PRUDENTIAL WORLD FUND, INC.
(The Fund)
International Stock Series
SUBADVISORY AGREEMENT
Agreement made as of the 18th day of September, 1996, between Prudential
Mutual Fund Management, Inc. (PMF or the Manager), a Delaware corporation, and
Mercator Asset Management, L.P. (the Subadviser), a limited partnership
organized under the laws of the State of Delaware.
W I T N E S S E T H
WHEREAS, the Manager has entered into a Management Agreement, dated as of
September 18, 1996 (the Management Agreement), with the Fund, on behalf of its
International Stock Series, 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 International Stock Series;
WHEREAS, the shares of the Corporation are divided into separate series or
funds, each of which is established pursuant to a resolution of the Board of
Directors of the Fund, and the Board of Directors may from time to time
terminate such series or funds or establish and terminate additional series or
funds;
WHEREAS, the Manager has entered into a separate subadvisory agreement,
dated September 18, 1996, with The Prudential Investment Corporation (PIC) a New
Jersey corporation, pursuant to which PIC will provide investment advisory
services to the International
Stock Series with respect to (i) the management of short-term assets, including
cash, money market instruments and repurchase agreements and (ii) the lending of
portfolio securities;
WHEREAS, the Manager desires to retain the Subadviser to provide investment
advisory services to the International Stock Series in connection with the
management of its assets 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 Board of
Directors of the Fund, the Subadviser shall manage the investment
operations of the International Stock Series and the composition of the
International Stock Series' portfolio, including the purchase, retention
and disposition thereof, in accordance with the International Stock Series'
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
collectively called the "Prospectus") and subject to the following
understandings:
(i) The Subadviser shall provide supervision of the International
Stock Series' investments and determine from time to time what
investments and securities will be purchased, retained, sold or loaned
by the International Stock Series, and what portion of the assets will
be invested or held uninvested as cash.
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(ii) In the performance of its duties and obligations under this
Agreement, the Subadviser shall act in conformity with the Fund's
Articles of Incorporation and By-Laws, and Prospectus of the
International Stock Series and with the instructions and directions of
the Manager and of the Board of Directors of the Fund 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.
(iii) The Subadviser shall advise PIC of the dollar amount of the
Fund's assets that shall be invested in repurchase agreements, money
market instruments or held in cash and advise PIC as to the securities
available for lending and the securities to be recalled from loan. In
the event the agreement with PIC is terminated, the Subadviser shall
provide investment advisory services to the Fund with respect to the
management of short-term assets and the lending of portfolio
securities under this Agreement.
(iv) The Subadviser shall determine the securities, futures
contracts and currencies to be purchased or sold by the International
Stock Series and will place orders with or through such persons,
brokers, dealers or futures commission merchants (including but not
limited to Prudential Securities
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Incorporated) to carry out the policy with respect to brokerage as set
forth in the International Stock Series Registration Statement and
Prospectus or as the Board of Directors may direct from time to time.
In providing the International Stock Series 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 International Stock Series' investment transaction business. It is
also understood that it is desirable for the International Stock
Series 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 Fund than may result when allocating brokerage
to
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other brokers on the basis of seeking the most favorable price and
efficient execution. Therefore, the Subadviser is authorized to place
orders for the purchase and sale of securities and futures contracts
for the International Stock Series with such brokers or futures
commission merchants, subject to review by the Board of Directors of
the Fund 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
International Stock Series 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
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consistent with its fiduciary obligations to the International Stock
Series, the Fund and to such other clients.
(v) The Subadviser shall maintain all books and records with
respect to the International Stock Series' 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
Board of Directors of the Fund such periodic and special reports as
the Board may reasonably request.
(vi) The Subadviser shall provide the Fund's Custodian on each
business day with information relating to all transactions concerning
the International Stock Series' assets and shall provide the Manager
with such information upon request of the Manager. (vii) 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 Directors or officers of the
Fund 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,
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officers or employees.
(c) The Subadviser shall keep the International Stock Series books and
records required to be maintained by the Subadviser pursuant to paragraph
1(a)(v) 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 International Stock Series required
by Rule 31a-1 under the 1940 Act. The Subadviser agrees that all records
which it maintains for the International Stock Series are the property of
the Fund and the Subadviser will surrender promptly to the Fund any of such
records upon the Fund'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)(v) hereof.
2. The Manager shall continue to have responsibility for all services to be
provided to the International Stock Series pursuant to the Management Agreement
and shall oversee and review the Subadviser's performance of its duties under
this Agreement.
3. The Manager shall compensate the Subadviser for the services provided
and the expenses assumed pursuant to this Subadvisory Agreement, a fee at an
annual rate of .75 of 1% of the average daily net assets of the Fund up to and
including $50 million and .60 of 1% of the average daily net assets of the Fund
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in excess of $50 million and up to and including $300 million and .45 of 1% of
the average daily net assets in excess of $300 million. This fee will be
computed daily and paid monthly
4. The Subadviser shall not be liable for any error of judgment or for any
loss suffered by the 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 the Fund at any
time, without the payment of any penalty, by the Board of Directors of the Fund
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 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 Director,
officer or employee of the Fund to
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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 stockholders, sales literature or other material prepared for distribution to
shareholders of the Fund 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 Xxx Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Secretary; or (2) to the Subadviser at 0000 Xxxx Xxxxxxxxxx
Xxxx., Xxxx Xxxxxxxxxx, XX 00000, Attention: General Partner.
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
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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.
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, INC.
By /s/ Xxxxxx X. Xxxxx
--------------------------------------
Xxxxxx X. Xxxxx
Executive Vice President
MERCATOR ASSET MANAGEMENT, L.P.
By /s/ Xxxxx X. Xxxxx
--------------------------------------
Xxxxx X. Xxxxx
General Partner
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