CONSULTING GROUP CAPITAL MARKETS FUNDS
INVESTMENT ADVISORY AGREEMENT
January 25, 2005
NFJ Investment Group
0000 Xxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Ladies and Gentlemen:
Under an agreement (the "Management Agreement") between the
Consulting Group Capital Markets Funds, a Massachusetts business trust
(the "Trust"), and Xxxxx Xxxxxx Fund Management LLC, (the "Manager"),
the Manager serves as the Trust's investment manager and has the
responsibility of evaluating, recommending, supervising and compensating
investment advisers to each series of the Trust.
The Manager hereby confirms its agreement with NFJ Investment
Group (the "Adviser") with respect to the Adviser's serving as an
investment adviser of Large Capitalization Value Equity Investments
(the "Portfolio"), a series of the Trust, as follows:
Section 1. Investment Description; Appointment
(a) The Trust desires to employ the Portfolio's 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 Adviser.
(b) The Manager, with the approval of the Trust, hereby
appoints the Adviser to act as an investment adviser to the Portfolio for
the periods and on the terms set forth in this Agreement. The Adviser
accepts such appointment and agrees to furnish the services herein set forth
for the compensation herein provided.
Section 2. Portfolio Management Duties
(a) Subject to the supervision of the Manager and the Trust's
Board of Trustees, the Adviser will (i) manage the portion of the
Portfolio's assets allocated to the Adviser by the Manager and subject to
the review of the Board of Trustees ("Allocated Assets") in accordance
with the Portfolio's investment objectives, policies and limitations as
stated in the Trust's Prospectus and Statement of Additional Information;
(ii) make investment decisions with respect to Allocated Assets; (iii)
place orders to purchase and sell securities and, where appropriate,
commodity futures contracts and options of any type with respect to
Allocated Assets; and (iv) vote proxies if such responsibility is
delegated to the Adviser by the Board of Trustees.
(b) The Adviser will keep the Trust and the Manager informed of
developments materially affecting the Portfolio and shall, on the Adviser's
own initiative, furnish to the Trust and the Manager from time to time
whatever information the Adviser believes appropriate for this purpose.
(c) The Adviser agrees that, with respect to the management of
the Allocated Assets, it will comply with applicable provisions of the
Investment Company Act of 1940, as amended (the "Act"), and all rules and
regulations thereunder, all applicable federal and state laws and regulations
and with any applicable procedures adopted by the Trust's Board of Trustees,
provided in writing to the Adviser. When engaging in transactions in
securities or other assets for the Portfolio with any adviser to any other
fund or portfolio under common control with the Portfolio, including any
adviser that is a principal underwriter or an "affiliated person"
(as defined in the Act) of a principal underwriter in connection with such
transactions, the Adviser or any of its "affiliated persons" will not
consult (other than for purposes of complying with Rule 12d3-1(a) and (b))
with such other adviser.
(d) The Manager will provide to the Adviser at the end of each
calendar month a list (the "Monthly List") of the securities comprising
the Allocated Assets as of such month end. The Adviser agrees that it
will review the Monthly List and promptly alert the Manager?s controller,
by facsimile at (000) 000-0000 or such other means as they may agree, as
to any discrepancies between the Adviser's records of such holdings and
the Monthly List. Upon the specific request of the Manager, the Adviser
shall provide to the Manager the Adviser's opinion as to the value of a
security included in the Allocated Assets in order to assist the Manager,
or the Trust?s Board of Trustees, as the case may be, in determining the
value of such security.
Section 3. Brokerage
(a) The Adviser agrees that it will place orders pursuant to
its investment determinations with respect to Allocated Assets with
brokers or dealers selected by it in accordance with the standards
specified in paragraphs (b) and (c) of this Section 3. The Adviser
may, but need not, place orders with respect to Allocated Assets
with (i) the Manager or its affiliates (ii) the Adviser or its
affiliates or (iii) any other adviser to the Portfolio or its affiliates,
in accordance with Section 11(a) of the Securities Exchange Act of 1934
and Rule 11a2-2(T) thereunder, Section 17(e) of the Act and Rule 17e-1
thereunder and other applicable laws and regulations.
(b) In placing orders with brokers and dealers, the 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, the price of the security, 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.
(c) 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 exercise
investment discretion. In connection with underwritten fixed-price new issues
of securities, the Adviser may receive new issue credits from managers or
members of the underwriting syndicate for research services
(as defined above).
In connection with agency transactions, the Adviser may cause the Portfolio
to
pay to a broker-dealer a commission in excess of that another broker-dealer
may charge for the same transaction, if the Adviser determines in good faith
that the commission charged is reasonable in relation to the value of
brokerage and research services (as defined above) provided by such broker,
viewed either in terms of the particular transaction or the Adviser's
overall responsibilities with respect to accounts over which the
Adviser exercises investment discretion.
Section 4. Information Provided to the Manager and the Trust
(a) The Adviser agrees that it will make available to the Manager
and the Trust promptly upon their request copies of all of its investment
records and ledgers with respect to the Portfolio to assist the Manager and
the Trust in monitoring compliance with the Act and the Investment Advisers
Act of 1940, as amended (the "Advisers Act"), as well as other applicable
laws. The Adviser will furnish the Trust's Board of Trustees such periodic
and special reports with respect to the Allocated Asset as the Manager and
the Board of Trustees may reasonably request.
(b) The Adviser agrees that it will immediately notify the Manager
and the Trust in the event that the Adviser or any of its affiliates:
(i) becomes subject to a statutory disqualification that prevents the Adviser
from serving as investment adviser pursuant to this Agreement; or (ii) is or
reasonably expects to become the subject of an administrative proceeding or
enforcement action by the SEC or other regulatory authority. The Adviser has
provided the information about itself set forth in the Registration Statement
and has reviewed the description of its operations, duties and
responsibilities as stated therein and acknowledges that they are true
and correct and contain no material misstatement or omission, and it
further agrees to notify the Manager and the Trust's Administrator
immediately of any material fact known to the Adviser respecting or
relating to the Adviser that is not contained in the Prospectus or
Statement of Additional Information of the Trust, or any amendment or
supplement thereto, or any statement contained therein that becomes
untrue in any material respect.
(c) The Adviser represents that it is an investment adviser
registered under the Advisers Act and other applicable laws and that the
statements contained in the Adviser's registration under the Advisers Act
on Form ADV, as of the date hereof, are true and correct and do not omit to
state any material fact required to be stated therein or necessary in order
to make the statement therein not misleading. The Adviser agrees to
maintain the completeness and accuracy of its registration on Form ADV in
accordance with all legal requirements relating to that Form. The Adviser
acknowledges that it is an "investment adviser" to the Portfolio with respect
to the Allocated Assets within the meaning of the Act and the Advisers Act.
(d) The Adviser confirms that neither it nor any of its
"affiliated persons" (as defined in the Act) are affiliated persons of:
(i) the Manager, (ii) any adviser to the Portfolio or any affiliated person
of that adviser; or (iii) the promoter, underwriter, officer, board member,
member of an advisory board, or employee of the Portfolio or the Trust.
Section 5. Books and Records
In compliance with the requirements of Rule 31a-3 under the Act, the
Adviser hereby agrees that all records that it maintains for the Trust are
available to the Trust and further agrees to surrender promptly to the Trust
copies of any such records upon the Trust's request. The Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the Act the
records required to be maintained by Rule 31a-1 under the Act and to preserve
the records required by Rule 204-2 under the Advisers Act for the period
specified in that Rule.
Section 6. Compensation
(a) In consideration of services rendered pursuant to this
Agreement, the Manager will pay the Adviser a fee that is computed daily
and paid monthly at the annual rate of 0.30% on the first $250 million and
0.25% thereafter, multiplied by the average daily value of Allocated Assets
(the "Portfolio Advisory Fee").
(b) The Portfolio Advisory Fee for the period from the date this
Agreement becomes effective to the end of the month during which this Agreement
becomes effective shall be prorated according to the proportion that such
period bears to the full monthly period. Upon any termination of this
greement 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 shall be payable upon the date of termination
of this Agreement.
(c) For the purpose of determining fees payable to the Adviser,
the value of the Portfolio's net assets shall be computed at the time and in
the manner specified in the Trust's Prospectus and/or the Statement of
Additional Information.
Section 7. Costs and Expenses
During the term of this Agreement, the Adviser will pay all
expenses incurred by it and its staff in connection with the performance of
its services under this Agreement, including the payment of salaries of all
officers and employees of the Trust who are employed by the Adviser. It is
understood that the Adviser does not, by this Agreement, undertake to assume
or pay any costs or expenses of the Trust or Portfolio.
Section 8. Standard of Care
The Adviser shall exercise its best judgment in rendering the services
provided by it under this Agreement in respect of the Allocated Assets.
The Adviser shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Manager or 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 Adviser
against any liability to the Manager or the Trust or to holders of the
Trust's shares representing interests in the Portfolio to which the 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 Adviser's reckless disregard of its obligations and duties under
this Agreement. The Adviser shall be responsible solely for the management
of the Allocated Assets, and the Adviser's compliance with the Act, rules
and regulations thereunder, other federal and state laws, and written
procedures of the Trust's Board of Trustees will be determined solely by
reference to the Allocated Assets. The Adviser shall have no liability
with respect to the actions of any other investment adviser to the Portfolio
and shall not be charged with knowledge of the holdings or transaction of
any position of the Portfolio other than the Allocated Assets.
Section 9. Services to Other Companies or Accounts
(a) It is understood that the services of the Adviser are not
exclusive, and nothing in this Agreement shall prevent the Adviser from
providing similar services to separate accounts and other investment
companies (whether or not their investment objectives and policies are
similar to those of the Trust) or from engaging in other activities.
(b) When the Adviser recommends the purchase or sale of a
security for other investment companies and other clients, and at the same
time the Adviser recommends the purchase or sale of the same security for
the Trust, it is understood that in light of its fiduciary duty to the Trust
such transactions will be executed on a basis that is fair and equitable to
the Trust.
(c) The Trust and the Manager understand and acknowledge that
the persons employed by the Adviser to assist in the performance of its
duties under this Agreement will not devote their full time to that service;
nothing contained in this Agreement will be deemed to limit or restrict the
right of the Adviser or any affiliate of the Adviser to engage in and devote
time and attention to other businesses or to render services of whatever
kind or nature.
Section 10. Duration and Termination
(a) This Agreement shall become effective on January 25, 2005
and shall continue for two years from that date, and thereafter 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
Portfolio's outstanding voting securities (as defined in the Act),
provided that the continuance is also approved by a majority of the
Trustees who are not "interested persons" (as defined in the Act) of
the Trust, by vote cast in person at a meeting called for the purpose
of voting on such approval.
(b) Notwithstanding the foregoing, this Agreement may be
terminated (i) by the Manager at any time without penalty, upon written
notice to the Adviser and the Trust, (ii) at any time without penalty by the
Trust, upon the vote of a majority of the Trust's Trustees or by vote of the
majority of the Trust's outstanding voting securities, upon written notice to
the Manager, Adviser and the Trust or (iii) by the Adviser at any time without
penalty, upon sixty (60) days' written notice to the Manager and the Trust.
(c) This Agreement will terminate automatically in the event of
its assignment (as defined in the Act and in rules adopted under the Act).
Section 11. Amendments
No provision of this Agreement may be changed, waived, discharged
or terminated orally, but only by an instrument in writing signed by the
party against whom enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be
effective until approved in accordance with applicable law.
Section 12. Limitation of Liability
The Manager and Adviser agree that the obligations of the Trust
under
this Agreement shall not be binding upon any of the Board members,
shareholders, nominees, officers, employees or agents, whether past, present
or future, of the Trust individually, but are binding only upon the assets
and property of the Portfolio, as provided in the Master Trust Agreement of
the Trust. The execution and delivery of this Agreement have been duly
authorized by the Manager and the Adviser, and signed by an authorized
officer of each acting as such.
Section 13. Notices
Any written notice required by or pertaining to this Agreement
shall be personally delivered to the party for whom it is intended, at
the address stated below, or shall be sent to such party by prepaid first
class mail, recognized air courier or facsimile.
If to the Manager: Xxxxx Xxxxxx Fund Management LLC
c/o Citigroup Asset Management
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: R. Xxx Xxxxxx
President
If to the Adviser: NFJ Investment Group
0000 Xxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Fax: (214) ___-____
Attention: ______________
Title: __________________
Section 14. 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 Advisers Act, or rules or orders of the SEC
thereunder.
(b) The captions of this Agreement are included for convenience
only and in no way define or limit any of the provisions thereof 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 Adviser
as an agent of the Trust or the Manager.
If the terms and conditions described above are in accordance with your
understanding, kindly indicate your acceptance of this Agreement by signing
and returning to us the enclosed copy of this Agreement.
XXXXX XXXXXX FUND MANAGEMENT LLC
By: ___________________________
Name: R. Xxx Xxxxxx
Title: President
Accepted:
NFJ Investment Group
By: ______________________________
Name:
Title:
