shares issued 42,650 34,723 Receivable from Investment Adviser 1,489 -- Prepaid expenses 775 851 ----------- ----------- TOTAL ASSETS 38,240,663 48,995,117 ----------- ----------- LIABILITIES: Cash overdraft -- -- Dividends payable -- -- Payable for capital shares redeemed 34,756 115,107 Accrued expenses and other liabilities: Investment management -- 223 Administration 1,183 1,542 Distribution 1,089 1,502 Shareholder servicing 3,922 4,893 Other 1,750 3,354 ----------- ----------- TOTAL LIABILITIES 42,700 126,621 ----------- ----------- NET ASSETS $38,197,963 $48,868,496 ----------- ----------- ----------- ----------- ......................................................................... COMPOSITION OF NET ASSETS: Capital $38,473,324 $46,389,386 Accumulated undistributed (overdistributed) net investment income -- 30,849 Accumulated net realized gains (losses) from investment transactions (1,428,444) 434,463 Unrealized appreciation/depreciation from investments 1,153,083 2,013,798 ----------- ----------- NET ASSETS $38,197,963 $48,868,496 ----------- ----------- ----------- ----------- ......................................................................... CLASS A (INVESTOR) SHARES Net Assets $17,371,871 $20,932,531 Shares Outstanding 1,384,754 1,564,218 Net Asset Value and Redemption Price per share $ 12.55 $ 13.38 ----------- ----------- ----------- ----------- Maximum sales charge 5.00% 5.00% ----------- ----------- ----------- ----------- Maximum Offering Price per share (Net Asset Value/(100%-maximum sales charge)) $ 13.21 $ 14.08 ----------- ----------- ----------- ----------- ......................................................................... CLASS B SHARES Net Assets $ 1,402,224 $ 1,937,616 Shares Outstanding 115,804 149,653 Net Asset Value, Offering Price and Redemption Price per share* $ 12.11 $ 12.95 ----------- ----------- ----------- ----------- ......................................................................... CLASS C SHARES Net Assets $ 308,913 $ 398,640 Shares Outstanding 25,377 30,634 Net Asset Value, Offering Price and Redemption Price per share* $ 12.17 $ 13.01 ----------- ----------- ----------- ----------- ......................................................................... CLASS Y SHARES Net Assets $19,114,955 $25,599,709 Shares Outstanding 1,523,207 1,913,995 Net Asset Value, Offering Price and Redemption Price per share $ 12.55 $ 13.38 ----------- ----------- ----------- ----------- ......................................................................... ADVISOR SHARES Net Assets $ -- $ -- Shares Outstanding -- -- Net Asset Value, Offering Price and Redemption Price per share $ -- $ -- ----------- ----------- ----------- ----------- </Table> - -------------- * Redemption Price per share varies by length of time shares are held. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 27 <Page> HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF ASSETS AND LIABILITIES -- OCTOBER 31, 2004 ...................................................................... <Table> <Caption> GROWTH AND MID-CAP INTERNATIONAL OVERSEAS INCOME FUND FUND EQUITY FUND EQUITY FUND - ---------------------------------------------------------------------------------------------------------------- ASSETS: Investments in master $148,304,804 $19,928,105 Investments, at value (non affiliated) (Note 2) $201,332,873 $125,916,662 Investment in affiliates at value -- 104,768 -- -- Interest and dividends receivable 241,696 33,033 -- -- Receivable for capital shares issued 763 1,061 1,281 29,944 Receivable for investments sold 837,633 1,678,866 -- -- Receivable from Investment Adviser -- -- -- -- Tax reclaims receivable -- -- 64,778 16,269 Prepaid expenses 9,188 3,149 2,451 248 ------------ ------------ ------------ ----------- TOTAL ASSETS 202,422,153 127,737,539 148,373,314 19,974,566 ------------ ------------ ------------ ----------- LIABILITIES: Cash overdraft 71,947 -- -- -- Payable for investments purchased 604,725 1,259,014 -- -- Payable for capital shares redeemed 1,711 12,639 5,168 43,818 Accrued expenses and other liabilities: Investment management 93,331 57,789 -- -- Administration 19,943 10,805 6,886 741 Distribution 2,479 4,489 -- 1,675 Shareholder servicing 1,169 1,861 -- 4,157 Other 46,029 28,562 44,485 4,956 ------------ ------------ ------------ ----------- TOTAL LIABILITIES 841,334 1,375,159 56,539 55,347 ------------ ------------ ------------ ----------- NET ASSETS $201,580,819 $126,362,380 $148,316,775 $19,919,219 ------------ ------------ ------------ ----------- ------------ ------------ ------------ ----------- COMPOSITION OF NET ASSETS: Capital $219,314,413 $118,859,260 $138,495,354 $16,771,152 Accumulated undistributed (overdistributed) net investment income 566,583 -- 2,066,521 86,769 Accumulated net realized gains (losses) from investment and foreign currency transactions (48,592,825) (10,149,066) (6,343,732) 1,165,026 Unrealized appreciation/depreciation from investments and foreign currencies 30,292,648 17,652,186 14,098,632 1,896,272 ------------ ------------ ------------ ----------- NET ASSETS $201,580,819 $126,362,380 $148,316,775 $19,919,219 ------------ ------------ ------------ ----------- ------------ ------------ ------------ ----------- ................................................................................................................. CLASS A (INVESTOR) SHARES Net Assets $ 1,500,077 $ 1,877,843 $ -- $17,721,430 Shares Outstanding 171,211 222,554 -- 1,271,886 Net Asset Value and Redemption Price per share $ 8.76 $ 8.44 $ -- $ 13.93 ------------ ------------ ------------ ----------- ------------ ------------ ------------ ----------- Maximum sales charge 5.00% 5.00% -- 5.00% ------------ ------------ ------------ ----------- ------------ ------------ ------------ ----------- Maximum Offering Price per share (Net Asset Value/(100% - maximum sales charge)) $ 9.22 $ 8.88 $ -- $ 14.66 ------------ ------------ ------------ ----------- ------------ ------------ ------------ ----------- ................................................................................................................. CLASS B SHARES Net Assets $ 3,820,480 $ 7,036,937 $ -- $ 2,061,188 Shares Outstanding 441,959 861,896 -- 153,440 Net Asset Value, Offering Price and Redemption Price per share* $ 8.64 $ 8.16 $ -- $ 13.43 ------------ ------------ ------------ ----------- ------------ ------------ ------------ ----------- ................................................................................................................. CLASS C SHARES Net Assets $ 41,220 $ 93,537 $ -- $ 136,601 Shares Outstanding 4,721 11,382 -- 9,992 Net Asset Value, Offering Price and Redemption Price per share* $ 8.73 $ 8.22 $ -- $ 13.67 ------------ ------------ ------------ ----------- ------------ ------------ ------------ ----------- ................................................................................................................. CLASS Y SHARES Net Assets $196,219,042 $ -- $ -- $ -- Shares Outstanding 22,372,386 -- -- -- Net Asset Value, Offering Price and Redemption Price per share $ 8.77 $ -- $ -- $ -- ------------ ------------ ------------ ----------- ------------ ------------ ------------ ----------- ................................................................................................................. ADVISOR SHARES Net Assets $ -- $ -- $148,316,775 $ -- Shares Outstanding -- -- 9,971,695 -- Net Asset Value, Offering Price and Redemption Price per share $ -- $ -- $ 14.87 $ -- ------------ ------------ ------------ ----------- ------------ ------------ ------------ ----------- ................................................................................................................. TRUST SHARES Net Assets $ -- $117,354,063 $ -- $ -- Shares Outstanding -- 13,780,983 -- -- Net Asset Value, Offering Price and Redemption Price per share $ -- $ 8.52 $ -- $ -- ------------ ------------ ------------ ----------- ------------ ------------ ------------ ----------- Investments, at cost $171,040,225 $108,369,244 ------------ ------------ ------------ ------------ </Table> <Table> <Caption> SMALL CAP OPPORTUNITY EQUITY FUND FUND -------------- --------------- ASSETS: Investments in master $279,762,634 $25,873,141 Investments, at value (non affiliated) (Note 2) Investment in affiliates at value -- -- Interest and dividends receivable -- -- Receivable for capital shares issued 908 17,548 Receivable for investments sold -- -- Receivable from Investment Adviser -- 8,329 Tax reclaims receivable -- -- Prepaid expenses 7,838 892 ------------ ----------- TOTAL ASSETS 279,771,380 25,899,910 ------------ ----------- LIABILITIES: Cash overdraft -- -- Payable for investments purchased -- -- Payable for capital shares redeemed 3,728 28,698 Accrued expenses and other liabilities: Investment management -- -- Administration 11,644 1,019 Distribution -- 2,228 Shareholder servicing -- 5,426 Other 87,059 6,313 ------------ ----------- TOTAL LIABILITIES 102,431 43,684 ------------ ----------- NET ASSETS $279,668,949 $25,856,226 ------------ ----------- ------------ ----------- ........................................................................... COMPOSITION OF NET ASSETS: Capital $267,996,465 $24,442,837 Accumulated undistributed (overdistributed) net investment income -- -- Accumulated net realized gains (losses) from investment and foreign currency transactions (29,184,678) (2,170,915) Unrealized appreciation/depreciation from investments and foreign currencies 40,857,162 3,584,304 ------------ ----------- NET ASSETS $279,668,949 $25,856,226 ------------ ----------- ------------ ----------- ........................................................................... CLASS A (INVESTOR) SHARES Net Assets $ -- $20,901,610 Shares Outstanding -- 1,916,157 Net Asset Value and Redemption Price per share $ -- $ 10.91 ------------ ----------- ------------ ----------- Maximum sales charge -- 5.00% ------------ ----------- ------------ ----------- Maximum Offering Price per share (Net Asset Value/(100% - maximum sales charge)) $ -- $ 11.48 ------------ ----------- ------------ ----------- ........................................................................... CLASS B SHARES Net Assets $ -- $ 4,610,633 Shares Outstanding -- 447,874 Net Asset Value, Offering Price and Redemption Price per share* $ -- $ 10.29 ------------ ----------- ------------ ----------- ........................................................................... CLASS C SHARES Net Assets $ -- $ 343,983 Shares Outstanding -- 33,110 Net Asset Value, Offering Price and Redemption Price per share* $ -- $ 10.39 ------------ ----------- ------------ ----------- ........................................................................... CLASS Y SHARES Net Assets $ -- $ -- Shares Outstanding -- -- Net Asset Value, Offering Price and Redemption Price per share $ -- $ -- ------------ ----------- ------------ ----------- ........................................................................... ADVISOR SHARES Net Assets $279,668,949 $ -- Shares Outstanding 21,391,198 -- Net Asset Value, Offering Price and Redemption Price per share $ 13.07 $ -- ------------ ----------- ------------ ----------- ........................................................................... TRUST SHARES Net Assets $ -- $ -- Shares Outstanding -- -- Net Asset Value, Offering Price and Redemption Price per share $ -- $ -- ------------ ----------- ------------ ----------- </Table> - -------------- * Redemption Price per share varies by length of time shares are held. 28 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. <Page> HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF OPERATIONS -- FOR THE YEAR ENDED OCTOBER 31, 2004 (a) ...................................................................... <Table> <Caption> LIMITED FIXED NEW YORK MATURITY INCOME BOND TAX-FREE FUND FUND FUND FUND --------------- --------------- --------------- --------------- INVESTMENT INCOME: Interest $ -- $ -- $ -- $2,697,209 Dividends -- -- -- 12,508 Investment income from portfolio 1,679,052 5,153,890 1,181,187 -- Foreign tax withholding from portfolio -- -- -- -- Expenses from portfolio (233,585) (555,214) (127,546) -- ---------- ---------- ---------- ---------- TOTAL INVESTMENT INCOME 1,445,467 4,598,676 1,053,641 2,709,717 ---------- ---------- ---------- ---------- ............................................................................................................... EXPENSES: Investment management -- -- -- 174,494 Administration 15,239 39,914 9,164 52,292 Distribution: Class B Shares 47,349 -- 54,562 138,367 Class C Shares 11,091 -- 3,204 20,233 Shareholder servicing: Class A (Investor) Shares 6,035 -- 41,900 72,123 Class B Shares 15,783 -- 18,187 46,122 Class C Shares 3,697 -- 1,068 6,744 Accounting 35,999 9,001 27,000 72,746 Custodian -- -- -- 21,989 Insurance 1,517 3,914 434 1,639 Registration 2,344 14,826 8,215 3,206 Printing 14,746 24,192 9,150 21,617 Transfer agent 80,063 27,211 62,938 69,889 Trustee 321 370 182 1,025 Other 5,299 11,044 3,320 13,487 ---------- ---------- ---------- ---------- Total expenses before fee reductions 239,483 130,472 239,324 715,973 Fees reduced by Investment Adviser (43,698) -- (54,731) -- ---------- ---------- ---------- ---------- NET EXPENSES 195,785 130,472 184,593 715,973 ---------- ---------- ---------- ---------- ............................................................................................................... NET INVESTMENT INCOME (LOSS) 1,249,682 4,468,204 869,048 1,993,744 ---------- ---------- ---------- ---------- ............................................................................................................... NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: (b) Net realized gains (losses) from investment transactions 331,944 1,275,025 (157,901) 113,912 Change in unrealized appreciation/depreciation from investments 32,330 (86,587) 377,523 817,257 ---------- ---------- ---------- ---------- ............................................................................................................... Net realized/unrealized gains (losses) from investment transactions 364,274 1,188,438 219,622 931,169 ---------- ---------- ---------- ---------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $1,613,956 $5,656,642 $1,088,670 $2,924,913 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- </Table> <Table> <Caption> GROWTH VALUE FUND FUND --------------- --------------- INVESTMENT INCOME: Interest $ -- $ -- Dividends -- -- Investment income from portfolio 135,660 453,975 Foreign tax withholding from portfolio (16) (1,224) Expenses from portfolio (127,675) (163,306) ----------- ---------- TOTAL INVESTMENT INCOME 7,969 289,445 ----------- ---------- .......................................................................... EXPENSES: Investment management -- -- Administration 6,534 8,459 Distribution: Class B Shares 5,100 6,843 Class C Shares 1,045 1,368 Shareholder servicing: Class A (Investor) Shares 19,374 24,303 Class B Shares 1,700 2,281 Class C Shares 348 456 Accounting 17,130 17,130 Custodian -- -- Insurance 350 445 Registration -- -- Printing 8,372 10,670 Transfer agent 21,675 21,677 Trustee 74 93 Other 3,644 4,056 ----------- ---------- Total expenses before fee reductions 85,346 97,781 Fees reduced by Investment Adviser (19,457) (10,929) ----------- ---------- NET EXPENSES 65,889 86,852 ----------- ---------- .......................................................................... NET INVESTMENT INCOME (LOSS) (57,920) 202,593 ----------- ---------- .......................................................................... NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: (b) Net realized gains (losses) from investment transactions (1,428,444) 434,463 Change in unrealized appreciation/depreciation from investments 1,153,083 2,013,798 ----------- ---------- .......................................................................... Net realized/unrealized gains (losses) from investment transactions (275,361) 2,448,261 ----------- ---------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ (333,281) $2,650,854 ----------- ---------- ----------- ---------- </Table> - -------------- (a) The Growth Fund and Value Fund commenced operations on May 7, 2004. (b) With the exception of New York Tax-Free Bond Fund, represents amounts allocated from the respective Master Portfolios. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 29 <Page> HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF OPERATIONS -- FOR THE YEAR ENDED OCTOBER 31, 2004 ...................................................................... <Table> <Caption> GROWTH AND MID-CAP INTERNATIONAL OVERSEAS INCOME FUND FUND EQUITY FUND EQUITY FUND - --------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $ 3,232,778 $ 733,695 $ -- $ -- Dividends from affiliated investments 2,950 11,581 -- -- Investment income from portfolio -- -- 3,763,791 498,174 Tax reclaims -- -- 8,469 4,101 Foreign tax withholding from portfolio -- -- (534,436) (71,211) Expenses from portfolio -- -- (1,234,862) (152,651) ----------- ------------ ----------- ---------- TOTAL INVESTMENT INCOME (LOSS) 3,235,728 745,276 2,002,962 278,413 ----------- ------------ ----------- ---------- ............................................................................................................... EXPENSES: Investment management 1,156,774 734,735 -- -- Administration 157,574 100,085 49,743 6,271 Distribution: Class B Shares 24,823 50,294 -- 12,213 Class C Shares 145 461 -- 1,001 Shareholder servicing: Class A (Investor) Shares 6,467 4,424 -- 37,446 Class B Shares 8,274 16,765 -- 4,071 Class C Shares 48 154 -- 334 Accounting 63,101 63,079 8,898 27,000 Custodian 56,717 47,146 -- -- Registration 15,485 13,715 26,928 10,464 Printing 59,867 35,170 32,542 10,449 Transfer agent 66,527 96,268 29,618 63,321 Trustee 3,223 2,164 766 121 Other 43,513 28,851 14,154 2,759 ----------- ------------ ----------- ---------- Total expenses before fee reductions 1,662,538 1,193,311 162,649 175,450 Fees reduced by Investment Adviser -- -- -- (15,880) ----------- ------------ ----------- ---------- NET EXPENSES 1,662,538 1,193,311 162,649 159,570 ----------- ------------ ----------- ---------- ............................................................................................................... NET INVESTMENT INCOME (LOSS) 1,573,190 (448,035) 1,840,313 118,843 ----------- ------------ ----------- ---------- ............................................................................................................... NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND FOREIGN CURRENCIES: (a) Net realized gains from investment and foreign currency transactions 9,000,926 21,489,500 19,965,089 2,009,405 Change in unrealized appreciation/depreciation from investments and foreign currencies (23,421) (11,346,234) 2,586,405 693,652 ----------- ------------ ----------- ---------- ............................................................................................................... Net realized/unrealized gains from investment, options and foreign currency transactions 8,977,505 10,143,266 22,551,494 2,703,057 ----------- ------------ ----------- ---------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $10,550,695 $ 9,695,231 $24,391,807 $2,821,900 ----------- ------------ ----------- ---------- ----------- ------------ ----------- ---------- </Table> <Table> <Caption> SMALL CAP OPPORTUNITY EQUITY FUND FUND -------------- --------------- INVESTMENT INCOME: Dividends $ -- $ -- Dividends from affiliated investments -- -- Investment income from portfolio 1,033,870 92,645 Tax reclaims -- -- Foreign tax withholding from portfolio -- -- Expenses from portfolio (2,516,337) (223,032) ------------ ---------- TOTAL INVESTMENT INCOME (LOSS) (1,482,467) (130,387) ------------ ---------- .......................................................................... EXPENSES: Investment management -- -- Administration 106,877 9,458 Distribution: Class B Shares -- 33,404 Class C Shares -- 2,694 Shareholder servicing: Class A (Investor) Shares -- 51,086 Class B Shares -- 11,135 Class C Shares -- 898 Accounting 9,000 27,000 Custodian -- -- Registration 20,246 9,660 Printing 77,378 12,436 Transfer agent 30,153 84,849 Trustee 2,161 183 Other 29,085 3,764 ------------ ---------- Total expenses before fee reductions 274,900 246,567 Fees reduced by Investment Adviser -- (26,819) ------------ ---------- NET EXPENSES 274,900 219,748 ------------ ---------- .......................................................................... NET INVESTMENT INCOME (LOSS) (1,757,367) (350,135) ------------ ---------- .......................................................................... NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND FOREIGN CURRENCIES: (a) Net realized gains from investment and foreign currency transactions 30,929,551 1,634,222 Change in unrealized appreciation/depreciation from investments and foreign currencies (11,885,640) (121,946) ------------ ---------- .......................................................................... Net realized/unrealized gains from investment, options and foreign currency transactions 19,043,911 1,512,276 ------------ ---------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 17,286,544 $1,162,141 ------------ ---------- ------------ ---------- </Table> - -------------- (a) With the exception of Growth and Income Fund and Mid-Cap Fund, represents amounts allocated from the respective Master Portfolios. 30 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. <Page> HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS ...................................................................... <Table> <Caption> LIMITED MATURITY FUND FIXED INCOME FUND - --------------------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, 2004 OCTOBER 31, 2003 OCTOBER 31, 2004 OCTOBER 31, 2003 - --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income $ 1,249,682 $ 3,333,115 $ 4,468,204 $ 10,945,642 Net realized gains from investment transactions 331,944 4,918,617 1,275,025 11,905,117 Change in unrealized appreciation/depreciation from investments 32,330 (2,609,744) (86,587) (2,456,592) ----------- ------------ ------------ ------------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 1,613,956 5,641,988 5,656,642 20,394,167 ----------- ------------ ------------ ------------- ............................................................................................................................. DIVIDENDS: NET INVESTMENT INCOME: Class A (Investor) Shares (79,559) (100,206) -- -- Class B Shares (161,712) (152,669) -- -- Class C Shares (37,490) (63,642) -- -- Class Y Shares (1,086,077) (3,280,529) -- -- Advisor Shares -- -- (4,500,718) (11,850,331) NET REALIZED GAINS: Class A (Investor) Shares (135,028) -- -- -- Class B Shares (282,131) -- -- -- Class C Shares (105,514) -- -- -- Class Y Shares (1,415,704) -- -- -- ----------- ------------ ------------ ------------- CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (3,303,215) (3,597,046) (4,500,718) (11,850,331) ----------- ------------ ------------ ------------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS (2,200,141) (60,812,597) (2,606,046) (182,416,067) ----------- ------------ ------------ ------------- CHANGE IN NET ASSETS (3,889,400) (58,767,655) (1,450,122) (173,872,231) ............................................................................................................................. NET ASSETS: Beginning of year 43,663,542 102,431,197 110,968,431 284,840,662 ----------- ------------ ------------ ------------- End of year $39,774,142 $ 43,663,542 $109,518,309 $ 110,968,431 ----------- ------------ ------------ ------------- ----------- ------------ ------------ ------------- Accumulated undistributed (overdistributed) net investment income $ (2,273) $ (6,183) $ 61,426 $ 3,875 ----------- ------------ ------------ ------------- ----------- ------------ ------------ ------------- </Table> See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 31 <Page> HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ...................................................................... <Table> <Caption> LIMITED MATURITY FUND FIXED INCOME FUND - --------------------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, 2004 OCTOBER 31, 2003 OCTOBER 31, 2004 OCTOBER 31, 2003 - --------------------------------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A (INVESTOR) SHARES: Proceeds from shares issued $ 420,136 $ 32,333,443 $ -- $ -- Dividends reinvested 200,881 86,864 -- -- Cost of shares redeemed (2,229,725) (30,657,661) -- -- ------------ ------------- ------------ ------------- Class A (Investor) Shares capital transactions (1,608,708) 1,762,646 -- -- ------------ ------------- ------------ ------------- .............................................................................................................................. CLASS B SHARES: Proceeds from shares issued 893,262 3,107,219 -- -- Dividends reinvested 397,930 130,108 -- -- Cost of shares redeemed (1,163,686) (964,324) -- -- ------------ ------------- ------------ ------------- Class B Shares capital transactions 127,506 2,273,003 -- -- ------------ ------------- ------------ ------------- .............................................................................................................................. CLASS C SHARES: Proceeds from shares issued 83,393 1,471,188 -- -- Dividends reinvested 141,149 57,276 -- -- Cost of shares redeemed (1,990,271) (733,409) -- -- ------------ ------------- ------------ ------------- Class C Shares capital transactions (1,765,729) 795,055 -- -- ------------ ------------- ------------ ------------- .............................................................................................................................. CLASS Y SHARES: Proceeds from shares issued 9,931,279 35,228,965 -- -- Dividends reinvested 1,913,383 2,958,619 -- -- Cost of shares redeemed (10,797,872) (103,830,885) -- -- ------------ ------------- ------------ ------------- Class Y Shares capital transactions 1,046,790 (65,643,301) -- -- ------------ ------------- ------------ ------------- .............................................................................................................................. ADVISOR SHARES: Proceeds from shares issued -- -- 26,239,405 174,706,822 Dividends reinvested -- -- 2,670,922 3,243,190 Cost of shares redeemed -- -- (31,516,373) (360,366,079) ------------ ------------- ------------ ------------- Advisor Shares capital transactions -- -- (2,606,046) (182,416,067) ------------ ------------- ------------ ------------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ (2,200,141) $ (60,812,597) $ (2,606,046) $(182,416,067) ------------ ------------- ------------ ------------- ------------ ------------- ------------ ------------- .............................................................................................................................. SHARE TRANSACTIONS: CLASS A (INVESTOR) SHARES: Issued 41,873 3,077,715 -- -- Reinvested 19,911 8,421 -- -- Redeemed (223,097) (2,924,192) -- -- ------------ ------------- ------------ ------------- Change in Class A (Investor) Shares (161,313) 161,944 -- -- ------------ ------------- ------------ ------------- .............................................................................................................................. CLASS B SHARES: Issued 88,212 293,513 -- -- Reinvested 39,414 12,334 -- -- Redeemed (115,235) (91,409) -- -- ------------ ------------- ------------ ------------- Change in Class B Shares 12,391 214,438 -- -- ------------ ------------- ------------ ------------- .............................................................................................................................. CLASS C SHARES: Issued 8,294 138,667 -- -- Reinvested 13,973 5,442 -- -- Redeemed (197,361) (70,036) -- -- ------------ ------------- ------------ ------------- Change in Class C Shares (175,094) 74,073 -- -- ------------ ------------- ------------ ------------- .............................................................................................................................. CLASS Y SHARES: Issued 984,517 3,349,080 -- -- Reinvested 189,646 279,954 -- -- Redeemed (1,068,607) (9,718,276) -- -- ------------ ------------- ------------ ------------- Change in Class Y Shares 105,556 (6,089,242) -- -- ------------ ------------- ------------ ------------- .............................................................................................................................. ADVISOR SHARES: Issued -- -- 2,434,997 16,137,521 Reinvested -- -- 247,974 299,797 Redeemed -- -- (2,927,030) (32,896,242) ------------ ------------- ------------ ------------- Change in Advisor Shares -- -- (244,059) (16,458,924) ------------ ------------- ------------ ------------- </Table> 32 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. <Page> HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ...................................................................... <Table> <Caption> NEW YORK BOND FUND TAX-FREE BOND FUND - --------------------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, 2004 OCTOBER 31, 2003 OCTOBER 31, 2004 OCTOBER 31, 2003 - --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income $ 869,048 $ 747,914 $ 1,993,744 $ 1,858,380 Net realized gains (losses) from investment transactions (157,901) 323,271 113,912 718,711 Change in unrealized appreciation/depreciation from investments 377,523 (145,359) 817,257 (200,970) ----------- ----------- ----------- ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 1,088,670 925,826 2,924,913 2,376,121 ----------- ----------- ----------- ----------- ............................................................................................................................. DIVIDENDS: NET INVESTMENT INCOME: Class A (Investor) Shares (638,457) (551,717) (868,263) (645,402) Class B Shares (223,750) (237,511) (419,400) (415,040) Class C Shares (13,252) (27,506) (61,105) (82,589) Class Y Shares -- -- (646,490) (714,717) NET REALIZED GAINS: Class A (Investor) Shares -- -- (120,953) -- Class B Shares -- -- (92,061) -- Class C Shares -- -- (15,865) -- Class Y (Adviser) Shares -- -- (96,127) -- ----------- ----------- ----------- ----------- CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (875,459) (816,734) (2,320,264) (1,857,748) ----------- ----------- ----------- ----------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 2,250,029 2,909,577 7,769,011 12,299,920 ----------- ----------- ----------- ----------- CHANGE IN NET ASSETS 2,463,240 3,018,669 8,373,660 12,818,293 ............................................................................................................................. NET ASSETS: Beginning of year 22,178,863 19,160,194 64,219,651 51,401,358 ----------- ----------- ----------- ----------- End of year $24,642,103 $22,178,863 $72,593,311 $64,219,651 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Accumulated undistributed (overdistributed) net investment income $ 11,787 $ (174) $ 3 $ 1,515 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -------------------- --------------- --------------- --------------- </Table> See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 33 <Page> HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ...................................................................... <Table> <Caption> NEW YORK BOND FUND TAX-FREE BOND FUND - ------------------------------------------------------------------------------------------------------------------------------ FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, 2004 OCTOBER 31, 2003 OCTOBER 31, 2004 OCTOBER 31, 2003 - ------------------------------------------------------------------------------------------------------------------------------ CAPITAL TRANSACTIONS: CLASS A (INVESTOR) SHARES: Proceeds from shares issued $ 11,120,582 $ 8,398,463 $19,778,905 $ 11,543,580 Dividends reinvested 592,247 501,654 907,234 590,442 Cost of shares redeemed (8,748,191) (6,884,172) (10,395,878) (6,313,380) ------------ ----------- ----------- ------------ Class A (Investor) Shares capital transactions 2,964,638 2,015,945 10,290,261 5,820,642 ------------ ----------- ----------- ------------ .............................................................................................................................. CLASS B SHARES: Proceeds from shares issued 899,953 2,250,164 2,134,581 6,989,555 Dividends reinvested 191,588 196,735 389,604 319,238 Cost of shares redeemed (1,572,057) (1,164,858) (3,543,472) (1,755,775) ------------ ----------- ----------- ------------ Class B Shares capital transactions (480,516) 1,282,041 (1,019,287) 5,553,018 ------------ ----------- ----------- ------------ .............................................................................................................................. CLASS C SHARES: Proceeds from shares issued 9,167 18,000 276,101 1,160,527 Dividends reinvested 12,757 20,473 54,385 63,214 Cost of shares redeemed (256,017) (426,882) (1,262,303) (610,458) ------------ ----------- ----------- ------------ Class C Shares capital transactions (234,093) (388,409) (931,817) 613,283 ------------ ----------- ----------- ------------ .............................................................................................................................. CLASS Y SHARES: Proceeds from shares issued -- -- 3,969,688 8,199,696 Dividends reinvested -- -- 188,028 197,795 Cost of shares redeemed -- -- (4,727,862) (8,084,514) ------------ ----------- ----------- ------------ Class Y Shares capital transactions -- -- (570,146) 312,977 ------------ ----------- ----------- ------------ CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 2,250,029 $ 2,909,577 $ 7,769,011 $ 12,299,920 ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------ .............................................................................................................................. SHARE TRANSACTIONS: CLASS A (INVESTOR) SHARES: Issued 1,055,569 794,521 1,759,416 1,028,866 Reinvested 56,325 47,355 80,838 52,637 Redeemed (833,673) (653,528) (926,189) (564,319) ------------ ----------- ----------- ------------ Change in Class A (Investor) Shares 278,221 188,348 914,065 517,184 ------------ ----------- ----------- ------------ .............................................................................................................................. CLASS B SHARES: Issued 85,059 211,083 189,522 620,289 Reinvested 18,245 18,625 34,705 28,472 Redeemed (149,766) (110,752) (318,736) (157,037) ------------ ----------- ----------- ------------ Change in Class B Shares (46,462) 118,956 (94,509) 491,724 ------------ ----------- ----------- ------------ .............................................................................................................................. CLASS C SHARES: Issued 868 1,669 24,608 103,233 Reinvested 1,213 1,940 4,817 5,614 Redeemed (24,313) (40,512) (112,449) (54,259) ------------ ----------- ----------- ------------ Change in Class C Shares (22,232) (36,903) (83,024) 54,588 ------------ ----------- ----------- ------------ .............................................................................................................................. CLASS Y SHARES: Issued -- -- 353,878 734,436 Reinvested -- -- 16,713 17,662 Redeemed -- -- (421,929) (724,104) ------------ ----------- ----------- ------------ Change in Class Y Shares -- -- (51,338) 27,994 ------------ ----------- ----------- ------------ ------------------- --------------- --------------- --------------- </Table> 34 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. <Page> HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ...................................................................... <Table> <Caption> GROWTH FUND VALUE FUND - ---------------------------------------------------------------------------------------------------------- FOR THE FOR THE PERIOD ENDED PERIOD ENDED OCTOBER 31, 2004 (a) OCTOBER 31, 2004 (a) - ---------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ (57,920) $ 202,593 Net realized gains (losses) from investment transactions (1,428,444) 434,463 Change in unrealized appreciation/depreciation from investments 1,153,083 2,013,798 ------------ ----------- CHANGE IN NET ASSETS FROM OPERATIONS (333,281) 2,650,854 ------------ ----------- ............................................................................................................ DIVIDENDS: NET INVESTMENT INCOME: Class A (Investor) Shares -- (68,463) Class B Shares -- (1,749) Class C Shares -- (444) Class Y Shares -- (105,185) ------------ ----------- CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS -- (175,841) ------------ ----------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 38,531,244 46,393,483 ------------ ----------- CHANGE IN NET ASSETS 38,197,963 48,868,496 ............................................................................................................ NET ASSETS: Beginning of period -- -- ------------ ----------- End of period $ 38,197,963 $48,868,496 ------------ ----------- ------------ ----------- Accumulated undistributed (overdistributed) net investment income $ -- $ 30,849 ------------ ----------- ------------ ----------- </Table> - -------------- (a) The Growth Fund and Value Fund commenced operations on May 7, 2004. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 35 <Page> HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ...................................................................... <Table> <Caption> GROWTH FUND VALUE FUND - ------------------------------------------------------------------------------------------------------------- FOR THE FOR THE PERIOD ENDED PERIOD ENDED OCTOBER 31, 2004 (a) OCTOBER 31, 2004 (a) - ------------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A (INVESTOR) SHARES: Proceeds from shares issued $19,786,406 $23,212,388 Dividends reinvested -- 67,173 Cost of shares redeemed (2,253,596) (3,411,150) ----------- ----------- Class A (Investor) Shares capital transactions 17,532,810 19,868,411 ----------- ----------- .............................................................................................................. CLASS B SHARES: Proceeds from shares issued 1,516,870 1,963,686 Dividends reinvested -- 1,711 Cost of shares redeemed (93,968) (124,729) ----------- ----------- Class B Shares capital transactions 1,422,902 1,840,668 ----------- ----------- .............................................................................................................. CLASS C SHARES: Proceeds from shares issued 329,711 402,773 Dividends reinvested -- 440 Cost of shares redeemed (17,780) (23,948) ----------- ----------- Class C Shares capital transactions 311,931 379,265 ----------- ----------- .............................................................................................................. CLASS Y SHARES: Proceeds from shares issued 20,852,452 26,452,278 Dividends reinvested -- 81,165 Cost of shares redeemed (1,588,851) (2,228,304) ----------- ----------- Class Y Shares capital transactions 19,263,601 24,305,139 ----------- ----------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $38,531,244 $46,393,483 ----------- ----------- ----------- ----------- .............................................................................................................. SHARE TRANSACTIONS: CLASS A (INVESTOR) SHARES: Issued 1,564,821 1,818,480 Reinvested -- 5,025 Redeemed (180,067) (259,287) ----------- ----------- Change in Class A (Investor) Shares 1,384,754 1,564,218 ----------- ----------- .............................................................................................................. CLASS B SHARES: Issued 123,574 159,465 Reinvested -- 133 Redeemed (7,770) (9,945) ----------- ----------- Change in Class B Shares 115,804 149,653 ----------- ----------- .............................................................................................................. CLASS C SHARES: Issued 26,836 32,464 Reinvested -- 34 Redeemed (1,459) (1,864) ----------- ----------- Change in Class C Shares 25,377 30,634 ----------- ----------- .............................................................................................................. CLASS Y SHARES: Issued 1,651,120 2,077,872 Reinvested -- 6,073 Redeemed (127,913) (169,950) ----------- ----------- Change in Class Y Shares 1,523,207 1,913,995 ----------- ----------- ---------------------- ---------------- </Table> - -------------- (a) The Growth Fund and Value Fund commenced operations on May 7, 2004. 36 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. <Page> HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ...................................................................... <Table> <Caption> GROWTH AND INCOME FUND MID-CAP FUND - ---------------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, 2004 OCTOBER 31, 2003 OCTOBER 31, 2004 OCTOBER 31, 2003 - ---------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 1,573,190 $ 1,762,934 $ (448,035) $ (277,390) Net realized gains (losses) from investment and options transactions 9,000,926 (9,441,001) 21,489,500 9,437 Change in unrealized appreciation/depreciation from investments and options (23,421) 38,518,987 (11,346,234) 33,785,071 ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS FROM OPERATIONS 10,550,695 30,840,920 9,695,231 33,517,118 ------------ ------------ ------------ ------------ ........................................................................................................................... DIVIDENDS: NET INVESTMENT INCOME: Class A (Investor) Shares (12,296) (10,010) -- -- Class B Shares (876) (2,046) -- -- Class C Shares (a) (24) -- -- -- Class Y Shares (1,535,871) (2,030,344) -- -- ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (1,549,067) (2,042,400) -- -- ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS (14,941,610) 7,450,742 (51,555,708) 31,225,520 ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS (5,939,982) 36,249,262 (41,860,477) 64,742,638 ............................................................................................................................ NET ASSETS: Beginning of year 207,520,801 171,271,539 168,222,857 103,480,219 ------------ ------------ ------------ ------------ End of year $201,580,819 $207,520,801 $126,362,380 $168,222,857 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Accumulated undistributed (overdistributed) net investment income $ 566,583 $ 542,460 $ -- $ -- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ </Table> - -------------- (a) Growth and Income Class C Shares commenced operations on November 3, 2003. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 37 <Page> HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ...................................................................... <Table> <Caption> GROWTH AND INCOME FUND MID-CAP FUND - --------------------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, 2004 OCTOBER 31, 2003 OCTOBER 31, 2004 OCTOBER 31, 2003 - --------------------------------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A (INVESTOR) SHARES: Proceeds from shares issued $ 1,500,035 $ 900,030 $ 863,793 $ 638,547 Dividends reinvested 12,137 9,705 -- -- Cost of shares redeemed (1,915,097) (576,695) (614,831) (388,850) ------------ ------------ ------------ ------------ Class A (Investor) Shares capital transactions (402,925) 333,040 248,962 249,697 ------------ ------------ ------------ ------------ .............................................................................................................................. CLASS B SHARES: Proceeds from shares issued 1,837,750 945,891 1,257,527 873,543 Dividends reinvested 869 2,022 -- -- Cost of shares redeemed (320,783) (139,831) (548,619) (429,567) ------------ ------------ ------------ ------------ Class B Shares capital transactions 1,517,836 808,082 708,908 443,976 ------------ ------------ ------------ ------------ .............................................................................................................................. CLASS C SHARES: (a) Proceeds from shares issued 45,962 -- 38,477 25,000 Cost of shares redeemed (5,303) -- (4,165) -- ------------ ------------ ------------ ------------ Class C Shares capital transactions 40,659 -- 34,312 25,000 ------------ ------------ ------------ ------------ .............................................................................................................................. CLASS Y SHARES: Proceeds from shares issued 12,306,056 33,049,306 -- -- Dividends reinvested 348,375 421,341 -- -- Cost of shares redeemed (28,751,611) (27,161,027) -- -- ------------ ------------ ------------ ------------ Class Y Shares capital transactions (16,097,180) 6,309,620 -- -- ------------ ------------ ------------ ------------ .............................................................................................................................. TRUST SHARES: Proceeds from shares issued -- -- 11,848,793 46,107,032 Cost of shares redeemed -- -- (64,396,683) (15,600,185) ------------ ------------ ------------ ------------ Trust Shares capital transactions -- -- (52,547,890) 30,506,847 ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $(14,941,610) $ 7,450,742 $(51,555,708) $ 31,225,520 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ .............................................................................................................................. SHARE TRANSACTIONS: CLASS A (INVESTOR) SHARES: Issued 170,577 114,468 103,921 90,070 Reinvested 1,389 1,290 -- -- Redeemed (218,685) (78,927) (74,968) (56,634) ------------ ------------ ------------ ------------ Change in Class A (Investor) Shares (46,719) 36,831 28,953 33,436 ------------ ------------ ------------ ------------ .............................................................................................................................. CLASS B SHARES: Issued 209,864 125,862 155,872 131,936 Reinvested 101 265 -- -- Redeemed (37,302) (18,379) (69,124) (65,762) ------------ ------------ ------------ ------------ Change in Class B Shares 172,663 107,748 86,748 66,174 ------------ ------------ ------------ ------------ .............................................................................................................................. CLASS C SHARES: (a) Issued 5,315 -- 4,931 3,671 Redeemed (595) -- (506) -- ------------ ------------ ------------ ------------ Change in Class C Shares 4,720 -- 4,425 3,671 ------------ ------------ ------------ ------------ .............................................................................................................................. CLASS Y SHARES: Issued 1,406,257 4,459,324 -- -- Reinvested 39,834 56,068 -- -- Redeemed (3,307,085) (3,647,279) -- -- ------------ ------------ ------------ ------------ Change in Class Y Shares (1,860,994) 868,113 -- -- ------------ ------------ ------------ ------------ .............................................................................................................................. TRUST SHARES: Issued -- -- 1,427,284 6,913,528 Redeemed -- -- (7,710,357) (2,336,030) ------------ ------------ ------------ ------------ Change in Trust Shares -- -- (6,283,073) 4,577,498 ------------ ------------ ------------ ------------ </Table> - -------------- (a) Growth and Income Fund class C Shares commenced operations on November 3, 2003. 38 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. <Page> HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ...................................................................... <Table> <Caption> INTERNATIONAL EQUITY FUND OVERSEAS EQUITY FUND - ----------------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, 2004 OCTOBER 31, 2003 OCTOBER 31, 2004 OCTOBER 31, 2003 - ----------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income $ 1,840,313 $ 2,282,789 $ 118,843 $ 1,123 Net realized gains (losses) from investment and foreign currency transactions 19,965,089 (889,405) 2,009,405 194,623 Change in unrealized appreciation/depreciation from investments and foreign currencies 2,586,405 43,679,183 693,652 2,572,761 ------------- ------------ ----------- ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 24,391,807 45,072,567 2,821,900 2,768,507 ------------- ------------ ----------- ----------- ............................................................................................................................. DIVIDENDS: NET INVESTMENT INCOME: Class A (Investor) Shares -- -- (75,763) (71,236) Class B Shares -- -- -- (3,341) Class C Shares -- -- -- (54) Advisor Shares (3,737,768) (3,705,000) -- -- NET REALIZED GAINS FROM INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS: Class A (Investor) Shares -- -- -- -- Class B Shares -- -- -- -- Class C Shares -- -- -- -- ------------- ------------ ----------- ----------- CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (3,737,768) (3,705,000) (75,763) (74,631) ------------- ------------ ----------- ----------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 4,005,057 (112,413,621) 5,879,349 713,058 ------------- ------------ ----------- ----------- CHANGE IN NET ASSETS 24,659,096 (71,046,054) 8,625,486 3,406,934 ............................................................................................................................. NET ASSETS: Beginning of year 123,657,679 194,703,733 11,293,733 7,886,799 ------------- ------------ ----------- ----------- End of year $ 148,316,775 $123,657,679 $19,919,219 $11,293,733 ------------- ------------ ----------- ----------- ------------- ------------ ----------- ----------- Accumulated undistributed net investment income $ 2,066,521 $ 3,732,087 $ 86,769 $ 77,699 ------------- ------------ ----------- ----------- ------------- ------------ ----------- ----------- </Table> See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 39 <Page> HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ...................................................................... <Table> <Caption> INTERNATIONAL EQUITY FUND OVERSEAS EQUITY FUND - ---------------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, 2004 OCTOBER 31, 2003 OCTOBER 31, 2004 OCTOBER 31, 2003 - ---------------------------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A (INVESTOR) SHARES: Proceeds from shares issued $ -- $ -- $10,468,157 $ 74,256,371 Dividends reinvested -- -- 74,544 69,478 Cost of shares redeemed -- -- (5,380,471) (73,955,056) ------------ --------------- ----------- ------------ Class A (Investor) Shares capital transactions -- -- 5,162,230 370,793 ------------ --------------- ----------- ------------ ............................................................................................................................. CLASS B SHARES: Proceeds from shares issued -- -- 836,302 400,571 Dividends reinvested -- -- -- 3,234 Cost of shares redeemed -- -- (111,311) (67,981) ------------ --------------- ----------- ------------ Class B Shares capital transactions -- -- 724,991 335,824 ------------ --------------- ----------- ------------ ............................................................................................................................. CLASS C SHARES: Proceeds from shares issued -- -- 24,526 10,780 Dividends reinvested -- -- -- 54 Cost of shares redeemed -- -- (32,398) (4,393) ------------ --------------- ----------- ------------ Class C Shares capital transactions -- -- (7,872) 6,441 ------------ --------------- ----------- ------------ ............................................................................................................................. ADVISOR SHARES: Proceeds from shares issued 26,978,110 1,033,987,233 -- -- Dividends reinvested 1,968,545 2,711,050 -- -- Cost of shares redeemed (24,941,598) (1,149,111,904) -- -- ------------ --------------- ----------- ------------ Advisor Shares capital transactions 4,005,057 (112,413,621) -- -- ------------ --------------- ----------- ------------ CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 4,005,057 $ (112,413,621) $ 5,879,349 $ 713,058 ------------ --------------- ----------- ------------ ------------ --------------- ----------- ------------ ............................................................................................................................. SHARE TRANSACTIONS: CLASS A (INVESTOR) SHARES: Issued -- -- 816,578 7,113,411 Reinvested -- -- 5,847 7,075 Redeemed -- -- (411,221) (6,989,865) ------------ --------------- ----------- ------------ Change in Class A (Investor) Shares -- -- 411,204 130,621 ------------ --------------- ----------- ------------ ............................................................................................................................. CLASS B SHARES: Issued -- -- 67,626 40,360 Reinvested -- -- -- 339 Redeemed -- -- (9,063) (7,369) ------------ --------------- ----------- ------------ Change in Class B Shares -- -- 58,563 33,330 ------------ --------------- ----------- ------------ ............................................................................................................................. CLASS C SHARES: Issued -- -- 1,956 1,049 Reinvested -- -- -- 6 Redeemed -- -- (2,475) (439) ------------ --------------- ----------- ------------ Change in Class C Shares -- -- (519) 616 ------------ --------------- ----------- ------------ ............................................................................................................................. ADVISOR SHARES: Issued 1,962,577 92,631,040 -- -- Reinvested 151,249 255,518 -- -- Redeemed (1,835,748) (101,337,125) -- -- ------------ --------------- ----------- ------------ Change in Advisor Shares 278,078 (8,450,567) -- -- ------------ --------------- ----------- ------------ </Table> 40 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. <Page> HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ...................................................................... <Table> <Caption> SMALL CAP EQUITY FUND OPPORTUNITY FUND - ---------------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, 2004 OCTOBER 31, 2003 OCTOBER 31, 2004 OCTOBER 31, 2003 - ---------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment loss $ (1,757,367) $ (1,565,842) $ (350,135) $ (234,805) Net realized gains from investment transactions 30,929,551 4,018,810 1,634,222 275,213 Change in unrealized appreciation/depreciation from investments (11,885,640) 65,152,323 (121,946) 4,550,177 ------------ ------------ ----------- ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 17,286,544 67,605,291 1,162,141 4,590,585 ------------ ------------ ----------- ----------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS (63,689,406) 67,780,861 3,652,913 2,364,162 ------------ ------------ ----------- ----------- CHANGE IN NET ASSETS (46,402,862) 135,386,152 4,815,054 6,954,747 ............................................................................................................................ NET ASSETS: Beginning of year 326,071,811 190,685,659 21,041,172 14,086,425 End of year $279,668,949 $326,071,811 $25,856,226 $21,041,172 ------------ ------------ ----------- ----------- ------------ ------------ ----------- ----------- Accumulated undistributed (overdistributed) net investment income $ -- $ -- $ -- $ -- ------------ ------------ ----------- ----------- ------------ ------------ ----------- ----------- </Table> See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 41 <Page> HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ...................................................................... <Table> <Caption> SMALL CAP EQUITY FUND OPPORTUNITY FUND - ----------------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, 2004 OCTOBER 31, 2003 OCTOBER 31, 2004 OCTOBER 31, 2003 - ----------------------------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A (INVESTOR) SHARES: Proceeds from shares issued $ -- $ -- $11,062,186 $ 5,083,521 Cost of shares redeemed -- -- (7,827,796) (3,421,035) ------------- ------------- ----------- ----------- Class A (Investor) Shares capital transactions -- -- 3,234,390 1,662,486 ------------- ------------- ----------- ----------- ............................................................................................................................. CLASS B SHARES: Proceeds from shares issued -- -- 1,037,036 1,009,644 Cost of shares redeemed -- -- (548,444) (281,855) ------------- ------------- ----------- ----------- Class B Shares capital transactions -- -- 488,592 727,789 ------------- ------------- ----------- ----------- ............................................................................................................................. CLASS C SHARES: Proceeds from shares issued -- -- 46,142 65,774 Cost of shares redeemed -- -- (116,211) (91,887) ------------- ------------- ----------- ----------- Class C Shares capital transactions -- -- (70,069) (26,113) ------------- ------------- ----------- ----------- ............................................................................................................................. ADVISOR SHARES: Proceeds from shares issued 49,388,314 204,930,414 -- -- Cost of shares redeemed (113,077,720) (137,149,553) -- -- ------------- ------------- ----------- ----------- Advisor Shares capital transactions (63,689,406) 67,780,861 -- -- ------------- ------------- ----------- ----------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ (63,689,406) $ 67,780,861 $ 3,652,913 $ 2,364,162 ------------- ------------- ----------- ----------- ------------- ------------- ----------- ----------- ............................................................................................................................. SHARE TRANSACTIONS: CLASS A (INVESTOR) SHARES: Issued -- -- 1,041,089 554,127 Redeemed -- -- (736,333) (395,887) ------------- ------------- ----------- ----------- Change in Class A (Investor) Shares -- -- 304,756 158,240 ------------- ------------- ----------- ----------- ............................................................................................................................. CLASS B SHARES: Issued -- -- 102,168 119,900 Redeemed -- -- (55,286) (35,134) ------------- ------------- ----------- ----------- Change in Class B Shares -- -- 46,882 84,766 ------------- ------------- ----------- ----------- ............................................................................................................................. CLASS C SHARES: Issued -- -- 4,725 7,537 Redeemed -- -- (11,371) (11,212) ------------- ------------- ----------- ----------- Change in Class C Shares -- -- (6,646) (3,675) ------------- ------------- ----------- ----------- ............................................................................................................................. ADVISOR SHARES: Issued 3,907,178 19,641,503 -- -- Redeemed (8,901,381) (13,824,591) -- -- ------------- ------------- ----------- ----------- Change in Advisor Shares (4,994,203) 5,816,912 -- -- ------------- ------------- ----------- ----------- ------------------- --------------- --------------- --------------- </Table> 42 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. <Page> HSBC INVESTOR FUNDS -- LIMITED MATURITY FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS .......................................................................... SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED(k). <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 Year ended October 31, 2003 10.43 0.33 0.08 0.41 Year ended October 31, 2004 10.47 0.32* 0.06 0.38 - ------------------------------------------------------------------------------------------- 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 Year ended October 31, 2003 10.45 0.25 0.08 0.33 Year ended October 31, 2004 10.49 0.23 0.08 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 Year ended October 31, 2003 10.44 0.25 0.09 0.34 Year ended October 31, 2004 10.49 0.22* 0.08 0.30 - ------------------------------------------------------------------------------------------- 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 Year ended October 31, 2003 10.45 0.33 0.10 0.43 Year ended October 31, 2004 10.48 0.33 0.09 0.42 - ------------------------------------------------------------------------------------------- <Caption> DIVIDENDS ------------------------------------- NET REALIZED NET GAINS FROM NET ASSET INVESTMENT INVESTMENT TOTAL VALUE, END TOTAL INCOME TRANSACTIONS DIVIDENDS OF PERIOD RETURN - ------------------------------------------------------------------------------------------------------ CLASS A (INVESTOR) SHARES Period ended October 31, 2001 (b) (0.33) -- (0.33) $10.58 8.78%(c)(d) Year ended October 31, 2002 (0.44) (0.05) (0.49) 10.43 3.34%(d) Year ended October 31, 2003 (0.37) -- (0.37) 10.47 3.97%(d) Year ended October 31, 2004 (0.33) (0.46) (0.79) 10.06 3.90%(d) - ------------------------------------------------------------------------------------------------------ CLASS B SHARES Period ended October 31, 2001 (g) (0.25) -- (0.25) $10.59 8.02%(c)(h) Year ended October 31, 2002 (0.36) (0.05) (0.41) 10.45 2.65%(h) Year ended October 31, 2003 (0.29) -- (0.29) 10.49 3.19%(h) Year ended October 31, 2004 (0.26) (0.46) (0.72) 10.08 3.11%(h) - ------------------------------------------------------------------------------------------------------ CLASS C SHARES Period ended October 31, 2001 (i) (0.26) -- (0.26) $10.58 7.80%(c)(h) Year ended October 31, 2002 (0.36) (0.05) (0.41) 10.44 2.65%(h) Year ended October 31, 2003 (0.29) -- (0.29) 10.49 3.29%(h) Year ended October 31, 2004 (0.26) (0.46) (0.72) 10.07 3.03%(h) - ------------------------------------------------------------------------------------------------------ CLASS Y SHARES Period ended October 31, 2001 (j) (0.37) -- (0.37) $10.59 9.78%(c) Year ended October 31, 2002 (0.46) (0.05) (0.51) 10.45 3.69% Year ended October 31, 2003 (0.40) -- (0.40) 10.48 4.12% Year ended October 31, 2004 (0.36) (0.46) (0.82) 10.08 4.25% - ------------------------------------------------------------------------------------------------------ <Caption> RATIOS/SUPPLEMENTARY DATA ------------------------------------------------------------------------------- RATIO OF NET RATIO OF INVESTMENT RATIO OF NET ASSETS AT EXPENSES INCOME TO EXPENSES TO END OF TO AVERAGE AVERAGE AVERAGE NET PORTFOLIO PERIOD(000'S) NET ASSETS(k) NET ASSETS(k) ASSETS(f)(k) TURNOVER(a) - -------------------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Period ended October 31, 2001 (b) $ 977 1.10%(e) 4.27%(e) 1.49%(e) 102.01% Year ended October 31, 2002 1,608 0.96% 4.14% 0.96% 44.04% Year ended October 31, 2003 3,309 1.01% 2.99% 1.01% 98.42% Year ended October 31, 2004 1,558 1.10% 3.01% 1.21% 50.06% - -------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2001 (g) $ 896 1.85%(e) 3.52%(e) 7.59%(e) 102.01% Year ended October 31, 2002 4,178 1.70% 3.30% 1.70% 44.04% Year ended October 31, 2003 6,443 1.73% 2.30% 1.73% 98.42% Year ended October 31, 2004 6,321 1.85% 2.28% 1.96% 50.06% - -------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2001 (i) $ 161 1.85%(e) 3.60%(e) 17.61%(e) 102.01% Year ended October 31, 2002 1,759 1.70% 3.26% 1.70% 44.04% Year ended October 31, 2003 2,544 1.73% 2.31% 1.73% 98.42% Year ended October 31, 2004 679 1.85% 2.25% 1.96% 50.06% - -------------------------------------------------------------------------------------------------------------------- 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% Year ended October 31, 2003 31,368 0.69% 3.62% 0.69% 98.42% Year ended October 31, 2004 31,217 0.85% 3.28% 0.96% 50.06% - -------------------------------------------------------------------------------------------------------------------- </Table> * Calculated based on average shares outstanding (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. (k) The per share amounts and percentages reflect income and expenses assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor Limited Maturity Portfolio. HSBC INVESTOR FAMILY OF FUNDS 43 <Page> HSBC ADVISOR FUNDS TRUST -- FIXED INCOME FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS .......................................................................... SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED(b). <Table> <Caption> INVESTMENT ACTIVITIES ------------------------------------------ NET REALIZED AND UNREALIZED GAINS NET ASSET (LOSSES) FROM TOTAL VALUE, NET INVESTMENT AND FROM BEGINNING OF INVESTMENT FUTURES INVESTMENT PERIOD INCOME TRANSACTIONS ACTIVITIES - ----------------------------------------------------------------------------------------- ADVISOR SHARES 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 Year ended October 31, 2003 10.63 0.41 0.19 0.60 Year ended October 31, 2004 10.73 0.45 0.12 0.57 - ----------------------------------------------------------------------------------------- <Caption> DIVIDENDS ---------------------- NET ASSET NET VALUE, INVESTMENT TOTAL END OF TOTAL INCOME DIVIDENDS PERIOD RETURN - --------------------------------------------------------------------------- ADVISOR SHARES 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% Year ended October 31, 2003 (0.50) (0.50) 10.73 5.71% Year ended October 31, 2004 (0.45) (0.45) 10.85 5.46% - --------------------------------------------------------------------------- <Caption> RATIOS/SUPPLEMENTARY DATA --------------------------------------------------- RATIO OF RATIO OF NET NET ASSETS EXPENSES INVESTMENT AT END OF TO AVERAGE INCOME TO PERIOD NET AVERAGE NET PORTFOLIO (000's) ASSETS(b) ASSET(b) TURNOVER(a) - ----------------------------------------------------------------------------------- ADVISOR SHARES 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% Year ended October 31, 2003 110,968 0.56% 4.30% 70.91% Year ended October 31, 2004 109,518 0.64% 4.20% 34.88% - ----------------------------------------------------------------------------------- </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 per share amounts and percentages reflect income and expenses assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor Fixed Income Portfolio. See notes to financial statements. 44 HSBC INVESTOR FAMILY OF FUNDS <Page> HSBC INVESTOR FUNDS -- BOND FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS .......................................................................... SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED(e). <Table> <Caption> INVESTMENT ACTIVITIES ------------------------------------------ NET REALIZED AND UNREALIZED GAINS NET ASSET (LOSSES) FROM TOTAL VALUE, NET INVESTMENT AND FROM BEGINNING INVESTMENT FUTURES INVESTMENT OF PERIOD INCOME TRANSACTIONS ACTIVITIES - ------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Year ended October 31, 2000 $ 9.78 0.61 (0.01) 0.60 Year ended October 31, 2001 9.76 0.60 0.77 1.37 Year ended October 31, 2002 10.55 0.49 (0.14) 0.35 Year ended October 31, 2003 10.38 0.40 0.13 0.53 Year ended October 31, 2004 10.48 0.40 0.12 0.52 - ------------------------------------------------------------------------------------------- CLASS B SHARES Year ended October 31, 2000 $ 9.78 0.54 (0.01) 0.53 Year ended October 31, 2001 9.77 0.52 0.76 1.28 Year ended October 31, 2002 10.55 0.41 (0.13) 0.28 Year ended October 31, 2003 10.39 0.32 0.13 0.45 Year ended October 31, 2004 10.49 0.32 0.11 0.43 - ------------------------------------------------------------------------------------------- CLASS C SHARES Year ended October 31, 2000 $ 9.77 0.55 (0.01) 0.54 Year ended October 31, 2001 9.76 0.51 0.77 1.28 Year ended October 31, 2002 10.54 0.41 (0.13) 0.28 Year ended October 31, 2003 10.38 0.32 0.13 0.45 Year ended October 31, 2004 10.48 0.32 0.11 0.43 - ------------------------------------------------------------------------------------------- <Caption> DIVIDENDS ---------------------- NET ASSET NET VALUE, INVESTMENT TOTAL END OF TOTAL INCOME DIVIDENDS PERIOD RETURN - ------------------------------------------------------------------------------------ CLASS A (INVESTOR) SHARES Year ended October 31, 2000 (0.62) (0.62) $ 9.76 6.39%(c) Year ended October 31, 2001 (0.58) (0.58) 10.55 14.41%(c) Year ended October 31, 2002 (0.52) (0.52) 10.38 3.44%(c) Year ended October 31, 2003 (0.43) (0.43) 10.48 5.17%(c) Year ended October 31, 2004 (0.40) (0.40) 10.60 5.07%(c) - ------------------------------------------------------------------------------------ CLASS B SHARES Year ended October 31, 2000 (0.54) (0.54) $ 9.77 5.67%(d) Year ended October 31, 2001 (0.50) (0.50) 10.55 13.43%(d) Year ended October 31, 2002 (0.44) (0.44) 10.39 2.76%(d) Year ended October 31, 2003 (0.35) (0.35) 10.49 4.38%(d) Year ended October 31, 2004 (0.32) (0.32) 10.60 4.19%(d) - ------------------------------------------------------------------------------------ CLASS C SHARES Year ended October 31, 2000 (0.55) (0.55) $ 9.76 5.71%(d) Year ended October 31, 2001 (0.50) (0.50) 10.54 13.44%(d) Year ended October 31, 2002 (0.44) (0.44) 10.38 2.77%(d) Year ended October 31, 2003 (0.35) (0.35) 10.48 4.39%(d) Year ended October 31, 2004 (0.32) (0.32) 10.59 4.20%(d) - ------------------------------------------------------------------------------------ <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 AVERAGE PORTFOLIO (000's) ASSETS(e) NET ASSETS(e) NET ASSETS(a)(e) TURNOVER(b) - --------------------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES 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% Year ended October 31, 2003 14,143 1.10% 3.76% 1.21% 70.91% Year ended October 31, 2004 17,248 1.04% 3.78% 1.26% 34.88% - --------------------------------------------------------------------------------------------------------------------- CLASS B SHARES 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% Year ended October 31, 2003 7,430 1.85% 3.01% 1.96% 70.91% Year ended October 31, 2004 7,017 1.79% 3.05% 2.01% 34.88% - --------------------------------------------------------------------------------------------------------------------- CLASS C SHARES 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% Year ended October 31, 2003 606 1.85% 3.06% 1.97% 70.91% Year ended October 31, 2004 377 1.80% 3.07% 2.02% 34.88% - --------------------------------------------------------------------------------------------------------------------- </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) Excludes redemption charge. (e) The per share amounts and percentages reflect income and expenses assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor Fixed Income Portfolio. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 45 <Page> 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 FROM VALUE, NET INVESTMENT AND TOTAL FROM BEGINNING OF INVESTMENT FUTURES INVESTMENT PERIOD INCOME TRANSACTIONS ACTIVITIES - ---------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES 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 Year ended October 31, 2003 11.09 0.38 0.12 0.50 Year ended October 31, 2004 11.21 0.34 0.17 0.51 - ---------------------------------------------------------------------------------------------- CLASS B SHARES 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 Year ended October 31, 2003 11.08 0.30 0.12 0.42 Year ended October 31, 2004 11.20 0.25 0.17 0.42 - ---------------------------------------------------------------------------------------------- CLASS C SHARES 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 Year ended October 31, 2003 11.12 0.30 0.13 0.43 Year ended October 31, 2004 11.25 0.25 0.16 0.41 - ---------------------------------------------------------------------------------------------- CLASS Y SHARES 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 Year ended October 31, 2003 11.09 0.41 0.12 0.53 Year ended October 31, 2004 11.21 0.37 0.17 0.54 - ---------------------------------------------------------------------------------------------- <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, 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) Year ended October 31, 2003 (0.38) -- (0.38) 11.21 4.57%(b) Year ended October 31, 2004 (0.34) (0.06) (0.40) 11.32 4.57%(b) - ----------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended October 31, 2000 (0.39) (0.02) (0.41) $10.38 7.27%(d) Year ended October 31, 2001 (0.33) -- (0.33) 10.92 8.44%(d) Year ended October 31, 2002 (0.30) -- (0.30) 11.08 4.30%(d) Year ended October 31, 2003 (0.30) -- (0.30) 11.20 3.80%(d) Year ended October 31, 2004 (0.25) (0.06) (0.31) 11.31 3.80%(d) - ----------------------------------------------------------------------------------------------------- CLASS C SHARES Year ended October 31, 2000 (0.39) (0.02) (0.41) $10.42 7.23%(d) Year ended October 31, 2001 (0.33) -- (0.33) 10.96 8.40%(d) Year ended October 31, 2002 (0.30) -- (0.30) 11.12 4.28%(d) Year ended October 31, 2003 (0.30) -- (0.30) 11.25 3.87%(d) Year ended October 31, 2004 (0.25) (0.06) (0.31) 11.35 3.69%(d) - ----------------------------------------------------------------------------------------------------- CLASS Y SHARES 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% Year ended October 31, 2003 (0.41) -- (0.41) 11.21 4.84% Year ended October 31, 2004 (0.37) (0.06) (0.43) 11.32 4.83% - ----------------------------------------------------------------------------------------------------- <Caption> RATIOS/SUPPLEMENTARY DATA --------------------------------------------------------------------------- RATIO OF NET RATIO OF NET ASSETS RATIO OF INVESTMENT EXPENSES TO AT END OF EXPENSES TO INCOME AVERAGE PERIOD AVERAGE TO AVERAGE NET PORTFOLIO (000's) NET ASSETS NET ASSETS ASSETS(c) TURNOVER(a) - ----------------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Year ended October 31, 2000 $12,401 0.93% 4.60% 1.06% 34.12% Year ended October 31, 2001 17,722 0.95% 3.91% 1.07% 0.00% Year ended October 31, 2002 16,341 0.95% 3.52% 0.95% 30.70% Year ended October 31, 2003 22,326 0.91% 3.39% 0.91% 29.79% Year ended October 31, 2004 32,889 0.87% 3.01% 0.87% 26.96% - ----------------------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended October 31, 2000 $ 828 1.70% 3.81% 1.74% 34.12% Year ended October 31, 2001 5,619 1.70% 3.05% 1.82% 0.00% Year ended October 31, 2002 12,699 1.70% 2.74% 1.70% 30.70% Year ended October 31, 2003 18,352 1.66% 2.64% 1.66% 29.79% Year ended October 31, 2004 17,457 1.62% 2.27% 1.62% 26.96% - ----------------------------------------------------------------------------------------------------------------- CLASS C SHARES Year ended October 31, 2000 $ 416 1.71% 3.77% 1.73% 34.12% Year ended October 31, 2001 1,523 1.70% 3.04% 1.83% 0.00% Year ended October 31, 2002 2,608 1.70% 2.74% 1.70% 30.70% Year ended October 31, 2003 3,252 1.66% 2.64% 1.66% 29.79% Year ended October 31, 2004 2,340 1.62% 2.26% 1.62% 26.96% - ----------------------------------------------------------------------------------------------------------------- CLASS Y SHARES Year ended October 31, 2000 $ 9,514 0.69% 4.82% 0.78% 34.12% Year ended October 31, 2001 14,989 0.70% 4.19% 0.83% 0.00% Year ended October 31, 2002 19,753 0.70% 3.76% 0.70% 30.70% Year ended October 31, 2003 20,290 0.67% 3.67% 0.67% 29.79% Year ended October 31, 2004 19,908 0.62% 3.27% 0.62% 26.96% - ----------------------------------------------------------------------------------------------------------------- </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) Excludes redemption charge. See notes to financial statements. 46 HSBC INVESTOR FAMILY OF FUNDS <Page> HSBC INVESTOR FUNDS -- GROWTH FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS .......................................................................... SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED(h). <Table> <Caption> INVESTMENT ACTIVITIES ---------------------------------------- NET REALIZED AND UNREALIZED NET ASSET GAINS FROM TOTAL NET ASSET VALUE, NET INVESTMENT FROM VALUE, BEGINNING INVESTMENT AND FUTURES INVESTMENT END OF OF PERIOD LOSS TRANSACTIONS ACTIVITIES PERIOD TOTAL RETURN - ---------------------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Period ended October 31, 2004 (c) $12.68 (0.02) (0.11) (0.13) $12.55 (1.03)%(d)(e) - ---------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2004 (c) $12.28 (0.07) (0.10) (0.17) $12.11 (1.38)%(d)(g) - ---------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2004 (c) $12.35 (0.06) (0.12) (0.18) $12.17 (1.46)%(d)(g) - ---------------------------------------------------------------------------------------------------------------------- CLASS Y SHARES Period ended October 31, 2004 (c) $12.67 (0.01) (0.11) (0.12) $12.55 (0.95)%(d) - ---------------------------------------------------------------------------------------------------------------------- <Caption> RATIOS/SUPPLEMENTARY DATA ---------------------------------------------------------------------------- RATIO OF NET NET ASSETS RATIO OF INVESTMENT RATIO OF AT END OF EXPENSES TO LOSS TO EXPENSES TO PERIOD AVERAGE AVERAGE AVERAGE PORTFOLIO (000's) NET ASSETS(h) NET ASSETS(h) NET ASSETS(a)(h) TURNOVER(b) - ----------------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Period ended October 31, 2004 (c) $17,372 1.20%(f) (0.42)%(f) 1.31%(f) 53.08% - ----------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2004 (c) $ 1,402 1.95%(f) (1.17)%(f) 2.06%(f) 53.08% - ----------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2004 (c) $ 309 1.95%(f) (1.18)%(f) 2.06%(f) 53.08% - ----------------------------------------------------------------------------------------------------------------- CLASS Y SHARES Period ended October 31, 2004 (c) $19,115 0.95%(f) (0.17)%(f) 1.06%(f) 53.08% - ----------------------------------------------------------------------------------------------------------------- </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 its investable assets. (c) Class A Shares, Class B Shares, Class C Shares and Class Y Shares commenced operations on May 7, 2004. (d) Not annualized. (e) Excludes sales charge. (f) Annualized. (g) Excludes redemption charge. (h) The per share amounts and percentages reflect income and expenses assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor Growth Portfolio. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 47 <Page> HSBC INVESTOR FUNDS -- VALUE FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS .......................................................................... SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED(h). <Table> <Caption> INVESTMENT ACTIVITIES ------------------------------------------ NET REALIZED AND NET ASSET UNREALIZED GAINS VALUE, NET FROM INVESTMENT TOTAL FROM BEGINNING OF INVESTMENT AND FUTURES INVESTMENT PERIOD INCOME TRANSACTIONS ACTIVITIES - ---------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Period ended October 31, 2004 (c) $12.68 0.05 0.69 0.74 - ---------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2004 (c) $12.28 -- 0.68 0.68 - ---------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2004 (c) $12.35 0.01 0.67 0.68 - ---------------------------------------------------------------------------------------------- CLASS Y SHARES Period ended October 31, 2004 (c) $12.67 0.07 0.70 0.77 - ---------------------------------------------------------------------------------------------- <Caption> DIVIDENDS ---------------------- NET ASSET NET VALUE, INVESTMENT TOTAL END OF TOTAL INCOME DIVIDENDS PERIOD RETURN - --------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Period ended October 31, 2004 (c) (0.04) (0.04) $13.38 7.79% - --------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2004 (c) (0.01) (0.01) $12.95 9.06% - --------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2004 (c) (0.02) (0.02) $13.01 8.47% - --------------------------------------------------------------------------------- CLASS Y SHARES Period ended October 31, 2004 (c) (0.06) (0.06) $13.38 6.05% - --------------------------------------------------------------------------------- <Caption> RATIOS/SUPPLEMENTARY DATA ----------------------------------------------------------------------- RATIO OF RATIO OF NET NET ASSETS EXPENSES TO INVESTMENT RATIO OF AT END OF AVERAGE INCOME TO EXPENSES TO PERIOD NET AVERAGE NET AVERAGE NET PORTFOLIO (000's) ASSETS(h) ASSETS(h) ASSETS(a)(h) TURNOVER(b) - ------------------------------------------------------------------------------------------------------------ CLASS A (INVESTOR) SHARES Period ended October 31, 2004 (c) $ 20,933 1.20%(f) 0.81%(f) 1.25%(f) 10.33% - ------------------------------------------------------------------------------------------------------------ CLASS B SHARES Period ended October 31, 2004 (c) $ 1,938 1.95%(f) 0.05%(f) 2.00%(f) 10.33% - ------------------------------------------------------------------------------------------------------------ CLASS C SHARES Period ended October 31, 2004 (c) $ 399 1.95%(f) 0.04%(f) 2.00%(f) 10.33% - ------------------------------------------------------------------------------------------------------------ CLASS Y SHARES Period ended October 31, 2004 (c) $ 25,600 0.95%(f) 1.05%(f) 1.00%(f) 10.33% - ------------------------------------------------------------------------------------------------------------ </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 its investable assets. (c) Class A Shares, Class B Shares, Class C Shares and Class Y Shares commenced operations on May 7, 2004. (d) Not annualized. (e) Excludes sales charge. (f) Annualized. (g) Excludes redemption charge. (h) The per share amounts and percentages reflect income and expenses assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor Value Portfolio. See notes to financial statements. 48 HSBC INVESTOR FAMILY OF FUNDS <Page> 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) Year ended October 31, 2003 7.21 0.06 1.18 1.24 Year ended October 31, 2004 8.39 0.05 0.36 0.41 - ----------------------------------------------------------------------------------------------- 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) Year ended October 31, 2003 7.14 (0.01) 1.18 1.17 Year ended October 31, 2004 8.30 (0.02)> 0.36 0.34 - ----------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2004 (h) $ 8.40 (0.02)> 0.38 0.36 - ----------------------------------------------------------------------------------------------- CLASS Y SHARES Period ended October 31, 2001 (i) $10.00 0.02 (1.09) (1.07) Year ended October 31, 2002 8.92 0.06 (1.73) (1.67) Year ended October 31, 2003 7.22 0.07 1.19 1.26 Year ended October 31, 2004 8.40 0.07 0.36 0.43 - ----------------------------------------------------------------------------------------------- <Caption> DIVIDENDS ---------------------- NET ASSET NET VALUE, INVESTMENT TOTAL END OF INCOME DIVIDENDS PERIOD TOTAL RETURN - ---------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Period ended October 31, 2001 (b) (0.01) (0.01) $8.91 (12.65)%(c)(d) Year ended October 31, 2002 (0.01) (0.01) 7.21 (18.97)%(d) Year ended October 31, 2003 (0.06) (0.06) 8.39 17.26 %(d) Year ended October 31, 2004 (0.04) (0.04) 8.76 4.94 %(d) - ---------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2001 (f) (0.01) (0.01) $8.88 (10.52)%(c)(g) Year ended October 31, 2002 -- -- 7.14 (19.59)%(g) Year ended October 31, 2003 (0.01) (0.01) 8.30 16.40 %(g) Year ended October 31, 2004 (0.00)* (0.00)* 8.64 4.13 %(g) - ---------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2004 (h) (0.03) (0.03) $8.73 3.57 %(c)(g) - ---------------------------------------------------------------------------------------- CLASS Y SHARES Period ended October 31, 2001 (i) (0.01) (0.01) $8.92 (9.71)%(c) Year ended October 31, 2002 (0.03) (0.03) 7.22 (18.76)% Year ended October 31, 2003 (0.08) (0.08) 8.40 17.63 % Year ended October 31, 2004 (0.06) (0.06) 8.77 5.18 % - ---------------------------------------------------------------------------------------- <Caption> RATIOS/SUPPLEMENTARY DATA --------------------------------------------------------- RATIO OF NET NET ASSETS RATIO OF INVESTMENT AT END OF EXPENSES TO INCOME (LOSS) PERIOD AVERAGE TO AVERAGE PORTFOLIO (000's) NET ASSETS NET ASSETS TURNOVER(a) - ---------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Period ended October 31, 2001 (b) $ 1,927 1.11%(e) 0.15%(e) 43.13% Year ended October 31, 2002 1,306 1.01% 0.39% 59.85% Year ended October 31, 2003 1,827 1.04% 0.70% 64.52% Year ended October 31, 2004 1,500 1.02% 0.50% 73.68% - ---------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2001 (f) $ 330 1.84%(e) (0.64)(e) 43.13% Year ended October 31, 2002 1,154 1.76% (0.30)% 59.85% Year ended October 31, 2003 2,235 1.79% (0.07)% 64.52% Year ended October 31, 2004 3,820 1.77% (0.25)% 73.68% - ---------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2004 (h) $ 41 1.77%(e) (0.28)%(e) 73.68% - ---------------------------------------------------------------------------------------------- CLASS Y SHARES Period ended October 31, 2001 (i) $219,221 0.82%(e) 0.38%(e) 43.13% Year ended October 31, 2002 168,812 0.76% 0.66% 59.85% Year ended October 31, 2003 203,458 0.79% 0.96% 64.52% Year ended October 31, 2004 196,219 0.77% 0.77% 73.68% - ---------------------------------------------------------------------------------------------- </Table> * Less than $0.005 per share. > Calculated based on average shares outstanding. (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 C Shares commenced operations on November 3, 2003. (i) Class Y Shares commenced operations on April 2, 2001. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 49 <Page> HSBC INVESTOR FUNDS -- MID-CAP 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 OPTION INVESTMENT OF PERIOD LOSS TRANSACTIONS ACTIVITIES - ------------------------------------------------------------------------------------------- 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) Year ended October 31, 2002 7.90 (0.03) (1.57) (1.60) Year ended October 31, 2003 6.30 (0.03)* 1.68 1.65 Year ended October 31, 2004 7.95 (0.04)* 0.53 0.49 - ------------------------------------------------------------------------------------------- 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) Year ended October 31, 2002 7.82 (0.08) (1.55) (1.63) Year ended October 31, 2003 6.19 (0.08) 1.64 1.56 Year ended October 31, 2004 7.75 (0.10)* 0.51 0.41 - ------------------------------------------------------------------------------------------- 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) Year ended October 31, 2002 7.82 (0.08) (1.54) (1.62) Year ended October 31, 2003 6.20 (0.08) 1.68 1.60 Year ended October 31, 2004 7.80 (0.10)* 0.52 0.42 - ------------------------------------------------------------------------------------------- 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) Year ended October 31, 2002 7.91 (0.02) (1.56) (1.58) Year ended October 31, 2003 6.33 (0.01) 1.69 1.68 Year ended October 31, 2004 8.01 (0.02)* 0.53 0.51 - ------------------------------------------------------------------------------------------- <Caption> DIVIDENDS ------------------------ NET REALIZED GAINS FROM NET ASSET INVESTMENT VALUE, AND OPTION TOTAL END OF TOTAL TRANSACTIONS DIVIDENDS PERIOD RETURN - ------------------------------------------------------------------------------------------------ CLASS A (INVESTOR) SHARES Period ended October 31, 2000 (b) -- -- $10.07 (1.95)%(c)(d) Year ended October 31, 2001 (0.14) (0.14) 7.90 (20.37)%(d) Year ended October 31, 2002 -- -- 6.30 (20.25)%(d) Year ended October 31, 2003 -- -- 7.95 26.19 %(d) Year ended October 31, 2004 -- -- 8.44 6.16 %(d) - ------------------------------------------------------------------------------------------------ CLASS B SHARES Period ended October 31, 2000 (f) -- -- $10.06 (6.16)%(c)(g) Year ended October 31, 2001 (0.14) (0.14) 7.82 (21.09)%(g) Year ended October 31, 2002 -- -- 6.19 (20.84)%(g) Year ended October 31, 2003 -- -- 7.75 25.20 %(g) Year ended October 31, 2004 -- -- 8.16 5.29 %(g) - ------------------------------------------------------------------------------------------------ CLASS C SHARES Period ended October 31, 2000 (h) -- -- $10.06 0.20 %(c)(g) Year ended October 31, 2001 (0.14) (0.14) 7.82 (21.09)%(g) Year ended October 31, 2002 -- -- 6.20 (20.72)%(g) Year ended October 31, 2003 -- -- 7.80 25.81 %(g) Year ended October 31, 2004 -- -- 8.22 5.38 %(g) - ------------------------------------------------------------------------------------------------ TRUST SHARES Period ended October 31, 2000 (i) -- -- $10.08 0.80 %(c) Year ended October 31, 2001 (0.14) (0.14) 7.91 (20.34)% Year ended October 31, 2002 -- -- 6.33 (19.97)% Year ended October 31, 2003 -- -- 8.01 26.54 % Year ended October 31, 2004 -- -- 8.52 6.37 % - ------------------------------------------------------------------------------------------------ <Caption> RATIOS/SUPPLEMENTARY DATA ------------------------------------------------------------ RATIO OF NET NET ASSETS RATIO OF INVESTMENT AT END OF EXPENSES LOSS TO PERIOD TO AVERAGE AVERAGE PORTFOLIO (000's) NET ASSETS NET ASSETS TURNOVER(a) - ------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Period ended October 31, 2000 (b) $ 445 1.28%(e) (0.42)%(e) 57.69% Year ended October 31, 2001 927 1.13% (0.40)% 112.67% Year ended October 31, 2002 1,010 1.08% (0.46)% 140.23% Year ended October 31, 2003 1,539 1.10% (0.43)% 100.86% Year ended October 31, 2004 1,878 1.09% (0.54)% 106.72% - ------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2000 (f) $ 1,557 2.02%(e) (1.17)%(e) 57.69% Year ended October 31, 2001 3,827 1.88% (1.16)% 112.67% Year ended October 31, 2002 4,391 1.83% (1.21)% 140.23% Year ended October 31, 2003 6,009 1.85% (1.16)% 100.86% Year ended October 31, 2004 7,037 1.84% (1.29)% 106.72% - ------------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2000 (h) $ 18 2.11%(e) (1.29)%(e) 57.69% Year ended October 31, 2001 21 1.87% (1.13)% 112.67% Year ended October 31, 2002 20 1.83% (1.20)% 140.23% Year ended October 31, 2003 54 1.85% (1.23)% 100.86% Year ended October 31, 2004 94 1.84% (1.29)% 106.72% - ------------------------------------------------------------------------------------------------- TRUST SHARES Period ended October 31, 2000 (i) $108,487 1.01%(e) (0.22)%(e) 57.69% Year ended October 31, 2001 129,390 0.87% (0.13)% 112.67% Year ended October 31, 2002 98,059 0.82% (0.18)% 140.23% Year ended October 31, 2003 160,621 0.85% (0.17)% 100.86% Year ended October 31, 2004 117,354 0.84% (0.28)% 106.72% - ------------------------------------------------------------------------------------------------- </Table> * Calculated based on average shares outstanding. (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. 50 HSBC INVESTOR FAMILY OF FUNDS <Page> HSBC ADVISOR FUNDS TRUST -- INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS .......................................................................... SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED(b). <Table> <Caption> INVESTMENT ACTIVITIES --------------------------------------------- NET REALIZED AND UNREALIZED GAINS NET ASSET (LOSSES) FROM TOTAL VALUE, NET INVESTMENT AND FROM BEGINNING OF INVESTMENT FOREIGN CURRENCY INVESTMENT PERIOD INCOME TRANSACTIONS ACTIVITIES - ------------------------------------------------------------------------------------------------- ADVISOR SHARES Year ended October 31, 2000 $18.58 0.11 0.75 0.86 Year ended October 31, 2001 18.13 0.09 (4.38) (4.29) Year ended October 31, 2002 12.56 0.09 (1.73) (1.64) Year ended October 31, 2003 10.73 0.20 2.02 2.22 Year ended October 31, 2004 12.76 0.18 2.32 2.50 - ------------------------------------------------------------------------------------------------- <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, 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)% Year ended October 31, 2003 (0.19) -- (0.19) 12.76 21.03 % Year ended October 31, 2004 (0.39) -- (0.39) 14.87 20.06 % - -------------------------------------------------------------------------------------------------- <Caption> RATIOS/SUPPLEMENTARY DATA ------------------------------------------------------------- RATIO OF NET NET ASSETS RATIO OF INVESTMENT AT END OF EXPENSES TO INCOME TO PERIOD AVERAGE AVERAGE PORTFOLIO (000's) NET ASSETS(b) NET ASSETS(b) TURNOVER(a) - -------------------------------------------------------------------------------------------------- ADVISOR SHARES 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% Year ended October 31, 2003 123,658 1.07% 1.16% 68.51% Year ended October 31, 2004 148,317 1.05% 1.39% 106.11% - -------------------------------------------------------------------------------------------------- </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 per share amounts and percentages reflect income and expenses assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor International Portfolio. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 51 <Page> HSBC INVESTOR FUNDS -- OVERSEAS EQUITY FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS .......................................................................... SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED(e). <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, 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) Year ended October 31, 2003 9.87 0.01 1.95 1.96 Year ended October 31, 2004 11.73 0.08 2.19 2.27 - ------------------------------------------------------------------------------------------ CLASS B SHARES 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) Year ended October 31, 2003 9.56 (0.06) 1.89 1.83 Year ended October 31, 2004 11.34 0.01 * 2.08 2.09 - ------------------------------------------------------------------------------------------ CLASS C SHARES 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) Year ended October 31, 2003 9.68 (0.06) 1.93 1.87 Year ended October 31, 2004 11.54 (0.01) 2.14 2.13 - ------------------------------------------------------------------------------------------ <Caption> DIVIDENDS --------------------------------------- NET REALIZED GAINS FROM INVESTMENT NET AND FOREIGN NET ASSET INVESTMENT CURRENCY TOTAL VALUE, END TOTAL INCOME TRANSACTIONS DIVIDENDS OF PERIOD RETURN - -------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Year ended October 31, 2000 -- (0.22) (0.22) $17.21 3.05 %(c) Year ended October 31, 2001 -- (1.46) (1.46) 11.66 (25.93)%(c) Year ended October 31, 2002 (0.12) (0.29) (0.41) 9.87 (12.42)%(c) Year ended October 31, 2003 (0.10) -- (0.10) 11.73 20.09 %(c) Year ended October 31, 2004 (0.07) -- (0.07) 13.93 19.40 %(c) - -------------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended October 31, 2000 -- (0.22) (0.22) $16.85 2.18 %(d) Year ended October 31, 2001 -- (1.46) (1.46) 11.30 (26.52)%(d) Year ended October 31, 2002 (0.03) (0.29) (0.32) 9.56 (13.07)%(d) Year ended October 31, 2003 (0.05) -- (0.05) 11.34 19.26 %(d) Year ended October 31, 2004 -- -- -- 13.43 18.43 %(d) - -------------------------------------------------------------------------------------------------------- CLASS C SHARES Year ended October 31, 2000 -- (0.22) (0.22) $17.00 2.10 %(d) Year ended October 31, 2001 -- (1.46) (1.46) 11.41 (26.53)%(d) Year ended October 31, 2002 -- (0.29) (0.29) 9.68 (13.08)%(d) Year ended October 31, 2003 (0.01) -- (0.01) 11.54 19.28 %(d) Year ended October 31, 2004 -- -- -- 13.67 18.46 %(d) - -------------------------------------------------------------------------------------------------------- <Caption> RATIOS/SUPPLEMENTARY DATA ------------------------------------------------------------------------------------ RATIO OF NET INVESTMENT RATIO OF INCOME RATIO OF NET ASSETS EXPENSES TO (LOSS) EXPENSES TO AT END OF AVERAGE TO AVERAGE AVERAGE PORTFOLIO PERIOD (000's) NET ASSETS(e) NET ASSETS(e) NET ASSETS(a)(e) TURNOVER(b) - ------------------------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Year ended October 31, 2000 $ 7,252 1.85% (0.49)% 2.43% 27.81% Year ended October 31, 2001 6,940 1.85% (0.35)% 2.44% 26.90% Year ended October 31, 2002 7,203 1.85% (0.18)% 2.28% 31.63% Year ended October 31, 2003 10,096 1.85% 0.07 % 2.34% 68.51% Year ended October 31, 2004 17,721 1.78% 0.79 % 1.88% 106.11% - ------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended October 31, 2000 $ 358 2.60% (1.17)% 2.96% 27.81% Year ended October 31, 2001 294 2.60% (1.09)% 3.18% 26.90% Year ended October 31, 2002 588 2.60% (0.87)% 3.04% 31.63% Year ended October 31, 2003 1,076 2.60% (0.62)% 3.16% 68.51% Year ended October 31, 2004 2,061 2.53% 0.05 % 2.63% 106.11% - ------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Year ended October 31, 2000 $ 248 2.60% (1.14)% 2.96% 27.81% Year ended October 31, 2001 139 2.60% (1.10)% 3.16% 26.90% Year ended October 31, 2002 96 2.60% (1.00)% 3.04% 31.63% Year ended October 31, 2003 121 2.60% (0.64)% 3.17% 68.51% Year ended October 31, 2004 137 2.54% (0.10)% 2.66% 106.11% - ------------------------------------------------------------------------------------------------------------------------- </Table> * Calculated using the average shares outstanding method. (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) Excludes redemption charge. (e) The per share amounts and percentages reflect income and expenses assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor International Portfolio. See notes to financial statements. 52 HSBC INVESTOR FAMILY OF FUNDS <Page> HSBC ADVISOR FUNDS TRUST -- SMALL CAP EQUITY FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS .......................................................................... SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED(b). <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 - ------------------------------------------------------------------------------------------- ADVISOR SHARES Year ended October 31, 2000 $12.56 (0.10) 6.73 6.63 Year ended October 31, 2001 17.81 (0.10) (3.65) (3.75) Year ended October 31, 2002 11.32 (0.09) (1.96) (2.05) Year ended October 31, 2003 9.27 (0.06) 3.15 3.09 Year ended October 31, 2004 12.36 (0.08) 0.79 0.71 - ------------------------------------------------------------------------------------------- <Caption> DIVIDENDS ------------------------ NET REALIZED NET ASSET GAINS FROM VALUE, INVESTMENT TOTAL END OF TOTAL TRANSACTIONS DIVIDENDS PERIOD RETURN - ------------------------------------------------------------------------------------ ADVISOR SHARES Year ended October 31, 2000 (1.38) (1.38) $17.81 55.59 % Year ended October 31, 2001 (2.74) (2.74) 11.32 (22.98)% Year ended October 31, 2002 -- -- 9.27 (18.11)% Year ended October 31, 2003 -- -- 12.36 33.33 % Year ended October 31, 2004 -- -- 13.07 5.74 % - ------------------------------------------------------------------------------------ <Caption> RATIOS/SUPPLEMENTARY DATA ------------------------------------------------------------- RATIO OF NET NET ASSETS RATIO OF INVESTMENT AT END OF EXPENSES TO LOSS TO PERIOD AVERAGE AVERAGE PORTFOLIO (000's) NET ASSETS(b) NET ASSETS(b) TURNOVER(a) - -------------------------------------------------------------------------------------------------- ADVISOR SHARES Year ended October 31, 2000 $253,724 1.05% (0.68)% 79.51% Year ended October 31, 2001 180,265 1.07% (0.74)% 52.47% Year ended October 31, 2002 190,686 1.07% (0.87)% 103.90% Year ended October 31, 2003 326,072 1.01% (0.72)% 152.05% Year ended October 31, 2004 279,669 0.98% (0.62)% 81.75% - -------------------------------------------------------------------------------------------------- </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 per share amounts and percentages reflect income and expenses assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor Small Cap Portfolio. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 53 <Page> HSBC INVESTOR FUNDS -- OPPORTUNITY FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS .......................................................................... SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED(e). <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, 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) Year ended October 31, 2003 7.83 (0.10) 2.63 2.53 Year ended October 31, 2004 10.36 (0.13) 0.68 0.55 - ------------------------------------------------------------------------------------------- CLASS B SHARES 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) Year ended October 31, 2003 7.51 (0.18)* 2.52 2.34 Year ended October 31, 2004 9.85 (0.20) 0.64 0.44 - ------------------------------------------------------------------------------------------- CLASS C SHARES 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) Year ended October 31, 2003 7.57 (0.18) 2.55 2.37 Year ended October 31, 2004 9.94 (0.22) 0.67 0.45 - ------------------------------------------------------------------------------------------- <Caption> DIVIDENDS ------------------------ NET REALIZED NET ASSET GAINS FROM VALUE, INVESTMENT TOTAL END OF TOTAL TRANSACTIONS DIVIDENDS PERIOD RETURN - --------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Year ended October 31, 2000 (1.31) (1.31) $18.75 54.54 %(c) Year ended October 31, 2001 (5.43) (5.43) 9.60 (23.65)%(c) Year ended October 31, 2002 -- -- 7.83 (18.44)%(c) Year ended October 31, 2003 -- -- 10.36 32.31 %(c) Year ended October 31, 2004 -- -- 10.91 5.31 %(c) - --------------------------------------------------------------------------------------- CLASS B SHARES Year ended October 31, 2000 (1.31) (1.31) $18.40 53.30 %(d) Year ended October 31, 2001 (5.43) (5.43) 9.27 (24.16)%(d) Year ended October 31, 2002 -- -- 7.51 (18.99)%(d) Year ended October 31, 2003 -- -- 9.85 31.16 %(d) Year ended October 31, 2004 -- -- 10.29 4.47 %(d) - --------------------------------------------------------------------------------------- CLASS C SHARES Year ended October 31, 2000 (1.31) (1.31) $18.51 53.32 %(d) Year ended October 31, 2001 (5.43) (5.43) 9.35 (24.17)%(d) Year ended October 31, 2002 -- -- 7.57 (19.04)%(d) Year ended October 31, 2003 -- -- 9.94 31.31 %(d) Year ended October 31, 2004 -- -- 10.39 4.53 %(d) - --------------------------------------------------------------------------------------- <Caption> RATIOS/SUPPLEMENTARY DATA ----------------------------------------------------------------------------------- RATIO OF NET ASSETS RATIO OF INVESTMENT RATIO OF AT END OF EXPENSES TO LOSS TO EXPENSES TO PERIOD AVERAGE AVERAGE AVERAGE PORTFOLIO (000's) NET ASSETS(e) NET ASSETS(e) NET ASSETS(a)(e) TURNOVER(b) - ------------------------------------------------------------------------------------------------------------------------ CLASS A (INVESTOR) SHARES Year ended October 31, 2000 $15,415 1.65% (1.29)% 1.84% 79.51% Year ended October 31, 2001 11,892 1.65% (1.32)% 1.97% 52.47% Year ended October 31, 2002 11,384 1.65% (1.45)% 2.08% 103.90% Year ended October 31, 2003 16,695 1.65% (1.36)% 2.09% 152.05% Year ended October 31, 2004 20,902 1.61% (1.24)% 1.72% 81.75% - ------------------------------------------------------------------------------------------------------------------------ CLASS B SHARES Year ended October 31, 2000 $ 1,273 2.40% (2.02)% 2.49% 79.51% Year ended October 31, 2001 1,315 2.40% (2.08)% 2.73% 52.47% Year ended October 31, 2002 2,374 2.40% (2.18)% 2.86% 103.90% Year ended October 31, 2003 3,952 2.40% (2.11)% 2.83% 152.05% Year ended October 31, 2004 4,611 2.36% (2.00)% 2.47% 81.75% - ------------------------------------------------------------------------------------------------------------------------ CLASS C SHARES Year ended October 31, 2000 $ 707 2.40% (2.02)% 2.46% 79.51% Year ended October 31, 2001 407 2.40% (2.06)% 2.71% 52.47% Year ended October 31, 2002 329 2.40% (2.20)% 2.83% 103.90% Year ended October 31, 2003 395 2.40% (2.11)% 2.84% 152.05% Year ended October 31, 2004 344 2.37% (2.00)% 2.48% 81.75% - ------------------------------------------------------------------------------------------------------------------------ </Table> * Calculated using average shares outstanding method. (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) Excludes redemption charge. (e) The per share amounts and percentages reflect income and expenses assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor Small Cap Portfolio. See notes to financial statements. 54 HSBC INVESTOR FAMILY OF FUNDS <Page> HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 ...................................................................... 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 Growth Fund Growth Fund Trust HSBC Investor Value Fund Value 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, Growth Fund, Value 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: On May 7, 2004 the Equity Fund reorganized into two separate HSBC Investor Funds, the HSBC Investor Growth Fund and HSBC Investor Value Fund. Shareholders of the Equity Fund became shareholders of both the HSBC Investor Growth Fund and the HSBC Investor Value Fund as a result of the reorganization, receiving shares of the HSBC Investor Growth Fund and the HSBC Investor Value Fund having an aggregate net asset value equal to the aggregate net asset value of their investment in the Equity Fund. The beginning NAV for the HSBC Investor Value Fund and the HSBC Investor Growth Fund was the closing NAV for the respective class of shares of the Equity Fund. <Table> <Caption> PROPORTIONATE INTEREST ON FUND RESPECTIVE PORTFOLIO OCTOBER 31, 2004 - ---- -------------------- ---------------- Limited Maturity Fund HSBC Investor Limited Maturity Portfolio 62.5% Fixed Income Fund HSBC Investor Fixed Income Portfolio 64.7% Bond Fund HSBC Investor Fixed Income Portfolio 14.6% Growth Fund HSBC Investor Growth Portfolio 76.9% Value Fund HSBC Investor Value Portfolio 79.7% International Equity Fund HSBC Investor International Equity Portfolio 67.4% Overseas Equity Fund HSBC Investor International Equity Portfolio 9.1% Small Cap Equity Fund HSBC Investor Small Cap Equity Portfolio 77.9% Opportunity Fund HSBC Investor Small Cap Equity Portfolio 7.2% </Table> The HSBC Investor Limited Maturity Portfolio, HSBC Investor Fixed Income Portfolio, HSBC Investor Growth Portfolio, HSBC Investor Value 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 Portfolios (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 HSBC INVESTOR FAMILY OF FUNDS 55 <Page> HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 (CONTINUED) ...................................................................... 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, Growth Fund, Value 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 (Advisor). The Bond Fund, Overseas Equity Fund, and the Opportunity Fund each offers three classes of shares, 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. Under the Funds' organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, in the normal course of business, the Funds enter into contracts with their vendors and others that provide for general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds. However, based on experience, the Funds expect that risk of loss to be remote. 2. SIGNIFICANT ACCOUNTING POLICIES: The following is a summary of the significant accounting policies followed by the Funds in the preparation of their financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America ('GAAP'). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates. SECURITIES VALUATION: A. NEW YORK TAX-FREE BOND FUND, GROWTH AND INCOME FUND, AND MID-CAP FUND Bonds and other fixed income securities (other than short-term obligations but including listed issues) are valued on the basis of valuations furnished by a pricing service, the use of which has been approved by the Funds' Board of Trustees. In making such valuations, the pricing service utilizes both dealer-supplied valuations and the use of matrix techniques which take into account appropriate factors such as 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. In addition, specific securities may need to be valued by or at the direction of the Funds' Board of Trustees due to potentially significant events. Examples of potentially significant events that could affect the value of an individual security include corporate actions by the issuer, announcements by the issuer relating to its earnings or products, regulatory news, natural disasters and litigation. Examples of potentially significant events that could affect multiple securities held by a Fund include governmental actions, natural disasters and armed conflicts. B. FEEDER FUNDS The Feeder Funds record their investments in their respective Portfolios at value. Securities of the Portfolios are recorded at value as more fully discussed in the notes to those financial statements. 56 HSBC INVESTOR FAMILY OF FUNDS <Page> HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 (CONTINUED) ...................................................................... SECURITIES TRANSACTIONS AND RELATED INCOME: A. NEW YORK TAX-FREE BOND FUND, GROWTH AND INCOME FUND, AND MID-CAP FUND Changes in holdings of portfolio securities are reflected no later than the first business day following the trade date. 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. FUTURES CONTRACTS: The New York Tax-Free Bond Fund may invest in futures contracts for the purpose of hedging existing portfolio securities or securities it intends to purchase against fluctuations in fair value caused by changes in prevailing market interest rates. Upon entering into a futures contract, the New York Tax-Free Bond Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as 'variation margin', are made each day, depending on the daily fluctuations in the fair value of the underlying security. A gain or loss equal to the daily variation margin is recognized on a daily basis. 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 may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets. OPTIONS: The Growth and Income Fund and the Mid-Cap Fund may write covered call options against some of the securities in their portfolios provided the securities are listed on a national securities exchange. A call option is 'covered' if the Fund owns the underlying securities covered by the call. The premium received is recorded as a liability and is subsequently adjusted to the current fair value of the option written. Premiums received from writing options that expire unexercised are treated on the expiration date as realized gains from investments. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain or loss. If the call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining a realized gain or loss. For the fiscal year ended October 31, 2004, the funds did not write any covered call options. ALLOCATIONS: Expenses directly attributable to a Fund are charged to that Fund. Expenses not directly attributable to a Fund are allocated proportionately among various or all Funds within the HSBC Investor Family of Funds in relation to the net assets of each Fund or on another reasonable basis. Expenses specific to a class are charged to that class. In addition, income, expenses (other than class specific), and unrealized/realized gains and losses are allocated to each class based on relative net assets on a daily basis. HSBC INVESTOR FAMILY OF FUNDS 57 <Page> HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 (CONTINUED) ...................................................................... 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 Growth Fund and Value Fund, semi-annually in the case of the 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 within the components of net assets; 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. REDEMPTION FEE: Effective April 1, 2004, a redemption fee of 2.00% will be charged and recorded as paid-in-capital for any shares redeemed or exchanged after holding them for less than 30 days. This fee does not apply to shares purchased or exchanged into the Funds prior to April 1, 2004. Additionally, this fee does not apply to shares purchased through reinvested dividends or capital gains or shares held in certain omnibus accounts or retirement plans that cannot implement the fee. The redemption fee for the International Equity Fund and Overseas Equity Fund was effective beginning September 1, 2003. For the fiscal year ended October 31, 2004 the following Funds collected redemption fees as follows: <Table> <Caption> FUND FEES COLLECTED - ---- -------------- International Equity Fund................................... $12,666 Overseas Equity Fund........................................ $ 5,581 NY Tax-free Bond Fund....................................... $ 1,166 Fixed Income Fund........................................... $ 483 Bond Fund................................................... $ 415 Growth Fund................................................. $ 366 Growth & Income Fund........................................ $ 223 Value Fund.................................................. $ 194 Opportunity Fund............................................ $ 93 Mid-Cap Fund................................................ $ 6 Limited Maturity Fund....................................... $ 2 </Table> 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. 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, Growth and Income Fund and Mid-Cap Fund. As Investment Adviser, HSBC manages the investments of the Funds 58 HSBC INVESTOR FAMILY OF FUNDS <Page> HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 (CONTINUED) ...................................................................... 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% Growth and Income Fund...................................... 0.55% Mid-Cap Fund................................................ 0.55% </Table> ADMINISTRATION: BISYS Fund Services Ohio, Inc. ('BISYS Ohio'), a wholly-owned subsidiary of The BISYS Group, Inc., with whom certain officers of the Trusts are affiliated, serves the Trusts as Administrator. Such officers, with the exception of the Chief Compliance Officer as noted below, 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. The Portfolios pay half of each Feeder Fund's administration fee for a combination of the total fee rate above. BISYS Ohio may directly or through an affiliate, use their fee revenue, past profits, or other revenue sources to pay promotional, administrative, shareholder support, and other expenses to third parties, including broker dealers, in connection with the offer, sale and administration of shares of the Funds. In addition, BISYS provides an employee to serve as Chief Compliance Officer for the Funds including providing certain related services, for which it receives an additional fee. 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, received $597,255 in commissions from sales of the funds of which $597,211 was reallowed to affiliated brokers and dealers. 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. For performing these services the shareholder servicing agents receive a fee of 0.25%, 0.25%, and 0.25% that is computed daily and paid monthly equal to a percentage of average daily net assets of Class A (Investor) Shares, Class B Shares and Class C Shares of the Fund, respectively. 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. HSBC INVESTOR FAMILY OF FUNDS 59 <Page> HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 (CONTINUED) ...................................................................... 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, 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 - ---- ----- ---------- Bond Fund................................................... A 1.10 Bond Fund................................................... B 1.85 Bond Fund................................................... C 1.85 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> All contractual and voluntary investment advisory fee waivers are not subject to recoupment in subsequent fiscal periods. In addition, the investment advisor may waive additional fees at their discretion. 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, Mid-Cap Fund and Growth and Income Fund. For services to the Funds, BISYS Ohio, receives an annual fee, including reimbursement of certain expenses, from each fund accrued daily and paid monthly. Compensation HSBC receives for services to the Funds as custodian is presented in the Statement of Operations as custodian fees. 4. INVESTMENT TRANSACTIONS: Purchases of and proceeds from sales, excluding short-term securities, for the Funds for the fiscal year ended October 31, 2004, totaled: <Table> <Caption> PURCHASES SALES --------- ----- New York Tax-Free Bond Fund............................... $ 26,753,863 $ 18,709,578 Growth and Income Fund.................................... 154,156,979 167,656,658 Mid-Cap Fund.............................................. 141,831,679 193,392,708 </Table> There were no long-term U.S. Government securities held during the fiscal year ended October 31, 2004. Contributions and withdrawals of the respective Portfolios for the fiscal year ended October 31, 2004, totaled: <Table> <Caption> CONTRIBUTIONS WITHDRAWALS ------------- ----------- Limited Maturity Fund...................................... $11,445,572 $ 17,084,967 Fixed Income Fund.......................................... 26,267,746 33,512,499 Bond Fund.................................................. 12,142,073 10,874,503 Growth Fund................................................ 42,459,984 3,996,843 Value Fund................................................. 52,006,478 5,784,640 International Equity Fund.................................. 27,419,510 26,854,981 Overseas Equity Fund....................................... 11,450,704 5,705,280 Small Cap Equity Fund...................................... 49,406,374 113,317,427 Opportunity Fund........................................... 12,274,598 8,788,407 </Table> 60 HSBC INVESTOR FAMILY OF FUNDS <Page> HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 (CONTINUED) ...................................................................... 5. CONCENTRATION OF CREDIT RISK: The New York Tax-Free Bond Fund invests primarily in debt obligations issued by the State of New York and its respective political subdivisions, agencies and public authorities. The Fund is more susceptible to economic and political factors adversely affecting issuers of New York specific municipal securities than are municipal bond funds that are not concentrated in these issuers to the same extent. 6. FEDERAL INCOME TAX INFORMATION: The tax characteristics of dividends paid by the Funds during the fiscal year ended October 31, 2004 were as follows: <Table> <Caption> DIVIDENDS PAID FROM -------------------------- NET TOTAL TOTAL ORDINARY LONG TERM TAXABLE TAX EXEMPT DIVIDENDS INCOME CAPITAL GAINS DIVIDENDS DISTRIBUTIONS PAID(1) ------ ------------- --------- ------------- ------- Limited Maturity Fund.... $1,573,548 $ 1,736,087 $ 3,309,635 $ -- $3,309,635 Fixed Income Fund........ 4,544,831 -- 4,544,831 -- 4,544,831 Bond Fund................ 876,878 -- 876,878 -- 876,878 NY Tax-Free Bond Fund.... 4,914 325,008 329,922 1,995,085 2,325,007 Value Fund............... 175,840 -- 175,840 -- 175,840 Growth & Income Fund..... 1,549,067 -- 1,549,067 -- 1,549,067 International Equity Fund................... 3,737,768 -- 3,737,768 -- 3,737,768 Overseas Equity Fund..... 75,763 -- 75,763 -- 75,763 </Table> As of October 31, 2004, the components of accumulated earnings/(deficit) on a tax basis for the Funds were as follows: <Table> <Caption> UNDISTRIBUTED ACCUMULATED UNDISTRIBUTED UNDISTRIBUTED LONG TERM CAPITAL AND ORDINARY TAX EXEMPT CAPITAL ACCUMULATED DIVIDENDS OTHER INCOME INCOME GAINS EARNINGS PAYABLE LOSSES ------ ------ ----- -------- ------- ------ Limited Maturity Fund....... $ 63,514 $ -- $201,978 $ 265,492 $ (53,515) $ -- Fixed Income Fund........... 233,010 -- -- 233,010 (171,584) (1,581,953) Bond Fund................... 45,611 -- -- 45,611 (33,824) (827,070) NY Tax-Free Bond Fund....... -- 77,222 113,912 191,134 (77,219) -- Growth Fund................. -- -- -- -- -- (1,225,706) Value Fund.................. 503,837 -- -- 503,837 -- -- Growth & Income Fund........ 566,583 -- -- 566,583 -- (47,202,215) Mid-Cap Fund................ -- -- -- -- -- (9,993,884) International Equity Fund... 2,066,371 -- -- 2,066,371 -- (5,876,028) Overseas Equity Fund........ 1,082,333 -- 199,434 1,281,767 -- -- Opportunity Fund............ -- -- -- -- -- (2,107,205) Small Cap Equity Fund....... -- -- -- -- -- (28,555,918) <Caption> TOTAL UNREALIZED ACCUMULATED APPRECIATION/ EARNINGS/ (DEPRECIATION)(2) (DEFICIT) ----------------- --------- Limited Maturity Fund....... $ 519,923 $ 731,900 Fixed Income Fund........... 6,762,550 5,242,023 Bond Fund................... 691,893 (123,390) NY Tax-Free Bond Fund....... 3,377,114 3,491,029 Growth Fund................. 950,345 (275,361) Value Fund.................. 1,975,273 2,479,110 Growth & Income Fund........ 28,902,038 (17,733,594) Mid-Cap Fund................ 17,497,004 7,503,120 International Equity Fund... 13,631,078 9,821,421 Overseas Equity Fund........ 1,866,300 3,148,067 Opportunity Fund............ 3,520,594 1,413,389 Small Cap Equity Fund....... 40,228,402 11,672,484 </Table> --------------------- (1) Total dividends paid may differ from the amount reported in the Statement of Changes in Net Assets because for tax purposes dividends are recognized when actually paid. (2) The differences between book-basis and tax-basis unrealized appreciation/deprecation are attributable primarily to: tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains/losses on certain derivative instruments, the difference between book and tax amortization methods for premium and market discount, the realization for tax purposes of unrealized gains/losses on investments in passive foreign investment companies, and the return of capital adjustments from real estate investment trusts. HSBC INVESTOR FAMILY OF FUNDS 61 <Page> HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 (CONTINUED) ...................................................................... As of October 31, 2004, the following Funds have net capital loss carryforwards, which are available to offset future realized gains. <Table> <Caption> AMOUNT EXPIRES ------ ------- Fixed Income Fund.......................................... $ 1,484,323 2008 97,630 2010 Bond Fund.................................................. $ 159,153 2007 91,688 2008 185,518 2010 182,320 2011 208,391 2012 Growth Fund................................................ $ 1,225,706 2012 Growth & Income Fund....................................... $11,648,430 2009 25,956,764 2010 9,597,021 2011 Mid-Cap Fund............................................... $ 9,993,884 2010 Opportunity Fund........................................... $ 2,107,205 2010 International Equity Fund.................................. $ 5,876,028 2010 Small Cap Equity Fund...................................... $28,555,918 2010 </Table> 7. OTHER FEDERAL INCOME INFORMATION (UNAUDITED): For the fiscal year ended October 31, 2004, the following percentage of the total ordinary income dividends paid by the Funds qualify for the corporate dividends received deduction available to corporate shareholders. <Table> <Caption> DIVIDENDS RECEIVED DEDUCTION --------- Value Fund.................................................. 57% Growth & Income Fund........................................ 100% </Table> The Funds intend to elect to pass through to shareholders the income tax credit for taxes paid to foreign countries. Shareholders will receive more detailed information along with their 2004 Form 1099-DIV. <Table> <Caption> FOREIGN TAX CREDIT PASS THROUGH ------- International Equity Fund................................... $534,436 Overseas Equity Fund........................................ 71,211 </Table> For the fiscal year ended October 31, 2004, dividends paid by the Funds may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Funds intend to designate the maximum amount allowable as taxed at a maximum rate of 15%. Complete information will be reported in conjunction with your 2004 Form 1099-DIV. <Table> <Caption> AMOUNT ------ Value Fund.................................................. $ 175,840 Growth & Income Fund........................................ 1,549,067 International Equity Fund................................... 4,272,204 Overseas Equity Fund........................................ 146,974 </Table> 62 HSBC INVESTOR FAMILY OF FUNDS <Page> REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Trustees of HSBC Investor Funds HSBC Advisor Funds Trust: We have audited the accompanying statements of assets and liabilities of HSBC Investor Limited Maturity Fund, HSBC Investor Fixed Income Fund, HSBC Investor Bond Fund, HSBC Investor New York Tax-Free Bond Fund, HSBC Investor Growth Fund, HSBC Investor Value 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 and HSBC Investor Opportunity Fund (collectively, the Funds), including the schedules of portfolio investments of HSBC Investor New York Tax-Free Bond Fund, HSBC Investor Growth and Income Fund and HSBC Investor Mid-Cap Fund, as of October 31, 2004, and the related statements of operations for the period then ended, the statements of changes in net assets for each period in the two-year period then ended, and the financial highlights for each period in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned by HSBC Investor New York Tax-Free Bond Fund, HSBC Investor Growth and Income Fund and HSBC Investor Mid-Cap Fund as of October 31, 2004, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Funds as of October 31, 2004, the results of their operations for the period then ended, the changes in their net assets for each period in the two-year period then ended, and the financial highlights for each period in the five- year period then ended, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP Columbus, Ohio December 20, 2004 HSBC INVESTOR FAMILY OF FUNDS 63 <Page> HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- TABLE OF SHAREHOLDER EXPENSES -- OCTOBER 31, 2004 (UNAUDITED) ...................................................................... As a shareholder of the HSBC Investor Funds, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases, reinvested dividends, or other distributions; redemption fees; and exchange fees; (2) ongoing costs, including management fees; distribution and shareholder servicing fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the HSBC Investor Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from May 1, 2004 through October 31, 2004. ACTUAL EXPENSES The table below provides information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled 'Expenses Paid During Period' to estimate the expenses you paid on your account during this period. <Table> <Caption> BEGINNING ENDING EXPENSE PAID EXPENSE RATIO ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD 5/1/04 10/31/04 5/1/04-10/31/04 5/1/04-10/31/04 ------ -------- --------------- --------------- N.Y. Tax-Free Bond Fund................. Class A 1,000.00 1,039.20 4.57 0.89% Class Y 1,000.00 1,040.50 3.29 0.64% Class B 1,000.00 1,036.30 8.42 1.64% Class C 1,000.00 1,035.20 8.36 1.63% Growth & Income Fund.................... Class A 1,000.00 1,010.60 5.27 1.04% Class Y 1,000.00 1,010.80 4.00 0.79% Class B 1,000.00 1,005.80 9.05 1.79% Class C 1,000.00 1,006.90 9.05 1.79% International Equity Fund............... Advisor 1,000.00 1,101.10 5.14 0.97% Overseas Equity Fund.................... Class A 1,000.00 1,097.50 9.15 1.73% Class B 1,000.00 1,093.60 13.09 2.48% Class C 1,000.00 1,093.60 13.09 2.48% Fixed Income Fund....................... Advisor 1,000.00 1,040.00 3.39 0.66% Bond Fund............................... Class A 1,000.00 1,038.70 5.04 0.98% Class B 1,000.00 1,033.80 8.92 1.74% Class C 1,000.00 1,033.90 8.92 1.74% Small Cap Equity Fund................... Advisor 1,000.00 1,039.00 5.14 1.00% Opportunity Fund........................ Class A 1,000.00 1,037.10 8.06 1.57% Class B 1,000.00 1,032.10 11.88 2.32% Class C 1,000.00 1,033.80 11.89 2.32% Limited Maturity Fund................... Class A 1,000.00 1,030.90 5.63 1.10% Class Y 1,000.00 1,032.10 4.35 0.85% Class B 1,000.00 1,026.90 9.45 1.85% Class C 1,000.00 1,027.00 9.45 1.85% Mid-Cap Fund............................ Class A 1,000.00 1,024.30 5.66 1.11% Trust 1,000.00 1,025.30 4.39 0.86% Class B 1,000.00 1,018.70 9.46 1.86% Class C 1,000.00 1,019.90 9.47 1.86% </Table> The expense ratios of the Feeder Funds listed above include expenses allocated from the respective Master Portfolio. * Expenses are equal to the average account value times the Fund's annualized expense ratio multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year. ** The Value and Growth Funds commenced operations on May 7, 2004, and as such did not have a full 6 months of expenses during the period. 64 HSBC INVESTOR FAMILY OF FUNDS <Page> HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- TABLE OF SHAREHOLDER EXPENSES -- OCTOBER 31, 2004 (CONTINUED) (UNAUDITED) ......................................................................... HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below provides information about hypothetical account values and hypothetical expenses based on each HSBC Investor Funds's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. <Table> <Caption> BEGINNING ENDING EXPENSE PAID EXPENSE RATIO ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD 5/1/04 10/31/04 5/1/04-10/31/04 5/1/04-10/31/04 ------ -------- --------------- --------------- N.Y. Tax-Free Bond Fund................. Class A 1,000.00 1,020.72 4.53 0.89% Class Y 1,000.00 1,021.98 3.26 0.64% Class B 1,000.00 1,016.94 8.34 1.64% Class C 1,000.00 1,016.99 8.29 1.63% Growth & Income Fund.................... Class A 1,000.00 1,019.96 5.30 1.04% Class Y 1,000.00 1,021.22 4.02 0.79% Class B 1,000.00 1,016.18 9.10 1.79% Class C 1,000.00 1,016.18 9.10 1.79% International Equity Fund............... Advisor 1,000.00 1,020.32 4.94 0.97% Overseas Equity Fund.................... Class A 1,000.00 1,016.48 8.79 1.73% Class B 1,000.00 1,012.70 12.58 2.48% Class C 1,000.00 1,012.70 12.58 2.48% Fixed Income Fund....................... Advisor 1,000.00 1,021.88 3.36 0.66% Bond Fund............................... Class A 1,000.00 1,020.27 4.99 0.98% Class B 1,000.00 1,016.43 8.84 1.74% Class C 1,000.00 1,016.43 8.84 1.74% Small Cap Equity Fund................... Advisor 1,000.00 1,020.16 5.09 1.00% Opportunity Fund........................ Class A 1,000.00 1,017.29 7.98 1.57% Class B 1,000.00 1,013.51 11.77 2.32% Class C 1,000.00 1,013.51 11.77 2.32% Limited Maturity Fund................... Class A 1,000.00 1,019.66 5.60 1.10% Class Y 1,000.00 1,020.92 4.33 0.85% Class B 1,000.00 1,015.88 9.40 1.85% Class C 1,000.00 1,015.88 9.40 1.85% Mid-Cap Fund............................ Class A 1,000.00 1,019.61 5.65 1.11% Trust 1,000.00 1,020.87 4.38 0.86% Class B 1,000.00 1,015.83 9.45 1.86% Class C 1,000.00 1,015.83 9.45 1.86% </Table> The expense ratios of the Feeder Funds listed above include expenses allocated from the respective Master Portfolio. * Expenses are equal to the average account value times the Fund's annualized expense ratio multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year. ** The Value and Growth Funds commenced operations on May 7, 2004, and as such did not have a full 6 months of expenses during the period. HSBC INVESTOR FAMILY OF FUNDS 65 <Page> HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- SPECIAL MEETING OF SHAREHOLDERS (UNAUDITED) ...................................................................... At the Special Meeting of Shareholders of HSBC Investor Equity Fund (the 'Fund'), a series of the HSBC Investor Funds (The 'Trust'), held on February 27, 2004, shares were voted as follows on one proposal presented to the Shareholders: 1. To approve or disapprove an Agreement and Plan of Reorganization providing for the acquisition of all of the assets of the Fund by the HSBC Investor Growth Fund ('Growth Fund') and the HSBC Investor Value Fund ('Value Fund'), each a separate series of the Trust, and the assumption of all liabilities of the Fund by the Growth Fund and the Value Fund in exchange for shares of the Growth Fund and the Value Fund and the subsequent liquidation of the Fund. <Table> <Caption> FOR AGAINST ABSTAIN --- ------- ------- 3,338,217 (99.00%) 24,353 (0.72%) 9,222 (0.28%) </Table> 66 HSBC INVESTOR FAMILY OF FUNDS <Page> HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- BOARD OF TRUSTEES (UNAUDITED) ...................................................................... The following table contains information regarding HSBC Investor Family of Funds Board of Trustees. Asterisks indicate those Trustees who are 'interested persons,' as defined in the Investment Company Act of 1940, as amended, of the Funds. The Funds' Statement of Additional Information includes additional information about the Trustees and is available by calling (888) 525-5757. <Table> <Caption> NUMBER OF PORTFOLIOS TERM OF OFFICE AND IN THE FUND NAME, ADDRESS POSITION(S) LENGTH OF TIME PRINCIPAL OCCUPATION(S) COMPLEX OVERSEEN AND YEAR OF BIRTH HELD WITH THE FUNDS SERVED WITH THE FUNDS DURING PAST 5 YEARS BY TRUSTEE - ----------------------------------------------------------------------------------------------------------------------------- Frederick C. Chen Trustee Indefinite; 1990 to Management Consultant, since 1988 32 P.O. Box 182845 present Columbus, Ohio 43218 Date of Birth: 1927 - ----------------------------------------------------------------------------------------------------------------------------- Larry M. Robbins Trustee Indefinite; 1987 to Director for the Center of Teaching 32 P.O. Box 182845 present and Learning, University of Columbus, Ohio 43218 Pennsylvania Date of Birth: 1938 - ----------------------------------------------------------------------------------------------------------------------------- Alan S. Parsow Trustee Indefinite; 1987 to General Partner of Parsow 32 P.O. Box 182845 present Partnership, Ltd., since 1989 Columbus, Ohio 43218 Date of Birth: 1950 - ----------------------------------------------------------------------------------------------------------------------------- Michael Seely Trustee Indefinite; 1987 to President of Investor Access 32 P.O. Box 182845 present Corporation, 1978-present Columbus, Ohio 43218 Date of Birth: 1945 - ----------------------------------------------------------------------------------------------------------------------------- Stephen J. Baker* Trustee Indefinite; March Chief Executive Officer, HSBC Asset 32 P.O. Box 182845 2004 to present Management (Americas) Inc., 2003- Columbus, Ohio 43218 present; Chief Executive Officer, Date of Birth: 1956 HSBC Asset Management (Canada) Limited, 1998-2003 - ----------------------------------------------------------------------------------------------------------------------------- Thomas Robards Advisory Board Indefinite; 2004 to Senior Vice President and Chief 32 P.O. Box 182845 Member present Financial Officer, American Museum Columbus, Ohio 43218 of Natural History, 2003-present; Date of Birth: 1946 Chief Financial Officer, Datek Online Holding Corp., 2000-2003; Executive Vice President and Chief Financial Officer, Republic New York Corporation, 1976-2000 - ----------------------------------------------------------------------------------------------------------------------------- <Caption> NAME, ADDRESS OTHER DIRECTORSHIPS AND YEAR OF BIRTH HELD BY TRUSTEE - --------------------------------------------------- Frederick C. Chen None P.O. Box 182845 Columbus, Ohio 43218 Date of Birth: 1927 - --------------------------------------------------- Larry M. Robbins None P.O. Box 182845 Columbus, Ohio 43218 Date of Birth: 1938 - --------------------------------------------------- Alan S. Parsow None P.O. Box 182845 Columbus, Ohio 43218 Date of Birth: 1950 - --------------------------------------------------- Michael Seely None P.O. Box 182845 Columbus, Ohio 43218 Date of Birth: 1945 - --------------------------------------------------- Stephen J. Baker* None P.O. Box 182845 Columbus, Ohio 43218 Date of Birth: 1956 - --------------------------------------------------- Thomas Robards None P.O. Box 182845 Columbus, Ohio 43218 Date of Birth: 1946 - --------------------------------------------------- </Table> HSBC INVESTOR FAMILY OF FUNDS 67 <Page> HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- BOARD OF TRUSTEES (UNAUDITED) (CONTINUED) ...................................................................... The names of the Officers, their addresses, ages, position(s) held with each Trust, and principal occupation(s) during the past five years are described in the table below. Unless otherwise indicated, the address for each Officer is 3435 Stelzer Road, Columbus, Ohio 43219-3035. OFFICERS <Table> <Caption> TERM OF OFFICE AND NAME, ADDRESS POSITION(S) LENGTH OF TIME PRINCIPAL OCCUPATION(S) AND YEAR OF BIRTH HELD WITH THE FUNDS SERVED WITH THE FUNDS DURING PAST 5 YEARS - ---------------------------------------------------------------------------------------------------------------------------- Richard A. Fabietti President Indefinite; March Senior Vice President, Head of Product Management, HSBC 3435 Stelzer Road 2004- Present Asset Management (Americas) Inc., 1998-Present Columbus, Ohio 43219 Date of Birth: 1958 - ---------------------------------------------------------------------------------------------------------------------------- Mark L. Suter* Vice President Indefinite; Employee of BISYS Fund Services, Inc., 2000-Present; Vice 90 Park Avenue 2000-Present President of Client Services, Seligman Data 1997-1999; 10th Floor Vice President, Capitalink, 1996-1997 New York, NY 10018 Date of Birth: 1962 - ---------------------------------------------------------------------------------------------------------------------------- Salvatore Iocolano Vice President Indefinite; Senior Compliance Officer, HSBC Asset Management (Americas) 452 5th Avenue 2002-Present Inc., 2001-Present; Director of Compliance, KPMG Investment 18th Floor Advisors, 1999-2001; Securities Compliance Examiner, U.S. New York, NY 10018 Securities Exchange Commission, 1995-1998 Date of Birth: 1962 - ---------------------------------------------------------------------------------------------------------------------------- Troy Sheets* Treasurer Indefinite; Employee of BISYS Fund Services, Inc., 2002-Present; Senior 3435 Stelzer Road 2004-Present Manager, KPMG LLP, 1993-2002 Columbus, Ohio 43219 Date of Birth: 1971 - ---------------------------------------------------------------------------------------------------------------------------- Alaina Metz* Assistant Secretary Indefinite; Employee of BISYS Fund Services, Inc., 1995-Present 3435 Stelzer Road 1996-Present Columbus, Ohio 43219 Date of Birth: 1967 - ---------------------------------------------------------------------------------------------------------------------------- Frederick J. Schmidt* Chief Compliance Expires 2005; Senior Vice President and Chief Compliance Officer, CCO 90 Park Avenue Officer 2004-Present Services of BISYS Fund Services, 2004-Present; President, 10th Floor FJS Associates, 2002-2004; Vice President, Credit Agricole New York, NY 10016 Asset Management, U.S., 1987-2002 - ---------------------------------------------------------------------------------------------------------------------------- </Table> - --------- * Messrs. Suter, Sheets and Schmidt and Ms. Metz also are officers of certain other investment companies of which BISYS or an affiliate is the administrator. 68 HSBC INVESTOR FAMILY OF FUNDS <Page> HSBC INVESTOR LIMITED MATURITY PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- OCTOBER 31, 2004 ...................................................................... <Table> <Caption> - --------------------------------------------------------------- U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 67.7% PRINCIPAL AMOUNT($) VALUE($) --------- ---------- FEDERAL HOME LOAN BANK - 6.5% 2.95%, 9/14/06......................... 2,500,000 2,506,740 5.75%, 5/15/12......................... 1,500,000 1,653,918 ---------- 4,160,658 ---------- FEDERAL HOME LOAN MORTGAGE CORP. - 20.8% 3.25%, 2/25/08, Callable 2/25/05 @100.................................. 2,000,000 1,988,970 Pool #E92282, 5.50%, 11/1/17........... 1,450,972 1,504,106 Pool #2642, 4.50%, 10/25/27............ 3,000,000 3,071,243 Pool #C01188, 7.00%, 6/1/31............ 403,938 429,139 Pool #C75371, 6.00%, 1/1/33............ 895,585 928,521 Pool #A11010, 5.00%, 7/1/33............ 1,708,642 1,708,373 Pool #A14659, 6.50%, 10/1/33........... 1,585,933 1,677,735 Pool #E96835, 4.50%, 6/1/18............ 1,942,429 1,952,717 ---------- 13,260,804 ---------- FEDERAL NATIONAL MORTGAGE ASSOCIATION - 26.3% 4.00%, 9/2/08.......................... 1,000,000 1,016,819 5.50%, 3/15/11......................... 500,000 542,242 4.625%, 5/1/13......................... 1,250,000 1,247,780 Pool #535063, 6.50%, 12/1/14........... 384,527 408,262 Pool #535933, 6.50%, 5/1/31............ 302,445 318,635 Pool #593187, 7.00%, 11/1/31........... 943,404 1,002,570 Pool #695204, 5.50%, 3/1/33............ 1,363,718 1,391,241 Pool #694985, 6.00%, 3/1/33............ 1,681,359 1,745,706 Pool #555427, 6.00%, 2/1/18............ 2,193,514 2,303,286 Pool #704439, 5.00%, 5/1/18............ 1,986,621 2,030,223 Pool #722985, 3.95%, 7/1/33............ 1,442,800 1,451,524 Pool #740686, 6.50%, 10/1/33........... 1,383,478 1,458,568 Pool #753474, 5.50%, 11/1/33........... 1,809,978 1,845,436 ---------- 16,762,292 ---------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 6.6% Pool #2687, 6.00%, 12/20/28............ 569,116 593,609 Pool #3415, 5.50%, 7/20/33............. 1,620,619 1,658,470 Pool #612373, 6.00%, 11/15/33.......... 1,860,856 1,937,699 ---------- 4,189,778 ---------- U.S. TREASURY BONDS - 1.7% 5.375%, 2/15/31........................ 1,000,000 1,086,133 ---------- U.S. TREASURY NOTES - 5.8% 3.125%, 4/15/09........................ 1,550,000 1,545,823 4.875%, 2/15/12........................ 1,000,000 1,071,680 4.75%, 5/15/14......................... 1,000,000 1,057,344 ---------- 3,674,847 ---------- TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS.................... 43,134,512 ---------- <Caption> - --------------------------------------------------------------- CORPORATE OBLIGATIONS, - 25.4% PRINCIPAL AMOUNT($) VALUE($) --------- ---------- AEROSPACE & DEFENSE - 1.2% Honeywell International, Inc., 5.125%, 11/1/06............................... 750,000 780,906 ---------- AUTO MANUFACTURERS - 1.2% General Motors Corp., 7.20%, 1/15/11... 750,000 790,064 ---------- BANKING - 1.7% Corestates Capital, 6.75%, 11/15/06.... 1,000,000 1,074,861 ---------- BROKERAGE SERVICES - 4.4% Goldman Sachs Group, Inc., 5.70%, 9/1/12................................ 500,000 532,567 Goldman Sachs Group, Inc., 6.125%, 2/15/33............................... 750,000 764,776 Lehman Brothers Holdings, Inc., 6.25%, 5/15/06............................... 500,000 525,284 Merrill Lynch & Co., 3.375%, 9/14/07... 1,000,000 1,002,959 ---------- 2,825,586 ---------- ELECTRONIC COMPUTERS - 1.6% Hewlett-Packard Co., 7.15%, 6/15/05.... 1,000,000 1,028,797 ---------- FINANCE - 10.2% CIT Group, Inc., 4.125%, 2/21/06....... 1,000,000 1,016,608 Countrywide Home Loans, Inc., 5.50%, 8/1/06................................ 1,250,000 1,301,940 Ford Motor Credit Co., 6.50%, 1/25/07............................... 1,250,000 1,313,317 General Motors Accept Corp., 4.50%, 7/15/06............................... 250,000 253,707 General Motors Accept Corp., 5.125%, 5/9/08................................ 500,000 507,721 MGIC Investment Corp., 6.00%, 3/15/07............................... 750,000 797,214 Morgan Stanley, 4.75%, 4/1/14.......... 750,000 734,724 Washington Mutual, Inc., 4.625%, 4/1/14................................ 500,000 481,677 ---------- 6,406,908 ---------- GOVERNMENTS (FOREIGN) - 1.2% United Mexican States, 4.625%, 10/8/08............................... 750,000 762,750 ---------- INSURANCE - 0.4% Travelers Property Casualty Corp., 6.375%, 3/15/33....................... 250,000 257,141 ---------- MEDIA - 2.4% Comcast Corp., 5.30%, 1/15/14.......... 1,000,000 1,019,686 AOL Time Warner, Inc., 6.125%, 4/15/06............................... 500,000 522,697 ---------- 1,542,383 ---------- TELECOMMUNICATIONS - 0.8% Deutsche Telekom International Finance BV, 3.875%, 7/22/08................... 500,000 503,858 ---------- UTILITIES - 0.3% Pacific Gas & Electric Co., 2.72%, 4/3/06, Callable 1/3/05 @100 (b)...... 69,000 69,085 Pacific Gas & Electric Co., 4.80%, 3/1/14................................ 135,000 135,203 ---------- 204,288 ---------- TOTAL CORPORATE OBLIGATIONS............ 16,177,542 ---------- </Table> See notes to financial statements. HSBC INVESTOR PORTFOLIOS 69 <Page> HSBC INVESTOR LIMITED MATURITY PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- OCTOBER 31, 2004 (CONTINUED) ...................................................................... <Table> <Caption> - --------------------------------------------------------------- ASSET BACKED SECURITIES - 5.9% PRINCIPAL AMOUNT($) VALUE($) --------- ---------- Carmax Auto Owner Trust, 3.00%, 9/15/08............................... 1,250,000 1,247,850 Honda Auto Receivables Owner Trust 03 1 A4, 2.48%, 7/18/08.................... 2,500,000 2,491,889 ---------- TOTAL ASSET BACKED SECURITIES.......... 3,739,739 ---------- <Caption> - --------------------------------------------------------------- INVESTMENT COMPANIES - 0.3% SHARES VALUE($) --------- ---------- HSBC Investor Money Market Fund Class I Shares*............................... 168,429 168,429 ---------- TOTAL INVESTMENT COMPANIES............. 168,429 ---------- TOTAL INVESTMENTS (COST $62,393,888) (a) - 99.3%....... 63,220,222 ---------- ---------- </Table> - --------- Percentages indicated are based on net assets of $63,696,789. (a) Cost for federal income tax and financial reporting purposes are the same and differs from value by net unrealized appreciation as follows. <Table> Unrealized appreciation.......... $ 970,041 Unrealized depreciation.......... (143,707) --------- $ 826,334 --------- --------- </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. * Investment in affiliate. 70 HSBC INVESTOR PORTFOLIOS See notes to financial statements. <Page> HSBC INVESTOR FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- OCTOBER 31, 2004 ...................................................................... <Table> <Caption> - ---------------------------------------------------------------- U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 59.4% PRINCIPAL AMOUNT($) VALUE($) ---------- ----------- FEDERAL HOME LOAN BANK - 10.9% 2.875%, 9/15/06....................... 1,850,000 1,855,295 4.40%, 11/20/06....................... 4,500,000 4,640,675 5.05%, 2/6/13, Callable 12/8/04 @ 100.................................. 5,795,000 5,795,724 5.00%, 2/7/13, Callable 2/7/05 @ 100.................................. 6,085,000 6,113,337 ----------- 18,405,031 ----------- FEDERAL HOME LOAN MORTGAGE CORP. - 10.8% 5.75%, 9/15/10**...................... 4,910,000 6,976,348 5.00%, 7/15/14........................ 1,300,000 1,351,093 Pool #2642, 4.50%, 10/25/27........... 7,000,000 7,166,235 Pool #C00368, 8.50%, 10/1/24.......... 69,420 76,545 Pool #C00922, 8.00%, 2/1/30........... 514,564 559,152 Pool #C54447, 7.00%, 7/1/31........... 111,715 118,684 Pool #C60712, 6.50%, 11/1/31.......... 950,337 1,000,461 Pool #C80387, 6.50%, 4/1/26........... 59,271 62,519 Pool #D62926, 6.50%, 8/1/25........... 44,523 46,989 Pool #G00951, 6.00%, 7/1/28........... 539,165 559,631 Pool #G01317, 7.00%, 10/1/31.......... 419,744 445,931 ----------- 18,363,588 ----------- FEDERAL NATIONAL MORTGAGE ASSOCIATION - 18.6% 6.75%, 1/25/08........................ 112,199 112,126 4.625%, 5/1/13........................ 3,300,000 3,294,139 5.75%, 11/7/17........................ 2,575,000 2,557,899 6.25%, 5/15/29........................ 1,798,000 2,039,008 6.625%, 11/15/30...................... 500,000 593,766 5.50%, 8/1/33......................... 11,147,627 11,366,010 Pool #253438, 8.50%, 9/1/30........... 131,327 143,281 Pool #329530, 7.00%, 12/1/25.......... 128,715 137,310 Pool #329655, 7.00%, 11/1/25.......... 100,699 107,423 Pool #356905, 3.97%, 10/1/36, (b)..... 415,189 424,487 Pool #398958, 6.50%, 10/1/12.......... 131,195 139,342 Pool #535332, 8.50%, 4/1/30........... 110,157 120,282 Pool #535440, 8.50%, 8/1/30........... 131,033 142,961 Pool #535608, 9.50%, 4/1/30........... 213,006 240,616 Pool #548965, 8.50%, 7/1/30........... 104,565 114,084 Pool #568486, 7.00%, 1/1/31........... 88,219 93,776 Pool #573752, 8.50%, 2/1/31........... 113,381 123,703 Pool #575328, 6.50%, 4/1/31........... 161,561 170,209 Pool #623129, 6.50%, 1/1/32........... 1,723,097 1,815,333 Pool #651901, 6.00%, 8/1/32........... 1,902,334 1,975,515 Pool #695777, 5.50%, 4/1/33........... 1,847,485 1,884,772 Pool #722985, 3.95%, 7/1/33........... 4,111,979 4,136,843 ----------- 31,732,885 ----------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 2.7% Pool #346406, 7.50%, 2/15/23.......... 157,099 170,362 Pool #412530, 7.50%, 12/15/25......... 167,075 180,584 Pool #587112, 6.00%, 6/15/32.......... 2,753,890 2,870,282 Pool #780804, 10.00%, 12/15/20........ 131,904 148,072 Pool #780826, 9.50%, 5/15/18.......... 80,765 91,331 Pool #781300, 7.00%, 6/15/31.......... 367,100 392,003 Pool #781345, 6.00%, 10/15/31......... 699,284 729,313 ----------- 4,581,947 ----------- <Caption> - ---------------------------------------------------------------- U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS, CONT'D. PRINCIPAL AMOUNT($) VALUE($) ---------- ----------- U.S. TREASURY BONDS - 2.9% 6.00%, 2/15/26........................ 1,200,000 1,385,016 5.25%, 11/15/28....................... 2,200,000 2,319,111 5.375%, 2/15/31....................... 1,085,000 1,178,454 ----------- 4,882,581 ----------- U.S. TREASURY NOTES - 13.5% 5.875%, 11/15/04...................... 10,000,000 10,014,840 1.625%, 3/31/05....................... 800,000 798,562 1.625%, 2/28/06....................... 3,000,000 2,972,226 2.75%, 6/30/06........................ 2,800,000 2,813,782 4.00%, 2/15/14........................ 4,365,000 4,365,170 4.25%, 8/15/14........................ 790,000 803,948 5.50%, 8/15/28........................ 1,000,000 1,089,062 ----------- 22,857,590 ----------- TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS................... 100,823,622 ----------- - ---------------------------------------------------------------- CORPORATE OBLIGATIONS - 24.0% AEROSPACE & DEFENSE - 0.2% Lockheed Martin Corp., 8.50%, 12/1/29.............................. 300,000 402,887 ----------- AUTO MANUFACTURERS - 0.6% General Motors Corp., 7.125%, 7/15/13.............................. 1,050,000 1,089,417 ----------- FINANCE - 18.5% AIG SunAmerica Global Financing VI, 6.30%, 5/10/11, (c).................. 642,000 708,035 Anthem Insurance, 9.125%, 4/1/10, (c).................................. 205,000 250,713 Anthem Insurance, 9.00%, 4/1/27, (c).................................. 305,000 417,167 AXA Financial, Inc., 6.50%, 4/1/08.... 165,000 180,914 Capital One Bank, 5.125%, 2/15/14..... 725,000 728,241 CIT Group, Inc., 7.375%, 4/2/07....... 4,725,000 5,175,136 Citigroup, Inc., 5.625%, 8/27/12...... 2,500,000 2,695,455 Citigroup, Inc., 5.00%, 9/15/14, (c).................................. 775,000 786,312 EOP Operating LP, 7.50%, 4/19/29...... 163,000 185,671 Farmers Exchange Capital, 7.05%, 7/15/28, (c)......................... 388,000 392,937 Farmers Insurance Exchange, 8.625%, 5/1/24, (c).......................... 238,000 277,534 Florida Windstorm, 7.125%, 2/25/19, (c).................................. 608,000 709,594 Ford Motor Credit Co., 7.00%, 10/1/13.............................. 850,000 897,646 General Electric Capital Corp., 8.75%, 5/21/07.............................. 1,300,000 1,482,321 General Electric Capital Corp., 7.375%, 1/19/10...................... 447,000 519,234 General Electric Capital Corp., 6.875%, 11/15/10..................... 1,200,000 1,368,410 Goldman Sachs Capital I, 6.345%, 2/15/34.............................. 500,000 509,579 Goldman Sachs Group, Inc., 6.875%, 1/15/11.............................. 3,080,000 3,503,990 Hutchison Whampoa Finance CI Ltd., 7.45%, 8/1/17, (c)................... 402,000 442,817 J.P. Morgan Chase & Co., 5.25%, 5/30/07.............................. 3,500,000 3,670,716 Metropolitan Life Insurance Co., 7.80%, 11/1/25, (c).................. 275,000 338,387 Morgan Stanley, 5.80%, 4/1/07......... 2,500,000 2,654,390 </Table> See notes to financial statements. HSBC INVESTOR PORTFOLIOS 71 <Page> HSBC INVESTOR FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- OCTOBER 31, 2004 (CONTINUED) ...................................................................... <Table> <Caption> - ---------------------------------------------------------------- CORPORATE OBLIGATIONS, CONTINUED PRINCIPAL AMOUNT($) VALUE($) ---------- ----------- New York Life Insurance, 7.50%, 12/15/23, Callable 1/3/05 @103.25 (c).................................. 250,000 259,359 PNC Institutional Capital Trust A, 7.95%, 12/15/26 (c).................. 187,000 209,201 Prudential Insurance Co., 8.30%, 7/1/25 (c)........................... 548,000 692,625 Travelers Property Casualty Corp., 7.75%, 4/15/26....................... 1,000,000 1,202,069 Washington Mutual, Inc., 4.625%, 4/1/14............................... 1,000,000 963,354 ----------- 31,221,807 ----------- GOVERNMENTS (FOREIGN) - 0.6% United Mexican States, 8.125%, 12/30/19............................. 495,000 579,892 United Mexican States, 6.75%, 9/27/34.............................. 525,000 513,188 ----------- 1,093,080 ----------- OIL & GAS - 1.3% Anadarko Finance Co., 6.75%, 5/1/11, (c).................................. 1,250,000 1,422,659 Conoco, Inc., 6.95%, 4/15/29.......... 565,000 660,850 ----------- 2,083,509 ----------- TELECOMMUNICATIONS - 2.1% Comcast Cable Communications Holdings, Inc., 8.375%, 3/15/13................ 2,200,000 2,699,183 Lenfest Communications, 7.625%, 2/15/08.............................. 330,000 367,511 SBC Global Communications, Inc., 5.10%, 9/15/14....................... 380,000 382,643 ----------- 3,449,337 ----------- UTILITIES - 0.7% Pacific Gas & Electric Co., 4.80%, 3/1/14............................... 480,000 480,721 Pacific Gas & Electric Co., 6.05%, 3/1/34............................... 350,000 360,475 RAS Laffan Liquid Natural Gas, 8.29%, 3/15/14, (c)......................... 348,000 414,558 ----------- 1,255,754 ----------- TOTAL CORPORATE OBLIGATIONS........... 40,595,791 ----------- - ---------------------------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS - 3.8% Banc of America Commercial Mortgage, Inc. 00 2 A2, 7.20%, 5/15/10......... 675,000 771,756 Chase Commercial Mortgage Securities Corp. 99 2 A2, 7.20%, 1/15/32........ 700,000 799,306 DLJ Mortgage Acceptance Corp. IO 97 CF1 S, 0.94%, 5/15/30, (b) (d)....... 710,657 13,066 Fannie Mae IO 00 16 PS, 6.67%, 10/25/29, (b) (d).................... 177,591 13,209 Fannie Mae IO 01 4 SA, 5.66%, 2/17/31, (b) (d).............................. 488,528 45,985 Fannie Mae IO 200 32 SV, 6.71%, 3/18/30, (b) (d)..................... 98,141 5,510 Fannie Mae IO 270 2, 8.50%, 9/1/23, (d).................................. 106,495 21,064 Fannie Mae IO 296 2, 8.00%, 4/1/24, (d).................................. 121,373 22,878 Fannie Mae IO 306 2, 8.00%, 5/1/30, (d).................................. 180,382 35,832 FHA Weyerhauser, 7.43%, 1/1/24 (i).... 80,120 80,376 First Union-Chase Commercial Mortgage 99 C2 A2, 6.645%, 6/15/31............ 597,000 660,527 Freddie Mac IO 1534 K, 5.53%, 6/15/23, (b) (d).............................. 335,659 28,915 Freddie Mac IO 2141 SD, 6.28%, 4/15/29, (b) (d)..................... 231,317 24,423 <Caption> - ---------------------------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS, CONTINUED PRINCIPAL AMOUNT($) VALUE($) ---------- ----------- Freddie Mac IO 2247 SC, 5.63%, 8/15/30, (b) (d)..................... 177,434 10,323 GE Capital Commercial Mortgage Corp. 01 1 A1, 6.08%, 5/15/33.............. 273,694 292,118 GMAC Commercial Mortgage Securities, Inc. 98 C2 A2, 6.42%, 5/15/35........ 587,000 639,623 GMAC Commercial Mortgage Securities, Inc. IO 96 C1 X2, 1.74%, 10/15/28, (b) (d).................... 341,938 9,110 Government National Mortgage Association IO 99 29 SD, 6.11%, 3/16/26, (b) (d)..................... 112,037 3,507 Government National Mortgage Association IO 99 30 S, 6.71%, 8/16/29, (b) (d)..................... 194,639 19,420 Government National Mortgage Association IO 99 30 SA, 6.11%, 4/16/29, (b) (d)..................... 242,365 19,303 Government National Mortgage Association IO 99 32 SB, 6.11%, 7/16/27, (b) (d)..................... 135,311 6,839 GS Mortgage Securities Corp. IO 97 GL X2, 0.83%, 7/13/30, (b) (d).......... 374,325 7,585 LB-UBS Commercial Mortgage Trust 00 C3 A1, 7.95%, 7/15/09................... 287,291 308,967 LB-UBS Commercial Mortgage Trust 00 C4 A2, 7.37%, 8/15/26................... 600,000 695,147 PNC Mortgage Acceptance Corp. 00 C2 A2, 7.30%, 10/12/33.................. 600,000 693,654 Ryland Mortgage Securities Corp. 94 4 C1, 4.00%, 9/25/30, (b).............. 417,328 416,721 Salomon Brothers Mortgage Securities VII 00 C3 A2, 6.59%, 12/18/33........ 650,000 727,691 ----------- TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS.......................... 6,372,855 ----------- - ---------------------------------------------------------------- ASSET BACKED SECURITIES - 6.2% Citibank Credit Card Issuance Trust 00 A3, 6.875%, 11/16/09................. 1,115,000 1,230,102 Connecticut RRB Special Purpose Trust CL&P-1 01 1 A5, 6.21%, 12/30/11...... 700,000 777,204 Detroit Edison Securitization Funding LLC 01 1 A3, 5.875%, 3/1/10.......... 357,000 377,873 Detroit Edison Securitization Funding LLC 01 1 A5, 6.42%, 3/1/15........... 417,000 472,939 MBNA Master Credit Card Trust 00 E A, 7.80%, 10/15/12...................... 600,000 717,199 MBNA Master Credit Card Trust 99 B A, 5.90%, 8/15/11....................... 527,000 575,880 Peco Energy Transition Trust 00 A A3, 7.625%, 3/1/10....................... 600,000 691,983 Peco Energy Transition Trust 01 A A1, 6.52%, 12/31/10...................... 550,000 619,879 PSE&G Transition Funding LLC 01 1 A6, 6.61%, 6/15/15....................... 355,000 407,462 Union Acceptance Corp. 01 C B, 4.73%, 11/9/09.............................. 2,500,000 2,553,124 WFS Financial Owner Trust, 3.35%, 4/17/09.............................. 2,000,000 2,010,374 ----------- TOTAL ASSET BACKED SECURITIES......... 10,434,019 ----------- </Table> 72 HSBC INVESTOR PORTFOLIOS See notes to financial statements. <Page> HSBC INVESTOR FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- OCTOBER 31, 2004 (CONTINUED) ...................................................................... <Table> <Caption> - ---------------------------------------------------------------- MUNICIPAL BONDS - 1.5% PRINCIPAL AMOUNT($) VALUE($) ---------- ----------- FINANCE - 0.6% Sales Tax Asset Receivables Corp. New York, 3.29%, 10/15/07................ 1,060,000 1,060,000 ----------- URBAN AND COMMUNITY DEVELOPMENT - 0.9% Indianapolis Indiana Local Public Improvement, 3.00%, 10/15/05......... 1,500,000 1,506,570 ----------- TOTAL MUNICIPAL BONDS................. 2,566,570 ----------- <Caption> - ---------------------------------------------------------------- INVESTMENT COMPANIES - 4.2% SHARES VALUE($) ---------- ----------- HSBC Investor Money Market Fund Class I Shares *........................... 7,135,742 7,135,742 ----------- TOTAL INVESTMENT COMPANIES............ 7,135,742 ----------- TOTAL INVESTMENTS (COST $158,869,578) (a) - 99.1%..... 167,928,599 ----------- ----------- </Table> - --------- Percentages indicated are based on net assets of $169,459,384. (a) Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting of approximately $8,734. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: <Table> Unrealized appreciation........... $10,139,822 Unrealized depreciation........... (1,089,535) ----------- Net unrealized appreciation....... $ 9,050,287 ----------- ----------- </Table> (b) Variable rate security. The interest rates on these securities are adjusted periodically to reflect then-current short-term interest rates. The rates presented in this report represent the rates that were in effect on October 31, 2004. However, 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) Interest-Only represents securities that entitle holders to receive only interest payments on the underlying mortgages. The yield to maturity of an Interest-Only is extremely sensitive to the rate of principal payments on the underlying mortgage assets. A rapid (slow) rate of principal repayments may have an adverse (positive) effect on yield to maturity. The principal amount shown is the notional amount of the underlying mortgages. * Investment in affiliate. ** The principal amount of the security is denominated in Euro. (i) Rule 144a, section 4(2) or other security which is restricted as to resale to institutional investors. The Investment Advisor, using Board approved procedures, has deemed these securities to be illiquid. Represents .05% of net assets. See notes to financial statements. HSBC INVESTOR PORTFOLIOS 73 <Page> HSBC INVESTOR GROWTH PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- OCTOBER 31, 2004 ...................................................................... <Table> <Caption> - ----------------------------------------------------------------- COMMON STOCKS - 91.3% SHARES VALUE($) --------- ---------- AEROSPACE & DEFENSE - 1.8% Lockheed Martin Corp..................... 16,600 914,494 ---------- BIOTECHNOLOGY - 1.3% Gilead Sciences, Inc. (b)................ 18,400 637,192 ---------- BUSINESS SERVICES - 2.0% Cintas Corp.............................. 8,450 364,533 Paychex, Inc............................. 18,750 614,888 ---------- 979,421 ---------- COMPUTER SOFTWARE - 11.4% Apple Computer, Inc. (b)................. 12,150 638,240 Automatic Data Processing, Inc........... 19,000 824,409 Electronic Arts, Inc. (b)................ 10,200 458,184 First Data Corp.......................... 16,700 689,376 Lexmark International, Inc. (b).......... 5,600 465,416 Microsoft Corp........................... 75,550 2,114,644 SAP AG................................... 12,765 544,427 ---------- 5,734,696 ---------- COMPUTERS - 2.4% Dell, Inc. (b)........................... 34,150 1,197,299 ---------- CONSUMER PRODUCTS - 7.3% Avon Products, Inc....................... 11,500 454,825 Coach, Inc. (b).......................... 11,600 540,908 Harley-Davidson, Inc..................... 21,113 1,215,475 Harman International Industries, Inc..... 3,700 444,666 The Estee Lauder Cos., Inc. Class A...... 12,650 543,318 The Procter & Gamble Co.................. 8,500 435,030 ---------- 3,634,222 ---------- DIVERSIFIED MANUFACTURING OPERATIONS - 6.4% 3M Co.................................... 7,650 593,411 Danaher Corp............................. 14,150 780,090 General Electric Co...................... 52,812 1,801,944 ---------- 3,175,445 ---------- ELECTRONIC COMPONENTS & SEMICONDUCTORS - 2.6% Linear Technology Corp................... 6,600 250,008 Maxim Integrated Products, Inc........... 5,650 248,544 Microchip Technology, Inc................ 25,500 771,375 ---------- 1,269,927 ---------- FINANCE - 0.9% Robert Half International, Inc........... 16,150 428,460 ---------- FINANCIAL SERVICES - 11.6% Goldman Sachs Group, Inc................. 15,200 1,495,376 Legg Mason, Inc.......................... 7,400 471,454 Morgan Stanley........................... 9,400 480,246 SLM Corp................................. 36,700 1,661,041 T. Rowe Price Group, Inc................. 9,900 552,123 The Chicago Mercantile Exchange.......... 6,550 1,151,032 ---------- 5,811,272 ---------- HEALTH CARE - 9.6% Boston Scientific Corp. (b).............. 13,600 480,080 DENTSPLY International, Inc.............. 6,400 332,864 Guidant Corp............................. 11,750 782,785 Medtronic, Inc........................... 29,650 1,515,412 UnitedHealth Group, Inc.................. 6,650 481,460 Zimmer Holdings, Inc. (b)................ 15,100 1,171,609 ---------- 4,764,210 ---------- HOTELS & LODGING - 1.0% Starwood Hotels & Resorts Worldwide, Inc..................................... 9,900 472,527 ---------- <Caption> - ----------------------------------------------------------------- COMMON STOCKS, CONTINUED SHARES VALUE($) --------- ---------- INTERNET RELATED - 3.8% eBay, Inc. (b)........................... 10,800 1,054,188 Google, Inc. Class A (b)................. 2,350 448,157 Yahoo!, Inc. (b)......................... 10,000 361,900 ---------- 1,864,245 ---------- LEISURE - 2.4% Carnival Corp............................ 23,250 1,175,520 ---------- MEDICAL & HEALTH PRODUCTS - 1.8% Biomet, Inc.............................. 10,100 471,468 Genentech, Inc. (b)...................... 8,879 404,261 ---------- 875,729 ---------- OIL & GAS - 4.7% Schlumberger Ltd......................... 18,550 1,167,537 Smith International, Inc. (b)............ 20,500 1,190,640 ---------- 2,358,177 ---------- PHARMACEUTICALS - 5.3% Alcon, Inc............................... 6,900 491,280 Allergan, Inc............................ 6,500 465,140 Pfizer, Inc.............................. 57,950 1,677,653 ---------- 2,634,073 ---------- RETAIL - 11.1% Best Buy Co., Inc........................ 4,250 251,685 Costco Wholesale Corp.................... 21,797 1,044,948 Home Depot, Inc.......................... 26,250 1,078,350 Kohl's Corp. (b)......................... 9,600 487,296 Staples, Inc............................. 31,650 941,271 Wal-Mart Stores, Inc..................... 12,350 665,912 Walgreen Co.............................. 30,117 1,080,899 ---------- 5,550,361 ---------- TELECOMMUNICATIONS - 2.8% Cisco Systems, Inc. (b).................. 36,700 705,007 Research in Motion Ltd. (b).............. 7,650 674,730 ---------- 1,379,737 ---------- TRANSPORTATION - 1.1% Expeditors International of Washington, Inc..................................... 9,300 531,030 ---------- TOTAL COMMON STOCKS...................... 45,388,037 ---------- - ----------------------------------------------------------------- INVESTMENT COMPANIES - 7.3% SHARES VALUE($) --------- ---------- HSBC Investor Money Market Fund Class I Shares*................................. 3,619,333 3,619,333 ---------- TOTAL INVESTMENT COMPANIES............... 3,619,333 ---------- TOTAL INVESTMENTS (COST $47,015,502) (a) - 98.6%......... 49,007,370 ---------- ---------- </Table> - --------- Percentages indicated are based on net assets of $49,680,204. (a) Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting of approximately $228,316. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: <Table> Unrealized appreciation.......... $ 3,126,466 Unrealized depreciation.......... (1,362,914) ----------- Net unrealized appreciation...... $ 1,763,552 ----------- ----------- </Table> (b) Represents non-income producing security. * Investment in affiliate. 74 HSBC INVESTOR PORTFOLIOS See notes to financial statements. <Page> HSBC INVESTOR VALUE PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- OCTOBER 31, 2004 ...................................................................... <Table> <Caption> - ----------------------------------------------------------------- COMMON STOCKS - 90.5% SHARES VALUE($) --------- ---------- AEROSPACE & DEFENSE - 8.6% Lockheed Martin Corp..................... 28,000 1,542,520 Northrop Grumman Corp.................... 32,600 1,687,050 Raytheon Co.............................. 56,300 2,053,824 ---------- 5,283,394 ---------- BANKING - 5.1% Bank of America Corp..................... 32,100 1,437,759 Wells Fargo & Co......................... 28,800 1,719,936 ---------- 3,157,695 ---------- BUSINESS SERVICES - 2.3% Pitney Bowes, Inc........................ 32,100 1,404,375 ---------- COMPUTER SOFTWARE - 5.0% Computer Associates International, Inc..................................... 111,100 3,078,581 ---------- CONGLOMERATES - 2.0% Loews Corp............................... 20,700 1,239,930 ---------- CONSUMER PRODUCTS - 8.2% Albertson's, Inc......................... 50,400 1,149,624 Altria Group, Inc........................ 42,200 2,045,012 Kimberly-Clark Corp...................... 31,000 1,849,770 ---------- 5,044,406 ---------- DIVERSIFIED MANUFACTURING OPERATIONS - 2.7% Delphi Corp.............................. 52,500 441,525 Ingersoll-Rand Co........................ 17,400 1,190,856 ---------- 1,632,381 ---------- ELECTRONIC COMPONENTS & SEMICONDUCTORS - 2.8% Agilent Technologies, Inc. (b)........... 67,400 1,689,044 ---------- FINANCIAL SERVICES - 16.3% Citigroup, Inc........................... 32,307 1,433,462 Countrywide Financial Corp............... 76,600 2,445,838 Fannie Mae............................... 36,400 2,553,459 Genworth Financial, Inc. Class A......... 58,000 1,383,880 J.P. Morgan Chase & Co................... 39,150 1,511,190 MGIC Investment Corp..................... 11,800 758,858 ---------- 10,086,687 ---------- GAS & ELECTRIC UTILITY - 1.4% Dominion Resources, Inc.................. 13,000 836,160 ---------- HEALTH CARE - 1.8% HCA, Inc................................. 30,000 1,101,900 ---------- INSURANCE - 9.9% Aetna, Inc............................... 16,900 1,605,500 AON Corp................................. 77,200 1,575,652 Radian Group, Inc........................ 34,900 1,672,757 <Caption> - ----------------------------------------------------------------- COMMON STOCKS, CONTINUED SHARES VALUE($) --------- ---------- The Hartford Financial Services Group, Inc..................................... 21,100 1,233,928 ---------- 6,087,837 ---------- MEDIA - 1.5% Liberty Media Corp., Class A (b)......... 100,350 895,122 ---------- MINING - 5.9% Barrick Gold Corp........................ 93,700 2,109,187 Posco ADR................................ 13,800 515,982 Rio Tinto PLC ADR........................ 9,300 988,590 ---------- 3,613,759 ---------- OIL & GAS - 8.9% ConocoPhillips........................... 19,491 1,643,286 Kerr-McGee Corp.......................... 46,700 2,765,574 Transocean, Inc. (b)..................... 30,700 1,082,175 ---------- 5,491,035 ---------- PAPER PRODUCTS - 1.7% International Paper Co................... 26,800 1,032,068 ---------- TELECOMMUNICATIONS - 4.5% BellSouth Corp........................... 36,050 961,454 Motorola, Inc............................ 65,650 1,133,119 Sprint Corp.............................. 30,600 641,070 ---------- 2,735,643 ---------- TRANSPORTATION - 1.9% Union Pacific Corp....................... 18,700 1,177,539 ---------- TOTAL COMMON STOCKS...................... 55,587,556 ---------- <Caption> - ----------------------------------------------------------------- INVESTMENT COMPANIES - 9.5% SHARES VALUE($) --------- ---------- HSBC Investor Money Market Fund Class I Shares*......................... 5,823,353 5,823,353 ---------- TOTAL INVESTMENT COMPANIES............... 5,823,353 ---------- TOTAL (COST $58,799,753) (a) - 100.0%... 61,410,909 ---------- ---------- </Table> - --------- Percentages indicated are based on net assets of $61,413,997. (a) Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting of approximately $38,526. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: <Table> Unrealized appreciation.......... $ 3,734,100 Unrealized depreciation.......... (1,161,470) ----------- Net unrealized appreciation...... $ 2,572,630 ----------- ----------- </Table> (b) Represents non-income producing security. * Investment in affiliate. ADR -- American Depository Receipt See notes to financial statements. HSBC INVESTOR PORTFOLIOS 75 <Page> HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- OCTOBER 31, 2004 ...................................................................... <Table> <Caption> - ----------------------------------------------------------------- COMMON STOCKS - 99.2% SHARES VALUE($) ----------- ----------- AUSTRALIA - 1.1% BlueScope Steel Ltd................... 418,300 2,419,801 ----------- BELGIUM - 2.9% Belgacom (b).......................... 18,300 674,007 Delhaize Group........................ 51,900 3,351,813 KBC Bankverzekeringsholding........... 31,600 2,321,657 ----------- 6,347,477 ----------- BRAZIL - 1.1% CIA de Saneamento Basico do Estado de Sao Paulo............................ 7,710,000 311,959 Gerdau SA ADR......................... 33,400 492,984 Petroleo Brasileiro SA ADR............ 27,700 903,020 Unibanco GDR.......................... 13,000 343,850 Votorantim Celulos Papel SA ADR....... 13,700 473,335 ----------- 2,525,148 ----------- CANADA - 4.2% Alcan, Inc............................ 49,900 2,308,402 Bank of Nova Scotia................... 109,800 3,569,559 BCE, Inc.............................. 31,500 731,578 Manulife Financial Corp............... 56,400 2,633,636 ----------- 9,243,175 ----------- CHINA - 0.1% China Petroleum & Chemical Corp....... 592,000 224,369 ----------- FINLAND - 1.0% Nokia Corp., Class A.................. 140,800 2,176,958 ----------- FRANCE - 10.2% Assurances Generales de France........ 75,600 5,046,767 BNP Paribas SA........................ 15,800 1,077,985 Credit Agricole SA.................... 75,900 2,229,584 France Telecom SA..................... 32,800 941,278 Renault SA............................ 38,100 3,196,317 Sanofi-Aventis........................ 57,800 4,235,488 Societe Generale...................... 33,700 3,133,180 Total SA.............................. 12,500 2,605,665 ----------- 22,466,264 ----------- GERMANY - 7.9% Continental AG........................ 70,800 3,875,235 E.ON AG............................... 42,300 3,462,114 Fresenius Medical Care AG............. 22,800 1,752,388 HeidelbergCement AG................... 47,600 2,346,063 MAN AG................................ 66,000 2,297,487 Siemens AG............................ 26,600 1,990,025 Volkswagen AG......................... 35,200 1,571,047 ----------- 17,294,359 ----------- HUNGARY - 0.6% MOL Magyar Olaj -- es Gazipari Rt. GDR.................................. 21,600 1,211,760 ----------- INDIA - 0.3% ICICI Bank Ltd. ADR................... 47,300 745,448 ----------- ISRAEL - 0.4% Bank Hapoalim Ltd..................... 286,600 778,277 ----------- ITALY - 3.0% Banca Intesa SpA...................... 252,492 1,036,510 <Caption> - ----------------------------------------------------------------- COMMON STOCKS, CONTINUED SHARES VALUE($) ----------- ----------- ENI SpA............................... 241,500 5,497,411 ----------- 6,533,921 ----------- JAPAN - 24.5% Aiful Corp............................ 26,400 2,639,127 Canon, Inc............................ 124,000 6,127,651 Daito Trust Construction Co., Ltd..... 36,700 1,553,513 Daiwa House Industry Co., Ltd......... 171,000 1,751,443 Hitachi, Ltd.......................... 144,000 907,526 Honda Motor Co., Ltd.................. 96,600 4,673,236 ITOCHU Corp........................... 317,000 1,365,824 Japan Tobacco, Inc.................... 240 2,111,211 JFE Holdings, Inc..................... 104,700 2,814,490 Leopalace21 Corp...................... 29,300 535,974 Nippon Meat Packers, Inc.............. 151,000 1,886,162 Nippon Mining Holdings, Inc........... 360,000 1,714,367 Nissan Motor Co., Ltd................. 281,100 3,173,945 Promise Co., Ltd...................... 49,000 3,120,518 Sanyo Shinpan Finance Co., Ltd........ 20,400 1,144,952 Sega Sammy Holdings, Inc. (b)......... 43,000 1,998,961 Sony Corp............................. 12,510 436,169 Sumitomo Mitsui Financial Group, Inc.................................. 718 4,674,275 Takeda Chemical Industries, Ltd....... 21,500 1,040,110 Tanabe Seiyaku Co., Ltd............... 129,000 1,173,780 The Tokyo Electric Power Co., Inc..... 90,600 2,054,519 Toyota Motor Co....................... 82,000 3,199,887 UFJ Holdings, Inc..................... 453 2,105,882 UNY Co., Ltd.......................... 146,000 1,463,656 ----------- 53,667,178 ----------- LUXEMBOURG - 2.6% Arcelor............................... 307,680 5,760,516 ----------- NETHERLANDS - 3.7% ABN AMRO Holding NV................... 160,553 3,849,823 ING Groep NV.......................... 94,168 2,498,863 Royal Dutch Petroleum Co.............. 33,800 1,840,964 ----------- 8,189,650 ----------- NORWAY - 0.3% Yara International ASA (b)............ 52,100 559,171 ----------- SINGAPORE - 2.0% Flextronics International Ltd. (b).... 112,400 1,354,420 Singapore Telecommunications Ltd...... 2,104,630 3,062,569 ----------- 4,416,989 ----------- SOUTH AFRICA - 1.4% ABSA Group Ltd........................ 100,500 1,104,223 Sanlam Ltd............................ 615,600 1,088,262 Telkom South Africa Ltd............... 60,000 853,074 ----------- 3,045,559 ----------- SOUTH KOREA - 2.0% Hyundai Motor Co. Ltd................. 16,300 790,683 Industrial Bank of Korea GDR.......... 88,300 538,630 Kookmin Bank ADR...................... 14,600 490,998 POSCO ADR............................. 34,200 1,278,738 Shinhan Financial Group Co. Ltd. ADR.................................. 35,150 1,376,825 ----------- 4,475,874 ----------- </Table> 76 HSBC INVESTOR PORTFOLIOS See notes to financial statements. <Page> HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- OCTOBER 31, 2004 (CONTINUED) ...................................................................... <Table> <Caption> - ----------------------------------------------------------------- COMMON STOCKS, CONTINUED SHARES VALUE($) ----------- ----------- SPAIN - 1.9% Altadis SA............................ 19,800 728,494 Repsol SA............................. 155,000 3,367,799 ----------- 4,096,293 ----------- SWEDEN - 1.3% Svenska Cellusoa AB, B shares......... 77,800 2,903,888 ----------- SWITZERLAND - 3.3% Credit Suisse Group................... 106,800 3,662,864 Givaudan SA........................... 3,000 1,880,653 Nestle SA Registered.................. 7,048 1,671,982 ----------- 7,215,499 ----------- TAIWAN - 1.2% China Steel Corp. GDR................. 41,400 820,962 Compal Electronics, Inc............... 214,321 970,875 Gigabyte Technology Co. Ltd........... 257,250 290,791 Taiwan Semiconductor Manufacturing Co. Ltd.................................. 467,755 612,670 ----------- 2,695,298 ----------- THAILAND - 0.2% PTT Public Company Ltd. PLC........... 121,400 546,913 ----------- TURKEY - 0.6% Akbank TAS............................ 175,000,000 787,582 Ford Otomotiv Sanayi A.S.............. 80,700,000 638,992 ----------- 1,426,574 ----------- UNITED KINGDOM - 21.4% Associated British Foods PLC.......... 147,000 1,877,170 Aviva PLC............................. 340,000 3,404,685 Barclays PLC.......................... 237,700 2,323,498 BP Amoco PLC.......................... 609,200 5,904,512 British American Tobacco PLC.......... 159,000 2,395,590 Depfa Bank PLC........................ 96,470 1,469,349 George Wimpey PLC..................... 244,600 1,572,990 Glaxosmithkline PLC................... 162,400 3,422,560 InterContinental Hotels Group PLC..... 183,600 2,248,404 Lloyds TSB Group PLC.................. 83,200 658,874 Mitchells & Butlers PLC............... 119,800 626,790 <Caption> - ----------------------------------------------------------------- COMMON STOCKS, CONTINUED SHARES VALUE($) ----------- ----------- Punch Taverns PLC..................... 185,000 1,879,743 RMC Group PLC......................... 132,300 2,067,453 Royal & Sun Alliance Insurance Group PLC.................................. 736,000 1,010,859 Royal Bank Of Scotland Group PLC...... 42,600 1,256,279 J Sainsbury PLC....................... 410,062 1,942,002 Shell Transport & Trading Co. PLC..... 160,000 1,260,450 Taylor Woodrow PLC.................... 361,600 1,538,087 Trinity Mirror PLC.................... 145,600 1,725,531 Vodafone Group PLC.................... 1,461,053 3,744,914 Whitbread PLC......................... 169,400 2,527,383 Xstrata PLC........................... 146,000 2,266,789 ----------- 47,123,912 ----------- TOTAL COMMON STOCKS................... 218,090,271 ----------- - ----------------------------------------------------------------- INVESTMENT COMPANIES - 0.0% Investors Bank Trust Cash Reserve..... 79,394 79,394 ----------- TOTAL INVESTMENT COMPANIES............ 79,394 ----------- - ----------------------------------------------------------------- RIGHTS & WARRANTS - 0.0% UNITED KINGDOM - 0.0% TI Automotive Ltd., Class A (b)....... 190,000 0 ----------- TOTAL RIGHTS & WARRANTS............... 0 ----------- TOTAL INVESTMENTS (COST $196,771,568) (a) - 99.2%..... 218,169,665 ----------- ----------- </Table> - --------- Percentages indicated are based on net assets of $220,025,155. (a) Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting of approximately $690,604. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: <Table> Unrealized appreciation........... $24,854,662 Unrealized depreciation........... (4,147,169) ----------- Net unrealized appreciation....... $20,707,493 ----------- ----------- </Table> (b) Represents non-income producing security. ADR -- American Depository Receipt GDR -- Global Depository Receipt See notes to financial statements. HSBC INVESTOR PORTFOLIOS 77 <Page> HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE PORTFOLIO INVESTMENTS -- OCTOBER 31, 2004 ...................................................................... <Table> <Caption> PERCENT OF INDUSTRY NET ASSETS - -------- ---------- Automotive.................................................. 9.6% Banking & Financial Services................................ 22.3% Building & Construction..................................... 1.5% Building Materials.......................................... 2.7% Chemicals................................................... 0.5% Computer Related............................................ 1.6% Diversified Manufacturing Operations........................ 1.0% Drugs -- Medical............................................ 4.8% Electrical.................................................. 2.7% Electronic Components & Semiconductors...................... 4.1% Food & Beverage............................................. 4.2% Insurance................................................... 6.0% Leisure..................................................... 1.3% Metals & Mining............................................. 6.1% Manufacturing............................................... 5.6% Multimedia.................................................. 0.8% Oil & Gas................................................... 10.6% Paper Products.............................................. 1.5% Real Estate................................................. 0.2% Restaurants................................................. 1.2% Retail...................................................... 3.0% Telecommunciations.......................................... 5.5% Tobacco..................................................... 2.4% Investment Companies........................................ 0.0% ------ Total Investments........................................... 99.2% Other assets in excess of liabilities....................... 0.8% ------ Net Assets.................................................. 100.0% ------ ------ </Table> At October 31, 2004, the Portfolio's open forward currency contracts were as follows: <Table> <Caption> CONTRACT CONTRACT UNREALIZED DELIVERY AMOUNT VALUE APPRECIATION/ CURRENCY DATE (LOCAL CURRENCY) (U.S. DOLLAR) VALUE (DEPRECIATION) - -------- --------- ---------------- ------------- ----- -------------- SHORT CONTRACTS Japanese Yen................................ 11/1/2004 9,404,328 $88,636 $88,858 $ (222) ------- ------- ------ TOTAL SHORT CONTRACTS $88,636 $88,858 $ (222) ------- ------- ------ ------- ------- ------ </Table> 78 HSBC INVESTOR PORTFOLIOS See notes to financial statements. <Page> HSBC INVESTOR SMALL CAP EQUITY PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- OCTOBER 31, 2004 ...................................................................... <Table> <Caption> - ----------------------------------------------------------------- COMMON STOCKS - 97.4% SHARES VALUE($) --------- ----------- ADVERTISING - 1.9% Monster Worldwide, Inc. (b)............. 245,300 6,880,665 ----------- BANKING - 6.5% East West Bancorp, Inc.................. 208,200 8,336,328 Southwest Bancorp. of Texas, Inc........ 354,000 8,297,760 Wintrust Financial Corp................. 119,800 6,828,600 ----------- 23,462,688 ----------- BIOTECHNOLOGY - 3.5% Celgene Corp. (b)....................... 429,200 12,712,904 ----------- COMMERCIAL SERVICES - 2.1% Alliance Data Systems Corp. (b)......... 182,000 7,694,960 ----------- COMPUTER SOFTWARE - 6.1% Ascential Software Corp. (b)............ 350,800 4,942,772 CheckFree Corp. (b)..................... 115,900 3,592,900 SRA International, Inc. Class A (b)..... 154,200 8,289,792 Transaction Systems Architects, Inc. Class A (b)............................ 306,100 5,018,510 ----------- 21,843,974 ----------- CONSTRUCTION - 1.5% D. R. Horton, Inc....................... 177,650 5,329,500 ----------- CONSULTING SERVICES - 1.2% LECG Corp. (b).......................... 236,500 4,325,585 ----------- CRUISE LINES - 1.7% Royal Caribbean Cruises Ltd............. 129,000 6,011,400 ----------- DIVERSIFIED MANUFACTURING OPERATIONS - 7.8% Actuant Corp. Class A (b) 219,100 8,691,697 AMETEK, Inc............................. 308,900 10,168,988 Roper Industries, Inc................... 147,700 9,107,182 ----------- 27,967,867 ----------- ELECTRONIC COMPONENTS & SEMICONDUCTORS - 8.5% ATMI, Inc. (b).......................... 227,400 5,309,790 Power Integrations, Inc. (b)............ 146,400 3,132,960 Semtech Corp. (b)....................... 274,000 5,721,120 Thermo Electron Corp. (b)............... 327,400 9,494,600 Varian Semiconductor Equipment Associates, Inc. (b)................... 202,000 6,991,220 ----------- 30,649,690 ----------- ENVIRONMENTAL SERVICES - 6.0% Pioneer Natural Resources Co............ 203,900 6,606,360 Republic Services, Inc. Class A......... 268,900 8,282,120 Waste Connections, Inc. (b)............. 214,500 6,761,040 ----------- 21,649,520 ----------- FINANCIAL SERVICES - 1.2% CapitalSource, Inc. (b)................. 188,300 4,217,920 ----------- HEALTH CARE - 8.5% Cytyc Corp. (b)......................... 313,200 8,171,388 Manor Care, Inc......................... 299,500 9,805,630 Omnicare, Inc........................... 196,700 5,426,953 PacifiCare Health Systems, Inc. (b)..... 197,300 7,027,826 ----------- 30,431,797 ----------- HOSPITALS - 1.4% Triad Hospitals, Inc. (b)............... 157,700 5,208,831 ----------- HUMAN RESOURCES - 0.0% Employee Solutions, Inc. (b) (c)........ 2,483 2 ----------- <Caption> - ----------------------------------------------------------------- COMMON STOCKS, CONTINUED SHARES VALUE($) --------- ----------- INSURANCE - 1.0% Direct General Corp..................... 122,700 3,619,650 ----------- INTERNET RELATED - 5.0% Check Point Software Technologies Ltd. (b).................................... 279,000 6,311,259 Concur Technologies, Inc. (b)........... 505,200 5,256,606 RSA Security, Inc. (b).................. 315,300 6,451,038 ----------- 18,018,903 ----------- MEDIA - 2.4% The E.W. Scripps Co. Class A............ 73,400 3,502,648 Westwood One, Inc. (b).................. 228,600 5,276,088 ----------- 8,778,736 ----------- OIL & GAS - 12.5% Amerada Hess Corp....................... 104,500 8,434,195 Chesapeake Energy Corp.................. 526,500 8,466,120 Consol Energy, Inc...................... 106,600 3,773,640 Denbury Resources, Inc. (b)............. 209,400 5,193,120 Peabody Energy Corp..................... 182,700 11,652,605 Smith International, Inc. (b)........... 120,900 7,021,872 ----------- 44,541,552 ----------- PHARMACEUTICALS - 8.2% Elan Corp., PLC (b)..................... 374,000 9,649,200 OSI Pharmaceuticals, Inc. (b)........... 113,696 7,387,966 Santarus, Inc. (b)...................... 553,500 5,435,370 The Medicines Co. (b)................... 259,892 6,923,523 ----------- 29,396,059 ----------- RAILROAD EQUIPMENT - 2.0% Wabtec Corp............................. 350,400 7,102,608 ----------- RETAIL - 4.8% Cost Plus, Inc. (b)..................... 159,800 5,161,540 P.F. Chang's China Bistro, Inc. (b)..... 79,800 4,057,032 Williams-Sonoma, Inc. (b)............... 212,000 8,092,040 ----------- 17,310,612 ----------- STEEL PRODUCERS - 2.2% United States Steel Corp................ 211,100 7,751,592 ----------- TELECOMMUNICATIONS - 1.4% Scientific-Atlanta, Inc................. 184,800 5,061,672 ----------- TOTAL COMMON STOCKS..................... 349,968,687 ----------- - ----------------------------------------------------------------- INVESTMENT COMPANIES - 0.8% SHARES VALUE($) --------- ----------- HSBC Investor Money Market Fund Class I Shares *............................... 2,753,755 2,753,755 ----------- TOTAL INVESTMENT COMPANIES.............. 2,753,755 ----------- TOTAL INVESTMENTS (COST $298,288,950) (a) - 98.2%....... 352,722,442 ----------- ----------- </Table> - --------- Percentages indicated are based on net assets of $359,333,273. (a) Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting of approximately $853,300. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: <Table> Unrealized appreciation.......... $ 66,472,438 Unrealized depreciation.......... (12,892,246) ------------ Net unrealized appreciation...... $ 53,580,192 ------------ ------------ </Table> (b) Represents non-income producing security. * Investment in affiliate. (c) Represents illiquid security. See notes to financial statements. HSBC INVESTOR PORTFOLIOS 79 <Page> HSBC INVESTOR PORTFOLIOS STATEMENTS OF ASSETS AND LIABILITIES -- OCTOBER 31, 2004 ...................................................................... <Table> <Caption> LIMITED INTERNATIONAL SMALL CAP MATURITY FIXED INCOME GROWTH VALUE EQUITY EQUITY PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO - --------------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments in non-affiliates, at value $63,051,793 $160,792,857 $45,388,037 $55,587,556 $218,169,665 $349,968,687 Investments in affiliates, at value 168,429 7,135,742 3,619,333 5,823,353 -- 2,753,755 Cash 21 109 -- 73,345 3,689 -- Foreign currency -- -- -- -- 1,651,283 -- Interest and dividends receivable 511,941 1,837,026 17,490 107,847 348,913 38,622 Receivable for investments sold -- 1,216,881 1,263,167 476,443 261,321 8,637,157 Prepaid expenses 592 1,410 3,345 4,453 1,949 3,538 ----------- ------------ ----------- ----------- ------------ ------------ TOTAL ASSETS 63,732,776 170,984,025 50,291,372 62,072,997 220,436,820 361,401,759 ----------- ------------ ----------- ----------- ------------ ------------ ................................................................................................................................. LIABILITIES: Cash overdraft -- -- -- -- -- 652 Payable for investments purchased -- 1,439,586 586,187 626,719 107,562 1,790,439 Unrealized depreciation on forward foreign currency contracts -- -- -- -- 222 -- Accrued expenses and other liabilities: Investment management 21,944 57,580 20,593 27,185 183,595 245,168 Administration 3,285 8,785 1,573 1,976 10,481 15,644 Other 10,758 18,690 2,815 3,120 109,805 16,583 ----------- ------------ ----------- ----------- ------------ ------------ TOTAL LIABILITIES 35,987 1,524,641 611,168 659,000 411,665 2,068,486 ----------- ------------ ----------- ----------- ------------ ------------ ................................................................................................................................. NET ASSETS: Applicable to investors' beneficial interest $63,696,789 $169,459,384 $49,680,204 $61,413,997 $220,025,155 $359,333,273 ----------- ------------ ----------- ----------- ------------ ------------ ----------- ------------ ----------- ----------- ------------ ------------ Investments, at cost $62,393,888 $158,869,578 $47,015,502 $58,799,753 $196,771,568 $298,288,950 ----------- ------------ ----------- ----------- ------------ ------------ ----------- ------------ ----------- ----------- ------------ ------------ Foreign currency, at cost $ 1,391,612 ------------ ------------ </Table> 80 HSBC INVESTOR PORTFOLIOS See notes to financial statements. <Page> HSBC INVESTOR PORTFOLIOS STATEMENTS OF OPERATIONS -- FOR THE YEAR ENDED OCTOBER 31, 2004 (a) ...................................................................... <Table> <Caption> LIMITED FIXED MATURITY INCOME GROWTH PORTFOLIO PORTFOLIO PORTFOLIO - -------------------------------------------------------------------------------- INVESTMENT INCOME: Interest $3,100,206 $8,907,851 $ 47 Dividends 9,295 18,184 140,045 Dividend income from affiliated investments 11,026 44,789 14,843 Foreign tax withholding -- -- (17) ---------- ---------- ----------- TOTAL INVESTMENT INCOME 3,120,527 8,970,824 154,918 ---------- ---------- ----------- .................................................................................. EXPENSES: Investment management 303,933 743,417 99,225 Administration 28,433 69,546 7,426 Accounting 58,976 70,575 24,815 Custodian 34,174 62,616 8,646 Trustee 637 927 73 Other 8,607 18,969 3,524 ---------- ---------- ----------- TOTAL EXPENSES 434,760 966,050 143,709 ---------- ---------- ----------- .................................................................................. NET INVESTMENT INCOME (LOSS) 2,685,767 8,004,774 11,209 ---------- ---------- ----------- .................................................................................. NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND FOREIGN CURRENCIES: Net realized gains (losses) from investment and foreign currency transactions 350,688 1,234,753 (1,576,336) Change in unrealized appreciation/depreciation from investments and foreign currencies 195,249 533,676 1,991,868 ---------- ---------- ----------- .................................................................................. Net realized/unrealized gains from investment and foreign currency transactions 545,937 1,768,429 415,532 ---------- ---------- ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $3,231,704 $9,773,203 $ 426,741 ---------- ---------- ----------- ---------- ---------- ----------- <Caption> INTERNATIONAL SMALL CAP VALUE EQUITY EQUITY PORTFOLIO PORTFOLIO PORTFOLIO - ------------------------------------------------------------------------- INVESTMENT INCOME: Interest $ 106 $ 29,462 $ -- Dividends 485,952 6,146,706 1,333,092 Dividend income from affiliated investments 21,537 -- 52,198 Foreign tax withholding (1,224) (879,940) -- ---------- ----------- ------------ TOTAL INVESTMENT INCOME 506,371 5,296,228 1,385,290 ---------- ----------- ------------ ........................................................................... EXPENSES: Investment management 132,482 1,504,012 3,057,110 Administration 9,445 80,469 142,996 Accounting 24,482 88,674 53,012 Custodian 10,711 317,414 83,692 Trustee 93 1,783 1,982 Other 3,972 19,785 31,483 ---------- ----------- ------------ TOTAL EXPENSES 181,185 2,012,137 3,370,275 ---------- ----------- ------------ ........................................................................... NET INVESTMENT INCOME (LOSS) 325,186 3,284,091 (1,984,985) ---------- ----------- ------------ ........................................................................... NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND FOREIGN CURRENCIES: Net realized gains (losses) from investment and foreign currency transactions 506,578 32,731,371 41,945,235 Change in unrealized appreciation/depreciation from investments and foreign currencies 2,611,156 3,338,622 (17,175,725) ---------- ----------- ------------ ........................................................................... Net realized/unrealized gains from investment and foreign currency transactions 3,117,734 36,069,993 24,769,510 ---------- ----------- ------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $3,442,920 $39,354,084 $ 22,784,525 ---------- ----------- ------------ ---------- ----------- ------------ </Table> - --------- (a) The Value & Growth Portfolios commenced operations on May 7, 2004. See notes to financial statements. HSBC INVESTOR PORTFOLIOS 81 <Page> HSBC INVESTOR PORTFOLIOS STATEMENTS OF CHANGES IN NET ASSETS ...................................................................... <Table> <Caption> LIMITED MATURITY FIXED INCOME PORTFOLIO PORTFOLIO - ----------------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, 2004 OCTOBER 31, 2003 OCTOBER 31, 2004 OCTOBER 31, 2003 - ----------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income $ 2,685,767 $ 5,193,602 $ 8,004,774 $ 15,566,715 Net realized gains from investment transactions 350,688 7,058,455 1,234,753 14,700,573 Change in unrealized appreciation/depreciation from investments 195,249 (4,380,150) 533,676 (3,893,969) ------------ ------------- ------------ ------------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 3,231,704 7,871,907 9,773,203 26,373,319 ------------ ------------- ------------ ------------- Proceeds from contributions 19,537,952 76,560,059 47,385,442 210,631,816 Value of withdrawals (43,561,156) (149,758,568) (91,249,818) (419,256,855) ------------ ------------- ------------ ------------- CHANGE IN NET ASSETS FROM TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST (24,023,204) (73,198,509) (43,864,376) (208,625,039) ------------ ------------- ------------ ------------- CHANGE IN NET ASSETS (20,791,500) (65,326,602) (34,091,173) (182,251,720) ............................................................................................................................... NET ASSETS: Beginning of year 84,488,289 149,814,891 203,550,557 385,802,277 ------------ ------------- ------------ ------------- End of year $ 63,696,789 $ 84,488,289 $169,459,384 $ 203,550,557 ------------ ------------- ------------ ------------- ------------ ------------- ------------ ------------- </Table> 82 HSBC INVESTOR PORTFOLIOS See notes to financial statements. <Page> HSBC INVESTOR PORTFOLIOS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ...................................................................... <Table> <Caption> GROWTH VALUE PORTFOLIO PORTFOLIO - ------------------------------------------------------------------------------------------------------------ FOR THE FOR THE PERIOD ENDED PERIOD ENDED OCTOBER 31, 2004(a) OCTOBER 31, 2004(a) - ------------------------------------------------------------------------------------------------------------ INVESTMENT ACTIVITIES: OPERATIONS: Net investment income $ 11,209 $ 325,186 Net realized gains (losses) from investment transactions (1,576,336) 506,578 Change in unrealized appreciation/depreciation from investments 1,991,868 2,611,156 ----------- ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 426,741 3,442,920 ----------- ----------- Proceeds from contributions 53,535,759 64,069,267 Value of withdrawals (4,282,296) (6,098,190) ----------- ----------- CHANGE IN NET ASSETS FROM TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST 49,253,463 57,971,077 ----------- ----------- CHANGE IN NET ASSETS 49,680,204 61,413,997 ....................................................................................................... NET ASSETS: Beginning of period -- -- ----------- ----------- End of period $49,680,204 $61,413,997 ----------- ----------- ----------- ----------- ----------------------- ----------------- </Table> - --------- (a) The Value & Growth Portfolios commenced operations on May 7, 2004. See notes to financial statements. HSBC INVESTOR PORTFOLIOS 83 <Page> HSBC INVESTOR PORTFOLIOS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ...................................................................... <Table> <Caption> INTERNATIONAL EQUITY SMALL CAP EQUITY PORTFOLIO PORTFOLIO - ----------------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, 2004 OCTOBER 31, 2003 OCTOBER 31, 2004 OCTOBER 31, 2003 - ----------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 3,284,091 $ 2,659,063 $ (1,984,985) $ (1,839,018) Net realized gains (losses) from investment and foreign currency transactions 32,731,371 (3,720,334) 41,945,235 5,028,175 Change in unrealized appreciation/depreciation from investments and foreign currencies 3,338,622 61,679,947 (17,175,725) 88,818,863 ------------ --------------- ------------ ------------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 39,354,084 60,618,676 22,784,525 92,008,020 ------------ --------------- ------------ ------------- Proceeds from contributions 44,516,479 1,115,446,503 67,718,326 219,219,044 Value of withdrawals (65,649,972) (1,230,876,337) (157,351,034) (151,262,999) ------------ --------------- ------------ ------------- CHANGE IN NET ASSETS FROM TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST (21,133,493) (115,429,834) (89,632,708) 67,956,045 ------------ --------------- ------------ ------------- CHANGE IN NET ASSETS 18,220,591 (54,811,158) (66,848,183) 159,964,065 ............................................................................................................................ NET ASSETS: Beginning of year 201,804,564 256,615,722 426,181,456 266,217,391 ------------ --------------- ------------ ------------- End of year $220,025,155 $ 201,804,564 $359,333,273 $ 426,181,456 ------------ --------------- ------------ ------------- ------------ --------------- ------------ ------------- </Table> 84 HSBC INVESTOR PORTFOLIOS See notes to financial statements. <Page> HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS ...................................................................... <Table> <Caption> RATIOS/SUPPLEMENTARY DATA ------------------------------------------------------ RATIO OF NET NET ASSETS AT RATIO OF INVESTMENT END OF EXPENSES INCOME (LOSS) PERIOD TO AVERAGE TO AVERAGE PORTFOLIO TOTAL RETURN (000'S) NET ASSETS NET ASSETS TURNOVER - ---------------------------------------------------------------------------------------------------------------------------- LIMITED MATURITY PORTFOLIO Period ended October 31, 2001 (a) $115,180 0.55%(b) 4.97%(b) 102.01% Year ended October 31, 2002 149,815 0.51% 4.60% 44.04% Year ended October 31, 2003 4.42% 84,488 0.53% 3.70% 98.42% Year ended October 31, 2004 4.48% 63,697 0.57% 3.54% 50.06% - ---------------------------------------------------------------------------------------------------------------------------- FIXED INCOME PORTFOLIO Year ended October 31, 2000 $226,366 0.51% 6.74% 440.49% Year ended October 31, 2001 242,914 0.53% 6.53% 341.26% Year ended October 31, 2002 385,802 0.48% 5.14% 77.82% Year ended October 31, 2003 5.80% 203,551 0.48% 4.38% 70.91% Year ended October 31, 2004 5.56% 169,459 0.52% 4.31% 34.88% - ---------------------------------------------------------------------------------------------------------------------------- GROWTH PORTFOLIO Period ended October 31, 2004 (a) (0.86%)(c) $ 49,680 0.72%(b) 0.06%(b) 53.08% - ---------------------------------------------------------------------------------------------------------------------------- VALUE PORTFOLIO Period ended October 31, 2004 (a) 6.12%(c) $ 61,414 0.71%(b) 1.28%(b) 10.33% - ---------------------------------------------------------------------------------------------------------------------------- INTERNATIONAL EQUITY PORTFOLIO Year ended October 31, 2000 $332,325 0.84% 0.53% 27.81% Year ended October 31, 2001 275,848 0.90% 0.54% 26.90% Year ended October 31, 2002 256,616 0.91% 0.63% 31.63% Year ended October 31, 2003 23.70% 201,805 0.96% 1.00% 68.51% Year ended October 31, 2004 20.29% 220,025 0.94% 1.53% 106.11% - ---------------------------------------------------------------------------------------------------------------------------- SMALL CAP EQUITY PORTFOLIO Year ended October 31, 2000 $369,166 0.97% (0.60%) 79.51% Year ended October 31, 2001 265,573 0.98% (0.65%) 52.47% Year ended October 31, 2002 266,217 0.99% (0.78%) 103.90% Year ended October 31, 2003 33.30% 426,181 0.91% (0.62%) 152.05% Year ended October 31, 2004 5.93% 359,333 0.88% (0.52%) 81.75% - ---------------------------------------------------------------------------------------------------------------------------- </Table> (a) The Limited Maturity Portfolio commenced operations on January 24, 2001. Value Portfolio commenced operations on May 7, 2004. Growth Portfolio commenced operations on May 7, 2004. (b) Annualized. (c) Not annualized. See notes to financial statements. HSBC INVESTOR PORTFOLIOS 85 <Page> HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 ...................................................................... 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 Growth Portfolio Growth Portfolio HSBC Investor Value Portfolio Value 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. Under the Portfolios' organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Portfolios. In addition, in the normal course of business, the Portfolios enter into contracts with their vendors and others that provide for general indemnifications. The Portfolios' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Portfolios. However, based on experience, the Portfolios expect that risk of loss to be remote. The Growth and Value Portfolios commenced operation on May 7, 2004. 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. Examples of potentially significant events that could affect the value of an individual security include corporate actions by the issuer, announcements by the issuer relating to its earnings or products, regulatory news, natural disasters and litigation. Examples of potentially significant events that could affect multiple securities held by a Portfolio include governmental actions, natural disasters and armed conflicts. In addition, if events materially affecting the value of foreign securities occur between the time when the exchange on which they 86 HSBC INVESTOR PORTFOLIOS <Page> HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 (CONTINUED) ...................................................................... are traded closes and the time when the Portfolios' net assets are calculated, such securities may be valued using fair value pricing in accordance with procedures adopted by the Trustees. Management identifies possible fluctuations in foreign securities by monitoring the rise or fall in the value of a designated benchmark index. In the event of a rise or fall greater than predetermined levels, the International Equity Portfolio may use a systematic valuation model provided by an independent third party to value its foreign securities. When the International Equity Portfolio uses fair value pricing, the value assigned to the International Equity Portfolio's foreign securities may not be the quoted or published prices of the investment on their primary markets or exchanges. SECURITIES TRANSACTIONS AND RELATED INCOME: Changes in holdings of portfolio securities are reflected no later than on the first business day following the trade date. Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date. FOREIGN CURRENCY TRANSLATION: The accounting records of the Portfolios are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. Purchases and sales of securities, and income and expenses are translated at the prevailing rate of exchange on the respective dates of such transactions. The Portfolios do not isolate the portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS: The Portfolios may enter into forward foreign currency exchange contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Portfolios could be exposed to risks if the 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 futures contracts for the purpose of hedging their existing portfolio securities or securities it intends to purchase against fluctuations in fair value caused by changes in prevailing market interest rates. Upon entering into a futures contract, the Portfolio is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as 'variation margin,' are made or received by the Portfolio each day, depending on the daily fluctuations in the fair value of the underlying security. The Portfolio recognizes a gain or loss equal to the daily variation margin. Should market conditions move unexpectedly, the Portfolio may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets. MORTGAGE DOLLAR ROLL TRANSACTIONS: The 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 HSBC INVESTOR PORTFOLIOS 87 <Page> HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 (CONTINUED) ...................................................................... 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. RESTRICTED SECURITIES: A restricted security is a security which has been purchased through a private offering and cannot be resold to the general public without prior registration under the Securities Act of 1933 (the '1933 Act') or pursuant to the resale limitations provided by Rule 144 under the 1933 Act, or an exemption from the registration requirements of the 1933 Act. Whether a restricted security is illiquid is determined pursuant to guidelines established by the Board of Trustees. Not all restricted securities are consider illiquid. At October 31, 2004, the HSBC Limited Maturity Portfolio and HSBC Fixed Income Portfolio held restricted securities representing 0.1% and 3.6% of net assets, respectively. The restricted securities held as of October 31, 2004 are identified below: <Table> <Caption> ACQUISITION ACQUISITION PRINCIPAL SECURITY DATE COST AMOUNT VALUE($) - -------- ---- ---- ------ -------- HSBC LIMITED MATURITY PORTFOLIO Pacific Gas & Electric Co., 2.72%, 4/3/06, Callable 1/3/05@100............................................... 3/23/2004 $ 69,000 $ 69,000 $ 69,085 HSBC FIXED INCOME PORTFOLIO AIG SunAmerica Global Financing VI, 6.30%, 5/10/11........ 5/2/2001 $ 641,056 $ 642,000 $ 708,035 Anadarko Finance Co., 6.75%, 5/1/11....................... 3/18/2002 1,257,588 1,250,000 1,422,659 Anthem Insurance, 9.125%, 4//1/10......................... 8/1/2000 192,665 205,000 250,713 Anthem Insurance, 9.00%, 4//1/27.......................... 8/6/1997 63,899 60,000 82,066 Anthem Insurance, 9.00%, 4/1/27........................... 3/27/2000 98,016 105,000 143,615 Anthem Insurance, 9.00%, 4/1/27........................... 11/1/2000 113,831 140,000 191,467 Citigroup, Inc., 5.00%, 9/15/14........................... 11/30/2000 244,474 273,307 277,296 Citigroup, Inc., 5.00%, 9/15/14........................... 12/22/2000 448,617 501,693 509,016 DLJ Mortgage Acceptance Corp. IO 97 CFI S, 0.94%, 5/15/30.................................................. 5/16/1997 40,172 710,657 13,066 Farmers Exchange Capital, 7.05%, 7/15/28.................. 1/27/1999 38,692 38,000 38,484 Farmers Exchange Capital, 7.05%, 7/15/28.................. 7/16/1999 124,321 135,000 136,718 Farmers Exchange Capital, 7.05%, 7/15/28.................. 11/7/2000 178,457 215,000 217,736 Farmers Exchange Capital, 8.625%, 5/1/24.................. 5/9/1997 238,212 238,000 277,534 Florida Windstorm, 7.125%, 2/25/19........................ 5/27/1999 7,910 8,000 9,337 Florida Windstorm, 7.125%, 2/25/19........................ 8/7/2000 141,008 150,000 175,064 Florida Windstorm, 7.125%, 2/25/19........................ 11/28/2000 426,488 450,000 525,193 Hutchinson Whampoa Finance CI Ltd., 7.45%, 8/1/17......... 8/13/1998 111,221 132,000 145,403 Hutchinson Whampoa Finance CI Ltd., 7.45%, 8/1/17......... 10/9/1998 91,336 120,000 132,184 Hutchinson Whampoa Finance CI Ltd., 7.45%, 8/1/17......... 2/11/1999 132,765 150,000 165,230 Metropolitan Life Insurance Co., 7.80%, 11/1/25........... 6/2/1999 26,564 25,000 30,762 Metropolitan Life Insurance Co., 7.80%, 11/1/25........... 1/18/2001 250,755 250,000 307,624 RAS Laffan Liquid Natural Gas, 8.29%, 3/15/14............. 11/24/1998 40,930 48,000 57,180 RAS Laffan Liquid Natural Gas, 8.29%, 3/15/14............. 11/25/1998 175,879 200,000 238,252 RAS Laffan Liquid Natural Gas, 8.29%, 3/15/14............. 3/19/2001 100,313 100,000 119,126 </Table> 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, or another appropriate basis. 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. 88 HSBC INVESTOR PORTFOLIOS <Page> HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 (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. Waddell & Reed Investment Management Company, NWQ Investment Management Co., LLC, The Bernstein Unit of Alliance Capital Management L.P. and Westfield Capital Management, LLC serve as Sub-Investment Advisers for the Growth Portfolio, Value Portfolio, International Equity Portfolio and the Small Cap Equity Portfolio, respectively, and are paid for their services directly by HSBC. On January 30, 2004, The Bernstein Unit of Alliance Capital Management L.P. replaced Capital Guardian Trust Company as the Sub-Investment Adviser to the International 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 Waddell & Reed Investment Management Company receive in aggregate, from the Growth 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........................................... 0.500% 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> For their services as Investment Adviser and Sub-Investment Adviser, respectively, HSBC and NWQ Investment Management Co., LLC receive in aggregate, from the Value Portfolio, a fee accrued daily and paid monthly at an annual rate of: <Table> <Caption> BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE - ------------------------------------ -------- Up to $500 million.......................................... 0.525% In excess of $500 million but not exceeding $1 billion...... 0.475% In excess of $1 billion..................................... 0.425% </Table> For their services as Investment Adviser and Sub-Investment Adviser, respectively, HSBC and The Bernstein Unit of Alliance Capital Management L.P. (now known as AllianceBernstein Investment Research and Management) receive in aggregate, from the International Equity Portfolio, a fee accrued daily and paid monthly at an annual rate of: <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. HSBC INVESTOR PORTFOLIOS 89 <Page> HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- OCTOBER 31, 2004 (CONTINUED) ...................................................................... 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, except for the Chief Compliance Officer as described below, 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. BISYS Ohio may directly or through an affiliate, use their fee revenue, past profits, or other revenue sources to pay promotional, administrative, shareholder support, and other expenses to third parties, including broker dealers, in connection with the offer, sale and administration of shares of the Portfolios. In addition, BISYS provides an employee to serve as Chief Compliance Officer for the Portfolios including providing certain related services, for which it receives an additional fee. FUND ACCOUNTING AND CUSTODIAN: BISYS provides fund accounting services for the Portfolios. For its services to the Portfolios, BISYS receives an annual fee, including reimbursement of certain expenses, from each Portfolio accrued daily and paid monthly. HSBC serves as custodian to the Limited Maturity Portfolio, Fixed Income Portfolio, Growth Portfolio, Value Portfolio and Small Cap Equity Portfolio. Investor's Bank & Trust Company serves as custodian to the International Equity Portfolio. Compensation HSBC receives for services to the Portfolios as custodian is presented in the Statement of Operations as custodian fees. 4. INVESTMENT TRANSACTIONS: For the period ended October 31, 2004, each Portfolio purchased and sold securities, excluding short-term securities, in the following amounts: <Table> <Caption> PURCHASES SALES PURCHASES SALES (EXCLUDING U.S. (EXCLUDING U.S. OF U.S. OF U.S. GOVERNMENT) GOVERNMENT) GOVERNMENT GOVERNMENT ----------- ----------- ---------- ---------- Limited Maturity Portfolio........ $ 25,159,916 $ 34,669,535 $10,472,344 $18,849,371 Fixed Income Portfolio............ 19,305,178 53,370,147 38,496,118 46,428,904 Growth Portfolio.................. 65,958,425 20,984,058 -- -- Value Portfolio................... 57,604,451 5,134,629 -- -- International Portfolio........... 229,869,363 225,559,654 -- -- Small Cap Equity Portfolio........ 303,993,798 349,082,782 -- -- </Table> 90 HSBC INVESTOR PORTFOLIOS <Page> REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Trustees of HSBC Investor Portfolios: We have audited the accompanying statements of assets and liabilities of HSBC Investor Limited Maturity Portfolio, HSBC Investor Fixed Income Portfolio, HSBC Investor Growth Portfolio, HSBC Investor Value Portfolio, HSBC Investor International Equity Portfolio and HSBC Investor Small Cap Equity Portfolio (collectively, the Funds), including the schedules of portfolio investments, as of October 31, 2004, and the related statements of operations for the period then ended, the statements of changes in net assets for each period in the two-year period then ended, and the financial highlights for each period in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2004, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Funds as of October 31, 2004, the results of their operations for the period then ended, the changes in their net assets for each period in the two-year period then ended, and the financial highlights for each period in the five- year period then ended, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP Columbus, Ohio December 20, 2004 HSBC INVESTOR FAMILY OF FUNDS 91 <Page> HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- TABLE OF SHAREHOLDER EXPENSES -- OCTOBER 31, 2004 (UNAUDITED) ...................................................................... As a shareholder of the HSBC Investor Funds, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases, reinvested dividends, or other distributions; redemption fees; and exchange fees; (2) ongoing costs, including management fees; distribution [and/or service] 12b-1 fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the HSBC Investor Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from May 1, 2004 through October 31, 2004. ACTUAL EXPENSES The table below provides information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled 'Expenses Paid During Period' to estimate the expenses you paid on your account during this period. <Table> <Caption> BEGINNING ENDING EXPENSE PAID EXPENSE PAID ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD 5/1/04 10/31/04 5/1/04-10/31/04 5/1/04-10/31/04 ------ -------- --------------- --------------- Fixed Income Portfolio...................... 1,000.00 1,060.10 2.70 0.52% Small Cap Portfolio......................... 1,000.00 1,036.60 4.57 0.89% International Portfolio..................... 1,000.00 1,114.70 4.48 0.84% Limited Maturity Portfolio.................. 1,000.00 1,061.30 3.01 0.58% </Table> * Expenses are equal to the average account value times the Fund's annualized expense ratio multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year. ** The following portfolios did not have a full 6 months of expenses during the period and as such are not presented in the table above: Value Portfolio Growth Portfolio 92 HSBC INVESTOR FAMILY OF FUNDS <Page> HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- TABLE OF SHAREHOLDER EXPENSES -- OCTOBER 31, 2004 (CONTINUED) (UNAUDITED) ......................................................................... HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below provides information about hypothetical account values and hypothetical expenses based on each HSBC Investor Funds's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. <Table> <Caption> BEGINNING ENDING EXPENSE PAID EXPENSE PAID ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD 5/1/04 10/31/04 5/1/04-10/31/04 5/1/04-10/31/04 ------ -------- --------------- --------------- Fixed Income Portfolio........................ 1,000.00 1,022.58 2.65 0.52% Small Cap Portfolio........................... 1,000.00 1,020.72 4.53 0.89% International Portfolio....................... 1,000.00 1,020.97 4.28 0.84% Limited Maturity Portfolio.................... 1,000.00 1,022.28 2.96 0.58% </Table> * Expenses are equal to the average account value times the Fund's annualized expense ratio multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year. ** The following portfolios did not have a full 6 months of expenses during the period and as such are not presented in the table above: Value Portfolio Growth Portfolio HSBC INVESTOR FAMILY OF FUNDS 93 <Page> HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- BOARD OF TRUSTEES (UNAUDITED) ...................................................................... The following table contains information regarding HSBC Investor Family of Funds Board of Trustees. Asterisks indicate those Trustees who are 'interested persons,' as defined in the Investment Company Act of 1940, as amended, of the Funds. The Funds' Statement of Additional Information includes additional information about the Trustees and is available by calling (888) 525-5757. <Table> <Caption> TERM OF OFFICE AND NAME, ADDRESS POSITION(S) LENGTH OF TIME AND YEAR OF BIRTH HELD WITH THE FUNDS SERVED WITH THE FUNDS - ---------------------------------------------------------------- Frederick C. Chen Trustee Indefinite; 1990 to P.O. Box 182845 present Columbus, Ohio 43218 Date of Birth: 1927 - ---------------------------------------------------------------- Larry M. Robbins Trustee Indefinite; 1987 to P.O. Box 182845 present Columbus, Ohio 43218 Date of Birth: 1938 - ---------------------------------------------------------------- Alan S. Parsow Trustee Indefinite; 1987 to P.O. Box 182845 present Columbus, Ohio 43218 Date of Birth: 1950 - ---------------------------------------------------------------- Michael Seely Trustee Indefinite; 1987 to P.O. Box 182845 present Columbus, Ohio 43218 Date of Birth: 1945 - ---------------------------------------------------------------- Stephen J. Baker* Trustee Indefinite; March P.O. Box 182845 2004 to present Columbus, Ohio 43218 Date of Birth: 1956 - ---------------------------------------------------------------- Thomas Robards Advisory Board Indefinite; 2004 to P.O. Box 182845 Member present Columbus, Ohio 43218 Date of Birth: 1946 - ---------------------------------------------------------------- <Caption> NUMBER OF PORTFOLIOS IN THE FUND NAME, ADDRESS PRINCIPAL OCCUPATION(S) COMPLEX OVERSEEN OTHER DIRECTORSHIPS AND YEAR OF BIRTH DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE - ----------------------------------------------------------------------------------------------------- Frederick C. Chen Management Consultant, since 1988 32 None P.O. Box 182845 Columbus, Ohio 43218 Date of Birth: 1927 - ----------------------------------------------------------------------------------------------------- Larry M. Robbins Director for the Center of Teaching 32 None P.O. Box 182845 and Learning, University of Columbus, Ohio 43218 Pennsylvania Date of Birth: 1938 - ----------------------------------------------------------------------------------------------------- Alan S. Parsow General Partner of Parsow 32 None P.O. Box 182845 Partnership, Ltd., since 1989 Columbus, Ohio 43218 Date of Birth: 1950 - ----------------------------------------------------------------------------------------------------- Michael Seely President of Investor Access 32 None P.O. Box 182845 Corporation, 1978-present Columbus, Ohio 43218 Date of Birth: 1945 - ----------------------------------------------------------------------------------------------------- Stephen J. Baker* Chief Executive Officer, HSBC Asset 32 None P.O. Box 182845 Management (Americas) Inc., 2003- Columbus, Ohio 43218 present; Chief Executive Officer, Date of Birth: 1956 HSBC Asset Management (Canada) Limited, 1998-2003 - ----------------------------------------------------------------------------------------------------- Thomas Robards Senior Vice President and Chief 32 None P.O. Box 182845 Financial Officer, American Museum Columbus, Ohio 43218 of Natural History, 2003-present; Date of Birth: 1946 Chief Financial Officer, Datek Online Holding Corp., 2000-2003; Executive Vice President and Chief Financial Officer, Republic New York Corporation, 1976-2000 - ----------------------------------------------------------------------------------------------------- </Table> 94 HSBC INVESTOR FAMILY OF FUNDS <Page> HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- BOARD OF TRUSTEES (UNAUDITED) (CONTINUED) ...................................................................... The names of the Officers, their addresses, ages, position(s) held with each Trust, and principal occupation(s) during the past five years are described in the table below. Unless otherwise indicated, the address for each Officer is 3435 Stelzer Road, Columbus, Ohio 43219-3035. OFFICERS <Table> <Caption> TERM OF OFFICE AND NAME, ADDRESS POSITION(S) LENGTH OF TIME PRINCIPAL OCCUPATION(S) AND YEAR OF BIRTH HELD WITH THE FUNDS SERVED WITH THE FUNDS DURING PAST 5 YEARS - ---------------------------------------------------------------------------------------------------------------------------- Richard A. Fabietti President Indefinite; March Senior Vice President, Head of Product Management, HSBC 3435 Stelzer Road 2004-Present Asset Management (Americas) Inc., 1998-Present Columbus, Ohio 43219 Date of Birth: 1958 - ---------------------------------------------------------------------------------------------------------------------------- Mark L. Suter* Vice President Indefinite; Employee of BISYS Fund Services, Inc., 2000-Present; Vice 90 Park Avenue 2000-Present President of Client Services, Seligman Data 1997-1999; Vice 10th Floor President, Capitalink, 1996-1997 New York, NY 10018 Date of Birth: 1962 - ---------------------------------------------------------------------------------------------------------------------------- Salvatore Iocolano Vice President Indefinite; Senior Compliance Officer, HSBC Asset Management (Americas) 452 5th Avenue 2002-Present Inc., 2001-Present; Director of Compliance, KPMG Investment 18th Floor Advisors, 1999-2001; Securities Compliance Examiner, U.S. New York, NY 10018 Securities Exchange Commission, 1995-1998 Date of Birth: 1962 - ---------------------------------------------------------------------------------------------------------------------------- Troy Sheets* Treasurer Indefinite; Employee of BISYS Fund Services, Inc., 2002-Present; Senior 3435 Stelzer Road 2004-Present Manager, KPMG LLP, 1993-2002 Columbus, Ohio 43219 Date of Birth: 1971 - ---------------------------------------------------------------------------------------------------------------------------- Alaina Metz* Assistant Secretary Indefinite; Employee of BISYS Fund Services, Inc., 1995-Present 3435 Stelzer Road 1996-Present Columbus, Ohio 43219 Date of Birth: 1967 - ---------------------------------------------------------------------------------------------------------------------------- Frederick J. Schmidt* Chief Compliance Expires 2005; Senior Vice President and Chief Compliance Officer, CCO 90 Park Avenue Officer 2004-Present Services of BISYS Fund Services, 2004-Present; President, 10th Floor FJS Associates, 2002-2004; Vice President, Credit Agricole New York, NY 10016 Asset Management, U.S., 1987-2002 - ---------------------------------------------------------------------------------------------------------------------------- </Table> - --------- * Messrs. Suter, Sheets and Schmidt and Ms. Metz also are officers of certain other investment companies of which BISYS or an affiliate is the administrator. HSBC INVESTOR FAMILY OF FUNDS 95 <Page> PRIVACY POLICY FOR HSBC INVESTOR FUNDS AND HSBC ADVISOR FUNDS TRUST - -------------------------------------------------------------------------------- THIS PRIVACY POLICY NOTICE SUMMARIZES THE COLLECTION AND DISCLOSURE OF NONPUBLIC PERSONAL INFORMATION ('INFORMATION') OF CUSTOMERS ('YOU') OF THE HSBC INVESTOR FAMILY OF FUNDS ('WE' OR 'US'). IF YOU ARE AN INDIVIDUAL SHAREHOLDER OF RECORD OF ANY SERIES OF THE FUNDS, WE CONSIDER YOU TO BE A CUSTOMER OF THE HSBC INVESTOR FAMILY OF FUNDS. SHAREHOLDERS PURCHASING OR OWNING SHARES OF ANY OF THE HSBC INVESTOR FAMILY OF FUNDS THROUGH THEIR BANK, BROKER, OR OTHER FINANCIAL INSTITUTION SHOULD CONSULT THAT FINANCIAL INSTITUTION'S PRIVACY POLICIES. WE COLLECT THE FOLLOWING CATEGORIES OF INFORMATION ABOUT YOU - -------------------------------------------------------------------------------- We collect Information about you from the following sources: information we receive from you on applications or other forms; information about your transactions with us, our affiliates, or others; and information we receive from a consumer reporting agency. WE DISCLOSE THE FOLLOWING CATEGORIES OF INFORMATION ABOUT YOU - -------------------------------------------------------------------------------- We do not disclose any Information about you or any former customer to anyone, except as permitted by law, including to our affiliates and third party service providers. WE DISCLOSE INFORMATION ABOUT YOU TO THE FOLLOWING TYPES OF THIRD PARTIES - -------------------------------------------------------------------------------- We may disclose Information about you and any former customer to our affiliates, which we consider to include HSBC Bank USA, HSBC Asset Management (Americas) Inc. and their affiliates, and to nonaffiliated third parties, as permitted by law. We may disclose all of the Information we collect to companies that perform marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. PROTECTING THE SECURITY AND CONFIDENTIALITY OF YOUR INFORMATION - -------------------------------------------------------------------------------- We restrict access to Information about you to those employees who need to know that information to provide products or services to you. We maintain physical, electronic, and procedural safeguards that comply with federal standards to guard your Information. 96 HSBC INVESTOR FAMILY OF FUNDS <Page> A description of the policies and procedures that the Funds use to determine how to vote proxies relating to the portfolio securities is available without charge, upon request, by calling 1-800-525-5757 for HSBC Bank USA and HSBC Brokerage (USA) Inc. clients and 1-800-782-8183 for all other shareholders or on the Fund's website at www.investorfunds.us.hsbc.com and the Securities and Exchange Commission's website at http://www.sec.gov. A copy of the Fund's voting record for the 12-month period ending June 30, 2004 is available at the SEC's website at www.sec.gov. Schedules of Portfolio Investments for fiscal quarters ending January 31 and July 31 will be available no later than 60 days after period end, without charge, on the Fund's website at www.investorfunds.us.hsbc.com and on the Securities and Exchange Commission's website at http://www.sec.gov. <Page> [THIS PAGE INTENTIONALLY LEFT BLANK] HSBC Investor Family of funds: INVESTMENT ADVISER HSBC Asset Management (Americas) Inc. 452 Fifth Avenue New York, NY 10018 SUB-ADVISERS HSBC Investor Growth Portfolio Waddell & Reed Investment Management Company 6300 Lamar Avenue Overland Park, KS 66202 HSBC Investor Value Portfolio NWQ Investment Management Co., LLC 2049 Century Park East, 4th Floor Los Angeles, CA 90067 HSBC Investor International Equity Portfolio AllianceBernstein Investment Research and Management 1345 Avenue of the Americas, 39th Floor New York, NY 10105 HSBC Investor Small Cap Equity Portfolio Westfield Capital Management Company 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 Growth Portfolio HSBC Investor Value Portfolio 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 REGISTERED PUBLIC ACCOUNTING Firm KPMG LLP 191 West Nationwide Blvd., Suite 500 Columbus, OH 43215 LEGAL COUNSEL Dechert LLP 1775 Eye Street, N.W. Washington, D.C. 20006 The HSBC Investor Family of Funds are distributed by 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. HSB-0008 12/04 Item 2. Code of Ethics. Disclose whether, as of the end of the period covered by the report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. If the registrant has not adopted such a code of ethics, explain why it has not done so. The registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. This code of ethics is included as Exhibit 11 (a)(1). The registrant must briefly describe the nature of any amendment, during the period covered by the report, to a provision of its code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item. The registrant must file a copy of any such amendment as an exhibit pursuant to Item 11(a)(1), unless the registrant has elected to satisfy paragraph (f) of this Item by posting its code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by undertaking to provide its code of ethics to any person without charge, upon request, pursuant to paragraph (f)(3) of this Item. If the registrant has, during the period covered by the report, granted a waiver, including an implicit waiver, from a provision of the code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more items set forth in paragraph (b) of this Item, the registrant must briefly describe the nature of the waiver, the name of the person to whom the waiver was granted, and the date of the waiver. During the period covered by the report, with respect to the registrant's code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions; there have been no amendments to, nor any waivers granted from, a provision that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item 2. Item 3. Audit Committee Financial Expert. (a) (1) Disclose that the registrant's board of directors has determined that the registrant either: (i) Has at least one audit committee financial expert serving on its audit committee; or (ii) Does not have an audit committee financial expert serving on its audit committee. (2) If the registrant provides the disclosure required by paragraph (a)(1)(i) of this Item, it must disclose the name of the audit committee financial expert and whether that person is "independent." In order to be considered "independent" for purposes of this Item, a member of an audit committee may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: (i) Accept directly or indirectly any consulting, advisory, or other compensatory fee from the issuer; or (ii) Be an "interested person" of the investment company as defined in Section 2(a)(19) of the Act (15 U.S.C. 80a- 2(a)(19)). (3) If the registrant provides the disclosure required by paragraph (a)(1)(ii) of this Item, it must explain why it does not have an audit committee financial expert. 3(a)(1) The registrant's board of directors has determined that the registrant has at least one audit committee financial expert serving on its audit committee. 3(a)(2) The audit committee financial expert is Frederick C. Chen who is "independent" for purposes of this Item 3 of Form N-CSR. Item 4. Principal Accountant Fees and Services. (a) Disclose, under the caption Audit Fees, the aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. 2003 $165,450 2004 $200,230 (b) Disclose, under the caption Audit-Related Fees, the aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. 2003 $47,900 2004 $36,130 2003- Fees of $30,000 relate to the preparation and review of the Funds' 17f-2 filings, $10,000 relates to an N14 filing, $4,000 relates to a PEA No. 83 filing and $3,900 relates to the consent of the annual N-1A filing. 2004- Fees of $31,980 relate to the preparation and review of the Funds' 17f-2 filings and $4,150 relates to the consent of the annual N-1A filing. (c) Disclose, under the caption Tax Fees, the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. Registrants shall describe the nature of the services comprising the fees disclosed under this category. 2003 $89,250 2004 $108,115 Fees for both 2003 and 2004 relate to the preparation of federal income and excise tax returns and the review of excise taxes. (d) Disclose, under the caption All Other Fees, the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. 2003 $0 2004 $0 (e) (1) Disclose the audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. Except as permitted by Rule 2-01(c)(7)(i)(C) of Regulation S-X, the Trust's Audit Committee must preapprove all audit and non-audit services by the independent accountants relating to the operations or financial reporting of the Funds. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law. (2) Disclose the percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. None of the services summarized in (b)-(d), above, were approved by the audit Committee pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X. (f) If greater than 50 percent, disclose the percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees. Not applicable. (g) Disclose the aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant. 2003 $137,150 2004 $144,245 (h) Disclose whether the registrant's audit committee of the board of directors has considered whether the provision of nonaudit services that were rendered to the registrant's investment adviser (not including any subadviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. Not applicable. Item 5. Audit Committee of Listed Registrants. (a) If the registrant is a listed issuer as defined in Rule 10A-3 under the Exchange Act (17CFR 240.10A-3), state whether or not the registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)). If the registrant has such a committee, however designated, identify each committee member. If the entire board of directors is acting as the registrant's audit committee as specified in Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)), so state. (b) If applicable, provide the disclosure required by Rule 10A-3(d) under the Exchange Act (17CFR 240.10A-3(d)) regarding an exemption from the listing standards for all audit committees. Not applicable. Item 6. Schedule of Investments. File Schedule I - Investments in securities of unaffiliated issuers as of the close of the reporting period as set forth in 'SS' 210.12-12 of Regulation S-X, unless the schedule is included as part of the report to shareholders filed under Item 1 of this Form. Not applicable. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. A closed-end management investment company that is filing an annual report on this Form N-CSR must, unless it invests exclusively in non-voting securities, describe the policies and procedures that it uses to determine how to vote proxies relating to portfolio securities, including the procedures that the company uses when a vote presents a conflict between the interests of its shareholders, on the one hand, and those of the company's investment adviser; principal underwriter; or any affiliated person (as defined in Section 2(a)(3) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules thereunder) of the company, its investment adviser, or its principal underwriter, on the other. Include any policies and procedures of the company's investment adviser, or any other third party, that the company uses, or that are used on the company's behalf, to determine how to vote proxies relating to portfolio securities. Not applicable. Item 8. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. If the registrant is a closed-end management investment company, provide the information specified in paragraph (b) of this Item with respect to any purchase made by or on behalf of the registrant or any "affiliated purchaser," as defined in Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of shares or other units of any class of the registrant's equity securities that is registered by the registrant pursuant to Section 12 of the Exchange Act (15 U.S.C. 781). Not applicable. Item 9. Submission of Matters to a Vote of Security Holders. Describe any material changes to the procedures by which shareholders may recommend nominees to the registrant's board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or this Item. Not applicable. Item 10. Controls and Procedures. (a) Disclose the conclusions of the registrant's principal executive and principal financial officers, or persons performing similar functions, regarding the effectiveness of the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Act (17 CFR 270.30a-3(c))) as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act (17 CFR 240.13a-15(b) or 240.15d-15(b)). The registrant's principal executive officer and principal financial officer have concluded, based on their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant on Form N-CSR is (i) accumulated and communicated to the investment company's management, including its certifying officers, to allow timely decisions regarding required disclosure; and (ii) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. (b) Disclose any change in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. There were no changes in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected or are reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 11. Exhibits. (a) File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated. (a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit. The code of ethics that is the subject of the disclosure required by Item 2 is attached hereto. (a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2). Certifications pursuant to Rule 30a-2(a) are attached hereto. (a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable. (b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by rule 30a-2(b) under the Act as an exhibit. A certification furnished pursuant to this paragraph will not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant incorporates it by reference. Certifications pursuant to Rule 30a-2(b) are furnished herewith. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) HSBC Advisor Funds Trust ------------------------------------------------------------------- By (Signature and Title) /s/ Richard A. Fabietti -------------------------------------------------------- Richard A. Fabietti President Date January 10, 2005 ---------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title) /s/ Richard A. Fabietti -------------------------------------------------------- Richard A. Fabietti President Date January 10, 2005 ---------------------- By (Signature and Title) /s/ Troy Sheets -------------------------------------------------------- Troy Sheets Treasurer Date January 10, 2005 ---------------------- STATEMENT OF DIFFERENCES The section symbol shall be expressed as................................. 'SS'