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.
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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]
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Table of Contents
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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
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Glossary of Terms
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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.
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Chairman's Message
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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
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Commentary From the Investment Manager
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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
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Portfolio Reviews
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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
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Portfolio Reviews
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HSBC Investor Intermediate Duration Fixed Income Fund - As of April 30, 2006
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Average Annual Total Return (%)
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Inception Six 1 5 Since
As of April 30, 2006 Date Month'D' Year Year Inception
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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
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Portfolio Reviews
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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
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Portfolio Reviews
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HSBC Investor Core Plus Fixed Income Fund - As of April 30, 2006
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Average Annual Total Return (%)
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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
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Portfolio Reviews
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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
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Portfolio Reviews
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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
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Portfolio Reviews
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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
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Portfolio Reviews
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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
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Portfolio Reviews
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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>
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Portfolio Reviews
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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
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Portfolio Reviews
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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
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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>
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Portfolio Reviews
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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>
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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>
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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
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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
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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
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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
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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
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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
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HSBC INVESTOR FAMILY OF FUNDS
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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
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HSBC INVESTOR FAMILY OF FUNDS
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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
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HSBC INVESTOR FAMILY OF FUNDS
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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'