PRUDENTIAL XXXXXX FUND
(formerly The Prudential Institutional Fund)
(Prudential Bond Market Index Fund)
(Prudential Europe Index Fund)
(Prudential Pacific Index Fund)
(Prudential Small-Cap Index Fund)
SUBADVISORY AGREEMENT
Agreement made as of this 18th day of June 1997, between Prudential Mutual
Fund Management LLC, a New York limited liability company (PMF or the Manager),
and The Prudential Investment Corporation, a New Jersey Corporation (the
Subadviser).
W I T N E S S E T H
WHEREAS, the Manager has entered into a Management Agreement, dated June
18th, 1997 (the Management Agreement), with Prudential Xxxxxx Fund (formerly The
Prudential Institutional Fund) (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 PMF will act as
Manager of the Trust;
WHEREAS, the shares of beneficial interest of the Trust are divided into
separate series or funds, 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 series or funds or establish and terminate additional series or funds;
WHEREAS, the Manager desires to retain the Subadviser to provide
investment advisory services to Prudential Bond Market Index Fund, Prudential
Europe Index Fund, Prudential Pacific Index Fund and Prudential Small-Cap Index
Fund (the Funds) in connection with the management of the Trust and the
Subadviser is willing to render such investment advisory services;
NOW, THEREFORE, the Parties agree as follows:
1. (a) Subject to the supervision of the Manager and of the Trustees of
the Trust, the Subadviser shall manage the investment operations of the
Funds and the composition of each Fund's portfolio, including the
purchase, retention and disposition thereof, in accordance with the Funds'
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 collectively called the "Prospectus") and subject to the
following understandings:
(i) The Subadviser shall provide supervision of each Fund's
investments and determine from time to time what investments and
securities will be purchased, retained, sold or loaned by each 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 each Fund and the
Trust and with the 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 and
all other applicable federal and state laws and regulations.
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(iii) The Subadviser shall determine securities and futures
contracts to be purchased or sold by each Fund and will place
orders 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 each 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 may
be used 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
each 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 Funds 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
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purchase and sale of securities and futures contracts for the Funds
with such brokers or futures commission merchants, subject to review
by the Trustees of the Trust 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
Funds 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 each Fund, the Trust and to such other
clients.
(iv) The Subadviser shall maintain all books and records with
respect to each 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 Trustees of
the Trust such periodic and special reports as the Board may
reasonably request.
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(v) The Subadviser shall provide the Trust's Custodian on each
business day with information relating to all transactions
concerning each 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.
(b) The Subadviser shall authorize and permit any of its directors,
officers and employees who may be elected as Trustees or officers of the
Trust 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 Trust's books and records required to be
maintained by the Subadviser pursuant to paragraph 1(a)(iv) 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 Trust required by Rule 31a-1 under the 1940 Act.
The Subadviser agrees that all records which it maintains for the Trust
are the property of the Trust and the Subadviser will surrender promptly
to the Trust any of such records upon the Trust'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)(iv) hereof.
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2. The Manager shall continue to have responsibility for all services to
be provided to the Trust pursuant to the Management Agreement and shall oversee
and review the Subadviser's performance of its duties under this Agreement.
3. The Manager shall reimburse the Subadviser for reasonable costs and
expenses incurred by the Subadviser determined in a manner acceptable to the
Manager in furnishing the services provided in paragraph 1 hereof.
4. The Subadviser shall not be liable for any error of judgment or for any
loss suffered by each 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 each Fund at any
time, without the payment of any penalty, by the Trustees of the Trust or by
vote of a majority of the outstanding voting securities (as defined in the 0000
Xxx) of each 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
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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 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 Funds 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. 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 Xxxxxxx Xxxxxx Xxxxx, Xxxxxx, Xxx Xxxxxx
00000-0000, Attention: Secretary; or (2) to the Subadviser at Prudential Plaza,
000 Xxxxx Xxxxxx, Xxxxxx, XX 00000-0000, Attention: President.
9. 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.
10. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without reference to choice of law principles
thereof and in accordance with the 1940 Act. In the case of any conflict the
1940 Act shall control.
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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 MUTUAL FUND MANAGEMENT LLC
By /s/ XXXXX X. XXXXXX
--------------------------------------
Xxxxx X. Xxxxxx
President
THE PRUDENTIAL INVESTMENT CORPORATION
By /s/ XXXXXX X. XXXXXX
--------------------------------------
Xxxxxx X. Xxxxxx
Vice President
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