Prudential Value Fund
Subadvisory Agreement
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Agreement made as of this 16th day of February, 2001 between Prudential
Investments Fund Management LLC (PIFM or the Manager) and Key Asset Management
Inc. (the Subadviser or Key).
WHEREAS, the Manager has entered into a Management Agreement, dated
March 1, 1988, and amended and restated as of June 1, 1995 (the Management
Agreement), with Prudential Value Fund (the Fund), a Massachusetts business
trust and a diversified, open-end management investment company registered under
the Investment Company Act of 0000 (xxx 0000 Xxx), pursuant to which PIFM acts
as Manager of the Fund; and
WHEREAS, PIFM desires to retain the Subadviser to provide investment
advisory services to the Fund and to manage such portion of the Fund as the
Manager shall from time to time direct, and the Subadviser is willing to render
such investment advisory services; and
WHEREAS, this Agreement was approved by the Fund's shareholders at a
meeting held on January 31, 2001; and
NOW, THEREFORE, the Parties agree as follows:
1. (a) Subject to the supervision of the Manager and the Board of Trustees
of the Fund, the Subadviser shall manage such portion of the investment
operations of the Fund as the Manager shall direct and shall manage the
composition of the Fund's portfolio, including the purchase, retention and
disposition thereof, in accordance with the Fund's investment objectives,
policies and restrictions as stated in the Prospectus (such Prospectus and
Statement of Additional Information as currently in effect and as amended
or supplemented from time to time, being herein called the "Prospectus"),
and subject to the following understandings:
(i) The Subadviser shall provide supervision of such portion of
the Fund's investments as the Manager shall direct and shall
determine from time to time what investments and securities will be
purchased, retained, sold or loaned by the Fund, and what portion of
the assets will be invested or held uninvested as cash.
(ii) In the performance of its duties and obligations under this
Agreement, the Subadviser shall act in conformity with the
Declaration of Trust, By-Laws and Prospectus of the Fund and with the
instructions and directions of the Manager and of the Board of
Trustees of the Fund, cooperate with the Manager's (or its
designee's) personnel responsible for monitoring the Fund's
compliance, and will conform to and comply with the requirements of
the 1940 Act, the Internal Revenue Code of 1986 and all other
applicable federal and
state laws and regulations. In connection therewith, the Subadviser
shall, among other things, prepare and file such reports as are, or
may in the future be, required by the Securities and Exchange
Commission.
(iii) The Subadviser shall determine the securities and futures
contracts to be purchased or sold by such portion of the Fund, and
will place orders with or through such persons, brokers, dealers or
futures commission merchants (including but not limited to Prudential
Securities Incorporated or any broker or dealer affiliated with the
Subadviser) to carry out the policy with respect to brokerage as set
forth in the Fund's Prospectus or as the Board of Trustees may
direct from time to time. In providing the Fund with investment
supervision, it is recognized that the Subadviser will give primary
consideration to securing the most favorable price and efficient
execution. Within the framework of this policy, the Subadviser may
consider the financial responsibility, research and investment
information and other services provided by brokers, dealers or
futures commission merchants who may effect or be a party to any such
transaction or other transactions to which the Subadviser's other
clients may be a party. It is understood that Prudential Securities
Incorporated or any broker or dealer affiliated with the Subadviser
may be used as principal broker for securities transactions, but that
no formula has been adopted for allocation of the Fund's investment
transaction business. It is also understood that it is desirable for
the Fund that the Subadviser have access to supplemental investment
and market research and security and economic analysis provided by
brokers or futures commission merchants who may execute brokerage
transactions at a higher cost to the Fund than may result when
allocating brokerage to other brokers on the basis of seeking the
most favorable price and efficient execution. Therefore, the
Subadviser is authorized to place orders for the purchase and sale of
securities and futures contracts for the Fund with such brokers or
futures commission merchants, subject to review by the Fund's Board
of Trustees from time to time with respect to the extent and
continuation of this practice. It is understood that the services
provided by such brokers or futures commission merchants may be
useful to the Subadviser in connection with the Subadviser's services
to other clients.
On occasions when the Subadviser deems the purchase or sale of a
security or futures contract to be in the best interest of the Fund
as well as other clients of the Subadviser, the Subadviser, to the
extent permitted by applicable laws and regulations, may, but shall
be under no obligation to, aggregate the securities or futures
contracts to be sold or purchased in order to obtain the most
favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities or futures
contracts so purchased or sold, as well as the expenses incurred in
the transaction, will be made by the Subadviser in the manner the
Subadviser considers to be the most equitable and consistent with its
fiduciary obligations to the Fund and to such other clients.
(iv) The Subadviser shall maintain all books and records with
respect to the Fund's portfolio transactions required by
subparagraphs (b)(5), (6), (7), (9), (10) and (11) and paragraph (f)
of Rule 31a-1 under the 1940 Act, and shall render to the Fund's
Board of Trustees such periodic and special reports as the Trustees
may reasonably request. The Subadviser shall make reasonably
available its employees and officers for consultation with any of the
Trustees or officers or
employees of the Fund with respect to any matter discussed herein,
including, without limitation, the valuation of the Fund's
securities.
(v) The Subadviser shall provide the Fund's Custodian on each
business day with information relating to all transactions concerning
the portion of the Fund's assets it manages, and shall provide the
Manager with such information upon request of the Manager.
(vi) The investment management services provided by the Subadviser
hereunder are not to be deemed exclusive, and the Subadviser shall be
free to render similar services to others. Conversely, the Subadviser
and Manager understand and agree that if the Manager manages the Fund
in a "manager-of-managers" style, the Manager will, among other
things, (i) continually evaluate the performance of the Subadviser
through quantitative and qualitative analysis and consultations with
the Subadviser, (ii) periodically make recommendations to the Fund's
Board as to whether the contract with one or more subadvisers should
be renewed, modified, or terminated and (iii) periodically report to
the Fund's Board regarding the results of its evaluation and
monitoring functions. The Subadviser recognizes that its services may
be terminated or modified pursuant to this process.
(b) The Subadviser shall authorize and permit any of its directors,
officers and employees who may be elected as Trustees or officers of the
Fund to serve in the capacities in which they are elected. Services to be
furnished by the Subadviser under this Agreement may be furnished through
the medium of any of such directors, officers or employees.
(c) The Subadviser shall keep the Fund's books and records required to be
maintained by the Subadviser pursuant to paragraph 1(a) hereof and shall
timely furnish to the Manager all information relating to the Subadviser's
services hereunder needed by the Manager to keep the other books and
records of the Fund required by Rule 31a-1 under the 1940 Act. The
Subadviser agrees that all records which it maintains for the Fund are the
property of the Fund, and the Subadviser will surrender promptly to the
Fund any of such records upon the Fund's request, provided, however, that
the Subadviser may retain a copy of such records. The Subadviser further
agrees to preserve for the periods prescribed by Rule 31a-2 of the
Commission under the 1940 Act any such records as are required to be
maintained by it pursuant to paragraph 1(a) hereof.
(d) The Subadviser agrees to maintain adequate compliance procedures to
ensure its compliance with the 1940 Act, the Investment Advisers Act of
1940 and other applicable state and federal regulations.
(e) The Subadviser shall furnish to the Manager copies of all records
prepared in connection with (i) the performance of this Agreement and (ii)
the maintenance of compliance procedures pursuant to paragraph 1(d) hereof
as the Manager may reasonably request.
2. The Manager shall continue to have responsibility for all services to
be provided to the Fund pursuant to the Management Agreement and, as more
particularly discussed above, shall oversee and review the Subadviser's
performance of its duties under this Agreement.
3. For the services provided and the expenses assumed pursuant to this
Agreement, the Manager shall pay the Subadviser as full compensation
therefor, a fee equal to the percentage of the Fund's average daily net
assets of the portion of the Fund managed by the Subadviser as described
in the attached Schedule A.
4. The Subadviser shall not be liable for any error of judgment or for
any loss suffered by the Fund or the Manager in connection with the
matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the Subadviser's
part in the performance of its duties or from its reckless disregard of
its obligations and duties under this Agreement.
5. This Agreement shall continue in effect for a period of more than two
years from the date hereof only so long as such continuance is
specifically approved at least annually in conformity with the
requirements of the 1940 Act; provided, however, that this Agreement may
be terminated by the Fund at any time, without the payment of any penalty,
by the Board of Trustees of the Fund or by vote of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of the Fund, or
by the Manager or the Subadviser at any time, without the payment of any
penalty, on not more than 60 days' nor less than 30 days' written notice
to the other party. This Agreement shall terminate automatically in the
event of its assignment (as defined in the 0000 Xxx) or upon the
termination of the Management Agreement.
6. Nothing in this Agreement shall limit or restrict the right of any of
the Subadviser's directors, officers or employees who may also be a
Trustee, officer or employee of the Fund to engage in any other business
or to devote his or her time and attention in part to the management or
other aspects of any business, whether of a similar or a dissimilar
nature, nor limit or restrict the Subadviser's right to engage in any
other business or to render services of any kind to any other corporation,
firm, individual or association.
7. During the term of this Agreement, the Manager agrees to furnish the
Subadviser at its principal office all prospectuses, proxy statements,
reports to shareholders, sales literature or other material prepared for
distribution to shareholders of the Fund or the public, which refer to the
Subadviser in any way, prior to use thereof and not to use material if the
Subadviser reasonably objects in writing five business days (or such other
time as may be mutually agreed) after receipt thereof. Sales literature
may be furnished to the Subadviser hereunder by first-class or overnight
mail, facsimile transmission equipment or hand delivery.
8. This Agreement may be amended by mutual consent, but the consent of
the Fund must be obtained in conformity with the requirements of the 1940
Act.
9. This Agreement shall be governed by the laws of the State of New
York.
IN WITNESS WHEREOF, the Parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC
BY: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
Executive Vice President
KEY ASSET MANAGEMENT INC.
BY: /s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Managing Director
Schedule A
As compensation for Key's services, PIFM will pay Key a fee equal, on
an annualized basis, to the following:
0.29 of 1% on the first $50 million of the average net assets under
Key's management; and
0.23 of 1% on the next $250 million of the average net assets under
Key's management; and
0.15 of 1% over $300 million of the average net assets under Key's
management.
For purposes of computing the fees set out above, PIFM will aggregate the
assets of The Prudential Series Fund, Inc. - Prudential Value Portfolio
and Prudential Value Fund under Key's management. The parties may
aggregate the assets of other Prudential mutual fund portfolios which Key
may subadvise in the future with the portfolios described above by
amending this Schedule A.
