1
Exhibit 5(a)
PRUDENTIAL DIVERSIFIED SERIES
Management Agreement
Agreement made this __th day of _______, 19__, between
Prudential Diversified Series (the Trust), and Prudential Investments Fund
Management LLC, a New York limited liability company (the Manager).
W I T N E S S E T H
WHEREAS, the Trust is a non-diversified, open-end management
investment company registered under the Investment Company Act of 1940, as
amended (the 1940 Act);
WHEREAS, the shares of beneficial interest 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; and
WHEREAS, the Trust desires to retain the Manager to render or
contract to obtain as hereinafter provided investment advisory services to
the Trust and the Trust also desires to avail itself of the facilities
available to the Manager with respect to the administration of its day to day
corporate affairs, and the Manager is willing to render such investment
advisory and administrative services;
NOW, THEREFORE, the parties agree as follows:
1. The Trust hereby appoints the Manager to act as manager of the
Trust and administrator of its corporate affairs for the period and on the
terms set forth in this Agreement. The Manager accepts such appointment and
agrees to render the services
2
herein described, for the compensation herein provided. The Manager is
authorized to enter into sub-advisory agreements for investment advisory
services in connection with the management of the Trust and each Portfolio
thereof. Any such agreement may be entered into by the Manager on such terms and
in such manner as may be permitted by the 1940 Act and the rules thereunder. The
Manager will continue to have responsibility for all investment advisory
services furnished pursuant to any such sub-advisory agreements. The Manager
will review the performance of all sub-advisers (each an Adviser), and make
recommendations to the Trustees of the Trust with respect to the retention and
renewal of contracts.
2. Subject to the supervision of the Board of Trustees of the Trust,
the Manager shall administer the Trust's corporate affairs and, in connection
therewith, shall furnish the Trust with office facilities and with clerical,
bookkeeping and recordkeeping services at such office facilities and, subject to
Section 1 hereof, the Manager shall manage the investment operations of the
Trust and each Portfolio thereof and the composition of each Portfolio of the
Trust, including the purchase, retention and disposition thereof, in accordance
with each Portfolio's investment objectives, policies and restrictions as stated
in the Prospectus (hereinafter defined) and subject to the following
understandings:
(a) The Manager shall provide supervision of each Portfolio's
investments and determine from time to time what investments or
securities will be purchased, retained, sold or loaned by the Portfolio,
and what portion of its assets will be invested or held uninvested as
cash.
2
3
(b) The Manager, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Declaration of
Trust, By-Laws and Prospectus (hereinafter defined) of the Trust and
with the instructions and directions of the Board of Trustees of the
Trust and will conform to and comply with the requirements of the 1940
Act and all other applicable federal and state laws and regulations.
(c) The Manager shall determine the securities and futures
contracts to be purchased or sold by each Portfolio and will place
orders pursuant to its determinations with or through such persons,
brokers, dealers or futures commission merchants (including but not
limited to Prudential Securities Incorporated, and brokers, dealers and
futures commissions merchants which are "affiliated persons" of an
Adviser) in conformity with the policy with respect to brokerage as set
forth in the Trust's Registration Statement and Prospectus (hereinafter
defined) or as the Board of Trustees may direct from time to time. In
providing the Trust with investment supervision, it is recognized that
the Manager will give primary consideration to securing the most
favorable price and efficient execution. Consistent with this policy,
the Manager 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 other clients of the Manager
or an Adviser may be a party. It is understood that Prudential
Securities Incorporated or a broker which is an "affiliated person" of
an Adviser may be used
3
4
as principal broker for securities transactions but that no formula has
been adopted for allocation of the Trust's investment transaction business.
It is also understood that it is desirable for the Trust that the Manager
and each Adviser have access to supplemental investment and market research
and security and economic analysis provided by brokers or futures
commission merchants and that such brokers may execute brokerage
transactions at a higher cost to the Trust than may result when allocating
brokerage to other brokers or futures commission merchants on the basis of
seeking the most favorable price and efficient execution. Therefore, the
Manager and each Adviser is authorized to pay higher brokerage commissions
for the purchase and sale of securities and futures contracts for the Trust
to brokers or futures commission merchants who provide such research and
analysis, subject to review by the Trust'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 broker or futures commission
merchant may be useful to the Manager or an Adviser in connection with its
services to other clients.
On occasions when the Manager or an Adviser deems the purchase or
sale of a security or a futures contract to be in the best interest of
the Trust as well as other clients of the Manager or the Adviser, the
Manager or the Adviser, 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 so sold or purchased in order to
obtain the most favorable price or lower brokerage
4
5
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 Manager or the
Adviser in the manner it considers to be the most equitable and consistent
with its fiduciary obligations to the Portfolio, the Trust and to such
other clients.
(d) The Manager shall maintain all books and records with respect
to the Trust's portfolio transactions and shall render to the Trust's
Board of Trustees such periodic and special reports as the Board may
reasonably request.
(e) The Manager shall be responsible for the financial and
accounting records to be maintained by the Trust (including those being
maintained by the Trust's Custodian).
(f) The Manager shall provide the Trust's Custodian on each
business day with information relating to all transactions concerning
the Trust's assets.
(g) The investment management services of the Manager to the
Trust under this Agreement are not to be deemed exclusive, and the
Manager shall be free to render similar services to others.
3. The Trust has delivered to the Manager copies of each of the
following documents and will deliver to it all future amendments and
supplements, if any:
(a) Agreement and Declaration of Trust (such Agreement and
Declaration of Trust, as in effect on the date hereof and as amended
from time to time, is hereinafter called the "Declaration of Trust");
5
6
(b) By-Laws of the Trust (such By-Laws, as in effect on the date
hereof and as amended from time to time, are hereinafter called the
"By-Laws");
(c) Certified resolutions of the Board of Trustees of the Trust
authorizing the appointment of the Manager and approving the form of
this agreement;
(d) Registration Statement under the 1940 Act and the Securities
Act of 1933, as amended, on Form N-1A (the Registration Statement), as
filed with the Securities and Exchange Commission (the Commission)
relating to the Trust and its shares of beneficial interest and all
amendments thereto;
(e) Notification of Registration of the Trust under the 1940 Act
on Form N-8A as filed with the Commission and all amendments thereto; and
(f) Prospectus and Statement of Additional Information of the
Trust (such Prospectus and Statement of Additional Information, as
currently in effect and as amended or supplemented from time to time,
being hereinafter called the "Prospectus").
4. The Manager shall authorize and permit any of its officers and
employees who may be elected as Trustees or officers of the Trust to serve in
the capacities in which they are elected. All services to be furnished by the
Manager under this Agreement may be furnished through the medium of any such
officers or employees of the Manager.
5. The Manager shall keep the Trust's books and records required
to be maintained by it pursuant to paragraph 2 hereof. The Manager agrees
that all records which it maintains for the Trust are the property of the
Trust and it will surrender
6
7
promptly to the Trust any such records upon the Trust's request, provided
however that the Manager may retain a copy of such records. The Manager 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 the Manager pursuant to
Paragraph 2 hereof.
6. During the term of this Agreement, the Manager shall pay the
following expenses:
(i) the salaries and expenses of all personnel of the Trust and
the Manager except the fees and expenses of Trustees who are not
affiliated persons of the Manager or of any Adviser,
(ii) all expenses incurred by the Manager or by the Trust in
connection with managing the ordinary course of the Trust's business
other than those assumed by the Trust herein, and
(iii) the costs and expenses payable to any Adviser pursuant to
any sub-advisory agreements.
The Trust assumes and will pay the expenses described below:
(a) the fees and expenses incurred by the Trust in connection
with the management of the investment and reinvestment of each
Portfolio's assets,
(b) the fees and expenses of Trustees who are not affiliated
persons of the Manager or the Trust's Advisers,
(c) the fees and expenses of the Custodian that relate to (i) the
custodial function and the recordkeeping connected therewith, (ii)
preparing and maintaining the general accounting records of the Trust
and the providing of any
7
8
such records to the Manager useful to the Manager in connection with the
Manager's responsibility for the accounting records of the Trust pursuant
to Section 31 of the 1940 Act and the rules promulgated thereunder, (iii)
the pricing of the shares of the Trust, including the cost of any pricing
service or services which may be retained pursuant to the authorization of
the Board of Trustees of the Trust, and (iv) for both mail and wire orders,
the cashiering function in connection with the issuance and redemption of
the Trust's securities,
(d) the fees and expenses of the Trust's Transfer and Dividend
Disbursing Agent, which may be the Custodian, that relate to the
maintenance of each shareholder account,
(e) the charges and expenses of legal counsel and independent
accountants for the Trust,
(f) brokers' commissions and any issue or transfer taxes
chargeable to the Trust in connection with its securities and futures
transactions,
(g) all taxes and corporate fees payable by the Trust to federal,
state or other governmental agencies,
(h) the fees of any trade associations of which the Trust may be
a member,
(i) the cost of share certificates representing, and/or
non-negotiable share deposit receipts evidencing, shares of the Trust,
(j) the cost of fidelity, trustees and officers and errors and
omissions insurance,
8
9
(k) the fees and expenses involved in registering and maintaining
registration of the Trust and of its shares with the Commission,
registering the Trust as a broker or dealer and qualifying its shares
under state securities laws, including the preparation and printing of
the Trust's registration statements, prospectuses and statements of
additional information for filing under federal and state securities
laws for such purposes,
(l) allocable communications expenses with respect to investor
services and all expenses of shareholders' and Trustees' meetings and of
preparing, printing and mailing reports to shareholders in the amount
necessary for distribution to the shareholders,
(m) litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the
Trust's business, and
(n) any expenses assumed by the Trust pursuant to a Plan of
Distribution adopted in conformity with Rule 12b-1 under the 1940 Act.
7. For the services provided and the expenses assumed pursuant to
this Agreement, the Trust will pay to the Manager as full compensation
therefor a fee as set forth below. This fee will be computed daily and will
be paid to the Manager monthly. Any reduction in the fee payable shall be
made monthly. Any such reductions or payments are subject to readjustment
during the year.
Rate as a percentage of
Name of Portfolio average daily net assets
----------------- ------------------------
Conservative Growth Portfolio .75%
Moderate Growth Portfolio .75%
Aggressive Growth Portfolio .75%
9
10
8. The Manager shall not be liable for any error of judgment or
for any loss suffered by the Trust in connection with the matters to which
this Agreement relates, except a loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services (in which case
any award of damages shall be limited to the period and the amount set forth
in Section 36(b)(3) of the 0000 Xxx) or loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or from reckless disregard by it of its obligations and duties
under this Agreement.
9. 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
with respect to any Portfolio by the Trust at any time, without the payment
of any penalty, by the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities (as defined in the 0000 Xxx) of
the Portfolio, or by the Manager 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 1940 Act).
10. Nothing in this Agreement shall limit or restrict the right
of any officer or employee of the Manager who may also be a trustee, officer
or employee of the Trust 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
10
11
nature, nor limit or restrict the right of the Manager to engage in any other
business or to render services of any kind to any other corporation, firm,
individual or association.
11. Except as otherwise provided herein or authorized by the
Board of Trustees of the Trust from time to time, the Manager shall for all
purposes herein be deemed to be an independent contractor and shall have no
authority to act for or represent the Trust in any way or otherwise be deemed
an agent of the Trust.
12. During the term of this Agreement, the Trust agrees to
furnish the Manager 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 in any way to the Manager, prior to use thereof and not to use such
material if the Manager reasonably objects in writing within five business
days (or such other time as may be mutually agreed) after receipt thereof. In
the event of termination of this Agreement, the Trust will continue to
furnish to the Manager copies of any of the above mentioned materials which
refer in any way to the Manager. Sales literature may be furnished to the
Manager hereunder by first-class or overnight mail, facsimile transmission
equipment or hand delivery. The Trust shall furnish or otherwise make
available to the Manager such other information relating to the business
affairs of the Trust as the Manager at any time, or from time to time,
reasonably requests in order to discharge its obligations hereunder.
13. 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.
11
12
14. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered or mailed
by registered mail, postage prepaid, (1) to the Manager at Gateway Center
Three, 000 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000-0000, Attention: Secretary; or
(2) to the Trust at Gateway Center Three, 000 Xxxxxxxx Xxxxxx, Xxxxxx, XX
00000-0000, Attention: President.
15. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
[16. The Trust may use the name "Prudential Diversified Series"
or any name including the word "Prudential" only for so long as this
Agreement or any extension, renewal or amendment hereof remains in effect,
including any similar agreement with any organization which shall have
succeeded to the Manager's business as Manager or any extension, renewal or
amendment thereof remain in effect. At such time as such an agreement shall
no longer be in effect, the Trust will (to the extent that it lawfully can)
cease to use such a name or any other name indicating that it is advised by,
managed by or otherwise connected with the Manager, or any organization which
shall have so succeeded to such businesses. In no event shall the Trust use
the name "Prudential Diversified Series" or any name including the word
"Prudential" if the Manager's function is transferred or assigned to a
company of which The Prudential Insurance Company of America does not have
control.]
17. The Trust is a business trust organized under the Delaware
Business Trust Act pursuant to a certificate of trust dated July 29, 1998.
The Trust is a series trust and all debts, liabilities, obligations and
expenses of a particular Portfolio shall be
12
13
enforceable only against the assets of that Portfolio and not against the assets
of any other Portfolio or of the Trust as a whole. This Agreement is executed by
Trustee or officer of the Trust in such capacity and not individually. Neither
the Trustees, officers, agent or shareholders of the Trust assume any personal
liability for obligations entered into on behalf of the Trust (or a Portfolio
thereof).
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 DIVERSIFIED SERIES
By:__________________________________
President
PRUDENTIAL INVESTMENTS TRUST
MANAGEMENT LLC
By:__________________________________
Xxxxxx X. Xxxxx
Executive Vice President
13
