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(d)(13)
PRUDENTIAL DIVERSIFIED FUNDS
(Prudential Diversified Moderate Growth Fund)
SUBADVISORY AGREEMENT
Agreement made as of this 12th day of November, 1998, between Prudential
Investments Fund Management LLC (PIFM or the Manager), a New York limited
liability company, The Prudential Investment Corporation. (the Adviser), a
company organized under the laws of New Jersey.
WHEREAS, PIFM has entered into a management agreement (the Management
Agreement) with Prudential Diversified Funds (the Trust), a Delaware 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 will
act as manager of the Trust.
WHEREAS, shares of the Trust are divided into separate series or
portfolios (each a portfolio), each of which is established pursuant to a
resolution of the Trustees of the Trust, and the Trustees may from time to time
terminate such portfolios or establish and terminate additional portfolios.
WHEREAS, PIFM has the responsibility of evaluating, recommending,
supervising and compensating investment advisers to each portfolio of the Trust
and desires to retain the Adviser to provide investment advisory services to the
Prudential Diversified Moderate Growth Fund of the Trust (the Fund) in
connection with the management of the Trust and to manage such portion of the
Fund as the Manager shall from time to time direct, and the Adviser is willing
to render such investment advisory services.
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NOW, THEREFORE, the Parties agree as follows:
1. (a) Subject to the supervision of the Manager and of the Trustees of
the Trust, the Adviser shall manage such portion of the investment
operations of the Fund as the Manager shall direct and shall manage the
composition of such portion of the Fund, including the purchase, retention
and disposition thereof, in accordance with the Fund's investment
objective, 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") as delivered to the Adviser from time to time by the Manager
and subject to the following understandings:
(i) The Adviser shall provide supervision of such portion of the
Fund's investments and 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 it manages will be invested or held uninvested
as cash.
(ii) In the performance of its duties and obligations under this
Agreement, the Adviser shall act in conformity with the Agreement and
Declaration of Trust, By-Laws and Prospectus of the Trust and the Fund as
provided to the Adviser by the Manager and with the written instructions
and directions of the Manager and of the Trustees of the Trust and will
conform to and comply with the requirements of the 1940 Act, the Internal
Revenue Code of 1986, as amended, and all other applicable federal and
state laws and regulations.
(iii) The Adviser shall determine the securities and commodities or
other assets to
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be purchased or sold by such portion of the Fund and will place orders
pursuant to its determination with or through such persons, brokers,
dealers or futures commission merchants (including but not limited to
Prudential Securities Incorporated) to carry out the policy with respect
to brokerage as set forth in the Trust's Registration Statement and
Prospectus or as the Trustees may direct from time to time. In providing
the Fund with investment supervision, it is recognized that the Adviser
will give primary consideration to securing best execution. Within the
framework of this policy, the Adviser 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 Adviser's other clients may be a party. It is understood that
Prudential Securities Incorporated 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 Trust that the Adviser 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 Trust than may
result when allocating brokerage to other brokers on the basis of seeking
best execution. Therefore, the Adviser is authorized to place orders for
the purchase and sale of securities and commodities or other assets for
the Fund with such brokers or futures commission merchants, subject to
review by the 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
Adviser in connection with the Adviser's services to other
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clients.
On occasions when the Adviser deems the purchase or sale of a
security, commodity or other asset to be in the best interest of the Fund
as well as other clients of the Adviser, the Adviser, to the extent
permitted by applicable laws and regulations, may, but shall be under no
obligation to, aggregate the securities, commodities or other assets to be
sold or purchased in order to obtain best execution. In such event,
allocation of the securities, commodities or other assets so purchased or
sold, as well as the expenses incurred in the transaction, will be made by
the Adviser in the manner the Adviser considers to be the most equitable
and consistent with its fiduciary obligations to the Trust and to such
other clients.
(iv) The Adviser shall maintain all books and records with respect
to the 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 Trustees such periodic and special reports as the
Board may reasonably request.
(v) The Adviser shall provide the Trust's custodian (the 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. The Adviser
shall reconcile its records of the Fund's securities and cash managed by
the Adviser with statements provided by the Custodian at least once each
month. The Adviser shall provide the Manager with a written report on each
such reconciliation, including information on any discrepancies noted and
actions taken by the Adviser in response thereto, by the tenth business
day of the following month.
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(vi) The investment management services provided by the Adviser
hereunder are not exclusive, and the Adviser shall be free to render similar
services to others.
(b) Services to be furnished by the Adviser under this Agreement may
be furnished through the medium of any of its directors, officers or employees.
(c) The Adviser shall keep the Fund's books and records required to
be maintained by the Adviser pursuant to paragraph 1(a)(iv) hereof and shall
timely furnish to the Manager all information relating to the Adviser's services
hereunder needed by the Manager to keep the other books and records of the Trust
required by Rule 31a-1 under the 1940 Act. The Adviser agrees that all records
which it maintains for the Fund are the property of the Trust and the Adviser
will surrender promptly to the Trust any of such records upon the Trust's
request. The Adviser further agrees to 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 paragraph 1(a) hereof.
(d) The Adviser agrees to maintain adequate compliance procedures to
ensure its compliance with the 1940 Act, the Investment Advisers Act of 1940
(Advisers Act) and other applicable state and federal laws and regulations.
(e) The Adviser shall furnish to the Manager copies of all records
prepared in connection with (i) the performance of this Agreement and (ii) the
reports prepared in accordance with the compliance procedures maintained
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 shall oversee
and review the Adviser's
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performance of its duties under this Agreement.
3. The Manager shall reimburse the Adviser for reasonable costs and
expenses incurred by the Adviser determined in a manner acceptable to the
Manager in furnishing the services described in Paragraph 1 hereof.
4. The Adviser shall not be liable for any error of judgment or for any
loss suffered by the Fund, the Trust 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 Adviser'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 Trust at any
time, without the payment of any penalty, by the Trustees 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 Adviser 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 Adviser's directors, officers or employees 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 dissimilar nature, nor limit
the Adviser's right to engage in any other business or to render services
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of any kind to any other corporation, firm, individual or association.
7. During the term of this Agreement, the Manager agrees to furnish the
Adviser at its principal office all prospectuses, proxy statements, reports to
shareholders, sales literature or other material prepared for distribution to
shareholders of the Trust or the public, which refer to the Adviser in any way;
provided, however, that any such item which describes or characterizes the
Adviser's investment process with respect to the Fund, the names of any of its
clients (other than the Trust or advisory clients of PIFM and its affiliates) or
any of its performance results shall be furnished to the Adviser by first class
or overnight mail, facsimile transmission equipment or hand delivery prior to
use thereof, and such item shall not be used if the Adviser reasonably objects
to such use in writing within twenty-four (24) hours (or such other time as may
be mutually agreed) after receipt thereof (provided, however, that if such item
is not received by the Adviser during normal business hours on a business day,
such period shall end twenty-four (24) hours after the start of normal business
hours on the next succeeding business day).
8. This Agreement may be amended by mutual consent, but the consent of the
Trust 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
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THE PRUDENTIAL INVESTMENT CORPORATION
By /s/Xxxx Xxxxxxxxxx
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Xxxx Xxxxxxxxxx
Vice President
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