EXHIBIT (d)(2)
AMENDED SUBADVISORY AGREEMENT WITH PIC
PRUDENTIAL REAL ESTATE SECURITIES FUND
SUBADVISORY AGREEMENT
Agreement made as of this 28th day of March, 2001 between Prudential
Investments Fund Management LLC ("PIFM" or the "Manager") and Prudential
Investment Corporation (the "Subadviser").
WHEREAS, the Manager has entered into a Management Agreement, dated
March 28th, 2001 (the "Management Agreement"), with Prudential Real Estate
Securities Fund (the "Fund"), a Delaware business trust and a non 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, this Agreement is intended to supersede the agreement dated
February 18, 1998 between PIFM and the Subadviser;
NOW, THEREFORE, the Parties agree as follows:
1. (a) Subject to the supervision of the Manager and the Board of
[Trustees/Directors] 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(s),
including the purchase, retention and disposition thereof, in
accordance with the Fund's investment objectives, policies and
restrictions as stated in the Prospectus(es) (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
[Articles of Incorporation/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/Directors]of the Fund,
co-operate 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, as amended, 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 [Directors/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.
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(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, 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 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.
(b) The Subadviser shall authorize and permit any of its Trustees,
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 Trustees, 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.
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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 [Directors/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.
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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 PRUDENTIAL INVESTMENT
MANAGEMENT LLC CORPORATION
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxx X. Xxxxxxxxxx
------------------- ----------------------
Xxxxxx X. Xxxxx Xxxx X. Xxxxxxxxxx
Executive Vice President President
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EXHIBIT A
COMPENSATION SCHEDULE FOR FUNDS ADVISED BY PIC/XXXXXXXX
Annual fee payable to the Subadviser as a
Fund percentage of average daily net assets
---- --------------------------------------
Prudential Real Estate Securities Fund 0.375%
Prudential Xxxxxxxx International Growth Fund 0.60% of the first $300 million of Fund assets;
(a series of Prudential World Fund, Inc.
0.50% of the first $1.5 billion of Fund assets; and
0.45% of Fund assets in excess of $1.5 billion.
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