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EXHIBIT 5(b)
PRUDENTIAL DIVERSIFIED SERIES
(_____________________ 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 Adviser), a company
organized under the laws of _____________.
WHEREAS, PIFM has entered into a management agreement (the Management
Agreement) with Prudential Diversified Series (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
___________________ 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.
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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 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
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 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 Portfolio and will place orders pursuant to its determination with
or through such persons, brokers, dealers or futures commission
merchants
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(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 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,
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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 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.
(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.
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(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 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 ___ 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
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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 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
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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) 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.
PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC
By
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[ADVISER]
By
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