-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VUgdhswdcFIiLUpIVO1QlpJBJUpUF5mWSzB2byWCP1xasVIb/yWXE0VsOTgLiafQ J8Whof7sa0DXhkTVsceu+Q== 0000930413-08-000150.txt : 20080107 0000930413-08-000150.hdr.sgml : 20080107 20080107173020 ACCESSION NUMBER: 0000930413-08-000150 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20071031 FILED AS OF DATE: 20080107 DATE AS OF CHANGE: 20080107 EFFECTIVENESS DATE: 20080107 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HSBC ADVISOR FUNDS TRUST CENTRAL INDEX KEY: 0001010296 IRS NUMBER: 000000000 STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-07583 FILM NUMBER: 08516100 BUSINESS ADDRESS: STREET 1: C/O CITI STREET 2: 3435 STELZER RD CITY: COLUMBUS STATE: OH ZIP: 43219-3035 BUSINESS PHONE: (617) 470-8000 MAIL ADDRESS: STREET 1: C/O CITI STREET 2: 3435 STELZER ROAD CITY: COLUMBUS STATE: OH ZIP: 43219-3035 FORMER COMPANY: FORMER CONFORMED NAME: REPUBLIC ADVISOR FUNDS TRUST DATE OF NAME CHANGE: 19960403 FORMER COMPANY: FORMER CONFORMED NAME: REPUBLIC INVESTMENT MANAGEMENT TRUST DATE OF NAME CHANGE: 19960308 0001010296 S000009283 Core Plus Fixed Income Fund C000025345 Advisor Shares RFXIX 0001010296 S000009284 International Equity Fund C000025346 Advisor Shares RINEX 0001010296 S000009285 Opportunity Fund C000025347 Advisor Shares RESCX N-CSR 1 c51800_ncsr.txt 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) CITI 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 Date of reporting period: October 31, 2007 ITEM 1. REPORTS TO STOCKHOLDERS. [GRAPHIC] HSBC Investments (USA) Inc. HSBC Investor Family of Funds Annual Report October 31, 2007 FIXED INCOME FUNDS: EQUITY FUNDS: HSBC Investor Core Plus Fixed Income Fund HSBC Investor Growth Fund (Advisor) HSBC Investor Growth and Income HSBC Investor Core Plus Fixed Income Fund Fund HSBC Investor High Yield Fixed Income Fund HSBC International Equity Fund HSBC Investor Intermediate Duration HSBC Investor Mid-Cap Fund Fixed Income Fund HSBC Investor Opportunity Fund HSBC Investor New York Tax-Free Bond Fund HSBC Investor Opportunity Fund (Advisor) HSBC Investor Overseas Equity Fund HSBC Investor Value Fund [HSBC LOGO] - -------------------------------------------------------------------------------- TABLE OF CONTENTS - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS ANNUAL REPORT - OCTOBER 31, 2007 Glossary of Terms Chairman's Message ...................................................... 1 Commentary From the Certain parties ..................................... 2 Portfolio Reviews ....................................................... 3 Portfolio Composition ................................................... 23 Schedules of Portfolio Investments HSBC Investor New York Tax-Free Bond Fund ............................ 25 HSBC Investor Growth and Income Fund ................................. 27 HSBC Investor Mid-Cap Fund ........................................... 29 Statements of Assets and Liabilities .................................... 31 Statements of Operations ................................................ 34 Statements of Changes in Net Assets ..................................... 37 Financial Highlights .................................................... 51 Notes to Financial Statements ........................................... 64 Report of Independent Registered Public Accounting Firm ................. 75 Other Federal Income Tax Information .................................... 76 Table of Shareholder Expenses ........................................... 77 HSBC INVESTOR PORTFOLIOS Schedules of Portfolio Investments HSBC Investor Core Plus Fixed Income Portfolio ....................... 81 HSBC Investor High Yield Fixed Income Portfolio ...................... 85 HSBC Investor Intermediate Duration Fixed Income Portfolio ........... 90 HSBC Investor Growth Portfolio ....................................... 93 HSBC Investor International Equity Portfolio ......................... 94 HSBC Investor Opportunity Portfolio .................................. 96 HSBC Investor Value Portfolio ........................................ 98 Statements of Assets and Liabilities .................................... 99 Statements of Operations ................................................ 101 Statements of Changes in Net Assets ..................................... 103 Financial Highlights .................................................... 107 Notes to Financial Statements ........................................... 108 Report of Independent Registered Public Accounting Firm ................. 115 Investment Adviser Contract Approval .................................... 116 Table of Shareholder Expenses ........................................... 117 Board of Trustees ....................................................... 119 - -------------------------------------------------------------------------------- GLOSSARY OF TERMS - -------------------------------------------------------------------------------- LEHMAN BROTHERS U.S. AGGREGATE INDEX is an unmanaged index generally representative of the investment-grade debt issues with at least one year to final maturity. LEHMAN BROTHERS INTERMEDIATE U.S. AGGREGATE INDEX is an unmanaged index 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. 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 HIGH CURRENT YIELDS FUNDS AVERAGE is an average of managed funds that aims at high (relative) current yield from fixed income securities, has no quality or maturity restrictions, and tends to invest in lower grade 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 FUNDS 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. MERRILL LYNCH U.S. HIGH YIELD MASTER II INDEX is an unmanaged index which measures the performance of the broad high yield market. 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. 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 Certain partiess. 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 1000(R) GROWTH INDEX is unmanaged index which measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. RUSSELL 1000(R) VALUE INDEX is unmanaged index which measures the performance of the 1,000 largest of the 3,000 largest U.S.-domiciled companies (based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. RUSSELL 2500(R) GROWTH INDEX is unmanaged index which represents the smallest 2500 securities found in the Russell universe with higher price-to-book and higher forecasted growth values. SECURITIES INDUSTRY AND FINANCIAL MARKETS ASSOCIATION MUNICIPAL SWAP INDEX ("SIFMA") is produced by Municipal Market Data, is a 7-day high-grade market index comprised of tax-exempt VRDOs from MMD's extensive MMD's extensive database. 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. - -------------------------------------------------------------------------------- CHAIRMAN'S MESSAGE - -------------------------------------------------------------------------------- DEAR SHAREHOLDER, It is no secret that in today's global economy, investing is extremely complex. From the days when goods and services were bartered to the relatively modern period of "exchanges," many people are involved with many chances for both success and failure. The mutual fund industry of the 21st century exemplifies the most complex of investment vehicles, with the result that government agencies like the U.S. Securities and Exchange Commission and boards of mutual funds must be vigilant on behalf of the private investor. To protect and support their shareholders, mutual fund boards need to have the most current information about general market trends and individual companies in which the funds invest. Boards must also determine who will be the best providers of this information and the best managers of the processes of the funds. Our board relies on the advice of the counsel to the fund and on its own counsel to the independent trustees to analyze all the financial and managerial issues related to operations. For example, when approving advisory agreements, the board considers: o Nature, extent and quality of services to be provided o Cost of services and profits realized by the advisors o Determination of equitable fees o Comparison of fees and services provided by other advisors o Performance of the funds and fund advisors o Economies of scale as funds grow This list generally represents the factors for approving advisory agreements. If any of the service providers to the funds begins to fall short in its performance, the board will find out the reasons, recommend remedial action or make a change. This is an ongoing process, not limited to quarterly meetings. The board and all its service providers work every day on behalf of the shareholders. As always, as you read this report about the status of your investment, if you have questions, concerns or ideas, please contact us. Yours truly, /s/ Larry M. Robbins Larry M. Robbins, Chairman, HSBC Investor Funds 1 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- COMMENTARY FROM THE CERTAIN PARTIES - -------------------------------------------------------------------------------- HSBC INVESTMENTS (USA) INC. U.S. ECONOMIC REVIEW The U.S. economy slowed during the year ended October 31, 2007. Less consumption, housing weakness, subprime turmoil, and a recent slowing of corporate profits marked the year. While overall inflation was fine, inflationary pressures have been building through higher commodity prices. The housing market has been a main drag on the U.S. economy and its growth. Housing continues to deteriorate, as indicated by August's 4.4% year-over-year decline in the Case-Shiller index of home prices and cyclical low in existing home sales. After record years, corporate profits have begun to weaken led by a summer downturn in real estate, followed by subprime writedowns in Financials. A booming technology sector has been an exception to the slowdown in most industries. Employment is good, but growing anemically and matched with a less-tight 4.7% unemployment rate. Therefore, while the most recent quarterly economic growth was a strong 4.9% annualized, that reading appears both high and unsustainable. In 2008, we believe continued growth is an uncertainty as the country braces for more rounds of mortgage resets, and increased defaults. The housing market has declined, driven by tighter credit and slow underlying demand. Housing will likely remain weak to allow time for underlying housing fundamentals to stabilize. Continued tight credit, lower housing wealth, and slower job growth, all combine to increase the downside risk to growth. Our central scenario remains one of a soft-landing as indicators stay mixed, the employment situation remains reasonably healthy, and we believe we see a Federal Reserve Board (the "Fed") ready to support. However, we acknowledge downside risks to growth have increased given the potential implications of the subprime fallout for corporates and the economy at large. According to our central scenario, growth is expected to slow moderately in other developed markets like Europe, and remain strong in emerging markets. MARKET REVIEW Stocks posted strong returns in the year ended October 31, 2007. The S&P 500 Index (price only) gained 12.4%, the Russell 2000(R) Index (price only) gained 8.0%, and the MSCI EAFE gained 25.4%. International indexes created new highs, and the S&P this year finally surpassed its 2000 peak. The most significant market change in the past few months was due to the subprime contagion. When borrowers began to default on mortgages connected to souring housing investments, industries surrounding risky loan origination saw losses accelerate. Losses also spread to companies exposed to this sector, and tighter credit meant restrictive borrowing capacity for both consumers and companies. The subprime situation led to a spike in risk-aversion. This was evidenced by a drop in financials stocks and a flight towards more safe-haven instruments like gold and U.S. Treasuries. In the past three months, gold has rallied 19.9% to $797/oz and 10-year bond yields dropped 26 basis points (0.26%) to 4.47%. While the Fed has helpfully cut target rates, the situation remains critical. Looking at 2008, we believe we see a soft landing for the U.S. economy but a more difficult environment for corporate profits. We are therefore somewhat more cautious on equities over the next 12 months. Among fixed income markets, we prefer government debt to credit assets due to the market volatility and less attractive credit valuations. HSBC INVESTOR FAMILY OF FUNDS 2 - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- HSBC INVESTOR CORE PLUS FIXED INCOME 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 12-month period ended October 31, 2007, the Advisor shares of the Fund produced a 7.20% total return, and the Class A Shares returned 6.90% (without sales charge). That compared to a total return of 5.38% and 4.08% for the Lehman Brothers U.S. Aggregate Index(1) and the Lipper Intermediate Investment-Grade Debt Funds Average(1), respectively. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. PORTFOLIO PERFORMANCE The Fund outperformed the benchmark for the period under review. The key component of that outperformance was the Fund's defensive positioning. Early in the year, exposure to select off-benchmark holdings in high yield and emerging market debt contributed to positive performance. These gains were further enhanced later in the year, as the Fund moved to an underweight in corporates, as spread sectors underperformed duration adjusted treasuries. The Fund also benefited from individual security selection within corporate credits and mortgages.* Going forward, we will continue to analyze the yield curve for pricing anomalies and opportunistically add duration as higher yields reflect fair value. We look to remain defensive as we believe that the fundamentals may continue to deteriorate over the next 6-12 months eventually causing speculative grade defaults to rise from current levels. If this occurs, we will see a much more dramatic widening in credit spreads than we have seen in the current market environment. We believe the excesses of the past several years have yet to be resolved through short-term market volatility and central bank reaction. Consequently, we believe these will continue to have an economic and market impact. * Portfolio composition is subject to change. (1) For additional information, please refer to the Glossary of Terms. 3 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- HSBC INVESTOR CORE PLUS FIXED INCOME FUND - AS OF OCTOBER 31, 2007 - -------------------------------------------------------------------------------- VALUE OF A $10,000 INVESTMENT - -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Lehman Brothers U.S. HSBC Investor Core Plus Aggregate Index Fixed Income Fund (Advisor) 10/97 $ 10,000 $ 10,000 12/97 $ 10,147 $ 10,130 $ 10,305 $ 10,278 $ 10,546 $ 10,455 $ 10,992 $ 10,707 12/98 $ 11,029 $ 10,824 $ 11,107 $ 10,829 $ 10,878 $ 10,670 $ 10,951 $ 10,710 12/99 $ 10,938 $ 10,707 $ 11,179 $ 10,906 $ 11,374 $ 11,070 $ 11,717 $ 11,441 12/00 $ 12,210 $ 11,909 $ 12,580 $ 12,320 $ 12,651 $ 12,445 $ 13,235 $ 12,885 12/01 $ 13,241 $ 12,993 $ 13,253 $ 12,954 $ 13,743 $ 13,313 $ 14,372 $ 13,874 12/02 $ 14,598 $ 14,106 $ 14,802 $ 14,307 $ 15,172 $ 14,708 $ 15,150 $ 14,686 12/03 $ 15,198 $ 14,745 $ 15,602 $ 15,095 $ 15,220 $ 14,761 $ 15,707 $ 15,198 12/04 $ 15,857 $ 15,373 $ 15,781 $ 15,307 $ 16,256 $ 15,748 $ 16,146 $ 15,675 12/05 $ 16,242 $ 15,742 $ 16,137 $ 15,694 $ 16,125 $ 15,722 $ 16,739 $ 16,287 12/06 $ 16,946 $ 16,842 $ 17,201 $ 17,123 $ 17,112 $ 17,058 $ 17,598 $ 17,474 12/07 $ 17,757 $ 17,606 [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Lehman Brothers U.S. HSBC Investor Core Plus Aggregate Index Fixed Income Fund Class A(1) 10/97 $ 10,000 $ 9,528 12/97 $ 10,147 $ 9,637 $ 10,305 $ 9,781 $ 10,546 $ 9,933 $ 10,992 $ 10,183 12/98 $ 11,029 $ 10,254 $ 11,107 $ 10,256 $ 10,878 $ 10,096 $ 10,951 $ 10,120 12/99 $ 10,938 $ 10,123 $ 11,179 $ 10,273 $ 11,374 $ 10,435 $ 11,717 $ 10,764 12/00 $ 12,210 $ 11,196 $ 12,580 $ 11,549 $ 12,651 $ 11,660 $ 13,235 $ 12,051 12/01 $ 13,241 $ 12,136 $ 13,253 $ 12,092 $ 13,743 $ 12,413 $ 14,372 $ 12,901 12/02 $ 14,598 $ 13,113 $ 14,802 $ 13,283 $ 15,172 $ 13,642 $ 15,150 $ 13,600 12/03 $ 15,198 $ 13,634 $ 15,602 $ 13,946 $ 15,220 $ 13,612 $ 15,707 $ 14,011 12/04 $ 15,857 $ 14,162 $ 15,781 $ 14,099 $ 16,256 $ 14,484 $ 16,146 $ 14,400 12/05 $ 16,242 $ 14,466 $ 16,137 $ 14,406 $ 16,125 $ 14,425 $ 16,739 $ 14,929 12/06 $ 16,946 $ 15,438 $ 17,201 $ 15,685 $ 17,112 $ 15,605 $ 17,598 $ 15,989 10/07 $ 17,757 $ 16,105 The charts above represent a comparison of a hypothetical $10,000 investment in the indicated share class versus a similar investment in the Funds' benchmark and represents the reinvestment of dividends and capital gains in the Funds.
- ----------------------------------------------------------------------------------------------------------------------- EXPENSE FUND PERFORMANCE AVERAGE ANNUAL TOTAL RETURN (%) RATIO (%)(5) - ----------------------------------------------------------------------------------------------------------------------- INCEPTION 1 5 10 SINCE AS OF OCTOBER 31, 2007 DATE YEAR YEAR YEAR INCEPTION GROSS NET - ----------------------------------------------------------------------------------------------------------------------- HSBC Investor Core Plus Fixed Income Fund (Advisor) 1/9/95 7.20 5.08 5.82 6.86 0.80 0.45 - ----------------------------------------------------------------------------------------------------------------------- HSBC Investor Core Plus Fixed Income Fund Class A(1) 8/26/96 1.86 3.72 4.88 5.46 1.44 0.70 - ----------------------------------------------------------------------------------------------------------------------- HSBC Investor Core Plus Fixed Income Fund Class B(2) 1/6/98 2.10 3.95 -- 4.77 2.19 1.45 - ----------------------------------------------------------------------------------------------------------------------- HSBC Investor Core Plus Fixed Income Fund Class C(3) 11/4/98 4.92 3.92 -- 4.58 2.19 1.45 - ----------------------------------------------------------------------------------------------------------------------- Lehman Brothers U.S. Aggregate Index(4) -- 5.38 4.41 5.91 N/A N/A N/A - ----------------------------------------------------------------------------------------------------------------------- Lipper Intermediate Investment-Grade Debt Funds Average(4) -- 4.08 4.11 5.15 N/A N/A N/A - -----------------------------------------------------------------------------------------------------------------------
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. THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD HAVE BEEN LOWER. CURRENTLY, CONTRACTUAL FEE WAIVERS ARE IN EFFECT FROM MARCH 1, 2007 THROUGH MARCH 1, 2008. The total returns for Advisor Class, Class A Shares, B Shares and Class C Shares of the Fund for the year ended October 31, 2007 included the receipt of a one-time payment in respect of a class action settlement. Without the receipt of this payment, the returns for the Fund for the year ended October 31, 2007 would have been lower. (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. EFFECTIVE JULY 2006, THE FUND WAS RECLASSIFIED FROM THE LIPPER GENERAL BOND FUNDS AVERAGE TO THE LIPPER INTERMEDIATE INVESTMENT-GRADE DEBT FUNDS AVERAGE. (5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY 28, 2007. The Fund is measured against the Lehman Brothers U.S. Aggregate Index, 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 Fund's performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index HSBC INVESTOR FAMILY OF FUNDS 4 - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- HSBC INVESTOR HIGH YIELD FIXED INCOME FUND (CLASS A SHARES, B SHARES, C SHARES AND I SHARES) BY HSBC INVESTMENTS (USA) INC. HIGH YIELD TEAM HSBC Investments (USA) Inc. serves as investment adviser to the Fund. The HSBC High Yield Team provides the day to day management of the portfolio. The Team's philosophy is focused on delivering sustainable value added performance in the high yield fixed income market. The investment approach is a combination of top-down sector/industry selection and bottom-up security/quality selection. The team rotates sectors and themes within the high yield universe during different market environments seeking to add value, endeavoring to take advantage of market inefficiencies in order to outperform in both up and down markets. INVESTMENT CONCERNS Bond funds will tend to experience smaller fluctuations in value than stock funds. However, investors in any bond fund should anticipate fluctuations in price, especially for longer-term issues and in environments of rising interest rates. High yield bonds are subject to greater risks than investment grade bonds, such as the increased risk of default because of the lower credit quality of the issues. MARKET COMMENTARY The Fund delivered a total return of 7.13% (without sales charge) for Class A Shares and 7.29% for Class I Shares for the period ended October 31, 2007. That compared to 6.85% and 6.21% total return for the Fund's benchmarks, the Merrill Lynch U.S. High Yield Master II Index(1) and the Lipper High Current Yield Funds Average(1), respectively. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. PORTFOLIO PERFORMANCE The Fund (Class I Shares) outperformed the benchmark for the period under review. Performance was driven by the Fund's overweight exposure in CCC-rated issuers and its underweight in the building products and home builders industries.* Going forward, we will maintain duration that approximates that of the benchmark. We continue to analyze the yield curve for pricing anomalies. Our outlook for the remainder of 2007 is cautiously optimistic. On an industry front, we remain positive on the energy, gaming, wireless, and cable sectors. Although we remain cautious on home builders, financials and autos.* * Portfolio composition is subject to change. (1) For additional information, please refer to the Glossary of Terms. 5 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- HSBC INVESTOR HIGH YIELD FIXED INCOME FUND - AS OF OCTOBER 31, 2007 - -------------------------------------------------------------------------------- VALUE OF A $10,000 INVESTMENT - -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] HSBC Investor High Yield Merrill Lynch Fixed Income Fund Class I U.S. High Yield Master II Index 11/18/2005 $10,000 $10,000 12/05 $10,064 $10,150 3/06 $10,436 $10,443 6/06 $10,352 $10,464 9/06 $10,717 $10,885 12/06 $11,148 $11,347 3/07 $11,525 $11,653 6/07 $11,582 $11,693 9/07 $11,597 $11,727 10/07 $11,666 $11,803 [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] HSBC Investor High Yield Merrill Lynch Fixed Income Fund Class A(1) U.S. High Yield Master II Index 11/18/2005 $ 9,524 $10,000 12/05 $ 9,583 $10,150 3/06 $ 9,931 $10,443 6/06 $ 9,845 $10,464 9/06 $10,185 $10,885 12/06 $10,588 $11,347 3/07 $10,929 $11,653 6/07 $10,988 $11,693 9/07 $10,994 $11,727 10/07 $11,058 $11,803 The charts above represent a comparison of a hypothetical $10,000 investment in the indicated share class versus a similar investment in the Funds' benchmark and represents the reinvestment of dividends and capital gains in the Funds.
- ----------------------------------------------------------------------------------------------------------------- AVERAGE ANNUAL EXPENSE FUND PERFORMANCE TOTAL RETURN (%) RATIO (%)(5) - ----------------------------------------------------------------------------------------------------------------- INCEPTION 1 SINCE AS OF OCTOBER 31, 2007 DATE YEAR INCEPTION GROSS NET - ----------------------------------------------------------------------------------------------------------------- HSBC Investor High Yield Fixed Income Fund Class A(1) 11/18/05 2.00 5.29 3.53 0.80 - ----------------------------------------------------------------------------------------------------------------- HSBC Investor High Yield Fixed Income Fund Class B(2) 11/21/05 2.28 5.71 4.28 1.55 - ----------------------------------------------------------------------------------------------------------------- HSBC Investor High Yield Fixed Income Fund Class C(3) 12/14/05 5.21 7.26 4.28 1.55 - ----------------------------------------------------------------------------------------------------------------- HSBC Investor High Yield Fixed Income Fund Class I 11/18/05 7.29 8.22 3.28 0.55 - ----------------------------------------------------------------------------------------------------------------- Merrill Lynch U.S. High Yield Master II Index(4) -- 6.85 N/A N/A N/A - ----------------------------------------------------------------------------------------------------------------- Lipper High Current Yield Funds Average(4) -- 6.21 N/A N/A N/A - -----------------------------------------------------------------------------------------------------------------
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. THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD HAVE BEEN LOWER. CURRENTLY, CONTRACTUAL FEE WAIVERS ARE IN EFFECT FROM MARCH 1, 2007 THROUGH MARCH 1, 2008. (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. (5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY 28, 2007. The Fund is measured against the Merrill Lynch U.S. High Yield Master II Index, an unmanaged index which measures the performance of the broad high yield market. 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. HSBC INVESTOR FAMILY OF FUNDS 6 - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME 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 8.67% (without sales charge) for the Class A Shares and 8.93% for the Class I Shares during the 12-month period ended October 31, 2007. That compared to a total return of 5.53% and 4.08% for Lehman Brothers Intermediate U.S. Aggregate Index(1) and the Lipper Intermediate Investment-Grade Debt Funds Average(1). PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. PORTFOLIO PERFORMANCE The Fund (Class I Shares) outperformed the benchmark for the period under review. The key component of that outperformance was the Fund's defensive positioning. Early in the year, exposure to select off-benchmark holdings in high yield and emerging market debt contributed to positive performance. These gains were further enhanced later in the year, as the Fund moved to an underweight in corporates, as spread sectors underperformed duration adjusted treasuries. The Fund also benefited from individual security selection within corporate credits and mortgages.* Going forward, we will continue to analyze the yield curve for pricing anomalies and opportunistically add duration as higher yields reflect fair value. We look to remain defensive as we believe that the fundamentals may continue to deteriorate over the next 6-12 months eventually causing speculative grade defaults to rise from current levels. If this occurs, we will see a much more dramatic widening in credit spreads than we have seen in the current market environment. We believe the excesses of the past several years have yet to be resolved through short-term market volatility and central bank reaction. Consequently, we believe these will continue to have an economic and market impact.* * Portfolio composition is subject to change. (1) For additional information, please refer to the Glossary of Terms. 7 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME FUND - AS OF OCTOBER 31, 2007 - -------------------------------------------------------------------------------- VALUE OF A $10,000 INVESTMENT - -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Lehman Brothers HSBC Investor Intermediate Intermediate U.S. Duration Fixed Aggregate Index Income Fund Class I 1/23/01 $ 10,000 $ 10,000 $ 10,147 $ 10,237 $ 10,230 $ 10,278 $ 10,690 $ 10,813 12/01 $ 10,696 $ 10,767 $ 10,731 $ 10,701 $ 11,115 $ 10,988 $ 11,535 $ 11,451 12/02 $ 11,711 $ 11,581 $ 11,860 $ 11,705 $ 12,084 $ 11,974 $ 12,106 $ 11,953 12/03 $ 12,157 $ 11,969 $ 12,433 $ 12,214 $ 12,188 $ 11,969 $ 12,515 $ 12,268 12/04 $ 12,612 $ 12,355 $ 12,542 $ 12,260 $ 12,845 $ 12,534 $ 12,795 $ 12,483 12/05 $ 12,866 $ 12,514 $ 12,833 $ 12,514 $ 12,848 $ 12,555 $ 13,286 $ 13,003 12/06 $ 13,454 $ 13,660 $ 13,666 $ 13,905 $ 13,618 $ 13,877 $ 13,994 $ 14,177 10/07 $ 14,107 $ 14,271 [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Lehman Brothers HSBC Investor Intermediate Intermediate U.S. Duration Fixed Aggregate Index Income Fund Class A(1) 2/7/01 $ 10,000 $ 9,526 $ 10,147 $ 9,691 $ 10,230 $ 9,732 $ 10,690 $ 10,198 12/01 $ 10,696 $ 10,159 $ 10,731 $ 10,080 $ 11,115 $ 10,355 $ 11,535 $ 10,775 12/02 $ 11,711 $ 10,900 $ 11,860 $ 11,001 $ 12,084 $ 11,257 $ 12,106 $ 11,230 12/03 $ 12,157 $ 11,238 $ 12,433 $ 11,461 $ 12,188 $ 11,214 $ 12,515 $ 11,499 12/04 $ 12,612 $ 11,573 $ 12,542 $ 11,477 $ 12,845 $ 11,727 $ 12,795 $ 11,671 12/05 $ 12,866 $ 11,694 $ 12,833 $ 11,687 $ 12,848 $ 11,717 $ 13,286 $ 12,128 12/06 $ 13,454 $ 12,721 $ 13,666 $ 12,955 $ 13,618 $ 12,921 $ 13,994 $ 13,192 10/07 $ 14,107 $ 13,277 The charts above represent a comparison of a hypothetical $10,000 investment in the indicated share class versus a similar investment in the Funds' benchmark and represents the reinvestment of dividends and capital gains in the Funds.
- ------------------------------------------------------------------------------------------------------------------------ AVERAGE ANNUAL EXPENSE FUND PERFORMANCE TOTAL RETURN (%) RATIO (%)(5) - ------------------------------------------------------------------------------------------------------------------------ INCEPTION 1 5 SINCE AS OF OCTOBER 31, 2007 DATE YEAR YEAR INCEPTION GROSS NET - ------------------------------------------------------------------------------------------------------------------------ HSBC Investor Intermediate Duration Fixed Income Fund Class A(1) 2/7/01 3.56 3.38 4.30 1.65 0.65 - ------------------------------------------------------------------------------------------------------------------------ HSBC Investor Intermediate Duration Fixed Income Fund Class B(2) 2/15/01 3.96 3.61 4.36 2.40 1.40 - ------------------------------------------------------------------------------------------------------------------------ HSBC Investor Intermediate Duration Fixed Income Fund Class C(3) 2/13/01 6.86 3.61 4.24 2.40 1.40 - ------------------------------------------------------------------------------------------------------------------------ HSBC Investor Intermediate Duration Fixed Income Fund Class I 1/23/01 8.93 4.63 5.39 1.40 0.40 - ------------------------------------------------------------------------------------------------------------------------ Lehman Brothers Intermediate U.S. Aggregate Index(4) -- 5.53 4.12 N/A N/A N/A - ------------------------------------------------------------------------------------------------------------------------ Lipper Intermediate Investment-Grade Debt Funds Average(4) -- 4,08 4.11 N/A N/A N/A - ------------------------------------------------------------------------------------------------------------------------
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. THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD HAVE BEEN LOWER. CURRENTLY, CONTRACTUAL FEE WAIVERS ARE IN EFFECT FROM MARCH 1, 2007 THROUGH MARCH 1, 2008. The total returns for Class A shares, Class B Shares, Class C Shares and Class I Shares of the Fund for the year ended October 31, 2007 included the receipt of a one-time payment in respect of a class action settlement. Without the receipt of this payment, the returns for the Fund for the year ended October 31, 2007 would have been lower. (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. (5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY 28, 2007. The Fund is measured against the Lehman Brothers Intermediate U.S. Aggregate 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. HSBC INVESTOR FAMILY OF FUNDS 8 - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- HSBC INVESTOR NEW YORK TAX-FREE BOND FUND (CLASS A SHARES, B SHARES, C SHARES AND I SHARES) BY HSBC INVESTMENTS (USA) INC. U.S. CORE FIXED INCOME TEAM The HSBC Investor New York Tax-Free Bond Fund (the "Fund") seeks to provide shareholders with income exempt from regular, federal, New York state and New York city personal income taxes. INVESTMENT CONCERNS Bonds offer a relatively stable level of income, although bond prices will fluctuate providing the potential for principal gain or loss. Intermediate-term, higher-quality bonds generally offer less risk than longer-term bonds and a lower rate of return. The Fund's income may be subject to certain state and local taxes and, depending on your tax status, the federal alternative minimum tax. Regional funds may be subject to additional risks, since the issues they invest in are located in one geographical location. MARKET COMMENTARY The Fund delivered a total return of 2.34% (without sales charge) for Class A Shares and 2.59% for Class I Shares for the 12-month period ended October 31, 2007. That compared to 3.09% and 1.62% for the Fund's benchmarks, the Lehman Brothers New York Tax Exempt Index(1) and the Lipper New York Municipal Debt Funds Average(1), respectively. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. Fiscal conditions for state and local governments were mostly positive, but as the housing recession continues to worsen, the trend of strong revenue growth has weakened as well. Realty revenue has dramatically declined in states such as California, Florida and Nevada that had the strongest housing appreciation in recent years. At the same time, spending on Medicaid, pensions, infrastructure and security continues to grow. Most state and local governments though have rebuilt their reserves and should aid in weathering challenging times ahead. Back in June and July, New York City received another credit upgrade from rating agencies, due to continued fiscal discipline and strong revenue growth. Standard & Poor's, Moody's and Fitch rate the city as AA, Aa3 and A- respectively. However, the subprime crisis has started to take its toll on Wall Street profits, and coupled with an expected decline in housing prices, will crimp city and state revenues as well. Tax-free money markets were primarily influenced by technical supply and demand factors. Ample supply of variable rate demand notes (VRDN's) and tender option bonds exerted upward pressure on yields in the front end of the short municipal yield curve. In general, VRDN's provided higher returns than longer dated maturities. The SIFMA Muni Swap Index(1) of high grade VRDN's during the six month period ranged from a low of 3.58% in July, with heavy reinvestments of coupons and maturities, to 3.95% in August, the peak of the subprime liquidity crisis. One year note yields averaged 3.70% during June and July as new issuance flooded the market, but readjusted to an average of 3.40% as the Federal Reserve cut fed funds by 50 basis points (0.50%) to 4.75% in September with the additional 25 basis points (0.25%) cut at the end of October the one year note averaged 3.30% for the end of October. PERFORMANCE REVIEW The Fund endeavored to maintain a weighted average maturity slightly longer than the industry average over the last six months, as we expected the Federal Reserve to ease monetary policy. With a mostly flat to inverted short municipal yield curve, the fund was overweight in VRDN's. When the opportunities arose, we extended maturity buying commercial paper and notes from three months out to one year to help lock in yields, which may outperform VRDN's in a declining rate environment. As we wind down 2007, we will maintain our current maturity stance. The housing sector has yet to bottom, which may cause further credit turmoil and increase likelihood of additional monetary easing. However, higher commodity prices and a weaker dollar in recent days could push inflation higher. We will continue to monitor future data and adjust our strategy accordingly.* * Portfolio composition is subject to change. (1) For additional information, please refer to the Glossary of Terms. 9 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- HSBC INVESTOR NEW YORK TAX-FREE BOND FUND - AS OF OCTOBER 31, 2007 - -------------------------------------------------------------------------------- VALUE OF A $10,000 INVESTMENT - -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Lehman Brothers New HSBC Investor New York York Tax Exempt Index Tax-Free Bond Fund Class I 10/97 $ 10,000 $ 10,000 12/97 $ 10,211 $ 10,217 $ 10,347 $ 10,325 $ 10,516 $ 10,472 $ 10,839 $ 10,845 12/98 $ 10,914 $ 10,875 $ 11,012 $ 10,943 $ 10,817 $ 10,702 $ 10,776 $ 10,579 12/99 $ 10,692 $ 10,540 $ 11,016 $ 10,849 $ 11,187 $ 10,933 $ 11,449 $ 11,190 12/00 $ 11,976 $ 11,681 $ 12,240 $ 11,932 $ 12,341 $ 11,996 $ 12,617 $ 12,284 12/01 $ 12,556 $ 12,156 $ 12,710 $ 12,285 $ 13,143 $ 12,650 $ 13,766 $ 13,296 12/02 $ 13,770 $ 13,280 $ 13,939 $ 13,417 $ 14,285 $ 13,781 $ 14,314 $ 13,734 12/03 $ 14,497 $ 13,903 $ 14,735 $ 14,079 $ 14,391 $ 13,793 $ 14,944 $ 14,247 12/04 $ 15,115 $ 14,361 $ 15,107 $ 14,296 $ 15,530 $ 14,660 $ 15,504 $ 14,611 12/05 $ 15,618 $ 14,691 $ 15,664 $ 14,687 $ 15,666 $ 14,659 $ 16,183 $ 15,132 12/06 $ 16,358 $ 15,245 $ 16,490 $ 15,370 $ 16,401 $ 15,261 $ 16,698 $ 15,548 10/07 $ 16,783 $ 15,599 [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Lehman Brothers New HSBC Investor New York York Tax Exempt Index Tax-Free Bond Fund Class A(1) 10/97 $ 10,000 $ 9,526 12/97 $ 10,211 $ 9,730 $ 10,347 $ 9,819 $ 10,516 $ 9,953 $ 10,839 $ 10,303 12/98 $ 10,914 $ 10,324 $ 11,012 $ 10,382 $ 10,817 $ 10,146 $ 10,776 $ 10,023 12/99 $ 10,692 $ 9,978 $ 11,016 $ 10,265 $ 11,187 $ 10,339 $ 11,449 $ 10,575 12/00 $ 11,976 $ 11,032 $ 12,240 $ 11,261 $ 12,341 $ 11,315 $ 12,617 $ 11,579 12/01 $ 12,556 $ 11,452 $ 12,710 $ 11,566 $ 13,143 $ 11,902 $ 13,766 $ 12,502 12/02 $ 13,770 $ 12,479 $ 13,939 $ 12,600 $ 14,285 $ 12,934 $ 14,314 $ 12,881 12/03 $ 14,497 $ 13,032 $ 14,735 $ 13,189 $ 14,391 $ 12,913 $ 14,944 $ 13,330 12/04 $ 15,115 $ 13,428 $ 15,107 $ 13,359 $ 15,530 $ 13,690 $ 15,504 $ 13,636 12/05 $ 15,618 $ 13,702 $ 15,664 $ 13,690 $ 15,666 $ 13,655 $ 16,183 $ 14,087 12/06 $ 16,358 $ 14,184 $ 16,490 $ 14,278 $ 16,401 $ 14,168 $ 16,698 $ 14,439 10/07 $ 16,783 $ 14,483 The charts above represent a comparison of a hypothetical $10,000 investment in the indicated share class versus a similar investment in the Funds' benchmark and represents the reinvestment of dividends and capital gains in the Funds.
- --------------------------------------------------------------------------------------------------------------------- EXPENSE FUND PERFORMANCE AVERAGE ANNUAL TOTAL RETURN (%) RATIO (%)(5) - --------------------------------------------------------------------------------------------------------------------- INCEPTION 1 5 10 SINCE AS OF OCTOBER 31, 2007 DATE YEAR YEAR YEAR INCEPTION GROSS NET - --------------------------------------------------------------------------------------------------------------------- HSBC Investor New York Tax-Free Bond Fund Class A(1) 5/1/95 -2.54 2.39 3.77 4.56 0.93 0.93 - --------------------------------------------------------------------------------------------------------------------- HSBC Investor New York Tax-Free Bond Fund Class B(2) 1/6/98 -2.37 2.62 -- 3.62 1.68 1.68 - --------------------------------------------------------------------------------------------------------------------- HSBC Investor New York Tax-Free Bond Fund Class C(3) 11/4/98 0.58 2.61 -- 3.16 1.68 1.68 - --------------------------------------------------------------------------------------------------------------------- HSBC Investor New York Tax-Free Bond Fund Class I 7/1/96 2.59 3.64 4.55 5.00 0.68 0.68 - --------------------------------------------------------------------------------------------------------------------- Lehman Brothers New York Tax Exempt Index(4) -- 3.09 4.37 5.31 N/A N/A N/A - --------------------------------------------------------------------------------------------------------------------- Lipper New York Municipal Debt Funds Average(4) -- 1.62 3.86 4.43 N/A N/A N/A - ---------------------------------------------------------------------------------------------------------------------
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. THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD HAVE BEEN LOWER. (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. (5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY 28, 2007. 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. HSBC INVESTOR FAMILY OF FUNDS 10 - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- HSBC INVESTOR GROWTH FUND (CLASS A SHARES, B SHARES, C SHARES AND I SHARES) BY PHILIP J. SANDERS, SENIOR VICE PRESIDENT/PORTFOLIO MANAGER, CFA AND DANIEL P. BECKER, SENIOR VICE PRESIDENT/PORTFOLIO MANAGER, CFA WADDELL & REED INVESTMENT MANAGEMENT COMPANY The HSBC Investor Growth Fund (the "Fund") seeks long-term growth of capital by investing primarily in U.S. and foreign equity securities of high quality companies with market capitalization generally in excess of $2 billion, which the sub-adviser believes have the potential to generate superior levels of long-term profitability and growth. The Fund utilizes a two tier structure, commonly known as a "master-feeder", and invests all of its investable 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 30.45% (without sales charge) for the Class A Shares and 30.73% for the Class I Shares for the 12-month period ended October 31, 2007. That compared to a 19.23% for the Russell 1000(R) Growth Index(1) and a 21.72% return for the Lipper Large-Cap Growth Funds Average(1). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. Equities in general performed well during the Fund's fiscal year ended October 31, 2007, and large-cap growth stocks in particular generated healthy returns. Investors worried that the housing market's slump and the subprime mortgage crisis would weaken economic growth, so they sought shares of firms that appeared poised to deliver earnings growth in a slowing economy. Those trends helped the Fund post a strong absolute gain for the 12-month period under review. The Fund outperformed its benchmark index largely due to strong stock selection. In fact, security selection added to relative returns in seven of the eight economic sectors in which the Fund invested during the period. The performance of the Fund's holdings in the technology, consumer discretionary, materials and energy sectors especially lifted its return relative to the benchmark.* The Fund's holdings in the financial sector weighed on its relative performance. The subprime mortgage crisis caused problems for many of the financial stocks in the Fund's portfolio, as investors worried that a deteriorating credit environment could eat into financial firms' profits.* * Portfolio composition is subject to change. (1) For additional information, please refer to the Glossary of Terms. 11 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- HSBC INVESTOR GROWTH FUND - AS OF OCTOBER 31, 2007 - -------------------------------------------------------------------------------- VALUE OF A $10,000 INVESTMENT - -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Russell 1000(R) Growth Index HSBC Investor Growth Fund Class I 5/10/04 $10,000 $10,000 $10,314 $10,486 $ 9,775 $ 9,944 12/04 $10,671 $10,629 $10,235 $10,340 $10,487 $10,805 $10,908 $11,190 12/05 $11,233 $11,849 $11,580 $12,248 $11,129 $12,012 $11,567 $11,898 12/06 $12,252 $12,490 $12,398 $12,701 $13,248 $13,381 $13,805 $15,046 10/07 $14,275 $15,874 [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Russell 1000(R) Growth Index HSBC Investor Growth Fund Class A(1) 5/10/04 $10,000 $ 9,500 $10,314 $ 9,962 $ 9,775 $ 9,440 12/04 $10,671 $10,085 $10,235 $ 9,805 $10,487 $10,241 $10,908 $10,598 12/05 $11,233 $11,222 $11,580 $11,593 $11,129 $11,361 $11,567 $11,246 12/06 $12,252 $11,798 $12,398 $11,982 $13,248 $12,619 $13,805 $14,186 10/07 $14,275 $14,962 The charts above represent a comparison of a hypothetical $10,000 investment in the indicated share class versus a similar investment in the Funds' benchmark and represents the reinvestment of dividends and capital gains in the Funds.
- ----------------------------------------------------------------------------------------------- AVERAGE ANNUAL EXPENSE FUND PERFORMANCE TOTAL RETURN (%) RATIO (%)(5) - ----------------------------------------------------------------------------------------------- INCEPTION 1 3 SINCE AS OF OCTOBER 31, 2007 DATE YEAR YEAR INCEPTION GROSS NET - ----------------------------------------------------------------------------------------------- HSBC Investor Growth Fund Class A(1) 5/10/04 23.94 14.37 12.29 1.44 1.20 - ----------------------------------------------------------------------------------------------- HSBC Investor Growth Fund Class B(2) 5/10/04 25.43 14.97 12.87 2.19 1.95 - ----------------------------------------------------------------------------------------------- HSBC Investor Growth Fund Class C(3) 5/10/04 28.49 15.49 13.09 2.19 1.95 - ----------------------------------------------------------------------------------------------- HSBC Investor Growth Fund Class I 5/10/04 30.73 16.62 14.21 1.19 0.95 - ----------------------------------------------------------------------------------------------- Russell 1000(R) Growth Index(4) -- 19.23 12.87 N/A N/A N/A - ----------------------------------------------------------------------------------------------- Lipper Large-Cap Growth funds Average(4) -- 21.72 12.94 N/A N/A N/A - -----------------------------------------------------------------------------------------------
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. THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD HAVE BEEN LOWER. CURRENTLY, CONTRACTUAL FEE WAIVERS ARE IN EFFECT FROM MARCH 1, 2007 THROUGH MARCH 1, 2008. (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. (5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY 28, 2007. The Fund is measured against the Russell 1000(R) Growth Index an unmanaged index that measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Fund's performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index. HSBC INVESTOR FAMILY OF FUNDS 12 - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- HSBC INVESTOR GROWTH AND INCOME FUND (CLASS A SHARES, B SHARES, C SHARES AND I SHARES) BY GARY U. ROLLE, CFA, PRINCIPAL/CHIEF INVESTMENT OFFICER AND EDWARD S. HAN, PRINCIPAL/PORTFOLIO MANAGER AND TRANSAMERICA INVESTMENT MANAGEMENT, LLC The HSBC Investor Growth and Income Fund (the "Fund") normally invests at least 65% of its 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 28.09% (without sales charge) for the Class A Shares and 28.46% for the Class I Shares for the 12-month period ended October 31, 2007. That compared to a 14.55% return for the Standard & Poor's 500 Index(1) and a 14.56% return for the Lipper Large-Cap Core Funds Average(1). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. Stocks performed well during the period under review, despite a slowdown in the U.S. economy and market volatility related to the subprime mortgage crisis. Global economic growth and its positive impact on U.S. companies with international exposure helped lift the stock market, benefiting the Fund's absolute returns. The Fund held an overweight position relative to its index in shares of information technology and industrial firms. These sectors posted some of the market's strongest gains during the 12-month period, helping the Fund outperform its benchmark. Conversely, an underweight stake in the financial sector boosted relative performance, as investors concerned about the potential effects of the subprime mortgage crisis sold stocks in that sector. Selection among consumer discretionary sector stocks also contributed to the Fund's substantial relative gain.* An underweight position in the energy sector detracted from performance against the index, as energy stocks generated strong returns. The Fund's holdings in the consumer staples and health care sectors weighed on relative performance as well.* * Portfolio composition is subject to change. (1) For additional information, please refer to the Glossary of Terms. 13 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- HSBC INVESTOR GROWTH AND INCOME FUND - AS OF OCTOBER 31, 2007 - -------------------------------------------------------------------------------- VALUE OF A $10,000 INVESTMENT - -------------------------------------------------------------------------------- [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] HSBC Investor Growth and Standard & Poor's 500 Index Income Fund Class I 4/2/01 $10,000 $10,000 $10,585 $10,588 $ 9,032 $ 9,019 12/01 $ 9,997 $ 9,598 $10,024 $ 9,436 $ 8,682 $ 8,138 $ 7,183 $ 6,675 12/02 $ 7,788 $ 7,180 $ 7,543 $ 7,067 $ 8,704 $ 8,114 $ 8,934 $ 8,227 12/03 $10,021 $ 9,091 $10,191 $ 9,174 $10,366 $ 9,178 $10,172 $ 8,940 12/04 $11,111 $ 9,784 $10,872 $ 9,492 $11,021 $ 9,590 $11,418 $10,355 12/05 $11,656 $10,780 $12,146 $11,357 $11,971 $11,105 $12,649 $11,126 12/06 $13,495 $11,829 $13,582 $12,112 $14,434 $12,999 $14,727 $13,987 10/07 $14,961 $14,818 [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] HSBC Investor Growth and Standard & Poor's 500 Index Income Fund Class A(1) 4/12/01 $10,000 $ 9,498 $10,585 $ 9,730 $ 9,032 $ 8,277 12/01 $ 9,997 $ 8,811 $10,024 $ 8,653 $ 8,682 $ 7,459 $ 7,183 $ 6,117 12/02 $ 7,788 $ 6,575 $ 7,543 $ 6,462 $ 8,704 $ 7,423 $ 8,934 $ 7,517 12/03 $10,021 $ 8,299 $10,191 $ 8,365 $10,366 $ 8,377 $10,172 $ 8,150 12/04 $11,111 $ 8,922 $10,872 $ 8,646 $11,021 $ 8,733 $11,418 $ 9,419 12/05 $11,656 $ 9,801 $12,146 $10,316 $11,971 $10,077 $12,649 $10,096 12/06 $13,495 $10,726 $13,582 $10,983 $14,434 $11,775 $14,727 $12,664 10/07 $14,961 $13,409 The charts above represent a comparison of a hypothetical $10,000 investment in the indicated share class versus a similar investment in the Funds' benchmark and represents the reinvestment of dividends and capital gains in the Funds.
- ---------------------------------------------------------------------------------------------------------- AVERAGE ANNUAL EXPENSE FUND PERFORMANCE TOTAL RETURN (%) RATIO (%)(5) - ---------------------------------------------------------------------------------------------------------- INCEPTION 1 5 SINCE AS OF OCTOBER 31, 2007 DATE YEAR YEAR INCEPTION GROSS NET - ---------------------------------------------------------------------------------------------------------- HSBC Investor Growth and Income Fund Class A(1) 4/12/01 21.66 13.63 4.58 1.47 1.20 - ---------------------------------------------------------------------------------------------------------- HSBC Investor Growth and Income Fund Class B(2) 4/5/01 23.19 13.97 5.13 2.22 1.95 - ---------------------------------------------------------------------------------------------------------- HSBC Investor Growth and Income Fund Class C(3) 11/3/03 26.15 -- 13.20 2.22 1.95 - ---------------------------------------------------------------------------------------------------------- HSBC Investor Growth and Income Fund Class I 4/2/01 28.46 15.10 6.16 1.22 0.95 - ---------------------------------------------------------------------------------------------------------- Standard & Poor's 500 Index(4) -- 14.55 13.87 N/A N/A N/A - ---------------------------------------------------------------------------------------------------------- Lipper Large-Cap Core Funds Average(4) -- 14.56 12.58 N/A N/A N/A - ----------------------------------------------------------------------------------------------------------
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. THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD HAVE BEEN LOWER. CURRENTLY, CONTRACTUAL FEE WAIVERS ARE IN EFFECT FROM MARCH 1, 2007 THROUGH MARCH 1, 2008. (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. (5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY 28, 2007. 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. HSBC INVESTOR FAMILY OF FUNDS 14 - -------------------------------------------------------------------------------- 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 L.P. ("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 12-month period ended October 31, 2007, the Advisor shares of the HSBC Investor International Equity Fund produced a 25.41% return and the Class A Shares of the HSBC Investor Overseas Equity Fund returned 24.19% (without sales charge). That compared to a total return of 25.43% and 26.23% for the Funds' benchmarks, the MSCI EAFE Index(1) and the Lipper International Large-Cap Core Funds Average(1). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. International stocks performed well during the period. Investors encouraged by solid global economic growth and generally low interest rates bid up stocks in foreign markets, helping the Fund post strong absolute returns. Substantial declines in the value of the U.S. dollar also boosted absolute returns, as they increased the value of assets denominated in foreign currencies. The Fund held an overweight position relative to its benchmark index in shares of industrial commodities firms. Strong global demand, fueled by powerful economic growth in China and elsewhere, pushed up prices on commodities and bolstered the profits of commodities-related firms. Commodities stocks surged as a result, helping the Fund to produce positive performance. The Fund's holdings in the financial sector weighed on relative performance. Global investors during the second half of the period became concerned about rising mortgage defaults by U.S. homeowners with weak credit. Investors worried that sub-prime mortgage defaults could undermine securities backed by such loans, potentially leading to a global credit crunch. Financial stocks generally declined as a result of those fears, so the Fund's overweight position in the sector detracted from its returns relative to the benchmark which resulted with the Fund's (Advisor Shares) slightly underperforming the MSCI EAFE Index. * Portfolio composition is subject to change. (1) For additional information, please refer to the Glossary of Terms. 15 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- HSBC INVESTOR INTERNATIONAL EQUITY FUND HSBC INVESTOR OVERSEAS EQUITY FUND - AS OF OCTOBER 31, 2007 - -------------------------------------------------------------------------------- VALUE OF A $10,000 INVESTMENT - -------------------------------------------------------------------------------- [LINE GRAPH] HSBC Investor International MSCI EAFE Index Equity Fund (Advisor) 10/97 $ 10,000 $ 10,000 12/97 $ 99,89 $ 9,935 $ 11,466 $ 11,514 $ 11,595 $ 11,318 $ 99,55 $ 9,528 12/98 $ 12,020 $ 11,170 $ 11,987 $ 12,136 $ 12,514 $ 13,437 $ 13,072 $ 14,599 12/99 $ 15,301 $ 19,102 $ 15,294 $ 19,800 $ 14,697 $ 18,779 $ 13,520 $ 16,528 12/00 $ 13,166 $ 15,349 $ 11,368 $ 13,574 $ 11,269 $ 13,574 $ 9,697 $ 11,291 12/01 $ 10,374 $ 12,667 $ 10,481 $ 12,762 $ 10,231 $ 12,133 $ 8,217 $ 9,493 12/02 $ 8,750 $ 10,340 $ 8,038 $ 9,341 $ 9,611 $ 10,971 $ 10,398 $ 11,592 12/03 $ 12,176 $ 13,376 $ 12,713 $ 13,915 $ 12,768 $ 13,995 $ 12,739 $ 14,480 12/04 $ 14,697 $ 16,549 $ 14,682 $ 16,661 $ 14,572 $ 16,438 $ 16,093 $ 18,506 12/05 $ 16,756 $ 19,256 $ 18,344 $ 21,670 $ 18,516 $ 21,606 $ 19,254 $ 22,631 12/06 $ 21,257 $ 25,261 $ 22,138 $ 26,046 $ 23,615 $ 28,399 $ 24,142 $ 28,744 10/07 $ 25,093 $ 29,600 [LINE GRAPH] HSBC Investor Overseas Equity MSCI EAFE Index Fund Class A(1) 10/97 $ 10,000 $ 9,499 12/97 $ 9,989 $ 9,444 $ 11,466 $ 10,908 $ 11,595 $ 10,700 $ 9,955 $ 8,978 12/98 $ 12,020 $ 10,441 $ 11,987 $ 11,308 $ 12,514 $ 12,491 $ 13,072 $ 13,524 12/99 $ 15,301 $ 17,615 $ 15,294 $ 18,189 $ 14,697 $ 17,270 $ 13,520 $ 15,170 12/00 $ 13,166 $ 14,060 $ 11,368 $ 12,409 $ 11,269 $ 12,382 $ 9,697 $ 10,289 12/01 $ 10,374 $ 11,523 $ 10,481 $ 11,599 $ 10,231 $ 11036 $ 8,217 $ 8,737 12/02 $ 8,750 $ 9,514 $ 8,038 $ 8,521 $ 9,611 $ 9,870 $ 10,398 $ 10,593 12/03 $ 12,176 $ 12,213 $ 12,713 $ 12,687 $ 12,768 $ 12,745 $ 12,739 $ 13,160 12/04 $ 14,697 $ 15,009 $ 14,682 $ 15,092 $ 14,572 $ 14,855 $ 16,093 $ 16,694 12/05 $ 16,756 $ 17,331 $ 18,344 $ 19,482 $ 18,516 $ 19,381 $ 19,254 $ 20,266 12/06 $ 21,257 $ 22,576 $ 22,138 $ 23,191 $ 23,615 $ 25,214 $ 24,142 $ 25,483 10/07 $ 25,093 $ 26,226 The charts above represent a comparison of a hypothetical $10,000 investment in the indicated share class versus a similar investment in the Funds' benchmark and represents the reinvestment of dividends and capital gains in the Funds.
- -------------------------------------------------------------------------------------------------------------------------------- EXPENSE FUND PERFORMANCE AVERAGE ANNUAL TOTAL RETURN (%) RATIO (%)(5) - -------------------------------------------------------------------------------------------------------------------------------- INCEPTION 1 5 10 SINCE AS OF OCTOBER 31, 2007 DATE YEAR YEAR YEAR INCEPTION GROSS NET - -------------------------------------------------------------------------------------------------------------------------------- HSBC Investor International Equity Fund (Advisor) 1/9/95 25.41 23.68 11.46 11.93 0.97 0.97 - -------------------------------------------------------------------------------------------------------------------------------- HSBC Investor Overseas Equity Fund Class A(1) 8/26/96 17.99 21.49 10.12 10.44 1.67 1.67 - -------------------------------------------------------------------------------------------------------------------------------- HSBC Investor Overseas Equity Fund Class B(2) 1/6/98 19.26 21.82 -- 10.34 2.42 2.42 - -------------------------------------------------------------------------------------------------------------------------------- HSBC Investor Overseas Equity Fund Class C(3) 11/4/98 22.39 21.85 -- 10.66 2.42 2.42 - -------------------------------------------------------------------------------------------------------------------------------- MSCI EAFE Index(4) -- 25.43 23.71 9.64 N/A N/A N/A - -------------------------------------------------------------------------------------------------------------------------------- Lipper International Large-Cap Core Average(4) -- 26.23 20.94 8.40 N/A N/A N/A - --------------------------------------------------------------------------------------------------------------------------------
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. THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD HAVE BEEN LOWER. (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. (5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY 28, 2007. The Fund is measured against the Morgan Stanley Capital International ("MSCI") Europe, Australasia and Far East ("EAFE") Index, 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. HSBC INVESTOR FAMILY OF FUNDS 16 - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- HSBC INVESTOR MID-CAP FUND (CLASS A SHARES, B SHARES, C SHARES AND TRUST SHARES) BY TONY Y. DONG, CFA, DIRECTOR, MID-CAP EQUITY AND SENIOR PORTFOLIO MANAGER AND BRIAN S. MATUSZAK, CFA, SENIOR EQUITY ANALYST AND ANDY Y. MUI, CPA, SENIOR EQUITY ANALYST MUNDER CAPITAL MANAGEMENT The HSBC Investor Mid-Cap Fund (the "Fund") seeks to achieve its objective by investing in common or preferred stocks and convertible securities. The Fund will normally invest at least 80% of its assets in equity securities of mid-sized companies with market capitalizations falling within the range of the S&P MidCap 400 Index (between $600 million and $12 billion as of January 31, 2007) 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 30.51% (without sales charge) and 30.80 % for the Trust Shares for the 12-month period ended October 31, 2007. That compares to 17.02% and 26.07% for the Fund's benchmarks, the S&P MidCap 400 Index(1) and the Lipper Mid-Cap Growth Funds Average(1). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. Stock selection was the most prominent driver of strong absolute returns. The Fund produced double-digit gains in eight of the ten economic sectors represented in the index, while approximately 60% of the stocks in the portfolio generated double- or triple-digit gains. Mid-cap growth stocks performed especially well during this period. Investors moved up the market cap scale from more economically sensitive small cap stocks in favor of shares of somewhat larger companies that could produce above-average earnings in a weakening economy.* Stock selection was also key in helping the Fund outperform the benchmark index. Selection was beneficial across most sectors. For example, shares of a video-game retailer, a bank, an energy services and equipment provider and an engineering and construction firm all tripled in value during the 12-month period. Likewise, the stock of an online advertising firm, a digital mapping company, a utilities software enterprise and a medical devices maker tripled as well. A larger-than-benchmark position in industrials and an underweight stake in financials also boosted relative performance.* Stock selection within the consumer staples sector represented the largest drag on relative performance, as two of the four consumer staples stocks in the portfolio posted negative returns. Losses of those two stocks reduced the Fund's relative gain by only 0.74 percentage points.* * Portfolio composition is subject to change. (1) For additional information, please refer to the Glossary of Terms. 17 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- HSBC INVESTOR MID-CAP FUND - AS OF OCTOBER 31, 2007 [LINE GRAPH] HSBC Investor Mid-Cap HSBC Investor Mid-Cap S&P MidCap 400 Index Fund Trust Fund Class A(1) 10/97 $ 10,000 $ 10,000 $ 9,507 12/97 $ 10,542 $ 10,270 $ 9,762 $ 11,703 $ 11,259 $ 10,697 $ 11,452 $ 11,511 $ 10,935 $ 9,796 $ 9,406 $ 8,929 12/98 $ 12,557 $ 11,241 $ 10,663 $ 12,068 $ 11,727 $ 11,122 $ 13,420 $ 13,147 $ 12,449 $ 12,293 $ 12,230 $ 11,599 12/99 $ 14,406 $ 15,558 $ 14,728 $ 16,233 $ 18,363 $ 17,381 $ 15,698 $ 17,986 $ 17,007 $ 17,605 $ 19,209 $ 18,146 12/00 $ 16,927 $ 172,89 $ 16,331 $ 15,104 $ 15,756 $ 14,881 $ 17,091 $ 17,417 $ 16,452 $ 14,260 $ 14,259 $ 13,448 12/01 $ 16,825 $ 15,683 $ 14,795 $ 17,956 $ 15,610 $ 14,708 $ 16,285 $ 13,419 $ 12,637 $ 13,591 $ 11,009 $ 10,358 12/02 $ 14,383 $ 11,447 $ 10,772 $ 13,746 $ 11,173 $ 10,496 $ 16,169 $ 12,871 $ 12,084 $ 17,234 $ 13,455 $ 12,637 12/03 $ 19,507 $ 15,117 $ 14,191 $ 20,495 $ 15,646 $ 14,674 $ 20,694 $ 15,883 $ 14,898 $ 20,259 $ 15,135 $ 14,173 12/04 $ 22,722 $ 17,271 $ 16,176 $ 22,632 $ 17,034 $ 15,951 $ 23,597 $ 18,074 $ 16,918 $ 24,748 $ 18,987 $ 17,764 12/05 $ 25,575 $ 19,087 $ 17,841 $ 27,526 $ 21,156 $ 19,760 $ 26,660 $ 20,283 $ 18,953 $ 26,372 $ 20,076 $ 18,735 12/06 $ 28,214 $ 21,423 $ 19,992 $ 29,850 $ 22,630 $ 21,091 $ 31,594 $ 25,215 $ 23,476 $ 31,319 $ 26,052 $ 24,248 10/07 $ 32,143 $ 27,161 $ 25,277 The charts above represent a comparison of a hypothetical $10,000 investment in the indicated share class versus a similar investment in the Funds' benchmark and represents the reinvestment of dividends and capital gains in the Funds.
- -------------------------------------------------------------------------------------------------------------------------------- EXPENSE FUND PERFORMANCE AVERAGE ANNUAL TOTAL RETURN+ (%) RATIO (%)(5) - -------------------------------------------------------------------------------------------------------------------------------- INCEPTION 1 5 10 SINCE AS OF OCTOBER 31, 2007 DATE YEAR YEAR YEAR INCEPTION GROSS NET - -------------------------------------------------------------------------------------------------------------------------------- HSBC Investor Mid-Cap Fund Class A(1) 7/1/93 23.95 17.17 9.72 12.02 1.85 1.35 - -------------------------------------------------------------------------------------------------------------------------------- HSBC Investor Mid-Cap Fund Class B(2) 7/1/93 25.56 17.48 9.45 11.67 2.60 2.10 - -------------------------------------------------------------------------------------------------------------------------------- HSBC Investor Mid-Cap Fund Class C(3) 7/1/93 28.40 17.59 9.52 11.64 2.60 2.10 - -------------------------------------------------------------------------------------------------------------------------------- HSBC Investor Mid-Cap Fund Trust 7/1/93 30.80 18.64 10.51 12.70 1.60 1.10 - -------------------------------------------------------------------------------------------------------------------------------- S&P MidCap 400 Index(4) -- 17.02 17.78 12.39 N/A N/A N/A - -------------------------------------------------------------------------------------------------------------------------------- Lipper Mid-Cap Growth Funds Average(4) -- 26.07 17.33 8.39 N/A N/A N/A - --------------------------------------------------------------------------------------------------------------------------------
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. THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD HAVE BEEN LOWER. (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. (5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY 28, 2007. + For periods prior to July 1, 2000, the performance shown above includes the total return (adjusted for Fund expenses) generated 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 S&P MidCap 400 Index is an unmanaged index comprised of 400 domestic stocks chosen for market size (median market capitalization of $676 million), liquidity and industry group representation. 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. HSBC INVESTOR FAMILY OF FUNDS 18 - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- HSBC INVESTOR OPPORTUNITY FUND (FORMERLY KNOWN AS SMALL CAP EQUITY FUND) (ADVISOR, CLASS A SHARES, B SHARES AND C SHARES) BY WILLIAM A. MUGGIA PRESIDENT-CHIEF INVESTMENT OFFICER WESTFIELD CAPITAL MANAGEMENT The HSBC Investor Opportunity Fund ("the Fund") seeks to provide its 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 Fund invest all of its 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 12-month period ended October 31, 2007, the Advisor shares of the HSBC Investor Opportunity Fund produced a 29.42% return and the Class A Shares of the Fund produced a 30.28% return (without sales charge). The Funds' benchmarks, the Russell 2500(R) Growth Index(1) and the Lipper Mid-Cap Growth Funds Average(1), returned 20.36% and 26.07%, respectively. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. In a period of slowing corporate profit growth, small- and mid-capitalization growth stocks meaningfully outperformed value stocks as measured by Russell indices. Materials, energy and industrial stocks were among the performance leaders, as stocks in those sectors appeared to benefit from exposure to the healthy pace of economic activity outside the U.S. Broad participation within the health care sector helped the Fund outperform the benchmark. Stocks from five different industries contributed to relative gains, but the impact of stocks within pharmaceuticals & life science tools was most significant. Maintaining a commitment to the energy sector yielded positive results relative to the benchmark as well. Stock selection within energy equipment and services was notable as companies with exposure to markets in the eastern hemisphere performed well.* The consumer discretionary sector also provided a source of superior performance during the year. An underweight position in this lagging sector was of some benefit, but the bulk of excess return against the benchmark stemmed from stock selection. Our emphasis on shares of firms with unique franchises exposed to the high-end consumer, particularly in apparel retail, publishing and specialized consumer services, helped the Fund's consumer discretionary stake outperform that of the benchmark.* * Portfolio composition is subject to change. (1) For additional information, please refer to the Glossary of Terms. 19 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- HSBC INVESTOR OPPORTUNITY FUND - AS OF OCTOBER 31, 2007 - -------------------------------------------------------------------------------- VALUE OF A $10,000 INVESTMENT - -------------------------------------------------------------------------------- [LINE GRAPH] HSBC Investor Russell 2500(R) Opportunity Fund Growth Index (Advisor) 10/97 $10,000 $10,000 12/97 $ 9,812 $ 9,865 $10,905 $11,357 $10,373 $11,357 $ 8,070 $ 9,081 12/98 $10,116 $11,189 $10,408 $10,230 $11,691 $11,959 $11,286 $11,303 12/99 $15,728 $16,582 $18,110 $18,500 $16,859 $18,521 $16,363 $18,990 12/00 $13,197 $17,417 $10,569 $15,005 $12,817 $17,796 $ 9,347 $13,401 12/01 $11,767 $17,190 $11,420 $16,836 $ 9,521 $13,742 $ 7,706 $11,393 12/02 $ 8,344 $11,494 $ 8,077 $11,203 $ 9,912 $13,578 $10,900 $14,613 12/03 $12,208 $15,990 $12,880 $16,634 $12,897 $16,660 $12,174 $15,864 12/04 $13,989 $17,897 $13,384 $17,316 $13,860 $18,163 $14,732 $19,943 12/05 $15,133 $20,222 $16,922 $22,517 $15,886 $21,708 $15,695 $21,787 12/06 $16,989 $23,201 $17,674 $24,340 $18,909 $26,942 $19,033 $27,419 10/07 $19,821 $29,159 [LINE GRAPH] HSBC Investor Russell 2500(R) Opportunity Fund Growth Index Class A (1) 10/97 $10,000 $ 9,501 12/97 $ 9,812 $ 9,360 $10,905 $10,765 $10,373 $10,765 $ 8,070 $ 8,593 12/98 $10,116 $10,574 $10,408 $ 9,647 $11,691 $11,262 $11,286 $10,625 12/99 $15,728 $15,551 $18,110 $17,316 $16,859 $17,353 $16,363 $17,760 12/00 $13,197 $16,218 $10,569 $13,944 $12,817 $16,507 $ 93,47 $12,415 12/01 $11,767 $15,901 $11,420 $15,556 $ 9,521 $12,677 $ 7,706 $10,513 12/02 $ 8,344 $10,596 $ 8,077 $10,293 $ 9,912 $12,442 $10,900 $13,379 12/03 $12,208 $14,606 $12,880 $15,184 $12,897 $15,198 $12,174 $14,454 12/04 $13,989 $16,273 $13,384 $15,722 $13,860 $16,466 $14,732 $18,064 12/05 $15,133 $18,282 $16,922 $20,340 $15,886 $19,574 $15,695 $19,616 12/06 $16,989 $20,870 $17,674 $21,869 $18,909 $24,445 $19,033 $24,848 10/07 $19,821 $26,426 The charts above represent a comparison of a hypothetical $10,000 investment in the indicated share class versus a similar investment in the Funds' benchmark and represents the reinvestment of dividends and capital gains in the Funds.
- ------------------------------------------------------------------------------------------------------------ EXPENSE FUND PERFORMANCE AVERAGE ANNUAL TOTAL RETURN (%) RATIO (%) (5) - ------------------------------------------------------------------------------------------------------------ INCEPTION 1 5 10 SINCE AS OF OCTOBER 31, 2007 DATE YEAR YEAR YEAR INCEPTION GROSS NET - ------------------------------------------------------------------------------------------------------------ HSBC Investor Opportunity Fund (Advisor) 9/3/96 29.42 20.02 11.30 13.08 1.03 1.03 - ------------------------------------------------------------------------------------------------------------ HSBC Investor Opportunity Fund Class A (1) 9/23/96 23.79 18.41 10.21 11.26 1.70 1.65 - ------------------------------------------------------------------------------------------------------------ HSBC Investor Opportunity Fund Class B (2) 1/6/98 25.30 18.68 -- 10.76 2.45 2.40 - ------------------------------------------------------------------------------------------------------------ HSBC Investor Opportunity Fund Class C (3) 11/4/98 28.32 18.72 -- 11.62 2.45 2.40 - ------------------------------------------------------------------------------------------------------------ Russell 2500(R) Growth Index (4) -- 20.36 19.45 7.08 N/A N/A N/A - ------------------------------------------------------------------------------------------------------------ Lipper Mid-Cap Growth Funds Average(4) -- 26.07 17.33 8.39 N/A N/A N/A - ------------------------------------------------------------------------------------------------------------
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. THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD HAVE BEEN LOWER. CURRENTLY, CONTRACTUAL FEE WAIVERS ARE IN EFFECT FROM MARCH 1, 2007 THROUGH MARCH 1, 2008. (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. (5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY 28, 2007. The Fund is 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 Fund's performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index. HSBC INVESTOR FAMILY OF FUNDS 20 - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- HSBC INVESTOR VALUE FUND (CLASS A SHARES, B SHARES, C SHARES AND I SHARES) BY JON D. BOSSE, CFA CHIEF INVESTMENT OFFICER NWQ INVESTMENT MANAGEMENT CO., LLC The HSBC Investor Value Fund (the "Fund") seeks long-term growth of capital and income by investing primarily in U.S. and foreign companies with large and medium capitalizations that possess hidden opportunities underpriced by the market. The Fund utilizes a two tier structure, commonly known as a "master-feeder" and invests all of its assets in the HSBC Investor Value Portfolio (the "Portfolio"), which acts as the master fund. The Portfolio employs NWQ Investment Management Company, LLC ("NWQ") as sub-adviser. INVESTMENT CONCERNS Value-based investments are subject to the risk that the broad market may not recognize their intrinsic value. Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the Portfolio changes. MARKET COMMENTARY The Fund returned 9.77% (without sales charge) for the Class A Shares and 10.04% for the Class I Shares for the 12-month period ended October 31, 2007. That compared to a 10.83% return for the Russell 1000(R) Value Index(1) and a 10.94% return for the Lipper Multi-Cap Value Funds Average(1). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. Strong performance by energy and basic materials stocks enhanced the Fund's absolute return. Those sectors benefited as fast-expanding international economies contributed to powerful demand for oil and other raw materials. Select stocks in such diverse industries as insurance brokerage, railroads, tobacco, technology and telecommunications also contributed to the Fund's absolute return. The Fund's exposure to the financial sector negatively influenced performance, as financial stocks--and particularly mortgage-related stocks--suffered from investor concerns about the subprime mortgage crisis.* Strong performance by the Fund's holdings in the oil and natural gas exploration industry was the primary positive contributor to relative gains. Mining and metals stocks also were significant contributors to the Fund's performance against its benchmark, as those stocks benefited from strong global demand for precious and base metals.* The Fund held an underweight position in the lagging financial sector. Selection among financial stocks caused the Fund's allocation to the sector to weigh on relative returns, however. Shares of mortgage origination and service firms in the portfolio suffered from the loss of investor confidence in the mortgage business, while mortgage insurance-related holdings came under pressure as investors became increasingly concerned about loan defaults.* * Portfolio composition is subject to change. (1) For additional information, please refer to the Glossary of Terms. 21 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- HSBC INVESTOR VALUE FUND - AS OF OCTOBER 31, 2007 - -------------------------------------------------------------------------------- VALUE OF A $10,000 INVESTMENT - -------------------------------------------------------------------------------- [LINE GRAPH] HSBC Investor Russell 1000(R) Value Fund Value Index Class I 5/10/04 $10,000 $10,000 $10,341 $10,774 $10,500 $10,819 12/04 $11,590 $11,697 $11,600 $11,519 $11,794 $11,894 $12,253 $12,660 12/05 $12,408 $13,026 $13,144 $13,617 $13,221 $13,856 $14,044 $14,530 12/06 $15,168 $15,502 $15,356 $15,821 $16,112 $16,814 $16,073 $16,454 10/07 $16,075 $16,524 [LINE GRAPH] HSBC Investor Russell 1000(R) Value Fund Value Index Class A (1) 5/10/04 $10,000 $ 9,501 $10,341 $10,226 $10,500 $10,262 12/04 $11,590 $11,088 $11,600 $10,911 $11,794 $11,261 $12,253 $11,985 12/05 $12,408 $12,322 $13,144 $12,871 $13,221 $13,089 $14,044 $13,716 12/06 $15,168 $14,624 $15,356 $14,906 $16,112 $15,841 $16,073 $15,493 10/07 $16,075 $15,558 The charts above represent a comparison of a hypothetical $10,000 investment in the indicated share class versus a similar investment in the Funds' benchmark and represents the reinvestment of dividends and capital gains in the Funds.
- --------------------------------------------------------------------------------------------------- AVERAGE ANNUAL EXPENSE FUND PERFORMANCE TOTAL RETURN (%) RATIO (%) (5) - --------------------------------------------------------------------------------------------------- INCEPTION 1 3 SINCE AS OF OCTOBER 31, 2007 DATE YEAR YEAR INCEPTION GROSS NET - --------------------------------------------------------------------------------------------------- HSBC Investor Value Fund Class A (1) 5/10/04 4.28 13.34 13.56 1.43 1.20 - --------------------------------------------------------------------------------------------------- HSBC Investor Value Fund Class B (2) 5/10/04 4.98 13.88 14.17 2.18 1.95 - --------------------------------------------------------------------------------------------------- HSBC Investor Value Fund Class C (3) 5/10/04 7.97 14.41 14.37 2.18 1.95 - --------------------------------------------------------------------------------------------------- HSBC Investor Value Fund Class I 5/10/04 10.04 15.53 15.54 1.18 0.95 - --------------------------------------------------------------------------------------------------- Russell 1000(R) Value Index (4) -- 10.83 14.62 N/A N/A N/A - --------------------------------------------------------------------------------------------------- Lipper Multi-Cap Value Funds Average (4) -- 10.94 13.37 N/A N/A N/A - ---------------------------------------------------------------------------------------------------
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. THE PERFORMANCE ABOVE REFLECTS ANY FEE WAIVERS THAT HAVE BEEN IN EFFECT DURING THE APPLICABLE PERIODS, AS WELL AS ANY EXPENSE REIMBURSEMENTS THAT HAVE PERIODICALLY BEEN MADE. ABSENT SUCH WAIVERS AND REIMBURSEMENTS, RETURNS WOULD HAVE BEEN LOWER. CURRENTLY, CONTRACTUAL FEE WAIVERS ARE IN EFFECT FROM MARCH 1, 2007 THROUGH MARCH 1, 2008. (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. (5) REFLECTS THE EXPENSE RATIO AS REPORTED IN THE PROSPECTUS DATED FEBRUARY 28, 2007. The Fund is measured against the Russell 1000(R) Value Index, an unmanaged index comprised of the 1000 securities found in the Russell Universe(4) 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. HSBC INVESTOR FAMILY OF FUNDS 22 - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- PORTFOLIO COMPOSITION* OCTOBER 31, 2007 - -------------------------------------------------------------------------------- HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE - -------------------------------------------------------------------------------- Corporate Bonds 33.4% - -------------------------------------------------------------------------------- Mortgage Backed Securities 23.2% - -------------------------------------------------------------------------------- Commercial Mortgage Backed Securities 15.8% - -------------------------------------------------------------------------------- Collateralized Mortgage Obligations 7.6% - -------------------------------------------------------------------------------- Asset Backed Securities 7.2% - -------------------------------------------------------------------------------- U.S. Treasury Securities 6.3% - -------------------------------------------------------------------------------- Cash and Equivalents 4.0% - -------------------------------------------------------------------------------- Foreign Bonds 2.5% - -------------------------------------------------------------------------------- Total 100.0% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE - -------------------------------------------------------------------------------- Corporate Bonds 97.5% - -------------------------------------------------------------------------------- Cash and Equivalents 2.5% - -------------------------------------------------------------------------------- Total 100.0% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE - -------------------------------------------------------------------------------- Mortgage Backed Securities 24.3% - -------------------------------------------------------------------------------- Corporate Bond 36.4% - -------------------------------------------------------------------------------- Collateralized Mortgage Obligations 10.1% - -------------------------------------------------------------------------------- Asset Backed Securities 7.2% - -------------------------------------------------------------------------------- Commercial Mortgage Backed Securities 16.6% - -------------------------------------------------------------------------------- Foreign Bonds 4.4% - -------------------------------------------------------------------------------- Cash and Equivalents 1.0% - -------------------------------------------------------------------------------- Total 100.0% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HSBC INVESTOR NEW YORK TAX-FREE BOND FUND - -------------------------------------------------------------------------------- INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE - -------------------------------------------------------------------------------- Municipal Bonds 98.6% - -------------------------------------------------------------------------------- Cash and Equivalents 1.4% - -------------------------------------------------------------------------------- Total 100.0% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HSBC INVESTOR GROWTH PORTFOLIO - -------------------------------------------------------------------------------- INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE - -------------------------------------------------------------------------------- Information Technology 31.1% - -------------------------------------------------------------------------------- Health Care 16.4% - -------------------------------------------------------------------------------- Industrials 13.0% - -------------------------------------------------------------------------------- Consumer Staples 10.1% - -------------------------------------------------------------------------------- Consumer Discretionary 9.3% - -------------------------------------------------------------------------------- Financials 8.4% - -------------------------------------------------------------------------------- Energy 5.2% - -------------------------------------------------------------------------------- Materials 4.2% - -------------------------------------------------------------------------------- Cash and Equivalents 2.3% - -------------------------------------------------------------------------------- Total 100.0% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HSBC INVESTOR GROWTH AND INCOME FUND - -------------------------------------------------------------------------------- INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE - -------------------------------------------------------------------------------- Information Technology 24.2% - -------------------------------------------------------------------------------- Industrials 22.0% - -------------------------------------------------------------------------------- Consumer Discretionary 21.5% - -------------------------------------------------------------------------------- Financials 14.7% - -------------------------------------------------------------------------------- Materials 6.3% - -------------------------------------------------------------------------------- Energy 4.1% - -------------------------------------------------------------------------------- Consumer Staples 3.4% - -------------------------------------------------------------------------------- Telecommunications 2.6% - -------------------------------------------------------------------------------- Health Care 1.1% - -------------------------------------------------------------------------------- Cash and Equivalents 0.1% - -------------------------------------------------------------------------------- Total 100.0% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HSBC INTERNATIONAL EQUITY PORTFOLIO - -------------------------------------------------------------------------------- INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE - -------------------------------------------------------------------------------- Europe 62.6% - -------------------------------------------------------------------------------- Japan 21.1% - -------------------------------------------------------------------------------- Australia & Far East 7.4% - -------------------------------------------------------------------------------- Cash and Equivalents 1.6% - -------------------------------------------------------------------------------- Other 4.7% - -------------------------------------------------------------------------------- Canada 2.6% - -------------------------------------------------------------------------------- Total 100.0% - -------------------------------------------------------------------------------- * Portfolio composition is subject to change. 23 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS - -------------------------------------------------------------------------------- PORTFOLIO COMPOSITION* OCTOBER 31, 2007 - -------------------------------------------------------------------------------- HSBC INVESTOR MID-CAP FUND - -------------------------------------------------------------------------------- INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE - -------------------------------------------------------------------------------- Industrials 17.8% - -------------------------------------------------------------------------------- Information Technology 14.9% - -------------------------------------------------------------------------------- Consumer Discretionary 14.0% - -------------------------------------------------------------------------------- Financials 13.9% - -------------------------------------------------------------------------------- Health Care 10.4% - -------------------------------------------------------------------------------- Materials 7.3% - -------------------------------------------------------------------------------- Energy 6.6% - -------------------------------------------------------------------------------- Utilities 5.8% - -------------------------------------------------------------------------------- Consumer Staples 3.3% - -------------------------------------------------------------------------------- Business Services 2.4% - -------------------------------------------------------------------------------- Cash & Equivalents 2.3% - -------------------------------------------------------------------------------- Telecommunications 1.3% - -------------------------------------------------------------------------------- Total 100.0% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HSBC INVESTOR OPPORTUNITY PORTFOLIO - -------------------------------------------------------------------------------- INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE - -------------------------------------------------------------------------------- Health Care 26.6% - -------------------------------------------------------------------------------- Information Technology 17.6% - -------------------------------------------------------------------------------- Industrials 15.4% - -------------------------------------------------------------------------------- Energy 13.7% - -------------------------------------------------------------------------------- Consumer Discretionary 12.2% - -------------------------------------------------------------------------------- Financials 6.0% - -------------------------------------------------------------------------------- Business Services 2.7% - -------------------------------------------------------------------------------- Consumer Staples 2.7% - -------------------------------------------------------------------------------- Cash and Equivalents 1.7% - -------------------------------------------------------------------------------- Telecommunications 1.4% - -------------------------------------------------------------------------------- Total 100.0% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HSBC INVESTOR VALUE PORTFOLIO - -------------------------------------------------------------------------------- INVESTMENT ALLOCATION PERCENTAGE OF INVESTMENTS AT VALUE - -------------------------------------------------------------------------------- Financials 25.1% - -------------------------------------------------------------------------------- Information Technology 10.9% - -------------------------------------------------------------------------------- Consumer Discretionary 9.3% - -------------------------------------------------------------------------------- Energy 11.5% - -------------------------------------------------------------------------------- Industrials 7.7% - -------------------------------------------------------------------------------- Materials 6.6% - -------------------------------------------------------------------------------- Cash 9.4% - -------------------------------------------------------------------------------- Consumer Staples 6.7% - -------------------------------------------------------------------------------- Telecommunication Services 3.5% - -------------------------------------------------------------------------------- Miscellaneous 2.3% - -------------------------------------------------------------------------------- Transportation 2.3% - -------------------------------------------------------------------------------- Health Care 4.7% - -------------------------------------------------------------------------------- Total 100.0% - -------------------------------------------------------------------------------- * Portfolio composition is subject to change. HSBC INVESTOR FAMILY OF FUNDS 24 - -------------------------------------------------------------------------------- HSBC INVESTOR NEW YORK TAX - FREE BOND FUND - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 - -------------------------------------------------------------------------------- MUNICIPAL BONDS - 97.4% - -------------------------------------------------------------------------------- PRINCIPAL AMOUNT($) VALUE($) ------------- ------------ NEW YORK - 85.9% Buffalo, New York Fiscal Stability Authority Sales Tax & State Aid Revenue, 5.25%, 8/15/13, (MBIA Insured) .................................... 500,000 542,195 Long Island Power Authority Electrical Systems Revenue, 5.00%, 12/1/22, Callable 12/1/16 @ 100 ...... 500,000 526,455 Metropolitan Transportation Authority Revenue 5.25%, 11/15/11 ............................. 1,000,000 1,064,590 5.75%, 7/1/13, Escrowed to Maturity .................................... 285,000 303,328 5.50%, 1/1/19, (MBIA Insured), Callable 7/1/12 @ 100 ....................... 480,000 516,269 5.50%, 11/15/19, (FGIC Insured) ............. 1,000,000 1,131,960 5.00%, 11/15/32, (FSA Insured), Callable 11/15/12 @ 100 ..................... 1,625,000 1,669,622 Monroe County Airport Authority Revenue 5.63%, 1/1/10, AMT, (MBIA Insured) .......... 1,240,000 1,288,930 5.75%, 1/1/14, AMT, (MBIA Insured) .......... 750,000 820,200 New York City GO 5.25%, 8/1/11 ............................... 1,000,000 1,057,340 5.00%, 8/1/14 ............................... 200,000 214,136 5.00%, 8/1/15 ............................... 325,000 348,852 5.00%, 8/1/16, (Credit Support MBIA), Callable 8/1/15 @ 100 ................ 500,000 537,770 5.00%, 8/1/17 ............................... 500,000 535,755 New York City Housing Development Corp. Revenue, 5.60%, 11/1/19, AMT, Callable 11/1/09 @ 101 ............................... 100,000 103,159 New York City IDA Civic Facility Revenue, USTA National Tennis Center, 5.00%, 11/15/19, (FSA Insured), Callable 5/1/13 @ 100 ............. 1,000,000 1,053,290 New York City IDA Revenue, Queens Baseball Stadium, 5.00%, 1/1/18, (AMBAC Insured), Callable 1/1/17 @ 100 ....................... 550,000 590,959 New York City IDA Special Facility Revenue, Terminal One Group Association, 5.00%, 1/1/09, AMT ............. 1,000,000 1,012,030 New York City Municipal Water Finance Authority 5.00%, 6/15/34, Callable 6/15/13 @ 100 ....................................... 1,250,000 1,277,875 5.00%, 6/15/36, Callable 12/15/14 @ 100 ....................................... 1,000,000 1,026,450 New York City Transitional Finance Authority Building Aid Revenue 5.00%, 7/15/18, (FGIC Insured), Callable 1/15/17 @ 100 ...................... 550,000 591,756 5.00%, 7/15/36, (FGIC Insured), Callable 1/15/17 @ 100 ...................... 1,000,000 1,036,520 New York City Transitional Finance Authority Revenue 5.25%, 5/1/17, Callable 5/1/11 @ 100 ........ 400,000 420,852 5.25%, 2/1/29, Callable 2/1/11 @ 100 ........ 1,540,000 1,614,782 - -------------------------------------------------------------------------------- MUNICIPAL BONDS, CONTINUED - -------------------------------------------------------------------------------- PRINCIPAL AMOUNT($) VALUE($) ------------- ------------ NEW YORK, CONTINUED New York State Dormitory Authority Revenue, Cooper Union, 6.00%, 7/1/19, (MBIA Insured), Callable 7/1/09 @ 101 ................................ 350,000 367,679 New York State Dormitory Authority Revenue, Department of Health, 5.25%, 7/1/16, Callable 7/1/14 @ 100 ............... 500,000 536,530 New York State Dormitory Authority Revenue, Department of Mental Hygiene, 5.50%, 8/15/17, Callable 12/7/07 @ 102 ...................... 125,000 127,466 New York State Dormitory Authority Revenue, Fashion Institute, 5.25%, 7/1/22, (FGIC Insured) ...................... 1,250,000 1,386,762 New York State Dormitory Authority Revenue, Master Boces PG, 5.25%, 8/15/19, (FSA Insured), Callable 8/15/12 @ 100 ...................... 1,000,000 1,062,430 New York State Dormitory Authority Revenue, Mental Health 6.50%, 8/15/11 .............................. 225,000 247,568 5.00%, 2/15/15, (FGIC Insured) .............. 1,245,000 1,335,412 New York State Dormitory Authority Revenue, New York Presbyterian Hospital, 5.50%, 8/1/10, (AMBAC Insured) .................................... 750,000 788,153 New York State Dormitory Authority Revenue, New York University, 5.50%, 7/1/18, (AMBAC Insured) ..................... 500,000 563,185 New York State Dormitory Authority Revenue, NYSARC, Inc., 5.25%, 7/1/18, (FSA Insured), Callable 7/1/12 @ 101 ................................ 1,460,000 1,561,280 New York State Dormitory Authority Revenue, Rockefeller University, 5.25%, 7/1/13, Callable 7/1/08 @ 101 ............... 500,000 510,575 New York State Dormitory Authority Revenue, Sloan Kettering Institute, 5.50%, 7/1/23, (MBIA Insured) ............... 1,300,000 1,446,497 New York State Dormitory Authority Revenue, St. Johns University, 5.00%, 7/1/24, (MBIA Insured), Callable 7/1/17 @ 100 ................................ 1,000,000 1,057,260 New York State Dormitory Authority Revenue, State Personal Income Tax Revenue, 5.00%, 3/15/23, Callable 3/15/15 @ 100 ............................... 1,000,000 1,048,280 New York State Dormitory Authority Revenue, University of Rochester, 5.00%, 7/1/22, Callable 1/1/17 @100 ................ 500,000 527,030 New York State Environmental Facilities Corp. 5.70%, 1/15/14, Callable 7/15/09 @ 101 ...... 415,000 433,592 5.70%, 1/15/14 .............................. 15,000 15,713 New York State Environmental Facilities Corp. State Personal Income Tax Revenue, 5.00%, 12/15/16 ............................. 500,000 543,495 New York State Mortgage Agency Revenue, 5.60%, 10/1/14, AMT, Callable 11/23/07 @ 102 .............................. 1,000,000 1,015,830 25 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- HSBC INVESTOR NEW YORK TAX - FREE BOND FUND - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) - -------------------------------------------------------------------------------- MUNICIPAL BONDS, CONTINUED - -------------------------------------------------------------------------------- PRINCIPAL AMOUNT($) VALUE($) ------------- ------------ NEW YORK, CONTINUED New York State Municipal Bond Bank Revenue, 5.50%, 12/1/12 ..................... 850,000 923,644 New York State Thruway Authority Revenue, Personal Income Tax Revenue 5.00%, 3/15/13, (FSA Insured) ............... 645,000 688,273 5.00%, 3/15/19, (MBIA Insured), Callable 3/15/13 @ 100 ...................... 1,400,000 1,471,162 5.50%, 3/15/20, Prerefunded 3/15/12 @ 100 ... 500,000 540,615 5.00%, 3/15/21, (MBIA Insured), Callable 3/15/13 @ 100 ...................... 500,000 525,415 New York State Thruway Authority Revenue, Second General Highway & Bridge 5.50%, 4/1/17, (FGIC Insured), Callable 4/1/11 @ 101 ....................... 1,000,000 1,074,400 5.00%, 4/1/22, (MBIA Insured), Callable 4/1/14 @ 100 ....................... 1,000,000 1,052,580 New York State Thruway Authority Revenue, Service Contract Revenue, 5.50%, 4/1/11 ............................... 1,000,000 1,063,850 New York State Urban Development Corp. Revenue 6.50%, 1/1/09, (MBIA Insured) ............... 500,000 517,380 5.75%, 4/1/12 ............................... 500,000 541,605 5.00%, 3/15/21, (FSA Insured), Callable 3/15/15 @100 ....................... 1,000,000 1,054,930 5.13%, 1/1/22, Callable 7/1/14 @ 100 ........ 885,000 926,356 5.13%, 1/1/25, Prerefunded 1/1/11 @ 100 ..... 175,000 183,713 Onondaga County, Water Authority Revenue 5.00%, 9/15/14, (FSA Insured), Callable 9/15/10 @ 101 ...................... 300,000 314,898 5.00%, 9/15/15, (FSA Insured), Callable 9/15/10 @ 101 ...................... 665,000 697,093 Port Authority of New York & New Jersey Revenue 5.00%, 9/1/27, Callable 9/1/13 @ 100 ........ 795,000 824,598 5.38%, 3/1/28 ............................... 1,100,000 1,230,350 Port Authority of New York & New Jersey Special Obligation Revenue, 5.75%, 12/1/22, AMT, (MBIA Insured), Callable 12/1/07 @ 102 ...................... 500,000 510,680 Suffolk County, New York GO 5.25%, 5/1/12, (FSA Insured) ................ 515,000 552,379 5.25%, 5/1/15, (FSA Insured) ................ 100,000 110,071 Syracuse Industrial Development Agency Revenue, 5.00%, 1/1/36, AMT, (Credit Support XLCA), Callable 1/1/17 @ 100 ........ 1,000,000 1,009,450 Tobacco Settlement Financing Corp., 5.50%, 6/1/21, Callable 6/1/13 @ 100 ........ 1,000,000 1,067,650 Webster, Central School District GO, 5.00%, 6/15/14, (FSA Insured) ...................... 500,000 537,910 White Plains, New York, 5.00%, 5/15/17, (MBIA Insured) .............................. 300,000 326,721 Yonkers, New York, 5.00%, 12/1/14, (MBIA Insured) .............................. 750,000 808,402 ------------ 52,413,937 ------------ - -------------------------------------------------------------------------------- MUNICIPAL BONDS, CONTINUED - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ------------- ------------ PUERTO RICO - 11.5% Puerto Rico Commonwealth, Highway & Transportation Authority Grant Antic Revenue 5.00%, 9/15/17, (MBIA Insured), Callable 3/15/14 @ 100 ...................... 1,000,000 1,070,690 5.00%, 7/1/35, Prerefunded 7/1/15 @ 100 ..... 1,340,000 1,461,833 Puerto Rico Electric Power Authority Power Revenue, 5.25%, 7/1/22, (MBIA Insured) ...... 1,000,000 1,112,890 Puerto Rico Municipal Finance Agency Revenue, 5.00%, 8/1/12 ...................... 995,000 1,040,571 Puerto Rico Public Buildings Authority Revenue Guaranteed, 5.25%, 7/1/33, Callable 7/1/14 @ 100 ....................... 700,000 720,153 Puerto Rico Public Finance Corp. Revenue, 5.25%, 8/1/29, (MBIA Insured), Callable 7/1/10 @ 101 ....................... 1,000,000 1,062,810 Puerto Rico Public Finance Corp. Revenue, 5.38%, 6/1/18, (AMBAC Insured) ............................. 500,000 562,970 ------------ 7,031,917 ------------ TOTAL MUNICIPAL BONDS (COST $57,791,224) .......................... 59,445,854 ------------ - -------------------------------------------------------------------------------- INVESTMENT COMPANIES - 1.4% - -------------------------------------------------------------------------------- BlackRock Liquidity New York Money Fund Portfolio Institutional Shares, 3.28% (a) ... 861,220 861,220 Northern Institutional Diversified Assets Portfolio, Shares class, 4.80% (a) .......... 10,000 10,000 ------------ TOTAL INVESTMENT COMPANIES (COST $871,220) ............................. 871,220 ------------ TOTAL INVESTMENTS (COST $58,662,444) -- 98.8% ................. 60,317,074 ============ - ---------- Percentages indicated are based on net assets of $61,029,554. (a) The rates presented represent the annualized one day yield that was in effect on October 31, 2007. AMBAC -- American Municipal Bond Assurance Corp. AMT -- Interest on security is subject to Federal Alternative Minimum Tax FGIC -- Financial Guaranty Insurance Co. FSA -- Financial Security Assurance GO -- General Obligation IDA -- Industrial Development Agency MBIA -- Municipal Bond Insurance Association XLCA -- XL Capital Assurance SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 26 - -------------------------------------------------------------------------------- HSBC INVESTOR GROWTH AND INCOME FUND - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 - -------------------------------------------------------------------------------- COMMON STOCKS - 100.0% - -------------------------------------------------------------------------------- SHARES VALUE($) ------------- ------------ ADVERTISING - 1.2% Lamar Advertising Co. .......................... 12,000 641,520 ------------ 641,520 ------------ AEROSPACE & DEFENSE - 4.1% Boeing Co. ..................................... 10,500 1,035,195 United Technologies Corp. ...................... 14,500 1,110,555 ------------ 2,145,750 ------------ AUTOMOTIVE & TRANSPORT - 10.7% BorgWarner, Inc. ............................... 17,000 1,797,070 DaimlerChrysler AG ............................. 8,500 936,275 FedEx Corp. .................................... 2,500 258,350 Johnson Controls, Inc. ......................... 25,500 1,114,860 PACCAR, Inc. ................................... 27,000 1,500,120 ------------ 5,606,675 ------------ CHEMICALS - 6.3% Ecolab, Inc. ................................... 22,000 1,037,740 Monsanto Co. ................................... 17,000 1,659,710 Sigma-Aldrich Corp. ............................ 12,000 620,040 ------------ 3,317,490 ------------ COMPUTER SOFTWARE - 6.4% Electronic Arts, Inc. (a) ...................... 22,000 1,344,640 Intuit, Inc. (a) ............................... 16,000 514,720 Microsoft Corp. ................................ 34,000 1,251,540 Salesforce.com, Inc. (a) ....................... 4,900 276,213 ------------ 3,387,113 ------------ COMPUTERS - 10.0% Apple Computer, Inc. (a) ....................... 19,000 3,609,050 Hewlett-Packard Co. ............................ 16,000 826,880 Intel Corp. .................................... 31,000 833,900 ------------ 5,269,830 ------------ CONSUMER PRODUCTS - 3.9% Nike, Inc., Class B ............................ 22,000 1,457,720 PepsiCo, Inc. .................................. 8,000 589,760 ------------ 2,047,480 ------------ DIVERSIFIED MANUFACTURING OPERATIONS - 16.3% Caterpillar, Inc. .............................. 18,000 1,342,980 Donaldson Co., Inc. ............................ 17,500 750,050 Jacobs Engineering Group, Inc. (a) ............. 26,000 2,265,900 Kennametal, Inc. ............................... 15,600 1,422,876 Plum Creek Timber Co., Inc. .................... 20,700 924,669 Tyco Electronics Ltd. .......................... 19,000 677,730 W. W. Grainger, Inc. ........................... 13,000 1,168,960 ------------ 8,553,165 ------------ ELECTRONIC COMPONENTS & SEMICONDUCTORS - 2.1% NVIDIA Corp. (a) ............................... 14,000 495,320 Trimble Navigation Ltd. (a) .................... 14,000 583,800 ------------ 1,079,120 ------------ - -------------------------------------------------------------------------------- COMMON STOCKS, CONTINUED - -------------------------------------------------------------------------------- SHARES VALUE($) ------------- ------------ FINANCIAL SERVICES - 12.9% American Express Co. ........................... 17,700 1,078,815 Ameriprise Financial, Inc. ..................... 18,000 1,133,640 BlackRock, Inc., Class A ....................... 2,790 577,390 CME Group, Inc. ................................ 2,700 1,798,875 JP Morgan Chase & Co. .......................... 10,000 470,000 T. Rowe Price Group, Inc. ...................... 14,000 899,360 The Charles Schwab Corp. ....................... 36,000 836,640 ------------ 6,794,720 ------------ HEALTH CARE - 1.1% Zimmer Holdings, Inc. (a) ...................... 8,500 590,665 ------------ 590,665 ------------ HOTELS & LODGING - 2.9% Host Hotels & Resorts, Inc. .................... 19,960 442,314 Las Vegas Sands Corp. (a) ...................... 8,300 1,104,564 ------------ 1,546,878 ------------ INTERNET RELATED - 3.0% Google, Inc., Class A (a) ...................... 2,250 1,590,750 ------------ 1,590,750 ------------ MEDIA - 4.3% McGraw-Hill Cos., Inc. ......................... 25,000 1,251,000 The Walt Disney Co. ............................ 29,000 1,004,270 ------------ 2,255,270 ------------ MOTOR VEHICLES - 1.0% Harley-Davidson, Inc. .......................... 10,500 540,750 ------------ 540,750 ------------ OIL & GAS - 4.1% Schlumberger Ltd. .............................. 11,000 1,062,270 Suncor Energy, Inc. ADR. ....................... 10,000 1,092,300 ------------ 2,154,570 ------------ RESTAURANTS - 0.5% Starbucks Corp. (a) ............................ 10,000 266,800 ------------ 266,800 ------------ RETAIL - 3.7% Nordstrom, Inc. ................................ 18,500 729,640 Walgreen Co. ................................... 17,000 674,050 Whole Foods Market, Inc. ....................... 10,400 515,216 ------------ 1,918,906 ------------ TELECOMMUNICATIONS - 4.1% QUALCOMM, Inc. ................................. 17,500 747,775 Verizon Communications, Inc. ................... 30,000 1,382,100 ------------ 2,129,875 ------------ TRANSPORTATION - 1.4% Expeditors International of Washington, Inc. ... 14,100 714,165 ------------ 714,165 ------------ TOTAL COMMON STOCKS (COST $34,876,971) .......................... 52,551,492 ------------ 27 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- HSBC INVESTOR GROWTH AND INCOME FUND - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) - -------------------------------------------------------------------------------- INVESTMENT COMPANY - 0.1% - -------------------------------------------------------------------------------- SHARES VALUE($) ------------- ------------ Northern Institutional Diversified Assets Portfolio, Shares class, 4.80% (b) ... 33,830 33,830 ------------ TOTAL INVESTMENT COMPANY (COST $33,830) .............................. 33,830 ------------ TOTAL INVESTMENTS (COST $34,910,801) -- 100.1% ................ 52,585,322 ============ - ---------- Percentages indicated are based on net assets of $52,556,144. (a) Represents non-income producing security. (b) The rates presented represent the annualized one day yield that was in effect on October 31, 2007. ADR--American Depositary Receipt SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 28 - -------------------------------------------------------------------------------- HSBC INVESTOR MID - CAP FUND - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 - -------------------------------------------------------------------------------- COMMON STOCKS - 98.0% - -------------------------------------------------------------------------------- SHARES VALUE($) ------------- ------------ ADVERTISING - 0.7% Lamar Advertising Co. .......................... 4,350 232,551 ------------ 232,551 ------------ AEROSPACE & DEFENSE - 2.2% L-3 Communications Holdings, Inc. .............. 6,600 723,624 ------------ 723,624 ------------ AGRICULTURAL CHEMICALS - 1.3% Syngenta AG ADR ................................ 9,100 441,077 ------------ 441,077 ------------ AUCTION HOUSE/ART DEALER - 0.6% Ritchie Brothers Auctioneers, Inc. ADR ......... 2,550 190,817 ------------ 190,817 ------------ AUTOMOTIVE & TRANSPORT - 1.4% LKQ Corp. (a) .................................. 12,200 470,432 ------------ 470,432 ------------ BANKING - 1.7% HDFC Bank Ltd. ADR ............................. 4,000 556,000 ------------ 556,000 ------------ BIOTECHNOLOGY - 1.8% BioMarin Pharmaceuticals, Inc. (a) ............. 17,200 476,956 Vertex Pharmaceuticals, Inc. (a) ............... 4,050 130,977 ------------ 607,933 ------------ BUSINESS SERVICES - 0.8% Fidelity National Information Services, Inc. ... 5,550 255,966 ------------ 255,966 ------------ COMMERCIAL SERVICES - 1.8% IHS, Inc. (a) .................................. 7,050 444,503 Interface, Inc., Class A........................ 7,700 147,301 ------------ 591,804 ------------ COMMUNICATIONS - 1.5% CommScope, Inc. (a) ............................ 10,750 507,078 ------------ 507,078 ------------ COMPUTER SERVICES - 4.4% Cognizant Technology Solutions Corp. (a) ....... 9,900 410,454 j2 Global Communications, Inc. (a) ............. 15,425 519,668 Wright Express Corp. (a) ....................... 13,500 522,450 ------------ 1,452,572 ------------ COMPUTER SOFTWARE - 4.0% Akamai Technologies, Inc. (a) .................. 5,750 225,342 Blackbaud, Inc. ................................ 16,100 433,895 NAVTEQ Corp. (a) ............................... 4,300 331,960 VASCO Data Security International, Inc. (a) .... 12,900 341,076 ------------ 1,332,273 ------------ COMPUTERS - 2.3% Logitech International S.A. (a) ................ 12,150 429,138 VeriFone Holdings, Inc. (a) .................... 6,700 331,181 ------------ 760,319 ------------ - -------------------------------------------------------------------------------- COMMON STOCKS, CONTINUED - -------------------------------------------------------------------------------- SHARES VALUE($) ------------- ------------ CONSTRUCTION & ENGINEERING - 2.5% McDermott International, Inc. (a) .............. 13,500 824,310 ------------ 824,310 ------------ CONSUMER DISCRETIONARY - 0.8% Sotheby's Holdings, Inc. ....................... 4,600 249,182 ------------ 249,182 ------------ CONSUMER PRODUCTS - 1.6% Gildan Activewear, Inc. (a) .................... 7,100 319,003 Polo Ralph Lauren Corp. ........................ 3,000 206,400 ------------ 525,403 ------------ CORRECTIONAL INSTITUTIONS - 1.1% Corrections Corp. of America (a) ............... 12,850 363,527 ------------ 363,527 ------------ DIVERSIFIED MANUFACTURING OPERATIONS - 1.1% Emcor Group, Inc. (a) .......................... 10,400 358,072 ------------ 358,072 ------------ ELECTRONIC COMPONENTS & SEMICONDUCTORS - 3.0% FormFactor, Inc. (a) ........................... 6,400 250,304 Itron, Inc. (a) ................................ 4,400 472,956 Microchip Technology, Inc. ..................... 7,675 254,580 ------------ 977,840 ------------ ENERGY - 1.1% Core Laboratories NV (a) ....................... 2,500 364,850 ------------ 364,850 ------------ ENVIRONMENTAL SERVICES - 1.7% Stericycle, Inc. (a) ........................... 9,700 565,801 ------------ 565,801 ------------ FINANCIAL SERVICES - 8.0% Affiliated Managers Group, Inc. (a) ............ 4,550 598,552 BlackRock, Inc., Class A ....................... 2,025 419,074 CME Group, Inc. ................................ 700 466,375 Eaton Vance Corp. .............................. 8,250 412,747 iStar Financial, Inc. .......................... 4,950 151,025 Jones Lang LaSalle, Inc. ....................... 3,850 367,020 Zions Bancorporation ........................... 3,450 203,930 ------------ 2,618,723 ------------ FOOD & BEVERAGE - 3.4% Central European Distribution Corp. (a) ........ 7,800 414,804 Flowers Foods, Inc. ............................ 19,600 430,024 United Natural Foods, Inc. (a) ................. 9,150 264,801 ------------ 1,109,629 ------------ FUNERAL SERVICES - 1.1% Service Corp. International .................... 25,950 375,497 ------------ 375,497 ------------ HEALTH CARE - 8.7% DaVita, Inc. (a) ............................... 4,800 312,912 Express Scripts, Inc. (a) ...................... 3,700 233,470 Hologic, Inc. (a) .............................. 9,588 651,313 Laboratory Corp. of America Holdings (a) ....... 4,675 321,406 Psychiatric Solutions, Inc. (a) ................ 7,550 298,980 29 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- HSBC INVESTOR MID - CAP FUND - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) - -------------------------------------------------------------------------------- COMMON STOCKS, CONTINUED - -------------------------------------------------------------------------------- SHARES VALUE($) ------------- ------------ HEALTH CARE, CONTINUED ResMed, Inc. (a) ............................... 6,800 281,724 Techne Corp. (a) ............................... 1,025 66,871 VCA Antech, Inc. (a) ........................... 15,200 699,960 ------------ 2,866,636 ------------ INSURANCE - 3.6% Assurant, Inc. ................................. 5,600 327,264 Axis Capital Holdings Ltd. ..................... 12,350 490,789 Proassurance Corp. (a) ......................... 6,800 374,952 ------------ 1,193,005 ------------ LEISURE - 2.7% Penn National Gaming, Inc. (a) ................. 14,200 876,850 ------------ 876,850 ------------ MACHINERY - 1.6% Oshkosh Truck Corp. ............................ 9,675 524,385 ------------ 524,385 ------------ MATERIALS - 4.8% Airgas, Inc. ................................... 10,950 552,646 FMC Corp. ...................................... 11,150 641,125 Praxair, Inc. .................................. 4,475 382,523 ------------ 1,576,294 ------------ METAL PROCESSORS & FABRICATION - 1.2% Carpenter Technology Corp. ..................... 2,750 398,503 ------------ 398,503 ------------ OIL & GAS - 7.1% Atlas America, Inc. ............................ 3,100 178,870 Chesapeake Energy Corp. ........................ 9,625 379,995 FMC Technologies, Inc. (a) ..................... 8,500 515,355 Oil States International, Inc. (a) ............. 5,525 238,625 Superior Energy Services, Inc. (a) ............. 8,750 324,450 Weatherford International Ltd. (a) ............. 2,134 138,518 XTO Energy, Inc. ............................... 8,558 568,080 ------------ 2,343,893 ------------ RETAIL - 4.0% Dick's Sporting Goods, Inc. (a) ................ 16,650 555,610 GameStop Corp., Class A (a) .................... 12,950 766,899 ------------ 1,322,509 ------------ SPECIALTY RETAIL - 1.9% Penske Automotive Group, Inc. .................. 9,250 206,090 Tiffany & Co. .................................. 7,525 407,704 ------------ 613,794 ------------ TELECOMMUNICATIONS - 1.8% Crown Castle International Corp. (a) ........... 10,595 435,137 NII Holdings, Inc., Class B (a) ................ 2,975 172,550 ------------ 607,687 ------------ TRANSPORTATION - 1.3% American Commercial Lines, Inc. (a) ............ 8,800 131,208 Expeditors International of Washington, Inc. ... 5,600 283,640 ------------ 414,848 ------------ - -------------------------------------------------------------------------------- COMMON STOCKS, CONTINUED - -------------------------------------------------------------------------------- SHARES VALUE($) ------------- ------------ UTILITIES - 5.9% Equitable Resources, Inc. ...................... 12,775 719,488 ITC Holdings Corp. ............................. 9,550 546,642 Northeast Utilities ............................ 21,450 661,303 ------------ 1,927,433 ------------ WIRE & CABLE PRODUCTS - 3.5% Belden, Inc. ................................... 6,100 355,447 General Cable Corp. (a) ........................ 10,950 788,290 ------------ 1,143,737 ------------ TOTAL COMMON STOCKS (COST $21,788,116) .......................... 32,264,854 ------------ - -------------------------------------------------------------------------------- INVESTMENT COMPANIES - 3.0% - -------------------------------------------------------------------------------- MidCap S&P Depositary Receipt Trust Series 1 .................................... 1,500 247,410 Northern Institutional Diversified Assets Portfolio, Shares class, 4.80% (b) .......... 755,396 755,396 ------------ TOTAL INVESTMENT COMPANIES (COST $992,905) ............................. 1,002,806 ------------ TOTAL INVESTMENTS (COST $22,781,021) -- 101.0% ................ 33,267,660 ============ - ---------- Percentages indicated are based on net assets of $32,931,699. (a) Represents non-income producing security. (b) The rates presented represent the annualized one day yield that was in effect on October 31, 2007. ADR--American Depositary Receipt SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 30 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF ASSETS AND LIABILITIES--AS OF OCTOBER 31, 2007
------------ ------------ ------------ ------------ ------------- CORE PLUS INTERMEDIATE FIXED INCOME CORE PLUS HIGH YIELD DURATION NEW YORK FUND FIXED INCOME FIXED INCOME FIXED INCOME TAX-FREE (ADVISOR) FUND FUND FUND BOND FUND - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS: Investments in Affiliated Portfolios $ 81,537,056 $ 17,462,262 $ 9,002,580 $ 14,107,726 $ -- Investments in non-affiliates, at value -- -- -- -- 60,317,074 Interest and dividends receivable -- -- -- -- 843,675 Receivable for capital shares issued 314,684 76,249 72,894 57,055 146,392 Receivable from Investment Adviser 15,806 7,763 11,787 12,672 -- Prepaid expenses and other assets 7,256 4,673 7,805 843 3,711 ------------ ------------ ------------ ------------ ------------ TOTAL ASSETS 81,874,802 17,550,947 9,095,066 14,178,296 61,310,852 ------------ ------------ ------------ ------------ ------------ LIABILITIES: Dividends payable 382,197 76,447 58,530 64,168 184,067 Payable for capital shares redeemed 65,768 42,200 8,938 55,346 36,154 Accrued expenses and other liabilities: Investment Management -- -- -- -- 13,037 Administration 4,519 718 275 1,088 4,922 Distribution -- 3,619 1,672 3,529 6,129 Shareholder Servicing -- 3,800 1,344 878 8,935 Compliance Service 60 14 6 13 90 Transfer Agent 3,036 4,580 9,407 3,870 4,718 Trustee 156 35 46 34 239 Other 26,595 5,233 2,358 3,834 23,007 ------------ ------------ ------------ ------------ ------------ TOTAL LIABILITIES 482,331 136,646 82,576 132,760 281,298 ------------ ------------ ------------ ------------ ------------ NET ASSETS $ 81,392,471 $ 17,414,301 $ 9,012,490 $ 14,045,536 $ 61,029,554 ============ ============ ============ ============ ============ - ------------------------------------------------------------------------------------------------------------------------------------ COMPOSITION OF NET ASSETS: Capital $ 80,876,747 $ 17,996,171 $ 9,015,817 $ 14,052,287 $ 59,273,888 Accumulated net investment income (loss) 120,218 13,008 328 23,112 21,541 Accumulated net realized gains (losses) from investment and foreign currency transactions 476,947 (578,198) 94,442 49,296 79,495 Unrealized appreciation/depreciation from investments and foreign currencies (81,441) (16,680) (98,097) (79,159) 1,654,630 ------------ ------------ ------------ ------------ ------------ NET ASSETS $ 81,392,471 $ 17,414,301 $ 9,012,490 $ 14,045,536 $ 61,029,554 ============ ============ ============ ============ ============ - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSETS: Class A Shares $ -- $ 13,592,441 $ 3,706,420 $ 803,142 $ 32,304,801 Class B Shares -- 3,791,523 2,447,144 2,982,142 8,635,324 Class C Shares -- 30,337 217,372 305,239 806,965 Class I Shares -- -- 2,641,554 9,955,013 19,282,464 Advisor Shares 81,392,471 -- -- -- -- ------------ ------------ ------------ ------------ ------------ $ 81,392,471 $ 17,414,301 $ 9,012,490 $ 14,045,536 $ 61,029,554 ============ ============ ============ ============ ============ - ------------------------------------------------------------------------------------------------------------------------------------ SHARES OUTSTANDING ($0.001 PAR VALUE, UNLIMITED NUMBER OF SHARES AUTHORIZED): Class A Shares -- 1,297,385 370,321 79,931 2,923,293 Class B Shares -- 361,508 244,399 296,228 782,191 Class C Shares -- 2,900 21,665 30,331 72,820 Class I Shares -- -- 263,890 989,282 1,744,701 Advisor Shares 7,892,674 -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE: Class A Shares $ -- $ 10.48 $ 10.01 $ 10.05 $ 11.05 Class B Shares* $ -- $ 10.49 $ 10.01 $ 10.07 $ 11.04 Class C Shares* $ -- $ 10.46 $ 10.03 $ 10.06 $ 11.08 Class I Shares $ -- $ -- $ 10.01 $ 10.06 $ 11.05 Advisor Shares $ 10.31 $ -- $ -- $ -- $ -- 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))--Class A Shares $ -- $ 11.00 $ 10.51 $ 10.55 $ 11.60 ============ ============ ============ ============ ============ Total Investments, at cost $ 58,662,444 ============
- ---------- * 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 ASSETS AND LIABILITIES--AS OF OCTOBER 31, 2007 (CONTINUED)
------------ ------------ ------------- ------------ ------------- GROWTH GROWTH AND INTERNATIONAL MID-CAP OPPORTUNITY FUND INCOME FUND EQUITY FUND FUND FUND - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS: Investments in Affiliated Portfolios $ 62,980,032 $ -- $ 386,023,336 $ -- $ 20,654,692 Investments in non-affiliates, at value -- 52,585,322 -- 33,267,660 -- Interest and dividends receivable -- 27,858 -- 3,121 -- Receivable for capital shares issued 56,250 47 152,091 5,542 1,048 Receivable for investments sold -- -- -- 276,142 -- Reclaims receivable -- -- 357,552 -- -- Receivable from Investment Adviser -- -- -- -- 1,871 Prepaid expenses and other assets 6,196 12,495 13,645 5,021 5,479 ------------ ------------ ------------- ------------ ------------ TOTAL ASSETS 63,042,478 52,625,722 386,546,624 33,557,486 20,663,090 ------------ ------------ ------------- ------------ ------------ LIABILITIES: Payable for investments purchased -- -- -- 557,655 -- Payable for capital shares redeemed 106,708 6,756 688,699 17,836 324,001 Payable to Investment Adviser 21,550 -- -- -- -- Accrued expenses and other liabilities: Investment Management -- 24,477 -- 20,696 -- Administration 1,685 10,292 13,072 4,861 885 Distribution 1,073 3,181 -- 3,988 2,491 Shareholder Servicing 6,742 1,481 -- 2,575 4,277 Compliance Service 36 70 267 50 16 Transfer Agent 6,366 4,379 4,116 6,031 6,152 Trustee 98 180 658 119 39 Other 16,266 18,762 122,705 11,976 6,470 ------------ ------------ ------------- ------------ ------------ TOTAL LIABILITIES 160,524 69,578 829,517 625,787 344,331 ------------ ------------ ------------- ------------ ------------ NET ASSETS $ 62,881,954 $ 52,556,144 $ 385,717,107 $ 32,931,699 $ 20,318,759 ============ ============ ============= ============ ============ - ------------------------------------------------------------------------------------------------------------------------------------ COMPOSITION OF NET ASSETS: Capital $ 44,479,644 $ 40,627,351 $ 250,411,836 $ 19,007,456 $ 9,945,246 Accumulated net investment income (loss) -- 5,574 5,187,203 -- -- Accumulated net realized gains (losses) from investment and foreign currency transactions 2,872,186 (5,751,302) 28,775,413 3,437,604 5,989,770 Unrealized appreciation/depreciation from investments and foreign currencies 15,530,124 17,674,521 101,342,655 10,486,639 4,383,743 ------------ ------------ ------------- ------------ ------------ NET ASSETS $ 62,881,954 $ 52,556,144 $ 385,717,107 $ 32,931,699 $ 20,318,759 ============ ============ ============= ============ ============ - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSETS: Class A Shares $ 30,858,484 $ 2,048,013 $ -- $ 5,896,882 $ 15,057,289 Class B Shares 1,629,791 5,051,015 -- 6,285,063 4,927,584 Class C Shares 98,258 57,727 -- 78,745 333,886 Class I Shares 30,295,421 45,399,389 -- -- -- Advisor Shares -- -- 385,717,107 -- -- Trust Shares -- -- -- 20,671,009 -- ------------ ------------ ------------- ------------ ------------ $ 62,881,954 $ 52,556,144 $ 385,717,107 $ 32,931,699 $ 20,318,759 ============ ============ ============= ============ ============ - ------------------------------------------------------------------------------------------------------------------------------------ SHARES OUTSTANDING ($0.001 PAR VALUE, UNLIMITED NUMBER OF SHARES AUTHORIZED): Class A Shares 1,719,287 145,834 -- 545,473 917,662 Class B Shares 96,329 369,841 -- 624,161 329,740 Class C Shares 5,774 4,191 -- 7,748 22,103 Class I Shares 1,680,993 3,222,187 -- -- -- Advisor Shares -- -- 15,493,191 -- -- Trust Shares -- -- -- 1,874,100 -- - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE: Class A Shares $ 17.95 $ 14.04 $ -- $ 10.81 $ 16.41 Class B Shares $ 16.92 $ 13.66 $ -- $ 10.07 $ 14.94 Class C Shares* $ 17.02 $ 13.77 $ -- $ 10.16 $ 15.11 Class I Shares $ 18.02 $ 14.09 $ -- $ -- $ -- Advisor Shares $ -- $ -- $ 24.90 $ -- $ -- Trust Shares $ -- $ -- $ -- $ 11.03 $ -- 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))--Class A Shares $ 18.89 $ 14.78 $ -- $ 11.38 $ 17.27 ============ ============ ============= ============ ============ Total Investments, at cost $ 34,910,801 $ 22,781,021 ============ ============
- ---------- * Redemption Price per share varies by length of time shares are held. SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 32 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF ASSETS AND LIABILITIES--AS OF OCTOBER 31, 2007 (CONTINUED)
------------- ------------ ------------- OPPORTUNITY FUND OVERSEAS VALUE (ADVISOR) EQUITY FUND FUND - -------------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments in Affiliated Portfolios $ 176,674,531 $ 19,879,757 $ 57,849,714 Receivable for capital shares issued 32,000 2,642 72,045 Reclaims receivable -- 64,196 -- Prepaid expenses and other assets 7,708 5,263 6,311 ------------- ------------ ------------ TOTAL ASSETS 176,714,239 19,951,858 57,928,070 ------------- ------------ ------------ LIABILITIES: Payable for capital shares redeemed 48,080 8,089 68,804 Payable to Investment Adviser -- 1,842 10,120 Accrued expenses and other liabilities: Administration 7,959 758 1,662 Distribution -- 2,408 1,217 Shareholder Servicing -- 4,135 6,202 Compliance Service 218 16 50 Transfer Agent 3,289 5,011 6,352 Trustee 538 38 119 Other 61,277 6,798 18,229 ------------- ------------ ------------ TOTAL LIABILITIES 121,361 29,095 112,755 ------------- ------------ ------------ NET ASSETS $ 176,592,878 $ 19,922,763 $ 57,815,315 ============= ============ ============ - -------------------------------------------------------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS: Capital $ 98,069,819 $ 8,381,228 $ 43,896,071 Accumulated net investment income (loss) -- 79,109 131,577 Accumulated net realized gains (losses) from investment and foreign currency transactions 44,802,636 2,926,830 4,629,502 Unrealized appreciation/depreciation from investments and foreign currencies 33,720,423 8,535,596 9,158,165 ------------- ------------ ------------ NET ASSETS $ 176,592,878 $ 19,922,763 $ 57,815,315 ============= ============ ============ - -------------------------------------------------------------------------------------------------------------------------------- NET ASSETS: Class A Shares $ -- $ 16,077,619 $ 27,224,571 Class B Shares -- 3,698,455 1,772,292 Class C Shares -- 146,689 126,119 Class I Shares -- -- 28,692,333 Advisor Shares 176,592,878 -- -- ------------- ------------ ------------ $ 176,592,878 $ 19,922,763 $ 57,815,315 ============= ============ ============ - -------------------------------------------------------------------------------------------------------------------------------- SHARES OUTSTANDING ($0.001 PAR VALUE, UNLIMITED NUMBER OF SHARES AUTHORIZED): Class A Shares -- 784,884 1,646,362 Class B Shares -- 190,415 111,962 Class C Shares -- 7,358 7,910 Class I Shares -- -- 1,736,751 Advisor Shares 9,323,396 -- -- - -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE: Class A Shares $ -- $ 20.48 $ 16.54 Class B Shares* $ -- $ 19.42 $ 15.83 Class C Shares* $ -- $ 19.94 $ 15.94 Class I Shares $ -- $ -- $ 16.52 Advisor Shares $ 18.94 $ -- $ -- Maximum Sales Charge--Class A Shares --% 5.00% 5.00% ============= ============ ============ Maximum Offering Price per share (Net Asset Value/(100%-maximum sales charge))--Class A Shares $ -- $ 21.56 $ 17.41 ============= ============ ============
- ---------- * Redemption Price per share varies by length of time shares are held. 33 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF OPERATIONS--FOR THE YEAR ENDED OCTOBER 31, 2007
------------ ------------ ------------ ------------ ------------ CORE PLUS INTERMEDIATE FIXED INCOME CORE PLUS HIGH YIELD DURATION NEW YORK FUND FIXED INCOME FIXED INCOME FIXED INCOME TAX-FREE (ADVISOR) FUND FUND FUND BOND FUND - -------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Interest $ -- $ -- $ -- $ -- $ 2,679,374 Dividends -- -- -- -- 48,398 Investment Income from Affiliated Portfolios (a) 4,642,335 1,030,610 748,864 964,858 -- Expenses from Affiliated Portfolios (a) (490,903) (108,987) (122,821) (147,601) -- ------------ ------------ ------------ ------------ ----------- TOTAL INVESTMENT INCOME (LOSS) 4,151,432 921,623 626,043 817,257 2,727,772 ------------ ------------ ------------ ------------ ----------- - -------------------------------------------------------------------------------------------------------------------------------- EXPENSES: Investment Management -- -- -- -- 156,682 Administration 24,811 5,504 2,646 5,271 37,550 Distribution: Class B Shares -- 28,645 17,449 25,527 84,284 Class C Shares -- 883 1,932 3,377 7,156 Shareholder Servicing: Class A Shares -- 35,494 9,902 2,078 84,933 Class B Shares -- 10,258 5,818 8,598 28,257 Class C Shares -- 302 647 1,126 2,446 Accounting 9,000 22,336 28,700 29,000 75,650 Compliance Service 940 208 101 203 1,389 Custodian -- -- -- -- 13,497 Printing 24,741 8,140 4,063 7,018 25,053 Transfer Agent 20,263 55,447 65,378 49,002 62,171 Trustee 2,065 457 248 442 3,097 Registration fees -- 108 416 84 339 Other 25,889 13,157 13,418 8,696 25,794 ------------ ------------ ------------ ------------ ----------- Total expenses before fee reductions 107,709 180,939 150,718 140,422 608,298 Fees reduced by Investment Adviser (225,085) (129,294) (189,345) (177,310) -- Expenses reimbursed by Investment Adviser (80,258) (5,966) -- (21,743) (20,753) ------------ ------------ ------------ ------------ ----------- NET EXPENSES (197,634) 45,679 (38,627) (58,631) 587,545 ------------ ------------ ------------ ------------ ----------- - -------------------------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) 4,349,066 875,944 664,670 875,888 2,140,227 ------------ ------------ ------------ ------------ ----------- - -------------------------------------------------------------------------------------------------------------------------------- NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND FOREIGN CURRENCIES: (a) Net realized gains (losses) from investments and foreign currency transactions 2,097,739 433,571 94,442 792,234 79,494 Change in unrealized appreciation/depreciation from investments and foreign currencies (740,498) (152,977) (167,829) (170,042) (832,199) ------------ ------------ ------------ ------------ ----------- - -------------------------------------------------------------------------------------------------------------------------------- Net realized\unrealized gains (losses) from investment and foreign currency transactions 1,357,241 280,594 (73,387) 622,192 (752,705) ------------ ------------ ------------ ------------ ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 5,706,307 $ 1,156,538 $ 591,283 $ 1,498,080 $ 1,387,522 ============ ============ ============ ============ ===========
- ---------- (a) With the exception of the New York Tax-Free Bond Fund, represents amounts allocated from the respective Affiliated Portfolios. SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 34 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF OPERATIONS--FOR THE YEAR ENDED OCTOBER 31, 2007 (CONTINUED)
------------ ------------ ------------- ----------- ------------ GROWTH GROWTH AND INTERNATIONAL MID-CAP OPPORTUNITY FUND INCOME FUND EQUITY FUND FUND FUND - ----------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $ -- $ 588,114 $ -- $ 227,876 $ -- Dividend income from affiliated investments -- -- -- 3,207 -- Investment Income from Affiliated Portfolios (a) 555,038 -- 11,195,558 -- 87,148 Tax reclaims (a) -- -- 187,869 -- -- Foreign tax withholding from Affiliated Portfolios (a) -- -- (1,167,907) -- -- Expenses from Affiliated Portfolios (a) (321,014) -- (2,681,619) -- (211,232) ------------ ------------ ------------- ----------- ----------- TOTAL INVESTMENT INCOME (LOSS) 234,024 588,114 7,533,901 231,083 (124,084) ------------ ------------ ------------- ----------- ----------- - ----------------------------------------------------------------------------------------------------------------------------------- EXPENSES: Investment Management -- 293,414 -- 230,741 -- Administration 15,144 29,180 99,740 18,245 7,075 Distribution: Class B Shares 11,100 35,664 -- 50,304 36,681 Class C Shares 823 258 -- 664 2,321 Shareholder Servicing: Class A Shares 68,809 3,930 -- 13,349 44,816 Class B Shares 3,706 11,914 -- 16,837 12,227 Class C Shares 282 87 -- 224 791 Accounting 29,000 67,750 9,000 67,420 22,336 Compliance Service 559 1,076 3,760 681 276 Custodian -- 10,679 -- 18,965 -- Interest -- 60 -- -- -- Printing 23,658 20,698 130,484 18,652 12,349 Transfer Agent 85,271 58,952 33,321 80,480 80,014 Trustee 1,235 2,439 8,206 1,437 604 Registration fees 352 333 -- -- 152 Other 23,467 40,711 58,638 14,435 16,367 ------------ ------------ ------------- ----------- ----------- Total expenses before fee reductions 263,406 577,145 343,149 532,434 236,009 Fees reduced by Investment Adviser (46,044) (60,503) -- (112,291) (50,013) Expenses reimbursed by Investment Adviser (8,757) (60,580) (90,294) (52,113) (8,071) ------------ ------------ ------------- ----------- ----------- NET EXPENSES 208,605 456,062 252,855 368,030 177,925 ------------ ------------ ------------- ----------- ----------- - ----------------------------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) 25,419 132,052 7,281,046 (136,947) (302,009) ------------ ------------ ------------- ----------- ----------- - ----------------------------------------------------------------------------------------------------------------------------------- NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: (A) Net realized gains (losses) from investments and foreign currency transactions 2,943,213 4,390,113 29,592,826 3,529,981 6,380,550 Change in unrealized appreciation/depreciation from investments and foreign currencies 11,547,046 7,796,554 37,623,613 4,694,868 (180,853) ------------ ------------ ------------- ----------- ----------- - ----------------------------------------------------------------------------------------------------------------------------------- Net realized\unrealized gains (losses) from investment and foreign currency transactions 14,490,259 12,186,667 67,216,439 8,224,849 6,199,697 ------------ ------------ ------------- ----------- ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 14,515,678 $ 12,318,719 $ 74,497,485 $ 8,087,902 $ 5,897,688 ============ ============ ============= =========== ===========
- ---------- (a) With the exception of the Growth and Income Fund and the Mid-Cap Fund, represents amounts allocated from the respective Affiliated Portfolios. 35 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF OPERATIONS--FOR THE YEAR ENDED OCTOBER 31, 2007 (CONTINUED)
------------ ----------- ------------ OPPORTUNITY FUND OVERSEAS VALUE (ADVISOR) EQUITY FUND FUND - -------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Investment Income from Affiliated Portfolios (a) $ 622,456 $ 640,463 $ 1,078,143 Tax reclaims (a) -- 9,996 -- Foreign tax withholding from Affiliated Portfolios (a) -- (67,018) -- Expenses from Affiliated Portfolios (a) (1,569,198) (165,900) (366,118) ------------ ----------- ----------- TOTAL INVESTMENT INCOME (LOSS) (946,742) 417,541 712,025 ------------ ----------- ----------- - -------------------------------------------------------------------------------------------------------------------------- EXPENSES: Administration 51,982 6,322 16,335 Distribution: Class B Shares -- 26,013 14,368 Class C Shares -- 1,109 1,144 Shareholder Servicing: Class A Shares -- 42,880 70,903 Class B Shares -- 8,726 4,799 Class C Shares -- 420 388 Accounting 9,000 22,336 29,000 Compliance Service 2,099 246 621 Printing 53,454 10,814 26,451 Transfer Agent 30,509 66,348 85,728 Trustee 4,646 528 1,371 Registration fees -- 137 363 Other 46,324 17,471 24,500 ------------ ----------- ----------- Total expenses before fee reductions 198,014 203,350 275,971 Fees reduced by Investment Adviser -- -- (25,112) Expenses reimbursed by Investment Adviser (110,941) (4,313) (46,044) ------------ ----------- ----------- NET EXPENSES 87,073 199,037 204,815 ------------ ----------- ----------- - -------------------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) (1,033,815) 218,504 507,210 ------------ ----------- ----------- - -------------------------------------------------------------------------------------------------------------------------- NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: (A) Net realized gains (losses) from investments and foreign currency transactions 46,538,426 3,031,889 4,408,682 Change in unrealized appreciation/depreciation from investments 1,172,860 1,272,896 12,266 ------------ ----------- ----------- - -------------------------------------------------------------------------------------------------------------------------- Net realized\unrealized gains (losses) from investment transactions 47,711,286 4,304,785 4,420,948 ------------ ----------- ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 46,677,471 $ 4,523,289 $ 4,928,158 ============ =========== ===========
- ---------- (a) Represents amounts allocated from the respective Affiliated Portfolios. SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 36 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS
--------------------------- ---------------------------- CORE PLUS CORE PLUS FIXED FIXED INCOME FUND (ADVISOR) INCOME FUND - -------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2007 2006 2007 2006 - -------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 4,349,066 $ 4,105,465 $ 875,944 $ 843,851 Net realized gains (losses) from investment transactions 2,097,739 (1,501,702) 433,571 (377,777) Change in unrealized appreciation/ depreciation from investments and foreign currencies (740,498) 1,816,915 (152,977) 452,867 ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 5,706,307 4,420,678 1,156,538 918,941 ------------ ------------ ------------ ------------ - -------------------------------------------------------------------------------------------------------- DIVIDENDS: NET INVESTMENT INCOME: Class A Shares -- -- (704,651) (622,411) Class B Shares -- -- (172,434) (212,869) Class C Shares -- -- (5,092) (10,246) Advisor Shares (4,321,491) (4,104,585) -- -- NET REALIZED GAINS: Class A Shares -- -- -- (73,046) Class B Shares -- -- -- (29,921) Class C Shares -- -- -- (1,351) Advisor Shares -- (3,712,469) -- -- ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS RESULTING FROM SHAREHOLDER DIVIDENDS (4,321,491) (7,817,054) (882,177) (949,844) ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS (968,500) (5,370,906) 388,105 (7,315,720) ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS 416,316 (8,767,282) 662,466 (7,346,623) - -------------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 80,976,155 89,743,437 16,751,835 24,098,458 ------------ ------------ ------------ ------------ End of period $ 81,392,471 $ 80,976,155 $ 17,414,301 $ 16,751,835 ============ ============ ============ ============ Accumulated net investment income (loss) $ 120,218 $ 29,636 $ 13,008 $ 5,120 ============ ============ ============ ============
37 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
----------------------------- ---------------------------- CORE PLUS CORE PLUS FIXED FIXED INCOME FUND (ADVISOR) INCOME FUND - --------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2007 2006 2007 2006 - --------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A SHARES: Proceeds from shares issued $ -- $ -- $ 4,557,268 $ 1,922,955 Dividends reinvested -- -- 673,120 683,474 Value of shares redeemed -- -- (4,086,990) (7,996,165) ------------- ------------- ------------ ------------ Class A Shares capital transactions -- -- 1,143,398 (5,389,736) ------------- ------------- ------------ ------------ - --------------------------------------------------------------------------------------------------- CLASS B SHARES: Proceeds from shares issued -- -- 133,221 107,919 Dividends reinvested -- -- 152,515 219,337 Value of shares redeemed -- -- (832,273) (2,205,242) ------------- ------------- ------------ ------------ Class B Shares capital transactions -- -- (546,537) (1,877,986) ------------- ------------- ------------ ------------ - --------------------------------------------------------------------------------------------------- CLASS C SHARES: Proceeds from shares issued -- -- 16,800 5 Dividends reinvested -- -- 4,727 11,807 Value of shares redeemed -- -- (230,283) (59,810) ------------- ------------- ------------ ------------ Class C Shares capital transactions -- -- (208,756) (47,998) ------------- ------------- ------------ ------------ - --------------------------------------------------------------------------------------------------- ADVISOR SHARES: Proceeds from shares issued 16,414,081 18,068,509 -- -- Dividends reinvested 2,820,496 5,415,411 -- -- Value of shares redeemed (20,203,077) (28,854,826) -- -- ------------- ------------- ------------ ------------ Advisor Shares capital transactions (968,500) (5,370,906) -- -- ------------- ------------- ------------ ------------ CHANGE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS $ (968,500) $ (5,370,906) $ 388,105 $ (7,315,720) ============= ============= ============ ============ - --------------------------------------------------------------------------------------------------- SHARE TRANSACTIONS: CLASS A SHARES: Issued -- -- 435,107 188,221 Reinvested -- -- 64,455 66,942 Redeemed -- -- (391,171) (779,053) ------------- ------------- ------------ ------------ Change in Class A Shares -- -- 108,391 (523,890) ------------- ------------- ------------ ------------ - --------------------------------------------------------------------------------------------------- CLASS B SHARES: Issued -- -- 12,712 10,598 Reinvested -- -- 14,586 21,472 Redeemed -- -- (79,589) (216,292) ------------- ------------- ------------ ------------ Change in Class B Shares -- -- (52,291) (184,222) ------------- ------------- ------------ ------------ - --------------------------------------------------------------------------------------------------- CLASS C SHARES: Issued -- -- 1,628 -- Reinvested -- -- 453 1,158 Redeemed -- -- (22,120) (5,866) ------------- ------------- ------------ ------------ Change in Class C Shares -- -- (20,039) (4,708) ------------- ------------- ------------ ------------ - --------------------------------------------------------------------------------------------------- ADVISOR SHARES: Issued 1,596,631 1,788,443 -- -- Reinvested 274,454 536,720 -- -- Redeemed (1,968,988) (2,843,745) -- -- ------------- ------------- ------------ ------------ Change in Advisor Shares (97,903) (518,582) -- -- ------------- ------------- ------------ ------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 38 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
--------------------------- ---------------------------- HIGH YIELD INTERMEDIATE DURATION FIXED INCOME FUND FIXED INCOME FUND - ---------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2007 2006 (a) 2007 2006 - ---------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 664,670 $ 575,859 $ 875,888 $ 987,322 Net realized gains (losses) from 94,442 31,454 792,234 (420,155) investment transactions Change in unrealized appreciation/ depreciation from investments and foreign currencies (167,829) 69,732 (170,042) 480,307 ------------ ------------ ----------- ------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 591,283 677,045 1,498,080 1,047,474 ------------ ------------ ----------- ------------ - ---------------------------------------------------------------------------------------------------------- DIVIDENDS: NET INVESTMENT INCOME: Class A Shares (307,911) (301,928) (41,612) (46,821) Class B Shares (163,518) (84,509) (145,985) (166,109) Class C Shares (18,030) (8,755) (19,081) (19,885) Class I Shares (181,367) (174,183) (666,493) (767,823) NET REALIZED GAINS: Class A Shares (15,636) -- -- -- Class B Shares (6,846) -- -- -- Class C Shares (757) -- -- -- Class I Shares (8,215) -- -- -- ------------ ------------ ----------- ------------ CHANGE IN NET ASSETS RESULTING FROM SHAREHOLDER DIVIDENDS (702,280) (569,375) (873,171) (1,000,638) ------------ ------------ ----------- ------------ CHANGE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS (533,751) 9,549,568 (4,796,641) (13,008,376) ------------ ------------ ----------- ------------ CHANGE IN NET ASSETS (644,748) 9,657,238 (4,171,732) (12,961,540) - ---------------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 9,657,238 -- 18,217,268 31,178,808 ------------ ------------ ----------- ------------ End of period $ 9,012,490 $ 9,657,238 $14,045,536 $ 18,217,268 ============ ============ =========== ============ Accumulated net investment income (loss) $ 328 $ 6,484 $ 23,112 $ 7,071 ============ ============ =========== ============
- ---------- (a) The High Yield Fixed Income Fund commenced operations 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)
--------------------------- -------------------------- HIGH YIELD INTERMEDIATE DURATION FIXED INCOME FUND FIXED INCOME FUND - ---------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2007 2006 (a) 2007 2006 - ---------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A SHARES: Proceeds from shares issued $ 1,101,456 $ 5,577,211 $ 91,672 $ 25,306 Dividends reinvested 261,982 287,526 37,106 43,347 Value of shares redeemed (2,360,652) (1,183,299) (335,287) (151,593) ------------ ------------ ----------- ------------ Class A Shares capital transactions (997,214) 4,681,438 (206,509) (82,940) ------------ ------------ ----------- ------------ - ---------------------------------------------------------------------------------------------------------- CLASS B SHARES: Proceeds from shares issued 542,167 2,078,468 53,039 75,008 Dividends reinvested 113,890 56,791 129,255 141,353 Value of shares redeemed (279,180) (45,574) (1,060,828) (1,343,632) ------------ ------------ ----------- ------------ Class B Shares capital transactions 376,877 2,089,685 (878,534) (1,127,271) ------------ ------------ ----------- ------------ - ---------------------------------------------------------------------------------------------------------- CLASS C SHARES: Proceeds from shares issued 83,515 230,344 16,250 1,800 Dividends reinvested 15,343 8,113 18,729 20,272 Value of shares redeemed (112,155) (110) (248,148) (49,000) ------------ ------------ ----------- ------------ Class C Shares capital transactions (13,297) 238,347 (213,169) (26,928) ------------ ------------ ----------- ------------ - ---------------------------------------------------------------------------------------------------------- CLASS I SHARES: Proceeds from shares issued 1,158,432 2,775,374 2,137,921 908,462 Dividends reinvested 188,601 173,189 500,994 613,135 Value of shares redeemed (1,247,150) (408,465) (6,137,344) (13,292,834) ------------ ------------ ----------- ------------ Class I Shares capital transactions 99,883 2,540,098 (3,498,429) (11,771,237) ------------ ------------ ----------- ------------ CHANGE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS $ (533,751) $ 9,549,568 $(4,796,641) $(13,008,376) ============ ============ =========== ============ - ---------------------------------------------------------------------------------------------------------- SHARE TRANSACTIONS: CLASS A SHARES: Issued 107,567 557,001 9,160 2,635 Reinvested 25,689 28,555 3,707 4,508 Redeemed (230,848) (117,643) (33,428) (15,783) ------------ ------------ ----------- ------------ Change in Class A Shares (97,592) 467,913 (20,561) (8,640) ------------ ------------ ----------- ------------ - ---------------------------------------------------------------------------------------------------------- CLASS B SHARES: Issued 52,978 206,587 5,264 7,820 Reinvested 11,185 5,627 12,882 14,681 Redeemed (27,507) (4,471) (105,990) (139,306) ------------ ------------ ----------- ------------ Change in Class B Shares 36,656 207,743 (87,844) (116,805) ------------ ------------ ----------- ------------ - ---------------------------------------------------------------------------------------------------------- CLASS C SHARES: Issued 7,961 22,902 1,608 187 Reinvested 1,498 804 1,868 2,107 Redeemed (11,490) (10) (24,816) (5,095) ------------ ------------ ----------- ------------ Change in Class C Shares (2,031) 23,696 (21,340) (2,801) ------------ ------------ ----------- ------------ - ---------------------------------------------------------------------------------------------------------- Class I Shares: Issued 113,787 276,989 215,480 94,210 Reinvested 18,529 17,198 49,957 63,673 Redeemed (121,825) (40,788) (612,503) (1,377,269) ------------ ------------ ----------- ------------ Change in Class I Shares 10,491 253,399 (347,066) (1,219,386) ------------ ------------ ----------- ------------
- ---------- (a) 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)
-------------------------- NEW YORK TAX-FREE BOND FUND - ---------------------------------------------------------------------------------------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, 2007 2006 - ---------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 2,140,227 $ 2,082,496 Net realized gains (losses) from investment transactions 79,494 21,722 Change in unrealized appreciation/depreciation from investments and foreign currencies (832,199) 641,574 ----------- ------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 1,387,522 2,745,792 ----------- ------------ - ---------------------------------------------------------------------------------------------------------- DIVIDENDS: NET INVESTMENT INCOME: Class A Shares (1,173,859) (1,102,509) Class B Shares (304,650) (387,661) Class C Shares (26,272) (37,439) Class I Shares (608,516) (560,276) NET REALIZED GAINS: Class A Shares (11,494) (50,865) Class B Shares (4,734) (23,139) Class C Shares (438) (2,487) Class I Shares (5,055) (24,240) ----------- ------------ CHANGE IN NET ASSETS RESULTING FROM SHAREHOLDER DIVIDENDS (2,135,018) ( 2,188,616) ----------- ------------ CHANGE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS 323,731 (8,565,736) ----------- ------------ CHANGE IN NET ASSETS (423,765) (8,008,560) - ---------------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 61,453,319 69,461,879 ----------- ------------ End of period $61,029,554 $ 61,453,319 =========== ============ Accumulated net investment income (loss) $ 21,541 $ (5,389) =========== ============
41 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
-------------------------- NEW YORK TAX-FREE BOND FUND - ---------------------------------------------------------------------------------------------------------- FOR THE FOR THE YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, 2007 2006 - ---------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A SHARES: Proceeds from shares issued $ 7,409,045 $ 8,315,770 Dividends reinvested 1,075,105 1,100,289 Value of shares redeemed (8,495,178) (11,409,207) ----------- ------------ Class A Shares capital transactions (11,028) (1,993,148) ----------- ------------ - ---------------------------------------------------------------------------------------------------------- CLASS B SHARES: Proceeds from shares issued 141,720 724,932 Dividends reinvested 227,620 316,025 Value of shares redeemed (5,321,458) (3,683,709) ----------- ------------ Class B Shares capital transactions (4,952,118) (2,642,752) ----------- ------------ - ---------------------------------------------------------------------------------------------------------- CLASS C SHARES: Proceeds from shares issued 17,375 3,537 Dividends reinvested 14,700 24,112 Value of shares redeemed (456,298) (575,373) ----------- ------------ Class C Shares capital transactions (424,223) (547,724) ----------- ------------ - ---------------------------------------------------------------------------------------------------------- CLASS I SHARES: Proceeds from shares issued 7,546,678 1,615,824 Dividends reinvested 144,401 51,571 Value of shares redeemed (1,979,979) (5,049,507) ----------- ------------ Class I Shares capital transactions 5,711,100 (3,382,112) ----------- ------------ CHANGE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS $ 323,731 $ (8,565,736) =========== ============ - ---------------------------------------------------------------------------------------------------------- SHARE TRANSACTIONS: CLASS A SHARES: Issued 667,129 750,787 Reinvested 97,101 99,371 Redeemed (768,451) (1,031,733) ----------- ------------ Change in Class A Shares (4,221) (181,575) ----------- ------------ - ---------------------------------------------------------------------------------------------------------- CLASS B SHARES: Issued 12,842 65,596 Reinvested 20,557 28,569 Redeemed (481,133) (333,344) ----------- ------------ Change in Class B Shares (447,734) (239,179) ----------- ------------ - ---------------------------------------------------------------------------------------------------------- CLASS C SHARES: Issued 1,555 318 Reinvested 1,336 2,171 Redeemed (41,171) (51,822) ----------- ------------ Change in Class C Shares (38,280) (49,333) ----------- ------------ - ---------------------------------------------------------------------------------------------------------- CLASS I SHARES: Issued 681,820 145,686 Reinvested 13,084 4,650 Redeemed (179,624) (453,581) ----------- ------------ Change in Class I Shares 515,280 (303,245) ----------- ------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 42 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
----------------------------- ------------------------------ GROWTH FUND GROWTH AND INCOME FUND - --------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2007 2006 2007 2006 - --------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 25,419 $ (28,434) $ 132,052 $ (30,297) Net realized gains from investment transactions 2,943,213 3,103,028 4,390,113 3,592,585 Change in unrealized appreciation/ depreciation from investments and foreign currencies 11,547,046 (525,374) 7,796,554 2,346,553 ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 14,515,678 2,549,220 12,318,719 5,908,841 ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------------- DIVIDENDS: NET INVESTMENT INCOME: Class A Shares (9,938) -- (2,732) -- Class I Shares (37,788) -- (123,746) (25,548) NET REALIZED GAINS: Class A Shares (1,670,738) (357,021) -- -- Class B Shares (114,608) (22,246) -- -- Class C Shares (8,469) (5,635) -- -- Class I Shares (1,202,878) (219,862) -- -- ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS RESULTING FROM SHAREHOLDER DIVIDENDS (3,044,419) (604,764) (126,478) (25,548) ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS 12,667,797 164,248 (6,527,061) (11,382,983) ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS 24,139,056 2,108,704 5,665,180 (5,499,690) - -------------------------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 38,742,898 36,634,194 46,890,964 52,390,654 ------------- ------------- ------------- ------------- End of period $ 62,881,954 $ 38,742,898 $ 52,556,144 $ 46,890,964 ============= ============= ============= ============= Accumulated net investment income (loss) $ -- $ -- $ 5,574 $ -- ============= ============= ============= =============
43 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
----------------------------- ------------------------------ GROWTH FUND GROWTH AND INCOME FUND - --------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2007 2006 2007 2006 - --------------------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A SHARES: Proceeds from shares issued $ 8,418,213 $ 4,530,725 $ 395,680 $ 112,013 Dividends reinvested 1,668,294 354,352 2,678 -- Value of shares redeemed (7,016,198) (5,905,203) (160,534) (135,477) ------------- ------------- ------------- ------------- Class A Shares capital transactions 3,070,309 (1,020,126) 237,824 (23,464) ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------------- CLASS B SHARES: Proceeds from shares issued 61,125 233,048 255,981 398,426 Dividends reinvested 112,067 21,697 -- -- Value of shares redeemed (260,768) (181,902) (894,133) (543,576) ------------- ------------- ------------- ------------- Class B Shares capital transactions (87,576) 72,843 (638,152) (145,150) ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------------- CLASS C SHARES: Proceeds from shares issued 54 1,004 32,070 19,650 Dividends reinvested 8,413 5,623 -- -- Value of shares redeemed (197,005) (94,166) (17,991) (38,887) ------------- ------------- ------------- ------------- Class C Shares capital transactions (188,538) (87,539) 14,079 (19,237) ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------------- CLASS I SHARES: Proceeds from shares issued 13,457,915 4,081,210 4,767,318 4,960,323 Dividends reinvested 1,190,246 213,190 8,085 1,654 Value of shares redeemed (4,774,559) (3,095,330) (10,916,215) (16,157,109) ------------- ------------- ------------- ------------- Class I Shares capital transactions 9,873,602 1,199,070 (6,140,812) (11,195,132) ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS $ 12,667,797 $ 164,248 $ (6,527,061) $ (11,382,983) ============= ============= ============= ============= - --------------------------------------------------------------------------------------------------------------------- SHARE TRANSACTIONS: CLASS A SHARES: Issued 581,862 306,676 32,198 10,618 Reinvested 117,196 24,254 217 -- Redeemed (458,934) (400,591) (13,518) (12,870) ------------- ------------- ------------- ------------- Change in Class A Shares 240,124 (69,661) 18,897 (2,252) ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------------- CLASS B SHARES: Issued 4,219 16,381 22,376 38,279 Reinvested 8,307 1,549 -- -- Redeemed (18,265) (12,915) (74,961) (52,090) ------------- ------------- ------------- ------------- Change in Class B Shares (5,739) 5,015 (52,585) (13,811) ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------------- CLASS C SHARES: Issued 4 70 2,459 1,938 Reinvested 620 399 -- -- Redeemed (13,792) (6,716) (1,489) (3,743) ------------- ------------- ------------- ------------- Change in Class C Shares (13,168) (6,247) 970 (1,805) ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------------- CLASS I SHARES: Issued 901,736 276,028 403,086 465,603 Reinvested 83,266 14,592 654 160 Redeemed (313,430) (209,584) (901,425) (1,552,705) ------------- ------------- ------------- ------------- Change in Class I Shares 671,572 81,036 (497,685) (1,086,942) ------------- ------------- ------------- -------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 44 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
----------------------------- ------------------------------ INTERNATIONAL EQUITY FUND MID-CAP FUND - --------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2007 2006 2007 2006 - --------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 7,281,046 $ 4,854,991 $ (136,947) $ (4,898) Net realized gains (losses) from investment transactions 29,592,826 24,717,984 3,529,981 1,957,696 Change in unrealized appreciation/ depreciation from investments and foreign currencies 37,623,613 35,300,745 4,694,868 1,800,748 ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 74,497,485 64,873,720 8,087,902 3,753,546 ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------------- DIVIDENDS: NET INVESTMENT INCOME: Advisor Shares (7,179,951) (4,030,977) -- -- NET REALIZED GAINS: Class A Shares -- -- (258,695) (464,228) Class B Shares -- -- (522,684) (1,688,238) Class C Shares -- -- (6,914) (25,282) Advisor Shares (24,089,605) (6,656,885) -- -- Trust Shares -- -- (1,159,580) (4,269,467) ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS RESULTING FROM SHAREHOLDER DIVIDENDS (31,269,556) (10,687,862) (1,947,873) (6,447,215) ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS 58,740,573 36,418,624 (942,082) 1,132,987 ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS 101,968,502 90,604,482 5,197,947 (1,560,682) - --------------------------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 283,748,605 193,144,123 27,733,752 29,294,434 ------------- ------------- ------------- ------------- End of period $ 385,717,107 $ 283,748,605 $ 32,931,699 $ 27,733,752 ============= ============= ============= ============= Accumulated net investment income (loss) $ 5,187,203 $ 4,473,624 $ -- $ -- ============= ============= ============= =============
45 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
----------------------------- ------------------------------ INTERNATIONAL EQUITY FUND MID-CAP FUND - --------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2007 2006 2007 2006 - --------------------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A SHARES: Proceeds from shares issued $ -- $ -- $ 3,918,143 $ 1,084,845 Dividends reinvested -- -- 256,489 455,929 Value of shares redeemed -- -- (2,634,591) (371,463) ------------- ------------- ------------- ------------- Class A Shares capital transactions -- -- 1,540,041 1,169,311 ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------------- CLASS B SHARES: Proceeds from shares issued -- -- 235,774 437,454 Dividends reinvested -- -- 514,297 1,661,260 Value of shares redeemed -- -- (3,072,777) (1,317,254) ------------- ------------- ------------- ------------- Class B Shares capital transactions -- -- (2,322,706) 781,460 ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------------- CLASS C SHARES: Proceeds from shares issued -- -- 11,496 4,002 Dividends reinvested -- -- 6,914 25,282 Value of shares redeemed -- -- (49,388) (32,766) ------------- ------------- ------------- ------------- Class C Shares capital transactions -- -- (30,978) (3,482) ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------------- ADVISOR SHARES: Proceeds from shares issued 84,946,485 58,467,386 -- -- Dividends reinvested 22,576,471 7,069,762 -- -- Value of shares redeemed (48,782,383) (29,118,524) -- -- ------------- ------------- ------------- ------------- Advisor Shares capital transactions 58,740,573 36,418,624 -- -- ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------------- TRUST SHARES: Proceeds from shares issued -- -- 5,100,905 2,741,624 Dividends reinvested -- -- 581,066 1,566,969 Value of shares redeemed -- -- (5,810,410) (5,122,895) ------------- ------------- ------------- ------------- Trust Shares capital transactions -- -- (128,439) (814,302) ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS $ 58,740,573 $ 36,418,624 $ (942,082) $ 1,132,987 ============= ============= ============= ============= - --------------------------------------------------------------------------------------------------------------------- SHARE TRANSACTIONS: CLASS A SHARES: Issued -- -- 421,403 126,901 Reinvested -- -- 29,999 54,997 Redeemed -- -- (264,389) (41,265) ------------- ------------- ------------- ------------- Change in Class A Shares -- -- 187,013 140,633 ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------------- CLASS B SHARES: Issued -- -- 27,574 52,031 Reinvested -- -- 64,127 211,250 Redeemed -- -- (354,120) (158,683) ------------- ------------- ------------- ------------- Change in Class B Shares -- -- (262,419) 104,598 ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------------- CLASS C SHARES: Issued -- -- 1,231 462 Reinvested -- -- 855 3,184 Redeemed -- -- (5,550) (4,014) ------------- ------------- ------------- ------------- Change in Class C Shares -- -- (3,464) (368) ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------------- ADVISOR SHARES: Issued 3,750,486 2,922,941 -- -- Reinvested 1,070,482 390,377 -- -- Redeemed (2,166,669) (1,488,865) -- -- ------------- ------------- ------------- ------------- Change in Advisor Shares 2,654,299 1,824,453 -- -- ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------------- TRUST SHARES: Issued -- -- 522,495 305,751 Reinvested -- -- 66,712 186,322 Redeemed -- -- (600,816) (572,059) ------------- ------------- ------------- ------------- Change in Trust Shares -- -- (11,609) (79,986) ------------- ------------- ------------- -------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 46 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
------------------------------ ------------------------------- OPPORTUNITY FUND OPPORTUNITY FUND (ADVISOR) - --------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2007 2006 2007 2006 - --------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ (302,009) $ (342,572) $ (1,033,815) $ (960,327) Net realized gains (losses) from investment transactions 6,380,550 3,994,994 46,538,426 31,062,646 Change in unrealized appreciation/ depreciation from investments and foreign currencies (180,853) 1,342,022 1,172,860 2,986,040 ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 5,897,688 4,994,444 46,677,471 33,088,359 ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------- DIVIDENDS: NET REALIZED GAINS: Class A Shares (2,977,887) (711,320) -- -- Class B Shares (619,431) (150,813) -- -- Class C Shares (38,717) (10,198) -- -- Advisor Shares -- -- (29,938,816) (5,803,618) ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS RESULTING FROM SHAREHOLDER DIVIDENDS (3,636,035) (872,331) (29,938,816) (5,803,618) ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS (11,472,973) (2,312,697) (32,269,549) (12,679,647) ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS (9,211,320) 1,809,416 (15,530,894) 14,605,094 - --------------------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 29,530,079 27,720,663 192,123,772 177,518,678 ------------- ------------- ------------- ------------- End of period $ 20,318,759 $ 29,530,079 $ 176,592,878 $ 192,123,772 ============= ============= ============= ============= Accumulated net investment income (loss) $ -- $ -- $ -- $ -- ============= ============= ============= =============
47 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
------------------------------ ------------------------------- OPPORTUNITY FUND OPPORTUNITY FUND (ADVISOR) - --------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2007 2006 2007 2006 - --------------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A SHARES: Proceeds from shares issued $ 1,869,751 $ 3,495,715 $ -- $ -- Dividends reinvested 2,944,516 703,432 -- -- Value of shares redeemed (15,806,644) (6,056,187) -- -- ------------- ------------- ------------- ------------- Class A Shares capital transactions (10,992,377) (1,857,040) -- -- ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------- CLASS B SHARES: Proceeds from shares issued 187,082 253,088 -- -- Dividends reinvested 612,160 147,234 -- -- Value of shares redeemed (1,272,389) (805,798) -- -- ------------- ------------- ------------- ------------- Class B Shares capital transactions (473,147) (405,476) -- -- ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------- CLASS C SHARES: Proceeds from shares issued -- 2,010 -- -- Dividends reinvested 38,284 10,101 -- -- Value of shares redeemed (45,733) (62,292) -- -- ------------- ------------- ------------- ------------- Class C Shares capital transactions (7,449) (50,181) -- -- ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------- ADVISOR SHARES: Proceeds from shares issued -- -- 43,767,538 15,925,063 Dividends reinvested -- -- 12,322,958 4,071,601 Value of shares redeemed -- -- (88,360,045) (32,676,311) ------------- ------------- ------------- ------------- Advisor Shares capital transactions -- -- (32,269,549) (12,679,647) ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS $ (11,472,973) $ (2,312,697) $ (32,269,549) $ (12,679,647) ============= ============= ============= ============= - --------------------------------------------------------------------------------------------------------------- SHARE TRANSACTIONS: CLASS A SHARES: Issued 131,660 255,030 -- -- Reinvested 228,434 54,419 -- -- Redeemed (1,154,412) (443,567) -- -- ------------- ------------- ------------- ------------- Change in Class A Shares (794,318) (134,118) -- -- ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------- CLASS B SHARES: Issued 14,236 19,744 -- -- Reinvested 51,790 12,202 -- -- Redeemed (96,076) (63,328) -- -- ------------- ------------- ------------- ------------- Change in Class B Shares (30,050) (31,382) -- -- ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------- CLASS C SHARES: Issued -- 148 -- -- Reinvested 3,204 829 -- -- Redeemed (3,443) (4,807) -- -- ------------- ------------- ------------- ------------- Change in Class C Shares (239) (3,830) -- -- ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------- ADVISOR SHARES: Issued -- -- 2,507,207 962,234 Reinvested -- -- 822,079 262,486 Redeemed -- -- (5,122,696) (1,990,135) ------------- ------------- ------------- ------------- Change in Advisor Shares -- -- (1,793,410) (765,415) ------------- ------------- ------------- -------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 48 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
------------------------------ ------------------------------- OVERSEAS EQUITY FUND VALUE FUND - --------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2007 2006 2007 2006 - --------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 218,504 $ 288,789 $ 507,210 $ 336,981 Net realized gains (losses) from investment transactions 3,031,889 3,038,364 4,408,682 4,265,780 Change in unrealized appreciation/ depreciation from investments and foreign currencies 1,272,896 3,516,165 12,266 3,709,021 ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 4,523,289 6,843,318 4,928,158 8,311,782 ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------- DIVIDENDS: NET INVESTMENT INCOME: Class A Shares (474,482) (326,916) (213,752) (284,513) Class B Shares (48,615) (23,264) (1,937) (8,626) Class C Shares (2,106) (1,601) (113) (1,160) Class I Shares -- -- (240,365) (229,486) NET REALIZED GAINS: Class A Shares (2,532,363) (1,507,747) (2,315,837) (1,923,289) Class B Shares (377,205) (185,747) (187,844) (154,501) Class C Shares (18,983) (12,624) (14,732) (29,129) Class I Shares -- -- (1,767,244) (1,220,351) ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS RESULTING FROM SHAREHOLDER DIVIDENDS (3,453,754) (2,057,899) (4,741,824) (3,851,055) ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS (7,305,261) (1,874,669) 12,809,994 (155,652) ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS (6,235,726) 2,910,750 12,996,328 4,305,075 - -------------------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 26,158,489 23,247,739 44,818,987 40,513,912 ------------- ------------- ------------- ------------- End of period $ 19,922,763 $ 26,158,489 $ 57,815,315 $ 44,818,987 ============= ============= ============= ============= Accumulated net investment income (loss) $ 79,109 $ 294,103 $ 131,577 $ 94,489 ============= ============= ============= =============
49 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
------------------------------ ------------------------------- OVERSEAS EQUITY FUND VALUE FUND - --------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2007 2006 2007 2006 - --------------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A SHARES: Proceeds from shares issued $ 1,927,533 $ 3,898,094 $ 6,834,608 $ 3,803,760 Dividends reinvested 2,979,338 1,818,046 2,504,967 2,187,527 Value of shares redeemed (12,347,048) (7,848,982) (6,945,162) (7,101,747) ------------- ------------- ------------- ------------- Class A Shares capital transactions (7,440,177) (2,132,842) 2,394,413 (1,110,460) ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------- CLASS B SHARES: Proceeds from shares issued 299,816 426,797 81,743 108,230 Dividends reinvested 417,884 204,672 185,697 158,811 Value of shares redeemed (551,790) (338,565) (410,699) (281,760) ------------- ------------- ------------- ------------- Class B Shares capital transactions 165,910 292,904 (143,259) (14,719) ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------- CLASS C SHARES: Proceeds from shares issued 28,000 4,254 -- 1,051 Dividends reinvested 20,910 14,125 14,746 30,205 Value of shares redeemed (79,904) (53,110) (42,494) (287,134) ------------- ------------- ------------- ------------- Class C Shares capital transactions (30,994) (34,731) (27,748) (255,878) ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------- CLASS I SHARES: Proceeds from shares issued -- -- 13,481,595 2,983,526 Dividends reinvested -- -- 1,920,064 1,363,115 Value of shares redeemed -- -- (4,815,071) (3,121,236) ------------- ------------- ------------- ------------- Class I Shares capital transactions -- -- 10,586,588 1,225,405 ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS $ (7,305,261) $ (1,874,669) $ 12,809,994 $ (155,652) ============= ============= ============= ============= - --------------------------------------------------------------------------------------------------------------- SHARE TRANSACTIONS: CLASS A SHARES: Issued 102,880 228,774 433,376 245,996 Reinvested 170,248 116,471 160,308 149,309 Redeemed (695,566) (464,081) (424,086) (459,025) ------------- ------------- ------------- ------------- Change in Class A Shares (422,438) (118,836) 169,598 (63,720) ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------- CLASS B SHARES: Issued 16,784 25,997 5,175 7,211 Reinvested 25,023 13,637 12,417 11,270 Redeemed (31,048) (20,687) (26,217) (18,887) ------------- ------------- ------------- ------------- Change in Class B Shares 10,759 18,947 (8,625) (406) ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------- CLASS C SHARES: Issued 1,618 249 -- 69 Reinvested 1,221 922 979 2,131 Redeemed (4,376) (3,034) (2,761) (18,964) ------------- ------------- ------------- ------------- Change in Class C Shares (1,537) (1,863) (1,782) (16,764) ------------- ------------- ------------- ------------- - --------------------------------------------------------------------------------------------------------------- CLASS I SHARES: Issued -- -- 831,134 193,483 Reinvested -- -- 122,918 93,166 Redeemed -- -- (297,127) (201,427) ------------- ------------- ------------- ------------- Change in Class I Shares -- -- 656,925 85,222 ------------- ------------- ------------- -------------
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 50 - -------------------------------------------------------------------------------- HSBC ADVISOR FUNDS TRUST--CORE PLUS FIXED INCOME FUND (ADVISOR) - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS ----------------------------------------- ------------------------------------- NET REALIZED AND UNREALIZED NET NET ASSET GAINS REALIZED VALUE, NET (LOSSES) FROM TOTAL FROM NET GAINS FROM BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS - --------------------------------------------------------------------------------------------------------------------------- ADVISOR SHARES 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) Year Ended October 31, 2006 10.55 0.53 0.02 0.55 (0.51) (0.46) (0.97) Year Ended October 31, 2007 10.13 0.54 0.17 0.71 (0.53) -- (0.53) - --------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA ------------------------------------------------------------------- RATIO OF NET NET ASSETS RATIO OF NET INVESTMENT RATIO OF NET ASSET AT END OF EXPENSES TO INCOME TO EXPENSES TO PORTFOLIO VALUE, END TOTAL PERIOD AVERAGE NET AVERAGE AVERAGE NET TURNOVER OF PERIOD RETURN(b) (000'S) ASSETS(c) NET ASSETS(c) ASSETS(c)(d) RATE(e) - --------------------------------------------------------------------------------------------------------------------------- ADVISOR SHARES 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% Year Ended October 31, 2006 10.13 5.56% 80,976 0.56% 5.05% 0.80% 273.91% Year Ended October 31, 2007 10.31 7.20%(g)(h) 81,392 0.35%(g) 5.24%(g) 0.72% 252.26% - ---------------------------------------------------------------------------------------------------------------------------
(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 rate 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. (g) During the year ended October 31, 2007, HSBC reimbursed amounts to certain Funds related to past marketing arrangements. The corresponding impact to the net expense ratio, net income ratio, and the total return were 0.10% for the Advisor Shares. (h) During the year ended October 31, 2007, the respective Portfolio in which the Fund invests received monies related to certain nonrecurring litigation settlements. The corresponding impact to total return was 1.80%. 51 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- HSBC INVESTOR FUNDS--CORE PLUS FIXED INCOME FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS ------------------------------------------ ------------------------------------- NET REALIZED AND UNREALIZED NET NET ASSET GAINS REALIZED VALUE, NET (LOSSES) FROM TOTAL FROM NET GAINS FROM BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS - ---------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES 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) Year Ended October 31, 2006 10.30 0.49* 0.05 0.54 (0.49) (0.05) (0.54) Year Ended October 31, 2007 10.30 0.51* 0.19 0.70 (0.52) -- (0.52) - ---------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES 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) Year Ended October 31, 2006 10.31 0.41* 0.06 0.47 (0.42) (0.05) (0.47) Year Ended October 31, 2007 10.31 0.44* 0.18 0.62 (0.44) -- (0.44) - ---------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES 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) Year Ended October 31, 2006 10.30 0.41* 0.06 0.47 (0.42) (0.05) (0.47) Year Ended October 31, 2007 10.30 0.44* 0.16 0.60 (0.44) -- (0.44) - ---------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA ------------------------------------------------------------------ RATIO OF NET NET ASSETS RATIO OF NET INVESTMENT RATIO OF NET ASSET AT END OF EXPENSES TO INCOME TO EXPENSES TO PORTFOLIO VALUE, END TOTAL PERIOD AVERAGE NET AVERAGE AVERAGE NET TURNOVER OF PERIOD RETURN(b) (000'S) ASSETS(c) NET ASSETS(c) ASSETS(c)(d) RATE(e) - -------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES 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% Year Ended October 31, 2006 10.30 5.45% 12,248 0.79% 4.82% 1.43% 273.91% Year Ended October 31, 2007 10.48 6.90%(g)(h) 13,592 0.67%(g) 4.93%(g) 1.41% 252.26% - -------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES 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) 176.90% Year Ended October 31, 2006 10.31 4.67% 4,267 1.54% 4.06% 2.19% 273.91% Year Ended October 31, 2007 10.49 6.10%(g)(h) 3,792 1.42%(g) 4.18%(g) 2.12% 252.26% - -------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES 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) 176.90% Year Ended October 31, 2006 10.30 4.67% 236 1.54% 4.07% 2.19% 273.91% Year Ended October 31, 2007 10.46 5.92%(g)(h) 30 1.43%(g) 4.24%(g) 2.19% 252.26% - --------------------------------------------------------------------------------------------------------------------------
* 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 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 rate 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. (g) During the year ended October 31, 2007, HSBC reimbursed amounts to certain Funds related to past marketing arrangements. The corresponding impact to the net expense ratio, net income ratio, and the total returns were 0.03%, 0.03%, and 0.02% for Class A Shares, Class B Shares, and Class C Shares, respectively. (h) During the year ended October 31, 2007, the respective Portfolio in which the Fund invests received monies related to certain nonrecurring litigation settlements. The corresponding impact to the total return was 1.77%, 1.76% and 1.77% for Class A Shares, Class B Shares and Class C 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)
INVESTMENT ACTIVITIES DIVIDENDS ---------------------------------------- ------------------------------------- NET REALIZED AND UNREALIZED NET NET ASSET GAINS REALIZED VALUE, NET (LOSSES) FROM TOTAL 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, 2006(f) $ 10.00 0.69 0.12 0.81 (0.68) -- (0.68) Year Ended October 31, 2007 10.13 0.79* (0.09) 0.70 (0.79) (0.03) (0.82) - ------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period Ended October 31, 2006(g) $ 10.00 0.62 0.13 0.75 (0.61) -- (0.61) Year Ended October 31, 2007 10.14 0.71* (0.09) 0.62 (0.72) (0.03) (0.75) - ------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period Ended October 31, 2006(h) $ 10.01 0.58 0.15 0.73 (0.58) -- (0.58) Year Ended October 31, 2007 10.16 0.71* (0.09) 0.62 (0.72) (0.03) (0.75) - ------------------------------------------------------------------------------------------------------------------------------- CLASS I SHARES Period Ended October 31, 2006(i) $ 10.00 0.71 0.14 0.85 (0.71) -- (0.71) Year Ended October 31, 2007 10.14 0.81* (0.09) 0.72 (0.82) (0.03) (0.85) - ------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA ------------------------------------------------------------------- RATIO OF NET NET ASSETS RATIO OF NET INVESTMENT RATIO OF NET ASSET AT END OF EXPENSES TO INCOME TO EXPENSES TO PORTFOLIO VALUE, END TOTAL PERIOD AVERAGE NET AVERAGE AVERAGE NET TURNOVER OF PERIOD RETURN(b) (000'S) ASSETS(c) NET ASSETS(c) ASSETS(c)(d) RATE(e) - ------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES Period Ended October 31, 2006(f) $ 10.13 8.38% $ 4,742 0.80% 7.27% 3.53% 13.61% Year Ended October 31, 2007 10.01 7.13% 3,706 0.80% 7.71% 2.97% 30.77% - ------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period Ended October 31, 2006(g) $ 10.14 7.68% $ 2,106 1.55% 6.65% 4.26% 13.61% Year Ended October 31, 2007 10.01 6.22% 2,447 1.55% 6.95% 3.69% 30.77% - ------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period Ended October 31, 2006(h) $ 10.16 7.42% $ 241 1.55% 6.65% 4.29% 13.61% Year Ended October 31, 2007 10.03 6.20% 217 1.55% 6.90% 3.69% 30.77% - ------------------------------------------------------------------------------------------------------------------------------- CLASS I SHARES Period Ended October 31, 2006(i) $ 10.14 8.73% $ 2,568 0.55% 7.53% 3.29% 13.61% Year Ended October 31, 2007 10.01 7.29% 2,642 0.55% 7.95% 2.68% 30.77% - -------------------------------------------------------------------------------------------------------------------------------
* 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 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 rate 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 21, 2005. (h) Class C Shares commenced operations on December 14, 2005. (i) Class I Shares commenced operations on November 18, 2005. 53 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- HSBC INVESTOR FUNDS--INTERMEDIATE DURATION FIXED INCOME FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS ---------------------------------------- ------------------------------------- NET REALIZED AND UNREALIZED NET NET ASSET GAINS REALIZED VALUE, NET (LOSSES) FROM TOTAL FROM NET GAINS FROM BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS - -------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES 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) Year Ended October 31, 2006 9.67 0.45 0.05 0.50 (0.45) -- (0.45) Year Ended October 31, 2007 9.72 0.50* 0.33 0.83 (0.50) -- (0.50) - -------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES 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) Year Ended October 31, 2006 9.69 0.38 0.04 0.42 (0.38) -- (0.38) Year Ended October 31, 2007 9.73 0.43* 0.33 0.76 (0.42) -- (0.42) - -------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES 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) Year Ended October 31, 2006 9.68 0.38 0.05 0.43 (0.38) -- (0.38) Year Ended October 31, 2007 9.73 0.43* 0.33 0.76 (0.43) -- (0.43) - -------------------------------------------------------------------------------------------------------------------------- CLASS I SHARES 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) Year Ended October 31, 2006 9.68 0.47 0.05 0.52 (0.47) -- (0.47) Year Ended October 31, 2007 9.73 0.53* 0.32 0.85 (0.52) -- (0.52) - -------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA --------------------------------------------------------------------- RATIO OF NET NET ASSETS RATIO OF NET INVESTMENT RATIO OF NET ASSET AT END OF EXPENSES TO INCOME TO EXPENSES TO PORTFOLIO VALUE, END TOTAL PERIOD AVERAGE NET AVERAGE AVERAGE NET TURNOVER OF PERIOD RETURN(b) (000'S) ASSETS(c) NET ASSETS(c) ASSETS(c)(d) RATE(e) - ------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES 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%(f) 1,055 1.01%(f) 3.37%(f) 1.10%(f) 107.26% Year Ended October 31, 2006 9.72 5.30% 976 0.80% 4.61% 1.65% 236.51% Year Ended October 31, 2007 10.05 8.67%(g)(h) 803 0.53%(g) 5.02%(g) 1.67% 219.76% - ------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES 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)%(f) 4,852 1.76%(f) 2.60%(f) 1.85%(f) 107.26% Year Ended October 31, 2006 9.73 4.40% 3,738 1.56% 3.84% 2.40% 236.51% Year Ended October 31, 2007 10.07 7.96%(g)(h) 2,982 1.28%(g) 4.26%(g) 2.41% 219.76% - ------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES 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)%(f) 527 1.77%(f) 2.60%(f) 1.86%(f) 107.26% Year Ended October 31, 2006 9.73 4.51% 503 1.55% 3.86% 2.40% 236.51% Year Ended October 31, 2007 10.06 7.86%(g)(h) 305 1.27%(g) 4.27%(g) 2.43% 219.76% - ------------------------------------------------------------------------------------------------------------------------------- CLASS I SHARES 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%(f) 24,744(f) 0.76%(f) 3.60%(f) 0.85%(f) 107.26% Year Ended October 31, 2006 9.73 5.56% 13,000 0.58% 4.77% 1.38% 236.51% Year Ended October 31, 2007 10.06 8.93%(g)(h) 9,955 0.28%(g) 5.25%(g) 1.42% 219.76% - -------------------------------------------------------------------------------------------------------------------------------
* 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 rate 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 0.09%, 0.09%, 0.09% and 0.08% for Class A Shares, Class B Shares, Class C Shares and Class I Shares, respectively. (g) During the year ended October 31, 2007, HSBC reimbursed amounts to certain Funds related to past marketing arrangements. The corresponding impact to the net expense ratio, net income ratio, and the total returns were 0.12%, 0.12%, 0.13%, and 0.12% for Class A Shares, Class B Shares, Class C Shares and Class I Shares, respectively. (h) During the year ended October 31, 2007, the respective Portfolio in which the Fund invests received monies related to certain nonrecurring litigation settlements. The corresponding impact to the total return was 3.75%, 3.74%, 3.74% and 3.75% 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--NEW YORK TAX-FREE BOND FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
INVESTMENT ACTIVITIES DIVIDENDS ---------------------------------------- ------------------------------------- NET REALIZED AND UNREALIZED NET NET ASSET GAINS REALIZED VALUE, NET (LOSSES) FROM TOTAL FROM NET GAINS FROM BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS - -------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES 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) Year Ended October 31, 2006 11.08 0.37 0.12 0.49 (0.37) (0.02) (0.39) Year Ended October 31, 2007 11.18 0.39* (0.14) 0.25 (0.38) -- (0.38) - -------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES 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) Year Ended October 31, 2006 11.07 0.28 0.12 0.40 (0.28) (0.02) (0.30) Year Ended October 31, 2007 11.17 0.30* (0.13) 0.17 (0.30) -- (0.30) - -------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES 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) Year Ended October 31, 2006 11.11 0.28 0.12 0.40 (0.28) (0.02) (0.30) Year Ended October 31, 2007 11.21 0.31* (0.14) 0.17 (0.30) -- (0.30) - -------------------------------------------------------------------------------------------------------------------------------- CLASS I SHARES 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) Year Ended October 31, 2006 11.08 0.39 0.12 0.51 (0.39) (0.02) (0.41) Year Ended October 31, 2007 11.18 0.41* (0.13) 0.28 (0.41) -- (0.41) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA -------------------------------------------------------------------- RATIO OF NET NET ASSETS RATIO OF NET INVESTMENT RATIO OF NET ASSET AT END OF EXPENSES TO INCOME TO EXPENSES TO PORTFOLIO VALUE, END TOTAL PERIOD AVERAGE NET AVERAGE AVERAGE NET TURNOVER OF PERIOD RETURN(a) (000'S) ASSETS(b) NET ASSETS(b) ASSETS(b)(c) RATE(d) - ---------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES 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% Year Ended October 31, 2006 11.18 4.45% 32,727 0.93% 3.30% 0.93% 12.69% Year Ended October 31, 2007 11.05 2.34%(f) 32,305 0.86%(f) 3.50%(f) 0.89% 17.03% - ---------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES 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% Year Ended October 31, 2006 11.17 3.67% 13,735 1.68% 2.56% 1.68% 12.69% Year Ended October 31, 2007 11.04 1.58%(f) 8,635 1.61%(f) 2.75%(f) 1.64% 17.03% - ---------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES 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% Year Ended October 31, 2006 11.21 3.66% 1,246 1.68% 2.55% 1.68% 12.69% Year Ended October 31, 2007 11.08 1.57%(f) 807 1.60%(f) 2.75%(f) 1.63% 17.03% - ---------------------------------------------------------------------------------------------------------------------------------- CLASS I SHARES 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% Year Ended October 31, 2006 11.18 4.71% 13,746 0.68% 3.55% 0.68% 12.69% Year Ended October 31, 2007 11.05 2.59%(f) 19,282 0.60%(f) 3.74%(f) 0.63% 17.03% - ----------------------------------------------------------------------------------------------------------------------------------
* 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 as indicated. (d) Portfolio turnover rate 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. (f) During the year ended October 31, 2007, HSBC reimbursed amounts to certain Funds related to past marketing arrangements. The corresponding impact to the net expense ratio, net income ratio, and the total returns were 0.03%, 0.04%, 0.03%, and 0.03% for Class A Shares, Class B Shares, Class C Shares and Class I Shares, respectively. 55 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- HSBC INVESTOR FUNDS--GROWTH FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS ----------------------------------------- ------------------------------------- NET REALIZED AND UNREALIZED NET NET ASSET GAINS REALIZED VALUE, NET (LOSSES) FROM TOTAL 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, 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) Year Ended October 31, 2006 14.12 (0.02)* 0.99 0.97 -- (0.23) (0.23) Year Ended October 31, 2007 14.86 --*(i) 4.23 4.23 (0.01) (1.13) (1.14) - --------------------------------------------------------------------------------------------------------------------------------- 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 -- -- -- Year Ended October 31, 2006 13.57 (0.12)* 0.95 0.83 -- (0.23) (0.23) Year Ended October 31, 2007 14.17 (0.11)* 3.99 3.88 -- (1.13) (1.13) - --------------------------------------------------------------------------------------------------------------------------------- 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 -- -- -- Year Ended October 31, 2006 13.64 (0.13)* 0.99 0.83 -- (0.23) (0.23) Year Ended October 31, 2007 14.24 (0.11)* 4.02 3.91 -- (1.13) (1.13) - --------------------------------------------------------------------------------------------------------------------------------- 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) Year Ended October 31, 2006 14.12 0.02* 0.99 1.01 -- (0.23) (0.23) Year Ended October 31, 2007 14.90 0.03* 4.24 4.27 (0.02) (1.13) (1.15) - --------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA -------------------------------------------------------------------- RATIO OF NET NET ASSETS RATIO OF NET INVESTMENT RATIO OF NET ASSET AT END OF EXPENSES TO INCOME (LOSS) EXPENSES TO PORTFOLIO VALUE, END TOTAL PERIOD AVERAGE NET TO AVERAGE AVERAGE NET TURNOVER OF PERIOD RETURN(b) (000'S) ASSETS(c) NET ASSETS(c) ASSETS(c)(d) RATE(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% Year Ended October 31, 2006 14.86 6.92% 21,985 1.20% (0.14)% 1.44% 75.06% Year Ended October 31, 2007 17.95 30.45%(h) 30,858 1.11%(h) (0.03)%(h) 1.22% 57.04% - ---------------------------------------------------------------------------------------------------------------------------------- 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% Year Ended October 31, 2006 14.17 6.16% 1,446 1.95% (0.88)% 2.19% 75.06% Year Ended October 31, 2007 16.92 29.43%(h) 1,630 1.86%(h) (0.78)%(h) 1.98% 57.04% - ---------------------------------------------------------------------------------------------------------------------------------- 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% Year Ended October 31, 2006 14.24 6.13% 270 1.95% (0.89)% 2.18% 75.06% Year Ended October 31, 2007 17.02 29.49%(h) 98 1.86%(h) (0.79)%(h) 1.96% 57.04% - ---------------------------------------------------------------------------------------------------------------------------------- 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% Year Ended October 31, 2006 14.90 7.21% 15,042 0.95% 0.12% 1.19% 75.06% Year Ended October 31, 2007 18.02 30.73%(h) 30,295 0.87%(h) 0.20%(h) 0.96% 57.04% - ----------------------------------------------------------------------------------------------------------------------------------
* 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 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 rate 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 10, 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. (h) During the year ended October 31, 2007, HSBC reimbursed amounts to certain Funds related to past marketing arrangements. The corresponding impact to the net expense ratio, net income ratio, and the total returns 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. (i) Represents less than $0.005. SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 56 - -------------------------------------------------------------------------------- HSBC INVESTOR FUNDS--GROWTH AND INCOME FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
INVESTMENT ACTIVITIES DIVIDENDS ---------------------------------------- ---------------------- NET REALIZED AND UNREALIZED NET ASSET GAINS VALUE, NET (LOSSES) FROM TOTAL FROM NET BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME DIVIDENDS - ----------------------------------------------------------------------------------------------------------------- CLASS A SHARES 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) Year Ended October 31, 2006 9.75 (0.02)* 1.25 1.23 -- -- Year Ended October 31, 2007 10.98 0.01* 3.07 3.08 (0.02) (0.02) - ----------------------------------------------------------------------------------------------------------------- CLASS B SHARES 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) Year Ended October 31, 2006 9.61 (0.10)* 1.23 1.13 -- -- Year Ended October 31, 2007 10.74 (0.07)* 2.99 2.92 -- -- - ----------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period Ended October 31, 2004(f) $ 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) Year Ended October 31, 2006 9.70 (0.09) 1.22 1.13 -- -- Year Ended October 31, 2007 10.83 (0.08)* 3.02 2.94 -- -- - ----------------------------------------------------------------------------------------------------------------- CLASS I SHARES 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) Year Ended October 31, 2006 9.75 0.01* 1.25 1.26 (0.01) (0.01) Year Ended October 31, 2007 11.00 0.05* 3.08 3.13 (0.04) (0.04) - ----------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA -------------------------------------------------------------------- RATIO OF NET NET ASSETS RATIO OF NET INVESTMENT RATIO OF NET ASSET AT END OF EXPENSES TO INCOME (LOSS) EXPENSES TO PORTFOLIO VALUE, END TOTAL PERIOD AVERAGE NET TO AVERAGE AVERAGE NET TURNOVER OF PERIOD RETURN(a) (000'S) ASSETS(b) NET ASSETS(b) ASSETS(b)(c) RATE(d) - ----------------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES 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%(e) 1,260 1.11%(e) 0.73%(e) 1.16% 106.49% Year Ended October 31, 2006 10.98 12.62% 1,394 1.26% (0.22)% 1.47% 34.85% Year Ended October 31, 2007 14.04 28.09%(g) 2,048 1.08%(g) 0.10%(g) 1.32% 26.76% - ----------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES 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%(e) 4,194 1.87%(e) (0.10)%(e) 1.93% 106.49% Year Ended October 31, 2006 10.74 11.76% 4,537 2.01% (0.97)% 2.22% 34.85% Year Ended October 31, 2007 13.66 27.19%(g) 5,051 1.83%(g) (0.62)%(g) 2.07% 26.76% - ----------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period Ended October 31, 2004(f) $ 8.73 3.57% $ 41 1.77% (0.28)% 1.77% 73.68% Year Ended October 31, 2005 9.70 11.59%(e) 49 1.88%(e) (0.13)%(e) 1.93% 106.49% Year Ended October 31, 2006 10.83 11.65% 35 2.01% (0.90)% 2.22% 34.85% Year Ended October 31, 2007 13.77 27.15%(g) 58 1.82%(g) (0.64)%(g) 2.07% 26.76% - ----------------------------------------------------------------------------------------------------------------------------------- CLASS I SHARES 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%(e) 46,888 0.80%(e) 1.20%(e) 0.86% 106.49% Year Ended October 31, 2006 11.00 12.88% 40,925 1.01% 0.04% 1.22% 34.85% Year Ended October 31, 2007 14.09 28.46%(g) 45,399 0.83%(g) 0.38%(g) 1.07% 26.76% - -----------------------------------------------------------------------------------------------------------------------------------
> 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 rate 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 0.02%, 0.02%, 0.02% and 0.03% for Class A Shares, Class B Shares, Class C Shares and Class I Shares, respectively. (f) Class C shares commenced operations on November 3, 2003. (g) During the year ended October 31, 2007, HSBC reimbursed amounts to certain Funds related to past marketing arrangements. The corresponding impact to the net expense ratio, net income ratio, and the total returns were 0.12%, 0.12%, 0.13%, and 0.12% for Class A Shares, Class B Shares, Class C Shares and Class I Shares, respectively. 57 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- HSBC ADVISOR FUNDS TRUST--INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS ---------------------------------------- ------------------------------------- NET REALIZED AND UNREALIZED NET GAINS REALIZED (LOSSES) FROM GAINS FROM NET ASSET INVESTMENT INVESTMENT VALUE, NET AND FOREIGN TOTAL 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, 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) Year Ended October 31, 2006 17.54 0.38 5.14 5.52 (0.36) (0.60) (0.96) Year Ended October 31, 2007 22.10 0.50 4.69 5.19 (0.55) (1.84) (2.39) - -------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA ------------------------------------------------------------------ RATIO OF NET NET ASSETS RATIO OF NET INVESTMENT RATIO OF NET ASSET AT END OF EXPENSES TO INCOME TO EXPENSES TO PORTFOLIO VALUE, END TOTAL PERIOD AVERAGE NET AVERAGE AVERAGE NET TURNOVER OF PERIOD RETURN(b) (000'S) ASSETS NET ASSETS ASSETS(c) RATE(d) - ----------------------------------------------------------------------------------------------------------------------------- ADVISOR SHARES 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% Year Ended October 31, 2006 22.10 32.70% 283,749 0.97% 2.02% 0.97% 33.39% Year Ended October 31, 2007 24.90 25.41%(e)(f) 385,717 0.87%(e) 2.15%(e) 0.89% 26.08% - -----------------------------------------------------------------------------------------------------------------------------
(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) Total return calculations do not include any sales or redemption charges. (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 rate is calculated on the basis of the respective Portfolio in which the Fund invests all of its investable assets. (e) During the year ended October 31, 2007, HSBC reimbursed amounts to certain Funds related to past marketing arrangements. The corresponding impact to the net expense ratio, net income ratio, and the total return were 0.02% for the Advisor Shares. (f) During the year ended October 31, 2007, the Fund received monies related to certain nonrecurring litigation settlements. The corresponding impact to the total return was 0.18%. SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 58 - -------------------------------------------------------------------------------- HSBC INVESTOR FUNDS--MID-CAP FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
INVESTMENT ACTIVITIES DIVIDENDS ---------------------------------------- ------------------------ NET REALIZED AND UNREALIZED NET NET ASSET GAINS REALIZED VALUE, NET (LOSSES) FROM TOTAL FROM GAINS FROM BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL OF PERIOD INCOME TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS - ------------------------------------------------------------------------------------------------------------- CLASS A SHARES 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 -- -- Year Ended October 31, 2006 9.87 (0.00)> 1.19 1.19 (2.18) (2.18) Year Ended October 31, 2007 8.88 (0.04)* 2.59 2.55 (0.62) (0.62) - ------------------------------------------------------------------------------------------------------------- CLASS B SHARES 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 -- -- Year Ended October 31, 2006 9.48 (0.06)* 1.13 1.07 (2.18) (2.18) Year Ended October 31, 2007 8.37 (0.10)* 2.42 2.32 (0.62) (0.62) - ------------------------------------------------------------------------------------------------------------- CLASS C SHARES 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 -- -- Year Ended October 31, 2006 9.54 (0.06)* 1.15 1.09 (2.18) (2.18) Year Ended October 31, 2007 8.45 (0.10)* 2.43 2.33 (0.62) (0.62) - ------------------------------------------------------------------------------------------------------------- TRUST SHARES 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 Year Ended October 31, 2006 9.98 0.03* 1.20 1.23 (2.18) (2.18) Year Ended October 31, 2007 9.03 (0.02)* 2.64 2.62 (0.62) (0.62) - ------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA -------------------------------------------------------------------- RATIO OF NET NET ASSETS RATIO OF NET INVESTMENT RATIO OF NET ASSET AT END OF EXPENSES TO INCOME (LOSS) EXPENSES TO PORTFOLIO VALUE, END TOTAL PERIOD AVERAGE NET TO AVERAGE AVERAGE NET TURNOVER OF PERIOD RETURN(a) (000'S) ASSETS(b) NET ASSETS(b) ASSETS(b)(c) RATE(d) - ---------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES 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% Year Ended October 31, 2006 8.88 13.66% 3,185 1.48% (0.01)% 1.85% 53.16% Year Ended October 31, 2007 10.81 30.51%(f) 5,897 1.19%(f) (0.45)%(f) 1.70% 66.16% - ---------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES 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% Year Ended October 31, 2006 8.37 12.78% 7,425 2.25% (0.72)% 2.60% 53.16% Year Ended October 31, 2007 10.07 29.56%(f) 6,285 1.92%(f) (1.15)%(f) 2.48% 66.16% - ---------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES 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% Year Ended October 31, 2006 8.45 12.93% 95 2.25% (0.72)% 2.60% 53.16% Year Ended October 31, 2007 10.16 29.40%(f) 79 1.93%(f) (1.16)%(f) 2.46% 66.16% - ---------------------------------------------------------------------------------------------------------------------------- TRUST SHARES 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% Year Ended October 31, 2006 9.03 13.97% 17,029 1.26% 0.29% 1.60% 53.16% Year Ended October 31, 2007 11.03 30.80%(f) 20,671 0.93%(f) (0.19)%(f) 1.47% 66.16% - ----------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding. > Less than $0.005 per share. (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 rate 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. (f) During the year ended October 31, 2007, HSBC reimbursed amounts to certain Funds related to past marketing arrangements. The corresponding impact to the net expense ratio, net income ratio, and the total returns were 0.16%, 0.18%, 0.17%, and 0.17% for Class A Shares, Class B Shares, Class C Shares and Class Y Shares, respectively. 59 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- HSBC INVESTOR FUNDS--OPPORTUNITY FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS ---------------------------------------- ------------------------ NET REALIZED AND UNREALIZED NET NET ASSET GAINS REALIZED VALUE, NET (LOSSES) FROM TOTAL FROM GAINS FROM BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL OF PERIOD INCOME TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS - ------------------------------------------------------------------------------------------------------------- CLASS A SHARES 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 -- -- Year Ended October 31, 2006 12.39 (0.14)* 2.43 2.29 (0.39) (0.39) Year Ended October 31, 2007 14.29 (0.16)* 4.01 3.85 (1.73) (1.73) - ------------------------------------------------------------------------------------------------------------- CLASS B SHARES 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 -- -- Year Ended October 31, 2006 11.60 (0.23)* 2.27 2.04 (0.39) (0.39) Year Ended October 31, 2007 13.25 (0.25)* 3.67 3.42 (1.73) (1.73) - ------------------------------------------------------------------------------------------------------------- CLASS C SHARES 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 -- -- Year Ended October 31, 2006 11.71 (0.23)* 2.29 2.06 (0.39) (0.39) Year Ended October 31, 2007 13.38 (0.26)* 3.72 3.46 (1.73) (1.73) - ------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA -------------------------------------------------------------------- RATIO OF NET NET ASSETS RATIO OF NET INVESTMENT RATIO OF NET ASSET AT END OF EXPENSES TO INCOME (LOSS) EXPENSES TO PORTFOLIO VALUE, END TOTAL PERIOD AVERAGE NET TO AVERAGE AVERAGE NET TURNOVER OF PERIOD RETURN(b) (000'S) ASSETS(c) NET ASSETS(c) ASSETS(c)(d) RATE(e) - ---------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES 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% Year Ended October 31, 2006 14.29 18.81% 24,463 1.55% (1.04)% 1.70% 60.83% Year Ended October 31, 2007 16.41 30.28%(g) 15,057 1.52%(g) (1.13)%(g) 1.77% 69.41% - ---------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES 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% Year Ended October 31, 2006 13.25 17.91% 4,768 2.30% (1.79)% 2.45% 60.83% Year Ended October 31, 2007 14.94 29.30%(g) 4,928 2.26%(g) (1.91)%(g) 2.52% 69.41% - ---------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES 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% Year Ended October 31, 2006 13.38 17.92% 299 2.30% (1.78)% 2.45% 60.83% Year Ended October 31, 2007 15.11 29.32%(g) 334 2.27%(g) (1.91)%(g) 2.50% 69.41% - ----------------------------------------------------------------------------------------------------------------------------
* 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 Opportunity 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 rate 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. (g) During the year ended October 31, 2007, HSBC reimbursed amounts to certain Funds related to past marketing arrangements. The corresponding impact to the net expense ratio, net income ratio, and the total returns were 0.03%, 0.04%, and 0.03% for Class A Shares, Class B Shares, and Class C Shares, respectively. SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 60 - -------------------------------------------------------------------------------- HSBC ADVISOR FUNDS TRUST--OPPORTUNITY FUND (ADVISOR) - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS ----------------------------------------- ---------------------------- NET REALIZED AND UNREALIZED NET GAINS REALIZED (LOSSES) FROM GAINS FROM NET ASSET INVESTMENT INVESTMENT VALUE, NET AND FOREIGN TOTAL FROM AND FOREIGN BEGINNING INVESTMENT CURRENCY INVESTMENT CURRENCY TOTAL OF PERIOD INCOME TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS - ---------------------------------------------------------------------------------------------------------------- ADVISOR SHARES 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 -- -- Year Ended October 31, 2006 14.94 (0.09) 2.93 2.84 (0.50) (0.50) Year Ended October 31, 2007 17.28 (0.11) 4.48 4.37 (2.71) (2.71) - ---------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA ------------------------------------------------------------------ RATIO OF NET NET ASSETS RATIO OF NET INVESTMENT RATIO OF NET ASSET AT END OF EXPENSES TO INCOME (LOSS) EXPENSES TO PORTFOLIO VALUE, END TOTAL PERIOD AVERAGE NET TO AVERAGE AVERAGE NET TURNOVER OF PERIOD RETURN(b) (000'S) ASSETS(c) NET ASSETS(c) ASSETS(c)(d) RATE(e) - --------------------------------------------------------------------------------------------------------------------------- ADVISOR SHARES 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% Year Ended October 31, 2006 17.28 19.40% 192,124 1.03% (0.51)% 1.03% 60.83% Year Ended October 31, 2007 18.94 29.42%(g) 176,593 0.96%(g) (0.60)%(g) 1.03% 69.41% - ---------------------------------------------------------------------------------------------------------------------------
(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 Opportunity 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 rate 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. (g) During the year ended October 31, 2007, HSBC reimbursed amounts to certain Funds related to past marketing arrangements. The corresponding impact to the net expense ratio, net income ratio, and the total return were 0.07% for the Advisor Shares. 61 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- HSBC INVESTOR FUNDS--OVERSEAS EQUITY FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS ----------------------------------------- ------------------------------------- NET REALIZED AND UNREALIZED NET GAINS REALIZED (LOSSES) FROM GAINS FROM NET ASSET INVESTMENT INVESTMENT VALUE, NET AND FOREIGN TOTAL FROM NET AND FOREIGN BEGINNING INVESTMENT CURRENCY INVESTMENT INVESTMENT CURRENCY TOTAL OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS - ---------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES 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) Year Ended October 31, 2006 15.59 0.22 4.45 4.67 (0.25) (1.16) (1.41) Year Ended October 31, 2007 18.85 0.22* 3.92 4.14 (0.40) (2.11) (2.51) - ---------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES 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) Year Ended October 31, 2006 14.95 0.09 4.26 4.35 (0.14) (1.16) (1.30) Year Ended October 31, 2007 18.00 0.10* 3.70 3.80 (0.27) (2.11) (2.38) - ---------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES 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) Year Ended October 31, 2006 15.23 0.11 4.33 4.44 (0.14) (1.16) (1.30) Year Ended October 31, 2007 18.37 0.11* 3.80 3.91 (0.23) (2.11) (2.34) - ---------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA ------------------------------------------------------------------ RATIO OF NET NET ASSETS RATIO OF NET INVESTMENT RATIO OF NET ASSET AT END OF EXPENSES TO INCOME (LOSS) EXPENSES TO PORTFOLIO VALUE, END TOTAL PERIOD AVERAGE NET TO AVERAGE AVERAGE NET TURNOVER OF PERIOD RETURN(b) (000's) ASSETS(c) NET ASSETS(c) ASSETS(c)(d) RATE(e) - --------------------------------------------------------------------------------------------------------------------------- CLASS A SHARES 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% Year Ended October 31, 2006 18.85 31.85% 22,761 1.67% 1.24% 1.67% 33.39% Year Ended October 31, 2007 20.48 24.19%(f) 16,078 1.62%(f) 1.15%(f) 1.64% 26.08% - --------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES 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% Year Ended October 31, 2006 18.00 30.87% 3,234 2.42% 0.58% 2.42% 33.39% Year Ended October 31, 2007 19.42 23.26%(f) 3,698 2.37%(f) 0.59%(f) 2.40% 26.08% - --------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES 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% Year Ended October 31, 2006 18.37 30.92% 163 2.41% 0.58% 2.41% 33.39% Year Ended October 31, 2007 19.94 23.39%(f) 147 2.30%(f) 0.59%(f) 2.32% 26.08% - ---------------------------------------------------------------------------------------------------------------------------
* 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 rate 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, 2007, HSBC reimbursed amounts to certain Funds related to past marketing arrangements. The corresponding impact to the net expense ratio, net income ratio, and the total returns were 0.02%, 0.03%, and 0.02% for Class A Shares, Class B Shares, and Class C Shares, respectively. SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR FAMILY OF FUNDS 62 - -------------------------------------------------------------------------------- HSBC INVESTOR FUNDS--VALUE FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (a)
INVESTMENT ACTIVITIES DIVIDENDS ----------------------------------------- ------------------------------------- NET REALIZED AND UNREALIZED NET NET ASSET GAINS REALIZED VALUE, NET (LOSSES) FROM TOTAL 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, 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) Year Ended October 31, 2006 15.13 0.12* 2.95 3.07 (0.19) (1.29) (1.48) Year Ended October 31, 2007 16.72 0.14* 1.38 1.52 (0.13) (1.57) (1.70) - -------------------------------------------------------------------------------------------------------------------------------- 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) Year Ended October 31, 2006 14.60 --* 2.84 2.84 (0.07) (1.29) (1.36) Year Ended October 31, 2007 16.08 0.02* 1.32 1.34 (0.02) (1.57) (1.59) - -------------------------------------------------------------------------------------------------------------------------------- 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) Year Ended October 31, 2006 14.67 --* 2.85 2.85 (0.05) (1.29) (1.34) Year Ended October 31, 2007 16.18 0.02* 1.32 1.34 (0.01) (1.57) (1.58) - -------------------------------------------------------------------------------------------------------------------------------- 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) Year Ended October 31, 2006 15.13 0.15* 2.94 3.09 (0.23) (1.29) (1.52) Year Ended October 31, 2007 16.70 0.18* 1.38 1.56 (0.17) (1.57) (1.74) - -------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA ---------------------------------------------------------------------- RATIO OF NET NET ASSETS RATIO OF NET INVESTMENT RATIO OF NET ASSET AT END OF EXPENSES TO INCOME (LOSS) EXPENSES TO PORTFOLIO VALUE, END TOTAL PERIOD AVERAGE NET TO AVERAGE AVERAGE NET TURNOVER OF PERIOD RETURN(b) (000'S) ASSETS(c) NET ASSETS(c) ASSETS(c)(d) RATE(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% Year Ended October 31, 2006 16.72 21.70% 24,688 1.20% 0.74% 1.43% 20.63% Year Ended October 31, 2007 16.54 9.77%(h) 27,225 1.11%(h) 0.84%(h) 1.25% 18.67% - --------------------------------------------------------------------------------------------------------------------------------- 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% Year Ended October 31, 2006 16.08 20.78% 1,939 1.95% (0.01)% 2.18% 20.63% Year Ended October 31, 2007 15.83 8.92%(h) 1,772 1.87%(h) 0.10%(h) 2.00% 18.67% - --------------------------------------------------------------------------------------------------------------------------------- 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% Year Ended October 31, 2006 16.18 20.72% 157 1.95% 0.01% 2.17% 20.63% Year Ended October 31, 2007 15.94 8.95%(h) 126 1.87%(h) 0.11%(h) 1.99% 18.67% - --------------------------------------------------------------------------------------------------------------------------------- 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% Year Ended October 31, 2006 16.70 21.90% 18,036 0.95% 0.99% 1.18% 20.63% Year Ended October 31, 2007 16.52 10.04%(h) 28,692 0.87%(h) 1.07%(h) 0.99% 18.67% - ---------------------------------------------------------------------------------------------------------------------------------
* 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 rate 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 10, 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. (h) During the year ended October 31, 2007, HSBC reimbursed amounts to certain Funds related to past marketing arrangements. The corresponding impact to the net expense ratio, net income ratio, and the total returns were 0.09%, 0.08%, 0.08%, and 0.08% for Class A Shares, Class B Shares, Class C Shares and Class I Shares, respectively. 63 HSBC INVESTOR FAMILY OF FUNDS SEE NOTES TO FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 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 October 31, 2007, the Trust is comprised of 20 separate operational funds and the Advisor Trust is comprised of 3 separate operational 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"):
FUND SHORT NAME TRUST ---- ---------- ----- HSBC Investor Core Plus Fixed Income Fund Core Plus Fixed Income Advisor Trust (Advisor) Fund (Advisor) HSBC Investor Core Plus Fixed Income Fund Core Plus Fixed Income Fund Trust HSBC Investor High Yield Fixed Income Fund High Yield Fixed Trust Income Fund HSBC Investor Intermediate Duration Fixed Intermediate Duration Income Fund Fixed Income Fund Trust HSBC Investor New York Tax-Free Bond Fund New York Tax-Free Trust Bond Fund HSBC Investor Growth Fund Growth Fund Trust HSBC Investor Growth and Income Fund Growth and Income Fund Trust HSBC Investor International Equity Fund International Equity Fund Advisor Trust HSBC Investor Mid-Cap Fund Mid-Cap Fund Trust HSBC Investor Opportunity Fund Opportunity Fund Trust HSBC Investor Opportunity Fund (Advisor) Opportunity Fund (Advisor) Advisor Trust HSBC Investor Overseas Equity Fund Overseas Fund Trust HSBC Investor Value Fund Value Fund Trust
Financial statements for all other funds of the HSBC Investor Family of Funds are published separately. The Core Plus Fixed Income Fund (Advisor), Core Plus Fixed Income Fund, High Yield Fixed Income Fund, Intermediate Duration Fixed Income Fund, Growth Fund, International Equity Fund, Opportunity Fund, Opportunity Fund (Advisor), Overseas Fund, and the Value 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).
PROPORTIONATE INTEREST ON FUND RESPECTIVE PORTFOLIO OCTOBER 31, 2007 - ---- -------------------- ---------------- Core Plus Fixed Income Fund HSBC Investor Core Plus Fixed Income Portfolio 68.1% Fund (Advisor) Core Plus Fixed Income Fund HSBC Investor Core Plus Fixed Income Portfolio 14.6% High Yield Fixed Income Fund HSBC Investor High Yield Fixed Income Portfolio 62.1% Intermediate Duration HSBC Investor Intermediate Duration 93.7% Fixed Income Fund Fixed Income Portfolio Growth Fund HSBC Investor Growth Portfolio 70.2% International Equity Fund HSBC Investor International Equity Portfolio 84.8% Opportunity Fund HSBC Investor Opportunity Portfolio 78.8% Opportunity Fund (Advisor) HSBC Investor Opportunity Portfolio 9.2% Overseas Equity Fund HSBC Investor International Equity Portfolio 4.4% Value Fund HSBC Investor Value Portfolio 70.0%
HSBC INVESTOR FAMILY OF FUNDS 64 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) Financial statements for all other funds of the HSBC Investor Family of Funds are published separately. The HSBC Investor Core Plus Fixed Income Portfolio, HSBC Investor High Yield Fixed Income Portfolio, HSBC Investor Intermediate Duration Fixed Income Portfolio, HSBC Investor Growth Portfolio, HSBC Investor International Equity Portfolio, HSBC Investor Opportunity Portfolio and the HSBC Investor Value Portfolio (individually a "Portfolio", collectively the "Portfolios") are diversified series of the HSBC Investor Portfolios (the "Portfolio Trust"). The Portfolios operate as master funds in master-feeder arrangements. 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 High Yield Fixed Income Fund, Intermediate Duration Fixed Income Fund, New York Tax-Free Bond Fund, Growth Fund, Growth and Income Fund, and the Value Fund each offer 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 Opportunity Fund (Advisor) each offer one class of shares: Advisor Shares. The Core Plus Fixed Income Fund, Opportunity Fund, and the Overseas Equity Fund each offer three classes of shares: Class A Shares, Class B Shares, and Class C Shares. Class A Shares of the Growth Fund, Growth and Income Fund, Mid-Cap Fund, Opportunity Fund, Overseas Fund, and Value Fund have a maximum sales charge of 5.00% as a percentage of the original purchase price while Class A Shares of the Core Plus Fixed Income Fund, High Yield Fixed Income Fund, Intermediate Duration Fixed Income Fund, and New York Tax-Free Bond Fund have a maximum sales charge of 4.75% as a percentage of the original purchase price. The Class B Shares of the Funds are offered without any front-end sales charge but will be subject to a contingent deferred sales charge ("CDSC") ranging from a maximum of 4.00% if redeemed less than one year after purchase to 0.00% if redeemed more than four years after purchase. Class C Shares of the Funds are offered without any front-end sales charge but will be subject to a maximum CDSC of 1.00% if redeemed less than one year after purchase. No sales charges are assessed with respect to Advisor, Trust, Class I, or Class Y Shares of the Funds. 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 any 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 U.S. generally accepted accounting principles ("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 the 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. 65 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) 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, or are deemed unreliable due to a significant event or otherwise, 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 fair 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 fiscal year, 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 share of income, expenses, changes in unrealized appreciation and depreciation and realized 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. As of October 31, 2007, the Funds did not hold any investments in futures conracts. OPTIONS: The Growth and Income Fund and the Mid-Cap Fund may write covered call options against some of the securities in their portfolios provided the securities are listed on a national securities exchange. A call option is "covered" if the Fund owns the underlying securities covered by the call. The premium received is recorded as a liability and is subsequently adjusted to the current fair value of the option written. Premiums received from writing options that expire unexercised are treated on the expiration date as realized gains from investments. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain or loss. If the call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining a realized gain or loss. For the year ended October 31, 2007, the Funds did not write any covered call options. LINE OF CREDIT: Prior to February 1, 2007, the Growth and Income Fund, and Mid-Cap Fund, and prior to March 9, 2007, the New York Tax-Free Bond Fund participated in a short-term, demand note agreement with HSBC Bank USA, an affiliate of the Investment Adviser (defined below). Under the agreement, these Funds were able to borrow up to $50 million. The pur- HSBC INVESTOR FAMILY OF FUNDS 66 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) pose of the agreement was to meet temporary or emergency cash needs, including redemption requests that might otherwise require the untimely disposition of securities. During the period November 1, 2006 through February 1, 2007, the details of the borrowing were as follows (based on the actual number of days in which the respective Fund borrowed monies): AVERAGE NUMBER AVERAGE AMOUNT OF DAYS INTEREST FUND OUTSTANDING OUTSTANDING RATE - ---- ----------- ----------- -------- Growth and Income Fund ..... $ 184,343 2 5.82% 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. Class specific expenses are charged directly to the class incurring the expense. In addition, income, expenses (other than class specific expenses), and realized and unrealized gains and losses are allocated to each class of shares based on its relative net assets on a daily basis. DIVIDENDS TO SHAREHOLDERS: The Core Plus Fixed Income Fund (Advisor), Core Plus Fixed Income Fund, High Yield Fixed Income, Intermediate Duration Fixed Income Fund, and the New York Tax-Free Bond Fund declare all net investment income daily as dividends to their shareholders and distribute such dividends monthly. Dividends from net investment income, if any, are declared and distributed semi-annually in the case of the Growth Fund, Growth and Income Fund, Opportunity Fund, Opportunity (Advisor) and the Value Fund, and annually in the case of the International Equity Fund, Mid-Cap Fund, and Overseas Fund. The Funds' net realized gains, if any, are distributed to shareholders at least annually. Additional distributions are also made to the Funds' shareholders to the extent necessary to avoid the federal excise tax on certain undistributed income and net capital gains of regulated investment companies. The amount 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 (e.g., reclassification of market discounts, certain gain/loss, paydowns, and certain distributions), such amounts are reclassified within the composition of net assets; temporary differences (e.g., wash losses and post-october loss deferrals) 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. To the extent distributions from net investment income and net realized gains exceed net investment income and net realized gains for tax purposes, they are reported as distributions of capital. 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 year ended October 31, 2007, the following Funds collected redemption fees as follows: FUND FEES COLLECTED ---- -------------- Core Plus Fixed Income Fund (Advisor) ....... $ 12 Core Plus Fixed Income Fund ................. 356 High Yield Fixed Income Fund ................ 66 Intermediate Duration Fixed Income Fund ..... 46 New York Tax-Free Bond ...................... 2,570 Growth Fund ................................. 1,191 Growth & Income Fund ........................ 14 International Equity Fund ................... 9,912 Mid-Cap Fund ................................ 110 Opportunity Fund ............................ 158 Overseas Equity Fund ........................ 396 Value Fund .................................. 550 67 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) FEDERAL INCOME TAXES: Each Fund is a separate taxable entity for federal income tax purposes. Each Fund has qualified and intends to continue 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. NEW ACCOUNTING PRONOUNCEMENTS: In September 2006, the Financial Accounting Standards Board (FASB) issued Statement on Financial Accounting Standards SFAS No. 157, "Fair Value Measurements" ("SFAS No. 157") This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. SFAS No. 157 applies to fair value measurements already required or permitted by existing standards. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The changes to current GAAP from the application of this Statement relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. Management does not believe the adoption of SFAS No. 157 will materially impact the Funds' financial statements; however, additional disclosures will be required about the inputs used to develop the measurements and the effect of certain of the measurements on changes in net assets for the period. In July 2006, the FASB released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Funds' tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority based on technical merits of the position. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the year of determination. Adoption of FIN 48 is required no later than the last business day of the first financial statement reporting period for fiscal years beginning after December 15, 2006 and is applied to all open tax years as of the effective date. Management is currently in the process of evaluating the impact that will result from adopting FIN 48. At this time, management does not believe the adoption of FIN 48 will have a material impact to the financial statements. 3. RELATED PARTY TRANSACTIONS INVESTMENT MANAGEMENT: HSBC Investments (USA) Inc. ("HSBC" or the "Investment Adviser"), a wholly owned subsidiary of HSBC Bank USA, N.A., a national bank organized under the laws of the United States, 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, at an annual rate of 0.25% of the average daily net assets of the New York Tax-Free Bond Fund. 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. Feeder Funds are not directly charged any investment management fees. ADMINISTRATION: HSBC serves the Funds as Administrator. Under the terms of the Administration Agreement effective April 1, 2007, HSBC receives from the Funds a fee, accrued daily and paid monthly, at an annual rate of: BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE ------------------------------------ -------- Up to $12 billion ............................... 0.0525% In excess of $12 billion ........................ 0.0350% HSBC INVESTOR FAMILY OF FUNDS 68 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) Prior to April 1, 2007, under the terms of the Administration Agreement, the Funds paid fees under the following schedule: BASED ON AVERAGE DAILY NET ASSETS OF 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% 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. The administration fees accrued for each class by fund, of which 50% of such fees are deemed to be class specific, are as follows:
CORE PLUS INTERMEDIATE FIXED CORE PLUS HIGH YIELD DURATION GROWTH INCOME FIXED FIXED FIXED NEW YORK AND FUND INCOME INCOME INCOME TAX-FREE GROWTH INCOME (ADVISOR) FUND FUND FUND BOND FUND FUND FUND --------- --------- ---------- ------------ --------- -------- -------- Class A ......... $ -- $ 4,238 $ 1,337 $ 353 $ 20,386 $ 8,162 $ 920 Class B ......... -- 1,228 627 1,019 7,011 444 2,842 Class C ......... -- 38 68 137 604 34 21 Advisor ......... 24,811 -- -- -- -- -- -- Class I ......... -- -- -- 3,762 9,549 6,504 25,397 --------- --------- ---------- ------------ --------- -------- -------- Total ........ $ 24,811 $ 5,504 $ 2,646 $ 5,271 $ 37,550 $ 15,144 $ 29,180 ========= ========= ========== ============ ========= ======== ========
OPPORTUNITY OVERSEAS INTERNATIONAL MID-CAP OPPORTUNITY FUND EQUITY VALUE EQUITY FUND FUND FUND (ADVISOR) FUND FUND ------------- -------- ----------- ----------- -------- -------- Class A ......... $ -- $ 3,074 $ 5,528 $ -- $ 5,228 $ 8,469 Class B ......... -- 4,091 1,454 -- 1,042 578 Class C ......... -- 54 93 -- 52 47 Advisor ......... 99,740 -- -- 51,982 -- -- Class I ......... -- -- -- -- -- 7,241 Trust ........... -- 11,026 -- -- -- -- ------------- -------- ----------- ----------- -------- -------- Total ........ $ 99,740 $ 18,245 $ 7,075 $ 51,982 $ 6,322 $ 16,335 ============= ======== =========== =========== ======== ========
Pursuant to a Sub-Administration Agreement with HSBC, Citi Fund Services Ohio, Inc. ("Citi Ohio "), a wholly-owned subsidiary of Citigroup, Inc. (Citigroup, Inc. acquired The BISYS Group, Inc. effective August 1, 2007), serves as the Trust's sub-administrator, subject to the general supervision of the Funds' Board of Trustees and HSBC. For these services, Citi 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 Citi Ohio (the "CCO Agreement"), Citi Ohio makes an employee available to serve as the Funds' Chief Compliance Officer (the "CCO"). Under the CCO Agreement, Citi 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 Citi Ohio $251,569 for the year ended October 31, 2007, plus reimbursement of certain expenses. Expenses incurred by each fund are reflected on the Statements of Operations as "Compliance Service." Citi Ohio pays the salary and other compensation earned by any such individuals as employees of Citi Ohio. 69 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) DISTRIBUTION PLAN: Prior to August 1, 2007, BISYS Fund Services Limited Partnership ("BISYS"), a wholly-owned subsidiary of BISYS Fund Services, Inc., served the Trust as Distributor. Since August 1, 2007, Foreside Distribution Services, L.P. ("Foreside"), a wholly-owned subsidiary of Foreside Financial Group LLC, serves the Trust 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 reimbursement of expenses incurred by the Distributor related to distribution and marketing, at a rate not to exceed 0.25%, 1.00%, and 1.00% of the average daily net assets of Class A Shares (currently not being charged), Class B Shares (currently charging 0.75%), and Class C Shares (currently charging 0.75%) of the Funds, respectively. Foreside, as Distributor, also received $1,050,424, $522,962 and $24,364 in commissions from sales of HSBC Investor Family of Funds, for Class A Shares, Class B Shares, and Class C Shares, respectively of which $1,047,148, $522,574 and $23,905 were reallowed to HSBC affiliated brokers and dealers, for Class A Shares, Class B Shares, and Class C Shares, respectively. SHAREHOLDER SERVICING: The Trusts have adopted an Shareholder Services Plan, formerly known as Administrative Services Plan, which provides for payments to shareholder servicing agents (which currently consist of HSBC and its affiliates) for providing various shareholder services. For performing these services, the shareholder servicing agents receive a fee up to 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 Funds, respectively. The aggregate fees paid to the Distributor pursuant to the Distribution Plan and to shareholder servicing agents pursuant to the Shareholder Services Plan 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. FUND ACCOUNTING, TRANSFER AGENCY, CUSTODIAN AND TRUSTEE: Citi Ohio provides fund accounting and transfer agency services for each Fund. As transfer agent for the Funds, Citi Ohio 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, Citi Ohio receives an annual fee per Fund and share class, subject to certain minimums and reimbursement of certain expenses. Prior to February 1, 2007 for the Growth and Income Fund and Mid-Cap Fund, and prior to March 9, 2007 for the New York Tax-Free Bond Fund, HSBC served as custodian for the Funds. As custodian for the Funds, HSBC Bank received a fee based on the average daily net assets, number of transactions, and reimbursements of certain expenses. Compensation paid to HSBC for services to the Funds as custodian is as follows: HSBC CUSTODIAN FUND FEES ---- --------- New York Tax Free Bond Fund ................. $ 7,699 Mid-Cap Fund ................................ 8,066 Growth and Income Fund ...................... 5,041 --------- Total ....................................... $ 20,806 --------- Effective February 1, 2007 for the Growth and Income Fund and Mid-Cap Fund, and March 9, 2007 for the New York Tax-Free Bond Fund, The Northern Trust Company began serving as custodian of the Funds. Each of the six non-interested Trustees are compensated with a $35,000 annual Board retainer, as well as a $3,000 annual retainer for each Committee of the Board. Each non-interested Trustee also receives a $5,000 and $3,000 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. HSBC INVESTOR FAMILY OF FUNDS 70 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) FEE REDUCTIONS: The Investment Adviser has agreed to contractually waive 0.05% of its management fee, computed daily and paid monthly, and based on the average daily net assets of the Growth and Income Fund and the Mid-Cap Fund. The Investment Adviser has also agreed to contractually limit, through March 1, 2008, 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 the average daily net assets for any full fiscal year as follows:
CURRENT CONTRACTUAL EXPENSE FUND CLASS LIMITATION ---- ------- ------------------- Core Plus Fixed Income Fund (Advisor) ............... Advisor 0.45% Core Plus Fixed Income Fund ......................... A 0.70% Core Plus Fixed Income Fund ......................... B 1.45% Core Plus Fixed Income Fund ......................... C 1.45% High Yield Fixed Income Fund ........................ A 0.80% High Yield Fixed Income Fund ........................ B 1.55% High Yield Fixed Income Fund ........................ C 1.55% High Yield Fixed Income Fund ........................ I 0.55% Intermediate Duration Fixed Income Fund ............. A 0.65% Intermediate Duration Fixed Income Fund ............. B 1.40% Intermediate Duration Fixed Income Fund ............. C 1.40% Intermediate Duration Fixed Income Fund ............. I 0.40% Growth Fund ......................................... A 1.20% Growth Fund ......................................... B 1.95% Growth Fund ......................................... C 1.95% Growth Fund ......................................... I 0.95% Growth and Income Fund .............................. A 1.20% Growth and Income Fund .............................. B 1.95% Growth and Income Fund .............................. C 1.95% Growth and Income Fund .............................. I 0.95% Mid-Cap Fund ........................................ A 1.35% Mid-Cap Fund ........................................ B 2.10% Mid-Cap Fund ........................................ C 2.10% Mid-Cap Fund ........................................ Trust 1.10% Opportunity Fund .................................... A 1.65% Opportunity Fund .................................... B 2.40% Opportunity Fund .................................... C 2.40% Value Fund .......................................... A 1.20% Value Fund .......................................... B 1.95% Value Fund .......................................... C 1.95% Value Fund .......................................... I 0.95%
The Administrator and Citi Ohio may voluntarily waive/reimburse fees to help support the expense limits of the Funds. In addition, the Investment Adviser may waive/reimburse additional fees at their discretion. Amounts waived/reimbursed by the Investment Adviser, Administrator and Citi Ohio are reported separately on the Statements of Operations, as applicable. All contractual and any voluntary fee waivers/reimbursements are not subject to recoupment in subsequent fiscal periods. Voluntary waivers/reimbursements may be stopped at any time. 71 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) 4. INVESTMENT TRANSACTIONS Purchases and sales of securities (excluding securities maturing less than one year from acquisition) for the year ended October 31, 2007 were as follows: FUND PURCHASES SALES ---- -------------- ------------ New York Tax-Free Bond Fund .............. $ 13,358,035 $ 10,273,920 Growth and Income Fund ................... 12,946,329 18,938,140 Mid-Cap Fund ............................. 20,245,392 23,362,903 There were no long-term U.S. Government securities held during the year ended October 31, 2007. Contributions and withdrawals of the respective Portfolios for the year ended October 31, 2007 totaled: FUND CONTRIBUTIONS WITHDRAWALS ---- -------------- ------------ Core Plus Fixed Income Fund (Advisor) .... $ 12,028,152 $ 17,040,858 Core Plus Fixed Income Fund .............. 3,683,251 4,196,848 High Yield Fixed Income Fund ............. 2,387,955 3,611,070 Intermediate Duration Fixed Income Fund .. 2,036,842 7,620,843 Growth Fund .............................. 16,438,930 7,007,535 International Equity Fund ................ 67,373,638 39,135,855 Opportunity Fund (Advisor) ............... 69,968,165 132,187,671 Opportunity Fund ......................... 892,380 15,957,501 Overseas Equity Fund ..................... 1,066,812 12,135,990 Value Fund ............................... 14,371,230 6,583,921 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 October 31, 2007, the cost basis for federal income tax purposes, gross unrealized appreciation, gross unrealized depreciation and net unrealized appreciation/depreciation were as follows:
NET TAX TAX UNREALIZED UNREALIZED UNREALIZED APPRECIATION FUND TAX COST APPRECIATION DEPRECIATION (DEPRECIATION) - ---- ----------- ------------ ------------ -------------- New York Tax-Free Bond Fund ...... $58,662,444 $ 1,762,270 $ (107,640) $ 1,654,630 Growth and Income Fund ........... 34,936,174 18,190,670 (541,522) 17,649,148 Mid-Cap Fund ..................... 22,873,701 10,836,350 (442,391) 10,393,959
HSBC INVESTOR FAMILY OF FUNDS 72 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) The tax characteristics of dividends paid by the Funds during the year ended October 31, 2007 were as follows:
DIVIDENDS PAID FROM ----------------------------------------------------------------------- NET LONG TERM TOTAL TAX TOTAL ORDINARY CAPITAL TAXABLE EXEMPT DIVIDENDS INCOME GAINS DIVIDENDS DISTRIBUTIONS PAID(1) ------------ ----------- ------------ -------------- ---------- Core Plus Fixed Income (Advisor) ......... $ 4,297,819 $ -- $ 4,297,819 $ -- $4,297,819 Core Plus Fixed Income Fund .............. 873,677 -- 873,677 -- 873,677 High Yield Fixed Income Fund ............. 704,138 -- 704,138 -- 704,138 Intermediate Duration Fixed Income Fund .. 886,868 -- 886,868 -- 886,868 New York Tax-Free Bond Fund .............. 19,599 9,094 28,693 2,085,602 2,114,295 Growth Fund .............................. 25,419 3,019,000 3,044,419 -- 3,044,419 Growth and Income Fund ................... 126,478 -- 126,478 -- 126,478 International Equity Fund ................ 8,337,987 22,931,569 31,269,556 -- 31,269,556 Mid-Cap Fund ............................. 647,121 1,300,752 1,947,873 -- 1,947,873 Opportunity Fund ......................... 75,818 3,560,217 3,636,035 -- 3,636,035 Opportunity Fund (Advisor) ............... 3,149,480 26,789,336 29,938,816 -- 29,938,816 Overseas Equity Fund ..................... 667,589 2,786,165 3,453,754 -- 3,453,754 Value Fund ............................... 677,034 4,064,790 4,741,824 -- 4,741,824
The tax characteristics of dividends paid by the Funds during the year ended October 31, 2006 were as follows:
DIVIDENDS PAID FROM ----------------------------------------------------------------------- NET LONG TERM TOTAL TAX TOTAL ORDINARY CAPITAL TAXABLE EXEMPT DIVIDENDS INCOME GAINS DIVIDENDS DISTRIBUTIONS PAID(1) ------------ ----------- ------------ -------------- ---------- Core Plus Fixed Income (Advisor) ......... $ 5,304,945 $ 2,329,061 $ 7,634,006 $ -- $7,634,006 Core Plus Fixed Income Fund .............. 922,409 -- 922,409 -- 922,409 High Yield Fixed Income Fund ............. 508,987 -- 508,987 -- 508,987 Intermediate Duration Fixed Income Fund .. 973,678 -- 973,678 -- 973,678 New York Tax-Free Bond Fund .............. 4,399 100,731 105,130 2,003,584 2,108,714 Growth Fund .............................. -- 604,764 604,764 -- 604,764 Growth and Income Fund ................... 25,548 -- 25,548 -- 25,548 International Equity Fund ................ 4,030,977 6,656,885 10,687,862 -- 10,687,862 Mid-Cap Fund ............................. -- 6,447,215 6,447,215 -- 6,447,215 Opportunity Fund ......................... -- 872,331 872,331 -- 872,331 Opportunity Fund (Advisor) ............... -- 5,803,618 5,803,618 -- 5,803,618 Overseas Equity Fund ..................... 754,636 1,303,263 2,057,899 -- 2,057,899 Value Fund ............................... 523,785 3,327,270 3,851,055 -- 3,851,055
73 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) As of October 31, 2007, the components of accumulated earnings/(deficit) on a tax basis for the Funds were as follows:
UNDISTRIBUTED ACCUMULATED UNDISTRIBUTED LONG CAPITAL TOTAL UNDISTRIBUTED TAX TERM AND UNREALIZED ACCUMULATED ORDINARY EXEMPT CAPITAL ACCUMULATED DIVIDENDS OTHER APPRECIATION/ EARNINGS/ INCOME INCOME GAINS EARNINGS PAYABLE LOSSES (DEPRECIATION)(2) (DEFICIT) ------------- ------------- ------------- ----------- ---------- ------------ ----------------- ------------- Core Plus Fixed Income Fund (Advisor) ...... $ 502,414 $ -- $ 562,425 $ 1,064,839 $(382,197) $ -- $ (166,918) $ 515,724 Core Plus Fixed Income Fund .... 89,455 -- -- 89,455 (76,447) (557,978) (36,900) (581,870) High Yield Fixed Income Fund .... 84,276 -- 69,024 153,300 (58,530) -- (98,097) (3,327) Intermediate Duration Fixed Income Fund .... 87,279 -- 53,298 140,577 (64,168) -- (83,160) (6,751) New York Tax-Free Bond Fund ...... 23,394 205,608 56,101 285,103 (184,067) -- 1,654,630 1,755,666 Growth Fund ...... -- -- 2,892,354 2,892,354 -- -- 15,509,956 18,402,310 Growth and Income Fund ........... 5,574 -- -- 5,574 -- (5,725,929) 17,649,148 11,928,793 International Equity Fund .... 10,638,534 -- 24,126,978 34,765,512 -- -- 100,539,759 135,305,271 Mid-Cap Fund ..... -- -- 3,530,284 3,530,284 -- -- 10,393,959 13,924,243 Opportunity Fund ........... 1,084,596 -- 4,953,733 6,038,329 -- -- 4,335,184 10,373,513 Opportunity Fund (Advisor) ...... 9,223,734 -- 35,976,501 45,200,235 -- -- 33,322,824 78,523,059 Overseas Equity Fund ........... 562,242 -- 2,487,633 3,049,875 -- -- 8,491,660 11,541,535 Value Fund ....... 503,590 -- 4,085,539 4,589,129 -- -- 9,330,115 13,919,244
(1) Total dividends paid may differ from the amount reported in the Statement of Changes in Net Assets because dividends are recognized when actually paid for tax purposes. (2) The differences between book-basis and tax-basis unrealized appreciation/depreciation are attributable primarily to: tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains/losses on certain derivative instruments, the difference between book and tax amortization methods for premium and market discount, the realization for tax purposes of unrealized gains/losses on investments in passive foreign investment companies, and the return of capital adjustments from real estate investment trusts. As of October 31, 2007, the following Funds have net capital loss carryforwards, which are available to offset future realized gains. FUND AMOUNT EXPIRES ---- ---------- -------- Core Plus Fixed Income Fund ...... $ 185,453 2012 372,525 2014 Growth and Income Fund ........... 5,725,929 2011 7. LEGAL AND REGULATORY MATTERS AND PAYMENTS FROM AFFILIATE: On September 26, 2006 BISYS Fund Services, Inc. ("BISYS"), an affiliate of BISYS Fund Services Ohio, Inc. which provides various services to the Funds as described in footnote 3, reached a settlement with the Securities and Exchange Commission ("the SEC") regarding the SEC's investigation related to BISYS' past payment of certain marketing and other expenses with respect to certain of its mutual fund clients. Although BISYS has reached a settlement with the SEC, the Funds' management is not aware that any determination has been made as to how the BISYS settlement monies will be distributed. The SEC's examination of BISYS' mutual fund clients and their advisers, including HSBC, has not been completed. While the Funds' management is currently unable to determine the impact, if any, of such matters on the Funds or the Funds' financial statements, management does not anticipate a material, adverse impact to the Funds or the Funds' financial statements. During the year ended October 31, 2007, HSBC voluntarily reimbursed amounts to certain Funds related to past marketing arrangements that involved BISYS. The amounts reimbursed for the year ended October 31, 2007 are disclosed in the Statements of Operations as "Expenses reimbursed by Investment Adviser." The corresponding impact to the net expense ratio, net income ratio and total return for the year ended October 31, 2007 are disclosed in the Funds' Financial Highlights. HSBC INVESTOR FAMILY OF FUNDS 74 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Trustees of HSBC Investor Funds: We have audited the accompanying statements of assets and liabilities of HSBC Investor Core Plus Fixed Income Fund (Advisor), HSBC Investor Core Plus Fixed Income Fund, HSBC Investor High Yield Fixed Income Fund, HSBC Investor Intermediate Duration Fixed Income Fund, HSBC Investor New York Tax-Free Bond Fund, HSBC Investor Growth Fund, HSBC Investor Growth and Income Fund, HSBC Investor International Equity Fund, HSBC Investor Mid-Cap Fund, HSBC Investor Opportunity Fund, HSBC Investor Overseas Equity Fund, HSBC Investor Opportunity Fund (Advisor) and HSBC Investor Value Fund (the Funds), including the schedules of portfolio investments of HSBC Investor New York Tax-Free Bond Fund, HSBC Investor Growth and Income Fund and HSBC Investor Mid-Cap Fund, as of October 31, 2007, and the related statements of operations for the year then ended, the statements of changes in net assets for each period in the two-year period then ended, and the financial highlights for each period in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2007, by correspondence with custodians and brokers; or other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Funds as of October 31, 2007, the results of their operations for the year then ended, the changes in their net assets for each period in the two-year period then ended, and the financial highlights for each period in the five-year period then ended, in conformity with U.S. generally accepted accounting principles. KPMG LLP Columbus, Ohio December 27, 2007 75 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- OTHER FEDERAL INCOME TAX INFORMATION (UNAUDITED)--AS OF OCTOBER 31, 2007 OTHER FEDERAL INCOME TAX INFORMATION (UNAUDITED): For the year ended October 31, 2007, the following percentages of the total ordinary income dividends paid by the Funds qualify for the corporate dividends received deduction available to corporate shareholders: DIVIDENDS RECEIVED FUND DEDUCTION ---- ---------- Growth Fund .......................................... 100.00% Growth and Income Fund ............................... 100.00% Mid-Cap Fund ......................................... 52.21% Opportunity Fund ..................................... 100.00% Value Fund ........................................... 100.00% The International Equity Fund and the Overseas Equity Fund intend to elect to pass through to shareholders the income tax credit for taxes paid to foreign countries. Foreign source income and foreign tax expense per outstanding share on October 31, 2007 are as follows: FOREIGN FOREIGN TAX FUND SOURCE INCOME EXPENSE ---- ------------- ----------- International Equity Fund ........... $ 0.63 $ 0.06 Overseas Equity Fund ................ 0.44 0.04 The pass-through of the foreign tax credit will only affect those persons who are shareholders on the dividend record date in December 2007. These shareholders will receive more detailed information along with their 2007 Form 1099-DIV. For the year ended October 31, 2007, dividends paid by the Funds may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Funds intend to designate the maximum amount allowable as taxed at a maximum rate of 15%. Complete information will be reported in conjunction with your 2007 Form 1099-DIV. QUALIFIED DIVIDEND FUND INCOME ---- ----------- Growth Fund .......................................... 100.00% Growth and Income Fund ............................... 100.00% International Equity Fund ............................ 75.24% Mid-Cap Fund ......................................... 52.20% Opportunity Fund ..................................... 100.00% Overseas Equity Fund ................................. 92.64% Value Fund ........................................... 100.00% The New York Tax-Free Bond Fund designated 98.7% of its income dividends as exempt-interest dividends for the year ended October 31, 2007. During the year ended October 31, 2007 the following Fund declared tax-exempt income distributions: FUND AMOUNT ---- ---------- New York Tax-Free Bond Fund .......................... $2,085,602 During the year ended October 31, 2007, the following Funds declared net long term capital gain distributions: FUND AMOUNT ---- ----------- New York Tax-Free Bond Fund .......................... $ 9,094 Growth Fund .......................................... 3,019,000 International Equity Fund ............................ 22,931,569 Mid-Cap Fund ......................................... 1,300,752 Opportunity Fund ..................................... 3,560,217 Opportunity Fund (Advisor) ........................... 26,789,336 Overseas Equity Fund ................................. 2,786,165 Value Fund ........................................... 4,064,790 HSBC INVESTOR FAMILY OF FUNDS 76 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--AS OF OCTOBER 31, 2007 As a shareholder of the HSBC Investor Funds ("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. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from May 1, 2007 through October 31, 2007. ACTUAL EXAMPLE 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.
ENDING ANNUALIZED BEGINNING ENDING EXPENSES PAID EXPENSE RATIO ACCOUNT VALUE VALUE DURING PERIOD* DURING PERIOD 5/1/07 10/31/07 5/1/07 - 10/31/07 5/1/07 - 10/31/07 ------------- --------- ----------------- ----------------- Core Plus Fixed Income Fund (Advisor) ............... Advisor Shares $1,000.00 $1,021.00 $ 2.29 0.45% Core Plus Fixed Income Fund ..... Class A Shares 1,000.00 1,019.80 3.56 0.70% Class B Shares 1,000.00 1,015.90 7.37 1.45% Class C Shares 1,000.00 1,015.10 7.36 1.45% Class I Shares 1,000.00 1,107.50 6.64 1.25% High Yield Fixed Income Fund .... Class A Shares 1,000.00 996.90 4.03 0.80% Class B Shares 1,000.00 992.10 7.78 1.55% Class C Shares 1,000.00 992.10 7.78 1.55% Class I Shares 1,000.00 997.20 2.77 0.55% Intermediate Duration Fixed Income Fund .................. Class A Shares 1,000.00 1,017.70 3.31 0.65% Class B Shares 1,000.00 1,013.90 7.11 1.40% Class C Shares 1,000.00 1,012.90 7.10 1.40% Class I Shares 1,000.00 1,018.00 2.03 0.40% New York Tax-Free Bond Fund ..... Class A Shares 1,000.00 1,011.50 4.36 0.86% Class B Shares 1,000.00 1,007.70 8.10 1.60% Class C Shares 1,000.00 1,007.60 7.94 1.57% Class I Shares 1,000.00 1,012.70 3.04 0.60% Growth Fund ..................... Class A Shares 1,000.00 1,207.60 6.68 1.20% Class B Shares 1,000.00 1,202.60 10.83 1.95% Class C Shares 1,000.00 1,202.80 10.83 1.95% Class I Shares 1,000.00 1,208.80 5.29 0.95% Growth and Income Fund .......... Class A Shares 1,000.00 1,183.80 6.61 1.20% Class B Shares 1,000.00 1,179.60 10.71 1.95% Class C Shares 1,000.00 1,178.90 10.71 1.95% Class I Shares 1,000.00 1,185.50 5.23 0.95% International Equity Fund ....... Advisor Shares 1,000.00 1,094.50 4.22 0.80%
77 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--AS OF OCTOBER 31, 2007 (CONTINUED)
ENDING ANNUALIZED BEGINNING ENDING EXPENSES PAID EXPENSE RATIO ACCOUNT VALUE VALUE DURING PERIOD* DURING PERIOD 5/1/07 10/31/07 5/1/07 - 10/31/07 5/1/07 - 10/31/07 ------------- --------- ----------------- ----------------- Mid-Cap Fund .................... Class A Shares $1,000.00 $1,161.10 $ 7.35 1.35% Class B Shares 1,000.00 1,157.50 11.42 2.10% Class C Shares 1,000.00 1,157.20 11.42 2.10% Trust Shares 1,000.00 1,163.50 6.00 1.10% Overseas Equity Fund ............ Class A Shares 1,000.00 1,089.90 8.06 1.53% Class B Shares 1,000.00 1,085.50 12.04 2.29% Class C Shares 1,000.00 1,087.20 11.15 2.12% Opportunity Fund ................ Class A Shares 1,000.00 1,164.70 8.46 1.55% Class B Shares 1,000.00 1,159.90 12.52 2.30% Class C Shares 1,000.00 1,160.50 12.52 2.30% Opportunity Fund (Advisor) ...... Advisor Shares 1,000.00 1,154.20 5.59 1.03% Value Fund ...................... Class A Shares 1,000.00 1,007.70 6.07 1.20% Class B Shares 1,000.00 1,003.70 9.85 1.95% Class C Shares 1,000.00 1,003.20 9.85 1.95% Class I Shares 1,000.00 1,008.90 4.81 0.95%
- ---------- * Expenses are equal to the average account value over the period multiplied by the Funds' 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 (to reflect the one half year period). HSBC INVESTOR FAMILY OF FUNDS 78 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--AS OF OCTOBER 31, 2007 (CONTINUED) HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below provides information about hypothetical account values and hypothetical expenses based on each Fund'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.
ENDING ANNUALIZED BEGINNING ACCOUNT EXPENSES PAID EXPENSE RATIO ACCOUNT VALUE VALUE DURING PERIOD* DURING PERIOD 5/1/07 10/31/07 5/1/07 - 10/31/07 5/1/07 - 10/31/07 ------------- --------- ----------------- ----------------- Core Plus Fixed Income Fund (Advisor) ............... Advisor Shares $1,000.00 $1,022.94 $ 2.29 0.45% Core Plus Fixed Income Fund ..... Class A Shares 1,000.00 1,021.68 3.57 0.70% Class B Shares 1,000.00 1,017.90 7.37 1.45% Class C Shares 1,000.00 1,017.90 7.37 1.45% High Yield Fixed Income Fund .... Class A Shares 1,000.00 1,021.17 4.08 0.80% Class B Shares 1,000.00 1,017.39 7.88 1.55% Class C Shares 1,000.00 1,017.39 7.88 1.55% Class I Shares 1,000.00 1,022.43 2.80 0.55% Intermediate Duration Fixed Income Fund .................. Class A Shares 1,000.00 1,021.93 3.31 0.65% Class B Shares 1,000.00 1,018.15 7.12 1.40% Class C Shares 1,000.00 1,018.15 7.12 1.40% Class I Shares 1,000.00 1,023.19 2.04 0.40% New York Tax-Free Bond Fund ..... Class A Shares 1,000.00 1,020.87 4.38 0.86% Class B Shares 1,000.00 1,017.14 8.13 1.60% Class C Shares 1,000.00 1,017.29 7.98 1.57% Class I Shares 1,000.00 1,022.18 3.06 0.60% Growth Fund ..................... Class A Shares 1,000.00 1,019.16 6.11 1.20% Class B Shares 1,000.00 1,015.38 9.91 1.95% Class C Shares 1,000.00 1,015.38 9.91 1.95% Class I Shares 1,000.00 1,020.42 4.84 0.95% Growth and Income Fund .......... Class A Shares 1,000.00 1,019.16 6.11 1.20% Class B Shares 1,000.00 1,015.38 9.91 1.95% Class C Shares 1,000.00 1,015.38 9.91 1.95% Class I Shares 1,000.00 1,020.42 4.84 0.95% International Equity Fund ....... Advisor Shares 1,000.00 1,021.17 4.08 0.80% Mid-Cap Fund .................... Class A Shares 1,000.00 1,018.40 6.87 1.35% Class B Shares 1,000.00 1,014.62 10.66 2.10% Class C Shares 1,000.00 1,014.62 10.66 2.10% Trust Shares 1,000.00 1,019.66 5.60 1.10%
79 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--AS OF OCTOBER 31, 2007 (CONTINUED)
ENDING ANNUALIZED BEGINNING ACCOUNT EXPENSES PAID EXPENSE RATIO ACCOUNT VALUE VALUE DURING PERIOD* DURING PERIOD 5/1/07 10/31/07 5/1/07 - 10/31/07 5/1/07 - 10/31/07 ------------- --------- ----------------- ----------------- Overseas Equity Fund ............ Class A Shares $1,000.00 $1,017.49 $ 7.78 1.53% Class B Shares 1,000.00 1,013.66 11.62 2.29% Class C Shares 1,000.00 1,014.52 10.76 2.12% Opportunity Fund ................ Class A Shares 1,000.00 1,017.39 7.88 1.55% Class B Shares 1,000.00 1,013.61 11.67 2.30% Class C Shares 1,000.00 1,013.61 11.67 2.30% Opportunity Fund (Advisor) ...... Advisor Shares 1,000.00 1,020.01 5.24 1.03% Value Fund ...................... Class A Shares 1,000.00 1,019.16 6.11 1.20% Class B Shares 1,000.00 1,015.38 9.91 1.95% Class C Shares 1,000.00 1,015.38 9.91 1.95% Class I Shares 1,000.00 1,020.42 4.84 0.95%
- ---------- * Expenses are equal to the average account value over the period multiplied by the Funds' 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 (to reflect the one half year period). HSBC INVESTOR FAMILY OF FUNDS 80 - -------------------------------------------------------------------------------- HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 - -------------------------------------------------------------------------------- U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS--33.6% - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ----------- ------------ FEDERAL HOME LOAN MORTGAGE CORP. - 13.8% Pool #G12317, 5.50%, 8/1/21 ................... 1,148,078 1,149,893 Pool #C00368, 8.50%, 10/1/24 .................. 26,564 28,499 Pool #D62926, 6.50%, 8/1/25 ................... 19,734 20,362 Pool #C80387, 6.50%, 4/1/26 ................... 28,536 29,454 Pool #C00922, 8.00%, 2/1/30 ................... 175,764 186,601 Pool #C54447, 7.00%, 7/1/31 ................... 38,797 40,521 Pool #G01317, 7.00%, 10/1/31 .................. 137,821 143,943 Pool #C60712, 6.50%, 11/1/31 .................. 577,337 595,163 Pool #847557, 5.54%, 7/1/34(a)(g) ............. 1,092,079 1,111,816 Pool #1B2655, 4.20%, 12/1/34(a)(g) ............ 1,075,301 1,081,051 Pool #1J1313, 6.43%, 6/1/36(a) ................ 1,469,028 1,501,168 Pool #G02981, 6.00%, 6/1/37 ................... 1,204,623 1,212,448 TBA November, 6.00%, 11/11/37 ................. 1,900,000 1,911,875 TBA November, 5.50%, 11/15/37 ................. 7,650,000 7,530,469 ------------ 16,543,263 ------------ FEDERAL NATIONAL MORTGAGE ASSOCIATION - 11.5% Pool #398958, 6.50%, 10/1/12 .................. 53,807 55,298 Pool #781922, 5.00%, 2/1/21 ................... 2,339,252 2,303,419 Pool #329655, 7.00%, 11/1/25 .................. 38,924 40,745 Pool #329530, 7.00%, 12/1/25 .................. 81,301 85,106 Pool #535332, 8.50%, 4/1/30 ................... 39,881 42,836 Pool #548965, 8.50%, 7/1/30 ................... 44,326 47,620 Pool #535440, 8.50%, 8/1/30 ................... 45,119 48,473 Pool #253438, 8.50%, 9/1/30 ................... 39,581 42,522 Pool #568486, 7.00%, 1/1/31 ................... 39,026 40,894 Pool #573752, 8.50%, 2/1/31 ................... 33,580 36,076 Pool #575328, 6.50%, 4/1/31 ................... 49,521 51,020 Pool #356905, 7.23%, 10/1/36(a) ............... 166,247 167,193 Pool #922090, 5.90%, 3/1/37(a) ................ 2,054,764 2,077,199 Pool #256723, 6.50%, 5/1/37 ................... 1,155,184 1,182,401 TBA November. 5.00%, 11/15/36 ................. 1,000,000 959,688 TBA November, 5.50%, 11/15/36 ................. 3,710,000 3,655,508 TBA December, 6.00%, 12/15/36 ................. 2,900,000 2,918,125 ------------ 13,754,123 ------------ GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 1.2% Pool #346406, 7.50%, 2/15/23 .................. 45,999 48,654 Pool #412530, 7.50%, 12/15/25 ................. 71,981 76,226 Pool #781300, 7.00%, 6/15/31 .................. 132,432 139,479 TBA November, 6.00%, 11/15/36 ................. 1,080,000 1,093,500 ------------ 1,357,859 ------------ U.S. TREASURY NOTES - 7.1% 4.75%, 2/28/09 ................................ 1,750,000 1,766,954 3.88%, 5/15/09 ................................ 1,500,000 1,498,008 4.75%, 1/31/12 ................................ 1,480,000 1,517,000 4.13%, 8/31/12 ................................ 2,270,000 2,267,694 4.75%, 8/15/17 ................................ 305,000 311,719 6.38%, 8/15/27 ................................ 1,000,000 1,199,922 ------------ 8,561,297 ------------ - -------------------------------------------------------------------------------- U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS, CONT'D - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ----------- ------------ TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (COST $40,014,893) ................ 40,216,542 ------------ - -------------------------------------------------------------------------------- CORPORATE OBLIGATIONS--38.0% - -------------------------------------------------------------------------------- AGRICULTURAL CHEMICALS - 0.5% Cargill, Inc., 5.60%, 9/15/12 (b) ................ 600,000 606,040 ------------ 606,040 ------------ AUTO MANUFACTURERS - 0.4% General Motors, 8.25%, 7/15/23 ................... 550,000 496,375 ------------ 496,375 ------------ BANKING - 2.2% American Express Centurion Bank, 5.95%, 6/12/17 ................................ 700,000 704,174 Bank of America N.A., 6.10%, 6/15/17 ............. 1,000,000 1,023,475 Washington Mutual Bank, 5.56%, 2/4/11 (a) ........ 400,000 386,686 Washington Mutual, Inc., 6.09%, 9/17/12 (a) ...... 500,000 476,609 ------------ 2,590,944 ------------ BUILDING & CONSTRUCTION PRODUCTS - 1.8% Martin Marietta Materials, Inc., 5.13%, 4/30/10 (a) ............................ 600,000 593,218 Masco Corp., 6.00%, 3/12/10 (a)(g) ............... 550,000 540,293 USG Corp., 7.75%, 1/15/18 ........................ 1,000,000 1,012,681 ------------ 2,146,192 ------------ CONSUMER PRODUCTS - 1.2% Clorox Co., 5.45%, 10/15/12 ...................... 900,000 901,106 VF Corp., 5.95%, 11/1/17 ......................... 550,000 555,314 ------------ 1,456,420 ------------ ELECTRIC - 3.8% MidAmerican Energy Co., 5.95%, 7/15/17 ........... 2,900,000 2,999,197 Progress Energy, Inc., 5.98%, 11/14/08, Callable 2/14/08 @ 100 (a)(g) ................. 1,000,000 1,001,266 Puget Sound Energy, Inc., 6.97%, 6/1/67, Callable 6/1/17 @ 100 ......................... 600,000 567,594 ------------ 4,568,057 ------------ FINANCE - 8.7% First Data Corp., 9.88%, 9/24/15, Callable 9/30/11 @ 105 (b) .................... 300,000 287,250 Ford Motor Credit Co., LLC 4.95%, 1/15/08 ................................ 2,000,000 1,991,342 5.80%, 1/12/09 ................................ 1,550,000 1,495,369 7.25%, 10/25/11 ............................... 150,000 139,532 General Motors Acceptance Corp. 4.38%, 12/10/07 ............................... 2,250,000 2,246,413 7.25%, 3/2/11 ................................. 600,000 567,353 81 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) - -------------------------------------------------------------------------------- CORPORATE OBLIGATIONS, CONTINUED - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ----------- ------------ FINANCE, CONTINUED Preferred Term Securities Ltd., 8.79%, 9/15/30, Callable 9/15/10 @ 104 (b) ........... 787,500 858,375 SLM Corp. 4.00%, 1/15/10 ................................ 1,000,000 937,762 4.50%, 7/26/10 ................................ 1,300,000 1,217,176 XTRA Finance Corp., 5.15%, 4/1/17 (b) ............ 750,000 724,342 ------------ 10,464,914 ------------ HOSPITALS - 1.8% Covidien International Finance SA, 5.45%, 10/15/12 (b) ........................... 550,000 552,059 HCA, Inc., 8.75%, 9/1/10 ......................... 1,525,000 1,551,687 ------------ 2,103,746 ------------ MEDIA - 0.4% News America Holdings, 7.90%, 12/1/95 ............ 500,000 545,450 ------------ 545,450 ------------ MEDICAL - 1.9% Astrazeneca plc, 5.90%, 9/15/17 .................. 1,000,000 1,022,492 Schering-Plough, 6.00%, 9/15/17 .................. 1,200,000 1,220,524 ------------ 2,243,016 ------------ OFFICE EQUIPMENT & SERVICES - 1.3% IBM Corp., 5.70%, 9/14/17 ........................ 950,000 964,237 Xerox Corp., 6.40%, 12/18/09 (a)(g) .............. 550,000 549,627 ------------ 1,513,864 ------------ RETAIL - 5.7% Home Depot, Inc., 5.88%, 12/16/36 ................ 2,700,000 2,357,362 Kohl's Corp., 6.25%, 12/15/17 .................... 1,100,000 1,101,233 Kroger Co., 6.40%, 8/15/17 ....................... 850,000 884,343 Wal-Mart Stores, Inc., 5.88%, 4/5/27 ............. 900,000 882,095 Wal-Mart Stores, Inc., 6.50%, 8/15/37 ............ 1,500,000 1,577,524 ------------ 6,802,557 ------------ TELECOMMUNICATIONS - 3.4% AOL Time Warner, Inc., 7.70%, 5/1/32 ............. 1,150,000 1,292,260 BellSouth Telecommunications, 7.00%, 12/1/95 ................................ 700,000 704,163 Motorola, Inc., 6.00%, 11/15/17 .................. 1,200,000 1,184,972 Time Warner Entertainment Co., 8.38%, 3/15/23 ................................ 800,000 943,585 ------------ 4,124,980 ------------ TRANSPORTATION - 4.9% American Airlines, Inc. 6.98%, 4/1/11 ................................. 530,195 530,195 7.86%, 10/1/11 ................................ 1,250,000 1,320,312 Burlington North Santa Fe 5.65%, 5/1/17 ................................. 600,000 593,497 7.57%, 1/2/21 ................................. 294,292 332,826 Continental Airlines, Inc., 5.98%, 4/19/22 ....... 750,000 737,303 Union Pacific Corp., 5.75%, 11/15/17 ............................... 1,200,000 1,189,475 6.85%, 1/2/19 ................................. 1,161,581 1,220,589 ------------ 5,924,197 ------------ - -------------------------------------------------------------------------------- CORPORATE OBLIGATIONS, CONTINUED - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ----------- ------------ TOTAL CORPORATE OBLIGATIONS (COST $45,236,536) ............................ 45,586,752 ------------ - -------------------------------------------------------------------------------- ASSET BACKED SECURITIES--8.2% - -------------------------------------------------------------------------------- Americredit Automobile Receivables Trust, Series 2005-CF, Class A3, 4.47%, 5/6/10 (g) ............................. 735,608 734,160 Asset Backed Funding Certificates, Series 2003-AHL1, Class A1, 3.68%, 3/25/33 ................................ 738,743 727,109 Cairn Mezzanine plc, Series 2007-3A, Class B1, 6.40%, 8/13/47 (a)(b) ............... 905,000 497,750 Capital Auto Receivables Asset Trust, Series 2006-1, Class A2A, 5.03%, 9/15/08 (g) ............................ 79,632 79,620 Citigroup Mortgage Loan Trust, Inc., Series 2005-WF2, Class AF2, 4.92%, 8/25/35 ................................ 87,464 87,197 Countrywide Asset-Backed Certificates, Series 2006-S4, Class A3, 5.80%, 7/25/34 ................................ 1,060,000 1,029,076 Dominos Pizza Master Issuer LLC, Series 2007-1, Class A2, 5.26%, 4/25/37 (b) ............................ 1,200,000 1,193,272 Duane Street CLO, Series 2007-4A, Class C, 6.36%, 11/14/21 (a)(b) ............... 850,000 735,250 GE Business Loan Trust, Series 2006-2A, Class A, 5.27%, 11/15/34 (a)(b)(g) ................................... 1,455,232 1,450,429 GE Equipment Small Ticket LLC, Series 2005-2A, Class A3, 4.88%, 10/22/09 (b)(g) ........................ 1,430,147 1,430,469 GMAC Mortgage Corp., Loan Trust, Series 2006-HE3, Class A3, 5.81%, 10/25/36 ............................... 900,000 852,865 Preferred Term Securities XXII Ltd., 6.03%, 9/22/36, Callable 6/22/11 @ 100 (a)(b)(g) ....................... 1,096,250 1,048,563 ------------ TOTAL ASSET BACKED SECURITIES (COST $10,380,701) ............................ 9,865,760 ------------ - -------------------------------------------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS--8.6% - -------------------------------------------------------------------------------- Banc of America Mortgage Securities, Series 2005-D, Class 2A4, 4.78%, 5/25/35 (a) ............................ 1,100,000 1,093,289 Deutsche Mortgage Securities, Inc., Series 2006-WF1, Class 1A1, 5.07%, 6/26/35 (a)(b) ......................... 1,179,355 1,174,846 Fannie Mae IO Series 270, Class 2, 8.50%, 9/1/23 (c) ........ 45,063 10,612 Series 296, Class 2, 8.00%, 4/1/24 (c) ........ 54,506 13,553 Series 2000-16, Class PS,3.73%, 10/25/29 (a)(c) ............................... 35,357 1,652 Series 2000-32, Class SV, 3.57%, 3/18/30 (a)(c) ......................... 7,911 134 Series 306, Class IO, 8.00%, 5/1/30 (c) ....... 61,771 15,329 Series 2001-4, Class SA, 2.51%, 2/17/31 (a)(c) ......................... 219,630 16,222 FHA Weyerhauser, 7.43%, 1/1/24 (d)(f) ............ 33,082 33,082 SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 82 - -------------------------------------------------------------------------------- HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) - -------------------------------------------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS, CONTINUED - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ----------- ------------ Freddie Mac Series 2988, Class AF, 5.39%, 6/15/35 (a)(g) .. 1,131,947 1,115,057 Series 3212, Class BK, 5.40%, 9/15/36 ......... 900,000 864,162 Freddie Mac IO Series 1534, Class K, 2.28%, 6/15/23 (a)(c) ................................ 143,843 7,739 Series 2141, Class SD, 3.06%, 4/15/29 (c) ................................. 115,816 11,584 Series 2247, Class SC, 2.41%, 8/15/30 (a)(c) ................................ 58,785 4,096 Government National Mortgage Association IO, Series 1999-30 Class SA, 2.94%, 4/16/29 (a)(c) ............... 76,287 4,944 Class S, 3.54%, 8/16/29 (a)(c) ................ 58,536 4,757 Morgan Stanley Mortgage Loan Trust, Series 2006-3AR, Class 2A3, 5.71%, 3/25/36 (a) ............................ 1,268,533 1,286,552 Residential Accredit Loans, Inc. Series 2007-QS1, Class 2A8, 5.17%, 1/25/37 (a)(g) ......................... 2,070,680 2,053,205 Series 2007-QS2, Class A4, 6.25%, 1/25/37 ................................ 1,019,245 1,018,629 Residential Asset Securitization Trust, Series 2003-A15, Class 1A2, 5.32%, 2/25/34 (a)(g) ......................... 1,600,199 1,594,059 ------------ TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $10,337,795) ................ 10,323,503 ------------ - -------------------------------------------------------------------------------- COMMERCIAL MORTGAGE BACKED SECURITIES--18.0% - -------------------------------------------------------------------------------- Banc of America Commercial Mortgage, Inc., Series 2006-4, Class A4, 5.63%, 7/10/46 ................................ 1,540,000 1,540,750 Bear Stearns Commercial Mortgage Securities, Inc. Series 2006-T24, Class A4, 5.43%, 10/12/41 ............................... 1,100,000 1,094,316 Series 2007-T28, Class AJ, 6.18%, 9/11/42 ................................ 620,000 615,607 Citigroup Commercial Mortgage Trust Series 2006-C4, Class A3, 5.72%, 3/15/49 (a) ............................ 1,550,000 1,568,583 Series 2006-C5, Class A2, 5.38%, 10/15/49 ............................... 1,100,000 1,100,090 Citigroup/Deutsche Bank Commercial Mortgage Trust, Series 2007-CD4, Class A2B, 5.21%, 12/11/49 .................... 1,300,000 1,290,118 Commercial Mortgage Pass - Through Certificate Series 2005-FL11, Class A1, 5.24%, 11/15/17 (a)(b)(g) ..................... 139,247 139,008 Series 2006-FL12, Class A2, 5.19%, 12/15/20 (a)(b)(g) ............................ 1,514,909 1,510,064 Series 2005-LP5, Class AJ, 5.05%, 5/10/43 ................................ 1,550,000 1,457,240 CWCapital Cobalt Series 2007-C3, Class AJ, 6.02%, 5/15/46 ...... 1,240,000 1,217,107 Series 2006-C1, Class A2, 5.17%, 8/15/48 ...... 1,232,000 1,222,746 DLJ Mortgage Acceptance Corp., IO, Series 1997-CF1, Class S, 0.94%, 5/15/30 (a)(b)(c) ............................. 50,186 692 - -------------------------------------------------------------------------------- COMMERCIAL MORTGAGE BACKED SECURITIES, CONTINUED - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ----------- ------------ GS Mortgage Securities Corp. II Series 2006-GG8, Class AJ, 5.62%, 11/10/39 ............................... 1,300,000 1,258,923 Series 2007-GG10, Class AJ, 5.80%, 8/10/45 (a) ................................... 1,550,000 1,522,156 GS Mortgage Securities Corp., IO, Series 1997-GL, Class X2, 0.29%, 7/13/30 (a)(c) ................................ 36,505 597 JP Morgan Chase Commercial Mortgage Securities Corp., Series 2007-CB20, Class AJ, 6.10%, 2/12/51 ...................... 1,440,000 1,444,714 LB-UBS Commercial Mortgage Trust, Series 2007-C6, Class AM, 6.11%, 7/15/40 (a) ................................... 1,180,000 1,207,103 Morgan Stanley Capital I Series 2006-HQ10, Class A4, 5.33%, 11/12/41 ............................... 1,000,000 978,950 Series 2007-IQ14, Class A2, 5.61%, 4/15/49 ................................ 1,380,000 1,387,575 Washington Mutual Commercial Mortgage Securities Trust, Series 2006-SL1, Class A, 5.30%, 11/23/43 (a)(b) ............... 982,905 971,199 ------------ TOTAL COMMERCIAL MORTGAGE BACKED SECURITIES (COST $21,612,767) ............................ 21,527,538 ------------ - -------------------------------------------------------------------------------- FOREIGN BONDS--2.9% - -------------------------------------------------------------------------------- ICELAND - 1.0% Kaupthing Bank, 5.94%, 1/15/10 (a)(b)(g) ......... 1,250,000 1,245,746 ------------ 1,245,746 ------------ SOUTH KOREA - 1.2% Citibank Korea, Inc., 4.68%, 6/18/13, Callable 6/18/08 @ 100 (a) .................... 1,400,000 1,396,206 ------------ 1,396,206 ------------ UNITED KINGDOM - 0.7% Barclays Bank plc, 5.93%, 12/31/49 (b) ........... 850,000 804,549 ------------ 804,549 ------------ TOTAL FOREIGN BONDS (COST $3,503,008) ............................. 3,446,501 ------------ 83 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) - -------------------------------------------------------------------------------- INVESTMENT COMPANY--4.7% - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ----------- ------------ Northern Institutional Diversified Assets Portfolio, Shares class, 4.80% (e) ............ 5,641,041 5,641,041 ------------ TOTAL INVESTMENT COMPANY (COST $5,641,041) ............................. 5,641,041 ------------ TOTAL INVESTMENTS (COST $136,726,741) -- 114.0% ................. 136,607,637 ============ - ---------- Percentages indicated are based on net assets of $119,811,908. (a) Variable rate security. The interest rates on these securities are adjusted periodically to reflect then-current short-term interest rates. The rates presented represent the rates in effect on October 31, 2007. The maturity dates presented reflect the final maturity dates. However, some of these securities may contain 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. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. This security has been deemed liquid by the Investment Adviser 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. Interest rate adjusts periodically based on the pay off of the underlying mortgage. The interest rate presented represents the rates in effect on October 31, 2007. 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 Adviser, using Board approved procedures, has deemed these securities to be illiquid. Represents 0.03% of net assets. (e) Variable rate security. The rates presented represent the annualized one day yield that was in effect on October 31, 2007. (f) Fair valued security. Represents 0.03% of net assets. (g) Security held as collateral for to be announced securities. FHA -- Federal Housing Administration IO -- Interest-Only security. Represents 0.001% of net assets. LLC -- Limited Liability Co. PLC -- Public Limited Co. TBA -- Security was traded on a "to be announced" basis. Represents 15.08% of net assets. SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 84 - -------------------------------------------------------------------------------- HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 - -------------------------------------------------------------------------------- CORPORATE OBLIGATIONS--95.6% - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ------------- ------------ ADVERTISING - 1.9% Iron Mountain, Inc., 8.63%, 4/1/13, Callable 4/1/08 @ 101 ....................... 100,000 101,750 R.H. Donnelley Corp. 6.88%, 1/15/13, Callable 1/15/09 @ 103 ...... 100,000 94,000 6.88%, 1/15/13, Callable 1/15/09 @ 103 ...... 90,000 84,600 ------------ 280,350 ------------ AEROSPACE & DEFENSE - 1.1% DRS Technologies, Inc., 7.63%, 2/1/18, Callable 2/1/11 @ 104 ....................... 100,000 102,250 Transdigm, Inc., 7.75%, 7/15/14, Callable 7/15/09 @ 106 ...................... 50,000 50,875 ------------ 153,125 ------------ APPAREL MANUFACTURERS - 1.7% Hanesbrands, Inc., 8.78%, 12/15/14, Callable 12/15/08@ 102 (a) .................. 50,000 50,250 Levi Strauss & Co., 8.88%, 4/1/16, Callable 4/1/11 @ 104 ....................... 50,000 51,250 Quiksilver, Inc., 6.88%, 4/15/15, Callable 4/15/10 @ 103 ...................... 150,000 139,875 ------------ 241,375 ------------ AUTO MANUFACTURERS - 1.9% Cooper Standard Automotive, Inc., 8.38%, 12/15/14, Callable 12/15/09 @ 104 .............................. 50,000 44,500 General Motors Corp. 7.70%, 4/15/16 .............................. 50,000 46,000 7.13%, 7/15/13 .............................. 175,000 162,313 Goodyear Tire & Rubber Co., 8.63%, 12/1/11, Callable 12/1/09 @ 104 ............. 17,000 18,105 ------------ 270,918 ------------ BUILDING & CONSTRUCTION PRODUCTS - 2.2% Ainsworth Lumber Co., Ltd., 7.25%, 10/1/12, Callable 10/1/08 @ 104 ............. 150,000 103,125 Interline Brands, Inc., 8.13%, 6/15/14, Callable 6/15/10 @ 104 ...................... 50,000 49,875 Ply Gem Industries, Inc., 9.00%, 2/15/12, Callable 2/18/08 @ 105 ...................... 150,000 122,250 U.S. Concrete, Inc., 8.38%, 4/1/14, Callable 4/1/09 @ 104 ....................... 50,000 45,500 ------------ 320,750 ------------ CABLE TELEVISION - 3.0% Barrington Broadcasting Co. LLC, 10.50%, 8/15/14, Callable 8/15/10 @ 105 ............. 50,000 51,875 Bonten Media Acquisition, 9.00%, 6/1/15, Callable 6/1/11@ 105(b) ..................... 75,000 68,906 Cablevision Systems Corp., 8.00%, 4/15/12 ...... 100,000 97,750 Mediacom LLC, 7.88%, 2/15/11, Callable 2/15/08 @ 100 ...................... 200,000 193,500 Quebecor Media, Inc., 7.75%, 3/15/16, Callable 3/15/11 @ 104(b) ................... 25,000 24,125 ------------ 436,156 ------------ - -------------------------------------------------------------------------------- CORPORATE OBLIGATIONS, CONTINUED - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ------------- ------------ CASINOS & GAMBLING - 8.4% Choctaw Resort Development Entertainment, 7.25%, 11/15/19, Callable 11/15/11 @ 104(b) .................. 48,000 46,800 Fontainebleau Las Vegas, 10.25%, 6/15/15, Callable 6/15/11@ 105(b) .................... 100,000 93,500 Great Canadian Gaming Co., 7.25%, 2/15/15, Callable 2/15/11 @ 104(b) ................... 50,000 49,750 Greektown Holdings, Inc., 10.75%, 12/1/13, Callable 12/1/10 @ 105(b) ................... 125,000 124,375 Herbst Gaming, Inc., 7.00%, 11/15/14, Callable 11/15/09 @ 104 ..................... 50,000 40,500 Indianapolis Downs LLC, 11.00%, 11/1/12, Callable 11/1/10 @ 106(b) ................... 25,000 25,125 Inn of the Mountain Gods, 12.00%, 11/15/10, Callable 11/15/07 @ 106 ..................... 50,000 52,750 Isle of Capri Casinos, Inc., 7.00%, 3/1/14, Callable 3/1/09 @ 103.50 .................... 150,000 133,125 MGM MIRAGE, Inc., 6.75%, 4/1/13 ................ 100,000 97,500 Mohegan Tribal Gaming, 7.13%, 8/15/14, Callable 8/15/09 @ 104 ...................... 50,000 49,000 MTR Gaming Group, Inc., 9.00%, 6/1/12, Callable 6/1/09 @ 105 ....................... 100,000 100,000 Pinnacle Entertainment, 7.50%, 6/15/15, Callable 6/15/10 @ 104(b) ................... 50,000 48,250 Pokagon Gaming Authority, 10.38%, 6/15/14, Callable 6/15/10 @ 105(b) ................... 75,000 82,875 San Pasqual Casino, 8.00%, 9/15/13, Callable 9/15/09 @ 104(b) ................... 25,000 25,250 Seminole Hard Rock Entertainment, 8.19%, 3/15/14, Callable 3/15/09 @ 102 (a)(b) ...... 50,000 48,875 Seneca Gaming Corp., 7.25%, 5/1/12, Callable 5/1/08 @ 104 ....................... 50,000 50,375 Shingle Springs, 9.38%, 6/15/15, Callable 6/15/11@ 105(b) .................... 50,000 50,250 Turning Stone Resort Casino, 9.13%, 9/15/14, Callable 9/15/10 @ 105(b) ................... 75,000 77,625 Waterford Gaming LLC, 8.63%, 9/15/14(b) ........ 25,000 25,000 ------------ 1,220,925 ------------ CHEMICALS - 3.6% Georgia Gulf Corp., 9.50%, 10/15/14, Callable 10/15/10 @ 105 ..................... 100,000 86,500 Huntsman International LLC, 7.88%, 11/15/14, Callable 11/15/10 @ 104 ........... 35,000 37,625 Innophos, Inc., 8.88%, 8/15/14, Callable 8/16/09 @ 104 ...................... 50,000 50,375 JohnsonDiversey, Inc., 9.63%, 5/15/12, Callable 11/23/07 @ 105 ..................... 100,000 103,750 Lyondell Chemical Co. 6.88%, 6/15/17, Callable 6/15/12 @ 103 ...... 50,000 55,000 8.25%, 9/15/16, Callable 9/15/11 @ 104 ...... 25,000 28,562 8.00%, 9/15/14, Callable 9/15/10 @ 104 ...... 25,000 27,687 85 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) - -------------------------------------------------------------------------------- CORPORATE OBLIGATIONS, CONTINUED - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ------------- ------------ CHEMICALS, CONTINUED Mosaic Co., 7.63%, 12/1/16, Callable 12/1/11 @ 104(b) ................... 25,000 26,938 Nova Chemicals Corp., 6.50%, 1/15/12 ........... 50,000 48,000 Terra Capital, Inc., 7.00%, 2/1/17, Callable 2/1/12@ 104 ........................ 50,000 50,000 ------------ 514,437 ------------ COMPUTER SERVICES - 0.3% Activant Solutions, Inc., 9.50%, 5/1/16, Callable 5/1/11 @ 105 ....................... 50,000 45,625 ------------ 45,625 ------------ CONSUMER PRODUCTS - 1.4% Sealy Mattress Co., 8.25%, 6/15/14, Callable 6/15/09 @ 104 ...................... 50,000 49,750 Smithfield Foods, Inc., 7.75%, 7/1/17 .......... 50,000 51,500 Spectrum Brands, Inc., 7.38%, 2/1/15, Callable 2/1/10@ 104 ........................ 75,000 54,188 Yankee Acquisition Corp., 9.75%, 2/15/17, Callable 2/15/12@ 105 ....................... 50,000 46,250 ------------ 201,688 ------------ CONTAINERS - PAPER AND PLASTIC - 2.6% Owens-Brockway Glass Containers, 6.75%, 12/1/14, Callable 12/1/09 @ 103 ............. 50,000 50,125 Solo Cup Co., 8.50%, 2/15/14, Callable 2/15/09 @ 104 ...................... 200,000 180,000 Stone Container Finance Co. of Canada, 7.38%, 7/15/14, Callable 7/15/09 @ 104 ...... 150,000 145,125 ------------ 375,250 ------------ COSMETICS - 0.3% Chattem, Inc., 7.00%, 3/1/14, Callable 3/1/09 @ 104 ....................... 50,000 49,500 ------------ 49,500 ------------ DISTRIBUTION & WHOLESALE - 2.0% Baker & Taylor, Inc., 11.50%, 7/1/13, Callable 7/1/10 @ 106(b) .................... 100,000 98,500 Beverages & More, Inc., 9.25%, 3/1/12, Callable 9/1/09 @ 105(b) .................... 50,000 51,500 Central Garden & Pet Co., 9.13%, 2/1/13, Callable 2/1/08 @ 105 ....................... 50,000 47,750 Jarden Corp., 7.50%, 5/1/17, Callable 5/1/12 @ 104 ....................... 25,000 23,750 Pegasus Solutions, Inc., 10.50%, 4/15/15, Callable 4/15/11 @ 105(b) ................... 50,000 45,000 Pilgrim's Pride Corp., 8.38%, 5/1/17, Callable 5/1/12 @ 104 ....................... 25,000 25,187 ------------ 291,687 ------------ - -------------------------------------------------------------------------------- CORPORATE OBLIGATIONS, CONTINUED - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ------------- ------------ DIVERSIFIED OPERATIONS - 1.4% Bombardier, Inc., 8.00%, 11/15/14, Callable 11/15/10 @ 104(b) .................. 25,000 26,000 Koppers Holdings, Inc., 0.00%, 11/15/14, Callable 11/15/09 @ 105 (c) ....... 25,000 21,437 Snoqualmie Entertainment Authority, 9.06%, 2/1/14, Callable 2/1/09 @ 103 (a)(b) ................ 25,000 24,094 Susser Holdings LLC 10.63%, 12/15/13, Callable 12/15/09 @ 105 .............................. 50,000 52,000 10.63%, 12/15/13, Callable 12/15/09 @ 105 .............................. 72,000 74,880 ------------ 198,411 ------------ EDUCATION - 0.4% Education Management LLC 10.25%, 6/1/16, Callable 6/1/11 @ 105 ....... 25,000 26,250 8.75%, 6/1/14, Callable 6/1/10 @ 104 ........ 25,000 25,813 ------------ 52,063 ------------ ELECTRIC - 2.5% AES Corp. 7.75%, 3/1/14 ............................... 60,000 60,000 7.75%, 10/15/15(b) .......................... 50,000 50,062 Baldor Electic Co., 8.63%, 2/15/17, Callable 2/15/12 @ 104 ...................... 50,000 52,125 CMS Energy Corp., 6.88%, 12/15/15 .............. 100,000 100,458 Edison Mission Energy, 7.20%, 5/15/19 .......... 50,000 48,875 General Cable Corp., 7.13%, 4/1/17, Callable 4/1/12 @ 104 ....................... 50,000 50,000 ------------ 361,520 ------------ ENERGY - 3.6% Aventine Renewable Energy, Inc., 10.00%, 4/1/17, Callable 4/1/12 @ 105 ................................ 50,000 44,500 Copano Energy LLC, 8.13%, 3/1/16, Callable 3/1/11 @ 104 ....................... 80,000 82,200 Massey Energy Co., 6.88%, 12/15/13, Callable 12/15/09 @ 103 ..................... 100,000 94,500 Mirant North America LLC, 7.38%, 12/31/13, Callable 12/31/09 @ 104 ........... 50,000 50,687 NRG Energy, Inc., 7.38%, 2/1/16, Callable 2/1/11 @ 104 ....................... 50,000 49,875 Reliant Energy, Inc., 7.63%, 6/15/14 ........... 50,000 50,437 Verasun Energy Corp., 9.88%, 12/15/12, Callable 12/15/09 @ 105 ..................... 50,000 49,563 Williams Cos., Inc., 6.38%, 10/1/10 (b) ........ 100,000 101,250 ------------ 523,012 ------------ SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 86 - -------------------------------------------------------------------------------- HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) - -------------------------------------------------------------------------------- CORPORATE OBLIGATIONS, CONTINUED - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ------------- ------------ FINANCE - 6.8% Basell AF SCA, 8.38%, 8/15/15, Callable 8/15/10 @ 104 (b) .................. 150,000 134,250 CCM Merger, Inc., 8.00%, 8/1/13, Callable 8/1/09 @ 104(b) .................... 150,000 144,000 Ford Motor Credit Co. 7.38%, 2/1/11 ............................... 50,000 47,160 7.38%, 10/28/09 ............................. 250,000 241,113 General Motors Acceptance Corp., 6.88%, 8/28/12 .............................. 300,000 270,448 MSX International, 12.50%, 4/1/12, Callable 4/1/09 @ 110(b) .................... 25,000 23,750 Nalco Finance Holdings, Inc., 0.00%, 2/1/14, Callable 2/1/09 @ 105 (c) ........... 75,000 68,250 Nuveen Investments, Inc., 10.50%, 11/15/15, Callable 11/15/11 @ 105(b) .................. 50,000 50,000 ------------ 978,971 ------------ HEALTH CARE - 0.2% HCA, Inc., 9.25%, 11/15/16, Callable 11/15/11 @ 105 .............................. 25,000 26,313 ------------ 26,313 ------------ INTERNET RELATED - 0.3% Atlantic Broadband Finance LLC, 9.38%, 1/15/14, Callable 1/15/09 @ 105 ............. 50,000 49,000 ------------ 49,000 ------------ LEISURE - 0.7% AMC Entertainment, Inc., 11.00%, 2/1/16, Callable 2/1/11@ 106 ........................ 100,000 108,250 ------------ 108,250 ------------ MACHINERY - 0.7% Case New Holland, Inc., 7.13%, 3/1/14, Callable 3/1/10 @ 104 ....................... 50,000 51,750 Sensata Technologies, 8.00%, 5/1/14, Callable 5/1/10 @ 104 ....................... 50,000 49,063 ------------ 100,813 ------------ MANUFACTURING - 1.7% AGY Holding Corp., 11.00%, 11/15/14, Callable 11/15/10 @ 106(b) .................. 50,000 49,250 American Railcar Industries, 7.50%, 3/1/14, Callable 3/1/11 @ 104 ....................... 25,000 24,688 Coleman Cable, Inc., 9.88%, 10/1/12, Callable 10/1/08 @ 105 ...................... 50,000 49,250 Freescale Semiconductor, Inc., 10.13%, 12/15/16, Callable 12/15/11 @ 105 ........... 50,000 45,312 Libbey Glass, Inc., 12.38%, 6/1/11, Callable 6/1/08 @ 108 (a) ................... 25,000 27,187 Maax Corp., 9.75%, 6/15/12, Callable 6/15/08 @ 105 ...................... 50,000 17,000 - -------------------------------------------------------------------------------- CORPORATE OBLIGATIONS, CONTINUED - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ------------- ------------ MANUFACTURING, CONTINUED Ryerson, Inc., 12.00%, 11/1/15, Callable 11/1/11 @ 106(b) ................... 25,000 25,688 Tembec Industries, Inc., 7.75%, 3/15/12 ........ 25,000 10,344 ------------ 248,719 ------------ MEDICAL - 2.7% Advanced Medical Optics, 7.50%, 5/1/17, Callable 5/1/12 @ 104 ....................... 50,000 47,125 Community Health, 8.88%, 7/15/15, Callable 7/15/11 @ 104 ...................... 50,000 50,625 MQ Associates, Inc., 0.00%, 8/15/12, Callable 8/15/08 @ 109 (c) .................. 100,000 90,000 MultiPlan, Inc., 10.38%, 4/15/16, Callable 4/15/11 @ 105(b) ................... 100,000 102,250 Omnicare, Inc., 6.75%, 12/15/13, Callable 12/15/09 @ 103 ..................... 100,000 96,500 ------------ 386,500 ------------ METAL PROCESSORS & FABRICATION - 0.5% TriMas Corp., 9.88%, 6/15/12, Callable 12/10/07 @ 105 ..................... 77,000 79,118 ------------ 79,118 ------------ METALS & MINING - 3.0% AK Steel Corp., 7.75%, 6/15/12, Callable 11/23/07 @ 104 ..................... 100,000 102,000 Freeport-McMoran Copper & Gold, Inc., 8.25%, 4/1/15, Callable 4/1/11 @ 104 ........ 50,000 54,000 Gibraltar Industries, Inc., 8.00%, 12/1/15, Callable 12/1/10 @ 104 ...................... 150,000 141,000 International Coal Group, Inc., 10.25%, 7/15/14, Callable 7/15/10 @ 105 ............. 50,000 48,500 Noranda Aluminium Acquisition, 9.36%, 5/15/15, Callable 5/15/08 @ 102 (a)(b) ........................ 50,000 46,125 Tube City IMS Corp., 9.75%, 2/1/15, Callable 2/1/11 @ 105 ....................... 50,000 49,125 ------------ 440,750 ------------ OIL & GAS - 8.7% Chaparral Energy, Inc., 8.50%, 12/1/15, Callable 12/1/10 @ 104 ...................... 100,000 93,250 Chesapeake Energy Corp., 6.88%, 1/15/16, Callable 1/15/09 @ 103 ...................... 100,000 99,500 Cimarex Energy Co., 7.13%, 5/1/17, Callable 5/1/12 @ 104 ....................... 50,000 49,938 Clayton Williams Energy, Inc., 7.75%, 8/1/13, Callable 8/1/09 @ 104 ....................... 200,000 187,500 Colorado Interstate Gas Co., 6.80%, 11/15/15 ............................. 150,000 155,726 Compton Petroleum Finance Corp., 7.63%, 12/1/13, Callable 12/1/09 @ 104 ...... 100,000 95,750 87 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) - -------------------------------------------------------------------------------- CORPORATE OBLIGATIONS, CONTINUED - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ------------- ------------ OIL & GAS, CONTINUED Energy Partners Ltd., 9.75%, 4/15/14, Callable 4/15/11 @ 105 ...................... 50,000 49,500 Forest Oil Corp., 7.25%, 6/15/19, Callable 6/15/12 @ 104(b) ................... 50,000 50,000 Grant Prideco, Inc., 6.13%, 8/15/15, Callable 8/15/10 @ 103 ...................... 25,000 25,125 Inergy LP/Inergy Finance, 8.25%, 3/1/16, Callable 3/1/11 @ 104 ....................... 100,000 104,500 Newfield Exploration Co., 6.63%, 9/1/14, Callable 9/1/09 @ 103 ....................... 100,000 98,250 Opti Canada, Inc., 7.88%, 12/15/14, Callable 12/15/10 @ 104(b) .................. 50,000 49,625 Pogo Producing Co., 7.88%, 5/1/13, Callable 5/1/10 @ 104 ....................... 100,000 102,000 Swift Energy Co., 7.63%, 7/15/11, Callable 7/15/08 @ 104 ...................... 50,000 50,500 Tesoro Corp., 6.50%, 6/1/17, Callable 6/1/12 @ 103 ....................... 50,000 49,375 ------------ 1,260,539 ------------ PAPER & RELATED PRODUCTS - 2.5% Aleris International, Inc., 10.00%, 12/15/16, Callable 12/15/11 @ 105 ..................... 25,000 22,000 Catalyst Paper Corp., 8.63%, 6/15/11, Callable 12/6/07 @ 103 ...................... 50,000 39,500 Exopack Holding Corp., 11.25%, 2/1/14, Callable 2/1/10 @ 106 ....................... 50,000 50,625 Georgia-Pacific Corp., 7.70%, 6/15/15 .......... 100,000 98,500 Norampac, Inc., 6.75%, 6/1/13, Callable 6/1/08 @ 103 ....................... 100,000 95,250 Verso Paper Holdings LLC, 9.13%, 8/1/14, Callable 8/1/10 @ 105 ....................... 50,000 51,625 ------------ 357,500 ------------ PIPELINES - 3.1% Atlas Pipeline Partners LP, 8.13%, 12/15/15, Callable 12/15/10 @ 104 ..................... 50,000 49,750 Dynegy Holdings, Inc., 8.38%, 5/1/16 ........... 150,000 150,375 El Paso Corp., 7.00%, 6/15/17 .................. 100,000 100,204 Mueller Water Products, Inc., 7.38%, 6/1/17, Callable 6/1/12 @ 104 ....................... 50,000 46,500 Semgroup LP, 8.75%, 11/15/15, Callable 11/15/10 @ 104(b) .................. 50,000 48,000 Williams Partners LP, 7.25%, 2/1/17 ............ 50,000 51,563 ------------ 446,392 ------------ PRINTING & PUBLISHING - 2.8% Block Communications, Inc., 8.25%, 12/15/15, Callable 12/15/10 @ 104(b) ........ 50,000 50,250 Canwest Mediaworks LP, 9.25%, 8/1/15, Callable 8/1/11 @ 105(b) .................... 50,000 50,750 Idearc, Inc., 8.00%, 11/15/16, Callable 11/15/11 @ 104 ..................... 50,000 50,125 Medimedia USA, Inc., 11.38%, 11/15/14, Callable 11/15/09 @ 106(b) .................. 50,000 52,250 Morris Publishing, 7.00%, 8/1/13, Callable 8/1/08 @ 103 ....................... 100,000 76,750 - -------------------------------------------------------------------------------- CORPORATE OBLIGATIONS, CONTINUED - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ------------- ------------ PRINTING & PUBLISHING, CONTINUED Sheridan Group, Inc., 10.25%, 8/15/11, Callable 11/23/07 @ 105 ..................... 100,000 102,500 Valassis Communications, Inc., 8.25%, 3/1/15, Callable 3/1/11 @ 104 ....................... 35,000 29,487 ------------ 412,112 ------------ RENTAL - AUTO AND EQUIPMENT - 1.7% Avis Budget Car Rental, Inc., 7.63%, 5/15/14, Callable 5/15/10 @ 104 ...................... 100,000 99,000 Hertz Corp., 8.88%, 1/1/14, Callable 1/1/10 @ 104 ....................... 100,000 103,000 Rental Service Corp., 9.50%, 12/1/14, Callable 12/1/10 @ 105 ...................... 50,000 48,063 ------------ 250,063 ------------ RESTAURANTS - 3.0% Buffets, Inc., 12.50%, 11/1/14, Callable 11/1/10 @ 106 ...................... 50,000 32,375 Dave & Buster's, Inc., 11.25%, 3/15/14, Callable 3/15/10 @ 106 ...................... 50,000 50,875 Landry's Restaurants, Inc., 9.50%, 12/15/14, Callable 2/28/09 @ 101 ...................... 200,000 200,000 NPC International, Inc., 9.50%, 5/1/14, Callable 5/1/10 @ 105 ....................... 50,000 46,750 Outback Steakhouse, Inc., 10.00%, 6/15/15, Callable 6/15/11 @ 105(b) ................... 75,000 64,500 Sbarro, Inc., 10.38%, 2/1/15, Callable 2/1/10 @ 108 ....................... 50,000 45,187 ------------ 439,687 ------------ RETAIL - 1.9% Claire's Stores, Inc., 9.63%, 6/1/15, Callable 6/1/11 @ 105(b) .................... 50,000 40,875 Linens `N' Things, Inc., 10.87%, 1/15/14, Callable 1/15/08 @ 102 (a) .................. 50,000 33,000 Pep Boys, 7.50%, 12/15/14, Callable 12/15/09 @ 104 ..................... 50,000 48,125 Stater Bros. Holdings, Inc., 7.75%, 4/15/15, Callable 4/15/11 @ 104 ...................... 50,000 49,875 Suburban Propane Partners LP, 6.88%, 12/15/13, Callable 12/15/08 @ 103 ........... 50,000 48,750 United Auto Group, Inc., 7.75%, 12/15/16, Callable 12/15/11 @ 104 ..................... 50,000 48,625 ------------ 269,250 ------------ SEISMIC DATA COLLECTION - 0.7% CIE Gener de Geophysique, 7.50%, 5/15/15, Callable 5/15/10 @ 104 ...................... 50,000 51,000 Seitel, Inc., 9.75%, 2/15/14, Callable 2/15/11 @ 105 ...................... 50,000 46,375 ------------ 97,375 ------------ SPECIAL PURPOSE ENTITY - 4.2% Altra Industrial Motion, Inc., 9.00%, 12/1/11, Callable 12/1/08 @ 105 ............. 50,000 50,250 Buffalo Thunder Development Authority, 9.38%, 12/15/14, Callable 12/15/10 @ 105(b) .................. 50,000 46,750 SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 88 - -------------------------------------------------------------------------------- HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) - -------------------------------------------------------------------------------- CORPORATE OBLIGATIONS, CONTINUED - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ------------- ------------ SPECIAL PURPOSE ENTITY, CONTINUED Cellu Tissue Holdings, Inc., 9.75%, 3/15/10, Callable 11/23/07 @ 107 ..................... 50,000 49,125 Chukchansi Economic Development Authority, 8.00%, 11/15/13, Callable 11/15/09 @ 104(b) .................. 25,000 25,188 Hawker Beechcraft Acquisition Co. 9.75%, 4/1/17, Callable 4/1/12 @ 105(b) ..... 25,000 25,437 8.50%, 4/1/15, Callable 4/1/11 @ 104(b) ..... 50,000 50,875 Kar Holdings, Inc., 8.75%, 5/1/14, Callable 5/1/10 @ 104(b) .................... 50,000 48,250 Local TV Finance LLC, 9.25%, 6/15/15, Callable 6/15/11 @ 105(b) ................... 50,000 47,875 MCBC Holdings, Inc., 11.52%, 10/15/14, Callable 10/15/09 @ 103 (a)(b) .............. 25,000 25,000 Momentive Performance, 9.75%, 12/1/14, Callable 12/1/10 @ 105(b) ................... 50,000 48,750 Petroplus Finance Ltd., 7.00%, 5/1/17, Callable 5/1/12 @ 104(b) .................... 75,000 70,500 Rare Restaurant Group Ll, 9.25%, 5/15/14, Callable 5/15/11 @ 105(b) ................... 50,000 48,500 Regency Energy Partners LP, 8.38%, 12/15/13, Callable 12/15/10 @ 104.19 ........ 17,000 17,893 UCI Holdco, Inc., 12.69%, 12/15/13, Callable 12/15/07 @ 100 (a)(b) .............. 54,687 53,593 ------------ 607,986 ------------ TELECOMMUNICATIONS - 10.1% Broadview Network Holdings, 11.38%, 9/1/12, Callable 9/1/09 @ 106(b) .................... 25,000 26,500 Centennial Communications Corp., 10.00%, 1/1/13, Callable 1/1/09 @ 108 ............... 100,000 106,000 Cincinnati Bell, Inc., 8.38%, 1/15/14, Callable 1/15/09 @ 104 ...................... 100,000 100,250 Cricket Communications, 9.38%, 11/1/14, Callable 11/1/10 @ 105 ...................... 50,000 49,625 Insight Midwest LP, 9.75%, 10/1/09, Callable 11/23/07 @ 100 ..................... 130,000 130,162 IPCS, Inc., 8.61%, 5/1/14, Callable 5/1/08 @ 102 (a) ................... 100,000 97,000 Level 3 Financing, Inc., 9.25%, 11/1/14, Callable 11/1/10 @ 105 ...................... 50,000 47,125 Metropcs Wireless, Inc. 9.25%, 11/1/14, Callable 11/1/10 @ 105 ............................... 50,000 49,625 9.25%, 11/1/14, Callable 11/1/10 @ 105 ............................... 50,000 49,625 Nordic Telephone Co., Holdings, 8.88%, 5/1/16, Callable 5/1/11 @ 104 (b) ........... 50,000 52,875 NTL Cable plc, 9.13%, 8/15/16, Callable 8/15/11 @ 105 ...................... 125,000 131,875 Paetec Holding Corp., 9.50%, 7/15/15, Callable 7/15/11 @ 105(b) ................... 50,000 51,250 Panamsat Corp., 9.00%, 6/15/16, Callable 6/15/11 @ 105 ...................... 50,000 51,125 Qwest Corp., 5.63%, 11/15/08 ................... 150,000 149,250 Radio One, Inc., 6.38%, 2/15/13, Callable 2/15/09 @ 103 ...................... 50,000 44,000 - -------------------------------------------------------------------------------- CORPORATE OBLIGATIONS, CONTINUED - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ------------- ------------ TELECOMMUNICATIONS, CONTINUED Suncom Wireless Holdings, Inc., 8.50%, 6/1/13, Callable 6/1/08 @ 104 ............... 150,000 157,312 West Corp., 11.00%, 10/15/16, Callable 10/15/11 @ 106 ..................... 25,000 26,188 Wind Acquisition Financial SA, 10.75%, 12/1/15, Callable 12/1/10 @ 105(b) .......... 100,000 111,250 Windstream Corp., 8.63%, 8/1/16, Callable 8/1/11 @ 104 ....................... 25,000 26,750 ------------ 1,457,787 ------------ TOBACCO - 0.2% Alliance One International, Inc., 8.50%, 5/15/12 .............................. 25,000 24,875 ------------ 24,875 ------------ TRANSPORTATION - 0.8% Bristow Group, Inc., 7.50%, 9/15/17, Callable 9/15/12 @ 104(b) ................... 50,000 51,500 Navios Maritime Holdings, Inc., 9.50%, 12/15/14, Callable 12/15/10 @ 105 ........... 30,000 31,725 Saint Acquisition Corp., 13.31%, 5/15/15, Callable 5/15/09 @ 102 (a)(b) ............... 50,000 31,875 ------------ 115,100 ------------ WASTE DISPOSAL - 1.0% Allied Waste North America, Inc., 7.38%, 4/15/14, Callable 4/15/09 @ 104 ............. 150,000 151,500 ------------ 151,500 ------------ TOTAL CORPORATE OBLIGATIONS (COST $14,058,455) .......................... 13,845,392 ------------ - -------------------------------------------------------------------------------- INVESTMENT COMPANY--2.4% - -------------------------------------------------------------------------------- Northern Institutional Diversified Assets Portfolio, Shares class, 4.80% (d) .......... 355,288 355,288 ------------ TOTAL INVESTMENT COMPANY (COST $355,288) ............................. 355,288 ------------ TOTAL INVESTMENTS (COST $14,413,743) -- 98.0% ................. 14,200,680 ============ - ---------- Percentages indicated are based on net assets of $14,487,263. (a) Variable rate security. The interest rates on these securities are adjusted periodically to reflect then-current short-term interest rates. The rates presented represent the rates in effect on October 31, 2007. The maturity dates presented reflect the final maturity dates. However, some of these securities may contain put or demand features that allow the fund to require the issuer to repurchase the security from the fund within various time periods, including daily, weekly, monthly, or semi-annually. (b) Security exempt from registration under Rule 144a of the Securities Act of 1933. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. This security has been deemed liquid by the Investment Adviser based on procedures approved by the Board of Trustees. (c) Step Bond. Income recognition is on the effective yield method for Step Bonds. (d) The rate presented represents the annualized one day yield that was in effect on October 31, 2007. LLC -- Limited Liability Co. LP -- Limited Partnership PLC -- Public Limited Co. 89 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 - -------------------------------------------------------------------------------- U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS--28.0% - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ------------- ------------ Federal Home Loan Mortgage Corp. - 12.5% Pool #1B2655, 4.20%, 12/1/34(a)(d) .......... 199,130 200,195 Pool #1J1313, 6.43%, 6/1/36(a) .............. 273,308 279,287 Pool #847557, 5.54%, 7/1/34(a)(d) ........... 173,761 176,901 Pool #G02981, 6.00%, 6/1/37 ................. 194,294 195,556 Pool #G12317, 5.50%, 8/1/21 ................. 187,094 187,390 TBA November, 6.00%, 11/11/37 ............... 150,000 150,938 TBA November, 5.50%, 11/15/37 ............... 700,000 689,062 ------------ 1,879,329 ------------ Federal National Mortgage Association - 14.5% Pool #781922, 5.00%, 2/1/21 ................. 379,120 373,313 Pool #922090, 5.90%, 3/1/37(a) .............. 329,112 332,705 TBA December 2007 6.50%, 12/1/35 ............................ 850,000 870,027 6.00%, 12/15/36 ........................... 600,000 603,750 ------------ 2,179,795 ------------ Government National Mortgage Association - 1.0% 6.00%, 11/15/36 ............................. 150,000 151,875 ------------ TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (COST $4,198,134) ............... 4,210,999 ------------ - -------------------------------------------------------------------------------- CORPORATE OBLIGATIONS--41.8% - -------------------------------------------------------------------------------- AUTO MANUFACTURERS - 0.6% General Motors, 8.25%, 7/15/23 ................. 100,000 90,250 ------------ 90,250 ------------ BANKING - 2.5% American Express Centurion Bank, 5.95%, 6/12/17 .............................. 100,000 100,596 Bank of America N.A., 6.10%, 6/15/17 ........... 150,000 153,521 Washington Mutual, Inc., 6.09%, 9/17/12 (a) ................................. 75,000 71,492 Washington Mutual Bank, 5.56%, 2/4/11 (a) .................................. 50,000 48,336 ------------ 373,945 ------------ BUILDING & CONSTRUCTION PRODUCTS - 1.3% Martin Marietta Materials, Inc., 5.13%, 4/30/10 (a) .......................... 100,000 98,870 Masco Corp., 6.00%, 3/12/10 (a)(d) ............. 100,000 98,235 ------------ 197,105 ------------ ELECTRIC - 5.4% MidAmerican Energy Co., 5.95%, 7/15/17 ......... 450,000 465,393 Progress Energy, Inc., 5.98%, 11/14/08, Callable 2/14/08 @ 100 (a)(d) ............... 250,000 250,316 Puget Sound Energy, Inc., 6.97%, 6/1/67, Callable 6/1/17 @ 100 ....................... 100,000 94,599 ------------ 810,308 ------------ FINANCE - 9.9% Ford Motor Credit Co., LLC 4.95%, 1/15/08 .............................. 250,000 248,918 5.80%, 1/12/09 .............................. 300,000 289,426 7.25%, 10/25/11 ............................. 25,000 23,255 - -------------------------------------------------------------------------------- CORPORATE OBLIGATIONS, CONTINUED - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ------------- ------------ FINANCE, CONTINUED General Motors Acceptance Corp. 4.38%, 12/10/07 ............................. 500,000 499,203 7.25%, 3/2/11 ............................... 100,000 94,559 SLM Corp. 4.00%, 1/15/10 .............................. 150,000 140,664 4.50%, 7/26/10 .............................. 50,000 46,814 XTRA Finance Corp., 5.15%, 4/1/17 .............. 150,000 144,869 ------------ 1,487,708 ------------ HOSPITALS - 1.4% HCA, Inc., 8.75%, 9/1/10 ....................... 200,000 203,500 ------------ 203,500 ------------ MEDIA - 3.6% Time Warner Cable, Inc., 5.85%, 5/1/17 ......... 150,000 148,720 Time Warner Entertainment, 8.88%, 10/1/12 .............................. 350,000 398,354 ------------ 547,074 ------------ MEDICAL - 2.0% Astrazeneca plc, 5.90%, 9/15/17 ................ 150,000 153,374 Schering-Plough, 6.00%, 9/15/17 ................ 150,000 152,565 ------------ 305,939 ------------ OFFICE EQUIPMENT & SERVICES - 1.7% IBM Corp., 5.70%, 9/14/17 ...................... 150,000 152,248 Xerox Corp., 6.40%, 12/18/09 (a)(d) ............ 100,000 99,932 ------------ 252,180 ------------ RETAIL - 3.5% Federated Retail Holdings, Inc., 5.90%, 12/1/16 .............................. 150,000 143,204 Home Depot, Inc., 5.25%, 12/16/13 .............. 400,000 387,331 ------------ 530,535 ------------ TELECOMMUNICATIONS - 2.8% Motorola, Inc., 6.00%, 11/15/17 ................ 150,000 148,122 Verizon Pennsylvania, Inc., 5.65%, 11/15/11 .... 275,000 279,320 ------------ 427,442 ------------ TRANSPORTATION - 7.1% American Airlines, Inc. 6.98%, 4/1/11 ............................... 77,970 77,970 7.86%, 10/1/11 .............................. 200,000 211,250 Burlington Northern Santa Fe Railway Co., 4.83%, 1/15/23 .............................. 251,263 242,328 Continental Airlines, Inc., 5.98%, 4/19/22 ..... 100,000 98,307 Union Pacific Corp., 5.75%, 11/15/17 ........... 150,000 148,684 Union Pacific Railroad, 5.08%, 1/2/29 .......... 299,279 288,622 ------------ 1,067,161 ------------ SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 90 - -------------------------------------------------------------------------------- HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) - -------------------------------------------------------------------------------- CORPORATE OBLIGATIONS, CONTINUED - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ------------- ------------ TOTAL CORPORATE OBLIGATIONS (COST $6,284,555) ........................... 6,293,147 ------------ - -------------------------------------------------------------------------------- ASSET BACKED SECURITIES--8.2% - -------------------------------------------------------------------------------- Americredit Automobile Receivables Trust, Series 2005-CF, Class A3, 4.47%, 5/6/10 (d) ........................... 133,747 133,484 Asset Backed Funding Certificates, Series 2003-AHL1, Class A1, 3.68%, 3/25/33 .............................. 210,318 207,006 Cairn Mezzanine plc, Series 2007-3A, Class B1, 6.40%, 8/13/47 (a)(b) ............. 145,000 79,750 Citigroup Mortgage Loan Trust, Inc., Series 2005-WF2, Class AF2, 4.92%, 8/25/35 .............................. 15,345 15,297 Countrywide Asset-Backed Certificates, Series 2006-S4, Class A3, 5.80%, 7/25/34 .............................. 210,000 203,873 GE Business Loan Trust, Series 2006-2A, Class A, 5.27%, 11/15/34 (a)(b)(d) .......... 248,921 248,100 GMAC Mortgage Corp., Loan Trust, Series 2006-HE3, Class A3, 5.81%, 10/25/36 ............................. 170,000 161,097 Preferred Term Securities XXII Ltd., 6.03%, 9/22/36, Callable 6/22/11 @ 100 (a)(b)(d) ..................... 199,318 190,648 ------------ TOTAL ASSET BACKED SECURITIES (COST $1,324,232) ........................... 1,239,255 ------------ - -------------------------------------------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS--11.6% - -------------------------------------------------------------------------------- Banc of America Mortgage Securities, Series 2005-D, Class 2A4, 4.78%, 5/25/35 (a) .......................... 200,000 198,780 Deutsche Mortgage Securities, Inc., Series 2006-WF1, Class 1A1, 5.07%, 6/26/35 (a)(b) .............................. 179,467 178,781 Freddie Mac Series 2988, Class AF, 5.39%, 6/15/35 (a)(d) .............................. 169,792 167,259 Series 3212, Class BK, 5.40%, 9/15/36 ....... 150,000 144,027 Morgan Stanley Mortgage Loan Trust, Series 2006-3AR, Class 2A3, 5.71%, 3/25/36 (a) ................................. 271,828 275,690 Residential Accredit Loans, Inc. Series 2007-QS1, Class 2A8, 5.17%, 1/25/37 (a)(d) .............................. 360,118 357,079 Series 2007-QS2, Class A4, 6.25%, 1/25/37 .............................. 169,876 169,773 Residential Asset Securitization Trust, Series 2003-A15, Class 1A2, 5.32%, 2/25/34 (a)(d) ....................... 259,492 258,496 ------------ TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $1,754,762) ........................... 1,749,885 ------------ - -------------------------------------------------------------------------------- COMMERCIAL MORTGAGE BACKED SECURITIES--19.1% - -------------------------------------------------------------------------------- Banc of America Commercial Mortgage, Inc., Series 2006-4, Class A4, 5.63%, 7/10/46 (a) ................................. 230,000 230,112 - -------------------------------------------------------------------------------- COMMERCIAL MORTGAGE BACKED SECURITIES, CONTINUED - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ------------- ------------ Bear Stearns Commercial Mortgage Securities, Inc. Series 2006-T24, Class A4, 5.43%, 10/12/41 ............................. 200,000 198,967 Series 2007-T28, Class AJ, 6.18%, 9/11/42 ..................................... 80,000 79,433 Citigroup Commercial Mortgage Trust, Series 2006-C4, Class A3, 5.72%, 3/15/49 (a) .......................... 240,000 242,877 Citigroup/Deutsche Bank Commercial Mortgage Trust, Series 2007-CD4, Class A2B, 5.21%, 12/11/49 .................. 200,000 198,480 Commercial Mortgage Pass - Through Certificate Series 2005-FL11, Class A1, 5.24%, 11/15/17 (a)(b)(d) .......................... 34,241 34,182 Series 2006-FL12, Class A2, 5.19%, 12/15/20 (a)(d) ............................. 251,337 250,533 Series 2005-LP5, Class AJ, 5.05%, 5/10/43 ..................................... 200,000 188,031 CWCapital Cobalt, Series 2007-C3, Class AJ, 6.02%, 5/15/46 .................... 160,000 157,046 GS Mortgage Securities Corp. II Series 2006-GG8, Class AJ, 5.62%, 11/10/39 ............................. 180,000 174,312 Series 2007-GG10, Class AJ, 5.80%, 8/10/45 (a) .......................... 210,000 206,228 JP Morgan Chase Commercial Mortgage Securities Corp., Series 2007-CB20, Class AJ, 6.10%, 2/12/51 .................... 190,000 190,622 LB-UBS Commercial Mortgage Trust, Series 2007-C6, Class AM, 6.11%, 7/15/40 (a) .......................... 180,000 184,134 Morgan Stanley Capital I Series 2006-HQ10, Class A4, 5.33%, 11/12/41 ............................. 180,000 176,211 Series 2007-IQ14, Class A2, 5.61%, 4/15/49 .............................. 220,000 221,208 Washington Mutual Commercial Mortgage Securities Trust, Series 2006-SL1, Class A, 5.30%, 11/23/43 (a)(b) ............. 147,436 145,680 ------------ TOTAL COMMERCIAL MORTGAGE BACKED SECURITIES (COST $2,886,901) ........................... 2,878,056 ------------ - -------------------------------------------------------------------------------- FOREIGN BONDS--5.1% - -------------------------------------------------------------------------------- ICELAND - 1.5% Kaupthing Bank, 5.94%, 1/15/10 (a)(b)(d) ....... 225,000 224,234 ------------ 224,234 ------------ NETHERLANDS - 1.0% Shell International Finance BV, 5.20%, 3/22/17 .............................. 150,000 149,342 ------------ 149,342 ------------ 91 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) - -------------------------------------------------------------------------------- FOREIGN BONDS, CONTINUED - -------------------------------------------------------------------------------- SHARES OR PRINCIPAL AMOUNT($) VALUE($) ------------- ------------ SOUTH KOREA - 1.7% Citibank Korea, Inc., 4.68%, 6/18/13, Callable 6/18/08 @ 100 (a) .................. 250,000 249,323 ------------ 249,323 ------------ UNITED KINGDOM - 0.9% Barclays Bank plc, 5.93%, 12/31/49 (b) ......... 150,000 141,979 ------------ 141,979 ------------ TOTAL FOREIGN BONDS (COST $773,460) ............................. 764,878 ------------ - -------------------------------------------------------------------------------- INVESTMENT COMPANY--1.1% - -------------------------------------------------------------------------------- Northern Institutional Diversified Assets Portfolio, Shares class, 4.80% (c) .......... 169,259 169,259 ------------ TOTAL INVESTMENT COMPANY (COST $169,259) ............................. 169,259 ------------ TOTAL INVESTMENTS (COST $17,391,303) -- 114.9% ................ 17,305,479 ============ - ---------- Percentages indicated are based on net assets of $15,058,569. (a) Variable rate security. The interest rates on these securities are adjusted periodically to reflect then-current short-term interest rates. The rates presented represent the rates in effect on October 31, 2007. The maturity dates presented reflect the final maturity dates. However, some of these securities may contain put or demand features that allow the fund to require the issuer to repurchase the security from the fund within various time periods, including daily, weekly, monthly, or semi-annually. (b) Security exempt from registration under Rule 144a of the Securities Act of 1933. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. This security has been deemed liquid by the Investment Adviser based on procedures approved by the Board of Trustees. (c) The rate presented represents the annualized one day yield that was in effect on October 31, 2007. (d) Security held as collateral for to be announced securities. LLC -- Limited Liability Co. PLC -- Public Limited Co. TBA -- Security was traded on a "to be announced" basis. Represents 15.37% of net assets. SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 92 - -------------------------------------------------------------------------------- HSBC INVESTOR GROWTH PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 - -------------------------------------------------------------------------------- COMMON STOCKS--97.7% - -------------------------------------------------------------------------------- SHARES VALUE($) ------------- ------------ AEROSPACE & DEFENSE - 6.1% General Dynamics Corp. ......................... 25,400 2,310,384 The Boeing Co. ................................. 19,750 1,947,153 United Technologies Corp. ...................... 15,900 1,217,781 ------------ 5,475,318 ------------ BIOTECHNOLOGY - 3.6% Gilead Sciences, Inc. (a) ...................... 70,500 3,256,395 ------------ 3,256,395 ------------ BUSINESS SERVICES - 1.1% Fluor Corp. .................................... 6,450 1,019,100 ------------ 1,019,100 ------------ CASINOS & GAMBLING - 1.0% International Game Technology .................. 19,950 870,020 ------------ 870,020 ------------ CHEMICALS - 4.2% Monsanto Co. ................................... 38,400 3,748,992 ------------ 3,748,992 ------------ COMPUTER SOFTWARE - 5.8% Adobe Systems, Inc. (a) ........................ 74,600 3,573,340 Electronic Arts, Inc. (a) ...................... 26,750 1,634,960 ------------ 5,208,300 ------------ COMPUTERS - 12.4% Apple Computer, Inc. (a) ....................... 23,700 4,501,815 Hewlett-Packard Co. ............................ 47,150 2,436,712 Research In Motion Ltd. (a) .................... 33,450 4,164,859 ------------ 11,103,386 ------------ CONSUMER PRODUCTS - 7.4% Colgate-Palmolive Co. .......................... 47,300 3,607,571 PepsiCo, Inc. .................................. 40,900 3,015,148 ------------ 6,622,719 ------------ DIVERSIFIED MANUFACTURING OPERATIONS - 2.5% Joy Global, Inc. ............................... 18,600 1,079,916 Thermo Fisher Scientific, Inc. (a) ............. 19,500 1,146,795 ------------ 2,226,711 ------------ ELECTRONIC COMPONENTS & SEMICONDUCTORS - 1.7% Emerson Electric Co. ........................... 15,600 815,412 Microchip Technology, Inc. ..................... 21,000 696,570 ------------ 1,511,982 ------------ FARM MACHINERY & EQUIPMENT - 3.7% Deere & Co. .................................... 21,500 3,330,350 ------------ 3,330,350 ------------ FINANCIAL SERVICES - 6.6% Ambac Financial Group, Inc. .................... 7,900 290,957 CME Group, Inc. ................................ 5,175 3,447,844 Goldman Sachs Group, Inc. ...................... 4,500 1,115,640 Nymex Holdings, Inc. ........................... 2,800 359,856 UBS AG-ADR ..................................... 12,550 673,809 ------------ 5,888,106 ------------ - -------------------------------------------------------------------------------- COMMON STOCKS, CONTINUED - -------------------------------------------------------------------------------- SHARES VALUE($) ------------- ------------ FOOD & BEVERAGE - 4.4% The Coca-Cola Co. .............................. 29,000 1,791,040 Wm. Wrigley Jr. Co. ............................ 10,850 669,120 Yum! Brands, Inc. .............................. 36,900 1,485,963 ------------ 3,946,123 ------------ HEALTH CARE - 2.9% Baxter International, Inc. ..................... 22,300 1,338,223 DENTSPLY International, Inc. ................... 20,800 862,784 Zimmer Holdings, Inc. (a) ...................... 5,700 396,093 ------------ 2,597,100 ------------ HOTELS & LODGING - 4.3% Las Vegas Sands Corp. (a) ...................... 29,200 3,885,936 ------------ 3,885,936 ------------ INSURANCE - 1.8% AFLAC, Inc. .................................... 25,850 1,622,863 ------------ 1,622,863 ------------ INTERNET RELATED - 4.4% Google, Inc., Class A (a) ...................... 5,600 3,959,200 ------------ 3,959,200 ------------ OIL & GAS - 5.2% Schlumberger Ltd. .............................. 23,050 2,225,939 Smith International, Inc. ...................... 36,450 2,407,522 ------------ 4,633,461 ------------ PHARMACEUTICALS - 8.6% Abbott Laboratories ............................ 54,200 2,960,404 Alcon, Inc. ADR ................................ 6,950 1,057,859 Allergan, Inc. ................................. 16,000 1,081,280 Genentech, Inc. (a) ............................ 22,329 1,655,249 Schering-Plough Corp. .......................... 32,100 979,692 ------------ 7,734,484 ------------ RETAIL - 2.4% Kohl's Corp. (a) ............................... 19,900 1,093,903 Target Corp. ................................... 17,100 1,049,256 ------------ 2,143,159 ------------ TELECOMMUNICATIONS - 7.6% Cisco Systems, Inc. (a) ........................ 110,450 3,651,477 Nokia Corp. ADR ................................ 57,150 2,269,998 QUALCOMM, Inc. ................................. 20,900 893,057 ------------ 6,814,532 ------------ TOTAL COMMON STOCKS (COST $65,379,364) .......................... 87,598,237 ------------ - -------------------------------------------------------------------------------- INVESTMENT COMPANY--2.3% - -------------------------------------------------------------------------------- Northern Institutional Diversified Assets Portfolio, Shares class, 4.80% (b) .......... 2,057,774 2,057,774 ------------ TOTAL INVESTMENT COMPANY (COST $2,057,774) ........................... 2,057,774 ------------ TOTAL INVESTMENTS (COST $67,437,138) -- 100.0% ................ 89,656,011 ============ - ---------- Percentages indicated are based on net assets of $89,685,877. (a) Represents non-income producing security. (b) The rate presented represents the annualized one day yield that was in effect on October 31, 2007. ADR -- American Depositary Receipt 93 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 - -------------------------------------------------------------------------------- COMMON STOCKS--96.9% - -------------------------------------------------------------------------------- SHARES VALUE($) ------------- ------------ AUSTRALIA - 3.2% Macquarie Airports ............................. 579,924 2,382,795 National Australia Bank Ltd. ................... 131,665 5,325,753 QBE Insurance Group Ltd. ....................... 102,500 3,136,099 Zinifex Ltd. ................................... 235,900 3,732,463 ------------ 14,577,110 ------------ AUSTRIA - 1.0% Voestalpine AG ................................. 51,400 4,643,784 ------------ BELGIUM - 1.3% Fortis ......................................... 176,832 5,678,420 Fortis - Strip WPR ............................. 70,732 707 ------------ 5,679,127 ------------ BRAZIL - 2.6% Banco Do Brasil SA ............................. 60,000 1,087,062 Gerdau SA ADR .................................. 75,150 2,337,165 Petroleo Brasileiro SA ADR ..................... 55,400 4,608,726 Unibanco ADR ................................... 8,100 1,280,124 Usinas Siderurgicas de Minas Gerais SA ......... 30,200 2,368,966 ------------ 11,682,043 ------------ CANADA - 2.6% Canadian Imperial Bank of Commerce ............. 21,000 2,268,107 Encana Corp. ................................... 59,500 4,164,496 Gerdau Ameristeel Corp. ........................ 161,000 2,200,879 Nexen, Inc. .................................... 34 1,152 Teck Cominco Ltd., B Shares .................... 64,600 3,236,156 ------------ 11,870,790 ------------ CHINA - 0.5% China Petroleum & Chemical Corp. ............... 592,000 942,622 China Telecom Corp., Ltd. ...................... 1,264,000 1,092,937 ------------ 2,035,559 ------------ FINLAND - 1.0% Nokia Oyj ...................................... 52,100 2,068,954 Stora Enso Oyj, R Shares ....................... 123,400 2,276,027 ------------ 4,344,981 ------------ FRANCE - 12.3% Air France-KLM ................................. 28,700 1,095,055 BNP Paribas SA ................................. 64,580 7,156,768 Compagnie Generale des Establissements Michelin, B Shares .......................... 39,700 5,346,150 Credit Agricole SA ............................. 142,779 5,656,125 France Telecom SA .............................. 107,200 3,963,857 Lagardere S.C.A. ............................... 34,800 2,950,824 Renault SA ..................................... 62,300 10,521,374 Sanofi-Aventis ................................. 68,900 6,060,101 Societe Generale ............................... 35,385 5,977,343 Total SA ....................................... 92,000 7,423,280 ------------ 56,150,877 ------------ GERMANY - 11.7% Allianz SE ..................................... 39,800 8,978,500 BASF AG ........................................ 48,300 6,704,660 Daimler AG ..................................... 10,100 1,113,722 Deutsche Bank AG ............................... 43,200 5,770,810 - -------------------------------------------------------------------------------- COMMON STOCKS, CONTINUED - -------------------------------------------------------------------------------- SHARES VALUE($) ------------- ------------ GERMANY, CONTINUED Deutsche Lufthansa AG .......................... 162,600 4,804,736 Deutsche Telekom AG ............................ 241,900 4,969,293 E.ON AG ........................................ 41,000 8,024,178 Muenchener Rueckversicherungs- Gesellschaft AG ............................. 35,000 6,696,622 RWE AG ......................................... 44,500 6,069,450 ------------ 53,131,971 ------------ GREECE - 0.4% Public Power Corp. ............................. 49,210 1,999,075 ------------ HONG KONG - 0.3% China Netcom Group Corp., Ltd. ................. 462,000 1,419,925 ------------ INDIA - 0.5% State Bank of India GDR ........................ 17,600 2,182,400 ------------ ITALY - 3.5% Buzzi Unicem SpA ............................... 91,400 2,598,343 ENI SpA ........................................ 210,800 7,696,173 Fondiaria-SAI SpA .............................. 60,800 2,960,054 Fondiaria-SAI SpA-RNC .......................... 18,700 637,951 Italcementi SpA ................................ 91,700 2,112,133 ------------ 16,004,654 ------------ JAPAN - 20.8% Alps Electric Co., Ltd. ........................ 55,000 688,675 Canon, Inc. .................................... 32,250 1,632,043 EDION Corp. .................................... 67,800 778,870 FUJITSU Ltd. ................................... 573,000 4,499,634 Honda Motor Co., Ltd. .......................... 47,000 1,760,231 Isuzu Motors Ltd. .............................. 570,000 2,841,996 JFE Holdings, Inc. ............................. 101,600 5,948,279 Kyushu Electric Power Co., Inc. ................ 101,300 2,470,261 Mitsubishi Chemical Holdings Corp. ............. 303,000 2,507,365 Mitsubishi Corp. ............................... 129,000 4,016,987 Mitsubishi UFJ Financial Group, Inc. ........... 645,000 6,454,802 Mitsui & Co., Ltd. ............................. 209,000 5,421,760 Mitsui Chemicals, Inc. ......................... 417,000 3,922,589 Mitsui O.S.K. Lines Ltd. ....................... 327,000 5,405,205 NAMCO BANDAI Holdings, Inc. .................... 123,800 1,908,955 Nippon Mining Holdings, Inc. ................... 360,000 3,405,454 Nippon Telegraph & Telephone Corp. ............. 881 4,032,546 Nippon Yusen Kabushiki Kaisha .................. 152,000 1,569,480 Nissan Motor Co., Ltd. ......................... 534,700 6,135,284 ORIX Corp. ..................................... 21,300 4,369,758 Sharp Corp. .................................... 261,000 4,117,518 Sony Corp. ..................................... 12,510 617,905 Sumitomo Heavy Industries Ltd. ................. 163,000 2,153,647 Sumitomo Mitsui Financial Group, Inc. .......... 731 5,988,637 The Tokyo Electric Power Co., Inc. ............. 165,200 4,192,466 Toshiba Corp. .................................. 543,000 4,598,873 Toyota Motor Corp. ............................. 56,700 3,246,168 ------------ 94,685,388 ------------ NETHERLANDS - 5.8% ArcelorMittal .................................. 107,652 8,685,755 Corporate Express NV ........................... 107,400 1,202,178 ING Groep NV ................................... 216,068 9,764,998 SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 94 - -------------------------------------------------------------------------------- HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) - -------------------------------------------------------------------------------- COMMON STOCKS, CONTINUED - -------------------------------------------------------------------------------- SHARES VALUE($) ------------- ------------ NETHERLANDS, CONTINUED Koninklijke Ahold NV (a) ....................... 266,720 4,018,278 Wolters Kluwer NV .............................. 89,700 2,817,023 ------------ 26,488,232 ------------ SINGAPORE - 0.3% Neptune Orient Lines Ltd. ...................... 427,000 1,529,966 ------------ SOUTH AFRICA - 0.6% Sanlam Ltd. .................................... 554,040 2,036,446 Standard Bank Group Ltd. ....................... 34,900 634,141 ------------ 2,670,587 ------------ SOUTH KOREA - 1.7% Honam Petrochemical Corp. ...................... 8,100 1,236,892 Hynix Semiconductor, Inc. (a) .................. 24,700 693,102 Hyundai Motors Co. Ltd., Second Preferred ...... 15,950 612,766 Industrial Bank of Korea GDR ................... 88,300 1,735,095 Kookmin Bank ADR ............................... 14,600 1,192,674 POSCO ADR ...................................... 11,400 2,094,750 ------------ 7,565,279 ------------ SPAIN - 1.2% Repsol YPF SA .................................. 141,100 5,573,895 ------------ SWEDEN - 1.0% Electrolux AB, B Shares ........................ 118,500 2,302,821 Svenska Cellusoa AB (SCA), B Shares ............ 134,400 2,375,563 ------------ 4,678,384 ------------ SWITZERLAND - 1.5% Credit Suisse Group ............................ 81,100 5,481,917 Novartis AG .................................... 24,830 1,321,158 ------------ 6,803,075 ------------ TAIWAN - 1.0% China Steel Corp. GDR .......................... 38,878 1,098,303 Gigabyte Technology Co., Ltd. .................. 11,112 9,298 Siliconware Precision Industries Co. ........... 707,691 1,485,923 Taiwan Semiconductor Manufacturing Co., Ltd. ................................... 508,398 1,016,208 United Microelectronics Corp. .................. 1,094,551 718,098 ------------ 4,327,830 ------------ THAILAND - 0.3% PTT Public Company Ltd. plc .................... 121,400 1,498,281 ------------ UNITED KINGDOM - 21.8% Associated British Foods plc ................... 45,800 871,288 AstraZeneca plc ................................ 110,300 5,431,176 Aviva plc ...................................... 346,270 5,455,083 BAE Systems plc ................................ 485,500 5,043,387 Barclays plc ................................... 457,700 5,792,255 BP plc ......................................... 125,000 1,626,084 British American Tobacco plc ................... 111,100 4,232,209 British Energy Group plc ....................... 277,000 3,076,454 GlaxoSmithKline plc ............................ 259,600 6,667,396 HBOS plc ....................................... 373,041 6,799,121 Home Retail Group plc .......................... 358,100 3,255,319 ITV plc ........................................ 879,270 1,817,421 Kazakhmys plc .................................. 143,300 4,408,193 - -------------------------------------------------------------------------------- COMMON STOCKS, CONTINUED - -------------------------------------------------------------------------------- SHARES VALUE($) ------------- ------------ UNITED KINGDOM, CONTINUED Punch Taverns plc .............................. 91,000 1,907,859 Royal & Sun Alliance Insurance Group plc ................................... 762,188 2,511,165 Royal Bank of Scotland Group plc ............... 635,724 6,865,117 Royal Dutch Shell plc, A Shares ................ 232,387 10,195,009 Royal Dutch Shell plc, B Shares ................ 45,973 2,005,584 SABMiller plc .................................. 48,100 1,448,682 Taylor Wimpey plc .............................. 468,220 2,421,936 Vodafone Group plc ............................. 2,879,158 11,344,276 Xstrata plc .................................... 85,950 6,196,853 ------------ 99,371,867 ------------ TOTAL COMMON STOCKS (COST $319,304,574) ......................... 440,915,080 ------------ - -------------------------------------------------------------------------------- INVESTMENT COMPANY--1.6% - -------------------------------------------------------------------------------- Northern Institutional Diversified Assets Portfolio, Shares class, 4.80% (b) .......... 7,328,500 7,328,500 ------------ TOTAL INVESTMENT COMPANY (COST $7,328,500) ........................... 7,328,500 ------------ TOTAL INVESTMENTS (COST $326,633,074) -- 98.5% ................ 448,243,580 ============ - ---------- Percentages indicated are based on net assets of $455,061,609. (a) Represents non-income producing security. (b) The rate presented represents the annualized one day yield that was in effect on October 31, 2007. ADR -- American Depositary Receipt GDR -- Global Depositary Receipt PLC -- Public Limited Co. SPA -- Societa Per Azioni 95 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- HSBC INVESTOR OPPORTUNITY PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 - -------------------------------------------------------------------------------- COMMON STOCKS--98.0% - -------------------------------------------------------------------------------- SHARES VALUE($) ------------- ------------ AEROSPACE & DEFENSE - 3.7% Empresa Brasileira de Aeronautica S.A. ADR ......................................... 63,600 3,101,772 Esterline Technologies Corp. (a) ............... 43,300 2,371,974 Hexcel Corp. (a) ............................... 115,400 2,888,462 ------------ 8,362,208 ------------ BANKING - 1.4% East West Bancorp, Inc. ........................ 95,000 3,205,300 ------------ 3,205,300 ------------ BIOTECHNOLOGY - 1.8% Invitrogen Corp. (a) ........................... 44,100 4,007,367 ------------ 4,007,367 ------------ COMMERCIAL SERVICES - 1.1% Schawk, Inc., Class A .......................... 108,600 2,467,392 ------------ 2,467,392 ------------ COMPUTER SOFTWARE - 8.8% ACI Worldwide, Inc. (a) ........................ 125,100 2,861,037 BMC Software, Inc. (a) ......................... 65,900 2,230,056 Brocade Communications Systems, Inc. (a) ....... 434,400 4,131,144 Nuance Communications, Inc. (a) ................ 200,200 4,426,422 Red Hat, Inc. (a) .............................. 151,900 3,279,521 Satyam Computer Services Ltd. ADR .............. 93,300 2,831,655 ------------ 19,759,835 ------------ CONSUMER PRODUCTS - 3.7% Church & Dwight Co., Inc. ...................... 83,100 3,931,461 Jarden Corp. (a) ............................... 125,600 4,461,312 ------------ 8,392,773 ------------ DIVERSIFIED MANUFACTURING OPERATIONS - 3.6% Actuant Corp., Class A ......................... 47,500 3,276,550 AMETEK, Inc. ................................... 100,100 4,704,700 ------------ 7,981,250 ------------ EDUCATION - 1.4% Corinthian Colleges, Inc. (a) .................. 131,229 2,150,843 DeVry, Inc. .................................... 19,000 1,039,110 ------------ 3,189,953 ------------ ELECTRONIC COMPONENTS & SEMICONDUCTORS - 8.1% Atmel Corp. (a) ................................ 497,200 2,431,308 ATMI, Inc. (a) ................................. 67,900 2,182,306 Cognos, Inc. (a) ............................... 136,200 6,854,946 Silicon Laboratories, Inc. (a) ................. 80,600 3,522,220 Thomas & Betts Corp. (a) ....................... 55,800 3,125,358 ------------ 18,116,138 ------------ FINANCIAL SERVICES - 4.5% Affiliated Managers Group, Inc. (a) ............ 40,700 5,354,085 MF Global Ltd. (a) ............................. 163,700 4,838,972 ------------ 10,193,057 ------------ HEALTH CARE - 12.9% Gen-Probe, Inc. (a) ............................ 75,500 5,286,510 Manor Care, Inc. ............................... 63,600 4,234,488 Pediatrix Medical Group, Inc. (a) .............. 56,800 3,720,400 - -------------------------------------------------------------------------------- COMMON STOCKS, CONTINUED - -------------------------------------------------------------------------------- SHARES VALUE($) ------------- ------------ HEALTH CARE, CONTINUED ResMed, Inc. (a) ............................... 84,000 3,480,120 Respironics, Inc. (a) .......................... 129,000 6,457,740 Ventana Medical Systems, Inc. (a) .............. 44,100 3,880,800 Volcano Corp. (a) .............................. 108,600 1,855,974 ------------ 28,916,032 ------------ INDUSTRIAL MANUFACTURING - 7.1% Gardner Denver, Inc. (a) ....................... 104,400 3,771,972 IDEX Corp. ..................................... 134,900 4,778,158 Manitowoc Co., Inc. ............................ 70,500 3,472,830 WESCO International, Inc. (a) .................. 83,100 3,876,615 ------------ 15,899,575 ------------ MEDIA - 4.0% DreamWorks Animation SKG, Inc. (a) ............. 100,100 3,259,256 Meredith Corp. ................................. 91,600 5,702,100 ------------ 8,961,356 ------------ OIL & GAS - 13.7% Chesapeake Energy Corp. ........................ 96,700 3,817,716 Consol Energy, Inc. ............................ 101,000 5,706,500 Denbury Resources, Inc. (a) .................... 94,100 5,326,060 Grant Prideco, Inc. (a) ........................ 61,100 3,003,676 Massey Energy Co. .............................. 124,700 3,950,496 Range Resources Corp. .......................... 78,900 3,544,977 Smith International, Inc. ...................... 79,700 5,264,185 ------------ 30,613,610 ------------ PHARMACEUTICALS - 11.8% Alexion Pharmaceuticals, Inc. (a) .............. 60,850 4,655,025 Elan Corp. plc ADR (a) ......................... 442,900 10,541,020 MGI Pharma, Inc. (a) ........................... 144,200 4,698,036 OSI Pharmaceuticals, Inc. (a) .................. 144,200 5,994,394 Santarus, Inc. (a) ............................. 272,300 593,614 ------------ 26,482,089 ------------ RETAIL - 5.7% Dick's Sporting Goods, Inc. (a) ................ 76,400 2,549,468 PETsMART, Inc. ................................. 157,800 4,726,110 Rite Aid Corp. (a) ............................. 534,100 2,088,331 Urban Outfitters, Inc. (a) ..................... 136,600 3,451,882 ------------ 12,815,791 ------------ TELECOMMUNICATIONS - 3.5% Comverse Technology, Inc. (a) .................. 111,100 2,135,342 NeuStar, Inc. (a) .............................. 93,300 3,190,860 Polycom, Inc. (a) .............................. 90,100 2,520,998 ------------ 7,847,200 ------------ TRANSPORTATION - 1.2% Aircastle Ltd. ................................. 79,700 2,575,107 ------------ 2,575,107 ------------ TOTAL COMMON STOCKS (COST $177,041,397) ......................... 219,786,033 ------------ SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 96 - -------------------------------------------------------------------------------- HSBC INVESTOR OPPORTUNITY PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) - -------------------------------------------------------------------------------- INVESTMENT COMPANY--1.7% - -------------------------------------------------------------------------------- SHARES VALUE($) ------------- ------------ Northern Institutional Government Select Portfolio, Shares class, 4.65%, (b) .. 3,918,791 3,918,791 ------------ TOTAL INVESTMENT COMPANY (COST $3,918,791) ........................... 3,918,791 ------------ TOTAL INVESTMENTS (COST $180,960,188) -- 99.7% ................ 223,704,824 ============ - ---------- Percentages indicated are based on net assets of $224,268,466. (a) Represents non-income producing security. (b) The rate presented represents the annualized one day yield that was in effect on October 31, 2007. ADR -- American Depositary Receipt PLC -- Public Limited Co. 97 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- HSBC INVESTOR VALUE PORTFOLIO - -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS--AS OF OCTOBER 31, 2007 - -------------------------------------------------------------------------------- COMMON STOCKS--92.2% - -------------------------------------------------------------------------------- SHARES VALUE($) ------------- ------------ AEROSPACE & DEFENSE - 3.9% Lockheed Martin Corp. .......................... 12,500 1,375,500 Raytheon Co. ................................... 28,300 1,800,163 ------------ 3,175,663 ------------ BANKING - 3.8% Bank of America Corp. .......................... 29,100 1,404,948 Wells Fargo & Co. .............................. 50,700 1,724,307 ------------ 3,129,255 ------------ BUSINESS SERVICES - 2.0% Pitney Bowes, Inc. ............................. 42,100 1,685,684 ------------ 1,685,684 ------------ COMPUTER SOFTWARE - 7.2% CA, Inc. ....................................... 135,600 3,586,620 Microsoft Corp. ................................ 64,500 2,374,245 ------------ 5,960,865 ------------ CONGLOMERATES - 2.3% Loews Corp. .................................... 39,000 1,914,510 ------------ 1,914,510 ------------ CONSUMER PRODUCTS - 6.8% Altria Group, Inc. ............................. 30,800 2,246,244 Kimberly-Clark Corp. ........................... 27,500 1,949,475 Kraft Foods, Inc. .............................. 25,069 837,555 Tyson Foods, Inc., Class A ..................... 35,600 562,480 ------------ 5,595,754 ------------ DIVERSIFIED MANUFACTURING OPERATIONS - 2.0% Ingersoll-Rand Co., Class A .................... 32,400 1,631,340 ------------ 1,631,340 ------------ ELECTRONIC COMPONENTS & SEMICONDUCTORS - 0.8% Agilent Technologies, Inc. (a) ................. 17,464 643,548 ------------ 643,548 ------------ FINANCIAL SERVICES - 11.7% Citigroup, Inc. ................................ 77,307 3,239,163 Countrywide Financial Corp. .................... 89,600 1,390,592 Fannie Mae ..................................... 56,000 3,194,240 JP Morgan Chase & Co. .......................... 39,950 1,877,650 ------------ 9,701,645 ------------ INSURANCE - 11.1% Aetna, Inc. .................................... 16,700 938,039 Aon Corp. ...................................... 36,800 1,667,776 Genworth Financial, Inc., Class A .............. 80,800 2,205,840 MGIC Investment Corp. .......................... 18,400 356,224 Radian Group, Inc. ............................. 32,100 404,139 The Hartford Financial Services Group, Inc. .... 37,300 3,619,219 ------------ 9,191,237 ------------ MEDIA - 9.5% CBS Corp., Class B ............................. 34,350 985,845 Clear Channel Communications, Inc. ............. 38,800 1,465,476 Comcast Corp., Class A (a) ..................... 48,450 1,011,152 Liberty Media Corp. Interactive, Class A (a) ... 37,087 787,357 Viacom, Inc., Class B (a) ...................... 87,000 3,592,230 ------------ 7,842,060 ------------ - -------------------------------------------------------------------------------- COMMON STOCKS, CONTINUED - -------------------------------------------------------------------------------- SHARES VALUE($) ------------- ------------ METALS & MINING - 5.2% Barrick Gold Corp. ............................. 80,000 3,530,400 United States Steel Corp. ...................... 7,300 787,670 ------------ 4,318,070 ------------ OIL & GAS - 11.7% Apache Corp. ................................... 31,400 3,259,634 ConocoPhillips ................................. 15,771 1,339,904 Hess Corp. ..................................... 13,600 973,896 Noble Energy, Inc. ............................. 53,300 4,079,582 ------------ 9,653,016 ------------ PAPER & RELATED PRODUCTS - 1.5% International Paper Co. ........................ 34,100 1,260,336 ------------ 1,260,336 ------------ PHARMACEUTICALS - 3.7% Amgen, Inc. (a) ................................ 23,000 1,336,530 Sanofi-Aventis ADR ............................. 38,500 1,694,385 ------------ 3,030,915 ------------ TELECOMMUNICATIONS - 6.6% AT&T, Inc. ..................................... 51,791 2,164,346 Motorola, Inc. ................................. 134,600 2,529,134 Sprint Nextel Corp. ............................ 45,600 779,760 ------------ 5,473,240 ------------ TRANSPORTATION - 2.4% Union Pacific Corp. ............................ 15,300 1,959,012 ------------ 1,959,012 ------------ TOTAL COMMON STOCKS (COST $63,525,197) .......................... 76,166,150 ------------ - -------------------------------------------------------------------------------- INVESTMENT COMPANY--9.5% - -------------------------------------------------------------------------------- Northern Institutional Government Select Portfolio, Shares class, 4.65% (b) ... 7,879,803 7,879,803 ------------ TOTAL INVESTMENT COMPANY (COST $7,879,803) ........................... 7,879,803 ------------ TOTAL INVESTMENTS (COST $71,405,000) -- 101.7% ................ 84,045,953 ============ - ---------- Percentages indicated are based on net assets of $82,658,240. (a) Represents non-income producing security. (b) The rate presented represents the annualized one day yield that was in effect on October 31, 2007. ADR -- American Depositary Receipt SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 98 HSBC INVESTOR PORTFOLIOS STATEMENTS OF ASSETS AND LIABILITIES--AS OF OCTOBER 31, 2007
------------- ------------ ------------ ------------ -------------- INTERMEDIATE CORE PLUS HIGH YIELD DURATION INTERNATIONAL FIXED INCOME FIXED INCOME FIXED INCOME GROWTH EQUITY PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS: Investments in non-affiliates, at value $ 136,607,637 $ 14,200,680 $ 17,305,479 $ 89,656,011 $ 448,243,580 Foreign currency, at value -- -- -- -- 3,204,996 Interest and dividends receivable 1,081,970 343,043 139,809 72,962 1,225,858 Receivable for investments sold 6,916,275 49,875 2,334,516 -- 2,827,732 Prepaid expenses and other assets 1,219 3,527 433 786 4,328 ------------- ------------ ------------ ------------ ------------- TOTAL ASSETS 144,607,101 14,597,125 19,780,237 89,729,759 455,506,494 ------------- ------------ ------------ ------------ ------------- - ------------------------------------------------------------------------------------------------------------------------------------ LIABILITIES: Payable for investments purchased 24,731,970 101,250 4,711,705 -- 52,605 Accrued expenses and other liabilities: Investment Management 45,982 7,230 5,255 35,078 299,629 Administration 6,716 407 1,680 2,424 15,779 Compliance Service 86 10 14 49 295 Trustee 222 27 37 135 757 Other 10,217 938 2,977 6,196 75,820 ------------- ------------ ------------ ------------ ------------- TOTAL LIABILITIES 24,795,193 109,862 4,721,668 43,882 444,885 ------------- ------------ ------------ ------------ ------------- - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSETS: Applicable to investors' beneficial interest $ 119,811,908 $ 14,487,263 $ 15,058,569 $ 89,685,877 $ 455,061,609 ============= ============ ============ ============ ============= Total Investments, at cost $ 136,726,741 $ 14,413,743 $ 17,391,303 $ 67,437,138 $ 326,633,074 ------------- ------------ ------------ ------------ ------------- Foreign Currency, at cost $ -- $ -- $ -- $ -- $ 3,140,535 ============= ============ ============ ============ =============
99 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS STATEMENTS OF ASSETS AND LIABILITIES--AS OF OCTOBER 31, 2007 (CONTINUED)
------------- ------------ OPPORTUNITY VALUE PORTFOLIO PORTFOLIO - ------------------------------------------------------------------------------------- ASSETS: Investments in non-affiliates, at value $ 223,704,824 $ 84,045,953 Interest and dividends receivable 33,168 95,209 Receivable for investments sold 704,385 -- Prepaid expenses and other assets 11,273 970 ------------- ------------ TOTAL ASSETS 224,453,650 84,142,132 ------------- ------------ LIABILITIES: Payable for investments purchased -- 1,439,086 Accrued expenses and other liabilities: Investment Management 148,016 36,376 Administration 10,509 2,344 Compliance Service 272 65 Trustee 673 159 Other 25,714 5,862 ------------- ------------ TOTAL LIABILITIES 185,184 1,483,892 ------------- ------------ NET ASSETS: Applicable to investors' beneficial interest $ 224,268,466 $ 82,658,240 ============= ============ Total Investments, at cost $ 180,960,188 $ 71,405,000 ============= ============
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 100 HSBC INVESTOR PORTFOLIOS STATEMENTS OF OPERATIONS--FOR THE YEAR ENDED OCTOBER 31, 2007
------------- ------------ ------------ ------------ -------------- INTERMEDIATE CORE PLUS HIGH YIELD DURATION INTERNATIONAL FIXED INCOME FIXED INCOME FIXED INCOME GROWTH EQUITY PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO - ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME: Interest $ 6,435,643 $ 1,099,982 $ 1,012,039 $ -- $ 84,293 Dividends 132,498 11,350 23,668 757,173 12,919,538 Dividend income from affiliated investments 39,360 -- 6,707 36,044 -- Foreign tax withholding -- -- -- -- (1,354,165) ------------- ------------ ------------ ------------ ------------- TOTAL INVESTMENT INCOME 6,607,501 1,111,332 1,042,414 793,217 11,649,666 ------------- ------------ ------------ ------------ ------------- - ------------------------------------------------------------------------------------------------------------------------------------ EXPENSES: Investment Management 536,695 78,518 75,588 350,983 2,579,245 Administration 35,282 3,889 5,704 21,700 116,088 Accounting 72,903 70,851 65,598 55,756 94,354 Compliance Service 1,328 148 220 801 4,355 Custodian 33,382 24,596 9,078 18,158 265,711 Interest -- -- -- 401 -- Printing 454 48 78 257 1,395 Trustee 2,919 319 478 1,761 8,716 Other 15,162 1,520 2,696 9,387 52,078 ------------- ------------ ------------ ------------ ------------- TOTAL EXPENSES 698,125 179,889 159,440 459,204 3,121,942 ------------- ------------ ------------ ------------ ------------- - ------------------------------------------------------------------------------------------------------------------------------------ NET INVESTMENT INCOME (LOSS) 5,909,376 931,443 882,974 334,013 8,527,724 ------------- ------------ ------------ ------------ ------------- - ------------------------------------------------------------------------------------------------------------------------------------ NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND FOREIGN CURRENCIES: Net realized gains (losses) from investments and foreign currency transactions 2,910,717 119,132 848,391 4,271,356 36,079,080 Change in unrealized appreciation/ depreciation from investments and foreign currencies (1,031,793) (279,652) (182,994) 16,611,654 42,586,569 ------------- ------------ ------------ ------------ ------------- - ------------------------------------------------------------------------------------------------------------------------------------ Net realized\unrealized gains (losses) from investment transactions and foreign currency transactions 1,878,924 (160,520) 665,397 20,883,010 78,665,649 ------------- ------------ ------------ ------------ ------------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 7,788,300 $ 770,923 $ 1,548,371 $ 21,217,023 $ 87,193,373 ============= ============ ============ ============ =============
101 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS STATEMENTS OF OPERATIONS--FOR THE YEAR ENDED OCTOBER 31, 2007 (CONTINUED)
------------- ------------- OPPORTUNITY VALUE PORTFOLIO PORTFOLIO - -------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends $ 691,128 $ 1,438,654 Dividend income from affiliated investments 95,891 62,866 ------------- ------------ Total Investment Income 787,019 1,501,520 ------------- ------------ - -------------------------------------------------------------------------------------- EXPENSES: Investment Management 1,751,650 403,225 Administration 66,103 22,758 Accounting 57,017 55,785 Compliance Service 2,660 866 Custodian 53,663 14,389 Interest 15,603 400 Printing 1,191 153 Trustee 5,867 1,894 Other 34,773 9,619 ------------- ------------ TOTAL EXPENSES 1,988,527 509,089 ------------- ------------ - -------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) (1,201,508) 992,431 ------------- ------------ - -------------------------------------------------------------------------------------- NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND FOREIGN CURRENCIES: Net realized gains (losses) from investments and foreign currency transactions 58,390,322 6,083,399 Change in unrealized appreciation/ depreciation from investments and foreign currencies 1,890,389 71,241 ------------- ------------ - -------------------------------------------------------------------------------------- Net realized\unrealized gains (losses) from investment and foreign currency transactions 60,280,711 6,154,640 ------------- ------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 59,079,203 $ 7,147,071 ============= ============
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 102 HSBC INVESTOR PORTFOLIOS STATEMENTS OF CHANGES IN NET ASSETS
----------------------------------- ---------------------------------------- CORE PLUS HIGH YIELD FIXED INCOME FIXED INCOME PORTFOLIO PORTFOLIO - ----------------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, 2007 OCTOBER 31, 2006 OCTOBER 31, 2007 OCTOBER 31, 2006 (a) - ----------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 5,909,376 $ 5,487,117 $ 931,443 $ 599,770 Net realized gains (losses) from investment of foreign currency transactions 2,910,717 (2,015,195) 119,132 36,553 Change in unrealized appreciation/depreciation from investments and foreign currencies (1,031,793) 2,496,112 (279,652) 66,589 ------------- ------------- ------------ ------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 7,788,300 5,968,034 770,923 702,912 ------------- ------------- ------------ ------------ Proceeds from contributions 24,166,324 23,850,640 5,258,548 13,667,509 Value of withdrawals (23,334,647) (41,156,523) (4,260,973) (1,651,656) ------------- ------------- ------------ ------------ CHANGE IN NET ASSETS RESULTING FROM TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST 831,677 (17,305,883) 997,575 12,015,853 ------------- ------------- ------------ ------------ CHANGE IN NET ASSETS 8,619,977 (11,337,849) 1,768,498 12,718,765 - ----------------------------------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 111,191,931 122,529,780 12,718,765 -- ------------- ------------- ------------ ------------ End of period $ 119,811,908 $ 111,191,931 $ 14,487,263 $ 12,718,765 ============= ============= ============ ============
- ---------- (a) The High Yield Fixed Income Portfolio commenced operations on November 18, 2005. 103 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
------------------------------------ INTERMEDIATE DURATION FIXED INCOME PORTFOLIO - ------------------------------------------------------------------------------------ FOR THE FOR THE YEAR ENDED YEAR ENDED OCTOBER 31, 2007 OCTOBER 31, 2006 - ------------------------------------------------------------------------------------ INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 882,974 $ 1,058,913 Net realized gains (losses) from investment of foreign currency transactions 848,391 (458,266) Change in unrealized appreciation/depreciation from investments and foreign currencies (182,994) 518,623 ------------ ------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 1,548,371 1,119,270 ------------ ------------ Proceeds from contributions 2,605,895 1,801,738 Value of withdrawals (8,612,265) (16,214,126) ------------ ------------ CHANGE IN NET ASSETS RESULTING FROM TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST (6,006,370) (14,412,388) ------------ ------------ CHANGE IN NET ASSETS (4,457,999) (13,293,118) - ------------------------------------------------------------------------------------ NET ASSETS: Beginning of period 19,516,568 32,809,686 ------------ ------------ End of period $ 15,058,569 $ 19,516,568 ============ ============
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 104 HSBC INVESTOR PORTFOLIOS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
----------------------------------- ------------------------------------ GROWTH INTERNATIONAL EQUITY PORTFOLIO PORTFOLIO - -------------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, 2007 OCTOBER 31, 2006 OCTOBER 31, 2007 OCTOBER 31, 2006 - -------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 334,013 $ 210,246 $ 8,527,724 $ 5,767,764 Net realized gains (losses) from investment of foreign currency transactions 4,271,356 3,913,855 36,079,080 31,508,299 Change in unrealized appreciation/depreciation from investments and foreign currencies 16,611,654 (380,204) 42,586,569 39,700,669 ------------ ------------ ------------- ------------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 21,217,023 3,743,897 87,193,373 76,976,732 ------------ ------------ ------------- ------------- Proceeds from contributions 25,944,124 15,350,040 90,634,524 62,831,133 Value of withdrawals (17,303,034) (8,680,872) (56,520,981) (36,283,024) ------------ ------------ ------------- ------------- CHANGE IN NET ASSETS RESULTING FROM TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST 8,641,090 6,669,168 34,113,543 26,548,109 ------------ ------------ ------------- ------------- CHANGE IN NET ASSETS 29,858,113 10,413,065 121,306,916 103,524,841 - -------------------------------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 59,827,764 49,414,699 333,754,693 230,229,852 ------------ ------------ ------------- ------------- End of period $ 89,685,877 $ 59,827,764 $ 455,061,609 $ 333,754,693 ============ ============ ============= =============
105 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
----------------------------------- ------------------------------------ OPPORTUNITY VALUE PORTFOLIO PORTFOLIO - -------------------------------------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 31, 2007 OCTOBER 31, 2006 OCTOBER 31, 2007 OCTOBER 31, 2006 - -------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ (1,201,508) $ (937,617) $ 992,431 $ 741,017 Net realized gains (losses) from investment of foreign currency transactions 58,390,322 38,504,562 6,083,399 5,586,911 Change in unrealized appreciation/depreciation from investments and foreign currencies 1,890,389 3,658,201 71,241 5,704,297 ------------- ------------- ------------ ------------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 59,079,203 41,225,146 7,147,071 12,032,225 ------------- ------------- ------------ ------------- Proceeds from contributions 77,393,032 22,244,597 23,927,675 13,285,641 Value of withdrawals (153,698,612) (40,753,125) (15,848,601) (12,036,219) ------------- ------------- ------------ ------------- CHANGE IN NET ASSETS RESULTING FROM TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST (76,305,580) (18,508,528) 8,079,074 1,249,422 ------------- ------------- ------------ ------------- CHANGE IN NET ASSETS (17,226,377) 22,716,618 15,226,145 13,281,647 - -------------------------------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 241,494,843 218,778,225 67,432,095 54,150,448 ------------- ------------- ------------ ------------- End of period $ 224,268,466 $ 241,494,843 $ 82,658,240 $ 67,432,095 ============= ============= ============ =============
SEE NOTES TO FINANCIAL STATEMENTS. HSBC INVESTOR PORTFOLIOS 106 - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
RATIOS/SUPPLEMENTARY DATA ----------------------------------------------------------------------- RATIO OF NET NET ASSETS RATIO OF NET INVESTMENT RATIO OF AT END OF EXPENSES INCOME (LOSS) EXPENSES PORTFOLIO TOTAL PERIOD TO AVERAGE TO AVERAGE TO AVERAGE TURNOVER RETURN(a) (000'S) NET ASSETS(b) NET ASSETS(b) NET ASSETS(b)(c) RATE(a) - ----------------------------------------------------------------------------------------------------------------------------------- CORE PLUS FIXED INCOME PORTFOLIO Year Ended October 31, 2003 5.80% $203,551 0.48% 4.38% 0.48% 70.91% Year Ended October 31, 2004 5.56% 169,459 0.52% 4.31% 0.52% 34.88% Year Ended October 31, 2005 1.64%(d) 122,530 0.40%(d) 4.25%(d) 0.53% 176.60% Year Ended October 31, 2006 5.55% 111,192 0.63% 4.96% 0.63% 273.91% Year Ended October 31, 2007 6.94% 119,812 0.59% 4.99% 0.59% 252.56% - ----------------------------------------------------------------------------------------------------------------------------------- HIGH YIELD FIXED INCOME PORTFOLIO Period Ended October 31, 2006 (e) 7.41% $ 12,719 1.86% 6.33% 1.86% 13.61% Year Ended October 31, 2007 6.41% 14,487 1.37% 7.12% 1.37% 30.77% - ----------------------------------------------------------------------------------------------------------------------------------- INTERMEDIATE DURATION FIXED INCOME PORTFOLIO Year Ended October 31, 2003 4.42% $ 84,488 0.53% 3.70% 0.53% 98.42% Year Ended October 31, 2004 4.48% 63,697 0.57% 3.54% 0.57% 50.06% Year Ended October 31, 2005 0.76%(d) 32,810 0.49%(d) 3.85%(d) 0.58% 107.26% Year Ended October 31, 2006 5.29% 19,517 0.78% 4.58% 0.78% 236.51% Year Ended October 31, 2007 8.38% 15,059 0.84% 4.68% 0.84% 219.76% - ----------------------------------------------------------------------------------------------------------------------------------- GROWTH PORTFOLIO Period Ended October 31, 2004 (e) (0.86%) $ 49,680 0.72% 0.06% 0.72% 53.08% Year Ended October 31, 2005 13.59%(d) 49,415 0.63%(d) 0.77%(d) 0.68% 79.54% Year Ended October 31, 2006 7.53% 59,828 0.69% 0.38% 0.69% 75.06% Year Ended October 31, 2007 31.11% 89,686 0.62% 0.45% 0.62% 57.04% - ----------------------------------------------------------------------------------------------------------------------------------- INTERNATIONAL EQUITY PORTFOLIO Year Ended October 31, 2003 23.70% $201,805 0.96% 1.00% 0.96% 68.51% Year Ended October 31, 2004 20.29% 220,025 0.94% 1.53% 0.94% 106.11% Year Ended October 31, 2005 19.54% 230,230 0.84% 1.92% 0.84% 31.32% Year Ended October 31, 2006 32.79% 333,755 0.86% 2.03% 0.86% 33.39% Year Ended October 31, 2007 25.17% 455,062 0.79% 2.16% 0.79% 26.08% - ----------------------------------------------------------------------------------------------------------------------------------- OPPORTUNITY PORTFOLIO Year Ended October 31, 2003 33.30% $426,181 0.91% (0.62%) 0.91% 152.05% Year Ended October 31, 2004 5.93% 359,333 0.88% (0.52%) 0.88% 81.75% Year Ended October 31, 2005 14.35%(d) 218,778 0.85%(d) (0.45%)(d) 0.90% 63.95% Year Ended October 31, 2006 19.54% 241,495 0.91% (0.40%) 0.91% 60.83% Year Ended October 31, 2007 30.54% 224,268 0.91% (0.55%) 0.91% 69.41% - ----------------------------------------------------------------------------------------------------------------------------------- VALUE PORTFOLIO Period Ended October 31, 2004 (e) 6.12% $ 61,414 0.71% 1.28% 0.71% 10.33% Year Ended October 31, 2005 15.23%(d) 54,150 0.64%(d) 1.15%(d) 0.69% 16.45% Year Ended October 31, 2006 22.21% 67,432 0.71% 1.23% 0.71% 20.63% Year Ended October 31, 2007 10.28% 82,658 0.66% 1.29% 0.66% 18.67% - -----------------------------------------------------------------------------------------------------------------------------------
(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) 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 0.12%, 0.09%, 0.05%, 0.04% and 0.05% for the Core Plus Fixed Income Portfolio, Intermediate Duration Fixed Income Portfolio, Growth Portfolio, Opportunity Portfolio and Value Portfolio, respectively. (e) High Yield Fixed Income Portfolio commenced operations on November 18, 2005. Growth Portfolio commenced operations on May 7, 2004. Value Portfolio commenced operations on May 7, 2004. 107 HSBC INVESTOR PORTFOLIOS SEE NOTES TO FINANCIAL STATEMENTS. - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 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 Portfolio Trust contains the following master funds (individually a "Portfolio," collectively the "Portfolios"):
PORTFOLIO SHORT NAME - --------- HSBC Investor Core Plus Fixed Income Portfolio Core Plus Fixed Income Portfolio HSBC Investor High Yield Fixed Income Portfolio High Yield Fixed Income Portfolio HSBC Investor Intermediate Duration Fixed Income Portfolio Intermediate Duration Fixed Income Portfolio HSBC Investor Growth Portfolio Growth Portfolio HSBC Investor International Equity Portfolio International Equity Portfolio HSBC Investor Opportunity Portfolio Opportunity Portfolio HSBC Investor Value Portfolio Value Portfolio
The Portfolios operate as master funds in master-feeder arrangements, in which other funds invest their investable assets in the Portfolios. The Declaration of Trust permits the Board of Trustees to issue an unlimited number of beneficial interests in the Portfolios. The Portfolios are diversified series of the Portfolio Trust and are part of the HSBC Investor Family of Funds. Financial statements for all other funds 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 may 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 any 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 U.S. generally accepted accounting principles ("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, or are deemed unreliable due to a significant event or otherwise, are valued by or at the direction of the Portfolios' Board of Trustees. Examples of potentially significant events that could affect the value of an individual security include corporate actions by the issuer, announcements by the issuer relating to its earnings or products, regulatory news, natural disasters, and litigation. Examples of potentially significant events that could affect multiple securities held by a Portfolio include governmental actions, natural disasters, and armed conflicts. In addition, if events materially affecting the value of foreign securities occur between HSBC INVESTOR PORTFOLIOS 108 - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) 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, rather than local market closing prices. When the International Equity Portfolio uses such a valuation model, 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. INVESTMENT TRANSACTIONS AND RELATED INCOME: Investment transactions are accounted for no later than one business day after trade date. For financial reporting purposes, changes in holdings are accounted for on trade date on the last business day of the reporting period. Investments 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 counterparties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. The forward foreign currency exchange contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date. FUTURES CONTRACTS: Each Portfolio may invest in futures contracts for the purpose of hedging their existing portfolio securities or securities it intends to purchase against fluctuations in fair value caused by changes in prevailing market interest rates. Upon entering into a futures contract, the Portfolio is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as "variation margin," are made or received by the Portfolio each day, depending on the daily fluctuations in the fair value of the underlying security. The Portfolio recognizes a gain or loss equal to the daily variation margin. Should market conditions move unexpectedly, the Portfolio may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the underlying hedged assets. MORTGAGE DOLLAR ROLL TRANSACTIONS: The Core Plus Fixed Income Portfolio, the High Yield Fixed Income Portfolio and the Intermediate Duration 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. 109 HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) 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 adviser based on procedures established by the Board of Trustees. Therefore, not all restricted securities are considered illiquid. At October 31, 2007 the HSBC Core Plus Fixed Income Portfolio held restricted securities that were illiquid, representing 0.03% of net assets, as follows:
ACQUISITION ACQUISITION PRINCIPAL SECURITY NAME DATE COST($) AMOUNT($) VALUE($) - ------------- ----------- ----------- --------- -------- FHA Weyerhauser, 7.43%, 1/1/24 ............... 3/28/2002 32,060 33,082 33,082
REPURCHASE AGREEMENTS: The Portfolios may enter into repurchase agreements with an entity which is a member of the Federal Reserve System or which is a "primary dealer" (as designated by the Federal Reserve Bank of New York) in U.S. Government obligations. The repurchase price generally equals the price paid by a Portfolio plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying portfolio securities. The seller, under a repurchase agreement, is required to maintain the collateral held pursuant to the agreement, with a fair value equal to or greater than the repurchase price (including accrued interest). Collateral subject to repurchase agreements is held by the Portfolios' custodian or another qualified custodian or in the Federal Reserve/Treasury book-entry system. In the event of counterparty default, the Portfolio has the right to use the collateral to offset losses incurred. There is a potential for loss to the Portfolio in the event the Portfolio is delayed or prevented from exercising its rights to dispose of the collateral securities, including the risk of a possible decline in the fair value of the underlying securities during the period while the Portfolio seeks to assert its rights. LINE OF CREDIT: Prior to February 1, 2007 High Yield Fixed Income Portfolio, Growth Portfolio, International Portfolio, Opportunity Portfolio, and Value Portfolio and prior to March 9, 2007 Core Plus Fixed Income Portfolio and Intermediate Duration Fixed Income Portfolio were able to borrow up to $50 million under the terms of a short-term, demand note agreement with HSBC Bank. The purpose of the agreement was to meet temporary or emergency cash needs, including redemption requests that might otherwise require the untimely disposition of securities. During the period November 1, 2006 through February 1, 2007, the details of the borrowings were as follows (based on actual number of days in which the respective Portfolios borrowed monies):
AVERAGE NUMBER AVERAGE AMOUNT OF DAYS INTEREST FUND OUTSTANDING OUTSTANDING RATE - ---- ----------- ----------- -------- Growth Portfolio .............................. $ 2,481,136 1 5.82% Opportunity Portfolio ......................... $ 8,756,484 11 5.83% Value Portfolio ............................... $ 2,781,119 1 5.25%
The Core Plus Fixed Income Portfolio, Intermediate Duration Fixed Income Portfolio, High Yield Fixed Income Portfolio and International Portfolio did not have such borrowings during the period. 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 funds 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 feeder funds, and is therefore not subject to U.S. Federal income tax. As such, investors in the Portfolios will be taxed on their respective 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. HSBC INVESTOR PORTFOLIOS 110 - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) NEW ACCOUNTING PRONOUNCEMENTS: In September 2006, the Financial Accounting Standards Board (FASB) issued Statement on Financial Accounting Standards SFAS No. 157, "Fair Value Measurements" ("SFAS No. 157") This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. SFAS No. 157 applies to fair value measurements already required or permitted by existing standards. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The changes to current GAAP from the application of this Statement relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. Management does not believe the adoption of SFAS No. 157 will materially impact the Portfolios' financial statements; however, additional disclosures will be required about the inputs used to develop the measurements and the effect of certain of the measurements on changes in net assets for the period. In July 2006, the FASB released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Portfolios' tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority based on technical merits of the position. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the year of determination. Adoption of FIN 48 is required no later than the last business day of the first financial statement reporting period for fiscal years beginning after December 15, 2006 and is applied to all open tax years as of the effective date. Management is currently in the process of evaluating the impact that will result from adopting FIN 48. At this time, management does not believe the adoption of FIN 48 will have a material impact to the financial statements. 3. RELATED PARTY TRANSACTIONS: INVESTMENT MANAGEMENT: HSBC Investments (USA) Inc. ("HSBC" or the "Investment Adviser"), a wholly owned subsidiary of HSBC Bank USA, N.A., a national bank organized under the laws of the United States, 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, except that Waddell & Reed Investment Management Company, AllianceBernstein Investment Research and Management, Westfield Capital Management, LLC and NWQ Investment Management Co., LLC serve as Sub-Investment Advisers for the Growth Portfolio, International Equity Portfolio, Opportunity Portfolio, and the Value Portfolio, respectively, and are paid for their services directly by the respective Portfolios. For its services, the Investment Adviser receives a fee, accrued daily and paid monthly, at an annual rate of 0.60% of the High Yield Fixed Income Portfolio's average daily net assets and 0.40% of the Intermediate Duration 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:
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%
For their services, the Investment Adviser 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:
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%
111 HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) For their services, the Investment Adviser 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:
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%
For their services, the Investment Adviser and Westfield Capital Management, LLC receive in aggregate, a fee, accrued daily and paid monthly, at an annual rate of 0.80% of the Opportunity Portfolio's average daily net assets. For their services, the Investment Adviser 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:
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%
ADMINISTRATION: HSBC serves the Portfolios as Administrator. Under the terms of the Administration Agreement effective April 1, 2007, HSBC receives from the Portfolios a fee, accrued daily and paid monthly, at an annual rate of:
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE - ------------------------------------ -------- Up to $12 billion ........................................................ 0.0525% In excess of $12 billion ................................................. 0.0350%
Prior to April 1, 2007, under the terms of the Administration Agreement, the Portfolios paid fees under the following schedule:
BASED ON AVERAGE DAILY NET ASSETS OF 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%
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 HSBC 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, Citi Fund Services Ohio, Inc. ("Citi Ohio"), a wholly-owned subsidiary of The Citigroup, Inc. (Citigroup, Inc. acquired The BISYS Group, Inc. effective August 1, 2007), 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, Citi 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 Portfolios and Citi Ohio (the "CCO Agreement"), Citi Ohio makes an employee available to serve as the Portfolios' Chief Compliance Officer (the "CCO"). Under the CCO Agreement, Citi 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 Citi Ohio $251,569 for the period ended October 31, 2007, plus reimbursement of certain expenses. Expenses incurred by each Portfolio are reflected on the Statements of Operations as "Compliance Service." Citi Ohio pays the salary and other compensation earned by any such individuals as employees of Citi Ohio. HSBC INVESTOR PORTFOLIOS 112 - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) FUND ACCOUNTING, CUSTODIAN AND TRUSTEE: Citi Ohio provides fund accounting services for the Portfolios. For its services to the Portfolios, Citi Ohio receives an annual fee per Portfolio, including reimbursement of certain expenses, that is accrued daily and paid monthly. Prior to February 1, 2007 Investor's Bank & Trust Company ("IBT") served as Custodian for the High Yield Fixed Income Portfolio and the International Equity Portfolio. HSBC Bank served as Custodian to the Growth Portfolio, Opportunity Portfolio, and Value Portfolio prior to February 1, 2007 and Core Plus Fixed Income Portfolio, and Intermediate Duration Fixed Income Portfolio prior to March 9, 2007. Compensation paid to IBT and HSBC Bank for services to the Portfolios as custodian is as follows:
HSBC IBT CUSTODIAN CUSTODIAN FUND FEES FEES - ---- --------- --------- Core Plus Fixed Income Portfolio ................................ $17,525 $ -- High Yield Fixed Income Portfolio ............................... -- 16,635 Intermediate Duration Fixed Income Portfolio .................... 6,308 -- Growth Portfolio ................................................ 6,553 -- International Equity Portfolio .................................. -- 78,641 Opportunity Portfolio ........................................... 17,644 -- Value Portfolio ................................................. 6,553 -- ------- ------- Total ........................................................ $54,583 $95,276 ------- -------
The Northern Trust Company began serving as Custodian of the Portfolios subsequent to the dates noted above. Each of the six non-interested Trustees are compensated with a $35,000 annual Board retainer, as well as a $3,000 annual retainer for each Committee of the Board. Each non-interested Trustee also receives a $5,000 and $3,000 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. 4. INVESTMENT TRANSACTIONS: Purchases and sales of securities (excluding securities maturing less than one year from acquisition) for the year ended October 31, 2007 were as follows:
PURCHASES SALES PURCHASES SALES (EXCLUDING U.S. (EXCLUDING U.S. OF U.S. OF U.S. PORTFOLIO NAME GOVERNMENT) GOVERNMENT) GOVERNMENT GOVERNMENT - -------------- --------------- --------------- ------------ ------------ Core Plus Fixed Income Portfolio ....... $173,677,320 $154,916,609 $121,417,074 $133,139,816 High Yield Fixed Income Portfolio ...... 5,571,345 3,905,400 -- -- Intermediate Duration Fixed Income Portfolio .................... 23,042,241 24,133,204 17,532,833 19,533,301 Growth Portfolio ....................... 49,476,307 40,564,430 -- -- International Equity Portfolio ......... 142,051,687 100,370,820 -- -- Opportunity Portfolio .................. 146,616,170 216,533,261 -- -- Value Portfolio ........................ 20,643,270 13,432,353 -- --
113 HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--AS OF OCTOBER 31, 2007 (CONTINUED) 5. FEDERAL INCOME TAX INFORMATION: At October 31, 2007, the cost, gross unrealized appreciation and gross unrealized depreciation on securities for federal income tax purposes, were as follows:
NET TAX TAX UNREALIZED UNREALIZED UNREALIZED APPRECIATION PORTFOLIO NAME TAX COST APPRECIATION DEPRECIATION (DEPRECIATION) - --------------- ------------- ------------ ------------ -------------- Core Plus Fixed Income Portfolio ................... $ 136,842,084 $ 947,826 $ (1,182,273) $ (234,447) High Yield Fixed Income Portfolio .................. 14,413,743 212,662 (425,725) (213,063) Intermediate Duration Fixed Income Portfolio ....... 17,395,840 100,254 (190,615) (90,361) Growth Portfolio ................................... 67,459,229 23,556,912 (1,360,130) 22,196,782 International Equity Portfolio ..................... 327,640,578 128,724,821 (8,121,819) 120,603,002 Opportunity Portfolio .............................. 181,452,366 47,927,197 (5,674,739) 42,252,458 Value Portfolio .................................... 71,153,479 17,505,536 (4,613,062) 12,892,474
6. LEGAL AND REGULATORY MATTERS: On September 26, 2006 BISYS Fund Services, Inc. ("BISYS"), an affiliate of BISYS Fund Services Ohio, Inc. which provides various services to the Portfolios as described in footnote 3, reached a settlement with the Securities and Exchange Commission ("the SEC") regarding the SEC's investigation related to BISYS' past payment of certain marketing and other expenses with respect to certain of its mutual fund clients. Although BISYS has reached a settlement with the SEC, the Portfolios' management is not aware that any determination has been made as to how the BISYS settlement monies will be distributed. The SEC's examination of BISYS' mutual fund clients and their advisers, including HSBC, has not been completed. While the Portfolios' management is currently unable to determine the impact, if any, of such matters on the Portfolios or the Portfolios' financial statements, management does not anticipate a material, adverse impact to the Portfolios or the Portfolios' financial statements. HSBC INVESTOR PORTFOLIOS 114 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Trustees of HSBC Investor Portfolios: We have audited the accompanying statements of assets and liabilities of HSBC Investor Core Plus Fixed Income Portfolio, HSBC Investor High Yield Fixed Income Portfolio, HSBC Investor Intermediate Duration Fixed Income Portfolio, HSBC Investor Growth Portfolio, HSBC Investor International Equity Portfolio, HSBC Investor Opportunity Portfolio and HSBC Investor Value Portfolio (the Funds), including the schedules of portfolio investments, as of October 31, 2007, and the related statements of operations for the year then ended, the changes in net assets for each period in the two-year period then ended, and the financial highlights for each period in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2007, by correspondence with custodians and brokers; or other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Funds as of October 31, 2007, the results of their operations for the year then ended, the changes in their net assets for each period in the two-year period then ended, and the financial highlights for each period in the five-year period then ended, in conformity with U.S. generally accepted accounting principles. KPMG LLP Columbus, Ohio December 27, 2007 115 HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- INVESTMENT ADVISER CONTRACT APPROVAL (UNAUDITED)--OCTOBER 31, 2007 NWQ Investment Management Co. LLC, a wholly owned subsidiary of Nuveen Investments. Inc. ("Nuveen Investments"), a publicly traded company and a Sub-Adviser to the HSBC Investor Value Portfolio Fund, (the master portfolio into which the HSBC Investor Value Fund (the "Value Fund") invests all their assets), announced in June 2007 its intention to be acquired by investors led by Madison Dearborn Partners LLC. As a result, Nuveen Investments has experienced a change in control. Consequently, 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, reviewed and approved at their in person meeting held on September 17-18, 2007, the new Sub-Advisery Contract with respect to the Value Fund. The Value Fund and Sub-Advisery Contract are collectively referred to as the "Agreement". The Board of Trustees, including the Independent Trustees, at a meeting held on September 17-18, 2007, unanimously approved a new Sub-Advisory agreement between HSBC Investments (USA) Inc. and NWQ Investment management Company, LLC (the "New Agreement"). In determining whether it was appropriate to approve the New Agreement, the Board requested information, provided by HSBC and NWQ, that it believed to be reasonably necessary to reach its conclusion. The Board also took note of its comprehensive review of the performance of the Fund and NWQ in connection with the continuance of the prior Sub-Advisory Agreement for the Fund at its December 4-5, 2006 meeting pursuant to the requirements of Section 15(c) of the 1940 Act. In addition to any materials prepared specifically for Section 15(c) contract renewal analysis, on an ongoing basis the Trustees receive information and reports from HSBC and its Multi-manager unit and other service providers to the Fund on investment performance as well as operational, compliance and other matters. The Board 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, the Board determined that the New Agreement was consistent with the best interests of the Fund and its shareholders, and enables the Fund to receive a high quality of services at a cost that is appropriate, reasonable, and in the best interests of the Fund and its shareholders. The Board made these determinations and approved the New Agreement on the basis of the following considerations, among others: NATURE, EXTENT, AND QUALITY OF SERVICES PROVIDED BY NWQ. The Trustees considered the nature, quality and extent of the investment advisory services provided by NWQ and its historic performance managing accounts having similar investment objectives as the Fund. The Trustees concluded that the services to be provided by NWQ are extensive and that NWQ would deliver a high level of service to the Fund. INVESTMENT PERFORMANCE OF THE FUND AND NWQ. The Trustees took note of their comprehensive review of the Fund's short- and long-term investment performance during the Board's December 4-5, 2006 meeting, at which the Board approved the continuance of the Old Agreement for the Fund pursuant to the requirements of Section 15(c) of the 1940 Act. In this regard, the Trustees had considered short- and long-term investment performance of the Fund over various periods of time as compared to a peer group of comparable funds, as well as NWQ's historic performance managing accounts having similar investment objectives as the Fund. Additionally, the Trustees considered fee and expense information regarding the Fund's peer groups. The Trustees compared expenses of the Fund to the expenses of its peers, noting that the expenses for the Fund compared favorably with industry averages for other funds of similar size. COSTS OF SERVICES AND PROFITS REALIZED BY NWQ. The Trustees took note of their comprehensive review of the costs of services and profits realized by NWQ during the Board's December 4-5, 2006 meeting, at which the Board approved the continuance of the Old Agreement for the Fund pursuant to the requirements of Section 15(c) of the 1940 Act. The Trustees also considered that the Transaction had no material effect upon the analysis of NWQ's overall profitability and costs that had been prepared in connection with the continuance of the Old Agreement, and would not change any factors bearing upon the profitability to NWQ from its relationship with the Fund. ADVISER PERSONNEL. The Trustees considered NWQ's representations regarding staffing and capabilities to manage the assets of the HSBC Investor Value Portfolio (the "master fund" into which the Fund invests all its assets). The Trustees also considered the overall high quality of the personnel, operations, financial condition, investment management capabilities, methodologies, and performance of NWQ. HSBC INVESTOR PORTFOLIOS 116 - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--AS OF OCTOBER 31, 2007 As a shareholder of the HSBC Investor Portfolios ("Portfolios"), you incur ongoing costs, including management fees; and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Portfolios and to compare these costs with the ongoing costs of investing in other mutual funds. These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from May 1, 2007 through October 31, 2007. ACTUAL EXAMPLE 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.
ANNUALIZED BEGINNING ENDING EXPENSES PAID EXPENSE RATIO ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD 5/1/07 10/31/07 5/1/07 - 10/31/07 5/1/07 - 10/31/07 ------------- ------------- ----------------- ----------------- Core Plus Fixed Income Portfolio ................... $ 1,000.00 $ 1,048.30 $ 2.89 0.56% High Yield Fixed Income Portfolio .................. 1,000.00 1,029.40 5.58 1.09% Intermediate Duration Fixed Income Portfolio ....... 1,000.00 1,039.20 4.16 0.81% Growth Portfolio ................................... 1,000.00 1,215.90 3.35 0.60% International Equity Portfolio ..................... 1,000.00 1,111.50 4.04 0.76% Opportunity Portfolio .............................. 1,000.00 1,161.60 4.96 0.91% Value Portfolio .................................... 1,000.00 1,018.80 3.26 0.64%
- ---------- * Expenses are equal to the average account value over the period multiplied by the Portfolios' 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 (to reflect the one half year period). 117 HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- HSBC INVESTOR PORTFOLIOS - -------------------------------------------------------------------------------- TABLE OF SHAREHOLDER EXPENSES (UNAUDITED)--AS OF OCTOBER 31, 2007 (CONTINUED) HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below provides information about hypothetical account values and hypothetical expenses based on each Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolios' 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.
ANNUALIZED BEGINNING ENDING EXPENSES PAID EXPENSE RATIO ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD 5/1/07 10/31/07 5/1/07 - 10/31/07 5/1/07 - 10/31/07 ------------- ------------- ----------------- ----------------- Core Plus Fixed Income Portfolio ................... $ 1,000.00 $ 1,022.38 $ 2.85 0.56% High Yield Fixed Income Portfolio .................. 1,000.00 1,019.71 5.55 1.09% Intermediate Duration Fixed Income Portfolio ....... 1,000.00 1,021.12 4.13 0.81% Growth Portfolio ................................... 1,000.00 1,022.18 3.06 0.60% International Equity Portfolio ..................... 1,000.00 1,021.37 3.87 0.76% Opportunity Portfolio .............................. 1,000.00 1,020.62 4.63 0.91% Value Portfolio .................................... 1,000.00 1,021.98 3.26 0.64%
- ---------- * Expenses are equal to the average account value over the period multiplied by the Portfolios' 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 (to reflect the one half year period). HSBC INVESTOR PORTFOLIOS 118 - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- BOARD OF TRUSTEES AND OFFICERS (UNAUDITED) MANAGEMENT OF THE TRUST The following table contains information regarding HSBC Investor Family of Funds Board of Trustees ("Trustees"). Asterisks indicate those Trustees who are "interested persons," as defined in the Investment Company Act of 1940, as amended, of the Funds. The Funds' Statement of Additional Information includes additional information about the Trustees and is available by calling (888) 525-5757.
NUMBER OF POSITION(S) TERM OF OFFICE AND PORTFOLIOS IN FUND OTHER NAME, ADDRESS, HELD WITH LENGTH OF TIME SERVED PRINCIPAL OCCUPATION(S) COMPLEX OVERSEEN DIRECTORSHIPS AND AGE FUNDS WITH THE FUNDS DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE - ------------------------------------------------------------------------------------------------------------------------------------ NON-INTERESTED TRUSTEES Richard A. Brealey Trustee Indefinite; March Emeritus Professor, London Business 41 None P.O. Box 182845 2005 to present School (1968 to present); Deputy Columbus, OH 43218 Chairman, Balancing and Settlement Age: 71 Code Panel (September 2000 to present) - ------------------------------------------------------------------------------------------------------------------------------------ Alan S. Parsow Trustee Indefinite; 1987 General Partner of Elkhorn 41 None P.O. Box 182845 to present Partners, L.P. (a private Columbus, OH 43218 investment partnership) (since Age: 57 1989) - ------------------------------------------------------------------------------------------------------------------------------------ Larry M. Robbins Trustee Indefinite; 1987 Private Investor; Director, Center 41 None P.O. Box 182845 to present for Teaching and Learning, Columbus, OH 43218 University of Pennsylvania Age: 68 (1999-2006) - ------------------------------------------------------------------------------------------------------------------------------------ Michael Seely Trustee Indefinite; 1987 Private Investor; General Partner 41 None P.O. Box 182845 to present of Global Multi Manager Partners Columbus, OH 43218 (1999-2003); President of Investor Age: 62 Access Corporation (1981-2003) - ------------------------------------------------------------------------------------------------------------------------------------ Thomas F. Robards Trustee Indefinite; March Partner, Robards & Co. LLC 41 Overseas P.O. Box 182845 2005 to present (2005-present); Chief Financial Shipholding Columbus, OH 43218 Officer, American Museum of Natural Group Age: 61 History (2003 to 2004); Chief Financial Officer, Datek Online Inc. (2000 to 2002) - ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED TRUSTEE Stephen J. Baker* Trustee Indefinite; 2004 Chief Executive Officer, HSBC 41 None P.O. Box 182845 to present Investments (USA) Inc. and Columbus, OH 43218 Executive Vice President, HSBC Age: 51 (USA), N.A. (2003 to present); Chief Executive Officer, HSBC Asset Management (Canada) Limited (1998 to 2003) - ------------------------------------------------------------------------------------------------------------------------------------ EMERITUS TRUSTEE Frederick C. Chen Emeritus Until March 31, 2009; Management Consultant (1988 to 41 None P.O. Box 182845 Trustee Trustee from 1990 present) Columbus, OH 43218 to June, 2005 Age: 80 - ------------------------------------------------------------------------------------------------------------------------------------
119 HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- HSBC INVESTOR FAMILY OF FUNDS - -------------------------------------------------------------------------------- BOARD OF TRUSTEES AND OFFICERS (UNAUDITED) (CONTINUED) The names of the officers, their addresses, ages, position(s) held with the Trust, and principal occupation(s) during the past five years are described in the table below.
NAME, ADDRESS, POSITION(S) AND AGE/DATE HELD WITH TERM OF OFFICE AND PRINCIPAL OCCUPATION(S) OF BIRTH FUND LENGTH OF TIME SERVED DURING PAST 5 YEARS - ------------------------------------------------------------------------------------------------------------------------------------ Richard A. Fabietti President Indefinite; March 2004 Senior Vice President, Head of Product Management, HSBC 452 Fifth Avenue to present Investments (USA) Inc. (1998 to present). New York, NY 10018 Age: 49 - ------------------------------------------------------------------------------------------------------------------------------------ Elba Vasquez Vice President Indefinite; March 2006 Vice President of Product Administration, HSBC Investments 452 Fifth Avenue to present (USA) Inc. (2005 to present); Vice President of Client New York, NY 10018 Services, Citi Fund Services Ohio, Inc. (1996 to 2005). Age: 45 - ------------------------------------------------------------------------------------------------------------------------------------ Troy Sheets* Treasurer Indefinite; 2004 Vice President of Citi Fund Services Ohio, Inc. (2002 to 3435 Stelzer Road to present present); Senior Manager, KPMG LLP (1993 to 2002). Columbus, OH 43219-3035 Age: 36 - ------------------------------------------------------------------------------------------------------------------------------------ Gary A. Ashjian* Secretary Indefinite; June 2007 Manager, Citi Fund Services (November 2006 - Present); 100 Summer Street to present Senior Legal Product Manager, Pioneer Investments (June 2004 Suite 1500 - November 2006); Putnam Investments, Legal Product Manager Boston, MA 02110 (September 1993 - June 2004). Age: 48 - ------------------------------------------------------------------------------------------------------------------------------------ Frederick J. Schmidt* Chief Term expires 2007; Senior Vice President and Chief Compliance Officer, CCO 585 Stewart Avenue Compliance Officer 2004 to present Services of Citi Fund Services (2004 to present); President, Garden City, NY 11530 FJS Associates (2002 to 2004); Vice President Credit Age: 48 Agricole Asset Management, U.S. (1987 to 2002). - ------------------------------------------------------------------------------------------------------------------------------------
* Messrs. Sheets, Schmidt and Ashjian also are officers of certain other investment companies of which Citi or an affiliate is the administrator or sub-administrator. HSBC INVESTOR FAMILY OF FUNDS 120 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. An investment in a Fund is not a deposit of HSBC Bank USA, National Association, and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. HSBC INVESTOR FAMILY OF FUNDS: INVESTMENT ADVISER AND ADMINISTRATOR HSBC Investments (USA) Inc. 452 Fifth Avenue New York, NY 10018 SUB-ADVISERS HSBC INVESTOR GROWTH PORTFOLIO Waddell & Reed Investment Management Company 6300 Lamar Avenue Overland Park, KS 66202 HSBC GROWTH AND INCOME FUND TransAmerica Investment Management, LLC 1150 S. Olive Street, Suite 2700 Los Angeles, CA 90015 HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO AllianceBernstein Investment Research and Management 1345 Avenue of the Americas, 39th Floor New York, NY 10105 HSBC INVESTOR MID-CAP FUND Munder Capital Management Munder Capital Center 480 Pierce Street Birmingham, MI 48009-6063 HSBC INVESTOR OPPORTUNITY PORTFOLIO Westfield Capital Management, LLC One Financial Center Boston, MA 02111 HSBC INVESTOR VALUE PORTFOLIO NWQ Investment Management Co., LLC 2049 Century Park East, 16th Floor Los Angeles, CA 90067 SHAREHOLDER SERVICING AGENTS FOR HSBC BANK USA, N.A. AND HSBC SECURITIES (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 AND SPONSOR Citi Fund Services 3435 Stelzer Road Columbus, OH 43219 DISTRIBUTOR Foreside Distribution Services, L.P. 3435 Stelzer Road Columbus, OH 43219 CUSTODIAN HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO HSBC INVESTOR NEW YORK TAX-FREE BOND FUND HSBC INVESTOR HIGH YIELD FIXED INCOME FUND HSBC INVESTOR INTERMEDIATE DURATION FIXED INCOME PORTFOLIO HSBC INVESTOR GROWTH PORTFOLIO HSBC INVESTOR GROWTH AND INCOME FUND HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO HSBC INVESTOR MID-CAP FUND HSBC INVESTOR OPPORTUNITY PORTFOLIO HSBC INVESTOR VALUE PORTFOLIO The Northern Trust Company 50 South LaSalle Street Chicago, IL 60603 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 Foreside Distribution Services, L.P. 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. -- NOT FDIC INSURED -- NO BANK GUARANTEE -- MAY LOSE VALUE HSB-0008 12/07 ITEM 2. CODE OF ETHICS. (a) THE REGISTRANT HAS ADOPTED A CODE OF ETHICS THAT APPLIES TO THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICER, PRINCIPAL FINANCIAL OFFICER, PRINCIPAL ACCOUNTING OFFICER OR CONTROLLER, OR PERSONS PERFORMING SIMILAR FUNCTIONS. THIS CODE OF ETHICS IS INCLUDED AS EXHIBIT 12(a)(i). (b) DURING THE PERIOD COVERED BY THE REPORT, WITH RESPECT TO THE REGISTRANT'S CODE OF ETHICS THAT APPLIES TO ITS PRINCIPAL EXECUTIVE OFFICER, PRINCIPAL FINANCIAL OFFICER, PRINCIPAL ACCOUNTING OFFICER OR CONTROLLER, OR PERSONS PERFORMING SIMILAR FUNCTIONS; THERE HAVE BEEN NO AMENDMENTS TO, NOR ANY WAIVERS GRANTED FROM, A PROVISION THAT RELATES TO ANY ELEMENT OF THE CODE OF ETHICS DEFINITION ENUMERATED IN PARAGRAPH (b) OF THIS ITEM 2. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. 3(a)(1) THE REGISTRANT'S BOARD OF DIRECTORS HAS DETERMINED THAT THE REGISTRANT HAS AT LEAST ONE AUDIT COMMITTEE FINANCIAL EXPERT SERVING ON ITS AUDIT COMMITTEE. 3(a)(2) THE AUDIT COMMITTEE FINANCIAL EXPERT IS THOMAS ROBARDS, WHO IS "INDEPENDENT" FOR PURPOSES OF THIS ITEM 3 OF FORM N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) AUDIT FEES, 2006 $284,700 2007 $305,380 (b) AUDIT-RELATED FEES, 2006 $41,600 2007 $14,000 2006 - Fees of $5,200 relate to the consent of N-1A filing and $36,400 relate to the performance of the Funds' 17f-2 examinations. 2007 - Fees of $14,000 relate to the consent of N-1A filing and the consent of the N-14 filing for the Conservative Income Strategy Fund and the Conservative Growth Strategy Fund. (c) TAX FEES, 2006 $154,800 2007 $162,068 Fees for both 2006 and 2007 relate to the preparation of federal income and excise tax returns and the review of excise tax distributions. (d) ALL OTHER FEES, 2006 $0 2007 $0 (e) None of the services summarized in (b) - (d), above, were approved by the audit Committee pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X. (f) Not applicable. (g) Non-Audit Fees. 2006 $238,800 2007 $176,068 (h) THE AUDIT COMMITTEE CONSIDERED THE NONAUDIT SERVICES RENDERED TO THE REGISTRANT'S INVESTMENT ADVISER AND ANY ENTITY CONTROLLING, CONTROLLED BY, OR UNDER COMMON CONTROL WITH THE INVESTMENT ADVISER, AND BELIEVES THE SERVICES ARE COMPATIBLE WITH THE PRINCIPAL ACCOUNTANT'S INDEPENDENCE. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Not applicable. 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 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) THE CODE OF ETHICS THAT IS THE SUBJECT OF THE DISCLOSURE REQUIRED BY ITEM 2 IS ATTACHED HERETO. (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. 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 December 21, 2007 --------------------------------- 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 December 21, 2007 --------------------------------- By (Signature and Title)* /s/ TROY A. SHEETS ------------------------------------------------------- Troy A. Sheets Treasurer Date December 21, 2007 --------------------------------- * Print the name and title of each signing officer under his or her signature. EX-99.CODE ETH 2 c51800_ex99-code.txt EX-99.CODE ETH CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS HSBC INVESTOR FUNDS HSBC ADVISOR FUNDS TRUST HSBC INVESTOR PORTFOLIOS Approved by the Boards of Trustees HSBC Investor Funds, HSBC Advisor Funds Trust and HSBC Investor Portfolios as of August 14, 2003 Pursuant to the Sarbanes-Oxley Act of 2002 I. INTRODUCTION AND APPLICATION HSBC Investor Funds, HSBC Advisor Funds Trust and HSBC Investor Portfolios (each a "Trust") recognize the importance of high ethical standards in the conduct of their business and require this Code of Ethics ("Code") to be observed by their respective principal executive officers (each a "Covered Officer") (defined below). In accordance with the Sarbanes-Oxley Act of 2002 (the "Act") and the rules promulgated thereunder by the U.S. Securities and Exchange Commission ("SEC") each Trust is required to file reports pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended ("1934 Act"), and must disclose whether they have adopted a code of ethics applicable to the principal executive officers. Each Trust's Board of Trustees ("Board"), including a majority of its Independent Trustees (defined below) has approved this Code as compliant with the requirements of the Act and related SEC rules. This Code does not supersede or otherwise affect the separate code of ethics that each Trust has adopted pursuant to Rule 17j-1 under the Investment Company Act of 1940, as amended ("1940 Act"). All recipients of the Code are directed to read it carefully, retain it for future reference and abide by the rules and policies set forth herein. Any questions concerning the applicability or interpretation of such rules and policies, and compliance therewith, should be directed to the relevant Compliance Officer (defined below), as specified in Schedule 1. II. PURPOSE This Code has been adopted by the Board in accordance with the Act and the rules promulgated by the SEC in order to deter wrongdoing and promote: (A) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (B) full, fair, accurate, timely and understandable disclosure in reports and documents filed by the Trust with the SEC or made in other public communications by the Trust; (C) compliance with applicable governmental laws, rules and regulations; (D) prompt internal reporting to an appropriate person or persons of violations of the Code; and (E) accountability for adherence to the Code. III. DEFINITIONS (A) "COVERED OFFICER" means the principal executive officer and senior financial officers, including the principal financial officer, controller or principal accounting officer, or persons performing similar functions. (B) "COMPLIANCE OFFICER" means the person appointed by the Trust's Board of Trustees to administer the Code. (C) "TRUSTEE" means a trustee of the Trust. (D) "EXECUTIVE OFFICER" shall have the same meaning as set forth in Rule 3b-7 of the 1934 Act. Subject to any changes in the Rule, an Executive Officer means the president, any vice president, any officer who performs a policy making function, or any other person who performs similar policy making functions for the Trust. (E) "INDEPENDENT TRUSTEE" means a trustee of the Trust who is not an "interested person" of the Trust within the meaning of Section 2(a)(19) of the 1940 Act. (F) "IMPLICIT WAIVER" means the Compliance Officer failed to take action within a reasonable period of time regarding a material departure from a provision of the Code that has been made known to an Executive Officer. (G) "RESTRICTED LIST" means that listing of securities maintained by the Trust Compliance Officer in which trading by certain individuals subject to the Trust's 17j-1 code of ethics is generally prohibited. (H) "WAIVER" means the approval by the Compliance Office of a material departure from a provision of the Code. IV. HONEST AND ETHICAL CONDUCT (A) OVERVIEW. A "conflict of interest" occurs when a Covered Officer's personal interest interferes with the interests of, or his service to, the Trust. Certain conflicts of interest arise out of the relationships between Covered Officers and the Trust and already are subject to the conflict of interest provisions in the 1940 Act and the Investment Advisers Act of 1940, as amended (the "Advisers Act"). The Trust's and each investment adviser and sub-adviser's compliance programs and procedures are designed to prevent, or identify and correct, violations 2 of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. (B) GENERAL POLICY. Each Covered Officer shall adhere to the highest standards of honest and ethical conduct. Each Covered Officer has a duty to exercise his or her authority and responsibility for the benefit of the Trust, to place the interests of the shareholders first and to refrain from having outside interests that conflict with the interests of the Trust and its shareholders. Each such person must avoid any circumstances that might adversely affect or appear to affect his or her duty of complete loyalty to the Trust and its shareholders in discharging his or her responsibilities, including the protection of confidential information and corporate integrity. (C) EXAMPLES OF CONFLICTS. The following list provides examples of conflicts of interest under the Code but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Trust. (1) PROHIBITED CONFLICTS OF INTEREST. Each Covered Officer must: o not use his personal influence or personal relationships improperly to influence decisions or financial reporting by the Trust whereby the Covered Officer would benefit personally to the detriment of the Trust; o not cause the Trust to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than benefit the Trust; o not use material non-public knowledge of portfolio transactions made or contemplated for the Trust to trade personally or cause others to trade personally in contemplation of the market effect of such transactions; (2) CONFLICTS OF INTEREST THAT MAY BE WAIVED. There are some conflict of interest situations for which a Covered Officer may seek a Waiver from a provision(s) of the Code. Waivers must be sought in accordance with Section VIII of the Code. Examples of these include: o OUTSIDE EMPLOYMENT OR ACTIVITIES. Covered Officers may not serve as directors, officers, general partners, consultants, agents, representatives or employees of any other business unless prior authorization is obtained from the Compliance Officer. Such authorization will be based on a determination that the business of such corporation does not conflict with the interests of the Trust, and that such service would be consistent with the best interests of the Trust and its shareholders, and that such service is not prohibited by law. 3 o GIFTS, ENTERTAINMENT, FAVORS OR LOANS. No Covered Officer shall receive any gift or other thing of more than DE MINIMIS value from any person or entity that does business with or on behalf of the Trust. o CORPORATE OPPORTUNITIES. Covered Officers may not exploit for their own personal gain opportunities that are discovered through the use of Trust property, information or position unless the opportunity is fully disclosed, in writing, to the Board and the Board declines to pursue such opportunity. o OWNERSHIP INTERESTS. Covered Officers may not have: (i) any ownership interest in, or any consulting or employment relationship with, any of the Trust's service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; or (ii) a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Trust for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. V. FULL, FAIR, ACCURATE, TIMELY AND UNDERSTANDABLE DISCLOSURE (A) GENERAL POLICY. This Code is intended to promote the full, fair, accurate, timely and understandable disclosure in reports and other documents filed by the Trust with the SEC or made in other public communications by the Trust. Accordingly, the Covered Officers are expected to consider this to be central to their roles as officers of the Trust and shall ensure that full, fair, accurate, timely and understandable disclosure is made in the Trust's reports and other documents filed with the SEC and in other public communications. (B) RESPONSIBILITIES. Covered Officers shall: (1) familiarize himself with the disclosure requirements generally applicable to the Trust; (2) not knowingly misrepresent, or cause other to misrepresent; facts about the Trust to others, whether within or outside the Trust, including to the Trust's Trustee's and auditors, and to governmental regulators and self-regulatory organizations; (3) to the extent appropriate within his area of responsibility, consult with the other officers and employees of the Trust and the adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Trust files with, or submit to, the SEC and in other public communications made by the Trust; and (4) promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. 4 (C) CHANGES IN DISCLOSURE PROCESS. If, at any time, a Covered Officer believes that measures should be taken to improve the Trust's disclosure process, he or she shall advise the Compliance Officer and shall work with the Compliance Officer and other appropriate personnel to facilitate any changes in the process. VI. INTERNAL REPORTING BY COVERED PERSONS (A) CERTIFICATIONS. Each Covered Officer shall: (1) upon adoption of the Code (or thereafter as applicable upon becoming a Covered Officer), affirm in writing on Schedule A hereto that the Covered Officer has received, read, and understands the Code; and (2) annually thereafter affirm on Schedule A hereto that the Covered Officer has complied with the requirements of the Code. (B) REPORTING. A Covered Officer shall promptly report any knowledge of a material violation of this Code to the Compliance Officer. Failure to do so is itself a violation of the Code. (C) REQUIRED DOCUMENTATION. Any such report shall be in writing, and shall describe in reasonable detail the conduct that the Covered Officer believes to have violated this Code. If the Compliance Officer concludes that there has been a violation of the Code, he or she shall determine appropriate sanctions in accordance with Section IX(A) below. Notwithstanding the foregoing, the Compliance Officer shall be entitled to grant a Waiver of one or more provisions of this Code as set forth in Section VIII of the Code. VII. WAIVERS OF PROVISIONS OF THE CODE (A) WAIVERS. The Compliance Officer may grant Waivers to the Code in circumstances that present special hardship. Waivers shall be structured to be as narrow as is reasonably practicable with appropriate safeguards designed to prevent abuse of the Waiver. To request a Waiver from the Code, the Covered Officer shall submit to the Compliance Officer a written request describing the transaction, activity or relationship for which a Waiver is sought. The request shall briefly explain the reason for engaging in the transaction, activity or relationship. (B) IMPLICIT WAIVERS. In the event that the Compliance Officer has not acted upon a properly submitted request for a Waiver within a reasonable amount of time and a material departure from the Code has taken place in accordance with the request, the Compliance Officer may nevertheless, in lieu of finding a violation of the Code, determine retroactively to grant a Waiver. 5 (C) DOCUMENTATION. The Compliance Officer shall document all Waiver determinations. If a Waiver is granted under paragraphs (A) or (B), above, the Compliance Officer shall prepare a brief description of the nature of the Waiver, the name of the Covered Officer and the date of the Waiver so that this information may be disclosed in the next Form N-CSR to be filed on behalf of the Trust or posted on the Trust's internet website within five business days following the date of the Waiver. All Waivers must be reported to the Board at each quarterly meeting as set forth in Section IX below. VIII. REPORTING AND MONITORING (A) SANCTIONS. Compliance by Covered Officers with the provisions of the Code is required. Covered Officers should be aware that in response to any violation, the Trust will take whatever action is deemed necessary under the circumstances, including, but not limited to, fines, suspension or termination. (B) BOARD REPORTING. The Compliance Officer shall report any material violations of the Code to the Board for its consideration on a quarterly basis. At a minimum, the report shall: (1) describe the violation under the Code and any sanctions imposed; (2) identify and describe any Waivers to the Code; and (3) identify any recommended changes to the Code. (C) AMENDMENTS TO THE CODE. The Covered Officers and the Compliance Officer may recommend amendments to the Code for the consideration and approval of the Board. In connection with any amendment to the Code, the Compliance Officer shall prepare a brief description of the amendment, so that the necessary disclosure may be made with the next Form N-CSR to be filed on behalf of the Trust or posted on the Trust's internet website within five business days following the date of the amendment. IX. RECORD-KEEPING The Compliance Officer shall maintain all records, including any internal memoranda, relating to compliance with the Code or Waivers of the Code, for a period of 6 years from the end of the fiscal year in which such document was created, 2 years in an accessible place. Such records shall be furnished to the SEC or its staff upon request. XI. CONFIDENTIALITY All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained on a confidential basis and will be reasonably secured to prevent access to such records by unauthorized personnel. 6 EX-99.CERT 3 c51800_ex99-cert.txt EX-99.CERT CERTIFICATIONS I, Richard A. Fabietti, certify that: 1. I have reviewed this report on Form N-CSR of HSBC Advisor Funds Trust (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. December 21, 2007 /s/ RICHARD A. FABIETTI - ----------------- ----------------------- Date Richard A. Fabietti President CERTIFICATIONS I, Troy A. Sheets, certify that: 1. I have reviewed this report on Form N-CSR of HSBC Advisor Funds Trust (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. December 21, 2007 /s/ TROY A. SHEETS - ------------------ ------------------ Date Troy A. Sheets Treasurer EX-99.906CERT 4 c51800_ex99-906cert.txt EX-99.906CERT This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. ss. 1350, and accompanies the report on Form N-CSR for the period ended October 31, 2007 of HSBC Advisor Funds Trust (the "Registrant"). Each of the undersigned, being the Principal Executive Officer and Principal Financial Officer of the Registrant, hereby certifies that, to such officer's knowledge,: 1. the Form N-CSR fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78m(a) or 78o(d)); and 2. the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. December 21, 2007 - ----------------- Date /s/ RICHARD A. FABIETTI ----------------------- Richard A. Fabietti President /s/ TROY A. SHEETS ------------------ Troy A. Sheets Treasurer This certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of Form N-CSR or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----