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 Deutsche Asset
Management, Incorporated (the Subadviser or XxXX).
WHEREAS, the Manager has entered into a Management Agreement, dated
March 1, 1998, and amended and restated as of June 1, 1995 (the Management
Agreement), with Prudential Value Fund (the Fund), 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 as specified in Schedule A hereto (individually
and collectively, with the Fund, referred to herein as 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
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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)
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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
the Subadviser 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 Series 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.
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(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
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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
DEUTSCHE ASSET MANAGEMENT, INCORPORATED
BY: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
Vice President
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Schedule A
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As compensation for XxXX'x services, PIFM will pay XxXX 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 XxXX'x
management, and
0.23 of 1% on the next $250 million of the average net assets under XxXX'x
management, and
0.15 of 1% over $300 million of the average net assets under XxXX'x
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 XxXX'x management. The parties may
aggregate the assets of other Prudential mutual fund portfolios which XxXX
may subadvise in the future with the portfolios described above by
amending this Schedule A.
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