<PAGE>
ANNUAL REPORT
HSBC INVESTOR FUNDS
October 31, 2000
HSBC Investor Money Market Fund
HSBC Investor U.S. Government Money Market Fund
HSBC Investor New York Tax-Free Money Market Fund
[HSBC LOGO]
YOUR WORLD OF FINANCIAL SERVICES
<PAGE>
TABLE OF CONTENTS
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HSBC INVESTOR FUNDS
ANNUAL REPORT - OCTOBER 31, 2000
<TABLE>
<S> <C>
Presidents Message ................................................1
Commentary From the Investment Manager ............................2
Portfolio Reviews .................................................3
HSBC Investor Money Market Fund ...................................6
HSBC Investor U.S. Government Money Market Fund ..................15
HSBC Investor New York Tax-Free Money Market Fund ................23
Notes to Financial Statements ....................................32
Independent Auditors Report ......................................36
</TABLE>
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<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:
Commentary From the Investment Manager
Portfolio Reviews -- investment strategy, performance overview and outlook for
the coming months
Schedules of Portfolio Investments -- listing of the security holdings in each
Fund
Statements of Assets and Liabilities -- summary of the assets and liabilities
of each Fund
Statements of Operations -- summary of operations and its effect on the assets
of each Fund
Statements of Changes in Net Assets -- summary of changes in net assets during
the period
Financial Highlights -- per share summary of activity affecting net asset
value per share
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
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1
<PAGE>
COMMENTARY FROM THE INVESTMENT MANAGER
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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 headed for recession.
--------------------------------------------------------------------------------
(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
<PAGE>
PORTFOLIO REVIEWS
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HSBC INVESTOR MONEY MARKET FUND'D'
(CLASS A (INVESTOR) SHARES, D (PRIVATE INVESTOR) SHARES AND Y (ADVISER) SHARES)
by Peter J. Loftus
Portfolio Manager
The HSBC Investor Money Market Fund (the "Fund") returned 5.60% for Class A
(Investor) Shares, 5.75% for Class D (Private Investor) Shares, and 6.02% for
Class Y (Adviser) Shares during the year ended October 31, 2000. Those compare
to a 5.53% return for the Funds benchmark, the Lipper Money Market Funds
Average.(1) The Funds annualized 7-day yield through October 31, 2000, was 5.85%
for Class A (Investor) Shares, 6.00% for Class D (Private Investor) Shares and
6.25% for Class Y (Adviser) Shares.(2)
The U.S. economy grew strongly during much of the recent period, fueling
concerns about rising inflation. The Fed raised short-term interest rates four
times during the period, from 5.25% to 6.5%, in an effort to slow the economy
and head off inflation. Those rate hikes appeared to have the desired effect by
the end of the period, as the economy began to show signs of slowing.
The Funds average maturity was shorter than that of its peer group throughout
the period. That approach benefited performance as short-term rates rose. The
Funds average maturity began the period at 15 days and ended at 41 days.
Commercial paper (57.2% of net assets on October 31, 2000) made up the majority
of the Funds portfolio, followed by repurchase agreements (11.8%), floating-rate
notes (10.9%), corporate bonds (8.8%) and U.S. government agencies (5.6%). We
focused on keeping the Funds credit quality high, because many companies warned
that their profits might fall short of expectations. We felt that the extra
yield available from lower-rated securities was not enough to compensate for
their additional risk.*
Economic growth appears to be slowing to a more sustainable level. Therefore, we
do not expect the Fed to raise rates in the coming months. In fact, the Fed
might even lower interest rates if it appears the economy is growing too slowly.
We will extend the Funds average maturity to around 40 to 50 days, which we feel
should help the Fund to capture additional yield if rates fall. We will also
continue to invest in high-quality securities.*
--------------------------------------------------------------------------------
'D' An investment in the Fund is neither guaranteed nor insured by the FDIC or
any other government agency. Although the Fund strives to maintain the value of
your investment at $1.00 per share, it is possible to lose money by investing
in this Fund. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE AS
YIELDS ON MONEY MARKET FUNDS FLUCTUATE DAILY.
(1) The Lipper Money Market Funds Average is an average of managed funds that
invest in high-quality financial instruments rated in the top two grades, with
dollar-weighted average maturities of less than 90 days. Lipper is an
independent mutual fund performance monitor whose results are based on total
return.
(2) The 7-day yield quotation more closely reflects the current earnings of the
Fund than the total return quotation.
* Portfolio composition is subject to change.
3
<PAGE>
PORTFOLIO REVIEWS
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HSBC INVESTOR U.S. GOVERNMENT MONEY MARKET FUND'D'
(CLASS A (INVESTOR) SHARES, B SHARES, D (PRIVATE INVESTOR)
SHARES AND Y (ADVISER) SHARES)
by Peter J. Loftus
Portfolio Manager
The HSBC Investor U.S. Government Money Market Fund (the "Fund") for the year
ended October 31, 2000, returned 5.32% for Class A (Investor) Shares, 4.72% for
Class B Shares, 5.47% for Class D (Private Investor) Shares, and 5.74% for Class
Y (Adviser) Shares. That compared to 5.52% for the Lipper U.S. Government Money
Market Funds Average.(1) The Funds annualized 7-day yield as of October 31,
2000, was 5.71% for Class A (Investor) Shares, 5.11% for Class B Shares, 5.86%
for Class D (Private Investor) Shares and 6.11% for Class Y (Adviser)
Shares.(2)
Rising interest rates and poor performance from the money markets characterized
the year. The economy was growing very fast at the start of the period, leading
to fears of increased inflation. The Fed raised the federal funds rate four
times, for a total increase of 1.25 percentage points, in an effort to slow
economic growth and head off inflation. Those rate hikes led to higher yields on
short-term securities, hurting their performance through price reductions. The
market began to stabilize late in the period, as investors anticipated that
signs of a slowing economy would allow the Fed to maintain a neutral monetary
policy going forward.
Our strategy in that environment was to invest in floating-rate notes, which
provide a yield that is a fixed amount higher than Treasury bills. Those issues
help performance when rates rise, since their yields increase as Treasury yields
rise. We also took advantage of market weakness to buy securities with
attractive yields and high credit quality. Treasury and agency issues became
very inexpensive, as investors reacted to fears of a more restrictive Fed
policy, and we bought them to lock in their high yields. During the last two
months of the period we liquidated the Funds position in Treasury securities and
invested the proceeds in agency issues, because the yields available on agencies
had become more attractive. We decreased the Funds average maturity from 65 days
at the beginning of the period to 36 days as of October 31, 2000.*
We expect the economy to continue to slow during the coming months, allowing the
Fed to maintain a neutral monetary policy or perhaps even lower interest rates,
allowing yields on short-term fixed-income securities to decline. We may extend
the Funds average maturity to help lock in higher yields, and will continue to
look for other opportunities to increase the Funds yield for shareholders.
--------------------------------------------------------------------------------
'D' An investment in the Fund is neither guaranteed nor insured by the FDIC or
any other government agency. Although the Fund strives to maintain the value of
your investment at $1.00 per share, it is possible to lose money by investing
in this Fund. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE AS YIELDS
ON MONEY MARKET FUNDS FLUCTUATE DAILY.
(1) The Lipper U.S. Government Money Market Funds Average is an average of
managed funds that invest principally in financial instruments issued or
guaranteed by the U.S. government, its agencies, or its instrumentalities with
dollar-weighted average maturities of less than 90 days. Lipper is an
independent mutual fund performance monitor whose results are based on
total return.
(2) The 7-day yield quotation more closely reflects the current earnings of the
Fund than the total return quotation.
* Portfolio composition is subject to change.
4
<PAGE>
HSBC INVESTOR NEW YORK TAX-FREE MONEY MARKET FUND'D'
(CLASS A (INVESTOR) SHARES, D (PRIVATE INVESTOR) SHARES AND Y (ADVISER) SHARES)
by Peter J. Loftus
Portfolio Manager
The HSBC Investor New York Tax-Free Money Market Fund (the "Fund") posted total
returns of 3.24% for Class A (Investor) Shares, 3.39% for Class D (Private
Investor) Shares, and 3.65% Class Y (Adviser) Shares during the year ended
October 31, 2000. That compares to a total return of 3.38% for the Funds
benchmark, the Lipper New York Tax-Exempt Money Market Funds Average.(1) The
Funds annualized 7-day yield on October 31, 2000, was 3.54% for Class A
(Investor) Shares, 3.69% for Class D (Private Investor) Shares and 3.93% for
Class Y (Adviser) Shares.(2)
The past year in the short-term tax-exempt market was characterized by rising
interest rates. Concerns over inflation led the Fed to raise interest rates four
times during the period. In this rising rate environment, investors considered
yield secondary to preserving their principal.
The Funds average maturity in the beginning of the period was 18 days. This was
shorter than the average maturity of the Funds typical peer, as we sought to
reduce the risk in the Funds portfolio. The Fund ended the period with an
average maturity of 26 days. Though we kept the Funds average maturity
relatively short and positioned the Fund correctly for a rising interest rate
environment, the relatively poor performance of tax-free securities hurt the
Funds returns. The Fund held 67.3% of its net assets on October 31, 2000 in
weekly and daily floating rate notes, 5.5% in municipal notes and the remainder
in tax-exempt commercial paper and cash equivalents.*
We anticipate the Fed will probably not raise interest rates during the next
three to six months. We plan to lengthen the Funds average maturity to around 30
to 40 days to help capture additional yield for shareholders. Demand tends to
pick up near the end of the calendar year, as investors shift their money into
more stable investments. We believe that should help support prices of the
securities in the Funds portfolio.*
--------------------------------------------------------------------------------
'D' An investment in the Fund is neither guaranteed nor insured by the FDIC or
any other government agency. Although the Fund strives to maintain the value of
your investment at $1.00 per share, it is possible to lose money by investing
in this Fund. The Funds income may be subject to the federal alternative
minimum tax and to certain state and local taxes. Regional funds may be
subject to additional risk, since companies they invest in are located in one
geographical location. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE
AS YIELDS ON MONEY MARKET FUNDS FLUCTUATE DAILY.
(1) The Lipper N.Y. Tax-Exempt Money Market Funds Average is an average of
managed funds that invest in municipal obligations of New York with dollar-
weighted average maturities of less than 90 days. Lipper is an independent
mutual fund performance monitor whose results are based on total return.
(2) The 7-day yield quotation more closely reflects the current earnings of the
Fund than the total return quotation.
* Portfolio composition is subject to change
5
<PAGE>
HSBC INVESTOR FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR MONEY MARKET FUND OCTOBER 31, 2000
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER - 57.2%
SECURITY MATURITY PRINCIPAL
DESCRIPTION RATE DATE AMOUNT VALUE
------------------------------------------------------------ ---- -------- ----------- --------------
<S> <C> <C> <C> <C>
AUTOMOTIVE - 3.0%
Daimler Chrysler............................................ 6.49% 11/9/00 $10,000,000 $ 9,985,578
Daimler Chrysler............................................ 6.46 11/27/00 10,000,000 9,953,344
Daimler Chrysler............................................ 6.45 12/18/00 13,000,000 12,890,529
--------------
32,829,451
--------------
BANKING - 2.3%
Banco Santander Brasil...................................... 6.55 11/14/00 12,600,000 12,570,198
Citicorp.................................................... 6.47 11/6/00 13,000,000 12,988,318
--------------
25,558,516
--------------
CHEMICALS - 2.0%
Dupont Chemical Co. ........................................ 6.46 11/30/00 16,478,000 16,392,250
West Baton Rouge, Louisiana (Guaranteed by Dow Chemical).... 6.62 12/8/00 5,000,000 5,000,000
--------------
21,392,250
--------------
CONSUMER MANUFACTURING - 0.4%
Minnesota Mining & Manufacturing............................ 6.45 11/14/00 4,700,000 4,689,053
--------------
CONSUMER PRODUCTS - 2.8%
Nike, Inc. ................................................. 6.50 11/20/00 10,000,000 9,965,694
Nike, Inc. ................................................. 6.50 12/15/00 20,490,000 20,327,970
--------------
30,293,664
--------------
EDUCATION - 7.6%
Harvard University.......................................... 6.53 11/7/00 10,000,000 9,989,267
Harvard University.......................................... 6.52 11/10/00 10,000,000 9,983,925
Harvard University.......................................... 6.53 12/15/00 8,000,000 7,937,031
Tennessee State School Board................................ 6.50 11/13/00 10,000,000 10,000,000
Tennessee State School Board................................ 6.58 12/6/00 6,150,000 6,150,000
Tennessee State School Board................................ 6.62 12/21/00 4,400,000 4,400,000
Yale University............................................. 6.61 1/3/01 15,000,000 14,828,849
Yale University............................................. 6.56 11/3/00 10,000,000 9,996,406
Yale University............................................. 6.47 12/12/00 10,000,000 9,926,314
--------------
83,211,792
--------------
FINANCE - 16.6%
American Express Credit Corp. .............................. 6.47 11/2/00 10,000,000 9,998,203
American Express Credit Corp. .............................. 6.48 11/9/00 10,000,000 9,985,600
American Express Credit Corp. .............................. 6.46 12/5/00 10,000,000 9,938,989
Associates Corp. ........................................... 6.52 1/8/01 15,000,000 14,815,267
Associates Corp. ........................................... 6.53 1/17/01 20,000,000 19,720,662
Ford Motor Credit Corp. .................................... 6.47 11/2/00 5,000,000 4,999,101
Ford Motor Credit Corp. .................................... 6.46 11/22/00 15,000,000 14,943,475
General Electric Capital Corp. ............................. 6.45 11/17/00 10,000,000 9,971,333
General Electric Capital Corp. ............................. 6.44 2/20/01 13,000,000 12,741,863
General Electric Credit Corp. .............................. 6.46 12/1/00 10,000,000 9,946,167
General Motors Acceptance Corp. ............................ 6.45 11/20/00 15,000,000 14,948,938
General Motors Acceptance Corp. ............................ 6.46 11/27/00 10,000,000 9,953,344
General Motors Acceptance Corp. ............................ 6.51 1/9/01 10,000,000 9,875,225
IBM Credit Corp. ........................................... 6.47 11/1/00 10,000,000 10,000,000
International Lease Finance Co. ............................ 6.47 11/7/00 18,000,000 17,980,590
--------------
179,818,757
--------------
FOOD & BEVERAGE PRODUCTS - 3.8%
Anheuser Busch.............................................. 6.46 11/13/00 21,500,000 21,453,703
Hershey Foods............................................... 6.46 11/17/00 10,000,000 9,971,289
Kellogg Co. ................................................ 6.45 11/28/00 9,820,000 9,772,496
--------------
41,197,488
--------------
FOREIGN GOVERNMENT AGENCY - 1.1%
Province of Quebec.......................................... 6.73 11/20/00 11,646,000 11,604,634
--------------
</TABLE>
Continued
6
<PAGE>
HSBC INVESTOR FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR MONEY MARKET FUND OCTOBER 31, 2000
--------------------------------------------------------------------------------
COMMERCIAL PAPER, CONTINUED
<TABLE>
<CAPTION>
SECURITY MATURITY PRINCIPAL
DESCRIPTION RATE DATE AMOUNT VALUE
------------------------------------------------------------ ---- -------- ----------- --------------
HEALTH CARE - 7.7%
<S> <C> <C> <C> <C>
Baptist Hospital............................................ 6.50% 12/13/00 $20,000,000 $ 19,848,334
Becton Dickinson............................................ 6.48 11/28/00 11,000,000 10,946,540
Becton Dickinson............................................ 6.47 12/8/00 14,000,000 13,906,904
Mt. Sinai Medical Center.................................... 6.50 12/5/00 6,237,000 6,198,712
Mt. Sinai Medical Center.................................... 6.55 1/4/01 6,000,000 5,930,133
Mt. Sinai Medical Center.................................... 6.53 1/11/01 5,000,000 4,935,607
Mt. Sinai Medical Center.................................... 6.54 1/12/01 6,258,000 6,176,145
New York Hospital........................................... 6.64 1/5/01 15,869,000 15,681,327
--------------
83,623,702
--------------
OIL & GAS TRANSMISSION - 1.4%
Chevron Corp. .............................................. 6.47 12/14/00 10,000,000 9,922,719
Whiting, Indiana Pollution Control.......................... 6.56 11/6/00 5,000,000 5,000,000
--------------
14,922,719
--------------
PHARMACEUTICALS - 1.7%
Merck Co. .................................................. 6.46 11/29/00 10,000,000 9,949,755
Walgreen.................................................... 6.50 11/29/00 8,664,000 8,620,199
--------------
18,569,954
--------------
UTILITIES - 4.5%
City of Austin, Texas....................................... 6.64 1/24/01 12,000,000 11,816,600
Jacksonville Electric Authority............................. 6.52 12/6/00 15,000,000 14,999,999
Nebraska Public Power Authority............................. 6.66 12/7/00 9,086,000 9,086,000
Nebraska Public Power Authority............................. 6.70 1/29/01 3,000,000 3,000,000
New York State Power Authority.............................. 6.49 12/11/00 3,800,000 3,772,598
South Carolina Public Service Authority..................... 6.51 11/8/00 5,930,000 5,922,494
--------------
48,597,691
--------------
WASTE DISPOSAL - 2.3%
Gulf Coast Waste Disposal of Texas, Amoco Oil Project,
Guaranteed by Amoco Oil.................................... 6.59 11/6/00 10,000,000 10,000,000
Gulf Coast Waste Disposal of Texas, Amoco Oil Project,
Guaranteed by Amoco Oil.................................... 6.58 11/1/00 5,480,000 5,480,000
Gulf Coast Waste Disposal of Texas, Amoco Oil Project,
Guaranteed by Amoco Oil.................................... 6.51 11/9/00 10,000,000 10,000,000
--------------
25,480,000
--------------
TOTAL COMMERCIAL PAPER (Amortized Cost $621,789,671)....................................... 621,789,671
--------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------
MUNICIPAL VARIABLE RATE DEMAND NOTES* - 10.9%
FINANCE - 6.6%
Bell County Texas Health Facilities Revenue (MBIA
Insured)................................................... 6.73 11/1/00 9,500,000 9,500,000
California Housing Authority Series 2000 (LOC Commerzbank
A.G.)...................................................... 6.60 11/1/00 15,000,000 15,000,000
California Housing Financial Agency (LOC Westdeuche
Landesbank)................................................ 6.63 11/1/00 12,000,000 12,000,000
California Housing Financial Agency Revenue (AMBAC
Insured)................................................... 6.71 11/1/00 5,000,000 5,000,000
California Housing Financial Agency Revenue (FSA Insured)... 6.60 11/1/00 10,000,000 10,000,000
Illinois Health Facilities Revenue for Loyola University
Health System (MBIA Insured)............................... 6.60 11/1/00 5,685,000 5,685,000
New York State Housing Financial Authority (LOC Bayerische
Hypotheken)................................................ 6.62 11/1/00 6,000,000 6,000,000
New York State Housing Financial Authority (LOC Commerzbank
A.G.)...................................................... 6.62 11/1/00 4,210,000 4,210,000
Rhode Island Student Loan Authority (AMBAC Insured)......... 6.60 11/2/00 5,000,000 5,000,000
--------------
72,395,000
--------------
GENERAL OBLIGATIONS - 2.1%
Greensboro, North Carolina.................................. 6.60 11/1/00 1,100,000 1,100,000
Greensboro, North Carolina.................................. 6.60 11/1/00 2,650,000 2,650,000
Texas State, Taxable Series B............................... 6.71 11/1/00 19,100,000 19,100,000
--------------
22,850,000
--------------
</TABLE>
Continued
7
<PAGE>
HSBC INVESTOR FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR MONEY MARKET FUND OCTOBER 31, 2000
--------------------------------------------------------------------------------
MUNICIPAL VARIABLE RATE DEMAND NOTES, CONTINUED
<TABLE>
<CAPTION>
SECURITY MATURITY PRINCIPAL
DESCRIPTION RATE DATE AMOUNT VALUE
------------------------------------------------------------ ---- -------- ----------- --------------
<S> <C> <C> <C> <C>
HOUSING - 1.6%
New York City Housing Development........................... 6.60% 11/1/00 $ 3,420,000 $ 3,420,000
New York City Housing Development........................... 6.60 11/1/00 1,125,000 1,125,000
New York City Housing Development........................... 6.60 11/1/00 315,000 315,000
New York City Housing Development........................... 6.60 11/1/00 5,800,000 5,800,000
New York City Housing Development, (LOC Bayerische Hypo-Und
Verein).................................................... 6.60 11/1/00 4,000,000 4,000,000
Texas State Taxable Veterans Housing Assistance Series A2... 6.71 11/1/00 2,500,000 2,500,000
--------------
17,160,000
--------------
SPECIAL PURPOSE - 0.6%
Cleveland, Ohio Airport Systems, Series E (LOC Toronto
Dominion Bank)............................................. 6.60 11/1/00 6,745,000 6,745,000
--------------
TOTAL MUNICIPAL VARIABLE RATE DEMAND NOTES (Amortized Cost $119,150,000)................... 119,150,000
--------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 8.8%
BANKING - 4.3%
American Express Centurian Bank*............................ 6.59 11/17/00 11,400,000 11,400,000
Bank of America Corp.*...................................... 6.65 12/6/00 11,700,000 11,699,329
Bank One Corp.*............................................. 6.78 12/27/00 13,800,000 13,805,317
Fleet National Bank*........................................ 6.76 1/20/01 9,600,000 9,603,062
--------------
46,507,708
--------------
FINANCE - 1.4%
Ford Motor Credit Co.*...................................... 6.90 1/16/01 14,700,000 14,720,772
--------------
FINANCIAL - INVESTMENT BANKER/BROKER - 3.1%
Bear Stearns Co.*........................................... 6.76 12/15/00 6,600,000 6,600,000
Bear Stearns Co.*........................................... 6.73 1/26/01 6,600,000 6,600,000
Goldman Sachs Group, Inc.*.................................. 6.89 1/19/01 9,000,000 9,006,358
Merrill Lynch & Co.*........................................ 6.69 1/18/01 12,000,000 11,998,701
--------------
34,205,059
--------------
TOTAL CORPORATE OBLIGATIONS (Amortized Cost $95,433,539)................................... 95,433,539
--------------
------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 5.6%
FEDERAL HOME LOAN BANK - 1.7%
Federal Home Loan Bank...................................... 6.75 3/1/01 3,000,000 3,000,000
Federal Home Loan Bank*..................................... 6.84 11/1/00 10,000,000 10,000,000
Federal Home Loan Bank...................................... 7.00 5/18/01 5,000,000 5,000,000
--------------
18,000,000
--------------
STUDENT LOAN MARKETING ASSOCIATION - 3.9%
Student Loan Marketing Association*......................... 6.62 11/7/00 20,000,000 20,000,000
Student Loan Marketing Association*......................... 6.77 11/7/00 22,500,000 22,500,000
--------------
42,500,000
--------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Amortized Cost $60,500,000)...................... 60,500,000
--------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - 5.2%
BANKING - 5.2%
<S> <C> <C> <C> <C>
Bank of Nova Scotia......................................... 6.71 2/12/01 12,000,000 11,998,555
Deutsche Bank............................................... 7.05 5/2/01 11,400,000 11,398,387
National Bank of Canada..................................... 7.09 7/20/01 12,720,000 12,718,280
Svenska Handelsbank......................................... 6.72 2/12/01 8,580,000 8,579,081
Toronto Dominion............................................ 6.68 2/8/01 12,000,000 11,998,764
--------------
TOTAL CERTIFICATES OF DEPOSIT (Amortized Cost $56,693,067)................................. 56,693,067
--------------
</TABLE>
Continued
8
<PAGE>
HSBC INVESTOR FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR MONEY MARKET FUND OCTOBER 31, 2000
--------------------------------------------------------------------------------
MUNICIPAL BONDS - 0.6%
<TABLE>
<CAPTION>
SECURITY MATURITY PRINCIPAL
DESCRIPTION RATE DATE AMOUNT VALUE
------------------------------------------------------------ ---- -------- ----------- --------------
<S> <C> <C> <C> <C>
GENERAL OBLIGATIONS - 0.6%
New York City............................................... 7.00% 8/1/01 $ 7,045,000 $ 7,054,153
--------------
TOTAL MUNICIPAL BONDS (Amortized Cost $7,054,153).......................................... 7,054,153
--------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 11.8%
<S> <C> <C>
Goldman, Sachs & Co., 6.60%, purchased on 10/31/00, due
11/1/00, with a maturity value of $45,008,250
(collateralized by $46,251,000, various U.S. Government
Agency Obligations, 4.63% - 7.54%, 10/15/01 - 10/19/09
with a total market value of $45,480,385)
Lehman Brothers, 6.54%, purchased on 10/31/00, due 11/1/00,
with maturity value of $40,231,307 (collateralized by
$32,980,000 various FNMA, 0.00% - 6.63%,
6/9/04 - 1/26/18, and $46,545,000 various FHLB,
0.00% - 6.70%, 3/10/14 - 8/10/18, with a total market
value of $41,030,363)...................................... 40,224,000 40,224,000
Morgan Stanley Dean Witter, 6.58%, purchased on 10/31/00,
due 11/1/00, with a maturity value of $43,007,859
(collateralized by $3,400,000 FNMA, 5.63%, 5/14/04, and
$42,814,000 various TVA, 5.38% - 7.14%,
11/13/08 - 11/1/25, with a total market value of
$44,781,365)............................................... 43,000,000 43,000,000
--------------
TOTAL REPURCHASE AGREEMENTS (Cost $128,224,000)............. 128,224,000
--------------
TOTAL INVESTMENTS (Amortized Cost $1,088,844,430)
(a) - 100.1%............................................. 1,088,844,430
LIABILITIES IN EXCESS OF OTHER ASSETS - (0.1)%............ (619,012)
--------------
NET ASSETS - 100.0%....................................... $1,088,225,418
--------------
--------------
</TABLE>
---------
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
<TABLE>
<S> <C>
A.G. -- Aktiengesellschaft (West German Stock Co.)
AMBAC -- American Municipal Bond Assurance Corporation
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
LOC -- Letter of Credit
MBIA -- Municipal Bond Insurance Association
TVA -- Tennessee Valley Authority
</TABLE>
* Variable rate investments. The rate presented represents the rate in effect at
October 31, 2000. The date presented reflects the next rate change date.
See notes to financial statements.
9
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR MONEY MARKET FUND
---------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (amortized
cost $960,620,430)............... $ 960,620,430
Repurchase agreements............. 128,224,000
--------------
TOTAL INVESTMENTS.............. 1,088,844,430
Cash.............................. 231
Interest receivable............... 5,773,928
Prepaid expenses.................. 161
--------------
TOTAL ASSETS................... 1,094,618,750
LIABILITIES:
Dividends payable................. $5,713,321
Accrued expenses and other
liabilities:
Investment management............ 190,259
Administration................... 77,713
Shareholder servicing............ 245,507
Other............................ 166,532
----------
TOTAL LIABILITIES.............. 6,393,332
--------------
NET ASSETS........................ $1,088,225,418
--------------
--------------
COMPOSITION OF NET ASSETS:
Capital........................... $1,088,225,265
Accumulated net investment
income........................... 153
--------------
NET ASSETS........................ $1,088,225,418
--------------
--------------
CLASS A (INVESTOR) SHARES
Net Assets....................... $ 462,411,981
Shares Outstanding............... 462,411,868
Net Asset Value, Offering Price
and Redemption Price per
share.......................... $1.00
-----
-----
CLASS D (PRIVATE INVESTOR) SHARES
Net Assets....................... $ 398,720,306
Shares Outstanding............... 398,720,305
Net Asset Value, Offering Price
and Redemption Price per
share.......................... $1.00
-----
-----
CLASS Y (ADVISER) SHARES
Net Assets....................... $ 227,093,131
Shares Outstanding............... 227,093,092
Net Asset Value, Offering Price
and Redemption Price per
share.......................... $1.00
-----
-----
</TABLE>
---------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest............................ $42,846,541
EXPENSES:
Investment management............... $1,354,207
Administration...................... 548,241
Shareholder servicing:
Class A (Investor) Shares.......... 1,685,743
Class D (Private Investor)
Shares........................... 355,944
Accounting.......................... 43,141
Custodian........................... 199,785
Transfer agent...................... 43,358
Other............................... 321,159
----------
Total expenses before voluntary
fee reductions.................. 4,551,578
Voluntary fee reductions......... (434)
-----------
NET EXPENSES..................... 4,551,144
-----------
NET INVESTMENT INCOME............... 38,295,397
-----------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS......................... $38,295,397
-----------
-----------
</TABLE>
See notes to financial statements.
10
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR MONEY MARKET FUND
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED ENDED
OCTOBER 31, OCTOBER 31,
2000 1999
-------------- --------------
<S> <C> <C>
INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income...................................... $ 38,295,397 $ 12,231,036
Net realized gains from investment transactions............ -- 153
-------------- ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS.............. 38,295,397 12,231,189
-------------- ------------
DIVIDENDS:
Net investment income:
Class A (Investor) Shares (a)............................ (23,309,809) (6,090,783)
Class D (Private Investor) Shares (b).................... (8,234,174) (1,308,867)
Class Y (Adviser) Shares (c)............................. (6,751,414) (4,831,386)
-------------- ------------
CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS............. (38,295,397) (12,231,036)
-------------- ------------
CHANGE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS........ 740,907,333 347,317,932
-------------- ------------
CHANGE IN NET ASSETS........................................ 740,907,333 347,318,085
NET ASSETS:
Beginning of period........................................ 347,318,085 --
-------------- ------------
End of period.............................................. $1,088,225,418 $347,318,085
-------------- ------------
-------------- ------------
</TABLE>
---------
(a) The Fund commenced offering Class A (Investor) Shares on November 13, 1998.
(b) The Fund commenced offering Class D (Private Investor) Shares on April 1,
1999.
(c) The Fund commenced offering Class Y (Adviser) Shares on November 12, 1998.
See notes to financial statements.
11
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR MONEY MARKET FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS - CLASS A (INVESTOR) SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED NOVEMBER 13, 1998
OCTOBER 31, TO OCTOBER 31,
2000 1999(a)
------------ -----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 1.00 $ 1.00
-------- --------
INVESTMENT ACTIVITIES:
Net investment income...................................... 0.05 0.04
Net realized gains from investment transactions............ -- 0.00*
-------- --------
Total from investment activities........................... 0.05 0.04
-------- --------
DIVIDENDS:
Net investment income...................................... (0.05) (0.04)
-------- --------
Total dividends............................................ (0.05) (0.04)
-------- --------
NET ASSET VALUE, END OF PERIOD.............................. $ 1.00 $ 1.00
-------- --------
-------- --------
TOTAL RETURN................................................ 5.60% 4.42%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000's)......................... $462,412 $226,783
Ratio of expenses to average net assets..................... 0.77% 0.67%(c)
Ratio of net investment income to average net assets........ 5.53% 4.44%(c)
Ratio of expenses to average net assets (d)................. 0.77% 0.75%(c)
</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 voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratio would have been as indicated.
See notes to financial statements.
12
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR MONEY MARKET FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS - CLASS D (PRIVATE INVESTOR) SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED APRIL 1, 1999
OCTOBER 31, TO OCTOBER 31,
2000 1999(a)
------------ ---------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 1.00 $ 1.00
-------- --------
INVESTMENT ACTIVITIES:
Net investment income...................................... 0.06 0.03
Net realized gains from investment transactions............ -- 0.00*
-------- --------
Total from investment activities........................... 0.06 0.03
-------- --------
DIVIDENDS:
Net investment income...................................... (0.06) (0.03)
-------- --------
Total dividends............................................ (0.06) (0.03)
-------- --------
NET ASSET VALUE, END OF PERIOD.............................. $ 1.00 $ 1.00
-------- --------
-------- --------
TOTAL RETURN................................................ 5.75% 2.69%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000's)......................... $398,720 $ 46,863
Ratio of expenses to average net assets..................... 0.62% 0.59%(c)
Ratio of net investment income to average net assets........ 5.78% 4.56%(c)
Ratio of expenses to average net assets (d)................. 0.62% 0.62%(c)
</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 voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratio would have been as indicated.
See notes to financial statements.
13
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR MONEY MARKET FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS - CLASS Y (ADVISER) SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED NOVEMBER 12, 1998
OCTOBER 31, TO OCTOBER 31,
2000 1999(a)
------------ -----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 1.00 $ 1.00
-------- -------
INVESTMENT ACTIVITIES:
Net investment income...................................... 0.06 0.05
Net realized gains from investment transactions............ -- 0.00*
-------- -------
Total from investment activities........................... 0.06 0.05
-------- -------
DIVIDENDS:
Net investment income...................................... (0.06) (0.05)
-------- -------
Total dividends............................................ (0.06) (0.05)
-------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 1.00 $ 1.00
-------- -------
-------- -------
TOTAL RETURN................................................ 6.02% 4.76%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000's)......................... $227,093 $73,672
Ratio of expenses to average net assets..................... 0.37% 0.31%(c)
Ratio of net investment income to average net assets........ 5.96% 4.77%(c)
Ratio of expenses to average net assets (d)................. 0.37% 0.40%(c)
</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 voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratio would have been as indicated.
See notes to financial statements.
14
<PAGE>
HSBC INVESTOR FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR U.S. GOVERNMENT MONEY MARKET FUND OCTOBER 31, 2000
<TABLE>
<CAPTION>
--------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 63.9%
SECURITY PRINCIPAL
DESCRIPTION AMOUNT VALUE
-------------------------------- ----------- --------------
<S> <C> <C>
FEDERAL FARM CREDIT BANK - 1.8%
6.39%, 2/13/01.................. $17,500,000 $ 17,180,056
6.57%, 12/14/00*................ 13,750,000 13,750,000
--------------
30,930,056
--------------
FEDERAL HOME LOAN BANK - 22.6%
6.37%, 12/13/00................. 50,000,000 49,628,417
6.38%, 12/15/00................. 45,000,000 44,649,375
6.38%, 12/20/00................. 30,000,000 29,739,483
6.40%, 11/22/00................. 15,000,000 14,944,000
6.41%, 1/10/01.................. 45,000,000 44,438,688
6.41%, 1/3/01................... 30,000,000 29,663,475
6.41%. 12/22/00................. 7,000,000 6,936,434
6.42%, 1/24/01.................. 33,310,000 32,811,016
6.60%, 1/26/01.................. 2,750,000 2,750,000
6.66%, 4/6/01................... 2,750,000 2,750,645
6.69%, 11/1/00*................. 20,000,000 19,999,981
6.75%, 11/17/00................. 40,000,000 39,886,400
6.84%, 11/1/00*................. 25,000,000 25,000,000
6.86%, 11/1/00*................. 50,000,000 50,032,935
--------------
393,230,849
--------------
FEDERAL HOME LOAN MORTGAGE CORP. - 15.4%
6.39%, 12/19/00................. 16,968,000 16,823,433
6.39%, 12/7/00.................. 16,629,000 16,522,741
6.40%, 11/28/00................. 25,000,000 24,880,000
6.40%, 11/7/00.................. 51,000,000 50,945,599
6.41%, 11/10/00................. 50,000,000 49,919,875
6.42%, 1/4/01................... 30,000,000 29,657,600
6.43%, 1/25/01.................. 15,532,000 15,296,194
6.43%, 12/26/00................. 45,000,000 44,558,281
6.46%, 6/21/01.................. 1,925,000 1,844,922
6.49%, 2/1/01................... 17,500,000 17,212,908
--------------
267,661,553
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 7.8%
6.37%, 12/21/00................. 40,000,000 39,646,389
6.40%, 11/22/00................. 2,750,000 2,739,733
6.51%, 1/18/01.................. 75,000,000 73,956,534
6.71%, 11/7/00*................. 20,000,000 19,998,395
--------------
136,341,051
--------------
STUDENT LOAN MARKETING ASSOCIATION - 16.0%
6.63%, 11/7/00*................. 2,500,000 2,498,051
6.80%, 11/7/00*................. 10,000,000 9,994,459
6.81%, 11/7/00*................. 25,000,000 24,986,127
6.82%, 11/7/00*................. 5,000,000 5,000,000
6.82%, 11/7/00*................. 15,000,000 15,002,223
6.82%, 11/7/00*................. 15,000,000 14,996,663
6.82%, 11/7/00*................. 31,500,000 31,486,339
6.85%, 11/7/00*................. 25,000,000 24,996,040
6.87%, 11/7/00*................. 29,050,000 29,041,780
6.87%, 11/7/00*................. 15,650,000 15,651,302
6.87%, 11/7/00*................. 10,000,000 10,000,000
6.87%, 11/7/00*................. 5,000,000 4,999,270
6.87%, 11/7/00*................. 15,000,000 14,996,735
6.87%, 11/7/00*................. 25,000,000 24,994,747
<CAPTION>
--------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS, CONTINUED
SECURITY PRINCIPAL
DESCRIPTION AMOUNT VALUE
-------------------------------- ----------- --------------
<S> <C> <C>
6.90%, 11/7/00*................. $15,000,000 $ 15,000,000
6.90%, 11/7/00*................. 25,000,000 25,009,192
7.07%, 11/7/00*................. 10,000,000 9,999,903
--------------
278,652,831
--------------
UTILITIES - 0.3%
Tennessee Valley Authority,
6.00% 11/1/00.................. 5,000,000 5,000,000
--------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS (Amortized Cost
$1,111,816,340)................ 1,111,816,340
--------------
--------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 29.6%
U.S. TREASURY BILLS - 24.4%
5.95%, 12/28/00**............... 15,000,000 14,858,806
6.03%, 12/14/00**............... 55,000,000 54,608,999
6.03%, 2/8/01**................. 8,000,000 7,867,450
6.04%, 11/2/00**................ 35,000,000 34,994,128
6.06%, 11/30/00**............... 25,000,000 24,877,958
6.07%, 1/11/01**................ 45,000,000 44,469,078
6.07%, 2/1/01**................. 15,000,000 14,767,317
6.14%, 1/25/01**................ 40,000,000 39,428,139
6.15%, 2/15/01**................ 35,000,000 34,374,894
6.18%, 11/24/00**............... 40,000,000 39,844,127
6.23%, 11/16/00**............... 70,000,000 69,820,917
6.26%, 11/9/00**................ 45,000,000 44,938,300
--------------
424,850,113
--------------
U.S. TREASURY NOTES - 5.2%
4.63%, 11/30/00................. 45,000,000 44,939,118
5.00%, 2/28/01.................. 20,000,000 19,912,997
5.25%, 1/31/01.................. 25,000,000 24,931,886
--------------
89,784,001
--------------
TOTAL U.S. TREASURY OBLIGATIONS
(Amortized Cost
$514,634,114).................. 514,634,114
--------------
</TABLE>
<TABLE>
<S> <C> <C>
--------------------------------------------------------------
REPURCHASE AGREEMENTS - 8.6%
Goldman, Sachs & Co., 6.60%,
purchased on 10/31/00, due
11/1/00, with a maturity value
of $40,007,333 (collateralized
by $46,661,000, various U.S.
Government Agency Obligations,
0% - 6.25%, 3/19/01 -
8/25/09, with a total market
value $40,385,172)............. 40,000,000 40,000,000
Lehman Brothers, 6.54%,
purchased on 10/31/00, due
11/1/00, with maturity value of
$49,836,052 (collateralized by
$170,700,047, various U.S.
Government Agency Obligations,
0.00% - 85.96%, 12/25/21 -
4/25/24, with a total market
value of 50,931,741)........... 49,827,000 49,827,000
</TABLE>
Continued
15
<PAGE>
HSBC INVESTOR FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR U.S. GOVERNMENT MONEY MARKET FUND OCTOBER 31, 2000
<TABLE>
<CAPTION>
--------------------------------------------------------------
REPURCHASE AGREEMENTS, CONTINUED
SECURITY PRINCIPAL
DESCRIPTION AMOUNT VALUE
-------------------------------- ----------- --------------
<S> <C> <C>
Morgan Stanley Dean Witter,
6.58%, purchased on 10/31/00,
due 11/1/00, with a maturity
value of $60,010,967
(collateralized by $63,775,000,
various U.S. Government Agency
Obligations, 0.00% - 6.56%,
2/15/01 - 4/29/09, with a
total market value of
$61,506,984)................... $60,000,000 $ 60,000,000
--------------
TOTAL REPURCHASE AGREEMENTS
(Cost $149,827,000)............ 149,827,000
--------------
--------------------------------------------------------------
CONTINUED
VALUE
--------------
TOTAL INVESTMENTS (Amortized
Cost $1,776,277,454)(a) - 102.1% $1,776,277,454
--------------
LIABILITIES IN EXCESS OF OTHER
ASSETS - (2.1)%.............. (35,719,394)
--------------
NET ASSETS - 100.0%........... $1,740,558,060
--------------
--------------
</TABLE>
---------
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate investment. 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 disclosed represents effective yield at October 31, 2000.
See notes to financial statements.
16
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR U.S. GOVERNMENT MONEY MARKET FUND
-------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value
(amortized cost
$1,776,277,454)................ $1,776,277,454
Cash............................ 230
Interest receivable............. 7,900,551
Receivable for capital shares
issued......................... 24,913
Prepaid expenses................ 797
--------------
TOTAL ASSETS................. 1,784,203,945
LIABILITIES:
Dividends payable............... $ 8,196,751
Payable for capital shares
redeemed....................... 4,793
Securities purchased payable.... 34,392,964
Accrued expenses and other
liabilities:
Investment management.......... 285,348
Administration................. 117,544
Distribution................... 123
Shareholder servicing.......... 459,877
Other.......................... 188,485
-----------
TOTAL LIABILITIES............ 43,645,885
--------------
NET ASSETS...................... $1,740,558,060
--------------
--------------
COMPOSITION OF NET ASSETS:
Capital......................... $1,740,414,659
Accumulated net realized gains
from investment transactions... 143,401
--------------
NET ASSETS...................... $1,740,558,060
--------------
--------------
CLASS A (INVESTOR) SHARES
Net Assets..................... $1,024,292,490
Shares Outstanding............. 1,024,167,312
Net Asset Value, Offering Price
and Redemption Price per
share........................ $1.00
-----
-----
CLASS B SHARES
Net Assets..................... $ 119,487
Shares Outstanding............. 119,477
Net Asset Value, Offering Price
and Redemption Price per
share*....................... $1.00
-----
-----
CLASS D (PRIVATE INVESTOR) SHARES
Net Assets..................... $ 566,879,105
Shares Outstanding............. 566,867,077
Net Asset Value, Offering Price
and Redemption Price per
share........................ $1.00
-----
-----
CLASS Y (ADVISER) SHARES
Net Assets..................... $ 149,266,978
Shares Outstanding............. 149,260,793
Net Asset Value, Offering Price
and Redemption Price per
share........................ $1.00
-----
-----
</TABLE>
---------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest.......................... $ 92,337,573
EXPENSES:
Investment management............. $3,101,264
Administration.................... 1,258,857
Distribution:
Class B Shares................... 894
Shareholder servicing:
Class A (Investor) Shares........ 4,029,429
Class B Shares................... 297
Class D (Private Investor)
Shares......................... 1,120,896
Accounting........................ 49,279
Custodian......................... 180,242
Transfer agent.................... 65,843
Other............................. 774,966
----------
TOTAL EXPENSES................. 10,581,967
--------------
NET INVESTMENT INCOME............. 81,755,606
--------------
Net realized gains from investment
transactions..................... 143,400
--------------
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS.................. $ 81,899,006
--------------
--------------
</TABLE>
---------
* Redemption price per share varies by length of time shares are held.
See notes to financial statements.
17
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR U.S. GOVERNMENT MONEY MARKET 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...................................... $ 81,755,606 $ 55,523,103
Net realized gains from investment transactions............ 143,400 132,150
-------------- --------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS............. 81,899,006 55,655,253
-------------- --------------
DIVIDENDS:
Net investment income:
Class A (Investor) Shares................................ (52,324,115) (43,105,464)
Class B Shares........................................... (5,497) (4,070)
Class D (Private Investor) Shares (a).................... (24,016,629) (10,132,348)
Class Y (Adviser) Shares................................. (5,409,365) (2,281,221)
In excess of net investment income:
Class A (Investor) Shares................................ -- (1,373)
Class D (Private Investor) Shares (a).................... -- (24)
Class Y (Adviser) Shares................................. -- (59)
Net realized gains from investment transactions:
Class A (Investor) Shares................................ (85,766) (80,896)
Class B Shares........................................... (10) (7)
Class D (Private Investor) Shares (a).................... (39,757) --
Class Y (Adviser) Shares................................. (5,161) (2,248)
-------------- --------------
CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS............. (81,886,300) (55,607,710)
-------------- --------------
CHANGE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS........ 303,168,842 347,436,896
-------------- --------------
CHANGE IN NET ASSETS........................................ 303,181,548 347,484,439
NET ASSETS:
Beginning of period........................................ 1,437,376,512 1,089,892,073
-------------- --------------
End of period.............................................. $1,740,558,060 $1,437,376,512
-------------- --------------
-------------- --------------
</TABLE>
---------
(a) The Fund commenced offering Class D (Private Investor) Shares on April 1,
1999.
See notes to financial statements.
18
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR U.S. GOVERNMENT MONEY MARKET FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS A (INVESTOR) SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED ONE MONTH FOR THE YEARS ENDED
OCTOBER 31, PERIOD ENDED SEPTEMBER 30,
--------------------- OCTOBER 31, ----------------------------------
2000 1999 1998 1998 1997 1996
---------- -------- ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- -------- ---------- -------- -------- --------
INVESTMENT ACTIVITIES:
Net investment income...................... 0.05 0.04 0.00* 0.05 0.05 0.05
Net realized gains from investment
transactions............................. 0.00* 0.00* 0.00* 0.00* 0.00* --
---------- -------- ---------- -------- -------- --------
Total from investment activities........... 0.05 0.04 0.00* 0.05 0.05 0.05
---------- -------- ---------- -------- -------- --------
DIVIDENDS:
Net investment income...................... (0.05) (0.04) (0.00)* (0.05) (0.05) (0.05)
In excess of net investment income......... -- (0.00)* -- -- -- --
Net realized gains from investment
transactions............................. (0.00)* (0.00)* -- (0.00)* -- --
---------- -------- ---------- -------- -------- --------
Total dividends............................ (0.05) (0.04) (0.00)* (0.05) (0.05) (0.05)
---------- -------- ---------- -------- -------- --------
---------- -------- ---------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- -------- ---------- -------- -------- --------
---------- -------- ---------- -------- -------- --------
TOTAL RETURN................................ 5.32% 4.24% 0.39%(a) 5.00% 4.89% 4.98%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000's)......... $1,024,292 $932,874 $1,055,163 $988,236 $505,702 $246,368
Ratio of expenses to average net assets..... 0.75% 0.66% 0.50%(b) 0.52% 0.59% 0.57%
Ratio of net investment income to average
net assets................................. 5.20% 4.16% 4.40%(b) 4.89% 4.80% 4.80%
Ratio of expenses to average net assets..... 0.75% 0.66% 0.60%(b)(c) 0.62%(c) 0.71%(c) 0.75%(c)
</TABLE>
---------
* Less than $0.005 per share.
(a) Not annualized.
(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.
19
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR U.S. GOVERNMENT MONEY MARKET FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS B SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED ONE MONTH FOR THE PERIOD
OCTOBER 31, PERIOD ENDED FEBRUARY 2, 1998
-------------------------- OCTOBER 31, TO SEPTEMBER 30,
2000 1999 1998 1998(a)
------------ ----------- ------------ ----------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------
INVESTMENT ACTIVITIES:
Net investment income...................................... 0.05 0.04 0.00* 0.00*
Net realized gains from investment transactions............ 0.00* 0.00* 0.00* --
------ ------ ------ ------
Total from investment activities........................... 0.05 0.04 0.00* 0.00*
------ ------ ------ ------
DIVIDENDS:
Net investment income...................................... (0.05) (0.04) (0.00)* (0.00)*
Net realized gains from investment transactions............ (0.00)* (0.00)* -- --
------ ------ ------ ------
Total dividends............................................ (0.05) (0.04) (0.00)* (0.00)*
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD.............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------
------ ------ ------ ------
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE)................... 4.72% 3.54% 0.32%(b) 0.22%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000's)......................... $ 119 $ 119 $ 113 $ 113
Ratio of expenses to average net assets..................... 1.32% 1.34% 1.25%(c) 1.27%(c)
Ratio of net investment income to average net assets........ 4.61% 3.49% 3.65%(c) 4.14%(c)
Ratio of expenses to average net assets..................... 1.32% 1.34% 1.35%(c)(d) 1.37%(c)(d)
</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 voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratio would have been as indicated.
See notes to financial statements.
20
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR U.S. GOVERNMENT MONEY MARKET FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS D (PRIVATE INVESTOR) SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED APRIL 1, 1999 TO
OCTOBER 31, OCTOBER 31,
2000 1999 (a)
------------ ----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 1.00 $ 1.00
-------- --------
INVESTMENT ACTIVITIES:
Net investment income...................................... 0.05 0.03
Net realized gains from investment transactions............ 0.00* 0.00*
-------- --------
Total from investment activities........................... 0.05 0.03
-------- --------
DIVIDENDS:
Net investment income...................................... (0.05) (0.03)
Net realized gains from investment transactions............ (0.00)* (0.00)*
-------- --------
Total Dividends............................................ (0.05) (0.03)
-------- --------
NET ASSET VALUE, END OF PERIOD.............................. $ 1.00 $ 1.00
-------- --------
-------- --------
TOTAL RETURN................................................ 5.47% 2.53%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000's)......................... $566,879 $465,526
Ratio of expenses to average net assets..................... 0.60% 0.60%(c)
Ratio of net investment income to average net assets........ 5.36% 4.26%(c)
</TABLE>
---------
* Less than $0.005 per share.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
21
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR U.S. GOVERNMENT MONEY MARKET FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS Y (ADVISER) SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE FOR THE
YEARS ENDED ONE MONTH YEARS ENDED FOR THE PERIOD
OCTOBER 31, PERIOD ENDED SEPTEMBER 30, JULY 1, 1996 TO
------------------ OCTOBER 31, ----------------- SEPTEMBER 30,
2000 1999 1998 1998 1997 1996 (a)
-------- ------- ------------ ------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- ------- ------- ------- ------
INVESTMENT ACTIVITIES:
Net investment income............................... 0.06 0.05 0.00* 0.06 0.05 0.01
Net realized gains from investment transactions..... 0.00* 0.00* -- 0.00* 0.00* --
-------- ------- ------- ------- ------- ------
Total from investment activities.................... 0.06 0.05 0.00* 0.06 0.05 0.01
-------- ------- ------- ------- ------- ------
DIVIDENDS:
Net investment income............................... (0.06) (0.05) (0.00)* (0.06) (0.05) (0.01)
In excess of net investment income.................. -- (0.00)* -- -- -- --
Net realized gains from investment transactions..... (0.00)* (0.00)* -- (0.00)* -- --
-------- ------- ------- ------- ------- ------
Total dividends..................................... (0.06) (0.05) (0.00)* (0.06) (0.05) (0.01)
-------- ------- ------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- ------- ------- ------- ------
-------- ------- ------- ------- ------- ------
TOTAL RETURN......................................... 5.74% 4.57% 0.41%(b) 5.27% 5.15% 1.24%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000's)................. $149,267 $38,858 $34,617 $29,023 $16,180 $1,413
Ratio of expenses to average net assets............. 0.35% 0.34% 0.25%(c) 0.27% 0.33% 0.43%(c)
Ratio of net investment income to average net
assets............................................ 5.71% 4.47% 4.65%(c) 5.14% 5.06% 4.90%(c)
Ratio of expenses to average net assets............. 0.35% 0.34% 0.35%(c)(d) 0.37%(d) 0.45%(d) 0.61%(c)(d)
</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 voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratio would have been as indicated.
See notes to financial statements.
22
<PAGE>
HSBC INVESTOR FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR NEW YORK TAX-FREE MONEY MARKET FUND OCTOBER 31, 2000
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER AND NOTES - 100.8%
SHARES OR
SECURITY MOODY'S/S&P MATURITY PRINCIPAL
DESCRIPTION RATINGS(b) RATE DATE AMOUNT VALUE
------------------------------------------------------------ ----------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER -- 28.0%
Metropolitan Transit Authority.............................. P1/A1+ 4.15% 11/6/00 $5,000,000 $ 5,000,000
Metropolitan Transit Authority.............................. P1/A1+ 4.15 12/1/00 5,000,000 5,000,000
Metropolitan Transit Authority.............................. P1/A1+ 4.15 12/8/00 3,500,000 3,500,000
Metropolitan Transit Authority.............................. P1/A1+ 4.25 1/19/01 2,500,000 2,500,000
New York City Water Authority............................... P1/A1 4.30 11/6/00 5,000,000 5,000,000
New York City Water Authority............................... P1/A1 4.25 11/8/00 3,000,000 3,000,000
New York City, GO........................................... VMIG1/A1+ 4.25 11/8/00 4,000,000 4,000,000
New York State Dormitory Authority.......................... P1/A1+ 4.25 11/3/00 3,000,000 3,000,000
New York State Dormitory Authority, Columbia University..... P1/A1+ 3.95 11/1/00 2,000,000 2,000,000
New York State Dormitory Authority, Columbia University..... P1/A1+ 4.20 11/3/00 2,450,000 2,450,000
New York State Dormitory Authority, Columbia University..... P1/A1+ 3.95 11/9/00 3,055,000 3,055,000
New York State Dormitory, Mount Sinai School of Medicine.... P1/A1+ 4.00 12/8/00 3,600,000 3,600,000
New York State Environmental................................ VMIG1/A1+ 4.15 11/10/00 7,300,000 7,300,000
New York State Environmental................................ VMIG1/A1+ 4.10 12/12/00 2,500,000 2,500,000
New York State Power Authority.............................. P1/A1 4.00 11/8/00 7,000,000 7,000,000
New York State Power Authority.............................. NR/A-1 4.30 3/1/01 7,630,000 7,630,000
New York State Water Authority.............................. P1/A1 4.20 11/3/00 5,000,000 5,000,000
New York State, GO.......................................... VMIG1/A1+ 4.25 11/8/00 3,100,000 3,100,000
New York State, GO.......................................... VMIG1/A1+ 4.20 12/4/00 3,000,000 3,000,000
------------
77,635,000
------------
MUNICIPAL NOTES -- 5.5%
Buffalo, School District, GO, Series E (FSA Insured)........ Aaa/Aaa 5.00 12/1/00 270,000 270,210
Connetquot Central School District, Islip, New York......... MIG1/NR 5.00 6/29/01 1,100,000 1,104,294
Irvington Union Free School District........................ NR/NR 5.00 6/15/01 1,100,000 1,103,592
Liverpool Central School District........................... NR/NR 5.00 7/12/01 1,030,000 1,033,070
New York/New Jersey Port Authority.......................... A1/AA- 3.90 12/1/00 830,000 829,863
Oyster Bay, New York, GO.................................... NR/NR 4.50 11/30/00 2,000,000 2,000,838
Syracuse, New York.......................................... NR/NR 5.00 6/29/01 1,650,000 1,656,266
Triborough Bridge & Tunnel Authority New York............... MIG1/NR 4.35 1/1/01 7,100,000 7,099,999
Triborough Bridge & Tunnel Authority........................ AA3/A+ 5.00 1/1/01 280,000 280,383
------------
15,378,515
------------
VARIABLE RATE DEMAND NOTES* -- 67.3%
Albany, Institute of History, Civic Facility Revenue,(LOC
Keybank)................................................... VMIG1/NR 4.25 12/1/00 1,100,000 1,100,000
Babylon, New York IDA....................................... VMIG1/A-1+ 4.00 12/1/00 2,920,000 2,920,000
Babylon, New York IDA, AMT (LOC Union Bank of Switzerland
A.G.)...................................................... NR/A-1+ 4.70 12/1/00 2,500,000 2,500,000
Battery Park, New York, Housing Development................. VMIG1/NR 4.60 12/1/00 5,300,000 5,300,000
Chemung County, Industrial Development Agency, Series A (LOC
Chase Manhattan Bank)...................................... VMIG1/NR 4.25 12/1/00 1,500,000 1,500,000
Fulton County, Industrial Development Agency, Mills Inc.
Project, Series G (LOC FleetBoston Financial Corp.)........ NR/A-1 5.00 12/1/00 130,000 130,000
Great Neck North, New York, Water Authority, Water System... VMIG1/A1+ 4.20 12/1/00 500,000 500,000
Hempstead, New York IDA Nassau Energy (LOC Toronto Dominion
Bank)...................................................... NR/A-1+ 4.15 12/1/00 1,000,000 1,000,000
Long Island Power Authority (LOC ABN Amro Bank NV).......... VMIG1/A-1+ 4.55 12/1/00 1,570,000 1,570,000
Long Island Power Authority (LOC West Deutsche
Landesbank)................................................ VMIG1/A-1+ 4.20 12/1/00 7,300,000 7,300,000
Long Island Power Authority (MBIA Insured).................. VMIG1/A-1+ 4.25 12/1/00 4,000,000 4,000,000
Monroe County Industrial Development........................ NR/NR 4.88 12/1/00 1,700,000 1,700,000
Municipal Assistance Corp. New York......................... Aa1/AA+ 5.50 7/1/01 1,000,000 1,007,703
Nassau County, GO........................................... Aaa/Aaa 5.00 11/1/00 690,000 690,000
Nassau County, New York (LOC Bayerische Landsesbank)........ MIG1/SP1+ 6.00 3/20/01 1,650,000 1,659,270
</TABLE>
Continued
23
<PAGE>
HSBC INVESTOR FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR NEW YORK TAX-FREE MONEY MARKET FUND OCTOBER 31, 2000
--------------------------------------------------------------------------------
COMMERCIAL PAPER AND NOTES, CONTINUED
<TABLE>
<CAPTION>
SHARES OR
SECURITY MOODY'S/S&P MATURITY PRINCIPAL
DESCRIPTION RATINGS(b) RATE DATE AMOUNT VALUE
------------------------------------------------------------ ----------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
VARIABLE RATE DEMAND NOTES, CONTINUED
New York City Cultural Trust for the Museum of Natural
History.................................................... VMIG1/A-1+ 4.00% 4/4/01 $7,000,000 $ 7,000,000
New York City Health & Hospital (LOC Canadian Imperial
Bank)...................................................... VMIG1/A-1- 4.10 12/1/00 1,900,000 1,900,000
New York City Housing Development Corporation............... AA2/Aa 4.65 5/1/01 1,250,000 1,250,000
New York City Industrial Development Agency................. Vmig/A-1+ 4.75 1/1/01 900,000 900,000
New York City Transitional Finance Authority................ AA2/AA+ 4.00 11/15/00 550,000 549,988
New York City Transitional Finance Authority................ Vmig/A1+ 4.20 12/1/00 2,000,000 2,000,000
New York City Transitional Finance Authority................ Vmig/A1 4.25 12/1/00 6,000,000 6,000,000
New York City Water Financial Authority..................... Aaa/Aaa 6.25 12/15/00 4,000,000 4,048,110
New York City, Dormitory Authority.......................... VMIG1/A1+ 4.35 2/15/01 2,300,000 2,300,000
New York City, Multi-Family Rental.......................... NR/A1+ 4.15 11/15/00 1,100,000 1,100,000
New York City, GO........................................... Aaa/Aaa 3.00 11/15/00 550,000 549,743
New York City, GO........................................... A2/A 3.00 11/15/00 380,000 379,784
New York City, GO........................................... VMIG1/A1+ 4.20 12/1/00 4,500,000 4,500,000
New York City, GO........................................... Aaa/A 6.90 2/1/01 280,000 281,665
New York City, GO........................................... Vmig/A-1+ 4.40 6/8/01 2,400,000 2,400,000
New York City, GO (LOC Morgan Guaranty Trust)............... VMIG1/A1+ 4.75 12/1/00 2,800,000 2,800,000
New York City, GO (LOC Morgan Guaranty Trust)............... VMIG1/A-1+ 4.75 12/1/00 700,000 700,000
New York City, GO, Series F-4, (LOC Landesbank Hessen)...... VMIG1/A-1+ 4.15 12/1/00 700,000 700,000
New York City, GO, Sub-Series A-6 (LOC Landesbank Hessen)... VMIG1/A-1+ 4.15 12/1/00 500,000 500,000
New York City, GO, Sub-Series A-6 (LOC Landesbank Hessen)... VMG1/A-1+ 4.15 12/1/00 500,000 500,000
New York City, New York (LOC Societe Generale).............. VMIG1/A-1+ 4.15 12/1/00 6,700,000 6,700,000
New York City, New York, GO (FGIC Insured).................. VMIG1/A-1+ 4.75 1/1/01 800,000 800,000
New York City, New York, GO (LOC Commerzbank A.G.).......... VMIG1/A-1+ 4.20 12/1/00 6,700,000 6,700,000
New York City, New York, Health & Hospital Corp. (LOC Morgan
Guaranty Trust)............................................ VMIG1/A1+ 4.20 12/1/00 900,000 900,000
New York City, New York, Health & Hospital(LOC Commerzbank
A.G.)...................................................... VMIG1/A1+ 4.10 12/1/00 400,000 400,000
New York City Housing Development Corp...................... NR/A1+ 4.20 11/15/00 1,600,000 1,600,000
New York New York City Individual Development............... NR/A-1+ 4.20 12/1/00 400,000 400,000
New York State Dormitory Authority.......................... VMIG1/A1 4.20 12/1/00 1,160,000 1,160,000
New York State Dormitory Authority (LOC Chase Manhattan
Bank)...................................................... VMIG1/A-1+ 4.15 12/1/00 4,000,000 4,000,000
New York State Dormitory Authority, Cornell University...... Aa1/A-1+ 4.10 12/1/00 7,000,000 7,000,000
New York State Energy Research & Development Pollution
Control Revenue for Rochester Gas & Electric (MBIA
Insured)................................................... VMIG1/A-1+ 4.00 12/1/00 5,800,000 5,800,000
New York State Housing Authority, AMT (LOC Fleet Bank)...... VMIG1/NR 4.15 12/1/00 7,300,000 7,300,000
New York State Housing Authority, AMT (LOC Fleet Bank)...... VMIG1/NR 4.20 12/1/00 7,700,000 7,700,000
New York State Housing Finance Agency....................... VMIG1/NR 4.15 12/1/00 1,400,000 1,400,000
New York State Housing Finance Agency....................... VMIG1/NR 4.20 12/1/00 2,000,000 2,000,000
New York State Housing Finance Agency....................... VMIG1/NR 4.35 8/15/01 1,100,000 1,100,000
New York State Housing Financial Agency (LOC Commerzbank
A.G.)...................................................... VMIG1/A-1+ 4.00 11/15/00 1,500,000 1,500,000
New York State Housing Financial Agency, AMT (LOC Chase
Manhattan Bank)............................................ VMIG1/NR 4.20 12/1/00 5,500,000 5,500,000
New York State Local Government Assistance (LOC Bank of Nova
Scotia).................................................... VMIG1/A1+ 4.05 12/1/00 1,400,000 1,400,000
New York State Local Government Assistance (LOC Societe
Generale).................................................. VMIG1/A-1+ 4.15 12/1/00 3,600,000 3,600,000
New York State Mental Health Care........................... A3/A 5.00 2/15/01 990,000 990,960
New York State Power Authority.............................. VMIG1/A1 4.20 12/1/00 1,600,000 1,600,000
New York State Projects Finance Agency...................... Aaa/Aaa 4.30 11/1/00 830,000 830,000
New York State Transportation Authority..................... BAA1/Aaa 7.25 1/1/01 460,000 472,513
New York State Urban Development............................ Aaa/A 6.50 1/1/01 280,000 281,566
New York State, Energy Research & Development Authority..... VMIG1/A1+ 4.00 12/1/00 4,600,000 4,600,000
New York State, Energy, Research & Development.............. VMIG1/A1+ 4.00 12/1/00 5,600,000 5,600,000
</TABLE>
Continued
24
<PAGE>
HSBC INVESTOR FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
HSBC INVESTOR NEW YORK TAX-FREE MONEY MARKET FUND OCTOBER 31, 2000
--------------------------------------------------------------------------------
COMMERCIAL PAPER AND NOTES, CONTINUED
<TABLE>
<CAPTION>
SHARES OR
SECURITY MOODY'S/S&P MATURITY PRINCIPAL
DESCRIPTION RATINGS(b) RATE DATE AMOUNT VALUE
------------------------------------------------------------ ----------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
VARIABLE RATE DEMAND NOTES, CONTINUED
New York State, Environmental Quality....................... VMG1/AAA 4.30% 12/5/00 $4,000,000 $ 4,000,000
New York State, Housing Finance Agency...................... VMIG1/NR 4.25 11/15/00 4,000,000 4,000,000
New York State, Housing Finance Agency...................... VMIG1/NR 4.10 12/1/00 2,200,000 2,200,000
New York State, Housing Finance Agency...................... VMIG1/NR 4.15 12/1/00 1,900,000 1,900,000
New York State, Housing Finance Agency...................... A1/NR 4.15 12/1/00 1,100,000 1,100,000
New York State, Housing Finance Agency, Series A (LOC
Bayerische Hypo-Und Vereinsbank)........................... VMIG1/NR 4.20 12/1/00 500,000 500,000
New York State, Township Authority General Revenue (FGIC
Insured)................................................... VMIG1/A-1+ 4.60 12/1/00 1,100,000 1,100,000
New York State, Triborough Bridge and Tunnel Authority
Revenue, Series T, Prerefunded 1/1/01 @102................. AAA/A+ 7.00 1/1/01 420,000 431,422
New York, GO................................................ VMIG1/A1+ 4.75 12/1/00 300,000 300,000
New York, New York.......................................... VMIG1/A1+ 4.55 12/1/00 2,800,000 2,800,000
New York, New York.......................................... AAA/Aaa 8.25 2/1/01 1,000,000 1,043,158
New York/New Jersey Port Authority.......................... VMIG1/NR 4.40 2/1/01 1,100,000 1,100,000
Niagara County, New York, IDA, Solid Waste Disposal......... NR/A-1+ 4.25 12/1/00 300,000 300,000
Poughkeepsie Industrial Development Agency.................. NR/NR 4.45 12/1/00 1,000,000 1,000,000
Suffolk County, New York Water Authority.................... VMIG1/NR 4.10 12/1/00 3,000,000 3,000,000
Suffolk County, New York Water Authority.................... NR/A1c 4.10 12/1/00 7,000,000 7,000,000
Yonkers, New York, IDA, Civic Facility...................... VMIG1/NR 4.10 12/1/00 400,000 400,000
------------
186,745,882
------------
TOTAL COMMERCIAL PAPER AND NOTES (Amortized Cost $279,759,397).......................................... 279,759,397
------------
</TABLE>
<TABLE>
<S> <C> <C>
------------------------------------------------------------------------------------
INVESTMENT COMPANIES - 0.2%
Provident New York Tax-Free Money Market Fund............... 437,708 437,708
------------
TOTAL INVESTMENT COMPANIES (Cost $437,708).................. 437,708
------------
TOTAL INVESTMENTS (Amortized Cost $280,197,105)(a) -
101.0%..................................................... 280,197,105
LIABILITIES IN EXCESS OF OTHER ASSETS - (1.0)%............. (2,758,737)
------------
NET ASSETS - 100.0%........................................ $277,438,368
------------
------------
</TABLE>
---------
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
(b) The Moody's and Standard & Poor's ('S&P') rating indicated is 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>
A.G. -- Aktiengesellschaft (West German Stock Co.)
AMT -- Alternative Minimum Tax
FGIC -- Financial Guaranty Insurance Corp.
GO -- General Obligation
IDA -- Industrial Development Agency
LOC -- Letter of Credit
MBIA -- Municipal Bond Insurance Association
NV -- Naamloze Vennootschap (Dutch Corporation)
NR -- Not Rated
</TABLE>
* Variable rate investment. 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.
See notes to financial statements.
25
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR NEW YORK TAX-FREE MONEY MARKET FUND
---------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (amortized
cost $280,197,105)................ $280,197,105
Cash............................... 100,816
Interest and dividends
receivable........................ 1,670,681
Prepaid expenses................... 865
------------
TOTAL ASSETS.................... 281,969,467
LIABILITIES:
Dividends payable.................. $ 854,572
Securities purchased payable....... 3,500,000
Accrued expenses and other
liabilities:
Investment management............. 35,421
Administration.................... 19,364
Shareholder servicing............. 67,779
Other............................. 53,963
----------
TOTAL LIABILITIES............... 4,531,099
------------
NET ASSETS......................... $277,438,368
------------
------------
COMPOSITION OF NET ASSETS:
Capital............................ $277,449,904
Accumulated net investment income.. 19,095
Accumulated net realized losses
from investment transactions...... (30,631)
------------
NET ASSETS......................... $277,438,368
------------
------------
CLASS A (INVESTOR) SHARES
Net Assets........................ $134,841,320
Shares Outstanding................ 134,851,542
Net Asset Value, Offering Price
and Redemption Price per share.. $1.00
-----
-----
CLASS B SHARES
Net Assets........................ $ 10
Shares Outstanding................ 10
Net Asset Value, Offering Price
and Redemption Price per
share*.......................... $1.00
-----
-----
CLASS D (PRIVATE INVESTOR) SHARES
Net Assets........................ $100,291,405
Shares Outstanding................ 100,292,631
Net Asset Value, Offering Price
and Redemption Price per share.. $1.00
-----
-----
CLASS Y (ADVISER) SHARES
Net Assets........................ $ 42,305,633
Shares Outstanding................ 42,305,722
Net Asset Value, Offering Price
and Redemption Price per share.. $1.00
-----
-----
</TABLE>
--------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest............................... $8,570,741
Dividend............................... 25,408
----------
TOTAL INVESTMENT INCOME............. 8,596,149
EXPENSES:
Investment management.................. $329,359
Administration......................... 178,216
Shareholder servicing:
Class A (Investor) Shares............. 539,490
Class D (Private Investor) Shares..... 162,430
Accounting............................. 48,048
Custodian.............................. 57,393
Transfer agent......................... 42,236
Other.................................. 73,428
--------
TOTAL EXPENSES...................... 1,430,600
----------
NET INVESTMENT INCOME.................. 7,165,549
----------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS............................ $7,165,549
----------
----------
</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 NEW YORK TAX-FREE MONEY MARKET 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...................................... $ 7,165,549 $ 4,152,948
Net realized gains from investment transactions............ -- 28
------------ ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS............. 7,165,549 4,152,976
------------ ------------
DIVIDENDS:
Net investment income:
Class A (Investor) Shares................................ (4,269,368) (3,173,395)
Class D (Private Investor) Shares (a).................... (2,178,933) (538,125)
Class Y (Adviser) Shares................................. (717,206) (441,428)
------------ ------------
CHANGE IN NET ASSETS FROM SHAREHOLDER DIVIDENDS............. (7,165,507) (4,152,948)
------------ ------------
CHANGE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS........ 112,426,920 660,003
------------ ------------
CHANGE IN NET ASSETS........................................ 112,426,962 660,031
NET ASSETS:
Beginning of period...................................... 165,011,406 164,351,375
------------ ------------
End of period............................................ $277,438,368 $165,011,406
------------ ------------
------------ ------------
</TABLE>
---------
(a) The Fund commenced offering Class D (Private Investor) Shares on April 1,
1999.
See notes to financial statements.
27
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR NEW YORK TAX-FREE MONEY MARKET 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.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------
INVESTMENT ACTIVITIES:
Net investment income................................ 0.03 0.02 0.03 0.03 0.03
Net realized gains from investment transactions...... -- 0.00* 0.00* 0.00* --
-------- -------- -------- -------- -------
Total from investment activities..................... 0.03 0.02 0.03 0.03 0.03
-------- -------- -------- -------- -------
DIVIDENDS:
Net investment income................................ (0.03) (0.02) (0.03) (0.03) (0.03)
Net realized gains from investment transactions...... -- -- (0.00)* -- --
-------- -------- -------- -------- -------
Total dividends...................................... (0.03) (0.02) (0.03) (0.03) (0.03)
-------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------
-------- -------- -------- -------- -------
TOTAL RETURN.......................................... 3.24% 2.36% 2.95% 3.01% 3.04%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000's)................... $134,841 $113,583 $153,592 $123,324 $78,594
Ratio of expenses to average net assets............... 0.73% 0.70% 0.58% 0.60% 0.54%
Ratio of net investment income to average net assets.. 3.17% 2.39% 2.90% 2.98% 2.97%
Ratio of expenses to average net assets............... 0.73% 0.70% 0.66%(a) 0.72%(a) 0.63%(a)
</TABLE>
---------
* Less than $0.005 per share.
(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.
28
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR NEW YORK TAX-FREE MONEY MARKET FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS B SHARES (a)
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEARS ENDED OCTOBER 31, APRIL 29, 1998
---------------------------------- TO OCTOBER 31,
2000 1999 1998(b)
----------------- -------------- --------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 1.00 $ 1.00 $ 1.00
------ ------ ------
INVESTMENT ACTIVITIES:
Net investment income...................................... -- -- 0.01
Net realized gains from investment transactions............ -- -- 0.00*
------ ------ ------
Total from investment activities........................... -- -- 0.01
------ ------ ------
DIVIDENDS:
Net investment income...................................... -- -- (0.01)
------ ------ ------
Total dividends............................................ -- -- (0.01)
------ ------ ------
NET ASSET VALUE, END OF PERIOD.............................. $ 1.00 $ 1.00 $ 1.00
------ ------ ------
------ ------ ------
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE)................... --% --% 1.24%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period................................. $ 10 $ 10 $ 10
Ratio of expenses to average net assets..................... -- -- 1.33%(d)
Ratio of net investment income to average net assets........ -- -- 2.15%(d)
Ratio of expenses to average net assets..................... -- -- 1.41%(d)(e)
</TABLE>
---------
* Less than $0.005 per share.
(a) Class B Shares operated from April 29, 1998 to September 11, 1998. Since
September 11, 1998 net assets represent seed money and accordingly no income
or expenses have been allocated to the class.
(b) Period from commencement of operations.
(c) Not annualized.
(d) Annualized.
(e) 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.
29
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR NEW YORK TAX-FREE MONEY MARKET FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS D (PRIVATE INVESTOR) SHARES
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED.
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED APRIL 1, 1999
OCTOBER 31, TO OCTOBER 31,
2000 1999(a)
---------------- ----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 1.00 $ 1.00
-------- -------
INVESTMENT ACTIVITIES:
Net investment income...................................... 0.03 0.02
Net realized gains from investment transactions............ -- 0.00*
-------- -------
Total from investment activities........................... 0.03 0.02
-------- -------
DIVIDENDS:
Net investment income...................................... (0.03) (0.02)
-------- -------
Total dividends............................................ (0.03) (0.02)
-------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 1.00 $ 1.00
-------- -------
-------- -------
TOTAL RETURN................................................ 3.39% 1.50%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000's)......................... $100,291 $39,443
Ratio of expenses to average net assets..................... 0.58% 0.63%(c)
Ratio of net investment income to average net assets........ 3.35% 2.51%(c)
</TABLE>
---------
* Less than $0.005 per share.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
30
<PAGE>
HSBC INVESTOR FUNDS
HSBC INVESTOR NEW YORK TAX-FREE MONEY MARKET 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........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
INVESTMENT ACTIVITIES:
Net investment income...................................... 0.04 0.03 0.03 0.03 0.01
Net realized gains from investment transactions............ -- 0.00* 0.00* 0.00* --
------- ------- ------- ------- -------
Total from investment activities........................... 0.04 0.03 0.03 0.03 0.01
------- ------- ------- ------- -------
DIVIDENDS:
Net investment income...................................... (0.04) (0.03) (0.03) (0.03) (0.01)
Net realized gains from investment transactions............ -- -- (0.00)* -- --
------- ------- ------- ------- -------
Total dividends............................................ (0.04) (0.03) (0.03) (0.03) (0.01)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
------- ------- ------- ------- -------
TOTAL RETURN................................................ 3.65% 2.70% 3.21% 3.27% 1.03%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000's)......................... $42,306 $11,986 $10,759 $ 8,674 $ 3,714
Ratio of expenses to average net assets..................... 0.33% 0.38% 0.33% 0.35% 0.35%(c)
Ratio of net investment income to average net assets........ 3.64% 2.71% 3.15% 3.23% 3.12%(c)
Ratio of expenses to average net assets..................... 0.33% 0.38% 0.41%(d) 0.47%(d) 0.45%(c)(d)
</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 voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratio would have been as indicated.
See notes to financial statements.
31
<PAGE>
HSBC INVESTOR FUNDS
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000
1. ORGANIZATION:
The HSBC Investor Funds (the 'Trust'), a Massachusetts business trust
organized on April 22, 1987, is registered under the Investment Company Act
of 1940, as amended (the 'Act'), as an open-end management investment
company. The Trust contains the following funds (individually a 'Fund,'
collectively the 'Funds'):
<TABLE>
<CAPTION>
FUND SHORT NAME
---- ----------
<S> <C>
HSBC Investor Money Market Fund Money Market Fund
HSBC Investor U.S. Government Money Market Fund U.S. Government Money Market Fund
HSBC Investor N.Y. Tax-Free Money Market Fund N.Y. Tax-Free Money Market Fund
</TABLE>
The Funds are separate series of the Trust 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, along with all Funds within the
Trust, were renamed the HSBC Investor Funds.
The Funds are authorized to issue five classes of shares, Class A
(Investor) Shares, Class B Shares, Class C Shares, Class D (Private Investor)
Shares and Class Y (Adviser) Shares. For the year ended October 31, 2000 no
Class C shares were outstanding. For the year ended October 31, 2000 no Class
B Shares were outstanding for the Money Market Fund. Each class of shares in
each Fund has identical rights and privileges, except with respect to fees
paid under shareholder servicing and/or distribution plans, voting rights on
matters affecting a single class of shares, and the exchange privilege of
each class of shares.
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:
Investments of the Funds are valued at amortized cost, which approximates
market value, except for investments in other money market funds, which are
priced at net asset value. 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.
SECURITY 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.
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.
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income are declared daily and paid monthly
from each Fund. Dividends from net realized gains, if any, are declared and
paid at least annually by the Funds. 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 realized 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,
such amounts are reclassified to paid-in capital; temporary differences do
not require reclassification.
REPURCHASE AGREEMENTS:
The Funds may acquire repurchase agreements with an entity which is a
member of the Federal Reserve System or which is a 'primary dealer' (as
designated by the Federal Reserve Bank of New York) in U.S. Government
obligations. The repurchase price generally equals the price paid by a Fund
plus interest negotiated on the basis of current short-term rates, which may
be more or less than the rate on the underlying portfolio securities. The
seller, under a repurchase agreement, is required to maintain the collateral
held pursuant to the agreement, with a market value equal to or greater than
the repurchase price (including accrued interest). Collateral subject to
repurchase agreements is held by the Funds' custodian, or another qualified
custodian or in the Federal Reserve/Treasury book-entry system.
Continued
32
<PAGE>
HSBC INVESTOR FUNDS
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000
FEDERAL INCOME TAXES:
Each Fund is a separate taxable entity for federal income tax purposes.
Each Fund has qualified and intends to continue to qualify as a 'regulated
investment company' under Subchapter M of the Internal Revenue Code, as
amended, and to distribute substantially all of its taxable income and net
realized gains, if any, to its shareholders. Accordingly, no provision for
federal income or excise tax is required.
3. RELATED PARTY TRANSACTIONS:
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 Funds, was renamed
HSBC Bank USA ('HSBC'). For its services, HSBC receives a fee, accrued daily
and paid monthly, based on the following schedule:
<TABLE>
<CAPTION>
INVESTMENT MANAGEMENT FEES
---------------------------------
ANNUAL FEES AS
A PERCENTAGE OF
AVERAGE DAILY FEE VOLUNTARILY
NET ASSETS REDUCED
---------- -------
<S> <C> <C>
Money Market Fund........................................... 0.20% $434
U.S. Government Money Market Fund........................... 0.20% --
New York Tax-Free Money Market Fund......................... 0.15% --
</TABLE>
ADMINISTRATION:
BISYS Fund Services Ohio, Inc. ('BISYS Ohio'), a wholly-owned subsidiary of
The BISYS Group, Inc., with whom certain officers of the Trust are
affiliated, serves the Trust as Administrator. Such officers are paid no fees
directly by the Funds for serving as officers of the Trust. 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 Trust as the Distributor (the
'Distributor'). The Trust has 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%, 0.75%, 0.75% and 0.25% of the average daily net assets of
Class A (Investor) Shares, Class B Shares, Class C Shares and Class D
(Private Investor) Shares of the Fund, respectively, for amounts representing
actual expenses incurred by the Distributor for marketing costs and services
rendered in distributing each Fund's shares.
For the year ended October 31, 2000, no distribution fees were charged
except U.S. Government Money Market Fund, Class B Shares.
SHAREHOLDER SERVICING:
The Trust has entered into a Shareholder Servicing Agreement with its
shareholder servicing agents (which currently consist 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 0.60%, 1.00%, 1.00% and 0.25% per annum of each Fund's average daily
net assets of Class A (Investor) Shares, Class B Shares, Class C Shares and
Class D (Private Investor) Shares, respectively.
FUND ACCOUNTING, TRANSFER AGENT, 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 Funds.
For services to the Funds, BISYS Ohio and HSBC receive an annual per fund fee
accrued daily and paid monthly.
Continued
33
<PAGE>
HSBC INVESTOR FUNDS
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000
4. 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. All capital share
transactions have been processed at a net asset value of $1.00 per share.
Transactions in capital and shares of beneficial interest by class for the
year ended October 31, 2000 were as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT N.Y. TAX-FREE
MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND
--------------------------- --------------------------------- -----------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR PERIOD 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 (INVESTOR) SHARES (a):
Proceeds from shares
issued..................... $ 808,040,652 $ 486,435,538 $ 1,240,671,287 $ 1,233,797,888 $ 254,682,274 $ 346,775,888
Dividends reinvested......... 21,810,476 5,235,795 50,763,394 42,303,365 4,148,844 3,078,322
Cost of shares redeemed...... (594,222,197) (264,888,396) (1,200,024,413) (1,398,425,548) (237,573,063) (389,862,797)
------------- ------------- --------------- --------------- ------------- -------------
Class A (Investor) Shares
capital transactions......... 235,628,931 226,782,937 91,410,268 (122,324,295) 21,258,055 (40,008,587)
------------- ------------- --------------- --------------- ------------- -------------
CLASS B SHARES:
Proceeds from shares
issued..................... -- -- -- 5,700 -- --
Dividends reinvested......... -- -- 633 384 -- --
Cost of shares redeemed...... -- -- -- -- -- --
------------- ------------- --------------- --------------- ------------- -------------
Class B capital
transactions................. -- -- 633 6,084 -- --
------------- ------------- --------------- --------------- ------------- -------------
CLASS D (PRIVATE INVESTOR)
SHARES (b):
Proceeds from shares
issued..................... 694,829,084 118,010,668 1,663,031,449 976,577,861 238,182,645 184,775,978
Dividends reinvested......... 6,408,126 1,085,432 18,591,821 7,146,969 1,201,875 354,232
Cost of shares redeemed...... (349,380,362) (72,232,643) (1,580,272,368) (518,208,655) (178,535,243) (145,686,856)
------------- ------------- --------------- --------------- ------------- -------------
Class D (Private Investor)
Shares capital
transactions................. 351,856,848 46,863,457 101,350,902 465,516,175 60,849,277 39,443,354
------------- ------------- --------------- --------------- ------------- -------------
CLASS Y (ADVISER) SHARES (c):
Proceeds from shares
issued..................... 1,059,117,465 609,954,236 568,179,795 474,145,246 144,787,394 166,565,291
Dividends reinvested......... 5,265,153 4,270,991 2,101,150 577,952 192,456 158,384
Cost of shares redeemed...... (910,961,064) (540,553,689) (459,873,906) (470,484,266) (114,660,262) (165,498,439)
------------- ------------- --------------- --------------- ------------- -------------
Class Y (Adviser) Shares
capital transactions....... 153,421,554 73,671,538 110,407,039 4,238,932 30,319,588 1,225,236
------------- ------------- --------------- --------------- ------------- -------------
Change in net assets from
capital transactions....... $ 740,907,333 $ 347,317,932 $ 303,168,842 $ 347,436,896 $ 112,426,920 $ 660,003
------------- ------------- --------------- --------------- ------------- -------------
------------- ------------- --------------- --------------- ------------- -------------
SHARE TRANSACTIONS:
CLASS A (INVESTOR) SHARES (a):
Issued....................... 808,040,652 486,435,538 1,240,671,287 1,233,797,888 254,682,274 346,775,888
Reinvested................... 21,810,476 5,235,795 50,763,394 42,303,365 4,148,844 3,078,322
Redeemed..................... (594,222,197) (264,888,396) (1,200,024,413) (1,398,425,548) (237,573,063) (389,862,797)
------------- ------------- --------------- --------------- ------------- -------------
Change in Class A (Investor)
Shares....................... 235,628,931 226,782,937 91,410,268 (122,324,295) 21,258,055 (40,008,587)
------------- ------------- --------------- --------------- ------------- -------------
CLASS B SHARES:
Issued....................... -- -- -- 5,700 -- --
Reinvested................... -- -- 633 384 -- --
Redeemed..................... -- -- -- -- -- --
------------- ------------- --------------- --------------- ------------- -------------
Change in Class B Shares..... -- -- 633 6,084 -- --
------------- ------------- --------------- --------------- ------------- -------------
CLASS D (PRIVATE INVESTOR)
SHARES (b):
Issued....................... 694,829,084 118,010,668 1,663,031,449 976,577,861 238,182,645 184,775,978
Reinvested................... 6,408,126 1,085,432 18,591,821 7,146,969 1,201,875 354,232
Redeemed..................... (349,380,362) (72,232,643) (1,580,272,368) (518,208,655) (178,535,243) (145,686,856)
------------- ------------- --------------- --------------- ------------- -------------
Change in Class D (Private
Investor) Shares............. 351,856,848 46,863,457 101,350,902 465,516,175 60,849,277 39,443,354
------------- ------------- --------------- --------------- ------------- -------------
CLASS Y (ADVISER) SHARES (c):
Issued....................... 1,059,117,465 609,954,236 568,179,795 474,145,246 144,787,394 166,565,291
Reinvested................... 5,265,153 4,270,991 2,101,150 577,952 192,456 158,384
Redeemed..................... (910,961,064) (540,553,689) (459,873,906) (470,484,266) (114,660,262) (165,498,439)
------------- ------------- --------------- --------------- ------------- -------------
Change in Class Y (Adviser)
Shares....................... 153,421,554 73,671,538 110,407,039 4,238,932 30,319,588 1,225,236
------------- ------------- --------------- --------------- ------------- -------------
Change in shares............. 740,907,333 347,317,932 303,168,842 347,436,896 112,426,920 660,003
------------- ------------- --------------- --------------- ------------- -------------
------------- ------------- --------------- --------------- ------------- -------------
</TABLE>
---------
(a) The Money Market Fund commenced offering Class A (Investor) Shares on
November 13, 1998.
(b) The Funds commenced offering Class D (Private Investor) Shares on April 1,
1999.
(c) The Money Market Fund commenced offering Class Y (Adviser) Shares on
November 12, 1998.
Continued
34
<PAGE>
HSBC INVESTOR FUNDS
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000
5. CONCENTRATION OF CREDIT RISK:
The New York Tax-Free Money Market 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 money market funds that are
not concentrated in these issuers to the same extent.
6. FEDERAL INCOME TAX INFORMATION (UNAUDITED):
For federal income tax purposes, the following Funds have capital loss
carryforwards as of October 31, 2000, which are available to offset capital
gains, if any:
<TABLE>
<CAPTION>
AMOUNT EXPIRES
------ -------
<S> <C> <C>
New York Tax-Free Money Market Fund......................... $13,842 2003
5,393 2004
9,911 2005
1,485 2006
-------
$30,631
-------
-------
</TABLE>
During the year ended October 31, 2000, the New York Tax-Free Money Market
Fund declared $6,707,520 of tax-exempt income distributions.
35
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and
Board of Trustees of the
HSBC Investor Funds (formerly Republic Funds):
We have audited the accompanying statements of assets and liabilities of the
HSBC Investor Money Market Fund, HSBC Investor U.S. Government Money Market Fund
and HSBC Investor New York Tax-Free Money Market Fund (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
36
<PAGE>
HSBC INVESTOR FUNDS:
INVESTMENT MANAGER
HSBC Bank USA
452 Fifth Avenue
New York, NY 10018
SHAREHOLDER SERVICING AGENTS
FOR HSBC BANK USA AND
HSBC BROKERAGE (USA) INC. CLIENTS:
HSBC Bank USA
452 Fifth Avenue
New York, NY 10018
1-888-525-5757
FOR ALL OTHER SHAREHOLDERS:
HSBC Investor Funds
P.O. Box 182845
Columbus, OH 43218-2845
1-800-782-8183
ADMINISTRATOR, TRANSFER AGENT,
DISTRIBUTOR, AND SPONSOR
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
CUSTODIAN
HSBC Bank USA
452 Fifth Avenue
New York, NY 10018
INDEPENDENT AUDITORS
KPMG LLP
Two Nationwide Plaza
Suite 1600
Columbus, OH 43215
LEGAL COUNSEL
Dechert
1775 Eye Street, N.W.
Washington, D.C. 20006
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'
