<PAGE>
Annual Report
[GRAPHIC] HSBC Investor
Funds
October 31, 2000
INVESTOR SHARES
o HSBC Investor New York Tax-Free Bond Fund
o HSBC Investor Equity Fund
o HSBC Investor Bond Fund
o HSBC Investor Overseas Equity Fund
o HSBC Investor Opportunity Fund
ADVISOR/TRUST SHARES
o HSBC Investor New York Tax-Free Bond Fund
o HSBC Investor Equity Fund
o HSBC Investor Mid-Cap Fund
o HSBC Investor Fixed Income Fund
o HSBC Investor International Equity Fund
o HSBC Investor Small Cap Equity Fund
HSBC [LOGO]
YOUR WORLD OF FINANCIAL SERVICES
<PAGE>
--------------------------------------------------------------------------------
TABLE OF CONTENTS
HSBC INVESTOR FUNDS
HSBC ADVISOR FUNDS TRUST
ANNUAL REPORT - OCTOBER 31, 2000
<TABLE>
<S> <C>
President's Message ...........................................................1
Commentary From the Investment Manager ........................................2
Portfolio Reviews .............................................................4
HSBC Investor New York Tax-Free Bond Fund ....................................16
HSBC Investor Equity Fund ....................................................24
HSBC Investor Mid-Cap Fund ...................................................32
HSBC Investor Bond Fund ......................................................40
HSBC Investor Overseas Equity Fund ...........................................45
HSBC Investor Opportunity Fund ...............................................50
HSBC Investor Fixed Income Fund ..............................................55
HSBC Investor International Equity Fund ......................................58
HSBC Investor Small Cap Equity Fund ..........................................61
Notes to Financial Statements ................................................64
Independent Auditors' Report .................................................73
HSBC INVESTOR PORTFOLIOS
HSBC Investor Fixed Income Portfolio .........................................74
HSBC Investor International Equity Portfolio .................................83
HSBC Investor Small Cap Equity Portfolio .....................................91
Notes to Financial Statements ................................................97
Independent Auditors' Report ................................................101
</TABLE>
--------------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
We are pleased to present you with the annual reports for the HSBC Investor
Family of Funds for the year ended October 31, 2000. The report contains the
following features:
o Commentary From the Investment Manager
o Portfolio Reviews--investment strategy, performance overview and outlook for
the coming months
o Schedules of Portfolio Investments--listing of the security holdings in each
Fund
o Statements of Assets and Liabilities--summary of the assets and liabilities of
each Fund
o Statements of Operations--summary of operations and its effect on the assets
of each Fund
o Statements of Changes in Net Assets--summary of changes in net assets during
the period
o Financial Highlights--per share summary of activity affecting net asset value
per share
o Notes to Financial Statements
Finally, we thank you for your continued confidence in us. We look forward to
providing you with investment management services to meet your needs now and in
the years ahead.
Sincerely,
WALTER B. GRIMM
Walter B. Grimm
President
December 2000
--------------------------------------------------------------------------------
1
<PAGE>
--------------------------------------------------------------------------------
Commentary From the Investment Manager
HSBC BANK USA
U.S. ECONOMIC REVIEW
The U.S. economy grew very rapidly during much of the year ended October 31,
2000. Real Gross Domestic Product(1) growth averaged an annualized rate of more
than 6% during the three calendar quarters ended in June. That growth, coupled
with rising oil prices, led to concerns that inflation would rise. The Federal
Reserve Board (the "Fed") in response raised the federal funds rate four times,
for a total increase of 1.25 percentage points, in an attempt to slow economic
growth to a targeted rate of 3% to 3.5%.
Those rate increases started to take effect during the second calendar quarter
of 2000. Their dampening effect on the economy was compounded by heightened
tensions in the Middle East and weak equity markets. These combined factors
appear to have slowed the economy considerably, greatly decreasing the chance of
rising inflation. The Fed appears to have orchestrated a soft landing for the
economy. In other words, the economy seems to have slowed enough to hold off
inflation but does not appear to be headed for a recession.
GLOBAL ECONOMIC REVIEW
The global economy was strong during the period. European economies benefited
from increased efficiency. Asian economies continued to reap rewards from
reforms made in the wake of the 1998 financial crisis. Emerging markets
benefited from strong demand for natural resources and industrial production.
The Euro was very weak throughout the period, benefitting European exports as
they became relatively less expensive. However, the Euro's depreciation led the
European Central Bank to raise interest rates to help prop up the currency.
Meanwhile, central banks around the world raised interest rates in response to
concerns that strong economic growth would lead to inflation. Those rate hikes,
combined with factors such as high oil prices, helped to slow overseas economies
to sustainable levels.
MARKET ENVIRONMENT
Investors shifted focus from highly valued New Economy growth stocks to
inexpensive shares of companies in more traditional industries during the
period. Technology, telecommunications and media shares dominated during the
early part of the period, as investors were willing to pay high prices for
strong growth prospects. That focus on growth at any cost helped the Russell
1000 Growth Index(2) outperform the Russell 1000 Value Index(3) by more than 14
percentage points during the three months ended January 31, 2000.
Growth's dominance ended in March, however, as many technology companies
reported disappointing earnings, and higher interest rates and oil prices
portended slower global economic growth. Investors became concerned that the
high valuations on New Economy shares were unjustified in that environment, and
therefore sold those shares. Investors shifted their money to sectors such as
health care, consumer staples and financial services, which had been largely
ignored in the rush to invest in high-flying growth stocks. The Russell 1000
Value Index returned 5.52% for the year ended October 31, 2000, compared to
9.33% for the Russell 1000 Growth Index.
Global equity markets were very volatile during the period. Technology and
telecommunications shares powered foreign markets to strong returns early in the
period. That performance soon gave way to investor concerns that weak currency,
rising oil prices and higher interest rates would eat into corporate profits.
Those concerns caused overseas markets to perform poorly from January through
October. The MSCI EAFE Index(4) of developed markets lost 2.90% during the year
ended October 31, 2000.
U.S. fixed-income securities were hurt early in the period by the Fed's
tightening monetary policy and investor fears about inflation. Those factors
caused investors to sell bonds, pushing yields
--------------------------------------------------------------------------------
(1) The Gross Domestic Product is the measure of the market value of the goods
and services produced by labor and property in the United States.
(2) The Russell 1000 Growth Index is an unmanaged index comprised of the
securities in the Russell 1000 Index with a greater-than-average growth
orientation. Companies in this index tend to exhibit higher price-to-book and
price-to-earnings ratios, lower dividend yields and higher forecasted growth
rates.
(3) The Russell 1000 Value Index is an unmanaged index comprised of the
securities in the Russell 1000 Index with a less-than-average growth
orientation. Companies in this index generally have low price-to-book and
price-to-earnings ratios, higher dividend yields and lower forecasted growth
values.
(4) The Morgan Stanley Capital International (MSCI) Europe, Australasia and Far
East (EAFE) Index is an unmanaged index that measures performance of a diverse
range of developed countries in the indicated regions.
Investors cannot invest directly in an index, although they can invest in its
underlying securities.
2
<PAGE>
--------------------------------------------------------------------------------
Commentary From the Investment Manager - Continued
HSBC BANK USA
higher and prices lower. Long-term Treasury bonds benefited later in the period
from the federal government's aggressive program to buy back 30-year Treasury
bonds. That program reduced the supply of these instruments, and fueled investor
perceptions that long-term Treasuries would become more scarce going forward.
Treasury securities also benefited from foreign demand, as investors around the
world shifted money from volatile equity markets into the safety of U.S.
government bonds. Those factors caused Treasuries to outperform corporate
securities.
Meanwhile, the Fed's interest rate increases appeared to be taking
effect, making long-term inflation less likely. That environment resulted in an
unusual inverted yield curve. As of October 31, the federal funds rate stood at
6.59%--higher than the yield on longer-term Treasury securities.
3
<PAGE>
--------------------------------------------------------------------------------
Portfolio Reviews
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND'D'
(CLASS A (INVESTOR) SHARES, B SHARES, C SHARES AND Y (ADVISER) SHARES)
by Peter J. Loftus
Portfolio Manager
HSBC Bank USA
The HSBC Investor New York Tax-Free Bond Fund (the "Fund") delivered a total
return of 8.03% (without sales charge) for Class A (Investor) Shares and 8.41%
for Class Y (Adviser) Shares during the year ended October 31, 2000. That
compares to a 8.41% and 8.12% return for the Fund's benchmarks, the Lehman
Brothers 7-Year Municipal Bond Index and the Lipper N.Y. Municipal Bond Funds
Average,(1) respectively.
Much of the period was characterized by rising interest rates, which hurt the
overall bond market and the municipal bond market as well. Many investors at the
end of 1999 moved out of the bond market and took losses to offset gains from
other investments. Additionally, investors early in the period worried that the
Fed would raise interest rates, causing bond yields to rise. Those concerns
proved justified as the Fed raised rates four times during the period.
The supply of new bond issues fell during the early part of this calendar year.
Moreover, many investors moved out of equities and into bonds, in part because
many stocks seemed overvalued. Lower supply and higher demand pushed bond prices
higher and benefited the Fund.
Towards the end of 1999, we kept sufficient cash on hand to handle any
calendar-year-end redemptions associated with Y2K issues. We also upgraded the
Fund's credit quality during the period from A1 to AA. The higher yields
available on lower-rated securities did not justify the extra risk they would
have added to the portfolio.*
When bond prices declined and yields rose early in the period, we focused the
Fund's portfolio on securities with 10- to 15-year maturities, which we felt
offered the best mix of risk and reward. The Fund held a number of issues that
yielded more than 6% and had good call protection. This strategy benefited the
Fund as the fixed-income markets rallied from mid-May through the end of August,
providing capital appreciation and a higher income stream to investors.*
We expect the Fed to refrain from raising interest rates during the next three
to six months. Such a neutral policy should help support prices in the muni
market. We think that the bond market will experience some volatility during the
next three to six months and plan to keep the Fund's duration shorter than that
of its benchmark. As always, we will continue to invest in securities with very
good credit quality.
--------------------------------------------------------------------------------
'D' 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.
(1) The Lipper N.Y. Municipal Bond 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. Lipper is an independent
mutual fund performance monitor whose results are based on total return and do
not reflect a sales charge. Investors cannot invest directly in an index,
although they can invest in its underlying securities.
* Portfolio composition is subject to change.
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT AN INDICATION
OF FUTURE RESULTS. THE INVESTMENT RETURN AND NET ASSET VALUE WILL FLUCTUATE SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
4
<PAGE>
PORTFOLIO REVIEWS
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND - AS OF OCTOBER 31, 2000
VALUE OF A $10,000 INVESTMENT
[GRAPH]
<TABLE>
<CAPTION>
HSBC Investor N.Y. Tax-Free Bond Lehman Brothers 7-Year Lipper N.Y. Municipal Bond
Bond Fund A (Investor)2 Municipal Bond Index Funds Average 1
<S> <C> <C> <C>
5/01/95 9526 10000 10000
9852 10266 10106
9723 10257 9968
9801 10387 10027
9948 10510 10141
9969 10550 10195
10114 10641 10364
10301 10758 10570
Dec-95 10416 10815 10682
10508 10920 10731
10409 10883 10635
10240 10778 10458
10201 10758 10415
10191 10742 10417
10264 10825 10526
10374 10915 10626
10362 10920 10602
10494 11018 10769
10617 11137 10878
10812 11323 11071
Dec-96 10746 11289 11016
10735 11330 11012
10829 11424 11111
10679 11277 10968
10772 11335 11064
10941 11478 11230
11066 11588 11344
11437 11857 11694
11287 11773 11556
11426 11898 11689
11489 11968 11760
11564 12010 11825
Dec-97 11736 12158 12015
11843 12285 12131
11839 12296 12127
11842 12296 12133
11751 12225 12036
11961 12405 12256
12003 12439 12302
12026 12480 12319
12248 12670 12527
12425 12834 12683
12369 12853 12632
12422 12888 12674
Dec-98 12451 12915 12699
12574 13103 12841
12532 13030 12766
12521 13025 12764
12553 13056 12794
12449 12992 12688
12237 12804 12468
12270 12891 12481
12128 12861 12317
12088 12909 12271
11921 12854 12066
12083 12948 12196
Dec-99 12035 12896 12074
11976 12865 11980
12092 12918 12160
12380 13102 12454
12283 13053 12358
12165 13024 12267
12469 13315 12605
12653 13483 12782
12827 13659 12977
12779 13618 12893
10/31/2000 12879 13734 13003
</TABLE>
VALUE OF A $10,000 INVESTMENT
[GRAPH]
<TABLE>
<CAPTION>
HSBC Investor N.Y. Tax-Free Lehmand Brothers 7-Year Lipper N.Y. Municipal Bond
Bond Fund Y (Adviser) Municipal Bond Index Fund Average 1
<S> <C> <C> <C>
7/1/1996 10000 10000 10000
10109 10083 9892
10100 10088 9869
10231 10179 10024
10352 10289 10125
10545 10461 10304
Dec-96 10483 10429 10252
10474 10467 10249
10567 10554 10341
10423 10417 10207
10515 10472 10296
10680 10604 10451
10803 10705 10557
11166 10954 10881
11020 10876 10753
11146 10991 10876
11220 11056 10942
11294 11095 11003
Dec-97 11463 11231 11179
11569 11349 11287
11578 11359 11283
11583 11359 11288
11496 11294 11198
11704 11460 11401
11747 11492 11445
11772 11530 11461
12014 11705 11653
12167 11856 11798
12115 11874 11751
12159 11906 11790
Dec-98 12200 11931 11813
12324 12105 11945
12286 12037 11876
12277 12032 11874
12301 12061 11902
12212 12002 11804
12007 11828 11600
12042 11908 11613
11906 11881 11459
11870 11925 11417
11697 11875 11226
11869 11962 11347
Dec-99 11825 11914 11234
11758 11885 11147
11886 11934 11313
12172 12103 11587
12079 12059 11498
11965 12032 11412
12267 12300 11726
12450 12455 11890
12624 12618 12071
12554 12581 11993
10/31/2000 12707 12688 12082
</TABLE>
The charts above represent a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains in the Fund.
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
As of Inception 1 5 Since
October 31, 2000 Date Year Year Inception
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HSBC Investor New York Tax-Free Bond Fund A (Investor)(2) 5/1/95 2.93% 3.93% 4.71%
-----------------------------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund B(3) 1/6/98 3.27% N/A 1.79%
-----------------------------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund C(4) 11/4/98 6.23% N/A 1.41%
-----------------------------------------------------------------------------------------------------
HSBC Investor New York Tax-Free Bond Fund Y(Adviser) 7/1/96 8.41% N/A 5.63%
-----------------------------------------------------------------------------------------------------
</TABLE>
(2) Reflects the maximum sales charge of 4.75%.
(3) Reflects the contingent deferred sales charge maximum 5.00%.
(4) Reflects the contingent deferred sales charge maximum 1.00%.
The Fund is measured against the Lehman Brothers 7-Year Municipal Bond Index, an
unmanaged broad based index comprised of investment grade, fixed-rate and
tax-exempt securities with a remaining maturity of at least 7 years. The
performance of the index does not reflect the deduction of expenses associated
with a mutual fund, such as investment management and fund accounting fees. The
Fund's performance reflects the deduction of fees for these value-added
services. Investors cannot invest directly in an index, although they can invest
in its underlying securities. During the period shown, the Investment Manager
waived and/or voluntarily reimbursed fees for various expenses. Had these
waivers and/or reimbursements not been in effect, performance quoted would have
been lower.
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT AN INDICATION
OF FUTURE RESULTS. THE INVESTMENT RETURN AND NET ASSET VALUE WILL FLUCTUATE SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
5
<PAGE>
--------------------------------------------------------------------------------
Portfolio Reviews
HSBC INVESTOR EQUITY FUND (CLASS A (INVESTOR) SHARES, B SHARES, C SHARES AND Y
(ADVISER) SHARES)
by John L. Blundin
Portfolio Manager
Alliance Capital Management, L.P. and Institutional Capital Corporation
The HSBC Investor Equity Fund (the "Fund") seeks to provide its shareholders
with long-term growth of capital and income without excessive fluctuations in
market value. The Fund invests at least 65% of its assets in equity securities
of seasoned mid-sized and large companies whose shares are expected to show
above-average price appreciation. The Fund employs two sub-investment managers
to achieve its investment objective. Each sub-adviser pursues a different
investment style. Effective March 15, 2000, the Fund changed sub-investment
managers for the value portion of the portfolio from Brinson Partners, Inc. to
Institutional Capital Corporation.
Alliance Capital Management, L.P. pursues a growth style of investing, focusing
on investing in financially secure firms that have established operating
histories and are proven leaders in their industries or market sectors. These
companies may possess characteristics such as participation in expanding
markets, increasing unit sales volume, growth in revenues and earnings per share
or increasing return on investments.
Institutional Capital Corporation pursues a value style of investing, focusing
on shares of companies that are undervalued relative to the stock market as a
whole. The firm employs a fundamentals-based, bottom-up stock-picking method to
find these companies.
The Class A (Investor) Shares of the HSBC Equity Fund returned -2.38% (without
sales charge) during the year ended October 31, 2000. The Standard & Poor's 500
Stock Index returned 6.08%, the Russell 1000 Growth Index returned 9.33% and the
Lipper Large-Cap Core Funds Index(1) returned 9.64%.
The equity markets during the period were very volatile, particularly in the
technology sector. Concerns that strong economic growth would lead to rising
inflation caused the Fed to raise interest rates a total of 1.25 percentage
points during the period. A series of earnings warnings from companies such as
Dell and Intel fueled investor uneasiness about the fundamentals of many
technology companies. As a result, investors shifted their assets to other
sectors.
Value stocks performed poorly early in the period, but staged a dramatic
turnaround during the rest of the period. The switch in investor sentiment
from growth stocks to value shares came as many investors became concerned
that the valuations of technology, telecommunications and media stocks--
so-called New Economy shares--had become excessive. That fear was compounded
by the perception that the global economy was slowing.
In the growth section of the Fund, we used the correction in the technology
sector to invest in technology shares that had dropped significantly and
therefore offered attractive values. We increased the Fund's exposure to
technology from 17.45% as a percentage of net assets on October 31, 1999 at the
start of the period to 26.23% at the end of the period on October 31, 2000.*
The value side of the Fund benefited early in the period from its stake in
out-of-favor, inexpensive New Economy stocks. We sold many of those shares in
the spring, however, because we saw signs that investor sentiment was turning
away from those sectors. That move proved timely. Traditional value shares
outperformed growth stocks dramatically in the third calendar quarter. During
the rest of the period, we invested in shares of firms that had become
inexpensive enough to be attractive takeover targets. We also found
opportunities among reasonably-priced shares of firms that provide the
infrastructure for the New Economy, as well as Old Economy firms that are using
information technology effectively to improve their businesses.
Going forward, we expect the Fed's rate hikes to slow the economy to a more
sustainable level. In that environment, it is unlikely that the Fed will raise
rates again. The technology sector is still experiencing strong growth, and many
of the financial services companies represented in the Fund's portfolio are
becoming powerful global corporations. We will continue to invest the growth
portion of the Fund's portfolio in companies with solid fundamentals and growth
prospects, and on the value side, we will continue to seek inexpensive shares of
firms that may be the target of takeovers. We believe that value shares are
poised to perform well in the coming environment.
--------------------------------------------------------------------------------
(1) The Lipper Large-Cap Core Funds Index is comprised of 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 is an independent mutual fund performance monitor whose
results are based on total return and do not reflect a sales charge. Investors
cannot invest directly in an index, although they can invest in its underlying
securities.
* Portfolio composition is subject to change.
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT AN INDICATION
OF FUTURE RESULTS. THE INVESTMENT RETURN AND NET ASSET VALUE WILL FLUCTUATE SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
6
<PAGE>
--------------------------------------------------------------------------------
Portfolio Reviews
HSBC INVESTOR EQUITY FUND -- AS OF OCTOBER 31, 2000
--------------------------------------------------------------------------------
Value of a $10,000 Investment
[GRAPH]
<TABLE>
<CAPTION>
HSBC Investor Equity Fund Standard & Poor's 500 Stock
(A) Investor2 Index Russell 1000 Growth Index
<S> <C> <C> <C>
8/1/1995 9497 10000 10000
9630 10027 10075
9915 10447 10490
9758 10411 10442
10349 10869 10908
Dec-95 10530 11070 11074
10817 11450 11432
10903 11560 11581
11007 11671 11685
10988 11843 11863
11093 12149 12148
10955 12198 12161
10396 11656 11574
10598 11903 11889
11069 12572 12558
11543 12916 12836
12395 13896 13783
Dec-96 12161 13624 13560
12705 14470 14364
12676 14587 14419
12143 13980 13770
12787 14815 14515
13728 15725 15445
14351 16426 16085
15699 17730 17401
15035 16744 16580
15686 17661 17489
14882 17072 16923
15259 17862 17656
Dec-97 15612 18169 18015
15832 18371 18149
17240 19696 19443
18032 20704 20424
18106 20913 20634
17875 20553 20187
18501 21388 20934
18448 21160 20683
15439 18101 17591
16359 19261 18776
17855 20827 20259
18750 22089 21513
Dec-98 20170 23362 22883
20827 24339 23700
20051 23583 22947
20766 24526 23827
21661 25476 24823
21122 24875 24287
22433 26255 25524
21495 25436 24745
21365 25310 24513
20280 24616 23839
21467 26174 25441
21446 26706 26096
Dec-99 22144 28279 27668
21163 26858 26536
19955 26350 26465
22150 28927 28876
21647 28057 27913
20916 27481 27192
21291 28159 27885
21087 27719 27422
22417 29440 29451
21101 27886 28084
10/31/00 20957 27768 27747
</TABLE>
--------------------------------------------------------------------------------
Value of a $10,000 Investment
[GRAPH]
<TABLE>
<CAPTION>
HSBC Investor Equity Fund Y Standard & Poor's 500 Stock
(Adviser) Index Russell 1000 Growth Index
<S> <C> <C> <C>
7/1/1996 10000 10000 10000
9490 9555 9518
9683 9758 9776
10113 10306 10326
10546 10588 10555
11324 11392 11334
Dec-96 11116 11169 11150
11622 11862 11812
11595 11958 11857
11113 11461 11323
11701 12145 11936
12553 12891 12700
13129 13466 13226
14362 14535 14308
13764 13727 13633
14361 14479 14381
13634 13995 13915
13979 14643 14519
Dec-97 14291 14895 14813
14503 15060 14924
15792 16146 15988
16525 16973 16794
16592 17144 16967
16390 16849 16599
16965 17534 17214
16926 17347 17007
14166 14839 14465
15010 15789 15439
16382 17074 16658
17204 18109 17690
Dec-98 18519 19152 18816
19122 19953 19488
18420 19333 18869
19076 20106 19592
19908 20885 20412
19403 20392 19970
20620 21524 20988
19758 20852 20347
19649 20749 20157
18653 20180 19602
19755 21457 20920
19735 21893 21458
Dec-99 20381 23183 22751
19478 22018 21820
18377 21601 21761
20397 23714 23744
19934 23001 22953
19272 22529 22359
19618 23084 22929
19441 22723 22548
20666 24135 24217
19455 22861 23093
10/31/2000 19322 22764 22815
</TABLE>
The charts above represent a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains in the Fund.
--------------------------------------------------------------------------------
Average Annual Total Return
<TABLE>
<CAPTION>
As of Inception 1 5 Since
October 31, 2000 Date Year Year Inception
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HSBC Investor Equity Fund A (Investor)(2) 8/1/95 -7.27% 15.33% 15.14%
---------------------------------------------------------------------------------------
HSBC Investor Equity Fund B(3) 1/6/98 -6.63% N/A 9.63%
---------------------------------------------------------------------------------------
HSBC Investor Equity Fund C(4) 11/4/98 -3.99% N/A 7.43%
---------------------------------------------------------------------------------------
HSBC Investor Equity Fund Y (Adviser) 7/1/96 -2.19% N/A 16.40%
---------------------------------------------------------------------------------------
</TABLE>
(2) Reflects the maximum sales charge of 5.00%.
(3) Reflects the contingent deferred sales charge maximum 5.00%.
(4) Reflects the contingent deferred sales charge maximum 1.00%.
--------------------------------------------------------------------------------
The Fund is measured against the Standard & Poor's 500 Stock Index and the
Russell 1000 Growth Index. The Standard & Poor's 500 stock index is an unmanaged
index that is generally representative of the U.S. stock market as a whole. The
Russell 1000 Growth Index is an unmanaged index comprised of the securities in
the Russell 1000 Index with a greater-than-average growth orientation. The
performance of these indices does not reflect the deduction of expenses
associated with a mutual fund, such as investment management and fund accounting
fees. The Fund's performance reflects the deduction of fees for these
value-added services. Investors cannot invest directly in an index, although
they can invest in its underlying securities. During the period shown, the
Investment Manager waived and/or voluntarily reimbursed fees for various
expenses. Had these waivers and/or reimbursements not been in effect,
performance quoted would have been lower.
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT AN INDICATION
OF FUTURE RESULTS. THE INVESTMENT RETURN AND NET ASSET VALUE WILL FLUCTUATE SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
7
<PAGE>
--------------------------------------------------------------------------------
PORTFOLIO REVIEWS
HSBC INVESTOR MID-CAP FUND (CLASS A SHARES, B SHARES, C SHARES AND TRUST SHARES)
by Thomas D'Auria
Portfolio Manager
HSBC Asset Management (Americas), Inc.
The HSBC Investor Mid-Cap Fund seeks to achieve a higher rate of return than
that generated by the Standard & Poor's Mid-Cap 400 Stock Index by investing at
least 65% of its total assets in stocks of mid-sized companies with market
capitalization, at time of acquisition, falling within the range of the Standard
& Poor's Mid-Cap 400 Stock Index ($1 billion to $10 billion).
During the year ended October 31, 2000, the Class A Shares of the HSBC Investor
Mid-Cap Fund returned 40.25% (without sales charge), and 40.59% for the Trust
Shares'D'. That compared to a 34.62% return for the Lipper Mid-Cap Core Funds
Index(1) and a 31.85% return for the Standard & Poor's Mid-Cap 400 Stock Index,
respectively.
The year was difficult for mid-cap stocks. Investors responded to slowing
corporate earnings and overall stock market volatility by rotating in and out of
different sectors of the mid-cap market. Early in the period, richly-valued
shares of money-losing technology companies outperformed other mid-cap stocks,
even as investors concerned about the earnings of large technology companies'
earnings fled those companies' shares. Later, however, similar concerns hurt
mid-cap technology shares. Investors looking for stable earnings growth shifted
their attention to food and utilities companies and other firms that were
expected to provide steady if slow growth. Health-care stocks, and especially
biotechnology shares, performed well throughout the period.
The Fund's strategy is to buy growth stocks at reasonable prices. We believe
that approach hurt performance early in the period, as the most highly valued
stocks provided the strongest returns. As technology stocks lost ground, we
bought inexpensive shares of technology firms with strong growth prospects. That
strategy led to an overweight position in technology, which hurt returns as
other investors fled to shares of slower-growing, more stable firms during the
remainder of the period. The Fund benefited from its overweight stake in
health-care, and especially biotechnology stocks. Its underweight position in
poor-performing sectors such as basic materials and commodity-based stocks also
helped relative performance.
We expect mid-cap stocks' returns to move in line with the sector's earnings
growth, leading to overall returns in the low double digits during the coming
year. We believe that the market currently favors shares of slow-growing,
relatively stable firms because of the uncertainties surrounding corporate
earnings. We believe the Fund's overweight position in reasonably priced
technology and health-care stocks should help it perform well in that
environment. We will look to increase the Fund's stake in technology stocks if
we see signs of a recovery in that sector.
--------------------------------------------------------------------------------
(1) The Lipper Mid-Cap Core Funds Index is comprised of 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 is an independent mutual fund performance monitor whose
results are based on total return and do not reflect a sales charge. Investors
cannot invest directly in an index, although they can invest in its underlying
securities.
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT AN INDICATION
OF FUTURE RESULTS. THE INVESTMENT RETURN AND NET ASSET VALUE WILL FLUCTUATE SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
8
<PAGE>
--------------------------------------------------------------------------------
PORTFOLIO REVIEWS
HSBC INVESTOR MID-CAP FUND - AS OF OCTOBER 31, 2000
VALUE OF A $10,000 INVESTMENT
[GRAPH]
<TABLE>
<CAPTION>
HSBC Investor HSBC Investor Standard & Poor's
Mid Cap Fund (A)2 Mid Cap Fund Trust Mid Cap 400 Index
<S> <C> <C> <C>
7/1/1993 10000 10000 10000
9926 9897 9981
10257 10240 10393
10294 10240 10503
10551 10479 10538
10441 10377 10305
Dec-93 10662 10616 10783
10882 10788 11035
10625 10514 10878
10221 10103 10374
10294 10171 10451
10257 10137 10352
10074 9966 9996
10515 10411 10335
11029 10856 10876
10588 10445 10673
10809 10651 10790
10257 10068 10303
Dec-94 10294 10103 10398
10515 10342 10506
10993 10788 11057
11176 10959 11249
11544 11336 11475
11838 11575 11751
12132 11884 12230
12610 12329 12868
12868 12568 13106
13162 12842 13424
13125 12808 13078
13713 13390 13649
Dec-95 13713 13356 13615
14044 13664 13813
14338 13938 14282
14559 14144 14453
14853 14384 14895
15184 14726 15096
15000 14521 14870
14044 13562 13864
14816 14315 14663
15515 14966 15303
15662 15137 15347
16434 15856 16212
Dec-96 16029 15445 16230
17096 16473 16839
17059 16438 16700
16618 15959 15988
16912 16233 16403
18529 17774 17837
19191 18425 18338
20772 19932 20154
20074 19212 20130
21324 20411 21287
20441 19521 20361
20662 19760 20663
Dec-97 20993 20034 21465
20478 19555 21056
22059 21027 22801
23015 21918 23829
23456 22329 24264
22978 21849 23172
23529 22329 23318
22353 21233 22414
18015 17089 18242
19228 18219 19945
20331 19247 21727
21544 20377 22812
Dec-98 22978 21712 25568
23640 22329 24572
22574 21301 23286
23971 22603 23936
25110 23664 25825
25368 23870 25936
26875 25274 27325
26140 24589 26745
25221 23664 25828
25000 23459 25030
26360 24692 26306
29191 27363 27687
Dec-99 31801 29760 29332
31287 29281 28506
36360 33973 30501
37537 35068 33054
35588 33219 31900
34412 32089 31501
36765 34247 31964
35515 33082 32469
40404 37603 36094
39265 36507 35847
Oct-00 36354 37059 34632
</TABLE>
The chart above represents a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Fund's benchmark,
and represents the reinvestment of dividends and capital gains in the Fund.
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
As of Inception 1 5 Since
October 31, 2000 Date'D' Year Year Inception
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HSBC Investor Mid-Cap Fund A(2) 7/1/93 33.20% 21.52% 18.39%
--------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund B(3) 7/1/93 35.53% 21.88% 18.37%
--------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund C(4) 7/1/93 38.53% 21.88% 18.37%
--------------------------------------------------------------------------------
HSBC Investor Mid-Cap Fund Trust 7/1/93 40.59% 23.07% 19.55%
--------------------------------------------------------------------------------
</TABLE>
(2) Reflects the maximum sales charge of 5.00%.
(3) Reflects the contingent deferred sales charge maximum 4.00%.
(4) Reflects the contingent deferred sales charge maximum 1.00%.
--------------------------------------------------------------------------------
'D' Prior to July 1, 2000, HSBC Asset Management (Americas), 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 Standard & Poor's 400 Mid-Cap Index, an
unmanaged index that consists of 400 domestic stocks chosen for market size,
liquidity and industry group representation. The performance of the index does
not reflect the deduction of expenses associated with a mutual fund, such as
investment management and fund accounting fees. The Fund's performance reflects
the deduction of fees for these value-added services. Investors cannot invest
directly in an index, although they can invest in its underlying securities.
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT AN INDICATION
OF FUTURE RESULTS. THE INVESTMENT RETURN AND NET ASSET VALUE WILL FLUCTUATE SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
9
<PAGE>
--------------------------------------------------------------------------------
PORTFOLIO REVIEWS
HSBC INVESTOR BOND FUND (CLASS A (INVESTOR) SHARES, B SHARES AND C SHARES)
HSBC INVESTOR FIXED INCOME FUND
by Kenneth B. Dunn
Portfolio Manager
Miller Anderson & Sherrerd
The HSBC Investor Bond Fund and the HSBC Investor Fixed Income 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 "master-feeder," in which the HSBC Investor Bond Fund and the HSBC Investor
Fixed Income Fund invest all of their investable assets in the HSBC Investor
Fixed Income Portfolio (the "Portfolio").
The Portfolio invests primarily in fixed-income instruments such as U.S.
Government securities, corporate debt securities and commercial paper,
mortgage-backed and asset-backed securities and similar securities issued by
foreign governments and corporations. The Portfolio employs Miller Anderson &
Sherrerd as sub-investment manager.
During the year ended October 31, 2000, the Class A (Investor) Shares of the
HSBC Investor Bond Fund returned 6.39% (without sales charge), and the shares of
the HSBC Investor Fixed Income Fund produced a 6.98% return. The Funds'
benchmarks, the Salomon Brothers Broad Investment-Grade Bond Fund Index and the
Lipper Corporate Debt Funds A-Rated Average,(1) returned 7.28% and 5.52%,
respectively.
For the year ended October 31, 2000, the portfolio turnover for the Portfolio
was 440.49%. Portfolio turnover measures the amount of trading activity as a
percentage of the total value of the portfolio. The largest positions in the
Portfolio for the entire fiscal year were 30-year fixed rate U.S. agency
mortgages. The most liquid manner to hold these mortgages is on a when-issued,
or TBA ("To Be Announced") basis. Newly issued mortgages are sold for future
settlement, which occurs once a month. On that settlement date, a holder of TBA
mortgages can either take delivery of actual pools of U.S. agency mortgages
(GNMA, FNMA or FHLMC) or trade the current month's mortgages for mortgages to be
issued the following month. This trade is called TBA mortgage roll, and
technically consists of the selling of the current month's TBA mortgages and
purchasing the next month's TBA mortgages without actually changing the interest
rate on or par value of the mortgage position.
The economy began the period growing considerably faster than the Fed's targeted
3% growth rate--the level at which the Fed believes the economy can grow without
causing inflation to rise. The Fed raised short-term interest rates four times,
for a total increase of 1.25 percentage points, in an effort to slow economic
growth. Those rate hikes prompted fixed-income investors to sell bonds, causing
yields to rise. For example, the yield on the 30-year Treasury bond rose from
6.16% at the beginning of our fiscal period to a high of around 7% in January.
We believe the Fed's rate increases were effective in slowing the economy and
keeping inflation in check. The prospect for lower inflation, combined with an
aggressive effort by the federal government to buy back long-term Treasury
bonds, helped the bond markets to perform well during the second half of the
period. The yield on the 30-year Treasury finished the period at 5.79%.
We believed that investors were overreacting to inflation fears, and that
interest rates would decline somewhat. Therefore, in January we lengthened the
duration of the Portfolio to 1.2 years longer than that of the Portfolio's
benchmark, the Salomon Brothers Investment-Grade Bond Fund Index, to help lock
in higher yields. That strategy benefited the Portfolio, as yields fell for the
rest of the period. We reduced the Portfolio's duration as yields declined,
until it was neutral to the benchmark as of October 31, 2000.*
We eliminated the Portfolio's position in Treasuries during the period. We felt
that investors overreacted to the government's debt retirement program and
pushed Treasury prices too high to make the securities attractive. Instead, we
favored corporate bonds, agency issues and mortgage-backed securities--which we
felt offered attractive yields relative to Treasuries.
We expect that economic growth will continue to slow during the coming year,
allowing the Fed to either leave rates alone or cut them. Either scenario should
benefit the bond markets. Furthermore, we believe the Portfolio should not be
hurt by an economic slowdown, because its corporate holdings are all of very
high quality. We will reduce the Portfolio's allocation to agency issues if
agencies' yield advantage over Treasuries reverts to historical norms.
--------------------------------------------------------------------------------
(1) The Lipper Corporate Debt Funds A-Rated Average is an average of managed
funds that invest at least 65% of their assets in corporate debt issues rated
"A" or better or in government issues. Lipper is an independent mutual fund
performance monitor whose results are based on total return and do not reflect
a sales charge. Investors cannot invest directly in an index, although they can
invest in the underlying securities.
* Portfolio composition is subject to change.
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT AN
INDICATION OF FUTURE RESULTS. THE INVESTMENT RETURN AND NET ASSET VALUE WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR
LESS THAN THEIR ORIGINAL COST.
10
<PAGE>
--------------------------------------------------------------------------------
PORTFOLIO REVIEWS
HSBC INVESTOR BOND FUND
HSBC INVESTOR FIXED INCOME FUND - AS OF OCTOBER 31, 2000
VALUE OF A $10,000 INVESTMENT
[GRAPH]
<TABLE>
<CAPTION>
HSBC Investor Bond Fund A Salomon Bros. Broad
(Investor)2 Investment-Grade Bond Index
<S> <C> <C>
8/26/1996 9524 10000
9466 10000
9652 10174
9868 10403
10095 10575
Dec-96 9997 10481
10031 10522
10082 10533
9958 10427
10102 10576
10199 10676
10314 10803
10583 11095
10501 11000
10628 11162
10726 11322
10761 11375
Dec-97 10845 11491
10967 11639
10950 11631
11007 11677
11066 11737
11139 11849
11177 11947
11208 11972
11227 12156
11459 12442
11346 12386
11517 12454
Dec-98 11539 12493
11662 12585
11461 12364
11542 12435
11602 12477
11465 12362
11362 12320
11256 12271
11230 12262
11389 12409
11423 12446
11441 12446
Dec-99 11391 12389
11341 12354
11479 12498
11562 12660
11524 12623
11442 12611
11744 12875
11830 12993
11991 13178
12113 13268
10/31/2000 12152 13352
</TABLE>
VALUE OF A $10,000 INVESTMENT
[GRAPH]
<TABLE>
<CAPTION>
HSBC Investor Fixed Salomon Bros. Broad
Income Fund Investment-Grade Bond Index
<S> <C> <C>
1/9/1995 10000 10000
10119 10207
10340 10446
10445 10506
10535 10650
10983 11073
11018 11151
10995 11128
11173 11256
11298 11362
11444 11514
11601 11694
Dec-95 11741 11855
11839 11936
11640 11733
11573 11648
11533 11563
11506 11556
11649 11706
11609 11737
11736 11720
11926 11924
12153 12192
12389 12394
Dec-96 12433 12284
12322 12332
12435 12345
12311 12221
12351 12395
12556 12512
12785 12661
13067 13004
12987 12893
13194 13082
13291 13270
13354 13332
Dec-97 13463 13468
13613 13641
13609 13632
13658 13685
13685 13756
13841 13887
13893 14002
13949 14031
13979 14247
14228 14582
14124 14516
14338 14596
Dec-98 14384 14642
14525 14750
14286 14491
14391 14574
14472 14623
14299 14489
14181 14439
14058 14382
14019 14371
14233 14543
14267 14587
14310 14587
Dec-99 14229 14520
14189 14479
14371 14648
14495 14838
14442 14794
14334 14781
14712 15090
14841 15228
15046 15445
15205 15550
10/31/2000 15306 15649
</TABLE>
The charts above represent a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Funds' benchmark
and represents the reinvestment of dividends and capital gains in the Funds.
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
As of Inception 1 5 Since
October 31, 2000 Date Year Year Inception
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HSBC Investor Fixed Income Fund 1/9/95 6.98% 5.93% 7.55%
-----------------------------------------------------------------------------------------
HSBC Investor Bond Fund A (Investor)(2) 8/26/96 1.31% N/A 4.77%
-----------------------------------------------------------------------------------------
HSBC Investor Bond Fund B(3) 1/6/98 1.67% N/A 2.37%
-----------------------------------------------------------------------------------------
HSBC Investor Bond Fund C(4) 11/4/98 4.71% N/A 2.88%
-----------------------------------------------------------------------------------------
</TABLE>
(2) Reflects the maximum sales charge of 4.75%.
(3) Reflects the contingent deferred sales charge maximum 4.00%.
(4) Reflects the contingent deferred sales charge maximum 1.00%.
--------------------------------------------------------------------------------
The Funds are measured against the Salomon Brothers Broad Investment-Grade Bond
Fund Index, an unmanaged market capitalization-weighted index that includes
fixed-rate Treasury, government-sponsored, corporate and mortgage securities.
All issues mature in one year or more and have at least $50 million face amount
outstanding for entry into the index. The performance of the index does not
reflect the deduction of expenses associated with a mutual fund, such as
investment management and fund accounting fees. The Funds' performance reflects
the deduction of fees for these value-added services. Investors cannot invest
directly in an index, although they can invest in its underlying securities.
During the period shown, the Investment Manager waived and/or voluntarily
reimbursed fees for various expenses. Had these waivers and/or reimbursements
not been in effect, performance quoted would have been lower.
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT AN INDICATION
OF FUTURE RESULTS. THE INVESTMENT RETURN AND NET ASSET VALUE WILL FLUCTUATE SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
11
<PAGE>
--------------------------------------------------------------------------------
Portfolio Reviews
HSBC INVESTOR OVERSEAS EQUITY FUND'D' (CLASS A (INVESTOR) SHARES, B SHARES AND C
SHARES)
HSBC INVESTOR INTERNATIONAL EQUITY FUND
by David Fisher
Portfolio Manager
Capital Guardian Trust Company
The HSBC Investor Overseas Equity Fund and the HSBC Investor International
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 Fund employs a two-tier fund structure, known as
"master-feeder", in which the HSBC Investor Overseas Equity Fund and the HSBC
Investor International Equity Fund invest all of their investable assets in the
HSBC Investor International Equity Portfolio (the "Portfolio").
The Portfolio invests primarily in equity securities of companies organized and
domiciled in developed nations outside the United States, or for which the
principal trading market is outside the United States, including Europe, Canada,
Australia and the Far East. The Portfolio employs Capital Guardian Trust Company
(the "sub-investment manager") as sub-investment manager.
The Class A (Investor) Shares of the HSBC Investor Overseas Equity Fund returned
3.05% (without sales charge), and the shares of the HSBC Investor International
Equity Fund returned 4.05% for the year ended October 31, 2000. That compares to
a -2.90% and 3.45% return for the Funds' benchmarks, the MSCI EAFE Index and the
Lipper International Funds Index,(1) respectively.
Global markets were very volatile during the period. Information technology and
telecommunications stocks performed poorly, as the correction in the U.S.
technology sector spread globally. Technology shares in Asia were particularly
hard-hit. Rising oil prices hurt other sectors, such as automobiles and
chemicals. In this environment, investors favored energy, banking and food and
beverage stocks.
The sub-investment manager's research-driven approach to investing is based on
extensive field research and direct company contact. The Fund's large position
in the technology sector dampened performance somewhat. However, our careful
stock selection and focus on technology companies with earnings helped the Fund
avoid the most severe losses in the sector. We found opportunities in consumer
durables, food and beverage stocks, capital equipment and service
stocks--sectors that enjoyed strong recoveries and were relatively unfazed by
rising interest rates. The Fund's holdings in banks in the United Kingdom and
Canada, as well as energy stocks in various markets, also helped to boost the
returns.*
We anticipate improving returns from international markets going forward. The
telecommunications sector will remain an important and fast-growing part of the
global economy. We will continue to look for winners on the cutting edge of
technology. A decline in the valuations of many foreign stocks has created
buying opportunities among shares of some good companies. Europe should continue
to be a good place to invest, in part because of the weakness of the Euro, which
reduces the cost of stocks there. We also are encouraged by the prospects in
Japan, where a new generation of highly competitive companies is emerging.
--------------------------------------------------------------------------------
'D' International investing involves increased risk and volatility.
(1) The Lipper International Funds Index is comprised of managed funds that
invest their assets in securities whose primary trading markets are outside of
the United States. Lipper is an independent mutual fund performance monitor
whose results are based on total return and do not reflect a sales charge.
Investors cannot invest directly in an index, although they can invest in its
underlying securities.
* Portfolio composition is subject to change.
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT AN INDICATION
OF FUTURE RESULTS. THE INVESTMENT RETURN AND NET ASSET VALUE WILL FLUCTUATE SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
12
<PAGE>
--------------------------------------------------------------------------------
Portfolio Reviews
HSBC INVESTOR OVERSEAS EQUITY FUND
HSBC INVESTOR INTERNATIONAL EQUITY FUND - AS OF OCTOBER 31, 2000
--------------------------------------------------------------------------------
Value of a $10,000 Investment
[GRAPH]
<TABLE>
<CAPTION>
HSBC Investor Overseas
Equity Fund A (Investor)2 MSCI EAFE Index
<S> <C> <C>
8/26/1996 9497 10000
9383 10000
9630 10268
9639 10166
10066 10573
Dec-96 10132 10439
10227 10076
10407 10244
10388 10283
10578 10340
11301 11016
11928 11626
12318 11816
13587 10936
12108 11551
10996 10666
10920 10560
Dec-97 10932 10654
11404 11144
12194 11861
12628 12229
12791 12329
12579 12272
12387 12367
12387 12496
10595 10950
10393 10617
11212 11727
11876 12331
Dec-98 12087 12820
12695 12785
12415 12484
13090 13008
13794 13538
13389 12844
14460 13347
14981 13747
15251 13800
15656 13942
16303 14468
17711 14973
Dec-99 20392 16320
19474 15286
20607 15700
21056 16312
20021 15457
19006 15082
19992 15675
18840 15021
19221 15155
17561 14420
10/31/2000 16800 14082
</TABLE>
--------------------------------------------------------------------------------
Value of a $10,000 Investment
[GRAPH]
<TABLE>
<CAPTION>
HSBC Investor International
Equity Fund MSCI EAFE Index
<S> <C> <C>
1/9/1995 10000 10000
9740 9616
9800 9588
9910 10186
10300 10569
10440 10443
10330 10260
10902 10899
10771 10483
11002 10688
10831 10401
11012 10690
Dec-95 11254 11121
11467 11166
11528 11204
11639 11442
12045 11775
12035 11558
12090 11623
11744 11283
11917 11308
12242 11609
12263 11490
12843 11947
Dec-96 12950 11793
13085 11381
13324 11567
13397 11609
13667 11670
14644 12430
15497 13115
16027 13327
14779 12332
15788 13023
14301 12022
14197 11899
Dec-97 14208 12003
14823 12552
15874 13357
16466 13769
16690 13878
16433 13810
16187 13915
16187 14056
13839 12314
13627 11937
14801 13181
15695 13856
Dec-98 15975 14403
16806 14361
16443 14018
17356 14604
18292 15195
17777 14413
19217 14975
19930 15420
20305 15476
20878 15632
21744 16217
23652 16781
Dec-99 27319 18287
26145 17125
27693 17586
28317 18268
26944 17306
25521 16884
26857 17544
25322 16808
25846 16954
23637 16129
10/31/2000 22626 15748
</TABLE>
The charts above represent a comparison of a hypothetical $10,000
investment in the indicated share class versus a similar investment in the
Funds' benchmark and represents the reinvestment of dividends and capital
gains in the Funds.
--------------------------------------------------------------------------------
Average Annual Total Return
<TABLE>
<CAPTION>
As of Inception 1 5 Since
October 31, 2000 Date Year Year Inception
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HSBC Investor International Equity Fund 1/9/95 4.05% 15.87% 15.09%
-----------------------------------------------------------------------------------------
HSBC Investor Overseas Equity Fund A (Investor)(2) 8/26/96 -2.11% N/A 13.21%
-----------------------------------------------------------------------------------------
HSBC Investor Overseas Equity Fund B(3) 1/6/98 -1.82% N/A 14.64%
-----------------------------------------------------------------------------------------
HSBC Investor Overseas Equity Fund C(4) 11/4/98 1.10% N/A 20.43%
-----------------------------------------------------------------------------------------
</TABLE>
(2) Reflects the maximum sales charge of 5.00%.
(3) Reflects the contingent deferred sales charge maximum 4.00%.
(4) Reflects the contingent deferred sales charge maximum 1.00%.
--------------------------------------------------------------------------------
The Funds are measured against the Morgan Stanley Capital International (MSCI)
Europe, Australasia and Far East (EAFE) Index, which is an unmanaged index that
measures performance of a diverse range of developed countries in the indicated
regions. The performance of the index does not reflect the deduction of expenses
associated with a mutual fund, such as investment management and fund accounting
fees. The Funds' performance reflects the deduction of fees for these
value-added services. Investors cannot invest directly in an index, although
they can invest in its underlying securities. During the period shown, the
Investment Manager waived and/or voluntarily reimbursed fees for various
expenses. Had these waivers and/or reimbursements not been in effect,
performance quoted would have been lower.
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT AN INDICATION
OF FUTURE RESULTS. THE INVESTMENT RETURN AND NET ASSET VALUE WILL FLUCTUATE SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
13
<PAGE>
--------------------------------------------------------------------------------
PORTFOLIO REVIEWS
HSBC INVESTOR OPPORTUNITY FUND'D' (CLASS A (INVESTOR) SHARES, B SHARES AND
C SHARES)
HSBC INVESTOR SMALL CAP EQUITY FUND
by Brian Stack
Portfolio Manager
MFS Institutional Advisers, Inc.
The HSBC Investor Opportunity Fund and the HSBC Investor Small Cap Equity 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 HSBC Investor Opportunity Fund and
the HSBC Investor Small Cap Equity Fund invest all of their investable assets in
the HSBC Investor Small Cap Equity Portfolio (the "Portfolio").
The Portfolio invests primarily in common stocks of small and medium-sized
companies that may have the potential to become major enterprises. The Portfolio
employs MFS Institutional Advisers, Inc., as sub-investment manager.
During the year ended October 31, 2000, the Class A (Investor) Shares of the
HSBC Investor Opportunity Fund produced a 54.54% return (without sales charge),
and the shares of the HSBC Investor Small Cap Equity Fund produced a return of
55.59%. The Funds' benchmarks, the Russell 2000 Stock Index and the Lipper Small
Cap Funds Index,(1) gained 17.41% and 29.58%, respectively.
Shares of small companies outperformed large-company stocks during the period.
One reason: valuations of small-cap stocks began the period much lower than
those of large-cap stocks. That said, stocks were extremely volatile during the
period due to concerns about the strength of the U.S. economy and the
possibility of rising inflation. Technology stocks were especially volatile: the
sector posted strong gains through March, when inflation fears caused investors
to sell tech shares. Technology stock prices continued to fluctuate widely
during the rest of the period. Investors also began to shift assets from
high-priced growth stocks to more value-oriented shares, which offered more
stability in an uncertain environment.
The Portfolio employs a bottom-up fundamentals-based approach to investing in
small and medium-sized companies. We focus on the merits of individual companies
and their stock market valuations. We invest in shares of firms with strong
earnings growth potential because we believe that relative earnings growth
drives stock prices. That approach led the Portfolio to invest heavily in
technology, health-care and energy stocks. Stocks that had the greatest impact
on the Portfolio's performance include Caremark Rx, Inc. (5.37% of portfolio net
assets on October 31, 2000), which provides pharmaceutical services, and RSA
Security, Inc. (2.72%), a provider of Internet security.*
Small-company stocks continue to offer strong growth potential and more
attractive valuations than large-company shares. As always, we will continue to
invest in firms, that, we believe, have strong fundamentals, when their shares
trade at attractive valuations. We expect to find such opportunities among
shares of technology, energy and business services firms. We believe that the
technology sector continues to offer the potential for tremendous growth, driven
by networking at home and at work, as well as uses of technology to increase
productivity. Many business services firms offer strong growth rates and
predictable revenues.
--------------------------------------------------------------------------------
'D' Small-capitalization funds typically carry additional risks, since smaller
companies generally have a higher risk of failure. Historically, smaller
companies' stocks have experienced a greater degree of market volatility than
average.
(1) The Lipper Small Cap Funds Index is comprised of managed funds that, by
prospectus or portfolio practice, invest primarily in companies with market
capitalization of less than $1 billion at time of purchase. Lipper is an
independent mutual fund performance monitor whose results are based on total
return and do not reflect a sales charge. Investors cannot invest directly in an
index, although they can invest in its underlying securities.
* Portfolio composition is subject to change.
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT AN INDICATION
OF FUTURE RESULTS. THE INVESTMENT RETURN AND NET ASSET VALUE WILL FLUCTUATE SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. SOME OF THE RETURNS SHOWN REFLECT A PERIOD OF UNUSUALLY FAVORABLE
MARKET CONDITIONS, WHICH MAY BE DIFFICULT TO DUPLICATE.
14
<PAGE>
--------------------------------------------------------------------------------
PORTFOLIO REVIEWS
HSBC INVESTOR OPPORTUNITY FUND
HSBC INVESTOR SMALL CAP EQUITY FUND - AS OF OCTOBER 31, 2000
VALUE OF A $10,000 INVESTMENT
[GRAPH]
<TABLE>
<CAPTION>
HSBC Investor Opportunity
Fund A (Investor)2 Russell 2000 Stock Index
<S> <C> <C>
9/23/1996 9497 10000
9687 10000
9307 9846
9677 10252
Dec-96 9501 10520
9805 10730
9501 10470
9007 9976
9169 10004
10337 11117
10907 11593
11525 12133
11667 12410
12399 13319
11753 12734
11724 12651
Dec-97 11578 12873
11578 12670
12715 13606
13317 14167
13643 14246
13011 13479
13317 13507
12428 12413
9800 10003
10630 10786
11203 11226
11865 11814
Dec-98 13080 12545
12965 12712
11808 11682
11934 11864
12471 12928
13080 13116
13932 13710
13511 13333
13164 12840
13143 12843
13869 12895
15751 13665
Dec-99 19238 15212
18415 14967
22416 17439
21421 16289
20141 15309
19352 14417
21467 15673
20347 15169
22690 16327
21970 15847
10/31/2000 21433 15139
</TABLE>
VALUE OF A $10,000 INVESTMENT
[GRAPH]
<TABLE>
<CAPTION>
HSBC Investor Small Cap
Equity Fund Russell 2000 Stock Index
<S> <C> <C>
9/3/1996 10000 10000
10900 10391
10630 10231
11060 10652
Dec-96 10864 10931
11216 11150
10864 10879
10310 10366
10502 10395
11860 11551
12513 12046
13238 12607
13409 12895
14274 13839
13519 13231
13509 13146
Dec-97 13336 13376
13336 13165
14655 14138
15354 14721
15738 14803
15005 14005
15354 14035
14340 12899
11318 10394
12277 11207
12942 11664
13720 12275
Dec-98 15127 13035
14999 13208
13663 12139
13830 12328
14447 13433
15166 13629
16168 14245
15680 13854
15294 13342
15281 13345
16129 13399
18325 14199
Dec-99 22418 15806
21502 15552
26180 18120
25011 16926
23517 15907
22573 14980
25039 16286
23757 15762
26504 16965
25673 16466
10/31/2000 25095 15731
</TABLE>
The charts above represent a comparison of a hypothetical $10,000 investment in
the indicated share class versus a similar investment in the Funds' benchmark
and represents the reinvestment of dividends and capital gains in the Funds.
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
As of Inception 1 Since
October 31, 2000 Date Year Inception
-------------------------------------------------------------------------------------
<S> <C> <C> <C>
HSBC Investor Small Cap Equity Fund 9/3/96 55.59% 24.76%
-------------------------------------------------------------------------------------
HSBC Investor Opportunity Fund A (Investor)(2) 9/23/96 46.85% 20.43%
-------------------------------------------------------------------------------------
HSBC Investor Opportunity Fund B(3) 1/6/98 49.30% 23.44%
-------------------------------------------------------------------------------------
HSBC Investor Opportunity Fund C(4) 11/4/98 52.32% 36.38%
-------------------------------------------------------------------------------------
</TABLE>
(2) Reflects the maximum sales charge of 5.00%.
(3) Reflects the contingent deferred sales charge maximum 4.00%.
(4) Reflects the contingent deferred sales charge maximum 1.00%.
--------------------------------------------------------------------------------
The Funds are measured against the Russell 2000 Stock 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 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.
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT AN INDICATION
OF FUTURE RESULTS. THE INVESTMENT RETURN AND NET ASSET VALUE WILL FLUCTUATE SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. SOME OF THE RETURNS SHOWN REFLECT A PERIOD OF UNUSUALLY FAVORABLE
MARKET CONDITIONS, WHICH MAY BE DIFFICULT TO DUPLICATE.
15
<PAGE>
HSBC INVESTOR FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND OCTOBER 31, 2000
--------------------------------------------------------------------------------
MUNICIPAL BONDS - 98.8%
<TABLE>
<CAPTION>
SHARES OR
MOODY'S/S&P PRINCIPAL
RATINGS(b) AMOUNT VALUE
---------- ------ -----
<S> <C> <C> <C>
Brookhaven GO (FGIC Insured), 5.50%, 10/1/12................ Aaa/AAA $ 500,000 $ 518,970
Erie County GO Series B (FGIC Insured), 5.38%, 6/15/07...... Aaa/AAA 250,000 261,158
Long Island Power Authority (LOC ABN Amro Bank NV), 4.55%,
11/1/00*................................................... AA3/AA 1,000,000 1,000,000
Metropolitan Transit Authority of New York, Transportation
Facility Revenue - Series C-1, 5.75%, 7/1/13.............. Baa1/A 285,000 301,425
Metropolitan Transit Authority of New York, Transportation
Facility Revenue - Series C-1 (FGIC Insured), 5.25%,
7/1/17..................................................... Aaa/AAA 720,000 710,899
Monroe County Airport Authority, Greater Rochester
International Airport, AMT (MBIA Insured), 5.75%, 1/1/14... Aaa/AAA 750,000 790,748
New York City GO Series H, 6.00%, 8/1/14.................... A2/A 1,000,000 1,047,090
New York City Housing Development Corp., 5.70%, 11/1/13..... AA2/Aa 500,000 505,525
New York City Housing Development Corp., 5.60%, 11/1/19..... Aa2/AA 100,000 99,077
New York City Transitional Financial Authority Revenue (FGIC
Insured), 6.00%, 8/15/15................................... Aaa/AAA 1,000,000 1,067,610
New York City Water Authority, 5.94%, 6/15/19**............. Aaa/AAA 2,000,000 713,140
New York City, GO (LOC Morgan Guaranty Trust), 4.75%,
11/1/00*................................................... AA3/AAA 1,000,000 1,000,000
New York State Local Government Assistance Corp., Revenue,
6.00%, 4/1/16, Prerefunded 4/1/05 @ 102.................... Aaa/AAA 190,000 204,850
New York State Local Government Assistance Corp., Revenue,
6.00%, 4/1/16, Callable 4/1/05 @ 102....................... A3/AA - 810,000 844,255
New York State Dormitory Authority Revenue, 6.25%,
5/15/17.................................................... A3/A 375,000 398,996
New York State Dormitory Authority Revenue, Memorial Sloan
Kettering Hospital, 5.50%, 7/1/23.......................... Aaa/AAA 1,300,000 1,315,924
New York State Dormitory Authority Revenue, City University,
Series A (AMBAC Insured), 5.63%, 7/1/16.................... Aaa/AAA 1,000,000 1,051,120
New York State Dormitory Authority Revenue, Mental Health
Service Facility Series B, 6.50%, 8/15/11.................. A3/A 225,000 252,758
New York State Dormitory Authority Revenue, Mental Health
Services Series B, 5.50%, 8/15/17.......................... A3/A 1,000,000 995,030
New York State Dormitory Authority Revenue, Rockefeller
University, 5.25%, 7/1/13.................................. Aaa/AAA 500,000 511,570
New York State Dormitory Authority Revenue, State University
Educational Facilities, 5.75%, 5/15/09..................... A3/A 500,000 527,315
New York State Dormitory Authority Revenues, The NY
Presbyterian Hospital, 5.50%, 8/1/10 (AMBAC Insured)....... Aaa/AAA 750,000 786,563
New York State Dormitory Authority Revenues, The NY
Presbyterian Hospital, 6.00%, 7/1/19, Callable 7/1/09 @ 101
(AMBAC Insured)............................................ Aaa/AAA 350,000 368,669
New York State Energy Research & Development Pollution
Control Revenue for Niagara Mohawk Power Corp., AMT (LOC
Toronto Dominion Bank), 4.65%, 11/1/00*.................... AA2/NR 300,000 300,000
New York State Environmental Facility Corp., 5.70%,
1/15/14.................................................... Aaa/Aaa 1,000,000 1,051,580
New York State Housing Finance Agency, Service Contract,
5.88%, 9/15/14............................................. Baa1/A 1,000,000 1,019,400
New York State Mortgage Agency Revenue, AMT, 5.60%,
10/1/14.................................................... Aa1/AA 1,000,000 1,013,540
New York State Thruway Authority, Service Contract Revenue,
5.88%, 4/1/14.............................................. Aa/AAA 1,000,000 1,061,710
New York State Urban Development Corp., Revenue, 5.75%,
4/1/12..................................................... Baa1/A 500,000 529,395
New York State Urban Development Corp., Revenue, 5.75%,
4/1/12..................................................... Baa1/A 1,000,000 1,037,400
Port Authority of New York & New Jersey, 85th Series, 5.38%,
3/1/28..................................................... A1/AA - 1,100,000 1,082,576
Port Authority of New York & New Jersey, Special Obligation,
Revenue, JFK International Terminal, AMT (MBIA Insured),
5.75%, 12/1/22............................................. Aaa/AAA 500,000 507,565
-----------
TOTAL MUNICIPAL BONDS (Cost $20,055,481).............................................. 22,875,858
-----------
----------------------------------------------------------------------------------------------------
INVESTMENT COMPANIES - 0.2%
Provident New York Tax-Free Money Market Fund............................ 41,681 41,681
-----------
TOTAL INVESTMENT COMPANIES (Cost $41,681)............................................. 41,681
-----------
</TABLE>
Continued
16
<PAGE>
HSBC INVESTOR FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND OCTOBER 31, 2000
<TABLE>
<CAPTION>
VALUE
-----
<S> <C>
TOTAL INVESTMENTS (COST $22,097,161)(A) - 99.0%. 22,917,539
-----------
OTHER ASSETS IN EXCESS OF LIABILITIES - 1.0%......................................... 240,179
-----------
NET ASSETS - 100.0%.................................................................. $23,157,718
-----------
-----------
</TABLE>
---------
(a) Represents cost for financial reporting and federal income tax purposes and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $822,522
Unrealized depreciation..................................... (2,144)
--------
Net unrealized appreciation................................. $820,378
--------
--------
</TABLE>
(b) The Moody's and Standard & Poor's ('S&P') ratings indicated are believed to
be the most recent ratings available at October 31, 2000 for the securities
listed. Ratings are generally ascribed to securities at the time of
issuance. While Moody's and S&P may from time to time revise such ratings,
they undertake no obligation to do so, and the ratings do not necessarily
represent what the agencies would ascribe to these securities at
October 31, 2000. These ratings are unaudited.
<TABLE>
<S> <C>
AMBAC -- American Municipal Bond Assurance Corporation
Interest on security is subject to Federal Alternative
AMT -- Minimum Tax
FGIC -- Federal Guaranty Insurance Corporation
GO -- General Obligation
LOC -- Letter of Credit
MBIA -- Municipal Bond Insurance Association
</TABLE>
At October 31, 2000, the fund's open future contracts were as follows:
<TABLE>
<CAPTION>
UNREALIZED
NUMBER OF EXPIRATION CONTRACT DEPRECIATION
SHORT CONTRACT CONTRACTS DATE VALUE OF CONTRACTS
------------------------------------------------------------ --------- ---------- -------- ------------
<S> <C> <C> <C> <C>
Muni Bond Future............................................ 10 12/19/00 $995,625 $(10,993)
--------
--------
</TABLE>
* Variable rate investments. The rate presented on the Schedule of Portfolio
Investments is the rate in effect at October 31, 2000. The date presented
reflects the next rate change date.
** Rate presented indicates effective yield at time of purchase.
See notes to financial statements.
17
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
--------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (cost
$22,097,161).......................... $22,917,539
Cash................................... 35,316
Interest & dividends receivable........ 267,609
Receivable for capital shares issued... 6,000
Variation margin receivable on open
futures contracts..................... 3,438
Prepaid expenses....................... 836
-----------
TOTAL ASSETS........................ 23,230,738
LIABILITIES:
Dividends payable...................... $50,395
Payable for capital shares redeemed.... 163
Accrued expenses and other liabilities:
Investment management................. 4,945
Administration........................ 1,636
Distribution.......................... 239
Shareholder servicing................. 3,598
Other................................. 12,044
-------
TOTAL LIABILITIES................... 73,020
-----------
NET ASSETS............................. $23,157,718
-----------
-----------
COMPOSITION OF NET ASSETS:
Capital................................ $22,955,312
Dividends in excess of accumulated net
investment income..................... (37,574)
Accumulated net realized losses from
investment and futures transactions... (569,405)
Unrealized appreciation from
investments and futures............... 809,385
-----------
NET ASSETS............................. $23,157,718
-----------
-----------
CLASS A (INVESTOR) SHARES
Net Assets............................. $12,400,553
Shares Outstanding..................... 1,193,808
Net Asset Value and Redemption Price
per share............................. $ 10.39
-----------
-----------
Maximum Offering Price per share (Net
asset value/(100% -- maximum sales
charge of 4.75%))..................... $ 10.91
-----------
-----------
CLASS B SHARES
Net Assets............................. $ 827,672
Shares Outstanding..................... 79,763
Net Asset Value, Offering Price and
Redemption Price per share*........... $ 10.38
-----------
-----------
CLASS C SHARES
Net Assets............................. $ 415,783
Shares Outstanding..................... 39,897
Net Asset Value, Offering Price and
Redemption Price per share*........... $ 10.42
-----------
-----------
CLASS Y (ADVISER) SHARES
Net Assets............................. $ 9,513,710
Shares Outstanding..................... 915,952
Net Asset Value, Offering Price and
Redemption Price per share............ $ 10.39
-----------
-----------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000
<S> <C> <C>
INVESTMENT INCOME:
Interest................................ $1,411,153
Dividend................................ 4,677
----------
TOTAL INVESTMENT INCOME.............. 1,415,830
EXPENSES:
Investment management................... $64,112
Administration.......................... 20,846
Distribution:
Class B Shares......................... 4,631
Class C Shares......................... 2,132
Shareholder servicing:
Class A (Investor) Shares.............. 38,644
Class B Shares......................... 1,563
Class C Shares......................... 704
Accounting.............................. 45,614
Custodian............................... 9,174
Transfer agent.......................... 53,747
Other................................... 9,823
-------
Total expenses before fee reductions
and reimbursements................... 250,990
Fee reductions and reimbursements...... (27,652)
----------
NET EXPENSES........................... 223,338
----------
NET INVESTMENT INCOME................... 1,192,492
----------
NET REALIZED/UNREALIZED GAINS/(LOSSES)
FROM INVESTMENTS:
Net realized losses from investment and
futures transactions................... (453,209)
Change in unrealized
appreciation/depreciation from
investments and futures................ 1,251,385
----------
Net realized/unrealized gains from from
investments and futures................ 798,176
----------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS............................. $1,990,668
----------
----------
</TABLE>
---------
*Redemption price per share varies by length of time shares are held.
See notes to financial statements.
18
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
OCTOBER 31,
----------------------------
2000 1999
----------- -----------
<S> <C> <C>
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income...................................... $ 1,192,492 $ 1,325,626
Net realized losses from investment and futures
transactions............................................. (453,209) (116,195)
Change in unrealized appreciation/depreciation from
investments and futures.................................. 1,251,385 (2,293,233)
----------- -----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS.............. 1,990,668 (1,083,802)
----------- -----------
DIVIDENDS:
Net investment income:
Class A (Investor) Shares................................ (710,880) (909,157)
Class B Shares........................................... (23,831) (21,353)
Class C Shares (a)....................................... (10,608) (5,591)
Class Y (Adviser) Shares................................. (447,173) (388,326)
In excess of net investment income:
Class A (Investor) Shares................................ (19,831) (858)
Class B Shares........................................... (1,379) (23)
Class C Shares (a)....................................... (646) --
Class Y (Adviser) Shares................................. (14,516) (320)
Net realized gains from investment and futures
transactions:
Class A (Investor) Shares................................ -- (32,437)
Class B Shares........................................... -- (900)
Class Y (Adviser) Shares................................. -- (12,643)
----------- -----------
CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS............. (1,228,864) (1,371,608)
----------- -----------
CHANGE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS........ (4,610,671) (2,950,317)
----------- -----------
CHANGE IN NET ASSETS........................................ (3,848,867) (5,405,727)
NET ASSETS:
Beginning of period........................................ 27,006,585 32,412,312
----------- -----------
End of period.............................................. $23,157,718 $27,006,585
----------- -----------
----------- -----------
</TABLE>
---------
(a) The Fund commenced offering Class C Shares on November 4, 1998.
See notes to financial statements.
19
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS A (INVESTOR) SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED OCTOBER 31,
-------------------------------------------------------
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.08 $ 10.93 $ 10.64 $ 10.30 $ 10.38
------- ------- ------- ------- -------
INVESTMENT ACTIVITIES:
Net investment income...................................... 0.46 0.46 0.47 0.45 0.54
Net realized and unrealized gains/(losses) from investment
and futures transactions................................. 0.33 (0.83) 0.33 0.36 (0.01)
------- ------- ------- ------- -------
Total from investment activities........................... 0.79 (0.37) 0.80 0.81 0.53
------- ------- ------- ------- -------
DIVIDENDS:
Net investment income...................................... (0.46) (0.46) (0.47) (0.45) (0.54)
In excess of net investment income......................... (0.02) (0.00)* -- -- --
Net realized gains from investment and futures
transactions............................................. -- (0.02) (0.04) (0.02) (0.07)
------- ------- ------- ------- -------
Total dividends............................................ (0.48) (0.48) (0.51) (0.47) (0.61)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.39 $ 10.08 $ 10.93 $ 10.64 $ 10.30
------- ------- ------- ------- -------
------- ------- ------- ------- -------
TOTAL RETURN (EXCLUDES SALES CHARGE)........................ 8.03% (3.62)% 7.65% 8.22% 4.75%
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's)......................... $12,401 $17,568 $23,153 $20,794 $ 6,353
Ratio of expenses to average net assets..................... 0.93% 0.96 % 0.95% 0.92% 0.58%
Ratio of net investment income to average net assets........ 4.60% 4.22 % 4.28% 4.46% 4.78%
Ratio of expenses to average net assets (a)................. 1.06% 1.21 % 1.20% 1.55% 2.21%
Portfolio turnover (b)...................................... 34.12% 46.56 % 100.35% 163.46% 178.11%
</TABLE>
---------
* Less than $0.005 per share.
(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 Fund as a whole,
without distinguishing between the classes of shares issued.
See notes to financial statements.
20
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS B SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE YEARS FOR THE PERIOD
ENDED OCTOBER 31, JANUARY 6, 1998
------------------- TO OCTOBER 31,
2000 1999 1998(a)
-------- -------- -----------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $10.07 $10.92 $10.81
------ ------ ------
INVESTMENT ACTIVITIES:
Net investment income...................................... 0.39 0.38 0.37
Net realized and unrealized gains/(losses) from investment
and futures transactions................................. 0.33 (0.83) 0.11
------ ------ ------
Total from investment activities........................... 0.72 (0.45) 0.48
------ ------ ------
DIVIDENDS:
Net investment income...................................... (0.39) (0.38) (0.37)
In excess of net investment income......................... (0.02) (0.00)* --
Net realized gains from investment and futures
transactions............................................. -- (0.02) --
------ ------ ------
Total dividends............................................ (0.41) (0.40) (0.37)
------ ------ ------
NET ASSET VALUE, END OF PERIOD.............................. $10.38 $10.07 $10.92
------ ------ ------
------ ------ ------
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE)................... 7.27% (4.30)% 4.50%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's)......................... $ 828 $ 564 $ 618
Ratio of expenses to average net assets..................... 1.70% 1.71 % 1.70%(c)
Ratio of net investment income to average net assets........ 3.81% 3.48 % 3.53%(c)
Ratio of expenses to average net assets (d)................. 1.74% 1.96 % 1.95%(c)
Portfolio turnover (e)...................................... 34.12% 46.56 % 100.35%
</TABLE>
---------
* Less than $0.005 per share.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) During the period, certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See notes to financial statements.
21
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS C SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED NOVEMBER 4, 1998
OCTOBER 31, TO OCTOBER 31,
2000 1999(a)
------------ -----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $10.11 $10.90
------ ------
INVESTMENT ACTIVITIES:
Net investment income...................................... 0.39 0.34
Net realized and unrealized gains/(losses) from investment
and futures transactions................................. 0.33 (0.77)
------ ------
Total from investment activities........................... 0.72 (0.43)
------ ------
DIVIDENDS:
Net investment income...................................... (0.39) (0.34)
In excess of net investment income......................... (0.02) --
Net realized gains from investment and futures
transactions............................................. -- (0.02)
------ ------
Total dividends............................................ (0.41) (0.36)
------ ------
NET ASSET VALUE, END OF PERIOD.............................. $10.42 $10.11
------ ------
------ ------
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE)................... 7.23% (4.10)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's)......................... $ 416 $ 256
Ratio of expenses to average net assets..................... 1.71% 1.70 %(c)
Ratio of net investment income to average net assets........ 3.77% 3.46 %(c)
Ratio of expenses to average net assets (d)................. 1.73% 2.02 %(c)
Portfolio turnover (e)...................................... 34.12% 46.56 %
</TABLE>
---------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) During the period, certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See notes to financial statements.
22
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS Y (ADVISER) SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEARS ENDED OCTOBER 31, JULY 1, 1996
----------------------------------------- TO OCTOBER 31,
2000 1999 1998 1997 1996(a)
------ ------ ------ ------ --------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $10.07 $10.93 $10.64 $10.30 $10.18
------ ------ ------ ------ ------
INVESTMENT ACTIVITIES:
Net investment income...................................... 0.49 0.48 0.49 0.46 0.16
Net realized and unrealized gains/(losses) from investment
and futures transactions................................. 0.34 (0.84) 0.33 0.36 0.12
------ ------ ------ ------ ------
Total from investment activities........................... 0.83 (0.36) 0.82 0.82 0.28
------ ------ ------ ------ ------
DIVIDENDS:
Net investment income...................................... (0.49) (0.48) (0.49) (0.46) (0.16)
In excess of net investment income......................... (0.02) (0.00)* -- -- --
Net realized gains from investment and futures
transactions............................................. -- (0.02) (0.04) (0.02) --
------ ------ ------ ------ ------
Total dividends............................................ (0.51) (0.50) (0.53) (0.48) (0.16)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD.............................. $10.39 $10.07 $10.93 $10.64 $10.30
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN................................................ 8.41% (3.45)% 7.87% 8.38% 3.52%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's)......................... $9,514 $8,619 $8,641 $8,901 $8,233
Ratio of expenses to average net assets..................... 0.69% 0.71 % 0.70% 0.78% 0.60%(c)
Ratio of net investment income to average net assets........ 4.82% 4.49 % 4.53% 4.66% 4.78%(c)
Ratio of expenses to average net assets (d)................. 0.78% 0.96 % 0.95% 1.27% 2.26%(c)
Portfolio turnover (e)...................................... 34.12% 46.56 % 100.35% 163.46% 178.11%
</TABLE>
---------
* Less than $0.005 per share.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) During the period, certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See notes to financial statements.
23
<PAGE>
HSBC INVESTOR FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR EQUITY FUND OCTOBER 31, 2000
<TABLE>
<CAPTION>
--------------------------------------------------------------
COMMON STOCKS - 100.0%
SHARES VALUE
--------- ------------
<S> <C> <C>
AEROSPACE/DEFENSE - 1.2%
General Dynamics Corp............... 38,300 $ 2,740,844
------------
AUTO MANUFACTURERS - 1.3%
General Motors Corp................. 46,869 2,911,737
------------
AUTO PARTS & EQUIPMENT - 0.5%
TRW, Inc............................ 28,200 1,184,400
------------
BANKING & FINANCE - 15.7%
Associates First Capital Corp....... 59,617 2,213,281
Bank One Corp....................... 25,100 916,150
Chase Manhattan Corp................ 121,700 5,537,350
Citigroup, Inc...................... 155,532 8,184,871
Federal National Mortgage Assn...... 46,550 3,584,350
First Union Corp.................... 66,900 2,027,906
Household International, Inc........ 48,500 2,440,156
MBNA Corp........................... 109,200 4,101,825
Merrill Lynch & Co.................. 6,600 462,000
Morgan Stanley Dean Witter & Co..... 52,800 4,240,500
Wells Fargo & Co.................... 57,100 2,644,444
------------
36,352,833
------------
CHEMICALS - 0.4%
Air Products and Chemicals, Inc..... 25,600 955,200
------------
COMPUTER SERVICES - 0.4%
VeriSign, Inc. (b).................. 6,300 831,600
------------
COMPUTER SOFTWARE - 4.7%
America Online, Inc. (b)............ 25,500 1,285,965
Microsoft Corp. (b)................. 57,000 3,925,875
Oracle Corp. (b).................... 112,000 3,696,000
Veritas Software Corp. (b).......... 10,100 1,424,258
Yahoo!, Inc. (b).................... 8,000 469,000
------------
10,801,098
------------
COMPUTERS - 9.5%
Cisco Systems, Inc. (b)............. 149,300 8,043,537
Dell Computer Corp. (b)............. 131,500 3,879,249
Electronic Data Systems............. 49,550 2,325,753
EMC Corp. (b)....................... 24,400 2,173,125
International Business Machines
Corp............................... 36,350 3,580,475
Sun Microsystems, Inc. (b).......... 17,300 1,918,138
------------
21,920,277
------------
CONSUMER MANUFACTURING - 7.4%
General Electric Co................. 128,500 7,043,406
Harley-Davidson, Inc................ 51,000 2,457,563
Tyco International Ltd.............. 132,600 7,516,762
------------
17,017,731
------------
CONSUMER PRODUCTS - 2.6%
Colgate-Palmolive Co................ 44,700 2,626,572
Kimberly-Clark Corp................. 40,150 2,649,900
Newell Rubbermaid, Inc.............. 32,750 628,391
------------
5,904,863
------------
<CAPTION>
--------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE
--------- ------------
<S> <C> <C>
ELECTRICAL SERVICES - 1.8%
Edison International................ 58,100 $ 1,387,138
FPL Group, Inc...................... 41,900 2,765,400
------------
4,152,538
------------
ELECTRONIC COMPONENTS/SEMICONDUCTORS - 11.7%
Altera Corp. (b).................... 135,000 5,526,562
Applied Materials, Inc. (b)......... 9,800 520,625
Flextronics International Ltd.
(b)................................ 69,300 2,633,400
Intel Corp.......................... 137,300 6,178,499
Koninklijke (Royal) Philips
Electronics NV, ADR................ 81,331 3,248,157
PMC-Sierra, Inc. (b)................ 13,200 2,237,400
Solectron Corp. (b)................. 125,600 5,526,400
Thermo Electron Corp. (b)........... 32,750 949,750
------------
26,820,793
------------
FOREST PRODUCTS & PAPER - 1.0%
Weyerhaeuser Co..................... 46,850 2,199,022
------------
HEALTH CARE - 2.7%
Bausch & Lomb, Inc.................. 23,950 923,572
Becton Dickinson & Co............... 42,100 1,410,350
Guidant Corp. (b)................... 19,500 1,032,281
Medtronic, Inc...................... 54,500 2,960,031
------------
6,326,234
------------
INSURANCE - 4.4%
Allstate Corp....................... 73,700 2,966,425
American International Group........ 38,850 3,807,300
Loews Corp.......................... 6,700 609,281
Metlife, Inc. (b)................... 97,900 2,704,488
------------
10,087,494
------------
MEDIA - 5.3%
AT&T - Liberty Media Group (b)...... 214,800 3,866,400
Comcast Corp. (b)................... 33,000 1,344,750
Knight-Ridder, Inc.................. 22,850 1,148,213
News Corporation Ltd. ADR........... 54,550 1,974,028
Time Warner, Inc.................... 51,800 3,932,138
------------
12,265,529
------------
METALS - DIVERSIFIED - 0.5%
Alcan Aluminum Ltd.................. 36,700 1,158,344
------------
OIL & GAS - 4.0%
Conoco, Inc., Class B............... 92,250 2,508,047
Exxon Mobil Corp.................... 27,450 2,448,197
Texaco, Inc......................... 47,700 2,817,281
USX-Marathon Group, Inc............. 51,150 1,390,641
------------
9,164,166
------------
PHARMACEUTICALS - 8.6%
Abbott Laboratories................. 48,100 2,540,281
Bristol-Myers Squibb Co............. 50,950 3,104,766
Pfizer, Inc......................... 173,850 7,508,147
Pharmacia Corp...................... 40,787 2,243,285
Schering-Plough Corp................ 83,900 4,336,581
------------
19,733,060
------------
</TABLE>
Continued
24
<PAGE>
HSBC INVESTOR FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR EQUITY FUND OCTOBER 31, 2000
<TABLE>
<CAPTION>
--------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE
--------- ------------
<S> <C> <C>
RETAIL - 6.1%
Home Depot, Inc..................... 88,100 $ 3,788,300
Kohl's Corp. (b).................... 80,600 4,367,512
Target Corp......................... 87,750 2,424,094
Tricon Global Restaurants, Inc.
(b)................................ 41,700 1,251,000
Wal-Mart Stores, Inc................ 51,000 2,314,125
------------
14,145,031
------------
TELECOMMUNICATIONS - 9.5%
Amdocs Ltd. (b)..................... 25,800 1,672,163
AT&T Wireless Group (b)............. 57,900 1,443,881
JDS Uniphase Corp. (b).............. 16,300 1,327,431
Motorola, Inc....................... 78,750 1,963,828
Nokia OYJ ADR....................... 75,900 3,244,725
Nortel Networks Corp................ 42,300 1,924,650
Qwest Communications International,
Inc. (b)........................... 21,801 1,060,074
Verizon Communications.............. 67,800 3,919,688
Vodafone Group PLC ADR.............. 100,900 4,294,556
Worldcom, Inc. (b).................. 41,000 973,750
------------
21,824,746
------------
TRANSPORTATION - 0.7%
Burlington Northern Santa Fe
Corp............................... 62,750 1,666,797
------------
TOTAL COMMON STOCKS
(Cost $181,810,660)................ 230,164,337
------------
<CAPTION>
--------------------------------------------------------------
INVESTMENT COMPANIES - 1.1%
SHARES VALUE
--------- ------------
<S> <C> <C>
Dreyfus Cash Management Fund........ 2,429,188 $ 2,429,188
------------
TOTAL INVESTMENT COMPANIES (Cost
$2,429,188)........................ 2,429,188
------------
TOTAL INVESTMENTS
(Cost $184,239,848) (a) -
101.1%............................. 232,593,525
LIABILITIES IN EXCESS OF OTHER
ASSETS - (1.1)%.................. (2,454,442)
------------
NET ASSETS - 100.0%................ $230,139,083
------------
------------
</TABLE>
---------
(a) Represents cost for financial reporting purposes and differs from cost for
federal income tax purposes by the amount of losses recognized for financial
reporting purposes in excess of federal income tax reporting of
approximately $ 1,281,392. Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 57,120,242
Unrealized depreciation (10,047,957)
------------
Net unrealized appreciation $ 47,072,285
------------
------------
</TABLE>
(b) Represents non-income producing security.
ADR--American Depositary Receipt
NV --Naamloze Vennootschap (Dutch Corp.)
PLC--Public Limited Company
See notes to financial statements.
25
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR EQUITY FUND
--------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (cost
$184,239,848)..................... $232,593,525
Cash............................... 278,235
Dividends receivable............... 119,337
Receivable for investments sold.... 1,404,409
Receivable for capital shares
issued............................ 494
Prepaid expenses................... 5,993
------------
TOTAL ASSETS.................... 234,401,993
LIABILITIES:
Payable for investments
purchased......................... $ 881,943
Payable for capital shares
redeemed.......................... 3,221,763
Accrued expenses and other
liabilities:
Investment management............. 82,881
Administration.................... 15,896
Distribution...................... 2,380
Shareholder servicing............. 5,521
Other............................. 52,526
----------
TOTAL LIABILITIES............... 4,262,910
------------
NET ASSETS......................... $230,139,083
------------
------------
COMPOSITION OF NET ASSETS:
Capital............................ $188,832,199
Accumulated net realized losses
from investment and futures
transactions...................... (7,046,793)
Unrealized appreciation from
investments....................... 48,353,677
------------
NET ASSETS......................... $230,139,083
------------
------------
CLASS A (INVESTOR) SHARES
Net Assets......................... $ 22,558,034
Shares Outstanding................. 1,290,690
Net Asset Value and Redemption
Price per share................... $ 17.48
------------
------------
Maximum Offering Price per share
(Net asset value/(100% -- maximum
sales charge of 5.00%))........... $ 18.40
------------
------------
CLASS B SHARES
Net Assets......................... $ 1,604,391
Shares Outstanding................. 92,930
Net Asset Value, Offering Price and
Redemption Price per share*....... $ 17.26
------------
------------
CLASS C SHARES
Net Assets......................... $ 1,204,243
Shares Outstanding................. 69,375
Net Asset Value, Offering Price and
Redemption Price per share*....... $ 17.36
------------
------------
CLASS Y (ADVISER) SHARES
Net Assets......................... $204,772,415
Shares Outstanding................. 11,712,393
Net Asset Value, Offering Price and
Redemption Price per share........ $ 17.48
------------
------------
</TABLE>
--------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividend............................. $ 3,431,006
EXPENSES:
Investment management................ $1,198,382
Administration....................... 221,678
Distribution:
Class B Shares...................... 12,524
Class C Shares...................... 10,437
Shareholder servicing:
Class A (Investor) Shares........... 63,134
Class B Shares...................... 4,203
Class C Shares...................... 3,418
Accounting........................... 71,043
Custodian............................ 68,200
Transfer agent....................... 69,628
Legal................................ 95,048
Other................................ 131,078
----------
TOTAL EXPENSES...................... 1,948,773
-----------
NET INVESTMENT INCOME................ 1,482,233
-----------
NET REALIZED/UNREALIZED
GAINS/(LOSSES) FROM INVESTMENTS:
Net realized losses from investment
and futures transactions............ (6,289,505)
Change in unrealized
appreciation/depreciation from
investments and futures............. 3,280
-----------
Net realized/unrealized losses from
investments and futures............. (6,286,225)
-----------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS.......................... $(4,803,992)
-----------
-----------
</TABLE>
---------
* Redemption price per share varies by length of time shares are held.
See notes to financial statements.
26
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR EQUITY FUND
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
OCTOBER 31,
--------------------------------
2000 1999
------------ --------------
<S> <C> <C>
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income...................................... $ 1,482,233 $ 1,296,119
Net realized gains/(losses) from investment and futures
transactions............................................. (6,289,505) 26,280,422
Change in unrealized appreciation/depreciation from
investment and futures transactions...................... 3,280 19,851,181
------------ ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS.............. (4,803,992) 47,427,722
------------ ------------
DIVIDENDS:
Net investment income:
Class A (Investor) Shares................................ (93,579) (63,369)
Class Y (Adviser) Shares................................. (1,530,830) (1,164,923)
In excess of net investment income:
Class B Shares........................................... -- (449)
Class C Shares (a)....................................... -- (1,888)
Net realized gains from investment and futures
transactions:
Class A (Investor) Shares................................ (2,540,730) (546,206)
Class B Shares........................................... (164,600) (23,569)
Class C Shares (a)....................................... (140,798) (295)
Class Y (Adviser) Shares................................. (23,138,028) (4,883,735)
------------ ------------
CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS............. (27,608,565) (6,684,434)
------------ ------------
CHANGE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS........ (14,133,632) 928,285
------------ ------------
CHANGE IN NET ASSETS........................................ (46,546,189) 41,671,573
NET ASSETS:
Beginning of period........................................ 276,685,272 235,013,699
------------ ------------
End of period.............................................. $230,139,083 $276,685,272
------------ ------------
------------ ------------
</TABLE>
---------
(a) The Fund commenced offering Class C Shares on November 4, 1998.
See notes to financial statements.
27
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR EQUITY FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS A (INVESTOR) SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED OCTOBER 31,
-------------------------------------------------------
2000 1999 1998 1997 1996
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 19.89 $ 16.95 $ 15.00 $ 11.93 $10.24
------- ------- ------- ------- ------
INVESTMENT ACTIVITIES:
Net investment income.................................... 0.06 0.05 0.05 0.07 0.19
Net realized and unrealized gains/(losses) from
investment and futures transactions..................... (0.51) 3.32 2.80 3.32 1.67
------- ------- ------- ------- ------
Total from investment activities......................... (0.45) 3.37 2.85 3.39 1.86
------- ------- ------- ------- ------
DIVIDENDS:
Net investment income.................................... (0.07) (0.04) (0.05) (0.10) (0.17)
Net realized gains from investment and futures
transactions............................................ (1.89) (0.39) (0.85) (0.22) --
------- ------- ------- ------- ------
Total dividends.......................................... (1.96) (0.43) (0.90) (0.32) (0.17)
------- ------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 17.48 $ 19.89 $ 16.95 $ 15.00 $11.93
------- ------- ------- ------- ------
------- ------- ------- ------- ------
TOTAL RETURN (EXCLUDES SALES CHARGE)........................ (2.38)% 20.23% 19.98% 28.92% 18.30%
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's)......................... $22,558 $27,942 $23,559 $12,363 $3,918
Ratio of expenses to average net assets..................... 0.93 % 0.94% 1.03% 1.21% 1.28%
Ratio of net investment income to average net assets........ 0.34 % 0.26% 0.30% 0.48% 1.83%
Ratio of expenses to average net assets..................... 0.93 % 0.94% 1.03% 1.28%(a) 1.59%(a)
Portfolio turnover (b)...................................... 91.81 % 70.85% 176.34% 99.02% 86.18%
</TABLE>
---------
(a) During the period, certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(b) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See notes to financial statements.
28
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR EQUITY FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS B SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE PERIOD
OCTOBER 31, JANUARY 6, 1998
------------------------ TO OCTOBER 31,
2000 1999 1998(a)
------ ------ ---------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $19.74 $16.92 $14.88
------ ------ ------
INVESTMENT ACTIVITIES:
Net investment loss...................................... (0.07) (0.08) (0.01)
Net realized and unrealized gains/(losses) from
investment and futures transactions..................... (0.52) 3.30 2.07
------ ------ ------
Total from investment activities......................... (0.59) 3.22 2.06
------ ------ ------
DIVIDENDS:
Net investment income.................................... -- -- (0.02)
In excess of net investment income....................... -- (0.01) --
Net realized gains from investment and futures
transactions............................................ (1.89) (0.39) --
------ ------ ------
Total dividends.......................................... (1.89) (0.40) (0.02)
------ ------ ------
NET ASSET VALUE, END OF PERIOD.............................. $17.26 $19.74 $16.92
------ ------ ------
------ ------ ------
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE)................... (3.13)% 19.32 % 13.84 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's)......................... $1,604 $1,775 $ 956
Ratio of expenses to average net assets..................... 1.65 % 1.69 % 1.78 %(c)
Ratio of net investment loss to average net assets.......... (0.40)% (0.50)% (0.45)%(c)
Portfolio turnover (d)...................................... 91.81 % 70.85 % 176.34 %
</TABLE>
---------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See notes to financial statements.
29
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR EQUITY FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS C SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED NOVEMBER 4, 1998
OCTOBER 31, TO OCTOBER 31,
2000 1999(a)
------------ ----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $19.83 $17.08
------ ------
INVESTMENT ACTIVITIES:
Net investment loss...................................... (0.07) --
Net realized and unrealized gains/(losses) from
investment and futures transactions..................... (0.51) 3.19
------ ------
Total from investment activities......................... (0.58) 3.19
------ ------
DIVIDENDS:
In excess of net investment income....................... -- (0.05)
Net realized gains from investment and futures
transactions............................................ (1.89) (0.39)
------ ------
Total dividends.......................................... (1.89) (0.44)
------ ------
NET ASSET VALUE, END OF PERIOD.............................. $17.36 $19.83
------ ------
------ ------
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE)................... (3.11)% 19.05 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's)......................... $1,204 $1,626
Ratio of expenses to average net assets..................... 1.65 % 1.33 %(c)
Ratio of net investment loss to average net assets.......... (0.37)% (0.16)%(c)
Portfolio turnover (d)...................................... 91.81 % 70.85 %
</TABLE>
---------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See notes to financial statements.
30
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR EQUITY FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS Y (ADVISER) SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEARS ENDED OCTOBER 31, JULY 1, 1996
------------------------------------------------- TO OCTOBER 31,
2000 1999 1998 1997 1996(a)
-------- -------- -------- ------- --------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................... $ 19.89 $ 16.95 $ 15.01 $ 11.93 $ 11.49
-------- -------- -------- ------- -------
INVESTMENT ACTIVITIES:
Net investment income............................... 0.10 0.10 0.08 0.10 0.08
Net realized and unrealized gains/(losses) from
investment and futures transactions................ (0.51) 3.32 2.79 3.33 0.42
-------- -------- -------- ------- -------
Total from investment activities.................... (0.41) 3.42 2.87 3.43 0.50
-------- -------- -------- ------- -------
DIVIDENDS:
Net investment income............................... (0.11) (0.09) (0.08) (0.13) (0.06)
Net realized gains from investment and futures
transactions....................................... (1.89) (0.39) (0.85) (0.22) --
-------- -------- -------- ------- -------
Total dividends..................................... (2.00) (0.48) (0.93) (0.35) (0.06)
-------- -------- -------- ------- -------
NET ASSET VALUE, END OF PERIOD......................... $ 17.48 $ 19.89 $ 16.95 $ 15.01 $ 11.93
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
TOTAL RETURN........................................... (2.19)% 20.59% 20.16% 29.28% 4.72%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's).................... $204,772 $245,342 $210,498 $63,060 $33,155
Ratio of expenses to average net assets................ 0.68 % 0.69% 0.78% 0.96% 0.66%(c)
Ratio of net investment income to average net assets... 0.58 % 0.51% 0.55% 0.77% 1.93%(c)
Ratio of expenses to average net assets................ 0.68 % 0.69% 0.78% 1.03%(d) 0.97%(c)(d)
Portfolio turnover (e)................................. 91.81 % 70.85% 176.34% 99.02% 86.18%
</TABLE>
---------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) During the period, certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See notes to financial statements.
31
<PAGE>
HSBC INVESTOR FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR MID-CAP FUND OCTOBER 31, 2000
<TABLE>
<CAPTION>
--------------------------------------------------------------
COMMON STOCKS - 94.0%
SHARES VALUE
--------- ------------
<S> <C> <C>
BANKING & FINANCE - 9.7%
Lehman Brothers Holdings, Inc....... 38,000 $ 2,450,999
Marshall & Ilsley Corp.............. 31,000 1,404,688
Providian Financial Corp............ 11,000 1,144,000
Radian Group, Inc................... 18,000 1,275,750
Stilwell Financial, Inc............. 40,000 1,792,500
Summit Bancorp...................... 42,000 1,575,000
Washington Mutual, Inc.............. 24,500 1,078,000
------------
10,720,937
------------
BEVERAGES - 3.0%
Adolph Coors Co., Class A........... 30,000 1,910,625
Pepsi Bottling Group, Inc........... 41,000 1,419,625
------------
3,330,250
------------
BROADCASTING - 0.9%
Univision Communications, Inc.
(b)................................ 25,000 956,250
------------
COMMERCIAL SERVICES - 1.7%
Concord EFS, Inc. (b)............... 26,500 1,094,781
DeVry, Inc. (b)..................... 20,000 738,750
------------
1,833,531
------------
COMPUTER SERVICES - 2.8%
Art Technology Group, Inc. (b)...... 15,000 941,250
Factset Research Systems, Inc....... 30,000 1,136,100
SanDisk Corp. (b)................... 10,000 537,344
Sungard Data Systems, Inc. (b)...... 10,000 511,250
------------
3,125,944
------------
COMPUTER SOFTWARE - 4.8%
Citrix Systems, Inc. (b)............ 40,000 885,000
Intuit, Inc. (b).................... 27,000 1,658,812
Rational Software Corp. (b)......... 23,000 1,372,813
Wind River Systems (b).............. 32,500 1,334,531
------------
5,251,156
------------
CONSUMER MANUFACTURING - 1.8%
Harley-Davidson, Inc................ 41,000 1,975,688
------------
ELECTRONIC COMPONENTS/SEMICONDUCTORS - 15.2%
Altera Corp. (b).................... 25,000 1,023,438
Applied Micro Circuits Corp. (b).... 12,000 916,500
Atmel Corp. (b)..................... 55,000 821,563
Cypress Semiconductor Corp. (b)..... 26,000 973,375
DDI Corp. (b)....................... 45,000 1,797,188
Flextronics International Ltd.
(b)................................ 48,000 1,823,999
Integrated Device Technology, Inc.
(b)................................ 14,000 788,375
Jabil Circuit, Inc. (b)............. 46,000 2,624,874
Micrel, Inc. (b).................... 18,000 814,500
Microchip Technology, Inc. (b)...... 20,000 632,500
Vishay Intertechnology, Inc. (b).... 41,000 1,230,000
Vitesse Semiconductor Corp. (b)..... 27,000 1,888,312
Zoran Corp. (b)..................... 28,000 1,403,500
------------
16,738,124
------------
<CAPTION>
--------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE
--------- ------------
<S> <C> <C>
ENERGY - 2.2%
Hydrogenics Corp. (b)............... 10,000 $ 120,625
Tidewater, Inc...................... 49,000 2,263,188
------------
2,383,813
------------
FOOD - 0.4%
Flowers Industries, Inc............. 32,000 492,000
------------
GAS & ELECTRIC UTILITY - 6.1%
Calpine Corp. (b)................... 30,000 2,368,124
Constellation Energy Group, Inc..... 35,000 1,459,063
Exelon Corp......................... 25,000 1,503,125
PG & E Corp......................... 20,000 538,750
XCEL Energy, Inc.................... 33,000 843,563
------------
6,712,625
------------
HEALTH CARE - 7.5%
Cytyc Corp. (b)..................... 8,000 474,875
Foundation Health Systems (b)....... 67,000 1,352,563
Health Management
Associates, Inc. (b)............... 90,000 1,783,125
IVAX Corp. (b)...................... 19,000 826,500
LifePoint Hospitals, Inc. (b)....... 45,000 1,743,750
Tenet Healthcare Corp............... 55,000 2,162,187
------------
8,343,000
------------
INSURANCE - 3.1%
ACE Ltd............................. 28,000 1,099,000
Loews Corp.......................... 26,000 2,364,375
------------
3,463,375
------------
MANUFACTURING - 2.0%
Shaw Group, Inc. (b)................ 12,500 1,018,750
Trex Company, Inc. (b).............. 32,000 1,196,000
------------
2,214,750
------------
MEDICAL & HEALTH PRODUCTS - 8.4%
Cardinal Health, Inc................ 32,000 3,031,999
Edwards Lifesciences Corp. (b)...... 27,500 369,531
Forest Laboratories, Inc., Class A
(b)................................ 10,000 1,325,000
ImClone Systems (b)................. 10,000 546,875
Maxim Pharmaceuticals, Inc. (b)..... 11,500 510,313
Medimmune, Inc. (b)................. 10,000 653,750
Possis Medical, Inc. (b)............ 63,500 361,156
Sepracor, Inc. (b).................. 13,000 885,625
Watson Pharmaceutical, Inc. (b)..... 26,000 1,626,625
------------
9,310,874
------------
MEDICAL LABORATORIES - 6.0%
Chiron Corp. (b).................... 20,000 866,250
Genzyme Corp. (b)................... 23,000 1,633,000
Idec Pharmaceuticals Corp. (b)...... 5,000 980,625
Laboratory Corp. of America
Holdings (b)....................... 13,000 1,753,375
Millenium Pharmaceuticals (b)....... 20,000 1,451,250
------------
6,684,500
------------
</TABLE>
Continued
32
<PAGE>
HSBC INVESTOR FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR MID-CAP FUND OCTOBER 31, 2000
<TABLE>
<CAPTION>
--------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE
--------- ------------
<S> <C> <C>
OIL & GAS - 5.6%
Devon Energy Corp................... 17,000 $ 856,800
Dynegy, Inc......................... 25,000 1,157,813
R & B Falcon Corp. (b).............. 87,000 2,175,000
Weatherford International, Inc.
(b)................................ 55,000 2,007,500
------------
6,197,113
------------
PHARMACEUTICALS - 1.8%
Amerisource Health Corp., Class A
(b)................................ 45,000 1,954,688
------------
REAL ESTATE - 0.8%
Equity Office Properties Trust...... 30,000 903,750
------------
RETAIL - 6.9%
Chico's FAS, Inc. (b)............... 36,000 1,165,500
CVS Corp............................ 50,000 2,646,875
Limited, Inc........................ 70,000 1,767,500
Tiffany & Co........................ 49,000 2,091,688
------------
7,671,563
------------
TELECOMMUNICATIONS - 3.3%
ADC Telecommunications, Inc. (b).... 45,000 961,875
Broadwing, Inc. (b)................. 40,000 1,130,000
CIENA Corp. (b)..................... 14,800 1,555,850
------------
3,647,725
------------
TOTAL COMMON STOCKS
(Cost $86,411,403)................. 103,911,656
------------
<CAPTION>
--------------------------------------------------------------
INVESTMENT COMPANIES - 2.9%
SHARES VALUE
--------- ------------
<S> <C> <C>
Dreyfus Cash Management Fund........ 107,618 $ 107,618
Provident Temp Fund Dollar.......... 3,063,996 3,063,996
------------
TOTAL INVESTMENT COMPANIES (Cost
$3,171,614)........................ 3,171,614
------------
<CAPTION>
--------------------------------------------------------------
DEPOSITARY RECEIPTS - 1.3%
<S> <C> <C>
S&P 400 Mid-Cap Depositary Receipt.. 15,000 1,425,000
------------
TOTAL DEPOSITARY RECEIPTS (Cost
$1,404,728)........................ 1,425,000
------------
TOTAL INVESTMENTS
(Cost $90,987,745) (a) - 98.2%.... 108,508,270
OTHER ASSETS IN EXCESS OF
LIABILITIES - 1.8%................ 1,998,317
------------
NET ASSETS - 100.0%................ $110,506,587
------------
------------
</TABLE>
---------
(a) Represents cost for financial reporting purposes and differs from cost for
federal income tax purposes by the amount of losses recognized for financial
reporting purposes in excess of federal income tax reporting of
approximately $252,842. Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation $21,563,479
Unrealized depreciation (4,295,796)
-----------
Net unrealized appreciation $17,267,683
-----------
-----------
</TABLE>
(b) Represents non-income producing security.
See notes to financial statements.
33
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR MID-CAP FUND
<TABLE>
<CAPTION>
--------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
<S> <C> <C>
ASSETS:
Investments, at value (cost
$90,987,745)...................... $108,508,270
Cash............................... 263
Dividends receivable............... 64,804
Receivable for investments sold.... 3,069,023
Receivable for capital shares
issued............................ 43,766
Prepaid expenses................... 12,893
------------
TOTAL ASSETS.................... 111,699,019
LIABILITIES:
Payable for investments
purchased......................... $1,080,568
Payable for capital shares
redeemed.......................... 8,762
Accrued expenses and other
liabilities:
Investment management............. 50,664
Administration.................... 7,385
Distribution...................... 878
Shareholder servicing............. 376
Other............................. 43,799
----------
TOTAL LIABILITIES............... 1,192,432
------------
NET ASSETS......................... $110,506,587
------------
------------
COMPOSITION OF NET ASSETS:
Capital............................ $ 91,717,466
Accumulated net realized gains from
investment transactions........... 1,268,596
Unrealized appreciation from
investments....................... 17,520,525
------------
NET ASSETS......................... $110,506,587
------------
------------
CLASS A SHARES
Net Assets......................... $ 444,510
Shares Outstanding................. 44,125
Net Asset Value and Redemption
Price per share................... $ 10.07
------------
------------
Maximum Offering Price per share
(Net asset value/(100% -- maximum
sales charge of 5.00%))........... $ 10.60
------------
------------
CLASS B SHARES
Net Assets......................... $ 1,557,438
Shares Outstanding................. 154,881
Net Asset Value, Offering Price and
Redemption Price per share**...... $ 10.06
------------
------------
CLASS C SHARES
Net Assets......................... $ 17,732
Shares Outstanding................. 1,762
Net Asset Value, Offering Price and
Redemption Price per share**...... $ 10.06
------------
------------
TRUST SHARES
Net Assets......................... $108,486,907
Shares Outstanding................. 10,759,328
Net Asset Value, Offering Price and
Redemption Price per share........ $ 10.08
------------
------------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED OCTOBER 31, 2000*
<S> <C> <C>
INVESTMENT INCOME:
Interest.............................. $ 16,366
Dividend.............................. 235,171
-----------
TOTAL INVESTMENT INCOME............ 251,537
EXPENSES:
Investment management................. $175,798
Administration........................ 25,571
Distribution:
Class B Shares....................... 2,016
Class C Shares....................... 12
Shareholder servicing:
Class A Shares....................... 180
Class B Shares....................... 672
Class C Shares....................... 4
Accounting............................ 18,495
Custodian............................. 10,452
Transfer Agent........................ 15,654
Printing.............................. 43,893
Registration and filing............... 17,177
Other................................. 16,334
--------
TOTAL EXPENSES....................... 326,258
-----------
NET INVESTMENT LOSS................... (74,721)
-----------
NET REALIZED/UNREALIZED GAINS/(LOSSES)
FROM INVESTMENTS:
Net realized gains from investment
transactions......................... 1,268,596
Change in unrealized
appreciation/depreciation from
investments.......................... (1,416,553)
-----------
Net realized/unrealized losses from
investments.......................... (147,957)
-----------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS........................... $ (222,678)
-----------
-----------
</TABLE>
---------
* The Fund commenced offering Class A Shares on July 10, 2000.
The Fund commenced offering Class B Shares on July 17, 2000.
The Fund commenced offering Class C Shares on August 9, 2000.
The Fund commenced offering Trust Class Shares on July 1, 2000.
** Redemption price per share varies by length of time shares are held.
See notes to financial statements.
34
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR MID-CAP FUND
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
ENDED
OCTOBER 31,
2000(a)
--------------
<S> <C>
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment loss........................................ $ (74,721)
Net realized gains from investment transactions............ 1,268,596
Change in unrealized appreciation/depreciation from
investment transactions.................................. (1,416,553)
------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS.............. (222,678)
------------
CHANGE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS........ 110,729,265
------------
CHANGE IN NET ASSETS........................................ 110,506,587
NET ASSETS:
Beginning of period........................................ --
------------
End of period.............................................. $110,506,587
------------
------------
</TABLE>
---------
(a) The Fund commenced offering Class A Shares on July 10, 2000.
The Fund commenced offering Class B Shares on July 17, 2000.
The Fund commenced offering Class C Shares on August 9, 2000.
The Fund commenced offering Trust Class Shares on July 1, 2000.
See notes to financial statements.
35
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR MID-CAP FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS A SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 10, 2000
TO OCTOBER 31,
2000(a)
--------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $10.27
------
INVESTMENT ACTIVITIES:
Net investment loss...................................... (0.01)
Net realized and unrealized losses from investment
transactions............................................ (0.19)
------
Total from investment activities......................... (0.20)
------
NET ASSET VALUE, END OF PERIOD.............................. $10.07
------
------
TOTAL RETURN (EXCLUDES SALES CHARGE)........................ (1.95)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's)......................... $ 445
Ratio of expenses to average net assets..................... 1.28 %(c)
Ratio of net investment loss to average net assets.......... (0.42)%(c)
Portfolio turnover (d)...................................... 57.69 %
</TABLE>
---------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See notes to financial statements.
36
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR MID-CAP FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS B SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 17, 2000
TO OCTOBER 31,
2000(a)
--------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $10.72
------
INVESTMENT ACTIVITIES:
Net investment loss...................................... (0.02)
Net realized and unrealized losses from investment
transactions............................................ (0.64)
------
Total from investment activities......................... (0.66)
------
NET ASSET VALUE, END OF PERIOD.............................. $10.06
------
------
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE)................... (6.16)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's)......................... $1,557
Ratio of expenses to average net assets..................... 2.02 %(c)
Ratio of net investment loss to average net assets.......... (1.17)%(c)
Portfolio turnover (d)...................................... 57.69 %
</TABLE>
---------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See notes to financial statements.
37
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR MID-CAP FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS C SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE PERIOD
AUGUST 9, 2000
TO OCTOBER 31,
2000(a)
--------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $10.04
------
INVESTMENT ACTIVITIES:
Net investment loss...................................... (0.01)
Net realized and unrealized gains from investment
transactions............................................ 0.03
------
Total from investment activities......................... 0.02
------
NET ASSET VALUE, END OF PERIOD.............................. $10.06
------
------
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE)................... 0.20 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's)......................... $ 18
Ratio of expenses to average net assets..................... 2.11 %(c)
Ratio of net investment loss to average net assets.......... (1.29)%(c)
Portfolio turnover (d)...................................... 57.69 %
</TABLE>
---------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See notes to financial statements.
38
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR MID-CAP FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- TRUST SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 1, 2000
TO OCTOBER 31,
2000(a)
--------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.00
--------
INVESTMENT ACTIVITIES:
Net investment loss...................................... (0.01)
Net realized and unrealized gains from investment
transactions............................................ 0.09 (b)
--------
Total from investment activities......................... 0.08
--------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.08
--------
--------
TOTAL RETURN................................................ 0.80 %(c)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's)......................... $108,487
Ratio of expenses to average net assets..................... 1.01 %(d)
Ratio of net investment loss to average net assets.......... (0.22)%(d)
Portfolio turnover (e)...................................... 57.69 %
</TABLE>
---------
(a) Period from commencement of operations.
(b) 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.
(c) Not annualized.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See notes to financial statements.
39
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR BOND FUND
---------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value................... $4,265,063
Receivable for capital shares issued.... 10,389
Receivable from investment manager...... 4,130
Deferred organization costs............. 4,565
Prepaid expenses........................ 819
----------
TOTAL ASSETS......................... 4,284,966
LIABILITIES:
Dividends payable....................... $11,310
Payable for capital shares redeemed..... 24,003
Accrued expenses and other liabilities:
Administration......................... 149
Distribution........................... 414
Shareholder servicing.................. 904
Other.................................. 3,609
-------
TOTAL LIABILITIES.................... 40,389
----------
NET ASSETS.............................. $4,244,577
----------
----------
COMPOSITION OF NET ASSETS:
Capital................................. $4,613,440
Dividends in excess of accumulated net
investment income...................... (9,178)
Accumulated net realized losses from
investment and futures transactions.... (265,991)
Unrealized depreciation from investment
and futures transactions............... (93,694)
----------
NET ASSETS.............................. $4,244,577
----------
----------
CLASS A (INVESTOR) SHARES
Net Assets.............................. $3,827,813
Shares Outstanding...................... 392,118
Net Asset Value and Redemption Price per
share.................................. $ 9.76
----------
----------
Maximum Offering Price per share (Net
asset value/(100% -- maximum sales
charge of 4.75%))...................... $ 10.25
----------
----------
CLASS B SHARES
Net Assets.............................. $ 278,775
Shares Outstanding...................... 28,541
Net Asset Value, Offering Price and
Redemption Price per share*............ $ 9.77
----------
----------
CLASS C SHARES
Net Assets.............................. $ 137,989
Shares Outstanding...................... 14,144
Net Asset Value, Offering Price and
Redemption Price per share*............ $ 9.76
----------
----------
</TABLE>
--------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Investment income from portfolio......... $ 329,246
Expenses from portfolio.................. (23,299)
---------
TOTAL INVESTMENT INCOME............... 305,947
EXPENSES:
Administration........................... $ 1,853
Distribution
Class B Shares.......................... 2,475
Class C Shares.......................... 1,105
Shareholder servicing
Class A (Investor) Shares............... 10,200
Class B Shares.......................... 829
Class C Shares.......................... 366
Accounting............................... 23,966
Transfer agent........................... 52,448
Registration............................. 15,291
Other.................................... 22,307
-------
Total expenses before reimbursements.... 130,840
Reimbursements.......................... (100,442)
---------
NET EXPENSES............................ 30,398
---------
NET INVESTMENT INCOME.................... 275,549
---------
NET REALIZED/UNREALIZED
GAINS/(LOSSES) FROM INVESTMENTS:
Net realized losses from investment and
futures transactions.................... (90,829)
---------
Change in unrealized
appreciation/depreciation from
investments and futures................. 79,180
---------
Net realized/unrealized losses from
investments and futures................. (11,649)
---------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS.............................. $ 263,900
---------
---------
</TABLE>
---------
* Redemption price per share varies based on length of time shares are held.
See notes to financial statements.
40
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR BOND FUND
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
OCTOBER 31,
--------------------------
2000 1999
---------- ----------
<S> <C> <C>
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income...................................... $ 275,549 $ 303,848
Net realized losses from investment and futures
transactions............................................. (90,829) (176,984)
Change in unrealized appreciation/depreciation from
investment and futures transactions...................... 79,180 (97,937)
---------- ----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS.............. 263,900 28,927
---------- ----------
DIVIDENDS:
Net investment income:
Class A (Investor) Shares................................ (250,768) (280,856)
Class B Shares........................................... (17,916) (18,835)
Class C Shares (a)....................................... (7,835) (4,157)
Net realized gains from investment and futures
transactions:
Class A (Investor) Shares................................ -- (98,834)
Class B Shares........................................... -- (7,515)
Class C Shares (a)....................................... -- (143)
In excess of net realized gains from investment and futures
transactions:
Class A (Investor) Shares................................ -- (10,993)
Class B Shares........................................... -- (829)
---------- ----------
CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS............. (276,519) (422,162)
---------- ----------
CHANGE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS........ (573,614) 34,615
---------- ----------
CHANGE IN NET ASSETS........................................ (586,233) (358,620)
NET ASSETS:
Beginning of period...................................... 4,830,810 5,189,430
---------- ----------
End of period............................................ $4,244,577 $4,830,810
---------- ----------
---------- ----------
</TABLE>
---------
(a) The Fund commenced offering Class C Shares on November 4, 1998.
See notes to financial statements.
41
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR BOND FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS A (INVESTOR) SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEARS ENDED OCTOBER 31, AUGUST 26, 1996
---------------------------------------------- TO OCTOBER 31,
2000 1999 1998 1997 1996(a)
------- ------- ------- ------- ---------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................. $ 9.78 $ 10.51 $ 10.50 $ 10.26 $ 10.00
------- ------- ------- ------- -------
INVESTMENT ACTIVITIES:
Net investment income................................ 0.61 0.57 0.59 0.57 0.10
Net realized and unrealized gains/(losses) from
investment and futures transactions................ (0.01) (0.49) 0.01 0.30 0.26
------- ------- ------- ------- -------
Total from investment activities..................... 0.60 0.08 0.60 0.87 0.36
------- ------- ------- ------- -------
DIVIDENDS:
Net investment income................................ (0.62) (0.57) (0.59) (0.57) --
Net realized gains from investment and futures
transactions....................................... -- (0.22) -- (0.06) (0.10)
In excess of net realized gains from investment and
futures transactions............................... -- (0.02) -- -- --
------- ------- ------- ------- -------
Total dividends...................................... (0.62) (0.81) (0.59) (0.63) (0.10)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD........................ $ 9.76 $ 9.78 $ 10.51 $ 10.50 $ 10.26
------- ------- ------- ------- -------
------- ------- ------- ------- -------
TOTAL RETURN (EXCLUDES SALES CHARGE).................. 6.39% 0.68% 5.83% 8.71% 3.61%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's)................... $ 3,828 $ 4,331 $ 4,826 $ 2,439 $ 21
Ratio of expenses to average net assets............... 1.10% 1.07% 1.10% 1.10% 1.04%(c)
Ratio of net investment income to average net assets.. 6.13% 5.84% 5.51% 5.40% 5.23%(c)
Ratio of expenses to average net assets (d)........... 3.31% 2.62% 1.61% 5.24% 280.50%(c)
Portfolio turnover (e)................................ 440.49% 433.26% 126.40% 349.00% 152.00%
</TABLE>
---------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) During the period, certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio in
which the Fund invests all of its investable assets.
See notes to financial statements.
42
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR BOND FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS B SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE PERIOD
OCTOBER 31, JANUARY 6, 1998
--------------------- TO OCTOBER 31,
2000 1999 1998(a)
------- ------- ---------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 9.78 $ 10.51 $ 10.63
------- ------- -------
INVESTMENT ACTIVITIES:
Net investment income...................................... 0.54 0.49 0.41
Net realized and unrealized losses from investment and
futures transactions..................................... (0.01) (0.49) (0.12)
------- ------- -------
Total from investment activities........................... 0.53 -- 0.29
------- ------- -------
DIVIDENDS:
Net investment income...................................... (0.54) (0.49) (0.41)
Net realized gains from investment and futures
transactions............................................. -- (0.22) --
In excess of net realized gains from investment and futures
transactions............................................. -- (0.02) --
------- ------- -------
Total dividends............................................ (0.54) (0.73) (0.41)
------- ------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 9.77 $ 9.78 $ 10.51
------- ------- -------
------- ------- -------
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE)................... 5.67% (0.01)% 2.84%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's)......................... $ 279 $ 345 $ 364
Ratio of expenses to average net assets..................... 1.85% 1.79 % 1.85%(c)
Ratio of net investment income to average net assets........ 5.38% 5.13 % 4.76%(c)
Ratio of expenses to average net assets (d)................. 4.03% 3.37 % 2.36%(c)
Portfolio turnover (e)...................................... 440.49% 433.26 % 126.40%
</TABLE>
---------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) During the period, certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio in
which the Fund invests all of its investable assets.
See notes to financial statements.
43
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR BOND FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS C SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED NOVEMBER 4, 1998
OCTOBER 31, TO OCTOBER 31,
2000 1999(a)
------------ ----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 9.77 $ 10.46
------- -------
INVESTMENT ACTIVITIES:
Net investment income...................................... 0.55 0.47
Net realized and unrealized losses from investment and
futures transactions..................................... (0.01) (0.45)
------- -------
Total from investment activities........................... 0.54 0.02
------- -------
DIVIDENDS:
Net investment income...................................... (0.55) (0.47)
Net realized gains from investment and futures
transactions............................................. -- (0.24)
------- -------
Total dividends............................................ (0.55) (0.71)
------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 9.76 $ 9.77
------- -------
------- -------
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE)................... 5.71% 0.11%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's)......................... $ 138 $ 152
Ratio of expenses to average net assets..................... 1.85% 1.95%(c)
Ratio of net investment income to average net assets........ 5.38% 4.96%(c)
Ratio of expenses to average net assets (d)................. 4.05% 3.50%(c)
Portfolio turnover (e)...................................... 440.49% 433.26%
</TABLE>
---------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) During the period, certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio in
which the Fund invests all of its investable assets.
See notes to financial statements.
44
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR OVERSEAS EQUITY FUND
----------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value................... $7,887,344
Receivable for capital shares issued.... 3,016
Tax reclaims receivable................. 5,291
Deferred organization costs............. 3,475
Prepaid expenses........................ 950
----------
TOTAL ASSETS......................... 7,900,076
LIABILITIES:
Payable for capital shares redeemed..... $21,540
Accrued expenses and other liabilities:
Administration......................... 280
Distribution........................... 661
Shareholder servicing.................. 1,476
Other.................................. 17,103
-------
TOTAL LIABILITIES.................... 41,060
----------
NET ASSETS.............................. $7,859,016
----------
----------
COMPOSITION OF NET ASSETS:
Capital................................. $5,344,994
Accumulated net investment income....... 4,768
Accumulated net realized gains from
investment and foreign currency
transactions........................... 669,606
Unrealized appreciation from investment
and foreign currency transactions...... 1,839,648
----------
NET ASSETS.............................. $7,859,016
----------
----------
CLASS A (INVESTOR) SHARES
Net Assets.............................. $7,252,033
Shares Outstanding...................... 421,280
Net Asset Value and Redemption
Price per share........................ $ 17.21
----------
----------
Maximum Offering Price per share (Net
asset value/(100% -- maximum sales
charge of 5.00%))...................... $ 18.12
----------
----------
CLASS B SHARES
Net Assets.............................. $ 358,484
Shares Outstanding...................... 21,275
Net Asset Value, Offering Price and
Redemption Price per share*............ $ 16.85
----------
----------
CLASS C SHARES
Net Assets.............................. $ 248,499
Shares Outstanding...................... 14,616
Net Asset Value, Offering Price and
Redemption Price per share*............ $ 17.00
----------
----------
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000
<S> <C> <C>
INVESTMENT INCOME:
Investment income from portfolio......... $ 143,323
Tax reclaims............................. 970
Foreign tax withholding from portfolio... (17,711)
Expenses from portfolio.................. (77,269)
---------
TOTAL INVESTMENT INCOME............... 49,313
EXPENSES:
Administration........................... $ 3,772
Distribution
Class B Shares.......................... 1,938
Class C Shares.......................... 1,786
Shareholder servicing
Class A (Investor) Shares............... 21,970
Class B Shares.......................... 638
Class C Shares.......................... 583
Accounting............................... 23,969
Transfer agent........................... 49,738
Registration............................. 15,350
Other.................................... 30,714
-------
Total expenses before reimbursements.... 150,458
Reimbursements.......................... (52,503)
---------
NET EXPENSES............................ 97,955
---------
NET INVESTMENT LOSS...................... (48,642)
---------
NET REALIZED/UNREALIZED
GAINS/(LOSSES) FROM INVESTMENTS:
Net realized gains from investment and
foreign currency transactions........... 773,517
Change in unrealized
appreciation/depreciation from
investments and foreign currencies...... (406,702)
---------
Net realized/unrealized gains from
investments and foreign currencies...... 366,815
---------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS.............................. $ 318,173
---------
---------
</TABLE>
---------
* Redemption price per share varies based on length of time shares are held.
See notes to financial statements.
45
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR OVERSEAS EQUITY FUND
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
OCTOBER 31,
--------------------------
2000 1999
---------- ----------
<S> <C> <C>
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment loss........................................ $ (48,642) $ (21,758)
Net realized gains from investment and foreign currency
transactions............................................. 773,517 223,700
Change in unrealized appreciation/depreciation from
investment and foreign currencies........................ (406,702) 2,283,371
---------- ----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS.............. 318,173 2,485,313
---------- ----------
DIVIDENDS:
Net investment income:
Class A (Investor) Shares................................ -- (9,884)
Net realized gains from investment and foreign currency
transactions:
Class A (Investor) Shares................................ (105,101) --
Class B Shares........................................... (1,339) --
Class C Shares (a)....................................... (955) --
---------- ----------
CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS............. (107,395) (9,884)
---------- ----------
CHANGE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS........ (677,152) (261,508)
---------- ----------
CHANGE IN NET ASSETS........................................ (466,374) 2,213,921
NET ASSETS:
Beginning of period........................................ 8,325,390 6,111,469
---------- ----------
End of period.............................................. $7,859,016 $8,325,390
---------- ----------
---------- ----------
</TABLE>
---------
(a) The Fund commenced offering Class C Shares on November 4, 1998.
See notes to financial statements.
46
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR OVERSEAS EQUITY FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS A (INVESTOR) SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEARS ENDED OCTOBER 31, AUGUST 26, 1996
--------------------------------------- TO OCTOBER 31,
2000 1999 1998 1997 1996(a)
------ ------ ------ ------ -----------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $16.90 $11.64 $11.57 $10.15 $10.00
------ ------ ------ ------ ------
INVESTMENT ACTIVITIES:
Net investment loss........................................ (0.11) (0.04) (0.01) (0.00)* --
Net realized and unrealized gains from investment and
foreign currency transactions............................ 0.64 5.32 0.23 1.43 0.15
------ ------ ------ ------ ------
Total from investment activities........................... 0.53 5.28 0.22 1.43 0.15
------ ------ ------ ------ ------
DIVIDENDS:
Net investment income...................................... -- (0.02) (0.08) (0.01) --
Net realized gains from investment and foreign currency
transactions............................................. (0.22) -- (0.07) (0.00)* --
------ ------ ------ ------ ------
Total dividends............................................ (0.22) (0.02) (0.15) (0.01) --
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD.............................. $17.21 $16.90 $11.64 $11.57 $10.15
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN (EXCLUDES SALES CHARGE)........................ 3.05 % 45.41 % 1.96 % 14.08 % 1.50%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's)......................... $7,252 $8,138 $6,070 $3,660 $ 142
Ratio of expenses to average net assets..................... 1.85 % 1.86 % 1.77 % 1.71 % 1.69%(c)
Ratio of net investment loss to average net assets.......... (0.49)% (0.30)% (0.08)% (0.16)% 0.05%(c)
Ratio of expenses to average net assets (d)................. 2.43 % 2.44 % 1.86 % 4.10 % 33.34%(c)
Portfolio turnover (e)...................................... 27.81 % 34.26 % 40.47 % 30.00 % 23.30%
</TABLE>
---------
* Less than $0.005 per share.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) During the period, certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio in
which the Fund invests all of its investable assets.
See notes to financial statements.
47
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR OVERSEAS EQUITY FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS B SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE PERIOD
OCTOBER 31, JANUARY 6, 1998
-------------------- TO OCTOBER 31,
2000 1999 1998(a)
-------- -------- ---------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $16.69 $11.57 $11.45
------ ------ ------
INVESTMENT ACTIVITIES:
Net investment loss........................................ (0.10) (0.12) (0.07)
Net realized and unrealized gains from investment and
foreign currency transactions............................ 0.48 5.24 0.19
------ ------ ------
Total from investment activities........................... 0.38 5.12 0.12
------ ------ ------
DIVIDENDS:
Net realized gains from investment and foreign currency
transactions............................................. (0.22) -- --
------ ------ ------
Total dividends............................................ (0.22) -- --
------ ------ ------
NET ASSET VALUE, END OF PERIOD.............................. $16.85 $16.69 $11.57
------ ------ ------
------ ------ ------
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE)................... 2.18 % 44.25 % 1.05 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's)......................... $ 358 $ 90 $ 42
Ratio of expenses to average net assets..................... 2.60 % 2.59 % 2.52 %(c)
Ratio of net investment loss to average net assets.......... (1.17)% (1.04)% (0.83)%(c)
Ratio of expenses to average net assets (d)................. 2.96 % 3.24 % 2.61 %(c)
Portfolio turnover (e)...................................... 27.81 % 34.26 % 40.47 %
</TABLE>
---------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) During the period, certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio in
which the Fund invests all of its investable assets.
See notes to financial statements.
48
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR OVERSEAS EQUITY FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS C SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED NOVEMBER 4, 1998
OCTOBER 31, TO OCTOBER 31,
2000 1999(a)
------------ ------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $16.84 $11.88
------ ------
INVESTMENT ACTIVITIES:
Net investment loss........................................ (0.14) (0.08)
Net realized and unrealized gains from investment and
foreign currency transactions............................ 0.52 5.04
------ ------
Total from investment activities........................... 0.38 4.96
------ ------
DIVIDENDS:
Net realized gains from investment and foreign currency
transactions............................................. (0.22) --
------ ------
Total dividends............................................ (0.22) --
------ ------
NET ASSET VALUE, END OF PERIOD.............................. $17.00 $16.84
------ ------
------ ------
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE)................... 2.10 % 41.84 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's)......................... $ 248 $ 98
Ratio of expenses to average net assets..................... 2.60 % 2.57 %(c)
Ratio of net investment loss to average net assets.......... (1.14)% (1.01)%(c)
Ratio of expenses to average net assets (d)................. 2.96 % 3.15 %(c)
Portfolio turnover (e)...................................... 27.81 % 34.26 %
</TABLE>
---------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) During the period, certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio in
which the Fund invests all of its investable assets.
See notes to financial statements.
49
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR OPPORTUNITY FUND
--------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value.................. $17,412,605
Receivable for capital shares issued... 11,514
Deferred organization costs............ 2,990
Prepaid expenses....................... 1,367
-----------
TOTAL ASSETS........................ 17,428,476
LIABILITIES:
Payable for capital shares redeemed.... $10,195
Accrued expenses and other liabilities:
Administration........................ 593
Distribution.......................... 1,174
Shareholder servicing................. 3,469
Other................................. 17,363
-------
TOTAL LIABILITIES................... 32,794
-----------
NET ASSETS............................. $17,395,682
-----------
-----------
COMPOSITION OF NET ASSETS:
Capital................................ $10,180,469
Accumulated net realized gains from
investments........................... 4,984,099
Unrealized appreciation from
investments........................... 2,231,114
-----------
NET ASSETS............................. $17,395,682
-----------
-----------
CLASS A (INVESTOR) SHARES
Net Assets............................. $15,415,368
Shares Outstanding..................... 822,335
Net Asset Value and Redemption
Price per share........................ $ 18.75
-----------
-----------
Maximum Offering Price per share (Net
asset value/(100% -- maximum sales
charge of 5.00%))..................... $ 19.74
-----------
-----------
CLASS B SHARES
Net Assets............................. $ 1,272,969
Shares Outstanding..................... 69,169
Net Asset Value, Offering Price and
Redemption Price per share*........... $ 18.40
-----------
-----------
CLASS C SHARES
Net Assets............................. $ 707,345
Shares Outstanding..................... 38,207
Net Asset Value, Offering Price and
Redemption Price per share*........... $ 18.51
-----------
-----------
</TABLE>
---------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000
<TABLE>
<S> <C> <C>
INVESTMENT LOSS:
Investment income from portfolio........ $ 66,614
Expenses from portfolio................. (178,618)
----------
TOTAL INVESTMENT LOSS................ (112,004)
EXPENSES:
Administration.......................... $ 7,487
Distribution
Class B Shares......................... 6,958
Class C Shares......................... 4,497
Shareholder servicing
Class A (Investor) Shares.............. 42,152
Class B Shares......................... 2,364
Class C Shares......................... 1,524
Accounting.............................. 23,974
Transfer agent.......................... 58,007
Registration............................ 15,808
Other................................... 8,121
-------
Total expenses before reimbursements... 170,892
Reimbursements......................... (34,101)
----------
NET EXPENSES........................... 136,791
----------
NET INVESTMENT LOSS..................... (248,795)
----------
NET REALIZED/UNREALIZED GAINS FROM
INVESTMENTS:
Net realized gains from investment
transactions........................... 6,334,113
Change in unrealized
appreciation/depreciation from
investments............................ 1,367,057
----------
Net realized/unrealized gains from
investments............................ 7,701,170
----------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS............................. $7,452,375
----------
----------
</TABLE>
---------
* Redemption price per share varies based on length of time shares are held.
See notes to financial statements.
50
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR OPPORTUNITY FUND
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
OCTOBER 31,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment loss........................................ $ (248,795) $ (193,773)
Net realized gains from investment transactions............ 6,334,113 1,513,003
Change in unrealized appreciation/depreciation from
investment transactions.................................. 1,367,057 1,552,817
----------- -----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS.............. 7,452,375 2,872,047
----------- -----------
DIVIDENDS:
In excess of net investment income:
Class A (Investor) Shares................................ -- (42,676)
Class B Shares........................................... -- (1,322)
Class C Shares(a)........................................ -- (131)
Net realized gains from investment transactions:
Class A (Investor) Shares................................ (1,264,593) (723,716)
Class B Shares........................................... (53,066) (22,200)
Class C Shares(a)........................................ (28,892) (1,482)
----------- -----------
CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS............. (1,346,551) (791,527)
----------- -----------
CHANGE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS........ (2,550,305) (1,726,997)
----------- -----------
CHANGE IN NET ASSETS........................................ 3,555,519 353,523
NET ASSETS:
Beginning of period........................................ 13,840,163 13,486,640
----------- -----------
End of period.............................................. $17,395,682 $13,840,163
----------- -----------
----------- -----------
</TABLE>
---------
(a) The Fund commenced offering Class C Shares on November 4, 1998.
See notes to financial statements.
51
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR OPPORTUNITY FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS A (INVESTOR) SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEARS ENDED OCTOBER 31, SEPTEMBER 23, 1996
---------------------------------------------- TO OCTOBER 31,
2000 1999 1998 1997 1996 (a)
------- ------- ------- ------- ------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................... $ 13.19 $ 11.33 $ 12.37 $ 9.80 $ 10.00
------- ------- ------- ------- -------
INVESTMENT ACTIVITIES:
Net investment loss................................... (0.26) (0.19) (0.13) (0.07) --
Net realized and unrealized gains/(losses) from
investment transactions............................. 7.13 2.78 (0.46) 2.64 (0.20)
------- ------- ------- ------- -------
Total from investment activities...................... 6.87 2.59 (0.59) 2.57 (0.20)
------- ------- ------- ------- -------
DIVIDENDS:
Net investment income................................. -- (0.04) -- -- --
Net realized gains from investment transactions....... (1.31) (0.69) (0.45) (0.00)* --
------- ------- ------- ------- -------
Total dividends....................................... (1.31) (0.73) (0.45) (0.00)* --
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD......................... $ 18.75 $ 13.19 $ 11.33 $ 12.37 $ 9.80
------- ------- ------- ------- -------
------- ------- ------- ------- -------
TOTAL RETURN (EXCLUDES SALES CHARGE)................... 54.54 % 23.80 % (4.68)% 26.28 % (2.00)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's).................... $15,415 $13,015 $13,137 $ 9,983 $ 3,184
Ratio of expenses to average net assets................ 1.65 % 1.75 % 1.63 % 1.55 % 1.22 %(c)
Ratio of net investment loss to average net assets..... (1.29)% (1.38)% (1.17)% (1.05)% (0.28)%(c)
Ratio of expenses to average net assets (d)............ 1.84 % 2.14 % 1.64 % 2.01 % 2.90 %(c)
Portfolio turnover (e)................................. 79.51 % 77.74 % 154.69 % 92.18 % 50.55 %
</TABLE>
---------
* Less than $0.005 per share.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) During the period, certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio in
which the Fund invests all of its investable assets.
See notes to financial statements.
52
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR OPPORTUNITY FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS B SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE PERIOD
OCTOBER 31, JANUARY 6, 1998
-------------------- TO OCTOBER 31,
2000 1999 1998(a)
------- ------- ---------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 13.06 $ 11.31 $ 11.65
------- ------- -------
INVESTMENT ACTIVITIES:
Net investment loss........................................ (0.28) (0.23) (0.09)
Net realized and unrealized gains/(losses) from investment
transactions............................................. 6.93 2.71 (0.25)
------- ------- -------
Total from investment activities........................... 6.65 2.48 (0.34)
------- ------- -------
DIVIDENDS:
In excess of net investment income......................... -- (0.04) --
Net realized gains from investment transactions............ (1.31) (0.69) --
------- ------- -------
Total dividends............................................ (1.31) (0.73) --
------- ------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 18.40 $ 13.06 $ 11.31
------- ------- -------
------- ------- -------
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE)................... 53.30 % 22.93 % (2.92)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's)......................... $ 1,273 $ 536 $ 349
Ratio of expenses to average net assets..................... 2.40 % 2.48 % 2.38 %(c)
Ratio of net investment loss to average net assets.......... (2.02)% (2.12)% (1.92)%(c)
Ratio of expenses to average net assets (d)................. 2.49 % 2.92 % 2.39 %(c)
Portfolio turnover (e)...................................... 79.51 % 77.74 % 154.69 %
</TABLE>
---------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) During the period, certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio in
which the Fund invests all of its investable assets.
See notes to financial statements.
53
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR OPPORTUNITY FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS C SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED NOVEMBER 4, 1998
OCTOBER 31, TO OCTOBER 31,
2000 1999(a)
------------ -----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 13.13 $ 11.55
------- -------
INVESTMENT ACTIVITIES:
Net investment loss........................................ (0.32) (0.10)
Net realized and unrealized gains from investment
transactions............................................. 7.01 2.41
------- -------
Total from investment activities........................... 6.69 2.31
------- -------
DIVIDENDS:
In excess of net investment income......................... -- (0.04)
Net realized gains from investment transactions............ (1.31) (0.69)
------- -------
Total dividends............................................ (1.31) (0.73)
------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 18.51 $ 13.13
------- -------
------- -------
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE)................... 53.32 % 21.00 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's)......................... $ 707 $ 289
Ratio of expenses to average net assets..................... 2.40 % 2.38 %(c)
Ratio of net investment loss to average net assets.......... (2.02)% (2.02)%(c)
Ratio of expenses to average net assets (d)................. 2.46 % 2.77 %(c)
Portfolio turnover (e)...................................... 79.51 % 77.74 %
</TABLE>
---------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) During the period, certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio in
which the Fund invests all of its investable assets.
See notes to financial statements.
54
<PAGE>
HSBC ADVISOR FUNDS TRUST
HSBC INVESTOR FIXED INCOME FUND
<TABLE>
<CAPTION>
--------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
<S> <C> <C>
ASSETS:
Investments, at value................ $135,082,009
Prepaid expenses..................... 1,686
------------
TOTAL ASSETS...................... 135,083,695
LIABILITIES:
Dividends payable.................... $394,419
Payable for capital shares
redeemed............................ 214,526
Accrued expenses and other liabilities:
Administration...................... 4,680
Other............................... 11,892
--------
TOTAL LIABILITIES................. 625,517
------------
NET ASSETS........................... $134,458,178
------------
------------
COMPOSITION OF NET ASSETS:
Capital.............................. $141,707,002
Dividends in excess of accumulated
net investment income............... (287,929)
Accumulated net realized losses from
investment and futures
transactions........................ (4,850,671)
Unrealized depreciation from
investment and futures
transactions........................ (2,110,224)
------------
NET ASSETS........................... $134,458,178
------------
------------
Shares Outstanding................... 13,462,364
------------
------------
Net Asset Value, Offering Price and
Redemption Price per share.......... $ 9.99
------------
------------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000
<S> <C> <C>
INVESTMENT INCOME:
Investment income from portfolio........ $ 7,893,307
Expenses from portfolio................. (560,299)
-----------
TOTAL INVESTMENT INCOME.............. 7,333,008
EXPENSES:
Administration.......................... $44,163
Accounting.............................. 620
Transfer agent.......................... 23,402
Printing................................ 16,551
Other................................... 18,771
-------
TOTAL EXPENSES....................... 103,507
-----------
NET INVESTMENT INCOME................... 7,229,501
-----------
NET REALIZED/UNREALIZED
GAINS/(LOSSES) FROM INVESTMENTS:
Net realized losses from investment and
futures transactions................... (1,562,147)
Change in unrealized
appreciation/depreciation from
investments and futures................ 1,297,662
-----------
Net realized/unrealized losses from
investments and futures................ (264,485)
-----------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS............................. $ 6,965,016
-----------
-----------
</TABLE>
See notes to financial statements.
55
<PAGE>
HSBC ADVISOR FUNDS TRUST
HSBC INVESTOR FIXED INCOME FUND
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
OCTOBER 31,
------------------------------
2000 1999
------------ ------------
<S> <C> <C>
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income...................................... $ 7,229,501 $ 6,960,802
Net realized losses from investment and futures
transactions............................................. (1,562,147) (3,338,029)
Change in unrealized appreciation/depreciation from
investments and futures.................................. 1,297,662 (2,387,320)
----------- ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS.............. 6,965,016 1,235,453
----------- ------------
DIVIDENDS:
Net investment income...................................... (7,241,736) (6,960,802)
Net realized gains from investment and futures
transactions............................................. -- (2,615,480)
In excess of net realized gains from investment and futures
transactions............................................. -- (54,412)
----------- ------------
CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS............. (7,241,736) (9,630,694)
----------- ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued................................ 37,011,764 22,231,660
Dividends reinvested....................................... 6,456,778 8,621,925
Cost of shares redeemed.................................... (23,138,263) (5,781,569)
----------- ------------
CHANGE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS........ 20,330,279 25,072,016
----------- ------------
CHANGE IN NET ASSETS........................................ 20,053,559 16,676,775
NET ASSETS:
Beginning of period........................................ 114,404,619 97,727,844
----------- ------------
End of period.............................................. $134,458,178 $114,404,619
----------- ------------
----------- ------------
SHARE TRANSACTIONS:
Issued..................................................... 3,728,827 2,127,144
Reinvested................................................. 653,712 827,775
Redeemed................................................... (2,347,561) (567,666)
----------- ------------
CHANGE IN SHARES............................................ 2,034,978 2,387,253
----------- ------------
----------- ------------
</TABLE>
See notes to financial statements.
56
<PAGE>
HSBC ADVISOR FUNDS TRUST
HSBC INVESTOR FIXED INCOME FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED OCTOBER 31,
-----------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.01 $ 10.81 $ 10.92 $ 10.67 $ 10.96
-------- -------- ------- ------- -------
INVESTMENT ACTIVITIES:
Net investment income...................................... 0.69 0.62 0.65 0.59 0.59
Net realized and unrealized gains/(losses) from investment
and futures transactions................................. (0.02) (0.51) 0.02 0.31 0.08
-------- -------- ------- ------- -------
Total from investment activities........................... 0.67 0.11 0.67 0.90 0.67
-------- -------- ------- ------- -------
DIVIDENDS:
Net investment income...................................... (0.69) (0.62) (0.65) (0.64) (0.59)
In excess of net realized gains from investment and futures
transactions............................................. -- (0.01) -- -- --
Net realized gains from investment and futures
transactions............................................. -- (0.28) (0.13) (0.01) (0.37)
-------- -------- ------- ------- -------
Total dividends............................................ (0.69) (0.91) (0.78) (0.65) (0.96)
-------- -------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 9.99 $ 10.01 $ 10.81 $ 10.92 $ 10.67
-------- -------- ------- ------- -------
-------- -------- ------- ------- -------
TOTAL RETURN................................................ 6.98% 1.01% 6.26% 9.14% 6.51%
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's)......................... $134,458 $114,405 $97,728 $71,686 $42,424
Ratio of expenses to average net assets..................... 0.61% 0.69% 0.78% 0.83% 0.83%
Ratio of net investment income to average net assets........ 6.66% 6.31% 5.87% 5.92% 5.51%
Ratio of expenses to average net assets..................... 0.61% 0.69% 0.78% 0.85%(a) 1.06%(a)
Portfolio turnover (b)...................................... 440.49% 433.26% 126.40% 349.00% 152.00%
</TABLE>
---------
(a) During the period, certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(b) Portfolio turnover is calculated on the basis of the respective Portfolio in
which the Fund invests all of its investable assets.
See notes to financial statements.
57
<PAGE>
HSBC ADVISOR FUNDS TRUST
HSBC INVESTOR INTERNATIONAL EQUITY FUND
--------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
<TABLE>
<S> <C>
ASSETS:
Investments, at value.............. $220,373,242
Receivable for capital shares
issued............................ 750,000
Tax reclaims receivable............ 132,862
Prepaid expenses................... 7,724
------------
TOTAL ASSETS.................... 221,263,828
LIABILITIES:
Payable for capital shares
redeemed.......................... $1,381,400
Accrued expenses and other
liabilities:
Administration.................... 7,672
Other............................. 37,655
----------
TOTAL LIABILITIES............... 1,426,727
------------
NET ASSETS......................... $219,837,101
------------
------------
COMPOSITION OF NET ASSETS:
Capital............................ $164,751,543
Accumulated net investment income.. 289,499
Accumulated net realized gains from
investment and foreign currency
transactions...................... 15,514,089
Unrealized appreciation from
investment and foreign currency
transactions...................... 39,281,970
------------
NET ASSETS......................... $219,837,101
------------
------------
Shares Outstanding................. 12,124,948
------------
------------
Net Asset Value, Offering Price and
Redemption Price per share........ $ 18.13
------------
------------
</TABLE>
--------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Investment income from portfolio...... $ 3,530,367
Tax reclaims.......................... 82,277
Foreign tax withholding from
portfolio............................ (444,805)
Expenses from portfolio............... (1,883,626)
------------
TOTAL INVESTMENT INCOME............ 1,284,213
EXPENSES:
Administration........................ $91,504
Accounting............................ 2,741
Transfer agent........................ 24,107
Other................................. 27,372
-------
TOTAL EXPENSES....................... 145,724
------------
NET INVESTMENT INCOME................. 1,138,489
------------
NET REALIZED/UNREALIZED
GAINS/(LOSSSES) FROM INVESTMENTS:
Net realized gains from investment and
foreign currency transactions........ 17,513,754
Change in unrealized
appreciation/depreciation from
investments and foreign currencies... (18,216,044)
------------
Net realized/unrealized losses from
investments and foreign currencies... (702,290)
------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS........................... $ 436,199
------------
------------
</TABLE>
See notes to financial statements.
58
<PAGE>
HSBC ADVISOR FUNDS TRUST
HSBC INVESTOR INTERNATIONAL EQUITY FUND
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
OCTOBER 31,
------------------------------
2000 1999
------------ ------------
<S> <C> <C>
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income...................................... $ 1,138,489 $ 794,715
Net realized gains from investment and foreign currency
transactions............................................. 17,513,754 9,924,244
Change in unrealized appreciation/depreciation from
investments and foreign currencies....................... (18,216,044) 45,308,486
------------ ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS.............. 436,199 56,027,445
------------ ------------
DIVIDENDS:
Net investment income...................................... (1,113,205) (1,360,840)
Net realized gains from investment and foreign currency
transactions............................................. (10,986,096) (4,150,773)
------------ ------------
CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS............. (12,099,301) (5,511,613)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued................................ 98,205,172 21,530,523
Dividends reinvested....................................... 11,983,348 5,352,712
Cost of shares redeemed.................................... (50,692,579) (25,644,831)
------------ ------------
CHANGE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS........ 59,495,941 1,238,404
------------ ------------
CHANGE IN NET ASSETS........................................ 47,832,839 51,754,236
NET ASSETS:
Beginning of period........................................ 172,004,262 120,250,026
------------ ------------
End of period.............................................. $219,837,101 $172,004,262
------------ ------------
------------ ------------
SHARE TRANSACTIONS:
Issued..................................................... 4,690,175 1,192,021
Reinvested................................................. 603,844 402,970
Redeemed................................................... (2,424,813) (1,422,117)
------------ ------------
CHANGE IN SHARES............................................ 2,869,206 172,874
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements.
59
<PAGE>
HSBC ADVISOR FUNDS TRUST
HSBC INVESTOR INTERNATIONAL EQUITY FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED OCTOBER 31,
------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 18.58 $ 13.24 $ 13.76 $ 12.05 $ 10.80
-------- -------- -------- -------- -------
INVESTMENT ACTIVITIES:
Net investment income...................................... 0.11 0.09 0.11 0.12 0.11
Net realized and unrealized gains from investment and
foreign currency transactions............................ 0.75 (a) 5.87 0.32 1.85 1.31
-------- -------- -------- -------- -------
Total from investment activities........................... 0.86 5.96 0.43 1.97 1.42
-------- -------- -------- -------- -------
DIVIDENDS:
Net investment income...................................... (0.11) (0.15) (0.27) (0.11) (0.16)
Net realized gains from investment and foreign currency
transactions............................................. (1.20) (0.47) (0.68) (0.15) (0.01)
-------- -------- -------- -------- -------
Total dividends............................................ (1.31) (0.62) (0.95) (0.26) (0.17)
-------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 18.13 $ 18.58 $ 13.24 $ 13.76 $ 12.05
-------- -------- -------- -------- -------
-------- -------- -------- -------- -------
TOTAL RETURN................................................ 4.05% 46.92% 3.49% 16.62% 13.22%
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's)......................... $219,837 $172,004 $120,250 $132,924 $96,977
Ratio of expenses to average net assets..................... 0.90% 1.05% 1.09% 0.91% 1.11%
Ratio of net investment income to average net assets........ 0.51% 0.54% 0.75% 0.91% 0.99%
Ratio of expenses to average net assets..................... 0.90% 1.05% 1.09% 0.91% 1.13%(b)
Portfolio turnover (c)...................................... 27.81% 34.26% 40.47% 30.00% 23.30%
</TABLE>
---------
(a) 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.
(b) During the period, certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(c) Portfolio turnover is calculated on the basis of the respective Portfolio in
which the Fund invests all of its investable assets.
See notes to financial statements.
60
<PAGE>
HSBC ADVISOR FUNDS TRUST
HSBC INVESTOR SMALL CAP EQUITY FUND
<TABLE>
<CAPTION>
--------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
<S> <C> <C>
ASSETS:
Investments, at value.............. $256,498,153
Deferred organization costs........ 3,905
Prepaid expenses................... 2,821
------------
TOTAL ASSETS.................... 256,504,879
LIABILITIES:
Payable for capital shares
redeemed.......................... $2,745,339
Accrued expenses and other
liabilities:
Administration.................... 8,155
Other............................. 27,343
----------
TOTAL LIABILITIES............... 2,780,837
------------
NET ASSETS......................... $253,724,042
------------
COMPOSITION OF NET ASSETS:
Capital............................ $186,664,017
Accumulated net realized gains from
investments....................... 38,956,332
Unrealized appreciation from
investments....................... 28,103,693
------------
NET ASSETS......................... $253,724,042
------------
------------
Shares Outstanding................. 14,249,121
------------
------------
Net Asset Value, Offering Price and
Redemption Price per share........ $ 17.81
------------
------------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000
<S> <C> <C>
INVESTMENT LOSS:
Investment income from portfolio....... $ 819,387
Expenses from portfolio................ (2,139,949)
-----------
TOTAL INVESTMENT LOSS............... (1,320,562)
EXPENSES:
Administration......................... $89,708
Accounting............................. 120
Audit.................................. 10,158
Transfer agent......................... 26,910
Printing............................... 32,094
Other.................................. 15,547
-------
TOTAL EXPENSES...................... 174,537
-----------
NET INVESTMENT LOSS.................... (1,495,099)
-----------
NET REALIZED/UNREALIZED GAINS FROM
INVESTMENTS:
Net realized gains from investment
transactions.......................... 64,934,444
Change in unrealized
appreciation/depreciation from
investments........................... 18,833,299
-----------
Net realized/unrealized gains from
investments........................... 83,767,743
-----------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS............................ $82,272,644
-----------
-----------
</TABLE>
See notes to financial statements.
61
<PAGE>
HSBC ADVISOR FUNDS TRUST
HSBC INVESTOR SMALL CAP EQUITY FUND
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
OCTOBER 31,
------------------------------
2000 1999
------------ ------------
<S> <C> <C>
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment loss........................................ $ (1,495,099) $ (1,096,008)
Net realized gains from investment transactions............ 64,934,444 17,034,495
Change in unrealized appreciation from investments......... 18,833,299 13,041,935
------------- ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS.............. 82,272,644 28,980,422
------------- ------------
DIVIDENDS:
In excess of net investment income......................... -- (293,756)
Net realized gains from investment transactions............ (16,264,282) (14,603,978)
------------- ------------
CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS............. (16,264,282) (14,897,734)
------------- ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued................................ 243,832,983 44,399,234
Dividends reinvested....................................... 16,264,282 14,867,311
Cost of shares redeemed.................................... (220,919,632) (37,745,870)
------------- ------------
CHANGE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS........ 39,177,633 21,520,675
------------- ------------
CHANGE IN NET ASSETS........................................ 105,185,995 35,603,363
NET ASSETS:
Beginning of period........................................ 148,538,047 112,934,684
------------- ------------
End of period.............................................. $ 253,724,042 $148,538,047
------------- ------------
------------- ------------
SHARE TRANSACTIONS:
Issued..................................................... 14,316,985 3,779,113
Reinvested................................................. 1,146,179 1,394,006
Redeemed................................................... (13,043,328) (3,184,167)
------------- ------------
CHANGE IN SHARES............................................ 2,419,836 1,988,952
------------- ------------
------------- ------------
</TABLE>
See notes to financial statements.
62
<PAGE>
HSBC ADVISOR FUNDS TRUST
HSBC INVESTOR SMALL CAP EQUITY FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEARS ENDED OCTOBER 31, SEPTEMBER 3, 1996
-------------------------------------------------- TO OCTOBER 31,
2000 1999 1998 1997 1996(a)
-------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................... $ 12.56 $ 11.48 $ 13.44 $ 10.63 $ 10.00
-------- -------- -------- -------- -------
INVESTMENT ACTIVITIES:
Net investment loss................................... (0.10) (0.09) (0.09) (0.06) --
Net realized and unrealized gains/(losses) from
investments......................................... 6.73 2.65 (0.49) 2.93 0.63
-------- -------- -------- -------- -------
Total from investment activities...................... 6.63 2.56 (0.58) 2.87 0.63
DIVIDENDS:
In excess of net investment income.................... -- (0.03) -- -- --
Net realized gains from investments................... (1.38) (1.45) (1.38) (0.06) --
-------- -------- -------- -------- -------
Total dividends....................................... (1.38) (1.48) (1.38) (0.06) --
-------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD......................... $ 17.81 $ 12.56 $ 11.48 $ 13.44 $ 10.63
-------- -------- -------- -------- -------
-------- -------- -------- -------- -------
TOTAL RETURN........................................... 55.59 % 24.63 % (4.27)% 27.18 % 6.30 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000's).................... $253,724 $148,538 $112,935 $137,996 $92,842
Ratio of expenses to average net assets................ 1.05 % 1.18 % 1.14 % 1.02 % 0.91 %(c)
Ratio of net investment loss to average net assets..... (0.68)% (0.81)% (0.68)% (0.50)% (0.28)%(c)
Ratio of expenses to average net assets................ 1.05 % 1.18 % 1.16 %(d) 1.03 %(d) 1.17 %(c)(d)
Portfolio turnover (e)................................. 79.51 % 77.74 % 154.69 % 92.18 % 50.55 %
</TABLE>
---------
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) During the period, certain fees were reduced. If such fee reductions had not
occurred, the ratio would have been as indicated.
(e) Portfolio turnover is calculated on the basis of the respective Portfolio in
which the Fund invests all of its investable assets.
See notes to financial statements.
63
<PAGE>
HSBC INVESTOR FUNDS
HSBC ADVISOR FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000
1. ORGANIZATION:
The HSBC Investor Funds (the 'Trust'), a Massachusetts business trust
organized on April 22, 1987 and the HSBC Advisor Funds Trust (the 'Advisor
Trust'), a Massachusetts business trust organized on April 5, 1996, are
registered under the Investment Company Act of 1940, as amended (the 'Act'),
as open-end management investment companies. The Trust and Advisor Trust
(collectively the 'Trusts') contain the following funds (individually a
'Fund,' collectively the 'Funds'):
<TABLE>
<CAPTION>
FUND SHORT NAME TRUST
---- ---------- -----
<S> <C> <C>
HSBC Investor New York Tax-Free Bond Fund New York Tax-Free Bond Fund Trust
HSBC Investor Equity Fund Equity Fund Trust
HSBC Investor Mid-Cap Fund Mid-Cap Fund Trust
HSBC Investor Bond Fund Bond Fund Trust
HSBC Investor Overseas Equity Fund Overseas Equity Fund Trust
HSBC Investor Opportunity Fund Opportunity Fund Trust
HSBC Investor Fixed Income Fund Fixed Income Fund Advisor Trust
HSBC Investor International Equity Fund International Equity Fund Advisor Trust
HSBC Investor Small Cap Equity Fund Small Cap Equity Fund Advisor Trust
</TABLE>
The Funds are separate series of the Trusts and are part of the HSBC
Investor Family of Funds. Financial statements for all other series of HSBC
Investor Family of Funds are published separately.
Effective July 15, 2000 the Republic Funds and the Republic Advisor Funds
Trust, along with all Funds within the Trusts, were renamed the HSBC Investor
Funds and HSBC Advisor Funds Trust, respectively.
On July 1, 2000, the Mid-Cap Fund, prior to offering shares to the public,
exchanged its shares for portfolio securities of a collective investment
trust (the 'CTF') as part of a tax-free reorganization of the CTF. The
following is a summary of shares issued, net assets acquired, net asset value
per share and unrealized appreciation as of the date acquired:
<TABLE>
<S> <C>
Trust Class Shares.......................................... 8,434,364
Net assets acquired......................................... $84,343,643
Net asset value............................................. $ 10.00
Unrealized appreciation..................................... $18,937,078
</TABLE>
The Bond Fund, Fixed Income Fund, Overseas Equity Fund, International
Equity Fund, Opportunity Fund and the Small Cap Equity 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), per the following schedule:
<TABLE>
<CAPTION>
PROPORTIONATE
INTEREST ON
FUND RESPECTIVE PORTFOLIO OCTOBER 31, 2000
---- -------------------- ----------------
<S> <C> <C>
Bond Fund HSBC Investor Fixed Income Portfolio 1.9%
Fixed Income Fund HSBC Investor Fixed Income Portfolio 59.7%
Overseas Equity Fund HSBC Investor International Equity Portfolio 2.4%
International Equity Fund HSBC Investor International Equity Portfolio 66.3%
Opportunity Fund HSBC Investor Small Cap Equity Portfolio 4.7%
Small Cap Equity Fund HSBC Investor Small Cap Equity Portfolio 69.5%
</TABLE>
The HSBC Investor Fixed Income Portfolio, HSBC Investor International
Equity Portfolio, and the HSBC Investor Small Cap Equity Portfolio
(individually a 'Portfolio,' collectively the 'Portfolios'), are diversified
series of the HSBC Investor Portfolios (the 'Portfolio Trust'), 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 New York Tax-Free Bond Fund and Equity Fund each offers four classes of
shares, Class A (Investor) Shares, Class B Shares, Class C Shares and
Class Y (Adviser) Shares. The Mid-Cap Fund offers four classes of shares,
Class A Shares, Class B Shares, Class C Shares, and Trust Shares. The Bond
Fund, Overseas Equity Fund and Opportunity Fund each offers three classes of
shares, Class A (Investor) Shares, Class B Shares and Class C Shares. The
Fixed Income Fund, International Equity Fund and Small Cap Equity Fund each
offers one class of 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.
Continued
64
<PAGE>
HSBC INVESTOR FUNDS
HSBC ADVISOR FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000
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 generally accepted accounting principles in the United
States of America. 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, EQUITY 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 electronic and 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 at fair market value as
determined in good faith by or at the direction of the Board of Trustees.
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, EQUITY FUND AND MID-CAP FUND
Security transactions are accounted for on the date the security is
purchased or sold ('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 and Equity Fund invest in financial futures
contracts for the purpose of hedging their existing portfolio securities or
securities they intend to purchase against fluctuations in fair value caused
by changes in prevailing market interest rates. Upon entering into a
financial futures contract, the New York Tax-Free Bond Fund and Equity Fund
are required to pledge to the broker an amount of cash and/or other assets
equal to a certain percentage of the contract amount (initial margin
deposit). Subsequent payments, known as 'variation margin', are made each
day, depending on the daily fluctuations in the fair value of the underlying
security. A gain or loss equal to the daily variation margin is recognized on
a daily basis.
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.
Continued
65
<PAGE>
HSBC INVESTOR FUNDS
HSBC ADVISOR FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000
Should market conditions move unexpectedly, the New York Tax-Free Bond Fund
and the Equity Fund may not achieve the anticipated benefits of the financial
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.
EXPENSE ALLOCATION:
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.
ORGANIZATION EXPENSES:
Costs incurred in connection with the organization and initial registration
of the Trusts, which have been allocated among the Funds, have been deferred
and are being amortized over a five year period, beginning with each Fund's
commencement of operations, except for the Mid-Cap Fund which was expensed as
incurred.
DIVIDENDS TO SHAREHOLDERS:
The New York Tax-Free Bond Fund, the Bond Fund and the Fixed Income Fund
declare all net investment income daily as dividends to their shareholders
and distribute such dividends monthly. Dividends from net investment income,
if any, are declared and distributed quarterly in the case of the Equity
Fund, semi-annually in the case of the Opportunity Fund and Small Cap Equity
Fund and annually in the case of the Mid-Cap Fund, Overseas Equity Fund and
International 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 generally accepted accounting principles in the United States of
America. 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 to paid-in capital; temporary
differences do not require reclassification. The Overseas Equity Fund,
Opportunity Fund, International Equity Fund and the Small Cap Equity Fund
utilize equalization accounting for tax purposes and designate earnings and
profits, including net realized gains distributed to shareholders on
redemptions of shares, as a part of the dividends paid deduction for income
tax purposes.
As of October 31, 2000, the following reclassifications have been made to
increase/(decrease) such accounts with offsetting adjustments made to
capital:
<TABLE>
<CAPTION>
ACCUMULATED NET ACCUMULATED NET
INVESTMENT REALIZED GAIN/LOSS
INCOME/LOSS ON INVESTMENTS
----------- --------------
<S> <C> <C>
Equity Fund................................................. $ 52,438 $ (4)
Mid-Cap Fund................................................ 74,721 --
Bond Fund................................................... (858) 858
Overseas Equity Fund........................................ 83,661 (95,026)
Opportunity Fund............................................ 248,795 (1,216,671)
Fixed Income Fund........................................... (27,203) 27,203
International Equity Fund................................... 200,535 (1,984,904)
Small Cap Equity Fund....................................... 1,495,099 (24,551,096)
</TABLE>
FEDERAL INCOME TAXES:
Each Fund is a separate taxable entity for federal 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.
Continued
66
<PAGE>
HSBC INVESTOR FUNDS
HSBC ADVISOR FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000
3. RELATED PARTY TRANSACTIONS WITH AFFILIATES:
INVESTMENT MANAGEMENT:
On December 31, 1999, HSBC Holdings plc, a registered bank holding company,
acquired Republic New York Corporation. Subsequently, Republic National Bank
of New York was renamed HSBC Bank USA ('HSBC'). HSBC acts as Investment
Manager to the New York Tax-Free Bond Fund. HSBC Asset Management (Americas),
Inc. ('HSBC Americas'), a wholly owned subsidiary of HSBC Holdings plc, acts
as Investment Manager to the Mid-Cap Fund. As Investment Managers, HSBC and
HSBC Americas manage the investments of the Funds and continuously review,
supervise and administer the Funds' investments. For their services as
Investment Managers, HSBC and HSBC Americas are entitled to receive a fee,
computed daily and paid monthly, at an annual percentage rate of 0.25% of the
New York Tax-Free Bond Fund's and 0.55% of the Mid-Cap Fund's average daily
net assets.
HSBC also serves as Investment Manager to the Equity Fund. Alliance Capital
Management, L.P. and Institutional Capital Corporation serve as
Sub-Investment Managers to the Equity Fund. On March 15, 2000, Institutional
Capital Corporation replaced Brinson Partners as one of the Sub-Investment
Managers to the Equity Fund. For their services as Investment Manager and
Sub-Investment Managers to the Equity Fund, HSBC, Alliance Capital Management
and Institutional Capital Corporation are entitled to receive in the
aggregate a fee, computed daily and paid monthly, based on the following
schedule:
<TABLE>
<CAPTION>
BASED ON AVERAGE DAILY NET ASSETS FEE RATE
--------------------------------- --------
<S> <C>
Up to $50 million........................................... 0.500%
In excess of $50 million but not exceeding $100 million..... 0.425%
In excess of $100 million but not exceeding $200 million.... 0.375%
In excess of $200 million................................... 0.325%
</TABLE>
ADMINISTRATION:
BISYS Fund Services Ohio, Inc. ('BISYS Ohio'), who serves the Trusts as
Administrator, is a wholly-owned subsidiary of The BISYS Group, Inc., with
whom certain officers of the Trusts are affiliated. Such officers are paid no
fees directly by the Funds for serving as officers of the Trusts. Under the
terms of the administration agreement, BISYS Ohio receives from the Funds a
fee accrued daily and paid monthly at an annual rate of:
<TABLE>
<CAPTION>
ADMINISTRATION
BASED ON AVERAGE DAILY NET ASSETS FEE RATE
--------------------------------- --------
<S> <C>
Up to $1 billion............................................ 0.10%
In excess of $1 billion but not exceeding $2 billion........ 0.08%
In excess of $2 billion..................................... 0.07%
</TABLE>
The fee breakpoints are determined on the basis of the aggregate average
daily net assets of the HSBC Investor Family of Funds. The fee is allocated
to each of the HSBC Investor Family of Funds based upon its pro-rata share of
net assets.
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 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 for amounts representing
actual expenses incurred by the Distributor for marketing costs and services
rendered in distributing the Funds' shares. BISYS, as the Funds' distributor,
recovered $40,254 in commissions from sales of the funds of which $203 was
reallowed to affiliated brokers and dealers. The Distributor also receives
the proceeds of any CDSC imposed on redemptions of Class B Shares and
Class C Shares. In addition, the Distributor retains a portion of the
front-end sales charge of Class A (Investor) Shares. For the period ended
October 31, 2000 neither the Distributor nor HSBC have retained any monies
from dealer commissions.
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. 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.
Continued
67
<PAGE>
HSBC INVESTOR FUNDS
HSBC ADVISOR FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000
FEE REDUCTIONS:
The Investment Manager has agreed to reduce a portion of their fees and, to
the extent necessary, reimburse the Funds for certain expenses. For the year
ended October 31, 2000, expenses of the Funds were reduced and/or reimbursed
by amounts as detailed below:
<TABLE>
<CAPTION>
FEES
REDUCED REIMBURSED
------- ----------
<S> <C> <C>
New York Tax-Free Bond Fund................................. $27,652 $ --
Bond Fund................................................... -- 100,442
Overseas Equity Fund........................................ -- 52,503
Opportunity Fund............................................ -- 34,101
</TABLE>
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, the Equity Fund and the Mid-Cap Fund. For services to the
Funds, BISYS Ohio and HSBC receive an annual per fund fee accrued daily and
paid monthly.
4. INVESTMENT TRANSACTIONS:
Purchases of and proceeds from sales, excluding short-term securities, for
the Funds for the year ended October 31, 2000 totaled:
<TABLE>
<CAPTION>
PURCHASES SALES
--------- -----
<S> <C> <C>
New York Tax-Free Bond Fund................................. $ 8,075,173 $ 14,813,206
Equity Fund................................................. 245,997,710 283,030,432
Mid-Cap Fund................................................ 72,118,574 52,480,641
</TABLE>
Contributions and withdrawals of the respective Portfolios for the year
ended October 31, 2000 totaled:
<TABLE>
<CAPTION>
CONTRIBUTIONS WITHDRAWALS
------------- -----------
<S> <C> <C>
Bond Fund................................................... $ 997,191 $ 1,835,390
Fixed Income Fund........................................... 37,010,198 24,086,041
Overseas Equity Fund........................................ 2,383,091 3,255,177
International Equity Fund................................... 97,508,751 50,238,233
Opportunity Fund............................................ 2,895,586 6,928,418
Small Cap Equity Fund....................................... 243,833,256 219,081,684
</TABLE>
Continued
68
<PAGE>
HSBC INVESTOR FUNDS
HSBC ADVISOR FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000
CAPITAL SHARE TRANSACTIONS:
The Funds are authorized to issue an unlimited number of shares of
beneficial interest with a par value of $0.001 per share. Transactions in
capital and shares of beneficial interest for the Fixed Income Fund, the
International Equity Fund and the Small Cap Equity Fund are in the Statement
of Changes in Net Assets. Transactions in capital and shares of beneficial
interest by class for all other Funds for the year ended October 31, 2000
were as follows:
<TABLE>
<CAPTION>
NEW YORK TAX-FREE
BOND FUND EQUITY FUND
--------------------------- ---------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Proceeds from shares issued.............................. $ 5,467,875 $ 7,798,622 $ 3,393,134 $ 5,496,804
Dividends reinvested..................................... 720,325 955,019 2,632,994 608,893
Cost of shares redeemed.................................. (11,805,447) (12,646,454) (8,112,689) (5,897,024)
------------ ------------ ------------ ------------
Class A (Investor) Shares capital transactions.............. (5,617,247) (3,892,813) (2,086,561) 208,673
------------ ------------ ------------ ------------
CLASS B SHARES:
Proceeds from shares issued.............................. 270,380 22,456 230,714 696,169
Dividends reinvested..................................... 23,676 22,028 164,600 22,102
Cost of shares redeemed.................................. (49,099) (50,000) (350,443) (84,128)
------------ ------------ ------------ ------------
Class B Shares capital transactions......................... 244,957 (5,516) 44,871 634,143
------------ ------------ ------------ ------------
CLASS C SHARES(a):
Proceeds from shares issued.............................. 260,865 378,258 148,886 1,634,402
Dividends reinvested..................................... 9,985 5,024 140,798 2,182
Cost of shares redeemed.................................. (119,349) (108,371) (535,539) (27,532)
------------ ------------ ------------ ------------
Class C Shares capital transactions......................... 151,501 274,911 (245,855) 1,609,052
------------ ------------ ------------ ------------
CLASS Y (ADVISER) SHARES:
Proceeds from shares issued.............................. 1,903,903 850,001 19,587,921 14,387,714
Dividends reinvested..................................... 144,977 119,112 23,396,032 5,707,524
Cost of shares redeemed.................................. (1,438,762) (296,012) (54,830,040) (21,618,821)
------------ ------------ ------------ ------------
Class Y (Adviser) Shares capital transactions............... 610,118 673,101 (11,846,087) (1,523,583)
------------ ------------ ------------ ------------
Change in net assets from capital transactions.............. $ (4,610,671) $ (2,950,317) $(14,133,632) $ 928,285
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
SHARE TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Issued................................................... 539,621 719,171 185,956 283,248
Reinvested............................................... 70,605 89,403 148,814 34,417
Redeemed................................................. (1,160,027) (1,183,310) (448,870) (302,849)
------------ ------------ ------------ ------------
Change in Class A (Investor) Shares......................... (549,801) (374,736) (114,100) 14,816
------------ ------------ ------------ ------------
CLASS B SHARES:
Issued................................................... 26,264 2,086 13,118 36,475
Reinvested............................................... 2,321 2,066 9,400 1,264
Redeemed................................................. (4,838) (4,744) (19,536) (4,317)
------------ ------------ ------------ ------------
Change in Class B Shares.................................... 23,747 (592) 2,982 33,422
------------ ------------ ------------ ------------
CLASS C SHARES(a):
Issued................................................... 25,407 35,104 8,380 83,258
Reinvested............................................... 973 476 8,000 113
Redeemed................................................. (11,773) (10,290) (28,993) (1,383)
------------ ------------ ------------ ------------
Change in Class C Shares.................................... 14,607 25,290 (12,613) 81,988
------------ ------------ ------------ ------------
CLASS Y (ADVISER) SHARES:
Issued................................................... 187,154 81,145 1,132,911 740,789
Reinvested............................................... 14,187 11,145 1,321,153 321,224
Redeemed................................................. (140,946) (27,424) (3,073,758) (1,145,548)
------------ ------------ ------------ ------------
Change in Class Y (Adviser) Shares.......................... 60,395 64,866 (619,694) (83,535)
------------ ------------ ------------ ------------
Change in shares............................................ (451,052) (285,172) (743,425) 46,691
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
---------
(a) The New York Tax-Free Bond Fund and the Equity Fund commenced offering Class
C shares on November 4, 1998.
Continued
69
<PAGE>
HSBC INVESTOR FUNDS
HSBC ADVISOR FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000
<TABLE>
<CAPTION>
MID-CAP FUND
--------------
FOR THE PERIOD
ENDED
OCTOBER 31,
2000(a)
-------
<S> <C>
CAPITAL TRANSACTIONS:
CLASS A SHARES:
Proceeds from shares issued.............................. $ 482,606
Dividends reinvested..................................... --
Cost of shares redeemed.................................. (23,759)
------------
Class A Shares capital transactions......................... 458,847
------------
CLASS B SHARES:
Proceeds from shares issued.............................. 1,587,058
Dividends reinvested..................................... --
Cost of shares redeemed.................................. (15,366)
------------
Class B Shares capital transactions......................... 1,571,692
------------
CLASS C SHARES:
Proceeds from shares issued.............................. 18,572
Dividends reinvested..................................... --
Cost of shares redeemed.................................. --
------------
Class C Shares capital transactions......................... 18,572
------------
TRUST CLASS SHARES:
Proceeds from shares issued.............................. 26,692,955
Proceeds from shares issued in conjunction with CTF
conversion............................................. 84,343,643
Dividends reinvested..................................... --
Cost of shares redeemed.................................. (2,356,444)
------------
Trust Class Shares capital transactions..................... 108,680,154
------------
Change in net assets from capital transactions.............. $110,729,265
------------
------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued................................................... 46,313
Reinvested............................................... --
Redeemed................................................. (2,188)
------------
Change in Class A Shares.................................... 44,125
------------
CLASS B SHARES:
Issued................................................... 156,431
Reinvested............................................... --
Redeemed................................................. (1,549)
------------
Change in Class B Shares.................................... 154,882
------------
CLASS C SHARES:
Issued................................................... 1,762
Reinvested............................................... --
Redeemed................................................. --
------------
Change in Class C Shares.................................... 1,762
------------
TRUST CLASS SHARES:
Issued................................................... 2,549,619
Shares issued in conjunction with CTF conversion......... 8,434,364
Reinvested............................................... --
Redeemed................................................. (224,656)
------------
Change in Trust Class Shares................................ 10,759,327
------------
Change in shares............................................ 10,960,096
------------
------------
</TABLE>
---------
(a) The Fund commenced offering Class A Shares on July 10, 2000.
The Fund commenced offering Class B Shares on July 17, 2000.
The Fund commenced offering Class C Shares on August 9, 2000.
The Fund commenced offering Trust Class Shares on July 1, 2000.
Continued
70
<PAGE>
HSBC INVESTOR FUNDS
HSBC ADVISOR FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000
<TABLE>
<CAPTION>
BOND FUND OVERSEAS EQUITY FUND OPPORTUNITY FUND
------------------------- ------------------------- -------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2000 1999 2000 1999 2000 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
CLASS A (INVE) SHARES:
Proceeds from shares issued.......... $ 807,920 $ 896,358 $ 1,703,742 $ 1,626,201 $ 1,960,908 $ 1,578,167
Dividends reinvested................. 258,495 383,348 105,101 9,884 1,264,593 766,392
Cost of shares redeemed.............. (1,561,013) (1,408,465) (2,990,679) (2,010,092) (6,541,565) (4,459,217)
----------- ----------- ----------- ----------- ----------- -----------
Class A (Investor) Shares capital
transactions........................... (494,598) (128,759) (1,181,836) (374,007) (3,316,064) (2,114,658)
----------- ----------- ----------- ----------- ----------- -----------
CLASS B SHARES:
Proceeds from shares issued.......... 35,389 33,260 328,190 31,518 493,659 196,257
Dividends reinvested................. 18,465 26,282 1,339 -- 53,066 21,745
Cost of shares redeemed.............. (119,914) (52,075) (15,408) (4,256) (55,924) (96,495)
----------- ----------- ----------- ----------- ----------- -----------
Class B Shares capital transactions..... (66,060) 7,467 314,121 27,262 490,801 121,507
----------- ----------- ----------- ----------- ----------- -----------
CLASS C SHARES (a):
Proceeds from shares issued.......... -- 168,677 246,491 85,237 375,779 270,095
Dividends reinvested................. 8,233 3,536 955 -- 28,893 1,613
Cost of shares redeemed.............. (21,189) (16,306) (56,882) -- (129,714) (5,554)
----------- ----------- ----------- ----------- ----------- -----------
Class C Shares capital transactions..... (12,956) 155,907 190,563 85,237 274,958 266,154
----------- ----------- ----------- ----------- ----------- -----------
Change in net assets from capital
transactions........................... $ (573,614) $ 34,615 $ (677,152) $ (261,508) $(2,550,305) $(1,726,997)
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
SHARE TRANSACTIONS:
CLASS A (INVESTOR) SHARES:
Issued............................... 83,732 87,644 86,678 104,324 111,264 132,922
Reinvested........................... 26,801 37,693 5,590 799 84,194 67,901
Redeemed............................. (161,723) (141,248) (152,609) (144,937) (360,049) (373,048)
----------- ----------- ----------- ----------- ----------- -----------
Change in Class A (Investor) Shares..... (51,190) (15,911) (60,341) (39,814) (164,591) (172,225)
----------- ----------- ----------- ----------- ----------- -----------
CLASS B SHARES:
Issued............................... 3,687 3,342 16,629 2,028 27,719 16,198
Reinvested........................... 1,913 2,582 72 -- 3,573 1,934
Redeemed............................. (12,332) (5,260) (798) (278) (3,143) (8,008)
----------- ----------- ----------- ----------- ----------- -----------
Change in Class B Shares................ (6,732) 664 15,903 1,750 28,149 10,124
----------- ----------- ----------- ----------- ----------- -----------
CLASS C SHARES (A):
Issued............................... -- 16,745 11,885 5,817 20,957 22,386
Reinvested........................... 854 357 51 -- 1,934 143
Redeemed............................. (2,226) (1,587) (3,137) -- (6,724) (489)
----------- ----------- ----------- ----------- ----------- -----------
Change in Class C Shares................ (1,372) 15,515 8,799 5,817 16,167 22,040
----------- ----------- ----------- ----------- ----------- -----------
Change in shares........................ (59,294) 268 (35,639) (32,247) (120,275) (140,061)
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
---------
(a) The Bond Fund, Overseas Equity Fund and the Opportunity Fund commenced
offering Class C Shares on November 4, 1998.
Continued
71
<PAGE>
HSBC INVESTOR FUNDS
HSBC ADVISOR FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000
6. 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. The New York Tax-Free Bond Fund had the following
concentrations by municipal funding sources at October 31, 2000 (as a
percentage of total investments):
<TABLE>
<S> <C>
Airport..................................................... 3.45%
Facilities.................................................. 6.84
General Obligation.......................................... 21.57
Higher Education............................................ 18.21
Medical..................................................... 8.88
Multifamily Housing......................................... 7.09
Pollution Control........................................... 1.31
Power....................................................... 4.36
Single Family Housing....................................... 4.42
Transportation.............................................. 15.99
Utilities................................................... 7.70
Other....................................................... 0.18
------
100.00%
------
------
</TABLE>
7. FEDERAL INCOME TAX INFORMATION:
For federal income tax purposes, the following Funds have capital loss
carryforwards as of October 31, 2000, which are available to offset future
realized gains, if any:
<TABLE>
<CAPTION>
AMOUNT EXPIRES
------ -------
<S> <C> <C>
New York Tax-Free Bond...................................... $ 134,443 2007
445,952 2008
Equity Fund................................................. 5,765,400 2008
Bond Fund................................................... 174,274 2007
91,688 2008
Fixed Income Fund........................................... 3,273,905 2007
1,576,583 2008
</TABLE>
8. OTHER FEDERAL TAX INFORMATION (UNAUDITED):
For the taxable year ended October 31, 2000, the following percentages of
income dividends paid by the Funds qualify for the dividends received
deduction available to corporations.
<TABLE>
<CAPTION>
QUALIFIED
DIVIDEND
INCOME
------
<S> <C>
Equity Fund................................................. 100.00%
</TABLE>
During the year ended October 31, 2000, the New York Tax-Free Bond Fund
paid $1,199,974 tax-exempt income distributions.
During the year ended October 31, 2000, the Funds declared long-term
realized gain distributions in the following amounts:
<TABLE>
<CAPTION>
20% CAPITAL GAINS
-----------------
<S> <C>
Equity Fund................................................. $25,984,160
Overseas Equity Fund........................................ 194,128
Opportunity Fund............................................ 939,010
International Equity Fund................................... 11,479,385
Small Cap Equity Fund....................................... 10,893,242
</TABLE>
72
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and
Board of Trustees of the
HSBC Investor Funds (formerly Republic Funds)
HSBC Investor Advisor Funds Trust (formerly Republic Advisor Funds Trust):
We have audited the accompanying statements of assets and liabilities of the
HSBC Investor New York Tax-Free Bond Fund, HSBC Investor Equity Fund, HSBC
Investor Mid-Cap Fund, HSBC Investor Bond Fund, HSBC Investor Overseas Equity
Fund, HSBC Investor Opportunity Fund, HSBC Investor Fixed Income Fund, HSBC
Investor International Equity Fund, and HSBC Investor Small Cap Equity Fund
(collectively, the Funds), including the schedules of portfolio investments of
the HSBC Investor New York Tax-Free Bond Fund, HSBC Investor Equity Fund, and
HSBC Investor Mid-Cap Fund, as of October 31, 2000, and the related statements
of operations, statements of changes in net assets and the financial highlights
for each of the periods indicated herein. These financial statements and the
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included verification of
securities owned by the HSBC Investor New York Tax-Free Bond Fund, HSBC Investor
Equity Fund, and HSBC Investor Mid-Cap Fund as of October 31, 2000, by
confirmation with the custodian, correspondence with brokers and other
appropriate audit procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Funds as of October 31, 2000, the results of their operations, the changes in
their net assets and the financial highlights for each of the periods indicated
herein, in conformity with accounting principles generally accepted in the
United States of America.
KPMG LLP
Columbus, Ohio
December 8, 2000
73
<PAGE>
HSBC INVESTOR PORTFOLIOS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR FIXED INCOME PORTFOLIO OCTOBER 31, 2000
<TABLE>
<CAPTION>
-----------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 93.7%
SECURITY PRINCIPAL
DESCRIPTION AMOUNT VALUE
------------------------------------- ----------- ------------
<S> <C> <C>
FEDERAL HOME LOAN BANK - 3.1%
6.40%, 11/15/00 (g).................. $ 7,000,000 $ 6,982,332
------------
FEDERAL HOME LOAN MORTGAGE CORP. - 35.2%
6.38%, 11/14/00 (g).................. 7,000,000 6,983,592
6.39%, 11/21/00 (g).................. 20,000,000 19,927,880
6.38%, 12/5/00 (g)................... 5,000,000 4,969,445
6.45%, 1/11/01 (g)................... 8,000,000 7,898,072
6.75%, 9/15/29....................... 9,700,000 9,619,703
Pool #180881, 10.50%, 10/1/11........ 32,971 35,353
Pool #308433, 10.50%, 11/1/18........ 22,114 23,846
Pool #555201, 11.00%, 9/1/16......... 32,814 35,667
Pool #555283, 10.00%, 9/1/17......... 121,411 128,209
Pool #A00814, 10.00%, 11/1/20........ 300,595 315,872
Pool #A01417, 10.00%, 3/1/21......... 240,363 252,225
Pool #A01521, 9.50%, 12/1/16......... 97,507 102,552
Pool #A01663, 10.00%, 11/1/16........ 235,090 246,620
Pool #A01706, 10.00%, 6/1/17......... 291,509 305,895
Pool #D18976, 10.00%, 3/1/20......... 259,094 271,634
TBA November 2000, 8.50%,
11/1/30 (b)......................... 3,900,000 3,990,188
TBA November 2000, 6.00%,
11/1/30 (b)......................... 12,650,000 11,867,281
TBA November 2000, 6.50%,
11/1/30 (b)......................... 9,000,000 8,654,058
TBA November 2000, 8.00%,
11/1/30 (b)......................... 3,950,000 4,001,844
------------
79,629,936
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 40.1%
7.13%, 6/15/10....................... 6,700,000 6,907,667
6.25%, 5/15/29....................... 21,390,000 19,971,266
7.25%, 5/15/30....................... 9,845,000 10,405,584
Pool #124783, 10.50%, 12/1/16........ 33,655 35,923
Pool #303157, 10.00%, 5/1/22......... 34,318 35,982
Pool #323073, 10.50%, 10/1/18........ 239,079 255,670
Pool #323166, 9.50%, 8/1/22.......... 495,145 519,405
Pool #323559, 10.00%, 6/1/20......... 435,930 457,437
Pool #323715, 6.00%, 5/1/29.......... 10,753,251 10,105,550
Pool #418458, 10.00%, 11/1/18........ 621,888 651,873
Pool #427683, 10.50%, 6/1/09......... 627,071 667,778
Pool #44176, 10.00%, 6/1/20.......... 66,866 70,179
Pool #82931, 10.00%, 10/1/19......... 21,869 22,937
Pool #83435, 10.00%, 11/1/19......... 47,418 49,758
Pool #83880, 10.00%, 11/1/19......... 3,371 3,537
Pool #84964, 10.00%, 11/1/19......... 6,323 6,632
Pool #87291, 10.00%, 1/1/20.......... 3,848 4,039
TBA December 2000, 7.50%,
12/1/30 (b)......................... 3,425,000 3,415,369
TBA November 2000, 7.00%,
11/1/30 (b)......................... 1,800,000 1,764,000
TBA November 2000, 6.00%,
11/1/30 (b)......................... 7,400,000 6,937,500
TBA November 2000, 8.50%,
11/1/30 (b)......................... 5,150,000 5,259,438
TBA November 2000, 8.00%,
11/1/30 (b)......................... 1,200,000 1,214,813
<CAPTION>
-----------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS, CONTINUED
SECURITY PRINCIPAL
DESCRIPTION AMOUNT VALUE
------------------------------------- ----------- ------------
<S> <C> <C>
TBA November 2000, 7.50%,
11/1/30 (b)......................... $ 8,000,000 $ 7,985,000
TBA November 2000, 6.00%,
11/1/30 (b)......................... 2,150,000 2,230,625
TBA November 2000, 6.50%,
11/1/30 (b)......................... 12,300,000 11,819,537
------------
90,797,499
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 15.3%
Pool #120587, 13.50%, 11/15/14....... 26,200 29,809
Pool #136224, 10.00%, 11/15/15....... 32,557 34,361
Pool #150312, 11.50%, 2/15/16........ 11,845 13,009
Pool #163997, 10.50%, 8/15/16........ 8,026 8,631
Pool #164353, 10.50%, 6/15/16........ 23,949 25,755
Pool #164356, 10.50%, 6/15/16........ 71,386 76,768
Pool #199010, 10.00%, 1/15/17........ 25,351 26,738
Pool #227192, 10.00%, 6/15/19........ 23,849 25,137
Pool #253821, 10.00%, 10/15/18....... 21,265 22,420
Pool #257153, 10.00%, 11/15/18....... 7,339 7,738
Pool #258345, 10.00%, 6/15/19........ 2,513 2,649
Pool #265085, 10.00%, 4/15/19........ 17,404 18,344
Pool #271874, 10.00%, 4/15/19........ 20,494 21,602
Pool #278742, 10.50%, 9/15/19........ 57,092 61,342
Pool #282210, 10.50%, 11/15/19....... 84,772 91,082
Pool #301274, 10.00%, 1/15/21........ 30,668 32,297
Pool #38500, 11.00%, 1/15/10......... 49,829 54,009
Pool #38712, 11.00%, 3/15/10......... 18,675 20,241
Pool #39798, 11.00%, 6/15/10......... 15,734 17,054
Pool #41650, 11.00%, 8/15/10......... 33,909 36,753
Pool #41840, 11.00%, 8/15/10......... 44,651 48,397
Pool #42490, 11.00%, 7/15/10......... 35,342 38,307
Pool #43699, 11.00%, 9/15/10......... 20,845 22,594
Pool #44103, 11.00%, 9/15/10......... 20,566 22,291
Pool #780047, 9.00%, 12/15/17........ 591,144 619,083
Pool #780066, 10.50%, 12/15/20....... 233,580 250,847
Pool #780081, 10.00%, 2/15/25........ 77,543 81,541
Pool #780127, 10.50%, 4/15/25........ 73,309 78,555
Pool #780164, 10.00%, 12/15/17....... 141,771 149,526
Pool #780203, 9.50%, 12/15/17........ 395,531 415,330
Pool #780311, 9.50%, 12/15/21........ 285,856 300,091
Pool #780377, 9.00%, 12/15/19........ 528,436 552,414
Pool #780378, 11.00%, 1/15/19........ 134,811 146,309
Pool #780384, 11.00%, 2/15/17........ 147,891 160,643
Pool #780472, 10.00%, 3/15/25........ 236,304 248,488
Pool #780517, 10.50%, 1/15/18........ 54,663 58,780
Pool #780614, 11.00%, 3/15/18........ 372,102 404,032
Pool #780784, 10.00%, 8/15/21........ 373,880 393,741
Pool #780804, 10.00%, 12/15/20....... 1,061,786 1,118,712
Pool #780826, 9.50%, 5/15/18......... 704,496 739,898
Pool #780904, 9.50%, 7/15/18......... 472,358 495,972
Pool #780991, 9.00%, 11/15/24........ 556,275 578,964
Pool #80094, 6.75%, 7/20/27 (c)...... 212,963 215,606
Pool #80106, 6.75%, 8/20/27 (c)...... 593,729 601,096
Pool #80114, 6.75%, 9/20/27 (c)...... 386,732 391,531
Pool #80123, 7.13%, 10/20/27 (c)..... 571,705 580,753
</TABLE>
Continued
74
<PAGE>
HSBC INVESTOR PORTFOLIOS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR FIXED INCOME PORTFOLIO OCTOBER 31, 2000
<TABLE>
<CAPTION>
-----------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS, CONTINUED
SECURITY PRINCIPAL
DESCRIPTION AMOUNT VALUE
------------------------------------- ----------- ------------
<S> <C> <C>
Pool #80137, 7.13%, 11/20/27 (c)..... $ 690,900 $ 701,834
Pool #80145, 7.13%, 12/20/27 (c)..... 166,891 169,532
Pool #80156, 7.38%, 1/20/28 (c)...... 162,176 164,374
Pool #8599, 7.38%, 2/20/25 (c)....... 124,115 126,463
Pool #8613, 7.38%, 3/20/25 (c)....... 349,660 356,273
Pool #8619, 7.38%, 4/20/25 (c)....... 85,287 86,900
Pool #8621, 7.38%, 4/20/25 (c)....... 430,105 438,239
Pool #8623, 7.38%, 4/20/25 (c)....... 301,161 306,857
Pool #8624, 7.38%, 4/20/25 (c)....... 657,615 670,053
Pool #8628, 7.38%, 5/20/25 (c)....... 95,306 97,108
Pool #8631, 7.38%, 5/20/25 (c)....... 196,357 200,071
Pool #8634, 7.38%, 5/20/25 (c)....... 111,442 113,550
Pool #8643, 7.38%, 6/20/25 (c)....... 271,008 276,134
Pool #8646, 7.38%, 6/20/25 (c)....... 157,834 160,819
Pool #8663, 6.75%, 7/20/25 (c)....... 119,209 121,233
Pool #8686, 6.75%, 8/20/25 (c)....... 440,912 448,398
TBA November, 7.00%, 11/15/29 (b).... 21,150,000 20,852,588
------------
34,629,666
------------
TOTAL GOVERNMENT AGENCY OBLIGATIONS
(Cost $210,935,738)................. 212,039,433
------------
-----------------------------------------------------------------
CORPORATE OBLIGATIONS - 27.4%
AUTOMOTIVE - 0.7%
Daimler-Chrysler NA Holdings, 8.00%,
6/15/10............................. 380,000 388,549
Delphi Auto Systems Corp., 7.13%,
5/1/29.............................. 225,000 189,499
Ford Motor Co., 6.63%, 10/1/28....... 830,000 687,323
Ford Motor Co., 7.45%, 7/16/31....... 335,000 308,816
------------
1,574,187
------------
BANKING - 2.0%
Bank One Corp., 7.88%, 8/1/10........ 205,000 206,553
Bank One Corp., 7.63%, 10/15/26...... 410,000 386,421
Bank One Corp., 8.00%, 4/29/27....... 180,000 176,893
BankAmerica, 5.88%, 2/15/09.......... 460,000 413,340
Bayer Hypo-Vereinsbank Trust, 8.74%,
6/30/31, Callable 6/30/29
@ 100 (d)........................... 705,000 657,317
BNP Paribas Capital Trust, 9.00%,
12/31/49, Callable 10/27/10 @
100 (d)............................. 675,000 673,898
Chase Manhattan Corp., 7.00%,
11/15/09............................ 600,000 576,761
Citicorp, 6.38%, 11/15/08............ 335,000 314,681
State Street Corp., 7.65%, 6/15/10... 405,000 409,434
Wells Fargo Bank, 7.55%, 6/21/10..... 790,000 799,215
------------
4,614,513
------------
CABLE - 0.3%
Adelphia Communications, 7.88%,
5/1/09.............................. 230,000 180,550
Adelphia Communications, 9.38%,
11/15/09............................ 375,000 320,625
CSC Holdings, Inc., 8.13%, 7/15/09... 110,000 107,068
------------
608,243
------------
<CAPTION>
-----------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
SECURITY PRINCIPAL
DESCRIPTION AMOUNT VALUE
------------------------------------- ----------- ------------
<S> <C> <C>
CHEMICALS - 0.3%
Dow Chemical Co., 7.38%, 11/1/29..... $ 605,000 $ 579,553
------------
COMPUTER SOFTWARE & SYSTEMS - 0.3%
Hyundai Semiconductor, 8.25%,
5/15/04 (d)......................... 75,000 65,493
Hyundai Semiconductor, 8.63%,
5/15/07 (d)......................... 290,000 232,635
Sun Microsystems, Inc., 7.65%,
8/15/09............................. 370,000 374,086
------------
672,214
------------
FINANCE - 10.3%
Ahold Finance USA, Inc., 8.25%,
7/15/10............................. 275,000 278,821
Ahold Finance USA, Inc., 6.88%,
5/1/29.............................. 645,000 532,621
American Express, 6.88%, 11/1/05..... 500,000 496,467
American General Corp., 7.50%,
8/11/10............................. 280,000 279,750
American General Corp., 7.50%,
7/15/25............................. 650,000 620,677
Anthem Insurance, 9.13%,
4/1/10 (d).......................... 410,000 389,837
Anthem Insurance, 9.00%,
4/1/27 (d).......................... 610,000 513,817
AXA Financial, Inc., 6.50%, 4/1/08... 505,000 474,139
BT Institutional Capital Trust A,
8.09%, 12/1/26, Callable 12/1/06 @
104.05 (d).......................... 710,000 647,592
Citigroup, Inc., 7.25%, 10/1/10...... 555,000 550,577
Citigroup, Inc., 6.63%, 1/15/28...... 300,000 264,665
DR Structured Finance, 1994-K2,
9.35%, 8/15/19...................... 75,000 55,279
EOP Operating LP, 6.76%, 6/15/07..... 365,000 348,075
EOP Operating LP, 7.25%, 6/15/28..... 170,000 140,923
EOP Operating LP, 7.50%, 4/19/29..... 325,000 282,248
Equitable Life, 6.95%,
12/1/05 (d)......................... 585,000 576,609
Farmers Insurance Exchange, 8.63%,
5/1/24 (d).......................... 475,000 466,060
Florida Property & Casualty, 7.38%,
7/1/03 (d).......................... 250,000 249,966
Florida Windstorm, 7.13%,
2/25/19 (d)......................... 765,000 720,531
Ford Credit Co., 7.38%, 10/28/09..... 1,280,000 1,247,679
General Electric Capital Corp.,
7.38%, 1/19/10...................... 895,000 920,803
General Motors Acceptance Corp.,
7.75%, 1/19/10...................... 410,000 412,411
Goldman Sachs Group, Inc., 6.50%,
2/25/09 (d)......................... 370,000 341,876
Goldman Sachs Group, Inc., 6.65%,
5/15/09............................. 275,000 258,079
Goldman Sachs Group, Inc., 7.35%,
10/1/09............................. 320,000 314,028
Great 98 A A1, 7.33%, 3/15/06 (f).... 246,478 59,155
Great Western Financial, 8.21%,
2/1/27, Callable 2/1/07 @ 104.10.... 235,000 209,511
Hartford Financial Services Group,
7.90%, 6/15/10...................... 680,000 698,491
Household Finance Corp., 5.88%,
2/1/09.............................. 630,000 557,423
Household Finance Corp., 8.00%,
7/15/10............................. 410,000 414,654
</TABLE>
Continued
75
<PAGE>
HSBC INVESTOR PORTFOLIOS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR FIXED INCOME PORTFOLIO OCTOBER 31, 2000
<TABLE>
<CAPTION>
-----------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
SECURITY PRINCIPAL
DESCRIPTION AMOUNT VALUE
------------------------------------- ----------- ------------
<S> <C> <C>
Hutchison Whampoa Ltd., 7.45%,
8/1/17 (d).......................... $ 805,000 $ 728,750
John Hancock, 7.38%, 2/15/24 (d)..... 850,000 792,782
Lehman Brothers Holdings, Inc.,
8.25%, 6/15/07...................... 345,000 352,149
Metropolitan Life Insurance Co.,
7.45%, 11/1/23, Callable 11/1/03 @
103.53 (d).......................... 625,000 549,764
Metropolitan Life Insurance Co.,
7.80%, 11/1/25 (d).................. 300,000 289,296
Nationwide Mutual Insurance Co.,
7.50%, 2/15/24, Callable 2/15/04 @
103.27 (d).......................... 550,000 464,858
New York Life Insurance, 7.50%,
12/15/23, Callable 12/15/03 @
103.61 (d).......................... 500,000 438,399
Oil Purchase Co., 7.10%,
4/30/02 (d)......................... 275,237 259,452
Oil Purchase Co., 10.73%,
1/31/04 (d)......................... 187,914 179,172
Paiton Energy Funding, 9.34%,
2/15/14 (d)......................... 350,000 70,000
Petrozuata Finance, Inc., 8.22%,
4/1/17 (d).......................... 805,000 635,950
PNC Institutional Capital Trust A,
7.95%, 12/15/26, Callable 12/15/06 @
103.98 (d).......................... 375,000 335,034
Prime Property Funding II, 6.80%,
8/15/02 (d)......................... 215,000 211,852
Prime Property Funding II, 7.00%,
8/15/04 (d)......................... 420,000 407,808
Prudential Insurance Co., 8.30%,
7/1/25.............................. 1,095,000 1,096,398
Smart (CFS) 97 6 A1, 7.71%,
4/15/06 (f)......................... 262,780 52,556
Unicredito Italian Capital Trust,
9.20%, 10/2/49, Callable 10/5/10
@100 (d)............................ 340,000 340,830
Washington Mutual Capital I, 8.38%,
6/1/27, Callable 6/1/07 @ 104.096... 440,000 397,476
Washington Mutual, Inc., 8.25%,
4/1/10.............................. 500,000 509,078
World Financial, 6.91%,
9/1/13 (d).......................... 683,156 661,753
World Financial, 6.95%,
9/1/13 (d).......................... 1,240,000 1,202,854
------------
23,298,975
------------
GOVERNMENTS (FOREIGN) - 0.6%
Federal Republic of Brazil, 11.00%,
8/17/40, Callable 8/17/15 @100...... 485,000 368,600
Republic of Columbia, 8.70%,
2/15/16............................. 740,000 481,000
Republic of Columbia, 11.75%,
2/25/20............................. 105,000 84,105
United Mexican States, 10.38%,
2/17/09............................. 405,000 430,313
------------
1,364,018
------------
HEALTH CARE -- 0.4%
Columbia HCA Healthcare, 9.00%,
12/15/14............................ 215,000 210,464
Columbia HCA Healthcare, 7.19%,
11/15/15............................ 430,000 353,615
Columbia HCA Healthcare, 7.69%,
6/15/25............................. 170,000 139,890
Columbia HCA Healthcare, 7.58%,
9/15/25............................. 325,000 266,155
------------
970,124
------------
<CAPTION>
-----------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
SECURITY PRINCIPAL
DESCRIPTION AMOUNT VALUE
------------------------------------- ----------- ------------
<S> <C> <C>
INDUSTRIAL - 3.0%
Alcoa, Inc., 7.38%, 8/1/10........... $ 190,000 $ 191,781
CSC Holdings, Inc., 7.88%,
12/15/07............................ 560,000 542,275
International Game Technology, 8.38%,
5/15/09............................. 265,000 258,375
Jet Equipment Trust, 10.00%,
6/15/12 (d)......................... 175,000 194,777
Lockheed Martin Corp., 8.50%,
12/1/29............................. 740,000 791,825
News America Corp., 7.28%, 6/30/28... 700,000 601,171
News America Holdings, 8.88%,
4/26/23............................. 200,000 205,691
News America Holdings, 7.75%,
1/20/24............................. 120,000 109,018
Pharmacia Corp., 6.60%, 12/1/28...... 1,025,000 902,921
Raytheon Co., 8.20%, 3/1/06.......... 475,000 491,258
Raytheon Co., 8.30%, 3/1/10.......... 195,000 204,881
Rockwell International Corp., 6.70%,
1/15/28............................. 250,000 212,017
Scotia Pacific Company LLC, 7.71%,
1/20/14............................. 180,000 134,483
Time Warner, Inc., 6.63%, 5/15/29.... 430,000 370,012
Unilever Capital Corp., 7.13%,
11/1/10............................. 820,000 810,451
USA Waste, 7.00%, 7/15/28............ 700,000 573,697
Waste Management, Inc., 7.38%,
5/15/29............................. 320,000 274,528
------------
6,869,161
------------
OIL & GAS - 0.6%
Conoco, Inc., 6.95%, 4/15/29......... 1,130,000 1,050,558
Oxymar, 7.50%, 2/15/16 (d)........... 370,000 276,475
------------
1,327,033
------------
RETAIL - 2.7%
Albertsons, Inc., 7.45%, 8/1/29...... 1,115,000 999,415
Federated Department Stores, 6.30%,
4/1/09.............................. 220,000 184,903
Federated Department Stores, 7.00%,
2/15/28............................. 220,000 166,265
Federated Department Stores, 6.90%,
4/1/29.............................. 740,000 547,361
K-Mart Funding Corp., 8.80%,
7/1/10.............................. 201,353 172,946
Kroger Co., 8.05%, 2/1/10............ 140,000 141,883
Kroger Co., 7.70%, 6/1/29............ 1,060,000 984,472
Lowes Companies, 6.88%, 2/15/28...... 220,000 187,963
Lowes Companies, 6.50%, 3/15/29...... 630,000 511,012
Saks, Inc., 7.38%, 2/15/19........... 560,000 274,400
Target Corp., 7.50%, 8/15/10......... 705,000 700,989
Wal-Mart Stores, 6.88%, 8/10/09...... 165,000 163,873
Wal-Mart Stores, 7.55%, 2/15/30...... 950,000 986,044
------------
6,021,526
------------
SPECIAL PURPOSE - 1.1%
Farmers Exchange Capital, 7.05%,
7/15/28 (d)......................... 560,000 463,280
GS Escrow Corp., 7.13%, 8/1/05....... 845,000 785,588
PNC Funding Corp., 7.50%, 11/1/09.... 440,000 436,743
</TABLE>
Continued
76
<PAGE>
HSBC INVESTOR PORTFOLIOS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR FIXED INCOME PORTFOLIO OCTOBER 31, 2000
<TABLE>
<CAPTION>
-----------------------------------------------------------------
CORPORATE OBLIGATIONS, CONTINUED
SECURITY PRINCIPAL
DESCRIPTION AMOUNT VALUE
------------------------------------- ----------- ------------
<S> <C> <C>
Qwest Capital Funding, 7.90%,
8/15/10 (d)......................... $ 165,000 $ 167,506
UBS Preferred Funding Trust I, 8.62%,
10/1/49, Callable 10/1/10 @ 100..... 620,000 626,528
------------
2,479,645
------------
TELECOMMUNICATIONS - 3.9%
AT&T Corp., 6.50%, 3/15/29........... 790,000 620,416
Bellsouth Telecommunications, 6.38%,
6/1/28.............................. 920,000 779,146
Clear Channel Communications, 7.65%,
9/15/10............................. 350,000 343,907
Deutsche Telekom, 8.00%, 6/15/10..... 790,000 806,953
GTE Corp., 6.94%, 4/15/28............ 820,000 747,844
Intermedia Communication, 10.80%,
7/15/07, Callable 7/15/02 @
105.625............................. 630,000 518,175
Intermedia Communication, 8.60%,
6/1/08, Callable 6/1/03 @ 104.30.... 75,000 70,688
Lenfest Communications, 7.63%,
2/15/08............................. 660,000 654,154
Lucent Technologies, Inc., 6.45%,
3/15/29............................. 830,000 640,964
Motorola, Inc., 6.50%, 11/15/28...... 270,000 227,318
Nextel Communications, 10.00%,
9/15/07, Callable 9/15/02 @
105.325............................. 670,000 539,350
Nextel Communications, 9.38%,
11/15/09, Callable 11/15/04 @
104.69.............................. 195,000 188,175
Qwest Communications International,
8.01%, 2/1/08, Callable 2/1/03 @
104.145............................. 770,000 644,815
Vodafone Group PLC, 7.75%,
2/15/10 (d)......................... 135,000 137,483
Vodafone Group PLC, 7.88%,
2/15/30 (d)......................... 970,000 987,540
WorldCom, Inc., 6.95%, 8/15/28....... 1,155,000 1,017,069
------------
8,923,997
------------
TRANSPORTATION - 0.5%
Continental Airlines, 7.46%,
4/1/15.............................. 170,336 165,411
Continental Airlines, 6.65%,
9/15/17............................. 355,229 332,732
Continental Airlines, 6.55%,
2/2/19.............................. 306,161 283,716
US Airways Pass Through Trust, 8.11%,
2/20/17............................. 360,000 361,358
------------
1,143,217
------------
UTILITIES - 0.7%
CMS Energy Corp., 7.50%, 1/15/09..... 550,000 479,390
Mobil Energy Services, 8.67%,
1/1/17 (e).......................... 151,513 30,681
PSEG Energy Holdings, 9.13%,
2/10/04............................. 430,000 436,138
RAS Laffan Liquid Natural Gas, 8.29%,
3/15/14 (d)......................... 595,000 545,170
------------
1,491,379
------------
TOTAL CORPORATE OBLIGATIONS
(Cost $65,843,828).................. 61,937,785
------------
<CAPTION>
-----------------------------------------------------------------
ASSET BACKED SECURITIES - 11.1%
SECURITY PRINCIPAL
DESCRIPTION AMOUNT VALUE
------------------------------------- ----------- ------------
<S> <C> <C>
Arcadia Automobile Receivables Trust
97 C A4, 6.38%, 1/15/03............. $ 364,625 $ 364,030
Arcadia Automobile Receivables Trust
97 D, 6.20%, 5/15/03................ 300,161 299,359
Arcadia Automobile Receivables Trust
98 A A3, 5.90%, 11/15/02............ 177,426 177,161
Associates Automobile Receivables
Trust 00 1 A2, 7.15%, 3/15/03....... 980,000 978,464
Banc One Home Equity Trust 99 1 A1,
6.06%, 1/25/12...................... 254,850 252,329
BankBoston Home Equity Loan Trust 98
2 A1, 6.28%, 11/25/10............... 103,643 103,082
BMW 99 A A2, 6.16%, 12/25/01......... 381,145 380,626
Centex 99 2 A1, 5.91%, 4/25/19....... 345,356 342,330
Centex Home Equity 99 1 A1, 6.07%,
3/25/18............................. 140,313 139,522
Chevy Chase Auto Receivables Trust,
97 4 A, 6.25%, 6/15/04, Callable
9/15/01 @ 100....................... 149,034 148,326
Contimortgage Home Equity Loan Trust
99 1 A1, 6.01%, 12/25/13............ 169,804 168,817
Daimler-Benz AGT 97 A A, 6.05%,
3/31/05, Callable 10/20/00 @ 100.... 58,201 57,972
Daimler-Benz Vehicle Trust 98 A A3,
5.16%, 1/20/03...................... 1,521,824 1,510,685
EQCC Home Equity Loan Trust 99 1 A1F,
5.77%, 5/20/10...................... 256,517 254,692
EQCC Home Equity Loan Trust 99 2 A1F,
6.05%, 1/25/10...................... 354,276 351,654
EQCC Home Equity Loan Trust 99 3 A1F,
6.55%, 4/25/10...................... 742,386 737,443
First Security Auto Grantor Trust 97
B A, 6.10%, 4/15/03................. 287,501 286,768
First Security Auto Grantor Trust 98
A A, 5.97%, 4/15/04, Callable
4/15/01 @ 100....................... 211,607 210,367
First Security Auto Owner Trust 00 1
A2, 7.20%, 5/13/03.................. 1,375,000 1,378,493
First Security Auto Owner Trust 00 2
A2, 6.80%, 8/15/03.................. 1,500,000 1,499,662
First USA Credit Card Master Trust 97
10 A, 6.71%, 11/17/00 (c)........... 675,000 675,108
Ford Credit Auto Owner Trust 00 A A3,
6.82%, 6/15/02...................... 1,752,987 1,753,146
Ford Credit Auto Owner Trust 99 B,
5.47%, 9/15/01...................... 321,365 321,031
Ford Credit Auto Owner Trust 99 C A3,
5.77%, 11/15/01..................... 644,226 643,241
Ford Credit Auto Owner Trust 99 D A3,
6.20%, 4/15/02...................... 1,278,166 1,275,865
Green Tree Financial Corp. 99 1 A2,
5.43%, 11/1/06...................... 262,906 262,488
Green Tree Financial Corp. 99 2 A1,
5.60%, 12/1/30...................... 509,891 507,586
Green Tree Financial Corp. 99 3 A2,
5.51%, 2/1/31....................... 632,957 631,411
Green Tree Home Equity Loan Trust 98
A A2, 6.04%, 6/15/29................ 109,085 108,977
Green Tree Home Equity Loan Trust 99
C A1, 5.99%, 8/15/25................ 310,944 310,444
</TABLE>
Continued
77
<PAGE>
HSBC INVESTOR PORTFOLIOS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR FIXED INCOME PORTFOLIO OCTOBER 31, 2000
<TABLE>
<CAPTION>
-----------------------------------------------------------------
ASSET BACKED SECURITIES, CONTINUED
SECURITY PRINCIPAL
DESCRIPTION AMOUNT VALUE
------------------------------------- ----------- ------------
<S> <C> <C>
Green Tree Home Improvement Loan
Trust 98 E HIA 1, 5.91%, 7/15/30.... $ 986 $ 985
Harley-Davidson Eaglemark Morotcycle
Trust 99 2 A1, 5.84%, 10/15/03...... 385,865 381,987
Harley-Davidson Eaglemark Motorcycle
Trust 99 1 A1, 5.25%, 7/15/03....... 317,926 315,062
HFC Home Equity Loan 99 1 A1, 6.83%,
12/20/16............................ 548,281 545,759
Honda Auto Receivables Owner Trust 00
1 A2, 6.65%, 12/16/02............... 1,200,000 1,199,872
Indymac HEL 98 A A1, 6.98%,
11/25/00 (c)........................ 75,008 75,025
Long Beach Acceptance Auto Grantor
Trust 97 2 A, 6.69%, 9/25/04 (d).... 65,465 64,965
MBNA Master Credit Card Trust 00 E A,
7.80%, 10/15/12..................... 705,000 745,292
MMCA Automobile Trust 99 2 A1, 6.30%,
6/15/02............................. 590,421 589,736
Navistar Financial Corp. Owner Trust
99 A, 5.55% 2/15/02................. 266,964 266,561
New Holland 99 A A2, 6.39%,
10/15/02 (d)........................ 565,307 564,697
Nissan Auto Receivables Grantor Trust
98 A A, 5.45%, 4/15/04, Callable
7/15/01 @ 100....................... 558,499 553,467
Nissan Auto Receivables Owner Trust
00 B A2, 7.15%, 12/15/02............ 1,200,000 1,202,760
Oakwood 99 B A1, 7.00%,
11/15/00 (c)........................ 345,894 345,825
Option One 99 2 A1, 5.88%, 5/25/29... 307,970 305,768
Peco Energy Transition Trust 00 A A3,
7.63%, 3/1/10....................... 1,200,000 1,229,767
Premier Auto Trust 99 3 A2, 5.82%,
2/8/02.............................. 615,988 615,008
Textron Financial Corp. Receivable 98
A A1, 5.82%, 1/15/02 (d)............ 52,780 52,737
------------
TOTAL ASSETS BACKED SECURITIES
(Cost $25,149,990).................. 25,186,352
------------
-----------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 2.4%
American Southwest Financial
Securities Corp. 93 2 A1, 7.30%,
1/18/09............................. 71,470 71,426
American Southwest Financial
Securities Corp. IO 93 2 S1, 1.09%,
11/1/00 (c)......................... 3,429,453 89,015
Asset Securitization Corp. 96 MDS A1C
SEQ, 7.04%, 11/13/26................ 275,000 274,094
B A Mortgage Securities, Inc. 97 1
A2, 6.89%, 11/25/00 (c)............. 139,607 139,769
DLJ Mortgage Acceptance Corp. 97 CF1
S, IO, 1.13%, 11/1/00 (c) (d)....... 2,606,717 99,863
DR Structured Financial Trust, 94 K1
A1, 7.60%, 8/15/07.................. 250,608 213,083
DR Structured Financial Trust, 94 K1
A2, 8.38%, 8/15/15.................. 250,000 173,413
Fannie Mae 94 97 FC, 7.33%,
11/25/00 (c)........................ 109,145 109,752
Fannie Mae 96 14 PO, 0.00%, due
12/25/23............................ 64,026 42,381
<CAPTION>
-----------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS, CONTINUED
SECURITY PRINCIPAL
DESCRIPTION AMOUNT VALUE
------------------------------------- ----------- ------------
<S> <C> <C>
Fannie Mae 97 70 FA, 7.08%,
11/18/00 (c)........................ $ 100,410 $ 100,312
Fannie Mae 98 22 FA, 7.02%,
11/18/00 (c)........................ 516,992 512,550
Fannie Mae INV IE 92 89 SQ, 18.31%,
11/25/00 (c)........................ 338 21,416
Fannie Mae INV IE 97 30 SP, 22.18%,
11/25/00 (c)........................ 908 60,239
Fannie Mae IO 270 2, 8.50%, 9/1/23... 1,470,986 380,915
Fannie Mae IO 291 2, 8.00%, 11/1/27.. 1,454,589 394,176
Fannie Mae IO 296 2, 8.00%, 4/1/24... 1,836,296 501,367
Freddie Mac 1710 D, 7.08%,
11/15/00 (c)........................ 349,016 349,103
Freddie Mac IO 1534 K, 0.78%,
11/15/00, Callable 10/15/18 @
100 (c)............................. 5,067,858 149,593
Freddie Mac IO 186, 8.00%, 8/1/27.... 413,598 113,333
Freddie Mac IO 2141 SD, 1.53%,
11/15/00 (c)........................ 2,948,656 199,739
GMAC 96 C1 X2 IO, 1.21%,
11/1/00 (c)......................... 5,282,375 249,645
GMAC 97 C2 X IO, 2.03%,
11/1/00 (c)......................... 1,952,043 103,361
Government National Mortgage
Association IO 99 29 SD, 1.38%,
11/16/00 (c)........................ 4,140,670 151,418
Government National Mortgage
Association IO 99 30 S, 1.98%,
11/16/00 (c)........................ 4,607,793 263,346
Government National Mortgage
Association IO 99 30 SA, 1.38%,
11/16/00 (c)........................ 4,348,194 170,513
Government National Mortgage
Association IO 99 32 SB, 1.38%,
11/16/00 (c)........................ 3,372,479 127,332
Government National Mortgage
Association IO 99 44 SA, 1.93%,
11/16/00 (c)........................ 2,620,805 127,326
GS Mortgage Securities Corp. IO 97 GL
X2, 0.89%, 11/1/00 (c).............. 1,155,938 42,171
Moserv, Inc. 96 2 1A1, 7.47%,
11/25/00............................ 309,303 311,620
------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Cost $6,000,231)................... 5,542,271
------------
-----------------------------------------------------------------
YANKEE BONDS - 1.2%
Abbey National PLC, 7.95%,
10/26/29............................ 550,000 553,973
Glencore Nickel Property Ltd., 9.00%,
12/1/14............................. 595,000 491,619
Global Crossing Holding Ltd., 9.13%,
11/15/06............................ 720,000 686,700
Grupo Minero Mexico SA de C.V.,
8.25%, 4/1/08....................... 515,000 437,750
Multicanal SA, 13.13%, 4/15/09....... 245,000 213,150
Multicanal SA, 10.50%, 4/15/18....... 265,000 169,600
Province of Quebec, 7.13%, 2/9/24.... 155,000 147,221
------------
TOTAL YANKEE BONDS
(Cost $2,942,979)................... 2,700,013
------------
</TABLE>
Continued
78
<PAGE>
HSBC INVESTOR PORTFOLIOS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR FIXED INCOME PORTFOLIO OCTOBER 31, 2000
<TABLE>
<CAPTION>
-----------------------------------------------------------------
PREFERRED STOCKS - 0.3%
SECURITY PRINCIPAL
DESCRIPTION AMOUNT VALUE
------------------------------------- ----------- ------------
<S> <C> <C>
INDUSTRIAL - 0.3%
Home Ownership Funding Corp.,
13.33% (d).......................... $ 825 $ 625,112
------------
TOTAL PREFERRED STOCKS
(Cost $826,654)..................... 625,112
------------
-----------------------------------------------------------------
INVESTMENT COMPANIES - 2.5%
Dreyfus Cash Management Fund......... 5,723,778 5,723,778
------------
TOTAL INVESTMENT COMPANIES
(Cost $5,723,778)................... 5,723,778
------------
TOTAL INVESTMENTS - 138.6%
(Cost $317,423,198) (a)............. 313,754,744
LIABLILITIES IN EXCESS OF OTHER
ASSETS - (38.6)%................... (87,388,767)
------------
NET ASSETS - 100.0%................. $226,365,977
------------
------------
</TABLE>
---------
(a) Represents cost for financial reporting purposes and differs from cost for
federal income tax purposes by the amount of losses recognized for financial
reporting purposes in excess of federal income tax reporting of
approximately $16,368. Cost for federal income tax purposes differs from
value by net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation....................... $ 3,082,084
Unrealized depreciation....................... (6,766,906)
------------
Net unrealized depreciation................... $ (3,684,822)
------------
------------
</TABLE>
(b) Security purchased on a delayed delivery basis collateralized by cash and
cash equivalents.
(c) Represents a variable rate note. Interest rate disclosed represents current
rate at October 31, 2000. The maturity date presented reflects the next rate
change date.
(d) Security exempt from registration under Rule 144a of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. These securities
have been deemed liquid by the investment manager based on procedures
approved by The Board of Trustees.
(e) Represents non-income producing security.
(f) Represents an illiquid security, valued in good faith by the investment
manager. The Portfolio has received partial payment for this security.
(g) Represents the discount rate.
<TABLE>
<S> <C>
IE -- Ioette
IO -- Interest Only
LLC -- Limited Liability Company
PLC -- Public Limited Company
PO -- Principal Only
SA -- Societe Anonyme (French Corp.)
TBA -- Pool number to be announced
</TABLE>
At October 31, 2000 the fund's open futures contracts were as follows:
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION/
LONG NUMBER OF EXPIRATION CONTRACT (DEPRECIATION)
CONTRACTS CONTRACTS DATE VALUE OF CONTRACTS
--------------------- --------- ---------- ----------- --------------
<S> <C> <C> <C> <C>
U.S. 2 Year Note..... 22 1/3/01 $ 4,402,750 $ 5,069
</TABLE>
<TABLE>
<CAPTION>
SHORT
CONTRACTS
---------------------
<S> <C> <C> <C> <C>
U.S. Treasury
Bonds............... 376 12/29/00 $37,541,250 (21,048)
--------
$(15,979)
--------
--------
</TABLE>
See notes to financial statements.
79
<PAGE>
HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR FIXED INCOME PORTFOLIO
--------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
<TABLE>
<S> <C>
ASSETS:
Investments, at value
(cost $317,423,198).............. $313,754,744
Cash.............................. 58,150
Interest and dividends
receivable....................... 2,985,806
Variation margin receivable....... 189,375
Receivable for investments sold... 5,740,891
Prepaid expenses.................. 1,372
------------
TOTAL ASSETS................... 322,730,338
LIABILITIES:
Payable for investments
purchased........................ $96,252,754
Accrued expenses and other
liabilities:
Investment management............ 77,132
Administration................... 7,915
Other............................ 26,560
-----------
TOTAL LIABILITIES.............. 96,364,361
------------
NET ASSETS:
Applicable to investors'
beneficial interest.............. $226,365,977
------------
------------
</TABLE>
-------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.............................. $13,841,986
Dividend.............................. 421,416
-----------
TOTAL INVESTMENT INCOME............ 14,263,402
EXPENSES:
Investment management................. $786,892
Administration........................ 79,901
Accounting............................ 61,785
Custodian............................. 68,953
Other................................. 13,956
--------
TOTAL EXPENSES....................... 1,011,487
-----------
NET INVESTMENT INCOME................. 13,251,915
-----------
NET REALIZED/UNREALIZED LOSSES FROM
INVESTMENTS:
Net realized loss from investment and
futures transactions................. (2,366,277)
Change in unrealized
appreciation/depreciation from
investments and futures.............. 2,172,639
-----------
Net realized/unrealized losses from
investments and futures.............. (193,638)
-----------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS........................... $13,058,277
-----------
-----------
</TABLE>
See notes to financial statements.
80
<PAGE>
HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR FIXED INCOME PORTFOLIO
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
OCTOBER 31,
------------------------------
2000 1999
------------ ------------
<S> <C> <C>
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income...................................... $ 13,251,915 $ 12,159,615
Net realized losses from investment and futures
transactions............................................. (2,366,277) (5,842,322)
Change in unrealized appreciation/depreciation from
investments and futures.................................. 2,172,639 (3,882,328)
------------ ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS.............. 13,058,277 2,434,965
------------ ------------
CHANGE IN NET ASSETS FROM TRANSACTIONS IN INVESTORS'
BENEFICIAL INTERESTS....................................... 16,436,237 21,363,820
------------ ------------
CHANGE IN NET ASSETS........................................ 29,494,514 23,798,785
NET ASSETS:
Beginning of period........................................ 196,871,463 173,072,678
------------ ------------
End of period.............................................. $226,365,977 $196,871,463
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements.
81
<PAGE>
HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR FIXED INCOME PORTFOLIO
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED OCTOBER 31,
------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000's)......................... $226,366 $196,871 $173,073 $118,405 $ 64,178
Ratio of expenses to average net assets..................... 0.51% 0.56% 0.62% 0.57% 0.67%
Ratio of net investment income to average net assets........ 6.74% 6.43% 6.03% 6.17% 5.66%
Ratio of expenses to average net assets..................... 0.51% 0.56% 0.62% 0.77%(a) 0.90%(a)
Portfolio turnover.......................................... 440.49% 433.26% 126.40% 349.00% 152.00%
</TABLE>
---------
(a) During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratio would have been as indicated.
See notes to financial statements.
82
<PAGE>
HSBC INVESTOR PORTFOLIOS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO OCTOBER 31, 2000
<TABLE>
<CAPTION>
-----------------------------------------------------------------
COMMON STOCKS - 90.5%
SHARES VALUE
----------- ------------
<S> <C> <C>
AUSTRALIA - 2.9%
Australia & New Zealand Bank Group
Ltd................................. 225,821 $ 1,667,422
Broken Hill Proprietary Ltd.......... 149,878 1,452,266
Broken Hill Proprietary Ltd. ADR..... 83,800 1,660,288
Cable & Wireless Optus Ltd. (b)...... 354,000 749,494
Fosters Brewing Group Ltd............ 290,000 656,668
Lend Lease Corp. Ltd................. 61,525 720,010
News Corp. Ltd....................... 26,992 282,243
News Corp. Ltd. ADR.................. 8,275 355,825
OneSteel Ltd. (b).................... 12,388 5,905
Westpac Banking Corp. Ltd............ 207,656 1,417,518
WMC Ltd.............................. 158,300 604,936
------------
9,572,575
------------
CANADA - 5.7%
Abitibi-Consolidated, Inc............ 86,500 753,289
Alcan Aluminium Ltd.................. 35,100 1,104,319
ATI Technologies, Inc.(b)............ 18,900 150,360
Bank of Nova Scotia.................. 50,800 1,446,928
Bombardier, Class B.................. 338,000 5,300,490
Clarica Life Insurance Co............ 44,200 1,047,670
National Bank of Canada.............. 52,100 851,142
Nortel Networks Corp., ADR........... 45,600 2,074,800
Suncor Energy, Inc................... 40,800 803,250
Thomson Corp......................... 115,493 4,650,767
Toronto Dominion Bank................ 32,000 878,974
------------
19,061,989
------------
FINLAND - 3.5%
Metra Wartsila Oyj, B Shares......... 21,200 341,431
Nokia Oyj............................ 253,100 10,402,995
UPM-Kymmene Oyj...................... 35,000 989,414
------------
11,733,840
------------
FRANCE - 5.7%
Bouygues............................. 66,090 3,361,252
Christian Dior SA.................... 18,800 954,550
Compagnie De Saint Gobain............ 11,000 1,453,627
Groupe Danone........................ 9,800 1,368,981
LVMH (Louis Moet Vuitton Hennessy)... 5,500 400,936
Michelin, B Shares................... 21,900 633,013
PSA Peugeot Citroen.................. 5,600 1,030,058
Sanofi Synthelabo SA................. 60,320 3,170,057
Societe Television Francaise......... 100,000 5,450,357
Valeo SA............................. 10,460 454,845
Vivendi SA........................... 9,500 682,058
Wanadoo (b).......................... 6,800 86,460
------------
19,046,194
------------
<CAPTION>
-----------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE
----------- ------------
<S> <C> <C>
GERMANY - 6.4%
Aixtron (b).......................... 12,700 $ 1,770,858
Allianz Holdings AG.................. 2,600 882,653
Bayerische Motoren Werke AG.......... 36,400 1,203,317
Daimler Chrysler AG.................. 11,000 506,765
Deutsche Bank AG Registered.......... 8,200 674,217
Deutsche Telekom AG.................. 28,100 1,049,219
Dresdner Bank AG..................... 20,100 833,994
Epcos AG (b)......................... 11,900 902,784
Infineon Technologies AG (b)......... 69,300 2,907,719
Infineon Technologies AG ADR (b)..... 42,900 1,839,338
Intershop Communication AG (b)....... 11,000 475,529
Metro AG............................. 45,800 1,844,052
MG Technologies...................... 34,000 363,131
Muenchener Rueckversicher AG......... 5,800 1,828,879
Siemens AG........................... 30,200 3,839,832
T-Online International AG (b)........ 13,600 277,248
------------
21,199,535
------------
GREECE - 0.1%
Hellenic Bottling Co. SA............. 32,544 445,032
------------
HONG KONG - 2.4%
Cheung Kong Holdings Ltd............. 171,000 1,891,146
China Mobile Ltd. (b)................ 393,000 2,532,203
Hong Kong Land Holdings Ltd.......... 124,000 229,400
Hutchison Whampoa Ltd................ 105,600 1,310,040
Li & Fung Ltd........................ 340,000 632,145
Pacific Century CyberWorks Ltd.
(b)................................. 2 2
Shangri-La Asia, Ltd................. 532,000 525,257
Swire Pacific Ltd., Class A.......... 121,000 746,277
------------
7,866,470
------------
IRELAND - 0.5%
Allied Irish Banks PLC............... 67,716 689,077
CRH PLC.............................. 57,500 871,464
------------
1,560,541
------------
ITALY - 3.2%
Assicurazioni Generali............... 35,000 1,149,619
ENI SpA.............................. 514,000 2,779,699
Olivetti SpA......................... 400,000 1,215,862
Telecom Italia Mobile SpA RNC........ 473,000 2,505,851
Telecom Italia SpA................... 58,611 678,150
Telecom Italia SpA RNC............... 407,000 2,211,396
------------
10,540,577
------------
</TABLE>
Continued
83
<PAGE>
HSBC INVESTOR PORTFOLIOS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO OCTOBER 31, 2000
<TABLE>
<CAPTION>
-----------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE
----------- ------------
<S> <C> <C>
JAPAN - 21.8%
Advantest Corp....................... 24,700 $ 3,219,095
Aiful Corp........................... 11,850 933,359
Bridgestone Corp..................... 45,000 445,935
Chugai Pharmaceutical Co., Ltd....... 105,000 1,780,993
Daiwa Securities Group Inc........... 68,000 752,952
DDI Corp............................. 122 572,087
Fuji Soft ABC, Inc................... 10,400 683,895
Fujitsu Support and Services, Inc.... 4,900 595,075
Furukawa Electric Co., Ltd........... 45,000 1,182,841
Hirose Electronics Co., Ltd.......... 29,400 3,392,734
Hitachi, Ltd......................... 150,000 1,607,345
Honda Motor Co., Ltd................. 26,000 897,732
Japan Air Lines...................... 126,000 504,294
Jusco Co., Ltd....................... 80,000 1,502,020
Keyence Corp......................... 7,030 2,182,664
Kokusai Securities Co., Ltd.......... 27,000 227,501
Mitsubishi Heavy Industries, Ltd..... 275,000 1,067,900
Mitsubishi Motors Corp. (b).......... 412,000 1,320,679
Mitsui Chemicals, Inc................ 65,000 332,185
Murata Manufacturing Co., Ltd........ 26,000 3,109,915
Nichicon Corp........................ 36,000 642,608
Nikko Securities Co., Ltd............ 45,000 388,236
Nikon Corp........................... 186,000 2,701,768
Nintendo Co., Ltd.................... 11,700 1,934,172
Nippon Sheet Glass Co., Ltd.......... 73,000 1,109,846
Nippon Telegraph & Telephone Corp.... 115 1,045,873
Nissan Motor Co., Ltd................ 461,000 3,162,384
Nomura Securities Co., Ltd........... 45,000 954,103
NTT DoCoMo Network, Inc.............. 257 6,331,656
Rohm Co., Ltd........................ 13,500 3,401,389
Sankyo Co., Ltd...................... 52,000 1,145,382
Sanwa Bank, Ltd...................... 128,000 1,137,139
Sekisui House, Ltd................... 74,000 782,113
Shionogi & Co., Ltd.................. 109,000 2,126,366
Sony Corp............................ 79,610 6,357,934
Sony Corp. ADR....................... 4,400 365,200
Sumitomo Realty & Development Co.,
Ltd................................. 84,000 481,599
Suzuki Motor Corp.................... 58,000 621,507
Taiyo Yuden Co., Ltd................. 36,000 1,374,898
Tokyo Electron, Ltd.................. 69,900 5,467,225
Tokyo Seimitsu Co., Ltd.............. 15,300 1,078,982
Tokyu Corp........................... 190,000 981,442
Toray Industries, Inc................ 243,000 945,861
Ushio, Inc........................... 36,000 626,452
Yamanouchi Pharmaceutical Co.,
Ltd................................. 13,000 588,169
Yasuda Fire & Marine................. 163,000 840,481
------------
72,903,986
------------
MEXICO - 1.8%
Telefonos De Mexico ADR.............. 109,200 5,889,975
------------
<CAPTION>
-----------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE
----------- ------------
<S> <C> <C>
NETHERLANDS - 6.7%
ABN Amro Holding NV.................. 62,203 $ 1,439,422
Aegon NV............................. 125,282 4,969,912
ASM Lithography Holding NV (b)....... 170,800 4,663,292
DSM NV............................... 18,423 530,950
Hagemeyer NV......................... 36,000 849,849
Heineken Holding NV.................. 12,300 437,893
Heineken NV.......................... 59,000 3,200,708
ING Groep NV......................... 14,000 960,280
Koninklijke (Royal) Philips
Electronics NV...................... 21,000 824,343
STMicroelectronics NV................ 30,000 1,511,775
STMicroelectronics NV ADR............ 55,500 2,882,531
------------
22,270,955
------------
NORWAY - 0.4%
Norsk Hydro ASA...................... 32,000 1,269,652
Norsk Hydro ASA ADR.................. 2,100 82,819
------------
1,352,471
------------
PORTUGAL - 0.3%
Portugal Telecom SA.................. 95,000 845,526
PT Multimedia Servicos de
Telecomunicacoes.................... 1,700 48,129
------------
893,655
------------
RUSSIA - 0.3%
Lukoil-Holding, ADR.................. 16,900 902,460
------------
SINGAPORE - 1.2%
Chartered Semiconductor Manufacturing
Ltd. (b)............................ 65,000 281,408
Creative Technology Ltd.............. 19,000 308,467
Creative Technology Ltd. ADR......... 20,000 337,500
Datacraft Asia Ltd................... 33,000 226,050
Overseas Union Bank.................. 152,000 735,991
Singapore Airlines Ltd............... 56,000 561,449
Singapore Press Holdings Ltd......... 100,370 1,435,117
United Overseas Bank Ltd............. 21,000 155,515
------------
4,041,497
------------
SOUTH KOREA - 1.9%
Korea Telecom Corp. ADR.............. 8,500 313,438
Pohang Iron & Steel Co. Ltd. ADR..... 35,000 553,438
Samsung Electronics Ltd.............. 72,790 5,368,262
------------
6,235,138
------------
SPAIN - 1.1%
Banco Bilbao Vizcaya Argentina SA.... 106,700 1,419,967
Telefonica SA (b).................... 83,025 1,581,343
Telefonica SA ADR (b)................ 8,937 517,787
------------
3,519,097
------------
SWEDEN - 1.6%
ForeningsSparbanken AB............... 90,900 1,301,851
Hennes & Mauritz AB B Shares......... 62,000 1,157,121
Telefonaktiebolaget LM Ericsson...... 172,080 2,284,165
Telefonaktiebolaget LM Ericsson
ADR................................. 31,600 438,450
------------
5,181,587
------------
</TABLE>
Continued
84
<PAGE>
HSBC INVESTOR PORTFOLIOS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO OCTOBER 31, 2000
<TABLE>
<CAPTION>
-----------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE
----------- ------------
<S> <C> <C>
SWITZERLAND - 4.1%
Adecco SA............................ 1,095 $ 756,964
Compagnie Financiere Richemont AG.... 1,110 3,086,616
Holderbank Financiere Glaris AG, B
Shares.............................. 1,630 1,712,416
Nestle SA............................ 857 1,775,403
Novartis AG.......................... 1,727 2,619,192
PubliGroupe SA....................... 1,165 683,547
Roche Holding AG..................... 72 657,500
Schweizerische Rueckversicherungs
Registered.......................... 451 889,165
Swisscom AG.......................... 6,173 1,567,209
------------
13,748,012
------------
TAIWAN - 2.2%
Asustek Computer, Inc................ 311,562 1,705,804
Taiwan Semiconductor Manufacturing
Co. Ltd. ADR (b).................... 247,056 5,605,083
------------
7,310,887
------------
TURKEY - 0.5%
Turkive IS Bankasi................... 902,159 1,717,621
------------
UNITED KINGDOM - 16.2%
AstraZeneca PLC...................... 131,351 6,187,581
AstraZeneca PLC...................... 72,200 3,395,824
AstraZeneca PLC ADR.................. 8,300 395,806
Autonomy PLC ADR (b)................. 19,000 971,166
BG Group PLC......................... 78,555 316,259
BOC Group PLC........................ 5,200 72,678
British Aerospace PLC................ 120,086 685,302
British Airways PLC.................. 150,000 671,960
Cadbury Schweppes PLC................ 23,800 147,312
Caradon PLC.......................... 164,400 451,191
Dimensions Data Holdings PLC (b)..... 226,200 1,983,931
GKN PLC.............................. 69,200 799,864
Granada Media PLC (b)................ 123,700 718,500
Halifax Group PLC.................... 184,500 1,453,427
Invensys PLC......................... 571,700 1,363,549
Land Securities PLC.................. 60,000 618,160
Laporte PLC.......................... 752,400 8,740
Laporte PLC, Class B (b)............. 83,600 643,397
Lattice Group PLC (b)................ 78,555 167,398
Lloyds TSB Group PLC................. 606,384 6,185,732
New Dixons Group PLC................. 238,151 708,931
Rank Group PLC....................... 295,000 734,655
Reuters Group PLC.................... 155,366 3,027,649
Reuters Group PLC ADR................ 780 91,943
Royal & Sun Alliance Insurance Group
PLC................................. 131,396 935,399
Royal Bank Of Scotland Group PLC..... 69,300 1,556,756
Shell Transport & Trading Co. PLC.... 250,000 2,014,791
Tate & Lyle PLC...................... 240,000 767,581
TI Group PLC......................... 190,000 1,036,002
<CAPTION>
-----------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES OR
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
Unilever PLC......................... 96,000 $ 651,006
Vodafone Airtouch PLC................ 3,577,654 14,922,975
------------
53,685,465
------------
TOTAL COMMON STOCKS
(Cost $232,578,290)................. 300,679,559
------------
-----------------------------------------------------------------
PREFERRED STOCKS - 1.9%
JAPAN - 1.9%
NEC Corp............................. 326,000 6,210,304
------------
TOTAL PREFERRED STOCKS
(Cost $5,846,221)................... 6,210,304
------------
-----------------------------------------------------------------
CONVERTIBLE BONDS - 0.9%
JAPAN - 0.9%
Sakura Finance, 0.75%, 10/1/01,
Convertible Bond, convertible to
11,787.819 common stock shares until
9/30/01............................. 120,000,000* 1,730,986
Sanwa International Finance, 1.25%,
8/1/05, Convertible Bond,
convertible to 2,443 common stock
shares until 7/31/05................ 126,000,000* 1,341,515
------------
TOTAL CONVERTIBLE BONDS
(Cost $2,284,222)................... 3,072,501
------------
-----------------------------------------------------------------
SHORT-TERM INVESTMENTS - 7.6%
UNITED STATES - 7.6%
Investors Cash Reserve............... $25,400,311 25,400,311
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $25,400,311).................. 25,400,311
------------
TOTAL INVESTMENTS - 100.9%
(Cost $266,109,044) (a)............. 335,362,675
LIABILITIES IN EXCESS OF
OTHER ASSETS - (0.9)%.............. (3,038,121)
------------
NET ASSETS - 100.0%................. $332,324,554
------------
------------
</TABLE>
---------
* The principal amount of each security is denominated in the local currency
of each respective county.
(a) Represents cost for financial reporting purposes and differs for federal
income tax purposes by the amount of losses recognized for financial
reporting purposes in excess of federal income tax reporting of
approximately $185,666. Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation....................... $ 92,656,463
Unrealized depreciation....................... (23,588,498)
------------
Net unrealized appreciation................... $ 69,067,965
------------
------------
</TABLE>
(b) Represents non-income producing security.
<TABLE>
<S> <C>
AB -- Aktiebolag (Swedish Stock Co.)
ADR -- American Depositary Receipt
AG -- Aktiengesellschaft (West German Stock Co.)
NV -- Naamloze Vennootschaap (Dutch Corp.)
PLC -- Public Limited Company
SA -- Societe Anonyme (French Corp.) or Sociedad Anonima
(Spanish Corp.)
SpA -- Societa per Azioni (Italian Corp.)
</TABLE>
Continued
85
<PAGE>
HSBC INVESTOR PORTFOLIOS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO OCTOBER 31, 2000
--------------------------------------------------------------------------------
INDUSTRY DIVERSIFICATION
<TABLE>
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
-------- -------------
<S> <C>
Advertising.................................... 0.2%
Aerospace/Military............................. 0.2
Airlines....................................... 0.2
Automotive..................................... 3.0
Banking/Financial Services..................... 13.7
Building Materials............................. 1.7
Business Equipment/Services.................... 0.3
Cellular Communications........................ 5.3
Chemicals...................................... 0.3
Computer Related............................... 3.7
Conglomerates.................................. 0.6
Construction................................... 0.2
Consumer Products & Services................... 2.7
Electrical/Electronics......................... 19.6
Food & Beverage Products/Services.............. 3.0
Forest Products/Paper.......................... 0.3
Human Resources................................ 0.2
Industrial..................................... 0.7
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
-------- -------------
<S> <C>
Leisure........................................ 0.2%
Machinery/Equipment............................ 0.3
Manufacturing.................................. 4.5
Medical - Drugs................................ 6.5
Media.......................................... 4.4
Metals & Mining................................ 2.0
Oil & Gas...................................... 3.5
Real Estate.................................... 1.3
Telecommunications............................. 12.6
Textiles....................................... 0.3
Tire & Rubber.................................. 0.1
Tobacco........................................ 0.9
Transportation & Shipping...................... 0.8
Short Term Investments......................... 7.6
-----
Total Investments.............................. 100.9
Liabilities in Excess of Other Assets.......... (0.9)
-----
Net Assets..................................... 100.0%
-----
-----
</TABLE>
Continued
86
<PAGE>
HSBC INVESTOR PORTFOLIOS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO OCTOBER 31, 2000
At October 31, 2000, the Portfolio's open forward currency contracts were as
follows:
<TABLE>
<CAPTION>
CONTRACT CONTRACT UNREALIZED
DELIVERY AMOUNT VALUE APPRECIATION/
CURRENCY DATE (LOCAL CURRENCY) (U.S. DOLLAR) VALUE (DEPRECIATION)
-------- ---- ---------------- ------------- ----- --------------
<S> <C> <C> <C> <C> <C>
LONG CONTRACTS
Australian Dollar.............................. 11/3/00 38,825 $ 20,140 $ 20,117 $ (23)
British Pound.................................. 11/2/00 137,388 199,353 199,501 148
Euro............................................ 2/20/01 3,378,518 3,365,728 2,881,908 (483,820)
Euro............................................ 11/27/00 1,765,172 1,620,911 1,500,291 (120,620)
Euro............................................ 2/12/01 1,742,341 1,583,227 1,485,783 (97,444)
Euro............................................ 2/9/01 1,396,597 1,269,057 1,190,813 (78,244)
Euro............................................ 11/29/00 1,536,514 1,394,041 1,306,207 (87,834)
Euro............................................ 12/7/00 665,292 584,614 565,797 (18,817)
Euro............................................ 6/26/01 449,740 400,339 384,624 (15,715)
Euro............................................ 1/19/01 2,682,484 2,291,326 2,285,365 (5,961)
Euro............................................ 1/19/01 3,902,391 3,333,347 3,324,675 (8,672)
Hong Kong Dollar................................ 11/3/00 18,864,000 2,418,989 2,418,983 (6)
Singapore Dollar................................ 11/1/00 76,800 43,785 43,749 (36)
Singapore Dollar................................ 11/1/00 88,294 50,344 50,297 (47)
Singapore Dollar................................ 11/2/00 51,198 29,163 29,165 2
Singapore Dollar................................ 11/3/00 129,257 73,688 73,654 (34)
Japanese Yen.................................... 11/1/00 15,838,687 145,952 145,061 (891)
Japanese Yen.................................... 11/2/00 5,119,862 46,988 46,891 (97)
Japanese Yen.................................... 11/6/00 11,790,995 108,115 108,104 (11)
----------- ----------- ---------
TOTAL LONG CONTRACTS........................................................ $18,979,107 $18,060,985 $(918,122)
----------- ----------- ---------
----------- ----------- ---------
SHORT CONTRACTS
Australian Dollar.............................. 11/10/00 22,601 $ 11,764 $ 11,710 $ 54
Australian Dollar.............................. 11/1/00 83,659 43,786 43,349 437
Australian Dollar.............................. 11/2/00 61,684 32,371 31,962 409
Australian Dollar.............................. 11/3/00 98,427 51,056 51,000 56
British Pound.................................. 2/12/01 1,052,897 1,583,227 1,533,395 49,832
British Pound.................................. 6/26/01 273,779 400,339 399,148 1,191
British Pound.................................. 11/2/00 18,203 26,114 26,433 (319)
British Pound.................................. 11/3/00 16,098 23,432 23,379 53
British Pound.................................. 11/3/00 45,375 65,842 65,899 (57)
Canadian Dollar................................ 2/9/01 1,883,590 1,269,057 1,235,257 33,800
Canadian Dollar................................ 12/7/00 868,672 584,614 568,773 15,841
Euro........................................... 2/12/01 70,573 59,224 60,181 (957)
Euro........................................... 11/1/00 610,929 512,955 517,851 (4,896)
Euro........................................... 11/2/00 150,254 126,655 127,362 (707)
Euro........................................... 11/2/00 251,753 211,530 213,397 (1,867)
Japanese Yen................................... 2/20/01 350,994,240 3,365,728 3,276,509 89,219
Japanese Yen................................... 11/27/00 169,191,730 1,620,911 1,556,969 63,942
Japanese Yen................................... 11/29/00 146,299,200 1,394,041 1,346,777 47,264
Japanese Yen................................... 2/28/01 170,700,750 1,650,000 1,595,613 54,387
Japanese Yen................................... 1/19/01 243,971,940 2,291,326 2,265,374 25,952
Japanese Yen................................... 1/19/01 355,273,705 3,333,347 3,298,854 34,493
Japanese Yen................................... 11/1/00 9,204,019 84,814 84,296 518
Japanese Yen................................... 11/2/00 5,638,966 51,752 51,645 107
Japanese Yen................................... 11/6/00 4,402,508 40,368 40,364 4
----------- ----------- ---------
TOTAL SHORT CONTRACTS....................................................... $18,834,253 $18,425,497 $ 408,756
----------- ----------- ---------
----------- ----------- ---------
</TABLE>
See notes to financial statements.
87
<PAGE>
HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
--------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
<TABLE>
<S> <C>
ASSETS:
Investments, at value
(cost $266,109,044)............... $335,362,675
Foreign currency................... 88,773
Receivable for investments sold.... 2,448,393
Interest and dividends
receivable........................ 222,586
Prepaid expenses................... 57
------------
TOTAL ASSETS.................... 338,122,484
LIABILITIES:
Payable to custodian............... $ 189
Payable for investments
purchased......................... 4,995,035
Unrealized depreciation on forward
foreign exchange contracts........ 509,366
Accrued expenses and other
liabilities:
Investment management............. 195,198
Administration.................... 11,651
Other............................. 86,491
----------
TOTAL LIABILITIES............... 5,797,930
------------
NET ASSETS:
Applicable to investors' beneficial
interest.......................... $332,324,554
------------
------------
</TABLE>
---------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest............................ $ 1,006,085
Dividend............................ 4,518,352
Foreign tax withholding............. (687,585)
------------
TOTAL INVESTMENT INCOME.......... 4,836,852
EXPENSES:
Investment management............... $2,444,622
Administration...................... 144,147
Accounting.......................... 78,533
Custodian........................... 269,065
Other............................... 29,723
----------
TOTAL EXPENSES................... 2,966,090
------------
NET INVESTMENT INCOME............... 1,870,762
------------
NET REALIZED/UNREALIZED GAINS FROM
INVESTMENTS:
Net realized gains from investment
and foreign currency
transactions....................... 29,895,926
Change in unrealized
appreciation/depreciation from
investments and foreign
currencies......................... (25,559,425)
------------
Net realized/unrealized gains from
investments and foreign
currencies......................... 4,336,501
------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS......................... $ 6,207,263
------------
------------
</TABLE>
See notes to financial statements.
88
<PAGE>
HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
OCTOBER 31,
------------------------------
2000 1999
------------ ------------
<S> <C> <C>
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income...................................... $ 1,870,762 $ 1,505,458
Net realized gains from investment and foreign currency
transactions............................................. 29,895,926 15,448,935
Change in unrealized appreciation/depreciation from
investments and foreign currencies....................... (25,559,425) 77,634,898
------------ ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS.............. 6,207,263 94,589,291
------------ ------------
CHANGE IN NET ASSETS FROM TRANSACTIONS IN INVESTORS'
BENEFICIAL INTEREST........................................ 37,287,785 (11,497,147)
------------ ------------
CHANGE IN NET ASSETS........................................ 43,495,048 83,092,144
NET ASSETS:
Beginning of period........................................ 288,829,506 205,737,362
------------ ------------
End of period.............................................. $332,324,554 $288,829,506
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements.
89
<PAGE>
HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED OCTOBER 31,
------------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000's)......................... $332,325 $288,830 $205,737 $207,129 $135,239
Ratio of expenses to average net assets..................... 0.84% 0.91% 0.97% 0.76% 0.83%
Ratio of net investment income to average net assets........ 0.53% 0.61% 0.80% 1.21% 1.14%
Ratio of expenses to average net assets..................... 0.84% 0.91% 0.97% 1.01%(a) 1.10%(a)
Portfolio turnover.......................................... 27.81% 34.26% 40.47% 30.00% 23.30%
</TABLE>
---------
(a) During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratio would have been as indicated.
See notes to financial statements.
90
<PAGE>
HSBC INVESTOR PORTFOLIOS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR SMALL CAP EQUITY PORTFOLIO OCTOBER 31, 2000
<TABLE>
<CAPTION>
-----------------------------------------------------------------
COMMON STOCKS - 94.4%
SHARES VALUE
----------- ------------
<S> <C> <C>
ADVERTISING - 0.2%
Catalina Marketing Corp. (b)......... 21,100 $ 828,175
------------
AIRLINES - 0.6%
Skywest, Inc......................... 42,400 2,141,200
------------
BIOTECHNOLOGY - 0.1%
Ciphergen Biosystems, Inc. (b)....... 5,700 176,700
V.I. Technologies, Inc. (b).......... 71,400 330,225
------------
506,925
------------
BUILDING MATERIALS - 0.6%
CoorsTek, Inc. (b)................... 5,500 160,875
Martin Marietta Materials............ 54,100 2,077,440
------------
2,238,315
------------
COMMERCIAL SERVICES - 12.2%
Bright Horizons Family Solutions,
Inc. (b)............................ 33,800 845,000
Caremark Rx, Inc. (b)................ 1,587,100 19,838,749
Computer Learning Centers (b)........ 919 747
Concord EFS, Inc. (b)................ 171,400 7,080,962
Diamond Technology Partners, Inc.
(b)................................. 6,500 290,063
Gartner Group, Inc. (b).............. 71,100 675,450
Gartner Group, Inc. Class B (b)...... 2,050 17,938
Memberworks, Inc. (b)................ 14,900 512,188
Meta Group, Inc. (b)................. 38,030 366,039
Modis Professional Services, Inc.
(b)................................. 252,464 1,041,414
National Processing, Inc. (b)........ 93,200 1,473,725
NCO Group, Inc. (b).................. 113,100 2,474,063
NOVA Corp. (b)....................... 249,540 3,914,658
Orthodontic Centers of America (b)... 76,000 2,536,500
Parexel International Corp. (b)...... 158,200 1,384,250
Renaissance Worldwide, Inc. (b)...... 79,100 98,875
Sodexho Marriott Services, Inc....... 73,000 1,341,375
Spherion Corp. (b)................... 97,024 1,152,160
------------
45,044,156
------------
COMPUTER SERVICES - 8.5%
Affiliated Computer Services, Inc.
(b)................................. 113,905 6,343,084
Ceridian Corp. (b)................... 79,800 1,995,000
Checkfree Corp. (b).................. 78,100 3,885,475
CNET Networks, Inc. (b).............. 83,800 2,639,700
Complete Business Solutions (b)...... 80,000 830,000
DST Systems, Inc. (b)................ 44,616 2,749,461
Eloyalty Corp. (b)................... 328,725 3,163,978
Radiant Systems, Inc. (b)............ 27,400 505,188
Sungard Data Systems, Inc. (b)....... 117,752 6,020,071
Synopsys, Inc. (b)................... 80,000 2,790,000
Technology Solutions Co. (b)......... 243,925 579,322
------------
31,501,279
------------
COMPUTER SOFTWARE - 16.6%
Acxiom Corp. (b)..................... 80,040 3,221,610
Aspen Technology, Inc. (b)........... 159,100 6,572,818
AVT Corp. (b)........................ 132,100 829,753
Bottomline Technologies, Inc. (b).... 29,700 1,041,356
Concord Communications, Inc. (b)..... 35,000 271,250
CSG Systems International (b)........ 92,600 4,300,112
Cysive, Inc. (b)..................... 87,512 694,627
Dendrite International, Inc. (b)..... 132,536 2,882,658
<CAPTION>
-----------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE
----------- ------------
<S> <C> <C>
ePresence, Inc. (b).................. 150,000 $ 1,059,375
Exchange Applications, Inc. (b)...... 158,000 506,094
Fiserv, Inc. (b)..................... 24,862 1,303,701
HNC Software, Inc. (b)............... 115,200 2,340,000
Hyperion Solutions Corp. (b)......... 210,300 2,944,200
IDX Systems Corp. (b)................ 33,600 1,075,200
IMRglobal Corp. (b).................. 280,700 2,315,775
infoUSA, Inc. (b).................... 163,990 532,968
Inspire Insurance Solutions, Inc.
(b)................................. 114,600 71,625
JDA Software Group, Inc. (b)......... 71,800 1,081,488
Lightspan, Inc. (b).................. 24,800 57,350
Metasolv Software, Inc. (b).......... 137,000 1,703,938
National Data Corp................... 161,600 6,160,999
New Era of Networks, Inc. (b)........ 59,800 930,638
Numerical Technologies, Inc. (b)..... 26,600 545,300
Onyx Software Corp. (b).............. 6,300 100,013
Packeteer, Inc. (b).................. 41,200 1,024,850
Peregrine Systems, Inc. (b).......... 129,887 3,117,288
Probusiness Services, Inc. (b)....... 62,000 2,026,625
Proxicom, Inc. (b)................... 22,100 298,350
Scient Corp. (b)..................... 26,700 480,600
Smartforce PLC ADR (b)............... 132,900 6,688,607
Transaction Systems Architects, Inc.
Class A (b)......................... 190,335 2,569,523
Wind River Systems (b)............... 50,700 2,081,869
------------
60,830,560
------------
CONSTRUCTION & HOUSING - 0.5%
Dycom Industries, Inc. (b)........... 45,600 1,715,700
------------
CONSUMER GOODS & SERVICES - 0.2%
Blyth Industries, Inc................ 30,275 787,150
------------
ELECTRICAL & ELECTRONICS - 1.6%
Belden, Inc.......................... 46,945 1,217,636
Capstone Turbine Corp. (b)........... 3,070 170,385
Mettler-Toledo International, Inc.
(b)................................. 44,200 2,063,587
Sawtek, Inc. (b)..................... 12,900 656,288
Varian, Inc. (b)..................... 64,100 1,975,081
------------
6,082,977
------------
ELECTRONIC COMPONENTS/SEMICONDUCTORS - 5.6%
Anadigics, Inc. (b).................. 18,900 422,888
Applied Micro Circuits Corp. (b)..... 4,533 346,208
Dupont Photomasks, Inc. (b).......... 62,415 3,503,041
Galileo Technology Ltd. (b).......... 55,400 1,502,725
HI/FN, Inc. (b)...................... 27,710 1,711,093
Microchip Technology, Inc. (b)....... 19,360 612,244
MKS Instruments, Inc. (b)............ 32,100 589,838
Photronics, Inc. (b)................. 115,500 2,605,969
PRI Automation, Inc. (b)............. 93,200 2,108,650
Sipex Corp. (b)...................... 88,700 3,492,562
Varian Semiconductor Equipment
Associates, Inc. (b)................ 32,900 756,700
Veeco Instruments, Inc. (b).......... 47,600 3,151,268
------------
20,803,186
------------
FINANCIAL SERVICES - 1.5%
Federated Investors, Inc............. 83,700 2,437,763
Student Loan Corp.................... 30,800 1,647,800
Waddell & Reed Financial, Inc........ 43,800 1,396,125
------------
5,481,688
------------
</TABLE>
Continued
91
<PAGE>
HSBC INVESTOR PORTFOLIOS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR SMALL CAP EQUITY PORTFOLIO OCTOBER 31, 2000
<TABLE>
<CAPTION>
-----------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE
----------- ------------
<S> <C> <C>
FOOD & BEVERAGE PRODUCTS - 0.6%
Del Monte Foods Co. (b).............. 173,100 $ 1,049,419
Tootsie Roll Industries, Inc......... 34,012 1,305,210
------------
2,354,629
------------
HEALTH CARE - 12.2%
Arthrocare Corp. (b)................. 64,800 1,470,150
Conmed Corp. (b)..................... 73,300 1,076,594
Cyberonics (b)....................... 85,300 1,983,225
Cytyc Corp. (b)...................... 132,400 7,883,013
DaVita, Inc. (b)..................... 361,692 4,069,035
First Health Group Corp. (b)......... 75,800 2,956,200
Haemonetics Corp. (b)................ 102,900 2,418,150
Idexx Laboratories, Inc. (b)......... 181,800 4,363,200
Impath, Inc. (b)..................... 83,100 6,284,438
LifePoint Hospitals, Inc. (b)........ 78,000 3,022,500
Lincare Holdings, Inc. (b)........... 76,800 3,230,400
MID Atlantic Medical Services, Inc.
(b)................................. 77,600 1,319,200
Osteotech, Inc. (b).................. 129,500 712,250
Quorum Health Group, Inc. (b)........ 91,500 1,223,813
Steris Corp. (b)..................... 150,800 2,262,000
Visx, Inc. (b)....................... 31,100 666,706
------------
44,940,874
------------
INTERNET RELATED - 7.6%
Data Return Corp. (b)................ 3,700 42,550
Digital Insight Corp. (b)............ 79,600 1,537,275
E.piphany, Inc. (b).................. 11,100 1,000,388
Internap Network Services (b)........ 2,300 36,800
L90, Inc. (b)........................ 34,240 207,580
Netegrity, Inc. (b).................. 34,000 2,651,999
Netopia, Inc. (b).................... 53,100 577,463
Retek, Inc. (b)...................... 64,551 2,545,736
RSA Security, Inc. (b)............... 172,900 10,028,199
S1 Corp. (b)......................... 90,321 1,089,497
SonicWALL, Inc. (b).................. 15,800 236,013
SportsLine.com, Inc. (b)............. 99,000 847,688
Switchboard, Inc. (b)................ 920 5,980
Ticketmaster Online-CitySearch, Inc.
(b)................................. 55,000 880,000
Verity, Inc. (b)..................... 48,600 1,142,100
WatchGuard Technolgies, Inc. (b)..... 34,700 1,735,000
WebMD Corp. (b)...................... 303,500 3,452,312
------------
28,016,580
------------
MEDIA - 2.0%
Emmis Communications Corp., Class A
(b)................................. 20,900 559,075
Scholastic Corp. (b)................. 73,300 5,864,000
Spanish Broadcasting System, Inc.
(b)................................. 111,200 1,000,800
------------
7,423,875
------------
OIL & GAS - 6.3%
Cooper Cameron Corp. (b)............. 30,600 1,667,700
Dril-Quip (b)........................ 28,900 953,700
EOG Resources, Inc................... 35,700 1,405,688
Global Industries Ltd. (b)........... 393,900 4,135,949
Grant Prideco, Inc. (b).............. 46,170 857,031
Input/Output, Inc. (b)............... 183,400 1,547,438
Marine Drilling Companies, Inc.
(b)................................. 72,800 1,738,100
National-Oilwell, Inc. (b)........... 58,000 1,696,500
Newfield Exploration Co. (b)......... 65,200 2,461,300
<CAPTION>
-----------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES VALUE
----------- ------------
<S> <C> <C>
Noble Drilling Corp. (b)............. 119,100 $ 4,950,093
Weatherford International, Inc.
(b)................................. 46,570 1,699,805
------------
23,113,304
------------
PACKAGING & CONTAINERS - 0.3%
Ivex Packaging Corp. (b)............. 121,300 1,190,256
------------
PHARMACEUTICALS - 0.7%
Allos Therapeutics, Inc. (b)......... 48,950 526,213
Amerisource Health Corp., Class A
(b)................................. 22,500 977,343
Express Scripts, Inc., Class A (b)... 12,600 846,562
Introgen Therapeutic, Inc. (b)....... 24,210 285,981
------------
2,636,099
------------
REAL ESTATE INVESTMENT TRUST - 1.3%
Kilroy Realty Corp................... 29,800 776,663
Meristar Hospitality Corp............ 48,400 925,650
Pinnacle Holdings, Inc. (b).......... 188,500 2,968,875
------------
4,671,188
------------
RESTAURANTS, LODGING & HOSPITALITY - 2.0%
Applebee's International, Inc........ 42,345 1,278,951
Four Seasons Hotels, Inc............. 17,200 1,255,600
Landry's Seafood Restaurants......... 41,400 333,788
Papa John's International, Inc.
(b)................................. 95,700 2,404,462
Sonic Corp. (b)...................... 60,027 2,190,986
------------
7,463,787
------------
RETAIL STORES - 0.7%
BJ's Wholesale Club, Inc. (b)........ 17,300 569,819
Office Depot, Inc. (b)............... 93,900 780,544
Regis Corp........................... 80,350 1,215,293
------------
2,565,656
------------
TELECOMMUNICATIONS - 7.6%
Adelphia Business Solutions, Inc.
(b)................................. 89,400 558,750
Amdocs Ltd. (b)...................... 34,063 2,207,708
Black Box Corp. (b).................. 15,700 1,034,238
Cable Design Technologies Corp.
(b)................................. 110,720 2,553,480
Cabletron Systems (b)................ 140,000 3,797,500
Computer Network Technology Corp.
(b)................................. 161,600 4,911,124
Inrange Technologies Corp. (b)....... 2,110 77,279
Intermedia Communications, Inc.
(b)................................. 256,500 5,675,062
JNI Corp. (b)........................ 48,650 4,332,891
Mpower Communications Corp. (b)...... 75,750 492,375
Stratos Lightwave, Inc. (b).......... 2,840 75,083
TyCom Ltd. (b)....................... 300 10,050
WinStar Communications, Inc. (b)..... 55,700 1,086,150
XO Communications, Inc. (b).......... 39,900 1,346,002
------------
28,157,692
------------
TELECOMMUNICATIONS-EQUIPMENT - 4.0%
Advanced Fibre Communication (b)..... 53,900 1,755,119
American Tower Corp. (b)............. 42,085 1,722,855
Aware, Inc. (b)...................... 55,000 1,701,563
Carrier Access Corp. (b)............. 35,500 443,750
Natural Microsystems Corp. (b)....... 78,800 3,560,774
Netro Corp. (b)...................... 59,300 1,293,481
Proxim, Inc. (b)..................... 38,000 2,303,750
Tekelec (b).......................... 52,300 1,925,294
------------
14,706,586
------------
</TABLE>
Continued
92
<PAGE>
HSBC INVESTOR PORTFOLIOS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR SMALL CAP EQUITY PORTFOLIO OCTOBER 31, 2000
<TABLE>
<CAPTION>
-----------------------------------------------------------------
COMMON STOCKS, CONTINUED
SHARES OR
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
TRANSPORTATION & SHIPPING - 0.9%
EGL, Inc. (b)........................ 122,200 $ 3,482,700
------------
TOTAL COMMON STOCKS
(Cost $306,558,356)................. 348,684,537
------------
-----------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 7.8%
FEDERAL HOME LOAN BANK - 7.8%
6.38%, 11/10/00...................... $ 7,000,000 6,988,646
6.38%, 11/8/00....................... 10,000,000 9,987,380
6.45%, 11/1/00....................... 11,745,000 11,745,000
------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS (Cost $28,721,429)...... 28,721,026
------------
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
TOTAL INVESTMENTS - 102.2%
(Cost $335,279,785) (a)............. $377,405,563
LIABILITIES IN EXCESS OF OTHER ASSETS
- (2.2)%........................... (8,239,659)
------------
NET ASSETS - 100.0%................. $369,165,904
------------
------------
</TABLE>
---------
(a) Represents cost for financial reporting purposes and differs for federal
income tax purposes by the amount of losses recognized for financial
reporting purposes in excess of federal income tax reporting of
approximately $1,640,552. Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation....................... $ 92,253,685
Unrealized depreciation....................... (51,768,459)
------------
Net unrealized appreciation................... $ 40,485,226
------------
------------
</TABLE>
(b) Represents non-income producing security.
<TABLE>
<S> <C>
ADR --American Depositary Receipt
PLC --Public Limited Company
</TABLE>
See notes to financial statements.
93
<PAGE>
HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR SMALL CAP EQUITY PORTFOLIO
---------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value
(cost $335,279,785).............. $377,405,563
Cash.............................. 26,344
Receivable for investments sold... 3,511,181
Interest and dividends
receivable....................... 6,555
Deferred organization costs....... 8,589
Prepaid expenses.................. 498
------------
TOTAL ASSETS................... 380,958,730
LIABILITIES:
Payable for investments
purchased........................ $11,472,099
Accrued expenses and other
liabilities:
Investment management............ 254,182
Administration................... 12,046
Other............................ 54,499
-----------
TOTAL LIABILITIES.............. 11,792,826
------------
NET ASSETS:
Applicable to investors'
beneficial interest.............. $369,165,904
------------
------------
</TABLE>
--------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest........................... $ 914,855
Dividend........................... 324,824
------------
TOTAL INVESTMENT INCOME......... 1,239,679
EXPENSES:
Investment management.............. $2,939,403
Administration..................... 136,734
Accounting......................... 45,149
Custodian.......................... 108,504
Other.............................. 32,287
----------
TOTAL EXPENSES.................. 3,262,077
------------
NET INVESTMENT LOSS................ (2,022,398)
------------
NET REALIZED/UNREALIZED GAINS FROM
INVESTMENTS:
Net realized gains from investment
transactions...................... 104,678,966
Change in unrealized
appreciation/depreciation from
investments....................... 27,387,771
------------
Net realized/unrealized gains from
investments....................... 132,066,737
------------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS........................ $130,044,339
------------
------------
</TABLE>
See notes to financial statements.
94
<PAGE>
HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR SMALL CAP EQUITY PORTFOLIO
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
OCTOBER 31,
------------------------------
2000 1999
------------ ------------
<S> <C> <C>
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment loss........................................ $ (2,022,398) $ (1,468,080)
Net realized gains from investment transactions............ 104,678,966 26,630,272
Change in unrealized appreciation/depreciation from
investments.............................................. 27,387,771 21,946,566
------------ ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS.............. 130,044,339 47,108,758
------------ ------------
CHANGE IN NET ASSETS FROM TRANSACTIONS IN INVESTORS'
BENEFICIAL INTERESTS....................................... 1,816,380 3,679,033
------------ ------------
CHANGE IN NET ASSETS........................................ 131,860,719 50,787,791
NET ASSETS:
Beginning of period........................................ 237,305,185 186,517,394
------------ ------------
End of period.............................................. $369,165,904 $237,305,185
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements.
95
<PAGE>
HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR SMALL CAP EQUITY PORTFOLIO
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEARS ENDED OCTOBER 31, SEPTEMBER 3, 1996
--------------------------------------------- TO OCTOBER 31,
2000 1999 1998 1997 1996(a)
-------- -------- -------- -------- ------------------
<S> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000's).................. $369,166 $237,305 $186,517 $213,740 $119,901
Ratio of expenses to average net assets.............. 0.97 % 1.04 % 1.03 % 0.84 % 0.82 %(b)
Ratio of net investment loss to average net assets... (0.60)% (0.68)% (0.57)% (0.33)% (0.11)%(b)
Ratio of expenses to average net assets.............. 0.97 % 1.04 % 1.06 %(c) 1.09 %(c) 1.10 %(b)(c)
Portfolio turnover................................... 79.51 % 77.74 % 154.69 % 92.18 % 50.55 %
</TABLE>
---------
(a) Period from commencement of operations.
(b) Annualized.
(c) During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratio would have been as indicated.
See notes to financial statements.
96
<PAGE>
HSBC INVESTOR PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000
1. ORGANIZATION:
The HSBC Investor Portfolios (the 'Portfolio Trust'), is an open-end
management investment company organized as a master trust fund under the laws
of the State of New York on November 1, 1994. The Portfolios operate as
master funds in master-feeder arrangements. The Declaration of Trust permits
the Board of Trustees to issue an unlimited number of beneficial interests in
the Portfolios. The Portfolio Trust contains the following (individually a
'Portfolio,' collectively the 'Portfolios'):
<TABLE>
<CAPTION>
PORTFOLIO SHORT NAME
--------- ----------
<S> <C>
HSBC Investor Fixed Income Portfolio Fixed Income Portfolio
HSBC Investor International Equity Portfolio International Equity Portfolio
HSBC Investor Small Cap Equity Portfolio Small Cap Equity Portfolio
</TABLE>
The Portfolios are diversified series of the Portfolio Trust and are part
of the HSBC Investor Family of Funds. Financial Statements for all other
series of the HSBC Investor Family of Funds are published separately.
Effective July 15, 2000 the Republic Portfolios, along with all Portfolios
within the Portfolio Trust, were renamed the HSBC Investor Portfolios.
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 generally accepted accounting principles 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 electronic and 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 at fair market value as
determined in good faith by or at the direction of the Board of Trustees.
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 that 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
Continued
97
<PAGE>
HSBC INVESTOR PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000
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 financial 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 financial 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
financial 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 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.
SECURITIES TRANSACTIONS AND RELATED INCOME:
Security transactions are accounted for on the date the security is
purchased or sold ('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.
EXPENSES 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, except when allocations of direct expenses to each Portfolio can
otherwise be made fairly. Expenses directly attributable to a Portfolio are
charged to that Portfolio.
ORGANIZATION EXPENSES:
Costs incurred in connection with the organization and initial registration
of the Portfolios has been deferred and is being amortized over a five year
period, beginning with each Portfolio's commencement of operations.
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. Income received by the
Portfolio from sources within foreign countries may be subject to withholding
and other income or similar taxes imposed by such countries.
Continued
98
<PAGE>
HSBC INVESTOR PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES:
INVESTMENT MANAGEMENT:
On December 31, 1999, HSBC Holdings plc, a registered bank holding company,
acquired Republic New York Corporation. Subsequently, Republic National Bank
of New York, which serves as Investment Manager to the Portfolios pursuant to
an investment management contract with the Portfolio Trust, was renamed HSBC
Bank USA ('HSBC'). As Investment Manager, HSBC manages the investments of the
Portfolios and continuously reviews, supervises and administers the
Portfolios' investments. Miller Anderson & Sherrerd, Capital Guardian Trust
Company and MFS Institutional Advisers, Inc. serves as Sub-Investment
Managers for the Fixed Income Portfolio, International Equity Portfolio and
Small Cap Equity Portfolio, respectively.
For their services as Investment Manager and Sub-Investment Manager,
respectively, HSBC and Miller Anderson & Sherrerd are entitled to receive
from the Fixed Income Portfolio, in the aggregate a fee, computed daily and
paid monthly, based on the following schedule:
<TABLE>
<CAPTION>
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE
------------------------------------ --------
<S> <C> <C>
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..... $300,000 plus 0.200%
In excess of $150 million but not exceeding $250 million.... 0.400%
In excess of $250 million................................... 0.350%
</TABLE>
For their services as Investment Manager and Sub-Investment Manager,
respectively, HSBC and Capital Guardian Trust Company are entitled to receive
from the International Equity Portfolio, in the aggregate a fee, computed
daily and paid monthly, based on the following schedule:
<TABLE>
<CAPTION>
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE
------------------------------------ --------
<S> <C>
Up to $25 million........................................... 0.950%
In excess of $25 million but not exceeding $50 million...... 0.800%
In excess of $50 million but not exceeding $250 million..... 0.675%
In excess of $250 million................................... 0.625%
</TABLE>
For their services as Investment Manager and Sub-Investment Manager,
respectively, HSBC and MFS Institutional Advisers, Inc. are entitled to
receive from the Small Cap Equity Portfolio, in the aggregate a fee, computed
daily and paid monthly, based on the following schedule:
<TABLE>
<CAPTION>
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE
------------------------------------ --------
<S> <C>
Up to $50 million........................................... 1.000%
In excess of $50 million.................................... 0.850%
</TABLE>
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 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 equal on an annual basis to:
<TABLE>
<CAPTION>
ADMINISTRATION
BASED ON AVERAGE DAILY NET ASSETS OF FEE RATE
------------------------------------ --------
<S> <C>
Up to $1 billion............................................ 0.050%
In excess of $1 billion but not exceeding $2 billion........ 0.040%
In excess of $2 billion..................................... 0.035%
</TABLE>
Continued
99
<PAGE>
HSBC INVESTOR PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000
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.
FUND ACCOUNTING AND CUSTODIAN:
BISYS provides fund accounting services for the Portfolios. For its
services to the Portfolios, BISYS receives an annual per Portfolio fee
accrued daily and paid monthly. HSBC serves as custodian to the Fixed Income
Portfolio and Small Cap Equity Portfolio. Investor's Bank & Trust Company
serves as custodian to the International Equity Portfolio.
4. INVESTMENT TRANSACTIONS:
During the year ended October 31, 2000, each Portfolio purchased and sold
securities, excluding short-term securities, in the following amounts:
<TABLE>
<CAPTION>
PURCHASES SALES
--------- -----
<S> <C> <C>
Fixed Income Portfolio...................................... $1,080,426,928 $1,075,162,364
International Equity Portfolio.............................. 119,576,521 92,847,338
Small Cap Equity Portfolio.................................. 253,298,269 264,512,700
</TABLE>
100
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and
Board of Trustees of the
HSBC Investor Portfolios (formerly Republic Portfolios):
We have audited the accompanying statements of assets and liabilities of the
HSBC Investor Fixed Income Portfolio, HSBC Investor International Equity
Portfolio and HSBC Investor Small Cap Equity Portfolio (collectively, the
Funds), including the schedules of portfolio investments, as of October 31,
2000, and the related statements of operations, statements of changes in net
assets and the financial highlights for each of the periods indicated herein.
These financial statements and the financial highlights are the responsibility
of the Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included verification of
securities owned as of October 31, 2000, by confirmation with the custodian,
correspondence with brokers and other appropriate audit procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Funds as of October 31, 2000, the results of their operations, the changes in
their net assets and the financial highlights for each of the periods indicated
herein, in conformity with accounting principles generally accepted in the
United States of America.
KPMG LLP
Columbus, Ohio
December 8, 2000
101
<PAGE>
<TABLE>
<S> <C>
HSBC INVESTOR FUNDS: SHAREHOLDER SERVICING AGENTS
FOR HSBC BANK USA AND
INVESTMENT MANAGERS HSBC BROKERAGE (USA) INC. CLIENTS
HSBC Bank USA HSBC Bank USA
452 Fifth Avenue 452 Fifth Avenue
New York, NY 10018 New York, NY 10018
1-888-525-5757
HSBC INVESTOR MID-CAP FUND
HSBC Asset Management (Americas), Inc. FOR ALL OTHER SHAREHOLDERS
452 Fifth Avenue HSBC Investor Funds
New York, NY 10018 P.O. Box 182845
Columbus, OH 43218-2845
SUB-INVESTMENT MANAGERS 1-800-782-8183
HSBC INVESTOR EQUITY FUND
Alliance Capital Management, L.P. ADMINISTRATOR, TRANSFER AGENT,
1345 Avenue of the Americas DISTRIBUTOR, AND SPONSOR
New York, NY 10105 BISYS Fund Services
3435 Stelzer Road
Institutional Capital Corporation Columbus, OH 43219
225 West Wacker Drive
Chicago, IL 60606 CUSTODIANS
HSBC INVESTOR NEW YORK TAX-FREE BOND FUND
HSBC INVESTOR FIXED INCOME PORTFOLIO HSBC INVESTOR EQUITY FUND
Miller Anderson & Sherrerd HSBC INVESTOR MID-CAP FUND
One Tower Bridge HSBC INVESTOR FIXED INCOME PORTFOLIO
West Conshohocken, PA 19428 HSBC INVESTOR SMALL CAP EQUITY PORTFOLIO
HSBC Bank USA
HSBC INVESTOR INTERNATIONAL EQUITY PORTFOLIO 452 Fifth Avenue
Capital Guardian Trust Company New York, NY 10018
11100 Santa Monica Boulevard
Los Angeles, CA 90025 HSBC Investor International Equity Portfolio
Investors Bank & Trust Company
HSBC INVESTOR SMALL CAP EQUITY PORTFOLIO 200 Clarendon Street - 16th Floor
MFS Institutional Advisers, Inc. Boston, MA 02116
500 Boylston Street
Boston, MA 02116 INDEPENDENT AUDITORS
KPMG LLP
Two Nationwide Plaza, Suite 1600
Columbus, OH 42315
LEGAL COUNSEL
Dechert
1775 Eye Street, N.W.
Washington, D.C. 20006
</TABLE>
The HSBC Investor 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. 12/00
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as .............................. 'D'