1
Exhibit(h)(2)
AMENDMENT TO TRANSFER AGENCY AND SERVICE AGREEMENT
THIS AMENDMENT to the Transfer Agency and Service Agreement by and between
Prudential Diversified Funds (the "Fund") and Prudential Mutual Fund Services
LLC ("PMFS") is entered into as of August 24, 1999.
WHEREAS, the Fund and PMFS have entered into a Transfer Agency and
Service Agreement (the "Agreement") pursuant to which PMFS serves as transfer
agent, dividend disbursing agent and shareholder servicing agent for the Fund;
and
WHEREAS, the Fund and PMFS desire to amend the Agreement to confirm the
Fund's agreement to pay transfer agency account fees and expenses for beneficial
owners holding shares through omnibus accounts maintained by The Prudential
Insurance Company of America, its subsidiaries or affiliates.
NOW, THEREFORE, for and in consideration of the continuation of the
Agreement, and other good and valuable consideration, Article 8 of the Agreement
is amended by adding the following Section:
8.04 PMFS may enter into agreements with Prudential or any
subsidiary or affiliate of Prudential whereby PMFS will maintain an
omnibus account and the Fund will reimburse PMFS for amounts paid by
PMFS to Prudential, or such subsidiary or affiliate, in an amount not
in excess of the annual maintenance fee for each active beneficial
shareholder account as if each beneficial shareholder account were
maintained by PMFS on the Fund's records, subject to the fee schedule
attached hereto as Schedule A. Prudential, its subsidiary or affiliate,
as the case may be, shall maintain records relating to each beneficial
shareholder account that underlies the omnibus account maintained by
PMFS.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
PRUDENTIAL DIVERSIFIED FUNDS ATTEST:
By:_________________________ By:_________________________
President Secretary
PRUDENTIAL MUTUAL FUND SERVICES LLC
ATTEST:
By:_________________________ By:_________________________
President Secretary
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PRUDENTIAL DIVERSIFIED FUNDS
(Prudential Diversified Moderate Growth Fund)
SUBADVISORY AGREEMENT
Agreement made as of this 5th day of May, 2000, between Prudential
Investments Fund Management LLC (PIFM or the Manager), a New York limited
liability company, and Pacific Investment Management Company LLC (the Adviser),
a company organized under the laws of the State of Delaware.
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 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 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, and the Adviser is willing
to render such investment advisory services.
NOW, THEREFORE, the Parties agree as follows:
4
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 Fund as the Manager shall direct and shall manage the composition of such
portion of the Fund, including the 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 such portion of the Fund's
investments and 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 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, and
all other applicable federal and state laws and regulations.
(iii) The Adviser shall determine the securities and commodities or other
assets to be purchased or sold by such portion of the Fund 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
2
5
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 Fund 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 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 Fund 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
3
6
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 Fund'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 Fund'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.
(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.
4
7
(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 .25 of 1% of the average daily net assets of the portion of the Fund managed
by the Adviser. This fee will be computed daily and paid monthly.
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8
4. The Adviser shall not be liable for any error of judgment or 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.
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 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 0000 Xxx) or upon the termination of the
Management Agreement. Adviser shall promptly notify Manager in the event that
there is a change in the partners of Adviser that may constitute an assignment
of this 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 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
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9
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 Fund, 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. Concurrently with the execution of this Agreement, the Adviser is
delivering to PIFM a copy Part II of its Form ADV, as revised, on file with the
Securities and Exchange Commission and a copy of its Disclosure Document, as
revised, on file with the Commodity Futures Trading Commission. PIFM
acknowledges receipt of such documents.
9. Any written notice required by or pertaining to this Agreement shall be
personally delivered to the party for whom it is intended, at the address stated
below, or shall be sent to such party by prepaid first class mail or facsimile.
If to PIFM: Prudential Investments Fund Management LLC
0 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000-0000
Fax: (000) 000-0000
Attention: General Counsel
If to the Adviser: Pacific Investment Management Company LLC
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
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Xxxxxxx Xxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Executive Vice President
cc: Chief Administrative Officer
10. 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. 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.
PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC
By:__________________________
Xxxxxx X. Xxxxx
Executive Vice President
PACIFIC INVESTMENT MANAGEMENT COMPANY LLC
By:__________________________
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PRUDENTIAL DIVERSIFIED FUNDS
(Prudential Diversified High Growth Fund)
SUBADVISORY AGREEMENT
Agreement made as of this 5th day of May, 2000, between Prudential
Investments Fund Management LLC (PIFM or the Manager), a New York limited
liability company, and Pacific Investment Management Company (the Adviser), a
company organized under the laws of the State of Delaware.
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 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 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, and the Adviser is willing to render
such investment advisory services.
NOW, THEREFORE, the Parties agree as follows:
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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 Fund as the Manager shall direct and shall manage the
composition of such portion of the Fund, including the 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 such portion of the Fund's
investments and 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 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, and all other applicable federal and
state laws and regulations.
(iii) The Adviser shall determine the securities and commodities or
other assets to be purchased or sold by such portion of the Fund 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
2
13
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 Fund 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
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 Fund 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
3
14
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 Fund'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 Fund'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.
(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.
4
15
(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 .25 of 1% of the average daily net assets of the portion of the Fund managed
by the Adviser. This fee will be computed daily and paid monthly.
5
16
4. The Adviser shall not be liable for any error of judgment or 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.
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 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 0000 Xxx) or upon the termination of the
Management Agreement. Adviser shall promptly notify Manager in the event that
there is a change in the partners of Adviser that may constitute an assignment
of this 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 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
6
17
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 Fund, 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. Concurrently with the execution of this Agreement, the Adviser is
delivering to PIFM a copy Part II of its Form ADV, as revised, on file with the
Securities and Exchange Commission and a copy of its Disclosure Document, as
revised, on file with the Commodity Futures Trading Commission. PIFM
acknowledges receipt of such documents.
9. Any written notice required by or pertaining to this Agreement shall be
personally delivered to the party for whom it is intended, at the address stated
below, or shall be sent to such party by prepaid first class mail or facsimile.
If to PIFM: Prudential Investments Fund Management LLC
0 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000-0000
Fax: (000) 000-0000
Attention: General Counsel
If to the Adviser: Pacific Investment Management Company
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
7
18
Xxxxxxx Xxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Executive Vice President
cc: Chief Administrative Officer
10. 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. 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.
PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC
By:__________________________
Xxxxxx X. Xxxxx
Executive Vice President
PACIFIC INVESTMENT MANAGEMENT COMPANY
By:__________________________
8
19
PRUDENTIAL DIVERSIFIED FUNDS
(Prudential Diversified Conservative Growth Fund)
SUBADVISORY AGREEMENT
Agreement made as of this 5th day of May, 2000, between Prudential
Investments Fund Management LLC (PIFM or the Manager), a New York limited
liability company, and Pacific Investment Management Company LLC (the Adviser),
a company organized under the laws of the State of Delaware.
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 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 Conservative 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, and the Adviser is willing
to render such investment advisory services.
NOW, THEREFORE, the Parties agree as follows:
20
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 Fund as the Manager shall direct and shall manage the
composition of such portion of the Fund, including the 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 such portion of the Fund's
investments and 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 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, and all other applicable federal and
state laws and regulations.
(iii) The Adviser shall determine the securities and commodities or
other assets to be purchased or sold by such portion of the Fund 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
2
21
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 Fund 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
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 Fund 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
3
22
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 s\hall
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 Fund'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 Fund'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.
(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.
4
23
(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 .25 of 1% of the average daily net assets of the portion of the Fund managed
by the Adviser. This fee will be computed daily and paid monthly.
5
24
4. The Adviser shall not be liable for any error of judgment or 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.
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 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 0000 Xxx) or upon the termination of the
Management Agreement. Adviser shall promptly notify Manager in the event that
there is a change in the partners of Adviser that may constitute an assignment
of this 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 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
6
25
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 Fund, 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. Concurrently with the execution of this Agreement, the Adviser is
delivering to PIFM a copy Part II of its Form ADV, as revised, on file with the
Securities and Exchange Commission and a copy of its Disclosure Document, as
revised, on file with the Commodity Futures Trading Commission. PIFM
acknowledges receipt of such documents.
9. Any written notice required by or pertaining to this Agreement shall
be personally delivered to the party for whom it is intended, at the address
stated below, or shall be sent to such party by prepaid first class mail or
facsimile.
If to PIFM: Prudential Investments Fund Management LLC
0 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000-0000
Fax: (000) 000-0000
Attention: General Counsel
If to the Adviser: Pacific Investment Management Company LLC
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
7
26
Xxxxxxx Xxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Executive Vice President
cc: Chief Administrative Officer
10. 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. 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.
PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC
By: _________________________________
Xxxxxx X. Xxxxx
Executive Vice President
PACIFIC INVESTMENT MANAGEMENT COMPANY LLC
By: _________________________________
8
27
PRUDENTIAL DIVERSIFIED FUNDS
(Prudential Diversified Conservative Growth Fund)
SUBADVISORY AGREEMENT
Agreement made as of this 5th day of May, 2000, between Prudential
Investments Fund Management LLC (PIFM or the Manager), a New York limited
liability company, and Pacific Investment Management Company (the Adviser), a
company organized under the laws of the State of Delaware.
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 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 Conservative 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, and the Adviser is willing
to render such investment advisory services.
NOW, THEREFORE, the Parties agree as follows:
1
28
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 Fund as the Manager shall direct and shall manage the
composition of such portion of the Fund, including the 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 such portion of the Fund's
investments and 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 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, and all other applicable federal and
state laws and regulations.
(iii) The Adviser shall determine the securities and commodities or
other assets to be purchased or sold by such portion of the Fund 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
2
29
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 Fund 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
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 Fund 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
3
30
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 Fund'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 Fund'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.
(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.
4
31
(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 .25 of 1% of the average daily net assets of the portion of the Fund
managed by the Adviser. This fee will be computed daily and paid monthly.
5
32
4. The Adviser shall not be liable for any error of judgment or 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.
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 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 0000 Xxx) or upon the termination of the
Management Agreement. Adviser shall promptly notify Manager in the event that
there is a change in the partners of Adviser that may constitute an assignment
of this 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 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
6
33
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 Fund, 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. Concurrently with the execution of this Agreement, the Adviser is
delivering to PIFM a copy Part II of its Form ADV, as revised, on file with the
Securities and Exchange Commission and a copy of its Disclosure Document, as
revised, on file with the Commodity Futures Trading Commission. PIFM
acknowledges receipt of such documents.
9. Any written notice required by or pertaining to this Agreement shall
be personally delivered to the party for whom it is intended, at the address
stated below, or shall be sent to such party by prepaid first class mail or
facsimile.
If to PIFM: Prudential Investments Fund Management LLC
0 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000-0000
Fax: (000)000-0000
Attention: General Counsel
If to the Adviser: Pacific Investment Management Company
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
7
34
Xxxxxxx Xxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Executive Vice President
cc: Chief Administrative Officer
10. 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. 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.
PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC
By: __________________________________
Xxxxxx X. Xxxxx
Executive Vice President
PACIFIC INVESTMENT MANAGEMENT COMPANY
By: __________________________________
8
