UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant (X)
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permitted by Rule 14a-6(e)(2))
( ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Rule 14a-12
HSBC INVESTOR FUNDS
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(Name of Registrant as Specified In Its Charter)
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HSBC INVESTOR FUNDS
HSBC Investor Growth Fund
3435 Stelzer Road
Columbus, Ohio 43219-3035
April 25, 2008
Dear Shareholder:
On behalf of the Board of Trustees (the "Board") of the HSBC Investor Funds (the
"Trust"), I invite you to a special meeting of shareholders of the HSBC Investor
Growth Fund (the "Fund") scheduled for May 23, 2008 at the offices of Citi Fund
Services, 100 Summer Street, Suite 1500, Boston, Massachusetts 02110 at 10:00
a.m., Eastern Time (the "Special Meeting").
The purpose of the Special Meeting is to consider the following proposals:
(1) To approve a new investment advisory contract between HSBC
Investments (USA) Inc. ("Adviser") and the Trust on behalf of the
HSBC Investor Growth Fund for the purpose of increasing the
management fee in order to provide the Adviser with increased
flexibility in hiring sub-advisers; and
(2) To transact such other business as may properly come before the
Special Meeting and any adjournments or postponements thereof.
We strongly invite your participation by asking you to review these materials
and complete and return your Proxy Card as soon as possible.
Detailed information about the proposal is contained in the enclosed materials.
Your vote is important to us regardless of the number of shares you own. Whether
or not you plan to attend the Special Meeting in person, please read the Proxy
Statement and cast your vote promptly. It is important that your vote be
received no later than the time of the Special Meeting on May 23, 2008. VOTING
IS QUICK AND EASY. EVERYTHING YOU WILL REQUIRE IS ENCLOSED. To cast your vote
simply complete, sign and return the Proxy Card in the enclosed postage-paid
envelope. In addition to voting by mail you may also vote by either telephone or
via the Internet.
PLEASE TAKE A FEW MINUTES TO READ THE PROXY STATEMENT AND CAST YOUR VOTE. BY
VOTING AS SOON AS POSSIBLE YOU SAVE THE TRUST THE TROUBLE AND EXPENSE OF FURTHER
SOLICITING YOUR VOTE.
NOTE: You may receive more than one set of proxy solicitation materials if you
hold shares in more than one account. Please be sure to vote each account by
utilizing one of the methods described on the Proxy Card or by signing and
dating each Proxy Card and enclosing it in the postage-paid envelope provided
for each Proxy Card.
If you have any questions after considering the enclosed materials, please call
1-800-782-8183.
Sincerely,
/s/ Richard A. Fabietti
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Richard A. Fabietti
President
HSBC Investor Funds
HSBC INVESTOR FUNDS
HSBC Investor Growth Fund
3435 Stelzer Road
Columbus, Ohio 43219-3035
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 23, 2008
TO THE SHAREHOLDERS:
The HSBC Investor Funds (the "Trust"), on behalf of the HSBC Investor Growth
Fund (the "Fund"), will hold a special meeting of its shareholders (the "Special
Meeting") on May 23, 2008, at the offices of Citi Fund Services, 100 Summer
Street, Suite 1500, Boston, Massachusetts 02110 at 10:00 a.m., Eastern Time, for
the following purposes:
(1) To approve a new investment advisory contract between HSBC
Investments (USA) Inc. ("Adviser") and the Trust on behalf of the
HSBC Investor Growth Fund for the purpose of increasing the
management fee in order to provide the Adviser with increased
flexibility in hiring sub-advisers; and
(2) To transact such other business as may properly come before the
Special Meeting and any adjournments or postponements thereof.
You are entitled to vote at the Special Meeting and any adjournment(s) or
postponement(s) thereof if you owned shares of the Fund at the close of business
on April 18, 2008 (the "Record Date").
Whether or not you plan to attend the Special Meeting in person, please vote
your shares. In addition to voting by mail you may also vote by either telephone
or via the Internet, as provided in your proxy card. Use of telephone or
Internet voting will reduce the time and costs associated with this proxy
solicitation. Whichever method you choose, please read the enclosed Proxy
Statement carefully before you vote.
PLEASE RESPOND - WE ASK THAT YOU VOTE PROMPTLY IN ORDER TO AVOID THE
ADDITIONAL EXPENSE OF FURTHER SOLICITATION.
YOUR VOTE IS IMPORTANT.
By Order of the Board of Trustees
/s/ GARY A. ASHJIAN
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Gary A. Ashjian
Secretary
HSBC Investor Funds
April 25, 2008
HSBC INVESTOR FUNDS
HSBC Investor Growth Fund
3435 Stelzer Road
Columbus, Ohio 43219-3035
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PROXY STATEMENT
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SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 23, 2008
THIS PROXY STATEMENT IS BEING FURNISHED TO YOU IN CONNECTION WITH THE
SOLICITATION OF PROXIES BY THE BOARD OF TRUSTEES ("BOARD") OF HSBC INVESTOR
FUNDS (the "Trust"), on behalf of the HSBC Investor Growth Fund (the "Fund"), to
be voted at a special meeting of Shareholders to be held on May 23, 2008, at the
offices of Citi Fund Services, 100 Summer Street, Suite 1500, Boston,
Massachusetts 02110 at 10:00 a.m., Eastern Time, for the purposes set forth
below and described in greater detail in this Proxy Statement. The meeting and
any adjournment or postponement of the meeting is referred to in this Proxy
Statement as the "Special Meeting."
PROPOSALS:
(1) To approve a new investment advisory contract between HSBC
Investments (USA) Inc. ("Adviser") and the Trust on behalf of the
HSBC Investor Growth Fund for the purpose of increasing the
management fee in order to provide the Adviser with increased
flexibility in hiring sub-advisers; and
(2) To transact such other business as may properly come before the
Special Meeting and any adjournments or postponements thereof.
You are entitled to vote at the Special Meeting and any adjournment(s) or
postponement(s) thereof if you owned shares of the Fund at the close of business
on April 18, 2008 ("Record Date"). The date of the first mailing of the Proxy
Cards and this Proxy Statement to shareholders will be on or about April 25,
2008.
Only shareholders of record at the close of business on the Record Date will be
entitled to notice of, and to vote at, the Special Meeting. Shares represented
by proxies, unless previously revoked, will be voted at the Special Meeting in
accordance with the instructions of the shareholders. If Proxy Cards have been
executed, but no instructions are given, such proxies will be voted in favor of
the proposal. To revoke a proxy, the shareholder giving such proxy must either
(1) submit to the Trust a subsequently dated
Proxy Card, (2) deliver to the Trust a written notice of revocation, or (3)
otherwise give notice of revocation in open meeting, in all cases prior to the
exercise of the authority granted in the proxy.
The presence in person or by proxy of the holders of record of a majority of the
total shares outstanding of the Fund on the Record Date, shall constitute a
quorum at the Special Meeting for purposes of each respective proposal.
If a shareholder wishes to participate in the Special Meeting, but does not wish
to authorize the execution of a proxy by telephone or through the Internet, the
shareholder may still submit the Proxy Card included with this Proxy Statement
or attend the Special Meeting in person.
The Fund provides periodic reports to all of its shareholders which highlight
information including investment results. You may receive an additional copy of
the semi-annual report for the Fund for the period ended April 30, 2007 and the
annual report for the Fund for the year ended October 31, 2007 without charge,
by writing to the address set forth on the first page of this Proxy Statement or
by calling 1-800-782-8183. Requested shareholder reports will be sent by first
class mail within three (3) business days of the receipt of the request.
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PROPOSAL 1
HSBC INVESTOR GROWTH FUND
APPROVAL OF NEW INVESTMENT ADVISORY CONTRACT
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The shareholders of the HSBC Investor Growth Fund (the "Fund") will be asked at
the Special Meeting to approve a new investment advisory contract between the
Trust and HSBC Investments (USA) Inc. (the "Adviser") on behalf of the Fund that
reflects an increase in the overall management fees payable by the Fund.
INTRODUCTION
The Adviser acts as the investment adviser to the Fund pursuant to an investment
advisory contract dated June 16, 2003 and supplement thereto (the "Current
Advisory Contract").(1) The Adviser employs a sub-adviser to make the day-to-day
investment decisions and to continuously review, supervise and administer the
Fund's investment program. The Adviser receives an advisory fee and the
sub-adviser receives a sub-advisory fee in connection with their respective
services to the Fund. These fees together make up the overall management fee
paid by the Fund for advisory services.
The Trust operates in what is commonly referred to as a "manager of managers"
structure pursuant to the terms of an exemptive order received by the Adviser
and the Trust on March 14, 2000 from the U.S. Securities and Exchange Commission
that allows the Adviser to implement new investment sub-advisory contracts and
make material changes to existing sub-advisory contracts with the approval of
the Board of Trustees of the Trust (the "Board"), but without shareholder
approval (the "Order"). A condition of the Order requires that no changes to
sub-advisory contracts be made that would have the effect of an overall increase
in management fees payable by shareholders of the Fund unless shareholders are
given the opportunity to vote on such an increase.
At its December 10-11, 2007 in-person and February 11, 2008 telephonic meetings,
the Board approved the Adviser's recommendation to terminate Waddell & Reed
Investment Management Company ("Waddell & Reed") and to engage Winslow Capital
Management Inc. ("Winslow") as the sub-adviser to the Fund effective June 2,
2008. Additionally, at its March 31 - April 1, 2008 in-person meeting, after
further discussions, the Board ratified this recommendation.
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(1) The Fund invests all its assets in the HSBC Investor Growth Portfolio (the
"Portfolio"). The Fund operates in a two-tier structure, which is commonly
referred to as a "master/feeder" structure because one fund (the Fund or
"feeder fund") is investing all its assets in a second fund (the Portfolio
or "master fund"). The Current Advisory Contract is at the "master fund"
level, meaning that it is for advisory services to be provided to the
Portfolio and not to the Fund.
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Since the Board is authorized to make sub-adviser changes without shareholder
approval pursuant to the Order, YOU ARE NOT BEING ASKED TO VOTE ON THE
APPOINTMENT OF WINSLOW AS THE NEW SUB-ADVISER TO THE FUND. However, as required
by the Order, information about Winslow and the Board's approval of the new
sub-advisory contract is being provided to you beginning at page 10 of this
Proxy Statement.
The search process that led the Adviser to recommend the replacement of Waddell
& Reed by Winslow revealed that qualified sub-advisers that meet the Adviser's
guidelines demand significantly higher sub-advisory fees than the Fund had been
paying previously. As noted earlier, under the terms of the Order, the Fund is
only able to replace sub-advisers without a shareholder vote if it does not
cause an overall management fee increase to shareholders of the Fund. The
difference in sub-advisory fees charged by Waddell & Reed and Winslow is
approximately 0.09% at the Fund's current asset levels. While the Adviser is
willing to absorb this fee differential on an interim basis so that Winslow can
quickly replace Waddell & Reed, longer term the Adviser is not able to reduce
its fees by that amount. Accordingly, the Adviser requested, and the Board of
Trustees has approved, subject to shareholder approval, an amendment to the
Current Advisory Contract to provide for an increase in the overall management
fees payable by the Fund to accommodate the higher Winslow sub-advisory fees and
to provide additional flexibility should it be necessary to replace sub-advisers
again in the future.
More specifically, the Adviser proposed an increase in the overall management
fees by 0.19%, representing an overall increase of management fees from 0.49%
currently up to a maximum of 0.68% of the average daily net assets of the Fund.
SIGNIFICANTLY, THE MAXIMUM AMOUNT OF THE OVERALL MANAGEMENT FEE THAT MAY BE
RETAINED BY THE ADVISER IS 0.175%. Accordingly, the combined fees that will
actually be paid by the Fund to Winslow under the recently approved sub-advisory
contract and to the Adviser is currently 0.575% (0.40% to Winslow and 0.175% to
the Adviser). The remaining 0.105% permitted under the Amended Advisory Contract
would only be utilized if the Board in the future determines that a higher
sub-advisory fee is necessary to attract or retain the services of a qualified
sub-adviser.
As an example, assuming the proposal to increase the overall management fee is
approved, if the Adviser retains Sub-Adviser A, whose sub-advisory fee is 0.35%
of the Fund's average daily net assets, while maintaining its current advisory
fee of 0.175%, the overall management fee will be 0.525% (0.35% plus 0.175%).
The Adviser WILL NOT take more than 0.175% even though the overall fee falls
below the approved 0.68% level. If Sub-Adviser A underperforms its performance
benchmark, or otherwise does not meet the expectations of the Adviser, the
Adviser may wish to replace Sub-Adviser A with Sub-Adviser B, whose sub-advisory
fee is greater, say 0.55%. If the Adviser retains Sub-Adviser B, the overall
management of the Fund will be no greater than 0.68% of the Fund's average daily
net assets even though the advisory fee and sub-advisory fee together would
total 0.725% (0.175% plus 0.55%). Because the Adviser has committed that the
overall management fee would not be greater than 0.68%, it would reduce its
portion of the fee, in this situation, by 0.045% to 0.13%.
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The Adviser has agreed to take no more than 0.175% as payment for its services,
reserving the excess (0.505%) to pay a sub-adviser. Should the Adviser be able
to engage a sub-adviser for less than 0.505%, the savings would be passed along
to the Fund. If, however, the Adviser is unable to engage a sub-adviser for less
than 0.505%, then it would not take the full amount of its 0.175% fee so as to
keep the overall management fee at 0.68%.
The Adviser is requesting an increase in overall management fees higher than an
amount that is currently expected to be incurred, because it anticipates
increasing sub-advisory fees in the market. This extra amount requested would
effectively establish a sub-adviser "budget." The costs of attracting and
retaining successful portfolio managers, as well as compliance and regulatory
costs, have continued to rise, thereby increasing overall costs of investment
advisory services. The Adviser believes that the proposal to increase overall
management fees payable by the Fund would help contain some of these costs, and
afford the Adviser the flexibility to attract and retain, in an expedient
manner, highly qualified sub-advisers in a competitive market. The Adviser
believes this flexibility will favorably affect investment returns for the
benefit of shareholders of the Fund.
On December 10-11, 2007 and February 11, 2008, the Board voted unanimously to
enter into a new investment advisory contract (reflecting the overall management
fee of 0.68%) with the Adviser (the "New Advisory Contract"). The Board further
discussed and ratified the New Advisory Contract at its March 31 - April 1, 2008
meeting. The justifications for the Board's action are described below under
"Evaluation by the Board of Trustees."
A copy of the form of the New Advisory Contract is included as Appendix A to
this Proxy Statement. The material terms of the Current and New Advisory
Contracts are described below under "Description of the Current and New Advisory
Contracts."
DESCRIPTION OF THE CURRENT AND NEW ADVISORY CONTRACTS
The Current and New Advisory Contracts are identical except for the dates of
execution and effectiveness and the fees payable. A form of the proposed New
Advisory Contract is included as Appendix A to this Proxy Statement. The
following summary of terms is qualified in its entirety by reference to, and
made subject to, the complete text of Appendix A.
DUTIES UNDER THE CURRENT AND NEW ADVISORY CONTRACTS. The investment advisory
services to be provided by the Adviser to the Fund under the New Advisory
Contract are identical to those provided under the Current Advisory Contract.
Under the New Advisory Contract, the Adviser will provide investment guidance
and policy direction in connection with management of the Fund, including oral
and written research, analysis, advice, statistical and economic data and
information and judgments of both a macroeconomic and microeconomic character.
The Adviser is authorized to employ one or more sub-advisers to provide all or
any portion of the services contemplated by the New Advisory Contract.
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DURATION AND TERMINATION. Like the Current Advisory Contract, the New Advisory
Contract would run for an initial term of two years and thereafter so long as it
was approved: (i) by the vote of the holders of a majority of the outstanding
shares of the Fund or (ii) by the vote of a majority of those Trustees of the
Trust who are not parties to the New Advisory Contract or who are not
"interested persons," as that term is defined in Section 2(a)(19) of the
Investment Company 1940 Act, as amended (the "1940 Act"), of any party thereto,
cast in person at a meeting called for the purpose of voting on such approval.
Like the Current Advisory Contract, the New Advisory Contract will terminate
automatically in the event of its assignment. Additionally, like the Current
Advisory Contract, the New Advisory Contract is terminable (a) at any time
without penalty upon sixty (60) days' written notice to the 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 or (b) by the Adviser upon sixty (60)
days' written notice to the Trust.
COMPENSATION. The New Advisory Contract entitles the Adviser to be compensated
in the same manner as under the Current Advisory Contract. Under both the
Current and New Advisory Contracts, the Fund shall pay the Adviser an advisory
fee on the first business day of each month. Under the New Advisory Contract,
however, the Adviser is paid by the Trust an advisory fee based upon the average
daily value of the Fund's net assets at an annual rate of 0.68%, as opposed to
0.175%. As discussed above, however, the Adviser will not retain greater than
0.175% and will pay the excess up to 0.68% to a sub-adviser.
INDEMNIFICATION. Like the Current Advisory Contract, the New Advisory Contract
provides that the Adviser shall not be liable for any mistake in judgment or in
any other event whatsoever, except a loss resulting from the Adviser's willful
misfeasance, bad faith, or gross negligence in the performance of its duties
under the Agreement.
During the fiscal year ended October 31, 2007, the fees paid to the Adviser
under the Current Advisory Contract amounted to $129,080.
The Adviser has acted as the investment adviser to the Fund since its inception.
The Current Advisory Contract was approved by the initial sole shareholder of
the Fund on December 15, 2003 and was last approved by the Board on December
10-11, 2007.
EVALUATION BY THE BOARD OF TRUSTEES
As noted above, the Board has approved the New Advisory Contract in regards to
the Adviser's investment advisory services to the Fund.
In determining whether to approve the New Advisory Contract, the Board is
required to act solely in the best interests of the Fund and the Fund's
shareholders in evaluating the terms of the Agreement. The Board is required to
judge the terms of the arrangement in light of those that would be reached as a
result of arm's length bargaining.
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In connection with the approval of the New Advisory Contract, the Board
requested and received from the Adviser, and reviewed, a wide variety of
information. The Trustees carefully evaluated this information, and was advised
by independent legal counsel with respect to its deliberations. In approving the
Agreement, the Board took into account a number of factors, among others, as
discussed below.
Based on its review of the information requested and provided for the Fund, the
Board determined that the New Advisory Contract is consistent with the best
interests of the Fund and its shareholders, and enables the Fund to receive a
high quality of services at a cost that is appropriate and reasonable. The Board
made these determinations on the basis of the following considerations, among
others:
NATURE, EXTENT, AND QUALITY OF SERVICES PROVIDED BY THE ADVISER. The Board
considered the nature, quality and extent of the investment advisory services to
be provided by the Adviser, in light of the high quality of services provided to
the Fund and the Fund's historic performance. The Board considered historical
performance and the commitment of the Adviser to the successful operation of the
Fund including the level of expenses of the Fund. The Board considered the
capabilities and performance of the Adviser's Multimanager unit. The Board also
considered the expense limitation agreement in place for the Fund in order to
reduce the overall operating expenses of the Fund. The Board also noted the long
term relationship between the Adviser and the efforts undertaken by the Adviser
to foster the growth and development of the Fund since its inception.
INVESTMENT PERFORMANCE OF THE FUND. The Board considered short-term and
long-term investment performance of the Fund over various periods of time as
compared to a peer group of comparable funds. The Board members took note of the
performance information for the one year period and since inception in May of
2004. In addition, the Board compared expenses of the Fund to expenses of its
peers, noting that the expenses compared favorably with industry averages for
other funds of similar size.
COSTS OF SERVICES AND PROFITS REALIZED BY THE ADVISER. The Board considered the
Adviser's overall profitability and costs and an analysis of the estimated
profitability to the Adviser from its relationship with the HSBC Family of
Funds. The Board considered that the overall management fee under the New
Advisory Contract was within the range of those of similar funds, noting the
high level of resources, expertise and experience that was provided to the Fund
by the Adviser. The Board concluded that the combined advisory and sub-advisory
fees payable by the Fund was fair and reasonable in light of the services
provided, the anticipated costs of these services, the profitability of the
Adviser's relationship with the Fund, and the comparability of the advisory fee
to similar fees paid by comparable mutual funds. In particular, the Board took
note of the fact that the current combined advisory and sub-advisory fee was
significantly lower than the industry averages presented by the Adviser and that
the proposed fee increase would bring the combined advisory and sub-advisory fee
more in line with those paid by other funds of similar size and investment
strategy.
OTHER RELEVANT CONSIDERATIONS. The Board also considered the overall high
quality of the personnel, operations, financial condition, investment management
capabilities,
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methodologies, and performance of the Adviser. The Board considered the global
presence, experience and staffing capabilities of the Adviser's Multimanager
unit and its criteria for monitoring sub-advisers and suggesting sub-adviser
changes among those funds within the Trust (including the Fund) that are
sub-advised. The Board also noted the range of advisory and administrative
services provided by the Adviser to the Fund.
Accordingly, in light of the above considerations and such other factors and
information it considered relevant, the Board by a unanimous vote of the
Independent Trustees present in person at the meeting, approved the Agreement.
INFORMATION ABOUT THE ADVISER
The Adviser, 452 Fifth Avenue, New York, New York 10018, is a wholly-owned
subsidiary of HSBC Bank USA, N.A., which is a wholly-owned subsidiary of HSBC,
USA, Inc., a registered bank holding company, (collectively "HSBC"). HSBC
currently provides investment advisory services for individuals, trusts, estates
and institutions. As of December 31, 2007, HSBC managed $23 billion in the HSBC
Investor Family of Funds.
Set forth in Appendix B is certain information with respect to the executive
officers and directors of the Adviser.
The aggregate advisory fees paid by the Fund to HSBC under the Current Advisory
Agreement for the fiscal year ended October 31, 2007 were $129,080. The
aggregate Sub-Advisory fees paid by the Fund to the sub-adviser for the fiscal
year ended October 31, 2007 were $221,903 for a total of $350,983 fees in the
aggregate.
The Adviser also serves as the Trust's administrator, and in that role oversees
and coordinates the activities of other services providers, and monitors certain
aspects of the Trust's operations. The aggregate fees paid by the Fund to the
Adviser for administrative services for the fiscal year ended October 31, 2007
were $5,161.
SHAREHOLDER APPROVAL
Approval of this Proposal requires the affirmative vote of a majority of the
outstanding shares of the Fund. The term "a majority of the outstanding voting
securities," as used in this proxy statement, is defined by the 1940 Act as the
affirmative vote of the lesser of (a) 67 percent or more of the voting
securities present at the Special Meeting, if the holders of more than 50
percent of the Fund's outstanding voting securities are present or represented
by proxy, or (b) more than 50 percent of the Fund's outstanding voting
securities. All classes of the Fund will vote together on this Proposal.
- 8 -
BOARD RECOMMENDATION
THE BOARD OF TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS OF THE FUND VOTE "FOR" THE APPROVAL OF THE NEW
ADVISORY CONTRACT DESCRIBED IN PROPOSAL 1.
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INFORMATION ON WINSLOW
CAPITAL MANAGEMENT INC.
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INTRODUCTION
At its December 10-11, 2007 meeting, the Board of Trustees of the Trust
determined to replace Waddell & Reed Investment Management Company (Waddell &
Reed") as sub-adviser to the Fund with Winslow Capital Management Inc.
("Winslow"), and approved an investment sub-advisory agreement between HSBC and
Winslow, pursuant to which Winslow will, effective June 2, 2008, provide
investment sub-advisory services to the Fund. (2) HSBC, whose address is 452
Fifth Avenue, New York, New York 10018, serves as manager to the Fund. The Board
had further discussions and ratified its decision to replace Waddell & Reed with
Winslow at a telephonic meeting held February 11, 2008 and a meeting held March
31 - April 1, 2008.
HSBC continues to provide management services to the Fund and retains overall
supervisory responsibility for the general management and investment of the
Fund. Subject to review and approval by the Board, HSBC: (a) sets the Fund's
overall investment strategies; and (b) monitors and evaluates the investment
performance of Winslow. In addition, HSBC may select and recommend one or more
additional sub-advisers to manage all or part of the Fund's assets and, if
appropriate, allocate and reallocate the Fund's assets among the sub-advisers
providing investment advisory services to the Fund.
Prior to the change, Waddell & Reed was the sub-adviser for the Fund pursuant to
a sub-advisory agreement ("Waddell & Reed Agreement") dated as of January 30,
2004. Effective May 30, 2008, HSBC terminated the Waddell & Reed Agreement with
Waddell & Reed with respect to the Fund. Waddell & Reed's investment strategy in
managing the Fund was a key factor in HSBC's decision. HSBC believes that
Winslow's investment style will be more compatible than Waddell & Reed's with
HSBC's overall investment management philosophy.
HSBC's Multimanager unit proposed to the Board that Winslow provide investment
sub-advisory services to the Fund following the termination of the Waddell &
Reed Agreement. The Multimanager unit is the division of HSBC comprised of over
40 analysts worldwide and charged with monitoring sub-advisers and suggesting
sub-adviser changes among those funds of the Trust (such as the Fund) that are
sub-advised. The
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(2) The Fund invests all its assets in the HSBC Investor Growth Portfolio (the
"Portfolio"). The Fund operates in a two-tier structure, which is commonly
referred to as a "master/feeder" structure because one fund (the Fund or
"feeder fund") is investing all its assets in a second fund (the Portfolio
or "master fund"). The Current Sub-Advisory Contract is at the "master
fund" level, meaning that it is for sub-advisory services to be provided to
the Portfolio and not to the Fund.
- 10 -
Board reviewed a presentation and various materials from the Multimanager unit
in regards to its sub-adviser rating process, its forward-looking approach in
determining how a sub-adviser may perform as compared to its peers over the next
three to five years, and in particular the reasoning underlying the Multimanager
unit's recommendation to replace Waddell & Reed with Winslow.
At its December 10-11, 2007 meeting, the Board considered whether it was in the
best interests of the Fund and its shareholders to approve the investment
sub-advisory agreement between HSBC and Winslow with respect to the Fund (the
"Winslow Agreement"). The Board had further discussions and ratified its
December 10-11 decision to approve the Winslow Agreement at a telephonic meeting
held February 11, 2008 and a meeting held March 31 - April 1, 2008. In light of
the information presented for its consideration, the Board determined that the
Winslow Agreement was in the best interests of the Fund's shareholders and
approved the agreement.
INFORMATION ABOUT WINSLOW AND THE PORTFOLIO MANAGERS
Winslow Capital Management Inc. ("Winslow") is located at 4720 IDS Tower, 80
South Eighth Street, Minneapolis, Minnesota 55402. Winslow has been an
investment adviser since 1992 and as of December 31, 2007 managed approximately
$3.7 billion in assets.
The portfolio managers of the Fund are Clark J. Winslow, Justin H. Kelly, CFA
and R. Bartlett Wear, CFA. The educational background of each portfolio manager
is set forth below:
CLARK J. WINSLOW Mr. Winslow has served as the Chief Executive Officer and a
portfolio manager of Winslow since 1992. Mr. Winslow has 42 years of investment
experience and has managed portfolios since 1975. He began his career as an
institutional research analyst in 1966. Mr. Winslow has a B.A from Yale
University and an M.B.A. from the Harvard Business School.
JUSTIN H. KELLY, CFA Mr. Kelly is a Managing Director and portfolio manager of
Winslow and has been with the firm since 1999. Previously Mr. Kelly was a Vice
President and co-head of the Technology Team at Investment Advisers, Inc. in
Minneapolis from 1997-1999. For the prior four years, he was an investment
banker in New York City for Prudential Securities and then Salomon Brothers. Mr.
Kelly received a B.S. degree Summa Cum Laude in 1993 from Babson College where
he majored in Finance/Investments. Mr. Kelly has 16 years of investment
experience and is a Chartered Financial Analyst.
R. BART WEAR, CFA Mr. Wear is a Managing Director and portfolio manager of
Winslow Capital and has been with the firm since 1997. He previously was a
partner and equity manager at Baird Capital Management in Milwaukee, Wisconsin.
Prior to that, he was the lead equity manager and analyst of the mid-to-large
capitalization growth product at Firstar Investment Research and Management
Company. Mr. Wear graduated with honors from Arizona State University in 1982
where he majored in finance. Mr. Wear has 26 years of investment experience and
is a Chartered Financial Analyst.
- 11 -
The name and principal occupation of the directors and principal executive
officers of Winslow are set forth below. The business address of each is that of
Winslow.
- -------------------------------------------- ---------------------------------------------------------
NAME AND ADDRESS* POSITION
- -------------------------------------------- ---------------------------------------------------------
Clark J. Winslow Chief Executive Officer, Portfolio Manager, Director
- -------------------------------------------- ---------------------------------------------------------
Reed B. Wear Managing Director, Portfolio Manager, Director
- -------------------------------------------- ---------------------------------------------------------
Jean A. Baillon Managing Director, Chief Administrative Officer, Chief
Compliance Officer, Chief Financial Officer, Treasurer,
Secretary, Director
- --------------------------------------------- ---------------------------------------------------------
Justin H. Kelly Managing Director, Portfolio Manager, Director
- -------------------------------------------- ---------------------------------------------------------
- ------
*The address for Messrs. Winslow, Wear, Kelly and Ms. Baillon is 4720 IDS Tower,
80 South Eighth Street, Minneapolis, Minnesota 55402.
Appendix C sets forth the fees and other information regarding certain
investment companies sub-advised by Winslow with similar investment objectives
to the Fund.
THE WINSLOW SUB-ADVISORY AGREEMENT
HSBC and Winslow have entered into a sub-advisory agreement effective as of June
2, 2008. The Winslow Agreement will continue in effect for an initial term of
two years, and thereafter from year to year subject to annual approval of a
majority of the Board of Trustees of the Fund, in accordance with the Investment
Company Act of 1940 (the "1940 Act"), unless it is terminated by Winslow, HSBC,
or the Board of the Fund. It may be terminated at any time without penalty: (a)
upon thirty (30) days' written notice to Winslow by (i) the Fund upon the vote
of a majority of the Board or upon the vote of a majority of the Fund's
outstanding voting securities, or (ii) HSBC; or (b) by Winslow upon thirty (30)
days' written notice to the Fund or HSBC, subject to certain conditions. The
Winslow Agreement will also terminate automatically in the event of its
assignment (as defined in the 1940 Act) or the assignment or termination of the
investment advisory agreement between the Fund and HSBC.
Except as described below, the terms of the Winslow Agreement are substantially
the same as the terms of the sub-advisory agreement that had been in place
between HSBC and Waddell & Reed. Under the Winslow Agreement, subject to the
supervision of the Board and HSBC, Winslow, in coordination with HSBC, will
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 SEC.
Winslow is responsible for the market timing of purchases and sales and for all
yield enhancement strategies used in managing the
- 12 -
assets it oversees. Winslow will provide the Fund with ongoing investment
guidance and policy direction. Winslow will place orders to purchase and sell
securities for the Fund.
As compensation for the services provided and expenses assumed by Winslow under
the Winslow Agreement, Winslow will receive a sub-advisory fee computed daily on
the basis of the average daily net assets of all Winslow serviced funds and
separate accounts affiliated with the Adviser, including the Fund, at an annual
rate of 0.40% of the first $250 million of combined assets; 0.35% on the next
$250 million of combined assets; 0.30% on the next $250 million of combined
assets; 0.25% on the next $250 million of combined assets and 0.20% thereafter.
Under the Waddell & Reed Agreement, Waddell & Reed received 0.325% of the
average daily net assets of the Fund up to $50 million, 0.25% of the average
daily net assets of the Fund over $50 million up to $100 million, 0.20% of the
average daily net assets of the Fund over 100 million up to $200 million, and
0.15% of the average daily net assets of the Fund in excess of $200 million. For
the fiscal year ended October 31, 2007, Waddell & Reed received $221,903 in
sub-advisory fees.
The Winslow Agreement provides that Winslow shall not be liable for any error of
judgment or mistake of law or for any loss suffered by HSBC, the Trust or the
Fund in connection with the performance of the Winslow Agreement, except for
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of Winslow in the performance of its duties, or from reckless disregard by
Winslow of its duties under the Winslow Agreement.
The foregoing discussion is qualified in its entirety by reference to the
attached form of the Winslow Agreement in Appendix D.
FACTORS CONSIDERED BY THE TRUSTEES AND THEIR RECOMMENDATION
The Board of Trustees, including the Independent Trustees, at an in-person
meeting held on December 10-11, 2007 unanimously approved the Winslow Agreement.
Additionally, at a telephonic meeting held February 11, 2008 and an in-person
meeting held March 31 - April 1, 2008 the Board further discussed and ratified
this decision. In determining whether it was appropriate to approve the Winslow
Agreement, the Board requested information, provided by HSBC and Winslow, that
it believed to be reasonably necessary to reach its conclusion.
The Board carefully evaluated this information, and was advised by independent
legal counsel with respect to its deliberations. Based on its review of the
information requested and provided, the Board determined that the Winslow
Agreement was consistent with the best interests of the Fund and its
shareholders, and enables the Fund to receive a high quality of services at a
cost that is appropriate, reasonable, and in the best interests of the Fund and
its shareholders. The Board made these determinations and approved the Winslow
Agreement on the basis of the following considerations, among others:
- 13 -
NATURE, EXTENT, AND QUALITY OF SERVICES TO BE PROVIDED BY WINSLOW. The Trustees
considered the nature, quality and extent of the investment advisory services
provided by Winslow and its historic performance managing accounts having
similar investment objectives as the Fund. The Trustees concluded that the
services to be provided by Winslow are extensive and that Winslow would deliver
a high level of service to the Fund. The Trustees considered fee and expense
information regarding the Fund's peer groups. The Trustees compared expenses of
the Fund to the expenses of its peers, noting that the expenses for the Fund
compared favorably with industry averages for other funds of similar size.
COSTS OF SERVICES AND PROFITS TO BE REALIZED BY WINSLOW. The Board considered
the estimated profitability of Winslow's relationship with the Fund, and the
comparability of the proposed fee to fees paid by comparable mutual funds.
SUB-ADVISER PERSONNEL. The Trustees considered Winslow's representations
regarding staffing and capabilities to manage the assets of the Fund. The
Trustees also considered the overall high quality of the personnel, operations,
financial condition, investment management capabilities, methodologies, and
performance of Winslow.
Accordingly, in light of the above considerations and such other factors and
information it considered relevant, the Board of Trustees, including the
Independent Trustees, unanimously approved the Winslow Agreement.
AS NOTED ABOVE, YOU ARE NOT BEING ASKED TO VOTE ON THE APPOINTMENT OF WINSLOW AS
THE NEW SUB-ADVISER TO THE FUND.
- 14 -
----------------------------------------------
GENERAL INFORMATION
----------------------------------------------
MANAGEMENT AND OTHER SERVICE PROVIDERS
Set forth below is a description of the service providers of the Trust.
DISTRIBUTOR
Foreside Distribution Services, LP ("Foreside") serves as the distributor of the
Fund's shares. Foreside is located at 2 Portland Square, Portland, Maine 04101.
ADMINISTRATOR
The Adviser serves as the Trust's administrator, and in that role oversees and
coordinates the activities of other services providers, and monitors certain
aspects of the Trust's operations.
SUB-ADMINISTRATOR
Citi Fund Services Ohio, Inc. ("Citi"), whose address is 3435 Stelzer Road,
Columbus, Ohio 43219-3035, serves as the Fund's sub-administrator. Management
and administrative services of the Adviser and Citi include providing office
space, equipment and clerical personnel to the Fund and supervising custodial,
auditing, valuation, bookkeeping, legal and dividend dispersing services.
CUSTODIAN
Northern Trust Company acts as the custodian of the Fund's assets.
TRANSFER AGENCY
Citi Fund Services Ohio, Inc., whose address is 3435 Stelzer Road, Columbus,
Ohio 43219-3035, acts as transfer agent for shares of the Fund.
OTHER BUSINESS
The Board does not intend to present any other business at the Special Meeting.
If, however, any other matters are properly brought before the Special Meeting,
the persons named in the accompanying form of proxy will vote thereon in
accordance with their judgment.
- 15 -
The Trust does not hold annual shareholder meetings. Any shareholder proposal
intended to be presented at any future meeting of shareholders must be received
by the relevant Trust at its principal office a reasonable time before the
solicitation of proxies for such meeting in order for such proposal to be
considered for inclusion in that Proxy Statement relating to such meeting.
Shareholders who wish to communicate with the Board should send communications
to the attention of the Secretary of the Trust, 3435 Stelzer Road, Columbus,
Ohio 43219-3035 and communications will be directed to the Trustee or Trustees
indicated in the communication or, if no Trustee or Trustees are indicated, to
the Chairman of the Board.
VOTING INFORMATION
This Proxy Statement is furnished in connection with a solicitation of proxies
by the Board to be used at the Special Meeting. This Proxy Statement, along with
a Notice of the Meeting and Proxy Card, is first being mailed to shareholders of
the Fund on or about April 25, 2008. Only shareholders of record as of the close
of business on the Record Date, April 18, 2008, will be entitled to notice of,
and to vote at, the Special Meeting or any adjournments or postponements
thereof. If the enclosed form of Proxy Card is properly executed and returned in
time to be voted at the Special Meeting, the proxies named therein will vote the
shares represented by the proxy in accordance with the instructions marked
thereon. Unmarked but properly executed Proxy Cards will be voted FOR the
proposal. A proxy may be revoked at any time before or at the Special Meeting by
written notice to the Secretary of the Trust at the address on the cover of the
Proxy Statement or by attending and voting at the Special Meeting. Unless
revoked, all valid and executed proxies will be voted in accordance with the
specifications thereon or, in the absence of such specifications, for each
proposal.
QUORUM & VOTING REQUIREMENT
With regard to the proposal, a majority of the shares of the Fund outstanding on
the Record Date, present in person or represented by proxy, constitutes a quorum
for the transaction of business with respect to the proposal. Approval of the
proposal requires the affirmative vote of a majority of the outstanding shares
of the Fund, with all classes voting together. The term "a majority of the
outstanding voting securities," as used in this proxy statement, is defined by
the Investment Company Act of 1940, as amended, ("1940 Act") as the affirmative
vote of the lesser of (a) 67 percent or more of the voting securities present at
the Special Meeting, if the holders of more than 50 percent of the Fund's
outstanding voting securities are present or represented by proxy, or (b) more
than 50 percent of the Fund's outstanding voting securities.
- 16 -
ADJOURNMENTS
In the event that sufficient votes to approve the proposals are not received,
the persons named as proxies may propose one or more adjournments of the Special
Meeting to permit further solicitation of proxies. Any such adjournment will
require an affirmative vote by the holders of a majority of the shares of the
Fund present in person or by proxy and entitled to vote at the Special Meeting.
In determining whether to adjourn the Special Meeting, the following factors may
be considered: the percentage of votes actually cast, the percentage of negative
votes actually cast, the nature of any further solicitation and the information
to be provided to shareholders with respect to the reasons for the solicitation.
The persons named as proxies will vote upon such adjournment after consideration
of the best interests of all shareholders of the Fund.
EFFECT OF ABSTENTIONS AND BROKER "NON-VOTES"
For purposes of determining the presence of a quorum for transacting business at
the Special Meeting, executed proxies marked as abstentions and broker
"non-votes" (that is, proxies from brokers or nominees indicating that such
persons have not received instructions from the beneficial owner or other
persons entitled to vote shares on a particular matter with respect to which the
brokers or nominees do not have discretionary power) will be treated as shares
that are present for quorum purposes but which have not been voted. As a result,
such abstentions and broker "non-votes" will have the effect of a vote against
the proposal.
PROXY SOLICITATION
Proxies are solicited by mail. Additional solicitations may be made by
telephone, fax or personal contact by officers or employees of the Adviser and
its affiliates or by proxy soliciting firms retained by the Adviser. The cost of
solicitation, including the costs of any third party proxy solicitor, will be
borne by the Adviser.
- 17 -
SHARE INFORMATION
For each class of the Fund's shares entitled to vote at the Special Meeting, the
number of shares outstanding as of the Record Date is as follows:
NUMBER OF SHARES
NAME OF FUND OUTSTANDING AND
HSBC INVESTOR GROWTH FUND ENTITLED TO VOTE PER CLASS
============================================== =================================
Class A Shares ____________________________
Class B Shares ____________________________
Class C Shares ____________________________
Class I Shares ____________________________
FUND SHARES OWNED BY CERTAIN BENEFICIAL OWNERS
For a list of persons or entities that owned beneficially or of record 5% or
more of the outstanding shares of a class of the Fund as of the Record Date,
please refer to Appendix E.
- 18 -
APPENDIX A
INVESTMENT ADVISORY CONTRACT SUPPLEMENT
HSBC Investor Portfolios
3435 Stelzer Road
Columbus, Ohio 43219
____, 2008
HSBC Investments (USA) Inc.
452 Fifth Avenue
New York, New York 10018
Dear Sirs:
Re: HSBC Investor Growth Portfolio
This will confirm the agreement between the undersigned HSBC Investor
Portfolios (the "Trust") and HSBC Investments (USA) Inc. (the "Adviser") as
follows:
1. The Trust is an open-end management investment company organized as
a New York trust and consists of such separate investment portfolios as have
been or may be established by the Trustees of the Trust from time to time.
Separate interests of the Trust are offered to investors with respect to each
investment portfolio. HSBC Investor Growth Portfolio (the "Fund") is a separate
investment portfolio of the Trust.
2. The Trust and the Adviser have entered into an Investment Advisory
Contract dated December 31, 1999 and amended and restated on March 1, 2001 and
December 10, 2001 [and which follows this Supplement] pursuant to which the
Trust has employed the Adviser to provide investment advisory and other services
specified in the Advisory Contract and the Adviser has accepted such employment.
Terms used but not otherwise defined herein shall have the same meanings
assigned to them by the Advisory Contract.
3. As provided in paragraph 1 of the Advisory Contract, the Trust
hereby adopts the Advisory Contract with respect to the Fund and the Adviser
hereby acknowledges that the Advisory Contract shall pertain to the Fund, the
terms and conditions of the Advisory Contract being hereby incorporated herein
by reference.
4. The term "Covered Fund" as used in the Advisory Contract shall, for
purposes of this Supplement, pertain to the Fund.
5. As provided in paragraph 6 of the Advisory Contract and subject to
further conditions as set forth therein, the Trust shall with respect to the
Fund pay the Adviser a monthly fee on the first business day of each month at
the annual rate of up to 0.68% of the average daily value (as determined on each
business day at the time set forth in the
A-1
Prospectus for determining net asset value per share) of the net assets of the
Fund during the preceding month. Of that amount, the Adviser shall retain no
more than 0.175% for its investment advisory services and other services as
specified in the Advisory Contract, with the remainder available, as necessary,
solely for payments to sub-advisers and in amounts approved by the Board of
Trustees of the Trust.
6. This Supplement and the Advisory Contract (together, the "Contract")
shall become effective with respect to the Fund on ____, 2008 and shall continue
in effect with respect to the Fund for an initial term of two years from that
date, and shall continue in effect thereafter, but only so long as the
continuance is specifically approved at least annually (a) by the vote of a
majority of the outstanding voting securities of the Fund (as defined in the
1940 Act) or by the Board of Trustees, and (b) by the vote, cast in person at a
meeting called for that purpose, of a majority of the members of the Board of
Trustees who are not parties to this Contract or "interested persons" (as
defined in the 1940 Act) of any such party. This Contract may be terminated with
respect to the Fund at any time, without the payment of any penalty, by vote of
a majority of the outstanding voting securities of the Fund (as defined in the
1940 Act) or by a vote of a majority of the members of the Board of Trustees on
60 days' written notice to the Adviser or by the Adviser on 60 days' written
notice to the Trust. This Contract shall terminate automatically in the event of
its assignment as defined in the 1940 Act.
If the foregoing correctly sets forth the agreement between the Trust
and the Adviser, please so indicate by signing and returning to the Trust the
enclosed copy hereof.
Very truly yours,
HSBC INVESTOR PORTFOLIOS
By
------------------------------------
Name:
Title:
ACCEPTED:
HSBC INVESTMENTS (USA) INC.
By
- ------------------------------------
Title:
A-2
AMENDED AND RESTATED MASTER
INVESTMENT ADVISORY CONTRACT
HSBC Investor Portfolios
3435 Stelzer Road
Columbus, Ohio 43219
December 31, 1999
(amended and restated March 1, 2001 and
December 10, 2001)
As Renewed
December 13, 2004
HSBC Asset Management (Americas) Inc.
452 Fifth Avenue
New York, NY 10018
Dear Sirs:
This will confirm the agreement between the undersigned HSBC Investor Portfolios
(the "Trust") and HSBC Asset Management (Americas) Inc. (the "Adviser") as
follows:
1. The Trust is an open-end investment company organized as a
Massachusetts business trust and consists of one or more separate investment
portfolios (the "Funds") as may be established and designated by the Trust's
Board of Trustees (the "Board of Trustees") from time to time. This Contract
shall pertain to such Funds as shall be designated in Supplements to this
Contract as further agreed between the Trust and the Adviser (the "Covered
Funds"). A separate series of shares of beneficial interest in the Trust are
offered to investors with respect to each Fund. The Trust engages in the
business of investing and reinvesting the assets of each Fund in the manner and
in accordance with the investment objectives and restrictions specified in the
currently effective prospectus (the "Prospectus") relating to the Trust and the
Funds included in the Trust's registration statement, as amended from time to
time (the "Registration Statement"), filed by the Trust under the Investment
Company Act of 1940 (the "1940 Act") and the Securities Act of 1933. Copies of
the documents referred to in the preceding sentence have been furnished to the
Adviser. Any amendments to those documents shall be furnished to the Adviser
promptly. Pursuant to a Distribution Agreement, as supplemented, and an
Administration Agreement, as supplemented, between the Trust and BISYS Fund
Services (the "Sponsor"), the Trust has employed the
A-3
Sponsor to act as principal underwriter for each Fund and to provide to the
Trust management and other services.
2. The Trust hereby appoints the Adviser to provide the investment
advisory services specified in this Contract and the Adviser hereby accepts such
appointment. The Trust expressly authorizes the Adviser, subject to the approval
of the Board of Trustees and compliance with applicable law, to employ (without
obtaining the approval of Trust's shareholders) one or more sub-advisers to
provide all or any portion of the services contemplated hereby, subject to
supervision and oversight of the Adviser, on such terms and conditions as the
Adviser determines appropriate.
3. (a) The Adviser shall, at its expense, (i) employ or associate with
itself such persons as it believes appropriate to assist it in performing its
obligations under this Contract and (ii) provide all services, equipment and
facilities necessary to perform its obligations under this Contract.
(b) The Trust shall be responsible for all of its expenses and
liabilities, including compensation of its Trustees who are not affiliated with
the Sponsor or any of its affiliates; taxes and governmental fees; interest
charges; fees and expenses of the Trust's independent accountants and legal
counsel; trade association membership dues; fees and expenses of any custodian
(including maintenance of books and accounts and calculation of the net asset
value of shares of the Funds), transfer agent, registrar and dividend disbursing
agent of the Trust; expenses of issuing, selling, redeeming, registering and
qualifying for sale shares of beneficial interest in the Trust; expenses of
preparing and printing share certificates, prospectuses and reports to
shareholders, notices, proxy statements and reports to regulatory agencies; the
cost of office supplies, including stationery; travel expenses of all officers,
Trustees and employees; insurance premiums; brokerage and other expenses of
executing portfolio transactions; expenses of shareholders' meetings;
organization expenses; and extraordinary expenses.
4. (a) The Adviser shall provide to the Trust investment guidance and
policy direction in connection with the management of the portfolio of each
Covered Fund, including oral and written research, analysis, advice, statistical
and economic data and information and judgments of both a macroeconomic and
microeconomic character.
The Adviser will determine the securities to be purchased or sold by each
Covered Fund and will place orders pursuant to its determinations either
directly with the issuer or with any broker or dealer who deals in such
securities. The Adviser will determine what portion of each Covered Fund's
portfolio shall be invested in securities described by the policies of such
Covered Fund and what portion, if any, should be invested otherwise or held
uninvested.
The Trust will have the benefit of the investment analysis and research, the
review of current economic conditions and trends and the consideration of
long-range investment policy generally available to investment advisory
customers of the Adviser. It is understood that the Adviser will not use any
inside information pertinent to investment decisions undertaken in connection
with this Contract that may be in its possession or in
A-4
the possession of any of its affiliates nor will the Adviser seek to obtain any
such information.
(b) The Adviser also shall provide to the Trust's officers
administrative assistance in connection with the operation of the Trust and each
of the Covered Funds, which shall include (i) compliance with all reasonable
requests of the Trust for information, including information required in
connection with the Trust's filings with the Securities and Exchange Commission
and state securities commissions and (ii) such other services as the Adviser
shall from time to time determine, upon consultation with the Sponsor, to be
necessary or useful to the administration of the Trust and each of the Covered
Funds.
(c) As manager of the assets of each Covered Fund, the Adviser shall
make investments for the account of that Fund in accordance with the Adviser's
best judgment and within the investment objectives and restrictions set forth in
the Prospectus, the 1940 Act and the provisions of the Internal Revenue Code of
1986 relating to regulated investment companies subject to policy decisions
adopted by the Board of Trustees.
(d) The Adviser shall furnish to the Board of Trustees periodic
reports on the investment performance of each Covered Fund and on the
performance of its obligations under this Contract and shall supply such
additional reports and information as the Trust's officers or Board of Trustees
shall reasonably request.
(e) On occasions when the Adviser deems the purchase or sale of a
security to be in the best interest of a Covered Fund as well as other
customers, the Adviser, to the extent permitted by applicable law, may aggregate
the securities to be so sold or purchased in order to obtain the best execution
or lower brokerage commissions, if any. The Adviser may also on occasions
purchase or sell a particular security for one or more customers in different
amounts. On either occasion, and to the extent permitted by applicable law and
regulations, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to that Fund and to such other customers.
5. The Adviser shall give the Trust the benefit of the Adviser's best
judgment and efforts in rendering services under this Contract. As an inducement
to the Adviser's undertaking to render these services, the Trust agrees that the
Adviser shall not be liable under this Contract for any mistake in judgment or
in any other event whatsoever PROVIDED that nothing in this Contract shall be
deemed to protect or purport to protect the Adviser against any liability to the
Trust or its shareholders to which the Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of the Adviser's duties under this Contract or by reason of the Adviser's
reckless disregard of its obligations and duties hereunder.
6. In consideration of the services to be rendered by the Adviser under
this Contract, each Covered Fund shall pay the Adviser a monthly fee on the
first business
A-5
day of each month based upon the average daily value (as determined on each
business day at the time set forth in the Prospectus for determining net asset
value per share) of the net assets of that Fund during the preceding month, at
annual rates set forth in a Supplement to this Contract with respect to that
Fund. If the fees payable to the Adviser pursuant to this paragraph 6 begin to
accrue before the end of any month or if this Contract terminates before the end
of any month, the fees for the period from that date to the end of that month or
from the beginning of that month to the date of termination, as the case may be,
shall be prorated according to the proportion which the period bears to the full
month in which the effectiveness or termination occurs. For purposes of
calculating the monthly fees, the value of the net assets of each Covered Fund
shall be computed in the manner specified in the Prospectus for the computation
of net asset value. For purposes of this Contract, a "business day" is any day
the New York Stock Exchange is open for trading.
7. If the aggregate expenses of every character incurred by, or
allocated to, each Covered Fund in any fiscal year, other than interest, taxes,
expenses under the Distribution Agreement and the Amended and Restated Master
Distribution Plan and Supplements, brokerage commissions and other portfolio
transaction expenses, other expenditures which are capitalized in accordance
with generally accepted accounting principles and any extraordinary expense
(including, without limitation, litigation and indemnification expense), but
including the fees payable under this Contract and the fees payable to the
Sponsor under the Distribution Agreement and the Amended and Restated Master
Distribution Plan and Supplements ("includible expenses"), shall exceed any
applicable expense limitations, the Adviser shall pay that Fund an amount equal
to 50% of that excess. With respect to portions of a fiscal year in which this
Contract shall be in effect, the foregoing limitations shall be prorated
according to the proportion which that portion of the fiscal year bears to the
full fiscal year. At the end of each month of the Trust's fiscal year, the
Sponsor will review the includible expenses accrued during that fiscal year to
the end of the period and shall estimate the contemplated includible expenses
for the balance of that fiscal year. If, as a result of that review and
estimation, it appears likely that the includible expenses will exceed the
limitations referred to in this paragraph 7 for a fiscal year with respect to a
Covered Fund, the monthly fees relating to that Fund payable to the Adviser
under this Contract for such month shall be reduced, subject to a later
reimbursement to reflect actual expenses, by an amount equal to 50% of a pro
rata portion (prorated on the basis of the remaining months of the fiscal year,
including the month just ended) of the amount by which the includible expenses
for the fiscal year (less an amount equal to the aggregate of actual reductions
made pursuant to this provision with respect to prior months of the fiscal year)
are expected to exceed the limitations provided in this paragraph 7. For
purposes of the foregoing, the value of the net assets of each Covered Fund
shall be computed in the manner specified in paragraph 6, and any payments
required to be made by the Adviser shall be made once a year promptly after the
end of the Trust's fiscal year.
8. (a) This Contract and any Supplement hereto shall become effective
with respect to a Covered Fund on the date specified in such Supplement and
shall thereafter continue in effect with respect to that Fund for a period of
more than two years from such date only so long as the continuance is
specifically approved at least annually
A-6
(i) by the vote of a majority of the outstanding voting securities of the Fund
(as defined in the 1940 Act) or by the Board of Trustees and (ii) by the vote,
cast in person at a meeting called for that purpose, of a majority of the
members of the Board of Trustees who are not parties to this Contract or
"interested persons" (as defined in the 1940 Act) of any such party.
(b) This Contract and any Supplement hereto may be terminated with
respect to a Covered Fund at any time, without the payment of any penalty, by a
vote of a majority of the outstanding voting securities of that Fund (as defined
in the 1940 Act) or by a vote of a majority of the entire Board of Trustees on
60 days' written notice to the Adviser or by the Adviser on 60 days' written
notice to the Trust. This Contract shall terminate automatically in the event of
its assignment (as defined in the 1940 Act).
9. Except to the extent necessary to perform the Adviser's obligations
under this Contract, nothing herein shall be deemed to limit or restrict the
right of the Adviser, or any affiliate of the Adviser, or any employee of the
Adviser, to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
firm, individual or association.
10. The investment management services of the Adviser to the Trust
under this Contract are not to be deemed exclusive as to the Adviser and the
Adviser will be free to render similar services to others.
11. This Contract shall be construed in accordance with the laws of the
State of New York provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act.
12. In the event that the Board of Trustees shall establish one or more
additional investment portfolios, it shall so notify the Adviser in writing. If
the Adviser wishes to render investment advisory services to such portfolio, it
shall so notify the Trust in writing, whereupon such portfolio shall become a
Covered Fund hereunder.
13. The Declaration of Trust establishing the Trust, together with all
amendments thereto (the "Declaration"), a copy of which is on file in the Office
of the Secretary of the Commonwealth of Massachusetts, provides that the name of
the Trust refers to the Trustees under the Declaration collectively as Trustees
and not as individuals or personally, and that no shareholder, Trustee, officer,
employee or agent of the Trust shall be subject to claims against or obligations
of the Trust to any extent whatsoever, but that the Trust estate only shall be
liable.
A-7
If the foregoing correctly sets forth the agreement between the Trust and the
Adviser, please so indicate by signing and returning to the Trust the enclosed
copy hereof.
Very truly yours,
HSBC INVESTOR PORTFOLIOS
By _______________________________
Name:
Title:
ACCEPTED:
HSBC ASSET MANAGEMENT (AMERICAS) INC.
By
-----------------------------------------------------------
Title:
A-8
APPENDIX B
ADDITIONAL INFORMATION ABOUT HSBC INVESTMENTS (USA) INC.
EXECUTIVE OFFICERS AND DIRECTORS OF HSBC INVESTMENTS (USA) INC.
NAME AND ADDRESS* PRINCIPAL OCCUPATION
===================================== =============================================================
Stephen J. Baker + Chief Executive Officer, HSBC Investments (USA) Inc.
Manuel L. Diaz + President & Manager, HSBC Private Bank International
Alain Dromer + Chief Executive Officer, HSBC Investments (Europe) Ltd.
Nancie Dupier +
Andrew Ireland +
Paul Lawrence +
Kevin Newman + Head of Personal Financial Services, HSBC Bank USA, N.A.
James M. Curtis Secretary, HSBC Investments (USA) Inc.
Richard A. Fabietti Senior Vice President, Head of Product Management, HSBC
Investments (USA) Inc.
Salvatore J. Iocolano Chief Compliance Officer, HSBC Investments (USA) Inc.
Guillermo Konecny Chief Investment Officer, HSBC Investments (USA) Inc.
Jeremiah Murname Chief Operating Officer, HSBC Investment (USA) Inc.
- -------
*The address for Messrs. Baker, Iocolano, Fabietti, Newman, Lawrence, Dupier,
Ireland, Murname and Curtis is 452 Fifth Avenue, New York, NY 10018. The address
for Mr. Diaz is One Biscayne Tower, Miami, FL 33131; for Mr. Dromer is Level 21,
8 Canada Square, London E14 5HQ.
+ Director of HSBC Investments
B-1
APPENDIX C
ADDITIONAL INFORMATION ABOUT WINSLOW
NET ASSETS AS OF
FUND DECEMBER 31, 2007 FEE RATE (AS A % OF AVERAGE DAILY NET ASSETS)
====================================== ============================ =====================================================
MainStay Large Cap Growth Fund $1.3 billion .40% for the first $250 million;
.35% on the next $250 million;
.30% on the next $250 million;
.25% on the next $250 million;
and .20% on assets over $1
billion.*
MainStay Variable Product Large Cap $341 million .40% for the first $250 million;
Growth Portfolio Fund .35% on the next $250 million;
.30% on the next $250 million;
.25% on the next $250 million;
and .20% on assets over $1
billion.*
MGI US Large Cap Growth Equity Fund $142 million .40% on the first $100 million;
.30% on the next $200 million;
and .20% on assets over $300
million.
- ------
* Fee rate applies to the combined assets of the MainStay Large Cap Growth Fund
and the MainStay Variable Product Large Cap Growth Portfolio Fund.
C-1
APPENDIX D
HSBC INVESTOR PORTFOLIOS
GROWTH PORTFOLIO
SUB-ADVISORY AGREEMENT
AGREEMENT, effective commencing on __________, 2008, between Winslow
Capital Management, Inc. (the "Sub-adviser") and HSBC Investment Management
(USA) Inc. (the "Manager").
WHEREAS, the Manager has been retained by HSBC Investor Portfolios, a
New York master 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 Growth
Portfolio (the "Portfolio") 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 Portfolio pursuant to this Sub-advisory Agreement and the Sub-adviser is
willing to perform such services for the Portfolio;
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 Portfolio 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 Portfolio in accordance with the Portfolio's investment objectives, policies
and limitations as stated in the Portfolio's Prospectus and Statement of
Additional Information included as part of the Trust's Registration Statement on
behalf of the Portfolio 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 Portfolio; and
(c) place orders to purchase and sell securities for the Portfolio. 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
Portfolio.
D-1
In performing its investment management services to the
Portfolio hereunder, the Sub-adviser will provide the Portfolio 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 Portfolio will purchase, sell, enter into or use, and
will provide an ongoing evaluation of the Portfolio. The Sub-adviser will
determine what portion of the 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, 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 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;
(c) place orders pursuant to its investment determinations for the
Portfolio directly with the issuer, or with any broker or dealer the Sub-adviser
may choose, in accordance with applicable policies expressed in the Portfolio'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 Portfolio's assets or
contemplated investments. In addition, the Sub-adviser will keep the Trust and
the Trustees informed of developments materially affecting the 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) 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 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 available data regarding the Portfolio as may be mutually
agreed upon from time to time; and
(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 Portfolio,
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 Portfolio's assets in accordance with the Portfolio'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 Portfolio's administrator, accountant,
D-2
custodian or other agent designated by the Manager as responsible for testing
compliance of the Portfolio (the "Compliance Agent"). The Sub-adviser further
agrees to manage and invest the Portfolio'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 Portfolio 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
Portfolio's share of payroll taxes), and the Sub-adviser shall make available,
without expense to the Portfolio, 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
Portfolio 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
Portfolio: organization and offering expenses of the Portfolio (including
out-of-pocket expenses); fees payable to any other Portfolio 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 Portfolio 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
Portfolio; payments for maintaining the Portfolio's financial books and records
and calculating the daily net asset value of the Portfolio's 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 Portfolio for sale (if any); freight, insurance and other charges in
connection with the shipment of the portfolio securities of the Portfolio;
brokerage commissions or other costs of acquiring or disposing of any portfolio
securities or other assets of the Portfolio, or of entering into other
transactions or engaging in any investment practices with respect to the
Portfolio; 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 Portfolio'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.
D-3
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 Portfolio's average daily net assets,
equal on an annual basis to 0.40% of the average daily net assets of all
Sub-adviser serviced funds and separate accounts affiliated with the Manager,
including the Portfolio, for the first $250 million in combined assets; 0.35% of
the average daily net assets of all Sub-adviser serviced funds and separate
accounts affiliated with the Manager, including the Portfolio, for the next $250
million in combined assets; 0.30% of the average daily net assets of all
Sub-adviser serviced funds and separate accounts affiliated with the Manager,
including the Portfolio, for the next $250 million in combined assets; 0.25% of
the average daily net assets of all Sub-adviser serviced funds and separate
accounts affiliated with the Manager, including the Portfolio, for the next $250
million in combined assets; and 0.20% of the average daily net assets of all
Sub-adviser serviced funds and separate accounts affiliated with the Manager,
including the Portfolio, thereafter.
The "average daily net assets" of the Portfolio shall mean the average
of the values attributed to the Portfolio's net assets as of 4:00 p.m. (New York
time) on each day on which the net asset value of the Portfolio is determined
consistent with the provisions of Rule 22c-1 under the 1940 Act or, if the
Portfolio 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
Portfolio 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 Portfolio 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 Portfolio's portfolio may lawfully be determined, on that day. If the
determination of the net asset value of the shares of the Portfolio 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 Portfolio as last determined (whether
during or prior to such quarter). If the Portfolio 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 Portfolio hereunder.
5. BOOKS AND RECORDS. The Sub-adviser agrees to maintain such books and
records with respect to its services to the Portfolio 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 Portfolio's 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 Portfolio and the Sub-adviser and a copy will be provided
D-4
promptly to the Portfolio 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
Portfolio 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 Portfolio or the
holders of the Portfolio'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 Portfolio or to holders of the Portfolio'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
Portfolio.
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
Portfolio'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 Portfolio 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
D-5
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 Portfolio) 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 Portfolio 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 Portfolio, 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 Portfolio, such transactions will be executed on a
basis that is fair and equitable to the Portfolio. In connection with purchases
or sales of portfolio securities for the account of the Portfolio, 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, as requested by the Sub-adviser:
(a) the Trust's registration statement relating to the Portfolio, 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 Portfolio upon the
vote of a majority of the Trustees or upon the vote of a majority of the
Portfolio'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(c) 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(c). This Sub-advisory Agreement will also
D-6
terminate automatically in the event of its assignment (as defined in the 1940
Act) 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 Portfolio, and (ii) a majority of the
Trustees of the Portfolio, 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 Investment Management (USA) Inc.
452 Fifth Avenue
New York, New York 10018
Attention: Elba Vasquez
IF TO THE SUB-ADVISER:
Winslow Capital Management, Inc.
80 South 8th Street
4720 IDS TW
Minneapolis, MN 55402
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
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
D-7
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
Portfolio, 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 Portfolio has executed this
Sub-advisory Agreement not individually, but as an officer under the Portfolio's
Declaration of Trust, and the obligations of this Sub-advisory Agreement are not
binding upon the Portfolio's Trustees, its officers, or shareholders in the
Portfolio individually, but bind only the Portfolio 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 portfolio 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 portfolio managed by the Sub-adviser 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.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of ____________, 2008.
WINSLOW CAPITAL MANAGEMENT, INC.
By:
--------------------------------
Name:
Title:
HSBC INVESTMENT MANAGEMENT (USA) INC.
By:
--------------------------------
Name:
Title:
D-8
APPENDIX E
PRINCIPAL SHAREHOLDERS OF THE FUND
PRINCIPAL HOLDERS OF SECURITIES. As of the Record Date the following person(s)
owned of record, or were known by the Fund to own beneficially, 5% or more of
any class of the Fund's shares.
PERCENTAGE OF CLASS
CLASS NAME AND ADDRESS OUTSTANDING (%) TYPE OF OWNERSHIP
================================ ==================================== ======================= =======================
CLASS A Record
================================ ==================================== ======================= =======================
CLASS B Record
================================ ==================================== ======================= =======================
CLASS C Record
================================ ==================================== ======================= =======================
CLASS I Record
================================ ==================================== ======================= =======================
The Trustees and officers as a group owned less than 1% of the outstanding
shares of the Fund
E-1
Appendix 1
HSBC INVESTOR FUNDS
(THE "TRUST")
3435 Stelzer Road
Columbus, Ohio 43219-3035
PROXY CARD FOR
HSBC INVESTOR FUNDS
HSBC Investor Growth Fund
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES of the Trust for use at a
Special Meeting of the Shareholders (the "Special Meeting") of the HSBC Investor
Growth Fund (the "Fund") to be held on May 23, 2008 at 10:00 a.m., Eastern Time,
at the offices of Citi Fund Services, 100 Summer Street, Suite 1500, Boston,
Massachusetts 02110.
The undersigned, revoking previous proxies, hereby appoints Gary Ashjian and
Jennifer English, and either or both of them, with full power of substitution,
as proxies of the undersigned to vote at the above-stated Special Meeting, and
at all adjournments or postponements thereof, all interests in the Fund that are
held of record by the undersigned on the record date of the Special Meeting,
upon the following matters and upon any other matter which may come before the
Special Meeting, in their discretion:
1. Approval of the New Advisory Contract between HSBC Investments (USA)
Inc. and the Trust on behalf of the HSBC Investor Growth Fund for the
purpose of increasing the management fee in order to provide the
Adviser with increased flexibility in hiring sub-advisers.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. To transact such other business as may properly come before the Special
Meeting and any adjournment thereof.
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE FOR A
PROPOSAL, THIS PROXY WILL BE VOTED FOR THAT PROPOSAL.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING.
Every properly signed proxy will be voted in the manner specified therein and,
in the absence of specification, will be treated as GRANTING authority to vote
FOR Proposals 1-2 above.
PLEASE SIGN, DATE AND RETURN PROMPTLY
Receipt of Notice of Special Meeting
of Shareholders and Proxy Statement is hereby acknowledged.
- ---------------------------------------------------
Sign here exactly as name(s) appears on account.
- ---------------------------------------------------
Dated: _____________________, 2008
IMPORTANT: Joint owners must EACH sign. When signing as attorney, trustee,
executor, administrator, guardian or corporate officer,
please give your FULL title.
OR, VOTE BY TELEPHONE. IT'S FAST, CONVENIENT, AND IMMEDIATE!
Call toll-free on a touch-tone phone. Follow these four easy steps:
1. Read the accompanying proxy statement.
2. Call the toll-free number (there is no charge for this call)
3. Enter your control number located on your Proxy Card.
4. Follow the recorded instructions.
Or, vote by internet. it's fast, convenient, and your vote is immediately
confirmed and posted.
Follow these four easy steps:
1. Read the accompanying proxy statement.
2. Go to the website; http://www.[.]
3. Enter your control number located on your Proxy Card.
4. Follow the instructions provided.
Your vote is important! Call or visit the website anytime!
Do not return your Proxy Card if you are voting by telephone or internet.
Detach card