LARGE CAPITALIZATION VALUE EQUITY INVESTMENTS
SMALL CAPITALIZATION VALUE EQUITY INVESTMENTS
EACH A PORTFOLIO OF
CONSULTING GROUP CAPITAL MARKETS FUNDS
Two World Trade Center
New York, New York 10048
____________________
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
To Be Held on October 31, 1994
_____________________
To the Shareholders of:
Large Capitalization Value Equity Investments
Small Capitalization Value Equity Investments
Notice is hereby given that a Special Meeting of Shareholders
of Large Capitalization Value Equity Investments and Small
Capitalization Value Equity Investments, each a portfolio of
Consulting Group Capital Markets Funds, a Massachusetts business
trust (the "Trust"), will be held at Two World Trade Center, 100th
Floor, New York, New York 10048 at 10:00 a.m., on October 31, 1994.
The Special Meeting is held for the purposes of:
1. approving or disapproving a new Investment Advisory
Agreement for Large Capitalization Value Equity Investments with
Parametric Portfolio Associates. - LARGE CAPITAL VALUE EQUITY
INVESTMENTS;
2. approving or disapproving a new Investment Advisory
Agreement for Small Capitalization Value Equity Investments with NFJ
Investment Group. - SMALL CAPITAL VALUE EQUITY INVESTMENTS; and
3. transacting such other business as may properly come
before the meeting or any adjournment thereof.
The Board of Trustees of the Trust has fixed the close of
business on September __, 1994 as the record date for the
determination of shareholders entitled to notice of, and to vote at,
the Special Meeting and any adjournments thereof.
By Order of the Board of Trustees,
Christina T. Sydor
Secretary
September 27, 1994
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE REQUESTED
TO COMPLETE, SIGN,
DATE AND RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE,
WHICH NEEDS NO POSTAGE IF
MAILED IN THE UNITED STATES. INSTRUCTIONS FOR THE PROPER
EXECUTION OF PROXIES ARE SET
FORTH ON THE INSIDE COVER. IT IS IMPORTANT THAT PROXIES
BE RETURNED PROMPTLY.
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of
assistance to you in order that the Fund may avoid the time and
expense involved in validating your vote if you fail to sign your
proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in
the registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the
party signing should conform exactly to the name shown in the
registration on the proxy card.
3. All Other Accounts: The capacity of the individual signing the
proxy card should be indicated unless it is reflected in the form of
registration. For example:
Registration Valid Signature
Corporate Accounts
(1) ABC Corp. .................................... ABC Corp.
(2) ABC Corp. .................................... John Doe,
Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer ..... John Doe
(4) ABC Corp. Profit Sharing Plan ... John Doe, Trustee
Trust Accounts
(1) ABC Trust ..................................... Jane B. Doe,
Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78 ...................... Jane B. Doe
Custodian or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr. UGMA John B. Smith
(2) John B. Smith ................................ John B. Smith,
Jr.,
Executor
SPECIAL MEETING OF SHAREHOLDERS
October 31, 1994
Large Capitalization Value Equity Investments
Small Capitalization Value Equity Investments
each a sub-trust of
CONSULTING GROUP CAPITAL MARKETS FUNDS
Two World Trade Center
New York, New York 10048
______________________
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Trustees of Consulting
Group Capital Markets Funds (the "Trust") for use at a Special
Meeting of Shareholders of Large Capitalization Value Equity
Investments and Small Capitalization Value Equity Investments
(each a "Portfolio" and together the "Portfolios") to be held at
10:00 a.m. on October 31, 1994, at Two World Trade Center, 100th
Floor, New York, New York 10048, and at any adjournments thereof
(the "Meeting"). A Notice of the Meeting and a proxy card
accompany this Proxy Statement. Proxy solicitations will be
made primarily by mail, but proxy solicitations also may be made
by telephone, telegraph or personal interviews conducted by
officers and employees of the Trust; Smith Barney Inc. ("Smith
Barney"); Smith, Barney Advisers, Inc. administrator of the
Trust, of which the Consulting Group, the investment manager of
the Trust, is a part; Parametric Portfolio Associates, Inc.
("Parametric") and NFJ Investment Group, Inc. ("NFJ"), each
wholly owned subsidiaries of Pacific Financial Asset Management
Corporation ("PFAMCo") an indirect wholly owned subsidiary of
Pacific Mutual Life Insurance Company, investment advisers to
the Portfolios; The Boston Company Advisors, Inc. ("Boston
Advisors"), an indirect wholly owned subsidiary of Mellon Bank
Corporation, the sub-administrator of the Trust; and/or The
Shareholder Services Group, Inc. ("TSSG"), a subsidiary of First
Data Corporation, the transfer agent of the Trust. The costs of
proxy solicitation and expenses incurred in connection with the
preparation of this Proxy Statement and its enclosures will be
paid by PFAMCo. PFAMCo also will reimburse brokerage firms and
others for their expenses in forwarding solicitation material to
the beneficial owners of Trust shares.
If the enclosed proxy is properly executed and returned in
time to be voted at the Meeting, the shares of beneficial
interest in the Trust ("Shares") represented thereby will be
voted in accordance with the instructions marked thereon.
Unless instructions to the contrary are marked thereon, the
proxy will be voted FOR the approval of the Investment Advisory
Agreements described herein. Any shareholder who has given a
proxy has the right to revoke it at any time prior to its
exercise either by attending the Meeting and voting his or her
shares in person, or by submitting a letter of revocation or a
later-dated proxy to the Trust at the above address prior to the
date of the Meeting.
In the event that a quorum is not present at the Meeting,
or in the event that a quorum is present but sufficient votes to
approve any of the proposals are not received, the persons named
as proxies may propose one or more adjournments of the Meeting
to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of those Shares
represented at the Meeting in person or by proxy. If a quorum
is present, the persons named as proxies will vote those proxies
which they are entitled to vote FOR any such proposal in favor
of such an adjournment and will vote those proxies required to
be voted AGAINST any such proposal against any such adjournment.
Under the Master Trust Agreement of the Trust dated April 12,
1991, as amended, a quorum is constituted by the presence in
person or by proxy of the holders of a majority of the
outstanding Shares entitled to vote on a particular matter at
the Meeting.
The Trust has an unlimited number of shares of beneficial
interest, par value $0.001 per share, which are divided among
twenty-five portfolios of the Trust. Shares of thirteen of such
portfolios, including the Portfolios, are currently offered for
sale to shareholders. Since the matter being submitted to each
Portfolio's shareholders for approval affects the interests of
the shareholders of that Portfolio only and not the other
portfolios of the Trust, the Trust's Board of Trustees has
determined that proxies should be solicited from shareholders of
only the Portfolios. As of the record date, September __, 1994,
the following number of Shares were outstanding for each
Portfolio:
Name of Portfolio Shares Outstanding
Large Capitalization Value Equity Investments
Small Capitalization Value Equity Investments
Proposal 1 will be submitted to the shareholders of Large
Capitalization Value Equity Investments. Each Share outstanding
on the record date is entitled to one vote, and fractional
Shares are entitled to proportionate shares of one vote. As
of__________, to the knowledge of the Board of Trustees, no
single shareholder or "group" (as that term is used in Section
13(d) of the Securities Exchange Act of 1934, as amended)
beneficially owned more than 5% of either of the Portfolio's
outstanding Shares. As of __________ the Board of Trustees
beneficially owned __________% and __________% of the
outstanding Shares of Large Capitalization Value Equity
Investments and Small Capitalization Value Equity Investments,
respectively.
In order that your Shares may be represented at the
Meeting, you are requested to:
- indicate your instructions on the enclosed proxy
card;
- date and sign the proxy card;
- - mail the proxy card promptly in the enclosed envelope,
which requires no postage if mailed in the United States; and
- - allow sufficient time for the proxy card to be received on
or before 9:30 a.m., October 31, 1993.
Proposals 1 and 2 require the affirmative vote of a
"majority of the outstanding voting securities" of the
applicable Portfolio which, as defined in the Investment Company
Act of 1940, as amended ("1940 Act"), means the lesser of (a)
67% of the Portfolio's Shares present at a meeting of its
shareholders if the owners of more than 50% of the Shares of the
Portfolio then outstanding are present in person or by proxy or
(b) more than 50% of the Portfolio's outstanding shares
("Majority Vote").
BACKGROUND ON PROPOSALS 1 AND 2
(Proposal I to be voted on by shareholders of Large
Capitalization
Value Equity Investments only and Proposal II to be voted on
by shareholders of Small Capitalization Value Equity Investments
only)
Parametric currently serves as an investment adviser
("Adviser") to Large Capitalization Value Equity Investments
pursuant to an Advisory Agreement dated March 3, 1994 between
The Consulting Group (the Manager) and Parametric. NFJ
currently serves as an Adviser to Small Capitalization Value
Equity Investments of the Fund pursuant to an Advisory Agreement
dated April 1, 1993 between The Consulting Group and NFJ (each
of the current Advisory Agreements with Parametric and NFJ
hereinafter collectively referred to as "Current Advisory
Agreements.") Parametric and NFJ are each wholly owned
subsidiaries of PFAMCo, which is in turn, an indirect wholly
owned subsidiary of Pacific Mutual Life Insurance Company
("Pacific Mutual").
Parametric, NFJ, and others have entered into an agreement
("Consolidation Agreement") with Thomson Advisory Group L.P.
("TAG") providing for the consolidation of Parametric, NFJ, and
certain other entities with TAG (the "Consolidation"). As
described in more detail below, the Consolidation would result
in the transfer of the current investment advisory businesses of
Parametric and NFJ to new general partnerships that are expected
to be called Parametric Portfolio Associates ("New Parametric")
and NFJ Investment Group ("New NFJ"), respectively (although it
is possible that these names may change prior to closing of the
Consolidation).
The Current Advisory Agreements each provide for their
automatic termination in the event of an "assignment," as that
term is defined in the 1940 Act, and the Consolidation may
result in an assignment and resulting termination of the Current
Advisory Agreements with Parametric and NFJ. Consequently,
Parametric and NFJ have proposed that The Consulting Group enter
into new Advisory Agreements for Large Capitalization Value
Equity Investments and Small Capitalization Value Equity
Investments to take effect upon the closing of the
Consolidation.
At a meeting held on September 1, 1994, after considering
various factors described below, the Trustees, including the
Trustees who are not parties to the Advisory Agreements or
interested persons (as defined in the 1940 Act) of any such
party (the "Independent Trustees"), unanimously approved two
proposed new Advisory Agreements (collectively referred to
hereinafter as the "New Advisory Agreements"), one between The
Consulting Group and Parametric for Large Capitalization Value
Equity Investments, and one between The Consulting Group and NFJ
for Small Capitalization Value Equity Investments. The form of
the New Advisory Agreements is attached as Exhibit A.
PFAMCo has advised the Board of Trustees that after the
Consolidation, New Parametric and New NFJ will each retain the
services of their respective advisory personnel and employees
who currently provide services to Large Capitalization Value
Equity Investments and Small Capitalization Value Equity
Investments. PFAMCo further advised the Trustees that, subject
to approval of the New Advisory Agreements by shareholders, the
Consolidation is not expected to materially affect the level or
quality of advisory services provided to Large Capitalization
Value Equity Investments and Small Capitalization Value Equity
Investments, and that the same investment management personnel
who currently manage these Portfolios are expected to continue
to do so after the Consolidation. No change is anticipated in
the investment objectives and policies of these Portfolios.
The Consolidation Transaction
The Consolidation Agreement provides for the consolidation
of the investment advisory and other businesses of Parametric,
NFJ, and other subsidiaries of PFAMCo with TAG, which will
change its name to PIMCO Advisors, L.P. TAG and its affiliates
provide investment advisory and related services to a wide range
of institutional and individual clients, including mutual funds.
As a result of the Consolidation, the current investment
advisory business of Parametric and NFJ would be transferred to
separate general partnerships that are expected to be called
Parametric Portfolio Associates and NFJ Investment Group,
respectively (although it is possible that these names will
change prior to closing on the Consolidation). These new general
partnerships would be subsidiary partnerships of PIMCO Advisors.
The general partner of PIMCO Advisors would be another
partnership, to be called PIMCO Partners, G.P. PFAMCo would
indirectly hold a majority interest in PIMCO Partners, G.P., and
the remainder would be held indirectly by a group comprised of
the current Managing Directors of Pacific Investment Management
Company ("PIMCO"), another subsidiary of PFAMCo. In a separate
transaction that may occur contemporaneously with the
Consolidation, PIMCO Partners, G.P., certain other affiliates of
PFAMCo, and certain stockholders of Thomson Advisory Group Inc.
("TAG Inc."), the current general partner of TAG, may reoffer to
the public units of PIMCO Advisors which they would hold
(directly or indirectly) as of the Consolidation (the "secondary
offering"). If all such units were sold, PFAMCo would continue
to indirectly hold a majority interest in PIMCO Partners, G.P.,
with the remainder held indirectly by the current Managing
Directors of PIMCO.
Under the Consolidation, PIMCO Partners, G.P.'s power to
conduct the business of PIMCO Advisors will be delegated to two
boards that will govern PIMCO Advisors -- an Operating Board and
an Equity Board. The Operating Board will exercise
substantially all of the governance powers of the general
partner and will delegate day-to-day operational issues to an
Operating Committee. The Operating Board and Operating
Committee cannot effect certain transactions and other material
matters without the prior consent of the Equity Board. For
purposes of governance of PIMCO Advisors, the Operating Board
and the Equity Board are intended to constitute the functional
and legal equivalent of a board of directors of PIMCO Advisors.
PFAMCo will continue to hold a substantial interest in PIMCO
Advisors and the subsidiary partnerships after the Consolidation
through its indirect ownership of units of PIMCO Advisors.
PFAMCo's influence in the management of PIMCO Advisors and its
subsidiary partnerships will likely not be controlling in that
PFAMCo will not have representation on PIMCO Advisor's Operating
Board and will have only three representatives on the twelve-
member Equity Board. For more information about the
Consolidation, see Exhibit F.
The Consolidation Agreement provides for the discretionary
award of options on units of PIMCO Advisors to provide
incentives and rewards to key management employees of PIMCO
Advisors and its subsidiary partnerships.
The Consolidation Agreement contemplates that the Trust
conform with the provisions of Section 15(f) of the 1940 Act,
which provides, in pertinent part, that a fund's investment
adviser (or its controlling person) may receive any amount or
benefit in connection with its sale which results in an
assignment of an investment advisory contract if (1) for a
period of three years after the time of the event, 75% of the
members of the fund's board of directors are not "interested
persons" (as defined in the 1940 Act) of the new or old
investment adviser; and (2) there is no "unfair burden" imposed
on the fund as a result of the transaction.
The Board of Trustees currently conforms with these
provisions, and is expected to continue to conform with these
provisions for the required time period. PFAMCo and the
Consulting Group have committed to the Trust's Board that there
is no present intention to seek an increase in the Trust's
advisory or management fees with respect to the Portfolios for
which Parametric or NFJ serves as Adviser for a period of at
least two years following the Consolidation.
TAG and its affiliates provide investment advisory and
related services to a wide range of institutional and individual
clients including mutual funds. TAG is a Delaware limited
partnership organized in 1987. Some of TAG's outstanding
partnership units are traded on the New York Stock Exchange. As
of June 30, 1994, TAG managed approximately $9.4 billion in
assets, primarily through its Columbus Circle Investors division
("CCI").
Consummation of the Consolidation is contingent upon
certain events, including regulatory approvals and consents,
approval by TAG unitholders, and approval of new advisory
contracts or consent by a substantial portion of the advisory
clients of TAG and PFAMCo and its subsidiaries, including
Parametric and NFJ.
The Current and New Advisory Agreements
The Current Advisory Agreement with Parametric was
initially approved by the Trustees on December 9, 1993 and by
the shareholders of the Portfolio on March 3, 1994, and was last
approved by the Trustees on September 1, 1994. The Current
Advisory Agreement with NFJ was initially approved by the
Trustees on March 4, 1993 and by the shareholders of the
Portfolio on June 1, 1993, and was last approved by the Trustees
on September 1, 1994.
If the New Advisory Agreements are approved by
shareholders, upon consummation of the Consolidation, New
Parametric would replace Parametric as Adviser to Large
Capitalization Value Equity Investments, and New NFJ would
replace NFJ as Adviser to Small Capitalization Value Equity
Investments. The terms and conditions of the New Advisory
Agreements with New Parametric and New NFJ are identical in all
material respects to those of the Current Advisory Agreements
with Parametric and NFJ with the exception of the identity of
the Adviser, and the effectiveness and termination dates.
Each of the New Advisory Agreements, like each of the
Current Advisory Agreements, provides that the Adviser is
required to manage a portion of the securities held by the
Portfolio it serves, subject to the supervision and stated
direction of the Manager and ultimately the Board of Trustees in
accordance with the Portfolio's investment objective and
policies, make investment decisions for the Portfolio, and place
orders to purchase and sell securities on behalf of the
Portfolio.
Each of the New Advisory Agreements and the Current
Advisory Agreements provide that 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 any
investment advisory services rendered under the agreement,
except, provided 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
the agreement.
Each of the New Advisory Agreements, like each of the
Current Advisory Agreements provides that it terminates
automatically in the event of its assignment. In addition, each
of these agreements may be terminated by the Manager at any time
without penalty, upon written notice to the appropriate Adviser
and the Trust, by the Adviser upon 60 days' written notice to
the Manager and the Trust, and by the Trust at any time without
penalty, upon the vote of a majority of the Trust's Board of
Trustees or a majority of the outstanding voting securities of
the Portfolio of the Trust to which the agreement pertains, upon
written notice to the appropriate Adviser and the Manager.
Shareholders should refer to Exhibit A for the complete
terms of the New Advisory Agreements.
If the New Advisory Agreements are approved by the
shareholders of Large Capitalization Value Equity Investments or
Small Capitalization Value Equity Investments, as appropriate,
they will become effective upon consummation of the
Consolidation, and will remain in effect, unless earlier
terminated, for an initial two year term, subject to annual
review and continuation thereafter.
Parametric, NFJ, TAG, and the other parties to the
Consolidation Agreement may proceed with the Consolidation, even
if the New Advisory Agreements are not approved by shareholders.
In the event that the shareholders of Large Capitalization Value
Equity Investments or Small Capitalization Value Equity
Investments do not approve the New Advisory Agreements and the
Consolidation is consummated, subject to the approval of the
Securities and Exchange Commission if necessary, the Board of
Trustees could seek to obtain for Large Capitalization Value
Equity Investments and Small Capitalization Value Equity
Investments interim advisory services either from the current
Adviser or from another advisory organization. Thereafter, the
Board of Trustees would either negotiate a new advisory
agreement with an advisory organization selected by the Board or
make other appropriate arrangements in either event subject to
approval by the shareholders of Large Capitalization Value
Equity Investments or Small Capitalization Value Equity
Investments, as appropriate. In the event the Consolidation is
not consummated, Parametric would continue to serve as an
Adviser of Large Capitalization Value Equity Investments
pursuant to the terms of the Current Advisory Agreement for that
Portfolio, and NFJ would continue to serve as an Adviser to
Small Capitalization Value Equity Investments pursuant to the
Current Advisory Agreement for that Portfolio.
Advisory Fees
The fees under the New Advisory Agreements with New
Parametric and New NFJ are the same as the fees under the
Current Advisory Agreements with Parametric and NFJ. The New
Advisory Agreement for Large Capitalization Value Equity
Investments provides that The Consulting Group (and not the
Trust) will pay New Parametric a fee, payable monthly, at an
annual rate of .20% of the value of Large Capitalization Value
Equity Investments average daily net assets on the first $300
million of assets and 0.15% of the value of the Portfolio's
average daily net assets thereafter, multiplied by a fraction,
the numerator of which is the average daily value of the net
assets of the Portfolio allocated to New Parametric and the
denominator of which is the average daily net asset value of the
Portfolio. For the fiscal period ended August 31, 1994, total
advisory fees paid by The Consulting Group to Parametric
aggregated $______ based on average net assets for the fiscal
period of $___________. The New Advisory Agreement for Small
Capitalization Value Equity Investments with New NFJ provides
that The Consulting Group (and not the Trust) will pay New NFJ a
fee, payable monthly, at an annual rate equal to .30% of the
value of average daily net assets of Small Capitalization Value
Equity Investments, multiplied by a fraction, the numerator of
which is the average daily value of the net assets of the
Portfolio allocated to New NFJ and the denominator of which is
the average daily net asset value of the Portfolio. For the
fiscal period ended August 31, 1994, total advisory fees paid by
The Consulting Group to NFJ aggregated $_______ based on average
net assets of Small Capitalization Value Equity Investments.
Management Fees
The Consulting Group serves as Manager to the Trust
pursuant to a Management Agreement. Large Capitalization Value
Equity Investments pays The Consulting Group a management fee,
payable monthly, at an annual rate of 60% of the average daily
net assets of that Portfolio, and Small Capitalization Value
Equity Investments pays The Consulting Group a management fee,
payable monthly, at an annual rate of .60% of the average daily
net assets of that Portfolio. The Consulting Group, in turn,
pays the Advisers to the Portfolios the advisory fees described
above out of The Consulting Group's assets.
Parametric Portfolio Associates, Inc.
Parametric, located at 7310 Columbia Center, 701 Fifth
Avenue, Seattle, Washington 98104-7090, provides investment
management services to large accounts, such as employee benefit
plans, college endowments, and foundations. Accounts managed by
Parametric have combined assets, as of December 31, 1993, of
approximately $1.4 billion. Parametric is also a subsidiary of
PFAMCo. See Exhibit B for a list of the directors and principal
executive officers of Parametric and a table setting forth the
registered investment companies for which Parametric serves as
investment adviser, including the fees payable by such
investment companies and their approximate net assets.
Parametric's audited balance sheet as of December 31, 1993 is
attached as Exhibit C.
NFJ Investment Group, Inc.
NFJ, located at 2121 San Jacinto, Suite 1440, Dallas,
Texas 75201, provides investment management services to large
accounts such as employee benefit plans, college endowment
funds, and foundations. Accounts managed by NFJ had combined
assets, as of December 31, 1993 of approximately $965.9 million.
NFJ is a subsidiary of PFAMCo, which is an indirect wholly owned
subsidiary of Pacific Mutual. See Exhibit D for a list of the
directors and principal executive officers of NFJ and a table
setting forth the registered investment companies for which NFJ
serves as investment adviser, including the fees payable by such
investment companies and their approximate net assets. NFJ's
audited balance sheet as of December 31, 1993 is attached as
Exhibit E.
New Parametric and New NFJ
New Parametric and New NFJ will each be a general
partnership with two partners. The supervisory partner for each
will be PIMCO Advisors. The managing partner for each will be
Parametric Management, Inc. (located at __________) and NFJ
Management, Inc. (located at __________), respectively, which
will each be newly formed Delaware corporations that are wholly
owned by PIMCO Advisors. PIMCO Advisors will hold 99.9% of the
partnership interest of each of New NFJ and New Parametric.
The addresses of each of New Parametric and New NFJ (each
a "New Portfolio Manager") will be the same as the addresses of
Parametric and NFJ, respectively (each a "Current Portfolio
Manager"). Under the Consolidation, the day-to-day management of
each New Portfolio Manager is entrusted to its managing general
partner, which will delegate authority over the business and
operations of such New Portfolio Manager to the New Portfolio
Manager's Managing Directors. The Managing Directors of each
New Portfolio Manager will be the same individuals who currently
serve as Managing Directors of the Current Portfolio Managers.
Prior approval from PIMCO Advisors will be necessary for certain
extraordinary business transactions, contractual arrangements,
or other specified activities of each New Portfolio Manager.
PROPOSAL 1: LARGE CAPITALIZATION VALUE EQUITY INVESTMENTS
The Board of Trustees has determined that, by approving
the New Advisory Agreement with New Parametric on behalf of
Large Capitalization Value Equity Investments, that Portfolio
can best assure itself that services currently provided by
Parametric and its officers and employees will continue to be
provided after the Consolidation without interruption. The
Board believes that, like the Current Advisory Agreement with
Parametric, the New Advisory Agreement with New Parametric will
enable Large Capitalization Value Equity Investments to obtain
services of high quality at costs deemed appropriate,
reasonable, and in the best interests of the Portfolio and its
shareholders.
At a meeting on September 1, 1994, the Trustees considered
information with respect to whether the New Advisory Agreement
with New Parametric was in the best interests of Large
Capitalization Value Equity Investments and its shareholders.
The Trustees considered, among other factors, representations by
PFAMCo that the Consolidation would not materially affect the
investment advisory operations of Parametric or the level or
quality of advisory services provided to Large Capitalization
Value Equity Investments; that, subject to Board and shareholder
approval, the same personnel at Parametric who currently provide
services to Large Capitalization Value Equity Investments are
expected to continue to do so after the Consolidation; that the
advisory fee would not change as a result of the Consolidation;
and that Large Capitalization Value Equity Investments would be
unaffected in any other way by the Consolidation, including that
the Portfolio would not be subjected to any unfair burden as a
result of the transaction.
Based upon its review, the Board of Trustees concluded
that the New Advisory Agreement with New Parametric is
reasonable, fair and in the best interests of Large
Capitalization Value Equity Investments and its shareholders,
and that the fees provided in the New Advisory Agreement with
New Parametric are fair and reasonable. In the Board's view,
retaining New Parametric to serve as Adviser of Large
Capitalization Value Equity Investments, under the terms of the
New Advisory Agreement with New Parametric, after the
Consolidation is desirable and in the best interests of the
Portfolio and its shareholders. Accordingly, after consideration
of the above factors, and such other factors and information as
it deemed relevant, the Board of Trustees, including all of the
Independent Trustees, unanimously approved the New Advisory
Agreement with New Parametric and voted to recommend its
approval by Large Capitalization Value Equity Investments'
shareholders.
Required Vote
Approval of the New Advisory Agreement requires a Majority
Vote of the outstanding shares of Large Capitalization Value
Equity Investments.
THE TRUSTEES, INCLUDING ALL OF THE INDEPENDENT TRUSTEES,
RECOMMEND THAT THE SHAREHOLDERS OF LARGE CAPITALIZATION VALUE
EQUITY INVESTMENTS VOTE "FOR" THE NEW INVESTMENT ADVISORY
AGREEMENT BETWEEN THE CONSULTING GROUP AND NEW PARAMETRIC.
PROPOSAL 2: SMALL CAPITALIZATION VALUE EQUITY INVESTMENTS
The Board of Trustees has determined that, by approving
the New Advisory Agreement with New NFJ on behalf of Small
Capitalization Value Equity Investments, that Portfolio can best
assure itself that services currently provided by NFJ and their
officers and employees will continue to be provided after the
Consolidation without interruption. The Board believes that,
like the Current Advisory Agreements, the New Advisory
Agreements will enable Small Capitalization Value Equity
Investments to obtain services of high quality at costs deemed
appropriate, reasonable, and in the best interests of Small
Capitalization Value Equity Investments and its shareholders.
At a meeting on September 1, 1994, the Trustees considered
information with respect to whether the New Advisory Agreements
with New NFJ were in the best interests of Small Capitalization
Value Equity Investments and its shareholders. The Trustees
considered, among other factors, representations by Pacific
Mutual and PFAMCo that the Consolidation would not materially
affect the investment advisory operations of NFJ or the level or
quality of advisory services provided to Small Capitalization
Value Equity Investments; that, subject to Board and shareholder
approval, the same personnel at NFJ who currently provide
services to Small Capitalization Value Equity Investments are
expected to continue to do so after the Consolidation; that the
advisory fees would not change as a result of the Consolidation;
and that Small Capitalization Value Equity Investments would be
unaffected in any other way by the Consolidation, including that
the Portfolio would not be subjected to any unfair burden as a
result of the transaction.
Based upon its review, the Board of Trustees concluded
that the New Advisory Agreement with New NFJ is reasonable, fair
and in the best interests of Small Capitalization Value Equity
Investments and its shareholders, and that the fees provided in
the New Advisory Agreements with New NFJ are fair and
reasonable. In the Board's view, retaining New NFJ to serve as
Adviser of Small Capitalization Value Equity Investments, under
the terms of the New Advisory Agreement, after the Consolidation
is desirable and in the best interests of Small Capitalization
Value Equity Investments and its shareholders. Accordingly,
after consideration of the above factors, and such other factors
and information as it deemed relevant, the Board of Trustees,
including all of the Independent Trustees, unanimously approved
the New Advisory Agreement and voted to recommend its approval
by Small Capitalization Value Equity Investments' shareholders.
Required Vote
Approval of the New Advisory Agreement requires a Majority
Vote of the outstanding shares of Small Capitalization Value
Equity Investments.
THE TRUSTEES, INCLUDING ALL OF THE INDEPENDENT TRUSTEES,
RECOMMEND THAT THE SHAREHOLDERS OF SMALL CAPITALIZATION VALUE
EQUITY INVESTMENTS VOTE "FOR" THE NEW ADVISORY AGREEMENT BETWEEN
THE CONSULTING GROUP AND NEW NFJ.
ADDITIONAL INFORMATION
Portfolio Transactions and Brokerage Fees
Portfolio securities transactions for each Portfolio are
placed on behalf of the Trust by its investment advisers,
subject to the overall review of the Investment Manager and the
Board of Trustees. In selecting brokers of dealers to execute
portfolio transactions for a Portfolio, the Advisers seek the
best overall terms available. The Advisory Agreements provide
that, in assessing the best overall terms available for any
transaction, the Advisers consider the factors they deem
relevant, including 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
the commission, if any, for the specific transactions and on a
continuing basis. In addition, the Advisory Agreements
authorize the Advisers, in selecting brokers or dealers to
execute a particular transaction, and in evaluating the best
overall terms available, to consider the brokerage and research
services provided to the Trust and/or other accounts over which
the Advisers or their affiliates exercise investment discretion.
Fees under the Investment Management Agreement dated July 30,
1993 between the Trust and the Investment Manager and the
Advisory Agreements are not reduced by reason of either
Adviser's receiving such brokerage and research services.
Although investment decisions for the Portfolios are made
independently from those of other accounts managed by the
Advisers, investments of the type that the Portfolios may make
also may be made by those other accounts. When a Portfolio and
one or more other accounts managed by an Adviser are prepared to
invest in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in a
manner believed by the Adviser to be equitable to each. In some
cases, this procedure may adversely affect the size of the
position acquired for or disposed of by the Portfolio or the
price paid or received by the Portfolio.
To the extent consistent with applicable provision of the
1940 Act and the rules and exemptions adopted by the Securities
and Exchange Commission under the 1940 Act, the Board of
Trustees had determined that transactions for the Trust may be
executed through Smith Barney and other affiliated broker-
dealers if, in the judgment of the Adviser, the use of an
affiliated broker-dealer is likely to result in price and
execution at least as favorable as those of other qualified
broker-dealers, and if, in the transaction, the affiliated
broker-dealer charges the Fund a fair and reasonable rate.
Neither of the Portfolios will purchase any security,
including U.S. government securities, during the existence of
any underwriting or selling group elating to the security of
which Smith Barney is a member, except to the extent permitted
by the SEC.
The Board periodically reviews the commissions paid by the
Trust to determine if the comissions paid over representative
periods of time were reasonable in relation to the benefits
inuring to the Trust. During the fiscal year ended August 31,
1994, the Trust incurred total brokerage commissions on
portfolio transactions of $_______, of which $_______, or
_______% of the aggregate, was paid to Smith Barney, ______% of
the Trust's aggregate dollar amount of transactions involving
the payment of commissions were effected through Smith Barney
during the Trust' s last fiscal year.
Such brokerage commissions were incurred with respect to
each of the Portfolio's as follows:
Por
tfo
lio
T
o
t
a
l
C
o
m
m
i
s
s
i
o
n
s
C
o
m
m
i
s
s
i
o
n
s
P
a
i
d
t
o
S
m
i
t
h
B
a
r
n
e
y
%
o
f
T
o
t
a
l
C
o
m
m
i
s
s
i
o
n
s
P
a
i
d
t
o
S
m
i
t
h
B
a
r
n
e
y
%
of
To
ta
l
Tr
an
sa
ct
io
ns
In
vo
lv
in
g
Co
mm
is
si
on
s
Pa
id
to
Sm
it
h
Ba
rn
ey
Lar
ge
Cap
ita
liz
ati
on
Val
ue
Equ
ity
Inv
est
men
ts
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
__
__
__
__
__
Sma
ll
Cap
ita
liz
ati
on
Val
ue
Equ
ity
Inv
est
men
ts
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
__
__
__
__
__
SUBMISSION OF SHAREHOLDER PROPOSALS
As a Massachusetts Business Trust, the Trust does not hold
annual shareholders' meetings. Shareholders wishing to submit
proposals for inclusion in a proxy statement for a subsequent
meeting of shareholders' must submit their written proposals to
the Secretary of the Trust at the address set forth on the cover
of this Proxy Statement.
SHAREHOLDERS' REQUEST FOR SPECIAL MEETING
Shareholders holding more than 10% of the Trust's
outstanding voting securities (as defined in the 1940 Act) may
require the calling of a meeting of shareholders for the
purposes of voting on the removal of any Trustee of the Trust.
Meetings of shareholders for any other purpose also shall be
called by the Trustees when requested in writing by shareholders
holding at least 10% of the shares then outstanding, or if the
Trustees shall fail to call or give notice of any meeting of
shareholders for a period of 30 days after such application,
then shareholders holding at least 10% of the shares then
outstanding may call and give notice of such meeting.
OTHER MATTERS TO COME BEFORE THE MEETING
The Trustees do not intend to present any other business
at the Meeting, nor are they aware that any shareholder intends
to do so. If, however, any other matters are properly brought
before the Meeting, the persons named in the accompanying form
of proxy will vote thereon in accordance with their judgment.
September __, 1994
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS
WHO DO NOT EXPECT TO ATTEND THE MEETING ARE THEREFORE URGED TO
COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD AS SOON AS
POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
EXHIBIT LIST
EXHIBIT A Proposed Form of Investment Advisory Agreement.
EXHIBIT B Information about Parametric Portfolio Associates,
Inc. ("Parametric").
EXHIBIT C Audited balance sheet of Parametric as of December
31, 1993.
EXHIBIT D Information about NFJ Investment Group, Inc.
("NFJ").
EXHIBIT E Audited balance sheet of NFJ as of December 31,
1993.
EXHIBIT F More informantion about the Consolidation.
EXHIBIT A
CONSULTING GROUP CAPITAL MARKETS FUNDS
FORM OF
INVESTMENT ADVISORY AGREEMENT
[DATE]
[Name and Address of Advisor]
Dear Sirs:
Under an agreement (the "Management Agreement") between
Consulting Group Capital Markets Funds, a Massachusetts business
trust (the "Trust"), and Smith, Barney Advisers, 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 [NAME OF
ADVISER] (the "Advisor") with respect to the Advisor's serving
as an investment advisor of [NAME OF PORTFOLIO] (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 Advisor.
(b) The Manager, with the approval of the Trust, hereby
appoints the Advisor to act as an investment advisor to the
Portfolio for the periods and on the terms set forth in this
Agreement. The Advisor 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 Advisor will (i) manage the
portion of the Portfolio's assets allocated to the Advisor upon
the recommendation of the Manager and the approval 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 Advisor will keep the Trust and the Manager
informed of developments materially affecting the Portfolio and
shall, on the Advisor's own initiative, furnish to the Trust and
the Manager from time to time whatever information the Advisor
believes appropriate for this purpose.
(c) The Advisor 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 Advisor 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
Advisor may place orders with respect to Allocated Assets with
Shearson Lehman Brothers 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
Advisor will use its best efforts to seek the best overall terms
available. In assessing the best overall terms available for
any portfolio transaction, the Advisor 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 Advisor 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 Advisor or an affiliate exercise
investment discretion.
Section 4. Information Provided to the Manager and the
Trust
(a) The Advisor 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 Advisor 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 Advisor agrees that it will immediately notify
the Manager and the Trust in the event that the Advisor or any
of its affiliates: (i) becomes subject to a statutory
disqualification that prevents the Advisor from serving as
investment advisor 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 Advisor 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 Advisor respecting or relating to
the Advisor 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 Advisor represents that it is an investment
adviser registered under the Advisers Act and other applicable
laws and that the statements contained in the Advisor'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 Advisor
agrees to maintain the completeness and accuracy of its
registration on Form ADV in accordance with all legal
requirements relating to that Form. The Advisor 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 Advisor 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 Advisor 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 Advisor a fee that is
computed daily and paid monthly at the annual rate of * 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
Advisor 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 this Agreement becomes effective to the end of the month
during which this Agreement becomeseffective 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
Advisor, 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 Advisor 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 Advisor shall exercise its best judgment in rendering
the services provided by it under this Agreement. The Advisor
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 Advisor 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 Advisor
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 Advisor'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; provided, however, that the Advisor agrees
that neither it nor any of its affiliated persons (as defined in
the Act) shall accept retention as investment adviser,
investment manager or similar service provider during the
pendency of this Agreement and for the period of one (1) year
after the termination of this Agreement with or for the benefit
of any investment company registered under the Act that seeks as
a primary market for its shares asset allocation programs
similar in nature or market to Consulting Group Personalized
Investment Advisory Service.
(b) The proviso set forth in paragraph (a) of this
Section 9 shall not apply to the continuation of any contractual
relationship to which the Advisor is a party that is in effect
on the date of this Agreement.
(c) 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.
(d) 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, subject to the proviso set forth in
paragraph (a) of this Section 9.
Section 10. Duration and Termination
(a) This Agreement shall become effective on the later
of the closing date of the Consolidation Agreement entered into
by the Advisor and others with Thompson Advisory Group L.P., or
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 Advisor 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 Advisor 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 Advisor 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.
SMITH, BARNEY ADVISERS, INC.
By: ________________________
Name:
Title:
Accepted:
[Name of Advisor]
By: ______________________________
Name:
Title:
shared/shearsn2/trak/proxy/trakproxy4
Exhibit B
Information About Parametric
Portfolio Associates, Inc.
("Parametric")
Directors and Executive Officers
Parametric's directors and principal executive officers
and their principal occupations are shown below. Unless
otherwise indicated, the business address of each such person is
701 Fifth Avenue, Seattle, Washington 98104.
Name
Position with
Parametric and
Principal
Occupation(s)
William D. Cvengros
700 Newport Center
Drive
Newport Beach, CA
92660
Chairman of the Board
and Director,
Parametric, PFAMCo;
PMRealty Advisors,
Inc.; Director, Vice
Chairman and Chief
Investment Officer,
Pacific Mutual Life
Insurance Company;
Chairman of the Board
and Director, Pacific
Investment Management
Company, Cadence
Capital Management
Corporation; Director,
President, and Chief
Executive Office, NJF
Investment Group,
Inc.; Chairman of the
Board of Trustees and
Trustee, PFAMCo Funds;
Director, Mutual
Service Corporation,
Pacific Equities
Network, Pacific U.K.
Limited, Blairlogie
Capital Management
Limited, Pacific
Corinthian Life
Insurance Company;
Director, Furon
Company.
William E. Cornelius,
Jr.
Director and managing
Director, Parametric.
Mark W. England-Markun
Director, Managing
Director and Chief
Executive Officer,
Parametric.
Steven T. Bailey
700 Newport Center
Drive
Newport Beach, CA
92660
Director, Parametric;
Managing Director,
PFAMCo; President,
PFAMCo Funds;
Director, PFAMCo U.K.
Limited, PMRealty
Advisors, Inc.,
Cadence Capital
Management
Corporation, NFJ
Investment Group,
Inc., Blairlogie
Capital Management
Limited.
Audrey L. Milfs
700 Newport Center
Drive
Newport Beach, CA
92660
Director and
Secretary, Parametric;
Director, PFAMCo U.K.
Limited, Blairlogie
Capital Management
Limited; Vice
President and
Secretary, Pacific
Mutual Life Insurance
Company; Director and
Secretary, Cadence
Capital Management
Corporation, PFAMCo,
Pacific Financial
Holding Company, NJF
Investment Group,
Inc., PMRealty
Advisors, Inc., PM
Group Life Insurance
Company, Pacific
Mutual Realty Finance,
Inc., Alliance Health
Plan Network, Inc.,
Group Holding Company,
Employee Benefits
America Administration
Corporation;
Secretary, PFAMCo
Funds, Pacific
Investment
Administrative
Services Co., Pacific
Mutual Realty
Investors, Inc.,
Pacific Corinthian
Life Insurance
Company, Stocksplus
Management, Inc.,
Mutual Service
Corporation, United
Planners' Group, Inc.,
Pacific Select Fund,
Pacific Equities
Network, Pacific
Investment Management
Company.
Other Investment Company Clients
Parametric also acts as investment adviser to the
registered investment companies listed below. The following
table sets forth the name of each such investment company, its
approximate net assets at June 30, 1994, and the annual advisory
fee charged by Parametric (as a percentage of average daily net
assets).
Name of
Investment
Company
Approximate
Net Assets
at June 30,
1994
Annual
Advisory
Fees
PFAMCo
Funds
Enhanced
Equity
Portfolio
$59,231,000
.45% of
average
daily net
assets
Internation
al Equity
Portfolio
9,425,000
.45% of
average
daily net
assets
Balanced
Portfolio
(Equity
Segment)
78,049,000
.45% of
average
daily net
assets
allocated
to Equity
Segment of
Balanced
Portfolio
Pacific
Corinthian
Variable
Fund
Balanced
Portfolio
(Common
Stock
Segment)
4,930,535
.50% of
average
daily net
assets of
Common
Stock
Segment up
to $25
million;
.375% of
average
daily net
assets of
Common
Stock
Segment on
next $25
million;
and .30% of
average
daily net
assets of
Common
Stock
Segment
thereafter
Exhibit D
Information About NFJ Investment Group, Inc.
("NFJ")
Directors and Executive Officers
NFJ's directors and principal executive officers and their
principal occupations are shown below. Unless otherwise
indicated, the business address of each such person is 2121 San
Jacinto, Suite 1440, Dallas, Texas 75201.
Name
Position with NFJ
and Principal
Occupation (s)
William D. Cvengros
700 Newport Center Drive
Newport Beach, CA 92660
Director, President
and Chief Executive
Officer, NFJ; see
Exhibit B for other
occupations.
Benno J. Fischer
Director and
Managing Director,
NFJ.
John L. Johnson
Director and
Managing Director,
NFJ.
Jack C. Najork
Director and
Managing Director,
NFJ.
Steven T. Bailey
700 Newport Center Drive
Newport Beach, CA 92660
Director, NFJ; see
Exhibit B for other
occupations
Audrey L. Milfs
700 Newport Center Drive
Newport Beach, CA 92660
Director and
Secretary, NFJ; see
Exhibit B for other
occupations.
Thomas C. Sutton
700 Newport Center Drive
Newport Beach, CA 92660
Director, NFJ;
President, Director
and Chief Executive
Officer, Pacific
Financial Holding
Company, Group
Holding Company;
Chairman, Chief
Executive Officer
and Director,
Pacific Mutual Life
Insurance Company,
Pacific Corinthian
Life Insurance
Company; Chairman of
the Board of
Trustees, President
and Trustee, Pacific
Select Fund;
Chairman and
Director, PFAMCo, PM
Group Life
Insurance, Inc.;
Director, United
Planners' Group,
Inc., Cadence
Capital Management
Corporation, Pacific
Investment
Management Company,
PM Realty Advisors,
Inc., Pacific
Equities Network,
Mutual Service
Corporation,
Blairlogie Capital
Management
Corporation,
Alliance Health Plan
Network, Inc.,
Employee Benefits
America
Administration
Corporation, Pacific
Mutual Realty
Finance, Inc.,
Newhall Land &
Farming, Health
Insurance
Association of
America.
Other Investment Company Clients
NFJ also acts as investment adviser to the registered
investment companies listed below. The following table sets
forth the name of each such investment company, its approximate
net assets at June 30, 1994 and the annual advisory fee charged
by NFJ (as a percentage of average daily net assets).
Name of
Investment
Company
Approximate
Net
Assets at
June 30,
1994
Annual
Advisory
Fee
PFAMCo Funds
Equity
Income
Portfolio
$81,283,326
.45% of
average
daily net
assets
Diversified
Low P/E
Portfolio
17,509,835
.45% of
average
daily net
assets
Small Cap
Value
Portfolio
33,168,117
.60% of
average
daily net
assets
RSI Value
Equity Fund
Equity
Income
Portfolio
32,914,383
.60% of
1st $10
million;
.50% of
next $10
million;
.40% of
next $20
million;
.30% of
next $20
million;
.20% of
next $40
million;
.15% of
next $50
million;
.10% over
$150
million
thereafter
.
Pacific
Corinthian
Variable Fund
Diversified
Low P/E Series
13,718
.45% of
total
assets
Exhibit F
MORE INFORMATION ABOUT THE CONSOLIDATION
The following is a discussion of more detailed information
about the Consolidation for those shareholders seeking such
information.
The Consolidation Agreement provides that the business of
Parametric, NFJ, and certain other subsidiaries of PFAMCo will
be transferred to TAG in return for 24,575,000 newly issued
units of partner interest, of which 400,000 will be units of
general partner interest ("GP units") and 24,175,000 will be
units of limited partner interest, divided into two classes -
Class A and Class B. In connection with its assuming the role
of general partner of PIMCO Advisors, PIMCO Partners, G.P. also
will acquire common stock of TAG Inc., the current general
partner of TAG, for approximately $130 million. The current
common stockholders of TAG Inc. will retain economic interests
in TAG Inc. through preferred stock representing approximately
34% of the Class A and Class B partnership units owned by TAG
Inc. Class A units will have the same rights as the currently
outstanding public units of TAG; Class B units will be
subordinated to Class A units with respect to certain
distribution rights. In connection with the Consolidation and
recapitalization of TAG Inc., the Board of Directors of TAG Inc.
has approved a conversion ratio of 1 limited partner unit and/or
GP unit held by TAG Inc. for 1.4 Class B units. Effective
January 1, 1998, or earlier in the event of a restructuring of
PIMCO Advisors that may be undertaken by PIMCO Partners, G.P. in
connection with changes in the tax status of PIMCO Advisors, it
is anticipated that Class B units will convert to Class A units.
The average of the high and low prices for TAG units quoted on
the New York Stock Exchange on August 29, 1994 was $40.1875.
Giving effect to the Consolidation, but prior to any
secondary offering, PIMCO Partners, G.P. will own approximately
60.5% of all outstanding units of PIMCO Advisors. PFAMCo and
its other affiliates will separately own approximately 7.4% of
all outstanding units. TAG Inc. will own approximately 19.6% of
all outstanding units, and the public will own approximately
12.2% of all outstanding units.
In connection with the Consolidation, PIMCO Advisors will
adopt a stock option plan to provide incentives and rewards to
key employees of PIMCO Advisors, and its subsidiary
partnerships, which may include officers and directors of New
Parametric and New NFJ. The aggregate number of Class B units
with respect to which options may be granted under the plan is
2,800,00 and the terms of the Consolidation Agreement provide
for the grant of options with respect to up to 2,675,000 units
at the closing of the Consolidation. Each subsidiary
partnership of PIMCO Advisors will establish a profit sharing
plan in which its Managing Directors and certain designated
employees may participate.
PIMCO Partners, L.P., a California limited partnership,
will be the managing general partner of PIMCO Partners, G.P.
All of the ownership interest in PIMCO Partners, L.P. will be
held directly or indirectly by the PIMCO Managing Directors.
PIMCO Partners, L.P. will have a profits interest of
approximately 37.3% in PIMCO Partners, G.P. As of the
Consolidation, but prior to any secondary offering of units that
may be made at or about that time, William H. Gross, a Managing
Director of PIMCO, will hold approximately 41.9% of the
ownership interests in PIMCO Partners, L.P. (representing an
indirect economic interest in approximately 15.6% of the units
owned by PIMCO Partners, G.P., or 12.5% of the outstanding units
of PIMCO Advisors after the Consolidation). Under the terms of
the Amended and Restated Agreement of Limited Partnership of
PIMCO Advisors under the Consolidation, the Chief Executive
Officer of PIMCO Partners, L.P. will be a member of the Equity
Board of PIMCO Advisors, and PIMCO Partners, L.P. will have the
right to appoint two other members to the Equity Board, which is
described below.
Pursuant to a registration rights agreement among TAG
Inc., certain current stockholders of TAG Inc., certain
individuals affiliated with TAG or PFAMCo, PIMCO Partners, G.P.,
and PFAMCo, and certain affiliates of PFAMCo, holders of rights
may cause PIMCO Advisors to register Class A units held by such
individuals and entities for public sale under the Securities
Act of 1933. It is presently contemplated that approximately
4,000,000 Class A units may be registered and sold in this
manner contemporaneously with the closing of the Consolidation.
If all such units were sold, Pacific Mutual would continue to
indirectly hold a majority interest in PIMCO Partners, G.P.,
with the remainder held indirectly by a group comprised of the
current Managing Directors of PIMCO. The terms of any secondary
offering of units are subject to negotiation among the parties
and whether such offering will occur will depend on many
factors, including prevailing market conditions. It is not
possible to predict whether such an offering will occur. A
secondary offering also may have the effect of changing the
relative percentage interests in PIMCO Partners, L.P. of the
individual PIMCO Managing Directors. Certain units received by
the Managing Directors of Parametric and NFJ will be effectively
restricted as to sale or other disposition until January 1,
1998.
The Amended and Restated Partnership Agreement of PIMCO
Advisors will provide that a person or group that owns more than
20% of the combined voting power of the outstanding units of the
partnership shall have the right to vote not more than 20% of
the outstanding units entitled to vote, and the remaining units
owned by such person or group shall have no voting rights and
shall not be counted for quorum or unitholder approval purposes.
These provisions do not apply to entities controlled by Pacific
Mutual, PFAMCo, or the PIMCO Managing Directors, to certain
savings, profit-sharing, unit or stock bonus and employee
incentive or stock ownership plans established by PIMCO Advisors
or certain of its subsidiaries, or to other persons or groups
approved by PIMCO Partners, G.P. The intention of this
provision is to reduce the possibility that a future sale of
units by a significant holder of units would cause a "change in
control" of the PIMCO Advisors for purposes of the 1940 Act or
Investment Advisers Act of 1940.
On September 8, 1994, TAG announced a 106% distribution on
TAG's outstanding units, payable on October 9, 1994 to
unitholders of record as of the close of business on October 1,
1994, with holders of limited partner units receiving limited
partner units and holders of general partner units receiving
general partner units. The effect of the unit distribution will
be to double approximately the number of TAG units outstanding,
as well as the gross number of TAG units issued in return for
the PFAMCo businesses in the Consolidation. However, the unit
distribution will not have a material impact on the relative
percentage ownership interests of the parties to the
Consolidation as discussed herein.
PIMCO Partners, G.P., the general partner of PIMCO
Advisors, will delegate management and supervisory functions for
PIMCO Advisors to an Operating Board and an Equity Board. The
Operating Board and Equity Board are intended to constitute the
functional and legal equivalent of a board of directors after
the Consolidation. The Operating Board will exercise
substantially all of the governance powers of the general
partner except for those powers specifically delegated to the
Equity Board, and will delegate day-to-day operational issues to
the Operating Committee. The Equity Board will have the
authority to approve certain transactions and other material
matters involving PIMCO Advisors, including an amendment to the
partnership agreement of PIMCO Advisors or a subsidiary
partnership, incurring large amounts of debt or making material
acquisitions or dispositions, issuing additional units, and
others.
The Operating Board will initially be composed of 12
members as follows: the Chief Executive Officer of New PIMCO,
initially William S. Thompson, Jr. (who will also serve as
Chairperson of the Operating Board), six other persons
designated by the Managing Directors of New PIMCO (initially
William H. Gross, Brent R. Harris, Dean S. Meiling, James F.
Muzzy, William F. Podlich, III and William C. Powers), three
persons designated by the Managing Directors of the successor of
Columbus Circle Investors ("New CCI"), (initially Irwin F.
Smith, Donald A. Chiboucas and Daniel S. Pickett), and one
person selected by the vote of the successor of Cadence Capital
Management, Inc., New NFJ, and New Parametric, weighted by their
contribution to the income of PIMCO Advisors (initially David B.
Breed). The final initial member of the Operating Board shall
be the Chief Executive Officer of the PIMCO Advisors, William D.
Cvengros. Initially, the members of the Operating Committee will
be William D. Cvengros, William S. Thompson and Irwin F. Smith.
The Equity Board will initially be composed of 12 members as
follows: the Chairperson of the Operating Board (initially
William S. Thompson), the Chief Executive Officer of PIMCO
Advisors (initially William D. Cvengros), three persons
designated by PFAMCo (initially Walter B. Gerken, Thomas C.
Sutton and Glenn S. Schafer), two persons designated by PIMCO
Partners, L.P. (initially William H. Gross and William F.
Podlich, III), two persons designated by the preferred
stockholders of TAG Inc. (initially Irwin F. Smith and Donald K.
Miller) and three independent members designated by the other
nine members of the Equity Board, initially Walter E. Auch, Sr.,
Donald R. Kurtz and a third person to be selected. The
Chairperson of the Equity Board will initially be Walter B.
Gerken.
Under the Consolidation, PIMCO Partners, G.P. will be
given broad authority to effect a restructuring of PIMCO
Advisors to address certain tax consequences associated with the
potential loss of PIMCO Advisor's status as a partnership for
federal tax purposes. After any restructuring of PIMCO
Advisors, the members of the Operating Board (other than the
Chief Executive Officer of the partnership, who will serve ex
officio) will be selected by the advisory subsidiary
partnerships based on their relative contributions to the net
income of the partnership, and the members of the Equity Board
(other than the Chairperson of the Operating Board and the Chief
Executive Officer of the partnership) will be selected by the
existing members of the Equity Board in a manner reasonably
determined to most effectively represent the proportionate
interests of all direct and indirect beneficial holders of
units, including public unitholders, with at least three members
of the Equity Board being independent.
The Amended and Restated Partnership Agreement of PIMCO
Advisors provides that PIMCO Partners, G.P. may choose the form
and timing of any restructuring of PIMCO Advisors. A
restructuring may occur on or about the date on which the
partnership's exemption from corporate income tax expires, which
is expected to be December 31, 1997, or on such earlier or later
date as PIMCO Partners, G.P. may determine based on certain
factors, including certain tax considerations relating to
PFAMCo.
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec.
240.14a-12
CONSULTING GROUP CAPITAL MARKETS FUNDS
(Name of Registrant as Specified In Its Charter)
Paula Gilligan
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(j)(1), or 14a-
6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . .
2) Aggregate number of securities to which transaction
applies:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . .
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:1
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . .
4) Proposed maximum aggregate value of transaction:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . .
1 Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of
its filing.
1) Amount Previously Paid:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2) Form, Schedule or Registration Statement No.:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3) Filing Party:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4) Date Filed:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
* Parametric Portfolio Associates 0.20% of the first $300 million
0.15% thereafter
NFJ Investment Group 0.30%
- -11-
B-3
D-3
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