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PRUDENTIAL DIVERSIFIED PORTFOLIOS
(Prudential Diversified High Growth Portfolio)
SUBADVISORY AGREEMENT
Agreement made as of this _____ day of August, 1998, between
Prudential Investments Fund Management LLC (PIFM or the Manager), a New York
limited liability company, and Franklin Advisers, Inc. (the Adviser), a company
organized under the laws of _____________.
WHEREAS, PIFM has entered into a management agreement (the
Management Agreement) with Prudential Diversified Portfolios (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 High Growth Portfolio of the Trust (the Portfolio) in
connection with the management of the Trust and to manage such portion of the
Portfolio 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 Portfolio as the Manager shall direct
and shall manage the composition of such portion of the Portfolio,
including the purchase, retention and disposition thereof, in
accordance with the Portfolio'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 Portfolio's investments and determine from time to time what
investments and securities will be purchased, retained, sold or
loaned by the Portfolio, 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 Portfolio 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 Portfolio 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 Portfolio 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 Portfolio'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 Portfolio 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
Portfolio 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 Portfolio'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 Portfolio'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 Portfolio'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 Portfolio 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 Portfolio 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 compensate the Adviser for the services
provided and the expenses assumed pursuant to this Subadvisory Agreement at the
annual rate of .50 of 1% of the average daily net assets of the portion of the
Portfolio managed by the Adviser. This fee will be computed daily and paid
monthly.
4. The Adviser shall not be liable for any error of judgment or
for any loss suffered by the Portfolio, 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 Portfolio, 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
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dissimilar nature, nor limit the Adviser'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 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 Portfolio,
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.
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PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC
By
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FRANKLIN ADVISERS, INC.
By
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