Ex (d)(5)
PRUDENTIAL PACIFIC GROWTH FUND, INC.
SUBADVISORY AGREEMENT
Agreement made as of this 17th day of January, 2001 between Prudential
Investments Fund Management LLC ("PIFM" or the "Manager") and Jardine Xxxxxxx
International Management Inc. (the "Subadviser").
WHEREAS, the Manager has entered into a Management Agreement, dated July
16, 1992 (the "Management Agreement"), with Prudential Pacific Growth Fund, Inc.
(the "Fund"), a Maryland corporation and a diversified, open-end management
investment company registered under the Investment Company Act of 1940 (the
"1940 Act"), 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, the Subadviser is licensed by the Hong Kong Securities and Futures
Commission and is registered as an investment adviser.
NOW, THEREFORE, the Parties agree as follows:
1. (a) Subject to the supervision of the Manager and the Board of
Directors of the Fund, the Subadviser shall manage such portion of the
assets of the Fund as the Manager shall direct (the "Assets") and shall
manage the composition of the Assets, including the purchase, retention and
disposition thereof, in accordance with the Fund's investment objectives,
policies and restrictions as stated in the Fund's prospectus(es) and
statement of additional information (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, in relation to the Assets, 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 Articles of
Incorporation, By-Laws and Prospectus of the Fund and with the written
instructions and directions of the Manager and of the Board of
Directors of the Fund delivered to the Subadviser, and will use
reasonable efforts to manage the Assets so that the Fund will qualify,
and continue to qualify, as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended, and
regulations issued thereunder, except as may be authorized to the
contrary by Board of Directors of the Fund. For the avoidance of doubt,
investment objectives, policies and direction should not be deemed to
have been breached as a result of changes beyond the Subadviser's
control (including but not limited to change in price/value of assets).
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 Assets to be purchased
or sold by the Fund, as applicable, 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 Directors may direct from
time to time. In providing the Fund with investment advice, 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. Consistent with its fiduciary duty to the Fund, the
Subadviser and its associates shall have a discretion to effect,
without prior reference to the Manager, either as principal or
otherwise, transactions in which the Subadviser or any of its
associates has directly or indirectly a material interest or a
relationship of any description with another party which may involve
a potential conflict with the Subadviser's duty to the Manager or
the Fund. Neither the Subadviser nor its associates shall be liable to
account to the Manager or the Fund for any profit, commission or
remuneration made or received from or by reason of such transactions
or any connected transactions, nor will the Subadviser's fees be
abated thereby unless otherwise provided. 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 Directors 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 Directors
such periodic and special reports as the Directors may reasonably
request. The Subadviser shall make reasonably available its employees
and officers for consultation with any of the Directors 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, 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, 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 to each of
the Fund's separate series through quantitative and qualitative
analysis and consultations with such 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. Subadviser
recognizes that its services may be terminated or modified pursuant
to this process.
(vii) The Subadviser may with the prior written consent of the
Manager delegate any of its functions, powers, discretions,
privileges and duties under the terms of this Agreement to any of its
associates (which shall have full powers of
sub-delegation) and may provide information about the Manager and
the Fund to any such associates.
(viii) If the Subadviser considers that any investment objectives and
policies and/or instructions received in relation thereto may not,
from a compliance or system viewpoint, be capable of being fully
observed, it shall promptly advise the Manager of the same with a view
to arrive at a mutually acceptable modification to such investment
objectives and policies. Before such modification to such investment
objectives and policies and/or instructions is agreed between the
parties, the Subadviser shall use its best endeavours to comply with
such investment objectives and policies and/or instructions to the
fullest extent that the Subadviser in its opinion considers possible.
(ix) The Manager shall be responsible for the management of the its
affairs or the affairs of the Fund for tax purposes.
(x) For the avoidance of doubt, the Subadviser shall not be
deemed to have breached its duty of confidentiality owing to the
Manager if disclosures of information is required in order to
facilitate the Subadviser carrying out its duties hereunder or is
required by law or regulations or is requested by any investment
exchanges or statutory, regulatory or governmental bodies having
jurisdiction over the Subadviser or any of its associates.
(xi) The Subadviser is authorized to rely on, may act on and
treat as fully authorized by the Manager, any instruction or
communication which purports to have been given (and which is
accepted by the Subadviser in good faith as having been given) by or
on behalf of the persons notified by the Manager from time to time to
the Subadviser as being authorized to instruct it in respect of the
Fund and, by whatever means transmitted and whether or not in
writing and, unless the Subadviser shall have received written
notice to the contrary, whether or not the authority of such person
shall have been terminated. The Subadviser and its associates may use
voice recording procedures in connection with all communications and
any such voice record retained by the Subadviser and its associates
will constitute conclusive evidence of such communications.
(b) The Subadviser shall authorize and permit any of its directors,
officers and employees who may be elected as Directors 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 Securities and
Exchange 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 as the
Manager may advise in writing from time to time.
(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.
(f) The Subadviser will inform the Manager in writing within a
reasonable time of any changes in the directors of the Subadviser,
and of material changes to the information provided to the Manager
under this Agreement.
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. The Manager
warrants that the information set out in or provided pursuant to
Schedule I hereto (the "Client Information Statements") and any other
information provided from time to time to the Adviser are true, complete
and accurate. The Manager agrees to promptly advise the Adviser in
writing of any change to the information set out in the Client
Information Statements or in this Agreement. The Manager further confirm
that they have notice of the provisions and the risk disclosure statement
as set out in Schedule II hereto and agree to be bound by the terms
thereof.
3. For the services provided and the expenses assumed pursuant to this
Agreement, the Manager shall pay the Subadviser as full compensation
therefore, 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 III. The Subadviser shall be responsible for
its own expenses in performing its duties hereunder but shall not be
responsible for the expenses of the Fund. Without limiting the
generality of the foregoing, the Subadviser shall not be responsible for
brokerage commissions, transfer taxes or fees or custody fees of the Fund.
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. The Manager agrees to fully indemnify the Subadviser on demand
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of
any kind or nature whatsoever (other than those 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) which may be imposed on, incurred by, or
asserted against the Subadviser in performing its obligations or duties
hereunder.
The Subadviser agrees to fully indemnify the Manager on demand from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever resulting from the willful misfeasance,
negligence, bad faith or reckless disregard of the obligations or duties
hereunder on the part of the Subadviser, its directors, offers or
employees.
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 Directors 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. Section 4
shall survive termination of this Agreement. Further, termination will
not in any event affect accrued rights or existing commitments.
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
Director/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
-------------------
Executive Vice President
JARDINE XXXXXXX INTERNATIONAL MANAGEMENT, INC.
BY: /s/ Xxxx X. X. Xxxxx
--------------------
Xxxx X. X. Xxxxx
Director
SCHEDULE I
Client Information Statements
1 Name(s) of the client (i.e. the Prudential Investments Fund Management LLC
Manager)
2 Nature of entity (i.e. Private or REGISTERED INVESTMENT ADVISER TO OPEN-END MANAGEMENT COMPANIES
public limited company, etc.) (MUTUAL FUNDS)
3 Nature of the Manager's business REGISTERED INVESTMENT ADVISER
4 Country of incorporation/establishment NEW YORK LIMITED LIABILITY COMPANY
5 Registered office in country of 000 XXXXXXXX XXXXXX
incorporation/establishment Address GATEWAY CENTER THREE, 14TH FLOOR
NEWARK, NEW JERSEY USA 07102
ATTENTION: SECRETARY
Telephone no. (000) 000-0000 Fax no. (000) 000-0000
Telex no.
0 Xxxxxxxxx xxxxx xx xxxxxxxx xx Xxxx
Xxxx (xx any) Address
Telephone no. Fax no.
Telex no.
7 Where applicable, the individual(s) who is/are the ultimate beneficial
owner(s) of the share capital of the Manager, including a beneficiary
holding an interest through a nominee or trust:
Name PRUDENTIAL PACIFIC GROWTH FUND, INC.
000 XXXXXXXX XXXXXX
Address GATEWAY CENTER THREE, 00XX XXXXX
XXXXXX, XXX XXXXXX XXX 00000
ATTENTION: PRESIDENT
8 Will the account be operated under
Power of Attorney? Yes / No IF YES, PLEASE FURNISH SIGNED POWER OF ATTORNEY.
------------------------------------------------ ----------------------------------------------------------
9 Authorized signature(s) to operate the account
Any one of the following individuals is authorized on behalf of the
Manager to give oral and written instructions (i) in relation to the
operation of the account maintained by the Manager with the Subadviser
and (ii) to effect purchases, sales, holdings and other dealings in
securities (including futures contracts and option contracts), funds
or other investments:-
Name (English and, where Contact Telephone Number Signature
applicable, Chinese)
Xxxxx Xxxxxx (000) 000-0000 /S/ XXXXX XXXXXX
Xxxx Xxxxxxx (000) 000-0000 /S/ XXXX XXXXXXX
Xxxx Xxxxxxxxxx (000) 000-0000 /S/ XXXX XXXXXXXXXX
Xxxx Xxxxxxx (000) 000-0000 /S/ XXXX XXXXXXX
Xxxxx Xxxxxxxx' (000) 000-0000 XXXXX XXXXXXXX
10 Please dispatch trading confirmations to:-
Name Attention: Xxxxx Xxxxx & Xxxx Colvani, Prudential Group
State Street Bank & Trust
Address 0 Xxxxxxxx Xxxxx, Xxxxxx XX, 00000
Xxxxxx Xxxxxx Xxxxxxxx, 0xx Xxxxx
Telephone no. (000) 000-0000 Fax no. (000) 000-0000
Telex no.
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11 Documentation. Please provide the following:
x Certified copies of the Memorandum and Articles of Association,
Certificate of Incorporation and Business Registration
Certificate or other constitutional documents.
x A certified copy of the board resolution relating to the
execution of this Agreement and the appointment of authorized
signatories;
N/A A certified copy of the client's latest corporate record filed
with the Company Registry at the place of incorporation;
x A copy of the audited accounts for the last financial year;
See # 9 A list of signatories authorized to provide instructions on the
account together with their relevant specimen signature cards and
contact details (if not given above in section 9).
SCHEDULE II
Risk Disclosure Statements
1 In respect of transactions in securities, please note that:-
The price of securities can and does fluctuate, and any individual security
may experience upward or downward movements, and may even become valueless.
There is an inherent risk that losses may be incurred rather than profit
made as a result of buying and selling securities.
2 In respect of transactions involving futures contracts or options,
please note that:-
The risk of loss in trading futures contracts or options can be
substantial. In some circumstances, you may sustain losses in excess of
your initial margin funds. Placing contingent orders, such as "stop loss"
or "stop-limit" orders, will not necessarily achieve the desired results.
Market conditions may make it impossible to execute such orders. You may
be called upon at short notice to deposit additional margin funds. If the
required funds are not provided within the prescribed time, your position
will be liquidated. You will remain liable for any resulting deficit in
your account. You should therefore study and understand futures contracts
and options before you trade and carefully consider whether such trading
is suitable in the light of your own financial position and investment
objectives.
3 In respect of transactions in securities traded on the Growth Enterprise
Market of The Stock Exchange of Hong Kong Limited, please note that:-
(a) The Growth Enterprise Market has been established as a market
designed to accommodate companies to which a high investment risk
may be attached. In particular, companies may list on the Growth
Enterprise Market with neither a track record of profitability
nor any obligation to forecast future profitability. There may be
risks arising out of the emerging nature of companies listed on
the Growth Enterprise Market and the business sectors or
countries in which the companies operate.
(b) There are potential risks of investing in such companies and you
should make the decision to invest only after due and careful
consideration. The greater risk profile and other characteristics
of the Growth Enterprise Market mean that it is a market more
suited to professional and other sophisticated investors.
(c) Given the emerging nature of companies listed on the Growth
Enterprise Market, there is a risk that securities traded on the
Growth Enterprise Market may be susceptible to higher market
volatility compared to securities traded on the Main Board and no
assurance is given that there will be a liquid market in the
securities traded on the Growth Enterprise Market.
(d) The principal means of information dissemination on the Growth
Enterprise Market is publication on the internet website operated
by the Exchange. Companies listed on the Growth Enterprise Market
are not generally required to issue paid announcements in gazetted
newspapers. Accordingly, you need to have access to up-to-date
information on the Growth Enterprise Market-listed companies as
published on the Growth Enterprise Market website.
(e) This risk disclosure statement does not purport to disclose
all the risks and other significant aspects of the Growth
Enterprise Market. You should undertake your own research and
study on the trading of securities on the Growth Enterprise Market
before commencing any trading activities.
You should seek independent professional advice if you are uncertain of
or have not understood any aspect of this risk disclosure statement or
the nature and risks involved in trading of securities on the Growth
Enterprise Market.
SCHEDULE III
INVESTMENT ADVISORY FEE
The compensation to be received by the Subadviser under the Subadvisory
Agreement is as follows:
DAILY NET ASSETS FEE
First $250 million .50 of 1%
Over $250 million .45 of 1%
PIFM will pay the Subadviser the subadvisory fee from the management fee
that the Fund pays to PIFM under its Management Agreement.
The investment advisory fee is based on aggregate assets under management
of Prumerica Pacific Growth Fund and Prudential Pacific Growth Fund, Inc.
