SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Check the appropriate box:
X Preliminary information statement |_| Confidential, for use of the
Commission only (as permitted by
Rule 14c-5(d)(2))
|_| Definitive information statement
Commonfund Institutional Funds
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(Name of Registrant as Specified in Its Charter)
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0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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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:
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June 12, 2001
Dear Shareholder:
On June 12, 2001, the majority shareholder of the CIF Core Plus Bond
Fund and the CIF International Equity Fund (each a "Fund") of Commonfund
Institutional Funds approved certain changes to the investment sub-advisory
arrangements for each Fund, which will become effective on or about July 2,
2001. These changes were previously approved by the Board of Directors of
Commonfund Institutional Funds. The enclosed Information Statement provides a
more detailed description of each of these changes.
The Directors and officers of Commonfund Institutional Funds believe these
changes are important and encourage you to read the enclosed Information
Statement carefully. No action on your part is required.
Sincerely,
Robert L. Bovinette
Director and President
Commonfund Institutional Funds
CIF CORE PLUS BOND FUND
CIF INTERNATIONAL EQUITY FUND
FUNDS OF THE
COMMONFUND INSTITUTIONAL FUNDS
15 OLD DANBURY ROAD, P.O. BOX 812, WILTON, CT 06897
INFORMATION STATEMENT
This information statement (the "Information Statement") is being
furnished to the shareholders of the CIF Core Plus Bond Fund (the "Bond Fund")
and the CIF International Equity Fund (the "International Fund" and, with the
Bond Fund, the "Funds") of Commonfund Institutional Funds (the "Company"), a
Delaware business trust, pursuant to the requirements of Regulation 14C under
the Securities Exchange Act of 1934, in connection with the following proposals
(each a "Proposal") that were approved by written consent of the Majority
Shareholder (defined below) of each of the Funds on June 12, 2001:
Proposal
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(1) Approval by shareholders of the Bond Fund of an investment
sub-advisory agreement between the Company, Commonfund Asset
Management Company, Inc., ("Comanco"), Western Asset
Management Company Limited ("WAMCO Limited") and its
affiliate, Western Asset Management Company ("WAMCO") (the
"Amended WAMCO Agreement") appointing WAMCO Limited as an
additional sub-adviser to the Bond Fund; and
(2) Approval by shareholders of the Bond Fund of an investment
sub-advisory agreement between the Company, Comanco and
BlackRock Financial Management, Inc. ("BlackRock") (the
"Proposed BlackRock Agreement") appointing Black Rock as an
additional sub-adviser to the Bond Fund; and
(3) Approval by shareholders of the International Fund of an
investment sub-advisory agreement between the Company, Comanco
and Capital Guardian Trust Company ("CGTC") (the "Amended CGTC
Agreement") increasing the fee payable to CGTC.
This Information Statement will become effective on or about [July 2],
2001 and [will be furnished to shareholders of record of the Funds as of close
of business on [June 11], 2001 ("Record Date")]. As of the Record Date the
number of shares outstanding for each Fund was as follows: Bond Fund - [xxxx];
and International Fund - [xxxx]. This information statement will be mailed to
Shareholders on or about [June 12], 2001. WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
As required by the Investment Company Act of 1940, as amended (the
"1940 Act"), approval of each Proposal requires the affirmative vote of a
majority of the outstanding voting securities of each Fund entitled to vote on
such Proposal. As defined by the 1940 Act, "majority of the outstanding voting
securities" means the vote of (i) 67% or more of a Fund's outstanding shares
present at a meeting, if the holders of more than 50% of the outstanding shares
of the
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Fund are present or represented by proxy, or (ii) more than 50% of a Fund's
outstanding shares, whichever is less.
BENEFICIAL OWNERS. To the Company's knowledge, the Directors and
officers of the Company did not own shares of any Fund as of the Record Date.
Information about beneficial owners of 5% or more of the shares of each Fund as
of the Record Date is set forth below. The Common Fund for Nonprofit
Organizations (the "Majority Shareholder") held in excess of 50% of the
outstanding shares of each Fund as of the Record Date and has consented in
writing to each of the Proposals described in this Information Statement. As a
result, each Proposal has been approved as required by applicable law and no
further votes or consents are needed.
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Name of Fund Name and Address of Beneficial Number of Shares Percent of Fund's
Owner Beneficially Owned Outstanding Shares
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CIF Core Plus Bond Fund The Common Fund for Nonprofit
Organizations on behalf of its
Multi Strategy Bond Fund
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CIF International Equity Fund The Common Fund for Nonprofit
Organizations on behalf of its
International Equity Fund
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Proposal 1. APPROVAL OF THE AMENDED WAMCO AGREEMENT BETWEEN THE COMPANY,
COMANCO, WAMCO LIMITED AND WAMCO AND APPOINTMENT OF WAMCO
LIMITED AS AN ADDITIONAL SUB-ADVISER TO THE BOND FUND
BACKGROUND.
At a meeting of the Board of Directors held on February 26, 2001, based
on the recommendations of Comanco, the Board, including the Directors who are
not "interested persons" of any party to the agreement (the "Independent
Directors"), unanimously approved the Amended WAMCO Agreement and the
appointment of WAMCO Limited as a sub-adviser to the Bond Fund. The Board also
recommended that the Amended WAMCO Agreement be submitted to shareholders of the
Bond Fund for approval. The Majority Shareholder approved the Amended WAMCO
Agreement by written consent, which will become effective on or about July 2,
2001.
WAMCO currently serves as a sub-adviser to the Bond Fund under an
investment sub-advisory agreement between the Company, Comanco and WAMCO dated
December 11, 2000 (the "Current WAMCO Agreement"). Under the Current WAMCO
Agreement, WAMCO is responsible for managing the investment of all Bond Fund
assets allocated to WAMCO by Comanco. Based on the recommendation of Comanco and
WAMCO, it is proposed that WAMCO Limited, which is an affiliate of WAMCO based
in London, England, be engaged to jointly manage investments for Bond Fund
assets allocated to WAMCO and WAMCO Limited by Comanco. The Amended WAMCO
Agreement provides for Bond Fund assets to be managed jointly by WAMCO and WAMCO
Limited and is being recommended principally for the purpose of taking advantage
of the experience and expertise of WAMCO Limited in managing non-dollar
denominated investments.
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SUMMARY OF THE AMENDED WAMCO AGREEMENT.
The provisions of the Amended WAMCO Agreement are identical to the
provisions of the Current WAMCO Agreement, except for changes necessary to add
WAMCO Limited as a party to the agreement and to permit WAMCO and WAMCO Limited
jointly and severally to exercise their rights, duties and obligations under the
Amended WAMCO Agreement. The following summary of the Amended WAMCO Agreement is
qualified in its entirety by reference to the form of Amended WAMCO Agreement
attached hereto as Exhibit A.
DUTIES UNDER THE AMENDED WAMCO AGREEMENT. As is the case under the
Current WAMCO Agreement, Comanco would have general responsibility for
overseeing the investment advisory services provided to the Bond Fund by WAMCO
and WAMCO Limited, including formulating the Bond Fund's investment policies and
analyzing economic trends affecting the Bond Fund. In accordance with the Bond
Fund's investment objectives and policies, and under the supervision of Comanco
and the Company's Board of Directors, WAMCO and WAMCO Limited will collectively
manage the assets of the Bond Fund allocated to them. WAMCO and WAMCO Limited
would be authorized to make investment decisions for the Bond Fund and place
orders on behalf of the Bond Fund to effect the investment decisions made.
However, in the event of a disagreement between WAMCO and WAMCO Limited as to
the management of any Bond Fund assets, the decision of WAMCO would control.
The Amended WAMCO Agreement provides that WAMCO and WAMCO Limited shall
not be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in carrying out their
duties hereunder, except a loss resulting from willful misfeasance, bad faith or
gross negligence in the performance of their obligations or duties, or from
reckless disregard of their obligations or duties, except as may otherwise be
provided for under provisions of applicable state law or Federal securities law
to the extent such provisions cannot be waived or modified by the Amended WAMCO
Agreement.
PORTFOLIO TRANSACTIONS. The provisions relating to execution of
portfolio transactions of the Amended WAMCO Agreement are identical to the
Current WAMCO Agreement. The Amended WAMCO Agreement authorizes WAMCO and WAMCO
Limited to select brokers and dealers to execute portfolio transactions, subject
to their overall obligation to seek best execution for the Bond Fund. In
selecting a broker or dealer, WAMCO and WAMCO Limited may consider research
services provided to WAMCO and WAMCO Limited.
DURATION AND TERMINATION. The provisions relating to duration and
termination of the Amended WAMCO Agreement are identical to those of the Current
WAMCO Agreement. Unless terminated earlier, the Amended WAMCO Agreement shall
continue in effect for two years from its date of execution and, thereafter, for
periods of one year for so long as such continuance is specifically approved at
least annually by (i) a majority of the Independent Directors cast in person at
a meeting called for the purpose of voting on such approval, and (ii) the
Directors of the Company, or by the vote of a majority of the outstanding voting
securities of the Bond Fund.
The Amended WAMCO Agreement would terminate automatically in the event
of its assignment or in the event that Comanco's investment advisory agreement
with the Company is terminated with respect to the Bond Fund. The Amended WAMCO
Agreement is terminable at
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any time without penalty by the Directors of the Company or by the vote of a
majority of the outstanding shares of the Bond Fund on not less than 30 days nor
more than 60 days written notice to WAMCO and WAMCO Limited. WAMCO and WAMCO
Limited may terminate the Amended WAMCO Agreement upon 90 days written notice to
Comanco.
COMPENSATION. The compensation to be paid by Comanco under the Amended
WAMCO Agreement is identical to that called for by the Current WAMCO Agreement.
Under the Amended WAMCO Agreement, Comanco will pay WAMCO a fee, which is
calculated daily and paid quarterly at an annual rate of 0.135%. In turn, WAMCO
may pay WAMCO Limited a portion of the fee it receives from Comanco. For the
fiscal year ended April 30, 2001, Comanco paid advisory fees of [$xxxxx] to
WAMCO, which equaled 0.XX% of the Bond Fund's average daily net assets.
DESCRIPTIONS OF WAMCO AND WAMCO LIMITED.
WAMCO currently serves as an investment sub-adviser for the Bond Fund.
WAMCO is a corporation formed in 1971 under the laws of the State of California,
to provide investment advisory services. Legg Mason, Inc. is the sole
shareholder of WAMCO. The principle place of business of WAMCO is 117 E.
Colorado Boulevard, 6th Floor, Pasadena, CA 91105.
Established in 1990, WAMCO Limited is a [company with limited liability
organized under the laws of England]. WAMCO Limited is an indirect, wholly-owned
subsidiary of Legg Mason, Inc. The principal place of business of WAMCO Limited
is 155 Bishopgate, London, England.
Listed below are the names and principal occupations of each of the
directors and the principal executive officer of WAMCO and WAMCO Limited. The
principal business address of each director and the principal executive officer,
as it relates to their duties at WAMCO or WAMCO Limited, is 117 E. Colorado
Boulevard, 6th Floor, Pasadena, CA 91105 and 155 Bishopgate, London, England,
respectively.
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Name Title
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WAMCO
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WAMCO Limited
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An investment team at each of WAMCO and WAMCO Limited will provide
investment advice for the Bond Fund and no single person will have primary
responsibility for managing the assets of the Bond Fund.
As of April 30, 2001, WAMCO and WAMCO Limited managed over $XX billion
in client assets, respectively.
DIRECTORS' CONSIDERATIONS.
[The Directors of the Company, including the Independent Directors, approved the
Amended WAMCO Agreement at a meeting held on February 26, 2001. The Directors
received written information from WAMCO and WAMCO Limited and written and oral
information from
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Comanco. Comanco recommended the approval of the Amended WAMCO Agreement and
selection of WAMCO Limited as an additional sub-adviser to the Bond Fund and
reviewed the considerations underlying its recommendation. In this regard,
Comanco reviewed and summarized information about key personnel, investment
philosophy and process and performance track record of WAMCO Limited, among
other factors. The Directors also considered the quality of services WAMCO
Limited can be expected to provide to the Bond Fund in light of its history,
reputation, qualification and background, as well as the qualifications of its
personnel and its financial condition. The Directors also considered that the
combined fees to be paid to WAMCO and WAMCO Limited under the Amended WAMCO
Agreement would remain unchanged.]
Proposal 2. APPROVAL OF THE PROPOSED BLACKROCK AGREEMENT BETWEEN THE
COMPANY, COMANCO AND BLACKROCK AND APPROVAL OF BLACKROCK AS AN
ADDITIONAL SUB-ADVISER TO THE BOND FUND.
BACKGROUND.
At a meeting of the Board of Directors held on June 11, 2001, based on
the recommendation of Comanco, the Board, including the Independent Directors,
unanimously approved the Proposed BlackRock Agreement and the appointment of
BlackRock as a sub-adviser to the Bond Fund. The Board also recommended that the
Proposed BlackRock Agreement be submitted to shareholders of the Bond Fund for
approval. The Majority Shareholder approved the Proposed BlackRock Agreement by
written consent, which will become effective on or about July 2, 2001.
SUMMARY OF THE PROPOSED BLACKROCK AGREEMENT.
The provisions of the Proposed BlackRock Agreement are summarized
below. The following summary of the Proposed BlackRock Agreement is qualified in
its entirety by reference to the form of Proposed BlackRock Agreement attached
hereto as Exhibit B.
DUTIES UNDER THE SUB-ADVISORY AGREEMENT. Under the Proposed BlackRock
Agreement, Comanco will have general oversight responsibility for the investment
advisory services provided to the Bond Fund, including formulating investment
policies and analyzing economic trends affecting the Bond Fund. In accordance
with the Fund's investment objectives and policies, and under the supervision of
Comanco and the Company's Board of Directors, BlackRock will manage a discrete
portion of the assets of the Bond Fund allocated to it by Comanco. BlackRock
will be authorized to make investment decisions for the Fund and place orders on
behalf of the Fund to effect the investment decisions made.
The Proposed BlackRock Agreement provides that BlackRock shall not be
liable for any error of judgment or mistake of law or for any loss arising out
of any investment or for any act or omission in carrying out its duties
hereunder, except a loss resulting from willful misfeasance, bad faith or gross
negligence in the performance of its obligations or duties, or from reckless
disregard of its obligations or duties, except as may otherwise be provided for
under provisions of applicable state law or Federal securities law to the extent
such provisions cannot be waived or modified by the Proposed BlackRock
Agreement.
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PORTFOLIO TRANSACTIONS. The provisions relating to execution of
portfolio transactions of the Proposed BlackRock Agreement authorize BlackRock
to select brokers and dealers to execute portfolio transactions, subject to its
overall obligation to seek best execution for the Bond Fund. In selecting a
broker or dealer, BlackRock may consider research services provided to
BlackRock.
DURATION AND TERMINATION. Unless terminated earlier, the Proposed
BlackRock Agreement shall continue in effect for two years from its date of
execution and, thereafter, for periods of one year for so long as such
continuance is specifically approved at least annually by (i) a majority of the
Independent Directors cast in person at a meeting called for the purpose of
voting on such approval, and (ii) the Directors of the Company, or by the vote
of a majority of the outstanding voting securities of the Bond Fund.
The Proposed BlackRock Agreement would terminate automatically with
respect to the Bond Fund in the event of its assignment or in the event that
Comanco's investment advisory agreement with the Company is terminated with
respect to the Bond Fund. The Proposed BlackRock Agreement is terminable with
respect to the Bond Fund at any time without penalty by the Directors of the
Company or by the vote of a majority of the outstanding shares of the Fund on
not less than 30 days nor more than 60 days written notice to BlackRock.
BlackRock may terminate the Proposed BlackRock Agreement with respect to the
Fund upon 90 days written notice to Comanco.
COMPENSATION. Under the Proposed BlackRock Agreement, Comanco will pay
BlackRock a fee, which is calculated daily and paid quarterly at an annual rate
of [xxxxx%] of the average daily net assets of the Bond Fund.
DESCRIPTION OF BLACKROCK.
BlackRock is a corporation formed in [insert year] under the laws of [Delaware],
to provide investment advisory services. BlackRock is an indirect majority-owned
subsidiary of The PNC Financial Services Group, Inc., [a financial services
company, based in Pittsburgh, Pennsylvania, which through its subsidiaries
offers banking, brokerage and asset management services. The principal place of
business of BlackRock is 345 Park Avenue, 29th Floor, New York, NY 10154-0004.
Listed below are the names and principal occupations of each of the
directors and the principal executive officer of BlackRock. The principal
business address of each director and the principal executive officer, as it
relates to their duties at BlackRock, is 345 Park Avenue, 29th Floor, New York,
NY 10154-0004.
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Name Title
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[Insert portfolio manager/management team information.]
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As of April 30, 2001, BlackRock managed over $XX billion in client
assets.
DIRECTORS' CONSIDERATIONS.
[The Directors of the Company, including the Independent Directors,
approved the Proposed BlackRock Agreement at a meeting held on June 11, 2001.
The Directors received written information from BlackRock and written and oral
information from Comanco. Comanco recommended the approval of the Proposed
BlackRock Agreement and selection of BlackRock as an additional sub-adviser to
the Bond Fund and reviewed the considerations underlying its recommendation. In
this regard, Comanco reviewed and summarized information about key personnel,
investment philosophy and process and performance track record of BlackRock,
among other factors. The Directors also considered the quality of services
BlackRock can be expected to provide to the Bond Fund in light of its history,
reputation, qualification and background, as well as the qualifications of its
personnel and its financial condition. The Directors also considered the fees to
be paid to BlackRock and that such fees would not result in an increase in the
expenses to be borne by shareholders of the Bond Fund.]
Proposal 3. APPROVAL OF THE AMENDED CGTC AGREEMENT BETWEEN THE COMPANY,
COMANCO, AND CGTC
BACKGROUND.
At a meeting of the Board of Directors held on February 26, 2001, based
on the recommendations of Comanco, the Board, including the Independent
Directors, unanimously approved the Amended CGTC Agreement. The Board also
recommended that the Amended CGTC Agreement be submitted to shareholders of the
International Fund for approval. The Majority Shareholder approved the Amended
CGTC Agreement by written consent, which will become effective on or about July
2, 2001.
CGTC currently serves as a sub-adviser to the International Fund under
an investment sub-advisory agreement between the Company, Comanco and CGTC dated
December 11, 2000 (the "Current CGTC Agreement"). Under the Current CGTC
Agreement, CGTC is responsible for managing the investment of all International
Fund assets allocated to it by Comanco. Based on the recommendation of Comanco
and CGTC, it is proposed that the investment sub-advisory fee schedule be
revised to reflect CGTC's standard fees for accounts similar to the Fund. The
new fee schedule would increase the fee payable by Comanco to CGTC, however,
CGTC has voluntarily agreed to waive its fee by the amount of the proposed
increase.
SUMMARY OF THE AMENDED CGTC AGREEMENT.
The provisions of the Amended CGTC Agreement are identical to the
provisions of the Current CGTC Agreement, except for changes necessary to
increase the fee payable by Comanco to CGTC. The following summary of the
provisions of the Amended CGTC Agreement is qualified in its entirety by
reference to the form of Amended CGTC Agreement attached hereto as Exhibit C.
DUTIES UNDER THE AMENDED CGTC AGREEMENT. The duties under the Amended
CGTC Agreement are identical to those under the Current CGTC Agreement. As is
the case under the Current CGTC Agreement, Comanco would have general
responsibility for overseeing the
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investment advisory services provided to the International Fund by CGTC,
including formulating the International Fund's investment policies and analyzing
economic trends affecting the International Fund. In accordance with the
International Fund's investment objectives and policies, and under the
supervision of Comanco and the Company's Board of Directors, CGTC will manage
the assets of the International Fund allocated to it. CGTC would be authorized
to make investment decisions for the International Fund and place orders on
behalf of the International Fund to effect the investment decisions made.
The Amended CGTC Agreement provides that CGTC shall not be liable for
any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in carrying out its duties hereunder,
except a loss resulting from willful misfeasance, bad faith or gross negligence
in the performance of its obligations or duties, or from reckless disregard of
its obligations or duties, except as may otherwise be provided for under
provisions of applicable state law or Federal securities law to the extent such
provisions cannot be waived or modified by the Amended CGTC Agreement.
PORTFOLIO TRANSACTIONS. The provisions relating to execution of
portfolio transactions of the Amended CGTC Agreement are identical to the
Current CGTC Agreement. The Amended CGTC Agreement authorizes CGTC to select
brokers and dealers to execute portfolio transactions, subject to its overall
obligation to seek best execution for the International Fund. In selecting a
broker or dealer, CGTC may consider research services provided to CGTC.
DURATION AND TERMINATION. The provisions relating to duration and
termination of the Amended CGTC Agreement are identical to those of the Current
CGTC Agreement. Unless terminated earlier, the Amended CGTC Agreement shall
continue in effect for two years from its date of execution and, thereafter, for
periods of one year for so long as such continuance is specifically approved at
least annually by (i) a majority of the Independent Directors cast in person at
a meeting called for the purpose of voting on such approval, and (b) the
Directors of the Company, or by the vote of a majority of the outstanding voting
securities of the International Fund.
The Amended CGTC Agreement would terminate automatically in the event
of its assignment or in the event that Comanco's investment advisory agreement
with the Company is terminated with respect to the International Fund. The
Amended CGTC Agreement is terminable at any time without penalty by the
Directors of the Company or by the vote of a majority of the outstanding shares
of the International Fund on not less than 30 days nor more than 60 days written
notice to CGTC. CGTC may terminate the Amended CGTC Agreement upon 90 days
written notice to Comanco.
COMPENSATION. The compensation payable by Comanco under the Amended
CGTC Agreement is higher than that called for by the Current CGTC Agreement.
Under the Amended CGTC Agreement, Comanco is obligated to pay CGTC a fee, which
is calculated daily and paid quarterly at an annual rate of [0.40%.] Under the
Current CGTC Agreement, Comanco is obligated to pay CGTC a fee, which is
calculated daily and paid quarterly at an annual rate of [0.356%]. For the
fiscal year ended April 30, 2001, Comanco paid advisory fees of [$xxxxx] to
CGTC, which equaled 0.XX% of the Bond Fund's average daily net assets. Had the
fee payable under the Amended CGTC Agreement been in effect during the fiscal
year ended April 30, 2001, Comanco would have been obligated to pay [$xxxxx] to
CGTC, which represents a [xx%] increase over the amount payable under the
Current CGTC Agreement. CGTC has voluntarily
9
agreed to waive a portion of the sub-advisory fee payable under the Amended CGTC
Agreement so that the amount paid under the Amended CGTC Agreement is equal to
the amount that would have been paid under the Current CGTC Agreement. CGTC may
terminate this fee waiver at any time in its sole discretion.
DESCRIPTION OF CGTC.
CGTC, a trust company formed in 1931 under the laws of [insert state],
provides investment advisory services to institutional and private clients.
[Insert parent information.] The principal place of business of CGTC is 630
Fifth Avenue, 36th Floor, New York, NY 10111.
Listed below are the names and principal occupations of each of the
[trustees] and the principal executive officer of CGTC. The principal business
address of each [trustee] and the principal executive officer, as it relates to
their duties at CGTC, is 630 Fifth Avenue, 36th Floor, New York, NY 10111.
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Name Title
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An investment team at CGTC's International Active Division headed by
David J. Fisher provides investment advice for the International Fund. Mr.
Fisher has been with CGTC since December 1971 and has over 35 years of
investment experience.
As of April 30, 2001, CGTC managed over $XX billion in client assets.
DIRECTORS' CONSIDERATIONS.
[The Directors of the Company, including the Independent Directors,
approved the Amended CGTC Agreement at a meeting held on June 11, 2001. The
Directors received written and oral information from Comanco. Comanco
recommended the approval of the Amended CGTC Agreement and reviewed the
considerations underlying its recommendation. In this regard, Comanco noted that
the Amended CGTC Agreement is identical to the Current CGTC Agreement, except
for the increase in the fee payable to CGTC by Comanco. The Directors also
considered that, because CGTC's fee is payable by Comanco out of the advisory
fee that it receives from the International Fund, the increase in the fee
payable to CGTC, even in the absence of CGTC's voluntary fee waiver, would not
affect the expenses incurred by shareholders.]
GENERAL INFORMATION ABOUT THE COMPANY AND OTHER MATTERS
INVESTMENT ADVISER, DISTRIBUTOR AND ADMINISTRATOR. Comanco, located at
15 Old Danbury Road, P.O. Box 812, Wilton, CT 06897-0812, serves as investment
adviser to the Company pursuant to an investment advisory agreement between the
Company and Comanco. Commonfund Securities, Inc. ("CSI"), located at 15 Old
Danbury Road, P.O. Box 812, Wilton, CT 06897-0812, serves as the distributor of
the Company's shares pursuant to a Distribution
10
Agreement between the Company and CSI. Each of Comanco and CSI is a wholly-owned
subsidiary of The Common Fund for Nonprofit Organizations.
Investors Bank & Trust Company, located at 200 Clarendon Street,
Boston, MA 02116, serves as administrator to the Company.
FUND TRANSACTIONS. [Insert brokerage paid to affiliated broker for the
fiscal year end (April 30, 2001) for each Fund].
REPORTS TO SHAREHOLDERS. The Company will furnish, without charge, a
copy of the most recent Annual Report to Shareholders of the Company and the
most recent Semi-Annual Report succeeding such Annual Report, if any, upon
request. Requests should be directed to the Company at 15 Old Danbury Road, P.O.
Box 812, Wilton, CT 06897-0812, or by calling 1-888-TCF-FUND.
11
EXHIBIT A
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made this day of ____ , 2001, by and among Commonfund
Institutional Funds, a Delaware business trust (the "Company"), Commonfund Asset
Management Company, Inc., a Delaware Corporation (the "Investment Manager"),
Western Asset Management Company ("WAMCO") and Western Asset Management Company
Limited ("WAMCO Limited" together with WAMCO, the "Sub-Advisers").
WHEREAS, the Company is an open-end, management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), which consists of several series, each having its own investment
policies; and
WHEREAS, the Company has entered into an investment advisory agreement
with the Investment Manager pursuant to which the Investment Manager will act as
investment adviser to the Company; and
WHEREAS, each of WAMCO and WAMCO Limited is controlled by Legg Mason,
Inc.
WHEREAS, the Investment Manager, acting with the approval of the
Company, wishes to retain the Sub-Advisers to render discretionary investment
advisory services with respect to that portion of each portfolio identified on
the attached Schedule A to this Investment Sub-Advisory Agreement, as it may be
amended from time to time (each a "Fund") that may be allocated by the
Investment Manager for management by the one or both Sub-Advisers from time to
time (together with all income earned on those assets and all realized and
unrealized capital appreciation related to those assets (with respect to a Fund,
the "Managed Assets"), and the Sub-Advisers are willing to render such services.
NOW, THEREFORE, in consideration of mutual covenants herein contained,
the parties hereto agree as follows:
1. DUTIES OF SUB-ADVISERS. The Sub-Advisers shall collectively
manage the investment and reinvestment of the Managed Assets
and determine in their discretion, the securities and other
property to be purchased or sold and the portion of the
Managed Assets to retain in cash. WAMCO and WAMCO Limited
shall be jointly and severally responsible for the investment
decisions relating to the Managed Assets, provided that (i)
the Investment Manager may designate certain Managed Assets to
be managed by WAMCO or WAMCO Limited and (ii) in the event
that WAMCO and WAMCO Limited disagree as to the management of
any Managed Assets, WAMCO's decision shall control. The
Sub-Advisers
shall review all proxy solicitation materials and shall
exercise any voting rights associated with securities
comprising the Managed Assets in the best interests of the
Fund and its shareholders. The Sub-Advisers shall provide the
Investment Manager and the Company with records concerning the
Sub-Advisers' activities that the Company is required to
maintain, and to render regular reports to the Investment
Manager and to the Company concerning the Sub-Advisers'
discharge of the foregoing responsibilities.
The Sub-Advisers shall discharge the foregoing
responsibilities subject to the written instructions and
directions of the Company and its Board of Directors and their
agents, including the officers of the Company and the
Investment Manager, and in compliance with (i) such policies
as the Company may from time to time establish and communicate
in writing to the Sub-Advisers, (ii) the objectives, policies,
and limitations for each Fund set forth in the Prospectus and
Statement of Additional Information as those documents may
from time to time be amended or supplemented and delivered to
the Sub-Advisers (the "Prospectus and Statement of Additional
Information"), (iii) the Declaration of Trust of the Company,
and (iv) applicable laws and regulations including the 1940
Act, the Investment Advisers Act of 1940 (the "Advisers Act")
and the Internal Revenue Code of 1986. If a conflict in
policies or guidelines referenced herein occurs, the
Prospectus and Statement of Additional Information shall
control.
The Sub-Advisers agree to perform such duties at their own
expense and to provide the office space, furnishings and
equipment and the personnel required by it to perform the
services on the terms and for the compensation provided
herein. The Sub-Advisers will not, however, pay for the cost
of securities, commodities, and other investments (including
brokerage commissions and other transaction charges, if any)
purchased or sold for a Fund, nor will the Sub-Advisers bear
any expenses that would result in the Company's inability to
qualify as a regulated investment company under provisions of
the Internal Revenue Code.
2. DUTIES OF INVESTMENT MANAGER The Investment Manager shall
continue to have responsibility for all services to be
provided to a Fund pursuant to the Advisory Agreement between
it and the Company and shall oversee and review the
Sub-Advisers' performance under this Agreement.
The Investment Manager shall furnish to the Sub-Advisers
current and complete copies of the Declaration of Trust and
By-laws of the Company, and the current Prospectus and
Statement of Additional Information as those documents may be
amended from time to time. The provisions of Section 1,
paragraph 2 shall not apply to those documents as amended
unless the Sub-Advisers have received any such amendments.
2
3. CUSTODY, DELIVERY AND RECEIPT OF SECURITIES. The Company shall
designate one or more custodians to hold the Managed Assets.
The custodians, as so designated, will be responsible for the
custody, receipt and delivery of securities and other assets
of a Fund including the Managed Assets, and the Sub-Advisers
shall have no authority, responsibility or obligation with
respect to the custody, receipt or delivery of securities or
other assets of a Fund including the Managed Assets. In the
event that any cash or securities of a Fund are delivered to
the Sub-Advisers, they will promptly deliver the same over to
the custodian for the benefit of and in the name of the Fund.
Unless otherwise required by local custom, all securities
transactions for the Managed Assets will be consummated by
payment to or delivery by a Fund of cash or securities due to
or from the Managed Assets.
Repurchase agreements including tri-party repurchase
agreements and other trading agreements may be entered into by
a Fund acting through designated officers or agents;
custodians under tri-party repurchase agreements will act as
sub-custodians of the Fund.
4. PORTFOLIO TRANSACTIONS.
(a) Selection of Brokers. The Sub-Advisers are authorized to
select the brokers or dealers that will execute the purchases
and sales of portfolio securities and other property for a
Fund in a manner that implements the policy with respect to
brokerage set forth in the Prospectus and Statement of
Additional Information for the Fund or as the Board of
Directors or the Investment Manager may direct in writing from
time to time and in conformity with federal securities laws.
In executing Fund transactions and selecting brokers or
dealers, the Sub-Advisers will use their best efforts to seek
on behalf of the Fund the best overall terms available. In
assessing the best overall terms available for any
transaction, the Sub-Advisers shall consider all factors that
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, both for the
specific transaction and on a continuing basis. In evaluating
the best overall terms available, and in selecting the
broker-dealer to execute a particular transaction, the
Sub-Advisers may also consider the brokerage and research
services provided (as those terms are defined in Section 28(e)
of the Securities Exchange Act of 1934). Consistent with any
guidelines established by the Board of Directors and
communicated to the Sub-Advisers in writing, the Sub-Advisers
are authorized to pay to a broker or dealer who provides such
brokerage and research services a commission for executing a
portfolio transaction for a Fund that is in
3
excess of the amount of commission another broker or dealer
would have charged for effecting that transaction if, but only
if, the Sub-Advisers determine in good faith that such
commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or
dealer viewed in terms of that particular transaction or terms
of the overall responsibilities of the Sub-Advisers to the
Fund. In addition, the Sub-Advisers are authorized to allocate
purchase and sale orders for securities to brokers or dealers
(including brokers and dealers that are affiliated with the
Investment Manager, the Sub-Advisers or the Company's
principal underwriter) to take into account the sale of shares
of the Company if the Sub-Advisers believe that the quality of
the transaction and the commission are comparable to what they
would be with other qualified firms. In no instance, however,
will Fund assets be purchased from or sold to the Investment
Manager, the Sub-Advisers, the Company's principal
underwriter, or any affiliated person of either the Company,
the Investment Manager, the Sub-Advisers or the principal
underwriter, acting as principal in the transaction, except to
the extent permitted by the Securities and Exchange Commission
("SEC") and the 1940 Act.
(b) Aggregating Orders. The Sub-Advisers may aggregate orders
for purchase or sale of Managed Assets with similar orders
being made concurrently for other accounts managed by the
Sub-Advisers, if, in the Sub-Advisers' reasonable judgment,
such aggregation shall result in an overall economic benefit
to the Fund, taking into consideration the transaction price,
brokerage commission and other expenses. The Company
acknowledges that the determination of such economic benefit
to a Fund by the Sub-Advisers may represent the Sub-Advisers'
evaluation that a Fund is benefited over time by relatively
better purchase or sales prices, lower commission expenses and
beneficial timing of transactions or a combination of these
and other factors. In any single transaction in which
purchases and or sales of securities of any issuer for the
account of a Fund are aggregated with other accounts managed
by the Sub-Advisers, the actual prices applicable to the
transaction will be averaged among the accounts for which the
transaction is effected, including the account of a Fund.
5. COMPENSATION OF THE SUB-ADVISERS. For the services to be
rendered by the Sub-Advisers under this Agreement, the
Investment Manager shall pay to WAMCO compensation at the rate
specified in Schedule B as it may be amended from time to
time. Such compensation shall be paid at the times and on the
terms set forth in Schedule B. All rights of compensation
under this Agreement for services performed as of the
termination date shall survive the termination of this
Agreement. Except as may otherwise be prohibited by law or
regulation (including any then current SEC staff
interpretations), the Sub-Advisers may, in their discretion
and from time to time, waive a portion of its fee. The parties
4
understand that WAMCO will, from time to time, pay to WAMCO
Limited a portion of any fee paid to it hereunder.
6. OTHER EXPENSES. The Company shall pay all expenses relating to
mailing prospectuses, statements of additional information,
proxy solicitation material and shareholder reports to
shareholders.
7. REPORTS.
(a) The Company and the Sub-Advisers agree to furnish to each
other, current prospectuses, proxy statements, reports to
shareholders, certified copies of financial statements, and
such other information with regard to their affairs as each
may reasonably request. The Investment Manager will furnish to
the Sub-Advisers advertising and sales literature or other
material prepared for distribution to Fund shareholders or the
public, which refer to the Sub-Advisers or their clients in
any way, prior to the use thereof, and the Investment Manager
shall not use any such materials if the Sub-Advisers
reasonably object in writing within ten (10) business days (or
such other time as may be mutually agreed) after receipt
thereof.
(b) The Sub-Advisers shall provide to each Fund's custodian,
on each business day, information relating to all transactions
in the Managed Assets and shall provide such information to
the Investment Manager upon request. The Sub-Advisers will
make all reasonable efforts to notify the Custodian of all
orders to brokers for the Managed Assets by 9:00 am EST on the
day following the trade date and will affirm the trade to the
Custodian before the close of business one business day after
the trade date.
(c) The Sub-Advisers will promptly communicate to the
Investment Manager and to the Company such information
relating to portfolio transactions on behalf of a Fund as they
may reasonably request.
(d) The Sub-Advisers shall promptly notify the Company and the
Investment Manager of any financial condition likely to impair
the ability of the Sub-Advisers to fulfill their commitments
under this Agreement.
8. STATUS OF SUB-ADVISERS. The Sub-Advisers are and will continue
to be registered as such under the Advisers Act. The services
of the Sub-Advisers to the Company for each Fund are not to be
deemed exclusive, and the Sub-Advisers shall be free to render
similar services to others so long as their services to the
Fund are not impaired thereby. The Sub-Advisers shall be
deemed to be independent contractors and shall, unless
otherwise expressly provided or authorized, have no authority
to act for or represent the Company in any way or otherwise be
deemed an agent of the Company.
5
9. CERTAIN RECORDS. The Sub-Advisers shall maintain all books and
records with respect to transactions involving the Managed
Assets required by subparagraphs (b)(5), (6), (7), (9), (10)
and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act.
The Sub-Advisers shall provide to the Investment Manager or
the Board of Directors such periodic and special reports,
balance sheets or financial information, and such other
information with regard to their affairs as the Investment
Manager or the Board of Directors may reasonably request.
The Sub-Advisers shall keep the books and records relating to
the Managed Assets required to be maintained by the
Sub-Advisers under this Agreement and shall timely furnish to
the Investment Manager all information relating to the
Sub-Advisers' services under this Agreement needed by the
Investment Manager to keep the other books and records of the
Company required by Rule 31a-1 under the 1940 Act. The
Sub-Advisers shall also furnish to the Investment Manager any
other information within their control relating to the Managed
Assets that is required to be filed by the Investment Manager
or the Company with the SEC or sent to shareholders under the
1940 Act (including the rules adopted thereunder) or any
exemptive or other relief that the Investment Manager or the
Company obtains from the SEC. The Sub-Advisers agree that all
records that they maintain on behalf of the Company are
property of the Company and the Sub-Advisers will surrender
promptly to the Company any of such records upon the Company's
request; provided, however, that the Sub-Advisers may retain a
copy of such records. In addition, for the duration of this
Agreement, the Sub-Advisers shall preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any such records
as are required to be maintained by it pursuant to this
Agreement, and shall transfer said records to any successor
sub-adviser upon the termination of this Agreement (or, if
there is no successor sub-adviser, to the Investment Manager).
10. LIMITATION OF LIABILITY OF SUB-ADVISERS. The duties of the
Sub-Advisers shall be confined to those expressly set forth
herein, and no implied duties are assumed by or may be
asserted against the Sub-Advisers hereunder, except as may be
imposed by law. The Sub-Advisers shall not be liable for any
error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in carrying
out their duties hereunder, except a loss resulting from
willful misfeasance, bad faith or gross negligence in the
performance of their duties, or by reason of reckless
disregard of their obligations and duties hereunder, except as
may otherwise be provided under provisions of applicable state
law or Federal securities law which cannot be waived or
modified hereby. (As used in this Section 10, the term
"Sub-Advisers" shall include directors,
6
officers, employees and other corporate agents of the
Sub-Advisers as well as the entities themselves).
11. PERMISSIBLE INTERESTS. Agents and shareholders of the Company
may be interested in the Sub-Advisers (or any successor
thereof) as directors, partners, officers, or shareholders, or
otherwise; directors, partners, officers, agents, and
shareholders of the Sub-Advisers are or may be interested in
the Company as shareholders or otherwise; and the Sub-Advisers
(or any successor) are or may be interested in the Company as
a shareholder or otherwise. In addition, brokerage
transactions for the Company may be effected through
affiliates of the Sub-Advisers if approved by the Board of
Directors of the Company subject to the rules and regulations
of the SEC.
12. DURATION AND TERMINATION. This Agreement shall become
effective for each Fund set forth in Schedule A upon its
approval by the Board of Directors of the Company and by a
vote of the majority of the outstanding voting securities of
each Fund; provided, however, that at any time the Investment
Manager and the Company shall have obtained exemptive relief
from the SEC permitting them to engage a sub-adviser without
first obtaining approval of the Agreement from a majority of
the outstanding voting securities of the Fund(s) involved, the
Agreement shall become effective upon its approval by the
Company's Board of Directors. This Agreement shall remain in
effect until two years from date of execution, and thereafter,
for periods of one year so long as such continuance thereafter
is specifically approved at least annually by the vote of a
(a) majority of those Directors of the Company who are not
parties to this Agreement or interested persons of any such
party, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Directors of the
Company, or by the vote of a majority of the outstanding
voting securities of the Fund; provided, however, that if the
shareholders of a Fund fail to approve the Agreement as
provided herein, the Sub-Advisers may continue to serve
hereunder in the manner and to the extent permitted by the
1940 Act and rules and regulations thereunder. The foregoing
requirement that continuance of this Agreement be
"specifically approved at least annually" shall be construed
in a manner consistent with the 1940 Act and the rules and
regulations thereunder.
This Agreement may be terminated at any time, without the
payment of any penalty, by vote of a majority of the Directors
of the Company or by vote of a majority of the outstanding
voting securities of a Fund on not less than 30 days nor more
than 60 days written notice to the Sub-Advisers, by the
Investment Manager at any time without the payment of a
penalty upon 90 days written notice to the Sub-Advisers, or by
the Sub-Advisers at any time without the payment of any
penalty on 90 days written notice to the Investment Manager.
This Agreement will automatically and
7
immediately terminate in the event of its assignment or in the
event of the termination of the Investment Manager's advisory
agreement with the Company. Any termination of this Agreement
in accordance with the terms hereof will not affect the
obligations or liabilities accrued prior to termination. Any
notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the other
party at any office of such party.
As used in this Section 12, the terms "assignment",
"interested persons," and a "vote of a majority of the
outstanding voting securities" shall have the respective
meanings set forth in the 1940 Act and the rules and
regulations thereunder; subject to such exceptions as may be
granted by the SEC under said Act.
13. NOTICE. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by
registered or certified mail, postage prepaid, addressed by
the party giving notice to the other party at the last address
furnished by the other party to the party giving notice. At
the outset, such notices shall be delivered to the following
addresses:
(i) if to the Company, then care of:
Commonfund Asset Management Company, Inc.
15 Old Danbury Rd, P.O. Box 812
Wilton, CT 06897
Attn: Mr. Todd E. Petzel, President
(ii) if to the Investment Manager, at the foregoing
address; and
(iii) if to WAMCO or WAMCO Limited:
Western Asset Management Company
117 East Colorado Boulevard
Pasadena, CA 91105
14. SEVERABILITY. 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.
15. GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of New York and the applicable
provisions of the 1940 Act. To the extent that the applicable
laws of the State of New York, or any of the provisions
herein, conflict with the applicable provisions of the 1940
Act, the latter shall control. With respect to any suit,
action, or proceeding relating to this Agreement or
transactions contemplated hereby, each party irrevocably
submits to the non-exclusive jurisdiction of the United States
District Court for the Southern District of New York.
8
16. CONFIDENTIAL INFORMATION. The Sub-Advisers shall not identify
the Company or the Fund as a client, or disclose any
information about the Company or the Fund to any third party
except as may be required by law, as requested by a regulatory
body, or deemed appropriate to further the purposes of this
Agreement or as may be expressly permitted by the Company.
17. MISCELLANEOUS. This instrument constitutes the sole and only
agreement of the parties to it relating to its object; any
prior agreements, promises or representations not expressly
set forth in this Agreement are of no force and effect. No
waiver or modification of this Agreement shall be effective
unless reduced to writing and signed by the party to be
charged. No failure to exercise and no delay in exercising on
the part of any party hereto of any right, remedy, power or
privilege hereunder shall operate as a waiver thereof. Except
as set forth in Section 12, this Agreement binds and inures to
the benefit of the parties, their successors and assigns. This
Agreement may be executed in more than one counterpart, each
of which shall be deemed an original and both of which, taken
together, shall be deemed to constitute one and the same
instrument. A copy of the Certificate of Trust of the Company
is on file with the Secretary of State of the State of
Delaware and notice is hereby given that the obligations under
this instrument are not binding on any of the Directors,
officers or shareholders of the Company. Where the effect of a
requirement of the 1940 Act reflected in any provision of this
Agreement is altered by rule, regulation or order of the SEC,
whether of special or general application, such provision
shall be deemed to incorporate the effect of such rule,
regulation or order. The parties hereto agree that, except as
provided in Section 1 of this Agreement, joint action shall
not be required for satisfaction of any duty or obligation of
the Sub-Advisers, to the extent such duty or obligation may be
satisfied by any one Sub-Adviser acting singly.
9
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.
COMMONFUND INSTITUTIONAL FUNDS
By:
----------------------------------------------
Attest:
-----------------------------------------
COMMONFUND ASSET MANAGEMENT COMPANY, INC.
By:
---------------------------------------------
Attest:
-----------------------------------------
WESTERN ASSET MANAGEMENT COMPANY
By:
----------------------------------------------
Attest:
------------------------------------------
WESTERN ASSET MANAGEMENT COMPANY LIMITED
By:
----------------------------------------------
Attest:
------------------------------------------
10
SCHEDULE A
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
AMONG
COMMONFUND INSTITUTIONAL FUNDS
COMMONFUND ASSET MANAGEMENT COMPANY, INC.
WESTERN ASSET MANAGEMENT COMPANY
AND
WESTERN ASSET MANAGEMENT COMPANY LIMITED
FUND
- ----
CIF Core Plus Bond Fund
Date of this Schedule: ______
11
SCHEDULE B
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
DATED _______________ , 2000
AMONG
COMMONFUND INSTITUTIONAL FUNDS
COMMONFUND ASSET MANAGEMENT COMPANY, INC.
WESTERN ASSET MANAGEMENT COMPANY
AND
WESTERN ASSET MANAGEMENT COMPANY LIMITED
FEES
- ----
Daily Accrual
- -------------
Fees shall be accrued each day by applying to the Net Asset Value of the
Managed Assets at the end of that day, the daily rate, using a 365 day year,
equivalent to the following:
Fund (% Per Annum)
---- -------------
CIF Core Plus Bond Fund 0.135%
Quarterly Payment
- -----------------
Fees shall be paid within 30 days following the end of each calendar quarter.
COMMONFUND ASSET
MANAGEMENT COMPANY
By:
----------------------------
Name:
Title:
WESTERN ASSET MANAGEMENT
COMPANY
By:
----------------------------
Name:
Title:
WESTERN ASSET MANAGEMENT
COMPANY LIMITED
By:
----------------------------
Name:
Title:
Date of this Schedule B: ______
EXHIBIT B
FORM OF
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made this day of ____ , 2000, by and between Commonfund
Institutional Funds, a Delaware business trust (the "Company"), Commonfund Asset
Management Company, Inc., a Delaware Corporation (the "Investment Manager"), and
BlackRock Financial Management, Inc. (the "Sub-Adviser").
WHEREAS, the Company is an open-end, management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), which consists of several series, each having its own investment
policies; and
WHEREAS, the Company has entered into an investment advisory agreement
with the Investment Manager pursuant to which the Investment Manager will act as
investment manager to the Company; and
WHEREAS, the Investment Manager, acting with the approval of the
Company, wishes to retain the Sub- Adviser to render discretionary investment
advisory services with respect to that portion of each portfolio identified on
the attached Schedule A to this Investment Sub-Advisory Agreement, as it may be
amended from time to time (each a "Fund") that may be allocated by the
Investment Manager for management by the Sub-Adviser from time to time together
with all income earned on those assets and all realized and unrealized capital
appreciation related to those assets (with respect to a Fund, the "Managed
Assets"), and the Sub-Adviser is willing to render such services.
NOW, THEREFORE, in consideration of mutual covenants herein contained,
the parties hereto agree as follows:
1. DUTIES OF SUB-ADVISER. The Sub-Adviser shall manage the
investment and reinvestment of the Managed Assets and
determine in its discretion, the securities and other property
to be purchased or sold and the portion of the Managed Assets
to retain in cash. The Sub-Adviser shall review all proxy
solicitation materials and shall exercise any voting rights
associated with securities comprising the Managed Assets in
the best interests of the Fund and its shareholders. The
Sub-Adviser shall provide the Investment Manager and the
Company with records concerning the Sub-Adviser's activities
that the Company is required to maintain, and to render
regular reports to the Investment Manager and to the Company
concerning the Sub-Adviser's discharge of the foregoing
responsibilities.
The Sub-Adviser shall discharge the foregoing responsibilities
subject to the written instructions and directions of the
Company and its Board of Directors and their agents, including
the officers of the Company and the Investment Manager, and in
compliance with (i) such policies as the Company may from time
to time establish and communicate to the Sub-
Adviser, (ii) the objectives, policies, and limitations for
each Fund set forth in the Prospectus and Statement of
Additional Information as those documents may from time to
time be amended or supplemented from and delivered to the
Sub-Adviser (the "Prospectus and Statement of Additional
Information"), (iii) the Declaration of Trust of the Company,
and (iv) applicable laws and regulations including the 1940
Act, the Investment Advisers Act of 1940, and the Internal
Revenue Code of 1986. If a conflict in policies or guidelines
referenced herein occurs, the Prospectus and Statement of
Additional Information shall control.
The Sub-Adviser agrees to perform such duties at its own
expense and to provide the office space, furnishings and
equipment and the personnel required by it to perform the
services on the terms and for the compensation provided
herein. The Sub-Adviser will not, however, pay for the cost of
securities, commodities, and other investments (including
brokerage commissions and other transaction charges, if any)
purchased or sold for a Fund, nor will the Sub-Adviser bear
any expenses that would result in the Company's inability to
qualify as a regulated investment company under provisions of
the Internal Revenue Code.
5. DUTIES OF INVESTMENT MANAGER The Investment Manager shall
continue to have responsibility for all services to be
provided to a Fund pursuant to the Advisory Agreement between
it and the Company and shall oversee and review the
Sub-Adviser's performance under this Agreement.
The Investment Manager shall furnish to the Sub-Adviser
current and complete copies of the Declaration of Trust and
By-laws of the Company, and the current Prospectus and
Statement of Additional Information as those documents may be
amended from time to time.
6. CUSTODY, DELIVERY AND RECEIPT OF SECURITIES. The Company shall
designate one or more custodians to hold the Managed Assets.
The custodians, as so designated, will be responsible for the
custody, receipt and delivery of securities and other assets
of a Fund including the Managed Assets, and the Sub-Adviser
shall have no authority, responsibility or obligation with
respect to the custody, receipt or delivery of securities or
other assets of a Fund including the Managed Assets. In the
event that any cash or securities of a Fund are delivered to
the Sub-Adviser, it will promptly deliver the same over to the
custodian for the benefit of and in the name of the Fund.
Unless otherwise required by local custom, all securities
transactions for the Managed Assets will be consummated by
payment to or delivery by a Fund of cash or securities due to
or from the Managed Assets.
Repurchase agreements including tri-party repurchase
agreements and other trading agreements may be entered into by
a Fund acting through designated officers or agents;
custodians under tri-party repurchase agreements will act as
sub-custodians of the Fund.
7. PORTFOLIO TRANSACTIONS.
(a) Selection of Brokers. The Sub-Adviser is authorized to
select the brokers or dealers that will execute the purchases
and sales of portfolio securities and other property for a
Fund in a manner that implements the policy with respect to
brokerage set forth in the Prospectus and Statement of
Additional Information for the Fund or as the Board of
Directors or the Investment Manager may direct from time to
time and in conformity with federal securities laws.
In executing Fund transactions and selecting brokers or
dealers, the Sub-Adviser will use its best efforts to seek on
behalf of the Fund the best overall terms available. In
assessing the best overall terms available for any
transaction, the Sub-Adviser shall consider all factors that
it deems 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, both for the
specific transaction and on a continuing basis. In evaluating
the best overall terms available, and in selecting the
broker-dealer to execute a particular transaction, the
Sub-Adviser may also consider the brokerage and research
services provided (as those terms are defined in Section 28(e)
of the Securities Exchange Act of 1934). Consistent with any
guidelines established by the Board of Directors and
communicated to the Sub-Adviser, the Sub-Adviser is authorized
to pay to a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio
transaction for a Fund that is in excess of the amount of
commission another broker or dealer would have charged for
effecting that transaction if, but only if, the Sub-Adviser
determines in good faith that such commission was reasonable
in relation to the value of the brokerage and research
services provided by such broker or dealer viewed in terms of
that particular transaction or terms of the overall
responsibilities of the Sub-Adviser to the Fund. In addition,
the Sub-Adviser is authorized to allocate purchase and sale
orders for securities to brokers or dealers (including brokers
and dealers that are affiliated with the Investment Manager,
Sub-Adviser or the Company's principal underwriter) to take
into account the sale of shares of the Company if the
Sub-Adviser believes that the quality of the transaction and
the commission are comparable to what they would be with other
qualified firms. In no instance, however, will Fund assets be
purchased from or sold to the Investment Manager, Sub-Adviser,
the Company's principal underwriter, or any affiliated person
of either the Company, the Investment Manager, Sub-Adviser or
the principal underwriter, acting as principal in
the transaction, except to the extent permitted by the
Securities and Exchange Commission ("SEC") and the 1940 Act.
(b) Aggregating Orders. The Sub-Adviser may aggregate orders
for purchase or sale of Managed Assets with similar orders
being made concurrently for other accounts managed by
Sub-Adviser, if, in Sub-Adviser's reasonable judgment, such
aggregation shall result in an overall economic benefit to the
Fund, taking into consideration the transaction price,
brokerage commission and other expenses. The Company
acknowledges that the determination of such economic benefit
to a Fund by Sub-Adviser may represent Sub-Adviser's
evaluation that a Fund 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. In any single transaction in which
purchases and or sales of securities of any issuer for the
account of a Fund are aggregated with other accounts managed
by Sub-Adviser, the actual prices applicable to the
transaction will be averaged among the accounts for which the
transaction is effected, including the account of a Fund.
5. COMPENSATION OF THE SUB-ADVISER. For the services to be
rendered by the Sub-Adviser under this Agreement, the
Investment Manager shall pay to the Sub-Adviser compensation
at the rate specified in Schedule B as it may be amended from
time to time. Such compensation shall be paid at the times and
on the terms set forth in Schedule B. All rights of
compensation under this Agreement for services performed as of
the termination date shall survive the termination of this
Agreement. Except as may otherwise be prohibited by law or
regulation (including any then current SEC staff
interpretations), the Sub-Adviser may, in its discretion and
from time to time, waive a portion of its fee.
6. OTHER EXPENSES. The Company shall pay all expenses relating to
mailing prospectuses, statements of additional information,
proxy solicitation material and shareholder reports to
shareholders.
7. REPORTS.
(a) The Company and the Sub-Adviser agree to furnish to each
other, current prospectuses, proxy statements, reports to
shareholders, certified copies of financial statements, and
such other information with regard to their affairs as each
may reasonably request. The Investment Manager will furnish to
the Sub-Adviser advertising and sales literature or other
material prepared for distribution to Fund shareholders or the
public, which refer to the Sub-Adviser or its clients in any
way, prior to the use thereof, and the Investment Manager
shall not use any such materials if the Sub-Adviser reasonably
objects in writing within ten (10) business days (or such
other time as may be mutually agreed) after receipt thereof.
(b) The Sub-Adviser shall provide to each Fund's custodian, on
each business day, information relating to all transactions in
the Managed Assets and shall provide such information to the
Investment Manager upon request. The Sub-Adviser will make all
reasonable efforts to notify the Custodian of all orders to
brokers for the Managed Assets by 9:00 am EST on the day
following the trade date and will affirm the trade to the
Custodian before the close of business one business day after
the trade date.
(c) The Sub-Adviser will promptly communicate to the
Investment Manager and to the Company such information
relating to portfolio transactions on behalf of a Fund as they
may reasonably request.
(d) The Sub-Adviser shall promptly notify the Company and the
Investment Manager of any financial condition likely to impair
the ability of the Sub-Adviser to fulfill its commitments
under this Agreement.
8. STATUS OF SUB-ADVISER. The Sub-Adviser is and will continue to
be registered as such under the federal Investment Advisers
Act of 1940. The services of the Sub-Adviser to the Company
for each Fund are not to be deemed exclusive, and the
Sub-Adviser shall be free to render similar services to others
so long as its services to the Fund are not impaired thereby.
The Sub-Adviser shall be deemed to be an independent
contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the
Company in any way or otherwise be deemed an agent of the
Company.
9. CERTAIN RECORDS. The Sub-Adviser shall maintain all books and
records with respect to transactions involving the Managed
Assets required by subparagraphs (b)(5), (6), (7), (9), (10)
and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall provide to the Investment Manager or the
Board of Directors such periodic and special reports, balance
sheets or financial information, and such other information
with regard to its affairs as the Investment Manager or the
Board of Directors may reasonably request.
The Sub-Adviser shall keep the books and records relating to
the Managed Assets required to be maintained by the
Sub-Adviser under this Agreement and shall timely furnish to
the Investment Manager all information relating to the
Sub-Adviser's services under this Agreement needed by the
Investment Manager to keep the other books and records of the
Company required by Rule 31a-1 under the 1940 Act. The
Sub-Adviser shall also furnish to the Investment Manager any
other information relating to the Managed Assets that is
required to be filed by the Investment Manager or the Company
with the SEC or sent to
shareholders under the 1940 Act (including the rules adopted
thereunder) or any exemptive or other relief that the
Investment Manager or the Company obtains from the SEC. The
Sub-Adviser agrees that all records that it maintains on
behalf of the Company are property of the Company and the
Sub-Adviser will surrender promptly to the Company any of such
records upon the Company's request; provided, however, that
the Sub-Adviser may retain a copy of such records. In
addition, for the duration of this Agreement, the Sub-Adviser
shall preserve for the periods prescribed by Rule 31a-2 under
the 1940 Act any such records as are required to be maintained
by it pursuant to this Agreement, and shall transfer said
records to any successor sub-adviser upon the termination of
this Agreement (or, if there is no successor sub-adviser, to
the Investment Manager).
10. LIMITATION OF LIABILITY OF SUB-ADVISER. The duties of the
Sub-Adviser shall be confined to those expressly set forth
herein, and no implied duties are assumed by or may be
asserted against the Sub-Adviser hereunder, except as may be
imposed by law. The Sub-Adviser shall not be liable for any
error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in carrying
out its duties hereunder, except a loss resulting from willful
misfeasance, bad faith or gross negligence in the performance
of its duties, or by reason of reckless disregard of its
obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable state law or Federal
securities law which cannot be waived or modified hereby. (As
used in this Paragraph 10, the term "Sub-Adviser" shall
include directors, officers, employees and other corporate
agents of the Sub-Adviser as well as that entity itself).
11. PERMISSIBLE INTERESTS. Agents and shareholders of the Company
may be interested in the Sub-Adviser (or any successor
thereof) as directors, partners, officers, or shareholders, or
otherwise; directors, partners, officers, agents, and
shareholders of the Sub-Adviser are or may be interested in
the Company as shareholders or otherwise; and the Sub-Adviser
(or any successor) is or may be interested in the Company as a
shareholder or otherwise. In addition, brokerage transactions
for the Company may be effected through affiliates of the
Sub-Adviser if approved by the Board of Directors of the
Company subject to the rules and regulations of the Securities
and Exchange Commission.
12. DURATION AND TERMINATION. This Agreement shall become
effective for each Fund set forth in Schedule A upon its
approval by the Board of Directors of the Company and by a
vote of the majority of the outstanding voting securities of
each Fund; provided, however, that at any time the Investment
Manager and or the Company shall have obtained exemptive
relief from the Securities and Exchange Commission permitting
it to
engage a Sub-Adviser without first obtaining approval of
the Agreement from a majority of the outstanding voting
securities of the Fund(s) involved, the Agreement shall become
effective upon its approval by the Company's Board of
Directors. This Agreement shall remain in effect until two
years from date of execution, and thereafter, for periods of
one year so long as such continuance thereafter is
specifically approved at least annually by the vote of a (a)
majority of those Directors of the Company who are not parties
to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting
on such approval, and (b) by the Directors of the Company, or
by the vote of a majority of the outstanding voting securities
of the Fund; provided, however, that if the shareholders of a
Fund fail to approve the Agreement as provided herein, the
Sub-Adviser may continue to serve hereunder in the manner and
to the extent permitted by the Investment Company Act of 1940
and rules and regulations thereunder. The foregoing
requirement that continuance of this Agreement be
"specifically approved at least annually" shall be construed
in a manner consistent with the Investment Company Act of 1940
and the rules and regulations thereunder.
This Agreement may be terminated at any time, without the
payment of any penalty, by vote of a majority of the Directors
of the Company or by vote of a majority of the outstanding
voting securities of a Fund on not less than 30 days nor more
than 60 days written notice to the Sub-Adviser, by the
Investment Manager at any time without the payment of a
penalty upon 90 days written notice to the Sub-Adviser, or by
the Sub-Adviser at any time without the payment of any penalty
on 90 days written notice to the Investment Manager. This
Agreement will automatically and immediately terminate in the
event of its assignment or in the event of the termination of
the Investment Manager's advisory agreement with the Company.
Any termination of this Agreement in accordance with the terms
hereof will not affect the obligations or liabilities accrued
prior to termination. Any notice under this Agreement shall be
given in writing, addressed and delivered, or mailed postpaid,
to the other party at any office of such party.
As used in this Section 12, the terms "assignment",
"interested persons," and a "vote of a majority of the
outstanding voting securities" shall have the respective
meanings set forth in the 1940 Act and the rules and
regulations thereunder; subject to such exceptions as may be
granted by the SEC under said Act.
13. NOTICE. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by
registered or certified mail, or by express courier, postage
prepaid, addressed by the party giving notice to the other
party at the last address furnished by the other party to the
party
giving notice. At the outset, such notices shall be delivered
to the following addresses:
(iii) if to the Company, then care of:
Commonfund Asset Management Company, Inc.
15 Old Danbury Rd, P.O. Box 812
Wilton, CT 06897
Attn: Mr. Todd E. Petzel, President;
(iv) if to the Investment Manager, at the
foregoing address; and
(iii) if to the Sub-Adviser:
BlackRock Financial Management, Inc.
345 Park Avenue, 29th Floor
New York, New York 10154-0004
14. SEVERABILITY. 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.
15. GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of New York and the applicable
provisions of the 1940 Act. To the extent that the applicable
laws of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the
latter shall control. With respect to any suit, action, or
proceeding relating to this Agreement or transactions
contemplated hereby, each party irrevocably submits to the
non-exclusive jurisdiction of the United States District Court
for the Southern District of New York.
16. CONFIDENTIAL INFORMATION. Sub-Adviser shall not identify the
Company or the Fund as a client, or disclose any information
about the Company or the Fund to any third party except as may
be required by law, regulatory proceeding or as may be
expressly permitted by the Company.
17. MISCELLANEOUS. This instrument constitutes the sole and only
agreement of the parties to it relating to its object; any
prior agreements, promises or representations not expressly
set forth in this Agreement are of no force and effect. No
waiver or modification of this Agreement shall be effective
unless reduced to writing and signed by the party to be
charged. No failure to exercise and no delay in exercising on
the part of any party hereto of any right, remedy, power or
privilege hereunder shall operate as a waiver thereof. Except
as set forth in Section 12, this Agreement binds and inures to
the benefit of parties, their successors and assigns. This
Agreement may be executed in more than one counterpart each of
which shall be deemed an original and both of which, taken
together, shall be deemed to
constitute one and the same instrument. A copy of the
Certificate of Trust of the Company is on file with the
Secretary of State of the State of Delaware and notice is
hereby given that the obligations under this instrument are
not binding on any of the Directors, officers or shareholders
of the Company. Where the effect of a requirement of the 1940
Act reflected in any provision of this Agreement is altered by
rule, regulation or order of the SEC, whether of special or
general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.
COMMONFUND INSTITUTIONAL FUNDS
By:
-------------------------------------
Attest:
--------------------------------
COMMONFUND ASSET MANAGEMENT COMPANY, INC.
By:
------------------------------------
Attest:
--------------------------------
BLACKROCK FINANICAL MANAGEMENT, INC.
By:
------------------------------------
Attest:
---------------------------------
SCHEDULE A
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
AMONG
COMMONFUND INSTITUTIONAL FUNDS
COMMONFUND ASSET MANAGEMENT COMPANY, INC.
AND
BLACKROCK FINANCIAL MANAGEMENT, INC.
FUND
- ----
CIF Core Plus Bond Fund
Date of this Schedule: ______
SCHEDULE B
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
DATED , 2000
AMONG
COMMONFUND INSTITUTIONAL FUNDS
COMMONFUND ASSET MANAGEMENT COMPANY, INC.
AND
BLACKROCK FINANCIAL MANAGEMENT, INC.
FEES
- ----
Daily Accrual
- -------------
Fees shall be accrued each day by applying to the Net Asset Value of the
Managed Assets at the end of that day, the daily rate, using a 365 day year,
equivalent to the following:
Fund Managed Assets($) Fee (% per annum)
- ---- ----------------- -----------------
CIF Core Plus Bond Fund
Quarterly Payment
- -----------------
Fees shall be paid within 30 days following the end of each calendar quarter.
COMMONFUND ASSET BLACKROCK FINANCIAL
MANAGEMENT COMPANY, INC. MANAGEMENT, INC.
By: By:
------------------------ ------------------------
Name: Name:
Title: Title:
Date of this Schedule B: ______
EXHIBIT C
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made this day of ____ , 2000, by and between Commonfund
Institutional Funds, a Delaware business trust (the "Company"), Commonfund Asset
Management Company , a Delaware Corporation (the "Investment Manager"), and
Capital Guardian Trust Company (the "Sub-Adviser").
WHEREAS, the Company is an open-end, management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), which consists of several series, each having its own investment
policies; and
WHEREAS, the Company has entered into an investment advisory agreement
with the Investment Manager pursuant to which the Investment Manager will act as
investment manager to the Fund; and
WHEREAS, the Investment Manager, acting with the approval of the
Company, wishes to retain the Sub- Adviser to render discretionary investment
advisory services with respect to that portion of each portfolio identified on
the attached Schedule A to this Investment Sub-Advisory Agreement, as it may be
amended from time to time (each a "Fund") that may be allocated by the
Investment Manager for management by the Sub-Adviser from time to time (together
with all income earned on those assets and all realized and unrealized capital
appreciation related to those assets (with respect to a Fund, the "Managed
Assets"), and the Sub-Adviser is willing to render such services.
NOW, THEREFORE, in consideration of mutual covenants herein contained,
the parties hereto agree as follows:
1. DUTIES OF SUB-ADVISER. The Sub-Adviser shall manage the
investment and reinvestment of the Managed Assets and
determine in its discretion, the securities and other property
to be purchased or sold and the portion of the Managed Assets
to retain in cash. The Sub-Adviser shall review all proxy
solicitation materials and shall exercise any voting rights
associated with securities comprising the Managed Assets in
the best interests of the Fund and its shareholders. The
Sub-Adviser shall provide the Investment Manager and the
Company with records concerning the Sub-Adviser's activities
that the Company is required to maintain, and to render
regular reports to the Investment Manager and to the Company
concerning the Sub-Adviser's discharge of the foregoing
responsibilities.
The Sub-Adviser shall discharge the foregoing responsibilities
subject to the written instructions and directions of the
13
Company and its Board of Directors and their agents, including
the officers of the Company and the Investment Manager, and in
compliance with (i) such policies as the Company may from time
to time establish and communicate to the Sub-
Adviser, (ii) the objectives, policies, and limitations for
each Fund set forth in the Prospectus and Statement of
Additional Information as those documents may from time to
time be amended or supplemented from and delivered to the
Sub-Adviser (the "Prospectus and Statement of Additional
Information"), (iii) the Declaration of Trust of the Company,
and (iv) applicable laws and regulations including the
1940 Act and the Internal Revenue Code of 1986. If a conflict
in policies or guidelines referenced herein occurs, the
Prospectus and Statement of Additional Information shall
control.
The Sub-Adviser agrees to perform such duties at its own
expense and to provide the office space, furnishings and
equipment and the personnel required by it to perform the
services on the terms and for the compensation provided
herein. The Sub-Adviser will not, however, pay for the cost of
securities, commodities, and other investments (including
brokerage commissions and other transaction charges, if any)
purchased or sold for a Fund, nor will the Sub-Adviser bear
any expenses that would result in the Company's inability to
qualify as a regulated investment company under provisions of
the Internal Revenue Code.
2. DUTIES OF INVESTMENT MANAGER The Investment Manager shall
continue to have responsibility for all services to be
provided to a Fund pursuant to the Advisory Agreement between
it and the Company and shall oversee and review the
Sub-Adviser's performance under this Agreement.
The Investment Manager shall furnish to the Sub-Adviser
current and complete copies of the Declaration of Trust and
By-laws of the Company, and the current Prospectus and
Statement of Additional Information as those documents may be
amended from time to time.
3. CUSTODY, DELIVERY AND RECEIPT OF SECURITIES. The Company shall
designate one or more custodians to hold the Managed Assets.
The custodians, as so designated, will be responsible for the
custody, receipt and delivery of securities and other assets
of a Fund including the Managed Assets, and the Sub-Adviser
shall have no authority, responsibility or obligation with
respect to the custody, receipt or delivery of securities or
other assets of a Fund including the Managed Assets. In the
event that any cash or securities of a Fund are delivered to
the Sub-Adviser, it will promptly deliver the same over to the
14
custodian for the benefit of and in the name of the Fund.
Unless otherwise required by local custom, all securities
transactions for the Managed Assets will be consummated by
payment to or delivery by a Fund of cash or securities due to
or from the Managed Assets. Repurchase agreements including
tri-party repurchase agreements and other trading agreements
may be entered into by a Fund acting through designated
officers or agents; custodians under tri-party repurchase
agreements will act as sub-custodians of the Fund.
4. PORTFOLIO TRANSACTIONS.
(a) Selection of Brokers. The Sub-Adviser is authorized to
select the brokers or dealers that will execute the purchases
and sales of portfolio securities and other property for a
Fund in a manner that implements the policy with respect to
brokerage set forth in the Prospectus and Statement of
Additional Information for the Fund or as the Board of
Directors or the Investment Manager may direct from time to
time and in conformity with federal securities laws.
In executing Fund transactions and selecting brokers or
dealers, the Sub-Adviser will use its best efforts to seek on
behalf of the Fund the best overall terms available. In
assessing the best overall terms available for any
transaction, the Sub-Adviser shall consider all factors that
it deems 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, both for the
specific transaction and on a continuing basis. In evaluating
the best overall terms available, and in selecting the
broker-dealer to execute a particular transaction, the
Sub-Adviser may also consider the brokerage and research
services provided (as those terms are defined in Section 28(e)
of the Securities Exchange Act of 1934). Consistent with any
guidelines established by the Board of Directors and
communicated to the Sub-Adviser, the Sub-Adviser is authorized
to pay to a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio
transaction for a Fund that is in excess of the amount of
commission another broker or dealer would have charged for
effecting that transaction if, but only if, the Sub-Adviser
determines in good faith that such commission was reasonable
in relation to the value of the brokerage and research
services provided by such broker or dealer viewed in terms of
that particular transaction or terms of the overall
responsibilities of the Sub-Adviser to the Fund. In addition,
the Sub-Adviser is authorized to allocate purchase and sale
15
orders for securities to brokers or dealers (including brokers
and dealers that are affiliated with the Investment Manager,
Sub-Adviser or the Company's principal underwriter) to take
into account the sale of shares of the Company if the
Sub-Adviser believes that the quality of the transaction and
the commission are comparable to what they would be with other
qualified firms. In no instance, however, will Fund assets be
purchased from or sold to the Investment Manager, Sub-Adviser,
the Company's principal underwriter, or any affiliated person
of either the Company, the Investment Manager, Sub-Adviser or
the principal underwriter, acting as principal in
the transaction, except to the extent permitted by the
Securities and Exchange Commission ("SEC") and the 1940 Act.
(b) Aggregating Orders. The that Sub-Adviser may aggregate
orders for purchase or sale of Managed Assets with similar
orders being made concurrently for other accounts managed by
Sub-Adviser, if, in Sub-Adviser's reasonable judgment, such
aggregation shall result in an overall economic benefit to the
Fund, taking into consideration the transaction price,
brokerage commission and other expenses. The Company
acknowledges that the determination of such economic benefit
to a Fund by Sub-Adviser may represent Sub-Adviser's
evaluation that a Fund 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. In any single transaction in which
purchases and or sales of securities of any issuer for the
account of a Fund are aggregated with other accounts managed
by Sub-Adviser, the actual prices applicable to the
transaction will be averaged among the accounts for which the
transaction is effected, including the account of a Fund.
5. COMPENSATION OF THE SUB-ADVISER. For the services to be
rendered by the Sub-Adviser under this Agreement, the
Investment Manager shall pay to the Sub-Adviser compensation
at the rate specified in Schedule B as it may be amended from
time to time. Such compensation shall be paid at the times and
on the terms set forth in Schedule B. All rights of
compensation under this Agreement for services performed as of
the termination date shall survive the termination of this
Agreement. Except as may otherwise be prohibited by law or
regulation (including any then current SEC staff
interpretations), the Sub-Adviser may, in its discretion and
from time to time, waive a portion of its fee.
6. OTHER EXPENSES. The Company shall pay all expenses relating to
mailing prospectuses, statements of additional information,
16
proxy solicitation material and shareholder reports to
shareholders.
7. REPORTS.
(a) The Company and the Sub-Adviser agree to furnish to each
other, current prospectuses, proxy statements, reports to
shareholders, certified copies of financial statements, and
such other information with regard to their affairs as each
may reasonably request. The Investment Manager will furnish to
the Sub-Adviser advertising and sales literature or other
material prepared for distribution to Fund shareholders or the
public, which refer to the Sub-Adviser or its clients in any
way, prior to the use thereof,
and the Investment Manager shall not use any such materials if
the Sub-Adviser reasonably objects in writing within ten (10)
business days (or such other time as may be mutually agreed)
after receipt thereof.
(b) The Sub-Adviser shall provide to each Fund's custodian, on
each business day, information relating to all transactions in
the Managed Assets and shall provide such information to the
Investment Manager upon request. The Sub-Adviser will make all
reasonable efforts to notify the Custodian of all orders to
brokers for the Managed Assets by 9:00 am EST on the day
following the trade date and will affirm the trade to the
Custodian before the close of business one business day after
the trade date.
(c) The Sub-Adviser will promptly communicate to the
Investment Manager and to the Company such information
relating to portfolio transactions on behalf of a Fund as they
may reasonably request.
(d) The Sub-Adviser shall promptly notify the Company and the
Investment Manager of any financial condition likely to impair
the ability of the Sub-Adviser to fulfill its commitments
under this Agreement.
8. STATUS OF SUB-ADVISER. The Sub-Adviser is and will continue to
be registered as such under the federal Investment Advisers
Act of 1940. The services of the Sub-Adviser to the Company
for each Fund are not to be deemed exclusive, and the
Sub-Adviser shall be free to render similar services to others
so long as its services to the Fund are not impaired thereby.
The Sub-Adviser shall be deemed to be an independent
contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the
Company in any way or otherwise be deemed an agent of the
Company.
17
9. CERTAIN RECORDS. The Sub-Adviser shall maintain all books and
records with respect to transactions involving the Managed
Assets required by subparagraphs (b)(5), (6), (7), (9), (10)
and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall provide to the Investment Manager or the
Board of Directors such periodic and special reports, balance
sheets or financial information, and such other information
with regard to its affairs as the Investment Manager or the
Board of Directors may reasonably request.
The Sub-Adviser shall keep the books and records relating to
the Managed Assets required to be maintained by the
Sub-Adviser under this Agreement and shall timely furnish to
the Investment Manager all information relating to the
Sub-Adviser's services under this Agreement needed by the
Investment Manager to keep the other books and records of the
Company required by Rule 31a-1 under the 1940 Act. The
Sub-Adviser shall also furnish to the Investment Manager any
other information relating to the Managed Assets that is
required to be filed by the Investment Manager or the Company
with the SEC or sent to shareholders under the 1940 Act
(including the rules adopted thereunder) or any exemptive or
other relief that the Investment Manager or the Company
obtains from the SEC. The Sub-Adviser agrees that all records
that it maintains on behalf of the Company are property of the
Company and the Sub-Adviser will surrender promptly to the
Company any of such records upon the Company's request;
provided, however, that the Sub-Adviser may retain a copy of
such records. In addition, for the duration of this Agreement,
the Sub-Adviser shall preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any such records as are required
to be maintained by it pursuant to this Agreement, and shall
transfer said records to any successor sub-adviser upon the
termination of this Agreement (or, if there is no successor
sub-adviser, to the Investment Manager).
10. LIMITATION OF LIABILITY OF SUB-ADVISER. The duties of the
Sub-Adviser shall be confined to those expressly set forth
herein, and no implied duties are assumed by or may be
asserted against the Sub-Adviser hereunder, except as may be
imposed by law. The Sub-Adviser shall not be liable for any
error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in carrying
out its duties hereunder, except a loss resulting from willful
misfeasance, bad faith or gross negligence in the performance
of its duties, or by reason of reckless disregard of its
obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable state law or Federal
securities law which cannot be waived or modified hereby. (As
18
used in this Paragraph 10, the term "Sub-Adviser" shall
include directors, officers, employees and other corporate
agents of the Sub-Adviser as well as that entity itself).
11. PERMISSIBLE INTERESTS. Agents and shareholders of the Company
may be interested in the Sub-Adviser (or any successor
thereof) as directors, partners, officers, or shareholders, or
otherwise; directors, partners, officers, agents, and
shareholders of the Sub-Adviser are or may be interested in
the Company as shareholders or otherwise; and the Sub-Adviser
(or any successor) is or may be interested in the Company as a
shareholder or otherwise. In addition, brokerage transactions
for the Company may be effected through affiliates of the
Sub-Adviser if approved by the Board of Directors of the
Company subject to the rules and regulations of the Securities
and Exchange Commission.
12. DURATION AND TERMINATION. This Agreement shall become
effective for each Fund set forth in Schedule A upon its
approval by the Board of Directors of the Company and by a
vote of the majority of the outstanding voting securities of
each Fund; provided, however, that at any time the Adviser
shall have obtained exemptive relief from the Securities and
Exchange Commission permitting it to engage a Sub-Adviser
without first obtaining approval of the Agreement from a
majority of the outstanding voting securities of the Fund(s)
involved, the Agreement shall become effective upon its
approval by the Company's Board of Directors. This Agreement
shall remain in effect until two years from date of execution,
and thereafter, for periods of one year so long as such
continuance thereafter is specifically approved at least
annually by the vote of a (a) majority of those Directors of
the Company who are not parties to this Agreement or
interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and
(b) by the Directors of the Company, or by the vote of a
majority of the outstanding voting securities of the Fund;
provided, however, that if the shareholders of a Fund fail to
approve the Agreement as provided herein, the Sub-Adviser may
continue to serve hereunder in the manner and to the extent
permitted by the Investment Company Act of 1940 and rules and
regulations thereunder. The foregoing requirement that
continuance of this Agreement be "specifically approved at
least annually" shall be construed in a manner consistent with
the Investment Company Act of 1940 and the rules and
regulations thereunder.
This Agreement may be terminated at any time, without the
payment of any penalty, by vote of a majority of the Directors
of the Company or by vote of a majority of the outstanding
voting securities of a Fund on not less than 30 days nor more
19
than 60 days written notice to the Sub-Adviser, by the
Investment Manager at any time without the payment of a
penalty upon 90 days written notice to the Sub-Adviser, or by
the Sub-Adviser at any time without the payment of any penalty
on 90 days written notice to the Investment Manager. This
Agreement will automatically and immediately terminate in the
event of its assignment or in the event of the termination of
the Investment Manager's advisory agreement with the Company.
Any termination of this Agreement in accordance with the terms
hereof will not affect the obligations or liabilities accrued
prior to termination. Any notice under this Agreement shall be
given in writing, addressed and delivered, or mailed postpaid,
to the other party at any office of such party.
As used in this Section 12, the terms "assignment",
"interested persons," and a "vote of a majority of the
outstanding voting securities" shall have the respective
meanings set forth in the 1940 Act and the rules and
regulations thereunder; subject to such exceptions as may be
granted by the SEC under said Act.
13. NOTICE. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by
registered or certified mail, postage prepaid, addressed by
the party giving notice to the other party at the last address
furnished by the other party to the party giving notice. At
the outset, such notices shall be delivered to the following
addresses:
(i) if to the Company:
c/o Commonfund Asset Management Company
Attention: President
15 Old Danbury Rd,
P.O. Box 812, Wilton, CT 06897;
(ii) if to the Investment Manager, at the
foregoing address; and
(iii) if to the Sub-Adviser:
Capital Guardian Trust Company
630 Fifth Avenue, 36th Floor
New York, NY 10111
14. SEVERABILITY. 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.
15. GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of New York and the applicable
20
provisions of the 1940 Act. To the extent that the applicable
laws of the State of New York, or any of the provisions
herein, conflict with the applicable provisions of the 1940
Act, the latter shall control.
16. MISCELLANEOUS. This instrument constitutes the sole and only
agreement of the parties to it relating to its object; any
prior agreements, promises or representations not expressly
set forth in this Agreement are of no force and effect. No
waiver or modification of this Agreement shall be effective
unless reduced to writing and signed by the party to be
charged. No failure to exercise and no delay in exercising on
the part of any party hereto of any right, remedy, power or
privilege hereunder shall operate as a waiver thereof. Except
as set forth in Section 12, this Agreement binds and inures to
the benefit of parties, their successors and assigns. This
Agreement may be executed in more than one counterpart each of
which shall be deemed an original and both of which, taken
together, shall be deemed to constitute one and the same
instrument. A copy of the Certificate of Trust of the Company
is on file with the Secretary of State of the State of
Delaware and notice is hereby given that the obligations under
this instrument are not binding on any of the Directors,
officers or shareholders of the Company. Where the effect of a
requirement of the 1940 Act reflected in any provision of this
Agreement is altered by rule, regulation or order of the SEC,
whether of special or general application, such provision
shall be deemed to incorporate the effect of such rule,
regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.
COMMONFUND INSTITUTIONAL FUNDS
By:
--------------------------
Attest:
----------------------
COMMONFUND ASSET MANAGEMENT COMPANY
By:
--------------------------
Attest:
----------------------
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CAPITAL GUARDIAN TRUST COMPANY
By:
--------------------------
Attest:
----------------------
22
SCHEDULE A
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
AMONG
COMMONFUND INSTITUTIONAL FUNDS
COMMONFUND ASSET MANAGEMENT COMPANY
AND
CAPITAL GUARDIAN TRUST COMPANY
FUND
CIF International Equity Fund
Date of this Schedule: ______
23
SCHEDULE B
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
DATED , 2000
AMONG
COMMONFUND INSTITUTIONAL FUNDS
COMMONFUND ASSET MANAGEMENT COMPANY
AND
CAPITAL GUARDIAN TRUST COMPANY
FEES
Daily Accrual
Fees shall be accrued each day by applying to the Net Asset Value of the Managed
Assets at the end of that day, the daily rate, using a 365 day year, equivalent
to the following:
Fund Managed Assets($) (% Per Annum)
- --------- ----------------- -------------
CIF International First $ 100 million
Equity Fund Next $ 100 million
Over $ 200 million
Quarterly Payment
Fees shall be paid within 30 days following the end of each calendar quarter.
COMMONFUND ASSET MANAGEMENT CAPITAL GUARDIAN TRUST COMPANY
COMPANY
By:___________________________ By:___________________________
Name: Name:
Title: Title:
Date of this Schedule B: ______
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