UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-07583 HSBC ADVISOR FUNDS TRUST (Exact name of registrant as specified in charter) 452 FIFTH AVENUE NEW YORK, NY 10018 (Address of principal executive offices) (Zip code) 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, 2006 Date of reporting period: April 30, 2006 Item 1. Reports to Stockholders. <Page> Semi-Annual Report HSBC Investor Family of Funds April 30, 2006 HSBC Investor Intermediate Duration Fixed Income Fund HSBC Investor Core Plus Fixed Income Fund (Advisor) HSBC Investor Core Plus Fixed Income Fund HSBC Investor New York Tax-Free Bond Fund [COLOR GRAPHIC] HSBC Investor High Yield Fixed Income 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] <Page> - ------------------------------------------------------------------------------- Table of Contents - ------------------------------------------------------------------------------- HSBC Investor Family of Funds Semi Annual Report - April 30, 2006 Glossary of Terms Chairman's Message....................................................... 1 Commentary From the Investment Manager................................... 2 Portfolio Reviews........................................................ 3 Schedules of Portfolio Investments HSBC Investor New York Tax-Free Bond Fund....................... 24 HSBC Investor Growth and Income Fund............................ 26 HSBC Investor Mid-Cap Fund...................................... 27 Statements of Assets and Liabilities..................................... 29 Statements of Operations................................................. 32 Statements of Changes in Net Assets...................................... 35 Financial Highlights..................................................... 49 Notes to Financial Statements............................................ 62 Investment Adviser Contract Approval..................................... 71 Table of Shareholder Expenses............................................ 72 HSBC Investor Portfolios Schedules of Portfolio Investments HSBC Investor Intermediate Duration Fixed Income Portfolio...... 76 HSBC Investor Core Plus Fixed Income Portfolio.................. 79 HSBC Investor High Yield Fixed Income Portfolio................. 83 HSBC Investor Growth Portfolio.................................. 85 HSBC Investor Value Portfolio................................... 86 HSBC Investor International Equity Portfolio.................... 87 HSBC Investor Small Cap Equity Portfolio........................ 91 Statements of Assets and Liabilities..................................... 92 Statements of Operations................................................. 94 Statements of Changes in Net Assets...................................... 96 Financial Highlights..................................................... 100 Notes to Financial Statements............................................ 101 Investment Adviser Contract Approval..................................... 108 Table of Shareholder Expenses............................................ 109 <Page> This page intentionally left blank. <Page> - ------------------------------------------------------------------------------- Glossary of Terms - ------------------------------------------------------------------------------- Consumer Price Index ("CPI") A measure of price changes in consumer goods and services such as gasoline, food, and automobiles. Sometimes referred to as "headline inflation." Gross Domestic Product (GDP) is the measure of the market value of the goods and services produced by labor and property in the United States. Lehman Brothers Aggregate Bond Index is an unmanaged index generally representative of the investment-grade debt issues with at least one year to final maturity. Lehman Brothers Intermediate Aggregate Bond Index is an unmanaged index generally representative of investment-grade issues with maturities between three and ten years. Lehman Brothers New York Tax Exempt Index is an unmanaged index composed of investment grade New York tax-exempt securities, all having a $50 million minimum maturity value. Lipper 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 Funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) greater than 300% of the dollar-weighted median market capitalization of the middle 1,000 securities of the S&P SuperComposite 1500 Index. Large-cap growth funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P 500 Index. Lipper Mid-Cap Growth Funds Average is comprised of managed funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) of less than 300% of the dollar-weighted median market capitalization of the Standard & Poor's Mid-Cap 400 Index. Lipper Multi-Cap Value Funds Average is comprised of managed funds that, by portfolio practice, invest in a variety of market capitalization ranges, without concentrating 75% of their equity assets in any one market capitalization range over an extended period of time. Multi-Cap funds will generally have between 25% to 75% of their assets invested in companies with market capitalizations (on a three-year weighted basis) above 300% of the dollar-weighted median market capitalization of the S&P MidCap 400 Index. Multi-Cap Value funds seek long-term growth of capital by investing in companies that are considered to be undervalued relative to a major unmanaged stock index based on price-to-current earnings, book value, asset value, or other factors. These funds will normally have a below-average price-to-earnings ratio, price-to-book ratio, and three-year earnings growth figure, compared to the U S diversified multi-cap funds universe average. Lipper New York Municipal Debt Funds Average is an average of managed funds that invest at least 65% of their assets in municipal debt issues that are exempt from taxation in New York or a city in New York. Morgan Stanley Capital International Europe, Australasia and Far East ("MSCI EAFE") Index is an unmanaged index that measures performance of a diverse range of developed countries in the indicated regions. Producer Price Index ("PPI") A family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller. The Russell Universe - In 1984, Russell created the Russell family of stock indices as part of a more accurate and comprehensive system for evaluating the performance of investment managers. Russell now maintains 21 U.S. stock indices and has launched similar broad-market and style indices in Canada and Japan. Today, more than $214 billion is invested in funds modeling Russell's U.S. indices, and more than $1 trillion in funds is benchmarked against the global family of Russell indices. Russell MidCap'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' Value Index is unmanaged index which measures the performance of the 1,000 largest of the 3,000 largest U.S.-domiciled companies (based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. Russell 2500'r' Growth Index is unmanaged index which represents the smallest 2500 securities found in the Russell universe with higher price-to-book and higher forecasted growth values. Standard & Poor's MidCap 400 Index ("S&P MidCap 400") is an unmanaged index comprised of 400 domestic stocks chosen for market size (median market capitalization of $676 million), liquidity and industry group representation. Standard & Poor's 500 Index ("S&P 500") is an unmanaged index that measures the performance of the stock market as a whole. Lipper is an independent mutual fund performance monitor whose results are based on total return and do not reflect a sales charge. Securities indexes assume reinvestment of all distributions and interest payments and do not take in account brokerage fees or expenses. Securities in the Fund do not match those in the indexes and performance of the Fund will differ. Investors cannot invest directly in an index, although they can invest in the underlying funds or securities. <Page> - ------------------------------------------------------------------------------- Chairman's Message - ------------------------------------------------------------------------------- Dear Fellow Shareholders: The phrase, "disinterested trustees" is an important one in the mutual fund industry, although it could easily conjure up the image of a bunch of board people sitting around rubber stamping management decisions. The term actually means "independent of management" and denotes not a lack of interest but loyalty to the shareholders in supporting their vested interest in the funds. To help the trustees monitor all fund activities, the advisors, sub-advisors and administrators must provide timely and accurate information. The independent trustees then interpret all the data they receive, giving special attention to expenses, performance and compliance. To perform the tasks of monitoring and decision-making, the board has created various committees: o Audit The Audit Committee is composed entirely of independent trustees. The Chair is designated as the Audit Committee Financial Expert and has the required professional qualifications and experience. The Committee meets quarterly to receive reports from management on financial matters of the Funds, as well as those relating to internal controls and compliance with established policies and procedures of the Funds and with pertinent laws and regulations. At each meeting the Committee holds separate executive sessions with the Funds' Treasurer, Chief Compliance Officer and Independent Auditors. o Nominating and Governance The Nominating and Governance Committee meets when it is necessary to select new trustees. At this time, the committee establishes what can be called the "job description" for an independent trustee and then solicits nominations. This committee also deals with such issues as ongoing trustee education, board responsibilities, compensation and leadership development. o Valuation The Valuation Committee is responsible for overseeing established procedures in determining the appropriate value of the securities held by the individual HSBC Investor Funds and the net asset value per share of each of the funds in the HSBC complex. Working with management, auditors and, especially, the Funds' Chief Compliance Officer, this committee is a watchdog against any aberration in pricing or breach of regulations. The committee's job is not to establish price but to determine and oversee implementation of best practice. The committee structure allows board members to focus on specific issues so that when the full board meets it has the information it needs to make decisions on behalf of the shareholders, creating efficiency in governance. The independent trustees and all of the members of fund management wish to take this opportunity to thank you for your continued confidence in the HSBC Investor Funds. As always, should you have any questions or comments, please feel free to contact me. Yours truly, LARRY M. ROBBINS Larry M. Robbins, Chairman, HSBC Investor Funds 1 HSBC INVESTOR FAMILY OF FUNDS <Page> - ------------------------------------------------------------------------------- Commentary From the Investment Manager - ------------------------------------------------------------------------------- HSBC Investments (USA) Inc. U.S. Economic Review The U.S. economy expanded at a solid pace during the six-month period between November 1, 2005 and April 30, 2006. Gross domestic product grew at a relatively slow rate during the final two months of 2005, as the economy absorbed the effects of the summer's Gulf Coast hurricanes, but expanded quickly during the first four months of 2006. Strong business spending helped the economy shrug off the negative effects of rising interest rates and high prices on energy and commodities. Powerful global economic growth contributed to high oil prices, as demand for fuel outstripped supply. A mild winter in the eastern U.S. allowed inventories of heating oil and natural gas to increase. But burgeoning demand from China and concerns that militant activity in Nigeria and nuclear tensions with Iran could disrupt global oil supplies more than offset the effect of higher inventories. Strong global growth also pushed up prices of other commodities. Gold prices approached $600 an ounce, copper and aluminum traded near their all-time highs, and silver hit its highest level in many decades. Agricultural products also rose in price. In particular, a new push toward crops that could be used to make ethanol raised the prices of sugar and corn. That environment caused concerns about the potential for higher inflation, despite the fact that strong productivity gains to that point had allowed the economy to absorb higher energy and commodity prices without a significant increase in inflation. The Federal Reserve Board attempted to forestall higher prices by raising interest rates continually during this period, bringing its target short-term rate to 4.75% as of April 30. The Federal Reserve Board (the "Fed") installed a new chairman during this period, as Ben Bernanke succeeded long-time chairman Alan Greenspan. The Feds interest-rate increases caused yields on short-term bonds to rise. Meanwhile, yields on long-term bonds generally were stable. The bond market briefly experienced an inverted yield curve-an environment in which short-term bonds offer higher yields than long-term bonds-which historically has been a harbinger of recession. The yield curve quickly flattened, however, easing concerns about future economic weakness. Some observers worried that higher interest rates would lead to a significant decline in the housing market, potentially imperiling consumer spending. Healthy employment reports and increased wage growth helped relieve those fears, however. Market Review Stocks generated strong returns for the six-month period. The S&P 500 gained 9.64%, while the Russell 2000 Index of small-cap stocks climbed 18.91%. Strong corporate earnings and healthy corporate balance sheets helped fuel the stock-market rally. U.S. corporations used their large cash holdings to add value for shareholders in the form of stock buybacks and higher dividend payouts. Merger and acquisition activity also picked up considerably and contributed to stock gains. Strong global economic growth boosted the returns of stocks in a number of sectors. Shares of industrial firms benefited as the powerful worldwide expansion increased demand for heavy equipment, airplanes and other items; meanwhile, a number of industrial stocks also got a boost from strong defense spending. Materials firms saw their profits increase dramatically as commodity prices climbed, and stocks in that sector posted strong gains. Likewise, shares of energy firms benefited from the high prices of oil and gas. Financial stocks posted good returns despite rising interest rates. Consumer-oriented stocks generally lagged the broad market, as investors worried about the effects higher interest rates and energy prices would have on consumer spending. Health-care shares were held back by troubles at several large pharmaceuticals firms, while technology stocks produced mixed results. Strong returns from value-oriented sectors such as energy and commodities, coupled with relatively weak returns from growth sectors such as health care and technology, helped value indices continue a long run of market leadership. Small- and mid-cap stocks significantly outperformed larger shares, also continuing a long-standing trend. Foreign stocks out-gained the U.S. market by a wide margin, with emerging-markets stocks leading the way on the strength of burgeoning emerging economies and surging demand for natural resources. HSBC INVESTOR FAMILY OF FUNDS 2 <Page> - ------------------------------------------------------------------------------- Portfolio Reviews - ------------------------------------------------------------------------------- HSBC Investor Intermediate Duration Fixed Income Fund (formerly HSBC Investor Limited Maturity Fund) (Class A Shares, B Shares, C Shares and I Shares) by HSBC Investments (USA) Inc. U.S. Core Fixed Income Team The HSBC Investor Intermediate Duration Fixed Income Fund (the "Fund") seeks to realize above-average total return, consistent with reasonable risk, by investing in a diversified investment grade portfolio of U.S. government obligations, corporate bonds and mortgage-backed securities. The Fund utilizes a two tier structure, commonly known as "master-feeder," in which the Fund invests all of its investable assets in the HSBC Investor Intermediate Duration Fixed Income Portfolio (the "Portfolio"). Investment Concerns Bonds offer a relatively stable level of income, although bond prices will fluctuate providing the potential for principal gain or loss. Intermediate-term, higher-quality bonds generally offer less risk than longer-term bonds and a lower rate of return. Market Commentary The Fund returned 0.80% (without sales charge) for the Class A Shares and 0.93% for the Class I Shares during the six month period ended April 30, 2006. That compared to a total return of 0.95% for Lehman Brothers Intermediate Aggregate Bond Index.(4) Past performance is no guarantee of future results. GDP(4) growth in the U.S. fell off significantly in the fourth quarter of 2005, slowing to a relative crawl of 1.7% in the wake of late summer gulf storms, but recovered dramatically in the first quarter of 2006, when GDP growth rebounded to 4.8%. Energy prices rose steadily over the course of the semi-annual period, reaching a high of almost $74 a barrel in late April. This, along with the rise in a host of other commodity prices, gold and copper in particular, generated concerns about inflation among central bankers and consumers alike. Robust growth in non-farm payrolls helped buoy consumer confidence even as the realization dawned that the housing market had begun to cool off. In the face of continued strong output growth and incipient pricing pressures, the Fed maintained its measured pace of policy tightening, raising the target federal funds rate by 25 basis points (0.25%) at each of the four Federal Open Market Committee meetings during the period under review, to end at 4.75%. During the period ended April 30, 2006, the yield on the three-month U.S. Treasury Bill rose 88 basis points (0.88%), climbing more or less in sync with the step-wise increase in the fed funds rate. Meanwhile, the yield on the two-year Treasury note rose 48 basis points (0.48%) to end at 4.86% and the ten-year rose 50 basis points (0.50%), ending the quarter at 5.05%. The rise in rates caused a bearish flattening in the yield curve during the period, and created a somewhat difficult environment for performance. Spreads continued to tighten and spread sectors generally had significant excess returns versus Treasury securities of similar duration with securitized debt (Asset Backed Securities in particular) and corporates leading the way and lower quality paper showing the strongest performance. The Fund underperformed its benchmark index for the period under review. The key component of that was select, off-benchmark holdings in high yield and emerging market debt. An overweight in spread sectors generally relative to the benchmark, particularly asset backed securities and collateralized mortgage backed securities and individual security selection in corporate credit also had a negative impact on performance. Our short, defensive duration positioning relative to the benchmark helped performance, as did our yield curve positioning over the course of the six month period.* Going forward, we will opportunistically add duration as higher yields reflect fair value. We continue to analyze the yield curve for pricing anomalies and, subject to portfolio restrictions, we will attempt to add high quality securitized debt issues that offer attractive yields without the issuer specific risk of corporate bonds. Within corporates we will continue our focus on security selection, including select off-benchmark names that we think, in a relatively homogenized credit environment, may offer greater opportunities for value.* * Portfolio composition is subject to change. 3 HSBC INVESTOR FAMILY OF FUNDS <Page> - ------------------------------------------------------------------------------- Portfolio Reviews - ------------------------------------------------------------------------------- HSBC Investor Intermediate Duration Fixed Income Fund - As of April 30, 2006 - ------------------------------------------------------------------------------- Average Annual Total Return (%) - ------------------------------------------------------------------------------- Inception Six 1 5 Since As of April 30, 2006 Date Month'D' Year Year Inception - --------------------------------------------------------------------------------------------------------------------- HSBC Investor Intermediate Duration Fixed Income Fund Class A(1) 2/7/01 -3.96 -3.91 2.88 3.04 HSBC Investor Intermediate Duration Fixed Income Fund Class B(2) 2/15/01 -3.51 -3.66 3.12 3.23 HSBC Investor Intermediate Duration Fixed Income Fund Class C(3) 2/13/01 -0.56 -0.85 3.12 3.19 HSBC Investor Intermediate Duration Fixed Income Fund Class I 1/23/01 0.93 1.12 4.16 4.37 Lehman Brothers Intermediate Aggregate Bond Index(4) -- 0.95 1.20 4.84 N/A Lipper Intermediate Investment-Grade Debt Funds Average(4) -- 0.49 0.56 4.58 N/A 'D' Aggregate Return. Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains and do not reflect the taxes that a shareholder would pay on fund distributions or on the redemption of fund shares. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 4.75%. (2) Reflects the applicable contingent deferred sales charge, maximum of 4.00%. (3) Reflects the applicable contingent deferred sales charge, maximum of 1.00%. (4) For additional information, please refer to the Glossary of Terms. The Fund is measured against the Lehman Brothers Intermediate Aggregate Bond Index, an unmanaged index generally representative of investment-grade issues with maturities between three and ten years. The performance of the index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Fund's performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, although they can invest in its underlying securities. During the period shown, the Investment Manager waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. HSBC INVESTOR FAMILY OF FUNDS 4 <Page> - ------------------------------------------------------------------------------- Portfolio Reviews - ------------------------------------------------------------------------------- HSBC Investor Core Plus Fixed Income Fund (formerly HSBC Investor Fixed Income Fund and HSBC Investor Bond Fund) (Advisor, Class A Shares, B Shares and C Shares) by HSBC Investments (USA) Inc. U.S. Core Fixed Income Team The HSBC Investor Core Plus Fixed Income Fund (the "Fund") seeks to provide investors with above-average total return, consistent with reasonable risk, through investments in a diversified portfolio of fixed-income securities. The Fund utilizes a two-tier structure, commonly known as a "master-feeder," in which the Fund invest all of its investable assets in the HSBC Investor Core Plus Fixed Income Portfolio (the "Portfolio"). Investment Concerns Bonds offer a relatively stable level of income, although bond prices will fluctuate providing the potential for principal gain or loss. Intermediate-term, higher-quality bonds generally offer less risk than longer-term bonds and a lower rate of return. Market Commentary For the six month period ended April 30, 2006, the Advisor shares of the Fund produced a 0.88% total return, and the Class A Shares returned 0.83% (without sales charge). That compared to a total return of 0.56% and 2.08% for the Lehman Brothers U.S. Aggregate Bond Index(4) and the Lipper General Bond Funds Average(4), respectively. Past performance is no guarantee of future results. GDP(4) growth in the U.S. fell off significantly in the fourth quarter of 2005, slowing to a relative crawl of 1.7% in the wake of late summer gulf storms, but recovered dramatically in the first quarter of 2006, when GDP growth rebounded to 4.8%. Energy prices rose steadily over the course of the semi-annual period, reaching a high of almost $74 a barrel in late April. This, along with the rise in a host of other commodity prices, gold and copper in particular, generated concerns about inflation among central bankers and consumers alike. Robust growth in non-farm payrolls helped buoy consumer confidence even as the realization dawned that the housing market had begun to cool off. In the face of continued strong output growth and incipient pricing pressures, the Federal Reserve maintained its measured pace of policy tightening, raising the target federal funds rate by 25 basis points (0.25%) at each of the four Federal Open Market Committee meetings during the period under review, to end at 4.75%. During this period, the yield on the three-month U.S. Treasury Bill rose 88 basis points (0.88%), climbing more or less in sync with the step-wise increase in the fed funds rate. Meanwhile, the yield on the two-year Treasury note rose 48 basis points (0.48%) to end at 4.86% and the ten-year rose 50 basis points (0.50%), ending the quarter at 5.05%. The rise in rates caused a bearish flattening in the yield curve during the period under review, and created a somewhat difficult environment for performance. Spreads continued to tighten and spread sectors generally had significant excess returns versus Treasury securities of similar duration with securitized debt (Asset Backed Securities in particular) and corporates leading the way and lower quality paper showing the strongest performance.* The Fund outperformed its benchmark index for the period under review. The key component of that outperformance was select, off-benchmark holdings in high yield and emerging market debt. An overweight in spread sectors generally relative to the benchmark, particularly asset backed securities and collateralized mortgage backed securities and individual security selection in corporate credit also had a positive impact on performance. Our short, defensive duration positioning relative to the benchmark helped performance, as did our yield curve positioning over the course of the semiannual period.* Going forward, we will opportunistically add duration as higher yields reflect fair value. We continue to analyze the yield curve for pricing anomalies and, subject to portfolio restrictions, we will attempt to add high quality securitized debt issues that offer attractive yields without the issuer specific risk of corporate bonds. Within corporates we will continue our focus on security selection, including select off-benchmark names that we think, in a relatively homogenized credit environment, may offer greater opportunities for value.* * Portfolio composition is subject to change. 5 HSBC INVESTOR FAMILY OF FUNDS <Page> - ------------------------------------------------------------------------------- Portfolio Reviews - ------------------------------------------------------------------------------- HSBC Investor Core Plus Fixed Income Fund - As of April 30, 2006 - ------------------------------------------------------------------------------- Average Annual Total Return (%) - ------------------------------------------------------------------------------- Inception Six 1 5 10 Since As of April 30, 2006 Date Month'D' Year Year Year Inception - ------------------------------------------------------------------------------------------------------------------ HSBC Investor Core Plus Fixed Income Fund (Advisor) 1/9/95 0.88 1.14 4.95 6.11 6.72 HSBC Investor Core Plus Fixed Income Fund Class A(1) 8/26/96 -3.92 -3.87 3.48 -- 5.12 HSBC Investor Core Plus Fixed Income Fund Class B(2) 1/6/98 -3.46 -3.62 3.74 -- 4.25 HSBC Investor Core Plus Fixed Income Fund Class C(3) 11/4/98 -0.61 -0.92 3.73 -- 4.13 Lehman Brothers U.S. Aggregate Bond Index(4) -- 0.56 0.71 5.16 6.33 N/A Lipper General Bond Funds Average(4) -- 2.08 3.18 4.73 5.68 N/A 'D' Aggregate Return. Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains and do not reflect the taxes that a shareholder would pay on fund distributions or on the redemption of fund shares. The investment return and principal value will fluctuate so that an investor,s shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 4.75%. (2) Reflects the contingent deferred sales charge, maximum of 4.00%. (3) Reflects the contingent deferred sales charge, maximum of 1.00%. (4) For additional information, please refer to the Glossary of Terms. The Funds are measured against the Lehman Brothers U.S. Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities, with maturities of at least one year. The performance of the index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Funds' performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, although they can invest in its underlying securities. During the period shown, the Investment Manager waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower HSBC INVESTOR FAMILY OF FUNDS 6 <Page> - ------------------------------------------------------------------------------- Portfolio Reviews - ------------------------------------------------------------------------------- HSBC Investor New York Tax-Free Bond Fund (Class A Shares, B Shares, C Shares and I Shares) by HSBC Investments (USA) Inc. U.S. Core Fixed Income Team The HSBC Investor New York Tax-Free Bond Fund (the "Fund") seeks to provide shareholders with income exempt from regular, federal, New York state and New York city personal income taxes. Investment Concerns Bonds offer a relatively stable level of income, although bond prices will fluctuate providing the potential for principal gain or loss. Intermediate-term, higher-quality bonds generally offer less risk than longer-term bonds and a lower rate of return. The Fund's income may be subject to certain state and local taxes and, depending on your tax status, the federal alternative minimum tax. Regional funds may be subject to additional risks, since the issues they invest in are located in one geographical location. Market Commentary The Fund delivered a total return of 0.86% (without sales charge) for Class A Shares and 1.07% for Class I Shares for the six month period ended April 30, 2006. That compared to 1.56% and 1.43% for the Fund's benchmarks, the Lehman Brothers New York Tax Exempt Index(4) and the Lipper New York Municipal Debt Funds Average(4), respectively. Past performance does not guarantee future results. GDP(4) growth in the U.S. fell off significantly in the fourth quarter of 2005, slowing to a relative crawl of 1.7% in the wake of late summer gulf storms, but recovered dramatically in the first quarter of 2006, when GDP growth rebounded to 4.8%. Energy prices rose steadily over the course of the semi-annual period, reaching a high of almost $74 a barrel in late April. This, along with the rise in a host of other commodity prices, gold and copper in particular, generated concerns about inflation among central bankers and consumers alike. Robust growth in non-farm payrolls helped buoy consumer confidence even as the realization dawned that the housing market had begun to cool off. In the face of continued strong output growth and incipient pricing pressures, the Federal Reserve maintained its measured pace of policy tightening, raising the target federal funds rate by 25 basis points at each of the four Federal Open Market Committee meetings during the period under review, to end at 4.75%. During this period, the yield on the three-month U.S. Treasury Bill rose 88 basis points (0.88%), climbing more or less in sync with the step-wise increase in the fed funds rate. Meanwhile, the yield on the two-year rose 48 basis points (0.48%) to end at 4.86% and the ten-year rose 50 basis points (0.50%), ending the quarter at 5.05%. The rise in rates caused a bearish flattening in the yield curve during the period under review, and created a somewhat difficult environment for performance. Spreads continued to tighten and the spread sectors generally had significant excess versus Treasury securities of similar duration with securitized debt (Asset Backed Securities in particular) and corporates leading the way and lower quality paper showing the strongest performance. Following the lead of the Treasury curve, the municipal curve flattened even more dramatically. The yield for the two-year Muni Index rose 55 basis points (0.55%) in the period, to close at 3.63%, while the ten-year yield rose 23 basis points (0.23%), ending at 4.15% on April 30. The Fund underperformed its benchmark for the period of review. One of the key contributors to performance during the semi-annual period was the defensive duration positioning of the portfolio relative to the benchmark. Gains from duration were offset by the portfolio's higher quality profile relative to benchmark and continued positive performance of lower rated credit and sectors. The portfolio's barbelled positioning during the six month period marginally enhanced the returns of the portfolio as the municipal yield curve continued to flatten. Finally, sector allocation detracted from performance as the portfolio tended to be overweight in lower volatility and higher quality sectors. Lower quality revenue sectors such as tobacco, securitization, hospital, and resource recovery bonds all outperformed as quality spreads continued to compress.* Going forward, we will likely reduce our duration underweight as yields move higher.* We intend to add higher yielding insured paper and mixed collateral pre-refunded bonds on a tactical basis. Additionally, we are considering various bond strategies in light of the potential impact of the alternative minimum tax.* * Portfolio composition is subject to change. 7 HSBC INVESTOR FAMILY OF FUNDS <Page> - ------------------------------------------------------------------------------- Portfolio Reviews - ------------------------------------------------------------------------------- HSBC Investor New York Tax-Free Bond Fund - As of April 30, 2006 - ------------------------------------------------------------------------------- Average Annual Total Return (%) - ------------------------------------------------------------------------------- Inception Six 1 5 10 Since As of April 30, 2006 Date Month'D' Year Year Year Inception - ------------------------------------------------------------------------------------------------------------------ HSBC Investor New York Tax-Free Bond Fund Class A(1) 5/1/95 -3.91 -3.84 3.22 4.40 4.65 HSBC Investor New York Tax-Free Bond Fund Class B(2) 1/6/98 -3.48 -3.71 3.46 -- 3.56 HSBC Investor New York Tax-Free Bond Fund Class C(3) 11/4/98 -0.51 -0.78 3.44 -- 3.16 HSBC Investor New York Tax-Free Bond Fund Class I 7/1/96 1.07 1.30 4.51 -- 5.13 Lehman Brothers New York Tax Exempt Index(4) -- 1.56 2.13 5.21 6.00 N/A Lipper New York Municipal Debt Funds Average(4) -- 1.43 1.87 4.67 5.11 N/A 'D' Aggregate Return. Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains and do not reflect the taxes that a shareholder would pay on fund distributions or on the redemption of fund shares. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 4.75%. (2) Reflects the contingent deferred sales charge, maximum of 4.00%. (3) Reflects the contingent deferred sales charge, maximum of 1.00%. (4) For additional information, please refer to the Glossary of Terms. The Fund is measured against the Lehman Brothers New York Tax Exempt Index, an unmanaged index composed of investment grade New York tax-exempt securities, all having a $50 million minimum maturity value. The performance of the index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Fund's performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, 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 8 <Page> - ------------------------------------------------------------------------------- Portfolio Reviews - ------------------------------------------------------------------------------- HSBC Investor Growth Fund (Class A Shares, B Shares, C Shares and I Shares) by Philip J. Sanders, Senior Vice President/Portfolio Manager, CFA and Daniel P. Becker, Senior Vice President/Portfolio Manager, CFA Waddell & Reed Investment Management Company The HSBC Investor Growth Fund (the "Fund") seeks long-term growth of capital by investing primarily in U.S. and foreign equity securities of high quality companies with market capitalization generally in excess of $2 billion, which the sub-adviser believes have the potential to generate superior levels of long-term profitability and growth. The Fund utilizes a two tier structure, commonly known as a "master-feeder", and invests all of its assets in the HSBC Investor Growth Portfolio (the "Portfolio"), which acts as the master fund. The Portfolio employs Waddell & Reed Investment Management Company (Waddell & Reed) as sub-adviser. Investment Concerns Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. Market Commentary The Fund returned 8.07% (without sales charge) for the Class A Shares and 8.21% for the Class I Shares for the six month period ended April 30, 2006. That compared to a 9.63% return for the Standard & Poor's 500 Index(4), 7.06% for the Russell 1000'r' Growth Index(4) and a 7.23% return for the Lipper Large-Cap Growth Funds Average(4). Past performance does not guarantee future results. Large-capitalization growth stocks generated solid returns during the period, although they trailed smaller shares and value-oriented large caps. That environment helped the Fund post good absolute performance. The Fund outperformed its large-cap growth benchmark for the six-month period. That superior relative performance came primarily on the strength of stock selection within the energy sector. An overweight stake in energy stocks also contributed positively to the Fund's relative returns. The portfolio managers' stock selection within the information technology sector boosted the Fund's relative gains as well, as did selection among consumer discretionary stocks.* The Fund's investments in health-care stocks were the largest detractor from performance relative to the Russell 1000'r' Growth benchmark index. Selection among health-care stocks weighed on relative performance, as did a slightly overweight position in shares of health-care firms that was slightly larger than that of the benchmark. Several of the individual stocks that weighed the most on relative returns were in the health-care sector. * Portfolio composition is subject to change. 9 HSBC INVESTOR FAMILY OF FUNDS <Page> - ------------------------------------------------------------------------------- Portfolio Reviews - ------------------------------------------------------------------------------- HSBC Investor Growth Fund - As of April 30, 2006 - ------------------------------------------------------------------------------- Average Annual Total Return (%) - ------------------------------------------------------------------------------- Inception Six 1 Since As of April 30, 2006 Date Month'D' Year Inception - ------------------------------------------------------------------------------------- HSBC Investor Growth Fund Class A(1) 5/10/04 2.69 15.38 7.78 HSBC Investor Growth Fund Class B(2) 5/10/04 3.66 16.54 8.35 HSBC Investor Growth Fund Class C(3) 5/10/04 6.69 19.50 9.78 HSBC Investor Growth Fund Class I 5/10/04 8.21 21.73 10.87 Russell 1000'r' Growth Index(4) -- 7.06 15.18 N/A Standard & Poor's 500 Index(4) -- 9.63 15.41 N/A Lipper Large-Cap Growth Funds Average(4) -- 7.23 16.98 N/A 'D' Aggregate Return. Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains and do not reflect the taxes that a shareholder would pay on fund distributions or on the redemption of fund shares. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 5.00%. (2) Reflects the contingent deferred sales charge maximum of 4.00%. (3) Reflects the contingent deferred sales charge maximum of 1.00%. (4) For additional information, please refer to the Glossary of Terms. The Fund is measured against the Russell 1000'r' Growth Index and the Standard & Poor's 500 Index. The Russell 1000'r' Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The Standard & Poor's 500 Index is generally representative of the U.S. stock market as a whole. The indices are unmanaged and do not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Fund's performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, although they can invest in its underlying securities. During the period shown, the Investment Manager waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. HSBC INVESTOR FAMILY OF FUNDS 10 <Page> - ------------------------------------------------------------------------------- Portfolio Reviews - ------------------------------------------------------------------------------- HSBC Investor Value Fund (Class A Shares, B Shares, C Shares and I Shares) by Jon D. Bosse, CFA Chief Investment Officer NWQ Investment Management Co., LLC The HSBC Investor Value Fund (the "Fund") seeks long-term growth of capital and income by investing primarily in U.S. and foreign companies with large and medium capitalizations that possess hidden opportunities underpriced by the market. The Fund utilizes a two tier structure, commonly known as a "master-feeder" and invests all of its assets in the HSBC Investor Value Portfolio (the "Portfolio"), which acts as the master fund. The Portfolio employs NWQ Investment Management Company, LLC ("NWQ") as sub-adviser. Investment Concerns Value-based investments are subject to the risk that the broad market may not recognize their intrinsic value. Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this fund will fluctuate as the value of the securities in the Portfolio changes. Market Commentary The Fund returned 13.42% (without sales charge) for the Class A Shares and 13.52% for the Class I Shares for the six month period ended April 30, 2006. That compared to a 12.87% return for the Russell 1000'r' Value Index(4) and a 11.99% return for the Lipper Multi-Cap Value Funds Average(4). Past performance does not guarantee future results. The Fund's absolute return benefited from strong stock-market performance. Investor sentiment improved late in the period, as investors showed confidence in market fundamentals and the Fed's ability to restrain inflation without endangering economic growth. Corporate consolidation, supported by strong corporate balance sheets, inexpensive financing, good organic growth and shareholder activism, also helped push the market higher. Financial stocks provided the largest contribution to the Fund's absolute gains, followed by shares of miners, producer durables firms and industrial companies. Technology stocks reduced the Fund's absolute return.* Stock selection in the financials sector provided the largest boost to the Fund's relative returns. Mortgage stocks in particular lifted relative performance, as those stocks posted gains after lagging for much of 2005. An overweight stake in the materials and processing sector also helped performance against the benchmark, as did stock selection within that sector. Mining stocks were especially strong, as the prices of gold and other metals climbed due to bullish market fundamentals, as well as concerns about inflation and potential stockpiling by certain governments. Overweight stakes in producer durables and industrial stocks also boosted relative gains.* The Fund held an overweight position in technology stocks, due to the portfolio manager's belief that higher corporate spending would benefit such shares. That allocation weighed on relative performance, as certain of the Fund's technology holdings issued disappointing earnings results. Selection among consumer discretionary stocks also hindered returns against the benchmark, as a relatively large stake in attractively valued media shares underperformed the market for this period. Selection in the consumer staples sector likewise dragged on relative returns, due largely to weakness among food producers.* * Portfolio composition is subject to change. 11 HSBC INVESTOR FAMILY OF FUNDS <Page> - ------------------------------------------------------------------------------- Portfolio Reviews - ------------------------------------------------------------------------------- HSBC Investor Value Fund - As of April 30, 2006 - ------------------------------------------------------------------------------- Average Annual Total Return (%) - ------------------------------------------------------------------------------- Inception Six 1 Since As of April 30, 2006 Date Month'D' Year Inception - ------------------------------------------------------------------------------------- HSBC Investor Value Fund Class A(1) 5/10/04 7.72 16.63 15.15 HSBC Investor Value Fund Class B(2) 5/10/04 8.95 17.80 15.99 HSBC Investor Value Fund Class C(3) 5/10/04 11.96 20.84 17.30 HSBC Investor Value Fund Class I 5/10/04 13.52 23.04 18.53 Russell 1000'r' Value Index(4) -- 12.87 18.30 N/A Lipper Multi-Cap Value Funds Average(4) -- 11.99 18.21 N/A 'D' Aggregate Return. Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains and do not reflect the taxes that a shareholder would pay on fund distributions or on the redemption of fund shares. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 5.00%. (2) Reflects the contingent deferred sales charge, maximum of 4.00%. (3) Reflects the contingent deferred sales charge, maximum of 1.00%. (4) For additional information, please refer to the Glossary of Terms. The Fund is measured against the Russell 1000'r' Value Index, an unmanaged index comprised of the 1000 securities found in the Russell universe with a less-than-average growth orientation. Companies in this index generally have low price-to-book and price-to-earning ratios, higher dividend yields, and lower forecasted growth values. The performance of the index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Fund's performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, 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 12 <Page> - ------------------------------------------------------------------------------- Portfolio Reviews - ------------------------------------------------------------------------------- HSBC Investor Growth and Income Fund (Class A Shares, B Shares, C Shares and I Shares) by Gary U. Rolle, CFA, Principal/Chief Investment Officer and Edward S. Han, Principal/Portfolio Manager and Transamerica Investment Management, LLC The HSBC Investor Growth and Income Fund (the "Fund") normally invests at least 65% of its 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. The Fund employs Transamerica Investment Management, LLC ("TIM") as the sub-adviser to the Fund. Investment Concerns Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. Bonds offer a relatively stable level of income, although bond prices will fluctuate providing the potential for principal gain or loss. Intermediate-term, higher-quality bonds generally offer less risk than longer-term bonds and a lower rate of return. Market Commentary The Fund returned 12.21% (without sales charge) for the Class A Shares and 12.37% for the Class I Shares for the six month period ended April 30, 2006. That compared to a 9.63% return for the Standard & Poor's 500 Index(4) and a 9.23% return for the Lipper Large-Cap Core Funds Average(4). Past performance does not guarantee future results. Transamerica Investment Management serves as the sub-advisor for the HSBC Growth & Income Fund. The firm employs a bottom-up investment approach to identify attractively valued shares of firms that generate strong free cash flow and have high-quality management, good business plans and sound execution. The stock market posted strong returns for this six-month period, helping the Fund post good absolute performance. Shares of particular industrial, energy, telecommunications and financial firms especially boosted the Fund's gain. Certain stocks in the consumer discretionary and technology sectors held back Fund returns.* The sub-advisor's investment strategy led the Fund to hold an overweight position in industrials stocks. Shares of industrial firms benefited from global economic strength, so the Fund's relatively large stake in that sector boosted returns against the benchmark. The Fund held an underweight allocation to consumer staples. Stocks in that sector lagged the performance of the overall index, so the Fund's small position also lifted relative returns.* An overweight position in consumer discretionary stocks hurt performance against the S&P 500, as consumer stocks trailed the broad market. Likewise, the Fund's relatively small weighting in the financials sector weighed on relative performance, as financials out-gained the benchmark.* * Portfolio composition is subject to change. 13 HSBC INVESTOR FAMILY OF FUNDS <Page> - ------------------------------------------------------------------------------- Portfolio Reviews - ------------------------------------------------------------------------------- HSBC Investor Growth and Income Fund - As of April 30, 2006 - ------------------------------------------------------------------------------- Average Annual Total Return (%) - ------------------------------------------------------------------------------- Inception Six 1 5 Since As of April 30, 2006 Date Month'D' Year Year Inception - ----------------------------------------------------------------------------------------------------- HSBC Investor Growth and Income Fund Class A(1) 4/12/01 6.63 16.91 -0.40 0.84 HSBC Investor Growth and Income Fund Class B(2) 4/5/01 7.76 18.07 -0.13 1.67 HSBC Investor Growth and Income Fund Class C(3) 11/3/03 10.65 21.14 -- 10.78 HSBC Investor Growth and Income Fund Class I 4/2/01 12.37 23.41 0.88 2.76 Standard & Poor's 500 Index(4) -- 9.63 15.41 2.70 N/A Lipper Large-Cap Core Funds Average(4) -- 9.23 15.51 1.35 N/A 'D' Aggregate Return. Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains and do not reflect the taxes that a shareholder would pay on fund distributions or on the redemption of fund shares. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 5.00%. (2) Reflects the contingent deferred sales charge, maximum of 4.00%. (3) Reflects the contingent deferred sales charge, maximum of 1.00%. (4) For additional information, please refer to the Glossary of Terms. The Fund is measured against the Standard & Poor's 500 Index, an unmanaged index that is generally representative of the U.S. stock market as a whole. The performance of the index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Fund's performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, although they can invest in its underlying securities. During the period shown, the Investment Manager waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. HSBC INVESTOR FAMILY OF FUNDS 14 <Page> - ------------------------------------------------------------------------------- Portfolio Reviews - ------------------------------------------------------------------------------- HSBC Investor Mid-Cap Fund (Class A Shares, B Shares, C Shares and Trust Shares) by Tony Y. Dong, CFA, Director, Mid-Cap Equity and Senior Portfolio Manager and Brian S. Matuszak, CFA, Senior Equity Analyst and Andy Y. Mui, CPA, Senior Equity Analyst Munder Capital Management The HSBC Investor Mid-Cap Fund (the "Fund") seeks to achieve its objective by investing in common or preferred stocks and convertible securities. The Fund will normally invest at least 80% of its assets in equity securities of mid-sized companies with market capitalizations falling within the range of the S&P MidCap 400 Index (between $270 million and $8.6 billion as of March 31, 2005) at the time of acquisition. Investments are primarily in domestic common stocks but also may include, to a limited degree, preferred stocks, and convertible securities. The Portfolio employs Munder Capital Management ("Munder") as sub-investment adviser. Investment Concerns Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. Mid capitalization funds typically carry additional risks since smaller companies generally have a higher risk of failure, and historically, their stocks have experienced a greater degree of market volatility than stocks on average. Market Commentary The Fund's Class A Shares posted a return of 15.71% (without sales charge) and 15.86% for the Trust Shares for the six months ended April 30, 2006. That compares to 15.26% and 16.41% for the Fund's benchmarks, the S&P MidCap 400 Index(4) and the Lipper Mid-Cap Growth Funds Average(4). Past performance does not guarantee future results. Mid-cap shares performed well on the strength of good earnings growth, high productivity and healthy corporate balance sheets. Medium-sized stocks as represented by the S&P 400 significantly outperformed the larger stocks in the S&P 500(4) during the first five months of the period, continuing a long period of superior gains. That environment helped the Fund's holdings in eight of ten economic sectors generate gains, supporting a strong absolute return. The Fund's consumer staples and utilities stakes both declined very slightly. Those sectors accounted for less than 7% of assets, and their losses reduced the Fund's overall absolute returns by less than 0.1 percentage points.* The Fund's sub-advisor, Munder Capital Management, focuses on attractively valued shares of companies with high levels of profitability. That stock selection approach helped the Fund's investments in a broad range of sectors outperform the corresponding sectors in the benchmark. The HSBC Mid Cap Equity Fund's consumer discretionary, industrials, materials and health care stakes produced particularly strong relative performance. Losses for a handful of stocks accounted for the only significant drag on the Fund's relative returns, as certain stocks in the information technology and energy sectors weighed modestly on returns against the mid-cap benchmarks.* * Portfolio composition is subject to change. 15 HSBC INVESTOR FAMILY OF FUNDS <Page> - ------------------------------------------------------------------------------- Portfolio Reviews - ------------------------------------------------------------------------------- HSBC Investor Mid-Cap Fund - As of April 30, 2006 - ------------------------------------------------------------------------------- Average Annual Total Return (%) - ------------------------------------------------------------------------------- Inception Six 1 5 10 Since As of April 30, 2006 Date Month'D' Year Year Year Inception - -------------------------------------------------------------------------------------------------------- HSBC Investor Mid-Cap Fund Class A(1) 7/1/93 9.92 22.02 2.47 10.45 11.35 HSBC Investor Mid-Cap Fund Class B(2) 7/1/93 11.73 23.60 2.79 10.21 10.97 HSBC Investor Mid-Cap Fund Class C(3) 7/1/93 14.43 26.64 2.92 10.28 11.02 HSBC Investor Mid-Cap Fund Trust 7/1/93 15.86 28.77 3.79 11.25 12.07 Standard & Poor's MidCap 400 Index(4) -- 15.26 28.32 10.73 14.33 N/A Russell MidCap'r' Growth Index(4) -- 15.18 28.27 5.77 8.92 N/A Lipper Mid-Cap Growth Funds Average(4) -- 16.41 30.46 4.16 7.84 N/A 'D' Aggregate Return. Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains and do not reflect the taxes that a shareholder would pay on fund distributions or on the redemption of fund shares. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 5.00%. (2) Reflects the contingent deferred sales charge, maximum of 4.00%. (3) Reflects the contingent deferred sales charge, maximum of 1.00%. (4) For additional information, please refer to the Glossary of Terms. (1) For periods prior to July 1, 2000, the performance shown above includes the total return (adjusted for Fund expenses) generate by HSBC Investments (USA) Inc's management of a pooled investment vehicle called a collective investment trust (CTF) with the same investment objective as the Fund. The assets from that CTF were converted into the HSBC Investor Mid-Cap Fund on July 1, 2000. The CTF was not registered with the Securities & Exchange Commission (SEC) and thus was not subject to certain investment restrictions that are imposed on the Fund. If the CTF had been registered with the SEC, its performance might have been adversely affected. Performance assumes reinvestment of dividends and distributions. The Fund has changed its standardized benchmark from the Russell MidCap'r' Growth Index to the Standard & Poor's MidCap 400 Index ("S&P MidCap 400") to provide a more appropriate market comparison. The S&P MidCap 400 Index is comprised of 400 domestic stocks chosen for market size (median market capitalization of $676 million), liquidity and industry group representation. The Russell MidCap'r' Growth Index tracks the performance of those Russell securities in the Russell Universe(4) with higher price-to-book ratios and higher forecasted growth values. The performance of the indices 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 16 <Page> - ------------------------------------------------------------------------------- Portfolio Reviews - ------------------------------------------------------------------------------- HSBC Investor International Equity Fund HSBC Investor Overseas Equity Fund (Advisor, Class A Shares, B Shares and C Shares) by Kevin F. Simms Co-CIO International Value Equities and Director of Research - Global and International Value Equities AllianceBernstein Investment Research and Management The HSBC Investor International Equity Fund and the HSBC Investor Overseas Equity Fund (the "Funds") seek to provide their shareholders with long-term growth of capital and future income by investing primarily in securities of non-U.S. issuers and securities of issuers whose principal markets are outside of the United States. The Funds employ a two-tier fund structure, known as "master-feeder," in which the Funds invest all of their investable assets in the HSBC Investor International Equity Portfolio (the "Portfolio"). The Portfolio employs AllianceBernstein Investment Research and Management ("AllianceBernstein"), a unit of AllianceBernstein Investment Research and Management as sub-investment adviser. The Portfolio invests primarily in equity securities of companies organized and domiciled in developed nations outside the U.S., or for which the principal trading market is outside the U.S., including Europe, Canada, Australia and the Far East. Investment Concerns There are risks associated with investing in foreign companies, such as erratic market conditions, economic and political instability and fluctuations in currency and exchange rates. Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. Market Commentary For the six month period ended April 30, 2006, the Advisor shares of the HSBC Investor International Equity Fund produced a 28.02% return and the Class A Shares of the HSBC Investor Overseas Equity Fund returned 27.72% (without sales charge). That compared to a total return of 22.89% and 23.11% for the Funds' benchmarks, the MSCI EAFE Index(4) and the Lipper International Large-Cap Core Funds Average(4). Past performance does not guarantee future results. Global economic growth and corporate profits consistently exceeded expectations during this six-month period. Those developments generated optimism among global investors, supporting strong gains in international stock markets and boosting this Fund's returns.* The Fund generated benchmark-beating returns largely on the strength of good stock picking. The Fund's holdings in every economic sector except transportation outperformed the corresponding sectors in the EAFE index, while the Fund's transportation holdings lagged only slightly. Selection among financials and industrial commodities stocks was especially strong.* The Fund's sector weightings also contributed modestly to relative gains. An underweight position in the underperforming telecommunications sector boosted returns against the benchmark, as did overweight stakes in surging capital equipment and industrial commodities shares. Investments in emerging markets also helped the Fund outperform its index -- which does not include emerging-markets stocks -- as emerging markets led the global equity markets during the six-month period.* An overweight position in global energy stocks weighed on relative returns. The energy sector led the international markets during recent years, but trailed the markets during the recent six-month period.* * Portfolio composition is subject to change. 17 HSBC INVESTOR FAMILY OF FUNDS <Page> - ------------------------------------------------------------------------------- Portfolio Reviews - ------------------------------------------------------------------------------- HSBC Investor International Equity Fund HSBC Investor Overseas Equity Fund - As of April 30, 2006 - ------------------------------------------------------------------------------- Average Annual Total Return (%) - ------------------------------------------------------------------------------- Inception Six 1 5 10 Since As of April 30, 2006 Date Month Year Year Year Inception - --------------------------------------------------------------------------------------------------------------- HSBC Investor International Equity Fund (Advisor) 1/9/95 28.02 40.96 8.91 10.46 11.01 HSBC Investor Overseas Equity Fund Class A(1) 8/26/96 21.34 32.93 7.42 -- 9.32 HSBC Investor Overseas Equity Fund Class B(2) 1/6/98 23.24 34.95 7.70 -- 9.02 HSBC Investor Overseas Equity Fund Class C(3) 11/4/98 26.28 37.96 7.71 -- 9.39 MSCI EAFE Index(4) -- 22.89 33.49 9.18 6.68 N/A Lipper International Large-Cap Core Average(4) -- 23.11 34.04 6.99 6.77 N/A 'D' Aggregate Return. Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains and do not reflect the taxes that a shareholder would pay on fund distributions or on the redemption of fund shares. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 5.00%. (2) Reflects the contingent deferred sales charge, maximum of 4.00%. (3) Reflects the contingent deferred sales charge, maximum of 1.00%. (4) For additional information, please refer to the Glossary of Terms. The Funds are measured against the Morgan Stanley Capital International (MSCI) Europe, Australasia and Far East (EAFE) Index, which is an unmanaged index that measures performance of a diverse range of developed countries in the indicated regions. The performance of the index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Funds' performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, although they can invest in its underlying securities. During the period shown, the Investment Manager waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. HSBC INVESTOR FAMILY OF FUNDS 18 <Page> - ------------------------------------------------------------------------------- Portfolio Reviews - ------------------------------------------------------------------------------- HSBC Investor Small Cap Equity Fund HSBC Investor Opportunity Fund (Advisor, 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 Company, LLC as sub-investment adviser. The Portfolio invests primarily in common stocks of small and medium-sized companies that may have the potential to become major enterprises. Investment Concerns Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. Small-capitalization funds typically carry additional risks since smaller companies generally have a higher risk of failure, and historically, their stocks have experienced a greater degree of market volatility than stocks on average. Market Commentary For the six month period ended April 30, 2006, the Advisor shares of the HSBC Investor Small Cap Equity Fund produced a 20.98% return and the Class A Shares of the HSBC Investor Opportunity Fund produced a 20.72% return (without sales charge). The Funds' benchmarks, the Russell 2500'r' Growth Index(4) and the Lipper Mid-Cap Growth Funds Average(4), returned 19.11% and 16.41%, respectively. Past performance does not guarantee future results. Stronger-than-expected profit growth propelled small- and mid-cap growth stocks to sizable gains during this six-month period, helping this Fund generate strong returns. Health care stocks provided the largest contribution to the Fund's absolute return, followed by technology, industrials, energy and consumer stocks. Financials and materials stocks contributed the least to the Fund's gains, although every sector posted positive returns during this period. Selection among health care stocks was a principal reason the Fund outperformed its benchmark. The Fund's investments in the biotechnology and health care industries performed especially well. The Fund's manager attempt to maximize the risk-to-return profile of their investments in those volatile industries by focusing on shares of firms that have high-quality management teams, proven drugs in late-stage clinical trials and a focus on developing therapies for which there are immediate, unmet medical needs.* The Fund's stake in energy stocks also boosted relative returns, largely on the strength of investments in coal companies. Selection in the technology sector lifted relative performance as well, as healthy gains among data processing, communications equipment and application software firms more than offset weakness in shares of IT consulting, semiconductors and semiconductor capital equipment companies. An underweight position in the lagging consumer discretionary sector also helped performance against the benchmark.* An underweight position in surging materials stocks detracted from relative gains. Stock selection among financials also reduced the Fund's advantage over the benchmark, as the growth-oriented regional bank stocks held by the Fund slid due to investor concerns about competition and a flat yield curve. Finally, the Fund's small cash stake, which averaged 2.2% of assets, reduced relative performance due to the strong market environment.* * Portfolio composition is subject to change. 19 HSBC INVESTOR FAMILY OF FUNDS <Page> - ------------------------------------------------------------------------------- Portfolio Reviews - ------------------------------------------------------------------------------- HSBC Investor Small Cap Equity Fund HSBC Investor Opportunity Fund - As of April 30, 2006 - ------------------------------------------------------------------------------- Average Annual Total Return (%) - ------------------------------------------------------------------------------- Inception Six 1 5 Since As of April 30, 2006 Date Month Year Year Inception - ----------------------------------------------------------------------------------------------- HSBC Investor Small Cap Equity Fund (Advisor) 9/3/96 20.98 37.45 5.96 12.38 HSBC Investor Opportunity Fund Class A(1) 9/23/96 14.71 29.84 4.28 10.24 HSBC Investor Opportunity Fund Class B(2) 1/6/98 16.32 31.76 4.56 9.50 HSBC Investor Opportunity Fund Class C(3) 11/4/98 19.30 34.71 4.56 10.56 Russell 2500'r' Growth Index(4) -- 19.11 34.07 6.86 N/A Lipper Mid-Cap Growth Funds Average(4) -- 16.41 30.46 4.16 N/A 'D' Aggregate Return. Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains and do not reflect the taxes that a shareholder would pay on fund distributions or on the redemption of fund shares. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 5.00%. (2) Reflects the contingent deferred sales charge, maximum of 4.00%. (3) Reflects the contingent deferred sales charge, maximum of 1.00%. (4) For additional information, please refer to the Glossary of Terms. The Funds are measured against the Russell 2500'r' Growth Index, an unmanaged index that tracks the performance of 2500 securities found in the Russell Universe(4) with higher price-to-book and higher forecasted growth values. The performance for the index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Funds' performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, although they can invest in its underlying securities. During the period shown, the Investment Manager waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. HSBC INVESTOR FAMILY OF FUNDS 20 <Page> - ------------------------------------------------------------------------------- Portfolio Reviews - ------------------------------------------------------------------------------- Portfolio Composition* April 30, 2006 (Unaudited) - ------------------------------------------------------------------------------- HSBC Investor Intermediate Duration Fixed Income Portfolio - ------------------------------------------------------------------------------- Investment Allocation Percentage of Investments at Value - ------------------------------------------------------------------------------- Corporate Bonds 29.5% - ------------------------------------------------------------------------------- Mortgage Backed Securities 29.1% - ------------------------------------------------------------------------------- Asset Backed Securities 12.9% - ------------------------------------------------------------------------------- Collateralized Mortgage Obligations 12.4% - ------------------------------------------------------------------------------- U.S. Treasury Securities 8.0% - ------------------------------------------------------------------------------- Commercial Mortgage Backed Securities 7.0% - ------------------------------------------------------------------------------- Foreign Sovereign Bonds 0.5% - ------------------------------------------------------------------------------- Cash and Equivalents 0.3% - ------------------------------------------------------------------------------- Foreign Corporate Bonds 0.3% - ------------------------------------------------------------------------------- Total 100.0% - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- HSBC Investor Core Plus Fixed Income Portfolio - ------------------------------------------------------------------------------- Investment Allocation Percentage of Investments at Value - ------------------------------------------------------------------------------- Corporate Bonds 28.7% - ------------------------------------------------------------------------------- Mortgage Backed Securities 25.2% - ------------------------------------------------------------------------------- Asset Backed Securities 11.6% - ------------------------------------------------------------------------------- Collateralized Mortgage Obligations 11.2% - ------------------------------------------------------------------------------- U.S. Treasury Securities 10.4% - ------------------------------------------------------------------------------- Commercial Mortgage Backed Securities 7.1% - ------------------------------------------------------------------------------- U.S. Government Agencies 3.8% - ------------------------------------------------------------------------------- Municipal Bonds 0.8% - ------------------------------------------------------------------------------- Foreign Sovereign Bonds 0.5% - ------------------------------------------------------------------------------- Cash and Equivalents 0.4% - ------------------------------------------------------------------------------- Foreign Corporate Bonds 0.3% - ------------------------------------------------------------------------------- Total 100.0% - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- HSBC Investor New York Tax-Free Bond Fund - ------------------------------------------------------------------------------- Investment Allocation Percentage of Investments at Value - ------------------------------------------------------------------------------- Municipal Bonds 98.5% - ------------------------------------------------------------------------------- Cash and Equivalents 1.5% - ------------------------------------------------------------------------------- Total 100.0% - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- HSBC Investor High Yield Fixed Income Portfolio - ------------------------------------------------------------------------------- Investment Allocation Percentage of Investments at Value - ------------------------------------------------------------------------------- Corporate Bonds 84.0% - ------------------------------------------------------------------------------- Cash and Equivalents 16.0% - ------------------------------------------------------------------------------- Total 100.0% - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- HSBC Investor Growth Portfolio - ------------------------------------------------------------------------------- Investment Allocation Percentage of Investments at Value - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Information Technology 24.3% - ------------------------------------------------------------------------------- Industrials 18.9% - ------------------------------------------------------------------------------- Financials 13.7% - ------------------------------------------------------------------------------- Consumer Discretionary 12.1% - ------------------------------------------------------------------------------- Health Care 11.0% - ------------------------------------------------------------------------------- Consumer Staples 8.1% - ------------------------------------------------------------------------------- Energy 7.3% - ------------------------------------------------------------------------------- Repurchase Agreements 4.6% - ------------------------------------------------------------------------------- Total 100.0% - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- HSBC Investor Value Portfolio - ------------------------------------------------------------------------------- Investment Allocation Percentage of Investments at Value - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Financials 28.8% - ------------------------------------------------------------------------------- Industrials 11.8% - ------------------------------------------------------------------------------- Energy 11.0% - ------------------------------------------------------------------------------- Consumer Discretionary 9.0% - ------------------------------------------------------------------------------- Information Technology 8.9% - ------------------------------------------------------------------------------- Materials 7.9% - ------------------------------------------------------------------------------- Consumer Staples 6.6% - ------------------------------------------------------------------------------- Cash and Equivalents 4.7% - ------------------------------------------------------------------------------- Telecommunication Services 4.3% - ------------------------------------------------------------------------------- Utilities 2.1% - ------------------------------------------------------------------------------- Transportation 2.0% - ------------------------------------------------------------------------------- Miscellaneous 1.9% - ------------------------------------------------------------------------------- Health Care 1.0% - ------------------------------------------------------------------------------- Total 100.0% - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- HSBC Investor Growth and Income Fund - ------------------------------------------------------------------------------- Investment Allocation Percentage of Investments at Value - ------------------------------------------------------------------------------- Industrials 25.2% - ------------------------------------------------------------------------------- Consumer Discretionary 20.2% - ------------------------------------------------------------------------------- Information Technology 13.1% - ------------------------------------------------------------------------------- Financials 12.9% - ------------------------------------------------------------------------------- Energy 10.5% - ------------------------------------------------------------------------------- Health Care 9.1% - ------------------------------------------------------------------------------- Consumer Staples 4.0% - ------------------------------------------------------------------------------- Materials 3.4% - ------------------------------------------------------------------------------- Cash and Equivalents 1.6% - ------------------------------------------------------------------------------- Total 100.0% - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- * Portfolio composition is subject to change. 21 HSBC INVESTOR FAMILY OF FUNDS <Page> - ------------------------------------------------------------------------------- Portfolio Reviews - ------------------------------------------------------------------------------- Portfolio Composition* April 30, 2006 (Unaudited) - ------------------------------------------------------------------------------- HSBC Investor Mid-Cap Fund - ------------------------------------------------------------------------------- Investment Allocation Percentage of Investments at Value - ------------------------------------------------------------------------------- Financials 17.3% - ------------------------------------------------------------------------------- Information Technology 16.7% - ------------------------------------------------------------------------------- Industrials 15.8% - ------------------------------------------------------------------------------- Consumer Discretionary 14.7% - ------------------------------------------------------------------------------- Health Care 11.8% - ------------------------------------------------------------------------------- Energy 10.2% - ------------------------------------------------------------------------------- Materials 5.7% - ------------------------------------------------------------------------------- Utilities 3.3% - ------------------------------------------------------------------------------- Consumer Staples 3.0% - ------------------------------------------------------------------------------- Index 0.8% - ------------------------------------------------------------------------------- Cash and Equivalents 0.4% - ------------------------------------------------------------------------------- Telecommunication Services 0.3% - ------------------------------------------------------------------------------- Total 100.0% - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- HSBC International Equity Portfolio - ------------------------------------------------------------------------------- Investment Allocation Percentage of Investments at Value - ------------------------------------------------------------------------------- Europe 58.8% - ------------------------------------------------------------------------------- Japan 27.6% - ------------------------------------------------------------------------------- Australia & Far East 5.9% - ------------------------------------------------------------------------------- Canada 3.4% - ------------------------------------------------------------------------------- Other 2.8% - ------------------------------------------------------------------------------- Cash and Equivalents 1.5% - ------------------------------------------------------------------------------- Total 100.0% - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- HSBC Investor Small Cap Equity Portfolio - ------------------------------------------------------------------------------- Investment Allocation Percentage of Investments at Value - ------------------------------------------------------------------------------- HealthCare 26.5% - ------------------------------------------------------------------------------- Information Technology 22.0% - ------------------------------------------------------------------------------- Industrials 17.5% - ------------------------------------------------------------------------------- Energy 12.2% - ------------------------------------------------------------------------------- Consumer Discretionary 11.0% - ------------------------------------------------------------------------------- Financial 6.5% - ------------------------------------------------------------------------------- Cash and Equivalents 3.4% - ------------------------------------------------------------------------------- Materials 0.9% - ------------------------------------------------------------------------------- Total 100.0% - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- * Portfolio composition is subject to change. HSBC INVESTOR FAMILY OF FUNDS 22 <Page> This page intentionally left blank. - -------------------------------------------------------------------------------- HSBC INVESTOR NEW YORK TAX-FREE BOND FUND - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2006 (UNAUDITED) <Table> <Caption> - --------------------------------------------------------------- MUNICIPAL BONDS -- 96.4% - --------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) --------- ---------- NEW YORK - 88.0% Buffalo, New York Fiscal Stability Authority (MBIA Insured), 5.25%, 8/15/13............................... 500,000 539,615 Corning City, New York School District GO (FSA Insured), 4.00%, 6/15/08...... 930,000 936,203 Corning City, New York School District GO (FSA Insured), 5.00%, 6/15/09...... 790,000 820,107 Erie County, New York GO (FGIC Insured), 5.375%, 6/15/07............. 250,000 251,788 Grand Central New York District Management, 4.00%, 1/1/07............. 400,000 400,536 Metropolitan Transportation Authority of New York Revenue, 5.25%, 11/15/11.............................. 1,000,000 1,064,940 Metropolitan Transportation Authority of New York Revenue (FGIC Insured), 5.25%, 7/1/17, Prerefunded 7/1/08 @ 100.5................................. 1,145,000 1,187,960 Metropolitan Transportation Authority of New York Revenue (FGIC Insured), 5.50%, 11/15/19....................... 1,000,000 1,118,940 Metropolitan Transportation Authority of New York Revenue (FSA Insured), 5.00%, 11/15/32, Callable 11/15/12 @ 100................................... 1,625,000 1,665,039 Metropolitan Transportation Authority of New York Revenue (MBIA Insured), 5.50%, 1/1/19, Callable 7/1/12 @ 100................................... 480,000 517,934 Metropolitan Transportation Authority of New York Revenue, Escrowed to Maturity, 5.75%, 7/1/13............... 285,000 307,786 Monroe County, New York, Airport Authority Revenue, AMT (MBIA Insured), 5.625%, 1/1/10........................ 1,240,000 1,306,861 Monroe County, New York, Airport Authority Revenue, AMT (MBIA Insured), 5.75%, 1/1/14......................... 750,000 815,295 New York City GO, 5.00%, 8/1/08........ 990,000 1,016,888 New York City GO, 5.00%, 12/1/13....... 1,000,000 1,057,030 New York City GO, 5.00%, 8/1/14........ 200,000 211,026 New York City GO, 6.00%, 8/1/14, Prerefunded 8/1/07 @ 101.............. 945,000 980,768 New York City GO, 6.00%, 8/1/14, Callable 8/1/07 @ 101................. 55,000 56,918 New York City GO, 5.00%, 8/1/15........ 325,000 342,661 New York City Housing Development Corp. Revenue, AMT, 5.60%, 11/1/19, Callable 11/1/09 @ 101......................... 100,000 102,914 New York City Industrial Development Agency (FSA Insured), 5.00%, 11/15/19, Callable 5/1/13 @ 100................. 1,000,000 1,041,000 New York City Industrial Development Agency, AMT, 5.00%, 1/1/09............ 1,000,000 1,021,250 New York City Municipal Water Finance Authority, 5.00%, 6/15/34, Callable 6/15/13 @ 100......................... 1,250,000 1,276,600 New York City Municipal Water Finance Authority, 5.00%, 6/15/36, Callable 12/15/14 @ 100........................ 1,000,000 1,024,590 New York City Transitional Finance Authority Revenue, 5.25%, 5/1/17, Callable 5/1/11 @ 100................. 400,000 421,560 <Caption> - --------------------------------------------------------------- MUNICIPAL BONDS, CONTINUED - --------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) --------- ---------- New York City Transitional Finance Authority Revenue, 5.25%, 2/1/29, Callable 2/1/11 @ 100................. 1,540,000 1,621,697 New York City Water & Sewer Systems (FSA Insured), 5.00%, 6/15/29, Callable 6/15/15 @ 100................ 1,000,000 1,034,020 New York State Dormitory Authority Revenue, Columbia University, 5.00%, 7/1/29, Mandatory put 7/1/07 @ 100.... 1,000,000 1,014,340 New York State Dormitory Authority Revenue, Cooper Union (MBIA Insured), 6.00%, 7/1/19, Callable 7/1/09 @ 101................................... 350,000 376,019 New York State Dormitory Authority Revenue, Department of Health, 5.25%, 7/1/16, Callable 7/1/14 @ 100......... 500,000 531,180 New York State Dormitory Authority Revenue, Master Boces PG (FSA Insured), 5.25%, 8/15/19, Callable 8/15/12 @ 100......................... 1,000,000 1,064,050 New York State Dormitory Authority Revenue, Mental Health, 6.50%, 8/15/11............................... 225,000 251,858 New York State Dormitory Authority Revenue, Mental Health, 5.50%, 8/15/17, Prerefunded 2/15/07 @ 102.... 15,000 15,507 New York State Dormitory Authority Revenue, Mental Health, 5.50%, 8/15/17, Partially Prerefunded 2/15/07 @ 102................................. 985,000 1,015,348 New York State Dormitory Authority Revenue, Mental Health (FGIC Insured), 5.00%, 2/15/15........................ 1,245,000 1,324,618 New York State Dormitory Authority Revenue, New York Presbyterian Hospital (AMBAC Insured), 5.50%, 8/1/10................................ 750,000 797,460 New York State Dormitory Authority Revenue, New York University (AMBAC Insured), 5.50%, 7/1/18............... 500,000 556,375 New York State Dormitory Authority Revenue, NYSARC (FSA Insured), 2.00%, 7/1/06................................ 475,000 473,219 New York State Dormitory Authority Revenue, NYSARC (FSA Insured), 5.25%, 7/1/18, Callable 7/1/12 @ 101......... 1,460,000 1,558,857 New York State Dormitory Authority Revenue, Rockefeller University, 5.25%, 7/1/13, Callable 7/1/08 @ 101................................... 500,000 520,005 New York State Dormitory Authority Revenue, School District Board Financing, 5.00%, 7/1/08.............. 595,000 611,244 New York State Dormitory Authority Revenue, School District Rescue, 5.00%, 4/1/07......................... 500,000 505,115 New York State Dormitory Authority Revenue, Sloan Kettering Institute (MBIA Insured), 5.50%, 7/1/23......... 1,300,000 1,465,957 New York State Dormitory Authority, Personal Income Tax Revenue, 5.00%, 3/15/23, Callable 3/15/15 @ 100....... 1,000,000 1,042,170 New York State Environmental Facscorp., 5.00%, 6/15/09........................ 1,000,000 1,039,350 New York State Environmental Facscorp., 5.70%, 1/15/14, Callable 7/15/09 @ 101................................... 415,000 442,581 </Table> See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 24 - -------------------------------------------------------------------------------- HSBC INVESTOR NEW YORK TAX-FREE BOND FUND - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) <Table> <Caption> - --------------------------------------------------------------- MUNICIPAL BONDS, CONTINUED - --------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) --------- ---------- New York State Environmental Facscorp., 5.70%, 1/15/14, Prerefunded 7/15/09 @ 101................................... 570,000 610,174 New York State Environmental Facscorp., 5.70%, 1/15/14, Prerefunded 7/15/09 @ 101................................... 15,000 16,057 New York State Mortgage Agency Revenue, AMT, 5.60%, 10/1/14, Callable 9/1/07 @ 101.5................................. 1,000,000 1,025,400 New York State Municipal Bond Bank Revenue (LOC State Aid Withholding), 5.50%, 12/1/12........................ 850,000 922,437 New York State Thruway Authority Revenue, Highway & Bridge (FGIC Insured), 5.25%, 4/1/07............... 300,000 304,290 New York State Thruway Authority Revenue, Highway & Bridge (FGIC Insured), 5.50%, 4/1/17, Callable 4/1/11 @ 101.......................... 1,000,000 1,089,150 New York State Thruway Authority Revenue, Highway & Bridge (MBIA Insured), 5.00%, 4/1/22, Callable 4/1/14 @ 100.......................... 1,000,000 1,040,420 New York State Thruway Authority, Personal Income Tax Revenue, 5.50%, 3/15/20, Prerefunded 3/15/12 @ 100.... 500,000 544,780 New York State Thruway Authority, Personal Income Tax Revenue (FSA Insured), 5.00%, 3/15/13.............. 645,000 684,951 New York State Thruway Authority, Personal Income Tax Revenue (MBIA Insured), 5.00%, 3/15/19, Callable 3/15/13 @ 100......................... 1,400,000 1,455,286 New York State Thruway Authority, Personal Income Tax Revenue (MBIA Insured), 5.00%, 3/15/21, Callable 3/15/13 @ 100......................... 500,000 518,620 New York State Thruway Authority, Service Contract Revenue, 5.50%, 4/1/11................................ 1,000,000 1,074,510 New York State Urban Development Corp. (LOC GO of Corp.), 5.125%, 1/1/22, Callable 7/1/14 @ 100................. 885,000 924,896 New York State Urban Development Corp. Revenue, 5.75%, 4/1/12, Prerefunded 4/1/07 @ 102.......................... 1,000,000 1,038,610 New York State Urban Development Corp. Revenue, 5.75%, 4/1/12................ 500,000 544,910 New York State Urban Development Corp. Revenue, 5.125%, 1/1/25, Prerefunded 1/1/11 @ 100.......................... 175,000 185,761 New York State Urban Development Corp. Revenue, Series A (MBIA Insured), 6.50%, 1/1/09......................... 500,000 534,915 New York State Urban Development Corp. Revenue, Series B (FSA Insured), 5.00%, 3/15/21, Callable 3/15/15 @100.................................. 1,000,000 1,045,160 Onondaga County, New York Water Authority Revenue (FSA Insured), 5.00%, 9/15/14, Callable 9/15/10 @ 101................................... 300,000 317,433 Onondaga County, New York Water Authority Revenue (FSA Insured), 5.00%, 9/15/15, Callable 9/15/10 @ 101................................... 665,000 701,981 <Caption> - --------------------------------------------------------------- MUNICIPAL BONDS, CONTINUED - --------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) --------- ---------- Port Authority of New York & New Jersey Revenue, 5.375%, 3/1/28............... 1,100,000 1,216,622 Port Authority of New York & New Jersey Revenue, 5.00%, 9/1/27, Callable 9/1/13 @ 100.......................... 795,000 819,486 Port Authority of New York & New Jersey Special Obligation Revenue, AMT (MBIA Insured), 5.75%, 12/1/22, Callable 12/1/07 @ 102......................... 500,000 523,375 Suffolk County, New York (FSA Insured), 5.25%, 5/1/12......................... 515,000 551,632 Suffolk County, New York (FSA Insured), 5.25%, 5/1/15......................... 100,000 108,096 Tobacco Settlement Corp., 5.00%, 6/1/06................................ 1,000,000 1,001,040 Tobacco Settlement Corp., 5.50%, 6/1/21, Callable 6/1/13 @ 100......... 1,000,000 1,069,490 Webster, New York Central School District GO (FSA Insured), 5.00%, 6/15/14............................... 500,000 532,320 Yonkers New York, Series E (MBIA Insured), 5.00%, 12/1/14.............. 750,000 793,590 57,942,571 ---------- PUERTO RICO - 8.4% Puerto Rico Commonwealth, Highway and Transportation (MBIA Insured), 5.00%, 9/15/17, Callable 3/15/14 @ 100....... 1,000,000 1,049,260 Puerto Rico Electric Power Authority Revenue (MBIA Insured), 5.25%, 7/1/22................................ 1,000,000 1,098,790 Puerto Rico Municipal Finance Agency, 5.00%, 8/1/12......................... 995,000 1,036,959 Puerto Rico Public Buildings Authority Revenue, 5.25%, 7/1/33, Callable 7/1/14 @ 100.......................... 700,000 726,320 Puerto Rico Public Finance Corp. Revenue (MBIA Insured), 5.25%, 8/1/29, Callable 7/1/10 @ 101................. 1,000,000 1,062,230 Puerto Rico Publishing Finance Corp. Revenue (AMBAC Insured), 5.375%, 6/1/18................................ 500,000 548,765 ---------- 5,522,324 TOTAL MUNICIPAL BONDS (COST $62,063,070).................... 63,464,895 ---------- - --------------------------------------------------------------- INVESTMENT COMPANIES - 1.4% - --------------------------------------------------------------- BlackRock Liquidity New York Money Fund Portfolio Institutional Shares........ 950,954 950,954 ---------- TOTAL INVESTMENT COMPANIES (COST $950,954)............................. 950,954 ---------- TOTAL INVESTMENTS (COST $63,014,024) -- 97.8%.......... 64,415,849 ---------- ---------- </Table> - -------------- Percentages indicated are based on net assets of $65,862,213. AMBAC -- American Municipal Bond Assurance Corporation AMT -- Interest on security is subject to Federal Alternative Minimum Tax FGIC -- Federal Guaranty Insurance Corporation FSA -- Financial Security Assurance GO -- General Obligation LOC -- Letter of Credit MBIA -- Municipal Bond Insurance Association 25 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. - -------------------------------------------------------------------------------- HSBC INVESTOR GROWTH AND INCOME FUND - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2006 (UNAUDITED) <Table> <Caption> - ---------------------------------------------------------------- COMMON STOCKS - 98.4% - ---------------------------------------------------------------- SHARES VALUE($) ------- ---------- AEROSPACE & DEFENSE - 2.4% United Technologies Corp.................. 18,100 1,136,861 ---------- CHEMICALS - 3.4% Ecolab, Inc............................... 21,000 793,800 Monsanto Co............................... 10,000 834,000 ---------- 1,627,800 ---------- COMPUTER SOFTWARE - 5.6% Microsoft Corp............................ 44,000 1,062,600 NAVTEQ Corp. (a).......................... 10,000 415,200 SanDisk Corp. (a)......................... 19,500 1,244,685 ---------- 2,722,485 ---------- COMPUTERS - 3.2% Apple Computer, Inc. (a).................. 22,000 1,548,580 ---------- CONSUMER PRODUCTS - 6.2% Harley-Davidson, Inc...................... 10,000 508,400 Nike, Inc., Class B....................... 9,950 814,308 PepsiCo, Inc.............................. 10,000 582,400 The Procter & Gamble Co................... 19,000 1,105,990 ---------- 3,011,098 ---------- DIVERSIFIED MANUFACTURING OPERATIONS - 23.6% Caterpillar, Inc.......................... 24,000 1,817,760 Donaldson Co., Inc........................ 20,500 681,420 Graco, Inc................................ 15,000 701,250 Illinois Tool Works, Inc.................. 16,670 1,712,009 Jacobs Engineering Group, Inc. (a)........ 21,000 1,736,700 Kennametal, Inc........................... 19,500 1,206,075 PACCAR, Inc............................... 15,600 1,122,108 Plum Creek Timber Co., Inc................ 32,500 1,179,750 W. W. Grainger, Inc....................... 15,000 1,153,800 ---------- 11,310,872 ---------- FINANCIAL SERVICES - 8.5% American Express Co....................... 25,000 1,345,250 Ameriprise Financial, Inc................. 15,000 735,600 J.P. Morgan Chase & Co.................... 17,500 794,150 The Chicago Mercantile Exchange Holdings, Inc...................................... 2,700 1,236,600 ---------- 4,111,600 ---------- HEALTH CARE - 4.3% WellPoint, Inc. (a)....................... 15,000 1,065,000 Zimmer Holdings, Inc. (a)................. 16,000 1,006,400 ---------- 2,071,400 ---------- HOTELS & LODGING - 4.9% Hilton Hotels Corp........................ 19,000 511,860 Las Vegas Sands Corp. (a)................. 13,000 842,530 Marriott International, Inc., Class A..... 13,700 1,001,059 ---------- 2,355,449 ---------- INSURANCE - 1.9% Progressive Corp.......................... 8,400 911,652 ---------- <Caption> INTERNET RELATED - 1.8% - ---------------------------------------------------------------- COMMON STOCKS, CONTINUED - ---------------------------------------------------------------- SHARES VALUE($) ------- ---------- eBay, Inc. (a)............................ 25,000 860,250 ---------- LEISURE - 1.0% Carnival Corp............................. 10,000 468,200 ---------- MEDIA - 5.8% McGraw-Hill Cos., Inc..................... 32,000 1,781,120 The Walt Disney Co........................ 21,000 587,160 XM Satellite Radio Holdings Inc., Class A (a)...................................... 20,000 404,400 ---------- 2,772,680 ---------- OIL & GAS - 10.5% Anadarko Petroleum Corp................... 8,000 838,560 Apache Corp............................... 11,000 781,550 Schlumberger Ltd.......................... 28,000 1,935,920 Suncor Energy, Inc. ADR................... 17,500 1,500,450 ---------- 5,056,480 ---------- PHARMACEUTICALS - 4.8% Affymetrix, Inc. (a)...................... 20,000 573,000 Amgen, Inc. (a)........................... 13,000 880,100 Genentech, Inc. (a)....................... 11,000 876,810 ---------- 2,329,910 ---------- RESTAURANTS - 1.5% Starbucks Corp. (a)....................... 20,000 745,400 ---------- RETAIL - 3.0% Staples, Inc.............................. 45,000 1,188,450 Walgreen Co............................... 6,000 251,580 ---------- 1,440,030 ---------- TELECOMMUNICATIONS - 4.2% QUALCOMM, Inc............................. 33,000 1,694,220 Verizon Communications, Inc............... 10,500 346,815 ---------- 2,041,035 ---------- TRANSPORTATION - 1.8% FedEx Corp................................ 7,500 863,475 ---------- TOTAL COMMON STOCKS (COST $37,048,464)....................... 47,385,257 ---------- - ---------------------------------------------------------------- INVESTMENT COMPANIES - 1.6% - ---------------------------------------------------------------- HSBC Investor Money Market Fund Class I Shares *................................. 780,868 780,868 ---------- TOTAL INVESTMENT COMPANIES (COST $780,868).......................... 780,868 ---------- TOTAL INVESTMENTS (COST $37,829,332) - 100.0%............. 48,166,125 ---------- ---------- </Table> - -------------- Percentages indicated are based on net assets of $48,187,297. (a) Represents non-income producing security. * Investment in affiliate. ADR -- American Depository Receipt See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 26 - -------------------------------------------------------------------------------- HSBC INVESTOR MID-CAP FUND - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2006 (UNAUDITED) <Table> <Caption> - --------------------------------------------------------------- COMMON STOCKS -- 99.1% - --------------------------------------------------------------- SHARES VALUE($) --------- ----------- ADVERTISING SERVICES - 1.2% aQuantive, Inc. (a)................... 15,150 379,659 ----------- AEROSPACE & DEFENSE - 2.1% L-3 Communications Holdings, Inc...... 8,025 655,644 ----------- AUTOMOTIVE - 0.1% United Auto Group, Inc................ 1,062 44,923 ----------- BANKING - 2.7% Compass Bancshares, Inc............... 6,600 362,735 Euronet Worldwide, Inc. (a)........... 8,575 306,471 HDFC Bank Ltd. ADR.................... 2,795 164,402 ----------- 833,608 ----------- CHEMICALS - 2.5% Airgas, Inc........................... 11,325 458,096 Praxair, Inc.......................... 5,175 290,473 ----------- 748,569 ----------- COMPUTER SERVICES - 1.8% Cognizant Technology Solutions Corp. (a).................................. 8,775 558,178 ----------- COMPUTER SOFTWARE - 4.2% Blackbaud, Inc........................ 19,600 411,796 Cogent, Inc. (a)...................... 15,545 254,316 NAVTEQ Corp. (a)...................... 5,150 213,828 SRA International, Inc., Class A (a).................................. 12,600 403,452 ----------- 1,283,392 ----------- COMPUTERS & PERIPHERALS - 1.0% Logitech International SA ADR (a)..... 7,300 301,490 ----------- CONSTRUCTION & ENGINEERING - 1.3% McDermott International, Inc. (a)..... 6,650 404,320 ----------- CONSTRUCTION MATERIALS - 1.8% Florida Rock Industries, Inc.......... 8,937 557,401 ----------- CONSUMER PRODUCTS - 5.0% Constellation Brands, Inc. (a)........ 15,800 390,260 Jarden Corp. (a)...................... 9,200 312,800 The Toro Co........................... 3,825 189,146 Thor Industries, Inc.................. 7,050 355,884 Tiffany & Co.......................... 8,000 279,120 ----------- 1,527,210 ----------- DIVERSIFIED MANUFACTURING OPERATIONS - 2.9% Emcor Group, Inc. (a)................. 10,550 528,028 Graco, Inc............................ 7,400 345,950 ----------- 873,978 ----------- ELECTRONIC COMPONENTS & SEMICONDUCTORS - 3.0% FormFactor, Inc. (a).................. 9,725 405,435 Microchip Technology, Inc............. 8,800 327,888 ON Semiconductor Corp. (a)............ 24,100 172,797 ----------- 906,120 ----------- ENVIRONMENTAL SERVICES - 1.8% Stericycle, Inc. (a).................. 8,500 559,640 ----------- FINANCIAL SERVICES - 7.6% Affiliated Managers Group, Inc. (a)... 5,525 559,683 Blackrock, Inc., Class A.............. 2,250 340,965 TD Ameritrade Holding Corp. (a)....... 20,150 373,984 The Chicago Mercantile Exchange Holdings, Inc........................ 1,050 480,900 Wright Express Corp. (a).............. 18,200 560,377 ----------- 2,315,909 ----------- FOOD & BEVERAGE - 1.7% Flowers Foods, Inc.................... 18,675 524,581 ----------- <Caption> - --------------------------------------------------------------- COMMON STOCKS, CONTINUED - --------------------------------------------------------------- SHARES VALUE($) --------- ----------- HEALTH CARE - 9.5% Coventry Health Care, Inc. (a)........ 11,350 563,754 CYTYC Corp. (a)....................... 13,950 360,608 Hologic, Inc. (a)..................... 9,800 467,166 Laboratory Corp. of America Holdings (a).................................. 5,300 302,630 Psychiatric Solutions, Inc. (a)....... 2,250 74,385 ResMed, Inc. (a)...................... 11,950 515,642 Techne Corp. (a)...................... 1,350 76,491 VCA Antech, Inc. (a).................. 17,050 530,084 ----------- 2,890,760 ----------- INDUSTRIAL MANUFACTURING - 0.5% Ceradyne, Inc. (a).................... 2,750 145,750 ----------- INSURANCE - 5.8% AmerUs Group Co....................... 7,400 434,010 Proassurance Corp. (a)................ 8,050 405,559 StanCorp Financial Group, Inc......... 9,000 444,060 The PMI Group, Inc.................... 10,450 482,268 ----------- 1,765,897 ----------- LEISURE - 2.3% Penn National Gaming, Inc. (a)........ 16,975 691,222 ----------- METALS & MINING - 1.4% Phelps Dodge Corp..................... 5,100 439,569 ----------- OIL & GAS - 10.2% Chesapeake Energy Corp................ 12,400 392,832 Helmerich & Payne, Inc................ 7,900 574,645 Hugoton Royalty Trust................. 644 17,811 National-Oilwell, Inc. (a)............ 8,300 572,451 Noble Corp............................ 2,850 224,979 Oil States International, Inc. (a).... 6,150 248,276 Precision Drilling Trust.............. 10,350 367,839 Weatherford International Ltd. (a).... 4,709 249,247 XTO Energy, Inc....................... 10,808 457,719 ----------- 3,105,799 ----------- PHARMACEUTICALS - 2.4% Gilead Sciences, Inc. (a)............. 8,725 501,687 Nektar Therapeutics (a)............... 3,850 82,814 Vertex Pharmaceuticals, Inc. (a)...... 4,050 147,299 ----------- 731,800 ----------- REAL ESTATE - 4.2% American Home Mortgage Investment Corp................................. 10,350 359,352 Global Signal, Inc.................... 6,600 328,020 KKR Financial Corp.................... 27,155 586,548 ----------- 1,273,920 ----------- RESIDENTIAL BUILDING CONSTRUCTION - 2.4% KB Home, Inc.......................... 5,700 350,949 Pulte Homes, Inc...................... 10,400 388,440 ----------- 739,389 ----------- RETAIL - 6.8% Chico's FAS, Inc. (a)................. 5,500 203,830 Dick's Sporting Goods, Inc. (a)....... 10,825 456,274 GameStop Corp., Class A (a)........... 11,400 538,079 Jos. A. Bank Clothiers, Inc. (a)...... 10,187 427,854 Tractor Supply Co. (a)................ 6,800 440,572 ----------- 2,066,609 ----------- STORAGE/WAREHOUSING - 0.7% Mobile Mini, Inc. (a)................. 6,040 199,199 ----------- </Table> 27 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. - -------------------------------------------------------------------------------- HSBC INVESTOR MID-CAP FUND - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) <Table> <Caption> - --------------------------------------------------------------- COMMON STOCKS, CONTINUED - --------------------------------------------------------------- SHARES VALUE($) --------- ----------- TELECOMMUNICATIONS - 3.0% Comverse Technology, Inc. (a)......... 12,150 275,198 j2 Global Communications, Inc. (a).... 11,300 554,717 NII Holdings, Inc. Class B (a)........ 1,400 83,860 ----------- 913,775 ----------- TRANSPORTATION - 5.9% American Commercial Lines, Inc. (a)... 8,500 458,405 Old Dominion Freight Line, Inc. (a)... 21,387 688,660 Oshkosh Truck Corp.................... 10,600 648,720 ----------- 1,795,785 ----------- UTILITIES - 3.3% Aqua America, Inc..................... 12,500 298,750 Equitable Resources, Inc.............. 11,200 397,712 New Jersey Resources Corp............. 6,800 301,036 ----------- 997,498 ----------- TOTAL COMMON STOCKS (COST $23,159,077)................... 30,231,594 ----------- <Caption> - --------------------------------------------------------------- INVESTMENT COMPANIES -- 1.2% - --------------------------------------------------------------- SHARES VALUE($) --------- ----------- HSBC Investor Money Market Fund Class I Shares *..................... 128,744 128,744 MidCap S&P Depositary Receipt Trust Series 1............................. 1,600 234,352 ----------- TOTAL INVESTMENT COMPANIES (COST $346,214)...................... 363,096 ----------- TOTAL INVESTMENTS (COST $23,505,291) - 100.3%......... 30,594,690 ----------- ----------- </Table> - -------------- Percentages indicated are based on net assets of $30,497,877. (a) Represents non-income producing security. * Investment in affiliate. ADR -- American Depositary Receipt See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 28 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF ASSETS AND LIABILITIES -- APRIL 30, 2006 (UNAUDITED) <Table> <Caption> INTERMEDIATE DURATION CORE PLUS CORE PLUS NEW YORK HIGH YIELD FIXED INCOME FIXED INCOME FIXED INCOME TAX-FREE FIXED INCOME FUND FUND (ADVISOR) FUND BOND FUND FUND - --------------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments in Portfolio $20,409,425 $80,156,957 $17,588,341 -- $8,811,438 Investments, at value (non affiliated) -- -- -- $64,415,849 -- Interest and dividends receivable -- -- -- 895,791 -- Receivable for capital shares issued 500 -- 12,970 54,356 6,780 Receivable for investments sold -- -- -- 1,000,000 -- Receivable from Investment Adviser 35,412 45,723 25,154 -- 39,564 Prepaid expenses and other assets 10,417 5,892 4,655 8,806 12,312 ----------- ----------- ----------- ----------- ---------- TOTAL ASSETS 20,455,754 80,208,572 17,631,120 66,374,802 8,870,094 ----------- ----------- ----------- ----------- ---------- LIABILITIES: Dividends payable 81,321 336,992 66,485 175,359 50,969 Payable for capital shares redeemed 25,843 28,592 43,455 260,796 47,562 Accrued related party expenses and other liabilities: Investment management -- -- -- 13,657 -- Administration 1,244 4,498 720 5,228 267 Distribution 4,515 -- 6,562 10,685 1,025 Shareholder servicing 1,176 -- 3,633 10,371 1,241 Accounting -- -- -- 3,315 -- Compliance Service 56 111 38 100 23 Custodian -- -- -- 479 -- Transfer Agent 15,420 7,552 8,946 13,734 12,166 Trustee -- -- -- -- 25 Other 463 12,075 553 18,865 1,806 ----------- ----------- ----------- ----------- ---------- TOTAL LIABILITIES 130,038 389,820 130,392 512,589 115,084 ----------- ----------- ----------- ----------- ---------- NET ASSETS $20,325,716 $79,818,752 $17,500,728 $65,862,213 $8,755,010 ----------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- .................................................................................................................................. COMPOSITION OF NET ASSETS: Capital $21,300,366 $82,254,590 $18,685,874 $64,462,909 $8,597,892 Accumulated net investment income (loss) (962) 1,386,775 103,977 -- 450 Accumulated net realized gains (losses) from investments and foreign currency transactions (675,224) (2,652,788) (1,026,418) (2,521) 11,270 Unrealized appreciation/depreciation from investments and foreign currencies (298,464) (1,169,825) (262,705) 1,401,825 145,398 ----------- ----------- ----------- ----------- ---------- NET ASSETS $20,325,716 $79,818,752 $17,500,728 $65,862,213 $8,755,010 ----------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- .................................................................................................................................. NET ASSETS Class A Shares: $ 987,853 $ -- $12,117,659 $33,176,888 $4,402,266 Class B Shares: $ 4,166,985 $ -- $ 5,149,223 $15,314,618 $1,618,685 Class C Shares: $ 505,600 $ -- $ 233,846 $ 1,419,545 $ 139,314 Class I Shares: $14,665,278 $ -- $ -- $15,951,162 $2,594,745 Advisor Shares: $ -- $79,818,752 $ -- $ -- $ -- ----------- ----------- ----------- ----------- ---------- $20,325,716 $79,818,752 $17,500,728 $65,862,213 $8,755,010 ----------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- .................................................................................................................................. SHARES OUTSTANDING Class A Shares: 103,575 -- 1,199,774 3,020,341 431,468 Class B Shares: 436,106 -- 509,258 1,395,615 158,604 Class C Shares: 52,942 -- 23,166 128,874 13,619 Class I Shares: 1,535,609 -- -- 1,452,010 254,286 Advisor Shares: -- 8,033,841 -- -- -- .................................................................................................................................. NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE Class A Shares: $ 9.54 $ -- $ 10.10 $ 10.98 $ 10.20 Class B Shares:* $ 9.55 $ -- $ 10.11 $ 10.97 $ 10.21 Class C Shares:* $ 9.55 $ -- $ 10.09 $ 11.01 $ 10.23 Class I Shares: $ 9.55 $ -- $ -- $ 10.99 $ 10.20 Advisor Shares: $ -- $ 9.94 $ -- $ -- $ -- Maximum sales charge -- Class A Shares 4.75% -- 4.75% 4.75% 4.75% ----------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- Maximum Offering Price per share (Net Asset Value/(100%-maximum sales charge)) $ 10.02 $ -- $ 10.60 $ 11.53 $ 10.71 ----------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- Investments, at cost $63,014,024 ----------- ----------- </Table> - -------------- * Redemption Price per share varies by length of time shares are held. 29 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF ASSETS AND LIABILITIES -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) <Table> <Caption> GROWTH VALUE GROWTH AND MID-CAP INTERNATIONAL FUND FUND INCOME FUND FUND EQUITY FUND - --------------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments in Portfolio $39,743,088 $42,663,555 -- -- $261,289,157 Investments at value (non affiliated) -- -- $47,385,257 $30,465,946 -- Investment in affiliates at value -- -- 780,868 128,744 -- Cash -- -- -- 32,951 -- Interest and dividends receivable -- -- 31,932 3,810 -- Receivable for capital shares issued 13,518 12,248 4,000 4,510 -- Receivable from Investment Adviser 12,008 13,465 6,125 14,131 -- Reclaims receivable -- -- -- -- 174,891 Prepaid expenses and other assets 10,531 15,991 49,122 17,127 9,806 ----------- ----------- ----------- ----------- ------------ TOTAL ASSETS 39,779,145 42,705,259 48,257,304 30,667,219 261,473,854 ----------- ----------- ----------- ----------- ------------ LIABILITIES: Payable for investments purchased -- -- -- 93,408 -- Payable for capital shares redeemed 27,008 29,185 4,199 8,740 31,368 Accrued expenses and other liabilities: Investment management -- -- 23,925 18,829 -- Administration 1,221 1,283 10,255 4,854 18,460 Distribution 1,126 1,394 3,015 5,215 -- Shareholder servicing 5,064 5,348 1,281 2,224 -- Accounting -- -- 3,710 3,210 -- Compliance service 18 34 307 52 101 Custodian -- -- 8,258 11,689 -- Transfer Agent 14,874 16,674 13,374 18,534 6,591 Other 528 654 1,683 2,587 14,819 ----------- ----------- ----------- ----------- ------------ TOTAL LIABILITIES 49,839 54,572 70,007 169,342 71,339 ----------- ----------- ----------- ----------- ------------ NET ASSETS $39,729,306 $42,650,687 $48,187,297 $30,497,877 $261,402,515 ----------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- ----------- ------------ ................................................................................................................................... COMPOSITION OF NET ASSETS: Capital $32,410,692 $31,827,606 $48,690,600 $22,201,908 $179,344,520 Accumulated net investment income (loss) (33,939) 115,592 (21,187) 58,491 119,256 Accumulated net realized gains (losses) from investments and foreign currency transactions 1,917,292 1,722,902 (10,818,909) 1,148,079 9,082,392 Unrealized appreciation/depreciation from investments and foreign currencies 5,435,261 8,984,587 10,336,793 7,089,399 72,856,347 ----------- ----------- ----------- ----------- ------------ NET ASSETS $39,729,306 $42,650,687 $48,187,297 $30,497,877 $261,402,515 ----------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- ----------- ------------ ................................................................................................................................... NET ASSETS Class A Shares: $22,484,269 $23,865,840 $ 1,423,971 $ 2,505,254 $ -- Class B Shares: $ 1,457,002 $ 1,906,599 $ 4,683,455 $ 8,194,611 $ -- Class C Shares: $ 353,529 $ 340,750 $ 65,410 $ 128,870 $ -- Class I Shares: $15,434,506 $16,537,498 $42,014,461 $ -- $ -- Advisor Shares: $ -- $ -- $ -- $ -- $261,402,515 Trust Shares: $ -- $ -- $ -- $19,669,142 $ -- ----------- ----------- ----------- ----------- ------------ $39,729,306 $42,650,687 $48,187,297 $30,497,877 $261,402,515 ----------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- ----------- ------------ ................................................................................................................................... SHARES OUTSTANDING Class A Shares: 1,497,422 1,526,002 130,191 277,060 -- Class B Shares: 101,415 126,748 436,099 957,641 -- Class C Shares: 24,475 22,513 6,039 14,932 -- Class I Shares: 1,026,578 1,058,353 3,838,604 -- -- Advisor Shares: -- -- -- -- 12,261,561 Trust Shares: -- -- -- 1,965,695 -- ................................................................................................................................... NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE Class A Shares: $ 15.02 $ 15.64 $ 10.94 $ 9.04 $ -- Class B Shares:* $ 14.37 $ 15.04 $ 10.74 $ 8.56 $ -- Class C Shares:* $ 14.44 $ 15.14 $ 10.83 $ 8.63 $ -- Class I Shares: $ 15.03 $ 15.63 $ 10.95 $ -- $ -- Advisor Shares: $ -- $ -- $ -- $ -- $ 21.32 Trust Shares: $ -- $ -- $ -- $ 9.18 $ -- Maximum sales charge -- Class A Shares 5.00% 5.00% 5.00% 5.00% -- ----------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- ----------- ------------ Maximum Offering Price per share (Net Asset Value/(100%-maximum sales charge)) $ 15.81 $ 16.46 $ 11.52 $ 9.52 $ -- ----------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- ----------- ------------ Investments, at cost $37,829,332 $23,505,291 ----------- ----------- ----------- ----------- </Table> - -------------- * Redemption Price per share varies by length of time shares are held. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 30 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF ASSETS AND LIABILITIES -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) <Table> <Caption> OVERSEAS SMALL CAP OPPORTUNITY EQUITY FUND EQUITY FUND FUND - -------------------------------------------------------------------------------------------------------------- ASSETS: Investments in Portfolio $26,178,045 $198,995,436 $31,063,731 Receivable for capital shares issued 10,232 -- 6,103 Receivable from Investment Adviser -- -- 5,396 Tax reclaims receivable 32,773 -- -- Prepaid expenses and other assets 8,879 8,778 6,031 ----------- ------------ ----------- TOTAL ASSETS 26,229,929 199,004,214 31,081,261 ----------- ------------ ----------- LIABILITIES: Payable for capital shares redeemed 5,690 17,405 4,254 Administration 913 8,830 1,159 Distribution 2,329 -- 2,525 Shareholder services 5,272 -- 6,321 Compliance Service 18 155 21 Transfer agent 11,002 8,313 14,816 Printing 659 34,418 801 Other 493 4,040 630 ----------- ------------ ----------- TOTAL LIABILITIES 26,376 73,161 30,527 ----------- ------------ ----------- NET ASSETS $26,203,553 $198,931,053 $31,050,734 ----------- ------------ ----------- ----------- ------------ ----------- ............................................................................................................... COMPOSITION OF NET ASSETS: Capital $16,514,054 $134,427,806 $22,378,978 Accumulated net investment income (loss) (78,120) (455,373) (170,067) Accumulated net realized gains (losses) from investments, and foreign currency transactions 1,143,710 17,454,527 2,215,465 Unrealized appreciation/depreciation from investments, and foreign currencies 8,623,909 47,504,093 6,626,358 ----------- ------------ ----------- NET ASSETS $26,203,553 $198,931,053 $31,050,734 ----------- ------------ ----------- ----------- ------------ ----------- ............................................................................................................... NET ASSETS Class A Shares: $22,767,315 $ -- $25,527,758 Class B Shares: $ 3,224,725 $ -- 5,168,769 Class C Shares: $ 211,513 $ -- 354,207 Advisor Shares: -- 198,931,053 -- ----------- ------------ ----------- $26,203,553 $198,931,053 $31,050,734 ----------- ------------ ----------- ----------- ------------ ----------- ............................................................................................................... SHARES OUTSTANDING Class A Shares: 1,246,865 -- 1,757,878 Class B Shares: 184,255 -- 382,306 Class C Shares: 11,845 -- 25,955 Advisor Shares: -- 11,359,091 -- ----------- ------------ ----------- ............................................................................................................... NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE Class A Shares: $ 18.26 $ -- $ 14.52 Class B Shares:* $ 17.50 $ -- $ 13.52 Class C Shares:* $ 17.86 $ -- $ 13.65 Advisor Shares: $ -- $ 17.51 $ -- Maximum sales charge -- Class A Shares 5.00% -- 5.00% ----------- ------------ ----------- ----------- ------------ ----------- Maximum Offering Price per share (Net Asset Value/(100%-maximum sales charge)) $ 19.22 $ -- $ 15.28 ----------- ------------ ----------- ----------- ------------ ----------- </Table> - -------------- * Redemption Price per share varies by length of time shares are held. 31 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) <Table> <Caption> INTERMEDIATE CORE PLUS DURATION FIXED INCOME CORE PLUS NEW YORK HIGH YIELD FIXED INCOME FUND FIXED INCOME TAX-FREE FIXED INCOME FUND (ADVISOR) FUND BOND FUND FUND (B) - --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Interest $ -- $ -- $ -- $ 1,388,727 $ -- Dividends -- -- -- 22,344 -- Investment income from Portfolio 620,070 2,271,952 537,293 -- 258,735 Expenses from Portfolio (93,369) (262,034) (61,946) -- (61,301) ----------- ----------- ----------- ----------- ----------- TOTAL INVESTMENT INCOME 526,701 2,009,918 475,347 1,411,071 197,434 ----------- ----------- ----------- ----------- ----------- .................................................................................................................................. EXPENSES: Investment management -- -- -- 84,333 -- Administration 4,527 15,592 3,685 25,299 1,254 Distribution: Class B Shares 16,799 -- 21,383 58,843 2,859 Class C Shares 1,928 -- 994 6,013 315 Shareholder servicing: Class A Shares 1,279 -- 17,108 42,559 4,680 Class B Shares 5,600 -- 7,128 19,614 953 Class C Shares 643 -- 331 2,004 105 Accounting 14,341 4,464 13,389 37,479 13,399 Compliance service 218 638 167 6,406 64 Custodian -- -- -- 11,826 -- Registration 2,611 4,220 2,610 1,835 436 Printing 5,344 14,868 4,247 12,201 1,538 Transfer agent 33,336 14,273 31,968 36,808 31,118 Trustee 344 1,003 266 1,557 96 Other 2,146 6,940 1,729 9,296 522 ----------- ----------- ----------- ----------- ----------- Total expenses before fee reductions 89,116 61,998 105,005 356,073 57,339 Fees reduced by Investment Adviser (70,003) (46,498) (59,002) -- (91,121) ----------- ----------- ----------- ----------- ----------- NET EXPENSES 19,113 15,500 46,003 356,073 (33,782) ----------- ----------- ----------- ----------- ----------- .................................................................................................................................. NET INVESTMENT INCOME 507,588 1,994,418 429,344 1,054,998 231,216 ----------- ----------- ----------- ----------- ----------- .................................................................................................................................. NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND FOREIGN CURRENCIES: (A) Net realized gains (losses) from investments and foreign currency transactions (371,470) (1,224,590) (304,654) (2,521) 11,270 Change in unrealized appreciation/depreciation from investments and foreign currencies 90,960 (11,967) 53,865 (443,430) 145,398 ----------- ----------- ----------- ----------- ----------- .................................................................................................................................. Net realized/unrealized gains from investments and foreign currency transactions (280,510) (1,236,557) (250,789) (445,951) 156,668 ----------- ----------- ----------- ----------- ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 227,078 $ 757,861 $ 178,555 $ 609,047 $ 387,884 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- </Table> - -------------- (a) With the exception of New York Tax-Free Bond Fund, represents amounts allocated from the respective Master Portfolios. (b) High Yield Fixed Income Fund commenced operations on November 18, 2005. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 32 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) (CONTINUED) <Table> <Caption> GROWTH AND INTERNATIONAL GROWTH VALUE INCOME MID-CAP EQUITY FUND FUND FUND FUND FUND - --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $ -- $ -- $ 278,093 $ 295,665 $ -- Dividends from affiliated investments -- -- 11,010 8,729 -- Income from securities lending -- -- 106 1,800 -- Investment income from Portfolio 188,001 409,650 -- -- 2,349,524 Tax reclaims -- -- -- -- 13,101 Foreign tax withholding from Portfolio -- -- -- -- (182,261) Expenses from Portfolio (134,705) (149,348) -- -- (941,293) ----------- ----------- ----------- ---------- ----------- TOTAL INVESTMENT INCOME (LOSS) 53,296 260,302 289,209 306,194 1,239,071 ----------- ----------- ----------- ---------- ----------- ................................................................................................................................. EXPENSES: Investment management -- -- 145,736 110,467 -- Administration 7,289 7,768 18,216 11,046 41,213 Distribution: Class B Shares 5,231 6,937 16,850 29,177 -- Class C Shares 1,326 1,311 234 444 -- Shareholder servicing: Class A Shares 28,460 29,832 1,714 2,890 -- Class B Shares 1,744 2,312 5,617 9,726 -- Class C Shares 442 437 78 148 -- Accounting 17,852 17,852 32,678 32,104 4,463 Compliance service 261 290 869 405 1,408 Custodian -- -- 18,289 17,575 -- Interest -- -- 372 60 -- Printing 6,375 7,188 11,235 5,117 34,547 Transfer agent 47,363 47,822 35,630 46,752 16,144 Trustee 406 453 1,462 657 2,206 Other 7,491 7,834 20,825 7,935 19,342 ----------- ----------- ----------- ---------- ----------- Total expenses before fee reductions 124,240 130,036 309,805 274,503 119,323 Fees reduced by Investment Adviser (see note 3) (37,005) (41,705) (24,957) (26,800) -- ----------- ----------- ----------- ---------- ----------- NET EXPENSES 87,235 88,331 284,848 247,703 119,323 ----------- ----------- ----------- ---------- ----------- ................................................................................................................................. NET INVESTMENT INCOME (LOSS) (33,939) 171,971 4,361 58,491 1,119,748 ----------- ----------- ----------- ---------- ----------- ................................................................................................................................. NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND FOREIGN CURRENCIES: (A) Net realized gains (losses) from investments and foreign currency transactions 2,072,347 1,509,780 2,915,091 1,164,071 9,296,575 Change in unrealized appreciation/deprciation from investments and foreign currencies 926,809 3,547,709 2,805,379 3,098,376 44,438,050 ----------- ----------- ----------- ---------- ----------- ................................................................................................................................. Net realized/unrealized gains from investments and foreign currency transactions 2,999,156 5,057,489 5,720,470 4,262,447 53,734,625 ----------- ----------- ----------- ---------- ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,965,217 $ 5,229,460 $ 5,724,831 $4,320,938 $54,854,373 ----------- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ----------- </Table> - -------------- (a) With the exception of Growth and Income Fund and Mid-Cap Fund, represents amounts allocated from the respective Master Portfolios. 33 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, 2006 (UNAUDITED) (CONTINUED) <Table> <Caption> OVERSEAS SMALL CAP EQUITY EQUITY OPPORTUNITY FUND FUND FUND - -------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Investment income from Portfolio 257,104 503,421 79,466 Tax reclaims 553 -- -- Foreign tax withholding from Portfolio (19,438) -- -- Expenses from Portfolio (105,617) (851,746) (134,551) ----------- ----------- ----------- TOTAL INVESTMENT INCOME 132,602 (348,325) (55,085) ----------- ----------- ----------- .................................................................................................. EXPENSES: Administration 4,616 35,226 5,558 Distribution: Class B Shares 10,257 -- 18,396 Class C Shares 695 -- 1,253 Shareholder servicing: Class A Shares 27,121 -- 30,503 Class B Shares 3,419 -- 6,132 Class C Shares 232 -- 418 Accounting 13,389 4,463 13,389 Compliance service 170 1,306 203 Registration 5,529 4,865 3,789 Printing 4,138 28,410 4,976 Transfer agent 35,286 17,332 44,453 Trustee 266 2,047 319 Other 1,698 13,399 2,022 ----------- ----------- ----------- Total expenses before fee reductions 106,816 107,048 131,411 Fees reduced by Investment Adviser -- -- (16,429) ----------- ----------- ----------- NET EXPENSES 106,816 107,048 114,982 ----------- ----------- ----------- .................................................................................................. NET INVESTMENT INCOME (LOSS) 25,786 (455,373) (170,067) ----------- ----------- ----------- .................................................................................................. NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND FOREIGN CURRENCIES: Net realized gains (losses) from investments and foreign currency transactions 1,157,445 18,320,005 2,320,623 Change in unrealized appreciation/depreciation from investments and foreign currencies 4,877,374 17,942,570 3,403,784 ----------- ----------- ----------- .................................................................................................. Net realized/unrealized gains from investments and foreign currency transactions 6,034,819 36,262,575 5,724,407 ----------- ----------- ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 6,060,605 $35,807,202 $ 5,554,340 ----------- ----------- ----------- ----------- ----------- ----------- </Table> See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 34 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS <Table> <Caption> INTERMEDIATE DURATION CORE PLUS FIXED INCOME FUND FIXED INCOME FUND (ADVISOR) ------------------------------------------------------------------------------------------------ FOR THE FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE APRIL 30, 2006 YEAR ENDED APRIL 30, 2006 YEAR ENDED (UNAUDITED) OCTOBER 31, 2005 (UNAUDITED) OCTOBER 31, 2005 - --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 507,588 $ 1,217,650 $ 1,994,418 $ 4,410,508 Net realized gains (losses) from investments and foreign currency transactions (371,470) (164,652) (1,224,590) 5,419,977 Change in unrealized appreciation/depreciation from investments and foreign currencies 90,960 (909,347) (11,967) (7,924,615) ----------- ----------- ------------ ------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 227,078 143,651 757,861 1,905,870 ----------- ----------- ------------ ------------ ............................................................................................................................... DIVIDENDS: NET INVESTMENT INCOME: Class A Shares (22,252) (46,585) -- -- Class B Shares (80,330) (167,671) -- -- Class C Shares (9,230) (17,702) -- -- Class I Shares (411,420) (1,107,840) -- -- Advisor Shares -- -- (2,008,514) (4,620,609) NET REALIZED GAINS: Class A Shares -- (8,294) -- -- Class B Shares -- (34,076) -- -- Class C Shares -- (3,623) -- -- Class I Shares -- (168,256) -- -- Advisor Shares -- -- (3,712,469) ----------- ----------- ------------ ------------ CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (523,232) (1,554,047) (5,720,983) (4,620,609) ----------- ----------- ------------ ------------ CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS (10,556,938) (7,184,938) (4,961,563) (17,060,133) ----------- ----------- ------------ ------------ CHANGE IN NET ASSETS (10,853,092) (8,595,334) (9,924,685) (19,774,872) ............................................................................................................................... NET ASSETS: Beginning of period 31,178,808 39,774,142 89,743,437 109,518,309 ----------- ----------- ------------ ------------ End of period $20,325,716 $31,178,808 $ 79,818,752 $ 89,743,437 ----------- ----------- ------------ ------------ ----------- ----------- ------------ ------------ Accumulated net investment income (loss) $ (962) $ 14,682 $ 1,386,775 $ 1,400,871 ----------- ----------- ------------ ------------ ----------- ----------- ------------ ------------ </Table> 35 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) <Table> <Caption> INTERMEDIATE DURATION CORE PLUS FIXED INCOME FUND FIXED INCOME FUND (ADVISOR) - --------------------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE APRIL 30, 2006 YEAR ENDED APRIL 30, 2006 YEAR ENDED (UNAUDITED) OCTOBER 31, 2005 (UNAUDITED) OCTOBER 31, 2005 - --------------------------------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A SHARES: Proceeds from shares issued $ 7,199 $ 34,242 $ -- $ -- Dividends reinvested 17,838 50,200 -- -- Cost of shares redeemed (78,322) (535,335) -- -- ------------ ------------ ------------ ------------ Class A Shares capital transactions (53,285) (450,893) -- -- ------------ ------------ ------------ ------------ ............................................................................................................................... CLASS B SHARES: Proceeds from shares issued 46,953 321,814 -- -- Dividends reinvested 58,793 167,106 -- -- Cost of shares redeemed (731,034) (1,732,661) -- -- ------------ ------------ ------------ ------------ Class B Shares capital transactions (625,288) (1,243,741) -- -- ------------ ------------ ------------ ------------ ............................................................................................................................... CLASS C SHARES: Proceeds from shares issued 900 73,800 -- -- Dividends reinvested 8,128 20,896 -- -- Cost of shares redeemed (23,791) (222,961) -- -- ------------ ------------ ------------ ------------ Class C Shares capital transactions (14,763) (128,265) -- -- ------------ ------------ ------------ ------------ ............................................................................................................................... CLASS I SHARES: Proceeds from shares issued 525,544 3,589,138 -- -- Dividends reinvested 293,804 949,314 -- -- Cost of shares redeemed (10,682,950) (9,900,491) -- -- ------------ ------------ ------------ ------------ Class I Shares capital transactions (9,863,602) (5,362,039) -- -- ------------ ------------ ------------ ------------ ............................................................................................................................... ADVISOR SHARES: Proceeds from shares issued -- -- 12,970,059 19,120,519 Dividends reinvested -- -- 3,770,788 2,839,680 Cost of shares redeemed -- -- (21,702,410) (39,020,332) ------------ ------------ ------------ ------------ Advisor Shares capital transactions -- -- (4,961,563) (17,060,133) ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $(10,556,938) $ (7,184,938) $ (4,961,563) $(17,060,133) ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ............................................................................................................................... SHARE TRANSACTIONS: CLASS A SHARES: Issued 747 3,469 -- -- Reinvested 1,849 5,075 -- -- Redeemed (8,153) (54,165) -- -- ------------ ------------ ------------ ------------ Change in Class A Shares (5,557) (45,621) -- -- ------------ ------------ ------------ ------------ ............................................................................................................................... CLASS B SHARES: Issued 4,881 32,423 -- -- Reinvested 6,085 16,867 -- -- Redeemed (75,737) (175,199) -- -- ------------ ------------ ------------ ------------ Change in Class B Shares (64,771) (125,909) -- -- ------------ ------------ ------------ ------------ ............................................................................................................................... CLASS C SHARES: Issued 93 7,375 -- -- Reinvested 842 2,111 -- -- Redeemed (2,465) (22,459) -- -- ------------ ------------ ------------ ------------ Change in Class C Shares (1,530) (12,973) -- -- ------------ ------------ ------------ ------------ ............................................................................................................................... CLASS I SHARES: Issued 54,287 362,553 -- -- Reinvested 30,405 95,902 -- -- Redeemed (1,104,817) (1,000,441) -- -- ------------ ------------ ------------ ------------ Change in Class I Shares (1,020,125) (541,986) -- -- ------------ ------------ ------------ ------------ ............................................................................................................................... ADVISOR SHARES: Issued -- -- 1,277,241 1,776,405 Reinvested -- -- 371,977 264,105 Redeemed -- -- (2,124,536) (3,627,137) ------------ ------------ ------------ ------------ Change in Advisor Shares -- -- (475,318) (1,586,627) ------------ ------------ ------------ ------------ </Table> See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 36 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) <Table> <Caption> CORE PLUS FIXED INCOME FUND NEW YORK TAX-FREE BOND FUND --------------------------------- --------------------------------------------- FOR THE FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE APRIL 30, 2006 YEAR ENDED APRIL 30, 2006 YEAR ENDED (UNAUDITED) OCTOBER 31, 2005 (UNAUDITED) OCTOBER 31, 2005 - --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 429,344 $ 917,047 $ 1,054,998 $ 2,050,916 Net realized gains (losses) from investments and foreign currency transactions (304,654) 357,536 (2,521) 100,731 Change in unrealized appreciation/depreciation from investments and foreign currencies 53,865 (1,010,611) (443,430) (1,531,859) ----------- ----------- ----------- ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 178,555 263,972 609,047 619,788 ----------- ----------- ----------- ----------- .............................................................................................................................. DIVIDENDS: NET INVESTMENT INCOME: Class A Shares (317,894) (736,448) (554,966) (1,025,066) Class B Shares (110,989) (217,164) (197,222) (381,218) Class C Shares (5,171) (12,298) (20,047) (46,591) Class I Shares -- -- (282,763) (598,043) NET REALIZED GAINS: Class A Shares (73,046) -- (50,865) (52,912) Class B Shares (29,922) -- (23,139) (26,947) Class C Shares (1,351) -- (2,487) (3,247) Class I (Adviser) Shares -- -- (24,240) (30,806) ----------- ----------- ----------- ----------- CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (538,373) (965,910) (1,155,729) (2,164,830) ----------- ----------- ----------- ----------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS (6,237,912) 158,293 (3,052,984) (1,586,390) ----------- ----------- ----------- ----------- CHANGE IN NET ASSETS (6,597,730) (543,645) (3,599,666) (3,131,432) .............................................................................................................................. NET ASSETS: Beginning of period 24,098,458 24,642,103 69,461,879 72,593,311 ----------- ----------- ----------- ----------- End of period $17,500,728 $24,098,458 $65,862,213 $69,461,879 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Accumulated net investment income (loss) $ 103,977 $ 108,687 $ -- $ -- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- </Table> 37 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) <Table> <Caption> CORE PLUS FIXED NEW YORK TAX-FREE INCOME FUND BOND FUND - --------------------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE APRIL 30, 2006 YEAR ENDED APRIL 30, 2006 YEAR ENDED (UNAUDITED) OCTOBER 31, 2005 (UNAUDITED) OCTOBER 31, 2005 - --------------------------------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A SHARES: Proceeds from shares issued $ 1,114,368 $ 5,377,389 $ 5,115,087 $11,178,427 Dividends reinvested 350,787 686,992 512,427 997,193 Cost of shares redeemed (6,747,374) (5,153,657) (6,613,976) (9,874,970) ----------- ----------- ----------- ----------- Class A Shares capital transactions (5,282,219) 910,724 (986,462) 2,300,650 ----------- ----------- ----------- ----------- ................................................................................................................................ CLASS B SHARES: Proceeds from shares issued 65,007 276,141 531,771 1,160,530 Dividends reinvested 113,538 182,474 152,792 300,525 Cost of shares redeemed (1,088,598) (1,128,034) (1,498,855) (2,294,196) ----------- ----------- ----------- ----------- Class B Shares capital transactions (910,053) (669,419) (814,292) (833,141) ----------- ----------- ----------- ----------- ................................................................................................................................ CLASS C SHARES: Proceeds from shares issued 5 41,252 2,333 168,099 Dividends reinvested 6,027 12,108 13,121 31,499 Cost of shares redeemed (51,672) (136,372) (366,944) (712,746) ----------- ----------- ----------- ----------- Class C Shares capital transactions (45,640) (83,012) (351,490) (513,148) ----------- ----------- ----------- ----------- ................................................................................................................................ CLASS I SHARES: Proceeds from shares issued -- -- 883,457 3,878,812 Dividends reinvested -- -- 24,996 88,333 Cost of shares redeemed -- -- (1,809,193) (6,507,896) ----------- ----------- ----------- ----------- Class I Shares capital transactions -- -- (900,740) (2,540,751) ----------- ----------- ----------- ----------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $(6,237,912) $ 158,293 $(3,052,984) $(1,586,390) ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ................................................................................................................................ SHARE TRANSACTIONS: CLASS A SHARES: Issued 108,454 510,841 461,402 994,246 Reinvested 34,152 65,729 46,168 88,791 Redeemed (655,716) (491,249) (596,318) (879,250) ----------- ----------- ----------- ----------- Change in Class A Shares (513,110) 85,321 (88,748) 203,787 ----------- ----------- ----------- ----------- ................................................................................................................................ CLASS B SHARES: Issued 6,347 26,263 47,962 103,036 Reinvested 11,046 17,068 13,779 26,746 Redeemed (106,156) (107,440) (135,230) (204,345) ----------- ----------- ----------- ----------- Change in Class B Shares (88,763) (64,109) (73,489) (74,563) ----------- ----------- ----------- ----------- ................................................................................................................................ CLASS C SHARES: Issued -- 3,914 210 14,856 Reinvested 588 1,153 1,179 2,794 Redeemed (5,069) (13,005) (32,948) (63,317) ----------- ----------- ----------- ----------- Change in Class C Shares (4,481) (7,938) (31,559) (45,667) ----------- ----------- ----------- ----------- ................................................................................................................................ CLASS I SHARES: Issued -- -- 79,871 345,617 Reinvested -- -- 2,252 7,844 Redeemed -- -- (162,779) (579,080) ----------- ----------- ----------- ----------- Change in Class I Shares -- -- (80,656) (225,619) ----------- ----------- ----------- ----------- </Table> See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 38 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) <Table> <Caption> HIGH YIELD FIXED INCOME FUND - ------------------------------------------------------------------------------------------- FOR THE PERIOD ENDED APRIL 30, 2006* (UNAUDITED) - ------------------------------------------------------------------ INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 231,216 Net realized gains (losses) from investment transactions 11,270 Change in unrealized appreciation/depreciation from investments 145,398 ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 387,884 ----------- ................................................................... DIVIDENDS: NET INVESTMENT INCOME: Class A Shares (128,995) Class B Shares (24,064) Class C Shares (2,701) Class I Shares (75,006) ----------- CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (230,766) ----------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 8,597,892 ----------- CHANGE IN NET ASSETS 8,755,010 ................................................................... NET ASSETS: Beginning of period -- ----------- End of period $ 8,755,010 ----------- ----------- Accumulated net investment income (loss) $ 450 ----------- ----------- </Table> - -------------- * The High Yield Fixed Income Fund commenced operation on November 18, 2005. 39 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) <Table> <Caption> HIGH YIELD FIXED INCOME FUND - ------------------------------------------------------------------------------------------- FOR THE PERIOD ENDED APRIL 30, 2006* (UNAUDITED) - -------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A SHARES: Proceeds from shares issued $4,760,670 Dividends reinvested 97,961 Cost of shares redeemed (542,661) ---------- Class A Shares capital transactions 4,315,970 ---------- .................................................................... CLASS B SHARES: Proceeds from shares issued 1,629,211 Dividends reinvested 12,189 Cost of shares redeemed (43,659) ---------- Class B Shares capital transactions 1,597,741 ---------- .................................................................... CLASS C SHARES: Proceeds from shares issued 135,136 Dividends reinvested 1,918 Cost of shares redeemed (110) ---------- Class C Shares capital transactions 136,944 ---------- .................................................................... CLASS I SHARES: Proceeds from shares issued 2,602,052 Dividends reinvested 58,869 Cost of shares redeemed (113,684) ---------- Class I Shares capital transactions 2,547,237 ---------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $8,597,892 ---------- ---------- .................................................................... SHARE TRANSACTIONS: CLASS A SHARES: Issued 475,584 Reinvested 9,691 Redeemed (53,807) ---------- Change in Class A Shares 431,468 ---------- .................................................................... CLASS B SHARES: Issued 161,682 Reinvested 1,202 Redeemed (4,280) ---------- Change in Class B Shares 158,604 ---------- .................................................................... CLASS C SHARES: Issued 13,440 Reinvested 189 Redeemed (10) ---------- Change in Class C Shares 13,619 ---------- .................................................................... CLASS I SHARES: Issued 259,690 Reinvested 5,824 Redeemed (11,228) ---------- Change in Class I Shares 254,286 ---------- </Table> - -------------- * The High Yield Fixed Income Fund commenced operations on November 18, 2005. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 40 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) <Table> <Caption> GROWTH FUND VALUE FUND - --------------------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE APRIL 30, 2006 PERIOD ENDED APRIL 30, 2006 PERIOD ENDED (UNAUDITED) OCTOBER 31, 2005 (UNAUDITED) OCTOBER 31, 2005 - --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ (33,939) $ 133,116 $ 171,971 $ 360,402 Net realized gains (losses) from investment transactions 2,072,347 1,569,705 1,509,780 3,260,840 Change in unrealized appreciation/depreciation from investments 926,809 3,355,369 3,547,709 3,423,080 ----------- ----------- ------------ ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 2,965,217 5,058,190 5,229,460 7,044,322 ----------- ----------- ------------ ----------- ............................................................................................................................... DIVIDENDS: NET INVESTMENT INCOME: Class A Shares -- (71,973) (196,078) (125,206) Class B Shares -- -- (8,412) -- Class C Shares -- -- (1,160) (294) Class I Shares -- (120,143) (145,642) (201,076) NET REALIZED GAINS: Class A Shares (357,021) -- (1,923,289) (208,943) Class B Shares (22,246) -- (154,501) (18,614) Class C Shares (5,635) -- (29,129) (3,904) Class I (Adviser) Shares (219,862) -- (1,220,351) (241,526) ----------- ----------- ------------ ----------- CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (604,764) (192,116) (3,678,562) (799,563) ----------- ----------- ------------ ----------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 734,659 (6,429,843) 585,877 (14,599,343) ----------- ----------- ------------ ----------- CHANGE IN NET ASSETS 3,095,112 (1,563,769) 2,136,775 (8,354,584) ............................................................................................................................... NET ASSETS: Beginning of period 36,634,194 38,197,963 40,513,912 48,868,496 ----------- ----------- ------------ ----------- End of period $39,729,306 $36,634,194 $ 42,650,687 $40,513,912 ----------- ----------- ------------ ----------- ----------- ----------- ------------ ----------- Accumulated net investment income (loss) $ (33,939) $ -- $ 115,592 $ 294,913 ----------- ----------- ------------ ----------- ----------- ----------- ------------ ----------- </Table> 41 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 FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE APRIL 30, 2006 YEAR ENDED APRIL 30, 2006 YEAR ENDED (UNAUDITED) OCTOBER 31, 2005 (UNAUDITED) OCTOBER 31, 2005 - --------------------------------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A SHARES: Proceeds from shares issued $ 2,600,663 $ 7,190,005 $ 2,027,415 $ 6,244,508 Dividends reinvested 354,352 71,637 2,100,501 332,959 Cost of shares redeemed (3,734,174) (5,124,260) (4,456,278) (6,994,075) ------------ ----------- ------------ ------------ Class A Shares capital transactions (779,159) 2,137,382 (328,362) (416,608) ------------ ----------- ------------ ------------ ............................................................................................................................... CLASS B SHARES: Proceeds from shares issued 127,506 179,753 67,266 221,506 Dividends reinvested 21,697 -- 158,602 18,074 Cost of shares redeemed (86,417) (421,388) (147,430) (645,696) ------------ ----------- ------------ ------------ Class B Shares capital transactions 62,786 (241,635) 78,438 (406,116) ------------ ----------- ------------ ------------ ............................................................................................................................... CLASS C SHARES: Proceeds from shares issued 3 1,916 51 1,918 Dividends reinvested 5,623 -- 30,205 4,190 Cost of shares redeemed (16,206) (4,610) (92,266) (66,676) ------------ ----------- ------------ ------------ Class C Shares capital transactions (10,580) (2,694) (62,010) (60,568) ------------ ----------- ------------ ------------ ............................................................................................................................... CLASS I SHARES: Proceeds from shares issued 2,696,507 3,674,487 1,579,973 3,422,732 Dividends reinvested 213,190 95,917 1,291,214 388,870 Cost of shares redeemed (1,448,085) (12,093,300) (1,973,376) (17,527,653) ------------ ----------- ------------ ------------ Class I Shares capital transactions 1,461,612 (8,322,896) 897,811 (13,716,051) ------------ ----------- ------------ ------------ CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 734,659 $(6,429,843) $ 585,877 $(14,599,343) ------------ ----------- ------------ ------------ ------------ ----------- ------------ ------------ ............................................................................................................................... SHARE TRANSACTIONS: CLASS A SHARES: Issued 173,607 543,733 132,690 432,340 Reinvested 24,254 5,380 143,673 23,041 Redeemed (249,263) (385,043) (290,845) (479,115) ------------ ----------- ------------ ------------ Change in Class A Shares (51,402) 164,070 (14,482) (23,734) ------------ ----------- ------------ ------------ ............................................................................................................................... CLASS B SHARES: Issued 8,881 13,881 4,565 15,903 Reinvested 1,549 -- 11,256 1,182 Redeemed (6,068) (32,632) (10,066) (45,745) ------------ ----------- ------------ ------------ Change in Class B Shares 4,362 (18,751) 5,755 (28,660) ------------ ----------- ------------ ------------ ............................................................................................................................... CLASS C SHARES: Issued -- 169 3 131 Reinvested 399 -- 2,131 299 Redeemed (1,113) (357) (6,077) (4,608) ------------ ----------- ------------ ------------ Change in Class C Shares (714) (188) (3,943) (4,178) ------------ ----------- ------------ ------------ ............................................................................................................................... CLASS I SHARES: Issued 180,058 278,002 102,980 237,945 Reinvested 14,592 7,226 88,500 26,943 Redeemed (96,457) (880,050) (127,731) (1,184,279) ------------ ----------- ------------ ------------ Change in Class I Shares 98,193 (594,822) 63,749 (919,391) ------------ ----------- ------------ ------------ </Table> See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 42 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) <Table> <Caption> GROWTH AND INCOME FUND MID-CAP FUND - --------------------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE APRIL 30, 2006 YEAR ENDED APRIL 30, 2006 YEAR ENDED (UNAUDITED) OCTOBER 31, 2005 (UNAUDITED) OCTOBER 31, 2005 - --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 4,361 $ 1,924,523 $ 58,491 $ (258,037) Net realized gains (losses) from investment transactions 2,915,091 42,217,628 1,164,071 30,598,634 Change in unrealized appreciation/depreciation from investments 2,805,379 (22,761,234) 3,098,376 (13,661,163) ----------- ------------- ----------- ------------- ................................................................................................................................ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 5,724,831 21,380,917 4,320,938 16,679,434 ----------- ------------- ----------- ------------- ................................................................................................................................ DIVIDENDS: NET INVESTMENT INCOME: Class A Shares -- (13,734) -- -- Class B Shares -- (14,001) -- -- Class C Shares -- (192) -- -- Class I Shares (25,548) (2,477,542) -- -- ................................................................................................................................ NET REALIZED GAINS: Class A Shares -- -- (464,228) -- Class B Shares -- -- (1,688,238) -- Class C Shares -- -- (25,282) -- Trust Shares -- -- (4,269,467) -- ----------- ------------- ----------- ------------- CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (25,548) (2,505,469) (6,447,215) -- ----------- ------------- ----------- ------------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS (9,902,640) (168,065,613) 3,329,720 (113,747,380) ----------- ------------- ----------- ------------- CHANGE IN NET ASSETS (4,203,357) (149,190,165) 1,203,443 (97,067,946) ................................................................................................................................ NET ASSETS: Beginning of period 52,390,654 201,580,819 29,294,434 126,362,380 ----------- ------------- ----------- ------------- End of period $48,187,297 $ 52,390,654 $30,497,877 $ 29,294,434 ----------- ------------- ----------- ------------- ----------- ------------- ----------- ------------- Accumulated net investment income (loss) $ (21,187) $ -- $ 58,491 $ -- ----------- ------------- ----------- ------------- ----------- ------------- ----------- ------------- </Table> 43 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 FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE APRIL 30, 2006 YEAR ENDED APRIL 30, 2006 YEAR ENDED (UNAUDITED) OCTOBER 31, 2005 (UNAUDITED) OCTOBER 31, 2005 - --------------------------------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A SHARES: Proceeds from shares issued $ 70,082 $ 137,722 $ 215,891 $ 364,447 Dividends reinvested -- 13,438 455,929 -- Cost of shares redeemed (59,980) (534,595) (188,286) (405,751) ----------- ------------- ----------- ------------- Class A Shares capital transactions 10,102 (383,435) 483,534 (41,304) ----------- ------------- ----------- ------------- ................................................................................................................................. CLASS B SHARES: Proceeds from shares issued 319,142 527,760 326,069 496,846 Dividends reinvested -- 13,755 1,661,260 -- Cost of shares redeemed (321,793) (592,341) (630,325) (1,227,997) ----------- ------------- ----------- ------------- Class B Shares capital transactions (2,651) (50,826) 1,357,004 (731,151) ----------- ------------- ----------- ------------- ................................................................................................................................. CLASS C SHARES: Proceeds from shares issued 19,350 2,599 3,002 1,800 Dividends reinvested -- 183 25,282 -- Cost of shares redeemed (9,318) (20) (1,455) 25 ----------- ------------- ----------- ------------- Class C Shares capital transactions 10,032 2,762 26,829 1,775 ----------- ------------- ----------- ------------- ................................................................................................................................. CLASS I SHARES: Proceeds from shares issued 3,008,702 8,479,032 -- -- Dividends reinvested 1,654 622,998 -- -- Cost of shares redeemed (12,930,479) (131,458,444) -- -- Redemption In-Kind -- (45,277,700) -- -- ----------- ------------- ----------- ------------- Class I Shares capital transactions (9,920,123) (167,634,114) -- -- ----------- ------------- ----------- ------------- ................................................................................................................................. TRUST SHARES: Proceeds from shares issued -- -- 1,485,350 5,350,460 Dividends reinvested -- -- 1,566,969 -- Cost of shares redeemed -- -- (1,589,966) (69,769,880) Redemption In-Kind -- -- -- (48,557,280) ----------- ------------- ----------- ------------- Trust Shares capital transactions -- -- 1,462,353 (112,976,700) ----------- ------------- ----------- ------------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $(9,902,640) $(168,065,613) $ 3,329,720 $(113,747,380) ----------- ------------- ----------- ------------- ----------- ------------- ----------- ------------- ................................................................................................................................. SHARE TRANSACTIONS: CLASS A SHARES: Issued 6,573 14,916 24,323 38,102 Reinvested -- 1,443 54,997 -- Redeemed (5,571) (58,381) (20,087) (42,829) ----------- ------------- ----------- ------------- Change in Class A Shares 1,002 (42,022) 59,233 (4,727) ----------- ------------- ----------- ------------- ................................................................................................................................. CLASS B SHARES: Issued 30,500 57,646 38,319 55,019 Reinvested -- 1,492 211,093 -- Redeemed (30,638) (64,860) (73,753) (134,933) ----------- ------------- ----------- ------------- Change in Class B Shares (138) (5,722) 175,659 (79,914) ----------- ------------- ----------- ------------- ................................................................................................................................. CLASS C SHARES: Issued 1,910 287 346 201 Reinvested -- 20 3,184 -- Redeemed (897) (2) (178) (3) ----------- ------------- ----------- ------------- Change in Class C Shares 1,013 305 3,352 198 ----------- ------------- ----------- ------------- ................................................................................................................................. CLASS I SHARES: Issued 281,593 917,280 -- -- Reinvested 160 66,974 -- -- Redeemed (1,249,963) (13,877,205) -- -- Redemption In-Kind -- (4,672,621) -- -- ----------- ------------- ----------- ------------- Change in Class I Shares (968,210) (17,565,572) -- -- ----------- ------------- ----------- ------------- ................................................................................................................................. TRUST SHARES: Issued -- -- 161,517 561,225 Reinvested -- -- 186,322 -- Redeemed -- -- (170,851) (7,160,908) Redemption In-Kind -- -- -- (5,215,605) ----------- ------------- ----------- ------------- Change in Trust Shares -- -- 176,988 (11,815,288) ----------- ------------- ----------- ------------- </Table> See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 44 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) <Table> <Caption> INTERNATIONAL EQUITY FUND OVERSEAS EQUITY FUND - --------------------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE APRIL 30, 2006 YEAR ENDED APRIL 30, 2006 YEAR ENDED (UNAUDITED) OCTOBER 31, 2005 (UNAUDITED) OCTOBER 31, 2005 - --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 1,119,748 $ 3,493,764 $ 25,786 $ 261,810 Net realized gains (losses) from investment and foreign currency transactions 9,296,575 12,653,084 1,157,445 1,709,313 Change in unrealized appreciation/depreciation from investments and foreign currencies 44,438,050 14,319,665 4,877,374 1,850,263 ------------ ------------ ----------- ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 54,854,373 30,466,513 6,060,605 3,821,386 ------------ ------------ ----------- ----------- ............................................................................................................................... DIVIDENDS: NET INVESTMENT INCOME: Class A Shares -- -- (326,917) (86,962) Class B Shares -- -- (23,264) -- Class C Shares -- -- (1,601) -- Advisor Shares (4,030,977) (2,396,450) -- -- NET REALIZED GAINS FROM INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS: Class A Shares -- -- (1,507,747) (1,064,452) Class B Shares -- -- (185,746) (122,864) Class C Shares -- -- (12,624) (7,702) Advisor Shares (6,656,885) -- -- -- ------------ ------------ ----------- ----------- CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (10,687,862) (2,396,450) (2,057,899) (1,281,980) ------------ ------------ ----------- ----------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 24,091,881 16,757,285 (1,046,892) 789,114 ------------ ------------ ----------- ----------- CHANGE IN NET ASSETS 68,258,392 44,827,348 2,955,814 3,328,520 ............................................................................................................................... NET ASSETS: Beginning of period 193,144,123 148,316,775 23,247,739 19,919,219 ------------ ------------ ----------- ----------- End of period $261,402,515 $193,144,123 $26,203,553 $23,247,739 ------------ ------------ ----------- ----------- ------------ ------------ ----------- ----------- Accumulated net investment income (loss) $ 119,256 $ 3,030,485 $ (78,120) $ 247,876 ------------ ------------ ----------- ----------- ------------ ------------ ----------- ----------- </Table> 45 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 FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE APRIL 30, 2006 YEAR ENDED APRIL 30, 2006 YEAR ENDED (UNAUDITED) OCTOBER 31, 2005 (UNAUDITED) OCTOBER 31, 2005 - --------------------------------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A SHARES: Proceeds from shares issued $ -- $ -- $ 2,134,335 $ 5,532,757 Dividends reinvested -- -- 1,818,046 1,138,107 Cost of shares redeemed -- -- (5,382,928) (5,992,575) ------------ ------------ ----------- ------------ Class A Shares capital transactions -- -- (1,430,547) 678,289 ------------ ------------ ----------- ------------ ................................................................................................................................ CLASS B SHARES: Proceeds from shares issued -- -- 303,546 342,387 Dividends reinvested -- -- 204,672 119,012 Cost of shares redeemed -- -- (141,441) (360,874) ------------ ------------ ----------- ------------ Class B Shares capital transactions -- -- 366,777 100,525 ------------ ------------ ----------- ------------ ................................................................................................................................ CLASS C SHARES: Proceeds from shares issued -- -- 3,253 11,807 Dividends reinvested -- -- 14,125 7,641 Cost of shares redeemed -- -- (500) (9,148) ------------ ------------ ----------- ------------ Class C Shares capital transactions -- -- 16,878 10,300 ------------ ------------ ----------- ------------ ................................................................................................................................ ADVISOR SHARES: Proceeds from shares issued 32,646,478 58,275,702 -- -- Dividend Reinvested 7,069,762 241,344 -- -- Cost of Shares Redeemed (15,624,359) (42,759,761 -- -- ------------ ------------ ----------- ------------ Advisor Shares capital transactions 24,091,881 16,757,285 -- -- ------------ ------------ ----------- ------------ CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 24,091,881 $ 16,757,285 $(1,046,892) $ 789,114 ------------ ------------ ----------- ------------ ------------ ------------ ----------- ------------ ................................................................................................................................ SHARE TRANSACTIONS: CLASS A SHARES: Issued -- -- 128,486 375,295 Reinvested -- -- 116,471 79,895 Redeemed -- -- (324,250) (400,918) ------------ ------------ ----------- ------------ Change in Class A Shares -- -- (79,293) 54,272 ------------ ------------ ----------- ------------ ................................................................................................................................ CLASS B SHARES: Issued -- -- 18,845 24,056 Reinvested -- -- 13,637 8,435 Redeemed -- -- (8,936) (25,222) ------------ ------------ ----------- ------------ Change in Class B Shares -- -- 23,546 7,269 ------------ ------------ ----------- ------------ ................................................................................................................................ CLASS C SHARES: Issued -- -- 193 831 Reinvested -- -- 922 544 Redeemed -- -- (28) (609) ------------ ------------ ----------- ------------ Change in Class C Shares -- -- 1,087 766 ------------ ------------ ----------- ------------ ................................................................................................................................ ADVISOR SHARES: Issued 1,685,428 3,503,991 -- -- Reinvested 390,377 77,827 -- -- Redeemed (828,683) (2,539,074) -- -- ------------ ------------ ----------- ------------ Change in Advisor Shares 1,247,122 1,042,744 -- -- ------------ ------------ ----------- ------------ </Table> See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 46 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) <Table> <Caption> SMALL CAP EQUITY FUND OPPORTUNITY FUND - --------------------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE APRIL 30, 2006 YEAR ENDED APRIL 30, 2006 YEAR ENDED (UNAUDITED) OCTOBER 31, 2005 (UNAUDITED) OCTOBER 31, 2005 - --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ (455,373) $ (1,207,469) $ (170,067) $ (346,828) Net realized gains (losses) from investment and foreign currency transactions 18,320,005 47,977,577 2,320,623 4,141,172 Change in unrealized appreciation/depreciation from investments and foreign currencies 17,942,570 (11,295,639) 3,403,784 (361,730) ------------ ------------ ----------- ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 35,807,202 35,474,469 5,554,340 3,432,614 ------------ ------------ ----------- ----------- ................................................................................................................................ DIVIDENDS: NET INVESTMENT INCOME: Class A Shares -- -- -- -- Class B Shares -- -- -- -- Class C Shares -- -- -- -- Advisor Shares -- -- -- -- NET REALIZED GAINS FROM INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS: Class A Shares -- -- (711,320) -- Class B Shares -- -- (150,813) -- Class C Shares -- -- (10,198) -- Advisor Shares (5,803,618) -- -- -- ------------ ------------ ----------- ----------- CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (5,803,618) -- (872,331) -- ------------ ------------ ----------- ----------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS (8,591,209) 137,624,740 (1,351,938) (1,568,177) ------------ ------------ ----------- ----------- CHANGE IN NET ASSETS 21,412,375 (102,150,271) 3,330,071 1,864,437 ................................................................................................................................ NET ASSETS: Beginning of period 177,518,678 279,668,949 27,720,663 25,856,226 ------------ ------------ ----------- ----------- End of period $198,931,053 $177,518,678 $31,050,734 $27,720,663 ------------ ------------ ----------- ----------- ------------ ------------ ----------- ----------- Accumulated net investment income (loss) $ (455,373) $ -- $ (170,067) $ -- ------------ ------------ ----------- ----------- ------------ ------------ ----------- ----------- </Table> 47 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 FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE APRIL 30, 2006 YEAR ENDED APRIL 30, 2006 YEAR ENDED (UNAUDITED) OCTOBER 31, 2005 (UNAUDITED) OCTOBER 31, 2005 - --------------------------------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A SHARES: Proceeds from shares issued $ -- $ -- $ 1,629,235 $ 4,837,326 Dividends reinvested -- -- 703,432 -- Cost of shares redeemed -- -- (3,560,385) (5,698,960) ------------ ------------- ----------- ----------- Class A Shares capital transactions -- -- (1,227,718) (861,634) ------------ ------------- ----------- ----------- ................................................................................................................................ CLASS B SHARES: Proceeds from shares issued -- -- 161,063 244,211 Dividends reinvested -- -- 147,234 -- Cost of shares redeemed -- -- (428,944) (877,468) ------------ ------------- ----------- ----------- Class B Shares capital transactions -- -- (120,647) (633,257) ------------ ------------- ----------- ----------- ................................................................................................................................ CLASS C SHARES: Proceeds from shares issued -- -- 2,009 16,069 Dividends reinvested -- -- 10,101 -- Cost of shares redeemed -- -- (15,683) (89,355) ------------ ------------- ----------- ----------- Class C Shares capital transactions -- -- (3,573) (73,286) ------------ ------------- ----------- ----------- ................................................................................................................................ ADVISOR SHARES: Proceeds from shares issued 10,389,419 14,466,184 -- -- Dividends reinvested 4,071,601 -- -- -- Cost of shares redeemed (23,052,229) (90,280,738) -- -- Redemption In-Kind -- (61,810,186) -- -- ------------ ------------- ----------- ----------- Advisor Shares capital transactions (8,591,209) (137,624,740) -- -- ------------ ------------- ----------- ----------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ (8,591,209) $(137,624,740) $(1,351,938) $(1,568,177) ------------ ------------- ----------- ----------- ------------ ------------- ----------- ----------- ................................................................................................................................ SHARE TRANSACTIONS: CLASS A SHARES: Issued -- -- 119,851 411,566 Reinvested -- -- 54,419 -- Redeemed -- -- (262,490) (481,625) ------------ ------------- ----------- ----------- Change in Class A Shares -- -- (88,220) (70,059) ------------ ------------- ----------- ----------- ................................................................................................................................ CLASS B SHARES: Issued -- -- 12,696 22,382 Reinvested -- -- 12,202 -- Redeemed -- -- (33,764) (79,084) ------------ ------------- ----------- ----------- Change in Class B Shares -- -- (8,866) (56,702) ------------ ------------- ----------- ----------- ................................................................................................................................ CLASS C SHARES: Issued -- -- 148 1,413 Reinvested -- -- 830 -- Redeemed -- -- (1,195) (8,351) ------------ ------------- ----------- ----------- Change in Class C Shares -- -- (217) (6,938) ------------ ------------- ----------- ----------- ................................................................................................................................ ADVISOR SHARES: Issued 631,531 1,031,358 -- -- Reinvested 262,486 -- -- -- Redeemed (1,417,147) (6,178,289) -- -- Redemption In-Kind -- (4,362,046) -- -- ------------ ------------- ----------- ----------- Change in Advisor Shares (523,130) (9,508,977) -- -- ------------ ------------- ----------- ----------- </Table> See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 48 - -------------------------------------------------------------------------------- HSBC INVESTOR FUNDS -- INTERMEDIATE DURATION FIXED INCOME FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a) <Table> <Caption> INVESTMENT ACTIVITIES DIVIDENDS -------------------------------------- ------------------------------------- NET REALIZED AND UNREALIZED GAINS NET NET ASSET (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 SHARES Period ended October 31, 2001 (f) $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) Year ended October 31, 2005 10.06 0.33 (0.29) 0.04 (0.37) (0.06) (0.43) Six months ended April 30, 2006 (Unaudited) 9.67 0.21 (0.13) 0.08 (0.21) -- (0.21) - -------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2001 (h) $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) Year ended October 31, 2005 10.08 0.25 (0.29) (0.04) (0.29) (0.06) (0.35) Six months ended April 30, 2006 (Unaudited) 9.69 0.17 (0.14) 0.03 (0.17) -- (0.17) - -------------------------------------------------------------------------------------------------------------------------- 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) Year ended October 31, 2005 10.07 0.25 (0.29) (0.04) (0.29) (0.06) (0.35) Six months ended April 30, 2006 (Unaudited) 9.68 0.17 (0.13) 0.04 (0.17) -- (0.17) - -------------------------------------------------------------------------------------------------------------------------- CLASS I 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) Year ended October 31, 2005 10.08 0.35 (0.30) 0.05 (0.39) (0.06) (0.45) Six months ended April 30, 2006 (Unaudited) 9.68 0.22 (0.13) 0.09 (0.22) -- (0.22) <Caption> RATIOS/SUPPLEMENTARY DATA -------------------------------------------------------------- RATIO OF NET RATIO OF NET NET ASSETS EXPENSES INVESTMENT ASSET AT END TO INCOME TO RATIO OF VALUE, OF AVERAGE AVERAGE EXPENSES TO END OF TOTAL PERIOD NET NET AVERAGE NET PORTFOLIO PERIOD RETURN(b) (000'S) ASSETS(c) ASSETS(c) ASSETS(c)(d) TURNOVER(e) - ----------------------------------------------------------------------------------------------------------------------- CLASS A SHARES Period ended October 31, 2001 (f) $10.58 8.78 % $ 977 1.10% 4.27% 1.49% 102.01% Year ended October 31, 2002 10.43 3.34 % 1,608 0.96% 4.14% 0.96% 44.04% Year ended October 31, 2003 10.47 3.97 % 3,309 1.01% 2.99% 1.01% 98.42% Year ended October 31, 2004 10.06 3.90 % 1,558 1.10% 3.01% 1.21% 50.06% Year ended October 31, 2005 9.67 0.31 %(g) 1,055 1.01%(g) 3.37%(g) 1.10%(g) 107.26% Six months ended April 30, 2006 (Unaudited) 9.54 0.80 % 988 0.95% 4.24% 1.56% 124.22% - ----------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2001 (h) $10.59 8.02 % $ 896 1.85% 3.52% 7.59% 102.01% Year ended October 31, 2002 10.45 2.65 % 4,178 1.70% 3.30% 1.70% 44.04% Year ended October 31, 2003 10.49 3.19 % 6,443 1.73% 2.30% 1.73% 98.42% Year ended October 31, 2004 10.08 3.11 % 6,321 1.85% 2.28% 1.96% 50.06% Year ended October 31, 2005 9.69 (0.44)%(g) 4,852 1.76%(g) 2.60%(g) 1.85%(g) 107.26% Six months ended April 30, 2006 (Unaudited) 9.55 0.43 % 4,167 1.70% 3.47% 2.31% 124.22% - ----------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2001 (i) $10.58 7.80 % $ 161 1.85% 3.60% 17.61% 102.01% Year ended October 31, 2002 10.44 2.65 % 1,759 1.70% 3.26% 1.70% 44.04% Year ended October 31, 2003 10.49 3.29 % 2,544 1.73% 2.31% 1.73% 98.42% Year ended October 31, 2004 10.07 3.03 % 679 1.85% 2.25% 1.96% 50.06% Year ended October 31, 2005 9.68 (0.44)%(g) 527 1.77%(g) 2.60%(g) 1.86%(g) 107.26% Six months ended April 30, 2006 (Unaudited) 9.55 0.43 % 506 1.70% 3.48% 2.31% 124.22% - ----------------------------------------------------------------------------------------------------------------------- CLASS I 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% Year ended October 31, 2005 9.68 0.45 %(g) 24,744 0.76%(g) 3.60%(g) 0.85%(g) 107.26% Six months ended April 30, 2006 (Unaudited) 9.55 0.93 % 14,665 0.72% 4.42% 1.29% 124.22% - ----------------------------------------------------------------------------------------------------------------------- </Table> * Calculated based on average shares outstanding (a) The per share amounts and percentages reflect income and expenses assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor Intermediate Duration Fixed Income Portfolio. (b) Not annualized for periods less than one year. Total Return calculations do not include any sales or redemption charges. (c) Annualized for periods less than one year. (d) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been as indicated. (e) Portfolio turnover is calculated on the basis of the respective Portfolio in which the Fund invests all of its investable assets. (f) Class A Shares commenced operations on February 7, 2001. (g) During the year ended October 31, 2005, HSBC reimbursed certain amounts to the respective Portfolio in which the Fund invests related to violation of certain investment policies and limitations. The corresponding impact to the net expense ratio, net income ratio, gross expense ratio and total return were 0.09%, 0.09%, 0.09% and 0.08% for Class A Shares, Class B Shares, Class C Shares and Class I Shares, respectively. (h) Class B Shares commenced operations on February 15, 2001. (i) Class C Shares commenced operations on February 13, 2001. (j) Class I Shares commenced operations on January 23, 2001. See notes to financial statements. 49 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC ADVISOR FUNDS TRUST -- CORE PLUS FIXED INCOME FUND (ADVISOR) - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a) <Table> <Caption> INVESTMENT ACTIVITIES DIVIDENDS ------------------------------------------ ------------------------------------ NET REALIZED NET REALIZED AND GAINS UNREALIZED GAINS FROM NET ASSET (LOSSES) FROM INVESTMENTS VALUE, NET INVESTMENT AND TOTAL FROM NET AND BEGINNING OF INVESTMENT FUTURES INVESTMENT INVESTMENT FUTURES TOTAL PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS - -------------------------------------------------------------------------------------------------------------------------------- ADVISOR SHARES Year ended October 31, 2001 $ 9.99 0.67 0.80 1.47 (0.65) -- (0.65) Year ended October 31, 2002 10.81 0.55 (0.14) 0.41 (0.59) -- (0.59) Year ended October 31, 2003 10.63 0.41 0.19 0.60 (0.50) -- (0.50) Year ended October 31, 2004 10.73 0.45 0.12 0.57 (0.45) -- (0.45) Year ended October 31, 2005 10.85 0.44 (0.27) 0.17 (0.47) -- (0.47) Six months ended April 30, 2006 (Unaudited) 10.55 0.25 (0.16) 0.09 (0.24) (0.46) (0.70) - -------------------------------------------------------------------------------------------------------------------------------- <Caption> RATIOS/SUPPLEMENTARY DATA ----------------------------------------------------------------------- RATIO OF NET NET ASSETS RATIO OF INVESTMENT RATIO OF NET ASSET AT END OF EXPENSES TO INCOME TO EXPENSES TO VALUE, END TOTAL PERIOD AVERAGE AVERAGE AVERAGE NET PORTFOLIO OF PERIOD RETURN(b) (000'S) NET ASSETS(c) NET ASSETS(c) ASSETS(c)(d) TURNOVER(e) - -------------------------------------------------------------------------------------------------------------------------------- ADVISOR SHARES Year ended October 31, 2001 $10.81 15.11% $150,580 0.63% 6.45% 0.63% 341.26% Year ended October 31, 2002 10.63 3.94% 284,841 0.56% 5.06% 0.56% 77.82% Year ended October 31, 2003 10.73 5.71% 110,968 0.56% 4.30% 0.56% 70.91% Year ended October 31, 2004 10.85 5.46% 109,518 0.64% 4.20% 0.64% 34.88% Year ended October 31, 2005 10.55 1.55%(f) 89,743 0.52%(f) 4.15%(f) 0.52%(f) 176.60% Six months ended April 30, 2006 (Unaudited) 9.94 0.88% 79,819 0.67% 4.80% 0.78% 147.29% - -------------------------------------------------------------------------------------------------------------------------------- </Table> (a) The per share amounts and percentages reflect income and expenses assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor Core Plus Fixed Income Portfolio. (b) Not annualized for periods less than one year. Total Return calculations do not include any sales or redemption charges. (c) Annualized for periods less than one year. (d) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been as indicated. (e) Portfolio turnover is calculated on the basis of the respective Portfolio in which the Fund invests all of its investable assets. (f) During the year ended October 31, 2005, HSBC reimbursed certain amounts to the respective Portfolio in which the Fund invests related to violation of certain investment policies and limitations. The corresponding impact to the net expense ratio, net income ratio, gross expense ratio and total return were 0.11% for the Advisor Shares. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 50 - -------------------------------------------------------------------------------- HSBC INVESTOR FUNDS -- CORE PLUS FIXED INCOME FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a) <Table> <Caption> INVESTMENT ACTIVITIES DIVIDENDS ------------------------------------------ ------------------------------------ NET REALIZED AND NET UNREALIZED GAINS REALIZED NET ASSET (LOSSES) FROM GAINS FROM VALUE, NET INVESTMENT AND TOTAL FROM NET INVESTMENT BEGINNING OF INVESTMENT FUTURES INVESTMENT INVESTMENT AND FUTURES TOTAL PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS - -------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES 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) Year ended October 31, 2005 10.60 0.39 (0.27) 0.12 (0.42) -- (0.42) Six months ended April 30, 2006 (Unaudited) 10.30 0.25 (0.16) 0.09 (0.24) (0.05) (0.29) - -------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES 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) Year ended October 31, 2005 10.60 0.32 (0.27) 0.05 (0.34) -- (0.34) Six months ended April 30, 2006 (Unaudited) 10.31 0.20 (0.15) 0.05 (0.20) (0.05) (0.25) - -------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES 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) Year ended October 31, 2005 10.59 0.32 (0.27) 0.05 (0.34) -- (0.34) Six months ended April 30, 2006 (Unaudited) 10.30 0.20 (0.16) 0.04 (0.20) (0.05) (0.25) - -------------------------------------------------------------------------------------------------------------------------------- <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 AVERAGE AVERAGE PORTFOLIO PERIOD RETURN(b) (000'S) NET ASSETS(c) NET ASSETS(c) NET ASSETS(c)(d) TURNOVER(e) - --------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES Year ended October 31, 2001 $10.55 14.41% $ 6,683 1.10% 5.92% 2.61% 341.26% Year ended October 31, 2002 10.38 3.44% 12,053 1.10% 4.52% 1.47% 77.82% Year ended October 31, 2003 10.48 5.17% 14,143 1.10% 3.76% 1.21% 70.91% Year ended October 31, 2004 10.60 5.07% 17,248 1.04% 3.78% 1.26% 34.88% Year ended October 31, 2005 10.30 1.16%(f) 17,646 0.84%(f) 3.82%(f) 1.15%(f) 176.60% Six months ended April 30, 2006 (Unaudited) 10.10 0.83% 12,118 0.87% 4.61% 1.47% 147.29% - --------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended October 31, 2001 $10.55 13.43% $ 1,494 1.85% 5.04% 3.32% 341.26% Year ended October 31, 2002 10.39 2.76% 6,124 1.85% 3.66% 2.18% 77.82% Year ended October 31, 2003 10.49 4.38% 7,430 1.85% 3.01% 1.96% 70.91% Year ended October 31, 2004 10.60 4.19% 7,017 1.79% 3.05% 2.01% 34.88% Year ended October 31, 2005 10.31 0.50%(f) 6,168 1.59%(f) 3.08%(f) 1.90%(f) 176.60% Six months ended April 30, 2006 (Unaudited) 10.11 0.46% 5,149 1.62% 3.85% 2.23% 147.29% - --------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Year ended October 31, 2001 $10.54 13.44% $ 526 1.85% 5.11% 3.34% 341.26% Year ended October 31, 2002 10.38 2.77% 983 1.85% 3.75% 2.21% 77.82% Year ended October 31, 2003 10.48 4.39% 606 1.85% 3.06% 1.97% 70.91% Year ended October 31, 2004 10.59 4.20% 377 1.80% 3.07% 2.02% 34.88% Year ended October 31, 2005 10.30 0.51%(f) 285 1.58%(f) 3.14%(f) 1.89%(f) 176.60% Six months ended April 30, 2006 (Unaudited) 10.09 0.37% 234 1.62% 3.86% 2.23% 147.29% - --------------------------------------------------------------------------------------------------------------------------------- </Table> (a) The per share amounts and percentages reflect income and expenses assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor Core Plus Fixed Income Portfolio. (b) Not Annualized for periods less than one year. Total Return calculations do not include any sales or redemption charges. (c) Annualized for periods less than one year. (d) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been as indicated. (e) Portfolio turnover is calculated on the basis of the respective Portfolio in which the Fund invests all of its investable assets. (f) During the year ended October 31, 2005, HSBC reimbursed certain amounts to the respective Portfolio in which the Fund invests related to violation of certain investment policies and limitations. The corresponding impact to the net expense ratio, net income ratio, gross expense ratio and total return were 0.11%, 0.11% and 0.12% for Class A Shares, Class B Shares and Class C Shares, respectively. See notes to financial statements. 51 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC INVESTOR FUNDS -- NEW YORK TAX-FREE BOND FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. <Table> <Caption> INVESTMENT ACTIVITIES DIVIDENDS -------------------------------------- ------------------------------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) NET REALIZED NET ASSET FROM GAINS FROM VALUE, NET INVESTMENT TOTAL FROM NET INVESTMENT BEGINNING INVESTMENT AND FUTURES INVESTMENT INVESTMENT AND FUTURES TOTAL OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS - -------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES 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) Year ended October 31, 2005 11.32 0.34 (0.22) 0.12 (0.34) (0.02) (0.36) Six months ended April 30, 2006 (Unaudited) 11.08 0.18 (0.08) 0.10 (0.18) (0.02) (0.20) - -------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES 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) Year ended October 31, 2005 11.31 0.25 (0.22) 0.03 (0.25) (0.02) (0.27) Six months ended April 30, 2006 (Unaudited) 11.07 0.14 (0.08) 0.06 (0.14) (0.02) (0.16) - -------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES 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) Year ended October 31, 2005 11.35 0.25 (0.22) 0.03 (0.25) (0.02) (0.27) Six months ended April 30, 2006 (Unaudited) 11.11 0.14 (0.08) 0.06 (0.14) (0.02) (0.16) - -------------------------------------------------------------------------------------------------------------------------- CLASS I SHARES 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) Year ended October 31, 2005 11.32 0.37 (0.22) 0.15 (0.37) (0.02) (0.39) Six months ended April 30, 2006 (Unaudited) 11.08 0.19 (0.07) 0.12 (0.19) (0.02) (0.21) - -------------------------------------------------------------------------------------------------------------------------- <Caption> RATIOS/SUPPLEMENTARY DATA -------------------------------------------------------------------------- NET ASSETS RATIO OF NET AT RATIO OF INVESTMENT RATIO OF NET ASSET END OF EXPENSES INCOME TO EXPENSES TO VALUE, END TOTAL PERIOD TO AVERAGE AVERAGE AVERAGE PORTFOLIO OF PERIOD RETURN(a) (000'S) NET ASSETS(b) NET ASSETS(b) NET ASSETS(b)(c) TURNOVER(d) - ---------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES Year ended October 31, 2001 $10.93 9.26% $17,722 0.95% 3.91% 1.07% 0.00% Year ended October 31, 2002 11.09 5.08% 16,341 0.95% 3.52% 0.95% 30.70% Year ended October 31, 2003 11.21 4.57% 22,326 0.91% 3.39% 0.91% 29.79% Year ended October 31, 2004 11.32 4.57% 32,889 0.87% 3.01% 0.87% 26.96% Year ended October 31, 2005 11.08 1.03%(e) 34,441 0.88%(e) 3.02%(e) 0.89% 13.87% Six months ended April 30, 2006 (Unaudited) 10.98 0.86% 33,177 0.92% 3.26% 0.92% 9.72% - --------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended October 31, 2001 $10.92 8.44% $ 5,619 1.70% 3.05% 1.82% 0.00% Year ended October 31, 2002 11.08 4.30% 12,699 1.70% 2.74% 1.70% 30.70% Year ended October 31, 2003 11.20 3.80% 18,352 1.66% 2.64% 1.66% 29.79% Year ended October 31, 2004 11.31 3.80% 17,457 1.62% 2.27% 1.62% 26.96% Year ended October 31, 2005 11.07 0.28%(e) 16,258 1.63%(e) 2.27%(e) 1.64% 13.87% Six months ended April 30, 2006 (Unaudited) 10.97 0.48% 15,315 1.67% 2.51% 1.67% 9.72% - --------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Year ended October 31, 2001 $10.96 8.40% $ 1,523 1.70% 3.04% 1.83% 0.00% Year ended October 31, 2002 11.12 4.28% 2,608 1.70% 2.74% 1.70% 30.70% Year ended October 31, 2003 11.25 3.87% 3,252 1.66% 2.64% 1.66% 29.79% Year ended October 31, 2004 11.35 3.69% 2,340 1.62% 2.26% 1.62% 26.96% Year ended October 31, 2005 11.11 0.28%(e) 1,782 1.63%(e) 2.26%(e) 1.64% 13.87% Six months ended April 30, 2006 (Unaudited) 11.01 0.48% 1,420 1.67% 2.50% 1.67% 9.72% - --------------------------------------------------------------------------------------------------------------------------------- CLASS I SHARES 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% Year ended October 31, 2005 11.08 1.28%(e) 16,981 0.63%(e) 3.27%(e) 0.64% 13.87% Six months ended April 30, 2006 (Unaudited) 10.99 1.07% 15,951 0.67% 3.51% 0.67% 9.72% - -------------------------------------------------------------------------------------------------------------------------------- </Table> (a) Not Annualized for periods less than one year. Total Return calculations do not include any sales or redemption charges. (b) Annualized for periods less than one year. (c) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been as indicated. (d) Portfolio turnover is calculated on the basis of the Fund as a whole, without the distinguishing between the classes of shares issued. (e) During the year ended October 31, 2005, HSBC reimbursed certain amounts to the Fund related to violation of certain investment policies and limitations. The corresponding impact to the net expense ratio, net income ratio and total return were 0.01%, 0.01%, 0.01% and 0.01% for Class A Shares, Class B Shares, Class C Shares and Class I Shares, respectively. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 52 - -------------------------------------------------------------------------------- HSBC INVESTOR FUNDS -- HIGH YIELD FIXED INCOME FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a) <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 SHARES Period ended April 30, 2006 (Unaudited) (f) 10.00 0.30 0.20 0.50 (0.30) (0.30) - -------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended April 30, 2006 (Unaudited) (g) 10.00 0.27 0.21 0.48 (0.27) (0.27) - -------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period ended April 30, 2006 (Unaudited) (h) 10.01 0.24 0.22 0.46 (0.24) (0.24) - -------------------------------------------------------------------------------------------------------------------- CLASS I SHARES Period ended April 30, 2006 (Unaudited) (i) 10.00 0.31 0.20 0.51 (0.31) (0.31) - -------------------------------------------------------------------------------------------------------------------- <Caption> RATIOS/SUPPLEMENTARY DATA -------------------------------------------------------------------------- RATIO OF NET NET ASSETS AT RATIO OF INVESTMENT RATIO OF NET ASSET END OF EXPENSES TO INCOME TO EXPENSES TO VALUE, END TOTAL PERIOD AVERAGE AVERAGE NET AVERAGE PORTFOLIO OF PERIOD RETURN(b) (000'S) NET ASSETS(c) ASSETS(c) NET ASSETS(c)(d) TURNOVER(e) - ----------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES Period ended April 30, 2006 (Unaudited) (f) 10.20 5.10% 4,402 0.80% 6.86% 3.51% 6.94% - ----------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended April 30, 2006 (Unaudited) (g) 10.21 4.82% 1,619 1.55% 6.21% 4.20% 6.94% - ----------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period ended April 30, 2006 (Unaudited) (h) 10.23 4.58% 139 1.55% 6.33% 4.37% 6.94% - ----------------------------------------------------------------------------------------------------------------------------------- CLASS I SHARES Period ended April 30, 2006 (Unaudited) (i) 10.20 5.21% 2,595 0.55% 7.12% 3.27% 6.94% - ----------------------------------------------------------------------------------------------------------------------------------- </Table> (a) The per share amounts and percentages reflect income and expenses assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor High Yield Fixed Income Portfolio. (b) Not Annualized for periods less than one year. Total Return calculations do not include any sales or redemption charges. (c) Annualized for periods less than one year. (d) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been as indicated. (e) Portfolio turnover is calculated on the basis of the respective Portfolio in which the Fund invests all its investable assets. (f) Class A Shares commenced operations on November 18, 2005. (g) Class B Shares commenced operations on November 19, 2005. (h) Class C Shares commenced operations on December 14, 2005. (i) Class I Shares commenced operations on November 18, 2005. See notes to financial statements. 53 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC INVESTOR FUNDS -- GROWTH FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a) <Table> <Caption> INVESTMENT ACTIVITIES DIVIDENDS -------------------------------------- ------------------------------------- NET REALIZED AND UNREALIZED GAINS NET (LOSSES) REALIZED NET ASSET NET FROM TOTAL GAINS FROM VALUE, INVESTMENT INVESTMENT FROM NET INVESTMENT BEGINNING INCOME AND INVESTMENT INVESTMENT AND TOTAL OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS - ------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES Period ended October 31, 2004 (f) $12.68 (0.02) (0.11) (0.13) -- -- -- Year ended October 31, 2005 12.55 0.03 1.59 1.62 (0.05) -- (0.05) Six months ended April 30, 2006 (Unaudited) 14.12 (0.02) 1.15 1.13 -- (0.23) (0.23) - ------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2004 (f) $12.28 (0.07) (0.10) (0.17) -- -- -- Year ended October 31, 2005 12.11 (0.07) 1.53 1.46 -- -- -- Six months ended April 30, 2006 (Unaudited) 13.57 (0.07) 1.10 1.03 -- (0.23) (0.23) - ------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2004 (f) $12.35 (0.06) (0.12) (0.18) -- -- -- Year ended October 31, 2005 12.17 (0.07) 1.54 1.47 -- -- -- Six months ended April 30, 2006 (Unaudited) 13.64 (0.07) 1.10 1.03 -- (0.23) (0.23) - ------------------------------------------------------------------------------------------------------------------------------- CLASS I SHARES Period ended October 31, 2004 (f) $12.67 (0.01) (0.11) (0.12) -- -- -- Year ended October 31, 2005 12.55 0.06 1.59 1.65 (0.08) -- (0.08) Six months ended April 30, 2006 (Unaudited) 14.12 -- 1.14 1.14 -- (0.23) (0.23) - ------------------------------------------------------------------------------------------------------------------------------- <Caption> RATIOS/SUPPLEMENTARY DATA ------------------------------------------------------------------ RATIO OF NET INVESTMENT INCOME RATIO OF NET ASSETS RATIO OF (LOSS) TO EXPENSES NET ASSET AT END OF EXPENSES TO AVERAGE TO AVERAGE VALUE, END TOTAL PERIOD AVERAGE NET NET NET PORTFOLIO OF PERIOD RETURN(b) (000'S) ASSETS(c) ASSETS(c) ASSETS(c)(d) TURNOVER(e) - -------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES Period ended October 31, 2004 (f) $12.55 (1.03)% $17,372 1.20% (0.42)% 1.31% 53.08% Year ended October 31, 2005 14.12 12.91 %(g) 21,866 1.15%(g) 0.19 %(g) 1.35%(g) 79.54% Six months ended April 30, 2006 (Unaudited) 15.02 8.07 % 22,484 1.20% (0.23)% 1.39% 36.21% - -------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2004 (f) $12.11 (1.38)% $ 1,402 1.95% (1.17)% 2.06% 53.08% Year ended October 31, 2005 13.57 12.06 %(g) 1,317 1.90%(g) (0.48)%(g) 2.09%(g) 79.54% Six months ended April 30, 2006 (Unaudited) 14.37 7.66 % 1,457 1.95% (0.98)% 2.14% 36.21% - -------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2004 (f) $12.17 (1.46)% $ 309 1.95% (1.18)% 2.06% 53.08% Year ended October 31, 2005 13.64 12.08 %(g) 344 1.90%(g) (0.51)%(g) 2.10%(g) 79.54% Six months ended April 30, 2006 (Unaudited) 14.44 7.69 % 354 1.95% (0.98)% 2.14% 36.21% - -------------------------------------------------------------------------------------------------------------------------------- CLASS I SHARES Period ended October 31, 2004 (f) $12.55 0.95 % $19,115 0.95% (0.17)% 1.06% 53.08% Year ended October 31, 2005 14.12 13.17 %(g) 13,107 0.90%(g) 0.56 %(g) 1.07%(g) 79.54% Six months ended April 30, 2006 (Unaudited) 15.03 8.21 % 15,435 0.95% 0.02 % 1.14% 36.21% - -------------------------------------------------------------------------------------------------------------------------------- </Table> (a) The per share amounts and percentages reflect income and expenses assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor Growth Portfolio. (b) Not Annualized for periods less than one year. Total Return calculations do not include any sales or redemption charges. (c) Annualized for periods less than one year. (d) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been as indicated. (e) Portfolio turnover is calculated on the basis of the respective Portfolio in which the Fund invests all its investable assets. (f) Class A Shares, Class B Shares, Class C Shares and Class I Shares commenced operations on May 7, 2004. (g) During the year ended October 31, 2005, HSBC reimbursed certain amounts to the respective Portfolio in which the Fund invests related to violation of certain investment policies and limitations. The corresponding impact to the net expense ratio, net income ratio, gross expense ratio and total return were 0.05%, 0.05%, 0.05% and 0.05% for Class A Shares, Class B Shares, Class C Shares and Class I Shares, respectively. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 54 - -------------------------------------------------------------------------------- HSBC INVESTOR FUNDS -- VALUE FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a) <Table> <Caption> INVESTMENT ACTIVITIES DIVIDENDS ----------------------------------------- ------------------------------------- NET REALIZED AND UNREALIZED GAINS NET NET ASSET NET (LOSSES) REALIZED VALUE, INVESTMENT FROM TOTAL FROM NET GAINS FROM BEGINNING INCOME INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS - -------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES Period ended October 31, 2004 (f) $12.68 0.05 0.69 0.74 (0.04) -- (0.04) Year ended October 31, 2005 13.38 0.10 1.86 1.96 (0.08) (0.13) (0.21) Six months ended April 30, 2006 (Unaudited) 15.13 0.06 1.87 1.93 (0.13) (1.29) (1.42) - -------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2004 (f) $12.28 -- 0.68 0.68 (0.01) -- (0.01) Year ended October 31, 2005 12.95 (0.02) 1.80 1.78 -- (0.13) (0.13) Six months ended April 30, 2006 (Unaudited) 14.60 -- 1.80 1.80 (0.07) (1.29) (1.36) - -------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2004 (f) $12.35 0.01 0.67 0.68 (0.02) -- (0.02) Year ended October 31, 2005 13.01 (0.02) 1.82 1.80 (0.01) (0.13) (0.14) Six months ended April 30, 2006 (Unaudited) 14.67 -- 1.81 1.81 (0.05) (1.29) (1.34) - -------------------------------------------------------------------------------------------------------------------------------- CLASS I SHARES Period ended October 31, 2004 (f) $12.67 0.07 0.70 0.77 (0.06) -- (0.06) Year ended October 31, 2005 13.38 0.13 1.86 1.99 (0.11) (0.13) (0.24) Six months ended April 30, 2006 (Unaudited) 15.13 0.08 1.86 1.94 (0.15) (1.29) (1.44) - -------------------------------------------------------------------------------------------------------------------------------- <Caption> RATIOS/SUPPLEMENTARY DATA ------------------------------------------------------------------ RATIO OF NET NET INVESTMENT NET ASSETS INCOME ASSET AT END RATIO OF (LOSS) TO RATIO OF VALUE, OF EXPENSES TO AVERAGE EXPENSES TO END OF TOTAL PERIOD AVERAGE NET NET AVERAGE NET PORTFOLIO PERIOD RETURN(b) (000'S) ASSETS(c) ASSETS(c) ASSETS(c)(d) TURNOVER(e) - ------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES Period ended October 31, 2004 (f) $13.38 7.79% $20,933 1.20% 0.81% 1.25% 10.33% Year ended October 31, 2005 15.13 14.69%(g) 23,315 1.15%(g) 0.64%(g) 1.30%(g) 16.45% Six months ended April 30, 2006 (Unaudited) 15.64 13.42% 23,866 1.20% 0.78% 1.40% 9.31% - ------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2004 (f) $12.95 9.06% $ 1,938 1.95% 0.05% 2.00% 10.33% Year ended October 31, 2005 14.60 13.78%(g) 1,767 1.90%(g) (0.10)(g) 2.04%(g) 16.45% Six months ended April 30, 2006 (Unaudited) 15.04 12.95% 1,907 1.95% 0.03% 2.15% 9.31% - ------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2004 (f) $13.01 8.47% $ 399 1.95% 0.04% 2.00% 10.33% Year ended October 31, 2005 14.67 13.86%(g) 388 1.90%(g) (0.12)(g) 2.05%(g) 16.45% Six months ended April 30, 2006 (Unaudited) 15.14 12.96% 341 1.95% 0.04% 2.15% 9.31% - ------------------------------------------------------------------------------------------------------------------------- CLASS I SHARES Period ended October 31, 2004 (f) $13.38 6.05% $25,600 0.95% 1.05% 1.00% 10.33% Year ended October 31, 2005 15.13 14.96%(g) 15,044 0.90%(g) 0.91%(g) 1.02%(g) 16.45% Six months ended April 30, 2006 (Unaudited) 15.63 13.52% 16,537 0.95% 1.02% 1.15% 9.31% - ------------------------------------------------------------------------------------------------------------------------- </Table> * Calculated based on average shares outstanding. (a) The per share amounts and percentages reflect income and expenses assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor Value Portfolio. (b) Not annualized for periods less than one year. Total Return calculations do not include any sales or redemption charges. (c) Annualized for periods less than one year. (d) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been as indicated. (e) Portfolio turnover is calculated on the basis of the respective Portfolio in which the Fund invests all its investable assets. (f) Class A Shares, Class B Shares, Class C Shares and Class I Shares commenced operations on May 7, 2004. (g) During the year ended October 31, 2005, HSBC reimbursed certain amounts to the respective Portfolio in which the Fund invests related to violation of certain investment policies and limitations. The corresponding impact to the net expense ratio, net income ratio, gross expense ratio and total return were 0.05%, 0.05%, 0.05% and 0.05% for Class A Shares, Class B Shares, Class C Shares and Class I Shares, respectively. See notes to financial statements. 55 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 UNREALIZED GAINS NET ASSET NET (LOSSES) TOTAL VALUE, INVESTMENT FROM FROM NET BEGINNING INCOME INVESTMENT INVESTMENT INVESTMENT TOTAL OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME DIVIDENDS - ------------------------------------------------------------------------------------------------------------- CLASS A SHARES Period ended October 31, 2001 (e) $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) Year ended October 31, 2005 8.76 0.07 1.01 1.08 (0.09) (0.09) Six months ended April 30, 2006 (Unaudited) 9.75 (0.01) 1.20 1.19 -- -- - ------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2001 (g) $ 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)> Year ended October 31, 2005 8.64 (0.01) 1.01 1.00 (0.03) (0.03) Six months ended April 30, 2006 (Unaudited) 9.61 (0.05) 1.18 1.13 -- -- - ------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2004 (h) $ 8.40 (0.02)* 0.38 0.36 (0.03) (0.03) Year ended October 31, 2005 8.73 (0.01) 1.02 1.01 (0.04) (0.04) Six months ended April 30, 2006 (Unaudited) 9.70 (0.05) 1.18 1.13 -- -- - ------------------------------------------------------------------------------------------------------------- CLASS I 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) Year ended October 31, 2005 8.77 0.10 0.99 1.10 (0.12) (0.12) Six months ended April 30, 2006 (Unaudited) 9.75 0.01 1.20 1.21 (0.01) (0.01) - ------------------------------------------------------------------------------------------------------------- <Caption> RATIOS/SUPPLEMENTARY DATA ------------------------------------------------------------- RATIO OF NET RATIO OF INVESTMENT NET NET EXPENSES INCOME ASSET ASSETS AT TO (LOSS) TO RATIO OF VALUE, END OF AVERAGE AVERAGE EXPENSES TO END OF TOTAL PERIOD NET NET AVERAGE NET PORTFOLIO PERIOD RETURN(a) (000'S) ASSETS(b) ASSETS(b) ASSETS(b)(c) TURNOVER(d) - ------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES Period ended October 31, 2001 (e) $8.91 (12.65)% $ 1,927 1.11% 0.15 % 1.11% 43.13% Year ended October 31, 2002 7.21 (18.97)% 1,306 1.01% 0.39 % 1.01% 59.85% Year ended October 31, 2003 8.39 17.26 % 1,827 1.04% 0.70 % 1.04% 64.52% Year ended October 31, 2004 8.76 4.94 % 1,500 1.02% 0.50 % 1.02% 73.68% Year ended October 31, 2005 9.75 12.36 %(f) 1,260 1.11%(f) 0.73 %(f) 1.16% 106.49% Six months ended April 30, 2006 (Unaudited) 10.94 12.21% 1,424 1.32% (0.14)% 1.43% 8.63% - ------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2001 (g) $8.88 (10.52)% $ 330 1.84% (0.64)% 1.84% 43.13% Year ended October 31, 2002 7.14 (19.59)% 1,154 1.76% (0.30)% 1.76% 59.85% Year ended October 31, 2003 8.30 16.40 % 2,235 1.79% (0.07)% 1.79% 64.52% Year ended October 31, 2004 8.64 4.13 % 3,820 1.77% (0.25)% 1.77% 73.68% Year ended October 31, 2005 9.61 11.61 %(f) 4,194 1.87%(f) (0.10)%(f) 1.93% 106.49% Six months ended April 30, 2006 (Unaudited) 10.74 11.76% 4,683 2.07% (0.89)% 2.18% 8.63% - ------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2004 (h) $8.73 3.57 % $ 41 1.77% (0.28)% 1.77% 73.68% Year ended October 31, 2005 9.70 11.59 %(f) 49 1.88%(f) (0.13)%(f) 1.93% 106.49% Six months ended April 30, 2006 (Unaudited) 10.83 11.65% 65 2.07% (0.87)% 2.18% 8.63% - ------------------------------------------------------------------------------------------------------------------------- CLASS I 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% Year ended October 31, 2005 9.75 12.61 %(f) 46,888 0.80%(f) 1.20 %(f) 0.86% 106.49% Six months ended April 30, 2006 (Unaudited) 10.95 12.37% 42,014 1.07% 0.12% 1.18% 8.63% - ------------------------------------------------------------------------------------------------------------------------- </Table> > Less than $0.005 per share. * Calculated based on average shares outstanding. (a) Not annualized for periods less than one year. Total Return calculations do not include any sales or redemption charges. (b) Annualized for periods less than one year. (c) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been indicated. (d) Portfolio turnover is calculated on the basis of the Fund as a whole, without the distinguishing between the classes of shares issued. (e) Class A Shares commenced operations on April 12, 2001. (f) During the year ended October 31, 2005, HSBC reimbursed certain amounts to the Fund related to violation of certain investment policies and limitations. The corresponding impact to the net expense ratio, net income ratio and total return were 0.02%, 0.02%, 0.02% and 0.03% for Class A Shares, Class B Shares, Class C Shares and Class I Shares, respectively. (g) Class B Shares commenced operations on April 5, 2001. (h) Class C Shares commenced operations on November 3, 2003. (i) Class I Shares commenced operations on April 2, 2001. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 56 - -------------------------------------------------------------------------------- HSBC INVESTOR FUNDS -- MID-CAP FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. <Table> <Caption> INVESTMENT ACTIVITIES DIVIDENDS --------------------------------------- ------------------------ NET REALIZED AND UNREALIZED GAINS NET (LOSSES) REALIZED NET ASSET FROM GAINS FROM VALUE, NET INVESTMENTS TOTAL FROM INVESTMENTS BEGINNING INVESTMENT AND OPTIONS INVESTMENT AND OPTIONS TOTAL OF PERIOD LOSS TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS - --------------------------------------------------------------------------------------------------------- CLASS A SHARES 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 -- -- Year ended October 31, 2005 8.44 (0.06)* 1.49 1.43 -- -- Six months ended April 30, 2006 (Unaudited) 9.87 0.02 1.33 1.35 (2.18) (2.18) - --------------------------------------------------------------------------------------------------------- CLASS B SHARES 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 -- -- Year ended October 31, 2005 8.16 (0.13)* 1.45 1.32 -- -- Six months ended April 30, 2006 (Unaudited) 9.48 (0.01) 1.27 1.26 (2.18) (2.18) - --------------------------------------------------------------------------------------------------------- CLASS C SHARES 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 -- -- Year ended October 31, 2005 8.22 (0.13)* 1.45 1.32 -- -- Six months ended April 30, 2006 (Unaudited) 9.54 (0.01) 1.28 1.27 (2.18) (2.18) - --------------------------------------------------------------------------------------------------------- TRUST SHARES 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 -- -- Year ended October 31, 2005 8.52 (0.02)* 1.48 1.46 -- -- Six months ended April 30, 2006 (Unaudited) 9.98 0.03 1.35 1.38 (2.18) (2.18) - --------------------------------------------------------------------------------------------------------- <Caption> RATIOS/SUPPLEMENTARY DATA ------------------------------------------------------------------- RATIO OF NET NET NET INVESTMENT ASSET ASSETS AT RATIO OF LOSS TO RATIO OF VALUE, END OF EXPENSES AVERAGE EXPENSES TO END TOTAL PERIOD TO AVERAGE NET AVERAGE NET PORTFOLIO OF PERIOD RETURN(a) (000'S) NET ASSETS(b) ASSETS(b) ASSETS(b)(c) TURNOVER(d) - ---------------------------------------------------------------------------------------------------------------------- CLASS A SHARES Year ended October 31, 2001 $7.90 (20.37)% $ 927 1.13% (0.40)% 1.13% 112.67% Year ended October 31, 2002 6.30 (20.25)% 1,010 1.08% (0.46)% 1.08% 140.23% Year ended October 31, 2003 7.95 26.19 % 1,539 1.10% (0.43)% 1.10% 100.86% Year ended October 31, 2004 8.44 6.16 % 1,878 1.09% (0.54)% 1.09% 106.72% Year ended October 31, 2005 9.87 16.94 %(e) 2,151 1.38%(e) (0.65)%(e) 1.53% 169.62% Six months ended April 30, 2006 (Unaudited) 9.04 15.71 % 2,505 1.64% 0.44 % 1.82% 30.15% - ---------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended October 31, 2001 $7.82 (21.09)% $ 3,827 1.88% (1.16)% 1.88% 112.67% Year ended October 31, 2002 6.19 (20.84)% 4,391 1.83% (1.21)% 1.83% 140.23% Year ended October 31, 2003 7.75 25.20 % 6,009 1.85% (1.16)% 1.85% 100.86% Year ended October 31, 2004 8.16 5.29 % 7,037 1.84% (1.29)% 1.84% 106.72% Year ended October 31, 2005 9.48 16.18 %(e) 7,415 2.11%(e) (1.38)%(e) 2.27% 169.62% Six months ended April 30, 2006 (Unaudited) 8.56 15.34 % 8,195 2.39% (0.29)% 2.57% 30.15% - ---------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Year ended October 31, 2001 $7.82 (21.09)% $ 21 1.87% (1.13)% 1.87% 112.67% Year ended October 31, 2002 6.20 (20.72)% 20 1.83% (1.20)% 1.83% 140.23% Year ended October 31, 2003 7.80 25.81 % 54 1.85% (1.23)% 1.85% 100.86% Year ended October 31, 2004 8.22 5.38 % 94 1.84% (1.29)% 1.84% 106.72% Year ended October 31, 2005 9.54 16.06 %(e) 111 2.13%(e) (1.40)%(e) 2.28% 169.62% Six months ended April 30, 2006 (Unaudited) 8.63 15.33 % 129 2.39% (0.29)% 2.57% 30.15% - ---------------------------------------------------------------------------------------------------------------------- TRUST SHARES 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% Year ended October 31, 2005 9.98 17.14 %(e) 19,618 0.89%(e) (0.19)%(e) 1.02% 169.62% Six months ended April 30, 2006 (Unaudited) 9.18 15.86 % 19,669 1.40% 0.68 % 1.58% 30.15% - ---------------------------------------------------------------------------------------------------------------------- </Table> * Calculated based on average shares outstanding. (a) Not annualized for periods less than one year. Total Return calculations do not include any sales or redemption charges. (b) Annualized for periods less than one year. (c) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been indicated. (d) Portfolio turnover is calculated on the basis of the Fund as a whole, without the distinguishing between the classes of shares issued. (e) During the year ended October 31, 2005, HSBC reimbursed certain amounts to the Fund related to violation of certain investment policies and limitations. The corresponding impact to the net expense ratio and net income ratio were 0.10%, 0.10%, 0.10% and 0.09% for Class A Shares, Class B Shares, Class C Shares and Trust Shares, respectively. The corresponding impact to the total return was 0.57%, 0.57%, 0.57% and 0.56% for Class A Shares, Class B Shares, Class C Shares and Trust Shares, respectively. See notes to financial statements. 57 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC ADVISOR FUNDS TRUST -- INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a) <Table> <Caption> INVESTMENT ACTIVITIES DIVIDENDS -------------------------------------- ------------------------------------- NET REALIZED AND UNREALIZED GAINS NET (LOSSES) REALIZED 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, 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) Year ended October 31, 2005 14.87 0.31 2.59 2.90 (0.23) -- (0.23) Six months ended April 30, 2006 (Unaudited) 17.54 0.09 4.65 4.74 (0.36) (0.60) (0.96) - --------------------------------------------------------------------------------------------------------------------- <Caption> RATIOS/SUPPLEMENTARY DATA ---------------------------------------------------------------- RATIO OF RATIO OF NET NET NET EXPENSES INVESTMENT ASSET ASSETS AT TO INCOME TO RATIO OF VALUE, END OF AVERAGE AVERAGE EXPENSES TO END TOTAL PERIOD NET NET AVERAGE NET PORTFOLIO OF PERIOD RETURN(b) (000'S) ASSETS(c) ASSETS(c) ASSETS(c)(d) TURNOVER(e) - ----------------------------------------------------------------------------------------------------------------- ADVISOR SHARES Year ended October 31, 2001 $12.56 (25.42)% $184,494 0.99% 0.51% 0.99% 26.90% Year ended October 31, 2002 10.73 (13.32)% 194,704 0.99% 0.70% 0.99% 31.63% Year ended October 31, 2003 12.76 21.03% 123,658 1.07% 1.16% 1.07% 68.51% Year ended October 31, 2004 14.87 20.06% 148,317 1.05% 1.39% 1.05% 106.11% Year ended October 31, 2005 17.54 19.69% 193,144 0.92% 2.01% 0.92% 31.32% Six months ended April 30, 2006 (Unaudited) 21.32 28.02% 261,403 0.96% 1.02% 0.96% 14.64% - ----------------------------------------------------------------------------------------------------------------- </Table> (a) The per share amounts and percentages reflect income and expense assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor International Portfolio. (b) Not annualized for periods less than one year. Total Return calculations do not include any sales or redemption charges. (c) Annualized for periods less than one year. (d) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been as indicated. (e) Portfolio turnover is calculated on the basis of the respective Portfolio in which the Fund invests all of its inevitable assets. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 58 - -------------------------------------------------------------------------------- HSBC INVESTOR FUNDS -- OVERSEAS EQUITY FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a) <Table> <Caption> INVESTMENT ACTIVITIES DIVIDENDS -------------------------------------- ------------------------------------- NET REALIZED AND UNREALIZED GAINS NET (LOSSES) REALIZED FROM GAINS FROM INVESTMENT INVESTMENT NET ASSET NET AND TOTAL AND VALUE, INVESTMENT FOREIGN FROM NET FOREIGN BEGINNING OF INCOME CURRENCY INVESTMENT INVESTMENT CURRENCY TOTAL PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS - ------------------------------------------------------------------------------------------------------------------------ CLASS A SHARES 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) Year ended October 31, 2005 13.93 0.18 2.33 2.51 (0.06) (0.79) (0.85) Six months ended April 30, 2006 (Unaudited) 15.59 0.02 4.06 4.08 (0.25) (1.16) (1.41) - ------------------------------------------------------------------------------------------------------------------------ CLASS B SHARES 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 -- -- -- Year ended October 31, 2005 13.43 0.07 2.24 2.31 -- (0.79) (0.79) Six months ended April 30, 2006 (Unaudited) 14.95 (0.04) 3.89 3.85 (0.14) (1.16) (1.30) - ------------------------------------------------------------------------------------------------------------------------ CLASS C SHARES 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 -- -- -- Year ended October 31, 2005 13.67 0.06 2.29 2.35 -- (0.79) (0.79) Six months ended April 30, 2006 (Unaudited) 15.23 (0.04) 3.97 3.93 (0.14) (1.16) (1.30) - ------------------------------------------------------------------------------------------------------------------------ <Caption> RATIOS/SUPPLEMENTARY DATA ------------------------------------------------------------ RATIO OF NET NET RATIO OF INVESTMENT NET ASSETS EXPENSES INCOME ASSET AT TO (LOSS) TO RATIO OF VALUE, END OF AVERAGE AVERAGE EXPENSES TO END TOTAL PERIOD NET NET AVERAGE NET PORTFOLIO OF PERIOD RETURN(b) (000'S) ASSETS(c) ASSETS(c) ASSETS(c)(d) TURNOVER(e) - -------------------------------------------------------------------------------------------------------------- CLASS A SHARES Year ended October 31, 2001 $11.66 (25.93)% $ 6,940 1.85% (0.35)% 2.44% 26.90% Year ended October 31, 2002 9.87 (12.42)% 7,203 1.85% (0.18)% 2.28% 31.63% Year ended October 31, 2003 11.73 20.09 % 10,096 1.85% 0.07 % 2.34% 68.51% Year ended October 31, 2004 13.93 19.40 % 17,721 1.78% 0.79 % 1.88% 106.11% Year ended October 31, 2005 15.59 18.64 % 20,680 1.66% 1.21 % 1.66% 31.32% Six months ended April 30, 2006 (Unaudited) 18.26 27.72% 22,767 1.64% 0.29% 1.64% 14.64% - -------------------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended October 31, 2001 $11.30 (26.52)% $ 294 2.60% (1.09)% 3.18% 26.90% Year ended October 31, 2002 9.56 (13.07)% 588 2.60% (0.87)% 3.04% 31.63% Year ended October 31, 2003 11.34 19.26 % 1,076 2.60% (0.62)% 3.16% 68.51% Year ended October 31, 2004 13.43 18.43 % 2,061 2.53% 0.05 % 2.63% 106.11% Year ended October 31, 2005 14.95 17.72 % 2,403 2.41% 0.47 % 2.41% 31.32% Six months ended April 30, 2006 (Unaudited) 17.50 27.24% 3,225 2.38% (0.40)% 2.38% 14.64% - -------------------------------------------------------------------------------------------------------------- CLASS C SHARES Year ended October 31, 2001 $11.41 (26.53)% $ 139 2.60% (1.10)% 3.16% 26.90% Year ended October 31, 2002 9.68 (13.08)% 96 2.60% (1.00)% 3.04% 31.63% Year ended October 31, 2003 11.54 19.28 % 121 2.60% (0.64)% 3.17% 68.51% Year ended October 31, 2004 13.67 18.46 % 137 2.54% (0.10)% 2.66% 106.11% Year ended October 31, 2005 15.23 17.70 % 164 2.41% 0.48 % 2.41% 31.32% Six months ended April 30, 2006 (Unaudited) 17.86 27.28% 212 2.38% (0.42)% 2.38% 14.64% - -------------------------------------------------------------------------------------------------------------- </Table> * Calculated based on average shares outstanding. (a) The per share amounts and percentages reflect income and expense assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor International Portfolio. (b) Not annualized for periods less than one year. Total Return calculations do not include any sales or redemption charges. (c) Annualized for periods less than one year. (d) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been as indicated. (e) Portfolio turnover is calculated on the basis of the respective Portfolio in which the Fund invests all of its investable assets. See notes to financial statements. 59 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. (a) <Table> <Caption> INVESTMENT ACTIVITIES DIVIDENDS -------------------------------------- ------------------------ NET REALIZED AND UNREALIZED GAINS NET NET ASSET (LOSSES) TOTAL REALIZED VALUE, NET FROM FROM GAINS FROM BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL OF PERIOD LOSS TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS - ----------------------------------------------------------------------------------------------------------- ADVISOR SHARES 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 -- -- Year ended October 31, 2005 13.07 (0.10) 1.97 1.87 -- -- Six months ended April 30, 2006 (Unaudited) 14.94 (0.04) 3.11 3.07 (0.50) (0.50) - ----------------------------------------------------------------------------------------------------------- <Caption> RATIOS/SUPPLEMENTARY DATA -------------------------------------------------------------- RATIO OF RATIO OF NET NET NET EXPENSES INVESTMENT ASSET ASSETS AT TO LOSS TO RATIO OF VALUE, END OF AVERAGE AVERAGE EXPENSES TO END OF TOTAL PERIOD NET NET AVERAGE NET PORTFOLIO PERIOD RETURN(b) (000'S) ASSETS(c) ASSETS(c) ASSETS(c)(d) TURNOVER(e) - ---------------------------------------------------------------------------------------------------------------- ADVISOR SHARES Year ended October 31, 2001 $11.32 (22.98)% $180,265 1.07% (0.74)% 1.07% 52.47% Year ended October 31, 2002 9.27 (18.11)% 190,686 1.07% (0.87)% 1.07% 103.90% Year ended October 31, 2003 12.36 33.33 % 326,072 1.01% (0.72)% 1.01% 152.05% Year ended October 31, 2004 13.07 5.74 % 279,669 0.98% (0.62)% 0.98% 81.75% Year ended October 31, 2005 14.94 14.31 %(f) 177,519 0.94%(f) (0.54)%(f) 0.94%(f) 63.95% Six months ended April 30, 2006 (Unaudited) 17.51 20.98 % 198,931 1.02% (0.48)% 1.02% 31.02% - ---------------------------------------------------------------------------------------------------------------- </Table> (a) The per share amounts and percentages reflect income and expense assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor Small Cap Equity Portfolio. (b) Not annualized for periods less than one year. Total Return calculations do not include any sales or redemption charges. (c) Annualized for periods less than one year. (d) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been as indicated. (e) Portfolio turnover is calculated on the basis of the respective Portfolio in which the Fund invests all of its investable assets. (f) During the year ended October 31, 2005, HSBC reimbursed certain amounts to the respective Portfolio in which the Fund invests related to violation of certain investment policies and limitations. The corresponding impact to the net expense ratio, net income ratio, gross expense ratio and total return was 0.04% for the Advisor Shares. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 60 - -------------------------------------------------------------------------------- HSBC INVESTOR FUNDS -- OPPORTUNITY FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a) <Table> <Caption> INVESTMENT ACTIVITIES DIVIDENDS -------------------------------------- ------------------------ NET REALIZED AND NET UNREALIZED REALIZED GAINS GAINS NET ASSET (LOSSES) TOTAL (LOSSES) VALUE, NET FROM FROM FROM BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL OF PERIOD LOSS TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS - ---------------------------------------------------------------------------------------------------------- CLASS A SHARES 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 -- -- Year ended October 31, 2005 10.91 (0.14) 1.62 1.48 -- -- Six months ended April 30, 2006 (Unaudited) 12.39 (0.07) 2.59 2.52 (0.39) (0.39) - ---------------------------------------------------------------------------------------------------------- CLASS B SHARES 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 -- -- Year ended October 31, 2005 10.29 (0.22) 1.53 1.31 -- -- Six months ended April 30, 2006 (Unaudited) 11.60 (0.11) 2.42 2.31 (0.39) (0.39) - ---------------------------------------------------------------------------------------------------------- CLASS C SHARES 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 -- -- Year ended October 31, 2005 10.39 (0.21) 1.53 1.32 -- -- Six months ended April 30, 2006 (Unaudited) 11.71 (0.11) 2.44 2.33 (0.39) (0.39) - ---------------------------------------------------------------------------------------------------------- <Caption> RATIOS/SUPPLEMENTARY DATA ------------------------------------------------- RATIO OF NET NET NET ASSETS INVESTMENT ASSET AT END RATIO OF LOSS TO RATIO OF VALUE, OF EXPENSES TO AVERAGE EXPENSES TO END OF TOTAL PERIOD AVERAGE NET NET AVERAGE NET PORTFOLIO PERIOD RETURN(b) (000'S) ASSETS(c) ASSETS(c) ASSETS(c)(d) TURNOVER(e) - ----------------------------------------------------------------------------------------------------------------- CLASS A SHARES Year ended October 31, 2001 $9.60 (23.65)% $11,892 1.65% (1.32)% 1.97% 52.47% Year ended October 31, 2002 7.83 (18.44)% 11,384 1.65% (1.45)% 2.08% 103.90% Year ended October 31, 2003 10.36 32.31 % 16,695 1.65% (1.36)% 2.09% 152.05% Year ended October 31, 2004 10.91 5.31 % 20,902 1.61% (1.24)% 1.72% 81.75% Year ended October 31, 2005 12.39 13.57 %(f) 22,875 1.51%(f) (1.11)%(f) 1.69%(f) 63.95% Six months ended April 30, 2006 (Unaudited) 14.52 20.72 % 25,528 1.55% (1.01)% 1.66% 31.02% - ----------------------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended October 31, 2001 $9.27 (24.16)% $ 1,315 2.40% (2.08)% 2.73% 52.47% Year ended October 31, 2002 7.51 (18.99)% 2,374 2.40% (2.18)% 2.86% 103.90% Year ended October 31, 2003 9.85 31.16 % 3,952 2.40% (2.11)% 2.83% 152.05% Year ended October 31, 2004 10.29 4.47 % 4,611 2.36% (2.00)% 2.47% 81.75% Year ended October 31, 2005 11.60 12.73 %(f) 4,539 2.26%(f) (1.86)%(f) 2.44%(f) 63.95% Six months ended April 30, 2006 (Unaudited) 13.52 20.32 % 5,169 2.30% (1.76)% 2.41% 31.02% - ----------------------------------------------------------------------------------------------------------------- CLASS C SHARES Year ended October 31, 2001 $9.35 (24.17)% $ 407 2.40% (2.06)% 2.71% 52.47% Year ended October 31, 2002 7.57 (19.04)% 329 2.40% (2.20)% 2.83% 103.90% Year ended October 31, 2003 9.94 31.31 % 395 2.40% (2.11)% 2.84% 152.05% Year ended October 31, 2004 10.39 4.53 % 344 2.37% (2.00)% 2.48% 81.75% Year ended October 31, 2005 11.71 12.70 %(f) 306 2.26%(f) (1.86)%(f) 2.44%(f) 63.95% Six months ended April 30, 2006 (Unaudited) 13.65 20.30 % 354 2.30% (1.76)% 2.41% 31.02% - ----------------------------------------------------------------------------------------------------------------- </Table> * Calculated using average shares. (a) The per share amounts and percentages reflect income and expense assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor Small Cap Portfolio. (b) Not annualized for periods less than one year. Total Return calculations do not include any sales or redemption charges. (c) Annualized for periods less than one year. (d) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been as indicated. (e) Portfolio turnover is calculated on the basis of the respective Portfolio in which the Fund invests all of its investable assets. (f) During the year ended October 31, 2005, HSBC reimbursed certain amounts to the respective Portfolio in which the Fund invests related to violation of certain investment policies and limitations. The corresponding impact to the net expense ratio, net income ratio, gross expense ratio and total return were 0.04%, 0.04% and 0.04% for Class A Shares, Class B Shares and Class C Shares, respectively. See notes to financial statements. 61 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (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. As of April 30, 2006, the Trust is comprised of 24 separate funds and the Advisor Trust is comprised of 3 separate funds, each a diversified series of the HSBC Investor Family of Funds. The accompanying financial statements are presented for the following 13 funds (individually a 'Fund', collectively the 'Funds') of the Trust and Advisor Trust (collectively the 'Trusts'): <Table> <Caption> FUND SHORT NAME TRUST - ---- ---------- ----- HSBC Investor Intermediate Duration Fixed Income Intermediate Duration Trust Fund (formerly the HSBC Investor Limited Maturity Fixed Income Fund Fund) HSBC Investor Core Plus Fixed Income Fund (Advisor) Core Plus Fixed Income Advisor Trust (formerly the HSBC Investor Fixed Income Fund) Fund (Advisor) HSBC Investor Core Plus Fixed Income Fund (formerly Core Plus Fixed Income Trust the HSBC Investor Bond Fund) Fund HSBC Investor New York Tax-Free Bond Fund New York Tax-Free Bond Trust Fund HSBC Investor High Yield Fixed Income Fund High Yield Fixed Trust Income Fund 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 Advisor Trust Fund 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> Financial statements for all other series of the HSBC Investor Family of Funds are published separately. The HSBC Investor Intermediate Duration Fixed Income Portfolio (formerly the HSBC Investor Limited Maturity Portfolio), HSBC Investor Core Plus Fixed Income Portfolio (formerly the HSBC Investor Fixed Income Portfolio), HSBC Investor High Yield Fixed Income Portfolio, HSBC Investor Growth Portfolio, HSBC Investor Value Portfolio, HSBC Investor International Equity Portfolio and the HSBC Investor Small Cap Equity Portfolio (individually a 'Portfolio', collectively the 'Portfolios') are diversified series of the HSBC Investor Portfolios (the 'Portfolio Trust'). The Portfolio Trust is an open-end management investment company organized under the laws of the State of New York on November 1, 1994. The Portfolios operate as master funds in master-feeder arrangements. The Board of Trustees may authorize issuance of an unlimited number of shares of beneficial interest in the Portfolios under the Declaration of Trust of the Portfolio Trust. The Intermediate Duration Fixed Income Fund, Core Plus Fixed Income Fund (Advisor), Core Plus Fixed Income Fund, New York Tax-Free Bond Fund, High Yield Fixed Income Fund, Growth Fund, Value Fund, Growth and Income Fund, Mid-Cap 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). HSBC INVESTOR FAMILY OF FUNDS 62 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) <Table> <Caption> PROPORTIONATE INTEREST ON FUND RESPECTIVE PORTFOLIO APRIL 30, 2006 - ---- -------------------- -------------- Intermediate Duration Fixed HSBC Investor Intermediate Duration Fixed Income 94.2% Income Fund Portfolio Core Plus Fixed Income Fund HSBC Investor Core Plus Fixed Income Portfolio 73.8% (Advisor) Core Plus Fixed Income Fund HSBC Investor Core Plus Fixed Income Portfolio 16.2% High Yield Fixed Income Fund HSBC Investor High Yield Fixed Income Portfolio 80.0% Growth Fund HSBC Investor Growth Portfolio 68.7% Value Fund HSBC Investor Value Portfolio 69.2% International Equity Fund HSBC Investor International Equity Portfolio 85.0% Overseas Equity Fund HSBC Investor International Equity Portfolio 8.5% Small Cap Equity Fund HSBC Investor Small Cap Equity Portfolio 80.3% Opportunity Fund HSBC Investor Small Cap Equity Portfolio 12.5% </Table> The financial statements of the Portfolios, including the Schedules of Portfolio Investments, are included elsewhere in this report. The financial statements of the Portfolios should be read in conjunction with the financial statements of the Feeder Funds. The Funds are authorized to issue an unlimited number of shares of beneficial interest with a par value of $0.001 per share. The Intermediate Duration Fixed Income Fund, New York Tax-Free Bond Fund, High Yield Fixed Income Fund, Growth Fund, Value Fund, and the Growth and Income Fund each offers four classes of shares: Class A Shares, Class B Shares, Class C Shares and Class I Shares. The Mid-Cap Fund offers four classes of shares: Class A Shares, Class B Shares, Class C Shares, and Trust Shares. The Core Plus Fixed Income Fund (Advisor), International Equity Fund, and the Small Cap Equity Fund each offers one class of shares: Advisor Shares. The Core Plus Fixed Income Fund, Overseas Equity Fund, and the Opportunity Fund each offers three classes of shares: Class A Shares, Class B Shares and Class C Shares. Each class of shares in the Funds has identical rights and privileges except with respect to arrangements pertaining to shareholder servicing or distribution, class-related expenses, voting rights on matters affecting a single class of shares, and the exchange privilege of each class of shares. Under the Trusts' organizational documents, the Funds' officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, in the normal course of business, the Funds enter into contracts with service providers, which also provide for indemnifications by the Funds. The Funds' maximum exposure under these arrangements is unknown, as this would involve 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 63 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) reliance upon quoted prices or exchanges or over-the-counter prices, since such valuations are believed to reflect more accurately the fair value of such securities. All debt portfolio securities with a remaining maturity of 60 days or less are valued at amortized cost. Under the amortized cost method, premium or discount, if any, is amortized or accreted, respectively, on a constant (straight-line) basis to the maturity of the security. The value of each equity security is based either on the last sale price on a national securities exchange, or in the absence of recorded sales, at the closing bid prices on such exchanges, or at the quoted bid price in the over-the-counter market. Securities or other assets for which market quotations are not readily available are valued by or at the direction of the Funds' Board of Trustees. In addition, specific securities may need to be valued by or at the direction of the Funds' Board of Trustees due to potentially significant events. Examples of potentially significant events that could affect the value of an individual security include corporate actions by the issuer, announcements by the issuer relating to its earnings or products, regulatory news, natural disasters and litigation. Examples of potentially significant events that could affect multiple securities held by a Fund include governmental actions, natural disasters and armed conflicts. B. FEEDER FUNDS The Feeder Funds record their investments in their respective Portfolios at fair 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 During the period, security transactions are accounted for no later than one business day following trade date. For financial reporting purposes, however, changes in holdings are accounted for on trade date on the last business day of the reporting period. Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date. B. FEEDER FUNDS The Feeder Funds record daily their pro-rata income, expenses, changes in unrealized appreciation and depreciation and realized and unrealized gains and losses derived from their respective Portfolios. In addition, the Feeder Funds accrue their own expenses daily as incurred. FUTURES CONTRACTS: The New York Tax-Free Bond Fund, Growth and Income Fund and Mid-Cap Fund may invest in futures contracts for the purpose of hedging existing portfolio securities or securities it intends to purchase against fluctuations in fair value caused by changes in prevailing market interest rates. Upon entering into a futures contract, a Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as 'variation margin,' are made each day, depending on the daily fluctuations in the fair value of the underlying security. A gain or loss equal to the daily variation margin is recognized on a daily basis. Should market conditions move unexpectedly, a Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets. 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 HSBC INVESTOR FAMILY OF FUNDS 64 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) 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, 2006, the funds did not write any covered call options. SECURITIES LOANS: To generate additional income, the Funds may lend portfolio securities, in amounts up to 33 1/3% of their respective assets pursuant to agreements requiring that the loan be collateralized by cash, U.S. Government or U.S. Government agency securities, equal at all times to at least 100% of the fair value of the loaned securities. HSBC Bank USA ('HSBC Bank'), an affiliate of the Investment Adviser (defined below), acts as the securities lending agent for this activity. The Funds receive payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of collateral. Collateral is marked to market daily and adjusted, if needed, to provide the requited level of collateral. 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 Bank to be of good standing and creditworthy under guidelines approved by the Board of Trustees and when, in the judgement of HSBC Bank, the amounts that 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, 2006, the Funds had no securities on loan. LINE OF CREDIT: The New York Tax-Free Bond Fund, Growth and Income Fund and Mid-Cap Fund participate in a short-term, demand note agreement with HSBC Bank USA, an affiliate of the Investment Adviser (defined below). Under the agreement, these 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, 2006, the details of the borrowing were as follows (based on the actual number of days in which the respective Fund borrowed monies): <Table> <Caption> AVERAGE AVERAGE AMOUNT INTEREST FUND OUTSTANDING RATE ---- ----------- ---- Growth and Income Fund.... ............................. $666,151 4.64% Mid-Cap Fund............................................ 567,661 4.82% </Table> 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 expenses), and unrealized/realized gains and losses are allocated to each class based on relative net assets on a daily basis. DIVIDENDS TO SHAREHOLDERS: The Intermediate Duration Fixed Income Fund, Core Plus Fixed Income Fund (Advisor), Core Plus Fixed Income Fund, New York Tax-Free Bond Fund, and the High Yield Fixed Income 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. 65 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) The Funds' net realized gains, if any, are distributed to shareholders at least annually. Additional distributions are also made to the Funds' shareholders to the extent necessary to avoid the federal excise tax on certain undistributed income and net capital gains of regulated investment companies. The amount and character of net investment income and net realized gains distributions are determined in accordance with federal income tax regulations which may differ from GAAP. These 'book/tax' differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature (i.e. reclassification of market discounts, gain/loss, paydowns, and distributions), such amounts are reclassified within the components of net assets; temporary differences do not require reclassification. The Funds may utilize equalization accounting for tax purposes and designate earnings and profits, including net realized gains distributed to shareholders on redemption of shares, as a part of the dividends paid deduction for income tax purposes. REDEMPTION FEE: A redemption fee of 2.00% is charged and recorded as paid-in-capital for any shares redeemed or exchanged after holding them for less than 30 days. This fee does not apply to shares purchased through reinvested dividends or capital gains or shares held in certain omnibus accounts or retirement plans that cannot implement the fee. For the period ended April 30, 2006, the following Funds collected redemption fees as follows: <Table> <Caption> FUND FEES COLLECTED ---- -------------- Intermediate Duration Fixed Income Fund............. $ 2 Core Plus Fixed Income Fund (Advisor)............... $164 Core Plus Fixed Income Fund......................... $ 42 New York Tax-Free Bond Fund......................... $173 High Yield Fixed Income Fund........................ $254 Growth Fund......................................... $289 Value Fund.......................................... $ 83 Growth & Income Fund................................ $ -- Mid-Cap Fund........................................ $ 8 International Equity Fund........................... $ 1 Overseas Equity Fund................................ $120 Small Cap Equity Fund............................... $ 57 Opportunity Fund.................................... $219 </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, Growth and Income Fund, and the Mid-Cap Fund. As Investment Adviser, HSBC manages the investments of the Funds and continuously reviews, supervises and administers the Funds' investments. Sub-Investment Adviser services are provided by Transamerica Investment Management, LLC ('Transamerica') and Munder Capital Management ('Munder') for the Growth and Income Fund and Mid-Cap Fund, respectively. For its services as Investment Adviser, HSBC is entitled to receive a fee, accrued daily and paid monthly, based on average daily net assets, at an annual rate of 0.25% of the average daily net assets of the New York Tax-Free Bond Fund. HSBC INVESTOR FAMILY OF FUNDS 66 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) For its services as Investment Adviser and Sub-Investment Adviser, respectively, HSBC and Transamerica receive, in the aggregate, a fee accrued daily and paid monthly at an annual rate of 0.60% of the Growth and Income Fund's average daily net assets. For its services as Investment Adviser and Sub-Investment Adviser, respectively, HSBC and Munder receive, in the aggregate, a fee accrued daily and paid monthly at an annual rate of 0.75% of the Mid-Cap Fund's average daily net assets. The Investment Adviser has agreed to contractually waive 0.05% of its management fee, computed daily and paid monthly, based on average daily net assets of the Growth and Income Fund and Mid-Cap Fund. ADMINISTRATION: HSBC serves the Funds as Administrator. Under the terms of the administration agreement, HSBC receives from the Funds a fee, accrued daily and paid monthly, at an annual rate of: <Table> <Caption> BASED ON AVERAGE DAILY NET ASSETS FEE RATE --------------------------------- -------- Up to $8 billion........................................... 0.075% In excess of $8 billion but not exceeding $9.25 billion.... 0.070% In excess of $9.25 billion but not exceeding $12 billion... 0.050% In excess of $12 billion................................... 0.030% </Table> The fee breakpoints are determined on the basis of the aggregate average daily net assets of the HSBC Investor Family of Funds. The fee is allocated to each series of the HSBC Investor Family of Funds based upon its pro-rata share of net assets for each class. For assets invested in the underlying Portfolios by the Feeder Funds, the Portfolios pay half of the administration fee and the Feeder Funds pay half, for a combination of the total fee rate above. HSBC 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. Pursuant to a Sub-Administration Agreement with HSBC, BISYS Fund Services Ohio, Inc. ('BISYS Ohio') a wholly-owned subsidiary of The BISYS Group, Inc, serves as sub-administrator to each Fund subject to the general supervision of the Funds' Board of Trustees and HSBC. For these services, BISYS Ohio is entitled to a fee, payable by HSBC, at an annual rate equivalent to the fee rates set forth above, minus 0.02% (2 basis points), which is retained by HSBC. Under a Compliance Services Agreement between the Funds' and BISYS Ohio (the 'CCO Agreement'), BISYS Ohio makes an employee available to serve as the Funds' Chief Compliance Officer (the 'CCO'). Under the CCO Agreement, BISYS Ohio also provides infrastructure and support in implementing the written policies and procedures comprising the Funds' compliance program, including support services to the CCO. For the services provided under the CCO Agreement, the HSBC Investor Family of Funds paid BISYS Ohio $117,433 for the period ended April 30, 2006, plus certain out of pocket expenses. Expenses incurred are reflected on the Statement of Operations as 'Compliance service'. BISYS Ohio pays the salary and other compensation earned by any such individuals as employees of BISYS. DISTRIBUTION PLAN: BISYS Fund Services Limited Partnership ('BISYS'), a wholly-owned subsidiary of BISYS Fund Services, 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 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 $1,125,165 in commissions from sales of the HSBC Investor Family of Funds, of which $1,124,903 was reallowed to affiliated brokers and dealers. 67 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (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 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 currently are not intended to exceed 0.25% of the average daily net assets of Class A Shares, and 1.00% of the average daily net assets of Class B Shares and Class C Shares. FEE REDUCTIONS: The Investment Adviser has agreed to limit the total expenses, exclusive of interest, taxes, brokerage commissions and extraordinary expenses, of certain Funds. Each affected Fund Class has its own expense limitations based on average daily net assets for any full fiscal year as follows: <Table> <Caption> PRE 2/28/06 CURRENT EXPENSE EXPENSE FUND CLASS LIMITATION LIMITATION ---- ----- ---------- ---------- Intermediate Duration Fixed Income Fund......... A N/A 0.65% Intermediate Duration Fixed Income Fund......... B N/A 1.40% Intermediate Duration Fixed Income Fund......... C N/A 1.40% Intermediate Duration Fixed Income Fund......... I N/A 0.40% Core Plus Fixed Income Fund..................... A 1.10% 0.70% Core Plus Fixed Income Fund..................... B 1.85% 1.45% Core Plus Fixed Income Fund..................... C 1.85% 1.45% Core Plus Fixed Income Fund (Advisor)........... Advisor N/A 0.45% High Yield Fixed Income Fund.................... A 0.80% 0.80% High Yield Fixed Income Fund.................... B 1.55% 1.55% High Yield Fixed Income Fund.................... C 1.55% 1.55% High Yield Fixed Income Fund.................... I 0.55% 0.55% Growth Fund..................................... A 1.20% 1.20% Growth Fund..................................... B 1.95% 1.95% Growth Fund..................................... C 1.95% 1.95% Growth Fund..................................... I 0.95% 0.95% Value Fund...................................... A 1.20% 1.20% Value Fund...................................... B 1.95% 1.95% Value Fund...................................... C 1.95% 1.95% Value Fund...................................... I 0.95% 0.95% Growth and Income Fund.......................... A N/A 1.20% Growth and Income Fund.......................... B N/A 1.95% Growth and Income Fund.......................... C N/A 1.95% Growth and Income Fund.......................... I N/A 0.91% Mid-Cap Fund.................................... A N/A 1.35% Mid-Cap Fund.................................... B N/A 2.10% Mid-Cap Fund.................................... C N/A 2.10% Mid-Cap Fund.................................... Trust N/A 1.10% Overseas Equity Fund............................ A 1.85% 1.85% Overseas Equity Fund............................ B 2.60% 2.60% Overseas Equity Fund............................ C 2.60% 2.60% Opportunity Fund................................ A 1.65% 1.65% Opportunity Fund................................ B 2.40% 2.40% Opportunity Fund................................ C 2.40% 2.40% </Table> In addition, the investment advisor may waive additional fees at their discretion. All contractual and any voluntary investment advisory fee waivers are not subject to recoupment in subsequent fiscal periods. HSBC INVESTOR FAMILY OF FUNDS 68 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) FUND ACCOUNTING, TRANSFER AGENCY, CUSTODIAN AND TRUSTEE: 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 of 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 Bank receives a fee based on average daily net assets, number of transactions and reimbursement of certain expenses. Each of the six non-interested Trustees are compensated with a $24,000 annual Board retainer, as well as a $1,000 annual retainer for each Committee of the Board. Each non-interested Trustee also receives a $4,000 and $2,000 meeting fee for each regular in-person Board meeting and Committee meeting, respectively. Furthermore, each non-interested Trustee receives compensation for attending special meetings and/or functioning as a Committee Chairperson or Lead Trustee. In addition, the non-interested Trustees are reimbursed for certain expenses incurred in connection with their Board membership. OTHER: For its services as securities lending agent, HSBC Bank (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. Income from securities lending, net of related expenses, is recorded as earned by the Funds. The fees collected by HSBC Bank for the period ended April 30, 2006 were: <Table> <Caption> FUND FEE ---- --- Growth and Income Fund.............................. $ 94 Mid-Cap Fund........................................ 398 </Table> The HSBC Investor Family of Funds may use affiliated broker/dealers for the execution of portfolio investment trades. For the period ended April 30, 2006, affiliated broker/dealers did not receive any commissions on the execution of trades related to the HSBC Investor Family of Funds. 4. INVESTMENT TRANSACTIONS: Purchases of and proceeds from sales, excluding short-term securities, for the Funds for the period ended April 30, 2006 totaled: <Table> <Caption> FUND PURCHASES SALES ---- --------- ----- New York Tax-Free Bond Fund......................... $6,912,326 $ 6,292,966 Growth and Income Fund.............................. 4,214,970 18,119,624 Mid-Cap Fund........................................ 8,910,437 11,802,717 </Table> There were no long-term U.S. Government securities held during the period ended April 30, 2006. Contributions and withdrawals of the respective Portfolios for the period ended April 30, 2006 totaled: <Table> <Caption> FUND CONTRIBUTIONS WITHDRAWALS ---- ------------- ----------- Intermediate Duration Fixed Income Fund............. $ 337,209 $11,700,923 Core Plus Fixed Income Fund (Advisor)............... 12,969,049 23,491,867 Core Plus Fixed Income Fund......................... 1,224,116 8,000,210 High Yield Fixed Income Fund........................ 10,031,947 702,198 Growth Fund......................................... 5,483,317 5,411,126 Value Fund.......................................... 3,702,632 6,882,603 International Equity Fund........................... 32,020,718 19,317,610 Overseas Equity Fund................................ 2,446,889 5,653,057 Small Cap Equity Fund............................... 10,156,261 24,891,594 Opportunity Fund.................................... 1,813,335 4,149,313 </Table> 69 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) 5. CONCENTRATION OF CREDIT RISK: The New York Tax-Free Bond Fund invests primarily in debt obligations issued by the State of New York and its respective political subdivisions, agencies and public authorities. The Fund is more susceptible to economic and political factors adversely affecting issuers of New York specific municipal securities than are municipal bond funds that are not concentrated in these issuers to the same extent. 6. FEDERAL INCOME TAX INFORMATION: At April 30, 2006, 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) -------------- -------- ------------ ------------ -------------- New York Tax-Free Bond Fund... $63,014,024 $ 1,636,437 $ (234,612) $ 1,401,825 Growth and Income Fund........ 37,905,965 11,272,666 (1,012,506) 10,260,160 Mid-Cap Fund.................. 23,524,898 7,337,068 (267,276) 7,069,792 </Table> HSBC INVESTOR FAMILY OF FUNDS 70 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- INVESTMENT ADVISER CONTRACT APPROVAL (UNAUDITED) -- APRIL 30, 2006 The Board of Trustees (the 'Board of Trustees') of the HSBC Investor Trust, HSBC Advisor Trust and HSBC Portfolio Trust (collectively, the 'Trusts'), and the non-interested Trustees, voting separately, approved the renewal of the Investment Advisory Contracts and, where applicable Sub-Advisory Contracts, with respect to the respective series of the Trusts then existing (collectively, the 'Existing Funds') at an in-person meeting held on December 12, 2005. For the HSBC Investor High Yield Fixed Income Fund and HSBC Investor High Yield Fixed Income Portfolio (the 'High Yield Funds') the Board of Trustees reviewed and approved the initial investment advisory agreement on June 13, 2005 (the Existing Funds and High Yield Funds are collectively referred to as the 'Funds' and the Investment Advisory Contracts and Sub-Advisory Contracts are collectively referred to as the 'Agreements'). In determining whether it was appropriate to approve the Agreements for the Funds, the Board of Trustees requested information from the Adviser and the various Sub-Advisers 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 for each Fund, the Board of Trustees determined that the relevant Agreement is consistent with the best interests of the Funds and their shareholders, and enables the Funds to receive high quality services at a cost that is appropriate and reasonable. The Board of Trustees made these determinations on the basis of the following considerations, 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, as applicable to the Equity Funds, the sub-advisers), in light of the high quality services provided to the Funds, and each Fund's historic performance. In the case of the High Yield Funds, the Board of Trustees considered the historical performance and experience of the management team in managing other mutual funds having similar investment objectives. For the High Yield Funds and other Fixed Income Funds, the Board also considered the historical performance and experience of the management team in managing other accounts, and the reasonable expectation of achieving competitive performance for these Funds. The Board of Trustees also considered the general and administrative and marketing services provided to the Funds by the Adviser. With respect to the Equity Funds, the Board considered the capabilities and performance of the Adviser's Multimanager unit. The Board of Trustees also considered the sufficiency of the Adviser's capabilities and oversight for both internally managed Funds as well as the sub-advised Equity Funds. The Board of Trustees further considered the Adviser's and Sub-Advisers' ability to obtain best execution on portfolio transactions. -- Investment Performance of the Funds, Adviser and Sub-Advisers. The Board of Trustees considered short-term and long-term investment performance of each Fund over various periods of time as compared to a peer group of comparable funds. The Board of Trustees also considered the Equity Funds' sub-adviser's historic performance managing accounts having similar investment objectives as the Fund. With respect to the High Yield Funds, the Trustees considered the various measurements of investment performance provided with respect to the high yield team, and the significant achievements by the team in its management of high-yield products. -- 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 advisory fees under the Agreements were within the range of those of similar funds, noting the high level of resource, expertise and experience that was provided to the Funds by the Adviser and Sub-Advisers. For the Equity Funds, the Board of Trustees concluded that the combined advisory fees payable to the Adviser and each of the Equity Fund's Sub-Advisers 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 advisory fee to similar fees paid by comparable mutual funds. -- Other Relevant Considerations. The Board of Trustees considered the Adviser's and Sub-Adviser's representations regarding staffing and capabilities to manage the Funds. 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 Sub-Advisers. 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 meetings (including a separate vote of the Independent Trustees present in person at the meeting) approved the Agreements. 71 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- TABLE OF SHAREHOLDER EXPENSES (UNAUDITED) -- APRIL 30, 2006 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; 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, 2005 through April 30, 2006. ACTUAL EXPENSES The table on the following page 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. HSBC INVESTOR FAMILY OF FUNDS 72 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- TABLE OF SHAREHOLDER EXPENSES (UNAUDITED) -- APRIL 30, 2006 (CONTINUED) <Table> <Caption> ENDING BEGINNING ACCOUNT EXPENSE PAID EXPENSE RATIO ACCOUNT VALUE VALUE DURING PERIOD* DURING PERIOD 11/1/05 4/30/06 11/1/05 - 4/30/06 11/1/05 - 4/30/06 ------- ------- ----------------- ----------------- Intermediate Duration Fixed Income Fund Class A $1,000.00 $1,008.00 $4.73 0.95% Class I 1,000.00 1,009.30 3.59 0.72% Class B 1,000.00 1,004.30 8.45 1.70% Class C 1,000.00 1,004.30 8.45 1.70% Core Plus Fixed Income Fund (Advisor) Advisor Shares 1,000.00 1,008.80 3.34 0.67% Core Plus Fixed Income Fund Class A 1,000.00 1,008.30 4.33 0.87% Class B 1,000.00 1,004.60 8.05 1.62% Class C 1,000.00 1,003.70 8.05 1.62% New York Tax-Free Bond Fund Class A 1,000.00 1,008.60 4.58 0.92% Class I 1,000.00 1,010.70 3.34 0.67% Class B 1,000.00 1,004.80 8.30 1.67% Class C 1,000.00 1,004.80 8.30 1.67% High Yield Fixed Income Fund Class A** 1,000.00 1,051.00 3.69 0.80% Class I** 1,000.00 1,052.10 2.54 0.55% Class B*** 1,000.00 1,048.20 7.09 1.55% Class C**** 1,000.00 1,045.80 5.95 1.55% Growth Fund Class A 1,000.00 1,080.70 6.19 1.20% Class I 1,000.00 1,082.10 4.90 0.95% Class B 1,000.00 1,076.60 10.04 1.95% Class C 1,000.00 1,076.90 10.04 1.95% Value Fund Class A 1,000.00 1,134.20 6.35 1.20% Class I 1,000.00 1,135.20 5.03 0.95% Class B 1,000.00 1,129.50 10.30 1.95% Class C 1,000.00 1,129.60 10.30 1.95% Growth & Income Fund Class A 1,000.00 1,122.10 6.95 1.32% Class I 1,000.00 1,123.70 5.63 1.07% Class B 1,000.00 1,117.60 10.87 2.07% Class C 1,000.00 1,116.50 10.86 2.07% Mid-Cap Fund Class A 1,000.00 1,157.10 8.77 1.64% Trust Shares 1,000.00 1,158.60 7.49 1.40% Class B 1,000.00 1,153.40 12.76 2.39% Class C 1,000.00 1,153.30 12.76 2.39% International Equity Fund Advisor Shares 1,000.00 1,280.20 5.43 0.96% Overseas Fund Class A 1,000.00 1,277.20 9.26 1.64% Class B 1,000.00 1,272.40 13.41 2.38% Class C 1,000.00 1,272.80 13.41 2.38% Small Cap Equity Fund Advisor Shares 1,000.00 1,209.80 5.59 1.02% Opportunity Fund Class A 1,000.00 1,207.20 8.48 1.55% Class B 1,000.00 1,203.20 12.56 2.30% Class C 1,000.00 1,203.00 12.56 2.30% </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. ** Information shown reflects values using the expense ratios and rates of return for the period from November 18, 2005 to April 30, 2006. *** Information shown reflects values using the expense ratios and rates of return for the period from November 19, 2005 to April 30, 2006. **** Information shown reflects values using the expense ratios and rates of return for the period from December 14, 2005 to April 30, 2006. 73 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- TABLE OF SHAREHOLDER EXPENSES (UNAUDITED) -- APRIL 30, 2006 (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 11/1/05 4/30/06 11/1/05 - 4/30/06 11/1/05 - 4/30/06 ------- ------- ----------------- ----------------- Intermediate Duration Fixed Income Fund Class A $1,000.00 $1,020.08 $ 4.76 0.95% Class I 1,000.00 1,021.22 3.61 0.72% Class B 1,000.00 1,016.36 8.50 1.70% Class C 1,000.00 1,016.36 8.50 1.70% Core Plus Fixed Income Fund (Advisor) Advisor Shares 1,000.00 1,021.47 3.36 0.67% Core Plus Fixed Income Fund Class A 1,000.00 1,020.48 4.36 0.87% Class B 1,000.00 1,016.76 8.10 1.62% Class C 1,000.00 1,016.76 8.10 1.62% New York Tax-Free Bond Fund Class A 1,000.00 1,020.23 4.61 0.92% Class I 1,000.00 1,021.47 3.36 0.67% Class B 1,000.00 1,016.51 8.35 1.67% Class C 1,000.00 1,016.51 8.35 1.67% High Yield Fixed Income Fund Class A** 1,000.00 1,020.83 4.01 0.80% Class I** 1,000.00 1,022.07 2.76 0.55% Class B** 1,000.00 1,017.11 7.75 1.55% Class C** 1,000.00 1,017.11 7.75 1.55% Growth Fund Class A 1,000.00 1,018.84 6.01 1.20% Class I 1,000.00 1,020.08 4.76 0.95% Class B 1,000.00 1,015.12 9.74 1.95% Class C 1,000.00 1,015.12 9.74 1.95% Value Fund Class A 1,000.00 1,018.84 6.01 1.20% Class I 1,000.00 1,020.08 4.76 0.95% Class B 1,000.00 1,015.12 9.74 1.95% Class C 1,000.00 1,015.12 9.74 1.95% Growth & Income Fund Class A 1,000.00 1,018.25 6.61 1.32% Class I 1,000.00 1,019.49 5.36 1.07% Class B 1,000.00 1,014.53 10.34 2.07% Class C 1,000.00 1,014.53 10.34 2.07% Mid-Cap Fund Class A 1,000.00 1,016.66 8.20 1.64% Trust Shares 1,000.00 1,017.85 7.00 1.40% Class B 1,000.00 1,012.94 11.93 2.39% Class C 1,000.00 1,012.94 11.93 2.39% </Table> HSBC INVESTOR FAMILY OF FUNDS 74 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- TABLE OF SHAREHOLDER EXPENSES (UNAUDITED) -- APRIL 30, 2006 (CONTINUED) <Table> <Caption> BEGINNING ENDING EXPENSE PAID EXPENSE RATIO ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD 11/1/05 4/30/06 11/1/05 - 4/30/06 11/1/05 - 4/30/06 ------- ------- ----------------- ----------------- 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 1,012.99 11.88 2.38% Class C 1,000.00 1,012.99 11.88 2.38% Small Cap Equity Fund Advisor Shares 1,000.00 1,019.74 5.11 1.02% Opportunity Fund Class A 1,000.00 1,017.11 7.75 1.55% Class B 1,000.00 1,013.39 11.48 2.30% Class C 1,000.00 1,013.39 11.48 2.30% </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. ** Information shown reflects values using the expense ratios and rates of return for the periods from November 18, 2005 to April 30, 2006, November 19, 2005 to April 30, 2006, and December 14, 2005 to April 30, 2006, for Class A and I, Class B, and Class C, respectively, and has been annualized to reflect values for the period November 1, 2005 to April 30, 2006. 75 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2006 (UNAUDITED) <Table> <Caption> - --------------------------------------------------------------- U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 39.9% - --------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) --------- ---------- FEDERAL HOME LOAN MORTGAGE CORP. - 8.0% Pool #1B2655, 4.14%, 12/1/34, (a)...... 343,145 338,219 Pool #C01188, 7.00%, 6/1/31............ 218,072 224,345 Pool #C90893, 5.50%, 4/1/25............ 626,629 613,236 Pool #G01884, 5.00%, 9/1/35............ 578,579 547,201 ---------- 1,723,001 ---------- FEDERAL NATIONAL MORTGAGE ASSOCIATION - 23.3% Pool #254693, 5.50%, 4/1/33............ 959,400 934,334 Pool #535063, 6.50%, 12/1/14........... 232,417 237,840 Pool #593187, 7.00%, 11/1/31........... 481,176 495,321 Pool #740686, 6.50%, 10/1/33........... 607,938 620,504 Pool #781560, 4.49%, 10/1/34, (a)...... 450,728 441,795 Pool #825278, 5.00%, 7/1/35............ 575,260 544,265 TBA May, 5.50%, 5/1/35................. 1,200,000 1,165,126 TBA May, 6.00%, 5/15/36................ 600,000 597,187 ---------- 5,036,372 ---------- U.S. TREASURY NOTES - 8.6% 4.00%, 9/30/07......................... 95,000 93,835 4.50%, 2/15/09......................... 860,000 851,533 4.50%, 2/28/11......................... 265,000 260,156 4.75%, 3/31/11......................... 285,000 282,751 4.00%, 2/15/15......................... 405,000 375,258 ---------- 1,863,533 ---------- TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (COST $8,672,143)..................... 8,622,906 ---------- <Caption> - --------------------------------------------------------------- CORPORATE OBLIGATIONS - 31.4% - --------------------------------------------------------------- AUTO MANUFACTURERS - 1.8% DaimlerChrysler North American Holdings, 4.05%, 6/4/08............... 400,000 388,256 ---------- BANKS - 1.8% Sovereign Bank, 5.125%, 3/15/13........ 300,000 285,883 Turanalem Finance BV, 7.75%, 4/25/13, (b).......................... 100,000 98,625 ---------- 384,508 ---------- CABLE - 1.6% Comcast Corp., 6.50%, 1/15/15.......... 350,000 356,490 ---------- CHEMICALS - 1.1% Nova Chemicals Corp., 6.50%, 1/15/12... 250,000 233,750 ---------- COLLEGES & UNIVERSITIES - 1.9% Tulane University of Louisiana, 5.55%, 11/15/12, (a)......................... 400,000 402,500 ---------- ELECTRIC - 1.2% Progress Energy, Inc., 5.14%, 11/14/08, (a)......................... 250,000 250,141 ---------- FINANCE - 7.8% American General Finance Corp., 4.875%, 5/15/10............................... 500,000 485,467 Ford Motor Credit Corp., 5.80%, 1/12/09............................... 475,000 429,946 General Motors Acceptance Corp., 4.50%, 7/15/06............................... 250,000 248,177 General Motors Acceptance Corp., 4.375%, 12/10/07...................... 500,000 470,319 <Caption> - --------------------------------------------------------------- CORPORATE OBLIGATIONS, CONTINUED - --------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) --------- ---------- General Motors Corp., 8.25%, 7/15/23... 100,000 72,500 ---------- 1,706,409 ---------- MEDIA - 2.9% Time Warner Entertainment, 8.875%, 10/1/12............................... 550,000 622,808 ---------- OIL & GAS - 1.4% Pioneer Natural Resources, 6.875%, 5/1/18................................ 300,000 300,630 ---------- RETAIL - 3.8% Fred Meyer, Inc., 7.45%, 3/1/08........ 350,000 361,065 May Department Stores Co., 5.75%, 7/15/14............................... 500,000 491,312 ---------- 852,377 ---------- TELECOMMUNICATIONS - 3.6% AT&T, Inc., 5.10%, 9/15/14............. 400,000 376,584 Verizon Pennsylvania, Inc., 5.65%, 11/15/11.............................. 400,000 393,811 ---------- 770,395 ---------- TRANSPORTATION - 2.5% Burlington Northern Santa Fe Railway Co., 4.83%, 1/15/23................... 279,656 265,897 Union Pacific Railroad, 5.08%, 1/2/29................................ 299,958 279,513 ---------- 545,410 ---------- TOTAL CORPORATE OBLIGATIONS (COST $6,987,670)........................... 6,813,674 ---------- - --------------------------------------------------------------- ASSET BACKED SECURITIES - 13.9% - --------------------------------------------------------------- Asset Backed Funding Certificates Series 2003-AHL1, Class A1, 3.68%, 3/25/33............................... 210,318 202,621 Capital Auto Receivables Asset Trust Series 2003-2, Class A4A, 1.96%, 1/15/09............................... 339,159 335,860 Carmax Auto Owner Trust Series 2004-2, Class A3, 3.00%, 9/15/08.............. 491,354 486,651 Chase Issuance Trust 2005, Class A8, 4.94%, 10/15/12, (a).................. 300,000 300,212 Citibank Credit Card Issuance Trust Series 2005-A6, Class A6, 4.56%, 10/7/11, (a).......................... 450,000 449,986 MBNA Credit Card Master Note Trust Series 2002-A5, Class A5, 5.08%, 10/17/11, (a)......................... 450,000 452,282 SLM Student Loan Trust Series 2003-12, Class A3, 5.03%, 12/15/15, (a)........ 450,000 451,143 Volkswagen Auto Lease Trust Series 2004-A, Class A3, 2.84%, 7/20/07...... 333,359 331,462 ---------- TOTAL ASSET BACKED SECURITIES (COST $3,019,597)........................... 3,010,217 ---------- - --------------------------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS - 13.2% - --------------------------------------------------------------- Citigroup Mortgage Loan Trust, Inc. Series 2005-WF2, Class AF2, 4.92%, 8/25/35............................... 324,477 320,735 Countrywide Home Loans Series 2005- HYB8, Class 2A1, 5.385%, 12/20/35, (a)......................... 439,800 436,223 Freddie Mac Reference Remic Series R004, Class AL, 5.125%, 12/15/13...... 556,319 549,630 Freddie Mac Series 2962, Class CJ, 5.50%, 11/15/23....................... 566,117 566,917 J.P. Morgan Alternative Loan Trust Series 2005-S1, Class 2A9, 6.00%, 12/25/35.............................. 507,249 499,640 Morgan Stanley Mortgage Loan Trust Series 2006-3AR, Class 2A3, 5.92%, 3/25/36............................... 348,329 349,323 </Table> See notes to financial statements. HSBC INVESTOR PORTFOLIOS 76 - -------------------------------------------------------------------------------- HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) <Table> <Caption> - --------------------------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS, CONTINUED - --------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) --------- ---------- Nomura Asset Acceptance Corp. Series 2006-AP1, Class A2, 5.515%, 2/25/36... 150,000 147,946 ---------- TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $2,906,325)......... 2,870,414 ---------- - --------------------------------------------------------------- COMMERCIAL MORTGAGE BACKED SECURITIES - 7.5% - --------------------------------------------------------------- Banc of America Commercial Mortgage, Inc. Series 2005-6, Class AM, 5.18%, 9/10/47............................... 227,000 218,539 Commercial Mortgage Pass-Through Certificate Series 2005-FL11, Class A1, 5.05%, 11/15/17, (a) (b).... 299,842 299,821 Global Signal Trust Series 2006-1, Class A2, 5.45%, 2/15/36, (a) (b)..... 200,000 197,612 JP Morgan Chase Commercial Mortgage Securities Corp. Series 2005-LDP5, Class AM, 5.22%, 12/15/44............. 325,000 314,025 LB-UBS Commercial Mortgage Trust Series 2006-C1, Class A4, 5.16%, 2/15/31..... 300,000 287,565 Morgan Stanley Capital I Series 2006-T21, Class A4, 5.16%, 10/12/52... 330,000 316,183 ---------- TOTAL COMMERCIAL MORTGAGE BACKED SECURITIES (COST $1,686,732)..................... 1,633,745 ---------- <Caption> - --------------------------------------------------------------- FOREIGN BONDS** - 0.9% - --------------------------------------------------------------- ICELAND SOVEREIGN - 0.2% Housing Finance Fund, 3.75%, 2/15/24... 3,877,344 53,548 ---------- MEXICO FINANCE - 0.3% General Electric Capital Corp., 9.50%, 8/4/10................................ 800,000 73,471 ---------- - --------------------------------------------------------------- FOREIGN BONDS**, CONTINUED - --------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) --------- ---------- SOVEREIGN - 0.4% Mexican Bonos, 9.00%, 12/22/11......... 750,000 69,679 ---------- TOTAL FOREIGN BONDS** (COST $197,280)....................... 196,698 ---------- - --------------------------------------------------------------- INVESTMENT COMPANIES - 0.3% - --------------------------------------------------------------- HSBC Investor Money Market Fund Class I Shares*............................... 60,896 60,896 ---------- TOTAL INVESTMENT COMPANIES (COST $60,896)........................ 60,896 ---------- TOTAL INVESTMENTS (COST $23,530,643) -- 107.1%................................ 23,208,550 ---------- ---------- </Table> - --------- Percentages indicated are based on net assets of $21,671,765. (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, 2006. The maturity dates presented reflect the final maturity date. 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 manager based on procedures approved by the Board of Trustees. * Investment in affiliate. ** The principal amount of each security is denominated in the local currency of each respective country. TBA -- Security was traded on a 'to be announced' basis. 77 HSBC INVESTOR PORTFOLIOS See notes to financial statements. - -------------------------------------------------------------------------------- HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) At April 30, 2006, the portfolio's open forward currency contracts were as follows: <Table> <Caption> CURRENCY CONTRACT UNREALIZED DELIVERY AMOUNT VALUE APPRECIATION/ CURRENCY DATE (LOCAL CURRENCY) (U.S. DOLLAR) VALUE (DEPRECIATION) - -------- ---- ---------------- ------------- ----- -------------- LONG CONTRACTS Icelandic Krona...................................... 5/4/2006 3,704,582 $ 50,088 $ 49,981 $(107) Mexican Neuvo Peso................................... 5/2/2006 794,575 71,442 71,810 368 -------- -------- ----- TOTAL LONG CONTRACTS............................................................... $121,530 $121,791 $ 261 -------- -------- ----- -------- -------- ----- </Table> See notes to financial statements. HSBC INVESTOR PORTFOLIOS 78 - -------------------------------------------------------------------------------- HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2006 (UNAUDITED) <Table> <Caption> - ---------------------------------------------------------------- U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 42.8% - ---------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ---------- ----------- FEDERAL HOME LOAN MORTGAGE CORP. - 7.7% Pool #1B2655, 4.14%, 12/1/34, (a)..... 1,681,409 1,657,271 Pool #C00368, 8.50%, 10/1/24.......... 37,780 40,634 Pool #C00922, 8.00%, 2/1/30........... 243,455 259,195 Pool #C54447, 7.00%, 7/1/31........... 39,732 40,875 Pool #C60712, 6.50%, 11/1/31.......... 631,015 643,843 Pool #C80387, 6.50%, 4/1/26........... 37,840 38,681 Pool #C90893, 5.50%, 4/1/25........... 2,351,702 2,301,440 Pool #D62926, 6.50%, 8/1/25........... 29,221 29,868 Pool #G01317, 7.00%, 10/1/31.......... 207,877 213,857 Pool #G01884, 5.00%, 9/1/35........... 3,278,612 3,100,805 ----------- 8,326,469 ----------- FEDERAL NATIONAL MORTGAGE ASSOCIATION - 23.4% 5.50%, 3/15/11........................ 4,500,000 4,541,216 Pool #253438, 8.50%, 9/1/30........... 66,073 71,237 Pool #254693, 5.50%, 4/1/33........... 4,653,089 4,531,522 Pool #329530, 7.00%, 12/1/25.......... 118,083 121,702 Pool #329655, 7.00%, 11/1/25.......... 50,764 52,320 Pool #356905, 5.89%, 10/1/36, (a)..... 283,558 287,232 Pool #398958, 6.50%, 10/1/12.......... 88,373 90,149 Pool #535332, 8.50%, 4/1/30........... 58,519 63,066 Pool #535440, 8.50%, 8/1/30........... 68,680 74,049 Pool #535608, 9.50%, 4/1/30........... 131,706 144,376 Pool #548965, 8.50%, 7/1/30........... 59,661 64,324 Pool #568486, 7.00%, 1/1/31........... 40,222 41,426 Pool #573752, 8.50%, 2/1/31........... 54,755 59,036 Pool #575328, 6.50%, 4/1/31........... 72,360 73,862 Pool #781560, 4.49%, 10/1/34, (a)..... 1,717,545 1,683,507 Pool #825278, 5.00%, 7/1/35........... 3,259,805 3,084,167 TBA May, 5.50%, 5/1/35................ 5,950,000 5,777,081 TBA May, 6.50%, 5/1/35................ 1,910,000 1,942,231 TBA May, 6.00%, 5/15/36............... 2,900,000 2,886,405 ----------- 25,588,908 ----------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 0.4% Pool #346406, 7.50%, 2/15/23.......... 75,085 78,809 Pool #412530, 7.50%, 12/15/25......... 102,512 107,712 Pool #781300, 7.00%, 6/15/31.......... 188,677 195,912 ----------- 382,433 ----------- U.S. TREASURY BONDS - 2.0% 5.375%, 2/15/31....................... 2,180,000 2,212,700 ----------- U.S. TREASURY NOTES - 9.3% 4.50%, 2/15/09........................ 2,810,000 2,782,338 4.50%, 2/28/11........................ 2,915,000 2,861,712 4.75%, 3/31/11........................ 1,220,000 1,210,373 4.00%, 2/15/15........................ 2,175,000 2,015,272 5.50%, 8/15/28........................ 1,205,000 1,235,313 ----------- 10,105,008 ----------- TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (COST 46,919,627).......................... $46,615,518 ----------- <Caption> - ---------------------------------------------------------------- CORPORATE OBLIGATIONS - 31.2% - ---------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ---------- ----------- AUTO MANUFACTURERS - 1.4% DaimlerChrysler North American Holdings, 4.05%, 6/4/08.............. 1,575,000 1,528,760 ----------- BANKS - 1.4% Sovereign Bank, 5.125%, 3/15/13....... 1,075,000 1,024,415 Turanalem Finance BV, 7.75%, 4/25/13, (b)......................... 475,000 468,469 ----------- 1,492,884 ----------- CABLE - 1.5% Comcast Corp., 6.50%, 1/15/15......... 1,600,000 1,629,670 ----------- CHEMICALS - 2.1% Nova Chemicals Corp., 7.00%, 5/15/06.............................. 1,200,000 1,200,000 Nova Chemicals Corp., 6.50%, 1/15/12.............................. 1,190,000 1,112,650 ----------- 2,312,650 ----------- COLLEGES & UNIVERSITIES - 1.6% Tulane University of Louisiana, 5.55%, 11/15/12, (a)........................ 1,700,000 1,710,625 ----------- ELECTRIC - 0.9% Progress Energy, Inc., 5.14%, 11/14/08, (a)........................ 1,000,000 1,000,564 ----------- FINANCE - 5.9% American General Finance Corp., 4.875%, 5/15/10...................... 2,100,000 2,038,955 Ford Motor Credit Corp., 5.80%, 1/12/09.............................. 1,600,000 1,448,240 General Motors Acceptance Corp., 4.50%, 7/15/06....................... 1,250,000 1,240,886 General Motors Acceptance Corp., 4.375%, 12/10/07..................... 1,400,000 1,316,892 General Motors Corp., 8.25%, 7/15/23.............................. 500,000 362,500 ----------- 6,407,473 ----------- MEDICAL - 1.5% HCA, Inc., 6.95%, 5/1/12.............. 1,650,000 1,655,666 ----------- MULTIMEDIA - 0.5% Viacom, Inc., 6.25%, 4/30/16, (b)..... 600,000 594,652 ----------- OIL & GAS - 1.5% Pioneer Natural Resources, 6.875%, 5/1/18............................... 1,575,000 1,578,308 ----------- RETAIL - 3.4% Fred Meyer, Inc., 7.45%, 3/1/08....... 1,500,000 1,547,423 May Department Stores Co., 6.65%, 7/15/24.............................. 2,200,000 2,172,319 ----------- 3,719,742 ----------- TELECOMMUNICATIONS - 7.7% AOL Time Warner, Inc., 7.70%, 5/1/32............................... 1,000,000 1,092,837 AT&T, Inc., 5.10%, 9/15/14............ 1,750,000 1,647,554 Bell Telephone Co. Pennsylvania, 8.75%, 8/15/31....................... 850,000 978,585 Sprint Capital Corp., 8.75%, 3/15/32.............................. 1,300,000 1,613,023 Time Warner Entertainment Co., 8.375%, 3/15/23.............................. 1,300,000 1,457,862 Verizon Communications, Inc., 5.55%, 2/15/16.............................. 1,650,000 1,574,475 ----------- 8,364,336 ----------- </Table> 79 HSBC INVESTOR PORTFOLIOS See notes to financial statements. - -------------------------------------------------------------------------------- HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) <Table> <Caption> - ---------------------------------------------------------------- CORPORATE OBLIGATIONS, CONTINUED - ---------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ---------- ----------- TRANSPORTATION - 1.8% BNSF Funding Trust I, 6.61%, 12/15/55, Callable 01/15/26 @ 100.............. 1,200,000 1,153,183 Burlington Northern Santa Fe Railway Co., 7.57%, 1/2/21................... 312,308 343,926 Union Pacific Corp., 6.85%, 1/2/19.... 432,401 457,632 ----------- 1,954,741 ----------- TOTAL CORPORATE OBLIGATIONS (COST $34,798,525)......................... 33,950,071 ----------- - ---------------------------------------------------------------- ASSET BACKED SECURITIES - 12.7% - ---------------------------------------------------------------- Asset Backed Funding Certificates Series 2003-AHL1, Class A1, 3.68%, 3/25/33.............................. 738,743 711,708 Capital Auto Receivables Asset Trust Series 2003-2, Class A4A, 1.96%, 1/15/09.............................. 1,229,453 1,217,494 Capital Auto Receivables Asset Trust Series 2006-1, Class A2A, 5.03%, 9/15/08.............................. 2,040,000 2,037,347 Chase Issuance Trust 2005, Class A8, 4.94%, 10/15/12, (a)................. 1,000,000 1,000,707 Citibank Credit Card Issuance Trust Series 2005-A6, Class A6, 4.56%, 10/7/11, (a)......................... 2,150,000 2,149,933 MBNA Credit Card Master Note Trust Series 2002-A5, Class A5, 5.08%, 10/17/11, (a)........................ 2,250,000 2,261,410 Peco Energy Transition Trust Series 2000-A, Class A3, 7.625%, 3/1/10..... 600,000 634,253 SLM Student Loan Trust Series 2003-12, Class A3, 5.03%, 12/15/15, (a)....... 2,250,000 2,255,714 Volkswagen Auto Lease Trust Series 2004-A, Class A3, 2.84%, 7/20/07..... 1,514,300 1,505,683 ----------- TOTAL ASSET BACKED SECURITIES (COST $13,758,121)......................... 13,774,249 ----------- - ---------------------------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS - 12.3% - ---------------------------------------------------------------- Citigroup Mortgage Loan Trust, Inc. Series 2005-WF2, Class AF2, 4.92%, 8/25/35.............................. 1,017,148 1,005,419 Countrywide Home Loans Series 2005- HYB8, Class 2A1, 5.385%, 12/20/35, (a)........................ 1,651,495 1,638,063 Fannie Mae IO Series 2000-16, Class PS, 3.64%, 10/25/29, (a) (c)......... 84,607 5,256 Fannie Mae IO Series 2000-32, Class SV, 3.69%, 3/18/30, (a) (c).......... 29,046 1,219 Fannie Mae IO Series 2001-4, Class SA, 2.64%, 2/17/31, (a) (c).............. 307,243 13,051 Fannie Mae IO Series 270, Class 2, 8.50%, 9/1/23, (c)................... 64,603 16,162 Fannie Mae IO Series 296, Class 2, 8.00%, 4/1/24, (c)................... 73,651 17,431 Fannie Mae IO Series 306, Class IO, 8.00%, 5/1/30, (c)................... 93,060 23,098 FHA Weyerhauser, 7.43%, 1/1/24, (d) (e).............................. 34,389 34,389 Freddie Mac IO Series 1534, Class K, 2.46%, 6/15/23, (a) (c).............. 202,076 8,347 Freddie Mac IO Series 2141, Class SD, 3.24%, 4/15/29, (a) (c).............. 148,106 13,562 Freddie Mac IO Series 2247, Class SC, 2.59%, 8/15/30, (a) (c).............. 97,524 3,511 <Caption> - ---------------------------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS, CONTINUED - ---------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ---------- ----------- Freddie Mac Series 2894, Class QA, 5.50%, 12/15/24...................... 3,655,912 3,669,015 Freddie Mac Series 2962, Class CJ, 5.50%, 11/15/23...................... 2,177,372 2,180,447 Government National Mortgage Association IO Series 1999-30, Class S, 3.69%, 8/16/29, (a) (c)........... 89,114 5,741 Government National Mortgage Association IO Series 1999-30, Class SA, 3.09%, 4/16/29, (a) (c).......... 117,716 5,979 Government National Mortgage Association IO Series 1999-32, Class SB, 3.09%, 7/16/27, (a) (c).......... 32,152 678 J.P. Morgan Alternative Loan Trust Series 2005-S1, Class 2A9, 6.00%, 12/25/35............................. 2,351,793 2,316,514 Morgan Stanley Mortgage Loan Trust Series 2006-3AR, Class 2A3, 5.92%, 3/25/36.............................. 1,625,537 1,630,175 Nomura Asset Acceptance Corp. Series 2006-AP1, Class A2, 5.515%, 2/25/36.............................. 750,000 739,732 ----------- TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $13,572,216)................... 13,327,789 ----------- - ---------------------------------------------------------------- COMMERCIAL MORTGAGE BACKED SECURITIES - 7.7% - ---------------------------------------------------------------- Banc of America Commercial Mortgage, Inc. Series 2000-2, Class A2, 7.20%, 5/15/10.............................. 675,000 713,514 Banc of America Commercial Mortgage, Inc. Series 2005-6, Class AM, 5.18%, 9/10/47.............................. 900,000 866,454 Commercial Mortgage Pass-Through Certificate Series 2005-FL11, Class A1, 5.05%, 11/15/17, (a) (b)......... 1,219,356 1,219,271 DLJ Mortgage Acceptance Corp. IO Series 1997-CF1, Class S, 0.92%, 5/15/30, (a) (b) (c)................. 416,997 2,749 Global Signal Trust Series 2006-1, Class A2, 5.45%, 2/15/36, (a) (b).... 850,000 839,850 GMAC Commercial Mortgage Securities, Inc. IO Series 1996-C1, Class X2, 2.22%, 10/15/28, (a) (c)............. 115,437 2,319 GS Mortgage Securities Corp. IO Series 1997-GL, Class X2, 0.90%, 7/13/30, (a) (c).............................. 364,321 3,407 JP Morgan Chase Commercial Mortgage Securities Corp. Series 2005-LDP5, Class AM, 5.22%, 12/15/44............ 1,280,000 1,236,777 LB-UBS Commercial Mortgage Trust Series 2000-C3, Class A1, 7.95%, 7/15/09.............................. 204,401 207,331 LB-UBS Commercial Mortgage Trust Series 2006-C1, Class A4, 5.16%, 2/15/31.............................. 1,300,000 1,246,118 Morgan Stanley Capital I Series 2006-T21, Class A4, 5.16%, 10/12/52............................. 1,480,000 1,418,033 PNC Mortgage Acceptance Corp. Series 2000-C2, Class A2, 7.30%, 10/12/33... 600,000 637,610 ----------- TOTAL COMMERCIAL MORTGAGE BACKED SECURITIES (COST $8,576,866).................... 8,393,433 ----------- </Table> See notes to financial statements. HSBC INVESTOR PORTFOLIOS 80 - -------------------------------------------------------------------------------- HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) <Table> <Caption> - ---------------------------------------------------------------- FOREIGN BONDS** - 0.9% - ---------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ---------- ----------- ICELAND - 0.2% SOVEREIGN - 0.2% Housing Finance Fund, 3.75%, 2/15/24.............................. 19,537,785 269,825 ----------- MEXICO - 0.7% FINANCE - 0.3% General Electric Capital Corp., 9.50%, 8/4/10............................... 3,800,000 348,989 ----------- SOVEREIGN - 0.4% Mexican Bonos, 9.00%, 12/22/11........ 3,600,000 334,459 ----------- TOTAL FOREIGN BONDS** (COST $956,057)...................... 953,273 ----------- - ---------------------------------------------------------------- MUNICIPAL BONDS - 0.9% - ---------------------------------------------------------------- ENVIRONMENTAL SERVICES - 0.9% Louisiana Local Government Environmental Facilities & Community Development, 6.30%, 7/1/30, (LOC AMBAC)............................... 850,000 923,559 ----------- TOTAL MUNICIPAL BONDS (COST $930,321)...................... 923,559 ----------- - ---------------------------------------------------------------- INVESTMENT COMPANIES - 0.5% - ---------------------------------------------------------------- HSBC Investor Money Market Fund Class I Shares *........................... 510,201 510,201 ----------- TOTAL INVESTMENT COMPANIES (COST $510,201)............................ 510,201 ----------- TOTAL INVESTMENTS (COST $120,021,934) -- 109.0%....... 118,448,093 ----------- ----------- </Table> - --------- Percentages indicated are based on net assets of $108,659,148. (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, 2006. The maturity dates presented reflect the final maturity date. 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 manager 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 interest rate presented represents the rates that were in effect on April 30, 2006. 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 manager, using Board approved procedures, has deemed these securities to be illiquid. Represents 0.03% of net assets. (e) Security was fair valued (See note 2) as of April 30, 2006. * Investment in affiliate. ** The principal amount of each security is denominated in the local currency of each respective country. AMBAC - American Municipal Bank Assurance Corp. LOC - Letter of Credit TBA - Security was traded on a 'to be announced' basis. 81 HSBC INVESTOR PORTFOLIOS See notes to financial statements. - -------------------------------------------------------------------------------- HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) At April 30, 2006, the portfolio's open forward currency contracts were as follows: <Table> <Caption> CONTRACT CONTRACT UNREALIZED DELIVERY AMOUNT VALUE APPRECIATION/ CURRENCY DATE (LOCAL CURRENCY) (U.S. DOLLAR) VALUE (DEPRECIATION) - -------- ---- ---------------- ------------- ----- -------------- LONG CONTRACTS Icelandic Krona......................................... 5/4/2006 18,667,246 $252,392 $251,852 $ (540) Mexican Neuvo Peso...................................... 5/2/2006 3,813,960 342,920 344,687 1,767 -------- -------- ------ TOTAL LONG CONTRACTS................................................................. $595,312 $596,539 $1,227 -------- -------- ------ -------- -------- ------ </Table> See notes to financial statements. HSBC INVESTOR PORTFOLIOS 82 - -------------------------------------------------------------------------------- HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2006 (UNAUDITED) <Table> <Caption> - ---------------------------------------------------------------- CORPORATE OBLIGATIONS - 83.9% - ---------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ---------- ----------- ADVERTISING SERVICES - 4.0% Iron Mountain, Inc., 8.625%, 4/1/13, Callable 4/1/06 @ 104.313............ 250,000 260,313 R.H. Donnelley Corp., 6.875%, 1/15/13, Callable 1/15/09 @ 103.438 (a)....... 90,000 83,700 R.H. Donnelley Corp., 6.875%, 1/15/13, Callable 1/15/09 @ 103.438........... 100,000 93,000 ----------- 437,013 ----------- AEROSPACE/DEFENSE -- EQUIPMENT - 0.9% DRS Technologies, Inc., 7.625%, 2/1/18, Callable 2/1/11 @ 103.813.... 100,000 102,625 ----------- APPAREL MANUFACTURERS - 0.5% Levi Strauss & Co., 8.875%, 4/1/16, Callable 4/1/11 @ 104.438 (a)........ 50,000 50,125 ----------- BUILDING & CONSTRUCTION PRODUCTS - 1.3% Ply Gem Industries, Inc., 9.00%, 2/15/12, Callable 2/18/08 @ 104.50... 150,000 144,375 ----------- CABLE TELEVISION - 4.5% Cablevision Systems Corp., 8.00%, 4/15/12.............................. 250,000 249,375 Mediacom LLC, 7.875%, 2/15/11, Callable 2/15/06 @ 103.938........... 250,000 242,500 ----------- 491,875 ----------- CHEMICALS - 3.0% JohnsonDiversey, Inc., 9.625%, 5/15/12, Callable 5/15/07 @ 104.813.............................. 250,000 255,313 Millennium America, Inc., 9.25%, 6/15/08.............................. 25,000 26,125 PQ Corp., 7.75%, 2/15/13, Callable 2/15/09 @ 103.75 (a)................. 50,000 47,500 ----------- 328,938 ----------- COMPUTER SOFTWARE - 0.5% Activant Solutions Holdings, Inc., 9.50%, 5/1/16, Callable 5/1/11 @ 104.75 (a)........................... 50,000 50,875 ----------- CONTAINERS -- PAPER/PLASTIC - 2.4% Solo Cup Co., 8.50%, 2/15/14, Callable 2/15/2009 @ 104.25................... 250,000 237,500 Stone Container Finance Co. of Canada, 7.375%, 7/15/14, Callable 7/15/09 @ 103.688............................ 25,000 23,000 ----------- 260,500 ----------- DIVERSIFIED OPERATIONS - 1.0% Stripes Acquisition LLC/Susser Finance Corp., 10.625%, 12/15/13, Callable 12/15/2009 @ 105.313 (a)............. 100,000 106,250 ----------- ELECTRIC - 1.5% AES Corp., 7.75%, 3/1/14,............. 60,000 62,550 CMS Energy Corp., 6.875%, 12/15/15.... 100,000 99,500 ----------- 162,050 ----------- ENERGY - 4.3% Copano Energy LLC, 8.125%, 3/1/16, Callable 3/1/11 @ 104.0625 (a)....... 80,000 82,200 Massey Energy Co., 6.875%, 12/15/13, Callable 12/15/09 @ 103.44 (a)....... 100,000 96,250 <Caption> - ---------------------------------------------------------------- CORPORATE OBLIGATIONS, CONTINUED - ---------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ---------- ----------- Mirant North America LLC, 7.375%, 12/31/13, Callable 12/31/09 @ 103.688 (a)........................ 50,000 50,188 Williams Cos., 6.375%, 10/1/10, (a)... 250,000 249,375 ----------- 478,013 ----------- FINANCE - 8.3% Basell AF SCA, 8.375%, 8/15/15, Callable 8/15/10 @ 104.188 (a)....... 250,000 247,812 CCM Merger, Inc., 8.00%, 8/1/13, Callable 8/1/09 @ 104 (a)............ 250,000 242,500 Ford Motor Credit Co., 7.375%, 10/28/09............................. 100,000 92,398 General Motors Accept Corp., 6.875%, 8/28/12.............................. 300,000 279,542 Nalco Finance Holdings, Inc., 0.00%, 2/1/14, Callable 2/1/09 @ 104.5 (b)............................ 75,000 57,375 ----------- 919,627 ----------- GAMBLING - 6.4% Greektown Holdings, Inc., 10.75%, 12/1/13, Callable 12/1/10 @ 105.375 (a).......................... 100,000 105,000 Isle of Capri Casinos, Inc., 7.00%, 3/1/14, Callable 3/1/09 @ 103.50..... 250,000 245,625 Kerzner International Ltd., 6.75%, 10/1/15, Callable 10/1/10 @ 103.375.............................. 250,000 259,375 MGM MIRAGE, Inc., 6.75%, 4/1/13, (a).......................... 100,000 98,500 ----------- 708,500 ----------- LEISURE - 3.3% AMC Entertainment, Inc., 11.00%, 2/1/16, Callable 2/1/11 @ 105.50 (a)........................... 100,000 108,500 K2, Inc., 7.375%, 7/1/14, Callable 7/1/09 @ 103.688..................... 258,000 258,000 ----------- 366,500 ----------- MACHINERY -- FARM - 0.4% Case New Holland, Inc., 7.125%, 3/1/14, Callable 3/1/10 @ 103.563 (a).......................... 50,000 49,125 ----------- MANUFACTURING - 0.2% Nutro Products, Inc., 10.75%, 4/15/14, Callable 4/15/09 @ 108.063 (a)....... 25,000 25,875 ----------- MEDICAL - 0.9% MultiPlan, Inc., 10.375%, 4/15/16, Callable 4/15/11 @ 105.188 (a)....... 100,000 101,625 ----------- METAL PROCESSORS AND FABRICATION - 0.9% TriMas Corp., 9.875%, 6/15/12, Callable 6/15/07 @ 104.938........... 100,000 93,750 ----------- OIL & GAS - 10.0% Chaparral Energy, Inc., 8.50%, 12/1/15, Callable 12/1/10 @ 104.25 (a)........................... 100,000 103,000 Chesapeake Energy Corp., 6.875%, 1/15/16, Callable 1/15/09 @ 103.438.............................. 250,000 246,250 Clayton Williams Energy, Inc., 7.75%, 8/1/13, Callable 8/1/2009 @ 103.875 (a).......................... 100,000 94,250 Colorado Interstate Gas, 6.80%, 11/15/15, (a)........................ 150,000 150,109 </Table> 83 HSBC INVESTOR PORTFOLIOS See notes to financial statements. - -------------------------------------------------------------------------------- HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) <Table> <Caption> - ---------------------------------------------------------------- CORPORATE OBLIGATIONS, CONTINUED - ---------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ---------- ----------- Compton Petroleum Finance Corp., 7.625%, 12/1/13, Callable 12/1/09 @ 103.813............................ 250,000 247,499 El Paso Production Holdings, 7.75%, 6/1/13, Callable 6/1/08 @ 103.875.... 150,000 154,688 Inergy LP/Inergy Finance, 8.25%, 3/1/16, Callable 3/1/11 @ 104.125 (a).......................... 100,000 102,750 ----------- 1,098,546 ----------- PAPER & RELATED PRODUCTS - 5.0% Abitibi-Consolidated Co. of Canada, 8.375%, 4/1/15....................... 250,000 252,500 Exopac Holding Corp., 11.25%, 2/1/14, Callable 2/1/10 @ 105.625 (a)........ 50,000 50,625 Georgia-Pacific Corp., 7.70%, 6/15/15.............................. 250,000 250,000 ----------- 553,125 ----------- PHARMACY SERVICES - 0.9% Omnicare, Inc., 6.75%, 12/15/13, Callable 12/15/09 @ 103.375.......... 100,000 98,875 ----------- PUBLISHING - 2.6% Block Communications, Inc., 8.25%, 12/15/15, Callable 12/15/10 @ 104.125 (a)........................ 50,000 48,875 Morris Publishing, 7.00%, 8/1/13, Callable 8/1/08 @ 103.50............. 250,000 235,625 ----------- 284,500 ----------- RENTAL -- AUTO AND EQUIPMENT - 1.9% Avis Budget Car Rental, Inc., 7.625%, 5/15/14, Callable 5/15/10 @ 103.81 (a)........................... 100,000 101,750 Hertz Corp., 8.875%, 1/1/14, Callable 1/1/10 @ 104.44 (a).................. 100,000 106,250 ----------- 208,000 ----------- RESEARCH AND TESTING SERVICES - 0.5% Cie Gen Geophysique, 7.50%, 5/15/15, Callable 5/15/10 @ 103.75 (a)........ 50,000 51,625 ----------- RESTAURANTS - 2.7% Dave & Busters. Inc., 11.25%, 3/15/14, Callable 3/15/10 @ 105.625 (a)....... 50,000 50,500 Landry's Restaurants, Inc., 7.50%, 12/15/14, Callable 12/15/09 @ 103.75............................... 200,000 192,000 NPC International, Inc., 9.50%, 5/1/14, Callable 5/1/10 @ 104.75 (a)........................... 50,000 50,500 ----------- 293,000 ----------- RETAIL - 2.6% Linens 'n Things, Inc., 10.70%, 1/15/14, Callable 1/15/08 @ 102 (a) (c).............................. 50,000 50,625 The Jean Coutu Group PJC, Inc., 8.50%, 8/1/14, Callable 8/1/09 @ 104.25..... 250,000 234,375 ----------- 285,000 ----------- <Caption> - ---------------------------------------------------------------- CORPORATE OBLIGATIONS, CONTINUED - ---------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ---------- ----------- SEMICONDUCTOR EQUIPMENT - 0.5% Sensata Technologies BV, 8.00%, 5/1/14, Callable 5/1/10 @ 104 (a).... 50,000 50,250 ----------- STEEL - 3.2% AK Steel Corp., 7.75%, 6/15/12, Callable 6/15/07 @ 103.875........... 200,000 202,500 Gibraltar Industries, Inc., 8.00%, 12/1/15, Callable 12/1/10 @ 104 (a).............................. 150,000 152,625 ----------- 355,125 ----------- TELECOMMUNICATIONS - 7.5% Centennial Communications Corp., 10.00%, 1/1/13, Callable 1/1/09 @ 107.50............................... 100,000 104,000 Cincinnati Bell, Inc., 8.375%, 1/15/14, Callable 1/15/09 @ 104.1885............................. 250,000 255,625 Insight Midwest L.P., 9.75%, 10/1/09, Callable 10/1/06 @ 101.625........... 250,000 257,500 Nordic Telephone Co. Holdings, 8.875%, 5/1/16, Callable 5/1/11 @ 104.438 (a).......................... 50,000 51,750 Rural Cellular Corp., 9.75%, 1/15/10, Callable 1/15/07 @ 103.25............ 50,000 51,563 Wind Acquisition Financial SA, 10.75%, 12/1/15, Callable 12/1/10 @ 105.375.............................. 100,000 110,500 ----------- 830,938 ----------- WASTE DISPOSAL - 2.2% Allied Waste North America, Inc., 7.375%, 4/15/14, Callable 4/15/09 @ 103.688.............................. 250,000 246,250 ----------- TOTAL CORPORATE OBLIGATIONS (COST $9,076,618).......................... 9,232,875 ----------- - ---------------------------------------------------------------- INVESTMENT COMPANIES - 15.9% - ---------------------------------------------------------------- Investors Bank Trust Cash Reserve..... 1,754,963 1,754,963 ----------- TOTAL INVESTMENT COMPANIES (COST $1,754,963).......................... 1,754,963 ----------- TOTAL INVESTMENTS (COST $10,831,581) - 99.8%.......... 10,987,838 ----------- ----------- </Table> - --------- Percentages indicated are based on net assets of $11,015,360. (a) Security exempt from registration under Rule 144a of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. These securities have been deemed liquid by the investment manager based on procedures approved by the Board of Trustees. (b) Step Coupon. Rate set to step up to 9.0% on 2/2/09. (c) Variable rate security. The interest rates on these securities are adjusted periodically to reflect then-current short-term interest rates. The rates presented in this report, represents the rates that were in effect on April 30, 2006. The maturity dates presented reflect the final maturity date. However, each of these securities contains put or demand features that allow the fund to require the issuer to repurchase the security from the fund within various time periods, including daily, weekly, monthly, or semi-annually. See notes to financial statements. HSBC INVESTOR PORTFOLIOS 84 - -------------------------------------------------------------------------------- HSBC INVESTOR GROWTH PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2006 (UNAUDITED) <Table> <Caption> - ----------------------------------------------------------------- COMMON STOCKS - 95.3% SHARES VALUE($) --------- ---------- AEROSPACE & DEFENSE - 3.8% General Dynamics Corp.................... 20,300 1,332,086 The Boeing Co............................ 10,600 884,570 ---------- 2,216,656 ---------- BUSINESS SERVICES - 2.9% Paychex, Inc............................. 41,650 1,682,244 ---------- CHEMICALS - 3.0% Monsanto Co.............................. 20,700 1,726,380 ---------- COMPUTER SOFTWARE - 10.5% Adobe Systems, Inc. (a).................. 30,550 1,197,560 Automatic Data Processing, Inc........... 12,100 533,368 CheckFree Corp. (a)...................... 26,850 1,446,409 Electronic Arts, Inc. (a)................ 10,150 576,520 Microsoft Corp........................... 42,650 1,029,998 SAP AG ADR............................... 23,700 1,294,730 ---------- 6,078,585 ---------- COMPUTERS - 1.5% Apple Computer, Inc. (a)................. 12,250 862,278 ---------- CONSUMER PRODUCTS - 7.5% Colgate-Palmolive Co..................... 26,450 1,563,724 Harman International Industries, Inc..... 5,700 501,543 PepsiCo, Inc............................. 20,000 1,164,800 The Procter & Gamble Co.................. 18,650 1,085,617 ---------- 4,315,684 ---------- DIVERSIFIED MANUFACTURING OPERATIONS - 6.0% Caterpillar, Inc......................... 26,900 2,037,406 General Electric Co...................... 41,412 1,432,441 ---------- 3,469,847 ---------- ELECTRONIC COMPONENTS & SEMICONDUCTORS - 4.3% Broadcom Corp. (a)....................... 13,200 542,652 Maxim Integrated Products, Inc........... 11,850 417,831 Microchip Technology, Inc................ 41,750 1,555,605 ---------- 2,516,088 ---------- FINANCIAL SERVICES - 14.2% Franklin Resources, Inc.................. 5,950 554,064 Goldman Sachs Group, Inc................. 8,600 1,378,494 Legg Mason, Inc.......................... 17,900 2,120,792 Robert Half International, Inc........... 23,500 993,345 SLM Corp................................. 45,000 2,379,599 The Chicago Mercantile Exchange Holdings, Inc........................... 1,700 778,600 ---------- 8,204,894 ---------- HEALTH CARE - 3.5% DENTSPLY International, Inc.............. 9,650 575,816 Medtronic, Inc........................... 11,150 558,838 UnitedHealth Group, Inc.................. 17,400 865,476 ---------- 2,000,130 ---------- <Caption> - ----------------------------------------------------------------- COMMON STOCKS, CONTINUED - ----------------------------------------------------------------- SHARES VALUE($) --------- ---------- HOTELS & LODGING - 3.5% Las Vegas Sands Corp. (a)................ 31,200 2,022,072 ---------- INSURANCE - 1.2% AFLAC, Inc............................... 15,200 722,608 ---------- INTERNET RELATED - 4.1% eBay, Inc. (a)........................... 12,450 428,405 Google, Inc., Class A (a)................ 4,700 1,964,318 ---------- 2,392,723 ---------- OIL & GAS - 7.3% Schlumberger Ltd......................... 29,850 2,063,829 Smith International, Inc................. 50,950 2,151,619 ---------- 4,215,448 ---------- PHARMACEUTICALS - 7.5% Alcon, Inc............................... 5,650 574,662 Allergan, Inc............................ 6,150 631,728 Genentech, Inc. (a)...................... 15,979 1,273,686 Gilead Sciences, Inc. (a)................ 22,600 1,299,499 Johnson & Johnson........................ 9,650 565,587 ---------- 4,345,162 ---------- RESTAURANTS - 1.0% Starbucks Corp. (a)...................... 15,300 570,231 ---------- RETAIL - 7.5% Abercrombie & Fitch Co., Class A......... 10,100 613,373 Best Buy Co., Inc........................ 10,225 579,349 Home Depot, Inc.......................... 23,750 948,337 Staples, Inc............................. 13,025 343,990 Walgreen Co.............................. 44,417 1,862,404 ---------- 4,347,453 ---------- TELECOMMUNICATIONS - 4.2% Cisco Systems, Inc. (a).................. 73,550 1,540,873 QUALCOMM, Inc............................ 17,400 893,316 ---------- 2,434,189 ---------- TRANSPORTATION - 1.8% Expeditors International of Washington, Inc..................................... 12,250 1,048,723 ---------- TOTAL COMMON STOCKS (COST $47,890,794)...................... 55,171,395 ---------- <Caption> - ----------------------------------------------------------------- INVESTMENT COMPANIES - 4.6% - ----------------------------------------------------------------- SHARES VALUE($) --------- ---------- HSBC Investor Money Market Fund Class I Shares *............ 2,644,023 2,644,023 ---------- TOTAL INVESTMENT COMPANIES (COST $2,644,023)............................. 2,644,023 ---------- TOTAL INVESTMENTS (COST $50,534,817) - 99.9%............. 57,815,418 ---------- ---------- </Table> - --------- Percentages indicated are based on net assets of $57,888,505. (a) Represents non-income producing security. * Investment in affiliate. ADR -- American Depositary Receipt 85 HSBC INVESTOR PORTFOLIOS See notes to financial statements. - -------------------------------------------------------------------------------- HSBC INVESTOR VALUE PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2006 (UNAUDITED) <Table> <Caption> - ----------------------------------------------------------------- COMMON STOCKS - 95.3% SHARES VALUE($) --------- ---------- AEROSPACE & DEFENSE - 7.5% Lockheed Martin Corp..................... 19,400 1,472,460 Northrop Grumman Corp.................... 28,600 1,913,340 Raytheon Co.............................. 28,300 1,252,841 ---------- 4,638,641 ---------- BANKING - 4.8% Bank of America Corp..................... 23,600 1,178,112 Wells Fargo & Co......................... 25,800 1,772,202 ---------- 2,950,314 ---------- BUSINESS SERVICES - 2.2% Pitney Bowes, Inc........................ 32,100 1,343,385 ---------- COMPUTER SOFTWARE - 5.7% CA, Inc.................................. 87,100 2,208,856 Microsoft Corp........................... 54,300 1,311,345 ---------- 3,520,201 ---------- CONGLOMERATES - 1.9% Loews Corp............................... 11,200 1,188,880 ---------- CONSUMER PRODUCTS - 6.6% Altria Group, Inc........................ 29,200 2,136,272 Kimberly-Clark Corp...................... 24,500 1,433,985 Tyson Foods, Inc. -- Class A............. 34,200 499,320 ---------- 4,069,577 ---------- DIVERSIFIED MANUFACTURING OPERATIONS - 2.1% Ingersoll-Rand Co., Class A.............. 29,800 1,303,750 ---------- ELECTRONIC COMPONENTS & SEMICONDUCTORS - 1.5% Agilent Technologies, Inc. (a)........... 24,564 943,749 ---------- FINANCIAL SERVICES - 18.0% Citigroup, Inc........................... 36,707 1,833,515 Countrywide Financial Corp............... 76,600 3,114,556 Fannie Mae............................... 41,500 2,099,900 Genworth Financial, Inc., Class A........ 50,900 1,689,880 J.P. Morgan Chase & Co................... 34,150 1,549,727 MGIC Investment Corp..................... 11,800 834,260 ---------- 11,121,838 ---------- GAS & ELECTRIC UTILITY - 2.1% Dominion Resources, Inc.................. 17,000 1,272,790 ---------- INSURANCE - 7.0% Aetna, Inc............................... 16,600 639,100 AON Corp................................. 26,900 1,127,379 Radian Group, Inc........................ 17,400 1,091,328 The Hartford Financial Services Group, Inc..................................... 15,700 1,443,301 ---------- 4,301,108 ---------- <Caption> - ----------------------------------------------------------------- COMMON STOCKS, CONTINUED - ----------------------------------------------------------------- SHARES VALUE($) --------- ---------- MEDIA - 6.8% CBS Corp., Class B....................... 33,050 841,784 Liberty Media Corp., Class A (a)......... 100,350 837,923 Viacom, Inc., Class B (a)................ 63,800 2,541,153 ---------- 4,220,860 ---------- METALS & MINING - 6.4% Barrick Gold Corp........................ 62,700 1,911,096 POSCO ADR................................ 11,800 831,546 Rio Tinto PLC ADR........................ 5,300 1,180,310 ---------- 3,922,952 ---------- OIL & GAS - 11.0% ConocoPhillips........................... 16,271 1,088,530 Kerr-McGee Corp.......................... 30,589 3,054,617 Noble Energy, Inc........................ 59,000 2,653,820 ---------- 6,796,967 ---------- PAPER PRODUCTS - 1.6% International Paper Co................... 26,800 974,180 ---------- TELECOMMUNICATIONS - 8.1% AT&T, Inc................................ 44,900 1,176,829 BellSouth Corp........................... 21,050 711,069 Comcast Corp. Special Class A (a)........ 42,300 1,304,109 Motorola, Inc............................ 47,900 1,022,665 Sprint Nextel Corp....................... 30,600 758,880 ---------- 4,973,552 ---------- TRANSPORTATION - 2.0% Union Pacific Corp....................... 13,200 1,203,972 ---------- TOTAL COMMON STOCKS (COST $46,902,116)...................... 58,746,716 ---------- <Caption> - ----------------------------------------------------------------- INVESTMENT COMPANIES - 4.7% - ----------------------------------------------------------------- SHARES VALUE($) --------- ---------- HSBC Investor Money Market Fund Class I Shares*......................... 2,922,921 2,922,921 ---------- TOTAL INVESTMENT COMPANIES (COST $2,922,921)....................... 2,922,921 ---------- TOTAL INVESTMENTS (COST $49,825,037) - 100.0%............ 61,669,637 ---------- ---------- </Table> - --------- Percentages indicated are based on net assets of $61,678,884. (a) Represents non-income producing security. * Investment in Affiliate ADR - American Depository Receipt See notes to financial statements. HSBC INVESTOR PORTFOLIOS 86 - -------------------------------------------------------------------------------- HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2006 (UNAUDITED) <Table> <Caption> - ---------------------------------------------------------------- COMMON STOCKS - 97.4% SHARES VALUE($) --------- ----------- AUSTRALIA - 0.6% Macquarie Airports..................... 699,400 1,742,312 ----------- AUSTRIA - 0.5% Omv AG................................. 20,500 1,425,073 ----------- BELGIUM - 1.1% Delhaize Group......................... 29,300 2,110,360 KBC Bankverzekeringsholding............ 11,300 1,310,639 ----------- 3,420,999 ----------- BRAZIL - 1.9% Braskem SA-Pref........................ 40,000 275,234 Gerdau SA ADR.......................... 75,150 1,300,095 Petroleo Brasileiro SA ADR............. 27,700 2,462,253 Unibanco ADR........................... 8,100 642,735 Usinas Siderurgicas de Minas Gerais SA.................................... 30,200 1,146,890 ----------- 5,827,207 ----------- CANADA - 3.3% Canadian Natural Resources............. 43,400 2,609,126 EnCana Corp............................ 30,000 1,499,732 ING Canada, Inc........................ 32,800 1,766,176 IPSCO, Inc............................. 8,900 918,663 Nexen, Inc............................. 20,000 1,168,903 Teck Cominco Ltd., B shares............ 32,300 2,227,307 ----------- 10,189,907 ----------- CHINA - 0.1% China Petroleum & Chemical Corp........ 592,000 376,061 ----------- FINLAND - 0.5% Sampo OYJ, Class A..................... 77,000 1,589,011 ----------- FRANCE - 11.3% Assurances Generales de France......... 36,800 4,651,236 BNP Paribas New (a).................... 1,580 144,194 BNP Paribas SA......................... 15,800 1,492,766 Credit Agricole SA..................... 89,990 3,625,617 Renault SA............................. 55,300 6,417,498 Sanofi-Aventis......................... 57,800 5,449,941 Societe Generale....................... 33,700 5,147,861 Thomson SA............................. 58,900 1,218,462 Total SA, B Shares..................... 24,700 6,829,522 ----------- 34,977,097 ----------- GERMANY - 9.1% Allianz AG............................. 9,300 1,554,360 Continental AG......................... 51,400 6,117,921 E.ON AG (a)............................ 41,000 5,024,345 Fresenius Medical Care AG.............. 11,800 1,415,518 MAN AG................................. 66,000 5,001,804 Muenchener Rueckversicherungs- Gesellschaft AG....................... 28,600 4,047,010 RWE AG................................. 44,500 3,856,850 TUI AG................................. 41,500 884,159 ----------- 27,901,967 ----------- HONG KONG - 0.1% Sino Land Co., Ltd..................... 142,200 236,603 ----------- <Caption> - ---------------------------------------------------------------- COMMON STOCKS, CONTINUED - ---------------------------------------------------------------- SHARES VALUE($) --------- ----------- HUNGARY - 0.4% MOL Magyar Olaj -- es Gazipari Rt. GDR................................... 9,600 1,128,000 ----------- ISRAEL - 0.5% Bank Hapoalim BM....................... 286,600 1,445,806 ----------- ITALY - 1.9% Buzzi Unicem SpA....................... 27,300 698,366 ENI SpA................................ 166,500 5,082,559 ----------- 5,780,925 ----------- JAPAN - 27.3% Alps Electric Co., Ltd................. 55,000 965,700 Canon, Inc............................. 89,300 6,831,822 East Japan Railway Co.................. 102 796,469 EDION Corp............................. 67,800 1,640,659 Hitachi, Ltd........................... 144,000 1,071,304 Honda Motor Co., Ltd................... 23,500 1,669,873 ITOCHU Corp............................ 317,000 2,879,034 Japan Tobacco, Inc..................... 1,200 4,827,404 JFE Holdings, Inc...................... 140,100 5,439,104 Kobe Steel, Ltd........................ 958,000 3,256,443 Kyocera Corp........................... 11,400 1,064,401 Mitsubishi Corp........................ 129,000 3,121,607 Mitsubishi UFJ Financial Group, Inc.... 172 2,704,260 Mitsui & Co., Ltd...................... 171,000 2,584,901 Mitsui Chemicals, Inc.................. 396,000 2,866,087 Mitsui O.S.K. Lines, Ltd............... 451,000 3,228,502 Nippon Mining Holdings, Inc............ 360,000 3,329,644 Nippon Telegraph & Telephone Corp...... 344 1,540,975 Nissan Motor Co., Ltd.................. 225,100 2,959,813 ORIX Corp.............................. 19,300 5,797,628 Sanyo Shinpan Finance Co., Ltd......... 23,750 1,403,931 Sega Sammy Holdings, Inc............... 17,400 693,860 Sony Corp.............................. 12,510 628,522 Sumitomo Heavy Industries, Ltd......... 128,000 1,349,144 Sumitomo Metal Industries, Ltd......... 294,000 1,239,526 Sumitomo Mitsui Financial Group, Inc................................... 598 6,565,657 The Tokyo Electric Power Co., Inc...... 90,600 2,327,668 Tokyo Gas Co., Ltd..................... 529,000 2,560,202 Toyota Motor Corp...................... 123,900 7,247,904 UNY Co., Ltd........................... 90,000 1,608,696 ----------- 84,200,740 ----------- LUXEMBOURG - 0.9% Arcelor................................ 63,680 2,618,626 ----------- NETHERLANDS - 5.2% ABN AMRO Holding NV.................... 92,253 2,756,756 European Aeronautic Defence and Space Co.................................... 79,660 3,143,112 ING Groep NV........................... 190,468 7,750,669 Koninklijke Philips Electronics NV..... 35,000 1,207,475 Royal Dutch Shell plc, A Shares........ 33,600 1,151,971 ----------- 16,009,983 ----------- PHILLIPINES - 0.3% Philippine Long Distance Telephone Co.................................... 21,000 830,658 ----------- </Table> 87 HSBC INVESTOR PORTFOLIOS See notes to financial statements. - -------------------------------------------------------------------------------- HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) <Table> <Caption> - ---------------------------------------------------------------- COMMON STOCKS, CONTINUED - ---------------------------------------------------------------- SHARES VALUE($) --------- ----------- SINGAPORE - 1.8% Flextronics International, Ltd. (a).... 162,400 1,844,864 Singapore Telecommunications, Ltd...... 2,104,630 3,648,416 ----------- 5,493,280 ----------- SOUTH AFRICA - 0.9% Sanlam, Ltd............................ 554,040 1,433,443 Telkom South Africa, Ltd............... 28,000 667,988 Tiger Brands, Ltd...................... 20,800 580,425 ----------- 2,681,856 ----------- SOUTH KOREA - 1.7% Industrial Bank of Korea GDR........... 88,300 1,910,812 Kookmin Bank ADR....................... 14,600 1,300,130 POSCO ADR.............................. 29,000 2,043,630 ----------- 5,254,572 ----------- SPAIN - 3.1% Endesa SA.............................. 143,600 4,767,527 Repsol YPF SA.......................... 155,000 4,629,842 ----------- 9,397,369 ----------- SWITZERLAND - 1.9% Credit Suisse Group.................... 81,100 5,095,734 Novartis AG............................ 13,460 772,446 ----------- 5,868,180 ----------- TAIWAN - 1.0% China Steel Corp. GDR.................. 36,470 708,612 Compal Electronics, Inc. GDR........... 222,840 1,236,762 Gigabyte Technology Co., Ltd........... 270,112 213,635 Taiwan Semiconductor Manufacturing Co., Ltd................................... 491,141 1,049,736 ----------- 3,208,745 ----------- THAILAND - 0.3% PTT Public Company Ltd. plc............ 121,400 795,959 ----------- <Caption> - ---------------------------------------------------------------- COMMON STOCKS, CONTINUED - ---------------------------------------------------------------- SHARES VALUE($) --------- ----------- UNITED KINGDOM - 21.7% AstraZeneca plc........................ 61,200 3,381,031 Aviva plc.............................. 346,270 5,057,110 Barclays plc........................... 410,200 5,123,200 BHP Billiton plc....................... 47,100 969,549 BP Amoco plc........................... 255,100 3,146,540 British Aerospace plc.................. 485,500 3,695,734 British American Tobacco plc........... 110,300 2,819,542 Friends Provident plc.................. 782,500 2,807,076 George Wimpey plc...................... 244,600 2,334,684 HBOS plc............................... 260,121 4,564,899 Mitchells & Butlers plc................ 119,800 1,075,221 Punch Taverns plc...................... 185,000 2,954,819 Royal & Sun Alliance Insurance Group plc................................... 736,000 1,851,876 Royal Bank of Scotland Group plc....... 169,100 5,521,972 Royal Dutch Shell plc, B Shares........ 45,973 1,643,749 Sainsbury plc.......................... 410,062 2,499,056 Tate & Lyle plc........................ 191,100 1,933,787 Taylor Woodrow plc..................... 361,600 2,525,121 Vodafone Group plc..................... 2,871,953 6,781,132 Whitbread plc.......................... 145,200 2,965,102 Xstrata plc............................ 96,000 3,472,705 ----------- 67,123,905 ----------- TOTAL COMMON STOCKS (COST $208,441,583)................... 299,524,841 ----------- <Caption> - ---------------------------------------------------------------- REPURCHASE AGREEMENTS - 1.4% - ---------------------------------------------------------------- Investors Bank & Trust, 3.21%, purchased on 4/28/06, due 5/01/06 with maturity value of $4,429,637 (Collateralized fully by various U.S. Government Obligations)... ........... 4,428,452 4,428,452 ----------- TOTAL REPURCHASE AGREEMENTS (COST $4,428,452)..................... 4,428,452 ----------- <Caption> - ---------------------------------------------------------------- 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 $212,870,035) - 98.8%.......... 303,953,293 ----------- ----------- </Table> - --------- Percentages indicated are based on net assets of $307,492,484. (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 88 - -------------------------------------------------------------------------------- HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) <Table> <Caption> PERCENT OF INDUSTRY NET ASSETS - -------- ---------- Aerospace & Defense......................................... 2.2% Automotive.................................................. 7.9% Banking & Financial Services................................ 20.9% Building & Construction..................................... 1.8% Cash........................................................ 1.4% Chemicals................................................... 1.0% Computer Related............................................ 0.5% Drugs -- Medical............................................ 3.6% Electrical.................................................. 3.6% Electronic Components & Semiconductors...................... 2.5% Food & Beverage............................................. 1.0% Insurance................................................... 8.1% Leisure..................................................... 1.0% Manufacturing............................................... 7.1% Metals & Mining............................................. 8.2% Multimedia.................................................. 0.4% Oil & Gas................................................... 15.3% Real Estate................................................. 0.1% Retail...................................................... 3.1% Telecommunications.......................................... 4.4% Tobacco..................................................... 2.5% Tourism..................................................... 0.3% Transportation Services..................................... 1.9% ------ Total Investments........................................... 98.8% ------ Other assets in excess of liabilities....................... 1.2% ------ Net Assets.................................................. 100.0% ------ ------ </Table> 89 HSBC INVESTOR PORTFOLIOS See notes to financial statements. - -------------------------------------------------------------------------------- HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) At April 30, 2006, the portfolio's open forward currency contracts were as follows: <Table> <Caption> CONTRACT CONTRACT UNREALIZED DELIVERY AMOUNT VALUE APPRECIATION/ CURRENCY DATE (LOCAL CURRENCY) (U.S. DOLLAR) VALUE (DEPRECIATION) - -------- ---- ---------------- ------------- ----- -------------- LONG CONTRACTS Japanese Yen......................................... 5/1/2006 105,000,000 $ 921,295 $ 922,266 $ 971 SHORT CONTRACTS Swiss Franc.......................................... 6/15/2006 6,520,000 $5,158,432 $5,285,637 $(127,205) </Table> See notes to financial statements. HSBC INVESTOR PORTFOLIOS 90 - -------------------------------------------------------------------------------- HSBC INVESTOR SMALL CAP EQUITY PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2006 (UNAUDITED) <Table> <Caption> - ---------------------------------------------------------------- COMMON STOCKS - 95.7% - ---------------------------------------------------------------- SHARES VALUE($) ---------- ----------- ADVERTISING - 2.6% Monster Worldwide, Inc. (a)........... 112,800 6,474,720 ----------- AEROSPACE & DEFENSE - 1.0% Hexcel Corp. (a)...................... 107,000 2,363,630 ----------- BANKING - 3.0% East West Bancorp, Inc................ 101,200 4,014,604 Wintrust Financial Corp............... 65,500 3,389,625 ----------- 7,404,229 ----------- BIOTECHNOLOGY - 2.9% Celgene Corp. (a)..................... 168,700 7,112,392 ----------- COMMERCIAL SERVICES - 4.2% Alliance Data Systems Corp. (a)....... 90,900 4,999,500 Schawk, Inc., Class A................. 67,400 1,707,916 Sotheby's Holdings, Inc. (a).......... 125,400 3,760,746 ----------- 10,468,162 ----------- COMPUTER SOFTWARE - 9.6% Activision, Inc. (a).................. 58,400 828,696 CheckFree Corp. (a)................... 55,100 2,968,237 Mercury Interactive Corp. (a)......... 78,400 2,822,400 Satyam Computer Services Ltd. ADR..... 96,500 3,472,070 Sina Corp. (a)........................ 103,100 2,726,995 SRA International, Inc., Class A (a).................................. 142,700 4,569,254 Transaction Systems Architects, Inc., Class A (a).......................... 157,000 6,270,580 ----------- 23,658,232 ----------- CONSULTING SERVICES - 1.1% LECG Corp. (a)........................ 19,400 358,706 Resources Connection, Inc. (a)........ 84,900 2,283,810 ----------- 2,642,516 ----------- DIVERSIFIED MANUFACTURING OPERATIONS - 8.6% Actuant Corp., Class A................ 40,100 2,564,395 AMETEK, Inc........................... 150,500 7,415,135 AptarGroup, Inc....................... 40,900 2,143,569 IDEX Corp............................. 130,300 6,619,240 The Stanley Works..................... 48,000 2,508,000 ----------- 21,250,339 ----------- ELECTRONIC COMPONENTS & SEMICONDUCTORS - 10.3% Atmel Corp. (a)....................... 470,300 2,464,372 ATMI, Inc. (a)........................ 98,600 2,800,240 Cognos, Inc. (a)...................... 128,600 4,792,922 Integrated Device Technology, Inc. (a).................................. 157,600 2,398,672 Power Integrations, Inc. (a).......... 90,200 1,909,534 Thermo Electron Corp. (a)............. 174,500 6,725,230 Varian Semiconductor Equipment Associates, Inc. (a)................. 132,850 4,350,838 ----------- 25,441,808 ----------- ENVIRONMENTAL SERVICES - 4.0% Republic Services, Inc., Class A...... 139,500 6,139,395 Waste Connections, Inc. (a)........... 98,900 3,807,650 ----------- 9,947,045 ----------- FINANCIAL SERVICES - 2.4% Affiliated Managers Group, Inc. (a)... 57,600 5,834,880 ----------- HEALTH CARE - 12.7% Advanced Medical Optics, Inc. (a)..... 51,200 2,385,920 Charles River Laboratories International, Inc. (a)............................. 42,800 2,022,300 <Caption> - ---------------------------------------------------------------- COMMON STOCKS, CONTINUED - ---------------------------------------------------------------- SHARES VALUE($) ---------- ----------- CYTYC Corp. (a)....................... 117,400 3,034,790 Manor Care, Inc....................... 145,900 6,397,715 Omnicare, Inc......................... 140,100 7,945,070 Respironics, Inc. (a)................. 180,900 6,624,558 Ventana Medical Systems (a)........... 61,600 2,999,920 ----------- 31,410,273 ----------- HOSPITALS - 1.4% Triad Hospitals, Inc. (a)............. 86,900 3,580,280 ----------- MEDIA - 1.7% Meredith Corp......................... 85,600 4,245,760 ----------- OIL & GAS - 12.1% Chesapeake Energy Corp................ 140,700 4,457,376 Consol Energy, Inc.................... 65,500 5,577,980 Denbury Resources, Inc. (a)........... 157,000 5,118,200 Massey Energy Co...................... 142,700 5,515,355 Peabody Energy Corp................... 66,600 4,253,076 Smith International, Inc.............. 118,000 4,983,140 ----------- 29,905,127 ----------- PHARMACEUTICALS - 6.6% Elan Corp. PLC ADR (a)................ 505,400 7,434,434 MGI Pharma, Inc. (a).................. 33,000 616,440 OSI Pharmaceuticals, Inc. (a)......... 208,900 5,550,473 Santarus, Inc. (a).................... 369,700 2,854,084 ----------- 16,455,431 ----------- REAL ESTATE - 1.0% Northstar Realty Finance Corp......... 59,700 669,237 The Mills Corp........................ 60,000 1,914,600 ----------- 2,583,837 ----------- RETAIL - 6.6% Advance Auto Parts, Inc............... 116,800 4,697,696 Dick's Sporting Goods, Inc. (a)....... 70,700 2,980,005 P.F. Chang's China Bistro, Inc. (a)... 37,600 1,602,136 PETsMART, Inc......................... 138,700 3,836,442 Williams-Sonoma, Inc.................. 78,400 3,282,608 ----------- 16,398,887 ----------- TELECOMMUNICATIONS - 2.0% Polycom, Inc. (a)..................... 227,700 5,009,400 ----------- TRANSPORTATION - 1.9% J.B. Hunt Transport Services, Inc..... 202,300 4,820,809 ----------- TOTAL COMMON STOCKS (COST $177,833,854) 237,007,757 ----------- <Caption> - ---------------------------------------------------------------- INVESTMENT COMPANIES - 3.3% - ---------------------------------------------------------------- SHARES VALUE($) ---------- ----------- HSBC Investor Money Market Fund Class I Shares*............................ 8,247,705 8,247,705 ----------- TOTAL INVESTMENT COMPANIES (COST $8,247,705) 8,247,705 ----------- TOTAL INVESTMENTS (COST $186,081,559) -- 99.0% 245,255,462 ----------- ----------- </Table> - --------- Percentages indicated are based on net assets of $247,708,167. (a) Represents non-income producing security. * Investment in Affiliate ADR -- American Depository Receipt 91 HSBC INVESTOR PORTFOLIOS See notes to financial statements. HSBC INVESTOR PORTFOLIOS STATEMENTS OF ASSETS AND LIABILITIES -- APRIL 30, 2006 (UNAUDITED) <Table> <Caption> INTERMEDIATE DURATION CORE PLUS HIGH YIELD FIXED INCOME FIXED INCOME FIXED INCOME GROWTH VALUE PORTFOLIO PORTFOLIO PORTFOLIO (A) PORTFOLIO PORTFOLIO - --------------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments in non-affiliates, at value $23,147,654 $117,937,892 $10,987,838 $55,171,395 $ 58,746,716 Investments in affiliates, at value 60,896 510,201 -- 2,644,023 2,922,921 Interest and dividends receivable 168,622 1,011,426 180,023 42,353 81,836 Receivable for investments sold 1,978,010 14,102,691 -- 1,338,859 -- Unrealized appreciation on forward foreign currency contracts 368 1,767 -- -- -- Prepaid expenses and other assets 520 7,177 7,058 976 1,137 ----------- ------------ ----------- ----------- ------------ TOTAL ASSETS 25,356,070 133,571,154 11,174,919 59,197,606 61,752,610 ----------- ------------ ----------- ----------- ------------ ................................................................................................................................ LIABILITIES: Cash overdraft -- -- -- -- 27,625 Payable for investments purchased 3,664,746 24,850,475 150,000 1,259,823 -- Unrealized depreciation on forward foreign currency contracts 107 540 -- -- -- Accrued expenses and other liabilities: Investment management 7,375 42,688 4,560 23,112 26,068 Administration 1,876 6,606 285 1,799 1,899 Accounting 3,595 6,278 4,114 5,335 4,213 Compliance service 61 160 55 20 39 Custodian 5,809 2,679 -- 18,212 13,092 Trustee -- -- 74 -- -- Other 736 2,580 471 800 790 ----------- ------------ ----------- ----------- ------------ TOTAL LIABILITIES 3,684,305 24,912,006 159,559 1,309,101 73,726 ----------- ------------ ----------- ----------- ------------ ................................................................................................................................ NET ASSETS: Applicable to investors' beneficial interest $21,671,765 $108,659,148 $11,015,360 $57,888,505 $ 61,678,884 ----------- ------------ ----------- ----------- ------------ ----------- ------------ ----------- ----------- ------------ Investments, at cost $23,530,643 $120,021,934 $10,831,581 $50,534,817 $ 49,825,037 ----------- ------------ ----------- ----------- ------------ ----------- ------------ ----------- ----------- ------------ Foreign currency, at cost --------------- ------------ ------------ ------------ ------------ </Table> (a) The High Yield Fixed Income Portfolio commenced operation on November 18, 2005. See notes to financial statements. HSBC INVESTOR PORTFOLIOS 92 HSBC INVESTOR PORTFOLIOS STATEMENTS OF ASSETS AND LIABILITIES -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) <Table> <Caption> INTERNATIONAL SMALL CAP EQUITY EQUITY PORTFOLIO PORTFOLIO -------------- -------------- - ------------------------------------------------------------------------- ASSETS: Investments in non-affiliates, at value $303,953,293 $237,007,757 Investments in affiliates, at value -- 8,247,705 Cash -- 27,625 Foreign currency 3,480,827 -- Interest and dividends receivable 1,411,755 70,436 Receivable for investments sold 365,663 3,280,115 Unrealized appreciation on forward foreign currency contracts 971 -- Prepaid expenses and other assets 12,048 20,627 ------------ ------------ TOTAL ASSETS 309,224,557 248,654,265 ------------ ------------ ....................................................................... LIABILITIES: Payable for investments purchased 1,351,991 765,721 Unrealized depreciation on forward foreign currency contracts 127,205 -- Accrued expenses and other liabilities: Investment management 217,625 160,167 Administration 12,611 11,691 Accounting 3,504 3,610 Compliance service 130 188 Custodian 15,276 -- Trustee -- -- Other 3,731 4,721 ------------ ------------ TOTAL LIABILITIES 1,732,073 946,098 ------------ ------------ NET ASSETS: Applicable to investors' beneficial interest $307,492,484 $247,708,167 ------------ ------------ ------------ ------------ Investments, at cost $212,870,035 $186,081,559 ------------ ------------ ------------ ------------ Foreign currency, at cost $ 3,317,581 ------------ ------------ </Table> 93 HSBC INVESTOR PORTFOLIOS See notes to financial statements. HSBC INVESTOR PORTFOLIOS STATEMENTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) <Table> <Caption> INTERMEDIATE DURATION CORE PLUS HIGH YIELD FIXED INCOME FIXED INCOME FIXED INCOME GROWTH VALUE PORTFOLIO PORTFOLIO PORTFOLIO (A) PORTFOLIO PORTFOLIO - --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Interest $ 651,070 $ 2,995,063 $ 270,687 $ -- $ -- Dividends -- -- 6,930 225,785 531,470 Dividend income from affiliated investments 5,869 49,468 -- 34,315 31,292 Income from securities lending 3,075 17,878 -- 19 113 ----------- ------------ ---------- ---------- ----------- TOTAL INVESTMENT INCOME 660,014 3,062,409 277,617 260,119 562,875 ----------- ------------ ---------- ---------- ----------- ............................................................................................................................. EXPENSES: Investment management 51,488 261,162 21,182 132,919 149,916 Administration 4,827 21,074 1,324 10,088 10,708 Accounting 29,688 35,520 27,432 28,429 27,296 Compliance service 230 870 98 352 388 Custodian 10,633 25,069 15,049 10,712 13,092 Trustee 365 1,371 150 548 606 Other 2,127 8,100 645 3,284 3,535 ----------- ------------ ---------- ---------- ----------- TOTAL EXPENSES 99,358 353,166 65,880 186,332 205,541 ----------- ------------ ---------- ---------- ----------- ............................................................................................................................. NET INVESTMENT INCOME (LOSS) 560,656 2,709,243 211,737 73,787 357,334 ----------- ------------ ---------- ---------- ----------- ............................................................................................................................. NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND FOREIGN CURRENCIES: Net realized gains (losses) from investments and foreign currency transactions (402,173) (1,657,869) 12,241 2,754,704 1,945,744 Change in unrealized appreciation/depreciation from investments and foreign currencies 99,229 8,919 156,257 1,293,178 4,979,185 ----------- ------------ ---------- ---------- ----------- ............................................................................................................................. Net realized/unrealized gains (losses) from investments and foreign currency transactions (302,944) (1,648,950) 168,498 4,047,882 6,924,929 ----------- ------------ ---------- ---------- ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 257,712 $ 1,060,293 $ 380,235 $4,121,669 $ 7,282,263 ----------- ------------ ---------- ---------- ----------- ----------- ------------ ---------- ---------- ----------- </Table> (a) The High Yield Fixed Income Portfolio commenced operations on November 18, 2005. See notes to financial statements. HSBC INVESTOR PORTFOLIOS 94 HSBC INVESTOR PORTFOLIOS STATEMENTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED APRIL 30, 2006 (UNAUDITED) (CONTINUED) <Table> <Caption> INTERNATIONAL SMALL CAP EQUITY EQUITY PORTFOLIO PORTFOLIO - ------------------------------------------------------------------------ INVESTMENT INCOME: Interest $ 33,150 $ -- Dividends 2,749,453 518,945 Dividend income from affiliated investments -- 97,727 Foreign tax withholding (215,505) -- Income from securities lending -- 7,230 ------------ ------------ TOTAL INVESTMENT INCOME 2,567,098 623,902 ------------ ------------ ..................................................................... EXPENSES: Investment management 882,918 931,724 Administration 48,859 43,675 Accounting 46,366 27,328 Compliance service 1,681 1,611 Custodian 119,047 34,367 Trustee 2,633 2,526 Other 14,758 14,224 ------------ ------------ TOTAL EXPENSES 1,116,262 1,055,455 ------------ ------------ ..................................................................... NET INVESTMENT INCOME (LOSS) 1,450,836 (431,553) ------------ ------------ ..................................................................... NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND FOREIGN CURRENCIES: Net realized gains (losses) from investments and foreign currency transactions 11,980,778 22,894,387 Change in unrealized appreciation/depreciation from investments and foreign currencies 51,766,202 21,977,857 ------------ ------------ ..................................................................... Net realized/unrealized gains (losses) from investments and foreign currency transactions 63,746,980 44,872,244 ------------ ------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 65,197,816 $ 44,440,691 ------------ ------------ ------------ ------------ </Table> 95 HSBC INVESTOR PORTFOLIOS See notes to financial statements. HSBC INVESTOR PORTFOLIOS STATEMENTS OF CHANGES IN NET ASSETS <Table> <Caption> --------------------------------------- ------------------------------------------ INTERMEDIATE DURATION CORE PLUS FIXED INCOME FIXED INCOME PORTFOLIO PORTFOLIO - ------------------------------------------------------------------------------------------------------------------------------ FOR THE FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE APRIL 30, 2006 YEAR ENDED APRIL 30, 2006 YEAR ENDED (UNAUDITED) OCTOBER 31, 2005 (UNAUDITED) OCTOBER 31, 2005 - ------------------------------------------------------------------------------------------------------------------------------ INVESTMENT ACTIVITIES: OPERATIONS: Net investment income $ 560,656 $ 1,897,871 $ 2,709,243 $ 6,493,010 Net realized gains (losses) from investment and foreign currency transactions (402,173) (162,231) (1,657,869) 7,083,274 Change in unrealized appreciation/depreciation from investments and foreign currencies 99,229 (1,247,772) 8,919 (10,643,468) ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 257,712 487,868 1,060,293 2,932,816 ------------ ------------ ------------ ------------ Proceeds from contributions 803,700 6,926,443 18,592,258 31,409,368 Value of withdrawals (12,199,333) (38,301,414) (33,523,183) (81,271,788) ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS FROM TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST (11,395,633) (31,374,971) (14,930,925) (49,862,420) ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS (11,137,921) (30,887,103) (13,870,632) (46,929,604) ............................................................................................................................. NET ASSETS: Beginning of period 32,809,686 63,696,789 122,529,780 169,459,384 ------------ ------------ ------------ ------------ End of period $ 21,671,765 $ 32,809,686 $108,659,148 $122,529,780 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ </Table> See notes to financial statements. HSBC INVESTOR PORTFOLIOS 96 HSBC INVESTOR PORTFOLIOS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) <Table> <Caption> --------------------------------- HIGH YIELD FIXED INCOME PORTFOLIO - --------------------------------------------------------------------- FOR THE PERIOD ENDED APRIL 30, 2006 (A) (UNAUDITED) - --------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income $ 211,737 Net realized gains (losses) from investment transactions 12,241 Change in unrealized appreciation/depreciation from investments 156,257 ------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 380,235 ------------ Proceeds from contributions 11,582,416 Value of withdrawals (947,291) ------------ CHANGE IN NET ASSETS FROM TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST 10,635,125 ------------ CHANGE IN NET ASSETS 11,015,360 ........................................................ NET ASSETS: Beginning of period -- ------------ End of period $ 11,015,360 ------------ ------------ </Table> - --------- (a) The High Yield Fixed Income Portfolio commenced operations on November 18, 2005. 97 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 FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE APRIL 30, 2006 PERIOD ENDED APRIL 30, 2006 YEAR ENDED (UNAUDITED) OCTOBER 31, 2005 (UNAUDITED) OCTOBER 31, 2005 - ------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income $ 73,787 $ 403,238 $ 357,334 $ 721,613 Net realized gains (losses) from investment transactions 2,754,704 2,375,542 1,945,744 4,124,126 Change in unrealized appreciation/depreciation from investments 1,293,178 3,995,556 4,979,185 4,254,259 ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 4,121,669 6,774,336 7,282,263 9,099,998 ------------ ------------ ------------ ------------ Proceeds from contributions 11,019,790 15,081,868 8,492,544 14,013,050 Value of withdrawals (6,667,653) (22,121,709) (8,246,371) (30,376,597) ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS FROM TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST 4,352,137 (7,039,841) 246,173 (16,363,547) ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS 8,473,806 (265,505) 7,528,436 (7,263,549) .............................................................................................................................. NET ASSETS: Beginning of period 49,414,699 49,680,204 54,150,448 61,413,997 ------------ ------------ ------------ ------------ End of period $ 57,888,505 $ 49,414,699 $ 61,678,884 $ 54,150,448 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ </Table> See notes to financial statements. HSBC INVESTOR PORTFOLIOS 98 HSBC INVESTOR PORTFOLIOS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) <Table> <Caption> ------------------------------------------- ------------------------------------------ INTERNATIONAL EQUITY SMALL CAP EQUITY PORTFOLIO PORTFOLIO - ------------------------------------------------------------------------------------------------------------------------------ FOR THE FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE APRIL 30, 2006 YEAR ENDED APRIL 30, 2006 YEAR ENDED (UNAUDITED) OCTOBER 31, 2005 (UNAUDITED) OCTOBER 31, 2005 - ------------------------------------------------------------------------------------------------------------------------------ INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 1,450,836 $ 4,381,037 $ (431,553) $ (1,294,078) Net realized gains (losses) from investment and foreign currency transactions 11,980,778 18,977,305 22,894,387 62,035,547 Change in unrealized appreciation/depreciation from investments and foreign currencies 51,766,202 17,737,274 21,977,857 (17,237,446) ------------ ---------------- ------------- ------------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 65,197,816 41,095,616 44,440,691 43,504,023 ------------ ---------------- ------------- ------------- Proceeds from contributions 38,879,905 68,931,727 15,966,433 24,917,377 Value of withdrawals (26,815,089) (99,822,646) (31,477,182) (208,976,448) ------------ ---------------- ------------- ------------- CHANGE IN NET ASSETS FROM TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST 12,064,816 (30,890,919) (15,510,749) (184,059,071) ------------ ---------------- ------------- ------------- CHANGE IN NET ASSETS 77,262,632 10,204,697 28,929,942 (140,555,048) ............................................................................................................................. NET ASSETS: Beginning of period 230,229,852 220,025,155 218,778,225 359,333,273 ------------ ---------------- ------------- ------------- End of period $307,492,484 $ 230,229,852 $ 247,708,167 $ 218,778,225 ------------ ---------------- ------------- ------------- ------------ ---------------- ------------- ------------- </Table> 99 HSBC INVESTOR PORTFOLIOS See notes to financial statements. - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS <Table> <Caption> RATIOS/SUPPLEMENTARY DATA --------------------------------------------------- RATIO OF RATIO OF NET NET ASSETS AT EXPENSES INVESTMENT END OF TO AVERAGE INCOME (LOSS) TOTAL PERIOD NET TO AVERAGE RETURN(A) (000'S) ASSETS(B) NET ASSETS(B) - -------------------------------------------------------------------------------------------------------------- INTERMEDIATE DURATION FIXED INCOME PORTFOLIO Period ended October 31, 2001 (d) $115,180 0.55% 4.97% Year ended October 31, 2002 149,815 0.51% 4.60% Year ended October 31, 2003 4.42% 84,488 0.53% 3.70% Year ended October 31, 2004 4.48% 63,697 0.57% 3.54% Year ended October 31, 2005 0.76%(e) 32,810 0.49%(e) 3.85% (e) Six months ended April 30, 2006 (unaudited) 0.88% 21,672 0.77% 4.37% - -------------------------------------------------------------------------------------------------------------- CORE PLUS FIXED INCOME PORTFOLIO Year ended October 31, 2001 $242,914 0.53% 6.53% Year ended October 31, 2002 385,802 0.48% 5.14% Year ended October 31, 2003 5.80% 203,551 0.48% 4.38% Year ended October 31, 2004 5.56% 169,459 0.52% 4.31% Year ended October 31, 2005 1.64%(e) 122,530 0.40%(e) 4.25% (e) Six months ended April 30, 2006 (unaudited) 0.88% 108,659 0.63% 4.82% - -------------------------------------------------------------------------------------------------------------- HIGH YIELD FIXED INCOME PORTFOLIO Period ended April 30, 2006 (unaudited) (d) 4.68% 11,015 1.84% 5.91% - -------------------------------------------------------------------------------------------------------------- GROWTH PORTFOLIO Period ended October 31, 2004 (d) (0.86%) $ 49,680 0.72% 0.06% Year ended October 31, 2005 13.59% (e) 49,415 0.63%(e) 0.77% (e) Six months ended April 30, 2006 (unaudited) 8.32% 57,889 0.69% 0.27% - -------------------------------------------------------------------------------------------------------------- VALUE PORTFOLIO Period ended October 31, 2004 (d) 6.12% $ 61,414 0.71% 1.28% Year ended October 31, 2005 15.23%(e) 54,150 0.64%(e) 1.15% (e) Six months ended April 30, 2006 (unaudited) 13.58% 61,679 0.72% 1.25% - -------------------------------------------------------------------------------------------------------------- INTERNATIONAL EQUITY PORTFOLIO Year ended October 31, 2001 $275,848 0.90% 0.54% Year ended October 31, 2002 256,616 0.91% 0.63% Year ended October 31, 2003 23.70% 201,805 0.96% 1.00% Year ended October 31, 2004 20.29% 220,025 0.94% 1.53% Year ended October 31, 2005 19.54% 230,230 0.84% 1.92% Six months ended April 30, 2006 (unaudited) 28.12% 307,492 0.86% 1.11% - -------------------------------------------------------------------------------------------------------------- SMALL CAP EQUITY PORTFOLIO Year ended October 31, 2001 $265,573 0.98% (0.65%) Year ended October 31, 2002 266,217 0.99% (0.78%) Year ended October 31, 2003 33.30% 426,181 0.91% (0.62%) Year ended October 31, 2004 5.93% 359,333 0.88% (0.52%) Year ended October 31, 2005 14.35 %(e) 218,778 0.85%(e) (0.45%)(e) Six months ended April 30, 2006 (unaudited) 21.06% 247,708 0.91% (0.37%) - -------------------------------------------------------------------------------------------------------------- <Caption> RATIOS/SUPPLEMENTARY DATA ---------------------------- RATIO OF EXPENSES TO AVERAGE PORTFOLIO NET ASSETS(B)(C) TURNOVER - --------------------------------------------------------------------- INTERMEDIATE DURATION FIXED INCOME PORTFOLIO Period ended October 31, 2001 (d) 0.55% 102.01% Year ended October 31, 2002 0.51% 44.04% Year ended October 31, 2003 0.53% 98.42% Year ended October 31, 2004 0.57% 50.06% Year ended October 31, 2005 0.58% 107.26% Six months ended April 30, 2006 (unaudited) 0.77% 124.22% - ------------------------------------------------------------------- CORE PLUS FIXED INCOME PORTFOLIO Year ended October 31, 2001 0.53% 341.26% Year ended October 31, 2002 0.48% 77.82% Year ended October 31, 2003 0.48% 70.91% Year ended October 31, 2004 0.52% 34.88% Year ended October 31, 2005 0.53% 176.60% Six months ended April 30, 2006 (unaudited) 0.63% 147.29% - ------------------------------------------------------------------- HIGH YIELD FIXED INCOME PORTFOLIO Period ended April 30, 2006 (unaudited) (d) 1.84% 6.94% - ------------------------------------------------------------------- GROWTH PORTFOLIO Period ended October 31, 2004 (d) 0.72% 53.08% Year ended October 31, 2005 0.68% 79.54% Six months ended April 30, 2006 (unaudited) 0.69% 36.21% - ------------------------------------------------------------------- VALUE PORTFOLIO Period ended October 31, 2004 (d) 0.71% 10.33% Year ended October 31, 2005 0.69% 16.45% Six months ended April 30, 2006 (unaudited) 0.72% 9.31% - ------------------------------------------------------------------- INTERNATIONAL EQUITY PORTFOLIO Year ended October 31, 2001 0.90% 26.90% Year ended October 31, 2002 0.91% 31.63% Year ended October 31, 2003 0.96% 68.51% Year ended October 31, 2004 0.94% 106.11% Year ended October 31, 2005 0.84% 31.32% Six months ended April 30, 2006 (unaudited) 0.86% 14.64% - ------------------------------------------------------------------- SMALL CAP EQUITY PORTFOLIO Year ended October 31, 2001 0.98% 52.47% Year ended October 31, 2002 0.99% 103.90% Year ended October 31, 2003 0.91% 152.05% Year ended October 31, 2004 0.88% 81.75% Year ended October 31, 2005 0.90% 63.95% Six months ended April 30, 2006 (unaudited) 0.91% 31.02% - ------------------------------------------------------------------- </Table> (a) Not annualized for periods less than one year. (b) Annualized for periods less than one year. (c) During the period, certain fees were reduced. If such fee reductions had not occurred, the ratio would have been as indicated. (d) Intermediate Duration Fixed Income Portfolio commenced operations on January 24, 2001. High Yield Fixed Income Portfolio commenced operations on November 18, 2005. Value Portfolio commenced operations on May 7, 2004. Growth Portfolio commenced operations on May 7, 2004. (e) During the year ended October 31, 2005, HSBC reimbursed certain amounts to the Portfolios related to violations of certain investment policies and limitations. The corresponding impact to the net expense ratio, net income ratio and total return were 0.09%, 0.12%, 0.05%, 0.05% and 0.04% for Intermediate Duration Fixed Income Portfolio, Core Plus Fixed Income Portfolio, Growth Portfolio, Value Portfolio and Small Cap Equity Portfolio, respectively. See notes to financial statements. HSBC INVESTOR PORTFOLIOS 100 - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED) 1. ORGANIZATION: The HSBC Investor Portfolios (the 'Portfolio Trust'), is an open-end management investment company organized as a New York trust under the laws of the State of New York on November 1, 1994. The 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 master funds (individually a 'Portfolio,' collectively the 'Portfolios'): <Table> <Caption> PORTFOLIO SHORT NAME - --------- ---------- HSBC Investor Intermediate Duration Fixed Intermediate Duration Fixed Income Income Portfolio (formerly the HSBC Investor Portfolio Limited Maturity Portfolio) HSBC Investor Core Plus Fixed Income Portfolio Core Plus Fixed Income Portfolio (formerly the HSBC Investor Fixed Income Portfolio) HSBC Investor High Yield Fixed Income Portfolio High Yield 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 Portfolio Trust's organizational documents, the Portfolios' officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Portfolios. In addition, in the normal course of business, the Portfolios enter into contracts with their service providers, which also provide for indemnifications by the Portfolios. The Portfolios' maximum exposure under these arrangements is unknown as this would involve 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 ('GAAP'). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates. SECURITIES VALUATION: Bonds and other fixed income securities (other than short-term obligations but including listed issues) are valued on the basis of valuations furnished by a pricing service, the use of which has been approved by the Portfolios' Board of Trustees. In making such valuations, the pricing service utilizes both dealer-supplied valuations and the use of matrix techniques which take into account appropriate factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics other than market data and without exclusive reliance upon quoted prices or exchanges or over-the-counter prices, since such valuations are believed to reflect more accurately the fair value of such securities. All debt portfolio securities with a remaining maturity of 60 days or less are valued at amortized cost. Under the amortized cost method, premium or discount, if any, is amortized or accreted, respectively, on a constant (straight-line) basis to the maturity of the security. The value of each equity security is based either on the last sale price on a national securities exchange, or in the absence of recorded sales, at the closing bid prices on such exchanges, or at the quoted bid price in the over-the-counter market. Securities or other assets for which market quotations are not readily available are valued by or at the direction 101 HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) 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 value pricing in accordance with procedures adopted by the Board of Trustees. Management identifies possible fluctuations in foreign securities by monitoring the rise or fall in the value of a designated benchmark index. In the event of a rise or fall greater than predetermined levels, the International Equity Portfolio may use a systematic valuation model provided by an independent third party to value its foreign securities. 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: During the period, security transactions are accounted for no later than one business day following trade date. For financial reporting purposes, however, changes in holdings are accounted for on trade date on the last business day of the reporting period. Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date. 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. HSBC INVESTOR PORTFOLIOS 102 - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) MORTGAGE DOLLAR ROLL TRANSACTIONS: The Core Plus Fixed Income Portfolio may engage in dollar roll transactions with respect to mortgage securities issued by the Government National Mortgage Association, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. In a dollar roll transaction, the Portfolio sells a mortgage-backed security and simultaneously agrees to repurchase a similar security on a specified future date at an agreed upon price. During the roll period, the Portfolio will not be entitled to receive any interest or principal paid on the securities sold. The Portfolio is compensated for the lost interest on the securities sold by the difference between the sales price and the lower price for the future repurchase as well as by the interest earned on the reinvestment of the sales proceeds. The Portfolio may also be compensated by receipt of a commitment fee. When the Portfolio enters into a mortgage dollar roll transaction, liquid assets in an amount sufficient to pay for the future repurchase are segregated with the custodian. RESTRICTED AND ILLIQUID SECURITIES: A restricted security is a security which has been purchased through a private offering and cannot be resold to the general public without prior registration under the Securities Act of 1933 (the '1933 Act') or pursuant to the resale limitations provided by Rule 144 under the 1933 Act, or an exemption from the registration requirements of the 1933 Act. Certain restricted securities may be resold in transactions exempt from registration, normally to qualified institutional buyers, and may be deemed liquid by the investment manager based on procedures established by the Board of Trustees. Therefore, not all restricted securities are considered illiquid. At April 30, 2006, the HSBC Core Plus Fixed Income Portfolio held restricted securities that were illiquid, representing 0.03% of net assets, as follows: <Table> <Caption> ACQUISITION ACQUISITION PRINCIPAL SECURITY NAME DATE COST($) AMOUNT($) VALUE($) - ------------- ---- ------- --------- -------- FHA Weyerhauser, 7.43%, 1/1/24................ 3/28/2002 32,498 34,389 34,389 </Table> SECURITY LOANS: To generate additional income, the Portfolios may lend portfolio securities in amounts up to 33 1/3%, except for Small Cap Equity Portfolio, which may lend up to 30%, of its respective assets pursuant to agreements requiring that the loan be collateralized by cash, U.S. Government or U.S. Government agency securities, equal at all times to at least 100% of the fair value of the loaned securities. HSBC Bank USA ('HSBC Bank'), an affiliate of the Investment Adviser (defined below), acts as the securities lending agent for this activity. The Portfolios receive payments from borrowers equivalent to the dividends and interest that would have been earned on securities loaned while simultaneously seeking to earn income on the investment of collateral. Collateral is marked to market daily to provide the required level of collateral. 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 Bank to be of good standing and creditworthy under guidelines approved by the Board of Trustees and when, in the judgement of HSBC Bank, the amounts that can be earned currently from such securities loans justifies the attendant 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, 2006, the Portfolios did not have any securities on loan. LINE OF CREDIT: The Portfolios may borrow up to $50 million under the terms of a short-term, demand note agreement with HSBC Bank. 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, 2006, the details of the borrowings were as follows (based on actual number of days on which the respective Portfolios borrowed monies): <Table> <Caption> AVERAGE AMOUNT AVERAGE FUND OUTSTANDING INTEREST RATE - ---- ----------- ------------- Core Plus Fixed Income Portfolio........................... $7,732,592 4.60% </Table> 103 HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) EXPENSE ALLOCATIONS: Expenses directly attributable to a Portfolio are charged to that Portfolio. Expenses not directly attributable to a Portfolio are allocated proportionally among various or all series within the HSBC Investor Family of Funds in relation to net assets or on another reasonable basis. FEDERAL INCOME TAXES: Each Portfolio will be treated as a partnership for U.S. Federal income tax purposes. Accordingly, each Portfolio passes through all of its net investment income and gains and losses to its 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. For its services as Investment Adviser, HSBC receives a fee, accrued daily and paid monthly, at an annual rate of 0.40% of the Intermediate Duration Fixed Income Portfolio's average daily net assets and 0.60% of the High Yield Fixed Income Portfolio's average daily net assets. For its services as Investment Adviser, HSBC receives, from the Core Plus Fixed Income Portfolio, a fee accrued daily and paid monthly at an annual rate of: <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> HSBC INVESTOR PORTFOLIOS 104 - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) 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 $10 million........................................... 1.015% In excess of $10 million but not exceeding $25 million...... 0.925% In excess of $25 million but not exceeding $50 million...... 0.79% In excess of $50 million but not exceeding $100 million..... 0.70% In excess of $100 million................................... 0.61% </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: HSBC serves the Portfolios as Administrator. Under the terms of the administration agreement, HSBC receives from the Portfolios fee, accrued daily and paid monthly, at an annual rate of: <Table> <Caption> BASED ON AVERAGE DAILY NET ASSETS FEE RATE - --------------------------------- -------- Up to $8 billion............................................ 0.075% In excess of $8 billion but not exceeding $9.25 billion..... 0.070% In excess of $9.25 billion but not exceeding $12 billion.... 0.050% In excess of $12 billion.................................... 0.030% </Table> The fee rates and breakpoints are determined on the basis of the aggregate average daily net assets of the HSBC Investor Family of Funds; however the assets of the Portfolios and Feeder Funds that invest in the Portfolios are not double-counted. The total administration fee paid to BISYS is allocated to each series in the HSBC Investor Family of Funds based upon its proportionate share of the aggregate net assets of the Family of Funds. For assets invested in the Portfolios by Feeder Funds, the Portfolios pay half of the administration fee and the Feeder Funds pay half of the administration fee, for a combination of the total fee rate set forth above. Pursuant to a Sub-Administration Agreement with HSBC, BISYS Fund Services Ohio, Inc. ('BISYS Ohio') a wholly-owned subsidiary of The BISYS Group, Inc., serves as the Portfolio Trust's sub-administrator subject to the general supervision of the Portfolio Trust's Board of Trustees and HSBC. For these services, BISYS Ohio is entitled to a fee, payable by HSBC, at an annual rate equivalent to the fee rates set forth above, minus 0.02% (2 basis points), which is retained by HSBC. All voluntary administration fee waivers are not subject to recoupment in subsequent fiscal periods. Under a Compliance Services Agreement between the Portfolios' and BISYS Ohio (the 'CCO Agreement'), BISYS Ohio makes an employee available to serve as the Portfolios' Chief Compliance Officer (the 'CCO'). Under the CCO Agreement, BISYS Ohio also provides infrastructure and support in implementing the written policies and procedures comprising the Portfolios' compliance program, including support services to the CCO. For the services provided under the CCO Agreement, the HSBC Investor Family of Funds paid BISYS Ohio $117,433 for the period ended April 30, 2006, plus certain out of pocket expenses. Expenses incurred are reflected on the Statement of Operations as 'Compliance Service'. BISYS Ohio pays the salary and other compensation earned by any such individuals as employees of BISYS Ohio. 105 HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) FUND ACCOUNTING, CUSTODIAN AND TRUSTEE: BISYS Ohio provides fund accounting services for the Portfolios. For its services to the Portfolios, BISYS Ohio receives an annual fee per Portfolio, including reimbursement of certain expenses, from each Portfolio accrued daily and paid monthly. HSBC Bank serves as custodian to the Portfolios. Investor's Bank & Trust Company ('IBT') serves as custodian for the High Yield Fixed Income Portfolio and for the foreign assets of all Portfolios. Compensation paid to HSBC Bank and IBT for services to the Portfolios as custodian is presented in the Statements of Operations as custodian fees. Each of the six non-interested Trustees are compensated with a $24,000 annual Board retainer, as well as a $1,000 annual retainer for each Committee of the Board. Each non-interested Trustee also receives a $4,000 and $2,000 meeting fee for each regular in-person Board meeting and Committee meeting, respectively. Furthermore, each non-interested Trustee receives compensation for attending special meetings and/or functioning as a Committee Chairperson or Lead Trustee. In addition, the non-interested Trustees are reimbursed for certain expenses incurred in connection with their Board membership. OTHER: For its services as securities lending agent, HSBC Bank (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. Income from securities lending, net of related expenses, is recorded as earned by the Portfolios. The fees collected by HSBC Bank for the period ended April 30, 2006 were: <Table> <Caption> PORTFOLIO FEE - --------- --- Intermediate Duration Fixed Income Portfolio................ $ 161 Core Plus Fixed Income Portfolio............................ 940 Growth Portfolio............................................ 38 Value Fund Portfolio........................................ 188 Small Cap Equity Portfolio.................................. 7,966 </Table> The HSBC Investor Family of Funds may use affiliated broker/dealers for the execution of portfolio investment trades. For the period ended April 30, 2006, affiliated broker/dealers did not receive any commissions on the execution of trades related to the HSBC Investor Family of Funds. 4. INVESTMENT TRANSACTIONS: For the period ended April 30, 2006, each Portfolio purchased and sold securities, excluding short-term securities, in the following amounts: <Table> <Caption> PURCHASES SALES PURCHASES SALES (EXCLUDING U.S. (EXCLUDING U.S. OF U.S. OF U.S. PORTFOLIO NAME GOVERNMENT) GOVERNMENT) GOVERNMENT GOVERNMENT - -------------- ----------- ----------- ---------- ---------- Intermediate Duration Fixed Income Portfolio....................... $18,980,122 $ 26,046,165 $10,635,614 $13,580,774 Core Plus Fixed Income Portfolio....................... 96,558,425 108,148,784 53,046,523 55,825,407 High Yield Fixed Income Portfolio....................... 8,661,436 460,125 -- -- Growth Portfolio.................. 21,737,014 18,902,135 -- -- Value Portfolio................... 5,195,941 6,171,912 -- -- International Equity Portfolio.... 46,727,645 37,687,328 -- -- Small Cap Equity Portfolio........ 71,494,223 95,269,342 -- -- </Table> HSBC INVESTOR PORTFOLIOS 106 - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2006 (UNAUDITED) (CONTINUED) 5. FEDERAL INCOME TAX INFORMATION: As of April 30, 2006, 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) - -------------- -------- ------------ ------------ -------------- Intermediate Duration Fixed Income Portfolio.............. $ 23,555,072 $ 17,465 $ (363,987) $ (346,522) Core Plus Fixed Income Portfolio..................... 120,194,657 165,198 (1,911,762) (1,746,564) High Yield Fixed Income Portfolio..................... 10,831,581 191,438 (35,181) 156,257 Growth Portfolio................ 50,665,009 8,014,230 (863,821) 7,150,409 Value Portfolio................. 49,869,239 13,159,409 (1,359,011) 11,800,398 International Equity Portfolio..................... 213,186,293 92,595,218 (1,828,218) 90,767,000 Small Cap Equity Portfolio...... 187,367,893 60,814,195 (2,926,626) 57,887,569 </Table> 107 HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- INVESTMENT ADVISER CONTRACT APPROVAL (UNAUDITED) -- APRIL 30, 2006 The Board of Trustees (the 'Board of Trustees') of the HSBC Investor Trust, HSBC Advisor Trust and HSBC Portfolio Trust (collectively, the 'Trusts'), and the non-interested Trustees, voting separately, approved the renewal of the Investment Advisory Contracts and, where applicable Sub-Advisory Contracts, with respect to the respective series of the Trusts then existing (collectively, the 'Existing Funds') at an in-person meeting held on December 12, 2005. For the HSBC Investor High Yield Fixed Income Fund and HSBC Investor High Yield Fixed Income Portfolio (the 'High Yield Funds') the Board of Trustees reviewed and approved the initial investment advisory agreement on June 13, 2005 (the Existing Funds and High Yield Funds are collectively referred to as the 'Funds' and the Investment Advisory Contracts and Sub-Advisory Contracts are collectively referred to as the 'Agreements'). In determining whether it was appropriate to approve the Agreements for the Funds, the Board of Trustees requested information from the Adviser and the various Sub-Advisers 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 for each Fund, the Board of Trustees determined that the relevant Agreement is consistent with the best interests of the Funds and their shareholders, and enables the Funds to receive high quality services at a cost that is appropriate and reasonable. The Board of Trustees made these determinations on the basis of the following considerations, 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, as applicable to the Equity Funds, the sub-advisers), in light of the high quality services provided to the Funds, and each Fund's historic performance. In the case of the High Yield Funds, the Board of Trustees considered the historical performance and experience of the management team in managing other mutual funds having similar investment objectives. For the High Yield Funds and other Fixed Income Funds, the Board also considered the historical performance and experience of the management team in managing other accounts, and the reasonable expectation of achieving competitive performance for these Funds. The Board of Trustees also considered the general and administrative and marketing services provided to the Funds by the Adviser. With respect to the Equity Funds, the Board considered the capabilities and performance of the Adviser's Multimanager unit. The Board of Trustees also considered the sufficiency of the Adviser's capabilities and oversight for both internally managed Funds as well as the sub-advised Equity Funds. The Board of Trustees further considered the Adviser's and Sub-Advisers' ability to obtain best execution on portfolio transactions. - Investment Performance of the Funds, Adviser and Sub-Advisers. The Board of Trustees considered short-term and long-term investment performance of each Fund over various periods of time as compared to a peer group of comparable funds. The Board of Trustees also considered the Equity Funds' sub-adviser's historic performance managing accounts having similar investment objectives as the Fund. With respect to the High Yield Funds, the Trustees considered the various measurements of investment performance provided with respect to the high yield team, and the significant achievements by the team in its management of high-yield products. - 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 advisory fees under the Agreements were within the range of those of similar funds, noting the high level of resource, expertise and experience that was provided to the Funds by the Adviser and Sub-Advisers. For the Equity Funds, the Board of Trustees concluded that the combined advisory fees payable to the Adviser and each of the Equity Fund's Sub-Advisers 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 advisory fee to similar fees paid by comparable mutual funds. - Other Relevant Considerations. The Board of Trustees considered the Adviser's and Sub-Adviser's representations regarding staffing and capabilities to manage the Funds. 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 Sub-Advisers. 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 meetings (including a separate vote of the Independent Trustees present in person at the meeting) approved the Agreements. HSBC INVESTOR PORTFOLIOS 108 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- TABLE OF SHAREHOLDER EXPENSES (UNAUDITED) -- APRIL 30, 2006 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 shareholder servicing fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the HSBC Investor Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from November 1, 2005 through April 30, 2006. 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> EXPENSE PAID BEGINNING ENDING DURING EXPENSE RATIO ACCOUNT VALUE ACCOUNT VALUE PERIOD* DURING PERIOD 11/1/05 4/30/06 11/1/05-4/30/06 11/1/05 - 4/30/06 ------- ------- --------------- ----------------- Intermediate Duration Fixed Income Portfolio $1,000.00 $1,008.80 $ 3.84 0.77% Core Plus Fixed Income Portfolio 1,000.00 1,008.80 3.14 0.63% High Yield Fixed Income Portfolio** 1,000.00 1,046.80 8.51 1.84% Growth Portfolio 1,000.00 1,083.20 3.56 0.69% Value Portfolio 1,000.00 1,135.80 3.81 0.72% International Equity Portfolio 1,000.00 1,281.20 4.86 0.86% Small Cap Equity Portfolio 1,000.00 1,210.60 4.99 0.91% </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. ** Information shown reflects values using the expense ratios and rates of return for the period from November 18, 2005 to April 30, 2006. 109 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- TABLE OF SHAREHOLDER EXPENSES (UNAUDITED) -- APRIL 30, 2006 (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> EXPENSE PAID BEGINNING ENDING DURING EXPENSE RATIO ACCOUNT VALUE ACCOUNT VALUE PERIOD* DURING PERIOD 11/1/05 4/30/06 11/1/05-4/30/06 11/1/05-4/30/06 ------- ------- --------------- --------------- Intermediate Duration Fixed Income Portfolio $1,000.00 $1,020.98 $ 3.86 0.77% Core Plus Fixed Income Portfolio 1,000.00 1,021.67 3.16 0.63% High Yield Fixed Income Portfolio** 1,000.00 1,015.62 9.25 1.84% Growth Portfolio 1,000.00 1,021.37 3.46 0.69% Value Portfolio 1,000.00 1,021.22 3.61 0.72% International Equity Portfolio 1,000.00 1,020.53 4.31 0.86% Small Cap Equity Portfolio 1,000.00 1,020.28 4.56 0.91% </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. ** Information shown reflects values using the expense ratios for the period from November 18, 2005 to April 30, 2006 and has been annualized to reflect values for the period November 1, 2005 to April 30, 2006. HSBC INVESTOR FAMILY OF FUNDS 110 A description of the policies and procedures that the Funds use to determine how to vote proxies relating to the portfolio securities is available without charge, upon request, by calling 1-800-525-5757 for HSBC Bank USA and HSBC Brokerage (USA) Inc. clients and 1-800-782-8183 for all other shareholders or on the Fund's website at www.investorfunds.us.hsbc.com and the Securities and Exchange Commission's website at http://www.sec.gov. A copy of the Fund's voting record for the most recent 12 month period ending June 30 is available at the Security and Exchange Commission's website at http://www.sec.gov. Schedules of Portfolio Investments for fiscal quarters ending January 31 and July 31 will be available no later than 60 days after each period end, without charge, on the Fund's website at www.investorfunds.us.hsbc.com and on the Securities and Exchange Commission's website at http://www.sec.gov. [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] <Page> HSBC Investor Family of Funds: INVESTMENT ADVISER AND ADMINISTRATOR 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 Los Angeles, CA 90067 HSBC Investor International Equity Portfolio AllianceBernstein Investment Research and Management 1345 Avenue of the Americas, 39th Floor New York, NY 10105 HSBC Investor Small Cap Equity Portfolio Westfield Capital Management, LLC One Financial Center Boston, MA 02111 SHAREHOLDER SERVICING AGENTS For HSBC Bank USA, N.A. and HSBC Brokerage (USA) Inc. Clients HSBC Bank USA, N.A. 452 Fifth Avenue New York, NY 10018 1-888-525-5757 For All Other Shareholders HSBC Investor Funds P.O. Box 182845 Columbus, OH 43218-2845 1-800-782-8183 TRANSFER AGENT, DISTRIBUTOR AND SPONSOR BISYS Fund Services 3435 Stelzer Road Columbus, OH 43219 Custodians HSBC Investor Intermediate Duration Fixed Income Portfolio HSBC Investor Core Plus 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, N.A. 452 Fifth Avenue New York, NY 10018 HSBC High Yield Fixed Income Portfolio 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 06/06 <Page> Item 2. Code of Ethics. Not applicable - only for annual reports. Item 3. Audit Committee Financial Expert. Not applicable - only for annual reports. Item 4. Principal Accountant Fees and Services. Not applicable - only for annual reports. Item 5. Audit Committee of Listed Registrants. Not applicable. Item 6. Schedule of Investments. Not applicable. <Page> Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not applicable. Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable. Item 10. Submission of Matters to a Vote of Security Holders. Not applicable. Item 11. Controls and Procedures. (a)The registrant's principal executive officer and principal financial officer have concluded, based on their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. (b)There were no changes in the registrant's internal control over financial reporting (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 have materially affected or are reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. Exhibits. (a)(1) Not applicable - Only effective for annual reports. (a)(2) Certifications pursuant to Rule 30a-2(a) are attached hereto. (a)(3) Not applicable. (b) Certifications pursuant to Rule 30a-2(b) are furnished herewith. <Page> SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) HSBC ADVISOR FUNDS TRUST ------------------------------------------------------------------ By (Signature and Title)* /s/ Richard A. Fabietti ------------------------------------------------------ Richard A. Fabietti President Date__July 7, 2006__________________________________ 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___July 7, 2006_________________________________ By (Signature and Title)* /s/ Troy A. Sheets ----------------------------------------------------- Troy A. Sheets Treasurer Date___July 7, 2006_________________________________ * Print the name and title of each signing officer under his or her signature. STATEMENT OF DIFFERENCES 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'