UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-07583
HSBC ADVISOR FUNDS TRUST
(Exact name of registrant as specified in charter)
452 FIFTH AVENUE
NEW YORK, NY 10018
(Address of principal executive offices)
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, 2005
Date of reporting period: April 30, 2005
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).
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Semi-Annual Report
[GRAPHIC] HSBC Investor
Family of Funds
April 30, 2005
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]
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Table of Contents
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HSBC Investor Family of Funds
Semi-Annual Report - April 30, 2005
Glossary of Terms
Chairman's Message................................. 1
Commentary From the Investment Manager............. 2
Portfolio Reviews.................................. 4
Schedules of Portfolio Investments
HSBC Investor New York Tax-Free Bond Fund... 24
HSBC Investor Growth and Income Fund........ 27
HSBC Investor Mid-Cap Fund.................. 28
Statements of Assets and Liabilities............... 29
Statements of Operations........................... 31
Statements of Changes in Net Assets................ 33
Financial Highlights............................... 45
Notes to Financial Statements...................... 57
Table of Shareholder Expenses...................... 68
Shareholder Meeting Results........................ 71
HSBC Investor Portfolios
Schedules of Portfolio Investments
HSBC Investor Limited Maturity Portfolio..... 73
HSBC Investor Fixed Income Portfolio......... 75
HSBC Investor Growth Portfolio............... 78
HSBC Investor Value Portfolio................ 79
HSBC Investor International Equity Portfolio. 80
HSBC Investor Small Cap Equity Portfolio..... 83
Statements of Assets and Liabilities............... 84
Statements of Operations........................... 86
Statements of Changes in Net Assets................ 88
Financial Highlights............................... 91
Notes to Financial Statements...................... 92
Table of Shareholder Expenses...................... 101
Shareholder Meeting Results........................ 103
Glossary of Terms
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Gross Domestic Product Growth (GDP) is the measure of the market value of the
goods and services produced by labor and property in the United States.
Lehman Brothers U.S. Aggregate Bond Index is an unmanaged index generally
representative of the investment-grade debt issues with at least one year to
final maturity.
Lehman Brothers Intermediate Aggregate Bond Index is an unmanaged index
generally representative of investment-grade issues with maturities between
three and ten years.
Lehman Brothers New York Municipal Bond Index is an index composed of investment
grade New York tax-exempt securities, all having a $50 million minimum maturity
value.
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 Large-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 greater than 300% of
the dollar-weighted median market capitalization of the S&P 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 Multi-Cap Value Funds Average represents returns based on the average
return of all funds in the Lipper Multi-Cap Value Funds category for the periods
noted. Funds in the Lipper Average invest in a variety of market capitalization
ranges without concentrating 75% of their equity assets in any one market
capitalization range over an extended period of time. Multi-cap funds
typically have between 25% and 75% of their assets invested in companies with
market capitalizations (on a three-year weighted basis) above 300% of the
dollar-weighted median market capitalization of the middle 1,000 securities of
the S&P SuperComposite 1500 Index. Multi-cap value funds typically have a
below-average price-to-earnings ratio, price-to-book ratio, and three-year
sales-per-share growth value compared with the S&P SuperComposite 1500 Index.
Lipper N.Y. Municipal Debt Funds Average is an average of managed funds that
invest at least 65% of their assets in municipal debt issues that are exempt
from taxation in New York or a city in New York.
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.
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'r' Growth Index is an unmanaged index which measures the
performance of securities found in the Russell universe that fall in the
mid-range sector.
Russell 1000'r' Growth Index is 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'r' Value Index is unmanaged index which measures the performance of
the 1,000 largest of the 3,000 largest U.S.-domiciled companies (based on total
market capitalization) with lower price-to-book ratios and lower forecasted
growth values.
Russell 2500'r' Growth Index is an unmanaged index of the companies in the
Russell 2500'r' Index (the 2,500 smallest companies in the Russell 3000'r'
Index) with higher price-to-book ratios and higher 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.
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.
Chairman's Message
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Dear Fellow Shareholders:
Recent developments in corporate governance underscore the importance of
diligence by all parties involved in managing mutual funds. The Board of
Trustees of the HSBC Investor Funds takes very seriously the issues faced by
the industry, especially those demanding higher standards of conduct.
The Board is working closely with Fund Managers and Advisors to ensure that your
funds continue to comply with all pertinent laws and regulatory requirements on
issues such as contract renewals, fee structures and appropriate expenditures
needed to maintain the funds effectively.
While maintaining the integrity of the Funds' financial and managerial
activities, the Board takes seriously its responsibility to deliver
superior performance. The Board continuously reviews investment practices and
results in order to guarantee that the Funds' investments reflect the objectives
stated in the prospectus and that performance shows steady improvement. We are
also working with management and counsel to evaluate the performance of all
parties, including investment managers, service providers and our own
activities.
We believe that clear communication will help develop and maintain your
confidence. We look forward to continuing to communicate with you-the Funds'
most important asset. If you have any questions, suggestions or concerns, please
contact us through the Funds at:
HSBC Investor Funds
PO Box 182845
Columbus, OH 43218-2845
All of us who are involved in managing the HSBC Investor Funds welcome your
participation; and, especially on behalf of the Board, we thank you for your
continuing involvement.
Yours truly,
Larry M. Robbins
Larry M. Robbins
Chairman
HSBC INVESTOR FAMILY OF FUNDS 1
Commentary From the Investment Manager
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HSBC Investments (USA) Inc.
U.S. Economic Review
The United States economy generated solid growth during the six-month period
ended April 30, 2005. Healthy consumer and business spending helped offset the
negative influences of high energy prices and rising interest rates.
The Federal Reserve Board (the "Fed") prior to the period had gradually
increased its target federal funds rate, in an effort to prevent the kind of
excessive monetary stimulus that could lead to higher inflation. That reduction
in stimulus combined with rising oil prices to restrain the economy leading into
this period. Nonetheless, economic data in November indicated that the economy
was growing faster than had been anticipated, as low mortgage rates continued to
buttress strong consumer spending. Gross domestic product ("GDP")(1) increased
by an annualized rate of 3.8% during the fourth quarter of 2004 and by 4.4% for
2004 as a whole.
Oil prices declined in November and December, but resumed their increases during
2005. Higher energy prices acted as a brake on the economy, helping prevent a
significant rise in inflation. Meanwhile, the Fed maintained its policy of
gradually raising short-term interest rates throughout this six-month period.
Even so, signs of rising inflation emerged during early spring, as businesses
appeared to gain pricing power as they passed higher costs to consumers. The
economy appeared to soften around this time, but strong subsequent data
suggested that economic growth remained on a solid footing.
Corporate profits were very strong early in the period. Earnings grew 20% during
the fourth quarter of 2004, well ahead of the 15.2% consensus estimate. Profit
growth moderated during early 2005, as corporations digested slower revenue
growth and higher costs. Even so, first-quarter 2005 earnings came in well above
consensus estimates. Corporations flush with cash looked to generate top-line
growth through mergers and acquisitions. They also increased hiring during the
early months of 2005. The unemployment rate dipped to 5.2% as of the end of
March.
Global economies produced mixed results during the period. GDP of Eurozone
countries grew 1.7% during 2004, weighed down by weaker-than-expected
fourth-quarter growth. Those countries' economies are expected to grow slowly
during 2005 as well. Economies in Europe suffered from stalled consumer demand,
relatively weak export demand and high oil prices. Japan's economy improved
slightly during this period, but a leading economic indicator suggested that
that economy's growth would slow going forward. China's economy continued to
expand at a blistering pace, and Brazil generated its largest GDP increase in
recent years.
Market Environment
The stock market rallied during November and December, then declined during the
four months through April. A number of factors sparked stocks' early surge. The
resolution of political uncertainty following the presidential election helped
clear investors' outlook, and economic data and earnings reports came in
stronger than expected. Meanwhile, declining oil prices during late 2004
appeared to reduce the chance that energy costs would imperil economic growth.
Nearly all stock-market sectors generated strong gains during November and
December, and the major market indices closed 2004 at their highest levels in
more than three years.
Oil prices' renewed rise during January encouraged investors to take profits.
Investors also sold stocks on fears of slowing profit growth, which were
reinforced when several technology and telecommunications services announced
weak results. Stocks gained slightly in February, as mergers and acquisitions
activity picked up and energy stocks surged on continued strength in oil prices.
The market declined during March and April, however, as investors worried about
slowing profit growth, higher interest rates, inflation, possible weakness in
consumer spending and the ongoing effects of higher oil prices.
Value stocks generally outperformed growth across all size categories, from
small-cap to large-cap. Value's superior performance stemmed in part from the
surge in energy stocks, and also got a boost from investors' preference for
dividend-paying securities. Strong gains among chemical, tobacco and utilities
stocks also boosted value indices' returns. Meanwhile, shares of technology
firms suffered from soft demand, while rising interest rates weighed on
financial-services stocks. Large-cap stocks took over market leadership from
small-cap stocks, marking a significant trend reversal.
European markets produced some of the strongest dollar-denominated returns among
developed foreign countries. Asian markets generated solid gains in local
currencies. Their currencies declined against the dollar during the first
quarter of 2005, however, diminishing returns for U.S. investors. Emerging
markets generally produced healthy gains during the period.
2 HSBC INVESTOR FAMILY OF FUNDS
Commentary From the Investment Manager - (continued)
- ------------------------------------------------------------------------------
HSBC Investments (USA) Inc.
Bonds performed poorly during the six months through April. Rising short-term
interest rates pushed up yields on short-term bonds, causing their prices to
decline. Yields on long-term bonds were flat or down during much of the period,
but climbed significantly during early spring after investors became concerned
about signs of rising inflation.
High-yield corporate bonds suffered from major automakers' profit warnings and
credit downgrades during the spring of 2005. Those developments also hurt
emerging markets bonds and other credit-sensitive instruments. Bonds that tend
to hold up well during periods of rising interest rates, such as mortgage-backed
securities and floating-rate loans, generally outperformed other fixed-income
issues.
(1) For additional information, please refer to the Glossary of Terms.
HSBC INVESTOR FAMILY OF FUNDS 3
Portfolio Reviews
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HSBC Investor Limited Maturity Fund
(Class A Shares, B Shares, C Shares and Y Shares)
by John B. Cuccia
Portfolio Manager
HSBC Investments (USA) Inc.
The HSBC Investor Limited Maturity Fund (the "Fund") seeks to realize
above-average total return, consistent with reasonable risk, by investing in a
diversified investment grade portfolio of U.S. government obligations, corporate
bonds and mortgage-backed securities. The Fund utilizes a two tier structure,
commonly known as "master-feeder," in which the Fund invests all of its
investable assets in the HSBC Investor Limited Maturity Portfolio (the
"Portfolio").
Investment Concerns
Bonds offer a relatively stable level of income, although bond prices will
fluctuate providing the potential for principal gain or loss. Intermediate-term,
higher-quality bonds generally offer less risk than longer-term bonds and a
lower rate of return.
Market Commentary
The Fund returned 0.24%, (without sales charge) for the Class A Shares and 0.26%
for the Class Y Shares during the six month period ended April 30, 2005. That
compared to a return of 0.62% for the Lehman Brothers Intermediate Aggregate
Bond Index.
Past performance is no guarantee of future results.
The economy continued to expand at a moderate pace during the 4th quarter of
2004 and 1st quarter of 2005 growing at a rate of 3.8% and 3.5%, respectively.
The Federal Reserve Board (the "Fed") maintained a gradual approach to raising
the target federal funds rate increasing the target rate by 25 basis points
(0.25%) at each meeting since the Fed's first increase of the current cycle,
which began on June 30, 2004. On a cumulative basis, the Fed has increased the
target fed funds rate by 200 basis points (2.00%) with the last increase in the
target rate occurring on May 3, 2005.
The yields on most short-dated U.S. Treasury securities increased in lock step
with the federal funds rate rising by about 1% from October 31, 2004 to April
30, 2005. The yield on the three-month U.S. Treasury Bill closed at 2.9% on
April 30, while the yield on the two-year U.S. Treasury security ended at 3.65%.
Changing investor expectations about inflationary pressures and the level of
economic activity caused intra-period volatility, but weaker economic indicators
in April led investors to reduce the inflation risk premium embedded in
intermediate and long-term U.S. Treasury securities. As a result, the yield
curve continued to flatten with the yield on the thirty-year U.S. Treasury
security declining by 30 basis points (0.30%) to end the period at 4.51%. The
yield on the five-year U.S. Treasury increased 59 basis points (0.59%) to 3.90%
and the yield on the ten-year U.S. Treasury security increased 15 basis points
(0.15%) to 4.20%.
Despite strong performance through February, corporate bonds ended the period
with poor relative performance as yield premiums increased among most corporate
bonds. A confluence of factors including disappointing operating performance by
companies within the automotive sector and a greater focus on shareholder value
by many companies led investors to demand higher yield premiums. General Motors
and Ford provided the biggest drag on the corporate bond market as both
companies announced disappointing results and reduced expectations for the full
year. The rise in corporate yield premiums filtered through to other market
sectors as investors realigned valuations across sectors. Though the
government-related and securitized sectors experienced the ripple effects of
widening in corporate bond yield premiums, these sectors were able to outpace,
on a duration-adjusted basis, the return provided by U.S. Treasury securities
during the period.*
Performance Review
A defensive duration position, a barbelled yield curve strategy, higher-than
benchmark position in mortgage-backed securities and a neutral weighting in
corporate bonds all benefited the fund's absolute and relative-to-benchmark
total return over the semi-annual period. The stable cash flow provided by the
Fund's investment in mortgage securities also contributed to performance as
mortgage backed securities outperformed U.S. Treasury securities on duration
weighted basis. Price declines from the rise in yields on short-to-intermediate
U.S. Treasuries and the widening yield premiums in certain corporate bonds
held in the fund detracted from relative performance during the period. As
corporate bond yield premiums rose in March and April, we increased our target
weighting to 30% with opportunistic purchases of select corporate issuers
such as Berkshire Hathaway, GE, May Department Stores, Merck and Time Warner.
Additionally, as the spread between the ten-year and thirty-year U.S. Treasury
declined, we transitioned the Fund to a neutral yield curve strategy from
our barbelled position.*
4 HSBC INVESTOR FAMILY OF FUNDS
Portfolio Reviews
- -------------------------------------------------------------------------------
HSBC Investor Limited Maturity Fund - As of April 30, 2005
Going forward we will continue to position the portfolio defensively. We believe
that current income levels do not adequately cushion fixed income investors
against the prospect of price declines that would occur with a rise in interest
rates. As a result, we have positioned the portfolio with a lower sensitivity to
a change in interest rates than that of the Funda(euro)'TM's benchmark. We also
remain concerned about the level of yield premiums on corporate bonds and
securitized debt. While we are positioned defensively, we continue to find
select opportunities as outlined above with the recent corporate bond purchases.
It is in periods like now, that we believe it is important to remind our
investors of the benefits of active management. Current valuations allow us to
construct a portfolio where, we believe, the investor is less exposed to some of
the risks in the market.*
* Portfolio composition is subject to change.
<Table>
<Caption>
Fund Performance Average Annual Return
- --------------------------------------------------------------------------------------------------------
As of April 30, 2005 Inception 6 1 3 Since
Date Month Year Year Inception
- --------------------------------------------------------------------------------------------------------
HSBC Investor Limited Maturity Fund Class A(1) 2/7/01 -4.50% -1.63% 2.61% 3.57%
- --------------------------------------------------------------------------------------------------------
HSBC Investor Limited Maturity Fund Class B(2) 2/15/01 -4.14% -1.52% 2.91% 3.96%
- --------------------------------------------------------------------------------------------------------
HSBC Investor Limited Maturity Fund Class C(3) 2/13/01 -1.10% 1.56% 3.56% 3.93%
- --------------------------------------------------------------------------------------------------------
HSBC Investor Limited Maturity Fund Class Y 1/23/01 0.26% 3.47% 4.56% 5.15%
- --------------------------------------------------------------------------------------------------------
Lehman Brothers Intermediate Aggregate Bond Index -- 0.62% 4.27% 5.12% --
- --------------------------------------------------------------------------------------------------------
Lipper Intermediate Investment-Grade Funds Average(4) -- 0.75% 4.51% 5.27% --
- --------------------------------------------------------------------------------------------------------
</Table>
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. 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 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.
HSBC INVESTOR FAMILY OF FUNDS 5
Portfolio Reviews
- ------------------------------------------------------------------------------
HSBC Investor Fixed Income Fund
HSBC Investor Bond Fund (Class A Shares, B Shares and C Shares)
by Jerry Samet
Senior Portfolio Manager
HSBC Investments (USA) 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.
Market Commentary
For the six month period ended April 30, 2004, the shares of the HSBC Investor
Fixed Income Fund produced a 1.29% total return, and the Class A Shares of the
HSBC Investor Bond Fund returned 1.11% (without sales charge). That compared
favorably to the return of 0.98% provided by the Lehman Brothers U.S. Aggregate
Bond Index.
Past performance is no guarantee of future results.
The economy continued to expand at a moderate pace during the 4th quarter of
2004 and 1st quarter of 2005 growing at a rate of 3.8% and 3.5%, respectively.
The Federal Reserve Board (the "Fed") maintained a gradual approach to raising
the target federal funds rate increasing the target rate by 25 basis points
(0.25%) at each meeting since the Fed's first increase of the current cycle,
which began on June 30, 2004. On a cumulative basis, the Fed has increased the
target fed funds rate by 200 (2.00%) basis points with the last increase in the
target rate occurring on May 3, 2005.
The yields on most short-dated U.S. Treasury securities increased in lock step
with the federal funds rate rising by about 1% from October 31, 2004 to April
30, 2005. The yield on the three-month U.S. Treasury Bill closed at 2.9% on
April 30, while the yield on the two-year U.S. Treasury security ended at 3.65%.
Changing investor expectations about inflationary pressures and the level of
economic activity caused intra-period volatility, but weaker economic indicators
in April led investors to reduce the inflation risk premium embedded in
intermediate and long-term U.S. Treasury securities. As a result, the yield
curve continued to flatten with the yield on the thirty-year U.S. Treasury
security declining by 30 basis points (0.30%) to end the period at 4.51%. The
yield on the five-year U.S. Treasury increased 59 basis points (0.59%) to 3.90%
and the yield on the ten-year U.S. Treasury security increased 15 basis points
(0.15%) to 4.20%.
Despite strong performance through February, corporate bonds ended the period
with poor relative performance as yield premiums increased among most corporate
bonds. A confluence of factors including disappointing operating performance by
companies within the automotive sector and a greater focus on shareholder value
by many companies led investors to demand higher yield premiums. General Motors
and Ford provided the biggest drag on the corporate bond market as both
companies announced disappointing results and reduced expectations for the full
year. The rise in corporate yield premiums filtered through to other market
sectors as investors realigned valuations across sectors. Though the
government-related and securitized sectors experienced the ripple effects of
widening in corporate bond yield premiums, these sectors were able to outpace,
on a duration-adjusted basis, the return provided by U.S. Treasury securities
during the period.*
Performance Review
A defensive duration position, a barbelled yield curve strategy and a neutral
weighting in corporate bonds all benefited the fund's absolute and
relative-to-benchmark return over the semi-annual period. Price declines from
the rise in yields on short-to-intermediate U.S. Treasuries and the widening of
corporate bond yield premiums were cushioned by the fund's income return. As
corporate bond yield premiums rose in March and April, we increased our target
weighting to 30% with opportunistic purchases of select corporate issuers such
as Berkshire Hathaway, GE, May Department Stores, Merck and Time Warner.
Additionally, as the spread between the ten-year and thirty-year U.S. Treasury
declined, we transitioned the Fund to a neutral yield curve strategy from our
barbelled position.*
Going forward we will continue to position the portfolio defensively. We believe
that current income levels do not adequately cushion fixed income investors
against the prospect of price declines that would occur with a rise in
6 HSBC INVESTOR FAMILY OF FUNDS
Portfolio Reviews
- -------------------------------------------------------------------------------
HSBC Investor Fixed Income Fund
HSBC Investor Bond Fund - As of April 30, 2005
interest rates. As a result, we have positioned the portfolio with a
lower sensitivity to a change in interest rates than that of the Fund's
benchmark. We also remain concerned about the level of yield premiums on
corporate bonds and securitized debt. While we are positioned defensively, we
continue to find select opportunities as outlined above with the recent
corporate bond purchases. It is in periods like now, that we believe it is
important to remind our investors of the benefits of active management. Current
valuations allow us to construct a portfolio where, we believe, the investor is
less exposed to some of the risks in the market, and, as a result, the investor
is positioned to earn above benchmark returns over the market cycle.
* Portfolio composition is subject to change.
<Table>
<Caption>
Fund Performance Average Annual Return
- -----------------------------------------------------------------------------------------------------
Inception 6 1 5 10 Since
As of April 30, 2005 Date Month Year Year Year Inception
- -----------------------------------------------------------------------------------------------------
HSBC Investor Fixed Income Fund 1/9/95 1.29% 5.34% 7.38% 6.95% 7.28%
- -----------------------------------------------------------------------------------------------------
HSBC Investor Bond Fund Class A(1) 8/26/96 -3.71% 0.02% 5.83% -- 5.62%
- -----------------------------------------------------------------------------------------------------
HSBC Investor Bond Fund Class B(2) 1/6/98 -3.23% 0.14% 6.05% -- 4.72%
- -----------------------------------------------------------------------------------------------------
HSBC Investor Bond Fund Class C(3) 11/4/98 -0.16% 3.25% 6.08% -- 4.78%
- -----------------------------------------------------------------------------------------------------
Lehman Brothers U.S. Aggregate Bond Index -- 0.98% 5.26% 7.49% 7.14% --
- -----------------------------------------------------------------------------------------------------
Lipper General Bond Funds Average(4) -- 0.78% 4.30% 6.18% 7.22% --
- -----------------------------------------------------------------------------------------------------
</Table>
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. 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 are measured against the Lehman Brothers U.S. Aggregate Bond Index, an
unmanaged index which represents the U.S. investment-grade fixed-rate bond
market (including government and corporate securities, mortgage pass-through
securities and asset-backed securities). 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 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.
HSBC INVESTOR FAMILY OF FUNDS 7
Portfolio Reviews
- --------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund
(Class A Shares, B Shares, C Shares and Y Shares)
by Jerry Samet
Senior Fixed Income Portfolio Manager
HSBC Investments (USA) 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.
Market Commentary
The Fund delivered a total return of 0.93% (without sales charge) for Class A
Shares and 1.06% for Class Y Shares for the six month period ended April 30,
2005. That compared to 1.74% for the Fund's benchmark, the Lehman Brothers New
York Municipal Bond Index.
Past performance is no guarantee of future results.
For the six month period, the municipal market outperformed the taxable market
on a pre-tax total return basis. The return of the Lehman Brothers Muni Bond
Index(4) was 1.93% while the return of the Lehman Brothers U.S. Aggregate
Index(4) was 0.98%. Relative outperformance in the municipal market came despite
the municipal market having a duration that on average was approximately 8%
longer than that of the Lehman Brothers Aggregate over the course of the period.
The outperformance highlighted the change in shape of the yield curve over the
period. Treasury as well as municipal yield curves flattened dramatically with
yields on two-year and five-year Treasuries moving 110 (1.10%) and 61 basis
points (0.61%) higher. In contrast, the Ten-year was just 17 basis points
(0.17%) higher while thirty-year bonds actually moved 28 basis points (0.28%)
lower. In tax-exempts, two-year municipal yields were 87 basis points (0.87%)
higher; five-year municipals were 42 basis points (0.42%) higher. Ten-year
municipal yields moved 22 basis points (0.22%) higher while thirty-year bonds
were 10 basis points (0.10%) lower. However, the composition of the municipal
index is more heavily weighted toward longer-term securities along the yield
curve. Approximately 56% of its term-structured weighting is composed of
securities beyond ten years while the Lehman Brothers Aggregate possesses only
13% of its holdings beyond 10 years.
The Fund's duration at the beginning of the period approximated 94% of benchmark
but over the period gravitated down to 88% of benchmark and was one of the key
factors that helped drive the Fund's strong performance relative to benchmark.
The portfolio also maintained a barbelled position, which helped performance as
the longer and shorter portions of the curve outperformed the intermediate
portion of the curve. However, negatively impacting performance was the
portfolio's high credit quality profile. This tended to take away from
performance as many lower rated credits outperformed due to increased revenue
flows to municipal authorities and improved municipal balance sheets. This
manifested itself in the positive upgrade to downgrade ratio from the rating
agencies. An example of lower rated credit, favorable developments in tobacco
litigation helped drive the IDR/PCR sector (Baa2 average rating) to outperform
the broader Revenue Bond Index (Aa2 average rating) by 488 basis points
(4.88%).*
Fiscal year 2004 saw state tax revenues grow by 7.5%. Other than 1992 this was
the largest increase in nominal growth on record. After adjusting for the impact
of inflation and tax increases the growth rate increased by 3.2% after two
straight years of decline. Revenue sources were broad based as personal income
taxes, corporate income taxes and sales tax revenues all increased together for
the first time since fiscal year 2000. However, we remain concerned about
deteriorating fundamentals. Structural headwinds going forward include Medicaid
spending which once again is expected to show double digit increases.
Additionally, increases in education spending, employee health care and pension
liabilities will pressure local governments. Also, recently there has been an
increased dependency upon one-time budget items that are non-recurring to fix
municipal balance sheets. Furthermore, with many local municipal authorities
having just gone through a period of tax increases the political capital for
further increases may have been spent. Going forward New York municipalities
will be faced with either raising taxes or cutting spending in order to bring
about fiscal balance owing to the fact that state revenues are still
approximately 8% lower than their highs achieved in 2000.
8 HSBC INVESTOR FAMILY OF FUNDS
Portfolio Reviews
- -------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund - As of April 30, 2005
Once again the State of New York was a proxy of fundamental credit
conditions across the country. Moodys put the state's rating as well as its
appropriated debt on positive outlook. At A2 by Moodys and AA by S&P,
New York remains the lowest rated state in the nation with the exception
of California. New York City, the second largest municipal issuer behind
the State of California, also received an upgrade by Moodys to A1. These two
major upgrades were enough to upgrade the average rating of the Lehman
Brothers New York Municipal Bond Index from AA2 to AA1.'D'
We believe the portfolio remains positioned for a rising yield environment
and a flattening yield curve. 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 56 to an approximate spread range of 35-40. The
portfolio will continue to barbell. We will continue to overweight the
10-20 year portion of the yield curve, which could 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 overweight 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.
<Table>
<Caption>
Fund Performance Average Annual Return
- ------------------------------------------------------------------------------------------------------
Inception 6 1 5 Since
As of April 30, 2005 Date Month Year Year Inception
- ------------------------------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund Class A(1) 5/1/95 -3.82% -0.08% 4.81% 5.02%
- ------------------------------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund Class B(2) 1/6/98 -3.41% 0.21% 5.06% 3.92%
- ------------------------------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund Class C(3) 11/4/98 -0.43% 3.10% 5.02% 3.62%
- ------------------------------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund Class Y 7/1/96 1.06% 5.15% 6.11% 5.57%
- ------------------------------------------------------------------------------------------------------
Lehman Brothers New York Municipal Bond Index -- 1.74% 6.48% 6.97% --
- ------------------------------------------------------------------------------------------------------
Lipper New York Municipal Debt Funds Average(4) -- 1.75% 6.13% 6.32% --
- ------------------------------------------------------------------------------------------------------
</Table>
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. 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 New York Tax Exempt Index,
an unmanaged index composed of investment grade New York tax-exempt securities,
all having a $50 million minimum maturity value. The 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 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.
HSBC INVESTOR FAMILY OF FUNDS 9
Portfolio Reviews
- --------------------------------------------------------------------------------
HSBC Investor Growth Fund
(Class A Shares, B Shares, C Shares and Y Shares)
by Phil Sanders, Senior Vice President/Portfolio Manager, CFA and
Dan Becker, Senior Vice President/Portfolio Manager, CFA
Waddell & Reed Investment Management Company
The HSBC Investor Growth Fund (the "Fund") is part of a "master/feeder" fund
structure and invests all of its assets in the HSBC Investor Growth Portfolio,
which acts as the master fund. Waddell & Reed Investment Management Company
(Waddell & Reed) is the sub-adviser to the Fund. Waddell and Reed's large cap
growth strategy seeks to identify quality firms with strong potential for long
term profitability and long term earnings growth.
The Fund seeks long-term growth of capital by investing primarily in U.S. and
foreign equity securities of high quality companies with market capitalization
generally in excess of $2 billion, which the sub-adviser believes have the
potential to generate superior levels of long-term profitability and growth.
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.
Market Commentary
The Fund delivered a total return of 0.49% (without sales charge) for Class A
Shares and 0.60% for the Class Y Shares for the six month period ended April 30,
2005. That compared to a 1.14% return for the Fund's benchmark, the
Russell 1000'r' Growth Index.
Past performance is no guarantee of future results.
Large-cap growth stocks posted solid gains early in the period, after the
resolution of the presidential election removed uncertainties that had clouded
investors' outlooks. Large growth stocks pulled back considerably during
the second half of this six month period, as higher energy prices, interest
rates and commodities costs called into question the sustainability of
the economic recovery. That environment led to near-flat returns for both
this Fund and its benchmark.
The Fund's sub-advisor began de-emphasizing shares of economically
sensitive firms prior to this period, in anticipation of moderating growth
in profits and the economy. That approach led the managers to reduce the
Funda's technology-sector exposure modestly, to a position smaller than
that of the benchmark. The underweight technology stake boosted returns relative
to the benchmark, as technology stocks did not keep pace with the index during
this period. Furthermore, the focus on shares of firms that could provide
reliable earnings growth helped the Fund's technology allocation
outperform the technology stocks in the benchmark.*
Stock selection within the financial-services sector also strengthened the
Funda's relative returns. The managers focused on shares of capital-markets
firms, student loan providers and asset managers, rather than interest-rate
sensitive bank stocks. That emphasis helped the Fund's financial-services
stocks outperform the financial stocks in the index by a wide margin:
Financial-services stocks in the Russell 1000'r' Growth Index lost
approximately 5% during this period, while the Fund's financials stake
gained roughly 5%.
An underweight position in the relatively strong-performing health care sector
weighed on returns against the benchmark, while selection of health-care stocks
also dragged on relative performance. This Fund emphasizes shares of firms with
strong competitive advantages and high profit margins. Within health care this
approach typically leads the Fund to hold shares of medical device and
pharmaceuticals companies, as opposed to hospitals and other medical services
firms. That positioning hurt relative performance during this six month period,
as hospitals and medical services stocks led the health care sector.*
Stock selection in the consumer discretionary sector also dampened relative
gains. The sub-advisor focused in that sector on shares of firms with strong
franchises, but some of those stocks suffered due to fears about potential
weakness in consumer spending.
* Portfolio composition is subject to change.
10 HSBC INVESTOR FAMILY OF FUNDS
Portfolio Reviews
- -------------------------------------------------------------------------------
HSBC Investor Growth Fund - As of April 30, 2005
<Table>
<Caption>
Fund Performance Aggregate Return
- -------------------------------------------------------------------------------
Inception 6 Since
As of April 30, 2005 Date Month Inception
- -------------------------------------------------------------------------------
HSBC Investor Growth Fund Class A(1) 5/10/04 -4.53% -4.53%
- -------------------------------------------------------------------------------
HSBC Investor Growth Fund Class B(2) 5/10/04 -3.92% -4.32%
- -------------------------------------------------------------------------------
HSBC Investor Growth Fund Class C(3) 5/10/04 -0.84% -1.24%
- -------------------------------------------------------------------------------
HSBC Investor Growth Fund Class Y 5/10/04 0.60% 0.68%
- -------------------------------------------------------------------------------
Russell 1000'r' Growth Index -- -1.14% --
- -------------------------------------------------------------------------------
Lipper Large-Cap Growth Funds Average(4) -- 0.93% --
- -------------------------------------------------------------------------------
</Table>
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. 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 Russell 1000'r' Growth Index, an unmanaged
index which measures the performance of the securities found in the Russell
universe with higher price-to-book ratios and higher forecasted growth values.
The index does not reflect the deduction of expenses associated with a mutual
fund, such as investment management and fund accounting fees. The Fund's
performance reflects the deduction of fees for these 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.
HSBC INVESTOR FAMILY OF FUNDS 11
Portfolio Reviews
- -------------------------------------------------------------------------------
HSBC Investor Value Fund
(Class A Shares, B Shares, C Shares and Y Shares)
by Jon D. Bosse, CFA, Chief Investment Officer and
E.C. (Ted) Friedel, CFA, Managing Director
NWQ Investment Management Co., LLC
The HSBC Investor Value Fund (the "Fund") is part of a "master/feeder" fund
structure and invests all of its assets in the HSBC Investor Value Portfolio,
which acts as the master fund. NWQ Investment Management Company, LLC (NWQ) is
the subadviser to the Fund. NWQ seeks undervalued large and mid capitalization
companies with identifiable catalysts expected to improve profitability and/or
unlock value.
The Fund seeks long-term growth of capital and income by investing primarily in
U.S. and foreign companies with large and medium capitalizations that possess
hidden opportunities underpriced by the market.
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. Value-based investments are subject to
the risk that the broad market may not recognize their intrinsic value.
Market Commentary
For the six month period ended April 30, 2005, the shares of the HSBC Investor
Value Fund delivered a total return of 5.94% (without sales charge) for the
Class A Shares and 6.07% for the Class Y Shares. The Fund's benchmark, the
Russell 1000'r' Value Index, returned 6.72%.
Past performance does not guarantee future results.
Early in the period, the Fund's holdings rallied in response to a combination
of factors, including attractive security valuations, positive corporate
announcements and improved political and economic visibility. However, higher
oil prices and the Federal Reserve's acknowledgment of inflation risks for the
first time in this business cycle weighed on stock prices during early 2005,
offsetting some of the Fund's strong previous gains.
Stock selection played the largest role in boosting the Fund's returns relative
to its benchmark index. For example, the Fund held an underweight position in
the energy sector, reflecting the sub-advisor's concerns about high valuations
in the sector. However, security selection, particularly among shares of energy
exploration and production firms, more than offset the negative effect of the
underweight position.*
Stock selection in the health care sector also boosted the Fund's performance
relative to the benchmark. The Fund held an overweight position in shares of
managed-care firms, which benefited from improving fundamentals in that
industry.*
The Fund over-weighted technology stocks relative to the Russell 1000 Value
Index during this period. Technology shares posted strong gains during the
fourth quarter of 2004, but declined during early 2005, as business conditions
appeared to deteriorate. The Portfolio's relatively large technology stake
weighed on returns relative to the benchmark for the period as a whole.*
* Portfolio composition is subject to change.
12 HSBC INVESTOR FAMILY OF FUNDS
Portfolio Reviews
- -------------------------------------------------------------------------------
HSBC Investor Value Fund - As of April 30, 2005
<Table>
<Caption>
Fund Performance Aggregate Return
- -------------------------------------------------------------------------------
Inception 6 Since
As of April 30, 2005 Date Month Inception
- -------------------------------------------------------------------------------
HSBC Investor Value Fund Class A(1) 5/10/04 0.67% 7.58%
- -------------------------------------------------------------------------------
HSBC Investor Value Fund Class B(2) 5/10/04 1.51% 8.47%
- -------------------------------------------------------------------------------
HSBC Investor Value Fund Class C(3) 5/10/04 4.57% 11.43%
- -------------------------------------------------------------------------------
HSBC Investor Value Fund Class Y 5/10/04 6.07% 13.65%
- -------------------------------------------------------------------------------
Russell 1000'r' Value Index -- 6.72% --
- -------------------------------------------------------------------------------
Lipper Multi-Cap Value Funds Average(4) -- 5.18% --
- -------------------------------------------------------------------------------
</Table>
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. 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 Russell 1000'r' Value Index, an unmanaged
index generally representative of the performance of small-capitalization
stocks. 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 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.
HSBC INVESTOR FAMILY OF FUNDS 13
Portfolio Reviews
- -------------------------------------------------------------------------------
HSBC Investor Growth and Income Fund
(Class A Shares, B Shares, C Shares and Y Shares)
by Thomas D'Auria, CFA
Chief Investment Officer - U.S. Equities
HSBC Investments (USA) Inc.
Effective April 18, 2005, the Fund is being subadvised by Transamerica
Investment Management, LLC (TIM). Prior to that, HSBC Investments (USA) Inc.
managed the Fund's investments. The following commentary was prepared by HSBC
Investments (USA) Inc. incorporating TIM's future outlook.
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.
Market Commentary
The Fund returned 2.44% (without sales charge) for the Class A Shares and 2.53%
for the Class Y Shares for the six month period ended April 30, 2005. That
compared to a 3.28% return for the S&P 500 Index.
Past performance is no guarantee future results.
The Fund underperformed versus the S&P 500 for the six month period November
2004 through April 30, 2005 due to stock selection. Stock selection for the
Information Technology, Energy, Financials, Consumer Staples and Telecom
Services sectors detracted from performance as Healthcare and Consumer
Discretionary contributed towards performance. Best performing stocks included
Well Point Inc., Altria Group, Caremark Rx, Phelps Dodge & Prudential. Poor
performing stocks included eBay, Fannie Mae, Qualcomm, Harley-Davidson & BMC
Software.*
The major U.S. equity market indices were mixed during the period, as the S&P
500 rose 3.3% during the six month period ended April 30, 2005, while the NASDAQ
Composite Index(4) returned -2.70%.
The equity markets traded in a narrow range during most of the period, rising
during November and December on the back of strong economic reports and a
Republican sweep in the November elections. However, by early January, we had
grown concerned that the markets had moved upwards too quickly; and were not
surprised to see a pause in the rally, followed by a flat to downwards drift in
the past four months. In the face of a Federal Reserve that has boosted
short-term rates at eight consecutive Federal Open Market Committee meetings
dating back to June 2004, we are encouraged at the resiliency in the equity
markets.
While corporate profits remained strong during the first quarter, this was
overshadowed by expectations of rapidly slowing growth during the next several
quarters along with fears of a "soft patch" in the economy. These concerns
helped to pull stocks down from early-year highs.
We have been more optimistic on the equity markets for the past month or so,
based on our belief that fears over inflation have peaked, and that energy
prices should moderate going forward. We believe lower long rates and milder
energy prices could lead to a boost in business activity after the recent
slowdown.
We continue to favor stocks with high quality earnings, growing at a moderate
pace (stable growers). Those companies with excess cash flows who have the
ability to raise payouts are also favored. We believe stable growers could
outperform as earnings decelerate.*
We do not think inflation is as worrisome as it is being portrayed in the
headlines. Rates are only rising in the U.S. at the short-end. The conundrum
Greenspan has talked about is simply long-bond investors focusing on inflation
expectations and pricing the long bond accordingly.
Finally, we believe large-caps could outperform the broader market after five
years of underperformance. The 50 largest-cap companies are selling in line with
small-cap companies for the first time since the mid-90's and we believe these
companies are more likely to deliver higher returns over the next few years.*
* Portfolio composition is subject to change.
14 HSBC INVESTOR FAMILY OF FUNDS
Portfolio Reviews
- ------------------------------------------------------------------------------
HSBC Investor Growth and Income Fund - As of April 30, 2005
<Table>
<Caption>
Fund Performance Average Annual Return
- --------------------------------------------------------------------------------------------------------
Inception 6 1 3 Since
As of April 30, 2005 Date Month Year Year Inception
- --------------------------------------------------------------------------------------------------------
HSBC Investor Growth and Income Fund Class A(1) 4/12/01 -2.67% -1.68% -0.33% -4.00%
- --------------------------------------------------------------------------------------------------------
HSBC Investor Growth and Income Fund Class B(2) 4/5/01 -1.82% -1.23% 0.00% -2.79%
- --------------------------------------------------------------------------------------------------------
HSBC Investor Growth and Income Fund Class C(3) 11/3/03 1.01% 1.72% N/A 3.76%
- --------------------------------------------------------------------------------------------------------
HSBC Investor Growth and Income Fund Class Y 4/2/01 2.53% 3.64% 1.62% -1.75%
- --------------------------------------------------------------------------------------------------------
Standard & Poor's 500 Index -- 3.28% 6.33% 4.24% --
- --------------------------------------------------------------------------------------------------------
Lipper Large-Cap Growth Funds Average(4) -- 0.93% 1.11% 0.38% --
- --------------------------------------------------------------------------------------------------------
</Table>
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. 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.
HSBC INVESTOR FAMILY OF FUNDS 15
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 Investments (USA) Inc.
Effective April 18, 2005, the Fund is being sub-advised by Munder Capital
Management (Munder). Prior to that, HSBC Investments (USA) Inc. managed the
Fund's investments. The following commentary was prepared by HSBC Investments
(USA) Inc. incorporating Munder's future outlook.
The HSBC Investor Mid-Cap Fund (the "Fund") seeks to achieve a higher rate of
return than that generated by the Russell MidCap'r' 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(R) 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.
Market Commentary
The Fund's Class A Shares posted a return of 5.33% (without sales charge) and
5.40% for the Trust Shares for the six month period ended April 30, 2005. That
compares to 4.07% for the Fund's benchmark, the Russell MidCap'r' Growth Index.
Past performance does not guarantee future results.
The Fund outperformed both the benchmark and the peer group during this period
due to superior stock selection in the Consumer Discretionary, Financials and
Healthcare sectors.*
The major U.S. equity market indices were mixed during the period, as the S&P
500 rose 3.3% during the six-month period ended April 30, 2005, while the NASDAQ
Composite Index4 returned -2.70%.
The equity markets traded in a narrow range during most of the period, rising
during November and December on the back of strong economic reports and a
Republican sweep in the November elections. However, by early January, we had
grown concerned that the markets had moved upwards too quickly; and were not
surprised to see a pause in the rally, followed by a flat to downwards drift in
the past four months. In the face of a Federal Reserve that has boosted
short-term rates at eight consecutive Federal Open Market Committee meetings
dating back to June 2004, we are encouraged at the resiliency in the equity
markets.
While corporate profits remained strong during the first quarter, this was
overshadowed by expectations of rapidly slowing growth during the next several
quarters along with fears of a "soft patch" in the economy. These concerns
helped to pull stocks down from early-year highs.
We have been more optimistic on the equity markets for the past month or so,
based on our belief that fears over inflation have peaked, and that energy
prices should moderate going forward. We believe lower long rates and milder
energy prices could lead to a boost in business activity after the recent
slowdown.
We continue to favor stocks with high quality earnings, growing at a moderate
pace (stable growers). Those companies with excess cash flows who have the
ability to raise payouts are also favored. We believe stable growers could
outperform as earnings decelerate.
We do not think inflation is as worrisome as it is being portrayed in the
headlines. Rates are only rising in the U.S. at the short-end. The conundrum
Greenspan has talked about is simply long-bond investors focusing on inflation
expectations and pricing the long bond accordingly.
We anticipate that analysts' expectations for growth will also ratchet down,
leading to negative earnings revisions. In an environment of slowing earnings
growth and a decline in projected earnings, high quality companies are likely to
show relative strength, with cyclical names being more negatively impacted. Our
discipline has a strong focus on quality companies, and we believe that the
discipline should do relatively well in a stock picker's market.
* Portfolio composition is subject to change.
16 HSBC INVESTOR FAMILY OF FUNDS
Portfolio Reviews
- ------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund - As of April 30, 2005
<Table>
<Caption>
Fund Performance Average Annual Return
- -------------------------------------------------------------------------------------------------------
Inception 6 1 5 Since
As of April 30, 2005 Date'D' Month Year Year Inception
- -------------------------------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund Class A(1) 7/1/93 0.11% 2.54% -2.42% 10.42%
- -------------------------------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund Class B(2) 7/1/93 1.02% 2.99% -2.15% 10.15%
- -------------------------------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund Class C(3) 7/1/93 3.87% 5.95% -2.04% 10.21%
- -------------------------------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund Trust 7/1/93 5.40% 8.06% -1.19% 11.25%
- -------------------------------------------------------------------------------------------------------
Russell MidCap'r' Growth Index -- 4.07% 7.05% -6.15% 9.38%
- -------------------------------------------------------------------------------------------------------
Lipper Mid-Cap Growth Funds Average(4) -- 1.68% 3.94% -6.03% 8.21%
- -------------------------------------------------------------------------------------------------------
</Table>
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. 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 Investments (USA) 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'r' Growth Index, an unmanaged
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 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 services. Investors cannot
invest directly in an index, although they can invest in its underlying
securities.
HSBC INVESTOR FAMILY OF FUNDS 17
Portfolio Reviews
- -------------------------------------------------------------------------------
HSBC Investor International Equity Fund
HSBC Investor Overseas Equity Fund (Class A Shares, B Shares and C Shares)
by Kevin F. Simms
Co-CIO International Value Equities and Director of Research--Global
and International Value Equities AllianceBernstein Investment Research
and Management
The HSBC Investor International Equity Fund and the HSBC Investor
Overseas Equity Fund (the "Funds") seek to provide their shareholders
with long-term growth of capital and future income by investing primarily in
securities of non-U.S. issuers and securities of issuers whose principal markets
are outside of the United States. The Funds employ a two-tier fund structure,
known as "master-feeder," in which the Funds invest all of their investable
assets in the HSBC Investor International Equity Portfolio (the "Portfolio").
The Portfolio employs Bernstein, 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.
Market Commentary
For the six month period ended April 30, 2005, the shares of the HSBC Investor
International Equity Fund produced a 8.71% return, and the Class A Shares
of the HSBC Investor Overseas Equity Fund returned 8.29% (without sales charge).
That compared to a total return of 8.71% for the Funds' benchmark, the
Morgan Stanley Capital International, Europe, Australasia and Far East Index.
Past performance does not guarantee future results.
Global stock markets generated strong returns during this period. Foreign
companies have significantly improved their cost structures during recent years,
particularly in Europe and Japan. Those improvements have allowed the firms to
increase profits more quickly than expected during a period of moderate economic
growth. Corporations around the world produced positive earnings surprises, and
stocks benefited.
An overweight position in industrial commodities stocks helped the Fund perform
inline with its benchmark. That position included a relatively large weighting
in shares of steel manufacturers, which performed especially well as powerful
demand from China and the developed world contributed to strong pricing power in
the steel industry. The Fund also benefited from an underweight position in the
telecommunications sector. The portfolio managers held a relatively small stake
in that sector due to concerns about increased capacity and eroding profit
margins.*
Strong stock selection in a number of industries also boosted returns against
the benchmark. For example, the Fund held a large stake in shares of a German
tire maker, and the stock surged on lower costs and growth in the firm's
brakes business. Shares of a Japanese tobacco company helped the Fund's
relative returns as well, as investors in the Japanese market retreated to
such defensive stocks in the face of slowing economic growth. Strong
performance by shares of a cost-cutting French insurance company also
benefited relative gains.*
Certain currency movements had negative effects on the Fund's relative
returns. This Fund held approximately 10% of its assets in emerging-markets
stocks during this period. Currencies in emerging markets generally appreciated
against the dollar, but not as rapidly as currencies in developed foreign
markets. That disparity gave the Fund a smaller currency lift than the benchmark
experienced, hampering relative gains. Currency movements also weighed on the
Fund's overweight position in automobile stocks, because the dollar's weakness
cut into profit margins at foreign carmakers that sell in the U.S.*
Poor performance at individual aluminum and paper stocks also hampered relative
returns. Pricing in the aluminum industry was weaker than expected, possibly
because of higher than anticipated capacity, so the Fund's managers
reduced the portfolio's position in aluminum stocks. Meanwhile, prices
for paper did not strengthen as much as expected during this six-month period.
The Fund's managers believe that pricing power will improve, however,
so they maintained the portfolio's stake in the paper industry during
the period.
* Portfolio composition is subject to change.
18 HSBC INVESTOR FAMILY OF FUNDS
Portfolio Reviews
- -------------------------------------------------------------------------------
HSBC Investor International Equity Fund
HSBC Investor Overseas Equity Fund - As of April 30, 2005
<Table>
<Caption>
Fund Performance Average Annual Return
- -------------------------------------------------------------------------------------------------------------
Inception 6 1 5 10 Since
As of April 30, 2005 Date Month Year Year Year Inception
- -------------------------------------------------------------------------------------------------------------
HSBC Investor International Equity Fund 1/9/95 8.71% 19.69% -3.03% 8.41% 8.47%
- -------------------------------------------------------------------------------------------------------------
HSBC Investor Overseas Equity Fund Class A(1) 8/26/96 2.90% 12.91% -4.29% N/A 6.25%
- -------------------------------------------------------------------------------------------------------------
HSBC Investor Overseas Equity Fund Class B(2) 1/6/98 3.80% 13.90% -4.07% N/A 5.35%
- -------------------------------------------------------------------------------------------------------------
HSBC Investor Overseas Equity Fund Class C(3) 11/4/98 6.81% 16.90% -4.07% N/A 5.43%
- -------------------------------------------------------------------------------------------------------------
MSCI EAFE Index -- 8.71% 14.95% -0.55% 4.77% --
- -------------------------------------------------------------------------------------------------------------
Lipper International Large-Cap Core Average(4) -- 7.37% 12.01% -3.28% 5.17% --
- -------------------------------------------------------------------------------------------------------------
</Table>
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. 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 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.
HSBC INVESTOR FAMILY OF FUNDS 19
Portfolio Reviews
- ------------------------------------------------------------------------------
HSBC Investor Small Cap Equity Fund
HSBC Investor Opportunity Fund (Class A Shares, B Shares and C Shares)
by William A. Muggia
President-Chief Investment Officer
Westfield Capital Management
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.
Market Commentary
For the six months ended April 30, 2005, the shares of the HSBC Investor Small
Cap Equity Fund produced a 0.61% return and the Class A Shares of the HSBC
Investor Opportunity Fund produced a 0.27% return (without sales charge). The
Funds' benchmark, the Russell 2500'r' Growth Index, returned 1.12%.
Past performance does not guarantee future results.
Small stocks performed well during the first two months of the period, following
the resolution of the presidential election and a decline in energy prices. But
small caps declined from January through April, as investors worried about a
renewed rise in energy costs, higher interest rates and slower profit growth.
Defensive sectors such as utilities, energy and consumer staples led the
small-cap market during the period, while technology and financial-services
stocks lagged.
The Fund's managers and analysts located growth opportunities prior to the
period in the energy, materials and industrials sectors--sections of the market
that are not traditionally associated with growth investing. The Fund during the
recent period continued to hold an overweight position in energy stocks, which
boosted performance against the benchmark. Stock selection in the materials
sector also lifted relative returns, as the Fund's holdings of coal and steel
stocks benefited from high demand and low supplies for those materials.
Individual security selection in the industrials sector also helped returns
against the index.*
The managers' selection among technology stocks boosted relative returns as
well. This Fund seeks shares of reasonably-valued, high-quality firms, and does
not invest in speculative stocks. That focus on quality helped the Fund's
technology stake significantly outperform the technology stocks in the benchmark
during the six month period.*
The Fund held an overweight position in shares of health-care firms throughout
this period, partially due to the managers' belief that long-term demographic
trends are favorable for this sector, particularly in growing niches such as
biotechnology. That sector generally produced solid performance, but poor
returns among certain pharmaceutical and biotechnology stocks weighed on the
Fund's relative returns.*
The performance of the Fund's consumer-discretionary holdings also weighed on
returns against the benchmark. Losses at shares of specialty stores and media
firms particularly dragged on relative returns. Moreover, the Fund's managers
held a relatively small stake in shares of clothing retailers because the
industry exhibited overcapacity and high stock valuations. Those stocks managed
to post healthy gains, however, which also hurt the Fund's returns against the
benchmark. A sell-off in regional bank stocks hurt the Fund's financial services
allocation, also weighing on relative returns.*
* Portfolio composition is subject to change.
20 HSBC INVESTOR FAMILY OF FUNDS
Portfolio Reviews
- -------------------------------------------------------------------------------
HSBC Investor Small Cap Equity Fund
HSBC Investor Opportunity Fund - As of April 30, 2005
<Table>
<Caption>
Fund Performance Average Annual Return
- -------------------------------------------------------------------------------------------------------
Inception 6 1 5 Since
As of April 30, 2005 Date Month Year Year Inception
- -------------------------------------------------------------------------------------------------------
HSBC Investor Small Cap Equity Fund 9/3/96 0.61% 4.53% -0.92% 9.80%
- -------------------------------------------------------------------------------------------------------
HSBC Investor Opportunity Fund Class A(1) 9/23/96 -4.70% -1.17% -2.54% 7.51%
- -------------------------------------------------------------------------------------------------------
HSBC Investor Opportunity Fund Class B(2) 1/6/98 -4.09% -0.89% -2.28% 6.23%
- -------------------------------------------------------------------------------------------------------
HSBC Investor Opportunity Fund Class C(3) 11/4/98 -1.10% 2.28% -2.27% 7.12%
- -------------------------------------------------------------------------------------------------------
Russell 2500'r' Growth Index -- 1.12% 2.65% -4.98% --
- -------------------------------------------------------------------------------------------------------
Lipper Mid-Cap Growth Funds Average(4) -- 1.68% 3.94% -6.03% --
- -------------------------------------------------------------------------------------------------------
</Table>
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. 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 Russell 2500'r' Growth Index, an unmanaged
index of the companies in the Russell 2500'r' Index (the 2,500 smallest
companies in the Russell 3000'r' Index) with higher price-to-book ratios and
higher forecasted growth values. The performance of the index does not reflect
the deduction of expenses associated with a mutual fund, such as investment
management and fund accounting fees. The Funds' performance reflects the
deduction of fees for these 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.
HSBC INVESTOR FAMILY OF FUNDS 21
Portfolio Reviews
- --------------------------------------------------------------------------------
Portfolio Composition
April 30, 2005
(Unaudited)
HSBC Investor Limited Maturity Portfolio
- --------------------------------------------------
Security Allocation Percentage of Market Value
- --------------------------------------------------
U.S. Government Agencies 54.3%
Corporate Bond 33.4%
Asset Backed Securities 7.1%
Repurchase Agreements 2.7%
U.S. Treasury Notes 2.0%
Cash 0.5%
- --------------------------------------------------
Total 100.0%
HSBC Investor Fixed Income Portfolio
- --------------------------------------------------
Security Allocation Percentage of Market Value
- --------------------------------------------------
U.S. Government Agencies 42.7%
Corporate Bond 35.3%
Asset Backed Securities 8.0%
U.S. Treasury Securities 7.2%
Collateralized Mortgage
Obligations 4.1%
Municipal Bond 1.7%
Cash 1.0%
- --------------------------------------------------
Total 100.0%
HSBC Investor New York Tax Free Bond Fund
- --------------------------------------------------
Security Allocation Percentage of Market Value
- --------------------------------------------------
Municipal Bonds 92.1%
Variable Rate Notes 7.2%
Cash 0.7%
- --------------------------------------------------
Total 100.0%
Portfolio composition is subject to change.
HSBC Investor Growth Portfolio
- --------------------------------------------------
Security Allocation Percentage of Market Value
- --------------------------------------------------
Health Care 21.8%
Information Technology 18.7%
Financials 16.2%
Industrials 11.3%
Consumer Discretionary 9.8%
Consumer Staples 7.1%
Energy 6.2%
Cash 5.5%
Repurchase Agreements 2.1%
Telecommunication Services 1.3%
- --------------------------------------------------
Total 100.0%
HSBC Investor Value Portolio
- --------------------------------------------------
Security Allocation Percentage of Market Value
- --------------------------------------------------
Financials 26.7%
Industrials 13.3%
Energy 11.1%
Information Technology 10.5%
Repurchase Agreements 8.4%
Consumer Staples 8.3%
Consumer Discretionary 6.8%
Materials 4.7%
Telecommunication Services 4.5%
Cash 3.1%
Health Care 2.6%
- --------------------------------------------------
Total 100.0%
HSBC Investor Growth and Income Fund
- --------------------------------------------------
Security Allocation Percentage of Market Value
- --------------------------------------------------
Financials 8.2%
Industrials 17.3%
Consumer Discretionary 15.9%
Health Care 13.6%
Information Technology 12.4%
Energy 10.4%
Consumer Staples 4.2%
Telecommunication Services 3.9%
Utilities 3.2%
Materials 0.9%
- --------------------------------------------------
Total 100.0%
22 HSBC INVESTOR FAMILY OF FUNDS
Portfolio Reviews
- --------------------------------------------------------------------------------
Portfolio Composition
April 30, 2005
(Unaudited)
HSBC Investor Mid-Cap Fund
- --------------------------------------------------
Security Allocation Percentage of Market Value
- --------------------------------------------------
Consumer Discretionary 25.2%
Industrials 20.6%
Energy 14.4%
Financials 13.2%
Health Care 12.4%
Information Technology 6.8%
Telecommunication Services 4.8%
Consumer Staples 1.5%
Cash 1.1%
- --------------------------------------------------
Total 100.0%
HSBC Investor International Equity Portfolio
- --------------------------------------------------
Security Allocation Percentage of Market Value
- --------------------------------------------------
Europe 61.1%
Japan 22.1%
Australia and Far East 8.4%
Other 8.0%
Cash 0.4%
- --------------------------------------------------
Total 100.0%
Portfolio composition is subject to change.
HSBC Investor Small Cap Equity Portfolio
- --------------------------------------------------
Security Allocation Percentage of Market Value
- --------------------------------------------------
Health Care 22.5%
Information Technology 21.3%
Industrials 18.6%
Energy 13.1%
Consumer Discretionary 10.0%
Financials 6.6%
Materials 3.8%
Repurchase Agreements 2.1%
Telecommunications 2.0%
- --------------------------------------------------
Total 100.0%
HSBC INVESTOR FAMILY OF FUNDS 23
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED)
......................................................................
<Table>
<Caption>
- ---------------------------------------------------------------
MUNICIPAL BONDS - 91.3%
PRINCIPAL
AMOUNT($) VALUE($)
--------- ----------
NEW YORK - 84.7%
Brookhaven, New York GO (FGIC Insured),
5.50%, 10/1/12, ECON Defeased to Call,
10/01/06 @102......................... 500,000 528,655
Buffalo, New York Fiscal Stability
Authority (FSA Insured), 5.25%,
8/15/13............................... 500,000 563,645
Corning City, New York School District
GO (FSA Insured), 4.00%, 6/15/08...... 930,000 960,550
Corning City, New York School District
GO (FSA Insured), 5.00%, 6/15/09...... 790,000 849,519
Erie County, New York GO (FGIC
Insured), 5.375%, 6/15/07............. 250,000 254,540
Grand Central New York District
Management, 4.00%, 1/1/07............. 400,000 406,988
Guilderland, New York Central School
District GO (FSA Insured), 3.50%,
6/15/05............................... 250,000 250,295
Metropolitan Transportation Authority
of New York Revenue (FGIC Insured),
5.25%, 7/1/17, Prerefunded 7/1/08
@ 100.5............................... 1,145,000 1,232,970
Metropolitan Transportation Authority
of New York Revenue (FGIC Insured),
5.50%, 11/15/19....................... 1,000,000 1,169,010
Metropolitan Transportation Authority
of New York Revenue (FSA Insured),
5.00%, 11/15/32, Callable 11/15/12
@ 100................................. 1,625,000 1,693,347
Metropolitan Transportation Authority
of New York Revenue (MBIA Insured),
5.50%, 1/1/19, Callable 7/1/12
@ 100................................. 480,000 535,565
Metropolitan Transportation Authority
of New York Revenue, Escrowed to
Maturity, 5.75%, 7/1/13............... 285,000 319,571
Monroe County, New York, Airport
Authority Revenue, AMT (MBIA Insured),
5.625%, 1/1/10........................ 1,240,000 1,350,372
Monroe County, New York, Airport
Authority Revenue, AMT (MBIA Insured),
5.75%, 1/1/14......................... 750,000 843,578
Nassau County New York, Series S
(AMBAC Insured), 5.125%, 3/1/13,
Prerefunded 03/01/06 @ 103............ 2,900,000 3,043,840
New York City GO, 5.00%, 8/1/05........ 1,000,000 1,005,930
New York City GO, 5.00%, 8/1/08........ 990,000 1,049,351
New York City GO, 5.00%, 8/1/14........ 200,000 217,218
New York City GO, 6.00%, 8/1/14,
Callable 8/1/07 @ 101................. 980,000 1,045,003
New York City GO, 6.00%, 8/1/14,
Prerefunded 8/1/07 @ 101.............. 20,000 21,550
New York City Housing Development Corp.
Revenue, AMT, 5.60%, 11/1/19.......... 100,000 104,262
New York City Industrial Development
Agency (FSA Insured), 5.00%, 11/15/19,
Callable 5/1/30 @ 100................. 1,000,000 1,078,470
New York City Municipal Assistance
Corp. Revenue, 6.00%, 7/1/06, (Econ
Defeased to Maturity)................. 735,000 763,114
New York City Municipal Water Authority
Revenue, 5.00%, 6/15/34, Callable
6/15/13 @ 100......................... 1,250,000 1,298,988
<Caption>
- ---------------------------------------------------------------
MUNICIPAL BONDS, CONTINUED
PRINCIPAL
AMOUNT($) VALUE($)
--------- ----------
New York City Municipal Water Finance
Authority, 5.00%, 6/15/36, Callable
12/15/14 @ 100........................ 1,000,000 1,044,150
New York City Transitional Finance
Authority Revenue, 5.25%, 5/1/17,
Callable 5/1/11 @ 100................. 400,000 436,192
New York City Transitional Finance
Authority Revenue, 5.25%, 2/1/29,
Callable 2/1/11 @ 100................. 1,540,000 1,672,609
New York NY Series G, 5.00%, 12/1/13... 1,000,000 1,089,120
New York State Dormitory Authority
Revenue, City University, 5.00%,
7/1/06................................ 1,000,000 1,022,940
New York State Dormitory Authority
Revenue, Columbia University, 4.00%,
7/1/06................................ 1,000,000 1,015,100
New York State Dormitory Authority
Revenue, Columbia University, 5.00%,
7/1/29, Mandatory put 7/1/07 @ 100.... 1,000,000 1,042,040
New York State Dormitory Authority
Revenue, Cooper Union (MBIA Insured),
6.00%, 7/1/19, Callable 7/1/09
@ 101................................. 350,000 391,185
New York State Dormitory Authority
Revenue, Department of Health, 5.25%,
7/1/16, Callable 7/1/14 @ 100......... 500,000 548,770
New York State Dormitory Authority
Revenue, Master Boces PG (FSA
Insured), 5.25%, 8/15/19, Callable
8/15/12 @ 100......................... 1,000,000 1,098,240
New York State Dormitory Authority
Revenue, Mental Health, 6.50%,
8/15/11............................... 225,000 261,691
New York State Dormitory Authority
Revenue, Mental Health, 5.50%,
8/15/17, Prerefunded 2/15/07 @ 102.... 15,000 15,970
New York State Dormitory Authority
Revenue, Mental Health, 5.50%,
8/15/17, Partially Prerefunded 2/15/07
@ 102................................. 985,000 1,042,228
New York State Dormitory Authority
Revenue, New York Presbyterian
Hospital (AMBAC Insured), 5.50%,
8/1/10................................ 750,000 827,640
New York State Dormitory Authority
Revenue, New York University (AMBAC
Insured), 5.50%, 7/1/18............... 500,000 581,205
New York State Dormitory Authority
Revenue, NY State Rehabilitation
Association (CIFG Group Insured),
4.00%, 7/1/06......................... 1,120,000 1,134,325
New York State Dormitory Authority
Revenue, NYSARC (FSA Insured), 2.00%,
7/1/06................................ 475,000 469,561
New York State Dormitory Authority
Revenue, NYSARC (FSA Insured), 5.25%,
7/1/18, Callable 7/1/12 @ 101......... 1,460,000 1,612,555
New York State Dormitory Authority
Revenue, Rockefeller University,
5.25%, 7/1/13, Callable 7/1/08
@ 101................................. 500,000 536,910
New York State Dormitory Authority
Revenue, School District Board
Financing, 5.00%, 7/1/08.............. 595,000 630,545
New York State Dormitory Authority
Revenue, School District Rescue,
5.00%, 4/1/07......................... 500,000 518,150
</Table>
24 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
<Table>
<Caption>
- ---------------------------------------------------------------
MUNICIPAL BONDS, CONTINUED
PRINCIPAL
AMOUNT($) VALUE($)
--------- ----------
New York State Dormitory Authority
Revenue, Sloan Kettering Institute
(MBIA Insured), 5.50%, 7/1/23......... 1,300,000 1,515,046
New York State Environmental Facscorp,
5.70%, 1/15/14, Callable 7/15/09
@ 101................................. 415,000 458,056
New York State Environmental Facscorp,
5.70%, 1/15/14, Prerefunded 7/15/09
@ 101................................. 570,000 636,297
New York State Environmental Facscorp,
5.70%, 1/15/14, Prerefunded 7/15/09
@ 101................................. 15,000 16,745
New York State Mortgage Agency Revenue,
AMT, 5.60%, 10/1/14, Callable 9/1/07
@ 101.5............................... 1,000,000 1,035,510
New York State Municipal Bond Bank
Revenue, 5.50%, 12/1/12............... 850,000 956,267
New York State Thruway Authority
Revenue, Highway & Bridge (FGIC
Insured), 5.25%, 4/1/07............... 300,000 313,713
New York State Thruway Authority
Revenue, Highway & Bridge (FGIC
Insured), 5.50%, 4/1/17, Callable
4/1/11 @ 101.......................... 1,000,000 1,113,530
New York State Thruway Authority
Revenue, Highway & Bridge (MBIA
Insured), 5.00%, 4/1/22, Callable
4/1/14 @ 100.......................... 1,000,000 1,068,200
New York State Thruway Authority,
Personal Income Tax Revenue, 5.50%,
3/15/20, Callable 3/15/12 @ 100....... 500,000 550,365
New York State Thruway Authority,
Personal Income Tax Revenue (FSA
Insured), 5.00%, 3/15/13.............. 645,000 711,738
New York State Thruway Authority,
Personal Income Tax Revenue (MBIA
Insured), 5.00%, 3/15/19, Callable
3/15/12 @ 100......................... 1,400,000 1,507,632
New York State Thruway Authority,
Personal Income Tax Revenue (MBIA
Insured), 5.00%, 3/15/21, Callable
3/15/13 @ 100......................... 500,000 537,555
New York State Thruway Authority,
Service Contract Revenue, 5.50%,
4/1/11................................ 1,000,000 1,114,030
New York State Urban Development Corp.,
5.125%, 1/1/22, Callable 7/1/14
@ 100................................. 885,000 946,729
New York State Urban Development Corp.
Revenue, 5.75%, 4/1/12................ 500,000 566,970
New York State Urban Development Corp.
Revenue, 5.75%, 4/1/12, Prerefunded
4/1/07 @ 102.......................... 1,000,000 1,073,180
New York State Urban Development Corp.
Revenue, 5.125%, 1/1/25, Prerefunded
1/1/11 @ 100.......................... 175,000 192,722
New York State Urban Development Corp.
Revenue, Series A (MBIA Insured),
6.50%, 1/1/09......................... 500,000 559,470
Onondaga County, New York Water
Authority Revenue (FSA Insured),
5.00%, 9/15/14, Callable 9/15/10
@ 101................................. 300,000 327,666
Onondaga County, New York Water
Authority Revenue (FSA Insured),
5.00%, 9/15/15, Callable 9/15/10
@ 101................................. 665,000 718,559
<Caption>
- ---------------------------------------------------------------
MUNICIPAL BONDS, CONTINUED
PRINCIPAL
AMOUNT($) VALUE($)
--------- ----------
Port Authority of New York & New Jersey
Revenue, 5.00%, 9/1/27, Callable
9/1/13 @ 100.......................... 795,000 833,478
Port Authority of New York & New Jersey
Revenue, 5.375%, 3/1/28............... 1,100,000 1,258,653
Port Authority of New York & New Jersey
Special Obligation Revenue, AMT (MBIA
Insured), 5.75%, 12/1/22, Callable
12/1/07 @ 102......................... 500,000 538,550
Suffolk County, New York (FSA Insured),
5.25%, 5/1/12......................... 515,000 573,030
Suffolk County, New York (FSA Insured),
5.25%, 5/1/15......................... 100,000 112,392
Tobacco Settlement Corp., 5.00%,
6/1/06................................ 1,000,000 1,024,710
Tobacco Settlement Corp., Series C-1,
5.50%, 6/1/21, Callable 6/1/13
@ 100................................. 1,000,000 1,097,680
Webster, New York Central School
District GO (FSA Insured), 5.00%,
6/15/14............................... 500,000 553,290
Yonkers New York, Series E (MBIA
Insured), 5.00%, 12/1/14.............. 750,000 828,908
----------
60,318,128
----------
PUERTO RICO - (6.6%)
Puerto Rico Commonwealth, Highway and
Transportation (MBIA Insured), 5.00%,
9/15/17, Callable 3/15/14 @ 100....... 1,000,000 1,092,820
Puerto Rico Electric Power Authority
Revenue (MBIA Insured), 5.25%,
7/1/22................................ 1,000,000 1,152,790
Puerto Rico Public Buildings Authority
Revenue, 5.25%, 7/1/33, Callable
7/1/14 @ 100.......................... 700,000 743,918
Puerto Rico Public Finance Corp.
Revenue (MBIA Insured), 5.25%, 8/1/29,
Callable 7/1/10 @ 101................. 1,000,000 1,109,180
Puerto Rico Publishing Finance Corp.
Revenue (AMBAC Insured), 5.375%,
6/1/18................................ 500,000 579,480
----------
4,678,188
----------
TOTAL MUNICIPAL BONDS
(COST $62,135,291).................... 64,996,316
----------
- ---------------------------------------------------------------
VARIABLE RATE DEMAND NOTES* - (7.2%)
NEW YORK - (7.2%)
New York City Housing Development Corp.
Multifamily Revenue, East 165th
Street, AMT (LOC Citibank N.A.),
2.95%, 6/1/36......................... 2,100,000 2,100,000
New York City Housing Development Corp.
Multifamily Revenue, Manhattan Court
Development, AMT (LOC Citibank N.A.),
2.95%, 6/1/36......................... 1,000,000 1,000,000
New York State Mortgage Agency Revenue,
AMT (Dexia Credit Local), 2.95%,
10/1/34............................... 2,000,000 2,000,000
----------
5,100,000
----------
TOTAL VARIABLE RATE DEMAND NOTES* (COST
$5,100,000)........................... 5,100,000
----------
</Table>
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 25
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
<Table>
<Caption>
- ---------------------------------------------------------------
INVESTMENT COMPANIES - 0.7%
SHARES VALUE($)
--------- ----------
Provident New York Tax-Free Money
Market Fund Institutional Shares...... 492,757 492,757
----------
TOTAL INVESTMENT COMPANIES
(COST $492,757)....................... 492,757
----------
TOTAL INVESTMENTS
(COST $67,728,048) - 99.2%........... 70,589,073
----------
----------
</Table>
- --------------
Percentages indicated are based on net assets of $71,183,970.
* Variable rate security. The interest rates on these securities are adjusted
periodically to reflect then-current short-term interest rates. The rates
presented in this report represent the rates that were in effect on April 30,
2005. However, each of these securities contains put or demand features that
allow the fund to require the issuer to repurchase the security from the fund
within various time periods, including daily, weekly, monthly, or
semi-annually.
<Table>
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Interest on security is subject to Federal
Alternative Minimum Tax
FGIC -- Federal Guaranty Insurance Corporation
FSA -- Financial Security Assurance
GO -- General Obligation
LOC -- Letter of Credit
MBIA -- Municipal Bond Insurance Association
</Table>
26 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED)
......................................................................
<Table>
<Caption>
- ---------------------------------------------------------------
COMMON STOCKS - 90.1%
SHARES VALUE($)
------- -----------
AEROSPACE & DEFENSE - 1.2%
United Technologies Corp.............. 21,900 2,227,668
-----------
AIR FREIGHT & LOGISTICS - 1.0%
United Parcel Service, Inc............ 25,000 1,782,750
-----------
BANKING - 5.0%
Bank of America Corp.................. 100,000 4,504,000
Wachovia Corp......................... 45,000 2,303,100
Wells Fargo & Co...................... 40,000 2,397,600
-----------
9,204,700
-----------
BIOTECHNOLOGY - 1.9%
Amgen, Inc. (b)....................... 60,000 3,492,600
-----------
CHEMICALS - 2.3%
Du Pont (E.I) de Nemours and Co....... 30,000 1,413,300
The Dow Chemical Co................... 60,000 2,755,800
-----------
4,169,100
-----------
COMPUTER SOFTWARE - 6.2%
Affiliated Computer Services, Inc.,
Class A (b).......................... 24,000 1,144,080
BMC Software, Inc. (b)................ 77,800 1,260,360
Microsoft Corp........................ 300,000 7,590,000
Symantec Corp. (b).................... 66,900 1,256,382
-----------
11,250,822
-----------
COMPUTERS - 2.4%
Dell, Inc. (b)........................ 54,000 1,880,820
International Business Machines
Corp................................. 31,900 2,436,522
-----------
4,317,342
-----------
CONSUMER PRODUCTS - 5.9%
Black & Decker Corp................... 13,500 1,129,005
Gillette Co........................... 13,000 671,320
Harley-Davidson, Inc.................. 40,500 1,904,310
PepsiCo, Inc.......................... 70,000 3,894,800
The Procter & Gamble Co............... 57,000 3,086,550
-----------
10,685,985
-----------
DIVERSIFIED MANUFACTURING OPERATIONS - 12.4%
Caterpillar, Inc...................... 25,000 2,201,250
General Electric Co................... 200,000 7,240,000
Illinois Tool Works, Inc.............. 50,000 4,191,000
Jacobs Engineering Group, Inc. (b).... 40,000 1,948,400
Kennametal, Inc....................... 75,000 3,397,500
PACCAR, Inc........................... 40,000 2,716,000
Whirlpool Corp........................ 17,200 1,067,432
-----------
22,761,582
-----------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 2.6%
Intel Corp............................ 139,000 3,269,280
Texas Instruments, Inc................ 59,500 1,485,120
-----------
4,754,400
-----------
FINANCIAL SERVICES - 11.4%
American Express Co................... 75,000 3,952,500
Citigroup, Inc........................ 128,000 6,010,880
Countrywide Financial Corp............ 28,500 1,031,415
Goldman Sachs Group, Inc.............. 23,000 2,456,170
J.P. Morgan Chase & Co................ 80,000 2,839,200
Merrill Lynch & Co., Inc.............. 35,500 1,914,515
Prudential Financial, Inc............. 46,000 2,628,900
-----------
20,833,580
-----------
<Caption>
- ---------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE($)
------- -----------
HEALTH CARE - 6.4%
Caremark Rx, Inc. (b)................. 90,000 3,604,500
Guidant Corp.......................... 20,000 1,481,600
WellPoint, Inc. (b)................... 35,000 4,471,250
Zimmer Holdings, Inc. (b)............. 25,000 2,035,500
-----------
11,592,850
-----------
HOTELS & LODGING - 2.7%
Marriott International, Inc.,
Class A.............................. 60,000 3,765,000
Starwood Hotels & Resorts Worldwide,
Inc.................................. 20,700 1,124,838
-----------
4,889,838
-----------
INTERNET RELATED - 0.5%
eBay, Inc. (b)........................ 26,600 844,018
-----------
MEDIA - 2.8%
McGraw-Hill Cos., Inc................. 25,000 2,177,000
Time Warner, Inc. (b)................. 170,000 2,857,700
-----------
5,034,700
-----------
MEDICAL & HEALTH PRODUCTS - 0.4%
Genentech, Inc. (b)................... 10,000 709,400
-----------
OIL & GAS - 9.3%
Anadarko Petroleum Corp............... 60,000 4,382,400
Exxon Mobil Corp...................... 100,000 5,703,000
Schlumberger Ltd...................... 80,000 5,472,800
Suncor Energy, Inc. ADR............... 40,000 1,474,400
-----------
17,032,600
-----------
PHARMACEUTICALS - 3.6%
Abbott Laboratories................... 49,000 2,408,840
Johnson & Johnson..................... 60,000 4,117,800
-----------
6,526,640
-----------
RESIDENTIAL BUILDING CONSTRUCTION - 0.6%
Toll Brothers, Inc. (b)............... 15,000 1,137,000
-----------
RETAIL - 5.2%
Best Buy Co., Inc..................... 41,000 2,063,940
Costco Wholesale Corp................. 33,500 1,359,430
Home Depot, Inc....................... 87,000 3,077,190
Reebok International Ltd.............. 35,000 1,421,350
Target Corp........................... 34,000 1,577,600
-----------
9,499,510
-----------
TELECOMMUNICATIONS - 3.5%
QUALCOMM, Inc......................... 80,000 2,791,200
Verizon Communications, Inc........... 100,000 3,580,000
-----------
6,371,200
-----------
UTILITIES - 2.8%
Duke Energy Corp...................... 100,300 2,927,757
Exelon Corp........................... 45,800 2,267,100
-----------
5,194,857
-----------
TOTAL COMMON STOCKS
(COST $142,810,541).................. 164,313,142
-----------
TOTAL INVESTMENTS
(COST $142,810,541) - 90.1%......... 164,313,142
-----------
-----------
</Table>
- --------------
Percentages indicated are based on net assets of $182,365,708.
(b) Represents non-income producing security.
ADR -- American Depository Receipt
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 27
HSBC INVESTOR MID-CAP FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED)
......................................................................
<Table>
<Caption>
- ---------------------------------------------------------------
COMMON STOCKS - 98.6%
SHARES VALUE($)
--------- -----------
ADVERTISING SERVICES - 1.6%
Getty Images, Inc. (a)................ 16,325 1,168,054
-----------
AEROSPACE & DEFENSE - 3.0%
L-3 Communications Holdings, Inc...... 31,225 2,216,038
-----------
BANKING - 2.2%
Euronet Worldwide, Inc. (a)........... 27,175 803,293
UCBH Holdings, Inc.................... 52,825 830,937
-----------
1,634,230
-----------
BIOTECHNOLOGY - 1.8%
Gilead Sciences, Inc. (a)............. 36,025 1,336,528
-----------
BUILDING MATERIALS - 1.5%
Florida Rock Industries, Inc.......... 18,825 1,093,356
-----------
BUSINESS SERVICES - 1.9%
Digital River, Inc. (a)............... 32,275 858,515
ValueClick, Inc. (a).................. 51,225 530,691
-----------
1,389,206
-----------
COMPUTER SERVICES - 2.0%
Cognizant Technology Solutions Corp.
(a).................................. 26,225 1,101,712
ScanSource, Inc. (a).................. 7,900 365,375
-----------
1,467,087
-----------
COMPUTER SOFTWARE - 2.2%
SRA International, Inc. Class A (a)... 24,975 1,632,116
-----------
CONSUMER PRODUCTS - 5.2%
Alberto-Culver Co., Class B........... 26,125 1,162,563
Constellation Brands, Inc. (a)........ 25,300 1,333,563
The Toro Co........................... 31,425 1,298,481
-----------
3,794,607
-----------
CONSUMER SERVICES - 2.2%
VCA Antech, Inc. (a).................. 69,750 1,623,780
-----------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 1.7%
FormFactor, Inc. (a).................. 54,875 1,253,345
-----------
ENVIRONMENTAL SERVICES - 3.6%
Pioneer Natural Resources Co.......... 32,675 1,328,565
Stericycle, Inc. (a).................. 26,950 1,311,657
-----------
2,640,222
-----------
FINANCIAL SERVICES - 3.6%
Affiliated Managers Group, Inc. (a)... 17,900 1,119,287
Ameritrade Holding Corp. (a).......... 65,375 685,130
Asset Acceptance Capital Corp. (a).... 2,300 47,035
Investors Financial Services Corp..... 19,450 815,928
-----------
2,667,380
-----------
FOOD & BEVERAGE - 1.5%
Flowers Foods, Inc.................... 39,150 1,129,086
-----------
HEALTH CARE - 12.4%
Coventry Health Care, Inc. (a)........ 22,375 1,531,120
Kinetic Concepts, Inc. (a)............ 13,100 804,995
LifePoint Hospitals, Inc. (a)......... 21,025 934,561
Patterson Companies, Inc. (a)......... 18,950 957,923
Quest Diagnostics, Inc................ 8,725 923,105
Renal Care Group, Inc. (a)............ 32,175 1,227,476
ResMed, Inc. (a)...................... 23,625 1,467,113
Ventas, Inc........................... 45,600 1,230,288
-----------
9,076,581
-----------
INSURANCE - 5.6%
Ambac Financial Group, Inc............ 14,050 939,243
AmerUs Group Co....................... 23,200 1,090,632
RenaissanceRe Holdings Ltd............ 18,525 829,364
Universal American Financial Corp.
(a).................................. 75,175 1,259,181
-----------
4,118,420
-----------
LEISURE - 4.1%
International Game Technology......... 36,850 990,897
<Caption>
- ---------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE($)
--------- -----------
Penn National Gaming, Inc. (a)........ 65,075 2,049,862
-----------
3,040,759
-----------
MEDIA - 0.7%
InfoSpace, Inc. (a)................... 17,375 538,451
-----------
METALS & MINING - 1.4%
Phelps Dodge Corp..................... 12,375 1,062,394
-----------
OIL & GAS (10.3%
Airgas, Inc........................... 33,525 734,868
Chesapeake Energy Corp................ 36,325 698,893
Kinder Morgan, Inc.................... 20,300 1,552,137
Patterson-UTI Energy, Inc............. 57,150 1,369,886
Praxair, Inc.......................... 16,325 764,500
Precision Drilling Corp. (a).......... 19,450 1,403,706
XTO Energy, Inc....................... 35,383 1,067,505
-----------
7,591,495
-----------
REAL ESTATE - 1.7%
New Century Financial Corp............ 27,575 1,253,284
-----------
RESIDENTIAL BUILDING CONSTRUCTION -
3.4%
Pulte Homes, Inc...................... 16,325 1,166,421
Standard Pacific Corp................. 18,625 1,333,737
-----------
2,500,158
-----------
RETAIL - 11.8%
Chico's FAS, Inc. (a)................. 28,125 720,844
Dick's Sporting Goods, Inc. (a)....... 32,175 989,703
Foot Locker, Inc...................... 48,100 1,282,346
KB Home, Inc.......................... 23,700 1,350,899
Regis Corp............................ 32,800 1,171,944
Sears Holdings Corp. (a).............. 7,175 970,347
Tempur-Pedic International, Inc.
(a).................................. 66,425 1,268,053
Tractor Supply Co. (a)................ 21,450 862,719
-----------
8,616,855
-----------
TELECOMMUNICATIONS - 4.7%
Adelphia Business Solutions, Inc.
(a).................................. 19,923 319
Comverse Technology, Inc. (a)......... 36,125 823,289
j2 Global Communications, Inc. (a).... 35,500 1,268,060
Nextel Partners, Inc., Class A (a).... 59,550 1,400,616
-----------
3,492,284
-----------
TRANSPORTATION - 4.2%
Old Dominion Freight Line, Inc. (a)... 58,725 1,650,172
Oshkosh Truck Corp.................... 19,450 1,461,668
-----------
3,111,840
-----------
UTILITIES - 4.3%
Aqua America, Inc..................... 47,250 1,259,685
Equitable Resources, Inc.............. 16,550 953,942
New Jersey Resources Corp............. 21,450 930,072
-----------
3,143,699
-----------
TOTAL COMMON STOCKS
(COST $71,955,000)................... 72,591,256
-----------
- ---------------------------------------------------------------
INVESTMENT COMPANIES - 1.1%
HSBC Investor Money Market Fund Class
I Shares *........................... 791,186 791,186
-----------
TOTAL INVESTMENT COMPANIES
(COST $791,186)...................... 791,186
-----------
TOTAL INVESTMENTS
(COST $72,746,186) - 99.7%.......... 73,382,442
-----------
-----------
</Table>
- --------------
Percentages indicated are based on net assets of $73,610,356.
(a) Represents non-income producing security.
* Investment in affiliate.
ADR -- American Depositary Receipt
28 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- APRIL 30, 2005 (UNAUDITED)
..................................................................
<Table>
<Caption>
LIMITED NEW YORK
MATURITY FIXED INCOME BOND TAX-FREE BOND
FUND FUND FUND FUND
- ---------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in master $36,341,404 $110,374,646 $25,674,303 $ --
Investments, at value (non-
affiliated)(note 2) -- -- -- 70,589,073
Interest and dividends receivable -- -- -- 876,807
Receivable for capital shares issued 2,800 23,658 36,294 2,118
Receivable from Investment Adviser 2,836 -- 11,206 --
Prepaid expenses and other assets 5,300 3,694 3,621 5,114
----------- ------------ ----------- -----------
TOTAL ASSETS 36,352,340 110,401,998 25,725,424 71,473,112
----------- ------------ ----------- -----------
LIABILITIES:
Dividends payable 49,953 167,689 32,824 74,716
Payable for capital shares redeemed 9,709 438,274 149 141,958
Accrued expenses and other
liabilities:
Investment management -- -- -- 14,738
Administration 1,749 5,529 967 5,592
Accounting 2,934 246 379 5,886
Transfer Agent 14,914 5,877 11,633 11,778
Distribution 5,486 -- 7,558 11,825
Shareholder servicing 1,588 -- 5,207 10,908
Other 1,669 36,718 2,313 11,741
----------- ------------ ----------- -----------
TOTAL LIABILITIES 88,002 654,333 61,030 289,142
----------- ------------ ----------- -----------
NET ASSETS $36,264,338 $109,747,665 $25,664,394 $71,183,970
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
...............................................................................................................
COMPOSITION OF NET ASSETS:
Capital $36,372,665 $105,406,407 $26,005,269 $68,207,653
Accumulated net investment income
(loss) (56,914) 175,068 39,014 7,910
Accumulated net realized gains
(losses) from investment
transactions 25,563 1,670,221 (630,341) 107,382
Unrealized appreciation/depreciation
from investments (76,976) 2,495,969 250,452 2,861,025
----------- ------------ ----------- -----------
NET ASSETS $36,264,338 $109,747,665 $25,664,394 $71,183,970
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
...............................................................................................................
CLASS A (INVESTOR) SHARES:
Net Assets $ 1,329,014 $ -- $18,529,359 $34,100,403
Shares Outstanding 134,967 -- 1,762,444 3,033,469
Net Asset Value and Redemption Price
per share $ 9.85 $ -- $ 10.51 $ 11.24
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
Maximum sales charge 4.75% -- 4.75% 4.75%
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
Maximum Offering Price per share
(Net Asset Value/(100% - maximum
sales charge)) $ 10.34 $ -- $ 11.03 $ 11.80
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
...............................................................................................................
CLASS B SHARES:
Net Assets $ 5,804,042 $ -- $ 6,725,732 $16,681,555
Shares Outstanding 588,371 -- 639,751 1,485,575
Net Asset Value, Offering Price and
Redemption Price per share* $ 9.86 $ -- $ 10.51 $ 11.23
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
...............................................................................................................
CLASS C SHARES:
Net Assets $ 593,329 $ -- $ 409,303 $ 2,081,892
Shares Outstanding 60,177 -- 38,962 184,687
Net Asset Value, Offering Price and
Redemption Price per share* $ 9.86 $ -- $ 10.51 $ 11.27
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
...............................................................................................................
CLASS Y SHARES:
Net Assets $28,537,953 $ -- $ -- $18,320,120
Shares Outstanding 2,894,425 -- -- 1,629,518
Net Asset Value, Offering Price and
Redemption Price per share $ 9.86 $ -- $ -- $ 11.24
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
...............................................................................................................
ADVISOR SHARES:
Net Assets $ -- $109,747,665 $ -- $ --
Shares Outstanding -- 10,199,503 -- --
Net Asset Value, Offering Price and
Redemption Price per share $ -- $ 10.76 $ -- $ --
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
Investments, at cost $67,728,048
-----------
-----------
<Caption>
GROWTH VALUE
FUND FUND
-------------- --------------
Investments in master $ 40,323,842 $ 50,521,979
Investments, at value (non-
affiliated)(note 2) -- --
Interest and dividends receivable -- --
Receivable for capital shares issued 26,060 23,734
Receivable from Investment Adviser 13,159 584
Prepaid expenses and other assets 18,045 23,137
------------ ------------
TOTAL ASSETS 40,381,106 50,569,434
------------ ------------
LIABILITIES:
Dividends payable -- --
Payable for capital shares redeemed 40,746 49,887
Accrued expenses and other
liabilities:
Investment management -- --
Administration 1,252 1,560
Accounting -- --
Transfer Agent -- --
Distribution 1,062 1,515
Shareholder servicing 4,469 5,273
Other 91 878
------------ ------------
TOTAL LIABILITIES 47,620 59,113
------------ ------------
NET ASSETS $ 40,333,486 $ 50,510,321
------------ ------------
------------ ------------
.....................................
COMPOSITION OF NET ASSETS:
Capital $ 40,614,708 $ 45,636,692
Accumulated net investment income
(loss) 55,260 158,226
Accumulated net realized gains
(losses) from investment
transactions (1,180,365) 591,773
Unrealized appreciation/depreciation
from investments 843,883 4,123,630
------------ ------------
NET ASSETS $ 40,333,486 $ 50,510,321
------------ ------------
------------ ------------
.....................................
CLASS A (INVESTOR) SHARES:
Net Assets $ 19,870,535 $ 23,078,977
Shares Outstanding 1,579,413 1,644,543
Net Asset Value and Redemption Price
per share $ 12.58 $ 14.03
------------ ------------
------------ ------------
Maximum sales charge 5.00% 5.00%
------------ ------------
------------ ------------
Maximum Offering Price per share
(Net Asset Value/(100% - maximum
sales charge)) $ 13.24 $ 14.77
------------ ------------
------------ ------------
.....................................
CLASS B SHARES:
Net Assets $ 1,385,376 $ 2,006,339
Shares Outstanding 114,280 148,193
Net Asset Value, Offering Price and
Redemption Price per share* $ 12.12 $ 13.54
------------ ------------
------------ ------------
.....................................
CLASS C SHARES:
Net Assets $ 307,504 $ 418,808
Shares Outstanding 25,232 30,777
Net Asset Value, Offering Price and
Redemption Price per share* $ 12.19 $ 13.61
------------ ------------
------------ ------------
.....................................
CLASS Y SHARES:
Net Assets $ 18,770,071 $ 25,006,197
Shares Outstanding 1,491,834 1,783,007
Net Asset Value, Offering Price and
Redemption Price per share $ 12.58 $ 14.02
------------ ------------
------------ ------------
.....................................
ADVISOR SHARES:
Net Assets $ -- $ --
Shares Outstanding -- --
Net Asset Value, Offering Price and
Redemption Price per share $ -- $ --
------------ ------------
------------ ------------
Investments, at cost
</Table>
- --------------
* Redemption Price per share varies by length of time shares are held.
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 29
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- APRIL 30, 2005 (UNAUDITED)
..................................................................
<Table>
<Caption>
GROWTH AND MID-CAP INTERNATIONAL
INCOME FUND FUND EQUITY FUND
- ---------------------------------------------------------------------------------
ASSETS:
Investments in master $ -- $ -- $163,078,120
Investments, at value
(non-affiliated) (Note
2) 164,313,142 72,591,256 --
Investment in
affiliates, at value -- 791,186 --
Cash 12,905,519 75,534 --
Interest and dividends
receivable 163,248 29,531 --
Receivable for capital
shares issued 275 3,258 6,571
Receivable for
investments sold 24,048,374 1,018,373 --
Receivable from
Investment Adviser -- -- --
Tax reclaims receivable -- -- 114,212
Prepaid expenses and
other assets 27,150 6,881 4,244
------------ ----------- ------------
TOTAL ASSETS 201,457,708 74,516,019 163,203,147
------------ ----------- ------------
LIABILITIES:
Payable for investments
purchased 18,916,113 809,231 --
Payable for capital
shares redeemed 22,176 1,600 167,643
Accrued expenses and
other liabilities:
Investment management 84,614 41,755 --
Administration 18,834 8,131 7,403
Accounting 6,125 6,724 126
Transfer Agent 9,123 18,583 5,376
Distribution 2,562 4,663 --
Shareholder servicing 1,119 1,926 --
Other 31,334 13,050 49,016
------------ ----------- ------------
TOTAL LIABILITIES 19,092,000 905,663 229,564
------------ ----------- ------------
NET ASSETS $182,365,708 $73,610,356 $162,973,583
------------ ----------- ------------
------------ ----------- ------------
................................................................................
COMPOSITION OF NET
ASSETS:
Capital $196,156,891 $57,305,638 $142,744,171
Accumulated net
investment income
(loss) 601,546 (74,645) 838,670
Accumulated net
realized gains
(losses) from
investment and foreign
currency transactions (35,895,330) 15,743,107 1,182,641
Unrealized
appreciation/depreciation
from investments and
foreign currencies 21,502,601 636,256 18,208,101
------------ ----------- ------------
NET ASSETS $182,365,708 $73,610,356 $162,973,583
------------ ----------- ------------
------------ ----------- ------------
................................................................................
CLASS A (INVESTOR)
SHARES:
Net Assets $ 1,317,089 $ 1,882,438 $ --
Shares Outstanding 147,674 211,811 --
Net Asset Value and
Redemption Price per
share $ 8.92 $ 8.89 $ --
------------ ----------- ------------
------------ ----------- ------------
Maximum sales charge 5.00% 5.00% --
------------ ----------- ------------
------------ ----------- ------------
Maximum Offering Price
per share (Net Asset
Value/(100% - maximum
sales charge)) $ 9.39 $ 9.36 $ --
------------ ----------- ------------
------------ ----------- ------------
................................................................................
CLASS B SHARES:
Net Assets $ 3,990,480 $ 7,167,022 $ --
Shares Outstanding 453,708 836,520 --
Net Asset Value,
Offering Price and
Redemption Price per
share* $ 8.80 $ 8.57 $ --
------------ ----------- ------------
------------ ----------- ------------
................................................................................
CLASS C SHARES:
Net Assets $ 44,313 $ 99,868 $ --
Shares Outstanding 4,994 11,580 --
Net Asset Value,
Offering Price and
Redemption Price per
share* $ 8.87 $ 8.62 $ --
------------ ----------- ------------
------------ ----------- ------------
................................................................................
CLASS Y SHARES:
Net Assets $177,013,826 $ -- $ --
Shares Outstanding 19,842,242 -- --
Net Asset Value,
Offering Price and
Redemption Price per
share $ 8.92 $ -- $ --
------------ ----------- ------------
------------ ----------- ------------
................................................................................
ADVISOR SHARES:
Net Assets $ -- $ -- $162,973,583
Shares Outstanding -- -- 10,232,972
Net Asset Value,
Offering Price and
Redemption Price per
share $ -- $ -- $ 15.93
------------ ----------- ------------
------------ ----------- ------------
................................................................................
TRUST SHARES:
Net Assets $ -- $64,461,028 $ --
Shares Outstanding -- 7,180,884 --
Net Asset Value,
Offering Price and
Redemption Price per
share $ -- $ 8.98 $ --
------------ ----------- ------------
------------ ----------- ------------
Total investments, at
cost $142,810,541 $72,746,186
------------ -----------
------------ -----------
<Caption>
OVERSEAS SMALL CAP OPPORTUNITY
EQUITY FUND EQUITY FUND FUND
- ----------------------------------------------------------------------------
ASSETS:
Investments in master $22,383,916 $208,493,609 $25,569,556
Investments, at value
(non-affiliated) (Note
2) -- -- --
Investment in
affiliates, at value -- -- --
Cash -- -- --
Interest and dividends
receivable -- -- --
Receivable for capital
shares issued 24,782 2,628 9,514
Receivable for
investments sold -- -- --
Receivable from
Investment Adviser -- -- 7,251
Tax reclaims receivable 15,912 -- --
Prepaid expenses and
other assets 5,852 8,694 5,714
----------- ------------ -----------
TOTAL ASSETS 22,430,462 208,504,931 25,592,035
----------- ------------ -----------
LIABILITIES:
Payable for investments
purchased -- -- --
Payable for capital
shares redeemed 38,096 144,108 14,166
Accrued expenses and
other liabilities:
Investment management -- -- --
Administration 828 9,389 1,020
Accounting 378 246 379
Transfer Agent 6,944 4,900 10,701
Distribution 1,809 -- 2,139
Shareholder servicing 4,708 -- 5,402
Other 1,102 94,496 1,085
----------- ------------ -----------
TOTAL LIABILITIES 53,865 253,139 34,892
----------- ------------ -----------
NET ASSETS $22,376,597 $208,251,792 $25,557,143
----------- ------------ -----------
----------- ------------ -----------
.............................................................................
COMPOSITION OF NET
ASSETS:
Capital $18,823,918 $189,877,939 $24,085,888
Accumulated net
investment income
(loss) 65,679 (604,732) (164,417)
Accumulated net
realized gains
(losses) from
investment and foreign
currency transactions 992,787 (8,107,513) (686,789)
Unrealized
appreciation/depreciation
from investments and
foreign currencies 2,494,213 27,086,098 2,322,461
----------- ------------ -----------
NET ASSETS $22,376,597 $208,251,792 $25,557,143
----------- ------------ -----------
----------- ------------ -----------
.............................................................................
CLASS A (INVESTOR)
SHARES:
Net Assets $19,976,042 $ -- $20,807,347
Shares Outstanding 1,404,295 -- 1,902,231
Net Asset Value and
Redemption Price per
share $ 14.22 $ -- $ 10.94
----------- ------------ -----------
----------- ------------ -----------
Maximum sales charge 5.00% -- 5.00%
----------- ------------ -----------
----------- ------------ -----------
Maximum Offering Price
per share (Net Asset
Value/(100% - maximum
sales charge)) $ 14.97 $ -- $ 11.52
----------- ------------ -----------
----------- ------------ -----------
.............................................................................
CLASS B SHARES:
Net Assets $2,255,823 $ -- $ 4,475,845
Shares Outstanding 164,739 -- 435,333
Net Asset Value,
Offering Price and
Redemption Price per
share* $ 13.69 $ -- $ 10.28
----------- ------------ -----------
----------- ------------ -----------
.............................................................................
CLASS C SHARES:
Net Assets $ 144,732 $ -- $ 273,951
Shares Outstanding 10,375 -- 26,405
Net Asset Value,
Offering Price and
Redemption Price per
share* $ 13.95 $ -- $ 10.37
----------- ------------ -----------
----------- ------------ -----------
.............................................................................
CLASS Y SHARES:
Net Assets $ -- $ -- $ --
Shares Outstanding -- -- --
Net Asset Value,
Offering Price and
Redemption Price per
share $ -- $ -- $ --
----------- ------------ -----------
----------- ------------ -----------
.............................................................................
ADVISOR SHARES:
Net Assets $ -- $208,251,792 $ --
Shares Outstanding -- 15,840,403 --
Net Asset Value,
Offering Price and
Redemption Price per
share $ -- $ 13.15 $ --
----------- ------------ -----------
----------- ------------ -----------
.............................................................................
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.
30 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED APRIL 30, 2005
(UNAUDITED)
...................................................................
<Table>
<Caption>
NEW YORK
LIMITED FIXED INCOME BOND TAX-FREE
MATURITY FUND FUND FUND BOND FUND GROWTH FUND VALUE FUND
- -----------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ -- $ -- $ -- $1,380,609 $ -- $ --
Dividends -- -- -- 13,751 -- --
Investment income from
portfolio 798,226 2,666,209 625,237 -- 390,166 496,341
Foreign tax withholding
from portfolio -- -- -- -- -- (1,238)
Expenses from portfolio (77,438) (161,372) (38,622) -- (123,708) (154,778)
--------- ----------- --------- ---------- --------- ----------
TOTAL INVESTMENT INCOME 720,788 2,504,837 586,615 1,394,360 266,458 340,325
--------- ----------- --------- ---------- --------- ----------
..............................................................................................................................
EXPENSES:
Investment management -- -- -- 89,858 -- --
Administration 7,132 20,703 4,859 29,438 7,873 9,977
Distribution:
Class B Shares 22,479 -- 25,615 63,364 5,347 7,579
Class C Shares 2,360 -- 1,503 7,899 1,181 1,575
Shareholder servicing:
Class A (Investor)
Shares 1,761 -- 22,955 42,313 24,790 29,040
Class B Shares 7,493 -- 8,538 21,121 1,782 2,526
Class C Shares 786 -- 501 2,633 394 525
Accounting 16,434 4,746 13,879 36,173 17,851 17,852
Custodian -- -- -- 12,045 -- --
Registration 1,895 6,101 2,546 2,430 2,666 2,231
Printing 2,368 7,121 2,647 8,172 1,569 4,316
Transfer agent 35,607 14,539 34,559 38,170 35,051 29,998
Trustee 461 1,253 291 1,642 598 563
Other 1,921 5,211 1,505 7,900 718 1,843
--------- ----------- --------- ---------- --------- ----------
Total expenses before
fee reductions 100,697 59,674 119,398 363,158 99,820 108,025
Fees reduced by
Investment Adviser (15,826) -- (37,357) (8,761) (13,159) (807)
--------- ----------- --------- ---------- --------- ----------
NET EXPENSES 84,871 59,674 82,041 354,397 86,661 107,218
--------- ----------- --------- ---------- --------- ----------
..............................................................................................................................
NET INVESTMENT INCOME 635,917 2,445,163 504,574 1,039,963 179,797 233,107
--------- ----------- --------- ---------- --------- ----------
..............................................................................................................................
NET REALIZED/UNREALIZED
GAINS (LOSSES) FROM
INVESTMENTS: (a)
Net realized gains (losses)
from investments 25,563 3,256,381 198,877 107,382 248,079 630,297
Change in unrealized
appreciation/depreciation
from investments (596,899) (4,270,788) (443,588) (516,089) (309,200) 2,109,832
--------- ----------- --------- ---------- --------- ----------
..............................................................................................................................
Net realized/unrealized
gains from investments (571,336) (1,014,407) (244,711) (408,707) (61,121) 2,740,129
--------- ----------- --------- ---------- --------- ----------
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $ 64,581 $ 1,430,756 $ 259,863 $ 631,256 $ 118,676 $2,973,236
--------- ----------- --------- ---------- --------- ----------
--------- ----------- --------- ---------- --------- ----------
</Table>
- --------------
(a) 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 31
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED APRIL 30, 2005
(UNAUDITED)
...................................................................
<Table>
<Caption>
GROWTH AND INTERNATIONAL OVERSEAS
INCOME MID-CAP EQUITY EQUITY
FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ -- $ 2,359 $ -- $ --
Dividends 2,472,976 386,065 -- --
Dividends from affiliated investments 4,191 5,011 -- --
Income from securities lending 97 571 -- --
Investment income from portfolio -- -- 2,089,782 289,245
Tax reclaims -- -- 73,948 889
Foreign tax withholding from portfolio -- -- (211,453) (29,258)
Expenses from portfolio -- -- (708,435) (98,436)
----------- ----------- ----------- ----------
TOTAL INVESTMENT INCOME (LOSS) 2,477,264 394,806 1,243,842 162,440
----------- ----------- ----------- ----------
..................................................................................................................
EXPENSES:
Investment management 558,055 337,254 -- --
Administration 76,638 45,888 30,996 4,306
Distribution:
Class B Shares 15,010 27,621 -- 8,454
Class C Shares 163 376 -- 543
Shareholder servicing:
Class A (Investor) Shares 1,833 2,460 -- 25,358
Class B Shares 5,003 9,215 -- 2,818
Class C Shares 54 125 -- 181
Accounting 31,615 31,271 4,627 13,879
Custodian 29,192 24,132 -- --
Registration 10,200 1,661 3,719 3,577
Printing 19,783 16,006 9,856 2,162
Transfer agent 37,791 49,748 17,248 34,174
Trustee 4,710 2,889 1,693 232
Other 21,569 13,661 7,104 1,097
----------- ----------- ----------- ----------
Total expenses before fee reductions 811,616 562,307 75,243 96,781
Fees reduced by Investment Adviser (50,411) (93,656) -- --
----------- ----------- ----------- ----------
NET EXPENSES 761,205 468,651 75,243 96,781
----------- ----------- ----------- ----------
..................................................................................................................
NET INVESTMENT INCOME (LOSS) 1,716,059 (74,645) 1,168,599 65,659
----------- ----------- ----------- ----------
..................................................................................................................
NET REALIZED/UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS AND FOREIGN
CURRENCIES: (a)
Net realized gains (losses) from
investment and foreign currency
transactions 12,697,495 25,892,173 7,526,373 1,022,779
Change in unrealized
appreciation/depreciation from
investments and foreign currencies (8,790,047) (17,015,930) 4,109,469 597,941
----------- ----------- ----------- ----------
..................................................................................................................
Net realized/unrealized gains from
investment and foreign currency
transactions 3,907,448 8,876,243 11,635,842 1,620,720
----------- ----------- ----------- ----------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS $ 5,623,507 $ 8,801,598 $12,804,441 $1,686,379
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
<Caption>
SMALL CAP
EQUITY OPPORTUNITY
FUND FUND
--------------- ---------------
Interest $ -- $ --
Dividends -- --
Dividends from affiliated investments -- --
Income from securities lending -- --
Investment income from portfolio 489,806 54,633
Tax reclaims -- --
Foreign tax withholding from portfolio -- --
Expenses from portfolio (987,712) (109,340)
----------- ----------
TOTAL INVESTMENT INCOME (LOSS) (497,906) (54,707)
----------- ----------
.............................................................................
EXPENSES:
Investment management -- --
Administration 46,521 5,177
Distribution:
Class B Shares -- 17,702
Class C Shares -- 1,076
Shareholder servicing:
Class A (Investor) Shares -- 27,819
Class B Shares -- 5,901
Class C Shares -- 359
Accounting 4,746 13,879
Custodian -- --
Registration 6,297 3,552
Printing 15,821 3,070
Transfer agent 17,216 46,933
Trustee 3,232 314
Other 12,993 1,496
----------- ----------
Total expenses before fee reductions 106,826 127,278
Fees reduced by Investment Adviser -- (17,568)
----------- ----------
NET EXPENSES 106,826 109,710
----------- ----------
.............................................................................
NET INVESTMENT INCOME (LOSS) (604,732) (164,417)
----------- ----------
.............................................................................
NET REALIZED/UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS AND FOREIGN
CURRENCIES: (a)
Net realized gains (losses) from
investment and foreign currency
transactions 21,077,165 1,484,126
Change in unrealized
appreciation/depreciation from
investments and foreign currencies (13,771,064) (1,261,843)
----------- ----------
.............................................................................
Net realized/unrealized gains from
investment and foreign currency
transactions 7,306,101 222,283
----------- ----------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS $ 6,701,369 $ 57,866
----------- ----------
----------- ----------
</Table>
- --------------
(a) With the exception of Growth and Income Fund and Mid-Cap Fund, represents
amounts allocated from the respective Master Portfolios.
(b) Includes $357,645 related to the reimbursement of realized losses on the
disposal of the investment in certain investment companies. (see note 7)
32 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
......................................................................
<Table>
<Caption>
LIMITED MATURITY FUND FIXED INCOME FUND
- ---------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 635,917 $ 1,249,682 $ 2,445,163 $ 4,468,204
Net realized gains (losses) from
investment transactions 25,563 331,944 3,256,381 1,275,025
Change in unrealized
appreciation/depreciation from
investments (596,899) 32,330 (4,270,788) (86,587)
----------- ----------- ------------ ------------
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS 64,581 1,613,956 1,430,756 5,656,642
----------- ----------- ------------ ------------
............................................................................................................................
DIVIDENDS:
NET INVESTMENT INCOME:
Class A (Investor) Shares (25,576) (79,559) -- --
Class B Shares (85,856) (161,712) -- --
Class C Shares (9,026) (37,490) -- --
Class Y Shares (570,100) (1,086,077) -- --
Advisor Shares -- -- (2,331,521) (4,500,718)
NET REALIZED GAINS:
Class A (Investor) Shares (8,295) (135,028) -- --
Class B Shares (34,076) (282,131) -- --
Class C Shares (3,623) (105,514) -- --
Class Y Shares (168,256) (1,415,704) -- --
----------- ----------- ------------ ------------
CHANGE IN NET ASSETS FROM
SHAREHOLDER DIVIDENDS (904,808) (3,303,215) (2,331,521) (4,500,718)
----------- ----------- ------------ ------------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS (2,669,577) (2,200,141) 1,130,121 (2,606,046)
----------- ----------- ------------ ------------
CHANGE IN NET ASSETS (3,509,804) (3,889,400) 229,356 (1,450,122)
............................................................................................................................
NET ASSETS:
Beginning of period 39,774,142 43,663,542 109,518,309 110,968,431
----------- ----------- ------------ ------------
End of period $36,264,338 $39,774,142 $109,747,665 $109,518,309
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
Accumulated net investment
income (loss) $ (56,914) $ (2,273) $ 175,068 $ 61,426
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
</Table>
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 33
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
......................................................................
<Table>
<Caption>
LIMITED MATURITY FUND FIXED INCOME FUND
- ---------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Proceeds from shares issued $ 10,682 $ 420,136 $ -- $ --
Dividends reinvested 31,269 200,881 -- --
Cost of shares redeemed (238,548) (2,229,725) -- --
----------- ------------- ------------ ------------
Class A (Investor) Shares capital
transactions (196,597) (1,608,708) -- --
----------- ------------- ------------ ------------
............................................................................................................................
CLASS B SHARES:
Proceeds from shares issued 291,387 893,262 -- --
Dividends reinvested 100,779 397,930 -- --
Cost of shares redeemed (773,805) (1,163,686) -- --
----------- ------------- ------------ ------------
Class B Shares capital transactions (381,639) 127,506 -- --
----------- ------------- ------------ ------------
............................................................................................................................
CLASS C SHARES:
Proceeds from shares issued 72,900 83,393 -- --
Dividends reinvested 12,456 141,149 -- --
Cost of shares redeemed (157,700) (1,990,271) -- --
----------- ------------- ------------ ------------
Class C Shares capital transactions (72,344) (1,765,729) -- --
----------- ------------- ------------ ------------
............................................................................................................................
CLASS Y SHARES:
Proceeds from shares issued 2,132,269 9,931,279 -- --
Dividends reinvested 562,443 1,913,383 -- --
Cost of shares redeemed (4,713,709) (10,797,872) -- --
----------- ------------- ------------ ------------
Class Y Shares capital transactions (2,018,997) 1,046,790 -- --
----------- ------------- ------------ ------------
............................................................................................................................
ADVISOR SHARES:
Proceeds from shares issued -- -- 12,562,905 26,239,405
Dividends reinvested -- -- 1,406,291 2,670,922
Cost of shares redeemed -- -- (12,839,075) (31,516,373)
----------- ------------- ------------ ------------
Advisor Shares capital transactions -- -- 1,130,121 (2,606,046)
----------- ------------- ------------ ------------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $(2,669,577) $ (2,200,141) $ 1,130,121 $ (2,606,046)
----------- ------------- ------------ ------------
----------- ------------- ------------ ------------
............................................................................................................................
SHARE TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Issued 1,075 41,873 -- --
Reinvested 3,146 19,911 -- --
Redeemed (24,007) (223,097) -- --
----------- ------------- ------------ ------------
Change in Class A (Investor) Shares (19,786) (161,313) -- --
----------- ------------- ------------ ------------
............................................................................................................................
CLASS B SHARES:
Issued 29,331 88,212 -- --
Reinvested 10,120 39,414 -- --
Redeemed (77,866) (115,235) -- --
----------- ------------- ------------ ------------
Change in Class B Shares (38,415) 12,391 -- --
----------- ------------- ------------ ------------
............................................................................................................................
CLASS C SHARES:
Issued 7,283 8,294 -- --
Reinvested 1,252 13,973 -- --
Redeemed (15,803) (197,361) -- --
----------- ------------- ------------ ------------
Change in Class C Shares (7,268) (175,094) -- --
----------- ------------- ------------ ------------
............................................................................................................................
CLASS Y SHARES:
Issued 214,596 984,517 -- --
Reinvested 56,524 189,646 -- --
Redeemed (474,415) (1,068,607) -- --
----------- ------------- ------------ ------------
Change in Class Y Shares (203,295) 105,556 -- --
----------- ------------- ------------ ------------
............................................................................................................................
ADVISOR SHARES:
Issued -- -- 1,166,091 2,434,997
Reinvested -- -- 130,409 247,974
Redeemed -- -- (1,192,783) (2,927,030)
----------- ------------- ------------ ------------
Change in Advisor Shares -- -- 103,717 (244,059)
----------- ------------- ------------ ------------
</Table>
34 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
................................................................................
<Table>
<Caption>
BOND FUND NEW YORK TAX-FREE BOND FUND
- ---------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004
- --------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 504,574 $ 869,048 $ 1,039,963 $ 1,993,744
Net realized gains (losses) from
investment transactions 198,877 (157,901) 107,382 113,912
Change in unrealized
appreciation/depreciation from
investments (443,588) 377,523 (516,089) 817,257
----------- ----------- ----------- -----------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 259,863 1,088,670 631,256 2,924,913
----------- ----------- ----------- -----------
...........................................................................................................................
DIVIDENDS:
NET INVESTMENT INCOME:
Class A (Investor) Shares (361,781) (638,457) (508,052) (868,263)
Class B Shares (109,164) (223,750) (190,820) (419,400)
Class C Shares (6,402) (13,252) (23,679) (61,105)
Class Y Shares -- -- (309,505) (646,490)
NET REALIZED GAINS:
Class A (Investor) Shares -- -- (52,912) (120,953)
Class B Shares -- -- (26,947) (92,061)
Class C Shares -- -- (3,247) (15,865)
Class Y Shares -- -- (30,806) (96,127)
----------- ----------- ----------- -----------
CHANGE IN NET ASSETS FROM SHAREHOLDER
DIVIDENDS (477,347) (875,459) (1,145,968) (2,320,264)
----------- ----------- ----------- -----------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS 1,239,775 2,250,029 (894,629) 7,769,011
----------- ----------- ----------- -----------
CHANGE IN NET ASSETS 1,022,291 2,463,240 (1,409,341) 8,373,660
...........................................................................................................................
NET ASSETS:
Beginning of period 24,642,103 22,178,863 72,593,311 64,219,651
----------- ----------- ----------- -----------
End of period $25,664,394 $24,642,103 $71,183,970 $72,593,311
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Accumulated net investment income (loss) $ 39,014 $ 11,787 $ 7,910 $ 3
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</Table>
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 35
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
......................................................................
<Table>
<Caption>
NEW YORK
BOND FUND TAX-FREE BOND FUND
- ---------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Proceeds from shares issued $ 3,858,529 $11,120,582 $ 6,345,942 $ 19,778,905
Dividends reinvested 340,602 592,247 522,597 907,234
Cost of shares redeemed (2,760,276) (8,748,191) (5,419,470) (10,395,878)
----------- ----------- ----------- ------------
Class A (Investor) Shares capital
transactions 1,438,855 2,964,638 1,449,069 10,290,261
----------- ----------- ----------- ------------
..................................................................................................................................
CLASS B SHARES:
Proceeds from shares issued 175,896 899,953 549,625 2,134,581
Dividends reinvested 94,290 191,588 161,884 389,604
Cost of shares redeemed (504,844) (1,572,057) (1,363,617) (3,543,472)
----------- ----------- ----------- ------------
Class B Shares capital transactions (234,658) (480,516) (652,108) (1,019,287)
----------- ----------- ----------- ------------
..................................................................................................................................
CLASS C SHARES:
Proceeds from shares issued 41,250 9,167 15,978 276,101
Dividends reinvested 6,343 12,757 17,144 54,385
Cost of shares redeemed (12,015) (256,017) (274,562) (1,262,303)
----------- ----------- ----------- ------------
Class C Shares capital transactions 35,578 (234,093) (241,440) (931,817)
----------- ----------- ----------- ------------
..................................................................................................................................
CLASS Y SHARES:
Proceeds from shares issued -- -- 2,294,543 3,969,688
Dividends reinvested -- -- 64,702 188,028
Cost of shares redeemed -- -- (3,809,395) (4,727,862)
----------- ----------- ----------- ------------
Class Y Shares capital transactions -- -- (1,450,150) (570,146)
----------- ----------- ----------- ------------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $ 1,239,775 $ 2,250,029 $ (894,629) $ 7,769,011
----------- ----------- ----------- ------------
----------- ----------- ----------- ------------
..................................................................................................................................
SHARE TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Issued 365,739 1,055,569 564,096 1,759,416
Reinvested 32,299 56,325 46,419 80,838
Redeemed (263,157) (833,673) (482,348) (926,189)
----------- ----------- ----------- ------------
Change in Class A (Investor) Shares 134,881 278,221 128,167 914,065
----------- ----------- ----------- ------------
..................................................................................................................................
CLASS B SHARES:
Issued 16,715 85,059 48,957 189,522
Reinvested 8,953 18,245 14,408 34,705
Redeemed (48,047) (149,766) (121,457) (318,736)
----------- ----------- ----------- ------------
Change in Class B Shares (22,379) (46,462) (58,092) (94,509)
----------- ----------- ----------- ------------
..................................................................................................................................
CLASS C SHARES:
Issued 3,914 868 1,410 24,608
Reinvested 602 1,213 1,518 4,817
Redeemed (1,139) (24,313) (24,341) (112,449)
----------- ----------- ----------- ------------
Change in Class C Shares 3,377 (22,232) (21,413) (83,024)
----------- ----------- ----------- ------------
..................................................................................................................................
CLASS Y SHARES:
Issued -- -- 204,946 353,878
Reinvested -- -- 5,737 16,713
Redeemed -- -- (339,450) (421,929)
----------- ----------- ----------- ------------
Change in Class Y Shares -- -- (128,767) (51,338)
----------- ----------- ----------- ------------
</Table>
36 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
......................................................................
<Table>
<Caption>
GROWTH FUND VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2005 PERIOD ENDED APRIL 30, 2005 PERIOD ENDED
(UNAUDITED) OCTOBER 31, 2004(a) (UNAUDITED) OCTOBER 31, 2004(a)
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 179,797 $ (57,920) $ 233,107 $ 202,593
Net realized gains (losses) from
investment transactions 248,079 (1,428,444) 630,297 434,463
Change in unrealized
appreciation/depreciation from
investments (309,200) 1,153,083 2,109,832 2,013,798
----------- ----------- ----------- -----------
..................................................................................................................................
CHANGE IN NET ASSETS FROM OPERATIONS 118,676 (333,281) 2,973,236 2,650,854
----------- ----------- ----------- -----------
..................................................................................................................................
DIVIDENDS:
NET INVESTMENT INCOME:
Class A (Investor) Shares (48,913) -- (34,035) (68,463)
Class B Shares -- -- -- (1,749)
Class C Shares -- -- -- (444)
Class Y Shares (75,624) -- (71,695) (105,185)
NET REALIZED GAINS:
Class A (Investor) Shares -- -- (208,943) --
Class B Shares -- -- (18,614) --
Class C Shares -- -- (3,904) --
Class Y Shares -- -- (241,526) --
----------- ----------- ----------- -----------
CHANGE IN NET ASSETS FROM SHAREHOLDER
DIVIDENDS (124,537) -- (578,717) (175,841)
----------- ----------- ----------- -----------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS 2,141,384 38,531,244 (752,694) 46,393,483
----------- ----------- ----------- -----------
CHANGE IN NET ASSETS 2,135,523 38,197,963 1,641,825 48,868,496
..................................................................................................................................
NET ASSETS:
Beginning of period 38,197,963 -- 48,868,496 --
----------- ----------- ----------- -----------
End of period $40,333,486 $38,197,963 $50,510,321 $48,868,496
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Accumulated net investment income (loss) $ 55,260 $ -- $ 158,226 $ 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 37
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
......................................................................
<Table>
<Caption>
GROWTH FUND VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2005 PERIOD ENDED APRIL 30, 2005 PERIOD ENDED
(UNAUDITED) OCTOBER 31, 2004(a) (UNAUDITED) OCTOBER 31, 2004(a)
- ---------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Proceeds from shares issued $ 4,846,258 $19,786,406 $ 4,157,768 $23,212,388
Dividends reinvested 48,229 -- 240,422 67,173
Cost of shares redeemed (2,342,129) (2,253,596) (3,267,256) (3,411,150)
------------ ----------- ----------- -----------
Class A (Investor) Shares capital
transactions 2,552,358 17,532,810 1,130,934 19,868,411
------------ ----------- ----------- -----------
..................................................................................................................................
CLASS B SHARES:
Proceeds from shares issued 106,988 1,516,870 169,267 1,963,686
Dividends reinvested -- -- 18,057 1,711
Cost of shares redeemed (125,687) (93,968) (207,294) (124,729)
------------ ----------- ----------- -----------
Class B Shares capital transactions (18,699) 1,422,902 (19,970) 1,840,668
------------ ----------- ----------- -----------
..................................................................................................................................
CLASS C SHARES:
Proceeds from shares issued 2,100 329,711 1,800 402,773
Dividends reinvested -- -- 3,896 440
Cost of shares redeemed (4,021) (17,780) (3,700) (23,948)
------------ ----------- ----------- -----------
Class C Shares capital transactions (1,921) 311,931 1,996 379,265
------------ ----------- ----------- -----------
..................................................................................................................................
CLASS Y SHARES:
Proceeds from shares issued 2,261,318 20,852,452 2,406,904 26,452,278
Dividends reinvested 59,360 -- 281,406 81,165
Cost of shares redeemed (2,711,032) (1,588,851) (4,553,964) (2,228,304)
------------ ----------- ----------- -----------
Class Y Shares capital transactions (390,354) 19,263,601 (1,865,654) 24,305,139
------------ ----------- ----------- -----------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $ 2,141,384 $38,531,244 $ (752,694) $46,393,483
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
..................................................................................................................................
SHARE TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Issued 371,457 1,564,821 293,164 1,818,480
Reinvested 3,648 -- 16,733 5,025
Redeemed (180,446) (180,067) (229,572) (259,287)
------------ ----------- ----------- -----------
Change in Class A (Investor) Shares 194,659 1,384,754 80,325 1,564,218
------------ ----------- ----------- -----------
..................................................................................................................................
CLASS B SHARES:
Issued 8,531 123,574 12,379 159,465
Reinvested -- -- 1,299 133
Redeemed (10,055) (7,770) (15,138) (9,945)
------------ ----------- ----------- -----------
Change in Class B Shares (1,524) 115,804 (1,460) 149,653
------------ ----------- ----------- -----------
..................................................................................................................................
CLASS C SHARES:
Issued 169 26,836 131 32,464
Reinvested -- -- 279 34
Redeemed (314) (1,459) (267) (1,864)
------------ ----------- ----------- -----------
Change in Class C Shares (145) 25,377 143 30,634
------------ ----------- ----------- -----------
..................................................................................................................................
CLASS Y SHARES:
Issued 173,175 1,651,120 169,664 2,077,872
Reinvested 4,494 -- 19,613 6,073
Redeemed (209,042) (127,913) (320,265) (169,950)
------------ ----------- ----------- -----------
Change in Class Y Shares (31,373) 1,523,207 (130,988) 1,913,995
------------ ----------- ----------- -----------
</Table>
- --------------
(a) The Growth Fund and Value Fund commenced operations on May 7, 2004.
38 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
......................................................................
<Table>
<Caption>
GROWTH AND INCOME FUND MID-CAP FUND
- ---------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 1,716,059 $ 1,573,190 $ (74,645) $ (448,035)
Net realized gains (losses) from
investment transactions 12,697,495 9,000,926 25,892,173 21,489,500
Change in unrealized
appreciation/depreciation from
investments (8,790,047) (23,421) (17,015,930) (11,346,234)
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS FROM OPERATIONS 5,623,507 10,550,695 8,801,598 9,695,231
------------ ------------ ------------ ------------
..................................................................................................................................
DIVIDENDS:
NET INVESTMENT INCOME:
Class A (Investor) Shares (9,418) (12,296) -- --
Class B Shares (13,145) (876) -- --
Class C Shares (a) (176) (24) -- --
Class Y Shares (1,658,357) (1,535,871) -- --
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS FROM SHAREHOLDER
DIVIDENDS (1,681,096) (1,549,067) -- --
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS (23,157,522) (14,941,610) (61,553,622) (51,555,708)
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS (19,215,111) (5,939,982) (52,752,024) (41,860,477)
..................................................................................................................................
NET ASSETS:
Beginning of period 201,580,819 207,520,801 126,362,380 168,222,857
------------ ------------ ------------ ------------
End of period $182,365,708 $201,580,819 $ 73,610,356 $126,362,380
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Accumulated net investment income (loss) $ 601,546 $ 566,583 $ (74,645) $ --
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</Table>
- --------------
(a) Growth and Income Fund Class C commenced operations on November 3, 2003.
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 39
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
......................................................................
<Table>
<Caption>
GROWTH AND INCOME FUND MID-CAP FUND
- ---------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Proceeds from shares issued $ 128,795 $ 1,500,035 $ 139,324 $ 863,793
Dividends reinvested 9,179 12,137 -- --
Cost of shares redeemed (351,439) (1,915,097) (238,551) (614,831)
------------ ------------ ------------ ------------
Class A (Investor) Shares capital
transactions (213,465) (402,925) (99,227) 248,962
------------ ------------ ------------ ------------
..................................................................................................................................
CLASS B SHARES:
Proceeds from shares issued 435,515 1,837,750 350,866 1,257,527
Dividends reinvested 12,915 869 -- --
Cost of shares redeemed (338,389) (320,783) (568,067) (548,619)
------------ ------------ ------------ ------------
Class B Shares capital transactions 110,041 1,517,836 (217,201) 708,908
------------ ------------ ------------ ------------
..................................................................................................................................
CLASS C SHARES: (A)
Proceeds from shares issued 2,299 45,962 1,800 38,477
Dividends reinvested 168 -- -- --
Cost of shares redeemed -- (5,303) (25) (4,165)
------------ ------------ ------------ ------------
Class C Shares capital transactions 2,467 40,659 1,775 34,312
------------ ------------ ------------ ------------
..................................................................................................................................
CLASS Y SHARES:
Proceeds from shares issued 5,664,180 12,306,056 -- --
Dividends reinvested 400,662 348,375 -- --
Cost of shares redeemed (29,121,407) (28,751,611) -- --
------------ ------------ ------------ ------------
Class Y Shares capital transactions (23,056,565) (16,097,180) -- --
------------ ------------ ------------ ------------
..................................................................................................................................
TRUST SHARES:
Proceeds from shares issued -- -- 3,272,035 11,848,793
Cost of shares redeemed -- -- (15,953,724) (64,396,683)
Redemption in-kind (48,557,280) --
------------ ------------ ------------ ------------
Trust Shares capital transactions -- -- (61,238,969) (52,547,890)
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $(23,157,522) $(14,941,610) $(61,553,622) $(51,555,708)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
..................................................................................................................................
SHARE TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Issued 13,975 170,577 15,203 103,921
Reinvested 985 1,389 -- --
Redeemed (38,497) (218,685) (25,946) (74,968)
------------ ------------ ------------ ------------
Change in Class A (Investor) Shares (23,537) (46,719) (10,743) 28,953
------------ ------------ ------------ ------------
..................................................................................................................................
CLASS B SHARES:
Issued 47,921 209,864 39,606 155,872
Reinvested 1,401 101 -- --
Redeemed (37,573) (37,302) (64,982) (69,124)
------------ ------------ ------------ ------------
Change in Class B Shares 11,749 172,663 (25,376) 86,748
------------ ------------ ------------ ------------
..................................................................................................................................
CLASS C SHARES: (a)
Issued 255 5,315 201 4,931
Reinvested 18 -- -- --
Redeemed -- (595) (3) (506)
------------ ------------ ------------ ------------
Change in Class C Shares 273 4,720 198 4,425
------------ ------------ ------------ ------------
..................................................................................................................................
CLASS Y SHARES:
Issued 615,899 1,406,257 -- --
Reinvested 42,990 39,834 -- --
Redeemed (3,189,033) (3,307,085) -- --
------------ ------------ ------------ ------------
Change in Class Y Shares (2,530,144) (1,860,994) -- --
------------ ------------ ------------ ------------
..................................................................................................................................
TRUST SHARES:
Issued -- -- 353,284 1,427,284
Redeemed -- -- (1,737,778) --
Redemption in-kind -- -- (5,215,605) (7,710,357)
------------ ------------ ------------ ------------
Change in Trust Shares -- -- (6,600,099) (6,283,073)
------------ ------------ ------------ ------------
</Table>
- --------------
(a) Growth and Income Fund class C Shares commenced operations on November 3,
2003.
40 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
......................................................................
<Table>
<Caption>
INTERNATIONAL EQUITY FUND OVERSEAS EQUITY FUND
- ---------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 1,168,599 $ 1,840,313 $ 65,659 $ 118,843
Net realized gains (losses) from
investment and foreign currency
transactions 7,526,373 19,965,089 1,022,779 2,009,405
Change in unrealized
appreciation/depreciation from
investments and foreign currencies 4,109,469 2,586,405 597,941 693,652
------------ ------------ ----------- -----------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 12,804,441 24,391,807 1,686,379 2,821,900
------------ ------------ ----------- -----------
..................................................................................................................................
DIVIDENDS:
NET INVESTMENT INCOME:
Class A (Investor) Shares -- -- (86,749) (75,763)
Class B Shares -- -- -- --
Class C Shares -- -- -- --
Advisor Shares (2,396,450) (3,737,768) -- --
NET REALIZED GAINS FROM INVESTMENT AND
FOREIGN CURRENCY TRANSACTIONS:
Class A (Investor) Shares -- -- (1,064,452) --
Class B Shares -- -- (122,864) --
Class C Shares -- -- (7,702) --
------------ ------------ ----------- -----------
CHANGE IN NET ASSETS FROM SHAREHOLDER
DIVIDENDS (2,396,450) (3,737,768) (1,281,767) (75,763)
------------ ------------ ----------- -----------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS 4,248,817 4,005,057 2,052,766 5,879,349
------------ ------------ ----------- -----------
CHANGE IN NET ASSETS 14,656,808 24,659,096 2,457,378 8,625,486
..................................................................................................................................
NET ASSETS:
Beginning of period 148,316,775 123,657,679 19,919,219 11,293,733
------------ ------------ ----------- -----------
End of period $162,973,583 $148,316,775 $22,376,597 $19,919,219
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
Accumulated net investment income (loss) $ 838,670 $ 2,066,521 $ 65,679 $ 86,769
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
</Table>
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 41
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
......................................................................
<Table>
<Caption>
INTERNATIONAL EQUITY FUND OVERSEAS EQUITY FUND
- ---------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Proceeds from shares issued $ -- $ -- $ 3,663,913 $10,468,157
Dividends reinvested -- -- 1,137,895 74,544
Cost of shares redeemed -- -- (2,911,241) (5,380,471)
------------ ------------ ----------- -----------
Class A (Investor) Shares capital
transactions -- -- 1,890,567 5,162,230
------------ ------------ ----------- -----------
..................................................................................................................................
CLASS B SHARES:
Proceeds from shares issued -- -- 204,785 836,302
Dividends reinvested -- -- 119,012 --
Cost of shares redeemed -- -- (166,838) (111,311)
------------ ------------ ----------- -----------
Class B Shares capital
transactions -- -- 156,959 724,991
------------ ------------ ----------- -----------
..................................................................................................................................
CLASS C SHARES:
Proceeds from shares issued -- -- 1,800 24,526
Dividends reinvested -- -- 7,641 --
Cost of shares redeemed -- -- (4,201) (32,398)
------------ ------------ ----------- -----------
Class C Shares capital
transactions -- -- 5,240 (7,872)
------------ ------------ ----------- -----------
..................................................................................................................................
ADVISOR SHARES:
Proceeds from shares issued 15,317,898 26,978,110 -- --
Dividends reinvested 1,241,138 1,968,545 -- --
Cost of shares redeemed (12,310,219) (24,941,598) -- --
------------ ------------ ----------- -----------
Advisor Shares capital
transactions 4,248,817 4,005,057 -- --
------------ ------------ ----------- -----------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $ 4,248,817 $ 4,005,057 $ 2,052,766 $ 5,879,349
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
..................................................................................................................................
SHARE TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Issued -- -- 250,996 816,578
Reinvested -- -- 79,697 5,847
Redeemed -- -- (198,284) (411,221)
------------ ------------ ----------- -----------
Change in Class A (Investor)
Shares -- -- 132,409 411,204
------------ ------------ ----------- -----------
..................................................................................................................................
CLASS B SHARES:
Issued -- -- 14,500 67,626
Reinvested -- -- 8,631 --
Redeemed -- -- (11,832) (9,063)
------------ ------------ ----------- -----------
Change in Class B Shares -- -- 11,299 58,563
------------ ------------ ----------- -----------
..................................................................................................................................
CLASS C SHARES:
Issued -- -- 126 1,956
Reinvested -- -- 543 --
Redeemed -- -- (286) (2,475)
------------ ------------ ----------- -----------
Change in Class C Shares -- -- 383 (519)
------------ ------------ ----------- -----------
..................................................................................................................................
ADVISOR SHARES:
Issued 944,985 1,962,577 -- --
Reinvested 77,814 151,249 -- --
Redeemed (761,522) (1,835,748) -- --
------------ ------------ ----------- -----------
Change in Advisor Shares 261,277 278,078 -- --
------------ ------------ ----------- -----------
</Table>
42 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
......................................................................
<Table>
<Caption>
SMALL CAP EQUITY FUND OPPORTUNITY FUND
- ---------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ (604,732) $ (1,757,367) $ (164,417) $ (350,135)
Net realized gains (losses) from
investment transactions 21,077,165 30,929,551 1,484,126 1,634,222
Change in unrealized
appreciation/depreciation from
investments (13,771,064) (11,885,640) (1,261,843) (121,946)
------------ ------------ ----------- -----------
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS 6,701,369 17,286,544 57,866 1,162,141
------------ ------------ ----------- -----------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS (78,118,526) (63,689,406) (356,949) 3,652,913
------------ ------------ ----------- -----------
CHANGE IN NET ASSETS (71,417,157) (46,402,862) (299,083) 4,815,054
..................................................................................................................................
NET ASSETS:
Beginning of period 279,668,949 326,071,811 25,856,226 21,041,172
------------ ------------ ----------- -----------
End of period $208,251,792 $279,668,949 $25,557,143 $25,856,226
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
Accumulated net investment
income (loss) $ (604,732) $ -- $ (164,417) $ --
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
</Table>
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 43
HSBC INVESTOR FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
......................................................................
<Table>
<Caption>
SMALL CAP EQUITY FUND OPPORTUNITY FUND
- ---------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Proceeds from shares issued $ -- $ -- $ 3,014,001 $11,062,186
Cost of shares redeemed -- -- (3,166,963) (7,827,796)
------------ ------------- ----------- -----------
Class A (Investor) Shares capital
transactions -- -- (152,962) 3,234,390
------------ ------------- ----------- -----------
..................................................................................................................................
CLASS B SHARES:
Proceeds from shares issued -- -- 194,455 1,037,036
Cost of shares redeemed -- -- (328,761) (548,444)
------------ ------------- ----------- -----------
Class B Shares capital transactions -- -- (134,306) 488,592
------------ ------------- ----------- -----------
..................................................................................................................................
CLASS C SHARES:
Proceeds from shares issued -- -- 4,495 46,142
Cost of shares redeemed -- -- (74,176) (116,211)
------------ ------------- ----------- -----------
Class C Shares capital transactions -- -- (69,681) (70,069)
------------ ------------- ----------- -----------
..................................................................................................................................
ADVISOR SHARES:
Proceeds from shares issued 10,042,322 49,388,314 -- --
Cost of shares redeemed (88,160,848) (113,077,720) -- --
------------ ------------- ----------- -----------
Advisor Shares capital transactions (78,118,526) (63,689,406) -- --
------------ ------------- ----------- -----------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $(78,118,526) $ (63,689,406) $ (356,949) $ 3,652,913
------------ ------------- ----------- -----------
------------ ------------- ----------- -----------
..................................................................................................................................
SHARE TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Issued -- -- 261,844 1,041,089
Redeemed -- -- (275,770) (736,333)
------------ ------------- ----------- -----------
Change in Class A (Investor) Shares -- -- (13,926) 304,756
------------ ------------- ----------- -----------
..................................................................................................................................
CLASS B SHARES:
Issued -- -- 18,036 102,168
Redeemed -- -- (30,577) (55,286)
------------ ------------- ----------- -----------
Change in Class B Shares -- -- (12,541) 46,882
------------ ------------- ----------- -----------
..................................................................................................................................
CLASS C SHARES:
Issued -- -- 413 4,725
Redeemed -- -- (7,118) (11,371)
------------ ------------- ----------- -----------
Change in Class C Shares -- -- (6,705) (6,646)
------------ ------------- ----------- -----------
..................................................................................................................................
ADVISOR SHARES:
Issued 726,778 3,907,178 -- --
Redeemed (6,277,573) (8,901,381) -- --
------------ ------------- ----------- -----------
Change in Advisor Shares (5,550,795) (4,994,203) -- --
------------ ------------- ----------- -----------
</Table>
44 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements.
HSBC INVESTOR FUNDS -- LIMITED MATURITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
......................................................................
<Table>
<Caption>
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.(k)
INVESTMENT ACTIVITIES DIVIDENDS
------------------------------------------ -------------------------------------
NET REALIZED AND NET
NET ASSET UNREALIZED GAINS TOTAL REALIZED
VALUE, NET (LOSSES) FROM FROM NET GAINS FROM
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Period ended October 31,
2001 (b) $10.04 0.33 0.54 0.87 (0.33) -- (0.33)
Year ended October 31, 2002 10.58 0.44 (0.10) 0.34 (0.44) (0.05) (0.49)
Year ended October 31, 2003 10.43 0.33 0.08 0.41 (0.37) -- (0.37)
Year ended October 31, 2004 10.47 0.32* 0.06 0.38 (0.33) (0.46) (0.79)
Six months ended April 30,
2005 (Unaudited) 10.06 0.16* (0.13) 0.03 (0.18) (0.06) (0.24)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31,
2001 (g) $10.07 0.25 0.52 0.77 (0.25) -- (0.25)
Year ended October 31, 2002 10.59 0.36 (0.09) 0.27 (0.36) (0.05) (0.41)
Year ended October 31, 2003 10.45 0.25 0.08 0.33 (0.29) -- (0.29)
Year ended October 31, 2004 10.49 0.23 0.08 0.31 (0.26) (0.46) (0.72)
Six months ended April 30,
2005 (Unaudited) 10.08 0.12 (0.14) (0.02) (0.14) (0.06) (0.20)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31,
2001 (i) $10.07 0.26 0.51 0.77 (0.26) -- (0.26)
Year ended October 31, 2002 10.58 0.36 (0.09) 0.27 (0.36) (0.05) (0.41)
Year ended October 31, 2003 10.44 0.25 0.09 0.34 (0.29) -- (0.29)
Year ended October 31, 2004 10.49 0.22* 0.08 0.30 (0.26) (0.46) (0.72)
Six months ended April 30,
2005 (Unaudited) 10.07 0.12* (0.13) (0.01) (0.14) (0.06) (0.20)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Period ended October 31,
2001 (j) $10.00 0.37 0.59 0.96 (0.37) -- (0.37)
Year ended October 31, 2002 10.59 0.46 (0.09) 0.37 (0.46) (0.05) (0.51)
Year ended October 31, 2003 10.45 0.33 0.10 0.43 (0.40) -- (0.40)
Year ended October 31, 2004 10.48 0.33 0.09 0.42 (0.36) (0.46) (0.82)
Six months ended April 30,
2005 (Unaudited) 10.08 0.17 (0.14) 0.03 (0.19) (0.06) (0.25)
- ------------------------------------------------------------------------------------------------------------------------------
<Caption>
RATIOS/SUPPLEMENTARY DATA
--------------------------------------------------------------------------
RATIO OF
NET
RATIO OF INVESTMENT RATIO OF
EXPENSES INCOME TO EXPENSES
NET ASSET NET ASSETS AT TO AVERAGE AVERAGE TO AVERAGE
VALUE, END TOTAL END OF NET NET NET PORTFOLIO
OF PERIOD RETURN(c) PERIOD (000'S) ASSETS(e) ASSETS(e) ASSETS(e)(f) TURNOVER(a)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR)
SHARES
Period ended
October 31, 2001(b) $10.58 8.78 %(d) $ 977 1.10% 4.27% 1.49% 102.01%
Year ended
October 31, 2002 10.43 3.34 %(d) 1,608 0.96% 4.14% 0.96% 44.04%
Year ended
October 31, 2003 10.47 3.97 %(d) 3,309 1.01% 2.99% 1.01% 98.42%
Year ended
October 31, 2004 10.06 3.90 %(d) 1,558 1.10% 3.01% 1.21% 50.06%
Six months ended
April 30, 2005
(Unaudited) 9.85 0.25 %(d) 1,329 0.94% 3.33% 1.03% 13.36%
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended
October 31, 2001(g) $10.59 8.02 %(h) $ 896 1.85% 3.52% 7.59% 102.01%
Year ended
October 31, 2002 10.45 2.65 %(h) 4,178 1.70% 3.30% 1.70% 44.04%
Year ended
October 31, 2003 10.49 3.19 %(h) 6,443 1.73% 2.30% 1.73% 98.42%
Year ended
October 31, 2004 10.08 3.11 %(h) 6,321 1.85% 2.28% 1.96% 50.06%
Six months ended
April 30, 2005
(Unaudited) 9.86 (0.23)%(h) 5,804 1.69% 2.57% 1.77% 13.36%
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended
October 31, 2001(i) $10.58 7.80 %(h) $ 161 1.85% 3.60% 17.61% 102.01%
Year ended
October 31, 2002 10.44 2.65 %(h) 1,759 1.70% 3.26% 1.70% 44.04%
Year ended
October 31, 2003 10.49 3.29 %(h) 2,544 1.73% 2.31% 1.73% 98.42%
Year ended
October 31, 2004 10.07 3.03 %(h) 679 1.85% 2.25% 1.96% 50.06%
Six months ended
April 30, 2005
(Unaudited) 9.86 (0.13)%(h) 593 1.69% 2.57% 1.77% 13.36%
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Period ended
October 31, 2001 (j) $10.59 9.78 % $67,315 0.85% 4.59% 0.85% 102.01%
Year ended
October 31, 2002 10.45 3.69 % 94,886 0.71% 4.42% 0.71% 44.04%
Year ended
October 31, 2003 10.48 4.12 % 31,368 0.69% 3.62% 0.69% 98.42%
Year ended
October 31, 2004 10.08 4.25 % 31,217 0.85% 3.28% 0.96% 50.06%
Six months ended
April 30, 2005
(Unaudited) 9.86 0.27 % 28,538 0.69% 3.57% 0.77% 13.36%
- ----------------------------------------------------------------------------------------------------------------------------------
</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 for periods less than one year.
(d) Excludes sales charge.
(e) Annualized for periods less than one year.
(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.
See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS 45
HSBC ADVISOR FUNDS TRUST -- FIXED INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
......................................................................
<Table>
<Caption>
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (b)
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
Six months ended April 30, 2005
(Unaudited) 10.85 0.24 (0.10) 0.14
- ----------------------------------------------------------------------------------------------
<Caption>
DIVIDENDS
----------------------
NET ASSET
NET VALUE,
INVESTMENT TOTAL END OF TOTAL
INCOME DIVIDENDS PERIOD RETURN(c)
- -------------------------------------------------------------------------------------
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%
Six months ended April 30, 2005
(Unaudited) (0.23) (0.23) 10.76 1.29%
- -------------------------------------------------------------------------------------
<Caption>
RATIOS/SUPPLEMENTARY DATA
---------------------------------------------------------
RATIO OF NET
NET ASSETS RATIO OF INVESTMENT
AT END OF EXPENSES TO INCOME TO
PERIOD AVERAGE NET AVERAGE NET PORTFOLIO
(000'S) ASSETS(d) ASSETS(d) 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%
Six months ended April 30, 2005
(Unaudited) 109,748 0.41% 4.48% 47.83%
- ----------------------------------------------------------------------------------------------
</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.
(c) Not Annualized for periods less than one year.
(d) Annualized for periods less than one year.
See notes to financial statements.
46 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR FUNDS -- BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
......................................................................
<Table>
<Caption>
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (e)
INVESTMENT ACTIVITIES DIVIDENDS
------------------------------------------ ----------------------
NET REALIZED AND
UNREALIZED GAINS
NET ASSET (LOSSES) FROM TOTAL
VALUE, NET INVESTMENT AND FROM NET
BEGINNING INVESTMENT FUTURES INVESTMENT INVESTMENT TOTAL
OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME DIVIDENDS
- ----------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31,
2000 $ 9.78 0.61 (0.01) 0.60 (0.62) (0.62)
Year ended October 31,
2001 9.76 0.60 0.77 1.37 (0.58) (0.58)
Year ended October 31,
2002 10.55 0.49 (0.14) 0.35 (0.52) (0.52)
Year ended October 31,
2003 10.38 0.40 0.13 0.53 (0.43) (0.43)
Year ended October 31,
2004 10.48 0.40 0.12 0.52 (0.40) (0.40)
Six months ended April 30,
2005 (Unaudited) 10.60 0.23 (0.11) 0.12 (0.21) (0.21)
- ----------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31,
2000 $ 9.78 0.54 (0.01) 0.53 (0.54) (0.54)
Year ended October 31,
2001 9.77 0.52 0.76 1.28 (0.50) (0.50)
Year ended October 31,
2002 10.55 0.41 (0.13) 0.28 (0.44) (0.44)
Year ended October 31,
2003 10.39 0.32 0.13 0.45 (0.35) (0.35)
Year ended October 31,
2004 10.49 0.32 0.11 0.43 (0.32) (0.32)
Six months ended April 30,
2005 (Unaudited) 10.60 0.19 (0.11) 0.08 (0.17) (0.17)
- ----------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31,
2000 $ 9.77 0.55 (0.01) 0.54 (0.55) (0.55)
Year ended October 31,
2001 9.76 0.51 0.77 1.28 (0.50) (0.50)
Year ended October 31,
2002 10.54 0.41 (0.13) 0.28 (0.44) (0.44)
Year ended October 31,
2003 10.38 0.32 0.13 0.45 (0.35) (0.35)
Year ended October 31,
2004 10.48 0.32 0.11 0.43 (0.32) (0.32)
Six months ended April 30,
2005 (Unaudited) 10.59 0.19 (0.10) 0.09 (0.17) (0.17)
- ----------------------------------------------------------------------------------------------------------
<Caption>
RATIOS/SUPPLEMENTARY DATA
------------------------------------------------------------------------
RATIO OF RATIO OF NET
NET ASSET NET ASSETS EXPENSES INVESTMENT RATIO OF
VALUE, AT END OF TO AVERAGE INCOME TO EXPENSES TO
END OF TOTAL PERIOD NET AVERAGE NET AVERAGE NET PORTFOLIO
PERIOD RETURN(f) (000'S) ASSETS(g) ASSETS(g) ASSETS(g)(a) TURNOVER(b)
- --------------------------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31,
2000 $ 9.76 6.39%(c) $ 3,828 1.10% 6.13% 3.31% 440.49%
Year ended October 31,
2001 10.55 14.41%(c) 6,683 1.10% 5.92% 2.61% 341.26%
Year ended October 31,
2002 10.38 3.44%(c) 12,053 1.10% 4.52% 1.47% 77.82%
Year ended October 31,
2003 10.48 5.17%(c) 14,143 1.10% 3.76% 1.21% 70.91%
Year ended October 31,
2004 10.60 5.07%(c) 17,248 1.04% 3.78% 1.26% 34.88%
Six months ended April 30,
2005 (Unaudited) 10.51 1.11%(c) 18,529 0.74% 4.15% 1.03% 47.83%
- --------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31,
2000 $ 9.77 5.67%(d) $ 279 1.85% 5.38% 4.03% 440.49%
Year ended October 31,
2001 10.55 13.43%(d) 1,494 1.85% 5.04% 3.32% 341.26%
Year ended October 31,
2002 10.39 2.76%(d) 6,124 1.85% 3.66% 2.18% 77.82%
Year ended October 31,
2003 10.49 4.38%(d) 7,430 1.85% 3.01% 1.96% 70.91%
Year ended October 31,
2004 10.60 4.19%(d) 7,017 1.79% 3.05% 2.01% 34.88%
Six months ended April 30,
2005 (Unaudited) 10.51 0.73%(d) 6,726 1.49% 3.41% 1.78% 47.83%
- --------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31,
2000 $ 9.76 5.71%(d) $ 138 1.85% 5.38% 4.05% 440.49%
Year ended October 31,
2001 10.54 13.44%(d) 526 1.85% 5.11% 3.34% 341.26%
Year ended October 31,
2002 10.38 2.77%(d) 983 1.85% 3.75% 2.21% 77.82%
Year ended October 31,
2003 10.48 4.39%(d) 606 1.85% 3.06% 1.97% 70.91%
Year ended October 31,
2004 10.59 4.20%(d) 377 1.80% 3.07% 2.02% 34.88%
Six months ended April 30,
2005 (Unaudited) 10.51 0.83%(d) 409 1.48% 3.41% 1.77% 47.83%
- --------------------------------------------------------------------------------------------------------------------------------
</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.
(f) Not Annualized for periods less than one year.
(g) Annualized for periods less than one year.
See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS 47
HSBC INVESTOR FUNDS -- NEW YORK TAX-FREE BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
......................................................................
<Table>
<Caption>
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- -------------------------------------
NET REALIZED
AND UNREALIZED NET
NET ASSET GAINS (LOSSES) TOTAL REALIZED
VALUE, NET FROM FROM NET GAINS FROM
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- -----------------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31,
2000 $10.08 0.46 0.33 0.79 (0.46) (0.02) (0.48)
Year ended October 31,
2001 10.39 0.41 0.54 0.95 (0.41) -- (0.41)
Year ended October 31,
2002 10.93 0.38 0.16 0.54 (0.38) -- (0.38)
Year ended October 31,
2003 11.09 0.38 0.12 0.50 (0.38) -- (0.38)
Year ended October 31,
2004 11.21 0.34 0.17 0.51 (0.34) (0.06) (0.40)
Six months ended April 30,
2005 (Unaudited) 11.32 0.17 (0.06) 0.11 (0.17) (0.02) (0.19)
- -----------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31,
2000 $10.07 0.39 0.33 0.72 (0.39) (0.02) (0.41)
Year ended October 31,
2001 10.38 0.33 0.54 0.87 (0.33) -- (0.33)
Year ended October 31,
2002 10.92 0.30 0.16 0.46 (0.30) -- (0.30)
Year ended October 31,
2003 11.08 0.30 0.12 0.42 (0.30) -- (0.30)
Year ended October 31,
2004 11.20 0.25 0.17 0.42 (0.25) (0.06) (0.31)
Six months ended April 30,
2005 (Unaudited) 11.31 0.13 (0.06) 0.07 (0.13) (0.02) (0.15)
- -----------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31,
2000 $10.11 0.39 0.33 0.72 (0.39) (0.02) (0.41)
Year ended October 31,
2001 10.42 0.33 0.54 0.87 (0.33) -- (0.33)
Year ended October 31,
2002 10.96 0.30 0.16 0.46 (0.30) -- (0.30)
Year ended October 31,
2003 11.12 0.30 0.13 0.43 (0.30) -- (0.30)
Year ended October 31,
2004 11.25 0.25 0.16 0.41 (0.25) (0.06) (0.31)
Six months ended April 30,
2005 (Unaudited) 11.35 0.13 (0.06) 0.07 (0.13) (0.02) (0.15)
- -----------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Year ended October 31,
2000 $10.07 0.49 0.34 0.83 (0.49) (0.02) (0.51)
Year ended October 31,
2001 10.39 0.44 0.54 0.98 (0.44) -- (0.44)
Year ended October 31,
2002 10.93 0.41 0.16 0.57 (0.41) -- (0.41)
Year ended October 31,
2003 11.09 0.41 0.12 0.53 (0.41) -- (0.41)
Year ended October 31,
2004 11.21 0.37 0.17 0.54 (0.37) (0.06) (0.43)
Six months ended April 30,
2005 (Unaudited) 11.32 0.18 (0.06) 0.12 (0.18) (0.02) (0.20)
- -----------------------------------------------------------------------------------------------------------------------
<Caption>
RATIOS/SUPPLEMENTARY DATA
---------------------------------------------------------------------
RATIO OF NET
NET ASSET NET ASSETS RATIO OF INVESTMENT RATIO OF
VALUE, AT END OF EXPENSES TO INCOME TO EXPENSES TO
END OF TOTAL PERIOD AVERAGE NET AVERAGE NET AVERAGE NET PORTFOLIO
PERIOD RETURN(e) (000'S) ASSETS(f) ASSETS(f) ASSETS(f)(c) TURNOVER(a)
- -----------------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31,
2000 $10.39 8.03%(b) $12,401 0.93% 4.60% 1.06% 34.12%
Year ended October 31,
2001 10.93 9.26%(b) 17,722 0.95% 3.91% 1.07% 0.00%
Year ended October 31,
2002 11.09 5.08%(b) 16,341 0.95% 3.52% 0.95% 30.70%
Year ended October 31,
2003 11.21 4.57%(b) 22,326 0.91% 3.39% 0.91% 29.79%
Year ended October 31,
2004 11.32 4.57%(b) 32,889 0.87% 3.01% 0.87% 26.96%
Six months ended April 30,
2005 (Unaudited) 11.24 0.93%(b) 34,100 0.86% 3.02% 0.88% 10.39%
- -----------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31,
2000 $10.38 7.27%(d) $ 828 1.70% 3.81% 1.74% 34.12%
Year ended October 31,
2001 10.92 8.44%(d) 5,619 1.70% 3.05% 1.82% 0.00%
Year ended October 31,
2002 11.08 4.30%(d) 12,699 1.70% 2.74% 1.70% 30.70%
Year ended October 31,
2003 11.20 3.80%(d) 18,352 1.66% 2.64% 1.66% 29.79%
Year ended October 31,
2004 11.31 3.80%(d) 17,457 1.62% 2.27% 1.62% 26.96%
Six months ended April 30,
2005 (Unaudited) 11.23 0.56%(d) 16,682 1.61% 2.28% 1.63% 10.39%
- -----------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31,
2000 $10.42 7.23%(d) $ 416 1.71% 3.77% 1.73% 34.12%
Year ended October 31,
2001 10.96 8.40%(d) 1,523 1.70% 3.04% 1.83% 0.00%
Year ended October 31,
2002 11.12 4.28%(d) 2,608 1.70% 2.74% 1.70% 30.70%
Year ended October 31,
2003 11.25 3.87%(d) 3,252 1.66% 2.64% 1.66% 29.79%
Year ended October 31,
2004 11.35 3.69%(d) 2,340 1.62% 2.26% 1.62% 26.96%
Six months ended April 30,
2005 (Unaudited) 11.27 0.56%(d) 2,082 1.61% 2.27% 1.63% 10.39%
- -----------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Year ended October 31,
2000 $10.39 8.41% $ 9,514 0.69% 4.82% 0.78% 34.12%
Year ended October 31,
2001 10.93 9.53% 14,989 0.70% 4.19% 0.83% 0.00%
Year ended October 31,
2002 11.09 5.34% 19,753 0.70% 3.76% 0.70% 30.70%
Year ended October 31,
2003 11.21 4.84% 20,290 0.67% 3.67% 0.67% 29.79%
Year ended October 31,
2004 11.32 4.83% 19,908 0.62% 3.27% 0.62% 26.96%
Six months ended April 30,
2005 (Unaudited) 11.24 1.06% 18,320 0.61% 3.27% 0.63% 10.39%
- -----------------------------------------------------------------------------------------------------------------------
</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.
(e) Not Annualized for periods less than one year.
(f) Annualized for periods less than one year.
See notes to financial statements.
48 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR FUNDS -- GROWTH FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
......................................................................
<Table>
<Caption>
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (h)
INVESTMENT ACTIVITIES DIVIDENDS
---------------------------------------- ----------------------
NET REALIZED
AND UNREALIZED
GAINS (LOSSES)
NET ASSET NET FROM TOTAL
VALUE, INVESTMENT INVESTMENT FROM NET
BEGINNING INCOME AND FUTURES INVESTMENT INVESTMENT TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME DIVIDENDS
- --------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Period ended October 31,
2004 (c) $12.68 (0.02) (0.11) (0.13) -- --
Six months ended April 30,
2005 (Unaudited) 12.55 0.05 0.01 0.06 (0.03) (0.03)
- --------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31,
2004 (c) $12.28 (0.07) (0.10) (0.17) -- --
Six months ended April 30,
2005 (Unaudited) 12.11 -- 0.01 0.01 -- --
- --------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31,
2004 (c) $12.35 (0.06) (0.12) (0.18) -- --
Six months ended April 30,
2005 (Unaudited) 12.17 -- 0.02 0.02 -- --
- --------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Period ended October 31,
2004 (c) $12.67 (0.01) (0.11) (0.12) -- --
Six months ended April 30,
2005 (Unaudited) 12.55 0.07 0.01 0.08 (0.05) (0.05)
- --------------------------------------------------------------------------------------------------------
<Caption>
RATIOS/SUPPLEMENTARY DATA
--------------------------------------------------------------------------
RATIO OF
NET
INVESTMENT
NET ASSET NET ASSETS RATIO OF INCOME RATIO OF
VALUE, AT END OF EXPENSES TO (LOSS) TO EXPENSES TO
END OF TOTAL PERIOD AVERAGE AVERAGE AVERAGE PORTFOLIO
PERIOD RETURN(d) (000'S) NET ASSETS(f) NET ASSETS(f) NET ASSETS(f)(a) TURNOVER(b)
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Period ended October 31,
2004 (c) $12.55 (1.03)%(e) $17,372 1.20% (0.42)% 1.31% 53.08%
Six months ended April 30,
2005 (Unaudited) 12.58 0.49 %(e) 19,871 1.10% 0.74 % 1.16% 43.34%
- ----------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31,
2004 (c) $12.11 (1.38)%(g) $ 1,402 1.95% (1.17)% 2.06% 53.08%
Six months ended April 30,
2005 (Unaudited) 12.12 0.08 %(g) 1,385 1.84% 0.06 % 1.91% 43.34%
- ----------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31,
2004 (c) $12.17 (0.41)%(g) $ 309 1.95% (1.18)% 2.06% 53.08%
Six months ended April 30,
2005 (Unaudited) 12.19 0.16 %(g) 308 1.84% 0.07 % 1.91% 43.34%
- ----------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Period ended October 31,
2004 (c) $12.55 0.95 % $19,115 0.95% (0.17)% 1.06% 53.08%
Six months ended April 30,
2005 (Unaudited) 12.58 0.60 % 18,770 0.86% 1.06 % 0.92% 43.34%
- ----------------------------------------------------------------------------------------------------------------------------
</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 for periods less than one year.
(e) Excludes sales charge.
(f) Annualized for periods less than one year.
(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 49
HSBC INVESTOR FUNDS -- VALUE FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
......................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
INDICATED. (h)
<Table>
<Caption>
INVESTMENT ACTIVITIES DIVIDENDS
------------------------------------------ ---------------------------------------
NET REALIZED AND
NET ASSET UNREALIZED GAINS NET REALIZED
VALUE, NET (LOSSES) FROM TOTAL FROM NET GAINS FROM
BEGINNING OF INVESTMENT INVESTMENT AND INVESTMENT INVESTMENT INVESTMENT AND TOTAL
PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Period ended October 31,
2004 (c) $12.68 0.05 0.69 0.74 (0.04) -- (0.04)
Six months ended April 30,
2005 (Unaudited) 13.38 0.06* 0.74 0.80 (0.02) (0.13) (0.15)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31,
2004 (c) $12.28 -- 0.68 0.68 (0.01) -- (0.01)
Six months ended April 30,
2005 (Unaudited) 12.95 -- 0.72 0.72 -- (0.13) (0.13)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31,
2004 (c) $12.35 0.01 0.67 0.68 (0.02) -- (0.02)
Six months ended April 30,
2005 (Unaudited) 13.01 -- 0.73 0.73 -- (0.13) (0.13)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Period ended October 31,
2004 (c) $12.67 0.07 0.70 0.77 (0.06) -- (0.06)
Six months ended April 30,
2005 (Unaudited) 13.38 0.08 0.73 0.81 (0.04) (0.13) (0.17)
- ------------------------------------------------------------------------------------------------------------------------------
<Caption>
RATIOS/SUPPLEMENTARY DATA
------------------------------------------------------------------------
RATIO OF NET
NET ASSET NET ASSETS RATIO OF INVESTMENT RATIO OF
VALUE, AT END OF EXPENSES TO INCOME TO EXPENSES TO
END OF TOTAL PERIOD AVERAGE NET AVERAGE NET AVERAGE NET PORTFOLIO
PERIOD RETURN(d) (000'S) ASSETS(f) ASSETS(f) ASSETS(f)(a) TURNOVER(b)
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Period ended October 31,
2004 (c) $13.38 7.79%(e) $20,933 1.20% 0.81% 1.25% 10.33%
Six months ended April 30,
2005 (Unaudited) 14.03 5.94%(e) 23,079 1.10% 0.81% 1.10% 9.47%
- -----------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31,
2004 (c) $12.95 9.06%(g) $ 1,938 1.95% 0.05% 2.00% 10.33%
Six months ended April 30,
2005 (Unaudited) 13.54 5.51%(g) 2,006 1.85% 0.05% 1.85% 9.47%
- -----------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31,
2004 (c) $13.01 8.47%(g) $ 399 1.95% 0.04% 2.00% 10.33%
Six months ended April 30,
2005 (Unaudited) 13.61 5.57%(g) 419 1.85% 0.05% 1.85% 9.47%
- -----------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Period ended October 31,
2004 (c) $13.38 6.05% $25,600 0.95% 1.05% 1.00% 10.33%
Six months ended April 30,
2005 (Unaudited) 14.02 6.07% 25,006 0.85% 1.05% 0.85% 9.47%
- -----------------------------------------------------------------------------------------------------------------------------
</Table>
* Calculated based on average shares outstanding.
(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 for periods less than one year.
(e) Excludes sales charge.
(f) Annualized for periods less than one year.
(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.
50 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR FUNDS -- GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
.................................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
INDICATED.
<Table>
<Caption>
INVESTMENT ACTIVITIES DIVIDENDS
------------------------------------------ ----------------------
NET REALIZED AND
NET ASSET NET UNREALIZED GAINS
VALUE, INVESTMENT (LOSSES) FROM TOTAL FROM NET
BEGINNING OF INCOME INVESTMENT INVESTMENT INVESTMENT TOTAL
PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME DIVIDENDS
- -------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Period ended October 31,
2001 (b) $10.06 0.01 (1.15) (1.14) (0.01) (0.01)
Year ended October 31,
2002 8.91 0.04 (1.73) (1.69) (0.01) (0.01)
Year ended October 31,
2003 7.21 0.06 1.18 1.24 (0.06) (0.06)
Year ended October 31,
2004 8.39 0.05 0.36 0.41 (0.04) (0.04)
Six months ended April 30,
2005 (Unaudited) 8.76 0.07* 0.15 0.22 (0.06) (0.06)
- -------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31,
2001 (f) $ 9.54 (0.01) (0.64) (0.65) (0.01) (0.01)
Year ended October 31,
2002 8.88 (0.00)> (1.74) (1.74) -- --
Year ended October 31,
2003 7.14 (0.01) 1.18 1.17 (0.01) (0.01)
Year ended October 31,
2004 8.30 (0.02)* 0.36 0.34 (0.00)* (0.00)*
Six months ended April 30,
2005 (Unaudited) 8.64 0.03* 0.16 0.19 (0.03) (0.03)
- -------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31,
2004 (h) $ 8.40 (0.02)* 0.38 0.36 (0.03) (0.03)
Six months ended April 30,
2005 (Unaudited) 8.73 0.03* 0.15 0.18 (0.04) (0.04)
- -------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Period ended October 31,
2001 (i) $10.00 0.02 (1.09) (1.07) (0.01) (0.01)
Year ended October 31,
2002 8.92 0.06 (1.73) (1.67) (0.03) (0.03)
Year ended October 31,
2003 7.22 0.07 1.19 1.26 (0.08) (0.08)
Year ended October 31,
2004 8.40 0.07 0.36 0.43 (0.06) (0.06)
Six months ended April 30,
2005 (Unaudited) 8.77 0.08* 0.15 0.23 (0.08) (0.08)
<Caption>
RATIOS/SUPPLEMENTARY DATA
---------------------------------------------------------
RATIO OF NET RATIO OF
NET ASSET NET ASSETS RATIO OF INVESTMENT EXPENSES TO
VALUE, AT END OF EXPENSES TO INCOME (LOSS) AVERAGE
END OF TOTAL PERIOD AVERAGE TO AVERAGE NET PORTFOLIO
PERIOD RETURN(c) (000'S) NET ASSETS(e) NET ASSETS(e) ASSETS(e)(j) TURNOVER(a)
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Period ended October 31,
2001 (b) $8.91 (12.65)%(d) $ 1,927 1.11% 0.15 % 1.11% 43.13%
Year ended October 31,
2002 7.21 (18.97)%(d) 1,306 1.01% 0.39 % 1.01% 59.85%
Year ended October 31,
2003 8.39 17.26 %(d) 1,827 1.04% 0.70 % 1.04% 64.52%
Year ended October 31,
2004 8.76 4.94 %(d) 1,500 1.02% 0.50 % 1.02% 73.68%
Six months ended April 30,
2005 (Unaudited) 8.92 2.44 %(d) 1,317 0.98% 1.45 % 1.03% 45.81%
- -----------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31,
2001 (f) $8.88 (10.52)%(g) $ 330 1.84% (0.64)% 1.84% 43.13%
Year ended October 31,
2002 7.14 (19.59)%(g) 1,154 1.76% (0.30)% 1.76% 59.85%
Year ended October 31,
2003 8.30 16.40 %(g) 2,235 1.79% (0.07)% 1.79% 64.52%
Year ended October 31,
2004 8.64 4.13 %(g) 3,820 1.77% (0.25)% 1.77% 73.68%
Six months ended April 30,
2005 (Unaudited) 8.80 2.18 %(g) 3,990 1.73% 0.67 % 1.78% 45.81%
- -----------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31,
2004 (h) $8.73 3.57 %(g) $ 41 1.77% (0.28)% 1.77% 73.68%
Six months ended April 30,
2005 (Unaudited) 8.87 2.01 %(g) 44 1.73% 0.69 % 1.78% 45.81%
- -----------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Period ended October 31,
2001 (i) $8.92 (9.71)% $219,221 0.82% 0.38 % 0.82% 43.13%
Year ended October 31,
2002 7.22 (18.76)% 168,812 0.76% 0.66 % 0.76% 59.85%
Year ended October 31,
2003 8.40 17.63 % 203,458 0.79% 0.96 % 0.79% 64.52%
Year ended October 31,
2004 8.77 5.18 % 196,219 0.77% 0.77 % 0.77% 73.68%
Six months ended April 30,
2005 (Unaudited) 8.92 2.53 % 177,014 0.74% 1.72 % 0.78% 45.81%
- -----------------------------------------------------------------------------------------------------------------------------
</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 for periods less than one year.
(d) Excludes sales charge.
(e) Annualized for periods less than one year.
(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.
(j) During the period certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS 51
HSBC INVESTOR FUNDS -- MID-CAP FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
......................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
INDICATED.
<Table>
<Caption>
INVESTMENT ACTIVITIES DIVIDENDS
------------------------------------------ -------------------------
NET REALIZED
AND
UNREALIZED
NET ASSET GAINS (LOSSES) TOTAL NET REALIZED
VALUE, NET FROM FROM GAINS FROM
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD LOSS TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS
- -------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Period ended October 31,
2000 (b) $10.27 (0.01) (0.19) (0.20) -- --
Year ended October 31,
2001 10.07 (0.03) (2.00) (2.03) (0.14) (0.14)
Year ended October 31,
2002 7.90 (0.03) (1.57) (1.60) -- --
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 -- --
Six months ended April 30,
2005 (Unaudited) 8.44 (0.01)* 0.46 0.45 -- --
- -------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31,
2000 (f) $10.72 (0.02) (0.64) (0.66) -- --
Year ended October 31,
2001 10.06 (0.08) (2.02) (2.10) (0.14) (0.14)
Year ended October 31,
2002 7.82 (0.08) (1.55) (1.63) -- --
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 -- --
Six months ended April 30,
2005 (Unaudited) 8.16 (0.04)* 0.45 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) (0.14) (0.14)
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 -- --
Six months ended April 30,
2005 (Unaudited) 8.22 (0.04)* 0.44 0.40 -- --
- -------------------------------------------------------------------------------------------------------------
TRUST SHARES
Period ended October 31,
2000 (k) $10.00 (0.01) 0.09 (j) 0.08 -- --
Year ended October 31,
2001 10.08 (0.01) (2.02) (2.03) (0.14) (0.14)
Year ended October 31,
2002 7.91 (0.02) (1.56) (1.58) -- --
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 -- --
Six months ended April 30,
2005 (Unaudited) 8.52 (0.00)>* 0.46 0.46 -- --
- -------------------------------------------------------------------------------------------------------------
<Caption>
RATIOS/SUPPLEMENTARY DATA
-------------------------------------------------------------
RATIO OF NET
NET ASSET NET ASSETS RATIO OF INVESTMENT RATIO OF
VALUE, AT END OF EXPENSES TO LOSS TO EXPENSES TO
END OF TOTAL PERIOD AVERAGE NET AVERAGE NET AVERAGE NET PORTFOLIO
PERIOD RETURN(c) (000'S) ASSETS(e) ASSETS(e) ASSETS (e)(k) TURNOVER(a)
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Period ended October 31,
2000 (b) $10.07 (1.95)%(d) $ 445 1.28% (0.42)% 1.28% 57.69%
Year ended October 31,
2001 7.90 (20.37)%(d) 927 1.13% (0.40)% 1.13% 112.67%
Year ended October 31,
2002 6.30 (20.25)%(d) 1,010 1.08% (0.46)% 1.08% 140.23%
Year ended October 31,
2003 7.95 26.19 %(d) 1,539 1.10% (0.43)% 1.10% 100.86%
Year ended October 31,
2004 8.44 6.16 %(d) 1,878 1.09% (0.54)% 1.09% 106.72%
Six months ended April 30,
2005 (Unaudited) 8.89 5.33 %(d) 1,882 0.92% (0.24)% 1.13% 108.42%
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Period ended October 31,
2000 (f) $10.06 (6.16)%(g) $ 1,557 2.02% (1.17)% 2.02% 57.69%
Year ended October 31,
2001 7.82 (21.09)%(g) 3,827 1.88% (1.16)% 1.88% 112.67%
Year ended October 31,
2002 6.19 (20.84)%(g) 4,391 1.83% (1.21)% 1.83% 140.23%
Year ended October 31,
2003 7.75 25.20 %(g) 6,009 1.85% (1.16)% 1.85% 100.86%
Year ended October 31,
2004 8.16 5.29 %(g) 7,037 1.84% (1.29)% 1.84% 106.72%
Six months ended April 30,
2005 (Unaudited) 8.57 5.02 %(g) 7,167 1.66% (0.99)% 1.87% 108.42%
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Period ended October 31,
2000 (h) $10.06 0.20 %(g) $ 18 2.11% (1.29)% 2.11% 57.69%
Year ended October 31,
2001 7.82 (21.09)%(g) 21 1.87% (1.13)% 1.87% 112.67%
Year ended October 31,
2002 6.20 (20.72)%(g) 20 1.83% (1.20)% 1.83% 140.23%
Year ended October 31,
2003 7.80 25.81 %(g) 54 1.85% (1.23)% 1.85% 100.86%
Year ended October 31,
2004 8.22 5.38 %(g) 94 1.84% (1.29)% 1.84% 106.72%
Six months ended April 30,
2005 (Unaudited) 8.62 4.87 %(g) 100 1.66% (0.99)% 1.88% 108.42%
- -----------------------------------------------------------------------------------------------------------------------------------
TRUST SHARES
Period ended October 31,
2000 (k) $10.08 0.80 % $108,487 1.01% (0.22)% 1.01% 57.69%
Year ended October 31,
2001 7.91 (20.34)% 129,390 0.87% (0.13)% 0.87% 112.67%
Year ended October 31,
2002 6.33 (19.97)% 98,059 0.82% (0.18)% 0.82% 140.23%
Year ended October 31,
2003 8.01 26.54 % 160,621 0.85% (0.17)% 0.85% 100.86%
Year ended October 31,
2004 8.52 6.37 % 117,354 0.84% (0.28)% 0.84% 106.72%
Six months ended April 30,
2005 (Unaudited) 8.98 5.40 % 64,461 0.73% (0.06)% 0.86% 108.42%
- -----------------------------------------------------------------------------------------------------------------------------------
</Table>
* Calculated based on average shares outstanding.
> Less than $0.005 per share.
(a) Portfolio turnover is calculated on the basis of the fund as a whole,
without the distinguishing between the classes of shares issued.
(b) Class A (Investor) Shares commenced operations on July 10, 2000.
(c) Not annualized for periods less than one year.
(d) Excludes sales charge.
(e) Annualized for periods less than one year.
(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.
(k) During the period certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
See notes to financial statements.
52 HSBC INVESTOR FAMILY OF FUNDS
HSBC ADVISOR FUNDS TRUST -- INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
......................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
INDICATED. (b)
<Table>
<Caption>
INVESTMENT ACTIVITIES DIVIDENDS
------------------------------------------ -------------------------------------
NET REALIZED AND NET
UNREALIZED GAINS REALIZED
(LOSSES) FROM GAINS FROM
NET ASSET INVESTMENT TOTAL INVESTMENT
VALUE, NET AND FOREIGN FROM NET AND FOREIGN
BEGINNING INVESTMENT CURRENCY INVESTMENT INVESTMENT CURRENCY TOTAL
OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- ------------------------------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 2000 $18.58 0.11 0.75 0.86 (0.11) (1.20) (1.31)
Year ended October 31, 2001 18.13 0.09 (4.38) (4.29) -- (1.28) (1.28)
Year ended October 31, 2002 12.56 0.09 (1.73) (1.64) (0.19) -- (0.19)
Year ended October 31, 2003 10.73 0.20 2.02 2.22 (0.19) -- (0.19)
Year ended October 31, 2004 12.76 0.18 2.32 2.50 (0.39) -- (0.39)
Six months ended April 30,
2005 (Unaudited) 14.87 0.10 1.19 1.29 (0.23) -- (0.23)
- ------------------------------------------------------------------------------------------------------------------------------
<Caption>
RATIOS/SUPPLEMENTARY DATA
----------------------------------------------------
RATIO OF
NET
NET ASSET NET ASSETS RATIO OF INVESTMENT
VALUE, AT END OF EXPENSES TO INCOME TO
END OF TOTAL PERIOD AVERAGE NET AVERAGE NET PORTFOLIO
PERIOD RETURN(c) (000'S) ASSETS(d) ASSETS(d) TURNOVER(a)
- --------------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31, 2000 $18.13 4.05% $219,837 0.90% 0.51% 27.81%
Year ended October 31, 2001 12.56 (25.42)% 184,494 0.99% 0.51% 26.90%
Year ended October 31, 2002 10.73 (13.32)% 194,704 0.99% 0.70% 31.63%
Year ended October 31, 2003 12.76 21.03% 123,658 1.07% 1.16% 68.51%
Year ended October 31, 2004 14.87 20.06% 148,317 1.05% 1.39% 106.11%
Six months ended April 30,
2005 (Unaudited) 15.93 8.71% 162,974 0.96% 1.43% 10.99%
- --------------------------------------------------------------------------------------------------------------
</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 expense assuming
inclusion of the fund's proportionate share of the income and expenses
of the HSBC Investor International Portfolio.
(c) Not Annualized for periods less than one year.
(d) Annualized for periods less than one year.
See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS 53
HSBC INVESTOR FUNDS -- OVERSEAS EQUITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
......................................................................
<Table>
<Caption>
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (c)
INVESTMENT ACTIVITIES DIVIDENDS
----------------------------------------- -------------------------------------
NET REALIZED
AND UNREALIZED NET REALIZED
GAINS (LOSSES) GAINS FROM
NET ASSET NET FROM INVESTMENT INVESTMENT
VALUE, INVESTMENT AND FOREIGN TOTAL FROM NET AND FOREIGN
BEGINNING INCOME CURRENCY INVESTMENT INVESTMENT CURRENCY TOTAL
OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS
- ------------------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31,
2000 $16.90 (0.11) 0.64 0.53 -- (0.22) (0.22)
Year ended October 31,
2001 17.21 (0.04) (4.05) (4.09) -- (1.46) (1.46)
Year ended October 31,
2002 11.66 (0.04) (1.34) (1.38) (0.12) (0.29) (0.41)
Year ended October 31,
2003 9.87 0.01 1.95 1.96 (0.10) -- (0.10)
Year ended October 31,
2004 11.73 0.08 2.19 2.27 (0.07) -- (0.07)
Six months ended April 30,
2005 (Unaudited) 13.93 0.04 1.10 1.14 (0.06) (0.79) (0.85)
- ------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31,
2000 $16.69 (0.10) 0.48 0.38 -- (0.22) (0.22)
Year ended October 31,
2001 16.85 (0.14) (3.95) (4.09) -- (1.46) (1.46)
Year ended October 31,
2002 11.30 (0.08) (1.34) (1.42) (0.03) (0.29) (0.32)
Year ended October 31,
2003 9.56 (0.06) 1.89 1.83 (0.05) -- (0.05)
Year ended October 31,
2004 11.34 0.01* 2.08 2.09 -- -- --
Six months ended April 30,
2005 (Unaudited) 13.43 (0.01) 1.06 1.05 -- (0.79) (0.79)
- ------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31,
2000 $16.84 (0.14) 0.52 0.38 -- (0.22) (0.22)
Year ended October 31,
2001 17.00 (0.18) (3.95) (4.13) -- (1.46) (1.46)
Year ended October 31,
2002 11.41 (0.08) (1.36) (1.44) -- (0.29) (0.29)
Year ended October 31,
2003 9.68 (0.06) 1.93 1.87 (0.01) -- (0.01)
Year ended October 31,
2004 11.54 (0.01) 2.14 2.13 -- -- --
Six months ended April 30,
2005 (Unaudited) 13.67 (0.01) 1.08 1.07 -- (0.79) (0.79)
- ------------------------------------------------------------------------------------------------------------------------
<Caption>
RATIOS/SUPPLEMENTARY DATA
----------------------------------------------------------------------------
RATIO OF NET
RATIO OF INVESTMENT RATIO OF
NET ASSET NET ASSETS EXPENSES TO INCOME (LOSS) EXPENSES TO
VALUE, END TOTAL AT END OF AVERAGE NET TO AVERAGE AVERAGE NET PORTFOLIO
OF PERIOD RETURN(f) PERIOD (000'S) ASSETS(g) NET ASSETS(g) ASSETS(a)(g) TURNOVER(b)
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31,
2000 $17.21 3.05 %(c) $ 7,252 1.85% (0.49)% 2.43% 27.81%
Year ended October 31,
2001 11.66 (25.93)%(c) 6,940 1.85% (0.35)% 2.44% 26.90%
Year ended October 31,
2002 9.87 (12.42)%(c) 7,203 1.85% (0.18)% 2.28% 31.63%
Year ended October 31,
2003 11.73 20.09 %(c) 10,096 1.85% 0.07 % 2.34% 68.51%
Year ended October 31,
2004 13.93 19.40 %(c) 17,721 1.78% 0.79 % 1.88% 106.11%
Six months ended April 30,
2005 (Unaudited) 14.22 8.29 %(c) 19,976 1.64% 0.66 % 1.64% 10.99%
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31,
2000 $16.85 2.18 %(d) $ 358 2.60% (1.17)% 2.96% 27.81%
Year ended October 31,
2001 11.30 (26.52)%(d) 294 2.60% (1.09)% 3.18% 26.90%
Year ended October 31,
2002 9.56 (13.07)%(d) 588 2.60% (0.87)% 3.04% 31.63%
Year ended October 31,
2003 11.34 19.26 %(d) 1,076 2.60% (0.62)% 3.16% 68.51%
Year ended October 31,
2004 13.43 18.43 %(d) 2,061 2.53% 0.05 % 2.63% 106.11%
Six months ended April 30,
2005 (Unaudited) 13.69 7.80 %(d) 2,256 2.39% (0.10)% 2.39% 10.99%
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31,
2000 $17.00 2.10 %(d) $ 248 2.60% (1.14)% 2.96% 27.81%
Year ended October 31,
2001 11.41 (26.53)%(d) 139 2.60% (1.10)% 3.16% 26.90%
Year ended October 31,
2002 9.68 (13.08)%(d) 96 2.60% (1.00)% 3.04% 31.63%
Year ended October 31,
2003 11.54 19.28 %(d) 121 2.60% (0.64)% 3.17% 68.51%
Year ended October 31,
2004 13.67 18.46 %(d) 137 2.54% (0.10)% 2.66% 106.11%
Six months ended April 30,
2005 (Unaudited) 13.95 7.81 %(d) 145 2.39% (0.10)% 2.39% 10.99%
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
* Calculated based on average shares outstanding.
(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 expense assuming
inclusion of the fund's proportionate share of the income and expenses of
the HSBC Investor International Portfolio.
(f) Not Annualized for periods less than one year.
(g) Annualized for periods less than one year.
See notes to financial statements.
54 HSBC INVESTOR FAMILY OF FUNDS
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 DIVIDENDS
------------------------------------------ ------------------------
NET REALIZED AND NET
NET ASSET UNREALIZED GAINS TOTAL REALIZED
VALUE, NET (LOSSES) FROM FROM GAINS FROM
BEGINNING OF INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
PERIOD LOSS TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS
- ---------------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31,
2000 $12.56 (0.10) 6.73 6.63 (1.38) (1.38)
Year ended October 31,
2001 17.81 (0.10) (3.65) (3.75) (2.74) (2.74)
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 -- --
Six months ended April 30,
2005 (Unaudited) 13.07 (0.04) 0.12 0.08 -- --
- ---------------------------------------------------------------------------------------------------------------
<Caption>
RATIOS/SUPPLEMENTARY DATA
----------------------------------------------------
RATIO OF NET
NET ASSET NET ASSETS RATIO OF INVESTMENT
VALUE, AT END OF EXPENSES TO LOSS TO
END OF TOTAL PERIOD AVERAGE NET AVERAGE NET PORTFOLIO
PERIOD RETURN(c) (000'S) ASSETS(d) ASSETS(d) TURNOVER(a)
- ------------------------------------------------------------------------------------------------------
ADVISOR SHARES
Year ended October 31,
2000 $17.81 55.59 % $253,724 1.05% (0.68)% 79.51%
Year ended October 31,
2001 11.32 (22.98)% 180,265 1.07% (0.74)% 52.47%
Year ended October 31,
2002 9.27 (18.11)% 190,686 1.07% (0.87)% 103.90%
Year ended October 31,
2003 12.36 33.33 % 326,072 1.01% (0.72)% 152.05%
Year ended October 31,
2004 13.07 5.74 % 279,669 0.98% (0.62)% 81.75%
Six months ended April 30,
2005 (Unaudited) 13.15 0.61 % 208,252 0.90% (0.50)% 31.89%
- ------------------------------------------------------------------------------------------------------
</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 expense assuming
inclusion of the fund's proportionate share of the income and expenses of
the HSBC Investor International Portfolio.
(c) Not Annualized for periods less than one year.
(d) Annualized for periods less than one year.
See notes to financial statements.
HSBC INVESTOR FAMILY OF FUNDS 55
HSBC INVESTOR FUNDS -- OPPORTUNITY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
......................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
INDICATED. (e)
<Table>
<Caption>
INVESTMENT ACTIVITIES DIVIDENDS
------------------------------------------ --------------------------
NET REALIZED AND
NET ASSET UNREALIZED GAINS TOTAL NET REALIZED
VALUE, NET (LOSSES) FROM FROM GAINS FROM
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL
OF PERIOD LOSS TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS
- --------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31,
2000 $13.19 (0.26) 7.13 6.87 (1.31) (1.31)
Year ended October 31,
2001 18.75 (0.14) (3.58) (3.72) (5.43) (5.43)
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 -- --
Six months ended April 30,
2005 (Unaudited) 10.91 (0.06) 0.09 0.03 -- --
- --------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31,
2000 $13.06 (0.28) 6.93 6.65 (1.31) (1.31)
Year ended October 31,
2001 18.40 (0.23)* (3.47) (3.70) (5.43) (5.43)
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 -- --
Six months ended April 30,
2005 (Unaudited) 10.29 (0.10) 0.09 (0.01) -- --
- --------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31,
2000 $13.13 (0.32) 7.01 6.69 (1.31) (1.31)
Year ended October 31,
2001 18.51 (0.24)* (3.49) (3.73) (5.43) (5.43)
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 -- --
Six months ended April 30,
2005 (Unaudited) 10.39 (0.10) 0.08 (0.02) -- --
- --------------------------------------------------------------------------------------------------------------
<Caption>
RATIOS/SUPPLEMENTARY DATA
--------------------------------------------------------------------------
RATIO OF NET
NET ASSET NET ASSETS RATIO OF INVESTMENT RATIO OF
VALUE, AT END OF EXPENSES TO LOSS TO EXPENSES TO
END OF TOTAL PERIOD AVERAGE NET AVERAGE NET AVERAGE NET PORTFOLIO
PERIOD RETURN(f) (000'S) ASSETS(g) ASSETS(g) ASSETS(g)(a) TURNOVER(b)
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A (INVESTOR) SHARES
Year ended October 31,
2000 $18.75 54.54 %(c) $15,415 1.65% (1.29)% 1.84% 79.51%
Year ended October 31,
2001 9.60 (23.65)%(c) 11,892 1.65% (1.32)% 1.97% 52.47%
Year ended October 31,
2002 7.83 (18.44)%(c) 11,384 1.65% (1.45)% 2.08% 103.90%
Year ended October 31,
2003 10.36 32.31 %(c) 16,695 1.65% (1.36)% 2.09% 152.05%
Year ended October 31,
2004 10.91 5.31 %(c) 20,902 1.61% (1.24)% 1.72% 81.75%
Six months ended April 30,
2005 (Unaudited) 10.94 0.27 %(c) 20,807 1.47% (1.07)% 1.60% 31.89%
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Year ended October 31,
2000 $18.40 53.30 %(d) $ 1,273 2.40% (2.02)% 2.49% 79.51%
Year ended October 31,
2001 9.27 (24.16)%(d) 1,315 2.40% (2.08)% 2.73% 52.47%
Year ended October 31,
2002 7.51 (18.99)%(d) 2,374 2.40% (2.18)% 2.86% 103.90%
Year ended October 31,
2003 9.85 31.16 %(d) 3,952 2.40% (2.11)% 2.83% 152.05%
Year ended October 31,
2004 10.29 4.47 %(d) 4,611 2.36% (2.00)% 2.47% 81.75%
Six months ended April 30,
2005 (Unaudited) 10.28 (0.10)%(d) 4,476 2.22% (1.82)% 2.55% 31.89%
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Year ended October 31,
2000 $18.51 53.32 %(d) $ 707 2.40% (2.02)% 2.46% 79.51%
Year ended October 31,
2001 9.35 (24.17)%(d) 407 2.40% (2.06)% 2.71% 52.47%
Year ended October 31,
2002 7.57 (19.04)%(d) 329 2.40% (2.20)% 2.83% 103.90%
Year ended October 31,
2003 9.94 31.31 %(d) 395 2.40% (2.11)% 2.84% 152.05%
Year ended October 31,
2004 10.39 4.53 %(d) 344 2.37% (2.00)% 2.48% 81.75%
Six months ended April 30,
2005 (Unaudited) 10.37 (0.10)%(d) 274 2.22% (1.82)% 2.55% 31.89%
- -----------------------------------------------------------------------------------------------------------------------------------
</Table>
* Calculated using average shares.
(a) During the period certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(b) Portfolio turnover is calculated on the basis of the respective Portfolio in
which the Fund invests all of its investable assets.
(c) Excludes sales charge.
(d) Excludes redemption charge.
(e) The per share amounts and percentages reflect income and expense assuming
inclusion of the fund's proportionate share of the income and expenses of
the HSBC Investor Small Cap Portfolio.
(f) Not annualized for periods less than one year.
(g) Annualized for periods less than one year.
See notes to financial statements.
56 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
......................................................................
1. ORGANIZATION:
The HSBC Investor Funds (the 'Trust'), a Massachusetts business trust
organized on April 22, 1987, and the HSBC Advisor Funds Trust (the 'Advisor
Trust'), a Massachusetts business trust organized on April 5, 1996, are
registered under the Investment Company Act of 1940, as amended (the 'Act'),
as open-end management investment companies. The Trust and Advisor Trust
(collectively the 'Trusts') contain the following funds (individually a
'Fund,' collectively the 'Funds'):
<Table>
<Caption>
FUND SHORT NAME TRUST
- ---- ---------- -----
HSBC Investor Limited Maturity Fund Limited Maturity Fund Trust
HSBC Investor Fixed Income Fund Fixed Income Fund Advisor Trust
HSBC Investor Bond Fund Bond Fund Trust
HSBC Investor New York Tax-Free Bond Fund New York Tax-Free Bond Fund Trust
HSBC Investor 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).
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.
During the six months ended April 30, 2005, the Mid-Cap Fund delivered
securities of the Fund in exchange for the redemption of Trust Shares
(redemption in-kind). Cash and securities were transferred for redemptions
at a market value of $48,557,280.
<Table>
<Caption>
PROPORTIONATE
INTEREST ON
FUND RESPECTIVE PORTFOLIO APRIL 30, 2005
- ---- -------------------- --------------
Limited Maturity Fund HSBC Investor Limited Maturity Portfolio 70.8%
Fixed Income Fund HSBC Investor Fixed Income Portfolio 70.2
Bond Fund HSBC Investor Fixed Income Portfolio 16.3
Growth Fund HSBC Investor Growth Portfolio 80.2
Value Fund HSBC Investor Value Portfolio 78.4
International Equity Fund HSBC Investor International Equity Portfolio 75.3
Overseas Equity Fund HSBC Investor International Equity Portfolio 10.3
Small Cap Equity Fund HSBC Investor Small Cap Equity Portfolio 79.1
Opportunity Fund HSBC Investor Small Cap Equity Portfolio 9.7
</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
HSBC INVESTOR FAMILY OF FUNDS 57
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
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 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 refiect
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 confiicts.
58 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
B. FEEDER FUNDS
The Feeder Funds record their investments in their respective Portfolios
at value. Securities of the Portfolios are recorded at value as more fully
discussed in the notes to those financial statements.
SECURITIES TRANSACTIONS AND RELATED INCOME:
A. NEW YORK TAX-FREE BOND FUND, GROWTH AND INCOME FUND, AND MID-CAP FUND
Changes in holdings of portfolio securities are refiected no later than
the first business day following the trade date. However, for financial
statement purposes, portfolio securities are reflected as of 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 fiuctuations 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 fiuctuations 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
period ended April 30, 2005, the funds did not write any covered call
options.
SECURITY LOANS:
To generate additional income, the Funds may lend up to 33 1/3% of their
respective assets pursuant to agreements requiring that the loan be
continuously secured by any combination of cash, U.S. Government or U.S.
Government
HSBC INVESTOR FAMILY OF FUNDS 59
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
agency securities, equal at all times to at least 100% of the fair value.
The Funds receive payments from borrowers equivalent to the dividends and
interest that would have been earned on securities lent while simultaneously
seeking to earn income on the investment of collateral. Collateral is marked
to market daily to provide a level of collateral at least equal to the fair
value of securities lent. There may be risks of delay in recovery of the
securities or even loss of rights in the collateral should the borrower of
the securities fail financially. However, loans will be made only to
borrowers, such as broker-dealers, banks or institutional borrowers of
securities, deemed by HSBC to be of good standing and creditworthy under
guidelines established by the Board of Trustees and when, in the judgement
of HSBC, the consideration which can be earned currently from such
securities loans justifies the attendant risks. Loans are subject to
termination by the Funds or the borrower at any time and are, therefore, not
considered to be illiquid investments. As of April 30, 2005, the Funds had
no loans outstanding.
LINE OF CREDIT:
The funds participate in a short-term, demand note agreement with HSBC
Bank USA, an affiliate of the Investment Adviser (defined below). Under the
agreement, the funds may borrow up to $50 million. The purpose of the
agreement is to meet temporary or emergency cash needs, including redemption
requests that might otherwise require the untimely disposition of
securities.
During the period ended April 30, 2005, the Growth and Income Fund and
the Mid-Cap Fund had borrowed against the Line of Credit. The details of the
borrowing were as follows:
<Table>
<Caption>
AVERAGE AMOUNT AVERAGE INTEREST TOTAL INTEREST
FUND OUTSTANDING RATE CHARGES*
- ---- ----------- ---- --------
Growth and Income Fund....................... $628,155 3.30% $3,858
Mid-Cap Fund................................. 237,431 2.99% 709
</Table>
- ---------
* Total interest charged is included in Other Expenses on the Statement of
Operations.
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.
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.
60 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
REDEMPTION FEE:
Effective April 1, 2004, a redemption fee of 2.00% is charged and
recorded as paid-in-capital for any shares redeemed or exchanged after
holding them for less than 30 days. This fee does not apply to shares
purchased 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 period ended April 30, 2005 the following Funds collected
redemption fees as follows:
<Table>
<Caption>
FUND FEES COLLECTED
- ---- --------------
International Equity Fund................................... $ 144
Overseas Equity Fund........................................ $ 74
NY Tax-free Bond Fund....................................... $12,809
Fixed Income Fund........................................... $ 212
Bond Fund................................................... $ 28
Growth Fund................................................. $ 316
Growth & Income Fund........................................ $ 454
Value Fund.................................................. $ 342
Opportunity Fund............................................ $ 156
Mid-Cap Fund................................................ $ 8
Limited Maturity Fund....................................... $ 10
</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 Investments (USA) Inc. ('HSBC' or the 'Investment Adviser'), a
wholly owned subsidiary of HSBC Bank USA, a New York State chartered bank,
acts as Investment Adviser to the New York Tax-Free Bond Fund. As Investment
Adviser, HSBC manages the investments of the Funds and continuously reviews,
supervises and administers the Funds' investments. Effective April 18, 2005,
Transamerica Investment Management, LLC and Munder Capital Management began
serving as Sub-Investment Advisor for the Growth and Income Fund and Mid-Cap
Fund, respectively, and are paid for there services directly by HSBC.
For its services as Investment Adviser, HSBC is entitled to receive a
fee, accrued 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%
</Table>
For its services as Investment Adviser and Sub-Investment Advisor,
respectively, HSBC and Transamerica Investment Management, LLC receive in
aggregate, a fee accrued daily and paid monthly, at an annual rate of 0.60%
of the Growth and Income Fund's average daily net assets.
For its services as Investment Adviser and Sub-Investment Advisor,
respectively, HSBC and Munder Capital Management receive in aggregate, a fee
accrued daily and paid monthly, at an annual rate of 0.75% of the Growth and
Income Fund's average daily net assets.
HSBC INVESTOR FAMILY OF FUNDS 61
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
Prior to April, 18, 2005, HSBC Investments (USA) Inc. served as
Investment Advisor for the Growth and Income Fund and Mid-Cap Fund and
received a fee, accrued daily and paid monthly, based on average daily net
assets, at an annual rate of:
<Table>
<Caption>
FUND FEE RATE
- ---- --------
Growth and Income Fund...................................... 0.55%
Mid-Cap Fund................................................ 0.55%
</Table>
Effective April 18, 2005, the Investment Adviser has agreed to
contractually waive 0.05% of its management fee based on average daily net
assets of the Growth and Income Fund and Mid-Cap Funds.
All contractual and any voluntary investment advisory fee waivers are
not subject to recoupment in subsequent fiscal periods.
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..... 0.07%
In excess of $9.25 billion but not exceeding $12 billion.... 0.05%
In excess of $12 billion.................................... 0.03%
</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.
On June 13, 2005 the Board approved a proposal for HSBC to serve as the
Administrator of the Funds, which will be effective July 1, 2005 under the
same compensation structure as those currently with BISYS. In addition, the
Board approved a proposal for BISYS to serve as the sub-Administrator to
HSBC, in which BISYS will be compensated directly by HSBC effective July 1,
2005.
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 $344,412 in commissions from sales of the Funds
of which $343,984 was reallowed to affiliated brokers and dealers.
62 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
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.
FEE REDUCTIONS:
The Investment Adviser has agreed to limit the total annual expenses,
exclusive of interest, 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 any voluntary investment advisory fee waivers are
not subject to recoupment in subsequent fiscal periods.
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. As transfer
agent for the Funds, BISYS receives a fee based on the number Funds and
shareholder accounts, subject to certain minimums and reimbursement of
certain expenses. As fund accountant for the Funds, BISYS receives an annual
fee per Fund and share class, subject to certain minimums and reimbursement
of certain expenses. As custodian for the Funds, HSBC receives a fee based
on average daily net assets, number of transactions and reimbursement of
certain expenses.
OTHER:
For its service as security lending agent, HSBC Bank USA (see note
2 -- Security Loans), receives a fee equal to 0.06% of the average dollar
value of the loans outstanding during a given month from the Funds. The fees
collected by HSBC Bank USA for the period ended April 30, 2005 were:
<Table>
<Caption>
FUND
- ----
Growth and Income Fund...................................... $ 56
Mid-Cap Fund................................................ 242
</Table>
The HSBC Investor Family of Funds may use affiliated broker/dealers for
the execution of portfolio investment trades. For the six months ended April
30, 2005, affiliated broker/dealers did not receive any commissions on the
execution of trades related to the HSBC Investor Family of Funds.
HSBC INVESTOR FAMILY OF FUNDS 63
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
4. INVESTMENT TRANSACTIONS:
Purchases of and proceeds from sales, excluding short-term securities,
for the Funds for the period ended April 30, 2005, totaled:
<Table>
<Caption>
PURCHASES SALES
--------- -----
New York Tax-Free Bond Fund............................... $ 7,041,808 $ 9,085,605
Growth and Income Fund.................................... 90,806,441 131,733,621
Mid-Cap Fund.............................................. 129,640,077 191,484,081
</Table>
There were no long-term U.S. Government securities held during the
period ended April 30, 2005.
Contributions and withdrawals of the respective Portfolios for the period
ended April 30, 2005, totaled:
<Table>
<Caption>
CONTRIBUTIONS WITHDRAWALS
------------- -----------
Limited Maturity Fund....................................... $ 2,523,499 $ 6,172,321
Fixed Income Fund........................................... 12,552,258 13,387,890
Bond Fund................................................... 4,101,030 3,473,071
Growth Fund................................................. 7,217,473 5,294,717
Value Fund.................................................. 6,724,665 8,242,683
International Equity Fund................................... 15,261,382 13,293,801
Overseas Equity Fund........................................ 3,870,413 3,196,874
Small Cap Equity Fund....................................... 10,039,746 88,116,965
Opportunity Fund............................................ 3,234,809 3,705,971
</Table>
5. CONCENTRATION OF CREDIT RISK:
The New York Tax-Free Bond Fund invests primarily in debt obligations
issued by the State of New York and its respective political subdivisions,
agencies and public authorities. The Fund is more susceptible to economic
and political factors adversely affecting issuers of New York specific
municipal securities than are municipal bond funds that are not concentrated
in these issuers to the same extent.
6. FEDERAL INCOME TAX INFORMATION:
At April 30, 2005, the cost, gross unrealized appreciation and gross
unrealized depreciation on securities, for federal income tax purposes, were
as follows:
<Table>
<Caption>
NET UNREALIZED
TAX UNREALIZED TAX UNREALIZED APPRECIATION
FUND NAME TAX COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
--------- -------- ------------ -------------- --------------
New York Tax-Free Bond Fund..... $ 67,728,048 $ 2,940,082 $ (79,057) $ 2,861,025
Growth and Income Fund.......... 144,221,634 23,323,852 (3,232,344) 20,091,508
Mid-Cap Fund.................... 73,002,557 2,154,504 (1,774,619) 379,885
</Table>
7. PAYMENTS FROM AFFILIATES:
During the period ended April 30, 2005, HSBC reimbursed certain advisory
fees and gross losses realized by some of the Funds related to violations of
certain investment policies and limitations. HSBC also reimbursed the Funds
for interest on these amounts. The amounts, along with the corresponding
impact to the net expense ratio, net income ratio, and total return for the
period ended April 30, 2005, are as follows:
64 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
<Table>
<Caption>
NET NET
ADVISORY REALIZED EXPENSE INCOME TOTAL
FUND FEES(1) LOSSES(2) INTEREST(3) TOTAL RATIO RATIO RETURN
- ---- ------- --------- ----------- ----- ----- ----- ------
Small Cap Equity Fund............ $ 87,516 $ -- $ 3,996 $ 91,512 0.07% 0.07% 0.08%
Opportunity Fund Class A
Shares......................... 8,719 -- 398 9,117 0.08% 0.08% 0.00%
Opportunity Fund Class B
Shares......................... 1,888 -- 86 1,974 0.08% 0.08% 0.00%
Opportunity Fund Class C
Shares......................... 115 -- 5 120 0.08% 0.08% 0.00%
Limited Maturity Fund Class A
Shares......................... 1,125 -- 51 1,176 0.16% 0.17% 0.10%
Limited Maturity Fund Class B
Shares......................... 4,927 -- 225 5,152 0.16% 0.17% 0.10%
Limited Maturity Fund Class C
Shares......................... 506 -- 23 529 0.16% 0.17% 0.10%
Limited Maturity Fund Class Y
Shares......................... 24,303 -- 1,110 25,413 0.16% 0.17% 0.10%
Growth Fund Class A Shares....... 9,669 -- 441 10,110 0.10% 0.10% 0.08%
Growth Fund Class B Shares....... 684 -- 31 715 0.10% 0.10% 0.08%
Growth Fund Class C Shares....... 150 -- 7 157 0.10% 0.10% 0.08%
Growth Fund Class Y Shares....... 9,192 -- 420 9,612 0.09% 0.09% 0.08%
Value Fund Class A Shares........ 11,559 -- 528 12,087 0.10% 0.10% 0.07%
Value Fund Class B Shares........ 1,019 -- 47 1,066 0.10% 0.10% 0.08%
Value Fund Class C Shares........ 210 -- 10 220 0.10% 0.10% 0.08%
Value Fund Class Y Shares........ 12,564 -- 574 13,138 0.10% 0.10% 0.07%
Fixed Income Fund................ 118,164 -- 5,395 123,559 0.22% 0.23% 0.09%
Bond Fund Class A................ 19,302 -- 881 20,183 0.21% 0.22% 0.09%
Bond Fund Class B................ 7,219 -- 330 7,549 0.21% 0.22% 0.09%
Bond Fund Class C................ 436 -- 20 456 0.22% 0.23% 0.09%
Growth & Income Class A Shares... 334 -- 15 349 0.05% 0.05% 0.00%
Growth & Income Class B Shares... 976 -- 45 1,021 0.05% 0.05% 0.00%
Growth & Income Class C Shares... 11 -- -- 11 0.05% 0.05% 0.00%
Growth & Income Class Y Shares... 43,776 -- 1,999 45,775 0.04% 0.04% 0.00%
New York Tax-Free Bond Fund Class
A Shares....................... 4,037 -- 184 4,221 0.02% 0.02% 0.00%
New York Tax-Free Bond Fund Class
B Shares....................... 1,969 -- 90 2,059 0.02% 0.02% 0.00%
New York Tax-Free Bond Fund Class
C Shares....................... 243 -- 11 254 0.02% 0.02% 0.00%
New York Tax-Free Bond Fund Class
Y Shares....................... 2,130 -- 97 2,227 0.02% 0.02% 0.00%
Mid-Cap Fund Class A Shares...... 2,038 9,162 328 11,528 0.21% 0.24% 0.59%
Mid-Cap Fund Class B Shares...... 7,788 35,018 1,253 44,059 0.21% 0.24% 0.61%
Mid-Cap Fund Class C Shares...... 108 486 17 611 0.22% 0.24% 0.61%
Mid-Cap Fund Class Y Shares...... 69,607 312,980 11,200 393,787 0.13% 0.15% 0.59%
-------- -------- ------- -------- ---- ---- -----
Total $452,284 $357,646 $29,817 $839,747
-------- -------- ------- --------
-------- -------- ------- --------
</Table>
- ---------
(1) Amounts relate to the reimbursement of advisory fees on the investment
in certain investment companies and are included in 'Fees reduced by the
Investment Adviser' (except for the Feeder Funds which are included in
'Expenses from portfolio') on the Statements of Operations.
(2) Amounts relate to the reimbursement of realized losses on the disposal
of the investment in certain investment companies and are included in
'Net realized gains (losses) from investment transactions' on the
Statements of Operations.
(3) Amounts relate to the reimbursement of computed interest on the amounts
noted in (1) and (2) above and are included in 'Other income' (except
for the Feeder Funds which are included in 'Investment income from
portfolio') on the Statements of Operations.
HSBC INVESTOR FAMILY OF FUNDS 65
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
8. INVESTMENT ADVISOR CONTRACT APPROVAL:
Each Board of Trustees including the non-interested Trustees (the 'Board
of Trustees' of HSBC Investor Funds, HSBC Advisor Funds and HSBC Portfolios
approved renewal of the investment advisory agreement, and, where
applicable, sub-advisory agreement (collectively, 'Advisory Contracts') with
respect to each Trust's respective Funds or Portfolios at an in-person
meeting held on December 13, 2004. In determining whether it was appropriate
to approve each Advisory Contract, each Board of Trustees requested
information, provided by the Adviser, and, where applicable, Sub-Adviser,
that it believed to be reasonably necessary to reach its conclusion. The
Board of Trustees carefully evaluated this information, and was advised by
independent legal counsel with respect to its deliberations. Based on its
review of the information requested and provided, each Board of Trustees
determined that each Advisory Contract is consistent with the best interests
of each Fund and its shareholders, and enables each Fund to receive high
quality services at a cost that is appropriate, reasonable, and in the best
interests of each Fund and its shareholders. Each Board of Trustees made
these determinations on the basis of the following considerations, among
others:
-- The investment advisory fees payable to the Adviser and, where
applicable, Sub-Adviser under each Advisory Contract are fair and
reasonable in light of the services to be provided, the anticipated
costs of these services, the profitability of the Adviser's
relationship with each Fund, and the comparability of the proposed
fee to fees paid by comparable mutual funds;
-- Each Advisory Contract did not increase the level of current
investment advisory fees or overall operating expenses of each Fund
over historical fee and expense levels;
-- The nature, quality and extent of the investment advisory services
provided by the Adviser and, where applicable, Sub-Adviser to each
Fund, in light of the high quality services provided to the other
mutual funds advised by the Adviser and their historic performance,
including achievement of stated investment objectives;
-- The Adviser's and, where applicable, Sub-Adviser's representations
regarding its staffing and capabilities to manage the Funds,
including the retention of personnel with significant portfolio
management experience;
-- The Adviser's entrepreneurial commitment to the management and
success of each Fund, which could entail a substantial commitment
of resources to the successful operation of each Fund; and
-- The overall high quality of the personnel, operations, financial
condition, investment management capabilities, methodologies, and
performance of the Adviser and, where applicable, Sub-Adviser.
Accordingly, in light of the above considerations and such other factors
and information it considered relevant, each Board of Trustees unanimously
approved the respective Advisory Contract with respect to the Funds and
Portfolios.
New Advisory Contract between the Adviser and the Sub-Advisers to the
Growth and Income Fund and Mid-Cap Fund ('collectively, the 'Agreements')
were approved by the Board of Trustees of HSBC Investor Funds, with respect
to the Growth and Income Fund and the Mid-Cap Fund, at a meeting of the
Board of Trustees held on March 7-8, 2005. The Agreements were approved by
the shareholders of the respective Funds at a meeting of the shareholders
held on April 18, 2005.
In determining whether to approve the Agreements, the Board of Trustees
requested and received extensive materials and information from the Adviser
to assist them in considering the approval of the Agreements. Based on its
review of the information requested and provided, and the discussions with
management of the Adviser, the Board of Trustees determined that approval of
the Agreements was consistent with the best interests of each Fund and its
shareholders, and would enable each Fund to receive high quality services at
a cost that is appropriate, reasonable, and in the best interests of that
Fund and its shareholders. The Board of Trustees made these determinations
on the basis of the following factors, among others:
-- Nature, Extent, and Quality of Services Provided by Adviser and
Sub-Advisers. The Board of Trustees considered the nature, quality
and extent of the investment advisory services to be provided by
the Adviser and each Fund's Sub-Adviser, in light of the high
quality services provided to the other manager-of-manager mutual
funds advised by the Adviser, and each Fund's Sub-Adviser's
historic performance managing accounts having similar investment
objectives as the Funds. The Board of Trustees also considered the
services provided by the Adviser such as supervision of Fund
operations and compliance and regulatory filings as well as
disclosures to shareholders, general oversight of service providers
and coordination of Fund marketing
66 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
initiatives. The Board of Trustees considered the Adviser's
entrepreneurial commitment to the management and success of the
Funds, which could entail a substantial commitment of resources to
the successful operation of the Funds, as well as the Adviser's
agreement to waive 0.05% of its advisory fee for a period of at
least one year with respect to each Fund.
-- Investment Performance of the Fund, Adviser and Sub-Advisers. The
Board of Trustees considered short- and long-term investment
performance of each Fund over various periods of time as compared
to a peer group of comparable funds, as well as each Fund's
sub-adviser's historic performance managing accounts having similar
investment objectives as the Fund. Additionally, the Trustees
considered fee and expense information regarding each Fund's peer
groups, noting in particular that the proposed combined advisory
and sub-advisory fees were competitive with the advisory fees
charged by other funds in each Fund's peer group.
-- Costs of Services and Profits Realized by the Adviser. The Board of
Trustees considered the Adviser's overall profitability and costs
and an analysis of the estimated profitability to the Adviser from
its relationship with the Funds. The Board of Trustees considered
that the combined management fees under the Agreements would
increase the investment advisory fees of the Funds by 0.05%, with
respect to the Growth and Income Fund, and 0.20%, with respect to
the Mid-Cap Fund, over historical fee levels (no increase with
respect to the Growth and Income Fund and 0.15% with respect to the
Mid-Cap Fund after giving effect to the Adviser's agreement to
waive 0.05% of its advisory fee under the New Agreement), but
concluded that the combined advisory fees payable to the Adviser
and each Fund's Sub-Adviser are fair and reasonable in light of the
services to be provided, the anticipated costs of these services,
the profitability of the Adviser's relationship with the Fund, and
the comparability of the proposed fee to fees paid by comparable
mutual funds.
-- Other Relevant Considerations -- Adviser Personnel. The Board of
Trustees considered the Adviser's representations regarding the
Adviser's manager-of-managers staffing and capabilities to oversee
each Fund's Sub-Adviser and the sub-adviser's staffing and
capabilities to manage the Fund. The Board of Trustees also
considered the overall high quality of the personnel, operations,
financial condition, investment management capabilities,
methodologies, and performance of the Adviser and each Fund's
Sub-Adviser.
Accordingly, in light of the above considerations and such other factors
and information it considered relevant, the Board of Trustees by a unanimous
vote of those present in person at the meeting (including a separate vote of
the Independent Trustees present in person at the meeting) approved the
Agreements with respect to the Growth and Income Fund and the Mid-Cap Fund.
HSBC INVESTOR FAMILY OF FUNDS 67
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
TABLE OF SHAREHOLDER EXPENSES -- APRIL 30, 2005 (UNAUDITED)
......................................................................
As a shareholder of the HSBC Investor Funds, you incur two types of
costs: (1) transaction costs, including sales charges (loads) on purchases;
redemption fees; and exchange fees; (2) ongoing costs, including management
fees; distribution and shareholder servicing fees; interest expense; 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 November 1, 2004
through April 30, 2005.
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
11/1/04 4/30/05 11/1/04 - 4/30/05 11/1/04 - 4/30/05
------- ------- ----------------- -----------------
Limited Maturity Fund Class A $1,000.00 $1,002.50 $4.67 0.94%
Class Y 1,000.00 1,002.70 3.43 0.69%
Class B 1,000.00 997.70 8.37 1.69%
Class C 1,000.00 998.70 8.38 1.69%
Fixed Income Fund Advisor Shares 1,000.00 1,012.90 2.05 0.41%
Bond Fund Class A 1,000.00 1,011.10 3.69 0.74%
Class B 1,000.00 1,007.30 7.42 1.49%
Class C 1,000.00 1,008.30 7.37 1.48%
New York Tax-Free
Bond Fund Class A 1,000.00 1,009.30 4.28 0.86%
Class Y 1,000.00 1,010.60 3.04 0.61%
Class B 1,000.00 1,005.60 8.01 1.61%
Class C 1,000.00 1,005.60 8.01 1.61%
Growth Fund Class A 1,000.00 1,004.90 5.47 1.10%
Class Y 1,000.00 1,006.00 4.28 0.86%
Class B 1,000.00 1,000.80 9.13 1.84%
Class C 1,000.00 1,001.60 9.13 1.84%
Value Fund Class A 1,000.00 1,059.40 5.62 1.10%
Class Y 1,000.00 1,060.70 4.34 0.85%
Class B 1,000.00 1,055.10 9.43 1.85%
Class C 1,000.00 1,055.70 9.43 1.85%
Growth & Income Fund Class A 1,000.00 1,024.40 4.92 0.98%
Class Y 1,000.00 1,025.30 3.72 0.74%
Class B 1,000.00 1,021.80 8.67 1.73%
Class C 1,000.00 1,020.10 8.67 1.73%
</Table>
68 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
TABLE OF SHAREHOLDER EXPENSES -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
<Table>
<Caption>
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
11/1/04 4/30/05 11/1/04 - 4/30/05 11/1/04 - 4/30/05
------- ------- ----------------- -----------------
Mid-Cap Fund Class A 1,000.00 1,053.30 4.68 0.92%
Class Y 1,000.00 1,054.00 3.72 0.93%
Class B 1,000.00 1,050.20 8.44 1.66%
Class C 1,000.00 1,048.70 8.43 1.66%
International Equity
Fund Advisor Shares 1,000.00 1,087.10 4.97 0.96%
Overseas Fund Class A 1,000.00 1,082.90 8.47 1.68%
Class B 1,000.00 1,078.00 12.31 2.39%
Class C 1,000.00 1,078.10 12.31 2.39%
Small Cap Equity Fund Advisor Shares 1,000.00 1,006.10 4.48 0.90%
Opportunity Fund Class A 1,000.00 1,002.70 7.30 1.47%
Class B 1,000.00 999.00 11.00 2.22%
Class C 1,000.00 999.00 11.00 2.22%
</Table>
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
11/1/04 4/30/05 11/1/04 - 4/30/05 11/1/04 - 4/30/05
------- ------- ----------------- -----------------
Limited Maturity Fund Class A $1,000.00 $1,020.13 $4.71 0.94%
Class Y 1,000.00 1,020.37 3.46 0.69%
Class B 1,000.00 1,016.41 8.45 1.69%
Class C 1,000.00 1,016.41 8.45 1.69%
Fixed Income Fund Advisor Shares 1,000.00 1,022.76 2.06 0.41%
Bond Fund Class A 1,000.00 1,021.12 3.71 0.74%
Class B 1,000.00 1,017.41 7.45 1.49%
Class C 1,000.00 1,017.46 7.40 1.48%
</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.
HSBC INVESTOR FAMILY OF FUNDS 69
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
TABLE OF SHAREHOLDER EXPENSES -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
<Table>
<Caption>
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
11/1/04 4/30/05 11/1/04 - 4/30/05 11/1/04 - 4/30/05
------- ------- ----------------- -----------------
New York Tax-Free
Bond Fund Class A 1,000.00 1,020.53 4.31 0.86%
Class Y 1,000.00 1,021.77 3.06 0.61%
Class B 1,000.00 1,016.81 8.05 1.61%
Class C 1,000.00 1,016.81 8.05 1.61%
Growth Fund Class A 1,000.00 1,019.34 5.51 1.10%
Class Y 1,000.00 1,020.53 4.31 0.86%
Class B 1,000.00 1,015.67 9.20 1.84%
Class C 1,000.00 1,015.67 9.20 1.84%
Value Fund Class A 1,000.00 1,019.34 5.51 1.10%
Class Y 1,000.00 1,020.58 4.26 0.85%
Class B 1,000.00 1,015.62 9.25 1.85%
Class C 1,000.00 1,015.62 9.25 1.85%
Growth & Income Fund Class A 1,000.00 1,019.93 4.91 0.98%
Class Y 1,000.00 1,021.12 3.71 0.74%
Class B 1,000.00 1,016.22 8.65 1.73%
Class C 1,000.00 1,016.22 8.65 1.73%
Mid-Cap Fund Class A 1,000.00 1,020.23 4.61 0.92%
Class Y 1,000.00 1,021.17 3.66 0.73%
Class B 1,000.00 1,016.56 8.30 1.66%
Class C 1,000.00 1,016.56 8.30 1.66%
International Equity
Fund Advisor Shares 1,000.00 1,020.03 4.81 0.96%
Overseas Fund Class A 1,000.00 1,016.66 8.20 1.64%
Class B 1,000.00 1,012.94 11.93 2.39%
Class C 1,000.00 1,012.94 11.93 2.39%
Small Cap Equity Fund Advisor Shares 1,000.00 1,020.33 4.51 0.90%
Opportunity Fund Class A 1,000.00 1,017.50 7.35 1.47%
Class B 1,000.00 1,013.79 11.08 2.22%
Class C 1,000.00 1,013.79 11.08 2.22%
</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.
70 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
SHAREHOLDER MEETING RESULTS (UNAUDITED)
......................................................................
At a Special Meeting of Shareholders held on March 21, 2005, a proposal
to elect seven nominees was approved on behalf of the HSBC Investor Funds,
HSBC Advisor Funds Trust and HSBC Investor Portfolios (collectively, the
'Trusts'). The number of shares voted for, against or abstained are as
follows:
HSBC INVESTOR FUNDS
<Table>
<Caption>
FOR AGAINST ABSTAIN
--- ------- -------
Stephen J. Baker........................................... 4,013,227,309 396,540,860 0
Richard A. Brealey......................................... 4,013,550,074 396,218,095 0
Frederick C. Chen.......................................... 4,012,525,304 397,242,865 0
Alan A. Parsow............................................. 4,013,083,446 396,684,723 0
Thomas F. Robards.......................................... 4,013,262,198 396,505,971 0
Larry M. Robbins........................................... 4,012,517,654 397,250,515 0
Michael Seely.............................................. 4,013,282,990 396,485,179 0
</Table>
HSBC ADVISOR FUNDS TRUST
<Table>
<Caption>
FOR AGAINST ABSTAIN
--- ------- -------
Stephen J. Baker........................................... 520,578,380 72,648 0
Richard A. Brealey......................................... 520,578,380 72,648 0
Frederick C. Chen.......................................... 520,651,028 0 0
Alan A. Parsow............................................. 520,627,071 23,957 0
Thomas F. Robards.......................................... 520,627,071 23,957 0
Larry M. Robbins........................................... 520,622,082 28,946 0
Michael Seely.............................................. 520,627,071 23,957 0
</Table>
HSBC INVESTOR PORTFOLIOS
<Table>
<Caption>
FOR AGAINST ABSTAIN
--- ------- -------
Stephen J. Baker........................................... 63,969,810 59,867 0
Richard A. Brealey......................................... 63,975,736 53,941 0
Frederick C. Chen.......................................... 63,984,270 45,407 0
Alan A. Parsow............................................. 63,978,788 50,889 0
Thomas F. Robards.......................................... 63,958,729 70,948 0
Larry M. Robbins........................................... 63,972,348 57,329 0
Michael Seely.............................................. 63,963,174 66,504 0
</Table>
At a Special Meeting of Shareholders held on April 18, 2005, the
following proposals were approved on behalf of the HSBC Investor Funds:
(1) for shareholders of the HSBC Investor Growth and Income Fund (the
'Fund') prove a new investment advisory agreement between the Fund
and HSBC Investments (USA) Inc. (formerly HSBC Asset Management
(Americas) Inc.) (the 'Adviser'); (b) approve a new sub-advisory
agreement between the Adviser and Transamerica Investment
Management, LLC; and (c) authorize the Board of Trustees of the HSBC
Investor Growth and Income Fund and the Adviser to select and change
investment sub-advisers and to enter into or materially amend
investment sub-advisory agreements without obtaining the approval of
shareholders;
(2) for shareholders of the HSBC Investor Mid-Cap Fund to (a) approve a
new investment advisory agreement between the HSBC Investor Mid-Cap
Fund the Adviser and (b) approve a new sub-advisory agreement
between the Adviser and Munder Capital Management; and (c) authorize
the Board of Trustees of the HSBC Investor Mid-Cap Fund and the
Adviser to select and change investment sub-advisers and to enter
into or materially amend investment sub-advisory agreements without
obtaining the approval of shareholders;
(3) for shareholders of the HSBC Investor Mid-Cap Fund, to approve the
elimination of the fundamental investment restriction on purchasing
securities issued by any registered investment company.
HSBC INVESTOR FAMILY OF FUNDS 71
HSBC INVESTOR FAMILY OF FUNDS
- --------------------------------------------------------------------------------
SHAREHOLDER MEETING RESULTS -- (UNAUDITED) (CONTINUED)
......................................................................
Shares voted For, Against and Abstained from these proposals are as
follows:
HSBC INVESTOR GROWTH AND INCOME FUND:
<Table>
<Caption>
FOR AGAINST ABSTAIN
--- ------- -------
Approve new Investment Advisory Agreement between the Fund
and the Adviser 16,746,954 7,707 0
Approve a new sub-advisory agreement between the Adviser and
Transamerica Investment Management, LLC 16,750,927 2,411 1,323
Authorize the Board of Trustees of the HSBC Investor Growth
and Income Fund and the Adviser to select and change
investment sub-advisers and to enter into or materially
amend investment sub-advisory agreements without obtaining
the approval of shareholders 16,616,113 138,547 1
</Table>
HSBC INVESTOR MID-CAP FUND:
<Table>
<Caption>
FOR AGAINST ABSTAIN
--- ------- -------
Approve new Investment Advisory Agreement between the Fund
and the Adviser 12,080,980 0 55,696
Approve a new sub-advisory agreement between the Adviser and
Munder Capital Management 12,136,513 58 105
Authorize the Board of Trustees of the HSBC Investor Mid-Cap
Fund and the Adviser to select and change investment
sub-advisers and to enter into or materially amend
investment sub-advisory agreements without obtaining the
approval of shareholders 1,345,423 10,790,941 312
Approve the elimination of the fundamental investment
restriction on purchasing securities issued by any
registered investment company 12,130,528 5,941 207
</Table>
72 HSBC INVESTOR FAMILY OF FUNDS
HSBC INVESTOR LIMITED MATURITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED)
......................................................................
<Table>
<Caption>
- ---------------------------------------------------------------
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 57.2%
PRINCIPAL
AMOUNT($) VALUE($)
--------- ----------
FEDERAL HOME LOAN BANK - 3.2%
5.75%, 5/15/12......................... 1,500,000 1,622,354
----------
FEDERAL HOME LOAN MORTGAGE CORP. - 20.4%
5.125%, 7/15/12........................ 500,000 521,131
Pool #E92282, 5.50%, 11/1/17........... 1,363,320 1,397,494
Pool #C01188, 7.00%, 6/1/31............ 317,216 335,040
Pool #C75371, 6.00%, 1/1/33............ 744,708 765,191
Pool #2642, 4.50%, 10/25/27............ 3,000,000 3,019,797
Pool #A11010, 5.00%, 7/1/33............ 1,582,903 1,571,766
Pool #A14659, 6.50%, 10/1/33........... 1,092,885 1,136,063
Pool #E96835, 4.50%, 6/1/18............ 1,756,719 1,742,770
----------
10,489,252
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 25.1%
4.625%, 5/1/13......................... 1,250,000 1,237,219
Pool #535063, 6.50%, 12/1/14........... 322,895 337,077
Pool #535933, 6.50%, 5/1/31............ 236,457 246,355
Pool #593187, 7.00%, 11/1/31........... 719,327 760,254
Pool #695204, 5.50%, 3/1/33............ 1,247,718 1,261,127
Pool #694985, 6.00%, 3/1/33............ 1,481,475 1,522,597
Pool #555427, 6.00%, 2/1/18............ 1,888,577 1,958,108
Pool #704439, 5.00%, 5/1/18............ 1,777,056 1,792,132
Pool #722985, 3.90%, 7/1/33 (a)........ 1,330,718 1,322,078
Pool #740686, 6.50%, 10/1/33........... 804,292 838,170
Pool #753474, 5.50%, 11/1/33........... 1,623,555 1,640,123
----------
12,915,240
----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 6.5%
Pool #2687, 6.00%, 12/20/28............ 473,699 489,195
Pool #3415, 5.50%, 7/20/33............. 1,410,693 1,435,062
Pool #612373, 6.00%, 11/15/33.......... 1,353,341 1,397,172
----------
3,321,429
----------
U.S. TREASURY NOTES - 2.0%
4.75%, 5/15/14......................... 1,000,000 1,042,422
----------
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS (COST
$29,390,697).......................... 29,384,675
----------
<Caption>
- ---------------------------------------------------------------
CORPORATE OBLIGATIONS - 33.9%
PRINCIPAL
AMOUNT($) VALUE($)
--------- ----------
AEROSPACE & DEFENSE - 1.5%
Honeywell International, Inc., 5.125%,
11/1/06............................... 750,000 762,507
----------
AUTO MANUFACTURERS - 1.7%
DaimlerChrysler North American
Holdings, 4.05%, 6/4/08............... 275,000 264,907
General Motors Corp., 7.20%,
1/15/11 (l)........................... 750,000 633,308
----------
898,215
----------
BANKING - 2.0%
Corestates Capital, 6.75%, 11/15/06.... 1,000,000 1,042,446
----------
BROKERAGE SERVICES - 1.9%
Merrill Lynch & Co., 3.375%, 9/14/07... 1,000,000 987,167
----------
DIVERSIFIED MANUFACTURING OPERATIONS - 1.5%
General Electric Co., 5.00%, 2/1/13.... 750,000 763,293
----------
FINANCE - 14.3%
Bear Stearns Co., 3.69%, 9/27/07 (a)... 1,500,000 1,518,223
CIT Group, Inc., 4.125%, 2/21/06....... 1,000,000 1,003,690
Countrywide Home Loans, Inc., 5.50%,
8/1/06................................ 1,250,000 1,272,158
Ford Motor Credit Co., 6.50%,
1/25/07............................... 750,000 749,925
General Motors Accept Corp., 4.50%,
7/15/06 (l)........................... 250,000 244,511
General Motors Accept Corp., 5.125%,
5/9/08 (l)............................ 500,000 466,058
Met Life Global Funding, 4.50%,
5/5/10 (b)............................ 550,000 549,189
MGIC Investment Corp., 6.00%,
3/15/07............................... 750,000 775,480
Morgan Stanley, 4.75%, 4/1/14.......... 750,000 724,910
----------
7,304,144
----------
INSURANCE - 0.5%
Travelers Property Casualty Corp.,
6.375%, 3/15/33....................... 250,000 267,682
----------
MEDIA - 4.7%
AOL Time Warner Inc., 6.875%, 5/1/12... 500,000 556,831
Comcast Corp., 5.30%, 1/15/14.......... 1,000,000 1,015,022
Cox Communications, Inc., 7.125%,
10/1/12............................... 750,000 833,365
----------
2,405,218
----------
REAL ESTATE - 1.1%
EOP Operating LP, 7.00%, 7/15/11....... 500,000 552,319
----------
RETAIL - 2.0%
May Department Stores Co., 5.75%,
7/15/14............................... 1,000,000 1,035,435
----------
TELECOMMUNICATIONS - 2.4%
Deutsche Telekom International Finance,
3.875%, 7/22/08....................... 500,000 492,386
SBC Communications, Inc., 5.10%,
9/15/14............................... 750,000 750,340
----------
1,242,726
----------
UTILITIES - 0.3%
Pacific Gas & Electric Co., 3.82%,
4/3/06, Callable 7/3/05 @100 (a)...... 13,000 13,029
Pacific Gas & Electric Co., 4.80%,
3/1/14................................ 135,000 134,005
----------
147,034
----------
TOTAL CORPORATE OBLIGATIONS (COST
$17,467,756).......................... 17,408,186
----------
</Table>
See notes to financial statements. HSBC INVESTOR PORTFOLIOS 73
HSBC INVESTOR LIMITED MATURITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
<Table>
<Caption>
- ---------------------------------------------------------------
ASSET BACKED SECURITIES - 7.2%
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- ----------
Carmax Auto Owner Trust, 3.00%,
9/15/08............................... 1,250,000 1,234,019
Honda Auto Receivables Owner Trust 03
1 A4, 2.48%, 7/18/08.................. 2,500,000 2,471,615
----------
TOTAL ASSET BACKED SECURITIES (COST
$3,749,599)........................... 3,705,634
----------
- ---------------------------------------------------------------
INVESTMENT COMPANIES - 0.5%
HSBC Investor Money Market Fund Class I
Shares*............................... 261,369 261,369
----------
TOTAL INVESTMENT COMPANIES (COST
$261,369)............................. 261,369
----------
<Caption>
- ---------------------------------------------------------------
SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN - 2.8%
PRINCIPAL
AMOUNT($) VALUE($)
--------- ----------
Pool of various securities for HSBC
Family of Funds - Note 2 - Security
Loans................................. 1,410,000 1,410,000
----------
TOTAL SECURITIES HELD AS COLLATERAL FOR
SECURITIES ON LOAN (COST
$1,410,000)........................... 1,410,000
----------
TOTAL INVESTMENTS
(COST $52,273,399) - 101.6%.......... 52,175,886
----------
----------
</Table>
- --------------
Percentages indicated are based on net assets of $51,357,129.
(a) Variable rate security. The interest rates on these securities are adjusted
periodically to reflect then-current short-term interest rates. The rates
presented in this report represent the rates that were in effect on April
30, 2005. However, each or these securities contains put or demand features
that allow the fund to require the issuer to repurchase the security from
the fund within various time periods, including daily, weekly, monthly, or
semi-annually.
(b) Security exempt from registration under Rule 144a of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. These securities
have been deemed liquid by the investment advisor based on procedures
approved by the Board of Trustees.
(l) All or a portion of the security was on loan as of April 30, 2005.
* Investment in affiliate.
74 HSBC INVESTOR PORTFOLIOS See notes to financial statements.
HSBC INVESTOR FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005
......................................................................
<Table>
<Caption>
- ----------------------------------------------------------------
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 46.5%
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
FEDERAL HOME LOAN BANK - 1.2%
2.875%, 9/15/06....................... 1,850,000 1,829,054
-----------
FEDERAL HOME LOAN MORTGAGE CORP. - 17.5%
5.75%, 4/15/08........................ 11,700,000 12,262,829
5.00%, 7/15/14........................ 1,300,000 1,343,450
Pool #2642, 4.50%, 10/25/27........... 7,000,000 7,046,194
Pool #2894, 5.50%, 12/15/24........... 4,348,173 4,429,350
Pool #C00368, 8.50%, 10/1/24.......... 52,731 57,677
Pool #C00922, 8.00%, 2/1/30........... 404,151 441,993
Pool #C54447, 7.00%, 7/1/31........... 59,191 62,517
Pool #C60712, 6.50%, 11/1/31.......... 848,644 883,534
Pool #C80387, 6.50%, 4/1/26........... 52,005 54,257
Pool #D62926, 6.50%, 8/1/25........... 37,891 39,542
Pool #G00951, 6.00%, 7/1/28........... 466,790 480,611
Pool #G01317, 7.00%, 10/1/31.......... 327,447 345,846
-----------
27,447,800
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 18.7%
3.125%, 12/15/07...................... 810,000 792,950
4.25%, 5/15/09........................ 2,700,000 2,709,377
5.50%, 3/15/11........................ 1,000,000 1,058,087
4.625%, 5/1/13........................ 3,300,000 3,266,258
5.50%, 8/1/33......................... 9,646,430 9,744,872
Pool #253438, 8.50%, 9/1/30........... 102,306 111,585
Pool #329530, 7.00%, 12/1/25.......... 125,431 133,064
Pool #329655, 7.00%, 11/1/25.......... 88,899 94,310
Pool #356905, 4.20%, 10/1/36 (a)...... 376,228 386,628
Pool #398958, 6.50%, 10/1/12.......... 122,324 127,661
Pool #535332, 8.50%, 4/1/30........... 86,084 93,943
Pool #535440, 8.50%, 8/1/30........... 99,905 108,967
Pool #535608, 9.50%, 4/1/30........... 177,649 196,993
Pool #548965, 8.50%, 7/1/30........... 88,493 96,519
Pool #568486, 7.00%, 1/1/31........... 74,988 79,275
Pool #573752, 8.50%, 2/1/31........... 83,879 91,487
Pool #575328, 6.50%, 4/1/31........... 119,988 125,011
Pool #623129, 6.50%, 1/1/32........... 1,474,004 1,535,705
Pool #651901, 6.00%, 8/1/32........... 1,565,698 1,609,466
Pool #695777, 5.50%, 4/1/33........... 1,531,693 1,548,153
Pool #722985, 3.90%, 7/1/33 (a)....... 3,792,547 3,767,924
Pool #803855, 5.50%, 12/1/34.......... 1,726,819 1,744,397
-----------
29,422,632
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 2.5%
Pool #346406, 7.50%, 2/15/23.......... 109,542 118,398
Pool #412530, 7.50%, 12/15/25......... 146,991 158,369
Pool #587112, 6.00%, 6/15/32.......... 2,432,404 2,511,607
Pool #780804, 10.00%, 12/15/20........ 114,843 129,358
Pool #780826, 9.50%, 5/15/18.......... 65,303 72,142
Pool #781300, 7.00%, 6/15/31.......... 282,049 299,064
Pool #781345, 6.00%, 10/15/31......... 589,730 609,301
-----------
3,898,239
-----------
U.S. TREASURY BONDS - 1.9%
6.00%, 2/15/26........................ 1,200,000 1,419,890
5.25%, 11/15/28....................... 1,500,000 1,636,172
-----------
3,056,062
-----------
<Caption>
- ----------------------------------------------------------------
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS, CONT'D.
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
U.S. TREASURY NOTES - 4.7%
1.50%, 3/31/06........................ 3,000,000 2,949,843
2.75%, 6/30/06........................ 1,300,000 1,289,590
4.00%, 2/15/14........................ 3,115,000 3,078,616
4.25%, 8/15/14........................ 95,000 95,401
-----------
7,413,450
-----------
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS (COST
$72,076,626)......................... 73,067,237
-----------
- ----------------------------------------------------------------
CORPORATE OBLIGATIONS - 32.8%
AUTO MANUFACTURERS - 0.5%
DaimlerChrysler North American
Holdings, 4.05%, 6/4/08.............. 825,000 794,722
-----------
BUSINESS SERVICES - 0.7%
Xerox Corp., 9.75%, 1/15/09........... 1,000,000 1,135,000
-----------
DIVERSIFIED MANUFACTURING OPERATIONS - 1.3%
General Electric Co., 5.00%, 2/1/13... 2,000,000 2,035,448
-----------
FINANCE - 16.3%
AIG SunAmerica Global Financing VI,
6.30%, 5/10/11 (b)................... 642,000 694,745
Capital One Bank, 5.125%, 2/15/14..... 725,000 719,336
CIT Group, Inc., 7.375%, 4/2/07....... 3,725,000 3,938,810
Citigroup, Inc., 5.625%, 8/27/12...... 2,500,000 2,634,237
Citigroup, Inc., 5.00%, 9/15/14....... 775,000 780,117
Farmers Exchange Capital, 7.05%,
7/15/28 (b).......................... 388,000 409,926
Farmers Insurance Exchange, 8.625%,
5/1/24 (b)........................... 238,000 293,644
Florida Windstorm, 7.125%, 2/25/19
(b).................................. 608,000 719,489
Ford Motor Credit Co., 6.50%,
1/25/07.............................. 800,000 799,920
Ford Motor Credit Co., 7.00%,
10/1/13.............................. 850,000 764,979
General Electric Capital Corp., 8.75%,
5/21/07.............................. 1,300,000 1,417,802
General Electric Capital Corp.,
6.875%, 11/15/10..................... 1,200,000 1,332,388
J.P. Morgan Chase & Co., 5.25%,
5/30/07.............................. 3,500,000 3,576,044
Met Life Global Funding, 4.50%, 5/5/10
(b).................................. 1,500,000 1,497,788
Metropolitan Life Insurance Co.,
7.80%, 11/1/25 (b)................... 275,000 346,273
Morgan Stanley, 5.80%, 4/1/07......... 2,500,000 2,570,675
PNC Institutional Capital Trust A,
7.95%, 12/15/26, Callable
12/15/06 @ 103.98 (b)................ 187,000 203,993
Prudential Insurance Co., 8.30%,
7/1/25 (b)........................... 548,000 731,917
SLM Corp., 4.00%, 1/15/10............. 1,145,000 1,122,811
Travelers Property Casualty Corp.,
7.75%, 4/15/26....................... 1,000,000 1,248,841
-----------
25,803,735
-----------
MEDIA - 2.6%
AOL Time Warner, Inc., 7.70%,
5/1/32............................... 1,500,000 1,848,408
Cox Communications, Inc., 7.125%,
10/1/12.............................. 2,000,000 2,222,306
-----------
4,070,714
-----------
MEDICAL - 0.7%
HCA, Inc., 6.95%, 5/1/12.............. 1,000,000 1,042,427
-----------
</Table>
See notes to financial statements. HSBC INVESTOR PORTFOLIOS 75
HSBC INVESTOR FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (CONTINUED)
......................................................................
<Table>
<Caption>
- ----------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
OIL & GAS - 2.7%
Amerada Hess Corp., 6.65%, 8/15/11.... 1,550,000 1,666,582
Amerada Hess Corp., 7.875%, 10/1/29... 1,000,000 1,206,324
Anadarko Finance Co., 6.75%, 5/1/11... 1,250,000 1,390,020
-----------
4,262,926
-----------
REAL ESTATE - 1.1%
EOP Operating LP, 7.00%, 7/15/11...... 1,500,000 1,656,957
-----------
RETAIL - 2.1%
May Department Stores Co., 5.75%,
7/15/14.............................. 1,525,000 1,579,038
May Department Stores Co., 6.65%,
7/15/14.............................. 1,650,000 1,770,681
-----------
3,349,719
-----------
TELECOMMUNICATIONS - 3.4%
Comcast Cable Communications Holdings,
Inc., 8.375%, 3/15/13................ 2,200,000 2,670,828
SBC Communications, Inc., 5.10%,
9/15/14.............................. 1,500,000 1,500,680
Sprint Capital Corp., 8.75%,
3/15/32.............................. 850,000 1,142,977
-----------
5,314,485
-----------
TRANSPORT -- RAIL - 0.6%
Burlington North Santa Fe, 7.57%,
1/2/21............................... 329,167 388,720
Union Pacific Corp., 6.85%, 1/2/19.... 451,336 500,351
-----------
889,071
-----------
UTILITIES - 0.8%
Pacific Gas & Electric Co., 4.80%,
3/1/14............................... 480,000 476,461
Pacific Gas & Electric Co., 6.05%,
3/1/34............................... 350,000 373,991
RAS Laffan Liquid Natural Gas, 8.29%,
3/15/14 (b).......................... 348,000 405,491
-----------
1,255,943
-----------
TOTAL CORPORATE OBLIGATIONS (COST
$49,719,478)......................... 51,611,147
-----------
- ----------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 3.8%
Banc of America Commercial Mortgage,
Inc. 00 2 A2, 7.20%, 5/15/10......... 675,000 748,311
Chase Commercial Mortgage Securities
Corp. 99 2 A2, 7.20%, 1/15/32........ 700,000 775,141
DLJ Mortgage Acceptance Corp. IO 97
CF1 S, 0.91%, 5/15/30 (a) (b) (c).... 597,801 8,572
Fannie Mae IO 00 16 PS, 5.75%,
10/25/29 (a) (c)..................... 122,464 7,855
Fannie Mae IO 01 4 SA, 4.58%,
2/17/31 (a) (c)...................... 407,746 37,995
Fannie Mae IO 200 32 SV, 5.63%,
3/18/30 (a) (c)...................... 69,384 3,371
Fannie Mae IO 270 2, 8.50%, 9/1/23
(c).................................. 89,608 17,553
Fannie Mae IO 296 2, 8.00%, 4/1/24
(c).................................. 99,513 18,542
Fannie Mae IO 306 2, 8.00%, 5/1/30
(c).................................. 138,543 28,997
FHA Weyerhauser, 7.43%, 1/1/24 (d).... 79,098 79,351
First Union-Chase Commercial Mortgage
99 C2 A2, 6.645%, 6/15/31............ 597,000 640,613
Freddie Mac IO 1534 K, 4.40%,
6/15/23 (a) (c)...................... 268,286 20,940
Freddie Mac IO 2141 SD, 5.20%,
4/15/29 (a) (c)...................... 194,745 19,888
Freddie Mac IO 2247 SC, 4.55%,
8/15/30 (a) (c)...................... 136,406 6,477
<Caption>
- ----------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS, CONTINUED
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
GE Capital Commercial Mortgage Corp.
01 1 A1 6.08%, 5/15/33............... 257,662 268,448
GMAC Commercial Mortgage Securities,
Inc. 98 C2 A2, 6.42%, 5/15/35........ 587,000 620,165
GMAC Commercial Mortgage Securities,
Inc. IO 96 C1 X2, 2.80%,
10/15/28 (a) (c)..................... 310,938 5,968
Government National Mortgage
Association IO 99 29 SD, 5.03%,
3/16/26 (a) (c)...................... 47,818 774
Government National Mortgage
Association IO 99 30 S, 5.63%,
8/16/29 (a) (c)...................... 137,736 12,109
Government National Mortgage
Association IO 99 30 SA, 5.03%,
4/16/29 (a) (c)...................... 182,843 12,955
Government National Mortgage
Association IO 99 32 SB, 5.03%,
7/16/27 (a) (c)...................... 82,339 3,014
GS Mortgage Securities Corp. IO 97 GL
X2, 0.90%, 7/13/30 (a) (c)........... 370,754 6,211
LB-UBS Commercial Mortgage Trust
00 C3 A1, 7.95%, 7/15/09............. 220,035 232,214
LB-UBS Commercial Mortgage Trust
00 C4 A2, 7.37%, 8/15/26............. 600,000 674,434
PNC Mortgage Acceptance Corp. 00 C2
A2, 7.30%, 10/12/33.................. 600,000 669,444
Ryland Mortgage Securities Corp. 94 4
C1, 4.30%, 9/25/30, (a).............. 382,462 381,613
Salomon Brothers Mortgage Securities
VII 00 C3 A2, 6.59%, 12/18/33........ 650,000 706,983
-----------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS (COST $5,993,677)........ 6,007,938
-----------
- ----------------------------------------------------------------
ASSET BACKED SECURITIES - 7.4%
Citibank Credit Card Issuance Trust 00
A3, 6.875%, 11/16/09................. 1,115,000 1,190,861
Connecticut RRB Special Purpose Trust
CL&P-1 01 1 A5, 6.21%, 12/30/11...... 700,000 756,848
Daimler Chrysler Auto Trust, 3.28%,
12/8/09.............................. 1,500,000 1,469,430
Detroit Edison Securitization Funding
LLC 01 1 A3, 5.875%, 3/1/10.......... 357,000 367,529
Detroit Edison Securitization Funding
LLC 01 1 A5, 6.42%, 3/1/15........... 417,000 464,194
MBNA Master Credit Card Trust 00 E A,
7.80%, 10/15/12...................... 600,000 694,917
MBNA Master Credit Card Trust 99 B A,
5.90%, 8/15/11....................... 527,000 558,833
Peco Energy Transition Trust 00 A A3,
7.625%, 3/1/10....................... 600,000 667,796
Peco Energy Transition Trust 01 A A1,
6.52%, 12/31/10...................... 550,000 603,526
PSE&G Transition Funding LLC 01 1 A6,
6.61%, 6/15/15....................... 355,000 399,984
Union Acceptance Corp. 01 C B, 4.73%,
11/9/09.............................. 2,500,000 2,518,097
WFS Financial Owner Trust, 3.35%,
4/17/09.............................. 2,000,000 1,980,447
-----------
TOTAL ASSET BACKED SECURITIES
(COST $11,266,987)................... 11,672,462
-----------
</Table>
76 HSBC INVESTOR PORTFOLIOS See notes to financial statements.
HSBC INVESTOR FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (CONTINUED)
......................................................................
<Table>
<Caption>
- ----------------------------------------------------------------
MUNICIPAL BONDS - 1.6%
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
---------- -----------
URBAN AND COMMUNITY DEVELOPMENT - 1.6%
Indianapolis Indiana Local Public
Improvement, 3.00%, 10/15/05......... 1,500,000 1,497,585
Louisiana Local Government
Environmental Facilities & Community
Development (LOC AMBAC), 6.30%,
7/1/30............................... 850,000 954,516
-----------
TOTAL MUNICIPAL BONDS
(COST $2,432,456).................... 2,452,101
-----------
- ----------------------------------------------------------------
INVESTMENT COMPANIES - 1.0%
HSBC Investor Money Market Fund Class
I Shares*............................ 1,497,650 1,497,650
TOTAL INVESTMENT COMPANIES (COST
$1,497,650).......................... 1,497,650
-----------
TOTAL INVESTMENTS
(COST $142,986,874) - 93.1%......... 146,308,535
-----------
-----------
</Table>
- --------------
Percentages indicated are based on net assets of $157,134,324.
(a) Variable rate security. The interest rates on these securities are adjusted
periodically to reflect then-current short-term interest rates. The rates
presented in this report represents the rates that were in effect on April
30, 2005. However, each of these securities contains put or demand features
that allow the fund to require the issuer to repurchase the security from
the fund within various time periods, including daily, weekly, monthly, or
semi-annually.
(b) Security exempt from registration under Rule 144a of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. These securities
have been deemed liquid by the Investment Advisor based on procedures
approved by the Board of Trustees.
(c) Interest-only represents securities that entitle holders to receive only
interest payments on the underlying mortgages. The yield to maturity of an
Interest-Only is extremely sensitive to the rate of principal payments on
the underlying mortgage assets. A rapid (slow) rate of principal repayments
may have an adverse (positive) effect on yield to maturity. The principal
amount shown is the notional amount of the underlying mortgages.
(d) Rule 144a, section 4(2) or other security which is restricted as to resale
to institutional investors. The Investment Advisor, using Board approved
procedures, has deemed these securities to be illiquid. Represents .05% of
net assets.
* Investment in affiliate.
LOC -- Letter of Credit
See notes to financial statements. HSBC INVESTOR PORTFOLIOS 77
HSBC INVESTOR GROWTH PORTFOLIO
- -------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED)
......................................................................
<Table>
<Caption>
- -----------------------------------------------------------------
COMMON STOCKS - 95.8%
SHARES VALUE($)
----------- -----------
AEROSPACE & DEFENSE - 2.0%
General Dynamics Corp. ............... 9,800 1,029,490
-----------
BIOTECHNOLOGY - 1.2%
Gilead Sciences, Inc. (a)............. 16,050 595,455
-----------
BUSINESS SERVICES - 1.0%
Paychex, Inc. ........................ 17,050 521,730
-----------
CHEMICALS - 2.0%
Monsanto Co. ......................... 17,400 1,019,988
-----------
COMPUTER SOFTWARE - 8.5%
Automatic Data Processing, Inc. ...... 28,200 1,225,008
EMC Corp. (a)......................... 38,750 508,400
Microsoft Corp. ...................... 82,600 2,089,780
Oracle Corp. (a)...................... 48,350 558,926
-----------
4,382,114
-----------
COMPUTERS - 2.9%
Dell, Inc. (a)........................ 42,300 1,473,309
-----------
CONSUMER PRODUCTS - 4.5%
Avon Products, Inc. .................. 12,200 488,976
Harman International Industries, Inc.. 4,500 353,610
The Procter & Gamble Co. ............. 27,350 1,481,003
-----------
2,323,589
-----------
DIVERSIFIED MANUFACTURING OPERATIONS - 5.0%
Danaher Corp. ........................ 12,950 655,659
General Electric Co. ................. 52,512 1,900,934
-----------
2,556,593
-----------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 2.9%
Linear Technology Corp. .............. 13,450 480,703
Maxim Integrated Products, Inc. ...... 6,150 230,010
Microchip Technology, Inc. ........... 27,900 794,592
-----------
1,505,305
-----------
FINANCIAL SERVICES - 17.7%
American Express Co. ................. 10,300 542,810
Franklin Resources, Inc. ............. 15,350 1,054,238
Goldman Sachs Group, Inc. ............ 16,650 1,778,054
Legg Mason, Inc. ..................... 14,750 1,045,185
Moody's Corp. ........................ 5,250 431,235
Robert Half International, Inc. ...... 20,700 513,774
SLM Corp. ............................ 46,800 2,229,551
T. Rowe Price Group, Inc. ............ 9,000 496,530
The Chicago Mercantile Exchange....... 5,350 1,046,032
-----------
9,137,409
-----------
HEALTH CARE - 9.9%
DENTSPLY International, Inc. ......... 8,200 448,212
Medtronic, Inc. ...................... 23,900 1,259,530
Stryker Corp. ........................ 7,900 383,545
UnitedHealth Group, Inc. ............. 20,300 1,918,552
Zimmer Holdings, Inc. (a)............. 13,050 1,062,531
-----------
5,072,370
-----------
HOTELS & LODGING - 2.2%
Las Vegas Sands Corp. (a)............. 7,700 288,365
Starwood Hotels & Resorts Worldwide,
Inc. ................................ 15,700 853,138
-----------
1,141,503
-----------
INTERNET RELATED - 4.9%
eBay, Inc. (a)........................ 13,550 429,942
Google, Inc. Class A (a) (l).......... 7,250 1,595,000
Yahoo!, Inc. (a)...................... 14,300 493,493
-----------
2,518,435
-----------
<Caption>
- -----------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
----------- -----------
LEISURE - 1.6%
Carnival Corp. ....................... 16,650 813,852
-----------
MEDICAL & HEALTH PRODUCTS - 2.7%
Biomet, Inc. ......................... 11,100 429,459
Genentech, Inc. (a)................... 13,629 966,841
-----------
1,396,300
-----------
OIL & GAS - 6.5%
Baker Hughes, Inc. ................... 11,200 494,144
Schlumberger Ltd. .................... 17,800 1,217,698
Smith International, Inc. ............ 27,750 1,614,495
-----------
3,326,337
-----------
PHARMACEUTICALS - 8.7%
Alcon, Inc. .......................... 8,600 834,200
Allergan, Inc. ....................... 5,050 355,470
Johnson & Johnson..................... 30,050 2,062,331
Pfizer, Inc. ......................... 45,250 1,229,442
-----------
4,481,443
-----------
RETAIL - 8.4%
Advance Auto Parts (a)................ 10,150 541,503
Home Depot, Inc. ..................... 28,150 995,666
Kohl's Corp. (a)...................... 5,700 271,320
Staples, Inc. ........................ 35,925 685,090
Walgreen Co. ......................... 42,517 1,830,781
-----------
4,324,360
-----------
TELECOMMUNICATIONS - 1.4%
Cisco Systems, Inc. (a)............... 40,200 694,656
-----------
TRANSPORTATION - 1.8%
Expeditors International of
Washington, Inc. .................... 10,900 535,299
FedEx Corp. .......................... 4,550 386,523
-----------
921,822
-----------
TOTAL COMMON STOCKS
(COST $47,859,846)................... 49,236,060
-----------
- -----------------------------------------------------------------
INVESTMENT COMPANIES - 5.7%
HSBC Investor Money Market Fund
Class I Shares*...................... 2,946,216 2,946,216
-----------
TOTAL INVESTMENT COMPANIES
(COST $2,946,216).................... 2,946,216
-----------
- -----------------------------------------------------------------
SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN - 2.2%
Pool of various securities for HSBC
Family of Funds - Note 2 - Security
Loans................................ 1,120,000 1,120,000
-----------
TOTAL SECURITIES HELD AS COLLATERAL
FOR SECURITIES ON LOAN (COST
$1,120,000).......................... 1,120,000
-----------
TOTAL INVESTMENTS
(COST $51,926,062) - 103.7%......... 53,302,276
-----------
-----------
</Table>
- --------------
Percentages indicated are based on net assets of $51,408,092.
(a) Represents non-income producing security.
(l) Security, or portion of the security was on loan as of April 30, 2005.
* Investment in affiliate.
78 HSBC INVESTOR PORTFOLIOS See notes to financial statements.
HSBC INVESTOR VALUE PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED)
......................................................................
<Table>
- -----------------------------------------------------------------
COMMON STOCKS - (96.5%)
<Caption>
SHARES VALUE($)
--------- ----------
AEROSPACE & DEFENSE - 8.0%
Lockheed Martin Corp. ................... 28,000 1,706,600
Northrop Grumman Corp. .................. 32,600 1,787,784
Raytheon Co. ............................ 41,300 1,553,293
----------
5,047,677
----------
BANKING - 5.0%
Bank of America Corp. ................... 32,100 1,445,784
Wells Fargo & Co. ....................... 28,800 1,726,272
----------
3,172,056
----------
BUSINESS SERVICES - 2.3%
Pitney Bowes, Inc. ...................... 32,100 1,435,512
----------
COMPUTER SOFTWARE - 6.1%
Computer Associates International,
Inc. ................................... 108,100 2,907,890
Microsoft Corp. ......................... 37,200 941,160
----------
3,849,050
----------
CONGLOMERATES - 2.3%
Loews Corp. ............................. 20,700 1,467,216
----------
CONSUMER PRODUCTS - 9.0%
Albertson's, Inc. (l).................... 50,400 997,416
Altria Group, Inc. ...................... 42,200 2,742,578
Kimberly-Clark Corp. .................... 31,000 1,935,950
----------
5,675,944
----------
DIVERSIFIED MANUFACTURING OPERATIONS - 2.1%
Ingersoll-Rand Co. ...................... 17,400 1,337,538
----------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 3.3%
Agilent Technologies, Inc. (a)........... 101,700 2,110,275
----------
FINANCIAL SERVICES - 16.8%
Citigroup, Inc. ......................... 36,707 1,723,761
Countrywide Financial Corp. ............. 76,600 2,772,154
Fannie Mae............................... 44,000 2,373,800
Genworth Financial, Inc., Class A........ 58,000 1,621,100
J.P. Morgan Chase & Co. ................. 39,150 1,389,434
MGIC Investment Corp. ................... 11,800 696,200
----------
10,576,449
----------
GAS & ELECTRIC UTILITY - 1.6%
Dominion Resources, Inc. ................ 13,000 980,200
----------
HEALTH CARE - 2.9%
Aetna, Inc. ............................. 24,800 1,819,576
----------
INSURANCE - 7.4%
AON Corp. ............................... 77,200 1,609,620
Radian Group, Inc. ...................... 34,900 1,550,607
The Hartford Financial Services Group,
Inc. ................................... 21,100 1,527,007
----------
6,506,810
----------
</Table>
<Table>
<Caption>
- -----------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- ----------
MEDIA - 4.8%
Liberty Media Corp., Class A (a)....... 100,350 1,007,514
Viacom, Inc., Class B.................. 58,100 2,011,422
----------
3,018,936
----------
MINING - 5.1%
Barrick Gold Corp. .................... 93,700 2,091,384
Rio Tinto PLC ADR...................... 9,300 1,121,580
----------
3,212,964
----------
OIL & GAS - 10.5%
Burlington Resources, Inc. ............ 12,800 622,208
ConocoPhillips......................... 10,891 1,141,921
Kerr-McGee Corp. (l)................... 46,700 3,623,920
Noble Energy, Inc. (l)................. 19,200 1,231,104
----------
6,619,153
----------
PAPER PRODUCTS - 1.5%
International Paper Co. ............... 26,800 918,972
----------
STEEL - 1.0%
POSCO ADR.............................. 13,800 628,314
----------
TELECOMMUNICATIONS - 4.9%
BellSouth Corp. ....................... 36,050 954,965
Motorola, Inc. ........................ 93,500 1,434,290
Sprint Corp. .......................... 30,600 681,156
----------
3,070,411
----------
TRANSPORTATION - 1.9%
Union Pacific Corp. ................... 18,700 1,195,491
----------
TOTAL COMMON STOCKS
(COST $55,566,154).................... 60,822,967
----------
- ---------------------------------------------------------------
INVESTMENT COMPANIES - 3.4%
HSBC Investor Money Market Fund
Class I Shares*....................... 2,132,825 2,132,825
----------
TOTAL INVESTMENT COMPANIES
(COST $2,132,825)..................... 2,132,825
----------
</Table>
<Table>
- ---------------------------------------------------------------
SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN - 9.2%
Pool of various securities for HSBC
Family of Funds - Note 2 - Security
Loans................................. 5,766,400 5,766,400
----------
TOTAL SECURITIES HELD AS
COLLATERAL FOR SECURITIES
ON LOAN (COST $5,766,400)............. 5,766,400
----------
TOTAL INVESTMENTS
(COST $63,465,379) - 109.1%.......... 68,722,192
----------
----------
</Table>
- --------------
Percentages indicated are based on net assets of $62,995,877.
(a) Represents non-income producing security.
(l) All or a portion of the security was on loan as of April 30, 2005.
* Investment in Affiliate
ADR -- American Depository Receipt
See notes to financial statements. HSBC INVESTOR PORTFOLIOS 79
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED)
......................................................................
<Table>
<Caption>
- -----------------------------------------------------------------
COMMON STOCKS - 97.7%
SHARES VALUE($)
----------- -----------
AUSTRALIA - 0.6%
BlueScope Steel Ltd................... 218,300 1,312,660
-----------
BELGIUM - 2.0%
Delhaize Group........................ 51,900 3,427,881
KBC Bankverzekeringsholding........... 11,300 894,167
-----------
4,322,048
-----------
BRAZIL - 1.7%
Brasken SA............................ 10,000,000 395,443
CIA de Saneamento Basico do Estado de
Sao Paulo............................ 7,710,000 401,769
Gerdau SA ADR......................... 50,100 488,475
Petroleo Brasileiro SA ADR............ 27,700 1,017,974
Unibanco GDR.......................... 13,000 431,470
Usinas Siderurgicas de Minas Gerais
SA................................... 30,200 607,830
Votorantim Celulos Papel SA ADR....... 34,250 376,408
-----------
3,719,369
-----------
CANADA - 4.0%
Alcan, Inc............................ 62,900 2,040,324
Bank of Nova Scotia................... 109,800 3,490,939
Manulife Financial Corp............... 67,400 3,090,283
-----------
8,621,546
-----------
CHINA - 0.1%
China Petroleum & Chemical Corp....... 592,000 232,870
-----------
FINLAND - 1.0%
Nokia Corp., Class A.................. 69,100 1,101,872
Sampo OYJ, Class A.................... 77,000 1,074,355
-----------
2,176,227
-----------
FRANCE - 10.1%
Assurances Generales de France........ 44,600 3,571,564
BNP Paribas SA........................ 15,800 1,042,795
Credit Agricole SA.................... 75,900 1,968,020
France Telecom SA..................... 32,800 964,427
Renault SA............................ 38,100 3,193,850
Sanofi-Aventis........................ 57,800 5,119,153
Societe Generale...................... 33,700 3,360,118
Total SA.............................. 12,500 2,780,055
-----------
21,999,982
-----------
GERMANY - 8.7%
Continental AG........................ 51,400 3,796,080
E.ON AG............................... 42,300 3,588,431
Fresenius Medical Care AG............. 22,800 1,817,804
HeidelbergCement AG................... 51,261 2,977,677
MAN AG................................ 66,000 2,781,756
Muenchener Rueckversicher AG.......... 14,700 1,619,897
Siemens AG............................ 14,400 1,061,312
Volkswagen AG......................... 35,200 1,466,781
-----------
19,109,738
-----------
HUNGARY - 0.4%
MOL Magyar Olaj - es Gazipari Rt.
GDR.................................. 9,600 790,080
-----------
IRELAND - 0.7%
Depfa Bank PLC (a).................... 96,470 1,485,220
-----------
ISRAEL - 0.5%
Bank Hapoalim Ltd..................... 286,600 989,085
-----------
<Caption>
- -----------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE($)
----------- -----------
ITALY - 1.9%
ENI SpA............................... 166,500 4,187,374
-----------
JAPAN - 22.6%
Aiful Corp............................ 29,700 2,210,223
Aiful Corp. - W/I (a)................ 14,850 1,083,683
Canon, Inc............................ 108,300 5,634,129
Hitachi, Ltd.......................... 144,000 845,170
Honda Motor Co., Ltd.................. 96,600 4,649,834
ITOCHU Corp........................... 317,000 1,562,173
Japan Tobacco, Inc.................... 240 3,091,394
JFE Holdings, Inc..................... 104,700 2,905,695
Leopalace21 Corp...................... 29,300 447,401
Nippon Meat Packers, Inc.............. 89,000 1,120,258
Nippon Mining Holdings, Inc........... 360,000 2,178,509
Nissan Motor Co., Ltd................. 281,100 2,766,778
Promise Co., Ltd...................... 49,000 3,163,002
Sanyo Shinpan Finance Co., Ltd........ 26,900 1,817,132
Sega Sammy Holdings, Inc.............. 25,000 1,465,127
Sony Corp............................. 12,510 461,949
Sumitomo Mitsui Financial Group,
Inc.................................. 718 4,635,260
Takeda Chemical Industries, Ltd....... 21,500 1,046,496
The Tokyo Electric Power Co., Inc..... 90,600 2,175,092
Toyota Motor Co....................... 82,000 2,975,978
UFJ Holdings, Inc..................... 216 1,135,461
UNY Co., Ltd.......................... 146,000 1,690,515
-----------
49,061,259
-----------
LUXEMBOURG - 2.3%
Arcelor............................... 243,180 4,931,008
-----------
NETHERLANDS - 3.4%
ABN AMRO Holding NV................... 44,453 1,078,044
ING Groep NV.......................... 190,468 5,248,936
Royal Dutch Petroleum Co.............. 16,800 980,548
-----------
7,307,528
-----------
NORWAY - 0.1%
Yara International ASA (a)............ 13,700 182,832
-----------
PHILLIPINES - 0.3%
Philippine Long Distance Telephone
Co................................... 21,000 541,601
-----------
SINGAPORE - 2.4%
Flextronics International Ltd. (a).... 162,400 1,810,760
Singapore Telecommunications Ltd...... 2,104,630 3,289,187
-----------
5,099,947
-----------
SOUTH AFRICA - 1.6%
ABSA Group Ltd........................ 100,500 1,287,509
Sanlam Ltd............................ 615,600 1,167,663
Telkom South Africa Ltd............... 60,000 1,046,865
-----------
3,502,037
-----------
SOUTH KOREA - 2.6%
Hyundai Motor Co., Ltd................ 16,300 888,408
Industrial Bank of Korea GDR (a)...... 88,300 759,380
Kookmin Bank ADR...................... 14,600 624,150
POSCO ADR............................. 34,200 1,557,126
Shinhan Financial Group Co., Ltd.
ADR.................................. 35,150 1,848,890
-----------
5,677,954
-----------
</Table>
80 HSBC INVESTOR PORTFOLIOS See notes to financial statements.
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
<Table>
<Caption>
- -----------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE($)
----------- -----------
SPAIN - 3.8%
Altadis SA............................ 19,800 839,104
Endesa SA............................. 155,800 3,404,801
Repsol SA............................. 155,000 3,931,261
-----------
8,175,166
-----------
SWEDEN - 1.3%
Svenska Cellusoa AB, B shares......... 77,800 2,713,750
-----------
SWITZERLAND - 2.1%
Credit Suisse Group................... 106,800 4,494,474
-----------
TAIWAN - 1.5%
China Steel Corp., GDR................ 41,400 844,560
Compal Electronics, Inc............... 214,321 1,005,166
Far Eastone Telecommunications Co.,
Ltd. (a)............................. 21,400 393,154
Gigabyte Technology Co., Ltd.......... 257,250 254,976
Taiwan Semiconductor Manufacturing
Co., Ltd............................. 467,755 779,042
-----------
3,276,898
-----------
THAILAND - 0.3%
PTT Public Company Ltd................ 121,400 640,568
-----------
TURKEY - 0.3%
Ford Otomotiv Sanayi AS............... 80,700 543,288
-----------
UNITED KINGDOM - 21.4%
Aviva PLC............................. 346,270 3,914,129
Barclays PLC.......................... 110,200 1,137,187
BP Amoco PLC.......................... 692,800 7,064,512
George Wimpey PLC..................... 244,600 1,828,382
Glaxosmithkline PLC................... 99,400 2,511,954
HBOS PLC.............................. 183,000 2,714,762
Intercontinental Hotels Group PLC..... 163,929 1,955,901
Mitchells & Butlers PLC............... 119,800 687,118
Punch Taverns PLC..................... 185,000 2,247,061
<Caption>
- -----------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE($)
----------- -----------
Royal & Sun Alliance Insurance Group
PLC.................................. 736,000 1,070,898
Royal Bank Of Scotland Group PLC...... 93,500 2,824,255
Sainsbury PLC......................... 410,062 2,216,615
Shell Transport & Trading Co., PLC.... 160,000 1,437,929
Tate & Lyle PLC....................... 235,000 2,093,319
Taylor Woodrow PLC.................... 361,600 1,985,113
Trinity Mirror PLC.................... 145,600 1,775,509
Vodafone Group PLC.................... 1,461,053 3,821,016
Whitbread PLC......................... 169,400 2,757,480
Xstrata PLC........................... 146,000 2,523,710
-----------
46,566,850
-----------
TOTAL COMMON STOCKS
(COST $183,418,796).................. 211,661,359
-----------
- -----------------------------------------------------------------
INVESTMENT COMPANIES - 0.4%
Investors Bank Trust Cash Reserve..... 782,865 782,865
-----------
TOTAL INVESTMENT COMPANIES
(COST $782,865)...................... 782,865
-----------
- -----------------------------------------------------------------
RIGHTS & WARRANTS - 0.0%
UNITED KINGDOM - 0.0%
TI Automotive Ltd., Class A (a) (b)... 190,000 0
-----------
TOTAL RIGHTS & WARRANTS
(COST $0)............................ 0
-----------
TOTAL INVESTMENTS
(COST $184,201,661) - 98.1%......... 212,444,224
-----------
-----------
</Table>
- --------------
Percentages indicated are based on net assets of $216,511,206.
(a) Represents non-income producing security.
(b) Represents illiquid security.
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt
See notes to financial statements. HSBC INVESTOR PORTFOLIOS 81
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
- -------------------------------------------------------------------------------
SCHEDULE PORTFOLIO INVESTMENTS -- APRIL 30, 2005
......................................................................
<Table>
<Caption>
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
Automotive.................................................. 9.4%
Banking & Financial Services................................ 22.9%
Building & Construction..................................... 0.9%
Building Materials.......................................... 2.2%
Chemicals................................................... 0.7%
Computer Related............................................ 1.7%
Diversified Manufacturing Operations........................ 0.1%
Drugs -- Medical............................................ 4.4%
Electrical.................................................. 2.8%
Electronic Components & Semiconductors...................... 4.1%
Food & Beverage............................................. 2.5%
Insurance................................................... 7.2%
Leisure..................................................... 1.2%
Metals & Mining............................................. 5.3%
Manufacturing............................................... 5.1%
Multimedia.................................................. 0.8%
Oil & Gas................................................... 13.1%
Paper Products.............................................. 1.4%
Real Estate................................................. 0.2%
Restaurants................................................. 1.3%
Retail...................................................... 3.4%
Telecommunications.......................................... 5.2%
Tobacco..................................................... 1.8%
Investment Companies........................................ 0.4%
------
Total Investments........................................... 98.1%
------
</Table>
82 HSBC INVESTOR PORTFOLIOS See notes to financial statements.
HSBC INVESTOR SMALL CAP EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED)
......................................................................
<Table>
<Caption>
- -----------------------------------------------------------------
COMMON STOCKS - 98.2%
SHARES VALUE($)
--------- -----------
ADVERTISING - 2.7%
aQuantive, Inc. (a)..................... 203,400 2,257,740
Monster Worldwide, Inc. (a)............. 209,300 4,815,993
-----------
7,073,733
-----------
BANKING - 5.7%
Amegy Bancorporation, Inc............... 248,000 4,116,800
East West Bancorp., Inc................. 153,700 4,936,844
Wintrust Financial Corp................. 128,100 5,881,071
-----------
14,934,715
-----------
BIOTECHNOLOGY - 4.7%
Celgene Corp. (a) (l)................... 328,100 12,438,271
-----------
COMMERCIAL SERVICES - 1.9%
Alliance Data Systems Corp. (a)......... 127,100 5,134,840
-----------
COMPUTER SOFTWARE - 5.6%
CheckFree Corp. (a)..................... 83,300 3,055,444
SRA International, Inc. Class A (a)..... 105,800 6,914,030
Transaction Systems Architects, Inc.
Class A (a)............................ 232,900 4,828,017
-----------
14,797,491
-----------
CONSULTING SERVICES - 1.5%
LECG Corp. (a).......................... 190,400 3,946,992
-----------
DIVERSIFIED MANUFACTURING OPERATIONS - 9.7%
Actuant Corp. Class A (a)............... 105,800 4,506,022
AMETEK, Inc............................. 223,200 8,452,584
IDEX Corp............................... 140,800 5,244,800
Roper Industries, Inc................... 106,800 7,227,156
-----------
25,430,562
-----------
EDUCATIONAL SERVICES - 1.5%
Career Education Corp. (a).............. 127,100 3,996,024
-----------
ELECTRONIC COMPONENTS & SEMICONDUCTORS - 8.2%
ATMI, Inc. (a).......................... 154,700 3,544,951
Power Integrations, Inc. (a)............ 179,500 3,904,125
Semtech Corp. (a)....................... 196,400 3,317,196
Thermo Electron Corp. (a)............... 232,900 5,817,842
Varian Semiconductor Equipment
Associates, Inc. (a)................... 137,800 5,138,562
-----------
21,722,676
-----------
ENVIRONMENTAL SERVICES - 6.9%
Pioneer Natural Resources Co............ 147,500 5,997,350
Republic Services, Inc. Class A......... 206,700 7,151,820
Waste Connections, Inc. (a)............. 147,000 5,177,340
-----------
18,326,510
-----------
FINANCIAL SERVICES - 1.0%
CapitalSource, Inc. (a)................. 124,900 2,622,900
-----------
HEALTH CARE - 14.7%
Advanced Medical Optics, Inc. (a) (l)... 149,500 5,528,510
Cytyc Corp. (a)......................... 215,200 4,585,912
Kinetic Concepts, Inc. (a).............. 97,800 6,009,810
Manor Care, Inc......................... 216,400 7,216,940
Omnicare, Inc........................... 207,700 7,200,959
PacifiCare Health Systems, Inc. (a)..... 133,900 8,001,864
-----------
38,543,995
-----------
HOSPITALS - 2.7%
Triad Hospitals, Inc. (a)............... 139,800 7,164,750
-----------
<Caption>
- -----------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES OR
PRINCIPAL
AMOUNT($) VALUE($)
--------- -----------
HUMAN RESOURCES - 0.0%
Employee Solutions, Inc. (a) (b)...... 2,483 1
-----------
INTERNET RELATED - 2.0%
Concur Technologies, Inc. (a)......... 361,100 3,007,963
RSA Security, Inc. (a)................ 218,200 2,343,468
-----------
5,351,431
-----------
OIL & GAS - 12.8%
Chesapeake Energy Corp................ 389,300 7,490,132
Consol Energy, Inc.................... 139,800 6,044,952
Denbury Resources, Inc. (a)........... 144,800 4,595,952
Massey Energy Company................. 139,500 5,037,345
Peabody Energy Corp................... 122,200 5,348,694
Smith International, Inc.............. 87,400 5,084,932
-----------
33,602,007
-----------
PHARMACEUTICALS - 2.3%
Santarus, Inc. (a).................... 455,400 1,949,112
The Medicines Co. (a)................. 190,992 4,077,679
-----------
6,026,791
-----------
RAILROAD EQUIPMENT - 1.8%
Wabtec Corp........................... 242,000 4,840,000
-----------
RETAIL - 5.8%
Foot Locker, Inc...................... 152,100 4,054,986
P.F. Chang's China Bistro, Inc. (a)... 57,500 3,192,400
PETsMART, Inc......................... 75,100 2,001,415
Weight Watchers International, Inc.
(a).................................. 49,400 2,062,450
Williams-Sonoma, Inc. (a)............. 119,000 3,985,310
-----------
15,296,561
-----------
STEEL PRODUCERS - 1.9%
United States Steel Corp.............. 114,500 4,896,020
-----------
TELECOMMUNICATIONS - 2.1%
Scientific-Atlanta, Inc............... 135,800 4,152,764
Sonus Networks, Inc. (a) (l).......... 372,300 1,280,712
-----------
5,433,476
-----------
TELECOMMUNICATIONS -- EQUIPMENT - 1.7%
Polycom, Inc. (a)..................... 300,900 4,591,733
-----------
TRANSPORTATION - 1.0%
OMI Corp.............................. 149,400 2,717,586
-----------
TOTAL COMMON STOCKS
(COST $223,275,648).................. 258,889,065
-----------
- ---------------------------------------------------------------
SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN - 2.1%
Pool of various securities for HSBC
Family of Funds - Note 2 - Security
Loans................................ 5,583,000 5,583,000
-----------
TOTAL SECURITIES HELD AS COLLATERAL
FOR SECURITIES ON LOAN
(COST $5,583,000).................... 5,583,000
-----------
TOTAL INVESTMENTS
(COST $228,858,648) - 100.3%........ 264,472,065
-----------
-----------
</Table>
- --------------
Percentages indicated are based on net assets of $263,743,734.
(a) Represents non-income producing security.
(b) Represents illiquid security.
(l) All or a portion of the security was on loan as of April 30, 2005.
See notes to financial statements. HSBC INVESTOR PORTFOLIOS 83
HSBC INVESTOR PORTFOLIOS
-------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES -- APRIL 30, 2005 (UNAUDITED)
......................................................................
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------------------------------------
LIMITED MATURITY FIXED INCOME GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
------------------ ------------------ ------------------
ASSETS:
Investments in non-affiliates, at value* $51,914,517 $144,810,885 $50,356,060
Investments in affiliates, at value 261,369 1,497,650 2,946,216
Cash -- -- 87,263
Interest and dividends receivable 446,479 1,394,385 23,968
Receivable for investments sold 998,825 13,035,308 178,637
Prepaid expenses and other assets 755 2,375 1,288
----------- ------------ -----------
TOTAL ASSETS 53,621,945 160,740,603 53,593,432
----------- ------------ -----------
..........................................................................................................................
LIABILITIES:
Payable for investments purchased 819,113 3,523,271 1,030,518
Payable for collateral received on loaned securities 1,410,000 -- 1,120,000
Accrued expenses and other liabilities:
Investment management 17,710 52,379 21,133
Administration 2,898 8,323 1,629
Fund Accounting 6,508 9,693 7,908
Other 8,587 12,613 4,152
----------- ------------ -----------
TOTAL LIABILITIES 2,264,816 3,606,279 2,185,340
----------- ------------ -----------
..........................................................................................................................
NET ASSETS:
Applicable to investors' beneficial interest $51,357,129 $157,134,324 $51,408,092
----------- ------------ -----------
----------- ------------ -----------
Total investments, at cost $52,273,399 $142,986,874 $51,926,062
----------- ------------ -----------
----------- ------------ -----------
</Table>
- --------------
* The Limited Maturity Portfolio, Growth Portfolio, Value Portfolio and Small
Cap Equity Portfolio include securities on loan of $1,374,826; $1,100,000;
$5,610,668 and $5,289,770, respectively.
84 HSBC INVESTOR PORTFOLIOS See notes to financial statements.
HSBC INVESTOR PORTFOLIOS
-------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES -- APRIL 30, 2005 (UNAUDITED)
......................................................................
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL
VALUE EQUITY SMALL CAP EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
------------------ ------------------ ------------------
ASSETS:
Investments in non-affiliates, at value* $66,589,367 $212,444,224 $264,472,065
Investments in affiliates, at value 2,132,825 -- --
Cash -- -- --
Foreign currency -- 1,076,632 --
Interest and dividends receivable 85,669 944,334 19,742
Receivable for investments sold -- 2,653,997 6,369,288
Reclaims receivable -- 13,014 --
Prepaid expenses and other assets 2,094 3,776 7,035
----------- ------------ ------------
TOTAL ASSETS 68,809,955 217,135,977 270,868,130
----------- ------------ ------------
..........................................................................................................................
LIABILITIES:
Cash overdraft 7,714 299,597 1,211,961
Payable for investments purchased -- -- 121,815
Payable for collateral received on loaned securities 5,766,400 -- 5,583,000
Accrued expenses and other liabilities:
Investment management 27,228 181,234 180,971
Administration 1,988 10,397 12,691
Fund Accounting 8,346 11,190 8,191
Other 2,402 122,353 5,767
----------- ------------ ------------
TOTAL LIABILITIES 5,814,078 624,771 7,124,396
----------- ------------ ------------
..........................................................................................................................
NET ASSETS:
Applicable to investors' beneficial interest $62,995,877 $216,511,206 $263,743,734
----------- ------------ ------------
----------- ------------ ------------
Total investments, at cost $63,465,379 $184,201,661 $228,858,648
----------- ------------ ------------
----------- ------------ ------------
Foreign currency, at cost $ 1,073,904
------------
------------
</Table>
- --------------
* The Limited Maturity Portfolio, Growth Portfolio, Value Portfolio and Small
Cap Equity Portfolio include securities on loan of $1,374,826; $1,100,000;
$5,610,668 and $5,289,770, respectively.
See notes to financial statements. HSBC INVESTOR PORTFOLIOS 85
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED APRIL 30, 2005
(UNAUDITED)
......................................................................
<Table>
<Caption>
LIMITED MATURITY FIXED INCOME GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
------------------- ------------------ -------------------
INVESTMENT INCOME:
Interest $1,216,007 $ 3,902,469 $ 0
Dividends -- 1,242 479,031
Dividend income from affiliated investments 10,095 68,924 22,018
Foreign tax withholding -- -- --
Income from securities lending 3,735 1,896 26
---------- ----------- ---------
TOTAL INVESTMENT INCOME 1,229,837 3,974,531 501,075
---------- ----------- ---------
.........................................................................................................................
EXPENSES:
Investment management 116,000 325,973 130,666
Administration 11,007 30,917 10,004
Accounting 28,457 35,725 24,996
Custodian 10,161 23,410 15,493
Trustee 726 1,963 552
Other 2,628 6,865 1,860
---------- ----------- ---------
TOTAL EXPENSES BEFORE FEE REDUCTIONS 168,979 424,853 183,571
---------- ----------- ---------
Fees reduced by Investment Advisor (47,925) (179,106) (25,804)
---------- ----------- ---------
Net Expenses 121,054 245,747 157,767
---------- ----------- ---------
.........................................................................................................................
NET INVESTMENT INCOME (LOSS) 1,108,783 3,728,784 343,308
---------- ----------- ---------
.........................................................................................................................
NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized gains from investments 37,089 4,210,884 600,255
Change in unrealized appreciation/depreciation from
investments (923,847) (5,738,464) (615,654)
---------- ----------- ---------
.........................................................................................................................
Net realized/unrealized gains (losses) from investments (886,758) (1,527,580) (15,399)
---------- ----------- ---------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 222,025 $ 2,201,204 $ 327,909
---------- ----------- ---------
---------- ----------- ---------
</Table>
86 HSBC INVESTOR PORTFOLIOS See notes to financial statements.
HSBC INVESTOR PORTFOLIOS
-------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED APRIL 30, 2005
(UNAUDITED)
......................................................................
<Table>
<Caption>
INTERNATIONAL
VALUE EQUITY SMALL CAP EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
------------------- ------------------ ------------------
INVESTMENT INCOME:
Interest $ 0 $ 2,724 $ 0
Dividends 574,983 2,907,089 633,558
Dividend income from affiliated investments 40,737 -- --
Foreign tax withholding (1,546) (294,255) --
Income from securities lending 250 -- 3,270
---------- ----------- ------------
TOTAL INVESTMENT INCOME 614,424 2,615,558 636,828
---------- ----------- ------------
..........................................................................................................................
EXPENSES:
Investment management 169,368 791,086 1,271,129
Administration 12,162 43,721 60,396
Accounting 24,252 46,654 24,355
Custodian 16,351 106,695 37,424
Trustee 675 2,528 5,289
Other 2,178 9,517 3,645
---------- ----------- ------------
TOTAL EXPENSES BEFORE FEE REDUCTIONS 224,986 1,000,201 1,402,238
---------- ----------- ------------
Fees reduced by Investment Advisor (32,590) (118,382)
Net Expense 192,396 1,283,856
..........................................................................................................................
NET INVESTMENT INCOME (LOSS) 422,028 1,615,357 (647,028)
---------- ----------- ------------
..........................................................................................................................
NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized gains from investments 799,929 11,290,683 27,694,991
Change in unrealized appreciation/depreciation from
investments 2,645,658 6,609,257 (18,820,074)
---------- ----------- ------------
..........................................................................................................................
Net realized/unrealized gains (losses) from investments 3,445,587 17,899,940 8,874,917
---------- ----------- ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $3,867,615 $19,515,297 $ 8,227,889
---------- ----------- ------------
---------- ----------- ------------
</Table>
See notes to financial statements. HSBC INVESTOR PORTFOLIOS 87
HSBC INVESTOR PORTFOLIOS
-------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
......................................................................
<Table>
<Caption>
LIMITED MATURITY PORTFOLIO FIXED INCOME PORTFOLIO
----------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 1,108,783 $ 2,685,767 $ 3,728,784 $ 8,004,774
Net realized gains from investments 37,089 350,688 4,210,884 1,234,753
Change in unrealized
appreciation/depreciation from
investments (923,847) 195,249 (5,738,464) 533,676
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 222,025 3,231,704 2,201,204 9,773,203
------------ ------------ ------------ ------------
..............................................................................................................................
Proceeds from contributions 3,166,203 19,537,952 18,435,850 47,385,442
Value of withdrawals (15,727,888) (43,561,156) (32,962,114) (91,249,818)
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS FROM TRANSACTIONS IN
INVESTORS' BENEFICIAL INTEREST (12,561,685) (24,023,204) (14,526,264) (43,864,376)
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS (12,339,660) (20,791,500) (12,325,060) (34,091,173)
..............................................................................................................................
NET ASSETS:
Beginning of period 63,696,789 84,488,289 169,459,384 203,550,557
------------ ------------ ------------ ------------
End of period $ 51,357,129 $ 63,696,789 $157,134,324 $169,459,384
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</Table>
88 HSBC INVESTOR PORTFOLIOS See notes to financial statements.
HSBC INVESTOR PORTFOLIOS
-------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
......................................................................
<Table>
<Caption>
GROWTH VALUE
PORTFOLIO PORTFOLIO
---------------------------------------------------------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2005 PERIOD ENDED APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004 (a) (UNAUDITED) OCTOBER 31, 2004 (a)
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 343,308 $ 11,209 $ 422,028 $ 325,186
Net realized gains (losses) from
investments 600,255 (1,576,336) 799,929 506,578
Change in unrealized
appreciation/depreciation from
investments (615,654) 1,991,868 2,645,658 2,611,156
----------- ----------- ------------ -----------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 327,909 426,741 3,867,615 3,442,920
----------- ----------- ------------ -----------
............................................................................................................................
Proceeds from contributions 8,265,585 53,535,759 8,181,805 64,069,267
Value of withdrawals (7,225,606) (4,282,296) (10,467,540) (6,098,190)
----------- ----------- ------------ -----------
CHANGE IN NET ASSETS FROM TRANSACTIONS
IN INVESTORS' BENEFICIAL INTEREST 1,399,979 49,253,463 (2,285,735) 57,971,077
----------- ----------- ------------ -----------
CHANGE IN NET ASSETS 1,727,888 49,680,204 1,581,880 61,413,997
............................................................................................................................
NET ASSETS:
Beginning of period 49,680,204 -- 61,413,997 --
----------- ----------- ------------ -----------
End of period $51,408,092 $49,680,204 $ 62,995,877 $61,413,997
----------- ----------- ------------ -----------
----------- ----------- ------------ -----------
</Table>
- --------------
(a) Growth Portfolio commenced operations on May 7, 2004.
Value Portfolio commenced operations on May 7, 2004.
See notes to financial statements. HSBC INVESTOR PORTFOLIOS 89
HSBC INVESTOR PORTFOLIOS
-------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
......................................................................
<Table>
<Caption>
INTERNATIONAL EQUITY SMALL CAP EQUITY
PORTFOLIO PORTFOLIO
------------------------------------ --------------------------------------
FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE
APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss) $ 1,615,357 $ 3,284,091 $ (647,028) $ (1,984,985)
Net realized gains from investments 11,290,683 32,731,371 27,694,991 41,945,235
Change in unrealized
appreciation/depreciation from
investments 6,609,257 3,338,622 (18,820,074) (17,175,725)
------------- ------------ ------------- -------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS 19,515,297 39,354,084 8,227,889 22,784,525
------------- ------------ ------------- -------------
................................................................................................................................
Proceeds from contributions 20,660,980 44,516,479 16,130,849 67,718,326
Value of withdrawals (43,690,226) (65,649,972) (119,948,277) (157,351,034)
------------- ------------ ------------- -------------
CHANGE IN NET ASSETS FROM TRANSACTIONS IN
INVESTORS' BENEFICIAL INTEREST (23,029,246) (21,133,493) (103,817,428) (89,632,708)
------------- ------------ ------------- -------------
CHANGE IN NET ASSETS (3,513,949) 18,220,591 (95,589,539) (66,848,183)
................................................................................................................................
NET ASSETS:
Beginning of period 220,025,155 201,804,564 359,333,273 426,181,456
------------- ------------ ------------- -------------
End of period $ 216,511,206 $220,025,155 $ 263,743,734 $ 359,333,273
------------- ------------ ------------- -------------
------------- ------------ ------------- -------------
</Table>
90 HSBC INVESTOR PORTFOLIOS See notes to financial statements.
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(c) (000'S) NET ASSETS(b) NET ASSETS(b) TURNOVER
- ---------------------------------------------------------------------------------------------------------------------------------
LIMITED MATURITY PORTFOLIO
Period ended October 31, 2001 (a) $115,180 0.55% 4.97% 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%
Six months ended April 30, 2005 (Unaudited) 0.42% 51,357 0.42% 3.82% 13.36%
- ---------------------------------------------------------------------------------------------------------------------------------
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%
Six months ended April 30, 2005 (Unaudited) 1.36% 157,134 0.31% 4.57% 47.83%
- ---------------------------------------------------------------------------------------------------------------------------------
GROWTH PORTFOLIO
Period ended October 31, 2004 (a) (0.86%) $ 49,680 0.72% 0.06% 53.08%
Six months ended April 30, 2005 (Unaudited) 0.77% 51,408 0.61% 1.30% 43.34%
- ---------------------------------------------------------------------------------------------------------------------------------
VALUE PORTFOLIO
Period ended October 31, 2004 (a) 6.12% $ 61,414 0.71% 1.28% 10.33%
Six months ended April 30, 2005 (Unaudited) 6.20% 62,996 0.60% 1.31% 9.47%
- ---------------------------------------------------------------------------------------------------------------------------------
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%
Six months ended April 30, 2005 (Unaudited) 8.65% 216,511 0.87% 1.40% 10.99%
- ---------------------------------------------------------------------------------------------------------------------------------
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%
Six months ended April 30, 2005 (Unaudited) 0.60% 263,744 0.81% (0.41%) 31.89%
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
(a) 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 for periods less than one year.
(c) Not annualized for periods less than one year.
See notes to financial statements.
HSBC INVESTOR PORTFOLIOS 91
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
......................................................................
1. ORGANIZATION:
The HSBC Investor Portfolios (the 'Portfolio Trust'), is an open-end
management investment company organized as a master trust fund under the
laws of the State of New York on November 1, 1994. The Portfolios operate as
master funds in master-feeder arrangements. The Declaration of Trust permits
the Board of Trustees to issue an unlimited number of beneficial interests
in the Portfolios. The Portfolio Trust contains the following (individually
a 'Portfolio,' collectively the 'Portfolios'):
<Table>
<Caption>
PORTFOLIO SHORT NAME
- --------- ----------
HSBC Investor Limited Maturity Portfolio Limited Maturity Portfolio
HSBC Investor Fixed Income Portfolio Fixed Income Portfolio
HSBC Investor 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.
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 are traded closes and the time when the Portfolios' net assets
are calculated, such securities may be valued using fair
92 HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
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. However, for financial
reporting purposes portfolio securities are reflected as of 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 lower price for the future repurchase as well as by the
interest earned on the reinvestment of the sales proceeds. The
HSBC INVESTOR PORTFOLIOS 93
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
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
considered illiquid. At April 30, 2005, the HSBC Limited Maturity Portfolio
and HSBC Fixed Income Portfolio held restricted securities representing 1.1%
and 3.4% of net assets, respectively. The restricted securities held as of
April 30, 2005 are identified below:
<Table>
<Caption>
ACQUISITION PRINCIPAL
SECURITY NAME ACQUISITION DATE COST ($) AMOUNT ($) VALUE ($)
------------- ---------------- -------- ---------- ---------
LIMITED MATURITY PORTFOLIO
Met Life Global Funding, 4.50%, 5/5/10 4/27/2005 548,416 550,000 549,189
FIXED INCOME PORTFOLIO
AIG SunAmerica Global Financing VI, 6.30%, 5/10/11 5/2/2001 641,056 642,000 694,745
DLJ Mortgage Acceptance Corp. IO 97 CF1 S 0.91%,
5/15/30 5/16/1997 39,123 597,801 8,572
Farmers Exchange Capital, 7.05%, 7/15/28 1/27/1999 38,685 38,000 40,147
Farmers Exchange Capital, 7.05%, 7/15/28 7/16/1999 124,402 135,000 142,629
Farmers Exchange Capital, 7.05%, 7/15/28 11/7/2000 178,698 215,000 227,150
Farmers Insurance Exchange, 8.625%, 5/1/24 5/9/1997 238,210 238,000 293,644
FHA Weyerhauser, 7.43%, 1/1/24 3/28/2002 75,009 79,098 79,351
Florida Windstorm, 7.125%, 2/25/19 5/27/1999 7,910 8,000 9,467
Florida Windstorm, 7.125%, 2/25/19 8/7/2000 141,181 150,000 177,506
Florida Windstorm, 7.125%, 2/25/19 11/28/2000 426,945 450,000 532,516
Metropolitan Life Insurance Co., 7.80%, 11/1/25 6/2/1999 26,548 25,000 31,479
Metropolitan Life Insurance Co., 7.80%, 11/1/25 1/18/2001 250,747 250,000 314,793
Met Life Global Funding, 4.50%, 5/5/10 4/27/2005 1,495,680 1,500,000 1,497,788
PNC Institutional Capital Trust A, 7.95%, 12/15/26 12/23/1996 84,979 87,000 94,906
PNC Institutional Capital Trust A, 7.95%, 12/15/26 4/8/1997 95,171 100,000 109,087
Prudential Insurance Co., 8.30%, 7/1/25 7/31/1998 59,555 53,000 70,788
Prudential Insurance Co., 8.30%, 7/1/25 1/27/1999 215,152 180,000 240,411
Prudential Insurance Co., 8.30%, 7/1/25 9/23/1999 157,330 150,000 200,342
Prudential Insurance Co., 8.30%, 7/1/25 2/3/2000 170,517 165,000 220,376
RAS Laffan Liquid Natural Gas, 8.29%, 3/15/14 11/24/1998 41,156 48,000 55,929
RAS Laffan Liquid Natural Gas, 8.29%, 3/15/14 11/25/1998 176,670 200,000 233,041
RAS Laffan Liquid Natural Gas, 8.29%, 3/15/14 3/19/2001 100,301 100,000 116,521
</Table>
SECURITY LOANS:
To generate additional income, the Portfolios may lend up to 33 1/3% of
their respective assets pursuant to agreements requiring that the loan be
continuously secured by any combination of cash, U.S. Government or U.S.
Government agency securities, equal at all times to at least 100% of the
fair value. The Portfolios receive payments from borrowers equivalent to the
dividends and interest that would have been earned on securities lent while
simultaneously seeking to earn income on the investment of collateral.
Collateral is marked to market daily to provide a level of collateral at
least equal to the fair value of securities lent. There may be risks of
delay in recovery of the securities or even loss of rights in the collateral
should the borrower of the securities fail financially. However, loans will
be made only to borrowers, such as broker-dealers, banks or institutional
borrowers of securities, deemed by HSBC to be of good standing and
creditworthy under guidelines established by the Board of Trustees and when,
in the judgement of HSBC, the consideration which can be earned currently
from such securities loans justifies the attendant
94 HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
risks. Loans are subject to termination by the Portfolios or the borrower at
any time and are, therefore, not considered to be illiquid investments. As
of April 30, 2005, the following Portfolios had collateral and loaned
securities as follows:
<Table>
<Caption>
VALUE OF
VALUE LOANED
SECURITY TYPE OF COLLATERAL SECURITIES
------------- ------------- ----------
Limited Maturity Portfolio.................................. $1,410,000 $1,374,826
Growth Portfolio............................................ 1,120,000 1,100,000
Value Portfolio............................................. 5,766,400 5,610,668
Small Cap Equity Portfolio.................................. 5,583,000 5,289,770
</Table>
The cash collateral received by the Portfolios was invested in a pooled
account by HSBC Bank USA, and at April 30, 2005, the pooled account
consisted of the following:
<Table>
<Caption>
MARKET MATURITY MATURITY
SECURITY TYPE SECURITY NAME VALUE RATE DATE
------------- ------------- ----- ---- ----
Repurchase Agreement Nomura Securities $511,549,400 2.94% 5/02/05
International, Inc.
</Table>
LINE OF CREDIT:
The Portfolios participate in a short-term, demand note agreement with
HSBC Bank USA, an affiliate of the Investment Adviser (defined below). Under
the agreement, the Portfolios may borrow up to $50 million. The purpose of
the agreement is to meet temporary or emergency cash needs, including
redemption requests that might otherwise require the untimely disposition of
securities.
During the period ended April 30, 2005, The Fixed Income Portfolio had
borrowed against the Line of Credit an amount of $389,711 in one advance
over a total of 3 days, for an average amount outstanding during the period
of $389,711. The interest amount charged was $93 at a rate of 2.87%.
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.
3. RELATED PARTY TRANSACTIONS:
INVESTMENT MANAGEMENT:
HSBC Investments (USA) Inc. ('HSBC' or the 'Investment Adviser'), a
wholly owned subsidiary of HSBC Bank USA, a New York State chartered bank,
acts as the Investment Adviser to the Portfolios pursuant to an investment
management contract with the Portfolio Trust. As Investment Adviser, HSBC
manages the investments of the Portfolios and continuously reviews,
supervises and administers the Portfolios' investments. Waddell & Reed
Investment Management Company, NWQ Investment Management Co., LLC,
AllianceBernstein Investment Research and Management, 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.
HSBC INVESTOR PORTFOLIOS 95
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
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 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.
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:
96 HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
<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.
On June 13, 2005 the Board approved a proposal for HSBC to serve as the
Administrator of the Portfolios, which will be effective July 1, 2005 under
the same compensation structure as those currently with BISYS. In addition,
the Board approved a proposal for BISYS to serve as the sub-Administrator to
HSBC, in which BISYS will be compensated directly by HSBC effective July 1,
2005.
FUND ACCOUNTING AND CUSTODIAN:
BISYS provides fund accounting services for the Portfolios. For its
services to the Portfolios, BISYS receives an annual fee per Portfolio,
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.
OTHER:
For its service as security lending agent, HSBC Bank USA (see note 2
-Security Loans), receives a fee equal to 0.06% of the average dollar value
of the loans outstanding during a given month from the Portfolios. The fees
collected by HSBC Bank USA for the period ended April 30, 2005 were:
<Table>
<Caption>
PORTFOLIO
- ---------
Limited Maturity Portfolio.................................. $ 364
Fixed Income Portfolio...................................... 567
Growth Portfolio............................................ 27
Value Portfolio............................................. 216
Small Cap Equity Portfolio.................................. 1,580
</Table>
The HSBC Investor Family of Funds may use affiliated broker/dealers for
the execution of portfolio investment trades. For the six months ended April
30, 2005, affiliated broker/dealers did not receive any commissions on the
execution of trades related to the HSBC Investor Family of Funds.
HSBC INVESTOR PORTFOLIOS 97
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
4. INVESTMENT TRANSACTIONS:
For the period ended April 30, 2005, each Portfolio purchased and sold
securities, excluding short-term securities, in the following amounts:
<Table>
<Caption>
PURCHASES SALES PURCHASES OF
(EXCLUDING U.S. (EXCLUDING U.S. U.S. SALES OF U.S.
GOVERNMENT) GOVERNMENT) GOVERNMENT GOVERNMENT
----------- ----------- ---------- ----------
Limited Maturity Portfolio........ $ 5,752,715 $ 13,382,032 $ 1,589,250 $ 5,255,770
Fixed Income Portfolio............ 56,596,884 41,323,235 10,954,876 18,195,981
Growth Portfolio.................. 25,709,381 21,845,959 -- --
Value Portfolio................... 7,532,682 5,742,859 -- --
International Portfolio........... 25,098,539 49,443,298 -- --
Small Cap Equity Portfolio........ 112,889,492 225,600,872 -- --
</Table>
5. FEDERAL INCOME TAX INFORMATION:
At April 30, 2005, the cost, gross unrealized appreciation and gross
unrealized depreciation on securities, for federal income tax purposes, were
as follows:
<Table>
<Caption>
NET UNREALIZED
TAX UNREALIZED TAX UNREALIZED APPRECIATION
PORTFOLIO NAME TAX COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
- -------------- -------- ------------ -------------- --------------
Limited Maturity Portfolio...... $ 52,273,399 $ 360,257 $ (457,770) $ (97,513)
Fixed Income Portfolio.......... 142,997,102 4,660,354 (1,348,921) 3,311,433
Growth Portfolio................ 52,165,807 2,668,730 (1,532,261) 1,136,469
Value Portfolio................. 63,503,904 7,330,290 (2,112,002) 5,218,288
International Portfolio......... 184,892,265 32,038,580 (4,486,621) 27,551,959
Small Cap Equity Portfolio...... 230,365,955 45,178,479 (11,072,369) 34,106,110
</Table>
6. PAYMENTS FROM AFFILIATE:
During the period ended April 30, 2005, HSBC reimbursed certain advisory
fees by some of the Portfolios related to violations of certain investment
policies and limitations. HSBC also reimbursed the Portfolios for interest
on these amounts. The amounts, along with the corresponding impact to the
net expense ratio, net income ratio, and total return for the period ended
April 30, 2005, are as follows:
<Table>
<Caption>
NET NET
ADVISORY EXPENSE INCOME TOTAL
FUND FEES (1) INTEREST (2) TOTAL RATIO RATIO RETURN
- ---- -------- ------------ ----- ----- ----- ------
Limited Maturity Portfolio.............. $ 45,832 $ 2,093 $ 47,925 0.16% 0.17% 0.00%
Fixed Income Portfolio.................. 171,285 7,821 179,106 0.21% 0.22% 0.00%
Growth Portfolio........................ 24,678 1,126 25,804 0.09% 0.09% 0.00%
Value Portfolio......................... 31,167 1,423 32,590 0.10% 0.10% 0.00%
Small Cap Equity Portfolio.............. 113,213 5,169 118,382 0.07% 0.07% 0.00%
-------- ------- --------
Total............................... $386,175 $17,632 $403,807
</Table>
- --------------
(1) Amounts relate to the reimbursement of advisory fees on the investment in
certain investment companies and are included in 'Fees reduced by the
Investment Advisor' on the Statements of Operations.
(2) Amounts relate to the reimbursement of computed interest on the amounts
noted in (1) are included in 'Other income' on the Statements of Operations.
7. INVESTMENT ADVISOR CONTRACT APPROVAL:
Each Board of Trustees including the non-interested Trustees (the 'Board
of Trustees') of HSBC Investor Funds, HSBC Advisor Funds and HSBC Portfolios
approved renewal of the investment advisory agreement, and, where
98 HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
applicable, sub-advisory agreement (collectively, 'Advisory Contracts') with
respect to each Trust's respective Funds or Portfolios at an in-person
meeting held on December 13, 2004. In determining whether it was appropriate
to approve each Advisory Contract, each Board of Trustees requested
information, provided by the Adviser, and, where applicable, Sub-Adviser,
that it believed to be reasonably necessary to reach its conclusion. The
Board of Trustees carefully evaluated this information, and was advised by
independent legal counsel with respect to its deliberations. Based on its
review of the information requested and provided, each Board of Trustees
determined that each Advisory Contract is consistent with the best interests
of each Fund and its shareholders, and enables each Fund to receive high
quality services at a cost that is appropriate, reasonable, and in the best
interests of each Fund and its shareholders. Each Board of Trustees made
these determinations on the basis of the following considerations, among
others:
-- The investment advisory fees payable to the Adviser and, where
applicable, Sub-Adviser under each Advisory Contract are fair and
reasonable in light of the services to be provided, the anticipated
costs of these services, the profitability of the Adviser's
relationship with each Fund, and the comparability of the proposed
fee to fees paid by comparable mutual funds;
-- Each Advisory Contract did not increase the level of current
investment advisory fees or overall operating expenses of each Fund
over historical fee and expense levels;
-- The nature, quality and extent of the investment advisory services
provided by the Adviser and, where applicable, Sub-Adviser to each
Fund, in light of the high quality services provided to the other
mutual funds advised by the Adviser and their historic performance,
including achievement of stated investment objectives;
-- The Adviser's and, where applicable, Sub-Adviser's representations
regarding its staffing and capabilities to manage the Funds,
including the retention of personnel with significant portfolio
management experience;
-- The Adviser's entrepreneurial commitment to the management and
success of each Fund, which could entail a substantial commitment
of resources to the successful operation of each Fund; and
-- The overall high quality of the personnel, operations, financial
condition, investment management capabilities, methodologies, and
performance of the Adviser, and, where applicable, Sub-Adviser.
Accordingly, in light of the above considerations and such other factors
and information it considered relevant, each Board of Trustees unanimously
approved the respective Advisory Contract with respect to the Funds and
Portfolios.
New Advisory Contract between the Adviser and the Sub-Advisers to the
Growth and Income Fund and Mid-Cap Fund ('collectively, the Agreements')
were approved by the Board of Trustees of HSBC Investor Funds, with respect
to the Growth and Income Fund and the Mid-Cap Fund, at a meeting of the
Board of Trustees held on March 7-8, 2005. The Agreements were approved by
the shareholders of the respective Funds at a meeting of the shareholders
held on April 18, 2005.
In determining whether to approve the Agreements, the Board of Trustees
requested and received extensive materials and information from the Adviser
to assist them in considering the approval of the Agreements. Based on its
review of the information requested and provided, and the discussions with
management of the Adviser, the Board of Trustees determined that approval of
the Agreements was consistent with the best interests of each Fund and its
shareholders, and would enable each Fund to receive high quality services at
a cost that is appropriate, reasonable, and in the best interests of that
Fund and its shareholders. The Board of Trustees made these determinations
on the basis of the following factors, among others:
-- Nature, Extent, and Quality of Services Provided by Adviser and
Sub-Advisers. The Board of Trustees considered the nature, quality
and extent of the investment advisory services to be provided by
the Adviser and each Fund's Sub-Adviser, in light of the high
quality services provided to the other manager-of-manager mutual
funds advised by the Adviser, and each Fund's Sub-Adviser's
historic performance managing accounts having similar investment
objectives as the Funds. The Board of Trustees also considered the
services provided by the Adviser such as supervision of Fund
operations and compliance and regulatory filings as well as
disclosures to shareholders, general oversight of service providers
and coordination of Fund marketing initiatives. The Board of
Trustees considered the Adviser's entrepreneurial commitment to the
management and success of the Funds, which could entail a
substantial commitment of resources to the successful
HSBC INVESTOR PORTFOLIOS 99
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
operation of the Funds, as well as the Adviser's agreement to waive
0.05% of its advisory fee for a period of at least one year with
respect to each Fund.
-- Investment Performance of the Fund, Adviser and Sub-Advisers. The
Board of Trustees considered short- and long-term investment
performance of each Fund over various periods of time as compared
to a peer group of comparable funds, as well as each Fund's
sub-adviser's historic performance managing accounts having similar
investment objectives as the Fund. Additionally, the Trustees
considered fee and expense information regarding each Fund's peer
groups, noting in particular that the proposed combined advisory
and sub-advisory fees were competitive with the advisory fees
charged by other funds in each Fund's peer group.
-- Costs of Services and Profits Realized by the Adviser. The Board of
Trustees considered the Adviser's overall profitability and costs
and an analysis of the estimated profitability to the Adviser from
its relationship with the Funds. The Board of Trustees considered
that the combined management fees under the Agreements would
increase the investment advisory fees of the Funds by 0.05%, with
respect to the Growth and Income Fund, and 0.20%, with respect to
the Mid-Cap Fund, over historical fee levels (no increase with
respect to the Growth and Income Fund and 0.15% with respect to the
Mid-Cap Fund after giving effect to the Adviser's agreement to
waive 0.05% of its advisory fee under the New Agreement), but
concluded that the combined advisory fees payable to the Adviser
and each Fund's Sub-Adviser are fair and reasonable in light of the
services to be provided, the anticipated costs of these services,
the profitability of the Adviser's relationship with the Fund, and
the comparability of the proposed fee to fees paid by comparable
mutual funds.
-- Other Relevant Considerations-Adviser Personnel. The Board of
Trustees considered the Adviser's representations regarding the
Adviser's manager-of-managers staffing and capabilities to oversee
each Fund's Sub-Adviser and the sub-adviser's staffing and
capabilities to manage the Fund. The Board of Trustees also
considered the overall high quality of the personnel, operations,
financial condition, investment management capabilities,
methodologies, and performance of the Adviser and each Fund's
Sub-Adviser.
Accordingly, in light of the above considerations and such other factors and
information it considered relevant, the Board of Trustees by a unanimous
vote of those present in person at the meeting (including a separate vote of
the Independent Trustees present in person at the meeting) approved the
Agreements with respect to the Growth and Income Fund and the Mid-Cap Fund.
100 HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
TABLE OF SHAREHOLDER EXPENSES -- APRIL 30, 2005 (UNAUDITED)
......................................................................
As a shareholder of the HSBC Investor Funds, you incur two types of
costs: (1) transaction costs, including sales charges (loads) on purchases;
redemption fees; and exchange fees; (2) ongoing costs, including management
fees; distribution and/or service 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 November 1, 2004
through April 30, 2005.
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
11/1/04 4/30/05 11/1/04 - 4/30/05 11/1/04 - 4/30/05
------- ------- ----------------- -----------------
Limited Maturity Portfolio.... 1,000.00 1,004.20 2.09 0.42%
Fixed Income Portfolio........ 1,000.00 1,013.60 1.55 0.31%
Growth Portfolio.............. 1,000.00 1,007.70 3.04 0.61%
Value Portfolio............... 1,000.00 1,062.00 3.07 0.60%
International Portfolio....... 1,000.00 1,086.50 4.50 0.87%
Small Cap Portfolio........... 1,000.00 1,006.00 4.03 0.81%
</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.
HSBC INVESTOR PORTFOLIOS 101
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
TABLE OF SHAREHOLDER EXPENSES -- APRIL 30, 2005 (UNAUDITED)
(CONTINUED)
......................................................................
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below provides information about hypothetical account values
and hypothetical expenses based on each HSBC Investor Funds's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is
not the Fund's actual return. The hypothetical account values and expenses
may not be used to estimate the actual ending account balance or expenses
you paid for the period. You may use this information to compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight
your ongoing costs only and do not reflect any transactional costs, such as
sales charges (loads), redemption fees, or exchange fees. Therefore, the
table is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition,
if these transactional costs were included, your costs would have been
higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD
11/1/04 4/30/05 11/1/04 - 4/30/05 11/1/04 - 4/30/05
------- ------- ----------------- -----------------
Limited Maturity Portfolio.... 1,000.00 1,022.76 2.11 0.42%
Fixed Income Portfolio........ 1,000.00 1.023.31 1.56 0.31%
Growth Portfolio.............. 1,000.00 1,021.77 3.06 0.61%
Value Portfolio............... 1,000.00 1,021.82 3.01 0.60%
International Portfolio....... 1,000.00 1,020.48 4.36 0.87%
Small Cap Portfolio........... 1,000.00 1,020.78 4.06 0.81%
</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.
102 HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR PORTFOLIOS
- --------------------------------------------------------------------------------
SHAREHOLDER MEETING RESULTS (UNAUDITED)
At a Special Meeting of Shareholders held on March 21, 2005, a proposal to elect
seven nominees was approved on behalf of the HSBC Investor Funds, HSBC Advisor
Funds Trust and HSBC Investor Portfolios (collectively, the 'Trusts'). The
number of shares voted for, against or abstained are as follows:
HSBC INVESTOR FUNDS
<Table>
<Caption>
FOR AGAINST ABSTAIN
--- ------- -------
Stephen J. Baker............................................ 4,013,227,309 396,540,860 0
Richard A. Brealey.......................................... 4,013,550,074 396,218,095 0
Frederick C. Chen........................................... 4,012,525,304 397,242,865 0
Alan A. Parsow.............................................. 4,013,083,446 396,684,723 0
Thomas F. Robards........................................... 4,013,262,198 396,505,971 0
Larry M. Robbins............................................ 4,012,517,654 397,250,515 0
Michael Seely............................................... 4,013,282,990 396,485,179 0
</Table>
HSBC ADVISOR FUNDS TRUST
<Table>
<Caption>
FOR AGAINST ABSTAIN
--- ------- -------
Stephen J. Baker............................................ 520,578,380 72,648 0
Richard A. Brealey.......................................... 520,578,380 72,648 0
Frederick C. Chen........................................... 520,651,028 0 0
Alan A. Parsow.............................................. 520,627,071 23,957 0
Thomas F. Robards........................................... 520,627,071 23,957 0
Larry M. Robbins............................................ 520,622,082 28,946 0
Michael Seely............................................... 520,627,071 23,957 0
</Table>
HSBC INVESTOR PORTFOLIOS
<Table>
<Caption>
FOR AGAINST ABSTAIN
--- ------- -------
Stephen J. Baker............................................ 63,969,810 59,867 0
Richard A. Brealey.......................................... 63,975,736 53,941 0
Frederick C. Chen........................................... 63,984,270 45,407 0
Alan A. Parsow.............................................. 63,978,788 50,889 0
Thomas F. Robards........................................... 63,958,729 70,948 0
Larry M. Robbins............................................ 63,972,348 57,329 0
Michael Seely............................................... 63,963,174 66,504 0
</Table>
HSBC INVESTOR PORTFOLIOS 103
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 Funds voting
record for the 12 month period ending June 30, 2005 is available at the
Securities and Exchange Commission's website at http://www.sec.gov.
Schedules of Portfolio Investments for fiscal quarters ending January 31 and
July 31 will be available no later than 60 days after 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.
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
HSBC Investor Family of Funds:
INVESTMENT ADVISER
HSBC Investments (USA) Inc.
452 Fifth Avenue
New York, NY 10018
SUB-ADVISERS
HSBC Growth and Income Fund
TransAmerica Investment Management, LLC
1150 S. Olive Street, Suite 2700
Los Angeles, CA 90015
HSBC Investor Mid-Cap Fund
Munder Capital Management
Munder Capital Center
480 Pierce Street
Birmingham, MI 48009-6063
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
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 CenterBoston, MA 02111
SHAREHOLDER SERVICING AGENTS
For HSBC Bank USA and
HSBC Brokerage (USA) Inc. Clients
HSBC Bank USA
452 Fifth Avenue
New York, NY 1001
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 06/05
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.
Not applicable - only for annual reports.
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 12(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.
Not applicable. Only for annual reports
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.
(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.
(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.
(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.
(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.
(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.
(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.
(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.
(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 - only for annual reports.
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. Portfolio Managers of Closed-End Management Investment Companies.
If the registrant is a closed-end management investment company that is filing
an annual report on this Form N-CSR, provide the information specified in
paragraphs (a) and (b) of this Item with respect to portfolio managers.
Not applicable.
Item 9. 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 10. 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 11. 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 12. 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
the registrant intends to satisfy the Item 2 requirements through filing of
an exhibit. Not applicable
(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
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By (Signature and Title) /s/ Richard A. Fabietti
------------------------------------------------------
Richard A. Fabietti
President
Date June 29, 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 June 29, 2005
_______________________________
By (Signature and Title) /s/ Troy A. Sheets
------------------------------------------------------
Troy Sheets
Treasurer
Date June 29, 2005
_______________________________
STATEMENT OF DIFFERENCES
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The trademark symbol shall be expressed as.............................. 'TM'
The registered trademark symbol shall be expressed as................... 'r'
The dagger symbol shall be expressed as................................. 'D'
The section symbol shall be expressed as ............................... 'SS'