EXHIBIT 99D(2)
SUBADVISORY AGREEMENT
AGREEMENT made this 1st day of October, 1998 by and between HSBC ASSET
MANAGEMENT AMERICAS INC, (the "CLIENT") and DELAWARE INTERNATIONAL ADVISERS
LIMITED of Third Floor, 00 Xxxxxxxxx, Xxxxxx XX0X 0XX Xxxxxxx ("DELAWARE").
1. The CLIENT hereby appoints DELAWARE to manage funds in the
International Equity Fund series (the "Fund") of HSBC Mutual Funds Trust (the
"Trust") under the terms set forth below and represents that the CLIENT is duly
authorized to enter into this Agreement and to delegate discretionary investment
management with respect to the Fund to DELAWARE. DELAWARE hereby accepts such
appointment.
2. This Agreement shall take effect when a copy of this Agreement
has been returned to DELAWARE duly signed on the CLIENT's behalf. Following
commencement, this Agreement shall replace any agreement relating to the
management of the Fund which may have been previously entered into between
DELAWARE and the CLIENT. This Agreement shall continue in effect for a period
of two years from the date of its execution and may be renewed thereafter only
so long as such renewal and continuance are specifically approved by the Board
of Trustees of the Trust or by a vote of a majority of the outstanding voting
securities of the Fund, and only if the terms and renewal hereof have been
approved by the vote of a majority of the Trustees of the Trust who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
3. The CLIENT shall notify the Fund's custodian bank as to the
appointment of DELAWARE as sub-adviser of the CLIENT with respect to the Fund.
The CLIENT shall instruct the Fund's custodian bank to comply with instructions
from DELAWARE given under the terms of this Agreement.
4. DELAWARE shall have sole discretion with respect to investments
of assets in the Fund and may purchase and sell any type of investment in any
amount or proportion and on any market, all without prior consultation. DELAWARE
shall, however, be bound by the investment policies and restrictions of the Fund
as are set forth from time to time in the Fund's prospectus (the "Prospectus"),
a copy of which shall be provided to DELAWARE by the CLIENT initially and upon
each update, supplement or amendment thereto. Unless indicated in the
Prospectus, and subject to Rule 17f-5 under the Investment Company Act of 1940,
as amended (the "1940 Act"), there shall be no restrictions on the markets on
which transactions may be made on the Fund's behalf. DELAWARE may, but shall
not be obligated to, participate on behalf of the Fund in any class action,
formal or informal reorganization or restructuring proposal, merger,
combination, indenture revision, consolidation, bankruptcy, liquidation or
similar plan, agreement or arrangement with respect to securities in the Fund
and, upon prior written notice or notice by telephone
from DELAWARE to the CLIENT of DELAWARE's intention to participate in such
matters, DELAWARE shall automatically and without further action by the CLIENT
or the Fund be appointed as the FUND's attorney-in-fact for any such purpose,
including without limitation causing the Fund to be bound to any such plan,
agreement or arrangement. Under the terms of the Investment Management Agreement
between the CLIENT and the Trust, with respect to the Fund, the Trust shall
conduct its own business and affairs and shall bear the expenses and salaries
necessary and incidental thereto.
5. DELAWARE shall have the authority to select the brokerage firms
through which orders shall be placed. DELAWARE may combine orders for the Fund
with orders for other accounts or funds under management. DELAWARE may, subject
to its duty to secure best execution for the Fund (which for these purposes
shall disregard any benefit which might enure directly or indirectly to the Fund
as a result of the arrangement hereinafter described), effect transactions with
or through the agency of another person with whom DELAWARE has an arrangement
under which that person will from time to time provide to or procure for
DELAWARE services of other benefits the nature of which are such that their
provision results, or is designed to result, in an improvement in DELAWARE's
performance in providing services for its clients and for which DELAWARE makes
no direct payment but instead undertakes to place business with that person.
When orders are placed, DELAWARE shall issue suitable instructions to the Fund's
custodian bank with respect to deliveries and payments.
6. DELAWARE shall under no circumstances act as custodian for the
Fund or have possession of any assets of the Fund. Accordingly, arrangements
for the registration and identification of ownership and safe custody of
documents of title must be made by the CLIENT or the Fund with a custodian bank
which is selected by the Fund.
7. DELAWARE shall provide periodic statements to the CLIENT at
quarterly or such other intervals as DELAWARE and CLIENT shall agree but in any
event not less frequently than every six months. Such statements will show all
investments in the Fund and will contain details of the measure of portfolio
performance. If the CLIENT provides instructions to DELAWARE as to the format
of the periodic statements, such format may vary from the periodic statement
format set forth in the rules of IMRO (as defined below). For purposes of such
reports, securities in the Fund will normally be valued at mid-market prices as
of the close of business on the last business day of the applicable period.
8. It is understood that DELAWARE may perform similar services for
other clients or funds and that the investment action taken for each client or
fund may differ.
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9. DELAWARE shall not be liable for any loss incurred with respect
to the Fund due to errors of judgment when it has acted in good faith and has
not been grossly negligent; nor shall DELAWARE be responsible for any loss
incurred by reason of any act or omission of the CLIENT, any bank, broker, the
Fund's custodian bank, any administrator, transfer agent or distributor, or any
director, officer, or trustee of the Trust, whether appointed by or on behalf of
DELAWARE, the CLIENT or the Fund. Nothing contained herein shall be deemed to
waive any liability which cannot be waived under applicable law, including
applicable U.S. state and federal securities laws and the Financial Services Xxx
0000 of the United Kingdom ("FSA"), or any rules or regulations adopted under
any of those laws.
10. As compensation for its services hereunder, the CLIENT shall pay
to DELAWARE a monthly fee, within 15 business days following the end of each
month, based upon the average daily net assets of the Fund during the month.
The following annual fee rates, exclusive of Value Added Tax, if applicable,
shall apply:
Annual Fee Rate
Market Value as a Percentage
of the Account of Market Value
-------------- ---------------
First $20 Million 0.75%
Next $30 Million 0.50%
Next $50 Million 0.40%
Thereafter 0.35%
Subject to a minimum account size of $20 Million (or fees equivalent
thereto).
If this Agreement is terminated prior to the end of any calendar month, the fee
shall be prorated for the portion of any month in which this Agreement is in
effect according to the proportion which the number of calendar days during
which this Agreement is in effect bears to the number of calendar days in the
month, and shall be payable within 10 days after the date of effectiveness of
the termination.
11. The CLIENT shall cause all proxies received by it or the Fund or
on its or the Fund's behalf by the Fund's custodian bank to be delivered to
DELAWARE on a timely basis. DELAWARE shall be authorized to vote on behalf of
the Fund proxies relating to securities held in the Fund's portfolio, provided,
however, that DELAWARE will comply with any written instructions received from
the CLIENT as to the voting of proxies.
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12. Notwithstanding Section 2 hereof, this Agreement may be
terminated by the CLIENT of the Fund at any time, without the payment of a
penalty, on sixty days' written notice to DELAWARE of the CLIENT's or the Fund's
intention to do so, in the case of the Fund pursuant to action by the Board of
Trustees of the Trust or pursuant to vote of a majority of the outstanding
voting securities of the Fund. DELAWARE may terminate this Agreement at any
time, without the payment of a penalty on sixty days' written notice to the
CLIENT and the Fund of its intention to do so. Termination will be without
prejudice to the completion of transactions already initiated, which shall be
completed in accordance with DELAWARE's usual practice. Upon termination of
this Agreement, the obligations of all the parties hereunder shall cease and
terminate as of the date of effectiveness of such termination, except for the
obligation of the CLIENT to pay DELAWARE the fee provided in Section 10 hereof,
prorated to the date of effectiveness of the termination. This Agreement shall
automatically terminate in the event of its assignment.
13. DELAWARE represents that it is duly registered with the
Securities and Exchange Commission pursuant to the Investment Advisers Act of
1940, as amended. The CLIENT acknowledges receipt of a copy of Part II of
DELAWARE's current Form ADV, at least 48 hours prior to the signing of this
Agreement.
14. DELAWARE is a member of, and is regulated in the conduct of its
investment business by, the Investment Management Regulatory Organization
Limited ("IMRO") and is bound by the Conduct of Business Rules of IMRO. Based
on information that the CLIENT has furnished to DELAWARE, DELAWARE believes that
the CLIENT is a "Non-Private Customer" as defined by IMRO and proposes to treat
the CLIENT as such. In accordance with IMRO's rules, DELAWARE hereby notifies
the CLIENT as follows:
(a) Unless otherwise expressly stated in the Prospectus, DELAWARE
may advise on or effect transactions in units in collective investment schemes
which are Unregulated Collective Investment Schemes.
(b) Unless otherwise expressly stated in the Prospectus, DELAWARE
may effect transactions in derivatives (meaning options, futures, contracts for
differences) on the Fund's behalf only for the purposes of defensive currency
hedging and/or interest rate hedging transactions, whether or not those
transactions are under the rules of a Recognized or Designated Investment
Exchange and whether or not those transactions are executed using a standard
contract of such an Exchange. Such transactions may be "Contingent Liability
Transactions" (i.e., transactions under which there is a liability to make
further payments, other than charges and whether or not secured by margin, when
the transaction is due to be completed or upon the earlier closing out of the
position). The amount of funds which may be committed by way of margin may not
exceed 20% of the value of the
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Fund when the investment is made. In the event that the margin required at any
time exceeds 20% of the value of the Fund as a result of further margin calls at
any time, DELAWARE may at its discretion close out the Fund's position.
(c) The CLIENT acknowledges that, solely with respect to
temporary overdrafts resulting from settlement delays, the Fund's account with
its custodian bank may be overdrawn from time to time.
(d) To the extent not prohibited by applicable law or the
Prospectus, DELAWARE shall be entitled, without prior reference to the CLIENT,
to effect transactions for the Fund in which DELAWARE has directly or indirectly
a material interest (other than an interest arising solely from its
participation in the transaction) or a relationship with another party which may
involve a conflict with its duty to the CLIENT or the Fund. Such transactions
may include, among other things, the following:
(i) Buying an investment from or selling an investment to
the Fund when acting as a principal or as an agent for an Associate of DELAWARE
or a client thereof;
(ii) Acting in the same transaction as both an agent for
the Fund and also as an agent for the counterparty;
(iii) Purchasing, holding or selling for the benefit of the
Fund securities issued or guaranteed by companies in which DELAWARE or an
Associate of DELAWARE, or any of their directors or employees, has an interest,
through holding or dealing in its securities, serving as a director or
otherwise; and
(iv) Purchasing, holding or selling for the benefit of the
Fund securities issued by an Associate of DELAWARE or by a client of DELAWARE or
any of its Associates.
(e) DELAWARE has provided the CLIENT with a list of its current
Soft Commission Agreements and the CLIENT acknowledges receipt of that list.
DELAWARE's Soft Commission policies are described in Section 5 of this Agreement
and in Part II of DELAWARE's Form ADV.
15. Except as expressly otherwise provided herein any notice provided
for or required hereunder shall be in writing and sent to the person and place
indicated below or to such other person or place as the respective party may
designate by notice hereunder.
16. Any complaint hereunder should be referred to Xx. Xxxx Xxxxxxxx,
DELAWARE's Compliance Officer. If within two months after the complaint is made
it has not been resolved to the CLIENT's satisfaction the complaint
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will be notified to IMRO. The CLIENT may make its complaint directly to the
office of the Investment Ombudsman appointed by IMRO. If DELAWARE is unable to
meet any liabilities to the CLIENT, the CLIENT will have such rights to
compensation as may be prescribed form time to time by the Securities and
Investments Board of the United Kingdom. A statement describing those rights is
available from Xx. Xxxx Xxxxxxxx.
17. For purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities; "interested person;" and "assignment" shall
have the meanings defined in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed on their behalf by their duly authorized representatives as of the
date and the year first above written.
HSBC ASSET MANAGEMENT DELAWARE INTERNATIONAL
AMERICAS INC. ADVISERS LIMITED
By:__________________________ By:____________________________
Name: Name:
Title: Title:
Attest:______________________ Attest:________________________
Name: Name:
Title: Title:
Employer Identification Employer Identification
Number:______________________ Number: 00-0000000
----------
Designee for Notice: Designee for Notice:
[__________________________] Xxxxx X. Xxxxxx
HSBC Asset Management Americas, Inc. Managing Director
000 Xxxxxxxx XXXXXXXX International Advisers
Xxx Xxxx, XX 00000 Ltd.
USA
Xxxxx Xxxxx
00 Xxxxxxxxx
Xxxxxx, XX0X 0XX
Xxxxxxx
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DELAWARE International Advisers Ltd.'s Policy relating to Soft Commission
Agreements
1. (a) We pay commissions to brokers because we regard commissions as a
necessary incentive to secure the best performance and service from
our brokers.
(b) Our policy in relation to soft commission agreements is as follows:
we use customers' commissions to secure services such as advice,
information and research from brokers, for example, Reuters screens
and various stock exchanges quotation services. It is our policy to
use our customers' commissions to secure those services, however
sourced, for the benefit of our customers.
(c) We have soft dollar agreements in place with the brokers detailed
in paragraph 2, whereby we may use your commission in executing
agency transactions with those brokers, and those brokers may
provide to us various permitted goods or services (such as payment
of our invoices for quotation services), which can reasonably be
expected to assist us in the provision of investment services to
our customers and which are in fact used for the benefit of our
customers.
(d) From time to time, we may receive additional services from other
counterparties. We are satisfied that these investment related
services assist us in the performance of our advisory duties and
allow us to provide a cost effective service.
2. The brokers with whom we currently have soft commission agreements
are:
Xxxxxx & Company Limited
Instinet Investment Services Ltd.
Xxxxxxxxxx & Xxxxxx Inc.
JB Were & Co. Ltd.
