HSBC INVESTOR FUNDS
HSBC INVESTOR GLOBAL EMERGING MARKETS FIXED INCOME FUND
HSBC INVESTOR GLOBAL FIXED INCOME FUND (U.S. DOLLAR HEDGED)
HSBC INVESTOR GLOBAL FIXED INCOME FUND
SUB-ADVISORY AGREEMENT
AGREEMENT, effective commencing on November 1, 2006, between Halbis Capital
Management (USA) Inc. (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 each of the HSBC
Investor Global Emerging Markets Fixed Income Fund, HSBC Investor Global Fixed
Income Fund (U.S. Dollar Hedged) and HSBC Investor Global Fixed Income Fund (the
"Funds") pursuant to an Investment Advisory Contract dated November 1, 2006 (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 Funds
pursuant to this Sub-advisory Agreement and the Sub-adviser is willing to
perform such services for the Funds;
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 Funds 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 Funds in accordance with each 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 Funds 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 Funds; and (c) place orders to purchase and sell securities
for the Funds. 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 Funds.
In performing its investment management services to the Funds
hereunder, the Sub-adviser will provide the Funds 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 Funds will purchase, sell, enter into or use, and will provide an
ongoing evaluation of the Funds. The Sub-adviser will determine what portion of
each 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 Funds so that each Fund 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 Funds directly with the issuer, or with any broker or dealer the Sub-adviser
may choose, in accordance with applicable policies expressed in each 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 each Fund's assets or
contemplated investments. In addition, the Sub-adviser will keep the Trust and
the Trustees informed of developments materially affecting the Funds 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 Funds 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 Funds, 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
Funds, 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 each Fund's assets in accordance with each Fund's investment
objectives, policies and restrictions as well as applicable federal and state
securities laws, based upon instructions as may be provided to the Sub-adviser
by the Manager, the Funds' administrator, accountant, custodian or other agent
designated by the Manager as responsible for testing compliance of the Funds
(the "Compliance Agent"). The Sub-adviser further agrees to manage and invest
each 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 Funds meet and maintain, 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 Funds'
share of payroll taxes), and the Sub-adviser shall make available, without
expense to the Funds, 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 Funds
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 Funds:
organization and offering expenses of the Funds (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 Funds 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 Funds; payments for maintaining the Funds' financial
books and records and calculating the daily net asset value of the Funds'
shares; other payments for portfolio pricing or valuation services to pricing
agents, accountants, bankers and other specialists, if any; expenses relating to
investor and public relations; expenses of registering and qualifying shares of
the Funds for sale (if any); freight, insurance and other charges in connection
with the shipment of the portfolio securities of the Funds; brokerage
commissions or other costs of acquiring or disposing of any portfolio securities
or other assets of the Funds, or of entering into other transactions or engaging
in any investment practices with respect to the Funds; 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 Funds' 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, 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, with regard to each Fund, within 21 calendar days after the end of
each calendar quarter an advisory fee computed daily based on the basis of each
Fund's average daily net assets at an annual rate of 0.20%. The "average daily
net assets" of a Fund shall mean the average of the values attributed to that
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 a 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 a 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 a 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 that Fund as last determined
(whether during or prior to such quarter). If a 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 a Fund hereunder.
5. Books and Records. The Sub-adviser agrees to maintain such books and
records with respect to its services to the Funds 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 Funds'
transactions. The Sub-adviser also agrees that records it maintains and
preserves pursuant to Rules 31a-1 and Rule 31a-2 under the 1940 Act and
otherwise in connection with its services hereunder are the
joint property of the Funds and the Sub-adviser and a copy will be provided
promptly to the Funds upon their 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 Funds are being
conducted in accordance with applicable laws and regulations.
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 Funds or the holders
of the Funds' 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 Funds or to holders of the Funds' 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 Funds.
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 Funds' 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 Funds 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 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 Funds) 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 Funds 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
Funds, 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 Funds, such transactions will be executed on a basis that
is fair and equitable to the Funds. In connection with purchases or sales of
portfolio securities for the account of the Funds, 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 Funds,
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 a Fund upon the vote of a
majority of the Trustees or upon the vote of a majority of that 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.
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 Funds, and (ii) a majority of the
Trustees of the Funds, 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:
Halbis Capital Management (USA) Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ___________
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.
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 Funds, 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 Funds has executed this
Sub-advisory Agreement not individually, but as an officer under the Funds'
Declaration of Trust, and the obligations of this Sub-advisory Agreement are not
binding upon the Funds' Trustees, its officers, or shareholders in the Funds
individually, but bind only the Funds' 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.
h The Sub-adviser shall vote such stock and other securities
possessing "voting" rights which are part of the portion of the Funds 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 Funds 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.
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.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of __________, 2006.
HSBC HALBIS PARTNERS (USA) INC.
By
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Name:
Title:
HSBC INVESTMENTS (USA) INC.
By
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Name:
Title:
