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(d)(7)
PRUDENTIAL DIVERSIFIED FUNDS
(Prudential Diversified Moderate Growth Fund)
SUBADVISORY AGREEMENT
Agreement made as of this 12th day of November, 1998, between
Prudential Investments Fund Management LLC (PIFM or the Manager), a New York
limited liability company, and The Dreyfus Corporation (the Adviser), a company
organized under the laws of New York.
WHEREAS, PIFM has entered into a management agreement (the Management
Agreement) with Prudential Diversified Funds (the Trust), a Delaware business
trust and a diversified open-end management investment company registered under
the Investment Company Act of ▇▇▇▇ (▇▇▇ ▇▇▇▇ ▇▇▇), 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 Moderate Growth Fund of the Trust (the Fund) in
connection with the management of the Trust and to manage such portion of the
Fund as the Manager shall from time to time direct (the Adviser Assets) 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 the Adviser Assets, including the
composition, purchase, retention and disposition thereof, in accordance
with the Fund'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 the Adviser
Assets and determine from time to time what investments and securities
will be purchased, retained, sold or loaned with respect to the Adviser
Assets, and what portion of the Adviser 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
Fund 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 (the Code), and all
other applicable federal and state laws and regulations.
Notwithstanding the foregoing, the Manager shall remain responsible for
ensuring the overall compliance of the Trust and the Fund with the 1940
Act, the Code and all other applicable federal and state laws and
regulations, and the Adviser is only
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responsible for complying with this subsection (ii) with respect to the
Adviser Assets. The Manager will provide the Adviser with reasonable
advance notice of any change in the Fund's investment objective,
policies and restrictions as stated in the Prospectus, and the Adviser
shall, in the performance of its duties and obligations under this
Agreement, manage the Adviser Assets consistent with such changes,
provided the Adviser has received notice of the effectiveness of such
changes from the Trust or the Manager. For purposes of this subsection,
receipt of a modified Prospectus by the Adviser shall constitute notice
of the effectiveness of such changes. The Manager acknowledges and
agrees that the Prospectus will at all times be in compliance with all
disclosure requirements under all applicable federal and state laws and
regulations relating to the Trust or the Fund, including,without
limitation, the 1940 Act, and the rules and regulations thereunder, and
that the Adviser shall have no liability in connection therewith,
except as to the accuracy of material information furnished by the
Adviser to the Trust or to the Manager specifically for inclusion in
the Prospectus. The Adviser hereby agrees to provide to the Manager in
a timely manner such information relating to the Adviser and its
relationship to, and actions for, the Fund as may be required to be
contained in the Trust's Registration Statement.
(iii) The Adviser shall determine the securities and
commodities or other assets to be purchased or sold with respect to the
Adviser Assets 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) as the Adviser may elect, provided that this is
consistent with the policy with respect to brokerage set forth in the
Trust's Registration Statement and Prospectus or as the Trustees may
direct from time
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to time. In providing the Adviser Assets 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 broker for securities transactions to the
extent permitted by the 1940 Act and the rules and regulations
thereunder, 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 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
Adviser Assets 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 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
Fund as well as other clients of the Adviser, the Adviser, to the
extent permitted by applicable laws and regulations, may, but
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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. It is understood
that in some cases this procedure may adversely affect the price paid
or received by the Fund, or the size of the position obtained for, or
disposed of by, the Fund.
(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 Adviser Assets and shall provide the
Manager with such information upon request of the Manager. The Adviser
shall reconcile its records of the Adviser Assets 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.
(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
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furnished through the medium of any of its directors, officers or employees.
(c) The Adviser shall keep the Fund'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 Fund 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 Fund pursuant to the Management Agreement and shall
oversee and review the Adviser's 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 .45 of 1% of the
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average daily net assets of the Adviser Assets. This fee will be computed daily
and paid monthly no later than the 15th day following the end of each month. The
method of determining net assets of the Adviser Assets for purposes hereof shall
be the same as the method of determining net assets for purposes of establishing
the offering and redemption price of the Fund's shares as described in the
Prospectus. If this Agreement shall be effective for only a portion of a month,
the aforesaid fee shall be prorated for the portion of such month during which
this Agreement is in effect.
4. The Adviser shall not be liable for any error of judgment or mistake
of law for any loss suffered by the Fund, 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. The Adviser shall indemnify the Manager, its
affiliated persons, its officers, directors and employees, for any liability and
expenses, including attorneys fees, which may be sustained as a result of the
Adviser's willful misfeasance, bad faith, gross negligence, reckless disregard
of its duties hereunder or violation of applicable law, including, without
limitation, the 1940 Act and federal and state securities laws. The Manager
shall indemnify the Adviser, its affiliated persons, its officers, directors
and employees, for any liability and expenses, including attorneys fees, which
may be sustained as a result of the Manager's willful misfeasance, bad faith,
gross negligence, reckless disregard of its duties hereunder or violation of
applicable law, including, without limitation, the 1940 Act and federal and
state securities laws.
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
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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 ▇▇▇▇ ▇▇▇) of the Fund, 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 ▇▇▇▇ ▇▇▇) 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 to the management or other
aspects of any business, whether of a similar or 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 the Manager or any affiliate or agent thereof shall not
refer to or use the Adviser's name, or that of any of Adviser's clients, in any
such item without the prior approval of the Adviser, which approval shall not be
unreasonably withheld or delayed.
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
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their officers designated below as of the day and year first above written.
PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC
By /s/▇▇▇▇▇▇ ▇▇▇▇▇
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THE DREYFUS CORPORATION
By /s/▇▇▇▇▇▇▇▇ ▇▇▇▇
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