CONSULTING GROUP CAPITAL MARKETS FUNDS INTERIM INVESTMENT ADVISORY AGREEMENT
Exhibit (d)(53)
June 1,
2009
Pacific Investment Management Company LLC
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Ladies and Gentlemen:
Under an agreement (the “Interim Agreement”) between the Consulting Group Capital Markets
Funds, a Massachusetts business trust (the “Trust”), and Citigroup Investment Advisory Services,
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 Pacific Investment Management Company LLC (the
“Adviser”) with respect to the Adviser’s serving as an investment adviser of International Fixed
Income 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; and (iii) place orders to purchase and sell securities and, where appropriate, commodity
futures contracts and options of any type with respect to Allocated Assets. The Manager
understands that the Adviser does not guarantee that any investment objectives will be achieved.
(b) To the extent responsibility therefore is delegated to the Adviser by the Trust’s Board
of Trustees, the Adviser shall be responsible for voting all proxies related to Allocated Assets,
in accordance with Adviser’s “Proxy Voting Policies and Procedures”, as may be amended from time
to time. The Adviser shall
maintain a record of how the Adviser voted and such record shall be available to the Manager upon
its request. The right of Adviser to vote proxies shall continue until the earlier of the
termination of the Agreement or such time as the Board of Trustees specifically revokes Adviser’s
authority to vote proxies and specifically reserves such right to the Manager or to another.
(c) 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.
(d) 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
or such other means as they may agree, 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.
(e) 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 ( ) –
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.
(f) The Adviser may from time to time seek research assistance and rely on investment
management resources available to it through its affiliated companies, but in no case shall such
reliance relieve the Adviser of any of its obligations hereunder, nor shall the Manager, the Trust
or the Portfolio be responsible for any additional fees or expenses hereunder as a result.
(g) The Adviser shall have no responsibility under this Agreement with respect to the
management of assets of the Portfolio other than the portion of the Portfolio’s assets with
respect to which the Adviser provides investment advice.
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, 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 Manager acknowledges that it is an investment adviser registered under the Advisers
Act and other applicable laws. The Manager further acknowledges that the appointment of the
Adviser has been duly authorized and the transactions contemplated herein are in conformity with
the Trust’s governing documents.
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
All compensation due to the Manager for the services it provides to the Trust under the
Interim Agreement will be credited to an interest-bearing escrow account held at ▇▇▇▇▇ Brothers
▇▇▇▇▇▇▇▇ and Co. (the “Escrow Agent”) subject to the terms and conditions of an escrow agreement
among the Manager, the Trust, and the Escrow Agent. Pursuant to the terms of the escrow agreement,
in consideration of services rendered pursuant to this Agreement, the Escrow Agent will pay the
Adviser a fee that is computed daily and paid monthly at the annual rate of 0.25%, based on the
average daily value of Allocated Assets as determined by the Trust’s accounting agent (the
“Portfolio Advisory Fee”). Compensation for any partial period shall be pro-rated based on the
length of the period.
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. Adviser shall not be liable for any act or
omission of the custodian bank. 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.
If the custodian enters into securities lending transactions on behalf of the Portfolio, the
Trust or the custodian shall be responsible for ensuring that the securities or other assets in the
Portfolio are available for sale at all times. The Trust or the custodian shall be liable for any
loss resulting from the sale by the Adviser of a security that is not available in the Portfolio
for settlement as a result of such securities lending transactions. Subject to the Adviser’s
applicable standard of care as set forth in Section 8 of this Agreement, to the extent that the
Adviser initiates any securities lending transactions, the Adviser shall be responsible for
ensuring that the securities involved in such transactions are available to settle any trades
initiated by the Adviser.
The Adviser is expressly authorized to rely upon any and all instructions, approvals and
notices given on behalf of the Trust by any one or more of those persons designated as
representatives of the Trust whose names, titles and specimen signatures appear in Exhibit
“A” attached hereto. The Manager on behalf of the Trust may amend such Exhibit A from time to
time by written notice to the Adviser. The Adviser shall continue to rely upon these instructions
until notified by the Manager to the contrary.
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.
(d) Provided the investment objectives of the Portfolio are adhered to, the Manager agrees
that the Adviser may aggregate sales and purchase orders of securities, commodities and other
investments held in the Portfolio with similar orders being made simultaneously for other accounts
managed by the Adviser or with accounts of the affiliates of Adviser, if in the Adviser’s
reasonable judgment such aggregation shall result in an overall economic benefit to the Portfolio
taking into consideration the advantageous selling or purchase price, brokerage commission and
other expenses. The Manager acknowledges that the determination of such economic benefit to the
Portfolio by the Adviser represents the Adviser’s evaluation that the Portfolio is benefited by
relatively better purchase or sales prices, lower commission expenses and beneficial timing of
transactions or a combination of these and other factors.
Section 10. Duration and Termination
This Agreement shall become effective as of the date first written above and shall continue
in effect until termination of the Interim Agreement. This Agreement is terminable, without
penalty, at any time, by the Manager, by the Board, or by vote of holders of a majority (as
defined in the ▇▇▇▇ ▇▇▇) of the Portfolio’s shares; or on 60 days’ written notice by the Adviser,
and will terminate five business days after the Adviser receives written notice of the termination
of the Interim Management Agreement between the Trust and the Manager. This Agreement also will
terminate automatically in the event of its assignment (as defined in the 1940 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. Delivery of Documents
Concurrently with the execution of this Agreement, the Adviser is delivering to the Manager a
copy of Part II of its Form ADV, as revised, on file with the Securities and Exchange Commission.
The Manager acknowledges receipt of such copy.
The Adviser also has delivered to the Manager a copy of its Disclosure Document, as amended,
dated February 13, 2009, on file with the Commodity Futures Trading Commission. The Manager hereby
acknowledges receipt of such copy.
Section 14. 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: |
The Consulting Group | |
| c/o Citigroup Investment Advisory Services LLC | ||
| ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ | ||
| ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Fax: (▇▇▇) ▇▇▇-▇▇▇▇ | ||
| Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | ||
| Title: Assistant Secretary | ||
If to the Adviser: |
Pacific Investment Management Company LLC | |
| ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ | ||
| ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Fax: (▇▇▇) ▇▇▇-▇▇▇▇ | ||
| Attention: General Counsel | ||
| Email: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇ | ||
| cc: ▇▇▇▇ ▇▇▇▇▇▇, Executive Vice President | ||
| Email: ▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇ |
Section 15. 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.
(e) The Manager and the Adviser each agree that it shall promptly notify the other (i) of any
changes regarding the information about itself in this Agreement, or (ii) if any of its
representations or warranties hereunder are no longer true or completely accurate.
(f) This Agreement may be amended at any time but only by the mutual agreement of the
parties, in writing.
(g) This Agreement constitutes the entire agreement between the parties and supersedes in
their entirety all prior agreements between the parties relating to the subject matter hereof.
(h) This Agreement shall be executed in two counterparts, each of which shall be considered
to be an original.
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.
| THE MANAGER: | ||||||
| CITIGROUP INVESTMENT ADVISORY SERVICES, LLC. | ||||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |||||
| Name: | ||||||
| Title: | COO-CGCM Funds | |||||
| THE ADVISER: | ||||||
 |
PACIFIC INVESTMENT MANAGEMENT COMPANY LLC | |||||
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||
| Name: | ||||||
| Title: | Managing Director | |||||
Exhibit a
Designated Representatives
OF
International Fixed Income Investments
(PIMCO Account #1385)
June 1,
2009
| Name/Title | Signature | |