1
5(bv)
PRUDENTIAL DIVERSIFIED PORTFOLIOS
(Prudential Diversified Conservative Growth Portfolio)
SUBADVISORY AGREEMENT
Agreement made as of this _____ day of August, 1998, between Prudential
Investments Fund Management LLC (PIFM or the Manager), a New York limited
liability company, and The Dreyfus Corporation (the Adviser), a company
organized under the laws of _____________.
WHEREAS, PIFM has entered into a management agreement (the Management
Agreement) with Prudential Diversified Portfolios (the Trust), a Delaware
business trust and a diversified open-end management investment company
registered under the Investment Company Act of 0000 (xxx 0000 Xxx), pursuant to
which PIFM will act as manager of the Trust.
WHEREAS, shares of the Trust are divided into separate series or
portfolios (each a portfolio), each of which is established pursuant to a
resolution of the Trustees of the Trust, and the Trustees may from time to time
terminate such portfolios or establish and terminate additional portfolios.
WHEREAS, PIFM has the responsibility of evaluating, recommending,
supervising and compensating investment advisers to each portfolio of the Trust
and desires to retain the Adviser to provide investment advisory services to the
Prudential Diversified Conservative Growth Portfolio of the Trust (the
Portfolio) in connection with the management of the Trust and to manage such
portion of the Portfolio as the Manager shall from time to time direct, and the
Adviser is willing to render such investment advisory services.
2
NOW, THEREFORE, the Parties agree as follows:
1. (a) Subject to the supervision of the Manager and of the Trustees of the
Trust, the Adviser shall manage such portion of the investment operations of the
Portfolio as the Manager shall direct and shall manage the composition of such
portion of the Portfolio, including the purchase, retention and disposition
thereof, in accordance with the Portfolio's investment objective, policies and
restrictions as stated in the Prospectus (such Prospectus and Statement of
Additional Information as currently in effect and as amended or supplemented
from time to time being herein called the "Prospectus") as delivered to the
Adviser from time to time by the Manager and subject to the following
understandings:
(i) The Adviser shall provide supervision of such portion of the
Portfolio's investments and determine from time to time what investments and
securities will be purchased, retained, sold or loaned by the Portfolio, and
what portion of the assets it manages will be invested or held uninvested as
cash.
(ii) In the performance of its duties and obligations under this
Agreement, the Adviser shall act in conformity with the Agreement and
Declaration of Trust, By-Laws and Prospectus of the Trust and the Portfolio as
provided to the Adviser by the Manager and with the written instructions and
directions of the Manager and of the Trustees of the Trust and will conform to
and comply with the requirements of the 1940 Act, the Internal Revenue Code of
1986, as amended, and all other applicable federal and state laws and
regulations.
(iii) The Adviser shall determine the securities and commodities or other
assets to
2
3
be purchased or sold by such portion of the Portfolio and will place orders
pursuant to its determination with or through such persons, brokers, dealers or
futures commission merchants (including but not limited to Prudential Securities
Incorporated) to carry out the policy with respect to brokerage as set forth in
the Trust's Registration Statement and Prospectus or as the Trustees may direct
from time to time. In providing the Portfolio with investment supervision, it is
recognized that the Adviser will give primary consideration to securing best
execution. Within the framework of this policy, the Adviser may consider the
financial responsibility, research and investment information and other services
provided by brokers, dealers or futures commission merchants who may effect or
be a party to any such transaction or other transactions to which the Adviser's
other clients may be a party. It is understood that Prudential Securities
Incorporated may be used as principal broker for securities transactions but
that no formula has been adopted for allocation of the Portfolio's investment
transaction business. It is also understood that it is desirable for the Trust
that the Adviser have access to supplemental investment and market research and
security and economic analysis provided by brokers or futures commission
merchants who may execute brokerage transactions at a higher cost to the Trust
than may result when allocating brokerage to other brokers on the basis of
seeking best execution. Therefore, the Adviser is authorized to place orders for
the purchase and sale of securities and commodities or other assets for the
Portfolio with such brokers or futures commission merchants, subject to review
by the Trustees from time to time with respect to the extent and continuation of
this practice. It is understood that the services provided by such brokers or
futures commission merchants may be useful to the Adviser in connection with the
Adviser's services to other
3
4
clients.
On occasions when the Adviser deems the purchase or sale of a security,
commodity or other asset to be in the best interest of the Portfolio as well as
other clients of the Adviser, the Adviser, to the extent permitted by applicable
laws and regulations, may, but shall be under no obligation to, aggregate the
securities, commodities or other assets to be sold or purchased in order to
obtain best execution. In such event, allocation of the securities, commodities
or other assets so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Adviser in the manner the Adviser considers to
be the most equitable and consistent with its fiduciary obligations to the Trust
and to such other clients.
(iv) The Adviser shall maintain all books and records with respect to the
portfolio transactions required by subparagraphs (b)(5), (6), (7), (9), (10) and
(11) and paragraph (f) of Rule 31a-1 under the 1940 Act and shall render to the
Trustees such periodic and special reports as the Board may reasonably request.
(v) The Adviser shall provide the Trust's custodian (the Custodian) on
each business day with information relating to all transactions concerning the
portion of the Portfolio's assets it manages and shall provide the Manager with
such information upon request of the Manager. The Adviser shall reconcile its
records of the Portfolio's securities and cash managed by the Adviser with
statements provided by the Custodian at least once each month. The Adviser shall
provide the Manager with a written report on each such reconciliation, including
information on any discrepancies noted and actions taken by the Adviser in
response thereto, by the tenth business day of the following month.
4
5
(vi) The investment management services provided by the Adviser
hereunder are not exclusive, and the Adviser shall be free to render
similar services to others.
(b) Services to be furnished by the Adviser under this Agreement may
be furnished through the medium of any of its directors, officers or employees.
(c) The Adviser shall keep the Portfolio's books and records
required to be maintained by the Adviser pursuant to paragraph 1(a)(iv) hereof
and shall timely furnish to the Manager all information relating to the
Adviser's services hereunder needed by the Manager to keep the other books and
records of the Trust required by Rule 31a-1 under the 1940 Act. The Adviser
agrees that all records which it maintains for the Portfolio are the property
of the Trust and the Adviser will surrender promptly to the Trust any of such
records upon the Trust's request. The Adviser further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act any such records as are
required to be maintained by it pursuant to paragraph 1(a) hereof.
(d) The Adviser agrees to maintain adequate compliance procedures to
ensure its compliance with the 1940 Act, the Investment Advisers Act of 1940
(Advisers Act) and other applicable state and federal laws and regulations.
(e) The Adviser shall furnish to the Manager copies of all records
prepared in connection with (i) the performance of this Agreement and (ii) the
reports prepared in accordance with the compliance procedures maintained
pursuant to paragraph 1(d) hereof as the Manager may reasonably request.
2. The Manager shall continue to have responsibility for all services
to be provided to the Portfolio pursuant to the Management Agreement and shall
oversee and review the Adviser's
5
6
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 average daily net assets of the portion of the Portfolio
managed by the Adviser. This fee will be computed daily and paid monthly.
4. The Adviser shall not be liable for any error of judgment or for any
loss suffered by the Portfolio, the Trust or the Manager in connection with the
matters to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the Adviser's part in the
performance of its duties or from its reckless disregard of its obligations and
duties under this Agreement.
5. This Agreement shall continue in effect for a period of more than two
years from the date hereof only so long as such continuance is specifically
approved at least annually in conformity with the requirements of the 1940 Act;
provided, however, that this Agreement may be terminated by the Trust at any
time, without the payment of any penalty, by the Trustees or by vote of a
majority of the outstanding voting securities (as defined in the 0000 Xxx) of
the Portfolio, or by the Manager or the Adviser at any time, without the payment
of any penalty, on not more than 60 days' nor less than 30 days' written notice
to the other party. This Agreement shall terminate automatically in the event of
its assignment (as defined in the 0000 Xxx) or upon the termination of the
Management Agreement.
6. Nothing in this Agreement shall limit or restrict the right of any of
the Adviser's directors, officers or employees to engage in any other business
or to devote his or her time and attention in part to the management or other
aspects of any business, whether of a similar or
6
7
dissimilar nature, nor limit the Adviser's right to engage in any other business
or to render services of any kind to any other corporation, firm, individual or
association.
7. During the term of this Agreement, the Manager agrees to furnish the
Adviser at its principal office all prospectuses, proxy statements, reports to
shareholders, sales literature or other material prepared for distribution to
shareholders of the Trust or the public, which refer to the Adviser in any way;
provided, however, that any such item which describes or characterizes the
Adviser's investment process with respect to the Portfolio, the names of any of
its clients (other than the Trust or advisory clients of PIFM and its
affiliates) or any of its performance results shall be furnished to the Adviser
by first class or overnight mail, facsimile transmission equipment or hand
delivery prior to use thereof, and such item shall not be used if the Adviser
reasonably objects to such use in writing within twenty-four (24) hours (or such
other time as may be mutually agreed) after receipt thereof (provided, however,
that if such item is not received by the Adviser during normal business hours on
a business day, such period shall end twenty-four (24) hours after the start of
normal business hours on the next succeeding business day).
8. This Agreement may be amended by mutual consent, but the consent of the
Trust must be obtained in conformity with the requirements of the 1940 Act.
9. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
7
8
PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC
By
-------------------------
THE DREYFUS CORPORATION
By
-------------------------
8
