CONSULTING GROUP CAPITAL MARKETS FUNDS
INVESTMENT ADVISORY AGREEMENT
December 31, 1996
The Boston Company Asset Management, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Dear Sirs:
Under an agreement (the "Management Agreement") between the Consulting
Group Capital Markets Funds, a Massachusetts business trust (the "Trust"), and
Xxxxx Xxxxxx Mutual Funds Management Inc. (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 The Boston Company Asset
Management, Inc. (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 upon the recommendation of the Manager and 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; and (iii) place orders
to purchase and sell securities and, where appropriate, commodity futures
contracts with respect to Allocated Assets.
(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 it will comply with 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.
Section 3. Brokerage
(a) The Adviser agrees that it will place orders pursuant to its
investment determinations with respect to Allocated Assets either directly
with the issuer or 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 place orders with respect to Allocated Assets with Xxxxx Xxxxxx
Mutual Funds Management Inc. 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.
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 with respect to the
Portfolio such periodic and special reports 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 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 within the meaning of the Act and the
Advisers Act.
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 the
property of 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% of the average daily net assets of the Portfolio,
multiplied by a fraction, the numerator of which is the average daily value of
Allocated Assets and the denominator of which is the average daily value of
the Portfolio's total assets (the "Portfolio Advisory Fee"). The Portfolio
Advisory Fee payable to the Adviser shall be reduced in the same proportion as
the Portfolio Advisory Fee bears to the Manager's fee from the Portfolio to
the extent, in any fiscal year of the Portfolio, the aggregate expenses of the
Portfolio (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 Portfolio.
(b) The Portfolio Advisory Fee for the period from the date of 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
Agreement 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 who are employed by it and the Trust.
Section 8. Standard of Care
The Adviser shall exercise its best judgment in rendering the services
provided by it under this Agreement. 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 matter 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.
Section 9. Services to Other Companies or Accounts
(a) It is understood that the services of the Advisor are not
exclusive, and nothing in this agreement shall prevent the Advisor from
providing similar services to 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 Advisor recommends the purchase or sale of a security for
other investment companies and other clients, and at the same time the Advisor
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 Advisor 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 Advisor or any affiliate of the Advisor 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 as of end of business on
December 31, 1996, or, if a later date, the date it is approved by
shareholders of the Portfolio 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 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 notice to the Manager 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. 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 MUTUAL FUNDS
MANAGEMENT INC.
By: _____________________________
Name: Xxxxx X. XxXxxxxx
Title: President
Accepted:
THE BOSTON COMPANY ASSET MANAGEMENT, INC.
By: ______________________________
Name:
Title:
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