N-CSRS 1 a40117.txt HSBC INVESTOR PORTFOLIOS 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: 811-08928 HSBC INVESTOR PORTFOLIOS (Exact name of registrant as specified in charter) 452 FIFTH AVENUE NEW YORK, NY 10018 (Address of principal executive offices) BISYS FUND SERVICES 3435 STELZER ROAD COLUMBUS, OH 43219 (Name and address of agent for service) Registrant's telephone number, including area code: 1-800-782-8183 Date of fiscal year end: October 31, 2005 Date of reporting period: April 30, 2005 Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. 'SS' 3507. Item 1. Reports to Stockholders. Include a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Act (17 CFR 270.30e-1). ----------------------------------------------------------------------------- Semi-Annual Report [GRAPHIC] HSBC Investor Family of Funds April 30, 2005 HSBC Investor Limited Maturity Fund HSBC Investor Fixed Income Fund HSBC Investor Bond Fund HSBC Investor New York Tax-Free Bond Fund HSBC Investor Growth Fund HSBC Investor Value Fund HSBC Investor Growth and Income Fund HSBC Investor Mid-Cap Fund HSBC Investor International Equity Fund HSBC Investor Overseas Equity Fund HSBC Investor Small Cap Equity Fund HSBC Investor Opportunity Fund [HSBC LOGO] ----------------------------------------------------------------------------- Table of Contents -------------------------------------------------------------------------------- HSBC Investor Family of Funds Semi-Annual Report - April 30, 2005 Glossary of Terms Chairman's Message................................. 1 Commentary From the Investment Manager............. 2 Portfolio Reviews.................................. 4 Schedules of Portfolio Investments HSBC Investor New York Tax-Free Bond Fund... 24 HSBC Investor Growth and Income Fund........ 27 HSBC Investor Mid-Cap Fund.................. 28 Statements of Assets and Liabilities............... 29 Statements of Operations........................... 31 Statements of Changes in Net Assets................ 33 Financial Highlights............................... 45 Notes to Financial Statements...................... 57 Table of Shareholder Expenses...................... 68 Shareholder Meeting Results........................ 71 HSBC Investor Portfolios Schedules of Portfolio Investments HSBC Investor Limited Maturity Portfolio..... 73 HSBC Investor Fixed Income Portfolio......... 75 HSBC Investor Growth Portfolio............... 78 HSBC Investor Value Portfolio................ 79 HSBC Investor International Equity Portfolio. 80 HSBC Investor Small Cap Equity Portfolio..... 83 Statements of Assets and Liabilities............... 84 Statements of Operations........................... 86 Statements of Changes in Net Assets................ 88 Financial Highlights............................... 91 Notes to Financial Statements...................... 92 Table of Shareholder Expenses...................... 101 Shareholder Meeting Results........................ 103
Glossary of Terms ------------------------------------------------------------------------------ Gross Domestic Product Growth (GDP) is the measure of the market value of the goods and services produced by labor and property in the United States. Lehman Brothers U.S. Aggregate Bond Index is an unmanaged index generally representative of the investment-grade debt issues with at least one year to final maturity. Lehman Brothers Intermediate Aggregate Bond Index is an unmanaged index generally representative of investment-grade issues with maturities between three and ten years. Lehman Brothers New York Municipal Bond Index is an index composed of investment grade New York tax-exempt securities, all having a $50 million minimum maturity value. Lipper General Bond Funds Average is comprised of managed funds that do not have quality or maturity restrictions. The Funds primary goal is to keep the bulk of the portfolio's assets in corporate and government debt issues. Lipper Intermediate Investment-Grade Debt Funds Average is an average of managed funds that invest at least 65% of their assets in investment-grade debt issues (rated in the top four grades) with dollar-weighted average maturities of five to ten years. Lipper International Large-Cap Core Average consists of funds that, by portfolio practice, invest at least 75% of their equity assets in companies strictly outside of the U.S. with market capitalizations (on a three-year weighted basis) greater than the 250th largest company in the S&P/Citigroup World ex-U.S. Broad Market Index. Lipper Large-Cap Core Funds Average is comprised of managed funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) greater than 300% of the dollar-weighted median market capitalization of the Standard & Poor's Mid-Cap 400 Index. Lipper Large-Cap Growth Funds Average is comprised of managed funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) of greater than 300% of the dollar-weighted median market capitalization of the S&P Mid-Cap 400 Index. Lipper Mid-Cap Growth Funds Average is comprised of managed funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) of less than 300% of the dollar-weighted median market capitalization of the Standard & Poor's Mid-Cap 400 Index. Lipper Multi-Cap Value Funds Average represents returns based on the average return of all funds in the Lipper Multi-Cap Value Funds category for the periods noted. Funds in the Lipper Average invest in a variety of market capitalization ranges without concentrating 75% of their equity assets in any one market capitalization range over an extended period of time. Multi-cap funds typically have between 25% and 75% of their assets invested in companies with market capitalizations (on a three-year weighted basis) above 300% of the dollar-weighted median market capitalization of the middle 1,000 securities of the S&P SuperComposite 1500 Index. Multi-cap value funds typically have a below-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value compared with the S&P SuperComposite 1500 Index. Lipper N.Y. Municipal Debt Funds Average is an average of managed funds that invest at least 65% of their assets in municipal debt issues that are exempt from taxation in New York or a city in New York. Morgan Stanley Europe, Australasia and Far East (MSCI EAFE) Index is an unmanaged index that measures performance of a diverse range of developed countries in the indicated regions. NASDAQ Composite Index is a market price only index that tracks the performance of domestic common stocks traded on the regular Nasdaq market as well as National Market System traded foreign common stocks and American Depository Receipts. The Russell Universe - In 1984, Russell created the Russell family of stock indices as part of a more accurate and comprehensive system for evaluating the performance of investment managers. Russell now maintains 21 U.S. stock indices and has launched similar broad-market and style indices in Canada and Japan. Today, more than $214 billion is invested in funds modeling Russell's U.S. indices, and more than $1 trillion in funds is benchmarked against the global family of Russell indices. Russell MidCap'r' Growth Index is an unmanaged index which measures the performance of securities found in the Russell universe that fall in the mid-range sector. Russell 1000'r' Growth Index is an unmanaged index which measures the performance of 1,000 securities found in the Russell universe with higher price-to-book ratios and higher forecasted growth values. Russell 1000'r' Value Index is unmanaged index which measures the performance of the 1,000 largest of the 3,000 largest U.S.-domiciled companies (based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. Russell 2500'r' Growth Index is an unmanaged index of the companies in the Russell 2500'r' Index (the 2,500 smallest companies in the Russell 3000'r' Index) with higher price-to-book ratios and higher forecasted growth values. Standard & Poor's 500 Index (S&P 500) is an unmanaged index that measures the performance of the stock market as a whole. Lipper is an independent mutual fund performance monitor whose results are based on total return and do not reflect a sales charge. Securities indexes assume reinvestment of all distributions and interest payments and do not take in account brokerage fees or expenses. Securities in the Fund do not match those in the indexes and performance of the Fund will differ. Investors cannot invest directly in an index, although they can invest in the underlying funds or securities. Chairman's Message ------------------------------------------------------------------------------- Dear Fellow Shareholders: Recent developments in corporate governance underscore the importance of diligence by all parties involved in managing mutual funds. The Board of Trustees of the HSBC Investor Funds takes very seriously the issues faced by the industry, especially those demanding higher standards of conduct. The Board is working closely with Fund Managers and Advisors to ensure that your funds continue to comply with all pertinent laws and regulatory requirements on issues such as contract renewals, fee structures and appropriate expenditures needed to maintain the funds effectively. While maintaining the integrity of the Funds' financial and managerial activities, the Board takes seriously its responsibility to deliver superior performance. The Board continuously reviews investment practices and results in order to guarantee that the Funds' investments reflect the objectives stated in the prospectus and that performance shows steady improvement. We are also working with management and counsel to evaluate the performance of all parties, including investment managers, service providers and our own activities. We believe that clear communication will help develop and maintain your confidence. We look forward to continuing to communicate with you-the Funds' most important asset. If you have any questions, suggestions or concerns, please contact us through the Funds at: HSBC Investor Funds PO Box 182845 Columbus, OH 43218-2845 All of us who are involved in managing the HSBC Investor Funds welcome your participation; and, especially on behalf of the Board, we thank you for your continuing involvement. Yours truly, Larry M. Robbins Larry M. Robbins Chairman HSBC INVESTOR FAMILY OF FUNDS 1 Commentary From the Investment Manager ------------------------------------------------------------------------------- HSBC Investments (USA) Inc. U.S. Economic Review The United States economy generated solid growth during the six-month period ended April 30, 2005. Healthy consumer and business spending helped offset the negative influences of high energy prices and rising interest rates. The Federal Reserve Board (the "Fed") prior to the period had gradually increased its target federal funds rate, in an effort to prevent the kind of excessive monetary stimulus that could lead to higher inflation. That reduction in stimulus combined with rising oil prices to restrain the economy leading into this period. Nonetheless, economic data in November indicated that the economy was growing faster than had been anticipated, as low mortgage rates continued to buttress strong consumer spending. Gross domestic product ("GDP")(1) increased by an annualized rate of 3.8% during the fourth quarter of 2004 and by 4.4% for 2004 as a whole. Oil prices declined in November and December, but resumed their increases during 2005. Higher energy prices acted as a brake on the economy, helping prevent a significant rise in inflation. Meanwhile, the Fed maintained its policy of gradually raising short-term interest rates throughout this six-month period. Even so, signs of rising inflation emerged during early spring, as businesses appeared to gain pricing power as they passed higher costs to consumers. The economy appeared to soften around this time, but strong subsequent data suggested that economic growth remained on a solid footing. Corporate profits were very strong early in the period. Earnings grew 20% during the fourth quarter of 2004, well ahead of the 15.2% consensus estimate. Profit growth moderated during early 2005, as corporations digested slower revenue growth and higher costs. Even so, first-quarter 2005 earnings came in well above consensus estimates. Corporations flush with cash looked to generate top-line growth through mergers and acquisitions. They also increased hiring during the early months of 2005. The unemployment rate dipped to 5.2% as of the end of March. Global economies produced mixed results during the period. GDP of Eurozone countries grew 1.7% during 2004, weighed down by weaker-than-expected fourth-quarter growth. Those countries' economies are expected to grow slowly during 2005 as well. Economies in Europe suffered from stalled consumer demand, relatively weak export demand and high oil prices. Japan's economy improved slightly during this period, but a leading economic indicator suggested that that economy's growth would slow going forward. China's economy continued to expand at a blistering pace, and Brazil generated its largest GDP increase in recent years. Market Environment The stock market rallied during November and December, then declined during the four months through April. A number of factors sparked stocks' early surge. The resolution of political uncertainty following the presidential election helped clear investors' outlook, and economic data and earnings reports came in stronger than expected. Meanwhile, declining oil prices during late 2004 appeared to reduce the chance that energy costs would imperil economic growth. Nearly all stock-market sectors generated strong gains during November and December, and the major market indices closed 2004 at their highest levels in more than three years. Oil prices' renewed rise during January encouraged investors to take profits. Investors also sold stocks on fears of slowing profit growth, which were reinforced when several technology and telecommunications services announced weak results. Stocks gained slightly in February, as mergers and acquisitions activity picked up and energy stocks surged on continued strength in oil prices. The market declined during March and April, however, as investors worried about slowing profit growth, higher interest rates, inflation, possible weakness in consumer spending and the ongoing effects of higher oil prices. Value stocks generally outperformed growth across all size categories, from small-cap to large-cap. Value's superior performance stemmed in part from the surge in energy stocks, and also got a boost from investors' preference for dividend-paying securities. Strong gains among chemical, tobacco and utilities stocks also boosted value indices' returns. Meanwhile, shares of technology firms suffered from soft demand, while rising interest rates weighed on financial-services stocks. Large-cap stocks took over market leadership from small-cap stocks, marking a significant trend reversal. European markets produced some of the strongest dollar-denominated returns among developed foreign countries. Asian markets generated solid gains in local currencies. Their currencies declined against the dollar during the first quarter of 2005, however, diminishing returns for U.S. investors. Emerging markets generally produced healthy gains during the period. 2 HSBC INVESTOR FAMILY OF FUNDS Commentary From the Investment Manager - (continued) ------------------------------------------------------------------------------ HSBC Investments (USA) Inc. Bonds performed poorly during the six months through April. Rising short-term interest rates pushed up yields on short-term bonds, causing their prices to decline. Yields on long-term bonds were flat or down during much of the period, but climbed significantly during early spring after investors became concerned about signs of rising inflation. High-yield corporate bonds suffered from major automakers' profit warnings and credit downgrades during the spring of 2005. Those developments also hurt emerging markets bonds and other credit-sensitive instruments. Bonds that tend to hold up well during periods of rising interest rates, such as mortgage-backed securities and floating-rate loans, generally outperformed other fixed-income issues. (1) For additional information, please refer to the Glossary of Terms. HSBC INVESTOR FAMILY OF FUNDS 3 Portfolio Reviews ------------------------------------------------------------------------------- HSBC Investor Limited Maturity Fund (Class A Shares, B Shares, C Shares and Y Shares) by John B. Cuccia Portfolio Manager HSBC Investments (USA) Inc. The HSBC Investor Limited Maturity Fund (the "Fund") seeks to realize above-average total return, consistent with reasonable risk, by investing in a diversified investment grade portfolio of U.S. government obligations, corporate bonds and mortgage-backed securities. The Fund utilizes a two tier structure, commonly known as "master-feeder," in which the Fund invests all of its investable assets in the HSBC Investor Limited Maturity Portfolio (the "Portfolio"). Investment Concerns Bonds offer a relatively stable level of income, although bond prices will fluctuate providing the potential for principal gain or loss. Intermediate-term, higher-quality bonds generally offer less risk than longer-term bonds and a lower rate of return. Market Commentary The Fund returned 0.24%, (without sales charge) for the Class A Shares and 0.26% for the Class Y Shares during the six month period ended April 30, 2005. That compared to a return of 0.62% for the Lehman Brothers Intermediate Aggregate Bond Index. Past performance is no guarantee of future results. The economy continued to expand at a moderate pace during the 4th quarter of 2004 and 1st quarter of 2005 growing at a rate of 3.8% and 3.5%, respectively. The Federal Reserve Board (the "Fed") maintained a gradual approach to raising the target federal funds rate increasing the target rate by 25 basis points (0.25%) at each meeting since the Fed's first increase of the current cycle, which began on June 30, 2004. On a cumulative basis, the Fed has increased the target fed funds rate by 200 basis points (2.00%) with the last increase in the target rate occurring on May 3, 2005. The yields on most short-dated U.S. Treasury securities increased in lock step with the federal funds rate rising by about 1% from October 31, 2004 to April 30, 2005. The yield on the three-month U.S. Treasury Bill closed at 2.9% on April 30, while the yield on the two-year U.S. Treasury security ended at 3.65%. Changing investor expectations about inflationary pressures and the level of economic activity caused intra-period volatility, but weaker economic indicators in April led investors to reduce the inflation risk premium embedded in intermediate and long-term U.S. Treasury securities. As a result, the yield curve continued to flatten with the yield on the thirty-year U.S. Treasury security declining by 30 basis points (0.30%) to end the period at 4.51%. The yield on the five-year U.S. Treasury increased 59 basis points (0.59%) to 3.90% and the yield on the ten-year U.S. Treasury security increased 15 basis points (0.15%) to 4.20%. Despite strong performance through February, corporate bonds ended the period with poor relative performance as yield premiums increased among most corporate bonds. A confluence of factors including disappointing operating performance by companies within the automotive sector and a greater focus on shareholder value by many companies led investors to demand higher yield premiums. General Motors and Ford provided the biggest drag on the corporate bond market as both companies announced disappointing results and reduced expectations for the full year. The rise in corporate yield premiums filtered through to other market sectors as investors realigned valuations across sectors. Though the government-related and securitized sectors experienced the ripple effects of widening in corporate bond yield premiums, these sectors were able to outpace, on a duration-adjusted basis, the return provided by U.S. Treasury securities during the period.* Performance Review A defensive duration position, a barbelled yield curve strategy, higher-than benchmark position in mortgage-backed securities and a neutral weighting in corporate bonds all benefited the fund's absolute and relative-to-benchmark total return over the semi-annual period. The stable cash flow provided by the Fund's investment in mortgage securities also contributed to performance as mortgage backed securities outperformed U.S. Treasury securities on duration weighted basis. Price declines from the rise in yields on short-to-intermediate U.S. Treasuries and the widening yield premiums in certain corporate bonds held in the fund detracted from relative performance during the period. As corporate bond yield premiums rose in March and April, we increased our target weighting to 30% with opportunistic purchases of select corporate issuers such as Berkshire Hathaway, GE, May Department Stores, Merck and Time Warner. Additionally, as the spread between the ten-year and thirty-year U.S. Treasury declined, we transitioned the Fund to a neutral yield curve strategy from our barbelled position.* 4 HSBC INVESTOR FAMILY OF FUNDS Portfolio Reviews ------------------------------------------------------------------------------- HSBC Investor Limited Maturity Fund - As of April 30, 2005 Going forward we will continue to position the portfolio defensively. We believe that current income levels do not adequately cushion fixed income investors against the prospect of price declines that would occur with a rise in interest rates. As a result, we have positioned the portfolio with a lower sensitivity to a change in interest rates than that of the Funda(euro)'TM's benchmark. We also remain concerned about the level of yield premiums on corporate bonds and securitized debt. While we are positioned defensively, we continue to find select opportunities as outlined above with the recent corporate bond purchases. It is in periods like now, that we believe it is important to remind our investors of the benefits of active management. Current valuations allow us to construct a portfolio where, we believe, the investor is less exposed to some of the risks in the market.* * Portfolio composition is subject to change.
Fund Performance Average Annual Return -------------------------------------------------------------------------------------------------------- As of April 30, 2005 Inception 6 1 3 Since Date Month Year Year Inception -------------------------------------------------------------------------------------------------------- HSBC Investor Limited Maturity Fund Class A(1) 2/7/01 -4.50% -1.63% 2.61% 3.57% -------------------------------------------------------------------------------------------------------- HSBC Investor Limited Maturity Fund Class B(2) 2/15/01 -4.14% -1.52% 2.91% 3.96% -------------------------------------------------------------------------------------------------------- HSBC Investor Limited Maturity Fund Class C(3) 2/13/01 -1.10% 1.56% 3.56% 3.93% -------------------------------------------------------------------------------------------------------- HSBC Investor Limited Maturity Fund Class Y 1/23/01 0.26% 3.47% 4.56% 5.15% -------------------------------------------------------------------------------------------------------- Lehman Brothers Intermediate Aggregate Bond Index -- 0.62% 4.27% 5.12% -- -------------------------------------------------------------------------------------------------------- Lipper Intermediate Investment-Grade Funds Average(4) -- 0.75% 4.51% 5.27% -- --------------------------------------------------------------------------------------------------------
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 4.75%. (2) Reflects the contingent deferred sales charge (maximum of 4.00%). (3) Reflects the contingent deferred sales charge (maximum of 1.00%). (4) For additional information, please refer to the Glossary of Terms. The Fund is measured against the Lehman Brothers Intermediate Aggregate Bond Index, an unmanaged index generally representative of investment-grade issues with maturities between three and ten years. The performance of the index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Fund's performance reflects the deduction of fees for these services. Investors cannot invest directly in an index, although they can invest in its underlying securities. During the period shown, the Investment Manager waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. HSBC INVESTOR FAMILY OF FUNDS 5 Portfolio Reviews ------------------------------------------------------------------------------ HSBC Investor Fixed Income Fund HSBC Investor Bond Fund (Class A Shares, B Shares and C Shares) by Jerry Samet Senior Portfolio Manager HSBC Investments (USA) Inc. The HSBC Investor Fixed Income Fund and the HSBC Investor Bond Fund (the "Funds") seek to provide investors with above-average total return, consistent with reasonable risk, through investments in a diversified portfolio of fixed-income securities. The Funds utilize a two-tier structure, commonly known as a "master-feeder," in which the Funds invest all of their investable assets in the HSBC Investor Fixed Income Portfolio (the "Portfolio"). Investment Concerns Bonds offer a relatively stable level of income, although bond prices will fluctuate providing the potential for principal gain or loss. Intermediate-term, higher-quality bonds generally offer less risk than longer-term bonds and a lower rate of return. Market Commentary For the six month period ended April 30, 2004, the shares of the HSBC Investor Fixed Income Fund produced a 1.29% total return, and the Class A Shares of the HSBC Investor Bond Fund returned 1.11% (without sales charge). That compared favorably to the return of 0.98% provided by the Lehman Brothers U.S. Aggregate Bond Index. Past performance is no guarantee of future results. The economy continued to expand at a moderate pace during the 4th quarter of 2004 and 1st quarter of 2005 growing at a rate of 3.8% and 3.5%, respectively. The Federal Reserve Board (the "Fed") maintained a gradual approach to raising the target federal funds rate increasing the target rate by 25 basis points (0.25%) at each meeting since the Fed's first increase of the current cycle, which began on June 30, 2004. On a cumulative basis, the Fed has increased the target fed funds rate by 200 (2.00%) basis points with the last increase in the target rate occurring on May 3, 2005. The yields on most short-dated U.S. Treasury securities increased in lock step with the federal funds rate rising by about 1% from October 31, 2004 to April 30, 2005. The yield on the three-month U.S. Treasury Bill closed at 2.9% on April 30, while the yield on the two-year U.S. Treasury security ended at 3.65%. Changing investor expectations about inflationary pressures and the level of economic activity caused intra-period volatility, but weaker economic indicators in April led investors to reduce the inflation risk premium embedded in intermediate and long-term U.S. Treasury securities. As a result, the yield curve continued to flatten with the yield on the thirty-year U.S. Treasury security declining by 30 basis points (0.30%) to end the period at 4.51%. The yield on the five-year U.S. Treasury increased 59 basis points (0.59%) to 3.90% and the yield on the ten-year U.S. Treasury security increased 15 basis points (0.15%) to 4.20%. Despite strong performance through February, corporate bonds ended the period with poor relative performance as yield premiums increased among most corporate bonds. A confluence of factors including disappointing operating performance by companies within the automotive sector and a greater focus on shareholder value by many companies led investors to demand higher yield premiums. General Motors and Ford provided the biggest drag on the corporate bond market as both companies announced disappointing results and reduced expectations for the full year. The rise in corporate yield premiums filtered through to other market sectors as investors realigned valuations across sectors. Though the government-related and securitized sectors experienced the ripple effects of widening in corporate bond yield premiums, these sectors were able to outpace, on a duration-adjusted basis, the return provided by U.S. Treasury securities during the period.* Performance Review A defensive duration position, a barbelled yield curve strategy and a neutral weighting in corporate bonds all benefited the fund's absolute and relative-to-benchmark return over the semi-annual period. Price declines from the rise in yields on short-to-intermediate U.S. Treasuries and the widening of corporate bond yield premiums were cushioned by the fund's income return. As corporate bond yield premiums rose in March and April, we increased our target weighting to 30% with opportunistic purchases of select corporate issuers such as Berkshire Hathaway, GE, May Department Stores, Merck and Time Warner. Additionally, as the spread between the ten-year and thirty-year U.S. Treasury declined, we transitioned the Fund to a neutral yield curve strategy from our barbelled position.* Going forward we will continue to position the portfolio defensively. We believe that current income levels do not adequately cushion fixed income investors against the prospect of price declines that would occur with a rise in 6 HSBC INVESTOR FAMILY OF FUNDS Portfolio Reviews ------------------------------------------------------------------------------- HSBC Investor Fixed Income Fund HSBC Investor Bond Fund - As of April 30, 2005 interest rates. As a result, we have positioned the portfolio with a lower sensitivity to a change in interest rates than that of the Fund's benchmark. We also remain concerned about the level of yield premiums on corporate bonds and securitized debt. While we are positioned defensively, we continue to find select opportunities as outlined above with the recent corporate bond purchases. It is in periods like now, that we believe it is important to remind our investors of the benefits of active management. Current valuations allow us to construct a portfolio where, we believe, the investor is less exposed to some of the risks in the market, and, as a result, the investor is positioned to earn above benchmark returns over the market cycle. * Portfolio composition is subject to change.
Fund Performance Average Annual Return ----------------------------------------------------------------------------------------------------- Inception 6 1 5 10 Since As of April 30, 2005 Date Month Year Year Year Inception ----------------------------------------------------------------------------------------------------- HSBC Investor Fixed Income Fund 1/9/95 1.29% 5.34% 7.38% 6.95% 7.28% ----------------------------------------------------------------------------------------------------- HSBC Investor Bond Fund Class A(1) 8/26/96 -3.71% 0.02% 5.83% -- 5.62% ----------------------------------------------------------------------------------------------------- HSBC Investor Bond Fund Class B(2) 1/6/98 -3.23% 0.14% 6.05% -- 4.72% ----------------------------------------------------------------------------------------------------- HSBC Investor Bond Fund Class C(3) 11/4/98 -0.16% 3.25% 6.08% -- 4.78% ----------------------------------------------------------------------------------------------------- Lehman Brothers U.S. Aggregate Bond Index -- 0.98% 5.26% 7.49% 7.14% -- ----------------------------------------------------------------------------------------------------- Lipper General Bond Funds Average(4) -- 0.78% 4.30% 6.18% 7.22% -- -----------------------------------------------------------------------------------------------------
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 4.75%. (2) Reflects the contingent deferred sales charge (maximum of 4.00%). (3) Reflects the contingent deferred sales charge (maximum of 1.00%). (4) For additional information, please refer to the Glossary of Terms. The Funds are measured against the Lehman Brothers U.S. Aggregate Bond Index, an unmanaged index which represents the U.S. investment-grade fixed-rate bond market (including government and corporate securities, mortgage pass-through securities and asset-backed securities). The performance of the index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Funds' performance reflects the deduction of fees for these services. Investors cannot invest directly in an index, although they can invest in its underlying securities. During the period shown, the Investment Manager waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. HSBC INVESTOR FAMILY OF FUNDS 7 Portfolio Reviews -------------------------------------------------------------------------------- HSBC Investor New York Tax-Free Bond Fund (Class A Shares, B Shares, C Shares and Y Shares) by Jerry Samet Senior Fixed Income Portfolio Manager HSBC Investments (USA) Inc. The HSBC Investor New York Tax-Free Bond Fund (the "Fund") seeks to provide shareholders with income exempt from regular, federal, New York state and New York city personal income taxes. Investment Concerns Bonds offer a relatively stable level of income, although bond prices will fluctuate providing the potential for principal gain or loss. Intermediate-term, higher-quality bonds generally offer less risk than longer-term bonds and a lower rate of return. A fund's income may be subject to certain state and local taxes and, depending on your tax status, the federal alternative minimum tax. Regional funds may be subject to additional risks, since the issues they invest in are located in one geographical location. Market Commentary The Fund delivered a total return of 0.93% (without sales charge) for Class A Shares and 1.06% for Class Y Shares for the six month period ended April 30, 2005. That compared to 1.74% for the Fund's benchmark, the Lehman Brothers New York Municipal Bond Index. Past performance is no guarantee of future results. For the six month period, the municipal market outperformed the taxable market on a pre-tax total return basis. The return of the Lehman Brothers Muni Bond Index(4) was 1.93% while the return of the Lehman Brothers U.S. Aggregate Index(4) was 0.98%. Relative outperformance in the municipal market came despite the municipal market having a duration that on average was approximately 8% longer than that of the Lehman Brothers Aggregate over the course of the period. The outperformance highlighted the change in shape of the yield curve over the period. Treasury as well as municipal yield curves flattened dramatically with yields on two-year and five-year Treasuries moving 110 (1.10%) and 61 basis points (0.61%) higher. In contrast, the Ten-year was just 17 basis points (0.17%) higher while thirty-year bonds actually moved 28 basis points (0.28%) lower. In tax-exempts, two-year municipal yields were 87 basis points (0.87%) higher; five-year municipals were 42 basis points (0.42%) higher. Ten-year municipal yields moved 22 basis points (0.22%) higher while thirty-year bonds were 10 basis points (0.10%) lower. However, the composition of the municipal index is more heavily weighted toward longer-term securities along the yield curve. Approximately 56% of its term-structured weighting is composed of securities beyond ten years while the Lehman Brothers Aggregate possesses only 13% of its holdings beyond 10 years. The Fund's duration at the beginning of the period approximated 94% of benchmark but over the period gravitated down to 88% of benchmark and was one of the key factors that helped drive the Fund's strong performance relative to benchmark. The portfolio also maintained a barbelled position, which helped performance as the longer and shorter portions of the curve outperformed the intermediate portion of the curve. However, negatively impacting performance was the portfolio's high credit quality profile. This tended to take away from performance as many lower rated credits outperformed due to increased revenue flows to municipal authorities and improved municipal balance sheets. This manifested itself in the positive upgrade to downgrade ratio from the rating agencies. An example of lower rated credit, favorable developments in tobacco litigation helped drive the IDR/PCR sector (Baa2 average rating) to outperform the broader Revenue Bond Index (Aa2 average rating) by 488 basis points (4.88%).* Fiscal year 2004 saw state tax revenues grow by 7.5%. Other than 1992 this was the largest increase in nominal growth on record. After adjusting for the impact of inflation and tax increases the growth rate increased by 3.2% after two straight years of decline. Revenue sources were broad based as personal income taxes, corporate income taxes and sales tax revenues all increased together for the first time since fiscal year 2000. However, we remain concerned about deteriorating fundamentals. Structural headwinds going forward include Medicaid spending which once again is expected to show double digit increases. Additionally, increases in education spending, employee health care and pension liabilities will pressure local governments. Also, recently there has been an increased dependency upon one-time budget items that are non-recurring to fix municipal balance sheets. Furthermore, with many local municipal authorities having just gone through a period of tax increases the political capital for further increases may have been spent. Going forward New York municipalities will be faced with either raising taxes or cutting spending in order to bring about fiscal balance owing to the fact that state revenues are still approximately 8% lower than their highs achieved in 2000. 8 HSBC INVESTOR FAMILY OF FUNDS Portfolio Reviews ------------------------------------------------------------------------------- HSBC Investor New York Tax-Free Bond Fund - As of April 30, 2005 Once again the State of New York was a proxy of fundamental credit conditions across the country. Moodys put the state's rating as well as its appropriated debt on positive outlook. At A2 by Moodys and AA by S&P, New York remains the lowest rated state in the nation with the exception of California. New York City, the second largest municipal issuer behind the State of California, also received an upgrade by Moodys to A1. These two major upgrades were enough to upgrade the average rating of the Lehman Brothers New York Municipal Bond Index from AA2 to AA1.'D' We believe the portfolio remains positioned for a rising yield environment and a flattening yield curve. We would suspect that over the next three to four months the spread between five and ten year municipals is likely to flatten from the present 56 to an approximate spread range of 35-40. The portfolio will continue to barbell. We will continue to overweight the 10-20 year portion of the yield curve, which could perform well in a rising yield environment on a duration-adjusted basis relative to the five-year portion of the yield curve. From a quality standpoint the portfolio will continue to overweight insured and higher quality paper.* 'D' Standard and Poor or Moody's Fund Ratings represent an opinion only, not a recommendation to buy or sell. * Portfolio composition is subject to change.
Fund Performance Average Annual Return ------------------------------------------------------------------------------------------------------ Inception 6 1 5 Since As of April 30, 2005 Date Month Year Year Inception ------------------------------------------------------------------------------------------------------ HSBC Investor New York Tax-Free Bond Fund Class A(1) 5/1/95 -3.82% -0.08% 4.81% 5.02% ------------------------------------------------------------------------------------------------------ HSBC Investor New York Tax-Free Bond Fund Class B(2) 1/6/98 -3.41% 0.21% 5.06% 3.92% ------------------------------------------------------------------------------------------------------ HSBC Investor New York Tax-Free Bond Fund Class C(3) 11/4/98 -0.43% 3.10% 5.02% 3.62% ------------------------------------------------------------------------------------------------------ HSBC Investor New York Tax-Free Bond Fund Class Y 7/1/96 1.06% 5.15% 6.11% 5.57% ------------------------------------------------------------------------------------------------------ Lehman Brothers New York Municipal Bond Index -- 1.74% 6.48% 6.97% -- ------------------------------------------------------------------------------------------------------ Lipper New York Municipal Debt Funds Average(4) -- 1.75% 6.13% 6.32% -- ------------------------------------------------------------------------------------------------------
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 4.75%. (2) Reflects the contingent deferred sales charge (maximum of 4.00%). (3) Reflects the contingent deferred sales charge (maximum of 1.00%). (4) For additional information, please refer to the Glossary of Terms. The Fund is measured against the Lehman Brothers New York Tax Exempt Index, an unmanaged index composed of investment grade New York tax-exempt securities, all having a $50 million minimum maturity value. The index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Fund's performance reflects the deduction of fees for these services. Investors cannot invest directly in an index, although they can invest in its underlying securities. During the period shown, the Investment Manager waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. HSBC INVESTOR FAMILY OF FUNDS 9 Portfolio Reviews -------------------------------------------------------------------------------- HSBC Investor Growth Fund (Class A Shares, B Shares, C Shares and Y Shares) by Phil Sanders, Senior Vice President/Portfolio Manager, CFA and Dan Becker, Senior Vice President/Portfolio Manager, CFA Waddell & Reed Investment Management Company The HSBC Investor Growth Fund (the "Fund") is part of a "master/feeder" fund structure and invests all of its assets in the HSBC Investor Growth Portfolio, which acts as the master fund. Waddell & Reed Investment Management Company (Waddell & Reed) is the sub-adviser to the Fund. Waddell and Reed's large cap growth strategy seeks to identify quality firms with strong potential for long term profitability and long term earnings growth. The Fund seeks long-term growth of capital by investing primarily in U.S. and foreign equity securities of high quality companies with market capitalization generally in excess of $2 billion, which the sub-adviser believes have the potential to generate superior levels of long-term profitability and growth. Investment Concerns Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. Common stocks, and funds investing in common stocks, generally provide greater return potential when compared with other types of investments. Market Commentary The Fund delivered a total return of 0.49% (without sales charge) for Class A Shares and 0.60% for the Class Y Shares for the six month period ended April 30, 2005. That compared to a 1.14% return for the Fund's benchmark, the Russell 1000'r' Growth Index. Past performance is no guarantee of future results. Large-cap growth stocks posted solid gains early in the period, after the resolution of the presidential election removed uncertainties that had clouded investors' outlooks. Large growth stocks pulled back considerably during the second half of this six month period, as higher energy prices, interest rates and commodities costs called into question the sustainability of the economic recovery. That environment led to near-flat returns for both this Fund and its benchmark. The Fund's sub-advisor began de-emphasizing shares of economically sensitive firms prior to this period, in anticipation of moderating growth in profits and the economy. That approach led the managers to reduce the Funda's technology-sector exposure modestly, to a position smaller than that of the benchmark. The underweight technology stake boosted returns relative to the benchmark, as technology stocks did not keep pace with the index during this period. Furthermore, the focus on shares of firms that could provide reliable earnings growth helped the Fund's technology allocation outperform the technology stocks in the benchmark.* Stock selection within the financial-services sector also strengthened the Funda's relative returns. The managers focused on shares of capital-markets firms, student loan providers and asset managers, rather than interest-rate sensitive bank stocks. That emphasis helped the Fund's financial-services stocks outperform the financial stocks in the index by a wide margin: Financial-services stocks in the Russell 1000'r' Growth Index lost approximately 5% during this period, while the Fund's financials stake gained roughly 5%. An underweight position in the relatively strong-performing health care sector weighed on returns against the benchmark, while selection of health-care stocks also dragged on relative performance. This Fund emphasizes shares of firms with strong competitive advantages and high profit margins. Within health care this approach typically leads the Fund to hold shares of medical device and pharmaceuticals companies, as opposed to hospitals and other medical services firms. That positioning hurt relative performance during this six month period, as hospitals and medical services stocks led the health care sector.* Stock selection in the consumer discretionary sector also dampened relative gains. The sub-advisor focused in that sector on shares of firms with strong franchises, but some of those stocks suffered due to fears about potential weakness in consumer spending. * Portfolio composition is subject to change. 10 HSBC INVESTOR FAMILY OF FUNDS Portfolio Reviews ------------------------------------------------------------------------------- HSBC Investor Growth Fund - As of April 30, 2005
Fund Performance Aggregate Return ------------------------------------------------------------------------------- Inception 6 Since As of April 30, 2005 Date Month Inception ------------------------------------------------------------------------------- HSBC Investor Growth Fund Class A(1) 5/10/04 -4.53% -4.53% ------------------------------------------------------------------------------- HSBC Investor Growth Fund Class B(2) 5/10/04 -3.92% -4.32% ------------------------------------------------------------------------------- HSBC Investor Growth Fund Class C(3) 5/10/04 -0.84% -1.24% ------------------------------------------------------------------------------- HSBC Investor Growth Fund Class Y 5/10/04 0.60% 0.68% ------------------------------------------------------------------------------- Russell 1000'r' Growth Index -- -1.14% -- ------------------------------------------------------------------------------- Lipper Large-Cap Growth Funds Average(4) -- 0.93% -- -------------------------------------------------------------------------------
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 5.00%. (2) Reflects the contingent deferred sales charge (maximum of 4.00%). (3) Reflects the contingent deferred sales charge (maximum of 1.00%). (4) For additional information, please refer to the Glossary of Terms. The Fund is measured against the Russell 1000'r' Growth Index, an unmanaged index which measures the performance of the securities found in the Russell universe with higher price-to-book ratios and higher forecasted growth values. The index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Fund's performance reflects the deduction of fees for these services. Investors cannot invest directly in an index, although they can invest in its underlying securities. During the period shown, the Investment Manager waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. HSBC INVESTOR FAMILY OF FUNDS 11 Portfolio Reviews ------------------------------------------------------------------------------- HSBC Investor Value Fund (Class A Shares, B Shares, C Shares and Y Shares) by Jon D. Bosse, CFA, Chief Investment Officer and E.C. (Ted) Friedel, CFA, Managing Director NWQ Investment Management Co., LLC The HSBC Investor Value Fund (the "Fund") is part of a "master/feeder" fund structure and invests all of its assets in the HSBC Investor Value Portfolio, which acts as the master fund. NWQ Investment Management Company, LLC (NWQ) is the subadviser to the Fund. NWQ seeks undervalued large and mid capitalization companies with identifiable catalysts expected to improve profitability and/or unlock value. The Fund seeks long-term growth of capital and income by investing primarily in U.S. and foreign companies with large and medium capitalizations that possess hidden opportunities underpriced by the market. Investment Concerns Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. Common stocks, and funds investing in common stocks, generally provide greater return potential when compared with other types of investments. Value-based investments are subject to the risk that the broad market may not recognize their intrinsic value. Market Commentary For the six month period ended April 30, 2005, the shares of the HSBC Investor Value Fund delivered a total return of 5.94% (without sales charge) for the Class A Shares and 6.07% for the Class Y Shares. The Fund's benchmark, the Russell 1000'r' Value Index, returned 6.72%. Past performance does not guarantee future results. Early in the period, the Fund's holdings rallied in response to a combination of factors, including attractive security valuations, positive corporate announcements and improved political and economic visibility. However, higher oil prices and the Federal Reserve's acknowledgment of inflation risks for the first time in this business cycle weighed on stock prices during early 2005, offsetting some of the Fund's strong previous gains. Stock selection played the largest role in boosting the Fund's returns relative to its benchmark index. For example, the Fund held an underweight position in the energy sector, reflecting the sub-advisor's concerns about high valuations in the sector. However, security selection, particularly among shares of energy exploration and production firms, more than offset the negative effect of the underweight position.* Stock selection in the health care sector also boosted the Fund's performance relative to the benchmark. The Fund held an overweight position in shares of managed-care firms, which benefited from improving fundamentals in that industry.* The Fund over-weighted technology stocks relative to the Russell 1000 Value Index during this period. Technology shares posted strong gains during the fourth quarter of 2004, but declined during early 2005, as business conditions appeared to deteriorate. The Portfolio's relatively large technology stake weighed on returns relative to the benchmark for the period as a whole.* * Portfolio composition is subject to change. 12 HSBC INVESTOR FAMILY OF FUNDS Portfolio Reviews ------------------------------------------------------------------------------- HSBC Investor Value Fund - As of April 30, 2005
Fund Performance Aggregate Return ------------------------------------------------------------------------------- Inception 6 Since As of April 30, 2005 Date Month Inception ------------------------------------------------------------------------------- HSBC Investor Value Fund Class A(1) 5/10/04 0.67% 7.58% ------------------------------------------------------------------------------- HSBC Investor Value Fund Class B(2) 5/10/04 1.51% 8.47% ------------------------------------------------------------------------------- HSBC Investor Value Fund Class C(3) 5/10/04 4.57% 11.43% ------------------------------------------------------------------------------- HSBC Investor Value Fund Class Y 5/10/04 6.07% 13.65% ------------------------------------------------------------------------------- Russell 1000'r' Value Index -- 6.72% -- ------------------------------------------------------------------------------- Lipper Multi-Cap Value Funds Average(4) -- 5.18% -- -------------------------------------------------------------------------------
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 5.00%. (2) Reflects the contingent deferred sales charge (maximum of 4.00%). (3) Reflects the contingent deferred sales charge (maximum of 1.00%). (4) For additional information, please refer to the Glossary of Terms. The Funds are measured against the Russell 1000'r' Value Index, an unmanaged index generally representative of the performance of small-capitalization stocks. The performance of the index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Funds' performance reflects the deduction of fees for these services. Investors cannot invest directly in an index, although they can invest in its underlying securities. During the period shown, the Investment Manager waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. HSBC INVESTOR FAMILY OF FUNDS 13 Portfolio Reviews ------------------------------------------------------------------------------- HSBC Investor Growth and Income Fund (Class A Shares, B Shares, C Shares and Y Shares) by Thomas D'Auria, CFA Chief Investment Officer - U.S. Equities HSBC Investments (USA) Inc. Effective April 18, 2005, the Fund is being subadvised by Transamerica Investment Management, LLC (TIM). Prior to that, HSBC Investments (USA) Inc. managed the Fund's investments. The following commentary was prepared by HSBC Investments (USA) Inc. incorporating TIM's future outlook. The HSBC Investor Growth and Income Fund (the "Fund") normally invests at least 65% of its total assets in common stocks, preferred stocks, and convertible securities. The Fund may invest the balance of its assets in various types of fixed income securities and in money market instruments. Investment Concerns Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. Common stocks, and funds investing in common stocks, generally provide greater return potential when compared with other types of investments. Bonds offer a relatively stable level of income, although bond prices will fluctuate providing the potential for principal gain or loss. Intermediate-term, higher-quality bonds generally offer less risk than longer-term bonds and a lower rate of return. Market Commentary The Fund returned 2.44% (without sales charge) for the Class A Shares and 2.53% for the Class Y Shares for the six month period ended April 30, 2005. That compared to a 3.28% return for the S&P 500 Index. Past performance is no guarantee future results. The Fund underperformed versus the S&P 500 for the six month period November 2004 through April 30, 2005 due to stock selection. Stock selection for the Information Technology, Energy, Financials, Consumer Staples and Telecom Services sectors detracted from performance as Healthcare and Consumer Discretionary contributed towards performance. Best performing stocks included Well Point Inc., Altria Group, Caremark Rx, Phelps Dodge & Prudential. Poor performing stocks included eBay, Fannie Mae, Qualcomm, Harley-Davidson & BMC Software.* The major U.S. equity market indices were mixed during the period, as the S&P 500 rose 3.3% during the six month period ended April 30, 2005, while the NASDAQ Composite Index(4) returned -2.70%. The equity markets traded in a narrow range during most of the period, rising during November and December on the back of strong economic reports and a Republican sweep in the November elections. However, by early January, we had grown concerned that the markets had moved upwards too quickly; and were not surprised to see a pause in the rally, followed by a flat to downwards drift in the past four months. In the face of a Federal Reserve that has boosted short-term rates at eight consecutive Federal Open Market Committee meetings dating back to June 2004, we are encouraged at the resiliency in the equity markets. While corporate profits remained strong during the first quarter, this was overshadowed by expectations of rapidly slowing growth during the next several quarters along with fears of a "soft patch" in the economy. These concerns helped to pull stocks down from early-year highs. We have been more optimistic on the equity markets for the past month or so, based on our belief that fears over inflation have peaked, and that energy prices should moderate going forward. We believe lower long rates and milder energy prices could lead to a boost in business activity after the recent slowdown. We continue to favor stocks with high quality earnings, growing at a moderate pace (stable growers). Those companies with excess cash flows who have the ability to raise payouts are also favored. We believe stable growers could outperform as earnings decelerate.* We do not think inflation is as worrisome as it is being portrayed in the headlines. Rates are only rising in the U.S. at the short-end. The conundrum Greenspan has talked about is simply long-bond investors focusing on inflation expectations and pricing the long bond accordingly. Finally, we believe large-caps could outperform the broader market after five years of underperformance. The 50 largest-cap companies are selling in line with small-cap companies for the first time since the mid-90's and we believe these companies are more likely to deliver higher returns over the next few years.* * Portfolio composition is subject to change. 14 HSBC INVESTOR FAMILY OF FUNDS Portfolio Reviews ------------------------------------------------------------------------------ HSBC Investor Growth and Income Fund - As of April 30, 2005
Fund Performance Average Annual Return -------------------------------------------------------------------------------------------------------- Inception 6 1 3 Since As of April 30, 2005 Date Month Year Year Inception -------------------------------------------------------------------------------------------------------- HSBC Investor Growth and Income Fund Class A(1) 4/12/01 -2.67% -1.68% -0.33% -4.00% -------------------------------------------------------------------------------------------------------- HSBC Investor Growth and Income Fund Class B(2) 4/5/01 -1.82% -1.23% 0.00% -2.79% -------------------------------------------------------------------------------------------------------- HSBC Investor Growth and Income Fund Class C(3) 11/3/03 1.01% 1.72% N/A 3.76% -------------------------------------------------------------------------------------------------------- HSBC Investor Growth and Income Fund Class Y 4/2/01 2.53% 3.64% 1.62% -1.75% -------------------------------------------------------------------------------------------------------- Standard & Poor's 500 Index -- 3.28% 6.33% 4.24% -- -------------------------------------------------------------------------------------------------------- Lipper Large-Cap Growth Funds Average(4) -- 0.93% 1.11% 0.38% -- --------------------------------------------------------------------------------------------------------
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 5.00%. (2) Reflects the contingent deferred sales charge (maximum of 4.00%). (3) Reflects the contingent deferred sales charge (maximum of 1.00%). (4) For additional information, please refer to the Glossary of Terms. The Fund is measured against the Standard & Poor's 500 Index, an unmanaged index that is generally representative of the U.S. stock market as a whole. The performance of the index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Fund's performance reflects the deduction of fees for these value-added services. Investors cannot invest directly in an index, although they can invest in its underlying securities. During the period shown, the investment manager waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. HSBC INVESTOR FAMILY OF FUNDS 15 Portfolio Reviews ------------------------------------------------------------------------------- HSBC Investor Mid-Cap Fund (Class A Shares, B Shares, C Shares and Trust Shares) by Thomas D'Auria, CFA Chief Investment Officer - U.S. Equities HSBC Investments (USA) Inc. Effective April 18, 2005, the Fund is being sub-advised by Munder Capital Management (Munder). Prior to that, HSBC Investments (USA) Inc. managed the Fund's investments. The following commentary was prepared by HSBC Investments (USA) Inc. incorporating Munder's future outlook. The HSBC Investor Mid-Cap Fund (the "Fund") seeks to achieve a higher rate of return than that generated by the Russell MidCap'r' Growth Index by investing at least 80% of its total assets in stocks of mid-sized companies with market capitalization, at the time of acquisition, falling within the range of the Russell MidCap(R) Growth ($190 million to $13.3 billion). Investment Concerns Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. Common stocks, and funds investing in common stocks, generally provide greater return potential when compared with other types of investments. Mid capitalization funds typically carry additional risks since smaller companies generally have a higher risk of failure, and historically, their stocks have experienced a greater degree of market volatility than stocks on average. Market Commentary The Fund's Class A Shares posted a return of 5.33% (without sales charge) and 5.40% for the Trust Shares for the six month period ended April 30, 2005. That compares to 4.07% for the Fund's benchmark, the Russell MidCap'r' Growth Index. Past performance does not guarantee future results. The Fund outperformed both the benchmark and the peer group during this period due to superior stock selection in the Consumer Discretionary, Financials and Healthcare sectors.* The major U.S. equity market indices were mixed during the period, as the S&P 500 rose 3.3% during the six-month period ended April 30, 2005, while the NASDAQ Composite Index4 returned -2.70%. The equity markets traded in a narrow range during most of the period, rising during November and December on the back of strong economic reports and a Republican sweep in the November elections. However, by early January, we had grown concerned that the markets had moved upwards too quickly; and were not surprised to see a pause in the rally, followed by a flat to downwards drift in the past four months. In the face of a Federal Reserve that has boosted short-term rates at eight consecutive Federal Open Market Committee meetings dating back to June 2004, we are encouraged at the resiliency in the equity markets. While corporate profits remained strong during the first quarter, this was overshadowed by expectations of rapidly slowing growth during the next several quarters along with fears of a "soft patch" in the economy. These concerns helped to pull stocks down from early-year highs. We have been more optimistic on the equity markets for the past month or so, based on our belief that fears over inflation have peaked, and that energy prices should moderate going forward. We believe lower long rates and milder energy prices could lead to a boost in business activity after the recent slowdown. We continue to favor stocks with high quality earnings, growing at a moderate pace (stable growers). Those companies with excess cash flows who have the ability to raise payouts are also favored. We believe stable growers could outperform as earnings decelerate. We do not think inflation is as worrisome as it is being portrayed in the headlines. Rates are only rising in the U.S. at the short-end. The conundrum Greenspan has talked about is simply long-bond investors focusing on inflation expectations and pricing the long bond accordingly. We anticipate that analysts' expectations for growth will also ratchet down, leading to negative earnings revisions. In an environment of slowing earnings growth and a decline in projected earnings, high quality companies are likely to show relative strength, with cyclical names being more negatively impacted. Our discipline has a strong focus on quality companies, and we believe that the discipline should do relatively well in a stock picker's market. * Portfolio composition is subject to change. 16 HSBC INVESTOR FAMILY OF FUNDS Portfolio Reviews ------------------------------------------------------------------------------ HSBC Investor Mid-Cap Fund - As of April 30, 2005
Fund Performance Average Annual Return ------------------------------------------------------------------------------------------------------- Inception 6 1 5 Since As of April 30, 2005 Date'D' Month Year Year Inception ------------------------------------------------------------------------------------------------------- HSBC Investor Mid-Cap Fund Class A(1) 7/1/93 0.11% 2.54% -2.42% 10.42% ------------------------------------------------------------------------------------------------------- HSBC Investor Mid-Cap Fund Class B(2) 7/1/93 1.02% 2.99% -2.15% 10.15% ------------------------------------------------------------------------------------------------------- HSBC Investor Mid-Cap Fund Class C(3) 7/1/93 3.87% 5.95% -2.04% 10.21% ------------------------------------------------------------------------------------------------------- HSBC Investor Mid-Cap Fund Trust 7/1/93 5.40% 8.06% -1.19% 11.25% ------------------------------------------------------------------------------------------------------- Russell MidCap'r' Growth Index -- 4.07% 7.05% -6.15% 9.38% ------------------------------------------------------------------------------------------------------- Lipper Mid-Cap Growth Funds Average(4) -- 1.68% 3.94% -6.03% 8.21% -------------------------------------------------------------------------------------------------------
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 5.00%. (2) Reflects the contingent deferred sales charge (maximum of 4.00%). (3) Reflects the contingent deferred sales charge (maximum of 1.00%). (4) For additional information, please refer to the Glossary of Terms. 'D' Prior to July 1, 2000, HSBC Investments (USA) Inc. managed another pooled investment vehicle called a collective investment trust (CTF) with the same investment objective as the Fund since 1993. The assets from that CTF were converted into the HSBC Investor Mid-Cap Fund on July 1. The CTF was not registered with the Securities & Exchange Commission (SEC) and thus was not subject to certain investment restrictions that are imposed on the Fund. If the CTF had been registered with the SEC, its performance might have been adversely affected. Performance assumes reinvestment of dividends and distributions. The Fund is measured against the Russell MidCap'r' Growth Index, an unmanaged index which measures the performance of those Russell securities in the Russell universe with higher price-to-book ratios and higher forecasted growth values. The index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Fund's performance reflects the deduction of fees for these services. Investors cannot invest directly in an index, although they can invest in its underlying securities. HSBC INVESTOR FAMILY OF FUNDS 17 Portfolio Reviews ------------------------------------------------------------------------------- HSBC Investor International Equity Fund HSBC Investor Overseas Equity Fund (Class A Shares, B Shares and C Shares) by Kevin F. Simms Co-CIO International Value Equities and Director of Research--Global and International Value Equities AllianceBernstein Investment Research and Management The HSBC Investor International Equity Fund and the HSBC Investor Overseas Equity Fund (the "Funds") seek to provide their shareholders with long-term growth of capital and future income by investing primarily in securities of non-U.S. issuers and securities of issuers whose principal markets are outside of the United States. The Funds employ a two-tier fund structure, known as "master-feeder," in which the Funds invest all of their investable assets in the HSBC Investor International Equity Portfolio (the "Portfolio"). The Portfolio employs Bernstein, a unit of AllianceBernstein Investment Research and Management as sub-investment adviser. The Portfolio invests primarily in equity securities of companies organized and domiciled in developed nations outside the U.S., or for which the principal trading market is outside the U.S., including Europe, Canada, Australia and the Far East. Investment Concerns There are risks associated with investing in foreign companies, such as erratic market conditions, economic and political instability and fluctuations in currency and exchange rates. Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. Common stocks, and funds investing in common stocks, generally provide greater return potential when compared with other types of investments. Market Commentary For the six month period ended April 30, 2005, the shares of the HSBC Investor International Equity Fund produced a 8.71% return, and the Class A Shares of the HSBC Investor Overseas Equity Fund returned 8.29% (without sales charge). That compared to a total return of 8.71% for the Funds' benchmark, the Morgan Stanley Capital International, Europe, Australasia and Far East Index. Past performance does not guarantee future results. Global stock markets generated strong returns during this period. Foreign companies have significantly improved their cost structures during recent years, particularly in Europe and Japan. Those improvements have allowed the firms to increase profits more quickly than expected during a period of moderate economic growth. Corporations around the world produced positive earnings surprises, and stocks benefited. An overweight position in industrial commodities stocks helped the Fund perform inline with its benchmark. That position included a relatively large weighting in shares of steel manufacturers, which performed especially well as powerful demand from China and the developed world contributed to strong pricing power in the steel industry. The Fund also benefited from an underweight position in the telecommunications sector. The portfolio managers held a relatively small stake in that sector due to concerns about increased capacity and eroding profit margins.* Strong stock selection in a number of industries also boosted returns against the benchmark. For example, the Fund held a large stake in shares of a German tire maker, and the stock surged on lower costs and growth in the firm's brakes business. Shares of a Japanese tobacco company helped the Fund's relative returns as well, as investors in the Japanese market retreated to such defensive stocks in the face of slowing economic growth. Strong performance by shares of a cost-cutting French insurance company also benefited relative gains.* Certain currency movements had negative effects on the Fund's relative returns. This Fund held approximately 10% of its assets in emerging-markets stocks during this period. Currencies in emerging markets generally appreciated against the dollar, but not as rapidly as currencies in developed foreign markets. That disparity gave the Fund a smaller currency lift than the benchmark experienced, hampering relative gains. Currency movements also weighed on the Fund's overweight position in automobile stocks, because the dollar's weakness cut into profit margins at foreign carmakers that sell in the U.S.* Poor performance at individual aluminum and paper stocks also hampered relative returns. Pricing in the aluminum industry was weaker than expected, possibly because of higher than anticipated capacity, so the Fund's managers reduced the portfolio's position in aluminum stocks. Meanwhile, prices for paper did not strengthen as much as expected during this six-month period. The Fund's managers believe that pricing power will improve, however, so they maintained the portfolio's stake in the paper industry during the period. * Portfolio composition is subject to change. 18 HSBC INVESTOR FAMILY OF FUNDS Portfolio Reviews ------------------------------------------------------------------------------- HSBC Investor International Equity Fund HSBC Investor Overseas Equity Fund - As of April 30, 2005
Fund Performance Average Annual Return ------------------------------------------------------------------------------------------------------------- Inception 6 1 5 10 Since As of April 30, 2005 Date Month Year Year Year Inception ------------------------------------------------------------------------------------------------------------- HSBC Investor International Equity Fund 1/9/95 8.71% 19.69% -3.03% 8.41% 8.47% ------------------------------------------------------------------------------------------------------------- HSBC Investor Overseas Equity Fund Class A(1) 8/26/96 2.90% 12.91% -4.29% N/A 6.25% ------------------------------------------------------------------------------------------------------------- HSBC Investor Overseas Equity Fund Class B(2) 1/6/98 3.80% 13.90% -4.07% N/A 5.35% ------------------------------------------------------------------------------------------------------------- HSBC Investor Overseas Equity Fund Class C(3) 11/4/98 6.81% 16.90% -4.07% N/A 5.43% ------------------------------------------------------------------------------------------------------------- MSCI EAFE Index -- 8.71% 14.95% -0.55% 4.77% -- ------------------------------------------------------------------------------------------------------------- Lipper International Large-Cap Core Average(4) -- 7.37% 12.01% -3.28% 5.17% -- -------------------------------------------------------------------------------------------------------------
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 5.00%. (2) Reflects the contingent deferred sales charge (maximum of 4.00%). (3) Reflects the contingent deferred sales charge (maximum of 1.00%). (4) For additional information, please refer to the Glossary of Terms. The Funds are measured against the Morgan Stanley Capital International (MSCI) Europe, Australasia and Far East (EAFE) Index, which is an unmanaged index that measures performance of a diverse range of developed countries in the indicated regions. The performance of the index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Funds' performance reflects the deduction of fees for these services. Investors cannot invest directly in an index, although they can invest in its underlying securities. During the period shown, the Investment Manager waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. HSBC INVESTOR FAMILY OF FUNDS 19 Portfolio Reviews ------------------------------------------------------------------------------ HSBC Investor Small Cap Equity Fund HSBC Investor Opportunity Fund (Class A Shares, B Shares and C Shares) by William A. Muggia President-Chief Investment Officer Westfield Capital Management The HSBC Investor Small Cap Equity Fund and the HSBC Investor Opportunity Fund ("the Funds") seek to provide their shareholders with long-term growth of capital by investing in equity securities of emerging small and medium-sized companies expected to deliver earnings growth well above the growth rate of the economy and the rate of inflation. The Funds employ a two-tier structure, commonly referred to as "master-feeder." The Funds invest all of their investable assets in the HSBC Investor Small Cap Equity Portfolio (the "Portfolio"). The Portfolio employs Westfield Capital Management, LLC as sub-investment adviser. The Portfolio invests primarily in common stocks of small and medium-sized companies that may have the potential to become major enterprises. Investment Concerns Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. Common stocks, and funds investing in common stocks, generally provide greater return potential when compared with other types of investments. Small-capitalization funds typically carry additional risks since smaller companies generally have a higher risk of failure, and historically, their stocks have experienced a greater degree of market volatility than stocks on average. Market Commentary For the six months ended April 30, 2005, the shares of the HSBC Investor Small Cap Equity Fund produced a 0.61% return and the Class A Shares of the HSBC Investor Opportunity Fund produced a 0.27% return (without sales charge). The Funds' benchmark, the Russell 2500'r' Growth Index, returned 1.12%. Past performance does not guarantee future results. Small stocks performed well during the first two months of the period, following the resolution of the presidential election and a decline in energy prices. But small caps declined from January through April, as investors worried about a renewed rise in energy costs, higher interest rates and slower profit growth. Defensive sectors such as utilities, energy and consumer staples led the small-cap market during the period, while technology and financial-services stocks lagged. The Fund's managers and analysts located growth opportunities prior to the period in the energy, materials and industrials sectors--sections of the market that are not traditionally associated with growth investing. The Fund during the recent period continued to hold an overweight position in energy stocks, which boosted performance against the benchmark. Stock selection in the materials sector also lifted relative returns, as the Fund's holdings of coal and steel stocks benefited from high demand and low supplies for those materials. Individual security selection in the industrials sector also helped returns against the index.* The managers' selection among technology stocks boosted relative returns as well. This Fund seeks shares of reasonably-valued, high-quality firms, and does not invest in speculative stocks. That focus on quality helped the Fund's technology stake significantly outperform the technology stocks in the benchmark during the six month period.* The Fund held an overweight position in shares of health-care firms throughout this period, partially due to the managers' belief that long-term demographic trends are favorable for this sector, particularly in growing niches such as biotechnology. That sector generally produced solid performance, but poor returns among certain pharmaceutical and biotechnology stocks weighed on the Fund's relative returns.* The performance of the Fund's consumer-discretionary holdings also weighed on returns against the benchmark. Losses at shares of specialty stores and media firms particularly dragged on relative returns. Moreover, the Fund's managers held a relatively small stake in shares of clothing retailers because the industry exhibited overcapacity and high stock valuations. Those stocks managed to post healthy gains, however, which also hurt the Fund's returns against the benchmark. A sell-off in regional bank stocks hurt the Fund's financial services allocation, also weighing on relative returns.* * Portfolio composition is subject to change. 20 HSBC INVESTOR FAMILY OF FUNDS Portfolio Reviews ------------------------------------------------------------------------------- HSBC Investor Small Cap Equity Fund HSBC Investor Opportunity Fund - As of April 30, 2005
Fund Performance Average Annual Return ------------------------------------------------------------------------------------------------------- Inception 6 1 5 Since As of April 30, 2005 Date Month Year Year Inception ------------------------------------------------------------------------------------------------------- HSBC Investor Small Cap Equity Fund 9/3/96 0.61% 4.53% -0.92% 9.80% ------------------------------------------------------------------------------------------------------- HSBC Investor Opportunity Fund Class A(1) 9/23/96 -4.70% -1.17% -2.54% 7.51% ------------------------------------------------------------------------------------------------------- HSBC Investor Opportunity Fund Class B(2) 1/6/98 -4.09% -0.89% -2.28% 6.23% ------------------------------------------------------------------------------------------------------- HSBC Investor Opportunity Fund Class C(3) 11/4/98 -1.10% 2.28% -2.27% 7.12% ------------------------------------------------------------------------------------------------------- Russell 2500'r' Growth Index -- 1.12% 2.65% -4.98% -- ------------------------------------------------------------------------------------------------------- Lipper Mid-Cap Growth Funds Average(4) -- 1.68% 3.94% -6.03% -- -------------------------------------------------------------------------------------------------------
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Total return figures include change in share price, reinvestment of dividends and capital gains. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. To obtain performance information current to the most recent month end, please call 1-800-782-8183. (1) Reflects the maximum sales charge of 5.00%. (2) Reflects the contingent deferred sales charge (maximum of 4.00%). (3) Reflects the contingent deferred sales charge (maximum of 1.00%). (4) For additional information, please refer to the Glossary of Terms. The Funds are measured against the Russell 2500'r' Growth Index, an unmanaged index of the companies in the Russell 2500'r' Index (the 2,500 smallest companies in the Russell 3000'r' Index) with higher price-to-book ratios and higher forecasted growth values. The performance of the index does not reflect the deduction of expenses associated with a mutual fund, such as investment management and fund accounting fees. The Funds' performance reflects the deduction of fees for these services. Investors cannot invest directly in an index, although they can invest in its underlying securities. During the period shown, the Investment Manager waived and/or voluntarily reimbursed fees for various expenses. Had these waivers and/or reimbursements not been in effect, performance quoted would have been lower. HSBC INVESTOR FAMILY OF FUNDS 21 Portfolio Reviews -------------------------------------------------------------------------------- Portfolio Composition April 30, 2005 (Unaudited) HSBC Investor Limited Maturity Portfolio -------------------------------------------------- Security Allocation Percentage of Market Value -------------------------------------------------- U.S. Government Agencies 54.3% Corporate Bond 33.4% Asset Backed Securities 7.1% Repurchase Agreements 2.7% U.S. Treasury Notes 2.0% Cash 0.5% -------------------------------------------------- Total 100.0% HSBC Investor Fixed Income Portfolio -------------------------------------------------- Security Allocation Percentage of Market Value -------------------------------------------------- U.S. Government Agencies 42.7% Corporate Bond 35.3% Asset Backed Securities 8.0% U.S. Treasury Securities 7.2% Collateralized Mortgage Obligations 4.1% Municipal Bond 1.7% Cash 1.0% -------------------------------------------------- Total 100.0% HSBC Investor New York Tax Free Bond Fund -------------------------------------------------- Security Allocation Percentage of Market Value -------------------------------------------------- Municipal Bonds 92.1% Variable Rate Notes 7.2% Cash 0.7% -------------------------------------------------- Total 100.0% Portfolio composition is subject to change. HSBC Investor Growth Portfolio -------------------------------------------------- Security Allocation Percentage of Market Value -------------------------------------------------- Health Care 21.8% Information Technology 18.7% Financials 16.2% Industrials 11.3% Consumer Discretionary 9.8% Consumer Staples 7.1% Energy 6.2% Cash 5.5% Repurchase Agreements 2.1% Telecommunication Services 1.3% -------------------------------------------------- Total 100.0% HSBC Investor Value Portolio -------------------------------------------------- Security Allocation Percentage of Market Value -------------------------------------------------- Financials 26.7% Industrials 13.3% Energy 11.1% Information Technology 10.5% Repurchase Agreements 8.4% Consumer Staples 8.3% Consumer Discretionary 6.8% Materials 4.7% Telecommunication Services 4.5% Cash 3.1% Health Care 2.6% -------------------------------------------------- Total 100.0% HSBC Investor Growth and Income Fund -------------------------------------------------- Security Allocation Percentage of Market Value -------------------------------------------------- Financials 8.2% Industrials 17.3% Consumer Discretionary 15.9% Health Care 13.6% Information Technology 12.4% Energy 10.4% Consumer Staples 4.2% Telecommunication Services 3.9% Utilities 3.2% Materials 0.9% -------------------------------------------------- Total 100.0% 22 HSBC INVESTOR FAMILY OF FUNDS Portfolio Reviews -------------------------------------------------------------------------------- Portfolio Composition April 30, 2005 (Unaudited) HSBC Investor Mid-Cap Fund -------------------------------------------------- Security Allocation Percentage of Market Value -------------------------------------------------- Consumer Discretionary 25.2% Industrials 20.6% Energy 14.4% Financials 13.2% Health Care 12.4% Information Technology 6.8% Telecommunication Services 4.8% Consumer Staples 1.5% Cash 1.1% -------------------------------------------------- Total 100.0% HSBC Investor International Equity Portfolio -------------------------------------------------- Security Allocation Percentage of Market Value -------------------------------------------------- Europe 61.1% Japan 22.1% Australia and Far East 8.4% Other 8.0% Cash 0.4% -------------------------------------------------- Total 100.0% Portfolio composition is subject to change. HSBC Investor Small Cap Equity Portfolio -------------------------------------------------- Security Allocation Percentage of Market Value -------------------------------------------------- Health Care 22.5% Information Technology 21.3% Industrials 18.6% Energy 13.1% Consumer Discretionary 10.0% Financials 6.6% Materials 3.8% Repurchase Agreements 2.1% Telecommunications 2.0% -------------------------------------------------- Total 100.0% HSBC INVESTOR FAMILY OF FUNDS 23 HSBC INVESTOR NEW YORK TAX-FREE BOND FUND -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) ......................................................................
--------------------------------------------------------------- MUNICIPAL BONDS - 91.3% PRINCIPAL AMOUNT($) VALUE($) --------- ---------- NEW YORK - 84.7% Brookhaven, New York GO (FGIC Insured), 5.50%, 10/1/12, ECON Defeased to Call, 10/01/06 @102......................... 500,000 528,655 Buffalo, New York Fiscal Stability Authority (FSA Insured), 5.25%, 8/15/13............................... 500,000 563,645 Corning City, New York School District GO (FSA Insured), 4.00%, 6/15/08...... 930,000 960,550 Corning City, New York School District GO (FSA Insured), 5.00%, 6/15/09...... 790,000 849,519 Erie County, New York GO (FGIC Insured), 5.375%, 6/15/07............. 250,000 254,540 Grand Central New York District Management, 4.00%, 1/1/07............. 400,000 406,988 Guilderland, New York Central School District GO (FSA Insured), 3.50%, 6/15/05............................... 250,000 250,295 Metropolitan Transportation Authority of New York Revenue (FGIC Insured), 5.25%, 7/1/17, Prerefunded 7/1/08 @ 100.5............................... 1,145,000 1,232,970 Metropolitan Transportation Authority of New York Revenue (FGIC Insured), 5.50%, 11/15/19....................... 1,000,000 1,169,010 Metropolitan Transportation Authority of New York Revenue (FSA Insured), 5.00%, 11/15/32, Callable 11/15/12 @ 100................................. 1,625,000 1,693,347 Metropolitan Transportation Authority of New York Revenue (MBIA Insured), 5.50%, 1/1/19, Callable 7/1/12 @ 100................................. 480,000 535,565 Metropolitan Transportation Authority of New York Revenue, Escrowed to Maturity, 5.75%, 7/1/13............... 285,000 319,571 Monroe County, New York, Airport Authority Revenue, AMT (MBIA Insured), 5.625%, 1/1/10........................ 1,240,000 1,350,372 Monroe County, New York, Airport Authority Revenue, AMT (MBIA Insured), 5.75%, 1/1/14......................... 750,000 843,578 Nassau County New York, Series S (AMBAC Insured), 5.125%, 3/1/13, Prerefunded 03/01/06 @ 103............ 2,900,000 3,043,840 New York City GO, 5.00%, 8/1/05........ 1,000,000 1,005,930 New York City GO, 5.00%, 8/1/08........ 990,000 1,049,351 New York City GO, 5.00%, 8/1/14........ 200,000 217,218 New York City GO, 6.00%, 8/1/14, Callable 8/1/07 @ 101................. 980,000 1,045,003 New York City GO, 6.00%, 8/1/14, Prerefunded 8/1/07 @ 101.............. 20,000 21,550 New York City Housing Development Corp. Revenue, AMT, 5.60%, 11/1/19.......... 100,000 104,262 New York City Industrial Development Agency (FSA Insured), 5.00%, 11/15/19, Callable 5/1/30 @ 100................. 1,000,000 1,078,470 New York City Municipal Assistance Corp. Revenue, 6.00%, 7/1/06, (Econ Defeased to Maturity)................. 735,000 763,114 New York City Municipal Water Authority Revenue, 5.00%, 6/15/34, Callable 6/15/13 @ 100......................... 1,250,000 1,298,988 --------------------------------------------------------------- MUNICIPAL BONDS, CONTINUED PRINCIPAL AMOUNT($) VALUE($) --------- ---------- New York City Municipal Water Finance Authority, 5.00%, 6/15/36, Callable 12/15/14 @ 100........................ 1,000,000 1,044,150 New York City Transitional Finance Authority Revenue, 5.25%, 5/1/17, Callable 5/1/11 @ 100................. 400,000 436,192 New York City Transitional Finance Authority Revenue, 5.25%, 2/1/29, Callable 2/1/11 @ 100................. 1,540,000 1,672,609 New York NY Series G, 5.00%, 12/1/13... 1,000,000 1,089,120 New York State Dormitory Authority Revenue, City University, 5.00%, 7/1/06................................ 1,000,000 1,022,940 New York State Dormitory Authority Revenue, Columbia University, 4.00%, 7/1/06................................ 1,000,000 1,015,100 New York State Dormitory Authority Revenue, Columbia University, 5.00%, 7/1/29, Mandatory put 7/1/07 @ 100.... 1,000,000 1,042,040 New York State Dormitory Authority Revenue, Cooper Union (MBIA Insured), 6.00%, 7/1/19, Callable 7/1/09 @ 101................................. 350,000 391,185 New York State Dormitory Authority Revenue, Department of Health, 5.25%, 7/1/16, Callable 7/1/14 @ 100......... 500,000 548,770 New York State Dormitory Authority Revenue, Master Boces PG (FSA Insured), 5.25%, 8/15/19, Callable 8/15/12 @ 100......................... 1,000,000 1,098,240 New York State Dormitory Authority Revenue, Mental Health, 6.50%, 8/15/11............................... 225,000 261,691 New York State Dormitory Authority Revenue, Mental Health, 5.50%, 8/15/17, Prerefunded 2/15/07 @ 102.... 15,000 15,970 New York State Dormitory Authority Revenue, Mental Health, 5.50%, 8/15/17, Partially Prerefunded 2/15/07 @ 102................................. 985,000 1,042,228 New York State Dormitory Authority Revenue, New York Presbyterian Hospital (AMBAC Insured), 5.50%, 8/1/10................................ 750,000 827,640 New York State Dormitory Authority Revenue, New York University (AMBAC Insured), 5.50%, 7/1/18............... 500,000 581,205 New York State Dormitory Authority Revenue, NY State Rehabilitation Association (CIFG Group Insured), 4.00%, 7/1/06......................... 1,120,000 1,134,325 New York State Dormitory Authority Revenue, NYSARC (FSA Insured), 2.00%, 7/1/06................................ 475,000 469,561 New York State Dormitory Authority Revenue, NYSARC (FSA Insured), 5.25%, 7/1/18, Callable 7/1/12 @ 101......... 1,460,000 1,612,555 New York State Dormitory Authority Revenue, Rockefeller University, 5.25%, 7/1/13, Callable 7/1/08 @ 101................................. 500,000 536,910 New York State Dormitory Authority Revenue, School District Board Financing, 5.00%, 7/1/08.............. 595,000 630,545 New York State Dormitory Authority Revenue, School District Rescue, 5.00%, 4/1/07......................... 500,000 518,150
24 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. HSBC INVESTOR NEW YORK TAX-FREE BOND FUND -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ......................................................................
--------------------------------------------------------------- MUNICIPAL BONDS, CONTINUED PRINCIPAL AMOUNT($) VALUE($) --------- ---------- New York State Dormitory Authority Revenue, Sloan Kettering Institute (MBIA Insured), 5.50%, 7/1/23......... 1,300,000 1,515,046 New York State Environmental Facscorp, 5.70%, 1/15/14, Callable 7/15/09 @ 101................................. 415,000 458,056 New York State Environmental Facscorp, 5.70%, 1/15/14, Prerefunded 7/15/09 @ 101................................. 570,000 636,297 New York State Environmental Facscorp, 5.70%, 1/15/14, Prerefunded 7/15/09 @ 101................................. 15,000 16,745 New York State Mortgage Agency Revenue, AMT, 5.60%, 10/1/14, Callable 9/1/07 @ 101.5............................... 1,000,000 1,035,510 New York State Municipal Bond Bank Revenue, 5.50%, 12/1/12............... 850,000 956,267 New York State Thruway Authority Revenue, Highway & Bridge (FGIC Insured), 5.25%, 4/1/07............... 300,000 313,713 New York State Thruway Authority Revenue, Highway & Bridge (FGIC Insured), 5.50%, 4/1/17, Callable 4/1/11 @ 101.......................... 1,000,000 1,113,530 New York State Thruway Authority Revenue, Highway & Bridge (MBIA Insured), 5.00%, 4/1/22, Callable 4/1/14 @ 100.......................... 1,000,000 1,068,200 New York State Thruway Authority, Personal Income Tax Revenue, 5.50%, 3/15/20, Callable 3/15/12 @ 100....... 500,000 550,365 New York State Thruway Authority, Personal Income Tax Revenue (FSA Insured), 5.00%, 3/15/13.............. 645,000 711,738 New York State Thruway Authority, Personal Income Tax Revenue (MBIA Insured), 5.00%, 3/15/19, Callable 3/15/12 @ 100......................... 1,400,000 1,507,632 New York State Thruway Authority, Personal Income Tax Revenue (MBIA Insured), 5.00%, 3/15/21, Callable 3/15/13 @ 100......................... 500,000 537,555 New York State Thruway Authority, Service Contract Revenue, 5.50%, 4/1/11................................ 1,000,000 1,114,030 New York State Urban Development Corp., 5.125%, 1/1/22, Callable 7/1/14 @ 100................................. 885,000 946,729 New York State Urban Development Corp. Revenue, 5.75%, 4/1/12................ 500,000 566,970 New York State Urban Development Corp. Revenue, 5.75%, 4/1/12, Prerefunded 4/1/07 @ 102.......................... 1,000,000 1,073,180 New York State Urban Development Corp. Revenue, 5.125%, 1/1/25, Prerefunded 1/1/11 @ 100.......................... 175,000 192,722 New York State Urban Development Corp. Revenue, Series A (MBIA Insured), 6.50%, 1/1/09......................... 500,000 559,470 Onondaga County, New York Water Authority Revenue (FSA Insured), 5.00%, 9/15/14, Callable 9/15/10 @ 101................................. 300,000 327,666 Onondaga County, New York Water Authority Revenue (FSA Insured), 5.00%, 9/15/15, Callable 9/15/10 @ 101................................. 665,000 718,559 --------------------------------------------------------------- MUNICIPAL BONDS, CONTINUED PRINCIPAL AMOUNT($) VALUE($) --------- ---------- Port Authority of New York & New Jersey Revenue, 5.00%, 9/1/27, Callable 9/1/13 @ 100.......................... 795,000 833,478 Port Authority of New York & New Jersey Revenue, 5.375%, 3/1/28............... 1,100,000 1,258,653 Port Authority of New York & New Jersey Special Obligation Revenue, AMT (MBIA Insured), 5.75%, 12/1/22, Callable 12/1/07 @ 102......................... 500,000 538,550 Suffolk County, New York (FSA Insured), 5.25%, 5/1/12......................... 515,000 573,030 Suffolk County, New York (FSA Insured), 5.25%, 5/1/15......................... 100,000 112,392 Tobacco Settlement Corp., 5.00%, 6/1/06................................ 1,000,000 1,024,710 Tobacco Settlement Corp., Series C-1, 5.50%, 6/1/21, Callable 6/1/13 @ 100................................. 1,000,000 1,097,680 Webster, New York Central School District GO (FSA Insured), 5.00%, 6/15/14............................... 500,000 553,290 Yonkers New York, Series E (MBIA Insured), 5.00%, 12/1/14.............. 750,000 828,908 ---------- 60,318,128 ---------- PUERTO RICO - (6.6%) Puerto Rico Commonwealth, Highway and Transportation (MBIA Insured), 5.00%, 9/15/17, Callable 3/15/14 @ 100....... 1,000,000 1,092,820 Puerto Rico Electric Power Authority Revenue (MBIA Insured), 5.25%, 7/1/22................................ 1,000,000 1,152,790 Puerto Rico Public Buildings Authority Revenue, 5.25%, 7/1/33, Callable 7/1/14 @ 100.......................... 700,000 743,918 Puerto Rico Public Finance Corp. Revenue (MBIA Insured), 5.25%, 8/1/29, Callable 7/1/10 @ 101................. 1,000,000 1,109,180 Puerto Rico Publishing Finance Corp. Revenue (AMBAC Insured), 5.375%, 6/1/18................................ 500,000 579,480 ---------- 4,678,188 ---------- TOTAL MUNICIPAL BONDS (COST $62,135,291).................... 64,996,316 ---------- --------------------------------------------------------------- VARIABLE RATE DEMAND NOTES* - (7.2%) NEW YORK - (7.2%) New York City Housing Development Corp. Multifamily Revenue, East 165th Street, AMT (LOC Citibank N.A.), 2.95%, 6/1/36......................... 2,100,000 2,100,000 New York City Housing Development Corp. Multifamily Revenue, Manhattan Court Development, AMT (LOC Citibank N.A.), 2.95%, 6/1/36......................... 1,000,000 1,000,000 New York State Mortgage Agency Revenue, AMT (Dexia Credit Local), 2.95%, 10/1/34............................... 2,000,000 2,000,000 ---------- 5,100,000 ---------- TOTAL VARIABLE RATE DEMAND NOTES* (COST $5,100,000)........................... 5,100,000 ----------
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 25 HSBC INVESTOR NEW YORK TAX-FREE BOND FUND -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ......................................................................
--------------------------------------------------------------- INVESTMENT COMPANIES - 0.7% SHARES VALUE($) --------- ---------- Provident New York Tax-Free Money Market Fund Institutional Shares...... 492,757 492,757 ---------- TOTAL INVESTMENT COMPANIES (COST $492,757)....................... 492,757 ---------- TOTAL INVESTMENTS (COST $67,728,048) - 99.2%........... 70,589,073 ---------- ----------
-------------- Percentages indicated are based on net assets of $71,183,970. * Variable rate security. The interest rates on these securities are adjusted periodically to reflect then-current short-term interest rates. The rates presented in this report represent the rates that were in effect on April 30, 2005. However, each of these securities contains put or demand features that allow the fund to require the issuer to repurchase the security from the fund within various time periods, including daily, weekly, monthly, or semi-annually. AMBAC -- American Municipal Bond Assurance Corporation AMT -- Interest on security is subject to Federal Alternative Minimum Tax FGIC -- Federal Guaranty Insurance Corporation FSA -- Financial Security Assurance GO -- General Obligation LOC -- Letter of Credit MBIA -- Municipal Bond Insurance Association
26 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. HSBC INVESTOR GROWTH AND INCOME FUND -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) ......................................................................
--------------------------------------------------------------- COMMON STOCKS - 90.1% SHARES VALUE($) ------- ----------- AEROSPACE & DEFENSE - 1.2% United Technologies Corp.............. 21,900 2,227,668 ----------- AIR FREIGHT & LOGISTICS - 1.0% United Parcel Service, Inc............ 25,000 1,782,750 ----------- BANKING - 5.0% Bank of America Corp.................. 100,000 4,504,000 Wachovia Corp......................... 45,000 2,303,100 Wells Fargo & Co...................... 40,000 2,397,600 ----------- 9,204,700 ----------- BIOTECHNOLOGY - 1.9% Amgen, Inc. (b)....................... 60,000 3,492,600 ----------- CHEMICALS - 2.3% Du Pont (E.I) de Nemours and Co....... 30,000 1,413,300 The Dow Chemical Co................... 60,000 2,755,800 ----------- 4,169,100 ----------- COMPUTER SOFTWARE - 6.2% Affiliated Computer Services, Inc., Class A (b).......................... 24,000 1,144,080 BMC Software, Inc. (b)................ 77,800 1,260,360 Microsoft Corp........................ 300,000 7,590,000 Symantec Corp. (b).................... 66,900 1,256,382 ----------- 11,250,822 ----------- COMPUTERS - 2.4% Dell, Inc. (b)........................ 54,000 1,880,820 International Business Machines Corp................................. 31,900 2,436,522 ----------- 4,317,342 ----------- CONSUMER PRODUCTS - 5.9% Black & Decker Corp................... 13,500 1,129,005 Gillette Co........................... 13,000 671,320 Harley-Davidson, Inc.................. 40,500 1,904,310 PepsiCo, Inc.......................... 70,000 3,894,800 The Procter & Gamble Co............... 57,000 3,086,550 ----------- 10,685,985 ----------- DIVERSIFIED MANUFACTURING OPERATIONS - 12.4% Caterpillar, Inc...................... 25,000 2,201,250 General Electric Co................... 200,000 7,240,000 Illinois Tool Works, Inc.............. 50,000 4,191,000 Jacobs Engineering Group, Inc. (b).... 40,000 1,948,400 Kennametal, Inc....................... 75,000 3,397,500 PACCAR, Inc........................... 40,000 2,716,000 Whirlpool Corp........................ 17,200 1,067,432 ----------- 22,761,582 ----------- ELECTRONIC COMPONENTS & SEMICONDUCTORS - 2.6% Intel Corp............................ 139,000 3,269,280 Texas Instruments, Inc................ 59,500 1,485,120 ----------- 4,754,400 ----------- FINANCIAL SERVICES - 11.4% American Express Co................... 75,000 3,952,500 Citigroup, Inc........................ 128,000 6,010,880 Countrywide Financial Corp............ 28,500 1,031,415 Goldman Sachs Group, Inc.............. 23,000 2,456,170 J.P. Morgan Chase & Co................ 80,000 2,839,200 Merrill Lynch & Co., Inc.............. 35,500 1,914,515 Prudential Financial, Inc............. 46,000 2,628,900 ----------- 20,833,580 ----------- --------------------------------------------------------------- COMMON STOCKS, CONTINUED SHARES VALUE($) ------- ----------- HEALTH CARE - 6.4% Caremark Rx, Inc. (b)................. 90,000 3,604,500 Guidant Corp.......................... 20,000 1,481,600 WellPoint, Inc. (b)................... 35,000 4,471,250 Zimmer Holdings, Inc. (b)............. 25,000 2,035,500 ----------- 11,592,850 ----------- HOTELS & LODGING - 2.7% Marriott International, Inc., Class A.............................. 60,000 3,765,000 Starwood Hotels & Resorts Worldwide, Inc.................................. 20,700 1,124,838 ----------- 4,889,838 ----------- INTERNET RELATED - 0.5% eBay, Inc. (b)........................ 26,600 844,018 ----------- MEDIA - 2.8% McGraw-Hill Cos., Inc................. 25,000 2,177,000 Time Warner, Inc. (b)................. 170,000 2,857,700 ----------- 5,034,700 ----------- MEDICAL & HEALTH PRODUCTS - 0.4% Genentech, Inc. (b)................... 10,000 709,400 ----------- OIL & GAS - 9.3% Anadarko Petroleum Corp............... 60,000 4,382,400 Exxon Mobil Corp...................... 100,000 5,703,000 Schlumberger Ltd...................... 80,000 5,472,800 Suncor Energy, Inc. ADR............... 40,000 1,474,400 ----------- 17,032,600 ----------- PHARMACEUTICALS - 3.6% Abbott Laboratories................... 49,000 2,408,840 Johnson & Johnson..................... 60,000 4,117,800 ----------- 6,526,640 ----------- RESIDENTIAL BUILDING CONSTRUCTION - 0.6% Toll Brothers, Inc. (b)............... 15,000 1,137,000 ----------- RETAIL - 5.2% Best Buy Co., Inc..................... 41,000 2,063,940 Costco Wholesale Corp................. 33,500 1,359,430 Home Depot, Inc....................... 87,000 3,077,190 Reebok International Ltd.............. 35,000 1,421,350 Target Corp........................... 34,000 1,577,600 ----------- 9,499,510 ----------- TELECOMMUNICATIONS - 3.5% QUALCOMM, Inc......................... 80,000 2,791,200 Verizon Communications, Inc........... 100,000 3,580,000 ----------- 6,371,200 ----------- UTILITIES - 2.8% Duke Energy Corp...................... 100,300 2,927,757 Exelon Corp........................... 45,800 2,267,100 ----------- 5,194,857 ----------- TOTAL COMMON STOCKS (COST $142,810,541).................. 164,313,142 ----------- TOTAL INVESTMENTS (COST $142,810,541) - 90.1%......... 164,313,142 ----------- -----------
-------------- Percentages indicated are based on net assets of $182,365,708. (b) Represents non-income producing security. ADR -- American Depository Receipt See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 27 HSBC INVESTOR MID-CAP FUND -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) ......................................................................
--------------------------------------------------------------- COMMON STOCKS - 98.6% SHARES VALUE($) --------- ----------- ADVERTISING SERVICES - 1.6% Getty Images, Inc. (a)................ 16,325 1,168,054 ----------- AEROSPACE & DEFENSE - 3.0% L-3 Communications Holdings, Inc...... 31,225 2,216,038 ----------- BANKING - 2.2% Euronet Worldwide, Inc. (a)........... 27,175 803,293 UCBH Holdings, Inc.................... 52,825 830,937 ----------- 1,634,230 ----------- BIOTECHNOLOGY - 1.8% Gilead Sciences, Inc. (a)............. 36,025 1,336,528 ----------- BUILDING MATERIALS - 1.5% Florida Rock Industries, Inc.......... 18,825 1,093,356 ----------- BUSINESS SERVICES - 1.9% Digital River, Inc. (a)............... 32,275 858,515 ValueClick, Inc. (a).................. 51,225 530,691 ----------- 1,389,206 ----------- COMPUTER SERVICES - 2.0% Cognizant Technology Solutions Corp. (a).................................. 26,225 1,101,712 ScanSource, Inc. (a).................. 7,900 365,375 ----------- 1,467,087 ----------- COMPUTER SOFTWARE - 2.2% SRA International, Inc. Class A (a)... 24,975 1,632,116 ----------- CONSUMER PRODUCTS - 5.2% Alberto-Culver Co., Class B........... 26,125 1,162,563 Constellation Brands, Inc. (a)........ 25,300 1,333,563 The Toro Co........................... 31,425 1,298,481 ----------- 3,794,607 ----------- CONSUMER SERVICES - 2.2% VCA Antech, Inc. (a).................. 69,750 1,623,780 ----------- ELECTRONIC COMPONENTS & SEMICONDUCTORS - 1.7% FormFactor, Inc. (a).................. 54,875 1,253,345 ----------- ENVIRONMENTAL SERVICES - 3.6% Pioneer Natural Resources Co.......... 32,675 1,328,565 Stericycle, Inc. (a).................. 26,950 1,311,657 ----------- 2,640,222 ----------- FINANCIAL SERVICES - 3.6% Affiliated Managers Group, Inc. (a)... 17,900 1,119,287 Ameritrade Holding Corp. (a).......... 65,375 685,130 Asset Acceptance Capital Corp. (a).... 2,300 47,035 Investors Financial Services Corp..... 19,450 815,928 ----------- 2,667,380 ----------- FOOD & BEVERAGE - 1.5% Flowers Foods, Inc.................... 39,150 1,129,086 ----------- HEALTH CARE - 12.4% Coventry Health Care, Inc. (a)........ 22,375 1,531,120 Kinetic Concepts, Inc. (a)............ 13,100 804,995 LifePoint Hospitals, Inc. (a)......... 21,025 934,561 Patterson Companies, Inc. (a)......... 18,950 957,923 Quest Diagnostics, Inc................ 8,725 923,105 Renal Care Group, Inc. (a)............ 32,175 1,227,476 ResMed, Inc. (a)...................... 23,625 1,467,113 Ventas, Inc........................... 45,600 1,230,288 ----------- 9,076,581 ----------- INSURANCE - 5.6% Ambac Financial Group, Inc............ 14,050 939,243 AmerUs Group Co....................... 23,200 1,090,632 RenaissanceRe Holdings Ltd............ 18,525 829,364 Universal American Financial Corp. (a).................................. 75,175 1,259,181 ----------- 4,118,420 ----------- LEISURE - 4.1% International Game Technology......... 36,850 990,897 --------------------------------------------------------------- COMMON STOCKS, CONTINUED SHARES VALUE($) --------- ----------- Penn National Gaming, Inc. (a)........ 65,075 2,049,862 ----------- 3,040,759 ----------- MEDIA - 0.7% InfoSpace, Inc. (a)................... 17,375 538,451 ----------- METALS & MINING - 1.4% Phelps Dodge Corp..................... 12,375 1,062,394 ----------- OIL & GAS (10.3% Airgas, Inc........................... 33,525 734,868 Chesapeake Energy Corp................ 36,325 698,893 Kinder Morgan, Inc.................... 20,300 1,552,137 Patterson-UTI Energy, Inc............. 57,150 1,369,886 Praxair, Inc.......................... 16,325 764,500 Precision Drilling Corp. (a).......... 19,450 1,403,706 XTO Energy, Inc....................... 35,383 1,067,505 ----------- 7,591,495 ----------- REAL ESTATE - 1.7% New Century Financial Corp............ 27,575 1,253,284 ----------- RESIDENTIAL BUILDING CONSTRUCTION - 3.4% Pulte Homes, Inc...................... 16,325 1,166,421 Standard Pacific Corp................. 18,625 1,333,737 ----------- 2,500,158 ----------- RETAIL - 11.8% Chico's FAS, Inc. (a)................. 28,125 720,844 Dick's Sporting Goods, Inc. (a)....... 32,175 989,703 Foot Locker, Inc...................... 48,100 1,282,346 KB Home, Inc.......................... 23,700 1,350,899 Regis Corp............................ 32,800 1,171,944 Sears Holdings Corp. (a).............. 7,175 970,347 Tempur-Pedic International, Inc. (a).................................. 66,425 1,268,053 Tractor Supply Co. (a)................ 21,450 862,719 ----------- 8,616,855 ----------- TELECOMMUNICATIONS - 4.7% Adelphia Business Solutions, Inc. (a).................................. 19,923 319 Comverse Technology, Inc. (a)......... 36,125 823,289 j2 Global Communications, Inc. (a).... 35,500 1,268,060 Nextel Partners, Inc., Class A (a).... 59,550 1,400,616 ----------- 3,492,284 ----------- TRANSPORTATION - 4.2% Old Dominion Freight Line, Inc. (a)... 58,725 1,650,172 Oshkosh Truck Corp.................... 19,450 1,461,668 ----------- 3,111,840 ----------- UTILITIES - 4.3% Aqua America, Inc..................... 47,250 1,259,685 Equitable Resources, Inc.............. 16,550 953,942 New Jersey Resources Corp............. 21,450 930,072 ----------- 3,143,699 ----------- TOTAL COMMON STOCKS (COST $71,955,000)................... 72,591,256 ----------- --------------------------------------------------------------- INVESTMENT COMPANIES - 1.1% HSBC Investor Money Market Fund Class I Shares *........................... 791,186 791,186 ----------- TOTAL INVESTMENT COMPANIES (COST $791,186)...................... 791,186 ----------- TOTAL INVESTMENTS (COST $72,746,186) - 99.7%.......... 73,382,442 ----------- -----------
-------------- Percentages indicated are based on net assets of $73,610,356. (a) Represents non-income producing security. * Investment in affiliate. ADR -- American Depositary Receipt 28 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF ASSETS AND LIABILITIES -- APRIL 30, 2005 (UNAUDITED) ..................................................................
LIMITED NEW YORK MATURITY FIXED INCOME BOND TAX-FREE BOND FUND FUND FUND FUND --------------------------------------------------------------------------------------------------------------- ASSETS: Investments in master $36,341,404 $110,374,646 $25,674,303 $ -- Investments, at value (non- affiliated)(note 2) -- -- -- 70,589,073 Interest and dividends receivable -- -- -- 876,807 Receivable for capital shares issued 2,800 23,658 36,294 2,118 Receivable from Investment Adviser 2,836 -- 11,206 -- Prepaid expenses and other assets 5,300 3,694 3,621 5,114 ----------- ------------ ----------- ----------- TOTAL ASSETS 36,352,340 110,401,998 25,725,424 71,473,112 ----------- ------------ ----------- ----------- LIABILITIES: Dividends payable 49,953 167,689 32,824 74,716 Payable for capital shares redeemed 9,709 438,274 149 141,958 Accrued expenses and other liabilities: Investment management -- -- -- 14,738 Administration 1,749 5,529 967 5,592 Accounting 2,934 246 379 5,886 Transfer Agent 14,914 5,877 11,633 11,778 Distribution 5,486 -- 7,558 11,825 Shareholder servicing 1,588 -- 5,207 10,908 Other 1,669 36,718 2,313 11,741 ----------- ------------ ----------- ----------- TOTAL LIABILITIES 88,002 654,333 61,030 289,142 ----------- ------------ ----------- ----------- NET ASSETS $36,264,338 $109,747,665 $25,664,394 $71,183,970 ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- .............................................................................................................. COMPOSITION OF NET ASSETS: Capital $36,372,665 $105,406,407 $26,005,269 $68,207,653 Accumulated net investment income (loss) (56,914) 175,068 39,014 7,910 Accumulated net realized gains (losses) from investment transactions 25,563 1,670,221 (630,341) 107,382 Unrealized appreciation/depreciation from investments (76,976) 2,495,969 250,452 2,861,025 ----------- ------------ ----------- ----------- NET ASSETS $36,264,338 $109,747,665 $25,664,394 $71,183,970 ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- .............................................................................................................. CLASS A (INVESTOR) SHARES: Net Assets $ 1,329,014 $ -- $18,529,359 $34,100,403 Shares Outstanding 134,967 -- 1,762,444 3,033,469 Net Asset Value and Redemption Price per share $ 9.85 $ -- $ 10.51 $ 11.24 ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- Maximum sales charge 4.75% -- 4.75% 4.75% ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- Maximum Offering Price per share (Net Asset Value/(100% - maximum sales charge)) $ 10.34 $ -- $ 11.03 $ 11.80 ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- .............................................................................................................. CLASS B SHARES: Net Assets $ 5,804,042 $ -- $ 6,725,732 $16,681,555 Shares Outstanding 588,371 -- 639,751 1,485,575 Net Asset Value, Offering Price and Redemption Price per share* $ 9.86 $ -- $ 10.51 $ 11.23 ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- .............................................................................................................. CLASS C SHARES: Net Assets $ 593,329 $ -- $ 409,303 $ 2,081,892 Shares Outstanding 60,177 -- 38,962 184,687 Net Asset Value, Offering Price and Redemption Price per share* $ 9.86 $ -- $ 10.51 $ 11.27 ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- .............................................................................................................. CLASS Y SHARES: Net Assets $28,537,953 $ -- $ -- $18,320,120 Shares Outstanding 2,894,425 -- -- 1,629,518 Net Asset Value, Offering Price and Redemption Price per share $ 9.86 $ -- $ -- $ 11.24 ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- .............................................................................................................. ADVISOR SHARES: Net Assets $ -- $109,747,665 $ -- $ -- Shares Outstanding -- 10,199,503 -- -- Net Asset Value, Offering Price and Redemption Price per share $ -- $ 10.76 $ -- $ -- ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- Investments, at cost $67,728,048 ----------- ----------- GROWTH VALUE FUND FUND -------------- -------------- Investments in master $ 40,323,842 $ 50,521,979 Investments, at value (non- affiliated)(note 2) -- -- Interest and dividends receivable -- -- Receivable for capital shares issued 26,060 23,734 Receivable from Investment Adviser 13,159 584 Prepaid expenses and other assets 18,045 23,137 ------------ ------------ TOTAL ASSETS 40,381,106 50,569,434 ------------ ------------ LIABILITIES: Dividends payable -- -- Payable for capital shares redeemed 40,746 49,887 Accrued expenses and other liabilities: Investment management -- -- Administration 1,252 1,560 Accounting -- -- Transfer Agent -- -- Distribution 1,062 1,515 Shareholder servicing 4,469 5,273 Other 91 878 ------------ ------------ TOTAL LIABILITIES 47,620 59,113 ------------ ------------ NET ASSETS $ 40,333,486 $ 50,510,321 ------------ ------------ ------------ ------------ ..................................... COMPOSITION OF NET ASSETS: Capital $ 40,614,708 $ 45,636,692 Accumulated net investment income (loss) 55,260 158,226 Accumulated net realized gains (losses) from investment transactions (1,180,365) 591,773 Unrealized appreciation/depreciation from investments 843,883 4,123,630 ------------ ------------ NET ASSETS $ 40,333,486 $ 50,510,321 ------------ ------------ ------------ ------------ ..................................... CLASS A (INVESTOR) SHARES: Net Assets $ 19,870,535 $ 23,078,977 Shares Outstanding 1,579,413 1,644,543 Net Asset Value and Redemption Price per share $ 12.58 $ 14.03 ------------ ------------ ------------ ------------ Maximum sales charge 5.00% 5.00% ------------ ------------ ------------ ------------ Maximum Offering Price per share (Net Asset Value/(100% - maximum sales charge)) $ 13.24 $ 14.77 ------------ ------------ ------------ ------------ ..................................... CLASS B SHARES: Net Assets $ 1,385,376 $ 2,006,339 Shares Outstanding 114,280 148,193 Net Asset Value, Offering Price and Redemption Price per share* $ 12.12 $ 13.54 ------------ ------------ ------------ ------------ ..................................... CLASS C SHARES: Net Assets $ 307,504 $ 418,808 Shares Outstanding 25,232 30,777 Net Asset Value, Offering Price and Redemption Price per share* $ 12.19 $ 13.61 ------------ ------------ ------------ ------------ ..................................... CLASS Y SHARES: Net Assets $ 18,770,071 $ 25,006,197 Shares Outstanding 1,491,834 1,783,007 Net Asset Value, Offering Price and Redemption Price per share $ 12.58 $ 14.02 ------------ ------------ ------------ ------------ ..................................... ADVISOR SHARES: Net Assets $ -- $ -- Shares Outstanding -- -- Net Asset Value, Offering Price and Redemption Price per share $ -- $ -- ------------ ------------ ------------ ------------ Investments, at cost
-------------- * Redemption Price per share varies by length of time shares are held. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 29 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF ASSETS AND LIABILITIES -- APRIL 30, 2005 (UNAUDITED) ..................................................................
GROWTH AND MID-CAP INTERNATIONAL INCOME FUND FUND EQUITY FUND --------------------------------------------------------------------------------- ASSETS: Investments in master $ -- $ -- $163,078,120 Investments, at value (non-affiliated) (Note 2) 164,313,142 72,591,256 -- Investment in affiliates, at value -- 791,186 -- Cash 12,905,519 75,534 -- Interest and dividends receivable 163,248 29,531 -- Receivable for capital shares issued 275 3,258 6,571 Receivable for investments sold 24,048,374 1,018,373 -- Receivable from Investment Adviser -- -- -- Tax reclaims receivable -- -- 114,212 Prepaid expenses and other assets 27,150 6,881 4,244 ------------ ----------- ------------ TOTAL ASSETS 201,457,708 74,516,019 163,203,147 ------------ ----------- ------------ LIABILITIES: Payable for investments purchased 18,916,113 809,231 -- Payable for capital shares redeemed 22,176 1,600 167,643 Accrued expenses and other liabilities: Investment management 84,614 41,755 -- Administration 18,834 8,131 7,403 Accounting 6,125 6,724 126 Transfer Agent 9,123 18,583 5,376 Distribution 2,562 4,663 -- Shareholder servicing 1,119 1,926 -- Other 31,334 13,050 49,016 ------------ ----------- ------------ TOTAL LIABILITIES 19,092,000 905,663 229,564 ------------ ----------- ------------ NET ASSETS $182,365,708 $73,610,356 $162,973,583 ------------ ----------- ------------ ------------ ----------- ------------ ............................................................................... COMPOSITION OF NET ASSETS: Capital $196,156,891 $57,305,638 $142,744,171 Accumulated net investment income (loss) 601,546 (74,645) 838,670 Accumulated net realized gains (losses) from investment and foreign currency transactions (35,895,330) 15,743,107 1,182,641 Unrealized appreciation/depreciation from investments and foreign currencies 21,502,601 636,256 18,208,101 ------------ ----------- ------------ NET ASSETS $182,365,708 $73,610,356 $162,973,583 ------------ ----------- ------------ ------------ ----------- ------------ ............................................................................... CLASS A (INVESTOR) SHARES: Net Assets $ 1,317,089 $ 1,882,438 $ -- Shares Outstanding 147,674 211,811 -- Net Asset Value and Redemption Price per share $ 8.92 $ 8.89 $ -- ------------ ----------- ------------ ------------ ----------- ------------ Maximum sales charge 5.00% 5.00% -- ------------ ----------- ------------ ------------ ----------- ------------ Maximum Offering Price per share (Net Asset Value/(100% - maximum sales charge)) $ 9.39 $ 9.36 $ -- ------------ ----------- ------------ ------------ ----------- ------------ ............................................................................... CLASS B SHARES: Net Assets $ 3,990,480 $ 7,167,022 $ -- Shares Outstanding 453,708 836,520 -- Net Asset Value, Offering Price and Redemption Price per share* $ 8.80 $ 8.57 $ -- ------------ ----------- ------------ ------------ ----------- ------------ ............................................................................... CLASS C SHARES: Net Assets $ 44,313 $ 99,868 $ -- Shares Outstanding 4,994 11,580 -- Net Asset Value, Offering Price and Redemption Price per share* $ 8.87 $ 8.62 $ -- ------------ ----------- ------------ ------------ ----------- ------------ ............................................................................... CLASS Y SHARES: Net Assets $177,013,826 $ -- $ -- Shares Outstanding 19,842,242 -- -- Net Asset Value, Offering Price and Redemption Price per share $ 8.92 $ -- $ -- ------------ ----------- ------------ ------------ ----------- ------------ ............................................................................... ADVISOR SHARES: Net Assets $ -- $ -- $162,973,583 Shares Outstanding -- -- 10,232,972 Net Asset Value, Offering Price and Redemption Price per share $ -- $ -- $ 15.93 ------------ ----------- ------------ ------------ ----------- ------------ ............................................................................... TRUST SHARES: Net Assets $ -- $64,461,028 $ -- Shares Outstanding -- 7,180,884 -- Net Asset Value, Offering Price and Redemption Price per share $ -- $ 8.98 $ -- ------------ ----------- ------------ ------------ ----------- ------------ Total investments, at cost $142,810,541 $72,746,186 ------------ ----------- ------------ ----------- OVERSEAS SMALL CAP OPPORTUNITY EQUITY FUND EQUITY FUND FUND ---------------------------------------------------------------------------- ASSETS: Investments in master $22,383,916 $208,493,609 $25,569,556 Investments, at value (non-affiliated) (Note 2) -- -- -- Investment in affiliates, at value -- -- -- Cash -- -- -- Interest and dividends receivable -- -- -- Receivable for capital shares issued 24,782 2,628 9,514 Receivable for investments sold -- -- -- Receivable from Investment Adviser -- -- 7,251 Tax reclaims receivable 15,912 -- -- Prepaid expenses and other assets 5,852 8,694 5,714 ----------- ------------ ----------- TOTAL ASSETS 22,430,462 208,504,931 25,592,035 ----------- ------------ ----------- LIABILITIES: Payable for investments purchased -- -- -- Payable for capital shares redeemed 38,096 144,108 14,166 Accrued expenses and other liabilities: Investment management -- -- -- Administration 828 9,389 1,020 Accounting 378 246 379 Transfer Agent 6,944 4,900 10,701 Distribution 1,809 -- 2,139 Shareholder servicing 4,708 -- 5,402 Other 1,102 94,496 1,085 ----------- ------------ ----------- TOTAL LIABILITIES 53,865 253,139 34,892 ----------- ------------ ----------- NET ASSETS $22,376,597 $208,251,792 $25,557,143 ----------- ------------ ----------- ----------- ------------ ----------- ............................................................................ COMPOSITION OF NET ASSETS: Capital $18,823,918 $189,877,939 $24,085,888 Accumulated net investment income (loss) 65,679 (604,732) (164,417) Accumulated net realized gains (losses) from investment and foreign currency transactions 992,787 (8,107,513) (686,789) Unrealized appreciation/depreciation from investments and foreign currencies 2,494,213 27,086,098 2,322,461 ----------- ------------ ----------- NET ASSETS $22,376,597 $208,251,792 $25,557,143 ----------- ------------ ----------- ----------- ------------ ----------- ............................................................................ CLASS A (INVESTOR) SHARES: Net Assets $19,976,042 $ -- $20,807,347 Shares Outstanding 1,404,295 -- 1,902,231 Net Asset Value and Redemption Price per share $ 14.22 $ -- $ 10.94 ----------- ------------ ----------- ----------- ------------ ----------- Maximum sales charge 5.00% -- 5.00% ----------- ------------ ----------- ----------- ------------ ----------- Maximum Offering Price per share (Net Asset Value/(100% - maximum sales charge)) $ 14.97 $ -- $ 11.52 ----------- ------------ ----------- ----------- ------------ ----------- ............................................................................ CLASS B SHARES: Net Assets $2,255,823 $ -- $ 4,475,845 Shares Outstanding 164,739 -- 435,333 Net Asset Value, Offering Price and Redemption Price per share* $ 13.69 $ -- $ 10.28 ----------- ------------ ----------- ----------- ------------ ----------- ............................................................................ CLASS C SHARES: Net Assets $ 144,732 $ -- $ 273,951 Shares Outstanding 10,375 -- 26,405 Net Asset Value, Offering Price and Redemption Price per share* $ 13.95 $ -- $ 10.37 ----------- ------------ ----------- ----------- ------------ ----------- ............................................................................ CLASS Y SHARES: Net Assets $ -- $ -- $ -- Shares Outstanding -- -- -- Net Asset Value, Offering Price and Redemption Price per share $ -- $ -- $ -- ----------- ------------ ----------- ----------- ------------ ----------- ............................................................................ ADVISOR SHARES: Net Assets $ -- $208,251,792 $ -- Shares Outstanding -- 15,840,403 -- Net Asset Value, Offering Price and Redemption Price per share $ -- $ 13.15 $ -- ----------- ------------ ----------- ----------- ------------ ----------- ............................................................................ TRUST SHARES: Net Assets $ -- $ -- $ -- Shares Outstanding -- -- -- Net Asset Value, Offering Price and Redemption Price per share $ -- $ -- $ -- ----------- ------------ ----------- ----------- ------------ -----------
-------------- * Redemption Price per share varies by length of time shares are held. 30 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED) ...................................................................
NEW YORK LIMITED FIXED INCOME BOND TAX-FREE MATURITY FUND FUND FUND BOND FUND GROWTH FUND VALUE FUND --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Interest $ -- $ -- $ -- $1,380,609 $ -- $ -- Dividends -- -- -- 13,751 -- -- Investment income from portfolio 798,226 2,666,209 625,237 -- 390,166 496,341 Foreign tax withholding from portfolio -- -- -- -- -- (1,238) Expenses from portfolio (77,438) (161,372) (38,622) -- (123,708) (154,778) --------- ----------- --------- ---------- --------- ---------- TOTAL INVESTMENT INCOME 720,788 2,504,837 586,615 1,394,360 266,458 340,325 --------- ----------- --------- ---------- --------- ---------- ............................................................................................................................... EXPENSES: Investment management -- -- -- 89,858 -- -- Administration 7,132 20,703 4,859 29,438 7,873 9,977 Distribution: Class B Shares 22,479 -- 25,615 63,364 5,347 7,579 Class C Shares 2,360 -- 1,503 7,899 1,181 1,575 Shareholder servicing: Class A (Investor) Shares 1,761 -- 22,955 42,313 24,790 29,040 Class B Shares 7,493 -- 8,538 21,121 1,782 2,526 Class C Shares 786 -- 501 2,633 394 525 Accounting 16,434 4,746 13,879 36,173 17,851 17,852 Custodian -- -- -- 12,045 -- -- Registration 1,895 6,101 2,546 2,430 2,666 2,231 Printing 2,368 7,121 2,647 8,172 1,569 4,316 Transfer agent 35,607 14,539 34,559 38,170 35,051 29,998 Trustee 461 1,253 291 1,642 598 563 Other 1,921 5,211 1,505 7,900 718 1,843 --------- ----------- --------- ---------- --------- ---------- Total expenses before fee reductions 100,697 59,674 119,398 363,158 99,820 108,025 Fees reduced by Investment Adviser (15,826) -- (37,357) (8,761) (13,159) (807) --------- ----------- --------- ---------- --------- ---------- NET EXPENSES 84,871 59,674 82,041 354,397 86,661 107,218 --------- ----------- --------- ---------- --------- ---------- .............................................................................................................................. NET INVESTMENT INCOME 635,917 2,445,163 504,574 1,039,963 179,797 233,107 --------- ----------- --------- ---------- --------- ---------- .............................................................................................................................. NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: (a) Net realized gains (losses) from investments 25,563 3,256,381 198,877 107,382 248,079 630,297 Change in unrealized appreciation/depreciation from investments (596,899) (4,270,788) (443,588) (516,089) (309,200) 2,109,832 --------- ----------- --------- ---------- --------- ---------- .............................................................................................................................. Net realized/unrealized gains from investments (571,336) (1,014,407) (244,711) (408,707) (61,121) 2,740,129 --------- ----------- --------- ---------- --------- ---------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 64,581 $ 1,430,756 $ 259,863 $ 631,256 $ 118,676 $2,973,236 --------- ----------- --------- ---------- --------- ---------- --------- ----------- --------- ---------- --------- ----------
-------------- (a) With the exception of New York Tax-Free Bond Fund, represents amounts allocated from the respective Master Portfolios. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 31 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED) ...................................................................
GROWTH AND INTERNATIONAL OVERSEAS INCOME MID-CAP EQUITY EQUITY FUND FUND FUND FUND ----------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Interest $ -- $ 2,359 $ -- $ -- Dividends 2,472,976 386,065 -- -- Dividends from affiliated investments 4,191 5,011 -- -- Income from securities lending 97 571 -- -- Investment income from portfolio -- -- 2,089,782 289,245 Tax reclaims -- -- 73,948 889 Foreign tax withholding from portfolio -- -- (211,453) (29,258) Expenses from portfolio -- -- (708,435) (98,436) ----------- ----------- ----------- ---------- TOTAL INVESTMENT INCOME (LOSS) 2,477,264 394,806 1,243,842 162,440 ----------- ----------- ----------- ---------- ................................................................................................................. EXPENSES: Investment management 558,055 337,254 -- -- Administration 76,638 45,888 30,996 4,306 Distribution: Class B Shares 15,010 27,621 -- 8,454 Class C Shares 163 376 -- 543 Shareholder servicing: Class A (Investor) Shares 1,833 2,460 -- 25,358 Class B Shares 5,003 9,215 -- 2,818 Class C Shares 54 125 -- 181 Accounting 31,615 31,271 4,627 13,879 Custodian 29,192 24,132 -- -- Registration 10,200 1,661 3,719 3,577 Printing 19,783 16,006 9,856 2,162 Transfer agent 37,791 49,748 17,248 34,174 Trustee 4,710 2,889 1,693 232 Other 21,569 13,661 7,104 1,097 ----------- ----------- ----------- ---------- Total expenses before fee reductions 811,616 562,307 75,243 96,781 Fees reduced by Investment Adviser (50,411) (93,656) -- -- ----------- ----------- ----------- ---------- NET EXPENSES 761,205 468,651 75,243 96,781 ----------- ----------- ----------- ---------- ................................................................................................................. NET INVESTMENT INCOME (LOSS) 1,716,059 (74,645) 1,168,599 65,659 ----------- ----------- ----------- ---------- ................................................................................................................. NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND FOREIGN CURRENCIES: (a) Net realized gains (losses) from investment and foreign currency transactions 12,697,495 25,892,173 7,526,373 1,022,779 Change in unrealized appreciation/depreciation from investments and foreign currencies (8,790,047) (17,015,930) 4,109,469 597,941 ----------- ----------- ----------- ---------- ................................................................................................................. Net realized/unrealized gains from investment and foreign currency transactions 3,907,448 8,876,243 11,635,842 1,620,720 ----------- ----------- ----------- ---------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 5,623,507 $ 8,801,598 $12,804,441 $1,686,379 ----------- ----------- ----------- ---------- ----------- ----------- ----------- ---------- SMALL CAP EQUITY OPPORTUNITY FUND FUND --------------- --------------- Interest $ -- $ -- Dividends -- -- Dividends from affiliated investments -- -- Income from securities lending -- -- Investment income from portfolio 489,806 54,633 Tax reclaims -- -- Foreign tax withholding from portfolio -- -- Expenses from portfolio (987,712) (109,340) ----------- ---------- TOTAL INVESTMENT INCOME (LOSS) (497,906) (54,707) ----------- ---------- ............................................................................ EXPENSES: Investment management -- -- Administration 46,521 5,177 Distribution: Class B Shares -- 17,702 Class C Shares -- 1,076 Shareholder servicing: Class A (Investor) Shares -- 27,819 Class B Shares -- 5,901 Class C Shares -- 359 Accounting 4,746 13,879 Custodian -- -- Registration 6,297 3,552 Printing 15,821 3,070 Transfer agent 17,216 46,933 Trustee 3,232 314 Other 12,993 1,496 ----------- ---------- Total expenses before fee reductions 106,826 127,278 Fees reduced by Investment Adviser -- (17,568) ----------- ---------- NET EXPENSES 106,826 109,710 ----------- ---------- ............................................................................ NET INVESTMENT INCOME (LOSS) (604,732) (164,417) ----------- ---------- ............................................................................ NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND FOREIGN CURRENCIES: (a) Net realized gains (losses) from investment and foreign currency transactions 21,077,165 1,484,126 Change in unrealized appreciation/depreciation from investments and foreign currencies (13,771,064) (1,261,843) ----------- ---------- ............................................................................ Net realized/unrealized gains from investment and foreign currency transactions 7,306,101 222,283 ----------- ---------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 6,701,369 $ 57,866 ----------- ---------- ----------- ----------
-------------- (a) With the exception of Growth and Income Fund and Mid-Cap Fund, represents amounts allocated from the respective Master Portfolios. (b) Includes $357,645 related to the reimbursement of realized losses on the disposal of the investment in certain investment companies. (see note 7) 32 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS ......................................................................
LIMITED MATURITY FUND FIXED INCOME FUND --------------------------------------------------------------------------------------------------------------------------------- FOR THE SIX FOR THE SIX MONTHS ENDED FOR THE MONTHS ENDED FOR THE APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED (UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004 --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 635,917 $ 1,249,682 $ 2,445,163 $ 4,468,204 Net realized gains (losses) from investment transactions 25,563 331,944 3,256,381 1,275,025 Change in unrealized appreciation/depreciation from investments (596,899) 32,330 (4,270,788) (86,587) ----------- ----------- ------------ ------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 64,581 1,613,956 1,430,756 5,656,642 ----------- ----------- ------------ ------------ ............................................................................................................................ DIVIDENDS: NET INVESTMENT INCOME: Class A (Investor) Shares (25,576) (79,559) -- -- Class B Shares (85,856) (161,712) -- -- Class C Shares (9,026) (37,490) -- -- Class Y Shares (570,100) (1,086,077) -- -- Advisor Shares -- -- (2,331,521) (4,500,718) NET REALIZED GAINS: Class A (Investor) Shares (8,295) (135,028) -- -- Class B Shares (34,076) (282,131) -- -- Class C Shares (3,623) (105,514) -- -- Class Y Shares (168,256) (1,415,704) -- -- ----------- ----------- ------------ ------------ CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (904,808) (3,303,215) (2,331,521) (4,500,718) ----------- ----------- ------------ ------------ CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS (2,669,577) (2,200,141) 1,130,121 (2,606,046) ----------- ----------- ------------ ------------ CHANGE IN NET ASSETS (3,509,804) (3,889,400) 229,356 (1,450,122) ............................................................................................................................. NET ASSETS: Beginning of period 39,774,142 43,663,542 109,518,309 110,968,431 ----------- ----------- ------------ ------------ End of period $36,264,338 $39,774,142 $109,747,665 $109,518,309 ----------- ----------- ------------ ------------ ----------- ----------- ------------ ------------ Accumulated net investment income (loss) $ (56,914) $ (2,273) $ 175,068 $ 61,426 ----------- ----------- ------------ ------------ ----------- ----------- ------------ ------------
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 33 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ......................................................................
LIMITED MATURITY FUND FIXED INCOME FUND --------------------------------------------------------------------------------------------------------------------------------- FOR THE SIX FOR THE SIX MONTHS ENDED FOR THE MONTHS ENDED FOR THE APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED (UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004 --------------------------------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A (INVESTOR) SHARES: Proceeds from shares issued $ 10,682 $ 420,136 $ -- $ -- Dividends reinvested 31,269 200,881 -- -- Cost of shares redeemed (238,548) (2,229,725) -- -- ----------- ------------- ------------ ------------ Class A (Investor) Shares capital transactions (196,597) (1,608,708) -- -- ----------- ------------- ------------ ------------ .............................................................................................................................. CLASS B SHARES: Proceeds from shares issued 291,387 893,262 -- -- Dividends reinvested 100,779 397,930 -- -- Cost of shares redeemed (773,805) (1,163,686) -- -- ----------- ------------- ------------ ------------ Class B Shares capital transactions (381,639) 127,506 -- -- ----------- ------------- ------------ ------------ .............................................................................................................................. CLASS C SHARES: Proceeds from shares issued 72,900 83,393 -- -- Dividends reinvested 12,456 141,149 -- -- Cost of shares redeemed (157,700) (1,990,271) -- -- ----------- ------------- ------------ ------------ Class C Shares capital transactions (72,344) (1,765,729) -- -- ----------- ------------- ------------ ------------ .............................................................................................................................. CLASS Y SHARES: Proceeds from shares issued 2,132,269 9,931,279 -- -- Dividends reinvested 562,443 1,913,383 -- -- Cost of shares redeemed (4,713,709) (10,797,872) -- -- ----------- ------------- ------------ ------------ Class Y Shares capital transactions (2,018,997) 1,046,790 -- -- ----------- ------------- ------------ ------------ .............................................................................................................................. ADVISOR SHARES: Proceeds from shares issued -- -- 12,562,905 26,239,405 Dividends reinvested -- -- 1,406,291 2,670,922 Cost of shares redeemed -- -- (12,839,075) (31,516,373) ----------- ------------- ------------ ------------ Advisor Shares capital transactions -- -- 1,130,121 (2,606,046) ----------- ------------- ------------ ------------ CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $(2,669,577) $ (2,200,141) $ 1,130,121 $ (2,606,046) ----------- ------------- ------------ ------------ ----------- ------------- ------------ ------------ .............................................................................................................................. SHARE TRANSACTIONS: CLASS A (INVESTOR) SHARES: Issued 1,075 41,873 -- -- Reinvested 3,146 19,911 -- -- Redeemed (24,007) (223,097) -- -- ----------- ------------- ------------ ------------ Change in Class A (Investor) Shares (19,786) (161,313) -- -- ----------- ------------- ------------ ------------ .............................................................................................................................. CLASS B SHARES: Issued 29,331 88,212 -- -- Reinvested 10,120 39,414 -- -- Redeemed (77,866) (115,235) -- -- ----------- ------------- ------------ ------------ Change in Class B Shares (38,415) 12,391 -- -- ----------- ------------- ------------ ------------ .............................................................................................................................. CLASS C SHARES: Issued 7,283 8,294 -- -- Reinvested 1,252 13,973 -- -- Redeemed (15,803) (197,361) -- -- ----------- ------------- ------------ ------------ Change in Class C Shares (7,268) (175,094) -- -- ----------- ------------- ------------ ------------ .............................................................................................................................. CLASS Y SHARES: Issued 214,596 984,517 -- -- Reinvested 56,524 189,646 -- -- Redeemed (474,415) (1,068,607) -- -- ----------- ------------- ------------ ------------ Change in Class Y Shares (203,295) 105,556 -- -- ----------- ------------- ------------ ------------ .............................................................................................................................. ADVISOR SHARES: Issued -- -- 1,166,091 2,434,997 Reinvested -- -- 130,409 247,974 Redeemed -- -- (1,192,783) (2,927,030) ----------- ------------- ------------ ------------ Change in Advisor Shares -- -- 103,717 (244,059) ----------- ------------- ------------ ------------
34 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ...............................................................................
BOND FUND NEW YORK TAX-FREE BOND FUND --------------------------------------------------------------------------------------------------------------------------------- FOR THE SIX FOR THE SIX MONTHS ENDED FOR THE MONTHS ENDED FOR THE APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED (UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004 --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 504,574 $ 869,048 $ 1,039,963 $ 1,993,744 Net realized gains (losses) from investment transactions 198,877 (157,901) 107,382 113,912 Change in unrealized appreciation/depreciation from investments (443,588) 377,523 (516,089) 817,257 ----------- ----------- ----------- ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 259,863 1,088,670 631,256 2,924,913 ----------- ----------- ----------- ----------- ............................................................................................................................. DIVIDENDS: NET INVESTMENT INCOME: Class A (Investor) Shares (361,781) (638,457) (508,052) (868,263) Class B Shares (109,164) (223,750) (190,820) (419,400) Class C Shares (6,402) (13,252) (23,679) (61,105) Class Y Shares -- -- (309,505) (646,490) NET REALIZED GAINS: Class A (Investor) Shares -- -- (52,912) (120,953) Class B Shares -- -- (26,947) (92,061) Class C Shares -- -- (3,247) (15,865) Class Y Shares -- -- (30,806) (96,127) ----------- ----------- ----------- ----------- CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (477,347) (875,459) (1,145,968) (2,320,264) ----------- ----------- ----------- ----------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 1,239,775 2,250,029 (894,629) 7,769,011 ----------- ----------- ----------- ----------- CHANGE IN NET ASSETS 1,022,291 2,463,240 (1,409,341) 8,373,660 ............................................................................................................................. NET ASSETS: Beginning of period 24,642,103 22,178,863 72,593,311 64,219,651 ----------- ----------- ----------- ----------- End of period $25,664,394 $24,642,103 $71,183,970 $72,593,311 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Accumulated net investment income (loss) $ 39,014 $ 11,787 $ 7,910 $ 3 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 35 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ......................................................................
NEW YORK BOND FUND TAX-FREE BOND FUND --------------------------------------------------------------------------------------------------------------------------------- FOR THE SIX FOR THE SIX MONTHS ENDED FOR THE MONTHS ENDED FOR THE APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED (UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004 --------------------------------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A (INVESTOR) SHARES: Proceeds from shares issued $ 3,858,529 $11,120,582 $ 6,345,942 $ 19,778,905 Dividends reinvested 340,602 592,247 522,597 907,234 Cost of shares redeemed (2,760,276) (8,748,191) (5,419,470) (10,395,878) ----------- ----------- ----------- ------------ Class A (Investor) Shares capital transactions 1,438,855 2,964,638 1,449,069 10,290,261 ----------- ----------- ----------- ------------ ................................................................................................................................. CLASS B SHARES: Proceeds from shares issued 175,896 899,953 549,625 2,134,581 Dividends reinvested 94,290 191,588 161,884 389,604 Cost of shares redeemed (504,844) (1,572,057) (1,363,617) (3,543,472) ----------- ----------- ----------- ------------ Class B Shares capital transactions (234,658) (480,516) (652,108) (1,019,287) ----------- ----------- ----------- ------------ ................................................................................................................................. CLASS C SHARES: Proceeds from shares issued 41,250 9,167 15,978 276,101 Dividends reinvested 6,343 12,757 17,144 54,385 Cost of shares redeemed (12,015) (256,017) (274,562) (1,262,303) ----------- ----------- ----------- ------------ Class C Shares capital transactions 35,578 (234,093) (241,440) (931,817) ----------- ----------- ----------- ------------ ................................................................................................................................. CLASS Y SHARES: Proceeds from shares issued -- -- 2,294,543 3,969,688 Dividends reinvested -- -- 64,702 188,028 Cost of shares redeemed -- -- (3,809,395) (4,727,862) ----------- ----------- ----------- ------------ Class Y Shares capital transactions -- -- (1,450,150) (570,146) ----------- ----------- ----------- ------------ CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 1,239,775 $ 2,250,029 $ (894,629) $ 7,769,011 ----------- ----------- ----------- ------------ ----------- ----------- ----------- ------------ ................................................................................................................................. SHARE TRANSACTIONS: CLASS A (INVESTOR) SHARES: Issued 365,739 1,055,569 564,096 1,759,416 Reinvested 32,299 56,325 46,419 80,838 Redeemed (263,157) (833,673) (482,348) (926,189) ----------- ----------- ----------- ------------ Change in Class A (Investor) Shares 134,881 278,221 128,167 914,065 ----------- ----------- ----------- ------------ ................................................................................................................................. CLASS B SHARES: Issued 16,715 85,059 48,957 189,522 Reinvested 8,953 18,245 14,408 34,705 Redeemed (48,047) (149,766) (121,457) (318,736) ----------- ----------- ----------- ------------ Change in Class B Shares (22,379) (46,462) (58,092) (94,509) ----------- ----------- ----------- ------------ ................................................................................................................................. CLASS C SHARES: Issued 3,914 868 1,410 24,608 Reinvested 602 1,213 1,518 4,817 Redeemed (1,139) (24,313) (24,341) (112,449) ----------- ----------- ----------- ------------ Change in Class C Shares 3,377 (22,232) (21,413) (83,024) ----------- ----------- ----------- ------------ ................................................................................................................................. CLASS Y SHARES: Issued -- -- 204,946 353,878 Reinvested -- -- 5,737 16,713 Redeemed -- -- (339,450) (421,929) ----------- ----------- ----------- ------------ Change in Class Y Shares -- -- (128,767) (51,338) ----------- ----------- ----------- ------------
36 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ......................................................................
GROWTH FUND VALUE FUND --------------------------------------------------------------------------------------------------------------------------------- FOR THE SIX FOR THE SIX MONTHS ENDED FOR THE MONTHS ENDED FOR THE APRIL 30, 2005 PERIOD ENDED APRIL 30, 2005 PERIOD ENDED (UNAUDITED) OCTOBER 31, 2004(a) (UNAUDITED) OCTOBER 31, 2004(a) --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 179,797 $ (57,920) $ 233,107 $ 202,593 Net realized gains (losses) from investment transactions 248,079 (1,428,444) 630,297 434,463 Change in unrealized appreciation/depreciation from investments (309,200) 1,153,083 2,109,832 2,013,798 ----------- ----------- ----------- ----------- ................................................................................................................................. CHANGE IN NET ASSETS FROM OPERATIONS 118,676 (333,281) 2,973,236 2,650,854 ----------- ----------- ----------- ----------- ................................................................................................................................. DIVIDENDS: NET INVESTMENT INCOME: Class A (Investor) Shares (48,913) -- (34,035) (68,463) Class B Shares -- -- -- (1,749) Class C Shares -- -- -- (444) Class Y Shares (75,624) -- (71,695) (105,185) NET REALIZED GAINS: Class A (Investor) Shares -- -- (208,943) -- Class B Shares -- -- (18,614) -- Class C Shares -- -- (3,904) -- Class Y Shares -- -- (241,526) -- ----------- ----------- ----------- ----------- CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (124,537) -- (578,717) (175,841) ----------- ----------- ----------- ----------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 2,141,384 38,531,244 (752,694) 46,393,483 ----------- ----------- ----------- ----------- CHANGE IN NET ASSETS 2,135,523 38,197,963 1,641,825 48,868,496 ................................................................................................................................. NET ASSETS: Beginning of period 38,197,963 -- 48,868,496 -- ----------- ----------- ----------- ----------- End of period $40,333,486 $38,197,963 $50,510,321 $48,868,496 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Accumulated net investment income (loss) $ 55,260 $ -- $ 158,226 $ 30,849 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
-------------- (a) The Growth Fund and Value Fund commenced operations on May 7, 2004. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 37 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ......................................................................
GROWTH FUND VALUE FUND --------------------------------------------------------------------------------------------------------------------------------- FOR THE SIX FOR THE SIX MONTHS ENDED FOR THE MONTHS ENDED FOR THE APRIL 30, 2005 PERIOD ENDED APRIL 30, 2005 PERIOD ENDED (UNAUDITED) OCTOBER 31, 2004(a) (UNAUDITED) OCTOBER 31, 2004(a) --------------------------------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A (INVESTOR) SHARES: Proceeds from shares issued $ 4,846,258 $19,786,406 $ 4,157,768 $23,212,388 Dividends reinvested 48,229 -- 240,422 67,173 Cost of shares redeemed (2,342,129) (2,253,596) (3,267,256) (3,411,150) ------------ ----------- ----------- ----------- Class A (Investor) Shares capital transactions 2,552,358 17,532,810 1,130,934 19,868,411 ------------ ----------- ----------- ----------- ................................................................................................................................. CLASS B SHARES: Proceeds from shares issued 106,988 1,516,870 169,267 1,963,686 Dividends reinvested -- -- 18,057 1,711 Cost of shares redeemed (125,687) (93,968) (207,294) (124,729) ------------ ----------- ----------- ----------- Class B Shares capital transactions (18,699) 1,422,902 (19,970) 1,840,668 ------------ ----------- ----------- ----------- ................................................................................................................................. CLASS C SHARES: Proceeds from shares issued 2,100 329,711 1,800 402,773 Dividends reinvested -- -- 3,896 440 Cost of shares redeemed (4,021) (17,780) (3,700) (23,948) ------------ ----------- ----------- ----------- Class C Shares capital transactions (1,921) 311,931 1,996 379,265 ------------ ----------- ----------- ----------- ................................................................................................................................. CLASS Y SHARES: Proceeds from shares issued 2,261,318 20,852,452 2,406,904 26,452,278 Dividends reinvested 59,360 -- 281,406 81,165 Cost of shares redeemed (2,711,032) (1,588,851) (4,553,964) (2,228,304) ------------ ----------- ----------- ----------- Class Y Shares capital transactions (390,354) 19,263,601 (1,865,654) 24,305,139 ------------ ----------- ----------- ----------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 2,141,384 $38,531,244 $ (752,694) $46,393,483 ------------ ----------- ----------- ----------- ------------ ----------- ----------- ----------- ................................................................................................................................. SHARE TRANSACTIONS: CLASS A (INVESTOR) SHARES: Issued 371,457 1,564,821 293,164 1,818,480 Reinvested 3,648 -- 16,733 5,025 Redeemed (180,446) (180,067) (229,572) (259,287) ------------ ----------- ----------- ----------- Change in Class A (Investor) Shares 194,659 1,384,754 80,325 1,564,218 ------------ ----------- ----------- ----------- ................................................................................................................................. CLASS B SHARES: Issued 8,531 123,574 12,379 159,465 Reinvested -- -- 1,299 133 Redeemed (10,055) (7,770) (15,138) (9,945) ------------ ----------- ----------- ----------- Change in Class B Shares (1,524) 115,804 (1,460) 149,653 ------------ ----------- ----------- ----------- ................................................................................................................................. CLASS C SHARES: Issued 169 26,836 131 32,464 Reinvested -- -- 279 34 Redeemed (314) (1,459) (267) (1,864) ------------ ----------- ----------- ----------- Change in Class C Shares (145) 25,377 143 30,634 ------------ ----------- ----------- ----------- ................................................................................................................................. CLASS Y SHARES: Issued 173,175 1,651,120 169,664 2,077,872 Reinvested 4,494 -- 19,613 6,073 Redeemed (209,042) (127,913) (320,265) (169,950) ------------ ----------- ----------- ----------- Change in Class Y Shares (31,373) 1,523,207 (130,988) 1,913,995 ------------ ----------- ----------- -----------
-------------- (a) The Growth Fund and Value Fund commenced operations on May 7, 2004. 38 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ......................................................................
GROWTH AND INCOME FUND MID-CAP FUND --------------------------------------------------------------------------------------------------------------------------------- FOR THE SIX FOR THE SIX MONTHS ENDED FOR THE MONTHS ENDED FOR THE APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED (UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004 --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 1,716,059 $ 1,573,190 $ (74,645) $ (448,035) Net realized gains (losses) from investment transactions 12,697,495 9,000,926 25,892,173 21,489,500 Change in unrealized appreciation/depreciation from investments (8,790,047) (23,421) (17,015,930) (11,346,234) ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS FROM OPERATIONS 5,623,507 10,550,695 8,801,598 9,695,231 ------------ ------------ ------------ ------------ ................................................................................................................................. DIVIDENDS: NET INVESTMENT INCOME: Class A (Investor) Shares (9,418) (12,296) -- -- Class B Shares (13,145) (876) -- -- Class C Shares (a) (176) (24) -- -- Class Y Shares (1,658,357) (1,535,871) -- -- ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (1,681,096) (1,549,067) -- -- ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS (23,157,522) (14,941,610) (61,553,622) (51,555,708) ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS (19,215,111) (5,939,982) (52,752,024) (41,860,477) ................................................................................................................................. NET ASSETS: Beginning of period 201,580,819 207,520,801 126,362,380 168,222,857 ------------ ------------ ------------ ------------ End of period $182,365,708 $201,580,819 $ 73,610,356 $126,362,380 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Accumulated net investment income (loss) $ 601,546 $ 566,583 $ (74,645) $ -- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
-------------- (a) Growth and Income Fund Class C commenced operations on November 3, 2003. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 39 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ......................................................................
GROWTH AND INCOME FUND MID-CAP FUND --------------------------------------------------------------------------------------------------------------------------------- FOR THE SIX FOR THE SIX MONTHS ENDED FOR THE MONTHS ENDED FOR THE APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED (UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004 --------------------------------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A (INVESTOR) SHARES: Proceeds from shares issued $ 128,795 $ 1,500,035 $ 139,324 $ 863,793 Dividends reinvested 9,179 12,137 -- -- Cost of shares redeemed (351,439) (1,915,097) (238,551) (614,831) ------------ ------------ ------------ ------------ Class A (Investor) Shares capital transactions (213,465) (402,925) (99,227) 248,962 ------------ ------------ ------------ ------------ ................................................................................................................................. CLASS B SHARES: Proceeds from shares issued 435,515 1,837,750 350,866 1,257,527 Dividends reinvested 12,915 869 -- -- Cost of shares redeemed (338,389) (320,783) (568,067) (548,619) ------------ ------------ ------------ ------------ Class B Shares capital transactions 110,041 1,517,836 (217,201) 708,908 ------------ ------------ ------------ ------------ ................................................................................................................................. CLASS C SHARES: (A) Proceeds from shares issued 2,299 45,962 1,800 38,477 Dividends reinvested 168 -- -- -- Cost of shares redeemed -- (5,303) (25) (4,165) ------------ ------------ ------------ ------------ Class C Shares capital transactions 2,467 40,659 1,775 34,312 ------------ ------------ ------------ ------------ ................................................................................................................................. CLASS Y SHARES: Proceeds from shares issued 5,664,180 12,306,056 -- -- Dividends reinvested 400,662 348,375 -- -- Cost of shares redeemed (29,121,407) (28,751,611) -- -- ------------ ------------ ------------ ------------ Class Y Shares capital transactions (23,056,565) (16,097,180) -- -- ------------ ------------ ------------ ------------ ................................................................................................................................. TRUST SHARES: Proceeds from shares issued -- -- 3,272,035 11,848,793 Cost of shares redeemed -- -- (15,953,724) (64,396,683) Redemption in-kind (48,557,280) -- ------------ ------------ ------------ ------------ Trust Shares capital transactions -- -- (61,238,969) (52,547,890) ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $(23,157,522) $(14,941,610) $(61,553,622) $(51,555,708) ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ................................................................................................................................. SHARE TRANSACTIONS: CLASS A (INVESTOR) SHARES: Issued 13,975 170,577 15,203 103,921 Reinvested 985 1,389 -- -- Redeemed (38,497) (218,685) (25,946) (74,968) ------------ ------------ ------------ ------------ Change in Class A (Investor) Shares (23,537) (46,719) (10,743) 28,953 ------------ ------------ ------------ ------------ ................................................................................................................................. CLASS B SHARES: Issued 47,921 209,864 39,606 155,872 Reinvested 1,401 101 -- -- Redeemed (37,573) (37,302) (64,982) (69,124) ------------ ------------ ------------ ------------ Change in Class B Shares 11,749 172,663 (25,376) 86,748 ------------ ------------ ------------ ------------ ................................................................................................................................. CLASS C SHARES: (a) Issued 255 5,315 201 4,931 Reinvested 18 -- -- -- Redeemed -- (595) (3) (506) ------------ ------------ ------------ ------------ Change in Class C Shares 273 4,720 198 4,425 ------------ ------------ ------------ ------------ ................................................................................................................................. CLASS Y SHARES: Issued 615,899 1,406,257 -- -- Reinvested 42,990 39,834 -- -- Redeemed (3,189,033) (3,307,085) -- -- ------------ ------------ ------------ ------------ Change in Class Y Shares (2,530,144) (1,860,994) -- -- ------------ ------------ ------------ ------------ ................................................................................................................................. TRUST SHARES: Issued -- -- 353,284 1,427,284 Redeemed -- -- (1,737,778) -- Redemption in-kind -- -- (5,215,605) (7,710,357) ------------ ------------ ------------ ------------ Change in Trust Shares -- -- (6,600,099) (6,283,073) ------------ ------------ ------------ ------------
-------------- (a) Growth and Income Fund class C Shares commenced operations on November 3, 2003. 40 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ......................................................................
INTERNATIONAL EQUITY FUND OVERSEAS EQUITY FUND --------------------------------------------------------------------------------------------------------------------------------- FOR THE SIX FOR THE SIX MONTHS ENDED FOR THE MONTHS ENDED FOR THE APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED (UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004 --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 1,168,599 $ 1,840,313 $ 65,659 $ 118,843 Net realized gains (losses) from investment and foreign currency transactions 7,526,373 19,965,089 1,022,779 2,009,405 Change in unrealized appreciation/depreciation from investments and foreign currencies 4,109,469 2,586,405 597,941 693,652 ------------ ------------ ----------- ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 12,804,441 24,391,807 1,686,379 2,821,900 ------------ ------------ ----------- ----------- ................................................................................................................................. DIVIDENDS: NET INVESTMENT INCOME: Class A (Investor) Shares -- -- (86,749) (75,763) Class B Shares -- -- -- -- Class C Shares -- -- -- -- Advisor Shares (2,396,450) (3,737,768) -- -- NET REALIZED GAINS FROM INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS: Class A (Investor) Shares -- -- (1,064,452) -- Class B Shares -- -- (122,864) -- Class C Shares -- -- (7,702) -- ------------ ------------ ----------- ----------- CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS (2,396,450) (3,737,768) (1,281,767) (75,763) ------------ ------------ ----------- ----------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 4,248,817 4,005,057 2,052,766 5,879,349 ------------ ------------ ----------- ----------- CHANGE IN NET ASSETS 14,656,808 24,659,096 2,457,378 8,625,486 ................................................................................................................................. NET ASSETS: Beginning of period 148,316,775 123,657,679 19,919,219 11,293,733 ------------ ------------ ----------- ----------- End of period $162,973,583 $148,316,775 $22,376,597 $19,919,219 ------------ ------------ ----------- ----------- ------------ ------------ ----------- ----------- Accumulated net investment income (loss) $ 838,670 $ 2,066,521 $ 65,679 $ 86,769 ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 41 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ......................................................................
INTERNATIONAL EQUITY FUND OVERSEAS EQUITY FUND --------------------------------------------------------------------------------------------------------------------------------- FOR THE SIX FOR THE SIX MONTHS ENDED FOR THE MONTHS ENDED FOR THE APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED (UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004 --------------------------------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A (INVESTOR) SHARES: Proceeds from shares issued $ -- $ -- $ 3,663,913 $10,468,157 Dividends reinvested -- -- 1,137,895 74,544 Cost of shares redeemed -- -- (2,911,241) (5,380,471) ------------ ------------ ----------- ----------- Class A (Investor) Shares capital transactions -- -- 1,890,567 5,162,230 ------------ ------------ ----------- ----------- ................................................................................................................................. CLASS B SHARES: Proceeds from shares issued -- -- 204,785 836,302 Dividends reinvested -- -- 119,012 -- Cost of shares redeemed -- -- (166,838) (111,311) ------------ ------------ ----------- ----------- Class B Shares capital transactions -- -- 156,959 724,991 ------------ ------------ ----------- ----------- ................................................................................................................................. CLASS C SHARES: Proceeds from shares issued -- -- 1,800 24,526 Dividends reinvested -- -- 7,641 -- Cost of shares redeemed -- -- (4,201) (32,398) ------------ ------------ ----------- ----------- Class C Shares capital transactions -- -- 5,240 (7,872) ------------ ------------ ----------- ----------- ................................................................................................................................. ADVISOR SHARES: Proceeds from shares issued 15,317,898 26,978,110 -- -- Dividends reinvested 1,241,138 1,968,545 -- -- Cost of shares redeemed (12,310,219) (24,941,598) -- -- ------------ ------------ ----------- ----------- Advisor Shares capital transactions 4,248,817 4,005,057 -- -- ------------ ------------ ----------- ----------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 4,248,817 $ 4,005,057 $ 2,052,766 $ 5,879,349 ------------ ------------ ----------- ----------- ------------ ------------ ----------- ----------- ................................................................................................................................. SHARE TRANSACTIONS: CLASS A (INVESTOR) SHARES: Issued -- -- 250,996 816,578 Reinvested -- -- 79,697 5,847 Redeemed -- -- (198,284) (411,221) ------------ ------------ ----------- ----------- Change in Class A (Investor) Shares -- -- 132,409 411,204 ------------ ------------ ----------- ----------- ................................................................................................................................. CLASS B SHARES: Issued -- -- 14,500 67,626 Reinvested -- -- 8,631 -- Redeemed -- -- (11,832) (9,063) ------------ ------------ ----------- ----------- Change in Class B Shares -- -- 11,299 58,563 ------------ ------------ ----------- ----------- ................................................................................................................................. CLASS C SHARES: Issued -- -- 126 1,956 Reinvested -- -- 543 -- Redeemed -- -- (286) (2,475) ------------ ------------ ----------- ----------- Change in Class C Shares -- -- 383 (519) ------------ ------------ ----------- ----------- ................................................................................................................................. ADVISOR SHARES: Issued 944,985 1,962,577 -- -- Reinvested 77,814 151,249 -- -- Redeemed (761,522) (1,835,748) -- -- ------------ ------------ ----------- ----------- Change in Advisor Shares 261,277 278,078 -- -- ------------ ------------ ----------- -----------
42 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ......................................................................
SMALL CAP EQUITY FUND OPPORTUNITY FUND --------------------------------------------------------------------------------------------------------------------------------- FOR THE SIX FOR THE SIX MONTHS ENDED FOR THE MONTHS ENDED FOR THE APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED (UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004 --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ (604,732) $ (1,757,367) $ (164,417) $ (350,135) Net realized gains (losses) from investment transactions 21,077,165 30,929,551 1,484,126 1,634,222 Change in unrealized appreciation/depreciation from investments (13,771,064) (11,885,640) (1,261,843) (121,946) ------------ ------------ ----------- ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 6,701,369 17,286,544 57,866 1,162,141 ------------ ------------ ----------- ----------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS (78,118,526) (63,689,406) (356,949) 3,652,913 ------------ ------------ ----------- ----------- CHANGE IN NET ASSETS (71,417,157) (46,402,862) (299,083) 4,815,054 ................................................................................................................................. NET ASSETS: Beginning of period 279,668,949 326,071,811 25,856,226 21,041,172 ------------ ------------ ----------- ----------- End of period $208,251,792 $279,668,949 $25,557,143 $25,856,226 ------------ ------------ ----------- ----------- ------------ ------------ ----------- ----------- Accumulated net investment income (loss) $ (604,732) $ -- $ (164,417) $ -- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 43 HSBC INVESTOR FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ......................................................................
SMALL CAP EQUITY FUND OPPORTUNITY FUND --------------------------------------------------------------------------------------------------------------------------------- FOR THE SIX FOR THE SIX MONTHS ENDED FOR THE MONTHS ENDED FOR THE APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED (UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004 --------------------------------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS: CLASS A (INVESTOR) SHARES: Proceeds from shares issued $ -- $ -- $ 3,014,001 $11,062,186 Cost of shares redeemed -- -- (3,166,963) (7,827,796) ------------ ------------- ----------- ----------- Class A (Investor) Shares capital transactions -- -- (152,962) 3,234,390 ------------ ------------- ----------- ----------- ................................................................................................................................. CLASS B SHARES: Proceeds from shares issued -- -- 194,455 1,037,036 Cost of shares redeemed -- -- (328,761) (548,444) ------------ ------------- ----------- ----------- Class B Shares capital transactions -- -- (134,306) 488,592 ------------ ------------- ----------- ----------- ................................................................................................................................. CLASS C SHARES: Proceeds from shares issued -- -- 4,495 46,142 Cost of shares redeemed -- -- (74,176) (116,211) ------------ ------------- ----------- ----------- Class C Shares capital transactions -- -- (69,681) (70,069) ------------ ------------- ----------- ----------- ................................................................................................................................. ADVISOR SHARES: Proceeds from shares issued 10,042,322 49,388,314 -- -- Cost of shares redeemed (88,160,848) (113,077,720) -- -- ------------ ------------- ----------- ----------- Advisor Shares capital transactions (78,118,526) (63,689,406) -- -- ------------ ------------- ----------- ----------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $(78,118,526) $ (63,689,406) $ (356,949) $ 3,652,913 ------------ ------------- ----------- ----------- ------------ ------------- ----------- ----------- ................................................................................................................................. SHARE TRANSACTIONS: CLASS A (INVESTOR) SHARES: Issued -- -- 261,844 1,041,089 Redeemed -- -- (275,770) (736,333) ------------ ------------- ----------- ----------- Change in Class A (Investor) Shares -- -- (13,926) 304,756 ------------ ------------- ----------- ----------- ................................................................................................................................. CLASS B SHARES: Issued -- -- 18,036 102,168 Redeemed -- -- (30,577) (55,286) ------------ ------------- ----------- ----------- Change in Class B Shares -- -- (12,541) 46,882 ------------ ------------- ----------- ----------- ................................................................................................................................. CLASS C SHARES: Issued -- -- 413 4,725 Redeemed -- -- (7,118) (11,371) ------------ ------------- ----------- ----------- Change in Class C Shares -- -- (6,705) (6,646) ------------ ------------- ----------- ----------- ................................................................................................................................. ADVISOR SHARES: Issued 726,778 3,907,178 -- -- Redeemed (6,277,573) (8,901,381) -- -- ------------ ------------- ----------- ----------- Change in Advisor Shares (5,550,795) (4,994,203) -- -- ------------ ------------- ----------- -----------
44 HSBC INVESTOR FAMILY OF FUNDS See notes to financial statements. HSBC INVESTOR FUNDS -- LIMITED MATURITY FUND -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS ......................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.(k) INVESTMENT ACTIVITIES DIVIDENDS ------------------------------------------ ------------------------------------- NET REALIZED AND NET NET ASSET UNREALIZED GAINS TOTAL REALIZED VALUE, NET (LOSSES) FROM FROM NET GAINS FROM BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS ------------------------------------------------------------------------------------------------------------------------------ CLASS A (INVESTOR) SHARES Period ended October 31, 2001 (b) $10.04 0.33 0.54 0.87 (0.33) -- (0.33) Year ended October 31, 2002 10.58 0.44 (0.10) 0.34 (0.44) (0.05) (0.49) Year ended October 31, 2003 10.43 0.33 0.08 0.41 (0.37) -- (0.37) Year ended October 31, 2004 10.47 0.32* 0.06 0.38 (0.33) (0.46) (0.79) Six months ended April 30, 2005 (Unaudited) 10.06 0.16* (0.13) 0.03 (0.18) (0.06) (0.24) ------------------------------------------------------------------------------------------------------------------------------ CLASS B SHARES Period ended October 31, 2001 (g) $10.07 0.25 0.52 0.77 (0.25) -- (0.25) Year ended October 31, 2002 10.59 0.36 (0.09) 0.27 (0.36) (0.05) (0.41) Year ended October 31, 2003 10.45 0.25 0.08 0.33 (0.29) -- (0.29) Year ended October 31, 2004 10.49 0.23 0.08 0.31 (0.26) (0.46) (0.72) Six months ended April 30, 2005 (Unaudited) 10.08 0.12 (0.14) (0.02) (0.14) (0.06) (0.20) ------------------------------------------------------------------------------------------------------------------------------ CLASS C SHARES Period ended October 31, 2001 (i) $10.07 0.26 0.51 0.77 (0.26) -- (0.26) Year ended October 31, 2002 10.58 0.36 (0.09) 0.27 (0.36) (0.05) (0.41) Year ended October 31, 2003 10.44 0.25 0.09 0.34 (0.29) -- (0.29) Year ended October 31, 2004 10.49 0.22* 0.08 0.30 (0.26) (0.46) (0.72) Six months ended April 30, 2005 (Unaudited) 10.07 0.12* (0.13) (0.01) (0.14) (0.06) (0.20) ------------------------------------------------------------------------------------------------------------------------------ CLASS Y SHARES Period ended October 31, 2001 (j) $10.00 0.37 0.59 0.96 (0.37) -- (0.37) Year ended October 31, 2002 10.59 0.46 (0.09) 0.37 (0.46) (0.05) (0.51) Year ended October 31, 2003 10.45 0.33 0.10 0.43 (0.40) -- (0.40) Year ended October 31, 2004 10.48 0.33 0.09 0.42 (0.36) (0.46) (0.82) Six months ended April 30, 2005 (Unaudited) 10.08 0.17 (0.14) 0.03 (0.19) (0.06) (0.25) ------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTARY DATA -------------------------------------------------------------------------- RATIO OF NET RATIO OF INVESTMENT RATIO OF EXPENSES INCOME TO EXPENSES NET ASSET NET ASSETS AT TO AVERAGE AVERAGE TO AVERAGE VALUE, END TOTAL END OF NET NET NET PORTFOLIO OF PERIOD RETURN(c) PERIOD (000'S) ASSETS(e) ASSETS(e) ASSETS(e)(f) TURNOVER(a) ---------------------------------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Period ended October 31, 2001(b) $10.58 8.78 %(d) $ 977 1.10% 4.27% 1.49% 102.01% Year ended October 31, 2002 10.43 3.34 %(d) 1,608 0.96% 4.14% 0.96% 44.04% Year ended October 31, 2003 10.47 3.97 %(d) 3,309 1.01% 2.99% 1.01% 98.42% Year ended October 31, 2004 10.06 3.90 %(d) 1,558 1.10% 3.01% 1.21% 50.06% Six months ended April 30, 2005 (Unaudited) 9.85 0.25 %(d) 1,329 0.94% 3.33% 1.03% 13.36% ---------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2001(g) $10.59 8.02 %(h) $ 896 1.85% 3.52% 7.59% 102.01% Year ended October 31, 2002 10.45 2.65 %(h) 4,178 1.70% 3.30% 1.70% 44.04% Year ended October 31, 2003 10.49 3.19 %(h) 6,443 1.73% 2.30% 1.73% 98.42% Year ended October 31, 2004 10.08 3.11 %(h) 6,321 1.85% 2.28% 1.96% 50.06% Six months ended April 30, 2005 (Unaudited) 9.86 (0.23)%(h) 5,804 1.69% 2.57% 1.77% 13.36% ---------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2001(i) $10.58 7.80 %(h) $ 161 1.85% 3.60% 17.61% 102.01% Year ended October 31, 2002 10.44 2.65 %(h) 1,759 1.70% 3.26% 1.70% 44.04% Year ended October 31, 2003 10.49 3.29 %(h) 2,544 1.73% 2.31% 1.73% 98.42% Year ended October 31, 2004 10.07 3.03 %(h) 679 1.85% 2.25% 1.96% 50.06% Six months ended April 30, 2005 (Unaudited) 9.86 (0.13)%(h) 593 1.69% 2.57% 1.77% 13.36% ---------------------------------------------------------------------------------------------------------------------------------- CLASS Y SHARES Period ended October 31, 2001 (j) $10.59 9.78 % $67,315 0.85% 4.59% 0.85% 102.01% Year ended October 31, 2002 10.45 3.69 % 94,886 0.71% 4.42% 0.71% 44.04% Year ended October 31, 2003 10.48 4.12 % 31,368 0.69% 3.62% 0.69% 98.42% Year ended October 31, 2004 10.08 4.25 % 31,217 0.85% 3.28% 0.96% 50.06% Six months ended April 30, 2005 (Unaudited) 9.86 0.27 % 28,538 0.69% 3.57% 0.77% 13.36% ----------------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding. (a) Portfolio turnover is calculated on the basis of the respective Portfolio in which the Fund invests all of its investable assets. (b) Class A (Investor) Shares commenced operations on February 7, 2001. (c) Not annualized for periods less than one year. (d) Excludes sales charge. (e) Annualized for periods less than one year. (f) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been as indicated. (g) Class B Shares commenced operations on February 15, 2001. (h) Excludes redemption charge. (i) Class C Shares commenced operations on February 13, 2001. (j) Class Y Shares commenced operations on January 23, 2001. (k) The per share amounts and percentages reflect income and expenses assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor Limited Maturity Portfolio. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 45 HSBC ADVISOR FUNDS TRUST -- FIXED INCOME FUND -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS ......................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (b) INVESTMENT ACTIVITIES ------------------------------------------ NET REALIZED AND UNREALIZED GAINS NET ASSET (LOSSES) FROM TOTAL VALUE, NET INVESTMENT AND FROM BEGINNING OF INVESTMENT FUTURES INVESTMENT PERIOD INCOME TRANSACTIONS ACTIVITIES ---------------------------------------------------------------------------------------------- ADVISOR SHARES Year ended October 31, 2000 $10.01 0.69 (0.02) 0.67 Year ended October 31, 2001 9.99 0.67 0.80 1.47 Year ended October 31, 2002 10.81 0.55 (0.14) 0.41 Year ended October 31, 2003 10.63 0.41 0.19 0.60 Year ended October 31, 2004 10.73 0.45 0.12 0.57 Six months ended April 30, 2005 (Unaudited) 10.85 0.24 (0.10) 0.14 ---------------------------------------------------------------------------------------------- DIVIDENDS ---------------------- NET ASSET NET VALUE, INVESTMENT TOTAL END OF TOTAL INCOME DIVIDENDS PERIOD RETURN(c) ------------------------------------------------------------------------------------- ADVISOR SHARES Year ended October 31, 2000 (0.69) (0.69) $ 9.99 6.98% Year ended October 31, 2001 (0.65) (0.65) 10.81 15.11% Year ended October 31, 2002 (0.59) (0.59) 10.63 3.94% Year ended October 31, 2003 (0.50) (0.50) 10.73 5.71% Year ended October 31, 2004 (0.45) (0.45) 10.85 5.46% Six months ended April 30, 2005 (Unaudited) (0.23) (0.23) 10.76 1.29% ------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA --------------------------------------------------------- RATIO OF NET NET ASSETS RATIO OF INVESTMENT AT END OF EXPENSES TO INCOME TO PERIOD AVERAGE NET AVERAGE NET PORTFOLIO (000'S) ASSETS(d) ASSETS(d) TURNOVER(a) ---------------------------------------------------------------------------------------------- ADVISOR SHARES Year ended October 31, 2000 $134,458 0.61% 6.66% 440.49% Year ended October 31, 2001 150,580 0.63% 6.45% 341.26% Year ended October 31, 2002 284,841 0.56% 5.06% 77.82% Year ended October 31, 2003 110,968 0.56% 4.30% 70.91% Year ended October 31, 2004 109,518 0.64% 4.20% 34.88% Six months ended April 30, 2005 (Unaudited) 109,748 0.41% 4.48% 47.83% ----------------------------------------------------------------------------------------------
(a) Portfolio turnover is calculated on the basis of the respective Portfolio in which the Fund invests all of its investable assets. (b) The per share amounts and percentages reflect income and expenses assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor Fixed Income Portfolio. (c) Not Annualized for periods less than one year. (d) Annualized for periods less than one year. See notes to financial statements. 46 HSBC INVESTOR FAMILY OF FUNDS HSBC INVESTOR FUNDS -- BOND FUND -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS ......................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (e) INVESTMENT ACTIVITIES DIVIDENDS ------------------------------------------ ---------------------- NET REALIZED AND UNREALIZED GAINS NET ASSET (LOSSES) FROM TOTAL VALUE, NET INVESTMENT AND FROM NET BEGINNING INVESTMENT FUTURES INVESTMENT INVESTMENT TOTAL OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME DIVIDENDS ---------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Year ended October 31, 2000 $ 9.78 0.61 (0.01) 0.60 (0.62) (0.62) Year ended October 31, 2001 9.76 0.60 0.77 1.37 (0.58) (0.58) Year ended October 31, 2002 10.55 0.49 (0.14) 0.35 (0.52) (0.52) Year ended October 31, 2003 10.38 0.40 0.13 0.53 (0.43) (0.43) Year ended October 31, 2004 10.48 0.40 0.12 0.52 (0.40) (0.40) Six months ended April 30, 2005 (Unaudited) 10.60 0.23 (0.11) 0.12 (0.21) (0.21) ---------------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended October 31, 2000 $ 9.78 0.54 (0.01) 0.53 (0.54) (0.54) Year ended October 31, 2001 9.77 0.52 0.76 1.28 (0.50) (0.50) Year ended October 31, 2002 10.55 0.41 (0.13) 0.28 (0.44) (0.44) Year ended October 31, 2003 10.39 0.32 0.13 0.45 (0.35) (0.35) Year ended October 31, 2004 10.49 0.32 0.11 0.43 (0.32) (0.32) Six months ended April 30, 2005 (Unaudited) 10.60 0.19 (0.11) 0.08 (0.17) (0.17) ---------------------------------------------------------------------------------------------------------- CLASS C SHARES Year ended October 31, 2000 $ 9.77 0.55 (0.01) 0.54 (0.55) (0.55) Year ended October 31, 2001 9.76 0.51 0.77 1.28 (0.50) (0.50) Year ended October 31, 2002 10.54 0.41 (0.13) 0.28 (0.44) (0.44) Year ended October 31, 2003 10.38 0.32 0.13 0.45 (0.35) (0.35) Year ended October 31, 2004 10.48 0.32 0.11 0.43 (0.32) (0.32) Six months ended April 30, 2005 (Unaudited) 10.59 0.19 (0.10) 0.09 (0.17) (0.17) ---------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA ------------------------------------------------------------------------ RATIO OF RATIO OF NET NET ASSET NET ASSETS EXPENSES INVESTMENT RATIO OF VALUE, AT END OF TO AVERAGE INCOME TO EXPENSES TO END OF TOTAL PERIOD NET AVERAGE NET AVERAGE NET PORTFOLIO PERIOD RETURN(f) (000'S) ASSETS(g) ASSETS(g) ASSETS(g)(a) TURNOVER(b) -------------------------------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Year ended October 31, 2000 $ 9.76 6.39%(c) $ 3,828 1.10% 6.13% 3.31% 440.49% Year ended October 31, 2001 10.55 14.41%(c) 6,683 1.10% 5.92% 2.61% 341.26% Year ended October 31, 2002 10.38 3.44%(c) 12,053 1.10% 4.52% 1.47% 77.82% Year ended October 31, 2003 10.48 5.17%(c) 14,143 1.10% 3.76% 1.21% 70.91% Year ended October 31, 2004 10.60 5.07%(c) 17,248 1.04% 3.78% 1.26% 34.88% Six months ended April 30, 2005 (Unaudited) 10.51 1.11%(c) 18,529 0.74% 4.15% 1.03% 47.83% -------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended October 31, 2000 $ 9.77 5.67%(d) $ 279 1.85% 5.38% 4.03% 440.49% Year ended October 31, 2001 10.55 13.43%(d) 1,494 1.85% 5.04% 3.32% 341.26% Year ended October 31, 2002 10.39 2.76%(d) 6,124 1.85% 3.66% 2.18% 77.82% Year ended October 31, 2003 10.49 4.38%(d) 7,430 1.85% 3.01% 1.96% 70.91% Year ended October 31, 2004 10.60 4.19%(d) 7,017 1.79% 3.05% 2.01% 34.88% Six months ended April 30, 2005 (Unaudited) 10.51 0.73%(d) 6,726 1.49% 3.41% 1.78% 47.83% -------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Year ended October 31, 2000 $ 9.76 5.71%(d) $ 138 1.85% 5.38% 4.05% 440.49% Year ended October 31, 2001 10.54 13.44%(d) 526 1.85% 5.11% 3.34% 341.26% Year ended October 31, 2002 10.38 2.77%(d) 983 1.85% 3.75% 2.21% 77.82% Year ended October 31, 2003 10.48 4.39%(d) 606 1.85% 3.06% 1.97% 70.91% Year ended October 31, 2004 10.59 4.20%(d) 377 1.80% 3.07% 2.02% 34.88% Six months ended April 30, 2005 (Unaudited) 10.51 0.83%(d) 409 1.48% 3.41% 1.77% 47.83% --------------------------------------------------------------------------------------------------------------------------------
(a) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been as indicated. (b) Portfolio turnover is calculated on the basis of the respective Portfolio in which the Fund invests all of its investable assets. (c) Excludes sales charge. (d) Excludes redemption charge. (e) The per share amounts and percentages reflect income and expenses assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor Fixed Income Portfolio. (f) Not Annualized for periods less than one year. (g) Annualized for periods less than one year. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 47 HSBC INVESTOR FUNDS -- NEW YORK TAX-FREE BOND FUND -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS ......................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. INVESTMENT ACTIVITIES DIVIDENDS ---------------------------------------- ------------------------------------- NET REALIZED AND UNREALIZED NET NET ASSET GAINS (LOSSES) TOTAL REALIZED VALUE, NET FROM FROM NET GAINS FROM BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS ----------------------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Year ended October 31, 2000 $10.08 0.46 0.33 0.79 (0.46) (0.02) (0.48) Year ended October 31, 2001 10.39 0.41 0.54 0.95 (0.41) -- (0.41) Year ended October 31, 2002 10.93 0.38 0.16 0.54 (0.38) -- (0.38) Year ended October 31, 2003 11.09 0.38 0.12 0.50 (0.38) -- (0.38) Year ended October 31, 2004 11.21 0.34 0.17 0.51 (0.34) (0.06) (0.40) Six months ended April 30, 2005 (Unaudited) 11.32 0.17 (0.06) 0.11 (0.17) (0.02) (0.19) ----------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended October 31, 2000 $10.07 0.39 0.33 0.72 (0.39) (0.02) (0.41) Year ended October 31, 2001 10.38 0.33 0.54 0.87 (0.33) -- (0.33) Year ended October 31, 2002 10.92 0.30 0.16 0.46 (0.30) -- (0.30) Year ended October 31, 2003 11.08 0.30 0.12 0.42 (0.30) -- (0.30) Year ended October 31, 2004 11.20 0.25 0.17 0.42 (0.25) (0.06) (0.31) Six months ended April 30, 2005 (Unaudited) 11.31 0.13 (0.06) 0.07 (0.13) (0.02) (0.15) ----------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Year ended October 31, 2000 $10.11 0.39 0.33 0.72 (0.39) (0.02) (0.41) Year ended October 31, 2001 10.42 0.33 0.54 0.87 (0.33) -- (0.33) Year ended October 31, 2002 10.96 0.30 0.16 0.46 (0.30) -- (0.30) Year ended October 31, 2003 11.12 0.30 0.13 0.43 (0.30) -- (0.30) Year ended October 31, 2004 11.25 0.25 0.16 0.41 (0.25) (0.06) (0.31) Six months ended April 30, 2005 (Unaudited) 11.35 0.13 (0.06) 0.07 (0.13) (0.02) (0.15) ----------------------------------------------------------------------------------------------------------------------- CLASS Y SHARES Year ended October 31, 2000 $10.07 0.49 0.34 0.83 (0.49) (0.02) (0.51) Year ended October 31, 2001 10.39 0.44 0.54 0.98 (0.44) -- (0.44) Year ended October 31, 2002 10.93 0.41 0.16 0.57 (0.41) -- (0.41) Year ended October 31, 2003 11.09 0.41 0.12 0.53 (0.41) -- (0.41) Year ended October 31, 2004 11.21 0.37 0.17 0.54 (0.37) (0.06) (0.43) Six months ended April 30, 2005 (Unaudited) 11.32 0.18 (0.06) 0.12 (0.18) (0.02) (0.20) ----------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA --------------------------------------------------------------------- RATIO OF NET NET ASSET NET ASSETS RATIO OF INVESTMENT RATIO OF VALUE, AT END OF EXPENSES TO INCOME TO EXPENSES TO END OF TOTAL PERIOD AVERAGE NET AVERAGE NET AVERAGE NET PORTFOLIO PERIOD RETURN(e) (000'S) ASSETS(f) ASSETS(f) ASSETS(f)(c) TURNOVER(a) ----------------------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Year ended October 31, 2000 $10.39 8.03%(b) $12,401 0.93% 4.60% 1.06% 34.12% Year ended October 31, 2001 10.93 9.26%(b) 17,722 0.95% 3.91% 1.07% 0.00% Year ended October 31, 2002 11.09 5.08%(b) 16,341 0.95% 3.52% 0.95% 30.70% Year ended October 31, 2003 11.21 4.57%(b) 22,326 0.91% 3.39% 0.91% 29.79% Year ended October 31, 2004 11.32 4.57%(b) 32,889 0.87% 3.01% 0.87% 26.96% Six months ended April 30, 2005 (Unaudited) 11.24 0.93%(b) 34,100 0.86% 3.02% 0.88% 10.39% ----------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended October 31, 2000 $10.38 7.27%(d) $ 828 1.70% 3.81% 1.74% 34.12% Year ended October 31, 2001 10.92 8.44%(d) 5,619 1.70% 3.05% 1.82% 0.00% Year ended October 31, 2002 11.08 4.30%(d) 12,699 1.70% 2.74% 1.70% 30.70% Year ended October 31, 2003 11.20 3.80%(d) 18,352 1.66% 2.64% 1.66% 29.79% Year ended October 31, 2004 11.31 3.80%(d) 17,457 1.62% 2.27% 1.62% 26.96% Six months ended April 30, 2005 (Unaudited) 11.23 0.56%(d) 16,682 1.61% 2.28% 1.63% 10.39% ----------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Year ended October 31, 2000 $10.42 7.23%(d) $ 416 1.71% 3.77% 1.73% 34.12% Year ended October 31, 2001 10.96 8.40%(d) 1,523 1.70% 3.04% 1.83% 0.00% Year ended October 31, 2002 11.12 4.28%(d) 2,608 1.70% 2.74% 1.70% 30.70% Year ended October 31, 2003 11.25 3.87%(d) 3,252 1.66% 2.64% 1.66% 29.79% Year ended October 31, 2004 11.35 3.69%(d) 2,340 1.62% 2.26% 1.62% 26.96% Six months ended April 30, 2005 (Unaudited) 11.27 0.56%(d) 2,082 1.61% 2.27% 1.63% 10.39% ----------------------------------------------------------------------------------------------------------------------- CLASS Y SHARES Year ended October 31, 2000 $10.39 8.41% $ 9,514 0.69% 4.82% 0.78% 34.12% Year ended October 31, 2001 10.93 9.53% 14,989 0.70% 4.19% 0.83% 0.00% Year ended October 31, 2002 11.09 5.34% 19,753 0.70% 3.76% 0.70% 30.70% Year ended October 31, 2003 11.21 4.84% 20,290 0.67% 3.67% 0.67% 29.79% Year ended October 31, 2004 11.32 4.83% 19,908 0.62% 3.27% 0.62% 26.96% Six months ended April 30, 2005 (Unaudited) 11.24 1.06% 18,320 0.61% 3.27% 0.63% 10.39% -----------------------------------------------------------------------------------------------------------------------
(a) Portfolio turnover is calculated on the basis of the fund as a whole, without the distinguishing between the classes of shares issued. (b) Excludes sales charge. (c) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been as indicated. (d) Excludes redemption charge. (e) Not Annualized for periods less than one year. (f) Annualized for periods less than one year. See notes to financial statements. 48 HSBC INVESTOR FAMILY OF FUNDS HSBC INVESTOR FUNDS -- GROWTH FUND -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS ......................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (h) INVESTMENT ACTIVITIES DIVIDENDS ---------------------------------------- ---------------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) NET ASSET NET FROM TOTAL VALUE, INVESTMENT INVESTMENT FROM NET BEGINNING INCOME AND FUTURES INVESTMENT INVESTMENT TOTAL OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME DIVIDENDS -------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Period ended October 31, 2004 (c) $12.68 (0.02) (0.11) (0.13) -- -- Six months ended April 30, 2005 (Unaudited) 12.55 0.05 0.01 0.06 (0.03) (0.03) -------------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2004 (c) $12.28 (0.07) (0.10) (0.17) -- -- Six months ended April 30, 2005 (Unaudited) 12.11 -- 0.01 0.01 -- -- -------------------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2004 (c) $12.35 (0.06) (0.12) (0.18) -- -- Six months ended April 30, 2005 (Unaudited) 12.17 -- 0.02 0.02 -- -- -------------------------------------------------------------------------------------------------------- CLASS Y SHARES Period ended October 31, 2004 (c) $12.67 (0.01) (0.11) (0.12) -- -- Six months ended April 30, 2005 (Unaudited) 12.55 0.07 0.01 0.08 (0.05) (0.05) -------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA -------------------------------------------------------------------------- RATIO OF NET INVESTMENT NET ASSET NET ASSETS RATIO OF INCOME RATIO OF VALUE, AT END OF EXPENSES TO (LOSS) TO EXPENSES TO END OF TOTAL PERIOD AVERAGE AVERAGE AVERAGE PORTFOLIO PERIOD RETURN(d) (000'S) NET ASSETS(f) NET ASSETS(f) NET ASSETS(f)(a) TURNOVER(b) ---------------------------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Period ended October 31, 2004 (c) $12.55 (1.03)%(e) $17,372 1.20% (0.42)% 1.31% 53.08% Six months ended April 30, 2005 (Unaudited) 12.58 0.49 %(e) 19,871 1.10% 0.74 % 1.16% 43.34% ---------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2004 (c) $12.11 (1.38)%(g) $ 1,402 1.95% (1.17)% 2.06% 53.08% Six months ended April 30, 2005 (Unaudited) 12.12 0.08 %(g) 1,385 1.84% 0.06 % 1.91% 43.34% ---------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2004 (c) $12.17 (0.41)%(g) $ 309 1.95% (1.18)% 2.06% 53.08% Six months ended April 30, 2005 (Unaudited) 12.19 0.16 %(g) 308 1.84% 0.07 % 1.91% 43.34% ---------------------------------------------------------------------------------------------------------------------------- CLASS Y SHARES Period ended October 31, 2004 (c) $12.55 0.95 % $19,115 0.95% (0.17)% 1.06% 53.08% Six months ended April 30, 2005 (Unaudited) 12.58 0.60 % 18,770 0.86% 1.06 % 0.92% 43.34% ----------------------------------------------------------------------------------------------------------------------------
(a) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been as indicated. (b) Portfolio turnover is calculated on the basis of the respective portfolio in which the fund invests all its investable assets. (c) Class A Shares, Class B Shares, Class C Shares and Class Y Shares commenced operations on May 7, 2004. (d) Not Annualized for periods less than one year. (e) Excludes sales charge. (f) Annualized for periods less than one year. (g) Excludes redemption charge. (h) The per share amounts and percentages reflect income and expenses assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor Growth Portfolio. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 49 HSBC INVESTOR FUNDS -- VALUE FUND -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS ...................................................................... SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (h)
INVESTMENT ACTIVITIES DIVIDENDS ------------------------------------------ --------------------------------------- NET REALIZED AND NET ASSET UNREALIZED GAINS NET REALIZED VALUE, NET (LOSSES) FROM TOTAL FROM NET GAINS FROM BEGINNING OF INVESTMENT INVESTMENT AND INVESTMENT INVESTMENT INVESTMENT AND TOTAL PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS ------------------------------------------------------------------------------------------------------------------------------ CLASS A (INVESTOR) SHARES Period ended October 31, 2004 (c) $12.68 0.05 0.69 0.74 (0.04) -- (0.04) Six months ended April 30, 2005 (Unaudited) 13.38 0.06* 0.74 0.80 (0.02) (0.13) (0.15) ------------------------------------------------------------------------------------------------------------------------------ CLASS B SHARES Period ended October 31, 2004 (c) $12.28 -- 0.68 0.68 (0.01) -- (0.01) Six months ended April 30, 2005 (Unaudited) 12.95 -- 0.72 0.72 -- (0.13) (0.13) ------------------------------------------------------------------------------------------------------------------------------ CLASS C SHARES Period ended October 31, 2004 (c) $12.35 0.01 0.67 0.68 (0.02) -- (0.02) Six months ended April 30, 2005 (Unaudited) 13.01 -- 0.73 0.73 -- (0.13) (0.13) ------------------------------------------------------------------------------------------------------------------------------ CLASS Y SHARES Period ended October 31, 2004 (c) $12.67 0.07 0.70 0.77 (0.06) -- (0.06) Six months ended April 30, 2005 (Unaudited) 13.38 0.08 0.73 0.81 (0.04) (0.13) (0.17) ------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTARY DATA ------------------------------------------------------------------------ RATIO OF NET NET ASSET NET ASSETS RATIO OF INVESTMENT RATIO OF VALUE, AT END OF EXPENSES TO INCOME TO EXPENSES TO END OF TOTAL PERIOD AVERAGE NET AVERAGE NET AVERAGE NET PORTFOLIO PERIOD RETURN(d) (000'S) ASSETS(f) ASSETS(f) ASSETS(f)(a) TURNOVER(b) ----------------------------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Period ended October 31, 2004 (c) $13.38 7.79%(e) $20,933 1.20% 0.81% 1.25% 10.33% Six months ended April 30, 2005 (Unaudited) 14.03 5.94%(e) 23,079 1.10% 0.81% 1.10% 9.47% ----------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2004 (c) $12.95 9.06%(g) $ 1,938 1.95% 0.05% 2.00% 10.33% Six months ended April 30, 2005 (Unaudited) 13.54 5.51%(g) 2,006 1.85% 0.05% 1.85% 9.47% ----------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2004 (c) $13.01 8.47%(g) $ 399 1.95% 0.04% 2.00% 10.33% Six months ended April 30, 2005 (Unaudited) 13.61 5.57%(g) 419 1.85% 0.05% 1.85% 9.47% ----------------------------------------------------------------------------------------------------------------------------- CLASS Y SHARES Period ended October 31, 2004 (c) $13.38 6.05% $25,600 0.95% 1.05% 1.00% 10.33% Six months ended April 30, 2005 (Unaudited) 14.02 6.07% 25,006 0.85% 1.05% 0.85% 9.47% -----------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding. (a) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been as indicated. (b) Portfolio turnover is calculated on the basis of the respective portfolio in which the fund invests all its investable assets. (c) Class A Shares, Class B Shares, Class C Shares and Class Y Shares commenced operations on May 7, 2004. (d) Not annualized for periods less than one year. (e) Excludes sales charge. (f) Annualized for periods less than one year. (g) Excludes redemption charge. (h) The per share amounts and percentages reflect income and expenses assuming inclusion of the Fund's proportionate share of the income and expenses of the HSBC Investor Value Portfolio. See notes to financial statements. 50 HSBC INVESTOR FAMILY OF FUNDS HSBC INVESTOR FUNDS -- GROWTH AND INCOME FUND -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS ................................................................................ SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
INVESTMENT ACTIVITIES DIVIDENDS ------------------------------------------ ---------------------- NET REALIZED AND NET ASSET NET UNREALIZED GAINS VALUE, INVESTMENT (LOSSES) FROM TOTAL FROM NET BEGINNING OF INCOME INVESTMENT INVESTMENT INVESTMENT TOTAL PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME DIVIDENDS ------------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Period ended October 31, 2001 (b) $10.06 0.01 (1.15) (1.14) (0.01) (0.01) Year ended October 31, 2002 8.91 0.04 (1.73) (1.69) (0.01) (0.01) Year ended October 31, 2003 7.21 0.06 1.18 1.24 (0.06) (0.06) Year ended October 31, 2004 8.39 0.05 0.36 0.41 (0.04) (0.04) Six months ended April 30, 2005 (Unaudited) 8.76 0.07* 0.15 0.22 (0.06) (0.06) ------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2001 (f) $ 9.54 (0.01) (0.64) (0.65) (0.01) (0.01) Year ended October 31, 2002 8.88 (0.00)> (1.74) (1.74) -- -- Year ended October 31, 2003 7.14 (0.01) 1.18 1.17 (0.01) (0.01) Year ended October 31, 2004 8.30 (0.02)* 0.36 0.34 (0.00)* (0.00)* Six months ended April 30, 2005 (Unaudited) 8.64 0.03* 0.16 0.19 (0.03) (0.03) ------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2004 (h) $ 8.40 (0.02)* 0.38 0.36 (0.03) (0.03) Six months ended April 30, 2005 (Unaudited) 8.73 0.03* 0.15 0.18 (0.04) (0.04) ------------------------------------------------------------------------------------------------------------- CLASS Y SHARES Period ended October 31, 2001 (i) $10.00 0.02 (1.09) (1.07) (0.01) (0.01) Year ended October 31, 2002 8.92 0.06 (1.73) (1.67) (0.03) (0.03) Year ended October 31, 2003 7.22 0.07 1.19 1.26 (0.08) (0.08) Year ended October 31, 2004 8.40 0.07 0.36 0.43 (0.06) (0.06) Six months ended April 30, 2005 (Unaudited) 8.77 0.08* 0.15 0.23 (0.08) (0.08) RATIOS/SUPPLEMENTARY DATA --------------------------------------------------------- RATIO OF NET RATIO OF NET ASSET NET ASSETS RATIO OF INVESTMENT EXPENSES TO VALUE, AT END OF EXPENSES TO INCOME (LOSS) AVERAGE END OF TOTAL PERIOD AVERAGE TO AVERAGE NET PORTFOLIO PERIOD RETURN(c) (000'S) NET ASSETS(e) NET ASSETS(e) ASSETS(e)(j) TURNOVER(a) ----------------------------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Period ended October 31, 2001 (b) $8.91 (12.65)%(d) $ 1,927 1.11% 0.15 % 1.11% 43.13% Year ended October 31, 2002 7.21 (18.97)%(d) 1,306 1.01% 0.39 % 1.01% 59.85% Year ended October 31, 2003 8.39 17.26 %(d) 1,827 1.04% 0.70 % 1.04% 64.52% Year ended October 31, 2004 8.76 4.94 %(d) 1,500 1.02% 0.50 % 1.02% 73.68% Six months ended April 30, 2005 (Unaudited) 8.92 2.44 %(d) 1,317 0.98% 1.45 % 1.03% 45.81% ----------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2001 (f) $8.88 (10.52)%(g) $ 330 1.84% (0.64)% 1.84% 43.13% Year ended October 31, 2002 7.14 (19.59)%(g) 1,154 1.76% (0.30)% 1.76% 59.85% Year ended October 31, 2003 8.30 16.40 %(g) 2,235 1.79% (0.07)% 1.79% 64.52% Year ended October 31, 2004 8.64 4.13 %(g) 3,820 1.77% (0.25)% 1.77% 73.68% Six months ended April 30, 2005 (Unaudited) 8.80 2.18 %(g) 3,990 1.73% 0.67 % 1.78% 45.81% ----------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2004 (h) $8.73 3.57 %(g) $ 41 1.77% (0.28)% 1.77% 73.68% Six months ended April 30, 2005 (Unaudited) 8.87 2.01 %(g) 44 1.73% 0.69 % 1.78% 45.81% ----------------------------------------------------------------------------------------------------------------------------- CLASS Y SHARES Period ended October 31, 2001 (i) $8.92 (9.71)% $219,221 0.82% 0.38 % 0.82% 43.13% Year ended October 31, 2002 7.22 (18.76)% 168,812 0.76% 0.66 % 0.76% 59.85% Year ended October 31, 2003 8.40 17.63 % 203,458 0.79% 0.96 % 0.79% 64.52% Year ended October 31, 2004 8.77 5.18 % 196,219 0.77% 0.77 % 0.77% 73.68% Six months ended April 30, 2005 (Unaudited) 8.92 2.53 % 177,014 0.74% 1.72 % 0.78% 45.81% -----------------------------------------------------------------------------------------------------------------------------
> Less than $0.005 per share. * Calculated based on average shares outstanding. (a) Portfolio turnover is calculated on the basis of the fund as a whole, without the distinguishing between the classes of shares issued. (b) Class A (Investor) Shares commenced operations on April 12, 2001. (c) Not annualized for periods less than one year. (d) Excludes sales charge. (e) Annualized for periods less than one year. (f) Class B Shares commenced operations on April 5, 2001. (g) Excludes redemption charge. (h) Class C Shares commenced operations on November 3, 2003. (i) Class Y Shares commenced operations on April 2, 2001. (j) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been as indicated. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 51 HSBC INVESTOR FUNDS -- MID-CAP FUND -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS ...................................................................... SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
INVESTMENT ACTIVITIES DIVIDENDS ------------------------------------------ ------------------------- NET REALIZED AND UNREALIZED NET ASSET GAINS (LOSSES) TOTAL NET REALIZED VALUE, NET FROM FROM GAINS FROM BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL OF PERIOD LOSS TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS ------------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Period ended October 31, 2000 (b) $10.27 (0.01) (0.19) (0.20) -- -- Year ended October 31, 2001 10.07 (0.03) (2.00) (2.03) (0.14) (0.14) Year ended October 31, 2002 7.90 (0.03) (1.57) (1.60) -- -- Year ended October 31, 2003 6.30 (0.03)* 1.68 1.65 -- -- Year ended October 31, 2004 7.95 (0.04)* 0.53 0.49 -- -- Six months ended April 30, 2005 (Unaudited) 8.44 (0.01)* 0.46 0.45 -- -- ------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2000 (f) $10.72 (0.02) (0.64) (0.66) -- -- Year ended October 31, 2001 10.06 (0.08) (2.02) (2.10) (0.14) (0.14) Year ended October 31, 2002 7.82 (0.08) (1.55) (1.63) -- -- Year ended October 31, 2003 6.19 (0.08) 1.64 1.56 -- -- Year ended October 31, 2004 7.75 (0.10)* 0.51 0.41 -- -- Six months ended April 30, 2005 (Unaudited) 8.16 (0.04)* 0.45 0.41 -- -- ------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2000 (h) $10.04 (0.01) 0.03 (j) 0.02 -- -- Year ended October 31, 2001 10.06 (0.09) (2.01) (2.10) (0.14) (0.14) Year ended October 31, 2002 7.82 (0.08) (1.54) (1.62) -- -- Year ended October 31, 2003 6.20 (0.08) 1.68 1.60 -- -- Year ended October 31, 2004 7.80 (0.10)* 0.52 0.42 -- -- Six months ended April 30, 2005 (Unaudited) 8.22 (0.04)* 0.44 0.40 -- -- ------------------------------------------------------------------------------------------------------------- TRUST SHARES Period ended October 31, 2000 (k) $10.00 (0.01) 0.09 (j) 0.08 -- -- Year ended October 31, 2001 10.08 (0.01) (2.02) (2.03) (0.14) (0.14) Year ended October 31, 2002 7.91 (0.02) (1.56) (1.58) -- -- Year ended October 31, 2003 6.33 (0.01) 1.69 1.68 -- -- Year ended October 31, 2004 8.01 (0.02)* 0.53 0.51 -- -- Six months ended April 30, 2005 (Unaudited) 8.52 (0.00)>* 0.46 0.46 -- -- ------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA ------------------------------------------------------------- RATIO OF NET NET ASSET NET ASSETS RATIO OF INVESTMENT RATIO OF VALUE, AT END OF EXPENSES TO LOSS TO EXPENSES TO END OF TOTAL PERIOD AVERAGE NET AVERAGE NET AVERAGE NET PORTFOLIO PERIOD RETURN(c) (000'S) ASSETS(e) ASSETS(e) ASSETS (e)(k) TURNOVER(a) ----------------------------------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Period ended October 31, 2000 (b) $10.07 (1.95)%(d) $ 445 1.28% (0.42)% 1.28% 57.69% Year ended October 31, 2001 7.90 (20.37)%(d) 927 1.13% (0.40)% 1.13% 112.67% Year ended October 31, 2002 6.30 (20.25)%(d) 1,010 1.08% (0.46)% 1.08% 140.23% Year ended October 31, 2003 7.95 26.19 %(d) 1,539 1.10% (0.43)% 1.10% 100.86% Year ended October 31, 2004 8.44 6.16 %(d) 1,878 1.09% (0.54)% 1.09% 106.72% Six months ended April 30, 2005 (Unaudited) 8.89 5.33 %(d) 1,882 0.92% (0.24)% 1.13% 108.42% ----------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Period ended October 31, 2000 (f) $10.06 (6.16)%(g) $ 1,557 2.02% (1.17)% 2.02% 57.69% Year ended October 31, 2001 7.82 (21.09)%(g) 3,827 1.88% (1.16)% 1.88% 112.67% Year ended October 31, 2002 6.19 (20.84)%(g) 4,391 1.83% (1.21)% 1.83% 140.23% Year ended October 31, 2003 7.75 25.20 %(g) 6,009 1.85% (1.16)% 1.85% 100.86% Year ended October 31, 2004 8.16 5.29 %(g) 7,037 1.84% (1.29)% 1.84% 106.72% Six months ended April 30, 2005 (Unaudited) 8.57 5.02 %(g) 7,167 1.66% (0.99)% 1.87% 108.42% ----------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Period ended October 31, 2000 (h) $10.06 0.20 %(g) $ 18 2.11% (1.29)% 2.11% 57.69% Year ended October 31, 2001 7.82 (21.09)%(g) 21 1.87% (1.13)% 1.87% 112.67% Year ended October 31, 2002 6.20 (20.72)%(g) 20 1.83% (1.20)% 1.83% 140.23% Year ended October 31, 2003 7.80 25.81 %(g) 54 1.85% (1.23)% 1.85% 100.86% Year ended October 31, 2004 8.22 5.38 %(g) 94 1.84% (1.29)% 1.84% 106.72% Six months ended April 30, 2005 (Unaudited) 8.62 4.87 %(g) 100 1.66% (0.99)% 1.88% 108.42% ----------------------------------------------------------------------------------------------------------------------------------- TRUST SHARES Period ended October 31, 2000 (k) $10.08 0.80 % $108,487 1.01% (0.22)% 1.01% 57.69% Year ended October 31, 2001 7.91 (20.34)% 129,390 0.87% (0.13)% 0.87% 112.67% Year ended October 31, 2002 6.33 (19.97)% 98,059 0.82% (0.18)% 0.82% 140.23% Year ended October 31, 2003 8.01 26.54 % 160,621 0.85% (0.17)% 0.85% 100.86% Year ended October 31, 2004 8.52 6.37 % 117,354 0.84% (0.28)% 0.84% 106.72% Six months ended April 30, 2005 (Unaudited) 8.98 5.40 % 64,461 0.73% (0.06)% 0.86% 108.42% -----------------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding. > Less than $0.005 per share. (a) Portfolio turnover is calculated on the basis of the fund as a whole, without the distinguishing between the classes of shares issued. (b) Class A (Investor) Shares commenced operations on July 10, 2000. (c) Not annualized for periods less than one year. (d) Excludes sales charge. (e) Annualized for periods less than one year. (f) Class B Shares commenced operations on July 17, 2000. (g) Excludes redemption charge. (h) Class C Shares commenced operations on August 9, 2000. (i) Trust Shares commenced operations on July 1, 2000. (j) The amount shown for a share outstanding throughout the period does not accord with the change in aggregate gains and losses in the portfolio of securities during the period because of the timing of sales and purchases of fund shares in relation to fluctuating market values during the period. (k) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been as indicated. See notes to financial statements. 52 HSBC INVESTOR FAMILY OF FUNDS HSBC ADVISOR FUNDS TRUST -- INTERNATIONAL EQUITY FUND -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS ...................................................................... SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (b)
INVESTMENT ACTIVITIES DIVIDENDS ------------------------------------------ ------------------------------------- NET REALIZED AND NET UNREALIZED GAINS REALIZED (LOSSES) FROM GAINS FROM NET ASSET INVESTMENT TOTAL INVESTMENT VALUE, NET AND FOREIGN FROM NET AND FOREIGN BEGINNING INVESTMENT CURRENCY INVESTMENT INVESTMENT CURRENCY TOTAL OF PERIOD INCOME TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS ------------------------------------------------------------------------------------------------------------------------------ ADVISOR SHARES Year ended October 31, 2000 $18.58 0.11 0.75 0.86 (0.11) (1.20) (1.31) Year ended October 31, 2001 18.13 0.09 (4.38) (4.29) -- (1.28) (1.28) Year ended October 31, 2002 12.56 0.09 (1.73) (1.64) (0.19) -- (0.19) Year ended October 31, 2003 10.73 0.20 2.02 2.22 (0.19) -- (0.19) Year ended October 31, 2004 12.76 0.18 2.32 2.50 (0.39) -- (0.39) Six months ended April 30, 2005 (Unaudited) 14.87 0.10 1.19 1.29 (0.23) -- (0.23) ------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTARY DATA ---------------------------------------------------- RATIO OF NET NET ASSET NET ASSETS RATIO OF INVESTMENT VALUE, AT END OF EXPENSES TO INCOME TO END OF TOTAL PERIOD AVERAGE NET AVERAGE NET PORTFOLIO PERIOD RETURN(c) (000'S) ASSETS(d) ASSETS(d) TURNOVER(a) -------------------------------------------------------------------------------------------------------------- ADVISOR SHARES Year ended October 31, 2000 $18.13 4.05% $219,837 0.90% 0.51% 27.81% Year ended October 31, 2001 12.56 (25.42)% 184,494 0.99% 0.51% 26.90% Year ended October 31, 2002 10.73 (13.32)% 194,704 0.99% 0.70% 31.63% Year ended October 31, 2003 12.76 21.03% 123,658 1.07% 1.16% 68.51% Year ended October 31, 2004 14.87 20.06% 148,317 1.05% 1.39% 106.11% Six months ended April 30, 2005 (Unaudited) 15.93 8.71% 162,974 0.96% 1.43% 10.99% --------------------------------------------------------------------------------------------------------------
(a) Portfolio turnover is calculated on the basis of the respective Portfolio in which the Fund invests all of its investable assets. (b) The per share amounts and percentages reflect income and expense assuming inclusion of the fund's proportionate share of the income and expenses of the HSBC Investor International Portfolio. (c) Not Annualized for periods less than one year. (d) Annualized for periods less than one year. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 53 HSBC INVESTOR FUNDS -- OVERSEAS EQUITY FUND -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS ......................................................................
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (c) INVESTMENT ACTIVITIES DIVIDENDS ----------------------------------------- ------------------------------------- NET REALIZED AND UNREALIZED NET REALIZED GAINS (LOSSES) GAINS FROM NET ASSET NET FROM INVESTMENT INVESTMENT VALUE, INVESTMENT AND FOREIGN TOTAL FROM NET AND FOREIGN BEGINNING INCOME CURRENCY INVESTMENT INVESTMENT CURRENCY TOTAL OF PERIOD (LOSS) TRANSACTIONS ACTIVITIES INCOME TRANSACTIONS DIVIDENDS ------------------------------------------------------------------------------------------------------------------------ CLASS A (INVESTOR) SHARES Year ended October 31, 2000 $16.90 (0.11) 0.64 0.53 -- (0.22) (0.22) Year ended October 31, 2001 17.21 (0.04) (4.05) (4.09) -- (1.46) (1.46) Year ended October 31, 2002 11.66 (0.04) (1.34) (1.38) (0.12) (0.29) (0.41) Year ended October 31, 2003 9.87 0.01 1.95 1.96 (0.10) -- (0.10) Year ended October 31, 2004 11.73 0.08 2.19 2.27 (0.07) -- (0.07) Six months ended April 30, 2005 (Unaudited) 13.93 0.04 1.10 1.14 (0.06) (0.79) (0.85) ------------------------------------------------------------------------------------------------------------------------ CLASS B SHARES Year ended October 31, 2000 $16.69 (0.10) 0.48 0.38 -- (0.22) (0.22) Year ended October 31, 2001 16.85 (0.14) (3.95) (4.09) -- (1.46) (1.46) Year ended October 31, 2002 11.30 (0.08) (1.34) (1.42) (0.03) (0.29) (0.32) Year ended October 31, 2003 9.56 (0.06) 1.89 1.83 (0.05) -- (0.05) Year ended October 31, 2004 11.34 0.01* 2.08 2.09 -- -- -- Six months ended April 30, 2005 (Unaudited) 13.43 (0.01) 1.06 1.05 -- (0.79) (0.79) ------------------------------------------------------------------------------------------------------------------------ CLASS C SHARES Year ended October 31, 2000 $16.84 (0.14) 0.52 0.38 -- (0.22) (0.22) Year ended October 31, 2001 17.00 (0.18) (3.95) (4.13) -- (1.46) (1.46) Year ended October 31, 2002 11.41 (0.08) (1.36) (1.44) -- (0.29) (0.29) Year ended October 31, 2003 9.68 (0.06) 1.93 1.87 (0.01) -- (0.01) Year ended October 31, 2004 11.54 (0.01) 2.14 2.13 -- -- -- Six months ended April 30, 2005 (Unaudited) 13.67 (0.01) 1.08 1.07 -- (0.79) (0.79) ------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTARY DATA ---------------------------------------------------------------------------- RATIO OF NET RATIO OF INVESTMENT RATIO OF NET ASSET NET ASSETS EXPENSES TO INCOME (LOSS) EXPENSES TO VALUE, END TOTAL AT END OF AVERAGE NET TO AVERAGE AVERAGE NET PORTFOLIO OF PERIOD RETURN(f) PERIOD (000'S) ASSETS(g) NET ASSETS(g) ASSETS(a)(g) TURNOVER(b) --------------------------------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Year ended October 31, 2000 $17.21 3.05 %(c) $ 7,252 1.85% (0.49)% 2.43% 27.81% Year ended October 31, 2001 11.66 (25.93)%(c) 6,940 1.85% (0.35)% 2.44% 26.90% Year ended October 31, 2002 9.87 (12.42)%(c) 7,203 1.85% (0.18)% 2.28% 31.63% Year ended October 31, 2003 11.73 20.09 %(c) 10,096 1.85% 0.07 % 2.34% 68.51% Year ended October 31, 2004 13.93 19.40 %(c) 17,721 1.78% 0.79 % 1.88% 106.11% Six months ended April 30, 2005 (Unaudited) 14.22 8.29 %(c) 19,976 1.64% 0.66 % 1.64% 10.99% --------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended October 31, 2000 $16.85 2.18 %(d) $ 358 2.60% (1.17)% 2.96% 27.81% Year ended October 31, 2001 11.30 (26.52)%(d) 294 2.60% (1.09)% 3.18% 26.90% Year ended October 31, 2002 9.56 (13.07)%(d) 588 2.60% (0.87)% 3.04% 31.63% Year ended October 31, 2003 11.34 19.26 %(d) 1,076 2.60% (0.62)% 3.16% 68.51% Year ended October 31, 2004 13.43 18.43 %(d) 2,061 2.53% 0.05 % 2.63% 106.11% Six months ended April 30, 2005 (Unaudited) 13.69 7.80 %(d) 2,256 2.39% (0.10)% 2.39% 10.99% --------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Year ended October 31, 2000 $17.00 2.10 %(d) $ 248 2.60% (1.14)% 2.96% 27.81% Year ended October 31, 2001 11.41 (26.53)%(d) 139 2.60% (1.10)% 3.16% 26.90% Year ended October 31, 2002 9.68 (13.08)%(d) 96 2.60% (1.00)% 3.04% 31.63% Year ended October 31, 2003 11.54 19.28 %(d) 121 2.60% (0.64)% 3.17% 68.51% Year ended October 31, 2004 13.67 18.46 %(d) 137 2.54% (0.10)% 2.66% 106.11% Six months ended April 30, 2005 (Unaudited) 13.95 7.81 %(d) 145 2.39% (0.10)% 2.39% 10.99% ---------------------------------------------------------------------------------------------------------------------------------
* Calculated based on average shares outstanding. (a) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been as indicated. (b) Portfolio turnover is calculated on the basis of the respective Portfolio in which the Fund invests all of its investable assets. (c) Excludes sales charge. (d) Excludes redemption charge. (e) The per share amounts and percentages reflect income and expense assuming inclusion of the fund's proportionate share of the income and expenses of the HSBC Investor International Portfolio. (f) Not Annualized for periods less than one year. (g) Annualized for periods less than one year. See notes to financial statements. 54 HSBC INVESTOR FAMILY OF FUNDS HSBC ADVISOR FUNDS TRUST -- SMALL CAP EQUITY FUND -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS ...................................................................... SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (b)
INVESTMENT ACTIVITIES DIVIDENDS ------------------------------------------ ------------------------ NET REALIZED AND NET NET ASSET UNREALIZED GAINS TOTAL REALIZED VALUE, NET (LOSSES) FROM FROM GAINS FROM BEGINNING OF INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL PERIOD LOSS TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS --------------------------------------------------------------------------------------------------------------- ADVISOR SHARES Year ended October 31, 2000 $12.56 (0.10) 6.73 6.63 (1.38) (1.38) Year ended October 31, 2001 17.81 (0.10) (3.65) (3.75) (2.74) (2.74) Year ended October 31, 2002 11.32 (0.09) (1.96) (2.05) -- -- Year ended October 31, 2003 9.27 (0.06) 3.15 3.09 -- -- Year ended October 31, 2004 12.36 (0.08) 0.79 0.71 -- -- Six months ended April 30, 2005 (Unaudited) 13.07 (0.04) 0.12 0.08 -- -- --------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA ---------------------------------------------------- RATIO OF NET NET ASSET NET ASSETS RATIO OF INVESTMENT VALUE, AT END OF EXPENSES TO LOSS TO END OF TOTAL PERIOD AVERAGE NET AVERAGE NET PORTFOLIO PERIOD RETURN(c) (000'S) ASSETS(d) ASSETS(d) TURNOVER(a) ------------------------------------------------------------------------------------------------------ ADVISOR SHARES Year ended October 31, 2000 $17.81 55.59 % $253,724 1.05% (0.68)% 79.51% Year ended October 31, 2001 11.32 (22.98)% 180,265 1.07% (0.74)% 52.47% Year ended October 31, 2002 9.27 (18.11)% 190,686 1.07% (0.87)% 103.90% Year ended October 31, 2003 12.36 33.33 % 326,072 1.01% (0.72)% 152.05% Year ended October 31, 2004 13.07 5.74 % 279,669 0.98% (0.62)% 81.75% Six months ended April 30, 2005 (Unaudited) 13.15 0.61 % 208,252 0.90% (0.50)% 31.89% ------------------------------------------------------------------------------------------------------
(a) Portfolio turnover is calculated on the basis of the respective Portfolio in which the Fund invests all of its investable assets. (b) The per share amounts and percentages reflect income and expense assuming inclusion of the fund's proportionate share of the income and expenses of the HSBC Investor International Portfolio. (c) Not Annualized for periods less than one year. (d) Annualized for periods less than one year. See notes to financial statements. HSBC INVESTOR FAMILY OF FUNDS 55 HSBC INVESTOR FUNDS -- OPPORTUNITY FUND -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS ...................................................................... SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED. (e)
INVESTMENT ACTIVITIES DIVIDENDS ------------------------------------------ -------------------------- NET REALIZED AND NET ASSET UNREALIZED GAINS TOTAL NET REALIZED VALUE, NET (LOSSES) FROM FROM GAINS FROM BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT TOTAL OF PERIOD LOSS TRANSACTIONS ACTIVITIES TRANSACTIONS DIVIDENDS -------------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Year ended October 31, 2000 $13.19 (0.26) 7.13 6.87 (1.31) (1.31) Year ended October 31, 2001 18.75 (0.14) (3.58) (3.72) (5.43) (5.43) Year ended October 31, 2002 9.60 (0.13) (1.64) (1.77) -- -- Year ended October 31, 2003 7.83 (0.10) 2.63 2.53 -- -- Year ended October 31, 2004 10.36 (0.13) 0.68 0.55 -- -- Six months ended April 30, 2005 (Unaudited) 10.91 (0.06) 0.09 0.03 -- -- -------------------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended October 31, 2000 $13.06 (0.28) 6.93 6.65 (1.31) (1.31) Year ended October 31, 2001 18.40 (0.23)* (3.47) (3.70) (5.43) (5.43) Year ended October 31, 2002 9.27 (0.20)* (1.56) (1.76) -- -- Year ended October 31, 2003 7.51 (0.18)* 2.52 2.34 -- -- Year ended October 31, 2004 9.85 (0.20) 0.64 0.44 -- -- Six months ended April 30, 2005 (Unaudited) 10.29 (0.10) 0.09 (0.01) -- -- -------------------------------------------------------------------------------------------------------------- CLASS C SHARES Year ended October 31, 2000 $13.13 (0.32) 7.01 6.69 (1.31) (1.31) Year ended October 31, 2001 18.51 (0.24)* (3.49) (3.73) (5.43) (5.43) Year ended October 31, 2002 9.35 (0.21)* (1.57) (1.78) -- -- Year ended October 31, 2003 7.57 (0.18) 2.55 2.37 -- -- Year ended October 31, 2004 9.94 (0.22) 0.67 0.45 -- -- Six months ended April 30, 2005 (Unaudited) 10.39 (0.10) 0.08 (0.02) -- -- -------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA -------------------------------------------------------------------------- RATIO OF NET NET ASSET NET ASSETS RATIO OF INVESTMENT RATIO OF VALUE, AT END OF EXPENSES TO LOSS TO EXPENSES TO END OF TOTAL PERIOD AVERAGE NET AVERAGE NET AVERAGE NET PORTFOLIO PERIOD RETURN(f) (000'S) ASSETS(g) ASSETS(g) ASSETS(g)(a) TURNOVER(b) ----------------------------------------------------------------------------------------------------------------------------------- CLASS A (INVESTOR) SHARES Year ended October 31, 2000 $18.75 54.54 %(c) $15,415 1.65% (1.29)% 1.84% 79.51% Year ended October 31, 2001 9.60 (23.65)%(c) 11,892 1.65% (1.32)% 1.97% 52.47% Year ended October 31, 2002 7.83 (18.44)%(c) 11,384 1.65% (1.45)% 2.08% 103.90% Year ended October 31, 2003 10.36 32.31 %(c) 16,695 1.65% (1.36)% 2.09% 152.05% Year ended October 31, 2004 10.91 5.31 %(c) 20,902 1.61% (1.24)% 1.72% 81.75% Six months ended April 30, 2005 (Unaudited) 10.94 0.27 %(c) 20,807 1.47% (1.07)% 1.60% 31.89% ----------------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Year ended October 31, 2000 $18.40 53.30 %(d) $ 1,273 2.40% (2.02)% 2.49% 79.51% Year ended October 31, 2001 9.27 (24.16)%(d) 1,315 2.40% (2.08)% 2.73% 52.47% Year ended October 31, 2002 7.51 (18.99)%(d) 2,374 2.40% (2.18)% 2.86% 103.90% Year ended October 31, 2003 9.85 31.16 %(d) 3,952 2.40% (2.11)% 2.83% 152.05% Year ended October 31, 2004 10.29 4.47 %(d) 4,611 2.36% (2.00)% 2.47% 81.75% Six months ended April 30, 2005 (Unaudited) 10.28 (0.10)%(d) 4,476 2.22% (1.82)% 2.55% 31.89% ----------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Year ended October 31, 2000 $18.51 53.32 %(d) $ 707 2.40% (2.02)% 2.46% 79.51% Year ended October 31, 2001 9.35 (24.17)%(d) 407 2.40% (2.06)% 2.71% 52.47% Year ended October 31, 2002 7.57 (19.04)%(d) 329 2.40% (2.20)% 2.83% 103.90% Year ended October 31, 2003 9.94 31.31 %(d) 395 2.40% (2.11)% 2.84% 152.05% Year ended October 31, 2004 10.39 4.53 %(d) 344 2.37% (2.00)% 2.48% 81.75% Six months ended April 30, 2005 (Unaudited) 10.37 (0.10)%(d) 274 2.22% (1.82)% 2.55% 31.89% -----------------------------------------------------------------------------------------------------------------------------------
* Calculated using average shares. (a) During the period certain fees were reduced. If such fee reductions had not occurred, the ratio would have been as indicated. (b) Portfolio turnover is calculated on the basis of the respective Portfolio in which the Fund invests all of its investable assets. (c) Excludes sales charge. (d) Excludes redemption charge. (e) The per share amounts and percentages reflect income and expense assuming inclusion of the fund's proportionate share of the income and expenses of the HSBC Investor Small Cap Portfolio. (f) Not annualized for periods less than one year. (g) Annualized for periods less than one year. See notes to financial statements. 56 HSBC INVESTOR FAMILY OF FUNDS HSBC INVESTOR FAMILY OF FUNDS -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) ...................................................................... 1. ORGANIZATION: The HSBC Investor Funds (the 'Trust'), a Massachusetts business trust organized on April 22, 1987, and the HSBC Advisor Funds Trust (the 'Advisor Trust'), a Massachusetts business trust organized on April 5, 1996, are registered under the Investment Company Act of 1940, as amended (the 'Act'), as open-end management investment companies. The Trust and Advisor Trust (collectively the 'Trusts') contain the following funds (individually a 'Fund,' collectively the 'Funds'):
FUND SHORT NAME TRUST ---- ---------- ----- HSBC Investor Limited Maturity Fund Limited Maturity Fund Trust HSBC Investor Fixed Income Fund Fixed Income Fund Advisor Trust HSBC Investor Bond Fund Bond Fund Trust HSBC Investor New York Tax-Free Bond Fund New York Tax-Free Bond Fund Trust HSBC Investor Growth Fund Growth Fund Trust HSBC Investor Value Fund Value Fund Trust HSBC Investor Growth and Income Fund Growth and Income Fund Trust HSBC Investor Mid-Cap Fund Mid-Cap Fund Trust HSBC Investor International Equity Fund International Equity Fund Advisor Trust HSBC Investor Overseas Equity Fund Overseas Equity Fund Trust HSBC Investor Small Cap Equity Fund Small Cap Equity Fund Advisor Trust HSBC Investor Opportunity Fund Opportunity Fund Trust
The Funds are separate series of the Trusts and are part of the HSBC Investor Family of Funds. Financial statements for all other series of HSBC Investor Family of Funds are published separately. The Limited Maturity Fund, Fixed Income Fund, Bond Fund, Growth Fund, Value Fund, International Equity Fund, Overseas Equity Fund, Small Cap Equity Fund, and the Opportunity Fund (individually a 'Feeder Fund,' collectively the 'Feeder Funds') utilize the Master Feeder Fund Structure and seek to achieve their investment objectives by investing all of their investable assets in their Respective Portfolios (as defined below). On May 7, 2004 the Equity Fund reorganized into two separate HSBC Investor Funds, the HSBC Investor Growth Fund and HSBC Investor Value Fund. Shareholders of the Equity Fund became shareholders of both the HSBC Investor Growth Fund and the HSBC Investor Value Fund as a result of the reorganization, receiving shares of the HSBC Investor Growth Fund and the HSBC Investor Value Fund having an aggregate net asset value equal to the aggregate net asset value of their investment in the Equity Fund. The beginning NAV for the HSBC Investor Value Fund and the HSBC Investor Growth Fund was the closing NAV for the respective class of shares of the Equity Fund. During the six months ended April 30, 2005, the Mid-Cap Fund delivered securities of the Fund in exchange for the redemption of Trust Shares (redemption in-kind). Cash and securities were transferred for redemptions at a market value of $48,557,280.
PROPORTIONATE INTEREST ON FUND RESPECTIVE PORTFOLIO APRIL 30, 2005 ---- -------------------- -------------- Limited Maturity Fund HSBC Investor Limited Maturity Portfolio 70.8% Fixed Income Fund HSBC Investor Fixed Income Portfolio 70.2 Bond Fund HSBC Investor Fixed Income Portfolio 16.3 Growth Fund HSBC Investor Growth Portfolio 80.2 Value Fund HSBC Investor Value Portfolio 78.4 International Equity Fund HSBC Investor International Equity Portfolio 75.3 Overseas Equity Fund HSBC Investor International Equity Portfolio 10.3 Small Cap Equity Fund HSBC Investor Small Cap Equity Portfolio 79.1 Opportunity Fund HSBC Investor Small Cap Equity Portfolio 9.7
The HSBC Investor Limited Maturity Portfolio, HSBC Investor Fixed Income Portfolio, HSBC Investor Growth Portfolio, HSBC Investor Value Portfolio, HSBC Investor International Equity Portfolio, and the HSBC Investor Small HSBC INVESTOR FAMILY OF FUNDS 57 HSBC INVESTOR FAMILY OF FUNDS -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ...................................................................... Cap Equity Portfolio (individually a 'Portfolio,' collectively the 'Portfolios'), are diversified series of the HSBC Investor Portfolios (the 'Portfolio Trust'), and like each Feeder Fund, are open-end management investment companies. The financial statements of the Portfolios, including the Schedules of Portfolio Investments, are included in this report. The financial statements of the Portfolios should be read in conjunction with the financial statements of the Feeder Funds. The Funds are authorized to issue an unlimited number of shares of beneficial interest with a par value of $0.001 per share. The Limited Maturity Fund, New York Tax-Free Bond Fund, Growth Fund, Value Fund, and the Growth and Income Fund each offers four classes of shares: Class A (Investor) Shares, Class B Shares, Class C Shares and Class Y Shares. The Mid-Cap Fund offers four classes of shares: Class A Shares, Class B Shares, Class C Shares, and Trust Shares. The Fixed Income Fund, International Equity Fund, and the Small Cap Equity Fund each offers one class of shares (Advisor). The Bond Fund, Overseas Equity Fund, and the Opportunity Fund each offers three classes of shares, Class A (Investor) Shares, Class B Shares and Class C Shares. Each class of shares in the Funds has identical rights and privileges except with respect to fees paid under shareholder servicing or distribution plans, voting rights on matters affecting a single class of shares, and the exchange privilege of each class of shares. Under the Funds' organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, in the normal course of business, the Funds enter into contracts with their vendors and others that provide for general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds. However, based on experience, the Funds expect that risk of loss to be remote. 2. SIGNIFICANT ACCOUNTING POLICIES: The following is a summary of the significant accounting policies followed by the Funds in the preparation of their financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America ('GAAP'). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates. SECURITIES VALUATION: A. NEW YORK TAX-FREE BOND FUND, GROWTH AND INCOME FUND, AND MID-CAP FUND Bonds and other fixed income securities (other than short-term obligations but including listed issues) are valued on the basis of valuations furnished by a pricing service, the use of which has been approved by the Funds' Board of Trustees. In making such valuations, the pricing service utilizes both dealer-supplied valuations and the use of matrix techniques which take into account appropriate factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics other than market data and without exclusive reliance upon quoted prices or exchanges or over-the-counter prices, since such valuations are believed to refiect more accurately the fair value of such securities. All debt portfolio securities with a remaining maturity of 60 days or less are valued at amortized cost. Under the amortized cost method, premium or discount, if any, is amortized or accreted, respectively, on a constant (straight-line) basis to the maturity of the security. The value of each equity security is based either on the last sale price on a national securities exchange, or in the absence of recorded sales, at the closing bid prices on such exchanges, or at the quoted bid price in the over-the-counter market. Securities or other assets for which market quotations are not readily available are valued by or at the direction of the Funds' Board of Trustees. In addition, specific securities may need to be valued by or at the direction of the Funds' Board of Trustees due to potentially significant events. Examples of potentially significant events that could affect the value of an individual security include corporate actions by the issuer, announcements by the issuer relating to its earnings or products, regulatory news, natural disasters and litigation. Examples of potentially significant events that could affect multiple securities held by a Fund include governmental actions, natural disasters and armed confiicts. 58 HSBC INVESTOR FAMILY OF FUNDS HSBC INVESTOR FAMILY OF FUNDS -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ...................................................................... B. FEEDER FUNDS The Feeder Funds record their investments in their respective Portfolios at value. Securities of the Portfolios are recorded at value as more fully discussed in the notes to those financial statements. SECURITIES TRANSACTIONS AND RELATED INCOME: A. NEW YORK TAX-FREE BOND FUND, GROWTH AND INCOME FUND, AND MID-CAP FUND Changes in holdings of portfolio securities are refiected no later than the first business day following the trade date. However, for financial statement purposes, portfolio securities are reflected as of trade date. Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date. B. FEEDER FUNDS The Feeder Funds record daily their pro-rata share of their respective Portfolio's income, expenses and realized and unrealized gains and losses. In addition, the Feeder Funds accrue their own expenses daily as incurred. Realized gains or losses and changes in unrealized appreciation or depreciation represent the Feeder Fund's share of such elements allocated from the Portfolio. FUTURES CONTRACTS: The New York Tax-Free Bond Fund may invest in futures contracts for the purpose of hedging existing portfolio securities or securities it intends to purchase against fiuctuations in fair value caused by changes in prevailing market interest rates. Upon entering into a futures contract, the New York Tax-Free Bond Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as 'variation margin', are made each day, depending on the daily fiuctuations in the fair value of the underlying security. A gain or loss equal to the daily variation margin is recognized on a daily basis. Futures contracts may also be entered into for non-hedging purposes. A 'sale' of futures contract means a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price at a specified time in the future. A 'purchase' of a futures contract means a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future. Should market conditions move unexpectedly, the New York Tax-Free Bond Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets. OPTIONS: The Growth and Income Fund and the Mid-Cap Fund may write covered call options against some of the securities in their portfolios provided the securities are listed on a national securities exchange. A call option is 'covered' if the Fund owns the underlying securities covered by the call. The premium received is recorded as a liability and is subsequently adjusted to the current fair value of the option written. Premiums received from writing options that expire unexercised are treated on the expiration date as realized gains from investments. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain or loss. If the call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining a realized gain or loss. For the period ended April 30, 2005, the funds did not write any covered call options. SECURITY LOANS: To generate additional income, the Funds may lend up to 33 1/3% of their respective assets pursuant to agreements requiring that the loan be continuously secured by any combination of cash, U.S. Government or U.S. Government HSBC INVESTOR FAMILY OF FUNDS 59 HSBC INVESTOR FAMILY OF FUNDS -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ...................................................................... agency securities, equal at all times to at least 100% of the fair value. The Funds receive payments from borrowers equivalent to the dividends and interest that would have been earned on securities lent while simultaneously seeking to earn income on the investment of collateral. Collateral is marked to market daily to provide a level of collateral at least equal to the fair value of securities lent. There may be risks of delay in recovery of the securities or even loss of rights in the collateral should the borrower of the securities fail financially. However, loans will be made only to borrowers, such as broker-dealers, banks or institutional borrowers of securities, deemed by HSBC to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in the judgement of HSBC, the consideration which can be earned currently from such securities loans justifies the attendant risks. Loans are subject to termination by the Funds or the borrower at any time and are, therefore, not considered to be illiquid investments. As of April 30, 2005, the Funds had no loans outstanding. LINE OF CREDIT: The funds participate in a short-term, demand note agreement with HSBC Bank USA, an affiliate of the Investment Adviser (defined below). Under the agreement, the funds may borrow up to $50 million. The purpose of the agreement is to meet temporary or emergency cash needs, including redemption requests that might otherwise require the untimely disposition of securities. During the period ended April 30, 2005, the Growth and Income Fund and the Mid-Cap Fund had borrowed against the Line of Credit. The details of the borrowing were as follows:
AVERAGE AMOUNT AVERAGE INTEREST TOTAL INTEREST FUND OUTSTANDING RATE CHARGES* ---- ----------- ---- -------- Growth and Income Fund....................... $628,155 3.30% $3,858 Mid-Cap Fund................................. 237,431 2.99% 709
--------- * Total interest charged is included in Other Expenses on the Statement of Operations. ALLOCATIONS: Expenses directly attributable to a Fund are charged to that Fund. Expenses not directly attributable to a Fund are allocated proportionately among various or all Funds within the HSBC Investor Family of Funds in relation to the net assets of each Fund or on another reasonable basis. Expenses specific to a class are charged to that class. In addition, income, expenses (other than class specific), and unrealized/realized gains and losses are allocated to each class based on relative net assets on a daily basis. DIVIDENDS TO SHAREHOLDERS: The Limited Maturity Fund, Fixed Income Fund, Bond Fund, and the New York Tax-Free Bond Fund declare all net investment income daily as dividends to their shareholders and distribute such dividends monthly. Dividends from net investment income, if any, are declared and distributed quarterly in the case of the Growth Fund and Value Fund, semi-annually in the case of the Growth and Income Fund, Small Cap Equity Fund, and the Opportunity Fund and annually in the case of the Mid-Cap Fund, International Equity Fund and Overseas Equity Fund. The Funds' net realized gains, if any, are distributed to shareholders at least annually. Additional distributions are also made to the Funds' shareholders to the extent necessary to avoid the federal excise tax on certain undistributed income and net capital gains of regulated investment companies. The amount of dividends from net investment income and net realized gains are determined in accordance with federal income tax regulations which may differ from GAAP. These 'book/tax' differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature (i.e. reclassification of market discounts, gain/loss, paydowns, and distributions), such amounts are reclassified within the components of net assets; temporary differences do not require reclassification. The Funds may utilize equalization accounting for tax purposes and designate earnings and profits, including net realized gains distributed to shareholders on redemption of shares, as a part of the dividends paid deduction for income tax purposes. 60 HSBC INVESTOR FAMILY OF FUNDS HSBC INVESTOR FAMILY OF FUNDS -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ...................................................................... REDEMPTION FEE: Effective April 1, 2004, a redemption fee of 2.00% is charged and recorded as paid-in-capital for any shares redeemed or exchanged after holding them for less than 30 days. This fee does not apply to shares purchased or exchanged into the Funds prior to April 1, 2004. Additionally, this fee does not apply to shares purchased through reinvested dividends or capital gains or shares held in certain omnibus accounts or retirement plans that cannot implement the fee. The redemption fee for the International Equity Fund and Overseas Equity Fund was effective beginning September 1, 2003. For the period ended April 30, 2005 the following Funds collected redemption fees as follows:
FUND FEES COLLECTED ---- -------------- International Equity Fund................................... $ 144 Overseas Equity Fund........................................ $ 74 NY Tax-free Bond Fund....................................... $12,809 Fixed Income Fund........................................... $ 212 Bond Fund................................................... $ 28 Growth Fund................................................. $ 316 Growth & Income Fund........................................ $ 454 Value Fund.................................................. $ 342 Opportunity Fund............................................ $ 156 Mid-Cap Fund................................................ $ 8 Limited Maturity Fund....................................... $ 10
FEDERAL INCOME TAXES: Each Fund is a separate taxable entity for federal income tax purposes. Each Fund has qualified and intends to qualify each year as a 'regulated investment company' under Subchapter M of the Internal Revenue Code, as amended and to distribute substantially all of their taxable net investment income and net realized gains, if any, to their shareholders. Accordingly, no provision for federal income or excise tax is required. 3. RELATED PARTY TRANSACTIONS: INVESTMENT MANAGEMENT: HSBC Investments (USA) Inc. ('HSBC' or the 'Investment Adviser'), a wholly owned subsidiary of HSBC Bank USA, a New York State chartered bank, acts as Investment Adviser to the New York Tax-Free Bond Fund. As Investment Adviser, HSBC manages the investments of the Funds and continuously reviews, supervises and administers the Funds' investments. Effective April 18, 2005, Transamerica Investment Management, LLC and Munder Capital Management began serving as Sub-Investment Advisor for the Growth and Income Fund and Mid-Cap Fund, respectively, and are paid for there services directly by HSBC. For its services as Investment Adviser, HSBC is entitled to receive a fee, accrued daily and paid monthly, based on average daily net assets, at an annual rate of:
FUND FEE RATE ---- -------- New York Tax-Free Bond Fund................................. 0.25%
For its services as Investment Adviser and Sub-Investment Advisor, respectively, HSBC and Transamerica Investment Management, LLC receive in aggregate, a fee accrued daily and paid monthly, at an annual rate of 0.60% of the Growth and Income Fund's average daily net assets. For its services as Investment Adviser and Sub-Investment Advisor, respectively, HSBC and Munder Capital Management receive in aggregate, a fee accrued daily and paid monthly, at an annual rate of 0.75% of the Growth and Income Fund's average daily net assets. HSBC INVESTOR FAMILY OF FUNDS 61 HSBC INVESTOR FAMILY OF FUNDS -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ...................................................................... Prior to April, 18, 2005, HSBC Investments (USA) Inc. served as Investment Advisor for the Growth and Income Fund and Mid-Cap Fund and received a fee, accrued daily and paid monthly, based on average daily net assets, at an annual rate of:
FUND FEE RATE ---- -------- Growth and Income Fund...................................... 0.55% Mid-Cap Fund................................................ 0.55%
Effective April 18, 2005, the Investment Adviser has agreed to contractually waive 0.05% of its management fee based on average daily net assets of the Growth and Income Fund and Mid-Cap Funds. All contractual and any voluntary investment advisory fee waivers are not subject to recoupment in subsequent fiscal periods. ADMINISTRATION: BISYS Fund Services Ohio, Inc. ('BISYS Ohio'), a wholly-owned subsidiary of The BISYS Group, Inc., with whom certain officers of the Trusts are affiliated, serves the Trusts as Administrator. Such officers, with the exception of the Chief Compliance Officer as noted below, are paid no fees directly by the Funds for serving as officers of the Trusts. Under the terms of the administration agreement, BISYS Ohio receives from the Funds a fee accrued daily and paid monthly at an annual rate of:
BASED ON AVERAGE DAILY NET ASSETS FEE RATE --------------------------------- -------- Up to $8 billion............................................ 0.075% In excess of $8 billion but not exceeding $9.25 billion..... 0.07% In excess of $9.25 billion but not exceeding $12 billion.... 0.05% In excess of $12 billion.................................... 0.03%
The fee breakpoints are determined on the basis of the aggregate average daily net assets of the HSBC Investor Family of Funds. The fee is allocated to each of the HSBC Investor Family of Funds based upon its pro-rata share of net assets. The Portfolios pay half of each Feeder Fund's administration fee for a combination of the total fee rate above. BISYS Ohio may directly or through an affiliate, use their fee revenue, past profits, or other revenue sources to pay promotional, administrative, shareholder support, and other expenses to third parties, including broker dealers, in connection with the offer, sale and administration of shares of the Funds. In addition, BISYS provides an employee to serve as Chief Compliance Officer for the Funds including providing certain related services, for which it receives an additional fee. On June 13, 2005 the Board approved a proposal for HSBC to serve as the Administrator of the Funds, which will be effective July 1, 2005 under the same compensation structure as those currently with BISYS. In addition, the Board approved a proposal for BISYS to serve as the sub-Administrator to HSBC, in which BISYS will be compensated directly by HSBC effective July 1, 2005. DISTRIBUTION PLAN: BISYS Fund Services Limited Partnership ('BISYS'), a wholly-owned subsidiary of The BISYS Group, Inc., serves the Funds as Distributor (the 'Distributor'). The Trusts have adopted a non-compensatory Distribution Plan and Agreement (the 'Plan') pursuant to Rule 12b-1 of the Act. The Plan provides for a monthly payment of actual expenses by the Funds to the Distributor at a rate not to exceed 0.25% of the average daily net assets of Class A (Investor) Shares (currently not being charged) and 0.75% of the average daily net assets of Class B Shares and Class C Shares of the Funds. This payment represents expenses incurred by the Distributor for marketing costs and services rendered in distributing the Funds' shares. BISYS, as the Funds' distributor, received $344,412 in commissions from sales of the Funds of which $343,984 was reallowed to affiliated brokers and dealers. 62 HSBC INVESTOR FAMILY OF FUNDS HSBC INVESTOR FAMILY OF FUNDS -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ...................................................................... SHAREHOLDER SERVICING: The Trusts have entered into a Shareholder Servicing Agreement with its shareholder servicing agents (which currently consists of HSBC and its affiliates) for providing various shareholder services. For performing these services the shareholder servicing agents receive a fee of 0.25%, 0.25%, and 0.25% that is computed daily and paid monthly equal to a percentage of average daily net assets of Class A (Investor) Shares, Class B Shares and Class C Shares of the Fund, respectively. The aggregate fees paid to the Distributor pursuant to the Distribution Plan and to shareholder servicing agents pursuant to the Shareholder Servicing Agreement may not exceed 0.25% of the average daily net assets of Class A (Investor) Shares, and 1.00% of the average daily net assets of Class B Shares and Class C Shares. FEE REDUCTIONS: The Investment Adviser has agreed to limit the total annual expenses, exclusive of interest, taxes, brokerage commissions and extraordinary expenses, of the Limited Maturity Fund, Bond Fund, New York Tax-Free Bond Fund, Overseas Equity Fund and Opportunity Fund. Each Fund Class has it's own expense limitations based on average daily net assets for any full fiscal year as follows:
EXPENSE FUND CLASS LIMITATION ---- ----- ---------- Bond Fund................................................... A 1.10% Bond Fund................................................... B 1.85 Bond Fund................................................... C 1.85 Overseas Equity Fund........................................ A 1.85 Overseas Equity Fund........................................ B 2.60 Overseas Equity Fund........................................ C 2.60 Opportunity Fund............................................ A 1.65 Opportunity Fund............................................ B 2.40 Opportunity Fund............................................ C 2.40
All contractual and any voluntary investment advisory fee waivers are not subject to recoupment in subsequent fiscal periods. FUND ACCOUNTING, TRANSFER AGENCY AND CUSTODIAN: BISYS Ohio provides fund accounting and transfer agency services for all classes of each Fund. In addition, HSBC serves as custodian for the New York Tax-Free Bond Fund, Mid-Cap Fund and Growth and Income Fund. As transfer agent for the Funds, BISYS receives a fee based on the number Funds and shareholder accounts, subject to certain minimums and reimbursement of certain expenses. As fund accountant for the Funds, BISYS receives an annual fee per Fund and share class, subject to certain minimums and reimbursement of certain expenses. As custodian for the Funds, HSBC receives a fee based on average daily net assets, number of transactions and reimbursement of certain expenses. OTHER: For its service as security lending agent, HSBC Bank USA (see note 2 -- Security Loans), receives a fee equal to 0.06% of the average dollar value of the loans outstanding during a given month from the Funds. The fees collected by HSBC Bank USA for the period ended April 30, 2005 were:
FUND ---- Growth and Income Fund...................................... $ 56 Mid-Cap Fund................................................ 242
The HSBC Investor Family of Funds may use affiliated broker/dealers for the execution of portfolio investment trades. For the six months ended April 30, 2005, affiliated broker/dealers did not receive any commissions on the execution of trades related to the HSBC Investor Family of Funds. HSBC INVESTOR FAMILY OF FUNDS 63 HSBC INVESTOR FAMILY OF FUNDS -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ...................................................................... 4. INVESTMENT TRANSACTIONS: Purchases of and proceeds from sales, excluding short-term securities, for the Funds for the period ended April 30, 2005, totaled:
PURCHASES SALES --------- ----- New York Tax-Free Bond Fund............................... $ 7,041,808 $ 9,085,605 Growth and Income Fund.................................... 90,806,441 131,733,621 Mid-Cap Fund.............................................. 129,640,077 191,484,081
There were no long-term U.S. Government securities held during the period ended April 30, 2005. Contributions and withdrawals of the respective Portfolios for the period ended April 30, 2005, totaled:
CONTRIBUTIONS WITHDRAWALS ------------- ----------- Limited Maturity Fund....................................... $ 2,523,499 $ 6,172,321 Fixed Income Fund........................................... 12,552,258 13,387,890 Bond Fund................................................... 4,101,030 3,473,071 Growth Fund................................................. 7,217,473 5,294,717 Value Fund.................................................. 6,724,665 8,242,683 International Equity Fund................................... 15,261,382 13,293,801 Overseas Equity Fund........................................ 3,870,413 3,196,874 Small Cap Equity Fund....................................... 10,039,746 88,116,965 Opportunity Fund............................................ 3,234,809 3,705,971
5. CONCENTRATION OF CREDIT RISK: The New York Tax-Free Bond Fund invests primarily in debt obligations issued by the State of New York and its respective political subdivisions, agencies and public authorities. The Fund is more susceptible to economic and political factors adversely affecting issuers of New York specific municipal securities than are municipal bond funds that are not concentrated in these issuers to the same extent. 6. FEDERAL INCOME TAX INFORMATION: At April 30, 2005, the cost, gross unrealized appreciation and gross unrealized depreciation on securities, for federal income tax purposes, were as follows:
NET UNREALIZED TAX UNREALIZED TAX UNREALIZED APPRECIATION FUND NAME TAX COST APPRECIATION (DEPRECIATION) (DEPRECIATION) --------- -------- ------------ -------------- -------------- New York Tax-Free Bond Fund..... $ 67,728,048 $ 2,940,082 $ (79,057) $ 2,861,025 Growth and Income Fund.......... 144,221,634 23,323,852 (3,232,344) 20,091,508 Mid-Cap Fund.................... 73,002,557 2,154,504 (1,774,619) 379,885
7. PAYMENTS FROM AFFILIATES: During the period ended April 30, 2005, HSBC reimbursed certain advisory fees and gross losses realized by some of the Funds related to violations of certain investment policies and limitations. HSBC also reimbursed the Funds for interest on these amounts. The amounts, along with the corresponding impact to the net expense ratio, net income ratio, and total return for the period ended April 30, 2005, are as follows: 64 HSBC INVESTOR FAMILY OF FUNDS HSBC INVESTOR FAMILY OF FUNDS -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ......................................................................
NET NET ADVISORY REALIZED EXPENSE INCOME TOTAL FUND FEES(1) LOSSES(2) INTEREST(3) TOTAL RATIO RATIO RETURN ---- ------- --------- ----------- ----- ----- ----- ------ Small Cap Equity Fund............ $ 87,516 $ -- $ 3,996 $ 91,512 0.07% 0.07% 0.08% Opportunity Fund Class A Shares......................... 8,719 -- 398 9,117 0.08% 0.08% 0.00% Opportunity Fund Class B Shares......................... 1,888 -- 86 1,974 0.08% 0.08% 0.00% Opportunity Fund Class C Shares......................... 115 -- 5 120 0.08% 0.08% 0.00% Limited Maturity Fund Class A Shares......................... 1,125 -- 51 1,176 0.16% 0.17% 0.10% Limited Maturity Fund Class B Shares......................... 4,927 -- 225 5,152 0.16% 0.17% 0.10% Limited Maturity Fund Class C Shares......................... 506 -- 23 529 0.16% 0.17% 0.10% Limited Maturity Fund Class Y Shares......................... 24,303 -- 1,110 25,413 0.16% 0.17% 0.10% Growth Fund Class A Shares....... 9,669 -- 441 10,110 0.10% 0.10% 0.08% Growth Fund Class B Shares....... 684 -- 31 715 0.10% 0.10% 0.08% Growth Fund Class C Shares....... 150 -- 7 157 0.10% 0.10% 0.08% Growth Fund Class Y Shares....... 9,192 -- 420 9,612 0.09% 0.09% 0.08% Value Fund Class A Shares........ 11,559 -- 528 12,087 0.10% 0.10% 0.07% Value Fund Class B Shares........ 1,019 -- 47 1,066 0.10% 0.10% 0.08% Value Fund Class C Shares........ 210 -- 10 220 0.10% 0.10% 0.08% Value Fund Class Y Shares........ 12,564 -- 574 13,138 0.10% 0.10% 0.07% Fixed Income Fund................ 118,164 -- 5,395 123,559 0.22% 0.23% 0.09% Bond Fund Class A................ 19,302 -- 881 20,183 0.21% 0.22% 0.09% Bond Fund Class B................ 7,219 -- 330 7,549 0.21% 0.22% 0.09% Bond Fund Class C................ 436 -- 20 456 0.22% 0.23% 0.09% Growth & Income Class A Shares... 334 -- 15 349 0.05% 0.05% 0.00% Growth & Income Class B Shares... 976 -- 45 1,021 0.05% 0.05% 0.00% Growth & Income Class C Shares... 11 -- -- 11 0.05% 0.05% 0.00% Growth & Income Class Y Shares... 43,776 -- 1,999 45,775 0.04% 0.04% 0.00% New York Tax-Free Bond Fund Class A Shares....................... 4,037 -- 184 4,221 0.02% 0.02% 0.00% New York Tax-Free Bond Fund Class B Shares....................... 1,969 -- 90 2,059 0.02% 0.02% 0.00% New York Tax-Free Bond Fund Class C Shares....................... 243 -- 11 254 0.02% 0.02% 0.00% New York Tax-Free Bond Fund Class Y Shares....................... 2,130 -- 97 2,227 0.02% 0.02% 0.00% Mid-Cap Fund Class A Shares...... 2,038 9,162 328 11,528 0.21% 0.24% 0.59% Mid-Cap Fund Class B Shares...... 7,788 35,018 1,253 44,059 0.21% 0.24% 0.61% Mid-Cap Fund Class C Shares...... 108 486 17 611 0.22% 0.24% 0.61% Mid-Cap Fund Class Y Shares...... 69,607 312,980 11,200 393,787 0.13% 0.15% 0.59% -------- -------- ------- -------- ---- ---- ----- Total $452,284 $357,646 $29,817 $839,747 -------- -------- ------- -------- -------- -------- ------- --------
--------- (1) Amounts relate to the reimbursement of advisory fees on the investment in certain investment companies and are included in 'Fees reduced by the Investment Adviser' (except for the Feeder Funds which are included in 'Expenses from portfolio') on the Statements of Operations. (2) Amounts relate to the reimbursement of realized losses on the disposal of the investment in certain investment companies and are included in 'Net realized gains (losses) from investment transactions' on the Statements of Operations. (3) Amounts relate to the reimbursement of computed interest on the amounts noted in (1) and (2) above and are included in 'Other income' (except for the Feeder Funds which are included in 'Investment income from portfolio') on the Statements of Operations. HSBC INVESTOR FAMILY OF FUNDS 65 HSBC INVESTOR FAMILY OF FUNDS -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ...................................................................... 8. INVESTMENT ADVISOR CONTRACT APPROVAL: Each Board of Trustees including the non-interested Trustees (the 'Board of Trustees' of HSBC Investor Funds, HSBC Advisor Funds and HSBC Portfolios approved renewal of the investment advisory agreement, and, where applicable, sub-advisory agreement (collectively, 'Advisory Contracts') with respect to each Trust's respective Funds or Portfolios at an in-person meeting held on December 13, 2004. In determining whether it was appropriate to approve each Advisory Contract, each Board of Trustees requested information, provided by the Adviser, and, where applicable, Sub-Adviser, that it believed to be reasonably necessary to reach its conclusion. The Board of Trustees carefully evaluated this information, and was advised by independent legal counsel with respect to its deliberations. Based on its review of the information requested and provided, each Board of Trustees determined that each Advisory Contract is consistent with the best interests of each Fund and its shareholders, and enables each Fund to receive high quality services at a cost that is appropriate, reasonable, and in the best interests of each Fund and its shareholders. Each Board of Trustees made these determinations on the basis of the following considerations, among others: -- The investment advisory fees payable to the Adviser and, where applicable, Sub-Adviser under each Advisory Contract are fair and reasonable in light of the services to be provided, the anticipated costs of these services, the profitability of the Adviser's relationship with each Fund, and the comparability of the proposed fee to fees paid by comparable mutual funds; -- Each Advisory Contract did not increase the level of current investment advisory fees or overall operating expenses of each Fund over historical fee and expense levels; -- The nature, quality and extent of the investment advisory services provided by the Adviser and, where applicable, Sub-Adviser to each Fund, in light of the high quality services provided to the other mutual funds advised by the Adviser and their historic performance, including achievement of stated investment objectives; -- The Adviser's and, where applicable, Sub-Adviser's representations regarding its staffing and capabilities to manage the Funds, including the retention of personnel with significant portfolio management experience; -- The Adviser's entrepreneurial commitment to the management and success of each Fund, which could entail a substantial commitment of resources to the successful operation of each Fund; and -- The overall high quality of the personnel, operations, financial condition, investment management capabilities, methodologies, and performance of the Adviser and, where applicable, Sub-Adviser. Accordingly, in light of the above considerations and such other factors and information it considered relevant, each Board of Trustees unanimously approved the respective Advisory Contract with respect to the Funds and Portfolios. New Advisory Contract between the Adviser and the Sub-Advisers to the Growth and Income Fund and Mid-Cap Fund ('collectively, the 'Agreements') were approved by the Board of Trustees of HSBC Investor Funds, with respect to the Growth and Income Fund and the Mid-Cap Fund, at a meeting of the Board of Trustees held on March 7-8, 2005. The Agreements were approved by the shareholders of the respective Funds at a meeting of the shareholders held on April 18, 2005. In determining whether to approve the Agreements, the Board of Trustees requested and received extensive materials and information from the Adviser to assist them in considering the approval of the Agreements. Based on its review of the information requested and provided, and the discussions with management of the Adviser, the Board of Trustees determined that approval of the Agreements was consistent with the best interests of each Fund and its shareholders, and would enable each Fund to receive high quality services at a cost that is appropriate, reasonable, and in the best interests of that Fund and its shareholders. The Board of Trustees made these determinations on the basis of the following factors, among others: -- Nature, Extent, and Quality of Services Provided by Adviser and Sub-Advisers. The Board of Trustees considered the nature, quality and extent of the investment advisory services to be provided by the Adviser and each Fund's Sub-Adviser, in light of the high quality services provided to the other manager-of-manager mutual funds advised by the Adviser, and each Fund's Sub-Adviser's historic performance managing accounts having similar investment objectives as the Funds. The Board of Trustees also considered the services provided by the Adviser such as supervision of Fund operations and compliance and regulatory filings as well as disclosures to shareholders, general oversight of service providers and coordination of Fund marketing 66 HSBC INVESTOR FAMILY OF FUNDS HSBC INVESTOR FAMILY OF FUNDS -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ...................................................................... initiatives. The Board of Trustees considered the Adviser's entrepreneurial commitment to the management and success of the Funds, which could entail a substantial commitment of resources to the successful operation of the Funds, as well as the Adviser's agreement to waive 0.05% of its advisory fee for a period of at least one year with respect to each Fund. -- Investment Performance of the Fund, Adviser and Sub-Advisers. The Board of Trustees considered short- and long-term investment performance of each Fund over various periods of time as compared to a peer group of comparable funds, as well as each Fund's sub-adviser's historic performance managing accounts having similar investment objectives as the Fund. Additionally, the Trustees considered fee and expense information regarding each Fund's peer groups, noting in particular that the proposed combined advisory and sub-advisory fees were competitive with the advisory fees charged by other funds in each Fund's peer group. -- Costs of Services and Profits Realized by the Adviser. The Board of Trustees considered the Adviser's overall profitability and costs and an analysis of the estimated profitability to the Adviser from its relationship with the Funds. The Board of Trustees considered that the combined management fees under the Agreements would increase the investment advisory fees of the Funds by 0.05%, with respect to the Growth and Income Fund, and 0.20%, with respect to the Mid-Cap Fund, over historical fee levels (no increase with respect to the Growth and Income Fund and 0.15% with respect to the Mid-Cap Fund after giving effect to the Adviser's agreement to waive 0.05% of its advisory fee under the New Agreement), but concluded that the combined advisory fees payable to the Adviser and each Fund's Sub-Adviser are fair and reasonable in light of the services to be provided, the anticipated costs of these services, the profitability of the Adviser's relationship with the Fund, and the comparability of the proposed fee to fees paid by comparable mutual funds. -- Other Relevant Considerations -- Adviser Personnel. The Board of Trustees considered the Adviser's representations regarding the Adviser's manager-of-managers staffing and capabilities to oversee each Fund's Sub-Adviser and the sub-adviser's staffing and capabilities to manage the Fund. The Board of Trustees also considered the overall high quality of the personnel, operations, financial condition, investment management capabilities, methodologies, and performance of the Adviser and each Fund's Sub-Adviser. Accordingly, in light of the above considerations and such other factors and information it considered relevant, the Board of Trustees by a unanimous vote of those present in person at the meeting (including a separate vote of the Independent Trustees present in person at the meeting) approved the Agreements with respect to the Growth and Income Fund and the Mid-Cap Fund. HSBC INVESTOR FAMILY OF FUNDS 67 HSBC INVESTOR FAMILY OF FUNDS -------------------------------------------------------------------------------- TABLE OF SHAREHOLDER EXPENSES -- APRIL 30, 2005 (UNAUDITED) ...................................................................... As a shareholder of the HSBC Investor Funds, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases; redemption fees; and exchange fees; (2) ongoing costs, including management fees; distribution and shareholder servicing fees; interest expense; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the HSBC Investor Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from November 1, 2004 through April 30, 2005. ACTUAL EXPENSES The table below provides information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled 'Expenses Paid During Period' to estimate the expenses you paid on your account during this period.
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD 11/1/04 4/30/05 11/1/04 - 4/30/05 11/1/04 - 4/30/05 ------- ------- ----------------- ----------------- Limited Maturity Fund Class A $1,000.00 $1,002.50 $4.67 0.94% Class Y 1,000.00 1,002.70 3.43 0.69% Class B 1,000.00 997.70 8.37 1.69% Class C 1,000.00 998.70 8.38 1.69% Fixed Income Fund Advisor Shares 1,000.00 1,012.90 2.05 0.41% Bond Fund Class A 1,000.00 1,011.10 3.69 0.74% Class B 1,000.00 1,007.30 7.42 1.49% Class C 1,000.00 1,008.30 7.37 1.48% New York Tax-Free Bond Fund Class A 1,000.00 1,009.30 4.28 0.86% Class Y 1,000.00 1,010.60 3.04 0.61% Class B 1,000.00 1,005.60 8.01 1.61% Class C 1,000.00 1,005.60 8.01 1.61% Growth Fund Class A 1,000.00 1,004.90 5.47 1.10% Class Y 1,000.00 1,006.00 4.28 0.86% Class B 1,000.00 1,000.80 9.13 1.84% Class C 1,000.00 1,001.60 9.13 1.84% Value Fund Class A 1,000.00 1,059.40 5.62 1.10% Class Y 1,000.00 1,060.70 4.34 0.85% Class B 1,000.00 1,055.10 9.43 1.85% Class C 1,000.00 1,055.70 9.43 1.85% Growth & Income Fund Class A 1,000.00 1,024.40 4.92 0.98% Class Y 1,000.00 1,025.30 3.72 0.74% Class B 1,000.00 1,021.80 8.67 1.73% Class C 1,000.00 1,020.10 8.67 1.73%
68 HSBC INVESTOR FAMILY OF FUNDS HSBC INVESTOR FAMILY OF FUNDS -------------------------------------------------------------------------------- TABLE OF SHAREHOLDER EXPENSES -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ......................................................................
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD 11/1/04 4/30/05 11/1/04 - 4/30/05 11/1/04 - 4/30/05 ------- ------- ----------------- ----------------- Mid-Cap Fund Class A 1,000.00 1,053.30 4.68 0.92% Class Y 1,000.00 1,054.00 3.72 0.93% Class B 1,000.00 1,050.20 8.44 1.66% Class C 1,000.00 1,048.70 8.43 1.66% International Equity Fund Advisor Shares 1,000.00 1,087.10 4.97 0.96% Overseas Fund Class A 1,000.00 1,082.90 8.47 1.68% Class B 1,000.00 1,078.00 12.31 2.39% Class C 1,000.00 1,078.10 12.31 2.39% Small Cap Equity Fund Advisor Shares 1,000.00 1,006.10 4.48 0.90% Opportunity Fund Class A 1,000.00 1,002.70 7.30 1.47% Class B 1,000.00 999.00 11.00 2.22% Class C 1,000.00 999.00 11.00 2.22%
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below provides information about hypothetical account values and hypothetical expenses based on each HSBC Investor Funds's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD 11/1/04 4/30/05 11/1/04 - 4/30/05 11/1/04 - 4/30/05 ------- ------- ----------------- ----------------- Limited Maturity Fund Class A $1,000.00 $1,020.13 $4.71 0.94% Class Y 1,000.00 1,020.37 3.46 0.69% Class B 1,000.00 1,016.41 8.45 1.69% Class C 1,000.00 1,016.41 8.45 1.69% Fixed Income Fund Advisor Shares 1,000.00 1,022.76 2.06 0.41% Bond Fund Class A 1,000.00 1,021.12 3.71 0.74% Class B 1,000.00 1,017.41 7.45 1.49% Class C 1,000.00 1,017.46 7.40 1.48%
-------------- * Expenses are equal to the average account value times the Fund's annualized expense ratio multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year. HSBC INVESTOR FAMILY OF FUNDS 69 HSBC INVESTOR FAMILY OF FUNDS -------------------------------------------------------------------------------- TABLE OF SHAREHOLDER EXPENSES -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ......................................................................
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD 11/1/04 4/30/05 11/1/04 - 4/30/05 11/1/04 - 4/30/05 ------- ------- ----------------- ----------------- New York Tax-Free Bond Fund Class A 1,000.00 1,020.53 4.31 0.86% Class Y 1,000.00 1,021.77 3.06 0.61% Class B 1,000.00 1,016.81 8.05 1.61% Class C 1,000.00 1,016.81 8.05 1.61% Growth Fund Class A 1,000.00 1,019.34 5.51 1.10% Class Y 1,000.00 1,020.53 4.31 0.86% Class B 1,000.00 1,015.67 9.20 1.84% Class C 1,000.00 1,015.67 9.20 1.84% Value Fund Class A 1,000.00 1,019.34 5.51 1.10% Class Y 1,000.00 1,020.58 4.26 0.85% Class B 1,000.00 1,015.62 9.25 1.85% Class C 1,000.00 1,015.62 9.25 1.85% Growth & Income Fund Class A 1,000.00 1,019.93 4.91 0.98% Class Y 1,000.00 1,021.12 3.71 0.74% Class B 1,000.00 1,016.22 8.65 1.73% Class C 1,000.00 1,016.22 8.65 1.73% Mid-Cap Fund Class A 1,000.00 1,020.23 4.61 0.92% Class Y 1,000.00 1,021.17 3.66 0.73% Class B 1,000.00 1,016.56 8.30 1.66% Class C 1,000.00 1,016.56 8.30 1.66% International Equity Fund Advisor Shares 1,000.00 1,020.03 4.81 0.96% Overseas Fund Class A 1,000.00 1,016.66 8.20 1.64% Class B 1,000.00 1,012.94 11.93 2.39% Class C 1,000.00 1,012.94 11.93 2.39% Small Cap Equity Fund Advisor Shares 1,000.00 1,020.33 4.51 0.90% Opportunity Fund Class A 1,000.00 1,017.50 7.35 1.47% Class B 1,000.00 1,013.79 11.08 2.22% Class C 1,000.00 1,013.79 11.08 2.22%
--------------- * Expenses are equal to the average account value times the Fund's annualized expense ratio multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year. 70 HSBC INVESTOR FAMILY OF FUNDS HSBC INVESTOR FAMILY OF FUNDS -------------------------------------------------------------------------------- SHAREHOLDER MEETING RESULTS (UNAUDITED) ...................................................................... At a Special Meeting of Shareholders held on March 21, 2005, a proposal to elect seven nominees was approved on behalf of the HSBC Investor Funds, HSBC Advisor Funds Trust and HSBC Investor Portfolios (collectively, the 'Trusts'). The number of shares voted for, against or abstained are as follows: HSBC INVESTOR FUNDS
FOR AGAINST ABSTAIN --- ------- ------- Stephen J. Baker........................................... 4,013,227,309 396,540,860 0 Richard A. Brealey......................................... 4,013,550,074 396,218,095 0 Frederick C. Chen.......................................... 4,012,525,304 397,242,865 0 Alan A. Parsow............................................. 4,013,083,446 396,684,723 0 Thomas F. Robards.......................................... 4,013,262,198 396,505,971 0 Larry M. Robbins........................................... 4,012,517,654 397,250,515 0 Michael Seely.............................................. 4,013,282,990 396,485,179 0
HSBC ADVISOR FUNDS TRUST
FOR AGAINST ABSTAIN --- ------- ------- Stephen J. Baker........................................... 520,578,380 72,648 0 Richard A. Brealey......................................... 520,578,380 72,648 0 Frederick C. Chen.......................................... 520,651,028 0 0 Alan A. Parsow............................................. 520,627,071 23,957 0 Thomas F. Robards.......................................... 520,627,071 23,957 0 Larry M. Robbins........................................... 520,622,082 28,946 0 Michael Seely.............................................. 520,627,071 23,957 0
HSBC INVESTOR PORTFOLIOS
FOR AGAINST ABSTAIN --- ------- ------- Stephen J. Baker........................................... 63,969,810 59,867 0 Richard A. Brealey......................................... 63,975,736 53,941 0 Frederick C. Chen.......................................... 63,984,270 45,407 0 Alan A. Parsow............................................. 63,978,788 50,889 0 Thomas F. Robards.......................................... 63,958,729 70,948 0 Larry M. Robbins........................................... 63,972,348 57,329 0 Michael Seely.............................................. 63,963,174 66,504 0
At a Special Meeting of Shareholders held on April 18, 2005, the following proposals were approved on behalf of the HSBC Investor Funds: (1) for shareholders of the HSBC Investor Growth and Income Fund (the 'Fund') prove a new investment advisory agreement between the Fund and HSBC Investments (USA) Inc. (formerly HSBC Asset Management (Americas) Inc.) (the 'Adviser'); (b) approve a new sub-advisory agreement between the Adviser and Transamerica Investment Management, LLC; and (c) authorize the Board of Trustees of the HSBC Investor Growth and Income Fund and the Adviser to select and change investment sub-advisers and to enter into or materially amend investment sub-advisory agreements without obtaining the approval of shareholders; (2) for shareholders of the HSBC Investor Mid-Cap Fund to (a) approve a new investment advisory agreement between the HSBC Investor Mid-Cap Fund the Adviser and (b) approve a new sub-advisory agreement between the Adviser and Munder Capital Management; and (c) authorize the Board of Trustees of the HSBC Investor Mid-Cap Fund and the Adviser to select and change investment sub-advisers and to enter into or materially amend investment sub-advisory agreements without obtaining the approval of shareholders; (3) for shareholders of the HSBC Investor Mid-Cap Fund, to approve the elimination of the fundamental investment restriction on purchasing securities issued by any registered investment company. HSBC INVESTOR FAMILY OF FUNDS 71 HSBC INVESTOR FAMILY OF FUNDS -------------------------------------------------------------------------------- SHAREHOLDER MEETING RESULTS -- (UNAUDITED) (CONTINUED) ...................................................................... Shares voted For, Against and Abstained from these proposals are as follows: HSBC INVESTOR GROWTH AND INCOME FUND:
FOR AGAINST ABSTAIN --- ------- ------- Approve new Investment Advisory Agreement between the Fund and the Adviser 16,746,954 7,707 0 Approve a new sub-advisory agreement between the Adviser and Transamerica Investment Management, LLC 16,750,927 2,411 1,323 Authorize the Board of Trustees of the HSBC Investor Growth and Income Fund and the Adviser to select and change investment sub-advisers and to enter into or materially amend investment sub-advisory agreements without obtaining the approval of shareholders 16,616,113 138,547 1
HSBC INVESTOR MID-CAP FUND:
FOR AGAINST ABSTAIN --- ------- ------- Approve new Investment Advisory Agreement between the Fund and the Adviser 12,080,980 0 55,696 Approve a new sub-advisory agreement between the Adviser and Munder Capital Management 12,136,513 58 105 Authorize the Board of Trustees of the HSBC Investor Mid-Cap Fund and the Adviser to select and change investment sub-advisers and to enter into or materially amend investment sub-advisory agreements without obtaining the approval of shareholders 1,345,423 10,790,941 312 Approve the elimination of the fundamental investment restriction on purchasing securities issued by any registered investment company 12,130,528 5,941 207
72 HSBC INVESTOR FAMILY OF FUNDS HSBC INVESTOR LIMITED MATURITY PORTFOLIO -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) ......................................................................
--------------------------------------------------------------- U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 57.2% PRINCIPAL AMOUNT($) VALUE($) --------- ---------- FEDERAL HOME LOAN BANK - 3.2% 5.75%, 5/15/12......................... 1,500,000 1,622,354 ---------- FEDERAL HOME LOAN MORTGAGE CORP. - 20.4% 5.125%, 7/15/12........................ 500,000 521,131 Pool #E92282, 5.50%, 11/1/17........... 1,363,320 1,397,494 Pool #C01188, 7.00%, 6/1/31............ 317,216 335,040 Pool #C75371, 6.00%, 1/1/33............ 744,708 765,191 Pool #2642, 4.50%, 10/25/27............ 3,000,000 3,019,797 Pool #A11010, 5.00%, 7/1/33............ 1,582,903 1,571,766 Pool #A14659, 6.50%, 10/1/33........... 1,092,885 1,136,063 Pool #E96835, 4.50%, 6/1/18............ 1,756,719 1,742,770 ---------- 10,489,252 ---------- FEDERAL NATIONAL MORTGAGE ASSOCIATION - 25.1% 4.625%, 5/1/13......................... 1,250,000 1,237,219 Pool #535063, 6.50%, 12/1/14........... 322,895 337,077 Pool #535933, 6.50%, 5/1/31............ 236,457 246,355 Pool #593187, 7.00%, 11/1/31........... 719,327 760,254 Pool #695204, 5.50%, 3/1/33............ 1,247,718 1,261,127 Pool #694985, 6.00%, 3/1/33............ 1,481,475 1,522,597 Pool #555427, 6.00%, 2/1/18............ 1,888,577 1,958,108 Pool #704439, 5.00%, 5/1/18............ 1,777,056 1,792,132 Pool #722985, 3.90%, 7/1/33 (a)........ 1,330,718 1,322,078 Pool #740686, 6.50%, 10/1/33........... 804,292 838,170 Pool #753474, 5.50%, 11/1/33........... 1,623,555 1,640,123 ---------- 12,915,240 ---------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 6.5% Pool #2687, 6.00%, 12/20/28............ 473,699 489,195 Pool #3415, 5.50%, 7/20/33............. 1,410,693 1,435,062 Pool #612373, 6.00%, 11/15/33.......... 1,353,341 1,397,172 ---------- 3,321,429 ---------- U.S. TREASURY NOTES - 2.0% 4.75%, 5/15/14......................... 1,000,000 1,042,422 ---------- TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (COST $29,390,697).......................... 29,384,675 ---------- --------------------------------------------------------------- CORPORATE OBLIGATIONS - 33.9% PRINCIPAL AMOUNT($) VALUE($) --------- ---------- AEROSPACE & DEFENSE - 1.5% Honeywell International, Inc., 5.125%, 11/1/06............................... 750,000 762,507 ---------- AUTO MANUFACTURERS - 1.7% DaimlerChrysler North American Holdings, 4.05%, 6/4/08............... 275,000 264,907 General Motors Corp., 7.20%, 1/15/11 (l)........................... 750,000 633,308 ---------- 898,215 ---------- BANKING - 2.0% Corestates Capital, 6.75%, 11/15/06.... 1,000,000 1,042,446 ---------- BROKERAGE SERVICES - 1.9% Merrill Lynch & Co., 3.375%, 9/14/07... 1,000,000 987,167 ---------- DIVERSIFIED MANUFACTURING OPERATIONS - 1.5% General Electric Co., 5.00%, 2/1/13.... 750,000 763,293 ---------- FINANCE - 14.3% Bear Stearns Co., 3.69%, 9/27/07 (a)... 1,500,000 1,518,223 CIT Group, Inc., 4.125%, 2/21/06....... 1,000,000 1,003,690 Countrywide Home Loans, Inc., 5.50%, 8/1/06................................ 1,250,000 1,272,158 Ford Motor Credit Co., 6.50%, 1/25/07............................... 750,000 749,925 General Motors Accept Corp., 4.50%, 7/15/06 (l)........................... 250,000 244,511 General Motors Accept Corp., 5.125%, 5/9/08 (l)............................ 500,000 466,058 Met Life Global Funding, 4.50%, 5/5/10 (b)............................ 550,000 549,189 MGIC Investment Corp., 6.00%, 3/15/07............................... 750,000 775,480 Morgan Stanley, 4.75%, 4/1/14.......... 750,000 724,910 ---------- 7,304,144 ---------- INSURANCE - 0.5% Travelers Property Casualty Corp., 6.375%, 3/15/33....................... 250,000 267,682 ---------- MEDIA - 4.7% AOL Time Warner Inc., 6.875%, 5/1/12... 500,000 556,831 Comcast Corp., 5.30%, 1/15/14.......... 1,000,000 1,015,022 Cox Communications, Inc., 7.125%, 10/1/12............................... 750,000 833,365 ---------- 2,405,218 ---------- REAL ESTATE - 1.1% EOP Operating LP, 7.00%, 7/15/11....... 500,000 552,319 ---------- RETAIL - 2.0% May Department Stores Co., 5.75%, 7/15/14............................... 1,000,000 1,035,435 ---------- TELECOMMUNICATIONS - 2.4% Deutsche Telekom International Finance, 3.875%, 7/22/08....................... 500,000 492,386 SBC Communications, Inc., 5.10%, 9/15/14............................... 750,000 750,340 ---------- 1,242,726 ---------- UTILITIES - 0.3% Pacific Gas & Electric Co., 3.82%, 4/3/06, Callable 7/3/05 @100 (a)...... 13,000 13,029 Pacific Gas & Electric Co., 4.80%, 3/1/14................................ 135,000 134,005 ---------- 147,034 ---------- TOTAL CORPORATE OBLIGATIONS (COST $17,467,756).......................... 17,408,186 ----------
See notes to financial statements. HSBC INVESTOR PORTFOLIOS 73 HSBC INVESTOR LIMITED MATURITY PORTFOLIO -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ......................................................................
--------------------------------------------------------------- ASSET BACKED SECURITIES - 7.2% SHARES OR PRINCIPAL AMOUNT($) VALUE($) --------- ---------- Carmax Auto Owner Trust, 3.00%, 9/15/08............................... 1,250,000 1,234,019 Honda Auto Receivables Owner Trust 03 1 A4, 2.48%, 7/18/08.................. 2,500,000 2,471,615 ---------- TOTAL ASSET BACKED SECURITIES (COST $3,749,599)........................... 3,705,634 ---------- --------------------------------------------------------------- INVESTMENT COMPANIES - 0.5% HSBC Investor Money Market Fund Class I Shares*............................... 261,369 261,369 ---------- TOTAL INVESTMENT COMPANIES (COST $261,369)............................. 261,369 ---------- --------------------------------------------------------------- SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN - 2.8% PRINCIPAL AMOUNT($) VALUE($) --------- ---------- Pool of various securities for HSBC Family of Funds - Note 2 - Security Loans................................. 1,410,000 1,410,000 ---------- TOTAL SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (COST $1,410,000)........................... 1,410,000 ---------- TOTAL INVESTMENTS (COST $52,273,399) - 101.6%.......... 52,175,886 ---------- ----------
-------------- Percentages indicated are based on net assets of $51,357,129. (a) Variable rate security. The interest rates on these securities are adjusted periodically to reflect then-current short-term interest rates. The rates presented in this report represent the rates that were in effect on April 30, 2005. However, each or these securities contains put or demand features that allow the fund to require the issuer to repurchase the security from the fund within various time periods, including daily, weekly, monthly, or semi-annually. (b) Security exempt from registration under Rule 144a of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. These securities have been deemed liquid by the investment advisor based on procedures approved by the Board of Trustees. (l) All or a portion of the security was on loan as of April 30, 2005. * Investment in affiliate. 74 HSBC INVESTOR PORTFOLIOS See notes to financial statements. HSBC INVESTOR FIXED INCOME PORTFOLIO -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 ......................................................................
---------------------------------------------------------------- U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 46.5% PRINCIPAL AMOUNT($) VALUE($) ---------- ----------- FEDERAL HOME LOAN BANK - 1.2% 2.875%, 9/15/06....................... 1,850,000 1,829,054 ----------- FEDERAL HOME LOAN MORTGAGE CORP. - 17.5% 5.75%, 4/15/08........................ 11,700,000 12,262,829 5.00%, 7/15/14........................ 1,300,000 1,343,450 Pool #2642, 4.50%, 10/25/27........... 7,000,000 7,046,194 Pool #2894, 5.50%, 12/15/24........... 4,348,173 4,429,350 Pool #C00368, 8.50%, 10/1/24.......... 52,731 57,677 Pool #C00922, 8.00%, 2/1/30........... 404,151 441,993 Pool #C54447, 7.00%, 7/1/31........... 59,191 62,517 Pool #C60712, 6.50%, 11/1/31.......... 848,644 883,534 Pool #C80387, 6.50%, 4/1/26........... 52,005 54,257 Pool #D62926, 6.50%, 8/1/25........... 37,891 39,542 Pool #G00951, 6.00%, 7/1/28........... 466,790 480,611 Pool #G01317, 7.00%, 10/1/31.......... 327,447 345,846 ----------- 27,447,800 ----------- FEDERAL NATIONAL MORTGAGE ASSOCIATION - 18.7% 3.125%, 12/15/07...................... 810,000 792,950 4.25%, 5/15/09........................ 2,700,000 2,709,377 5.50%, 3/15/11........................ 1,000,000 1,058,087 4.625%, 5/1/13........................ 3,300,000 3,266,258 5.50%, 8/1/33......................... 9,646,430 9,744,872 Pool #253438, 8.50%, 9/1/30........... 102,306 111,585 Pool #329530, 7.00%, 12/1/25.......... 125,431 133,064 Pool #329655, 7.00%, 11/1/25.......... 88,899 94,310 Pool #356905, 4.20%, 10/1/36 (a)...... 376,228 386,628 Pool #398958, 6.50%, 10/1/12.......... 122,324 127,661 Pool #535332, 8.50%, 4/1/30........... 86,084 93,943 Pool #535440, 8.50%, 8/1/30........... 99,905 108,967 Pool #535608, 9.50%, 4/1/30........... 177,649 196,993 Pool #548965, 8.50%, 7/1/30........... 88,493 96,519 Pool #568486, 7.00%, 1/1/31........... 74,988 79,275 Pool #573752, 8.50%, 2/1/31........... 83,879 91,487 Pool #575328, 6.50%, 4/1/31........... 119,988 125,011 Pool #623129, 6.50%, 1/1/32........... 1,474,004 1,535,705 Pool #651901, 6.00%, 8/1/32........... 1,565,698 1,609,466 Pool #695777, 5.50%, 4/1/33........... 1,531,693 1,548,153 Pool #722985, 3.90%, 7/1/33 (a)....... 3,792,547 3,767,924 Pool #803855, 5.50%, 12/1/34.......... 1,726,819 1,744,397 ----------- 29,422,632 ----------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 2.5% Pool #346406, 7.50%, 2/15/23.......... 109,542 118,398 Pool #412530, 7.50%, 12/15/25......... 146,991 158,369 Pool #587112, 6.00%, 6/15/32.......... 2,432,404 2,511,607 Pool #780804, 10.00%, 12/15/20........ 114,843 129,358 Pool #780826, 9.50%, 5/15/18.......... 65,303 72,142 Pool #781300, 7.00%, 6/15/31.......... 282,049 299,064 Pool #781345, 6.00%, 10/15/31......... 589,730 609,301 ----------- 3,898,239 ----------- U.S. TREASURY BONDS - 1.9% 6.00%, 2/15/26........................ 1,200,000 1,419,890 5.25%, 11/15/28....................... 1,500,000 1,636,172 ----------- 3,056,062 ----------- ---------------------------------------------------------------- U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS, CONT'D. PRINCIPAL AMOUNT($) VALUE($) ---------- ----------- U.S. TREASURY NOTES - 4.7% 1.50%, 3/31/06........................ 3,000,000 2,949,843 2.75%, 6/30/06........................ 1,300,000 1,289,590 4.00%, 2/15/14........................ 3,115,000 3,078,616 4.25%, 8/15/14........................ 95,000 95,401 ----------- 7,413,450 ----------- TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (COST $72,076,626)......................... 73,067,237 ----------- ---------------------------------------------------------------- CORPORATE OBLIGATIONS - 32.8% AUTO MANUFACTURERS - 0.5% DaimlerChrysler North American Holdings, 4.05%, 6/4/08.............. 825,000 794,722 ----------- BUSINESS SERVICES - 0.7% Xerox Corp., 9.75%, 1/15/09........... 1,000,000 1,135,000 ----------- DIVERSIFIED MANUFACTURING OPERATIONS - 1.3% General Electric Co., 5.00%, 2/1/13... 2,000,000 2,035,448 ----------- FINANCE - 16.3% AIG SunAmerica Global Financing VI, 6.30%, 5/10/11 (b)................... 642,000 694,745 Capital One Bank, 5.125%, 2/15/14..... 725,000 719,336 CIT Group, Inc., 7.375%, 4/2/07....... 3,725,000 3,938,810 Citigroup, Inc., 5.625%, 8/27/12...... 2,500,000 2,634,237 Citigroup, Inc., 5.00%, 9/15/14....... 775,000 780,117 Farmers Exchange Capital, 7.05%, 7/15/28 (b).......................... 388,000 409,926 Farmers Insurance Exchange, 8.625%, 5/1/24 (b)........................... 238,000 293,644 Florida Windstorm, 7.125%, 2/25/19 (b).................................. 608,000 719,489 Ford Motor Credit Co., 6.50%, 1/25/07.............................. 800,000 799,920 Ford Motor Credit Co., 7.00%, 10/1/13.............................. 850,000 764,979 General Electric Capital Corp., 8.75%, 5/21/07.............................. 1,300,000 1,417,802 General Electric Capital Corp., 6.875%, 11/15/10..................... 1,200,000 1,332,388 J.P. Morgan Chase & Co., 5.25%, 5/30/07.............................. 3,500,000 3,576,044 Met Life Global Funding, 4.50%, 5/5/10 (b).................................. 1,500,000 1,497,788 Metropolitan Life Insurance Co., 7.80%, 11/1/25 (b)................... 275,000 346,273 Morgan Stanley, 5.80%, 4/1/07......... 2,500,000 2,570,675 PNC Institutional Capital Trust A, 7.95%, 12/15/26, Callable 12/15/06 @ 103.98 (b)................ 187,000 203,993 Prudential Insurance Co., 8.30%, 7/1/25 (b)........................... 548,000 731,917 SLM Corp., 4.00%, 1/15/10............. 1,145,000 1,122,811 Travelers Property Casualty Corp., 7.75%, 4/15/26....................... 1,000,000 1,248,841 ----------- 25,803,735 ----------- MEDIA - 2.6% AOL Time Warner, Inc., 7.70%, 5/1/32............................... 1,500,000 1,848,408 Cox Communications, Inc., 7.125%, 10/1/12.............................. 2,000,000 2,222,306 ----------- 4,070,714 ----------- MEDICAL - 0.7% HCA, Inc., 6.95%, 5/1/12.............. 1,000,000 1,042,427 -----------
See notes to financial statements. HSBC INVESTOR PORTFOLIOS 75 HSBC INVESTOR FIXED INCOME PORTFOLIO -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (CONTINUED) ......................................................................
---------------------------------------------------------------- CORPORATE OBLIGATIONS, CONTINUED PRINCIPAL AMOUNT($) VALUE($) ---------- ----------- OIL & GAS - 2.7% Amerada Hess Corp., 6.65%, 8/15/11.... 1,550,000 1,666,582 Amerada Hess Corp., 7.875%, 10/1/29... 1,000,000 1,206,324 Anadarko Finance Co., 6.75%, 5/1/11... 1,250,000 1,390,020 ----------- 4,262,926 ----------- REAL ESTATE - 1.1% EOP Operating LP, 7.00%, 7/15/11...... 1,500,000 1,656,957 ----------- RETAIL - 2.1% May Department Stores Co., 5.75%, 7/15/14.............................. 1,525,000 1,579,038 May Department Stores Co., 6.65%, 7/15/14.............................. 1,650,000 1,770,681 ----------- 3,349,719 ----------- TELECOMMUNICATIONS - 3.4% Comcast Cable Communications Holdings, Inc., 8.375%, 3/15/13................ 2,200,000 2,670,828 SBC Communications, Inc., 5.10%, 9/15/14.............................. 1,500,000 1,500,680 Sprint Capital Corp., 8.75%, 3/15/32.............................. 850,000 1,142,977 ----------- 5,314,485 ----------- TRANSPORT -- RAIL - 0.6% Burlington North Santa Fe, 7.57%, 1/2/21............................... 329,167 388,720 Union Pacific Corp., 6.85%, 1/2/19.... 451,336 500,351 ----------- 889,071 ----------- UTILITIES - 0.8% Pacific Gas & Electric Co., 4.80%, 3/1/14............................... 480,000 476,461 Pacific Gas & Electric Co., 6.05%, 3/1/34............................... 350,000 373,991 RAS Laffan Liquid Natural Gas, 8.29%, 3/15/14 (b).......................... 348,000 405,491 ----------- 1,255,943 ----------- TOTAL CORPORATE OBLIGATIONS (COST $49,719,478)......................... 51,611,147 ----------- ---------------------------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS - 3.8% Banc of America Commercial Mortgage, Inc. 00 2 A2, 7.20%, 5/15/10......... 675,000 748,311 Chase Commercial Mortgage Securities Corp. 99 2 A2, 7.20%, 1/15/32........ 700,000 775,141 DLJ Mortgage Acceptance Corp. IO 97 CF1 S, 0.91%, 5/15/30 (a) (b) (c).... 597,801 8,572 Fannie Mae IO 00 16 PS, 5.75%, 10/25/29 (a) (c)..................... 122,464 7,855 Fannie Mae IO 01 4 SA, 4.58%, 2/17/31 (a) (c)...................... 407,746 37,995 Fannie Mae IO 200 32 SV, 5.63%, 3/18/30 (a) (c)...................... 69,384 3,371 Fannie Mae IO 270 2, 8.50%, 9/1/23 (c).................................. 89,608 17,553 Fannie Mae IO 296 2, 8.00%, 4/1/24 (c).................................. 99,513 18,542 Fannie Mae IO 306 2, 8.00%, 5/1/30 (c).................................. 138,543 28,997 FHA Weyerhauser, 7.43%, 1/1/24 (d).... 79,098 79,351 First Union-Chase Commercial Mortgage 99 C2 A2, 6.645%, 6/15/31............ 597,000 640,613 Freddie Mac IO 1534 K, 4.40%, 6/15/23 (a) (c)...................... 268,286 20,940 Freddie Mac IO 2141 SD, 5.20%, 4/15/29 (a) (c)...................... 194,745 19,888 Freddie Mac IO 2247 SC, 4.55%, 8/15/30 (a) (c)...................... 136,406 6,477 ---------------------------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS, CONTINUED PRINCIPAL AMOUNT($) VALUE($) ---------- ----------- GE Capital Commercial Mortgage Corp. 01 1 A1 6.08%, 5/15/33............... 257,662 268,448 GMAC Commercial Mortgage Securities, Inc. 98 C2 A2, 6.42%, 5/15/35........ 587,000 620,165 GMAC Commercial Mortgage Securities, Inc. IO 96 C1 X2, 2.80%, 10/15/28 (a) (c)..................... 310,938 5,968 Government National Mortgage Association IO 99 29 SD, 5.03%, 3/16/26 (a) (c)...................... 47,818 774 Government National Mortgage Association IO 99 30 S, 5.63%, 8/16/29 (a) (c)...................... 137,736 12,109 Government National Mortgage Association IO 99 30 SA, 5.03%, 4/16/29 (a) (c)...................... 182,843 12,955 Government National Mortgage Association IO 99 32 SB, 5.03%, 7/16/27 (a) (c)...................... 82,339 3,014 GS Mortgage Securities Corp. IO 97 GL X2, 0.90%, 7/13/30 (a) (c)........... 370,754 6,211 LB-UBS Commercial Mortgage Trust 00 C3 A1, 7.95%, 7/15/09............. 220,035 232,214 LB-UBS Commercial Mortgage Trust 00 C4 A2, 7.37%, 8/15/26............. 600,000 674,434 PNC Mortgage Acceptance Corp. 00 C2 A2, 7.30%, 10/12/33.................. 600,000 669,444 Ryland Mortgage Securities Corp. 94 4 C1, 4.30%, 9/25/30, (a).............. 382,462 381,613 Salomon Brothers Mortgage Securities VII 00 C3 A2, 6.59%, 12/18/33........ 650,000 706,983 ----------- TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST $5,993,677)........ 6,007,938 ----------- ---------------------------------------------------------------- ASSET BACKED SECURITIES - 7.4% Citibank Credit Card Issuance Trust 00 A3, 6.875%, 11/16/09................. 1,115,000 1,190,861 Connecticut RRB Special Purpose Trust CL&P-1 01 1 A5, 6.21%, 12/30/11...... 700,000 756,848 Daimler Chrysler Auto Trust, 3.28%, 12/8/09.............................. 1,500,000 1,469,430 Detroit Edison Securitization Funding LLC 01 1 A3, 5.875%, 3/1/10.......... 357,000 367,529 Detroit Edison Securitization Funding LLC 01 1 A5, 6.42%, 3/1/15........... 417,000 464,194 MBNA Master Credit Card Trust 00 E A, 7.80%, 10/15/12...................... 600,000 694,917 MBNA Master Credit Card Trust 99 B A, 5.90%, 8/15/11....................... 527,000 558,833 Peco Energy Transition Trust 00 A A3, 7.625%, 3/1/10....................... 600,000 667,796 Peco Energy Transition Trust 01 A A1, 6.52%, 12/31/10...................... 550,000 603,526 PSE&G Transition Funding LLC 01 1 A6, 6.61%, 6/15/15....................... 355,000 399,984 Union Acceptance Corp. 01 C B, 4.73%, 11/9/09.............................. 2,500,000 2,518,097 WFS Financial Owner Trust, 3.35%, 4/17/09.............................. 2,000,000 1,980,447 ----------- TOTAL ASSET BACKED SECURITIES (COST $11,266,987)................... 11,672,462 -----------
76 HSBC INVESTOR PORTFOLIOS See notes to financial statements. HSBC INVESTOR FIXED INCOME PORTFOLIO -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (CONTINUED) ......................................................................
---------------------------------------------------------------- MUNICIPAL BONDS - 1.6% SHARES OR PRINCIPAL AMOUNT($) VALUE($) ---------- ----------- URBAN AND COMMUNITY DEVELOPMENT - 1.6% Indianapolis Indiana Local Public Improvement, 3.00%, 10/15/05......... 1,500,000 1,497,585 Louisiana Local Government Environmental Facilities & Community Development (LOC AMBAC), 6.30%, 7/1/30............................... 850,000 954,516 ----------- TOTAL MUNICIPAL BONDS (COST $2,432,456).................... 2,452,101 ----------- ---------------------------------------------------------------- INVESTMENT COMPANIES - 1.0% HSBC Investor Money Market Fund Class I Shares*............................ 1,497,650 1,497,650 TOTAL INVESTMENT COMPANIES (COST $1,497,650).......................... 1,497,650 ----------- TOTAL INVESTMENTS (COST $142,986,874) - 93.1%......... 146,308,535 ----------- -----------
-------------- Percentages indicated are based on net assets of $157,134,324. (a) Variable rate security. The interest rates on these securities are adjusted periodically to reflect then-current short-term interest rates. The rates presented in this report represents the rates that were in effect on April 30, 2005. However, each of these securities contains put or demand features that allow the fund to require the issuer to repurchase the security from the fund within various time periods, including daily, weekly, monthly, or semi-annually. (b) Security exempt from registration under Rule 144a of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. These securities have been deemed liquid by the Investment Advisor based on procedures approved by the Board of Trustees. (c) Interest-only represents securities that entitle holders to receive only interest payments on the underlying mortgages. The yield to maturity of an Interest-Only is extremely sensitive to the rate of principal payments on the underlying mortgage assets. A rapid (slow) rate of principal repayments may have an adverse (positive) effect on yield to maturity. The principal amount shown is the notional amount of the underlying mortgages. (d) Rule 144a, section 4(2) or other security which is restricted as to resale to institutional investors. The Investment Advisor, using Board approved procedures, has deemed these securities to be illiquid. Represents .05% of net assets. * Investment in affiliate. LOC -- Letter of Credit See notes to financial statements. HSBC INVESTOR PORTFOLIOS 77 HSBC INVESTOR GROWTH PORTFOLIO ------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) ......................................................................
----------------------------------------------------------------- COMMON STOCKS - 95.8% SHARES VALUE($) ----------- ----------- AEROSPACE & DEFENSE - 2.0% General Dynamics Corp. ............... 9,800 1,029,490 ----------- BIOTECHNOLOGY - 1.2% Gilead Sciences, Inc. (a)............. 16,050 595,455 ----------- BUSINESS SERVICES - 1.0% Paychex, Inc. ........................ 17,050 521,730 ----------- CHEMICALS - 2.0% Monsanto Co. ......................... 17,400 1,019,988 ----------- COMPUTER SOFTWARE - 8.5% Automatic Data Processing, Inc. ...... 28,200 1,225,008 EMC Corp. (a)......................... 38,750 508,400 Microsoft Corp. ...................... 82,600 2,089,780 Oracle Corp. (a)...................... 48,350 558,926 ----------- 4,382,114 ----------- COMPUTERS - 2.9% Dell, Inc. (a)........................ 42,300 1,473,309 ----------- CONSUMER PRODUCTS - 4.5% Avon Products, Inc. .................. 12,200 488,976 Harman International Industries, Inc.. 4,500 353,610 The Procter & Gamble Co. ............. 27,350 1,481,003 ----------- 2,323,589 ----------- DIVERSIFIED MANUFACTURING OPERATIONS - 5.0% Danaher Corp. ........................ 12,950 655,659 General Electric Co. ................. 52,512 1,900,934 ----------- 2,556,593 ----------- ELECTRONIC COMPONENTS & SEMICONDUCTORS - 2.9% Linear Technology Corp. .............. 13,450 480,703 Maxim Integrated Products, Inc. ...... 6,150 230,010 Microchip Technology, Inc. ........... 27,900 794,592 ----------- 1,505,305 ----------- FINANCIAL SERVICES - 17.7% American Express Co. ................. 10,300 542,810 Franklin Resources, Inc. ............. 15,350 1,054,238 Goldman Sachs Group, Inc. ............ 16,650 1,778,054 Legg Mason, Inc. ..................... 14,750 1,045,185 Moody's Corp. ........................ 5,250 431,235 Robert Half International, Inc. ...... 20,700 513,774 SLM Corp. ............................ 46,800 2,229,551 T. Rowe Price Group, Inc. ............ 9,000 496,530 The Chicago Mercantile Exchange....... 5,350 1,046,032 ----------- 9,137,409 ----------- HEALTH CARE - 9.9% DENTSPLY International, Inc. ......... 8,200 448,212 Medtronic, Inc. ...................... 23,900 1,259,530 Stryker Corp. ........................ 7,900 383,545 UnitedHealth Group, Inc. ............. 20,300 1,918,552 Zimmer Holdings, Inc. (a)............. 13,050 1,062,531 ----------- 5,072,370 ----------- HOTELS & LODGING - 2.2% Las Vegas Sands Corp. (a)............. 7,700 288,365 Starwood Hotels & Resorts Worldwide, Inc. ................................ 15,700 853,138 ----------- 1,141,503 ----------- INTERNET RELATED - 4.9% eBay, Inc. (a)........................ 13,550 429,942 Google, Inc. Class A (a) (l).......... 7,250 1,595,000 Yahoo!, Inc. (a)...................... 14,300 493,493 ----------- 2,518,435 ----------- ----------------------------------------------------------------- COMMON STOCKS, CONTINUED SHARES OR PRINCIPAL AMOUNT($) VALUE($) ----------- ----------- LEISURE - 1.6% Carnival Corp. ....................... 16,650 813,852 ----------- MEDICAL & HEALTH PRODUCTS - 2.7% Biomet, Inc. ......................... 11,100 429,459 Genentech, Inc. (a)................... 13,629 966,841 ----------- 1,396,300 ----------- OIL & GAS - 6.5% Baker Hughes, Inc. ................... 11,200 494,144 Schlumberger Ltd. .................... 17,800 1,217,698 Smith International, Inc. ............ 27,750 1,614,495 ----------- 3,326,337 ----------- PHARMACEUTICALS - 8.7% Alcon, Inc. .......................... 8,600 834,200 Allergan, Inc. ....................... 5,050 355,470 Johnson & Johnson..................... 30,050 2,062,331 Pfizer, Inc. ......................... 45,250 1,229,442 ----------- 4,481,443 ----------- RETAIL - 8.4% Advance Auto Parts (a)................ 10,150 541,503 Home Depot, Inc. ..................... 28,150 995,666 Kohl's Corp. (a)...................... 5,700 271,320 Staples, Inc. ........................ 35,925 685,090 Walgreen Co. ......................... 42,517 1,830,781 ----------- 4,324,360 ----------- TELECOMMUNICATIONS - 1.4% Cisco Systems, Inc. (a)............... 40,200 694,656 ----------- TRANSPORTATION - 1.8% Expeditors International of Washington, Inc. .................... 10,900 535,299 FedEx Corp. .......................... 4,550 386,523 ----------- 921,822 ----------- TOTAL COMMON STOCKS (COST $47,859,846)................... 49,236,060 ----------- ----------------------------------------------------------------- INVESTMENT COMPANIES - 5.7% HSBC Investor Money Market Fund Class I Shares*...................... 2,946,216 2,946,216 ----------- TOTAL INVESTMENT COMPANIES (COST $2,946,216).................... 2,946,216 ----------- ----------------------------------------------------------------- SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN - 2.2% Pool of various securities for HSBC Family of Funds - Note 2 - Security Loans................................ 1,120,000 1,120,000 ----------- TOTAL SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (COST $1,120,000).......................... 1,120,000 ----------- TOTAL INVESTMENTS (COST $51,926,062) - 103.7%......... 53,302,276 ----------- -----------
-------------- Percentages indicated are based on net assets of $51,408,092. (a) Represents non-income producing security. (l) Security, or portion of the security was on loan as of April 30, 2005. * Investment in affiliate. 78 HSBC INVESTOR PORTFOLIOS See notes to financial statements. HSBC INVESTOR VALUE PORTFOLIO -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) ...................................................................... ----------------------------------------------------------------- COMMON STOCKS - (96.5%)
SHARES VALUE($) --------- ---------- AEROSPACE & DEFENSE - 8.0% Lockheed Martin Corp. ................... 28,000 1,706,600 Northrop Grumman Corp. .................. 32,600 1,787,784 Raytheon Co. ............................ 41,300 1,553,293 ---------- 5,047,677 ---------- BANKING - 5.0% Bank of America Corp. ................... 32,100 1,445,784 Wells Fargo & Co. ....................... 28,800 1,726,272 ---------- 3,172,056 ---------- BUSINESS SERVICES - 2.3% Pitney Bowes, Inc. ...................... 32,100 1,435,512 ---------- COMPUTER SOFTWARE - 6.1% Computer Associates International, Inc. ................................... 108,100 2,907,890 Microsoft Corp. ......................... 37,200 941,160 ---------- 3,849,050 ---------- CONGLOMERATES - 2.3% Loews Corp. ............................. 20,700 1,467,216 ---------- CONSUMER PRODUCTS - 9.0% Albertson's, Inc. (l).................... 50,400 997,416 Altria Group, Inc. ...................... 42,200 2,742,578 Kimberly-Clark Corp. .................... 31,000 1,935,950 ---------- 5,675,944 ---------- DIVERSIFIED MANUFACTURING OPERATIONS - 2.1% Ingersoll-Rand Co. ...................... 17,400 1,337,538 ---------- ELECTRONIC COMPONENTS & SEMICONDUCTORS - 3.3% Agilent Technologies, Inc. (a)........... 101,700 2,110,275 ---------- FINANCIAL SERVICES - 16.8% Citigroup, Inc. ......................... 36,707 1,723,761 Countrywide Financial Corp. ............. 76,600 2,772,154 Fannie Mae............................... 44,000 2,373,800 Genworth Financial, Inc., Class A........ 58,000 1,621,100 J.P. Morgan Chase & Co. ................. 39,150 1,389,434 MGIC Investment Corp. ................... 11,800 696,200 ---------- 10,576,449 ---------- GAS & ELECTRIC UTILITY - 1.6% Dominion Resources, Inc. ................ 13,000 980,200 ---------- HEALTH CARE - 2.9% Aetna, Inc. ............................. 24,800 1,819,576 ---------- INSURANCE - 7.4% AON Corp. ............................... 77,200 1,609,620 Radian Group, Inc. ...................... 34,900 1,550,607 The Hartford Financial Services Group, Inc. ................................... 21,100 1,527,007 ---------- 6,506,810 ----------
----------------------------------------------------------------- COMMON STOCKS, CONTINUED SHARES OR PRINCIPAL AMOUNT($) VALUE($) --------- ---------- MEDIA - 4.8% Liberty Media Corp., Class A (a)....... 100,350 1,007,514 Viacom, Inc., Class B.................. 58,100 2,011,422 ---------- 3,018,936 ---------- MINING - 5.1% Barrick Gold Corp. .................... 93,700 2,091,384 Rio Tinto PLC ADR...................... 9,300 1,121,580 ---------- 3,212,964 ---------- OIL & GAS - 10.5% Burlington Resources, Inc. ............ 12,800 622,208 ConocoPhillips......................... 10,891 1,141,921 Kerr-McGee Corp. (l)................... 46,700 3,623,920 Noble Energy, Inc. (l)................. 19,200 1,231,104 ---------- 6,619,153 ---------- PAPER PRODUCTS - 1.5% International Paper Co. ............... 26,800 918,972 ---------- STEEL - 1.0% POSCO ADR.............................. 13,800 628,314 ---------- TELECOMMUNICATIONS - 4.9% BellSouth Corp. ....................... 36,050 954,965 Motorola, Inc. ........................ 93,500 1,434,290 Sprint Corp. .......................... 30,600 681,156 ---------- 3,070,411 ---------- TRANSPORTATION - 1.9% Union Pacific Corp. ................... 18,700 1,195,491 ---------- TOTAL COMMON STOCKS (COST $55,566,154).................... 60,822,967 ---------- --------------------------------------------------------------- INVESTMENT COMPANIES - 3.4% HSBC Investor Money Market Fund Class I Shares*....................... 2,132,825 2,132,825 ---------- TOTAL INVESTMENT COMPANIES (COST $2,132,825)..................... 2,132,825 ----------
--------------------------------------------------------------- SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN - 9.2% Pool of various securities for HSBC Family of Funds - Note 2 - Security Loans................................. 5,766,400 5,766,400 ---------- TOTAL SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (COST $5,766,400)............. 5,766,400 ---------- TOTAL INVESTMENTS (COST $63,465,379) - 109.1%.......... 68,722,192 ---------- ----------
-------------- Percentages indicated are based on net assets of $62,995,877. (a) Represents non-income producing security. (l) All or a portion of the security was on loan as of April 30, 2005. * Investment in Affiliate ADR -- American Depository Receipt See notes to financial statements. HSBC INVESTOR PORTFOLIOS 79 HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) ......................................................................
----------------------------------------------------------------- COMMON STOCKS - 97.7% SHARES VALUE($) ----------- ----------- AUSTRALIA - 0.6% BlueScope Steel Ltd................... 218,300 1,312,660 ----------- BELGIUM - 2.0% Delhaize Group........................ 51,900 3,427,881 KBC Bankverzekeringsholding........... 11,300 894,167 ----------- 4,322,048 ----------- BRAZIL - 1.7% Brasken SA............................ 10,000,000 395,443 CIA de Saneamento Basico do Estado de Sao Paulo............................ 7,710,000 401,769 Gerdau SA ADR......................... 50,100 488,475 Petroleo Brasileiro SA ADR............ 27,700 1,017,974 Unibanco GDR.......................... 13,000 431,470 Usinas Siderurgicas de Minas Gerais SA................................... 30,200 607,830 Votorantim Celulos Papel SA ADR....... 34,250 376,408 ----------- 3,719,369 ----------- CANADA - 4.0% Alcan, Inc............................ 62,900 2,040,324 Bank of Nova Scotia................... 109,800 3,490,939 Manulife Financial Corp............... 67,400 3,090,283 ----------- 8,621,546 ----------- CHINA - 0.1% China Petroleum & Chemical Corp....... 592,000 232,870 ----------- FINLAND - 1.0% Nokia Corp., Class A.................. 69,100 1,101,872 Sampo OYJ, Class A.................... 77,000 1,074,355 ----------- 2,176,227 ----------- FRANCE - 10.1% Assurances Generales de France........ 44,600 3,571,564 BNP Paribas SA........................ 15,800 1,042,795 Credit Agricole SA.................... 75,900 1,968,020 France Telecom SA..................... 32,800 964,427 Renault SA............................ 38,100 3,193,850 Sanofi-Aventis........................ 57,800 5,119,153 Societe Generale...................... 33,700 3,360,118 Total SA.............................. 12,500 2,780,055 ----------- 21,999,982 ----------- GERMANY - 8.7% Continental AG........................ 51,400 3,796,080 E.ON AG............................... 42,300 3,588,431 Fresenius Medical Care AG............. 22,800 1,817,804 HeidelbergCement AG................... 51,261 2,977,677 MAN AG................................ 66,000 2,781,756 Muenchener Rueckversicher AG.......... 14,700 1,619,897 Siemens AG............................ 14,400 1,061,312 Volkswagen AG......................... 35,200 1,466,781 ----------- 19,109,738 ----------- HUNGARY - 0.4% MOL Magyar Olaj - es Gazipari Rt. GDR.................................. 9,600 790,080 ----------- IRELAND - 0.7% Depfa Bank PLC (a).................... 96,470 1,485,220 ----------- ISRAEL - 0.5% Bank Hapoalim Ltd..................... 286,600 989,085 ----------- ----------------------------------------------------------------- COMMON STOCKS, CONTINUED SHARES VALUE($) ----------- ----------- ITALY - 1.9% ENI SpA............................... 166,500 4,187,374 ----------- JAPAN - 22.6% Aiful Corp............................ 29,700 2,210,223 Aiful Corp. - W/I (a)................ 14,850 1,083,683 Canon, Inc............................ 108,300 5,634,129 Hitachi, Ltd.......................... 144,000 845,170 Honda Motor Co., Ltd.................. 96,600 4,649,834 ITOCHU Corp........................... 317,000 1,562,173 Japan Tobacco, Inc.................... 240 3,091,394 JFE Holdings, Inc..................... 104,700 2,905,695 Leopalace21 Corp...................... 29,300 447,401 Nippon Meat Packers, Inc.............. 89,000 1,120,258 Nippon Mining Holdings, Inc........... 360,000 2,178,509 Nissan Motor Co., Ltd................. 281,100 2,766,778 Promise Co., Ltd...................... 49,000 3,163,002 Sanyo Shinpan Finance Co., Ltd........ 26,900 1,817,132 Sega Sammy Holdings, Inc.............. 25,000 1,465,127 Sony Corp............................. 12,510 461,949 Sumitomo Mitsui Financial Group, Inc.................................. 718 4,635,260 Takeda Chemical Industries, Ltd....... 21,500 1,046,496 The Tokyo Electric Power Co., Inc..... 90,600 2,175,092 Toyota Motor Co....................... 82,000 2,975,978 UFJ Holdings, Inc..................... 216 1,135,461 UNY Co., Ltd.......................... 146,000 1,690,515 ----------- 49,061,259 ----------- LUXEMBOURG - 2.3% Arcelor............................... 243,180 4,931,008 ----------- NETHERLANDS - 3.4% ABN AMRO Holding NV................... 44,453 1,078,044 ING Groep NV.......................... 190,468 5,248,936 Royal Dutch Petroleum Co.............. 16,800 980,548 ----------- 7,307,528 ----------- NORWAY - 0.1% Yara International ASA (a)............ 13,700 182,832 ----------- PHILLIPINES - 0.3% Philippine Long Distance Telephone Co................................... 21,000 541,601 ----------- SINGAPORE - 2.4% Flextronics International Ltd. (a).... 162,400 1,810,760 Singapore Telecommunications Ltd...... 2,104,630 3,289,187 ----------- 5,099,947 ----------- SOUTH AFRICA - 1.6% ABSA Group Ltd........................ 100,500 1,287,509 Sanlam Ltd............................ 615,600 1,167,663 Telkom South Africa Ltd............... 60,000 1,046,865 ----------- 3,502,037 ----------- SOUTH KOREA - 2.6% Hyundai Motor Co., Ltd................ 16,300 888,408 Industrial Bank of Korea GDR (a)...... 88,300 759,380 Kookmin Bank ADR...................... 14,600 624,150 POSCO ADR............................. 34,200 1,557,126 Shinhan Financial Group Co., Ltd. ADR.................................. 35,150 1,848,890 ----------- 5,677,954 -----------
80 HSBC INVESTOR PORTFOLIOS See notes to financial statements. HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ......................................................................
----------------------------------------------------------------- COMMON STOCKS, CONTINUED SHARES VALUE($) ----------- ----------- SPAIN - 3.8% Altadis SA............................ 19,800 839,104 Endesa SA............................. 155,800 3,404,801 Repsol SA............................. 155,000 3,931,261 ----------- 8,175,166 ----------- SWEDEN - 1.3% Svenska Cellusoa AB, B shares......... 77,800 2,713,750 ----------- SWITZERLAND - 2.1% Credit Suisse Group................... 106,800 4,494,474 ----------- TAIWAN - 1.5% China Steel Corp., GDR................ 41,400 844,560 Compal Electronics, Inc............... 214,321 1,005,166 Far Eastone Telecommunications Co., Ltd. (a)............................. 21,400 393,154 Gigabyte Technology Co., Ltd.......... 257,250 254,976 Taiwan Semiconductor Manufacturing Co., Ltd............................. 467,755 779,042 ----------- 3,276,898 ----------- THAILAND - 0.3% PTT Public Company Ltd................ 121,400 640,568 ----------- TURKEY - 0.3% Ford Otomotiv Sanayi AS............... 80,700 543,288 ----------- UNITED KINGDOM - 21.4% Aviva PLC............................. 346,270 3,914,129 Barclays PLC.......................... 110,200 1,137,187 BP Amoco PLC.......................... 692,800 7,064,512 George Wimpey PLC..................... 244,600 1,828,382 Glaxosmithkline PLC................... 99,400 2,511,954 HBOS PLC.............................. 183,000 2,714,762 Intercontinental Hotels Group PLC..... 163,929 1,955,901 Mitchells & Butlers PLC............... 119,800 687,118 Punch Taverns PLC..................... 185,000 2,247,061 ----------------------------------------------------------------- COMMON STOCKS, CONTINUED SHARES VALUE($) ----------- ----------- Royal & Sun Alliance Insurance Group PLC.................................. 736,000 1,070,898 Royal Bank Of Scotland Group PLC...... 93,500 2,824,255 Sainsbury PLC......................... 410,062 2,216,615 Shell Transport & Trading Co., PLC.... 160,000 1,437,929 Tate & Lyle PLC....................... 235,000 2,093,319 Taylor Woodrow PLC.................... 361,600 1,985,113 Trinity Mirror PLC.................... 145,600 1,775,509 Vodafone Group PLC.................... 1,461,053 3,821,016 Whitbread PLC......................... 169,400 2,757,480 Xstrata PLC........................... 146,000 2,523,710 ----------- 46,566,850 ----------- TOTAL COMMON STOCKS (COST $183,418,796).................. 211,661,359 ----------- ----------------------------------------------------------------- INVESTMENT COMPANIES - 0.4% Investors Bank Trust Cash Reserve..... 782,865 782,865 ----------- TOTAL INVESTMENT COMPANIES (COST $782,865)...................... 782,865 ----------- ----------------------------------------------------------------- RIGHTS & WARRANTS - 0.0% UNITED KINGDOM - 0.0% TI Automotive Ltd., Class A (a) (b)... 190,000 0 ----------- TOTAL RIGHTS & WARRANTS (COST $0)............................ 0 ----------- TOTAL INVESTMENTS (COST $184,201,661) - 98.1%......... 212,444,224 ----------- -----------
-------------- Percentages indicated are based on net assets of $216,511,206. (a) Represents non-income producing security. (b) Represents illiquid security. ADR -- American Depositary Receipt GDR -- Global Depositary Receipt See notes to financial statements. HSBC INVESTOR PORTFOLIOS 81 HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO ------------------------------------------------------------------------------- SCHEDULE PORTFOLIO INVESTMENTS -- APRIL 30, 2005 ......................................................................
PERCENT OF INDUSTRY NET ASSETS -------- ---------- Automotive.................................................. 9.4% Banking & Financial Services................................ 22.9% Building & Construction..................................... 0.9% Building Materials.......................................... 2.2% Chemicals................................................... 0.7% Computer Related............................................ 1.7% Diversified Manufacturing Operations........................ 0.1% Drugs -- Medical............................................ 4.4% Electrical.................................................. 2.8% Electronic Components & Semiconductors...................... 4.1% Food & Beverage............................................. 2.5% Insurance................................................... 7.2% Leisure..................................................... 1.2% Metals & Mining............................................. 5.3% Manufacturing............................................... 5.1% Multimedia.................................................. 0.8% Oil & Gas................................................... 13.1% Paper Products.............................................. 1.4% Real Estate................................................. 0.2% Restaurants................................................. 1.3% Retail...................................................... 3.4% Telecommunications.......................................... 5.2% Tobacco..................................................... 1.8% Investment Companies........................................ 0.4% ------ Total Investments........................................... 98.1% ------
82 HSBC INVESTOR PORTFOLIOS See notes to financial statements. HSBC INVESTOR SMALL CAP EQUITY PORTFOLIO -------------------------------------------------------------------------------- SCHEDULE OF PORTFOLIO INVESTMENTS -- APRIL 30, 2005 (UNAUDITED) ......................................................................
----------------------------------------------------------------- COMMON STOCKS - 98.2% SHARES VALUE($) --------- ----------- ADVERTISING - 2.7% aQuantive, Inc. (a)..................... 203,400 2,257,740 Monster Worldwide, Inc. (a)............. 209,300 4,815,993 ----------- 7,073,733 ----------- BANKING - 5.7% Amegy Bancorporation, Inc............... 248,000 4,116,800 East West Bancorp., Inc................. 153,700 4,936,844 Wintrust Financial Corp................. 128,100 5,881,071 ----------- 14,934,715 ----------- BIOTECHNOLOGY - 4.7% Celgene Corp. (a) (l)................... 328,100 12,438,271 ----------- COMMERCIAL SERVICES - 1.9% Alliance Data Systems Corp. (a)......... 127,100 5,134,840 ----------- COMPUTER SOFTWARE - 5.6% CheckFree Corp. (a)..................... 83,300 3,055,444 SRA International, Inc. Class A (a)..... 105,800 6,914,030 Transaction Systems Architects, Inc. Class A (a)............................ 232,900 4,828,017 ----------- 14,797,491 ----------- CONSULTING SERVICES - 1.5% LECG Corp. (a).......................... 190,400 3,946,992 ----------- DIVERSIFIED MANUFACTURING OPERATIONS - 9.7% Actuant Corp. Class A (a)............... 105,800 4,506,022 AMETEK, Inc............................. 223,200 8,452,584 IDEX Corp............................... 140,800 5,244,800 Roper Industries, Inc................... 106,800 7,227,156 ----------- 25,430,562 ----------- EDUCATIONAL SERVICES - 1.5% Career Education Corp. (a).............. 127,100 3,996,024 ----------- ELECTRONIC COMPONENTS & SEMICONDUCTORS - 8.2% ATMI, Inc. (a).......................... 154,700 3,544,951 Power Integrations, Inc. (a)............ 179,500 3,904,125 Semtech Corp. (a)....................... 196,400 3,317,196 Thermo Electron Corp. (a)............... 232,900 5,817,842 Varian Semiconductor Equipment Associates, Inc. (a)................... 137,800 5,138,562 ----------- 21,722,676 ----------- ENVIRONMENTAL SERVICES - 6.9% Pioneer Natural Resources Co............ 147,500 5,997,350 Republic Services, Inc. Class A......... 206,700 7,151,820 Waste Connections, Inc. (a)............. 147,000 5,177,340 ----------- 18,326,510 ----------- FINANCIAL SERVICES - 1.0% CapitalSource, Inc. (a)................. 124,900 2,622,900 ----------- HEALTH CARE - 14.7% Advanced Medical Optics, Inc. (a) (l)... 149,500 5,528,510 Cytyc Corp. (a)......................... 215,200 4,585,912 Kinetic Concepts, Inc. (a).............. 97,800 6,009,810 Manor Care, Inc......................... 216,400 7,216,940 Omnicare, Inc........................... 207,700 7,200,959 PacifiCare Health Systems, Inc. (a)..... 133,900 8,001,864 ----------- 38,543,995 ----------- HOSPITALS - 2.7% Triad Hospitals, Inc. (a)............... 139,800 7,164,750 ----------- ----------------------------------------------------------------- COMMON STOCKS, CONTINUED SHARES OR PRINCIPAL AMOUNT($) VALUE($) --------- ----------- HUMAN RESOURCES - 0.0% Employee Solutions, Inc. (a) (b)...... 2,483 1 ----------- INTERNET RELATED - 2.0% Concur Technologies, Inc. (a)......... 361,100 3,007,963 RSA Security, Inc. (a)................ 218,200 2,343,468 ----------- 5,351,431 ----------- OIL & GAS - 12.8% Chesapeake Energy Corp................ 389,300 7,490,132 Consol Energy, Inc.................... 139,800 6,044,952 Denbury Resources, Inc. (a)........... 144,800 4,595,952 Massey Energy Company................. 139,500 5,037,345 Peabody Energy Corp................... 122,200 5,348,694 Smith International, Inc.............. 87,400 5,084,932 ----------- 33,602,007 ----------- PHARMACEUTICALS - 2.3% Santarus, Inc. (a).................... 455,400 1,949,112 The Medicines Co. (a)................. 190,992 4,077,679 ----------- 6,026,791 ----------- RAILROAD EQUIPMENT - 1.8% Wabtec Corp........................... 242,000 4,840,000 ----------- RETAIL - 5.8% Foot Locker, Inc...................... 152,100 4,054,986 P.F. Chang's China Bistro, Inc. (a)... 57,500 3,192,400 PETsMART, Inc......................... 75,100 2,001,415 Weight Watchers International, Inc. (a).................................. 49,400 2,062,450 Williams-Sonoma, Inc. (a)............. 119,000 3,985,310 ----------- 15,296,561 ----------- STEEL PRODUCERS - 1.9% United States Steel Corp.............. 114,500 4,896,020 ----------- TELECOMMUNICATIONS - 2.1% Scientific-Atlanta, Inc............... 135,800 4,152,764 Sonus Networks, Inc. (a) (l).......... 372,300 1,280,712 ----------- 5,433,476 ----------- TELECOMMUNICATIONS -- EQUIPMENT - 1.7% Polycom, Inc. (a)..................... 300,900 4,591,733 ----------- TRANSPORTATION - 1.0% OMI Corp.............................. 149,400 2,717,586 ----------- TOTAL COMMON STOCKS (COST $223,275,648).................. 258,889,065 ----------- --------------------------------------------------------------- SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN - 2.1% Pool of various securities for HSBC Family of Funds - Note 2 - Security Loans................................ 5,583,000 5,583,000 ----------- TOTAL SECURITIES HELD AS COLLATERAL FOR SECURITIES ON LOAN (COST $5,583,000).................... 5,583,000 ----------- TOTAL INVESTMENTS (COST $228,858,648) - 100.3%........ 264,472,065 ----------- -----------
-------------- Percentages indicated are based on net assets of $263,743,734. (a) Represents non-income producing security. (b) Represents illiquid security. (l) All or a portion of the security was on loan as of April 30, 2005. See notes to financial statements. HSBC INVESTOR PORTFOLIOS 83 HSBC INVESTOR PORTFOLIOS ------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES -- APRIL 30, 2005 (UNAUDITED) ......................................................................
---------------------------------------------------------------------------------------------------------------------------- LIMITED MATURITY FIXED INCOME GROWTH PORTFOLIO PORTFOLIO PORTFOLIO ------------------ ------------------ ------------------ ASSETS: Investments in non-affiliates, at value* $51,914,517 $144,810,885 $50,356,060 Investments in affiliates, at value 261,369 1,497,650 2,946,216 Cash -- -- 87,263 Interest and dividends receivable 446,479 1,394,385 23,968 Receivable for investments sold 998,825 13,035,308 178,637 Prepaid expenses and other assets 755 2,375 1,288 ----------- ------------ ----------- TOTAL ASSETS 53,621,945 160,740,603 53,593,432 ----------- ------------ ----------- ......................................................................................................................... LIABILITIES: Payable for investments purchased 819,113 3,523,271 1,030,518 Payable for collateral received on loaned securities 1,410,000 -- 1,120,000 Accrued expenses and other liabilities: Investment management 17,710 52,379 21,133 Administration 2,898 8,323 1,629 Fund Accounting 6,508 9,693 7,908 Other 8,587 12,613 4,152 ----------- ------------ ----------- TOTAL LIABILITIES 2,264,816 3,606,279 2,185,340 ----------- ------------ ----------- ......................................................................................................................... NET ASSETS: Applicable to investors' beneficial interest $51,357,129 $157,134,324 $51,408,092 ----------- ------------ ----------- ----------- ------------ ----------- Total investments, at cost $52,273,399 $142,986,874 $51,926,062 ----------- ------------ ----------- ----------- ------------ -----------
-------------- * The Limited Maturity Portfolio, Growth Portfolio, Value Portfolio and Small Cap Equity Portfolio include securities on loan of $1,374,826; $1,100,000; $5,610,668 and $5,289,770, respectively. 84 HSBC INVESTOR PORTFOLIOS See notes to financial statements. HSBC INVESTOR PORTFOLIOS ------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES -- APRIL 30, 2005 (UNAUDITED) ......................................................................
---------------------------------------------------------------------------------------------------------------------------- INTERNATIONAL VALUE EQUITY SMALL CAP EQUITY PORTFOLIO PORTFOLIO PORTFOLIO ------------------ ------------------ ------------------ ASSETS: Investments in non-affiliates, at value* $66,589,367 $212,444,224 $264,472,065 Investments in affiliates, at value 2,132,825 -- -- Cash -- -- -- Foreign currency -- 1,076,632 -- Interest and dividends receivable 85,669 944,334 19,742 Receivable for investments sold -- 2,653,997 6,369,288 Reclaims receivable -- 13,014 -- Prepaid expenses and other assets 2,094 3,776 7,035 ----------- ------------ ------------ TOTAL ASSETS 68,809,955 217,135,977 270,868,130 ----------- ------------ ------------ ......................................................................................................................... LIABILITIES: Cash overdraft 7,714 299,597 1,211,961 Payable for investments purchased -- -- 121,815 Payable for collateral received on loaned securities 5,766,400 -- 5,583,000 Accrued expenses and other liabilities: Investment management 27,228 181,234 180,971 Administration 1,988 10,397 12,691 Fund Accounting 8,346 11,190 8,191 Other 2,402 122,353 5,767 ----------- ------------ ------------ TOTAL LIABILITIES 5,814,078 624,771 7,124,396 ----------- ------------ ------------ ......................................................................................................................... NET ASSETS: Applicable to investors' beneficial interest $62,995,877 $216,511,206 $263,743,734 ----------- ------------ ------------ ----------- ------------ ------------ Total investments, at cost $63,465,379 $184,201,661 $228,858,648 ----------- ------------ ------------ ----------- ------------ ------------ Foreign currency, at cost $ 1,073,904 ------------ ------------
-------------- * The Limited Maturity Portfolio, Growth Portfolio, Value Portfolio and Small Cap Equity Portfolio include securities on loan of $1,374,826; $1,100,000; $5,610,668 and $5,289,770, respectively. See notes to financial statements. HSBC INVESTOR PORTFOLIOS 85 HSBC INVESTOR PORTFOLIOS -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED) ......................................................................
LIMITED MATURITY FIXED INCOME GROWTH PORTFOLIO PORTFOLIO PORTFOLIO ------------------- ------------------ ------------------- INVESTMENT INCOME: Interest $1,216,007 $ 3,902,469 $ 0 Dividends -- 1,242 479,031 Dividend income from affiliated investments 10,095 68,924 22,018 Foreign tax withholding -- -- -- Income from securities lending 3,735 1,896 26 ---------- ----------- --------- TOTAL INVESTMENT INCOME 1,229,837 3,974,531 501,075 ---------- ----------- --------- ........................................................................................................................ EXPENSES: Investment management 116,000 325,973 130,666 Administration 11,007 30,917 10,004 Accounting 28,457 35,725 24,996 Custodian 10,161 23,410 15,493 Trustee 726 1,963 552 Other 2,628 6,865 1,860 ---------- ----------- --------- TOTAL EXPENSES BEFORE FEE REDUCTIONS 168,979 424,853 183,571 ---------- ----------- --------- Fees reduced by Investment Advisor (47,925) (179,106) (25,804) ---------- ----------- --------- Net Expenses 121,054 245,747 157,767 ---------- ----------- --------- ........................................................................................................................ NET INVESTMENT INCOME (LOSS) 1,108,783 3,728,784 343,308 ---------- ----------- --------- ........................................................................................................................ NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: Net realized gains from investments 37,089 4,210,884 600,255 Change in unrealized appreciation/depreciation from investments (923,847) (5,738,464) (615,654) ---------- ----------- --------- ........................................................................................................................ Net realized/unrealized gains (losses) from investments (886,758) (1,527,580) (15,399) ---------- ----------- --------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 222,025 $ 2,201,204 $ 327,909 ---------- ----------- --------- ---------- ----------- ---------
86 HSBC INVESTOR PORTFOLIOS See notes to financial statements. HSBC INVESTOR PORTFOLIOS ------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED) ......................................................................
INTERNATIONAL VALUE EQUITY SMALL CAP EQUITY PORTFOLIO PORTFOLIO PORTFOLIO ------------------- ------------------ ------------------ INVESTMENT INCOME: Interest $ 0 $ 2,724 $ 0 Dividends 574,983 2,907,089 633,558 Dividend income from affiliated investments 40,737 -- -- Foreign tax withholding (1,546) (294,255) -- Income from securities lending 250 -- 3,270 ---------- ----------- ------------ TOTAL INVESTMENT INCOME 614,424 2,615,558 636,828 ---------- ----------- ------------ ......................................................................................................................... EXPENSES: Investment management 169,368 791,086 1,271,129 Administration 12,162 43,721 60,396 Accounting 24,252 46,654 24,355 Custodian 16,351 106,695 37,424 Trustee 675 2,528 5,289 Other 2,178 9,517 3,645 ---------- ----------- ------------ TOTAL EXPENSES BEFORE FEE REDUCTIONS 224,986 1,000,201 1,402,238 ---------- ----------- ------------ Fees reduced by Investment Advisor (32,590) (118,382) Net Expense 192,396 1,283,856 ......................................................................................................................... NET INVESTMENT INCOME (LOSS) 422,028 1,615,357 (647,028) ---------- ----------- ------------ ......................................................................................................................... NET REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: Net realized gains from investments 799,929 11,290,683 27,694,991 Change in unrealized appreciation/depreciation from investments 2,645,658 6,609,257 (18,820,074) ---------- ----------- ------------ ......................................................................................................................... Net realized/unrealized gains (losses) from investments 3,445,587 17,899,940 8,874,917 ---------- ----------- ------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $3,867,615 $19,515,297 $ 8,227,889 ---------- ----------- ------------ ---------- ----------- ------------
See notes to financial statements. HSBC INVESTOR PORTFOLIOS 87 HSBC INVESTOR PORTFOLIOS ------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS ......................................................................
LIMITED MATURITY PORTFOLIO FIXED INCOME PORTFOLIO ---------------------------------------------------------------------------------- FOR THE SIX FOR THE SIX MONTHS ENDED FOR THE MONTHS ENDED FOR THE APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED (UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004 --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income $ 1,108,783 $ 2,685,767 $ 3,728,784 $ 8,004,774 Net realized gains from investments 37,089 350,688 4,210,884 1,234,753 Change in unrealized appreciation/depreciation from investments (923,847) 195,249 (5,738,464) 533,676 ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 222,025 3,231,704 2,201,204 9,773,203 ------------ ------------ ------------ ------------ ............................................................................................................................. Proceeds from contributions 3,166,203 19,537,952 18,435,850 47,385,442 Value of withdrawals (15,727,888) (43,561,156) (32,962,114) (91,249,818) ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS FROM TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST (12,561,685) (24,023,204) (14,526,264) (43,864,376) ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS (12,339,660) (20,791,500) (12,325,060) (34,091,173) ............................................................................................................................. NET ASSETS: Beginning of period 63,696,789 84,488,289 169,459,384 203,550,557 ------------ ------------ ------------ ------------ End of period $ 51,357,129 $ 63,696,789 $157,134,324 $169,459,384 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
88 HSBC INVESTOR PORTFOLIOS See notes to financial statements. HSBC INVESTOR PORTFOLIOS ------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ......................................................................
GROWTH VALUE PORTFOLIO PORTFOLIO --------------------------------------------------------------------------------------- FOR THE SIX FOR THE SIX MONTHS ENDED FOR THE MONTHS ENDED FOR THE APRIL 30, 2005 PERIOD ENDED APRIL 30, 2005 YEAR ENDED (UNAUDITED) OCTOBER 31, 2004 (a) (UNAUDITED) OCTOBER 31, 2004 (a) --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income $ 343,308 $ 11,209 $ 422,028 $ 325,186 Net realized gains (losses) from investments 600,255 (1,576,336) 799,929 506,578 Change in unrealized appreciation/depreciation from investments (615,654) 1,991,868 2,645,658 2,611,156 ----------- ----------- ------------ ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 327,909 426,741 3,867,615 3,442,920 ----------- ----------- ------------ ----------- ........................................................................................................................... Proceeds from contributions 8,265,585 53,535,759 8,181,805 64,069,267 Value of withdrawals (7,225,606) (4,282,296) (10,467,540) (6,098,190) ----------- ----------- ------------ ----------- CHANGE IN NET ASSETS FROM TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST 1,399,979 49,253,463 (2,285,735) 57,971,077 ----------- ----------- ------------ ----------- CHANGE IN NET ASSETS 1,727,888 49,680,204 1,581,880 61,413,997 ........................................................................................................................... NET ASSETS: Beginning of period 49,680,204 -- 61,413,997 -- ----------- ----------- ------------ ----------- End of period $51,408,092 $49,680,204 $ 62,995,877 $61,413,997 ----------- ----------- ------------ ----------- ----------- ----------- ------------ -----------
-------------- (a) Growth Portfolio commenced operations on May 7, 2004. Value Portfolio commenced operations on May 7, 2004. See notes to financial statements. HSBC INVESTOR PORTFOLIOS 89 HSBC INVESTOR PORTFOLIOS ------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) ......................................................................
INTERNATIONAL EQUITY SMALL CAP EQUITY PORTFOLIO PORTFOLIO ------------------------------------ -------------------------------------- FOR THE SIX FOR THE SIX MONTHS ENDED FOR THE MONTHS ENDED FOR THE APRIL 30, 2005 YEAR ENDED APRIL 30, 2005 YEAR ENDED (UNAUDITED) OCTOBER 31, 2004 (UNAUDITED) OCTOBER 31, 2004 --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITIES: OPERATIONS: Net investment income (loss) $ 1,615,357 $ 3,284,091 $ (647,028) $ (1,984,985) Net realized gains from investments 11,290,683 32,731,371 27,694,991 41,945,235 Change in unrealized appreciation/depreciation from investments 6,609,257 3,338,622 (18,820,074) (17,175,725) ------------- ------------ ------------- ------------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 19,515,297 39,354,084 8,227,889 22,784,525 ------------- ------------ ------------- ------------- ................................................................................................................................ Proceeds from contributions 20,660,980 44,516,479 16,130,849 67,718,326 Value of withdrawals (43,690,226) (65,649,972) (119,948,277) (157,351,034) ------------- ------------ ------------- ------------- CHANGE IN NET ASSETS FROM TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST (23,029,246) (21,133,493) (103,817,428) (89,632,708) ------------- ------------ ------------- ------------- CHANGE IN NET ASSETS (3,513,949) 18,220,591 (95,589,539) (66,848,183) ................................................................................................................................ NET ASSETS: Beginning of period 220,025,155 201,804,564 359,333,273 426,181,456 ------------- ------------ ------------- ------------- End of period $ 216,511,206 $220,025,155 $ 263,743,734 $ 359,333,273 ------------- ------------ ------------- ------------- ------------- ------------ ------------- -------------
90 HSBC INVESTOR PORTFOLIOS See notes to financial statements. HSBC INVESTOR PORTFOLIOS ------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS ......................................................................
RATIOS/SUPPLEMENTARY DATA --------------------------------------------------------------- RATIO OF NET NET ASSETS AT RATIO OF INVESTMENT END OF EXPENSES INCOME (LOSS) PERIOD TO AVERAGE TO AVERAGE PORTFOLIO TOTAL RETURN(c) (000'S) NET ASSETS(b) NET ASSETS(b) TURNOVER --------------------------------------------------------------------------------------------------------------------------------- LIMITED MATURITY PORTFOLIO Period ended October 31, 2001 (a) $115,180 0.55% 4.97% 102.01% Year ended October 31, 2002 149,815 0.51% 4.60% 44.04% Year ended October 31, 2003 4.42% 84,488 0.53% 3.70% 98.42% Year ended October 31, 2004 4.48% 63,697 0.57% 3.54% 50.06% Six months ended April 30, 2005 (Unaudited) 0.42% 51,357 0.42% 3.82% 13.36% --------------------------------------------------------------------------------------------------------------------------------- FIXED INCOME PORTFOLIO Year ended October 31, 2000 $226,366 0.51% 6.74% 440.49% Year ended October 31, 2001 242,914 0.53% 6.53% 341.26% Year ended October 31, 2002 385,802 0.48% 5.14% 77.82% Year ended October 31, 2003 5.80% 203,551 0.48% 4.38% 70.91% Year ended October 31, 2004 5.56% 169,459 0.52% 4.31% 34.88% Six months ended April 30, 2005 (Unaudited) 1.36% 157,134 0.31% 4.57% 47.83% --------------------------------------------------------------------------------------------------------------------------------- GROWTH PORTFOLIO Period ended October 31, 2004 (a) (0.86%) $ 49,680 0.72% 0.06% 53.08% Six months ended April 30, 2005 (Unaudited) 0.77% 51,408 0.61% 1.30% 43.34% --------------------------------------------------------------------------------------------------------------------------------- VALUE PORTFOLIO Period ended October 31, 2004 (a) 6.12% $ 61,414 0.71% 1.28% 10.33% Six months ended April 30, 2005 (Unaudited) 6.20% 62,996 0.60% 1.31% 9.47% --------------------------------------------------------------------------------------------------------------------------------- INTERNATIONAL EQUITY PORTFOLIO Year ended October 31, 2000 $332,325 0.84% 0.53% 27.81% Year ended October 31, 2001 275,848 0.90% 0.54% 26.90% Year ended October 31, 2002 256,616 0.91% 0.63% 31.63% Year ended October 31, 2003 23.70% 201,805 0.96% 1.00% 68.51% Year ended October 31, 2004 20.29% 220,025 0.94% 1.53% 106.11% Six months ended April 30, 2005 (Unaudited) 8.65% 216,511 0.87% 1.40% 10.99% --------------------------------------------------------------------------------------------------------------------------------- SMALL CAP EQUITY PORTFOLIO Year ended October 31, 2000 $369,166 0.97% (0.60%) 79.51% Year ended October 31, 2001 265,573 0.98% (0.65%) 52.47% Year ended October 31, 2002 266,217 0.99% (0.78%) 103.90% Year ended October 31, 2003 33.30% 426,181 0.91% (0.62%) 152.05% Year ended October 31, 2004 5.93% 359,333 0.88% (0.52%) 81.75% Six months ended April 30, 2005 (Unaudited) 0.60% 263,744 0.81% (0.41%) 31.89% ---------------------------------------------------------------------------------------------------------------------------------
(a) Limited Maturity Portfolio commenced operations on January 24, 2001. Value Portfolio commenced operations on May 7, 2004. Growth Portfolio commenced operations on May 7, 2004. (b) Annualized for periods less than one year. (c) Not annualized for periods less than one year. See notes to financial statements. HSBC INVESTOR PORTFOLIOS 91 HSBC INVESTOR PORTFOLIOS -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) ...................................................................... 1. ORGANIZATION: The HSBC Investor Portfolios (the 'Portfolio Trust'), is an open-end management investment company organized as a master trust fund under the laws of the State of New York on November 1, 1994. The Portfolios operate as master funds in master-feeder arrangements. The Declaration of Trust permits the Board of Trustees to issue an unlimited number of beneficial interests in the Portfolios. The Portfolio Trust contains the following (individually a 'Portfolio,' collectively the 'Portfolios'):
PORTFOLIO SHORT NAME --------- ---------- HSBC Investor Limited Maturity Portfolio Limited Maturity Portfolio HSBC Investor Fixed Income Portfolio Fixed Income Portfolio HSBC Investor Growth Portfolio Growth Portfolio HSBC Investor Value Portfolio Value Portfolio HSBC Investor International Equity Portfolio International Equity Portfolio HSBC Investor Small Cap Equity Portfolio Small Cap Equity Portfolio
The Portfolios are diversified series of the Portfolio Trust and are part of the HSBC Investor Family of Funds. Financial Statements for all other series of the HSBC Investor Family of Funds are published separately. Under the Portfolios' organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Portfolios. In addition, in the normal course of business, the Portfolios enter into contracts with their vendors and others that provide for general indemnifications. The Portfolios' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Portfolios. However, based on experience, the Portfolios expect that risk of loss to be remote. 2. SIGNIFICANT ACCOUNTING POLICIES: The following is a summary of the significant accounting policies followed by the Portfolios in the preparation of their financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America ('U.S.'). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates. SECURITIES VALUATION: Bonds and other fixed income securities (other than short-term obligations but including listed issues) are valued on the basis of valuations furnished by a pricing service, the use of which has been approved by the Portfolios' Board of Trustees. In making such valuations, the pricing service utilizes both dealer-supplied valuations and the use of matrix techniques which take into account appropriate factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics other than market data and without exclusive reliance upon quoted prices or exchanges or over-the-counter prices, since such valuations are believed to reflect more accurately the fair value of such securities. All debt portfolio securities with a remaining maturity of 60 days or less are valued at amortized cost. Under the amortized cost method, premium or discount, if any, is amortized or accreted, respectively, on a constant (straight-line) basis to the maturity of the security. The value of each equity security is based either on the last sale price on a national securities exchange, or in the absence of recorded sales, at the closing bid prices on such exchanges, or at the quoted bid price in the over-the-counter market. Securities or other assets for which market quotations are not readily available are valued by or at the direction of the Portfolios' Board of Trustees. Examples of potentially significant events that could affect the value of an individual security include corporate actions by the issuer, announcements by the issuer relating to its earnings or products, regulatory news, natural disasters and litigation. Examples of potentially significant events that could affect multiple securities held by a Portfolio include governmental actions, natural disasters and armed conflicts. In addition, if events materially affecting the value of foreign securities occur between the time when the exchange on which they are traded closes and the time when the Portfolios' net assets are calculated, such securities may be valued using fair 92 HSBC INVESTOR PORTFOLIOS HSBC INVESTOR PORTFOLIOS -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ...................................................................... value pricing in accordance with procedures adopted by the Trustees. Management identifies possible fluctuations in foreign securities by monitoring the rise or fall in the value of a designated benchmark index. In the event of a rise or fall greater than predetermined levels, the International Equity Portfolio may use a systematic valuation model provided by an independent third party to value its foreign securities. When the International Equity Portfolio uses fair value pricing, the value assigned to the International Equity Portfolio's foreign securities may not be the quoted or published prices of the investment on their primary markets or exchanges. SECURITIES TRANSACTIONS AND RELATED INCOME: Changes in holdings of portfolio securities are reflected no later than on the first business day following the trade date. However, for financial reporting purposes portfolio securities are reflected as of trade date. Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization or accretion of premium or discount. Dividend income is recorded on the ex-dividend date. FOREIGN CURRENCY TRANSLATION: The accounting records of the Portfolios are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the current rate of exchange to determine the value of investments, assets and liabilities. Purchases and sales of securities, and income and expenses are translated at the prevailing rate of exchange on the respective dates of such transactions. The Portfolios do not isolate the portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments and foreign currencies. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS: The Portfolios may enter into forward foreign currency exchange contracts in connection with planned purchases or sales of securities or to hedge the U.S. dollar value of portfolio securities denominated in a particular currency. The Portfolios could be exposed to risks if the counter-parties to the contracts are unable to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. The forward foreign currency exchange contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized gains or losses until the contract settlement date. FUTURES CONTRACTS: Each Portfolio may invest in futures contracts for the purpose of hedging their existing portfolio securities or securities it intends to purchase against fluctuations in fair value caused by changes in prevailing market interest rates. Upon entering into a futures contract, the Portfolio is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as 'variation margin,' are made or received by the Portfolio each day, depending on the daily fluctuations in the fair value of the underlying security. The Portfolio recognizes a gain or loss equal to the daily variation margin. Should market conditions move unexpectedly, the Portfolio may not achieve the anticipated benefits of the futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets. MORTGAGE DOLLAR ROLL TRANSACTIONS: The Fixed Income Portfolio may engage in dollar roll transactions with respect to mortgage securities issued by the Government National Mortgage Association, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. In a dollar roll transaction, the Portfolio sells a mortgage-backed security and simultaneously agrees to repurchase a similar security on a specified future date at an agreed upon price. During the roll period, the Portfolio will not be entitled to receive any interest or principal paid on the securities sold. The Portfolio is compensated for the lost interest on the securities sold by the difference between the sales price and the lower price for the future repurchase as well as by the interest earned on the reinvestment of the sales proceeds. The HSBC INVESTOR PORTFOLIOS 93 HSBC INVESTOR PORTFOLIOS -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ...................................................................... Portfolio may also be compensated by receipt of a commitment fee. When the Portfolio enters into a mortgage dollar roll transaction, liquid assets in an amount sufficient to pay for the future repurchase are segregated with the custodian. RESTRICTED SECURITIES: A restricted security is a security which has been purchased through a private offering and cannot be resold to the general public without prior registration under the Securities Act of 1933 (the '1933 Act') or pursuant to the resale limitations provided by Rule 144 under the 1933 Act, or an exemption from the registration requirements of the 1933 Act. Whether a restricted security is illiquid is determined pursuant to guidelines established by the Board of Trustees. Not all restricted securities are considered illiquid. At April 30, 2005, the HSBC Limited Maturity Portfolio and HSBC Fixed Income Portfolio held restricted securities representing 1.1% and 3.4% of net assets, respectively. The restricted securities held as of April 30, 2005 are identified below:
ACQUISITION PRINCIPAL SECURITY NAME ACQUISITION DATE COST ($) AMOUNT ($) VALUE ($) ------------- ---------------- -------- ---------- --------- LIMITED MATURITY PORTFOLIO Met Life Global Funding, 4.50%, 5/5/10 4/27/2005 548,416 550,000 549,189 FIXED INCOME PORTFOLIO AIG SunAmerica Global Financing VI, 6.30%, 5/10/11 5/2/2001 641,056 642,000 694,745 DLJ Mortgage Acceptance Corp. IO 97 CF1 S 0.91%, 5/15/30 5/16/1997 39,123 597,801 8,572 Farmers Exchange Capital, 7.05%, 7/15/28 1/27/1999 38,685 38,000 40,147 Farmers Exchange Capital, 7.05%, 7/15/28 7/16/1999 124,402 135,000 142,629 Farmers Exchange Capital, 7.05%, 7/15/28 11/7/2000 178,698 215,000 227,150 Farmers Insurance Exchange, 8.625%, 5/1/24 5/9/1997 238,210 238,000 293,644 FHA Weyerhauser, 7.43%, 1/1/24 3/28/2002 75,009 79,098 79,351 Florida Windstorm, 7.125%, 2/25/19 5/27/1999 7,910 8,000 9,467 Florida Windstorm, 7.125%, 2/25/19 8/7/2000 141,181 150,000 177,506 Florida Windstorm, 7.125%, 2/25/19 11/28/2000 426,945 450,000 532,516 Metropolitan Life Insurance Co., 7.80%, 11/1/25 6/2/1999 26,548 25,000 31,479 Metropolitan Life Insurance Co., 7.80%, 11/1/25 1/18/2001 250,747 250,000 314,793 Met Life Global Funding, 4.50%, 5/5/10 4/27/2005 1,495,680 1,500,000 1,497,788 PNC Institutional Capital Trust A, 7.95%, 12/15/26 12/23/1996 84,979 87,000 94,906 PNC Institutional Capital Trust A, 7.95%, 12/15/26 4/8/1997 95,171 100,000 109,087 Prudential Insurance Co., 8.30%, 7/1/25 7/31/1998 59,555 53,000 70,788 Prudential Insurance Co., 8.30%, 7/1/25 1/27/1999 215,152 180,000 240,411 Prudential Insurance Co., 8.30%, 7/1/25 9/23/1999 157,330 150,000 200,342 Prudential Insurance Co., 8.30%, 7/1/25 2/3/2000 170,517 165,000 220,376 RAS Laffan Liquid Natural Gas, 8.29%, 3/15/14 11/24/1998 41,156 48,000 55,929 RAS Laffan Liquid Natural Gas, 8.29%, 3/15/14 11/25/1998 176,670 200,000 233,041 RAS Laffan Liquid Natural Gas, 8.29%, 3/15/14 3/19/2001 100,301 100,000 116,521
SECURITY LOANS: To generate additional income, the Portfolios may lend up to 33 1/3% of their respective assets pursuant to agreements requiring that the loan be continuously secured by any combination of cash, U.S. Government or U.S. Government agency securities, equal at all times to at least 100% of the fair value. The Portfolios receive payments from borrowers equivalent to the dividends and interest that would have been earned on securities lent while simultaneously seeking to earn income on the investment of collateral. Collateral is marked to market daily to provide a level of collateral at least equal to the fair value of securities lent. There may be risks of delay in recovery of the securities or even loss of rights in the collateral should the borrower of the securities fail financially. However, loans will be made only to borrowers, such as broker-dealers, banks or institutional borrowers of securities, deemed by HSBC to be of good standing and creditworthy under guidelines established by the Board of Trustees and when, in the judgement of HSBC, the consideration which can be earned currently from such securities loans justifies the attendant 94 HSBC INVESTOR PORTFOLIOS HSBC INVESTOR PORTFOLIOS -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ...................................................................... risks. Loans are subject to termination by the Portfolios or the borrower at any time and are, therefore, not considered to be illiquid investments. As of April 30, 2005, the following Portfolios had collateral and loaned securities as follows:
VALUE OF VALUE LOANED SECURITY TYPE OF COLLATERAL SECURITIES ------------- ------------- ---------- Limited Maturity Portfolio.................................. $1,410,000 $1,374,826 Growth Portfolio............................................ 1,120,000 1,100,000 Value Portfolio............................................. 5,766,400 5,610,668 Small Cap Equity Portfolio.................................. 5,583,000 5,289,770
The cash collateral received by the Portfolios was invested in a pooled account by HSBC Bank USA, and at April 30, 2005, the pooled account consisted of the following:
MARKET MATURITY MATURITY SECURITY TYPE SECURITY NAME VALUE RATE DATE ------------- ------------- ----- ---- ---- Repurchase Agreement Nomura Securities $511,549,400 2.94% 5/02/05 International, Inc.
LINE OF CREDIT: The Portfolios participate in a short-term, demand note agreement with HSBC Bank USA, an affiliate of the Investment Adviser (defined below). Under the agreement, the Portfolios may borrow up to $50 million. The purpose of the agreement is to meet temporary or emergency cash needs, including redemption requests that might otherwise require the untimely disposition of securities. During the period ended April 30, 2005, The Fixed Income Portfolio had borrowed against the Line of Credit an amount of $389,711 in one advance over a total of 3 days, for an average amount outstanding during the period of $389,711. The interest amount charged was $93 at a rate of 2.87%. EXPENSE ALLOCATION: Expenses incurred by the HSBC Investor Family of Funds with respect to any two or more funds within the HSBC Investor Family of Funds are allocated in proportion to the net assets of each fund within the HSBC Investor Family of Funds, or another appropriate basis. Expenses directly attributable to a Portfolio are charged to that Portfolio. FEDERAL INCOME TAXES: Each Portfolio will be treated as a partnership for U.S. Federal income tax purposes. Accordingly, each Portfolio passes through all of its net investment income and gains and losses to its Feeders, and is therefore not subject to U.S. Federal income tax. As such, an investor in the Portfolios will be taxed on their share of the Portfolios' ordinary income and realized gains. It is intended that the Portfolios will be managed in such a way that an investor will be able to satisfy the requirements of the Internal Revenue Code applicable to regulated investment companies. 3. RELATED PARTY TRANSACTIONS: INVESTMENT MANAGEMENT: HSBC Investments (USA) Inc. ('HSBC' or the 'Investment Adviser'), a wholly owned subsidiary of HSBC Bank USA, a New York State chartered bank, acts as the Investment Adviser to the Portfolios pursuant to an investment management contract with the Portfolio Trust. As Investment Adviser, HSBC manages the investments of the Portfolios and continuously reviews, supervises and administers the Portfolios' investments. Waddell & Reed Investment Management Company, NWQ Investment Management Co., LLC, AllianceBernstein Investment Research and Management, and Westfield Capital Management, LLC serve as Sub-Investment Advisers for the Growth Portfolio, Value Portfolio, International Equity Portfolio and the Small Cap Equity Portfolio, respectively, and are paid for their services directly by HSBC. HSBC INVESTOR PORTFOLIOS 95 HSBC INVESTOR PORTFOLIOS -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ...................................................................... For its services as Investment Adviser, HSBC receives a fee, accrued daily and paid monthly, at an annual rate of 0.40% of the Limited Maturity Portfolio's average daily net assets. For its services as Investment Adviser, HSBC receives, from the Fixed Income Portfolio, a fee accrued daily and paid monthly at an annual rate of:
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 as Investment Adviser and Sub-Investment Adviser, respectively, HSBC and Waddell & Reed Investment Management Company receive in aggregate, from the Growth Portfolio, a fee accrued daily and paid monthly at an annual rate of:
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%
For their services as Investment Adviser and Sub-Investment Adviser, respectively, HSBC and NWQ Investment Management Co., LLC receive in aggregate, from the Value Portfolio, a fee accrued daily and paid monthly at an annual rate of:
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%
For their services as Investment Adviser and Sub-Investment Adviser, respectively, HSBC and AllianceBernstein Investment Research and Management receive in aggregate, from the International Equity Portfolio, a fee accrued daily and paid monthly at an annual rate of:
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE ------------------------------------ -------- Up to $25 million........................................... 0.950% In excess of $25 million but not exceeding $50 million...... 0.800% In excess of $50 million but not exceeding $250 million..... 0.675% In excess of $250 million................................... 0.625%
For their services as Investment Adviser and Sub-Investment Adviser, respectively, HSBC and Westfield Capital Management LLC receive in aggregate, a fee accrued daily and paid monthly at an annual rate of 0.80% of the Small Cap Equity Portfolio's average daily net assets. ADMINISTRATION: BISYS Fund Services Ohio, Inc. ('BISYS Ohio'), a wholly-owned subsidiary of The BISYS Group, Inc., with whom certain officers of the Portfolio Trust are affiliated, serves the Portfolio Trust as Administrator. Such officers, except for the Chief Compliance Officer as described below, are paid no fees directly by the Portfolios for serving as officers of the Portfolio Trust. Under the terms of the administration agreement with the Portfolios, BISYS Ohio receives, from the Portfolios, a fee accrued daily and paid monthly at an annual rate of: 96 HSBC INVESTOR PORTFOLIOS HSBC INVESTOR PORTFOLIOS -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ......................................................................
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE ------------------------------------ -------- Up to $8 billion............................................ 0.0375% In excess of $8 billion but not exceeding $9.25 billion..... 0.0350% In excess of $9.25 billion but not exceeding $12 billion.... 0.0250% In excess of $12 billion.................................... 0.0150%
The fee breakpoints are determined on the basis of the aggregate average daily net assets of the HSBC Investor Family of Funds. The fee is allocated to each of the Portfolios based upon its pro-rata share of net assets. BISYS Ohio may directly or through an affiliate, use their fee revenue, past profits, or other revenue sources to pay promotional, administrative, shareholder support, and other expenses to third parties, including broker dealers, in connection with the offer, sale and administration of shares of the Portfolios. In addition, BISYS provides an employee to serve as Chief Compliance Officer for the Portfolios including providing certain related services, for which it receives an additional fee. On June 13, 2005 the Board approved a proposal for HSBC to serve as the Administrator of the Portfolios, which will be effective July 1, 2005 under the same compensation structure as those currently with BISYS. In addition, the Board approved a proposal for BISYS to serve as the sub-Administrator to HSBC, in which BISYS will be compensated directly by HSBC effective July 1, 2005. FUND ACCOUNTING AND CUSTODIAN: BISYS provides fund accounting services for the Portfolios. For its services to the Portfolios, BISYS receives an annual fee per Portfolio, including reimbursement of certain expenses, from each Portfolio accrued daily and paid monthly. HSBC serves as custodian to the Limited Maturity Portfolio, Fixed Income Portfolio, Growth Portfolio, Value Portfolio and Small Cap Equity Portfolio. Investor's Bank & Trust Company serves as custodian to the International Equity Portfolio. Compensation HSBC receives for services to the Portfolios as custodian is presented in the Statement of Operations as custodian fees. OTHER: For its service as security lending agent, HSBC Bank USA (see note 2 -Security Loans), receives a fee equal to 0.06% of the average dollar value of the loans outstanding during a given month from the Portfolios. The fees collected by HSBC Bank USA for the period ended April 30, 2005 were:
PORTFOLIO --------- Limited Maturity Portfolio.................................. $ 364 Fixed Income Portfolio...................................... 567 Growth Portfolio............................................ 27 Value Portfolio............................................. 216 Small Cap Equity Portfolio.................................. 1,580
The HSBC Investor Family of Funds may use affiliated broker/dealers for the execution of portfolio investment trades. For the six months ended April 30, 2005, affiliated broker/dealers did not receive any commissions on the execution of trades related to the HSBC Investor Family of Funds. HSBC INVESTOR PORTFOLIOS 97 HSBC INVESTOR PORTFOLIOS -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ...................................................................... 4. INVESTMENT TRANSACTIONS: For the period ended April 30, 2005, each Portfolio purchased and sold securities, excluding short-term securities, in the following amounts:
PURCHASES SALES PURCHASES OF (EXCLUDING U.S. (EXCLUDING U.S. U.S. SALES OF U.S. GOVERNMENT) GOVERNMENT) GOVERNMENT GOVERNMENT ----------- ----------- ---------- ---------- Limited Maturity Portfolio........ $ 5,752,715 $ 13,382,032 $ 1,589,250 $ 5,255,770 Fixed Income Portfolio............ 56,596,884 41,323,235 10,954,876 18,195,981 Growth Portfolio.................. 25,709,381 21,845,959 -- -- Value Portfolio................... 7,532,682 5,742,859 -- -- International Portfolio........... 25,098,539 49,443,298 -- -- Small Cap Equity Portfolio........ 112,889,492 225,600,872 -- --
5. FEDERAL INCOME TAX INFORMATION: At April 30, 2005, the cost, gross unrealized appreciation and gross unrealized depreciation on securities, for federal income tax purposes, were as follows:
NET UNREALIZED TAX UNREALIZED TAX UNREALIZED APPRECIATION PORTFOLIO NAME TAX COST APPRECIATION (DEPRECIATION) (DEPRECIATION) -------------- -------- ------------ -------------- -------------- Limited Maturity Portfolio...... $ 52,273,399 $ 360,257 $ (457,770) $ (97,513) Fixed Income Portfolio.......... 142,997,102 4,660,354 (1,348,921) 3,311,433 Growth Portfolio................ 52,165,807 2,668,730 (1,532,261) 1,136,469 Value Portfolio................. 63,503,904 7,330,290 (2,112,002) 5,218,288 International Portfolio......... 184,892,265 32,038,580 (4,486,621) 27,551,959 Small Cap Equity Portfolio...... 230,365,955 45,178,479 (11,072,369) 34,106,110
6. PAYMENTS FROM AFFILIATE: During the period ended April 30, 2005, HSBC reimbursed certain advisory fees by some of the Portfolios related to violations of certain investment policies and limitations. HSBC also reimbursed the Portfolios for interest on these amounts. The amounts, along with the corresponding impact to the net expense ratio, net income ratio, and total return for the period ended April 30, 2005, are as follows:
NET NET ADVISORY EXPENSE INCOME TOTAL FUND FEES (1) INTEREST (2) TOTAL RATIO RATIO RETURN ---- -------- ------------ ----- ----- ----- ------ Limited Maturity Portfolio.............. $ 45,832 $ 2,093 $ 47,925 0.16% 0.17% 0.00% Fixed Income Portfolio.................. 171,285 7,821 179,106 0.21% 0.22% 0.00% Growth Portfolio........................ 24,678 1,126 25,804 0.09% 0.09% 0.00% Value Portfolio......................... 31,167 1,423 32,590 0.10% 0.10% 0.00% Small Cap Equity Portfolio.............. 113,213 5,169 118,382 0.07% 0.07% 0.00% -------- ------- -------- Total............................... $386,175 $17,632 $403,807
-------------- (1) Amounts relate to the reimbursement of advisory fees on the investment in certain investment companies and are included in 'Fees reduced by the Investment Advisor' on the Statements of Operations. (2) Amounts relate to the reimbursement of computed interest on the amounts noted in (1) are included in 'Other income' on the Statements of Operations. 7. INVESTMENT ADVISOR CONTRACT APPROVAL: Each Board of Trustees including the non-interested Trustees (the 'Board of Trustees') of HSBC Investor Funds, HSBC Advisor Funds and HSBC Portfolios approved renewal of the investment advisory agreement, and, where 98 HSBC INVESTOR PORTFOLIOS HSBC INVESTOR PORTFOLIOS -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ...................................................................... applicable, sub-advisory agreement (collectively, 'Advisory Contracts') with respect to each Trust's respective Funds or Portfolios at an in-person meeting held on December 13, 2004. In determining whether it was appropriate to approve each Advisory Contract, each Board of Trustees requested information, provided by the Adviser, and, where applicable, Sub-Adviser, that it believed to be reasonably necessary to reach its conclusion. The Board of Trustees carefully evaluated this information, and was advised by independent legal counsel with respect to its deliberations. Based on its review of the information requested and provided, each Board of Trustees determined that each Advisory Contract is consistent with the best interests of each Fund and its shareholders, and enables each Fund to receive high quality services at a cost that is appropriate, reasonable, and in the best interests of each Fund and its shareholders. Each Board of Trustees made these determinations on the basis of the following considerations, among others: -- The investment advisory fees payable to the Adviser and, where applicable, Sub-Adviser under each Advisory Contract are fair and reasonable in light of the services to be provided, the anticipated costs of these services, the profitability of the Adviser's relationship with each Fund, and the comparability of the proposed fee to fees paid by comparable mutual funds; -- Each Advisory Contract did not increase the level of current investment advisory fees or overall operating expenses of each Fund over historical fee and expense levels; -- The nature, quality and extent of the investment advisory services provided by the Adviser and, where applicable, Sub-Adviser to each Fund, in light of the high quality services provided to the other mutual funds advised by the Adviser and their historic performance, including achievement of stated investment objectives; -- The Adviser's and, where applicable, Sub-Adviser's representations regarding its staffing and capabilities to manage the Funds, including the retention of personnel with significant portfolio management experience; -- The Adviser's entrepreneurial commitment to the management and success of each Fund, which could entail a substantial commitment of resources to the successful operation of each Fund; and -- The overall high quality of the personnel, operations, financial condition, investment management capabilities, methodologies, and performance of the Adviser, and, where applicable, Sub-Adviser. Accordingly, in light of the above considerations and such other factors and information it considered relevant, each Board of Trustees unanimously approved the respective Advisory Contract with respect to the Funds and Portfolios. New Advisory Contract between the Adviser and the Sub-Advisers to the Growth and Income Fund and Mid-Cap Fund ('collectively, the Agreements') were approved by the Board of Trustees of HSBC Investor Funds, with respect to the Growth and Income Fund and the Mid-Cap Fund, at a meeting of the Board of Trustees held on March 7-8, 2005. The Agreements were approved by the shareholders of the respective Funds at a meeting of the shareholders held on April 18, 2005. In determining whether to approve the Agreements, the Board of Trustees requested and received extensive materials and information from the Adviser to assist them in considering the approval of the Agreements. Based on its review of the information requested and provided, and the discussions with management of the Adviser, the Board of Trustees determined that approval of the Agreements was consistent with the best interests of each Fund and its shareholders, and would enable each Fund to receive high quality services at a cost that is appropriate, reasonable, and in the best interests of that Fund and its shareholders. The Board of Trustees made these determinations on the basis of the following factors, among others: -- Nature, Extent, and Quality of Services Provided by Adviser and Sub-Advisers. The Board of Trustees considered the nature, quality and extent of the investment advisory services to be provided by the Adviser and each Fund's Sub-Adviser, in light of the high quality services provided to the other manager-of-manager mutual funds advised by the Adviser, and each Fund's Sub-Adviser's historic performance managing accounts having similar investment objectives as the Funds. The Board of Trustees also considered the services provided by the Adviser such as supervision of Fund operations and compliance and regulatory filings as well as disclosures to shareholders, general oversight of service providers and coordination of Fund marketing initiatives. The Board of Trustees considered the Adviser's entrepreneurial commitment to the management and success of the Funds, which could entail a substantial commitment of resources to the successful HSBC INVESTOR PORTFOLIOS 99 HSBC INVESTOR PORTFOLIOS -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ...................................................................... operation of the Funds, as well as the Adviser's agreement to waive 0.05% of its advisory fee for a period of at least one year with respect to each Fund. -- Investment Performance of the Fund, Adviser and Sub-Advisers. The Board of Trustees considered short- and long-term investment performance of each Fund over various periods of time as compared to a peer group of comparable funds, as well as each Fund's sub-adviser's historic performance managing accounts having similar investment objectives as the Fund. Additionally, the Trustees considered fee and expense information regarding each Fund's peer groups, noting in particular that the proposed combined advisory and sub-advisory fees were competitive with the advisory fees charged by other funds in each Fund's peer group. -- Costs of Services and Profits Realized by the Adviser. The Board of Trustees considered the Adviser's overall profitability and costs and an analysis of the estimated profitability to the Adviser from its relationship with the Funds. The Board of Trustees considered that the combined management fees under the Agreements would increase the investment advisory fees of the Funds by 0.05%, with respect to the Growth and Income Fund, and 0.20%, with respect to the Mid-Cap Fund, over historical fee levels (no increase with respect to the Growth and Income Fund and 0.15% with respect to the Mid-Cap Fund after giving effect to the Adviser's agreement to waive 0.05% of its advisory fee under the New Agreement), but concluded that the combined advisory fees payable to the Adviser and each Fund's Sub-Adviser are fair and reasonable in light of the services to be provided, the anticipated costs of these services, the profitability of the Adviser's relationship with the Fund, and the comparability of the proposed fee to fees paid by comparable mutual funds. -- Other Relevant Considerations-Adviser Personnel. The Board of Trustees considered the Adviser's representations regarding the Adviser's manager-of-managers staffing and capabilities to oversee each Fund's Sub-Adviser and the sub-adviser's staffing and capabilities to manage the Fund. The Board of Trustees also considered the overall high quality of the personnel, operations, financial condition, investment management capabilities, methodologies, and performance of the Adviser and each Fund's Sub-Adviser. Accordingly, in light of the above considerations and such other factors and information it considered relevant, the Board of Trustees by a unanimous vote of those present in person at the meeting (including a separate vote of the Independent Trustees present in person at the meeting) approved the Agreements with respect to the Growth and Income Fund and the Mid-Cap Fund. 100 HSBC INVESTOR PORTFOLIOS HSBC INVESTOR PORTFOLIOS -------------------------------------------------------------------------------- TABLE OF SHAREHOLDER EXPENSES -- APRIL 30, 2005 (UNAUDITED) ...................................................................... As a shareholder of the HSBC Investor Funds, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchases; redemption fees; and exchange fees; (2) ongoing costs, including management fees; distribution and/or service fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the HSBC Investor Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from November 1, 2004 through April 30, 2005. ACTUAL EXPENSES The table below provides information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled 'Expenses Paid During Period' to estimate the expenses you paid on your account during this period.
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD 11/1/04 4/30/05 11/1/04 - 4/30/05 11/1/04 - 4/30/05 ------- ------- ----------------- ----------------- Limited Maturity Portfolio.... 1,000.00 1,004.20 2.09 0.42% Fixed Income Portfolio........ 1,000.00 1,013.60 1.55 0.31% Growth Portfolio.............. 1,000.00 1,007.70 3.04 0.61% Value Portfolio............... 1,000.00 1,062.00 3.07 0.60% International Portfolio....... 1,000.00 1,086.50 4.50 0.87% Small Cap Portfolio........... 1,000.00 1,006.00 4.03 0.81%
-------------- * Expenses are equal to the average account value times the Fund's annualized expense ratio multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year. HSBC INVESTOR PORTFOLIOS 101 HSBC INVESTOR PORTFOLIOS -------------------------------------------------------------------------------- TABLE OF SHAREHOLDER EXPENSES -- APRIL 30, 2005 (UNAUDITED) (CONTINUED) ...................................................................... HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below provides information about hypothetical account values and hypothetical expenses based on each HSBC Investor Funds's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD 11/1/04 4/30/05 11/1/04 - 4/30/05 11/1/04 - 4/30/05 ------- ------- ----------------- ----------------- Limited Maturity Portfolio.... 1,000.00 1,022.76 2.11 0.42% Fixed Income Portfolio........ 1,000.00 1.023.31 1.56 0.31% Growth Portfolio.............. 1,000.00 1,021.77 3.06 0.61% Value Portfolio............... 1,000.00 1,021.82 3.01 0.60% International Portfolio....... 1,000.00 1,020.48 4.36 0.87% Small Cap Portfolio........... 1,000.00 1,020.78 4.06 0.81%
-------------- * Expenses are equal to the average account value times the Fund's annualized expense ratio multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year. 102 HSBC INVESTOR PORTFOLIOS HSBC INVESTOR PORTFOLIOS -------------------------------------------------------------------------------- SHAREHOLDER MEETING RESULTS (UNAUDITED) At a Special Meeting of Shareholders held on March 21, 2005, a proposal to elect seven nominees was approved on behalf of the HSBC Investor Funds, HSBC Advisor Funds Trust and HSBC Investor Portfolios (collectively, the 'Trusts'). The number of shares voted for, against or abstained are as follows: HSBC INVESTOR FUNDS
FOR AGAINST ABSTAIN --- ------- ------- Stephen J. Baker............................................ 4,013,227,309 396,540,860 0 Richard A. Brealey.......................................... 4,013,550,074 396,218,095 0 Frederick C. Chen........................................... 4,012,525,304 397,242,865 0 Alan A. Parsow.............................................. 4,013,083,446 396,684,723 0 Thomas F. Robards........................................... 4,013,262,198 396,505,971 0 Larry M. Robbins............................................ 4,012,517,654 397,250,515 0 Michael Seely............................................... 4,013,282,990 396,485,179 0
HSBC ADVISOR FUNDS TRUST
FOR AGAINST ABSTAIN --- ------- ------- Stephen J. Baker............................................ 520,578,380 72,648 0 Richard A. Brealey.......................................... 520,578,380 72,648 0 Frederick C. Chen........................................... 520,651,028 0 0 Alan A. Parsow.............................................. 520,627,071 23,957 0 Thomas F. Robards........................................... 520,627,071 23,957 0 Larry M. Robbins............................................ 520,622,082 28,946 0 Michael Seely............................................... 520,627,071 23,957 0
HSBC INVESTOR PORTFOLIOS
FOR AGAINST ABSTAIN --- ------- ------- Stephen J. Baker............................................ 63,969,810 59,867 0 Richard A. Brealey.......................................... 63,975,736 53,941 0 Frederick C. Chen........................................... 63,984,270 45,407 0 Alan A. Parsow.............................................. 63,978,788 50,889 0 Thomas F. Robards........................................... 63,958,729 70,948 0 Larry M. Robbins............................................ 63,972,348 57,329 0 Michael Seely............................................... 63,963,174 66,504 0
HSBC INVESTOR PORTFOLIOS 103 A description of the policies and procedures that the Funds use to determine how to vote proxies relating to the portfolio securities is available without charge, upon request, by calling 1-800-525-5757 for HSBC Bank USA and HSBC Brokerage (USA) Inc. clients and 1-800-782-8183 for all other shareholders or on the Fund's website at www.investorfunds.us.hsbc.com and the Securities and Exchange Commission's website at http://www.sec.gov. A copy of the Funds voting record for the 12 month period ending June 30, 2005 is available at the Securities and Exchange Commission's website at http://www.sec.gov. Schedules of Portfolio Investments for fiscal quarters ending January 31 and July 31 will be available no later than 60 days after period end, without charge, on the Fund's website at www.investorfunds.us.hsbc.com and on the Securities and Exchange Commission's website at http://www.sec.gov. [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] HSBC Investor Family of Funds: INVESTMENT ADVISER HSBC Investments (USA) Inc. 452 Fifth Avenue New York, NY 10018 SUB-ADVISERS HSBC Growth and Income Fund TransAmerica Investment Management, LLC 1150 S. Olive Street, Suite 2700 Los Angeles, CA 90015 HSBC Investor Mid-Cap Fund Munder Capital Management Munder Capital Center 480 Pierce Street Birmingham, MI 48009-6063 HSBC Investor Growth Portfolio Waddell & Reed Investment Management Company 6300 Lamar Avenue Overland Park, KS 66202 HSBC Investor Value Portfolio NWQ Investment Management Co., LLC 2049 Century Park East, 4th Floor HSBC Investor International Equity Portfolio AllianceBernstein Investment Research and Management 1345 Avenue of the Americas, 39th Floor New York, NY 10105 HSBC Investor Small Cap Equity Portfolio Westfield Capital Management Company One Financial CenterBoston, MA 02111 SHAREHOLDER SERVICING AGENTS For HSBC Bank USA and HSBC Brokerage (USA) Inc. Clients HSBC Bank USA 452 Fifth Avenue New York, NY 1001 1-888-525-5757 For All Other Shareholders HSBC Investor Funds P.O. Box 182845 Columbus, OH 43218-2845 1-800-782-8183 ADMINISTRATOR, TRANSFER AGENT, DISTRIBUTOR, AND SPONSOR BISYS Fund Services 3435 Stelzer Road Columbus, OH 43219 CUSTODIANS HSBC Investor Limited Maturity Portfolio HSBC Investor Fixed Income Portfolio HSBC Investor New York Tax-Free Bond Fund HSBC Investor Growth Portfolio HSBC Investor Value Portfolio HSBC Investor Growth and Income Fund HSBC Investor Mid-Cap Fund HSBC Investor Small Cap Equity Portfolio HSBC Bank USA 452 Fifth Avenue New York, NY 10018 HSBC Investor International Equity Portfolio Investors Bank & Trust Company 200 Clarendon Street 16th Floor Boston, MA 02116 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM KPMG LLP 191 West Nationwide Blvd., Suite 500 Columbus, OH 43215 LEGAL COUNSEL Dechert LLP 1775 Eye Street, N.W. Washington, D.C. 20006 The HSBC Investor Family of Funds are distributed by BISYS Fund Services. This document must be preceded or accompanied by a current prospectus for the HSBC Investor Funds, which you should read carefully before you invest or send money. HSB-0008 06/05 Item 2. Code of Ethics. Disclose whether, as of the end of the period covered by the report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. If the registrant has not adopted such a code of ethics, explain why it has not done so. Not applicable - only for annual reports. The registrant must briefly describe the nature of any amendment, during the period covered by the report, to a provision of its code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item. The registrant must file a copy of any such amendment as an exhibit pursuant to Item 12(a)(1), unless the registrant has elected to satisfy paragraph (f) of this Item by posting its code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by undertaking to provide its code of ethics to any person without charge, upon request, pursuant to paragraph (f)(3) of this Item. If the registrant has, during the period covered by the report, granted a waiver, including an implicit waiver, from a provision of the code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more items set forth in paragraph (b) of this Item, the registrant must briefly describe the nature of the waiver, the name of the person to whom the waiver was granted, and the date of the waiver. During the period covered by the report, with respect to the registrant's code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions; there have been no amendments to, nor any waivers granted from, a provision that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item 2. Item 3. Audit Committee Financial Expert. (a) (1) Disclose that the registrant's board of directors has determined that the registrant either: (i) Has at least one audit committee financial expert serving on its audit committee; or (ii) Does not have an audit committee financial expert serving on its audit committee. (2) If the registrant provides the disclosure required by paragraph (a)(1)(i) of this Item, it must disclose the name of the audit committee financial expert and whether that person is "independent." In order to be considered "independent" for purposes of this Item, a member of an audit committee may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: (i) Accept directly or indirectly any consulting, advisory, or other compensatory fee from the issuer; or (ii) Be an "interested person" of the investment company as defined in Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)). (3) If the registrant provides the disclosure required by paragraph (a)(1)(ii) of this Item, it must explain why it does not have an audit committee financial expert. Not applicable, only for annual reports. Item 4. Principal Accountant Fees and Services. (a) Disclose, under the caption Audit Fees, the aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. (b) Disclose, under the caption Audit-Related Fees, the aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. (c) Disclose, under the caption Tax Fees, the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. Registrants shall describe the nature of the services comprising the fees disclosed under this category. (d) Disclose, under the caption All Other Fees, the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. (e) (1) Disclose the audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. (2) Disclose the percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. (f) If greater than 50 percent, disclose the percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees. (g) Disclose the aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant. (h) Disclose whether the registrant's audit committee of the board of directors has considered whether the provision of nonaudit services that were rendered to the registrant's investment adviser (not including any subadviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. Not applicable - only for annual reports. Item 5. Audit Committee of Listed Registrants. (a) If the registrant is a listed issuer as defined in Rule 10A-3 under the Exchange Act (17CFR 240.10A-3), state whether or not the registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)). If the registrant has such a committee, however designated, identify each committee member. If the entire board of directors is acting as the registrant's audit committee as specified in Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)), so state. (b) If applicable, provide the disclosure required by Rule 10A-3(d) under the Exchange Act (17CFR 240.10A-3(d)) regarding an exemption from the listing standards for all audit committees. Not applicable. Item 6. Schedule of Investments. File Schedule I - Investments in securities of unaffiliated issuers as of the close of the reporting period as set forth in 'SS' 210.12-12 of Regulation S-X, unless the schedule is included as part of the report to shareholders filed under Item 1 of this Form. Not applicable. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. A closed-end management investment company that is filing an annual report on this Form N-CSR must, unless it invests exclusively in non-voting securities, describe the policies and procedures that it uses to determine how to vote proxies relating to portfolio securities, including the procedures that the company uses when a vote presents a conflict between the interests of its shareholders, on the one hand, and those of the company's investment adviser; principal underwriter; or any affiliated person (as defined in Section 2(a)(3) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules thereunder) of the company, its investment adviser, or its principal underwriter, on the other. Include any policies and procedures of the company's investment adviser, or any other third party, that the company uses, or that are used on the company's behalf, to determine how to vote proxies relating to portfolio securities. Not applicable. Item 8. Portfolio Managers of Closed-End Management Investment Companies. If the registrant is a closed-end management investment company that is filing an annual report on this Form N-CSR, provide the information specified in paragraphs (a) and (b) of this Item with respect to portfolio managers. Not applicable. Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. If the registrant is a closed-end management investment company, provide the information specified in paragraph (b) of this Item with respect to any purchase made by or on behalf of the registrant or any "affiliated purchaser," as defined in Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of shares or other units of any class of the registrant's equity securities that is registered by the registrant pursuant to Section 12 of the Exchange Act (15 U.S.C. 781). Not applicable. Item 10. Submission of Matters to a Vote of Security Holders. Describe any material changes to the procedures by which shareholders may recommend nominees to the registrant's board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or this Item. Not applicable. Item 11. Controls and Procedures. (a) Disclose the conclusions of the registrant's principal executive and principal financial officers, or persons performing similar functions, regarding the effectiveness of the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Act (17 CFR 270.30a-3(c))) as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act (17 CFR 240.13a-15(b) or 240.15d-15(b)). The registrant's principal executive officer and principal financial officer have concluded, based on their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant on Form N-CSR is (i) accumulated and communicated to the investment company's management, including its certifying officers, to allow timely decisions regarding required disclosure; and (ii) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. (b) Disclose any change in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. There were no changes in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected or are reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. Exhibits. (a) File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated. (a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit. Not applicable (a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2). Certifications pursuant to Rule 30a-2(a) are attached hereto. (a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable. (b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by rule 30a-2(b) under the Act as an exhibit. A certification furnished pursuant to this paragraph will not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant incorporates it by reference. Certifications pursuant to Rule 30a-2(b) are furnished herewith. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) HSBC Investor Portfolios -------------------------------------------------------------------- By (Signature and Title) /s/ Richard A. Fabietti -------------------------------------------------------- Richard A. Fabietti President Date June 29, 2005 ----------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title) /s/ Richard A. Fabietti -------------------------------------------------------- Richard A. Fabietti President Date June 29, 2005 ----------------------------------- By (Signature and Title) /s/ Troy A. Sheets -------------------------------------------------------- Troy Sheets Treasurer Date June 29, 2005 ----------------------------------- STATEMENT OF DIFFERENCES ------------------------ The trademark symbol shall be expressed as.............................. 'TM' The registered trademark symbol shall be expressed as................... 'r' The dagger symbol shall be expressed as................................. 'D' The section symbol shall be expressed as ............................... 'SS'