HSBC INVESTOR FUNDS
HSBC INVESTOR GROWTH AND INCOME FUND
SUB-ADVISORY AGREEMENT
AGREEMENT, effective commencing on April 18, 2005, between Transamerica
Investment Management, LLC (the "Sub-adviser") and HSBC Investments (USA) Inc.
(the "Manager").
WHEREAS, the Manager has been retained by HSBC Investor Funds, a Massachusetts
business trust (the "Trust") registered as an open-end diversified investment
management company under the Investment Company Act of 1940, as amended (the
"1940 Act"), to provide investment advisory services to the HSBC Investor Growth
and Income Fund (the "Fund") pursuant to an Investment Advisory Contract dated
April 18, 2005 (the "Advisory Agreement");
WHEREAS, the Trust's Board of Trustees, including a majority of the Trustees who
are not parties to this Agreement or "interested persons," as defined in the
1940 Act, of any party to this Agreement, have approved the appointment of the
Sub-adviser to perform certain investment advisory services for the Fund
pursuant to this Sub-advisory Agreement and the Sub-adviser is willing to
perform such services for the Fund;
WHEREAS, the Sub-adviser is registered or exempt from registration as an
investment adviser under the Investment Advisers Act of 1940, as amended
("Advisers Act");
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the Manager and the Sub-adviser as follows:
1. Appointment. The Manager hereby appoints the Sub-adviser to perform
advisory services to the Fund for the periods and on the terms set forth in this
Sub-advisory Agreement. The Sub-adviser accepts such appointment and agrees to
furnish the services herein set forth, for the compensation herein provided.
2. Investment Advisory Duties. Subject to the supervision of the Board of
Trustees of the Trust and the Manager, the Sub-adviser will, in coordination
with the Manager, (a) provide a program of continuous investment management for
the Fund in accordance with the Fund's investment objectives, policies and
limitations as stated in the Fund's Prospectus and Statement of Additional
Information included as part of the Trust's Registration Statement on behalf of
the Fund filed with the Securities and Exchange Commission, as they may be
amended from time to time, copies of which shall be provided to the Sub-adviser
by the Manager; (b) make investment decisions for the Fund; and (c) place orders
to purchase and sell securities for the Fund. In particular, the Sub-adviser
will be responsible for the purchase and sale of securities and for all yield
enhancement strategies used in managing the Fund.
In performing its investment management services to the Fund hereunder, the
Sub-adviser will provide the Fund with ongoing investment guidance and policy
direction. The Sub-adviser will determine the securities, instruments,
repurchase agreements, options and other
investments and techniques that the Fund will purchase, sell, enter into or use,
and will provide an ongoing evaluation of the Fund. The Sub-adviser will
determine what portion of the Fund shall be invested in securities and other
assets.
The Sub-adviser further agrees that, in performing its duties hereunder, it
will:
a. comply with the 1940 Act and all rules and regulations thereunder,
the Advisers Act, applicable sections of the Internal Revenue Code of 1986, as
amended (the "Code"), and all other applicable federal and state laws and
regulations, and with any applicable procedures adopted by the Trustees;
b. manage the Fund so that it will qualify, and continue to qualify
(except where extraordinary circumstances dictate otherwise), as a regulated
investment company under Subchapter M of the Code and regulations issued
thereunder;
c. place orders pursuant to its investment determinations for the Fund
directly with the issuer, or with any broker or dealer the Sub-adviser may
choose, in accordance with applicable policies expressed in the Fund's
Prospectus and/or Statement of Additional Information and in accordance with
applicable legal requirements;
d. furnish to the Trust whatever statistical information the Trust may
reasonably request in writing with respect to the Fund's assets or contemplated
investments consistent with applicable law and regulations. In addition, the
Sub-adviser will keep the Trust and the Trustees informed of developments
materially affecting the Fund and shall, on the Sub-adviser's own initiative,
furnish to the Trust from time to time whatever information the Sub-adviser
believes appropriate for this purpose;
e. make available to the Manager and the Trust, promptly upon their
written request, such copies of its investment records and ledgers with respect
to the Fund as may be required to assist the Manager and the Trust in their
compliance with applicable laws and regulations. The Sub-adviser will furnish
the Trustees with such available data regarding the Fund, as may be mutually
agreed upon from time to time;
f. promptly notify the Manager and the Trust in the event that the
Sub-adviser or any of its affiliates: (1) becomes aware that it is subject to a
statutory disqualification that prevents the Sub-adviser from serving as an
investment adviser pursuant to this Sub-advisory Agreement; or (2) becomes aware
that it is the subject of an administrative proceeding or enforcement action by
the SEC or other regulatory authority. The Sub-adviser further agrees to notify
the Trust and the Manager promptly if any statement regarding the Sub-adviser
contained in the Trust's Registration Statement with respect to the Fund, or any
amendment or supplement thereto, becomes untrue or incomplete in any material
respect.
In performing its duties under this Agreement, the Sub-adviser shall manage
and invest the Fund's assets in accordance with the Fund's investment
objectives, policies and restrictions as well as applicable federal and state
securities laws, based upon instructions as may be
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provided to the Sub-adviser by the Manager, the Fund's administrator,
accountant, custodian or other agent designated by the Manager as responsible
for testing compliance of the Fund (the "Compliance Agent"). The Sub-adviser
further agrees to manage and invest the Fund's assets in accordance with
instructions as may be provided to the Sub-adviser from time to time by the
Manager or the Compliance Agent in an effort to ensure that the Fund meets and
maintains, so long as required by the Code, the requirements for qualification
as a regulated investment company under Subchapter M of the Code and regulations
issued thereunder.
In fulfilling its obligations under this Agreement, the Sub-adviser shall
be entitled to reasonably rely on and act in accordance with instructions
provided by the Manager or Compliance Agent.
3. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this Section 3, the Sub-adviser shall pay the compensation and
expenses of all its directors, partners, officers and employees, if any, who
serve as officers and executive employees of the Trust (including the Fund's
share of payroll taxes), and the Sub-adviser shall make available, without
expense to the Fund, the service of its directors, partners, officers and
employees, if any, who may be duly elected officers of the Trust, subject to
their individual consent to serve and to any limitations imposed by law.
The Sub-adviser shall not be required to pay any expenses of the Fund other
than those specifically allocated to the Sub-adviser in this Section 3. In
particular, but without limiting the generality of the foregoing, the
Sub-adviser shall not be responsible for the following expenses of the Fund:
organization and offering expenses of the Fund (including out-of-pocket
expenses); fees payable to any other Fund advisers or consultants; legal
expenses; auditing and accounting expenses; interest expenses; telephone, telex,
facsimile, postage and other communications expenses; taxes and governmental
fees; dues and expenses incurred by or with respect to the Fund in connection
with membership in investment company trade organizations; cost of insurance
relating to fidelity coverage for the Trust's officers and employees; fees and
expenses of any custodian, subcustodian, transfer agent, registrar, or dividend
disbursing agent of the Fund; payments for maintaining the Fund's financial
books and records and calculating the daily net asset value of the Fund's
shares; other payments for portfolio pricing or valuation services to pricing
agents, accountants, hankers and other specialists, if any; expenses relating to
investor and public relations; expenses of registering and qualifying shares of
the Fund for sale (if any); freight, insurance and other charges in connection
with the shipment of the portfolio securities of the Fund; brokerage commissions
or other costs of acquiring or disposing of any portfolio securities or other
assets of the Fund, or of entering into other transactions or engaging in any
investment practices with respect to the Fund; expenses of printing and
distributing prospectuses, Statements of Additional Information, reports,
notices and dividends to stockholders; costs of stationery; litigation expenses;
costs of stockholders' and other meetings; the compensation and all expenses
(specifically including travel expenses relating to the Fund's business) of
officers, trustees and employees of the Trust who are not interested persons of
the Sub-adviser; and travel expenses (or an appropriate portion thereof) of
officers or trustees of the Trust who are officers,
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directors or employees of the Sub-adviser to the extent that such expenses
relate to attendance at meetings of the Board of Trustees of the Trust or any
committees thereof or advisers thereto.
4. Compensation. As compensation for the services provided and expenses
assumed by the Sub-adviser under this Agreement, the Trust will pay the
Sub-adviser within 21 calendar days after the end of each calendar quarter an
advisory fee computed daily based on the basis of the Fund's average daily net
assets at an annual rate of 0.35%. The "average daily net assets" of the Fund
shall mean the average of the values attributed to the Fund's net assets as of
4:00 p.m. (New York time) on each day on which the net asset value of the Fund
is determined consistent with the provisions of Rule 22c-1 under the 1940 Act
or, if the Fund lawfully determines the value of its net assets as of some other
time on each business day, as of such other time. The value of net assets of the
Fund shall always be determined pursuant to the applicable provisions of the
Trust's Declaration of Trust, as amended, and Registration Statement. If,
pursuant to such provisions, the determination of net asset value is suspended
for any particular business day, then for the purposes of this Section 4, the
value of the net assets of the Fund as last determined shall be deemed to be the
value of its net assets as of the close of regular trading on the New York Stock
Exchange, or as of such other time as the value of the net assets of the Fund's
portfolio may lawfully be determined, on that day. If the determination of the
net asset value of the shares of the Fund has been so suspended for a period
including any quarter end when the Sub-adviser's compensation is payable
pursuant to this Section, then the Sub-adviser's compensation payable at the end
of such quarter shall be computed on the basis of the value of the net assets of
the Fund as last determined (whether during or prior to such quarter). If the
Fund determines the value of the net assets of its portfolio more than once on
any day, then the last such determination thereof on that day shall be deemed to
be the sole determination thereof on that day for the purposes of this Section
4. In the event that this Agreement is terminated pursuant to Section 10 hereof,
the Sub-adviser shall be entitled to a pro rata portion of the fee under this
Section 4 through and including the date upon which the Agreement is terminated
and the Sub-adviser ceases to provide investment advisory services to the Fund
hereunder.
5. Books and Records. The Sub-adviser agrees to maintain such books and
records with respect to its services to the Fund as are required by Section 31
under the 1940 Act, and rules adopted thereunder, and by other applicable legal
provisions, including the Investment Advisers Act of 1940 and the Securities and
Exchange Act of 1934, and to preserve such records for the periods and in the
manner required by that Section, and those rules and legal provisions. The
Manager shall maintain all books and other records not related to the Fund's
transactions. The Sub-adviser also agrees that records it maintains and
preserves pursuant to Rules 3la-1 and Rule 31a-2 under the 1940 Act and
otherwise in connection with its services hereunder are the joint property of
the Fund and the Sub-adviser and a copy will be provided promptly to the Fund
upon its written request. The Sub-adviser further agrees that it will furnish to
regulatory authorities having the requisite authority any information or reports
in connection with its services hereunder which may be requested in order to
determine whether the operations of the Fund are being conducted in accordance
with applicable laws and regulations.
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6. Standard of Care and Limitation of Liability. The Sub-adviser shall
exercise its best judgment in rendering the services provided by it under this
Sub-advisory Agreement. The Sub-adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund or the holders
of the Fund's shares in connection with the matters to which this Sub-advisory
Agreement relate, provided that nothing in this Sub-advisory Agreement shall be
deemed to protect or purport to protect the Sub-adviser against any liability to
the Fund or to holders of the Fund's shares to which the Sub-adviser would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or by reason of the
Sub-adviser's reckless disregard of its obligations and duties under this
Sub-advisory Agreement. As used in this Section 6, the term "Sub-adviser" shall
include any officers, directors, partners, employees, agents or other affiliates
of the Sub-adviser performing services for the Fund.
7. Indemnification.
a. The Sub-adviser hereby agrees to indemnify and hold harmless the
Manager from any controversies, claims, suits, losses, liabilities, judgments,
awards or settlements, and costs or expenses, including reasonable legal fees,
directly or proximately caused by, the investment decisions rendered by the
Sub-adviser in bad faith in a grossly negligent manner inconsistent with the
Fund's stated investment objectives, guidelines and restrictions, any
intentional failure of the Sub-adviser to fulfill any of its other obligations
under this Sub-advisory Agreement, any willful omission to disclose material
facts, by the Sub-adviser to the Fund or the Manager or any willful violation of
applicable law by the Sub-adviser. The Sub-adviser also agrees to indemnify and
hold harmless the Manager with respect to any reasonable losses incurred as the
result of grossly negligent errors made by the Sub-adviser in transmitting
orders to any broker for execution.
b. The Manager hereby agrees to indemnify and hold harmless the
Sub-adviser from any controversies, claims, suits, losses, liabilities,
judgments, awards or settlements, and costs or expenses, including reasonable
legal fees, caused by, or in any related to, its failure to fulfill any of its
obligations under this Sub-advisory Agreement, any willful omission to disclose
material facts by the Manager or any willful violation of applicable law by the
Manager.
c. If any party seeks indemnification under this Agreement (an
"indemnified party"), it shall notify the other party (the "indemnifying party")
in writing of the assertion of any third party claim or action and shall deliver
all copies of materials received in connection with the matter to the
indemnifying party. The indemnifying party shall have the right to control the
defense of any such claim or action with counsel of its own choosing, and the
indemnified party shall cooperate fully with the indemnifying party in the
defense or settlement of any matter that is covered by paragraphs (a) or (b)
above, subject to reimbursement by the indemnifying party for expenses incurred
by the indemnified party in connection with the indemnifying party's
participation in the defense.
8. Services Not Exclusive. It is understood that the services of the
Sub-adviser are not exclusive, and that nothing in this Sub-advisory Agreement
shall prevent the Sub-adviser
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from providing similar services to other individuals, institutions or investment
companies (whether or not their investment objectives and policies are similar
to those of the Fund) or from engaging in other activities, provided such other
services and activities do not, during the term of this Sub-advisory Agreement,
interfere in a material manner with the Sub-adviser's ability to meet its
obligations to the Trust and the Fund hereunder. When the Sub-adviser recommends
the purchase or sale of a security for other investment companies and other
clients, and at the same time the Sub-adviser recommends the purchase or sale of
the same security for the Fund, the Sub-adviser may, but shall not be obligated
to, aggregate the orders for securities to be purchased or sold. It is
understood that in light of its fiduciary duty to the Fund, such transactions
will be executed on a basis that is fair and equitable to the Fund. In
connection with purchases or sales of portfolio securities for the account of
the Fund, neither the Sub-adviser nor any of its directors, partners, officers
or employees shall act as a principal or agent or receive any commission.
9. Documentation. The Trust shall provide the Sub-adviser with the
following documents:
a. the Trust's registration statement relating to the Fund, and any
amendments thereto;
b. the current Declaration of Trust and By-laws (and any amendments
thereto) of the Trust;
c. resolutions of the Board of Trustees of the Trust authorizing the
appointment of the Sub-adviser to serve as Sub-adviser and approving this
Sub-advisory Agreement;
d. the Trust's Notification of Registration on Form N-8A; and
e. all procedures, policies or other documentation relating to the
Sub-adviser's activities under this Sub-advisory Agreement.
10. Duration and Termination. This Sub-advisory Agreement shall continue
for an initial term of two years from the date set forth above, unless sooner
terminated as provided herein. Notwithstanding the foregoing, this Sub-advisory
Agreement may be terminated: (a) at any time without penalty upon thirty (30)
days' written notice to the Sub-adviser by the Fund upon the vote of a majority
of the Trustees or upon the vote of a majority of the Fund's outstanding voting
securities, (b) at any time without penalty upon thirty (30) days' written
notice to the Sub-adviser by the Manager, or (c) by the Sub-adviser upon thirty
(30) days' written notice to the Trust or the Manager. Anything to the contrary
herein notwithstanding, any termination carried out pursuant to this Section 10
shall be without penalty and, further, the compensation schedule set forth in
Section 4 hereof shall apply to the service of the Sub-adviser beyond the end of
the notice period provided in this Section 10. This Sub-advisory Agreement will
also terminate automatically in the event of its assignment (as defined in the
0000 Xxx) or the assignment or termination of the Advisory Agreement.
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11. Amendments. No provision of this Sub-advisory Agreement may be changed,
waived, discharged or terminated orally, unless by an instrument in writing
signed by both parties, and no amendment of this Sub-advisory Agreement shall be
effective until approved by an affirmative vote of (i) a majority of the
outstanding voting securities of the Fund, and (ii) a majority of the Trustees
of the Fund, including a majority of Trustees who are not interested persons of
any party to this Sub-advisory Agreement, cast in person at a meeting called for
the purpose of voting on such approval, if such approval is required by
applicable law.
12. Notices. Any notice or other communication required or permitted to be
given hereunder shall be given in writing and mailed, faxed or delivered to the
other party at its address as follows:
If to the Manager:
HSBC Investments (USA) Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
If to the Sub-adviser:
Transamerica Investment Management, LLC
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxx 00000
Attention: Xxxx X. XxXxxx, General Counsel
Any party may specify a different or additional address for notice by sending a
written notice to the other at the address above, or at that or those last given
hereunder.
13. Miscellaneous.
a. This Sub-advisory Agreement shall be governed by the laws of the
State of New York, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the SEC
thereunder.
b. The captions of this Sub-advisory Agreement are included for
convenience only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
c. If any provision of this Sub-advisory Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Sub-advisory Agreement shall not be affected hereby and, to this extent,
the provisions of this Sub-advisory Agreement shall be deemed to be severable.
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d. Nothing herein shall be construed as constituting the Sub-adviser,
or any of its directors, officers or employees, an agent of the Manager or the
Fund, nor the Manager, or any of its directors, officers or employees, an agent
of the Sub-adviser.
e. This Sub-advisory Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but counterparts
shall, together, constitute only one Sub-advisory Agreement.
f. The undersigned officer of the Fund has executed this Sub-advisory
Agreement not individually, but as an officer under the Fund's Declaration of
Trust, and the obligations of this Sub-advisory Agreement are not binding upon
the Fund's Trustees, its officers, or shareholders in the Fund individually, but
bind only the Fund Trust estate.
g. The Manager hereby acknowledges that it has received and read a
copy of the Sub-adviser's current Form ADV, Part II and Privacy Policy.
h. The Sub-adviser shall vote such stock and other securities
possessing "voting" rights which are part of the portion of the Fund managed by
the Sub-adviser, personally or by proxy, consistent with the Sub-adviser's proxy
voting guidelines and processing standards.
i. The Sub-adviser shall not be responsible for voting any proxies
relating to securities held in the Fund which proxies have a record date which
is prior to the date of the Sub-advisory Agreement or on or after the date of
any termination of this Sub-advisory Agreement.
j. The Manager acknowledges and agrees that the Sub-adviser shall have
no responsibility for filing claims on behalf of Manager with respect to any
class action, bankruptcy proceeding or any other action or proceeding in which
the Manager may be entitled to participate as a result of its securities
holdings. The Sub-adviser's responsibility, with respect thereto, shall be
limited to cooperating with the custodian of the assets in making such filings.
k. It is hereby understood and agreed that the Sub-adviser shall not
be liable or responsible for any loss incurred in connection with
recommendations or investments made by the Sub-adviser or other actions taken by
the Sub-adviser with respect to managed assets prior to the termination of this
Agreement, provided such actions were taken by the Sub-adviser in accordance
with this Agreement. The Manager understands and agrees that financial
investments carry substantial risk and Sub-adviser cannot predict or guarantee
any particular results. The Sub-adviser shall not be liable or responsible for
any loss incurred in connection with any act or omission of the client,
administrators, custodian, or any broker-dealer or other third party.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of April 18, 2005.
TRANSAM XXXXX INVESTMENT MANAGEMENT, LLC
By /s/ Illegible
-------------------------------------
Illegible
HSBC INVESTMENTS (USA) INC.
By /s/ Illegible
-------------------------------------
Name: Illegible
Title: Illegible
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