EXHIBIT 99.(D)(19)
HSBC INVESTOR FUNDS
HSBC INVESTOR EQUITY FUND
SUB-ADVISORY AGREEMENT
Amended and restated March 1, 2001
AGREEMENT, effective commencing on March 14, 2000, between
Institutional Capital Corporation (the "Sub-adviser") and HSBC Asset Management
(Americas) 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 HSBC
Investor Equity Fund (the "Fund") pursuant to an Investment Advisory Contract
and Supplement thereto dated December 31, 1999 and amended and restated March 1,
2001 (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 portion of the Fund allocated by the Manager to the Sub-adviser (the
"Sub-adviser's Portfolio") for management 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 Sub-adviser's Portfolio; and (c) place orders to purchase and
sell securities for the Sub-adviser's Portfolio. In particular, the Sub-adviser
will be responsible
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for the market timing of purchases and sales and for all yield enhancement
strategies used in managing the Sub-adviser's Portfolio.
In performing its investment management services to the Fund hereunder,
the Sub-adviser will provide the Fund with ongoing investment guidance and
policy direction, including oral and written research, analysis, advice,
statistical and economic data and judgments regarding individual investments,
general economic conditions and trends and long-range investment policy, with
respect, in all cases, to the Sub-adviser's Portfolio. The Sub-adviser will
determine the securities, instruments, repurchase agreements, options and other
investments and techniques that the Sub-adviser's Portfolio will purchase, sell,
enter into or use, and will provide an ongoing evaluation of the Sub-adviser's
Portfolio. The Sub-adviser will determine what portion of the Sub-adviser's
Portfolio 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, 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 Sub-adviser's Portfolio 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, and conduct periodically such Subchapter M
compliance reviews as the Manager and Sub-adviser determine appropriate;
(c) place orders pursuant to its investment determinations for the
Sub-adviser's Portfolio directly with the issuer, or with any broker or dealer,
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 with respect to the Sub-adviser's Portfolio's assets or
contemplated investments. In addition, the Sub-adviser will keep the Trust and
the Trustees informed of developments materially affecting the Sub-adviser's
Portfolio 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) provide the Manager and the Board of Trustees of the Trust with a
copy of a written code of ethics complying with the requirements of Rule 17j-1
under the 1940 Act, together with evidence of its adoption. Within fifteen days
of the end of the calendar quarter of each year that this Sub-advisory Agreement
is in effect, the president or a vice-president of the Sub-adviser shall certify
to the Manager that the Sub-adviser has complied with the requirements of Rule
17j-1 during the previous year and that there has been no violation of the
Sub-adviser's code of ethics or, if such a violation has occurred, that
appropriate action was taken in response to such violation. Upon the written
request of the Manager, the Sub-adviser shall permit the Manager,
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its employees or its agents to examine the reports required to be made to the
Sub-adviser by Rule 17j-l(c)(1) and all other records relevant to the
Sub-adviser's code of ethics;
(f) provide the Manager with a copy of its Form ADV as most recently
filed with the SEC and promptly will furnish a copy of all amendments to the
Manager at least annually;
(g) notify the Manager of any change of control of the Sub-adviser and
any changes in the key personnel or general partners of the Sub-adviser, in each
case prior to or promptly after such change;
(h) make available to the Manager and the Trust, promptly upon their
request, such copies of its investment records and ledgers with respect to the
Sub-adviser's Portfolio 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 periodic and special reports regarding the
Sub-adviser's Portfolio as they may reasonably request;
(i) immediately 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 immediately of any material fact known to the
Sub-adviser respecting or relating to the Sub-adviser that is not contained in
the Trust's Registration Statement with respect to the Fund, or any amendment or
supplement thereto, but that is required to be disclosed therein, and of any
statement contained therein that becomes untrue in any material respect.
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 any of the following expenses of the
Fund: organization and offering expenses of the Fund (including out-of-pocket
expenses); fees payable to the Manager and 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
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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, bankers and other specialists, if any;
expenses of preparing share certificates and other expenses in connection with
the issuance, offering, distribution or sale of securities issued by the Fund;
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, 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 on the basis of the Sub-adviser's Portfolio's
average daily net assets allocated to the Sub-adviser at an annual rate of 0.35%
of net assets up to $500 million, 0.30% of net assets over $500 million up
to $1 billion, and 0.25% of net assets over $1 billion. The "average daily
net assets" of the Sub-adviser's Portfolio shall mean the average of the values
placed on the Sub-adviser's Portfolio'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 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 month 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
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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, and to preserve such records for the periods and in the manner
required by that Section, and those rules and legal provisions. 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 property of the Fund and will be surrendered promptly to the
Fund upon its 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.
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 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,
caused by, or in any way related to, the investment decisions rendered by the
Sub-adviser concerning the Sub-adviser's Portfolio in a manner inconsistent with
Section 6 hereof, any failure of the Sub-adviser to fulfill any of its other
obligations under this Sub-advisory Agreement, any material misrepresentation,
or omission to disclose material facts, by the Sub-adviser to the Manager or any
shareholder of the Fund, or any violation of applicable law by the Sub-adviser.
The Sub-adviser also agrees to indemnify and hold harmless the Manager with
respect to any losses incurred as the result of 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 way related to, its failure to fulfill
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any of its obligations under this Sub-advisory Agreement. The Manager also
agrees to indemnify and hold harmless the Sub-adviser with respect to any losses
related to the failure of any other sub-adviser to the Fund to perform its
obligations to the Fund in a manner consistent with the applicable sub-advisory
agreement between the Manager and such other sub-adviser.
(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 participate
at its own expense in the defense of any such claim or action with counsel of
its own choosing satisfactory to the indemnified party, 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 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 Fund shall provide the Sub-adviser with the
following documents, as soon as they are available:
(a) the Trust's registration statement relating to the Fund, and any
amendments thereto;
(b) the 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 Institutional Capital Corporation to serve as Sub-adviser and
approving this Sub-advisory Agreement;
(d) the Trust's Notification of Registration on Form N-8A; and
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(e) the Fund's current Prospectus and Statement of Additional
Information, and any supplements thereto.
10. Duration and Termination. This Sub-advisory Agreement shall
continue for an initial term of two years from the date set forth above, and
shall thereafter continue in effect only so long as continuance is specifically
approved at least annually by the vote of a majority of the Board of Trustees,
including a majority of the Trustees who are not parties to this Agreement or
"interested persons" of any party to this Agreement, at a meeting called for
that purpose, 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 (i)
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, or (ii) the Manager, or
(b) by the Sub-adviser upon thirty (30) days' written notice to the Fund,
provided that the Sub-adviser shall continue to be responsible for managing the
assets of the Fund for sixty (60) business days after the end of the notice
period unless the Fund shall agree in writing to shorten the period. Anything to
the contrary herein notwithstanding, any termination carried out pursuant to
this Section 10(b) 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(b).
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, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, 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 Bank USA
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxx
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If to the Sub-adviser:
Institutional Capital Corporation
000 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
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. Exclusive original jurisdiction to any claim, action or dispute
between the parties arising out of this Agreement shall be solely in state or
federal district courts sitting in the State of New York.
(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.
Where the effect of a requirement of the federal securities laws reflected in
any provision of this Sub-advisory Agreement is made less restrictive by a rule,
regulation or order of the SEC, whether of special or general application, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order. This Agreement may be signed in counterpart.
(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.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of March 1, 2001.
HSBC ASSET MANAGEMENT INSTITUTIONAL CAPITAL
(AMERICAS) INC. CORPORATION
By ______________________________ By ________________________
Name: Xxxxxx X. Xxxxx Name:
Title: Senior Executive Vice President Title:
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