CONSULTING GROUP CAPITAL MARKETS FUNDS
INVESTMENT MANAGEMENT AGREEMENT
December 1, 2005
The Consulting Group, A Division Of
Citigroup Investment Advisory Services Inc.
Attention: Xxxxxx X. Xxxxxx
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Consulting Group Capital Markets Funds (the "Trust"), a
business trust formed under the laws of The Commonwealth of
Massachusetts, confirms its agreement with the Consulting Group
(the "Manager"), a division of Citigroup Investment Advisory
Services Inc., with respect to the Manager's serving as
investment manager of the Trust as set forth below.
Section 1. Investment Description; Appointment
The Trust desires to employ its capital by investing and
reinvesting in investments of the kind and in accordance with the
investment objectives, policies and limitations specified in its
Master Trust Agreement dated April 12, 1991, as amended from time
to time (the "Trust Agreement"), in the prospectus (the
"Prospectus") and in the statement of additional information (the
"Statement of Additional Information") filed with the Securities
and Exchange Commission (the "SEC") as part of the Trust's
Registration Statement on Form N-1A, as amended from time to time
(the "Registration Statement") and in the manner and to the
extent as may from time to time be approved in the manner set
forth in the Trust Agreement. Copies of the Trust's Prospectus,
the Statement of Additional Information and the Trust Agreement
have been or will be submitted to the Manager. The Trust desires
to employ and hereby appoints the Manager to act as its
investment manager. The Manager accepts the appointment and
agrees to furnish the services described in Section 2 of this
Agreement for the compensation set forth in Section 6 of, and
Appendix I to, this Agreement.
Section 2. Services as Manager; Appointment of Advisers
(a) Subject to the supervision and direction of the Trust's
Board of Trustees, the Manager shall provide such services
reasonably requested by the Trust, including but not limited to
the following:
(i) monitoring and supervising the services provided to the
Trust by its administrator (the "Administrator") pursuant to a
separate agreement between the Trust and the Administrator, a
copy of which has been or will be submitted to the Manager; and
(ii) providing to the Trust investment management evaluation
services principally by performing initial due diligence on
prospective investment advisers ("Advisers") for each existing
series of its shares of beneficial interest and any series or
class which the Trust may offer from time to time in the future
(each, a "Portfolio"), thereafter monitoring and supervising
Adviser performance through quantitative and qualitative analysis
as well as periodic in-person, telephonic and written
consultations with Advisers and considering and approving
investments and use of certain investment strategies when the
Trust requests review and consideration of such matters by the
Manager. The Manager will be responsible for communicating
performance expectations and evaluations to Advisers and
ultimately recommending to the Board of Trustees of the Trust
whether Advisers' contracts should be renewed, modified or
terminated. The Manager will provide written reports to the Board
of Trustees regarding the results of its evaluation and
monitoring functions. The Manager will also be responsible for
conducting all operations of the Trust except those operations
contracted to the Advisers, custodian, transfer agent and
Administrator.
(b) The Manager will, at its own expenses, maintain sufficient
staff, employ or retain sufficient personnel, and consult with
any other persons that it determines may be necessary or useful
to the performance of its obligations under this Agreement.
Section 3. Brokerage
The Manager is authorized to permit the Advisers to execute
portfolio transactions for the Trust. In executing transactions
and selecting brokers or dealers, each Adviser will use its best
efforts to seek the best overall terms available. In assessing
the best overall terms available for any portfolio transaction,
the Adviser will consider all factors it deems relevant
including, but not limited to, the breadth of the market in the
security or commodity interest, the price of the security or
commodity interest, the financial condition and execution
capability of the broker or dealer and the reasonableness of any
commission for the specific transaction and on a continuing
basis. In selecting brokers or dealers to execute a particular
transaction and in evaluating the best overall terms available,
the Adviser may consider the brokerage and research services (as
those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) provided to the Trust and/or other accounts
over which the Adviser or an affiliate exercises investment
discretion.
Section 4. Information Provided to the Trust
The Manager will keep the Trust informed of developments
materially affecting the Portfolios and, in addition to providing
the Trust with whatever statistical or other information the
Trust may reasonably request with respect to its investments, the
Manager will, on its own initiative, furnish the Trust from time
to time with whatever information the Manager believes is
appropriate for this purpose.
Section 5. Standard of Care
The Manager shall exercise its best judgment in rendering
the services provided by it under this Agreement. The Manager
shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Trust in connection with the
matters to which this Agreement relates, provided that nothing in
this Agreement shall be deemed to protect or purport to protect
the Manager against any liability to the Trust or to holders of
the Trust's shares of beneficial interest to which the Manager
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 Manager's reckless disregard of its
obligations and duties under this Agreement.
Section 6. Compensation
(a) In consideration of services rendered pursuant to this
Agreement, each of the Trust's Portfolios will accrue daily and
pay monthly a fee at the annual rate applied to the value of that
Portfolio's average daily net assets as set forth in the schedule
attached hereto as Appendix I.
(b) The fee for the period from the commencement of investment
operations of a Portfolio to the end of the month during which
investment operations commence will be prorated according to the
proportion that such period bears to the full monthly period, and
will be payable that month. Upon any termination of this
Agreement with respect to a Portfolio before the end of a month,
the fee for such part of that month shall be prorated according
to the proportion that such period bears to the full monthly
period and will be payable upon the date of termination of this
Agreement.
(c) For the purpose of determining fees payable to the Manager
under this Agreement, the value of the Trust's net assets will be
computed in the manner described in the Trust's current
Prospectus and/or Statement of Additional Information.
Section 7. Costs and Expenses
The Manager will bear all expenses in connection with the
performance of its services under this Agreement, including the
payment of salaries of all officers and employees who are
employed by it and the Trust as well as the payment of the fees
of the Advisers.
Section 8. Reimbursement to the Trust
If, in any fiscal year of the Trust, the aggregate expenses
of the Trust (including fees pursuant to this agreement and the
Trust's Administration Agreement with the Administrator, but
excluding interest, taxes, brokerage, fees, and, if permitted by
state securities commissions, extraordinary expenses) exceed the
expense limitation of any state having jurisdiction over the
Trust, the Manager will reimburse the Trust to the extent
required by state law in the same proportion as its fees bear to
the combined fees paid by the Trust for investment management and
administration. The Manager's expense reimbursement obligation
will be limited to the amount of its fees received pursuant to
this Agreement. Such expense reimbursement, if any, will be
estimated, reconciled and paid on a monthly basis.
Section 9. Services to Other Companies or Accounts
The Trust understands that the Manager and the Advisers may
act as investment managers or advisers to fiduciary and other
managed accounts, including other investment companies, and the
Trust has no objection to the Manager's and Advisers' so acting,
provided that whenever the Trust and one or more other accounts
advised by an Adviser have available funds for investment,
investments suitable and appropriate for each will be allocated
in accordance with a formula believed to be equitable to each
account or company. The Trust recognizes that in some cases this
procedure may adversely affect the size of the position
obtainable for the Trust. In addition, the Trust understands and
acknowledges that the persons employed by the Manager to assist
in the performance of the Manager's duties under this Agreement
will not devote their full time to such service and nothing
contained in this Agreement shall be deemed to limit or restrict
the right of the Manager or any affiliate of the Manager to
engage in and devote time and attention to other businesses or to
render services of any kind or nature.
Section 10. Term of Agreement
(a) This Agreement will become effective as of the date first
written above ("Effective Date"), and shall continue for an
initial term of two years from the Effective Date. Thereafter,
this Agreement shall continue automatically for successive annual
periods, provided such continuance is specifically approved at
least annually by (i) the Trust's Board of Trustees or (ii) a
vote of a "majority" of the Trust's outstanding voting securities
(as defined in the Investment Company Act of 1940, as amended
(the "Act")), provided that in either event the continuance is
also approved by a majority of Trustees who are not "interested
persons" (as defined in the Act) of any party to this Agreement,
by vote cast in person at a meeting called for the purpose of
voting on such approval.
(b) This Agreement is terminable, without penalty, on 60 days'
written notice, by the Trust's Trustees or by vote of holders of
a majority of the Trust's outstanding voting securities, or upon
90 days' written notice, by the Manager.
(c) This Agreement will terminate automatically in the event of
its assignment (as defined in the Act or in rules adopted under
the Act).
Section 11. Filing of Trust Agreement
The Trust represents that a copy of the Trust Agreement is
on file with the Secretary of The Commonwealth of Massachusetts
and with the Boston City Clerk.
Section 12. Limitation of Liability
The Manager is hereby expressly put on notice of the
limitation of trustee and shareholder liability as set forth in
the Trust Agreement, and the Manager agrees that obligations
assumed by the Trust pursuant to this Agreement shall be limited
in all cases to the Trust and its assets. The Manager agrees
that any creditor of any Portfolio may look only to the assets of
that Portfolio to satisfy such creditor's debt. The Manager
agrees that the Manager shall not seek satisfaction of any such
obligation from the holders of the Trust's shares, nor from the
Trustees of the Trust.
Section 13. Miscellaneous
(a) This Agreement shall be governed by the laws of the State of
New York, provided that nothing herein shall be construed in a
manner inconsistent with the Act, the Investment Advisers Act of
1940, as amended, or rules or orders of the Securities and
Exchange Commission thereunder.
(b) The captions of this 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 Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby and, to
this extent, the provisions of this Agreement shall be deemed to
be severable.
(d) Nothing herein shall be construed as constituting the
Manager as an agent of the Trust.
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If the foregoing is in accordance with your understanding,
kindly indicate your acceptance of this Agreement by signing and
returning the enclosed copy of this Agreement.
Very truly yours,
CONSULTING GROUP CAPITAL MARKETS
FUNDS
By:
Name:
Title:
Accepted:
THE CONSULTING GROUP, A DIVISION OF
CITIGROUP INVESTMENT ADVISORY SERVICES INC.
By:
Name:
Title:
APPENDIX I
PORTFOLIOS OF THE CONSULTING GROUP CAPITAL MARKETS FUNDS
Manager's
Rate Of
Fee in
Accordance
With Section
6 of The
Agreement
Government Money Investments .15%
Core Fixed Income Investments .40%
Municipal Bond Investments .40%
Large Capitalization Value Equity Investments .60%
Small Capitalization Value Equity Investments .80%
Large Capitalization Growth Investments .60%
Small Capitalization Growth Investments .80%
International Equity Investments .70%
International Fixed Income Investments .50%
Emerging Markets Equity Investments .90%
High Yield Investments .70%
