Exhibit (d)(7)
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
JennisonDryden Asset Allocation Funds
Subadvisory Agreement
Agreement made as of this 17/th/ day of February, 2004 between
Prudential Investments LLC (PI or the Manager), a New York limited liability
company, and Quantitative Management, a division of Prudential Investment
Management, Inc., a New Jersey corporation (QM or the Subadviser).
WHEREAS, the Manager has entered into a Management Agreement (the
Management Agreement) dated February 17, 2004, with The Prudential Investment
Portfolios, Inc. (the Fund), a Maryland corporation and a diversified, open-end
management investment company registered under the Investment Company Act of
1940 as amended (the 1940 Act), pursuant to which PI acts as Manager of the
Fund; and
WHEREAS, the Manager desires to retain the Subadviser to provide
investment advisory services to the Fund and one or more of its series as
specified in Schedule A hereto (individually and collectively, with the Fund,
referred to herein as the Fund) and to manage such portion of the Fund as the
Manager shall from time to time direct, and the Subadviser is willing to render
such investment advisory services; and
NOW, THEREFORE, the Parties agree as follows:
1. (a) Subject to the supervision of the Manager and the Board of
Directors of the Fund, the Subadviser shall manage such portion of the
Fund's portfolio, including the purchase, retention and disposition
thereof, in accordance with the investment objectives, 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"),
and subject to the following understandings:
(i) The Subadviser shall provide supervision of such
portion of the Fund's investments as the Manager shall direct and
shall 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 will be invested or held uninvested as cash.
(ii) In the performance of its duties and obligations
under this Agreement, the Subadviser shall act in conformity with
the copies of the Articles of Incorporation, By-Laws and
Prospectus of the Fund provided to it by the Manager (the Fund
Documents) and with the instructions and directions of the Manager
and of the Board of Directors of the Fund, co-operate with the
Manager's (or its designee's) personnel responsible for
monitoring the Fund's compliance 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. In connection therewith, the Subadviser
shall, among other things, prepare and file such reports as are,
or may in the future be, required by the Securities and Exchange
Commission (the Commission). The Manager shall provide Subadviser
timely with copies of any updated Fund documents.
(iii) The Subadviser shall determine the securities and
futures contracts to be purchased or sold by such portion of the
Fund's portfolio, as applicable, and will place orders with or
through such persons, brokers, dealers or futures commission
merchants (including but not limited to Wachovia Securities LLC
or any broker or dealer affiliated with the Subadviser) to carry
out the policy with respect to brokerage as set forth in the
Fund's Prospectus or as the Board of Directors may direct from
time to time. In providing the Fund 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. The Manager (or Subadviser) to the
Fund each shall have discretion to effect investment transactions
for the Fund through broker-dealers (including, to the extent
legally permissible, broker-dealers affiliated with the
Subadviser(s)) qualified to obtain best execution of such
transactions who provide brokerage and/or research services, as
such services are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended (the 1934 Act), and to cause the
Fund to pay any such broker-dealers an amount of commission for
effecting a portfolio transaction in excess of the amount of
commission another broker-dealer would have charged for effecting
that transaction, if the brokerage or research services provided
by such broker-dealer, viewed in light of either that particular
investment transaction or the overall responsibilities of the
Manager (or the Subadviser) with respect to the Fund and other
accounts as to which they or it may exercise investment discretion
(as such term is defined in Section 3(a)(35) of the 1934 Act), are
reasonable in relation to the amount of commission.
On occasions when the Subadviser deems the purchase or sale
of a security or futures contract to be in the best interest of
the Fund 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 consistent with its fiduciary obligations to the
Fund and to such other clients.
(iv) The Subadviser shall maintain all books and records
with respect to the Fund's portfolio transactions effected by it
as 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 Fund's Board of Directors such periodic and special
reports as the Directors may reasonably request. The Subadviser
shall make reasonably available its employees and officers for
consultation with any of the Directors or officers or employees of
the Fund with respect to any matter discussed herein, including,
without limitation, the valuation of the Fund's securities.
(v) The Subadviser or its affiliate shall provide the
Fund's 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.
(vi) 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.
Conversely, Subadviser and Manager understand and agree that if
the Manager manages the Fund in a "manager-of-managers" style, the
Manager will, among other things, (i) continually evaluate the
performance of the Subadviser through quantitative and qualitative
analysis and consultations with such Subadviser (ii) periodically
make recommendations to the Fund's Board as to whether the
contract with one or more subadvisers should be renewed, modified,
or terminated, and (iii) periodically report to the Fund's Board
regarding the results of its evaluation and monitoring functions.
The Subadviser recognizes that its services may be terminated or
modified pursuant to this process.
(vii) The Subadviser acknowledges that the Manager and the
Fund intend to rely on Rule 17a-10 under the 1940 Act, and the
Subadviser hereby agrees that it shall not consult with any other
subadviser to the Fund with respect to transactions in securities
for the Fund's portfolio or any other transactions of Fund assets.
(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, officers or employees.
(c) The Subadviser shall keep the Fund's books and records required to
be maintained by the Subadviser pursuant to paragraph 1(a) 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 Fund required by Rule 31a-1 under the 1940
Act. The Subadviser agrees that all records which it maintains for the
Fund 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) hereof.
(d) In connection with its duties under this Agreement, the Subadviser
agrees to maintain adequate compliance procedures to ensure its
compliance with the 1940 Act, the Investment Advisers Act of 1940, as
amended, and other applicable state and federal regulations.
(e) The Subadviser shall furnish to the Manager copies of all records
prepared in connection with (i) the performance of this Agreement and
(ii) the maintenance of compliance procedures pursuant to paragraph
1(d) hereof as the Manager may reasonably request.
(f) The Subadviser shall be responsible for the voting of all
shareholder proxies with respect to the investments and securities held
in the Fund's portfolio, subject to such reporting and other
requirements as shall be established by the Manager.
2. The Manager shall continue to have responsibility for all services
to be provided to the Fund pursuant to the Management Agreement and, as more
particularly discussed above, shall oversee and review the Subadviser's
performance of its duties under this Agreement. The Manager shall provide (or
cause the Fund's custodian to provide) timely information to the Subadviser
regarding such matters as the composition of assets in the portion of the Fund
managed by the Subadviser, cash requirements and cash available for investment
in such portion of the Fund, and all other information as may be reasonably
necessary for the Subadviser to perform its duties hereunder (including any
excerpts of minutes of meetings of the Board of Directors of the Fund that
affect the duties of the Subadviser).
3. For the services provided and the expenses assumed pursuant to
this Agreement, the Manager shall pay the Subadviser as full compensation
therefor, a fee equal to the percentage of the Fund's average daily net assets
of the portion of the Fund managed by the Subadviser as described in the
attached Schedule A. Liability for
payment of compensation by the Manager to the Subadviser under this Agreement is
contingent upon the Manager's receipt of payment from the Fund for management
services described under the Management Agreement between the Fund and the
Manager. Expense caps or fee waivers for the Fund that may be agreed to by the
Manager, but not agreed to by the Subadviser, shall not cause a reduction in the
amount of the payment to the Subadviser by the Manager.
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, provided, however, that nothing in this Agreement shall be deemed to
waive any rights the Manager or the Fund may have against the Subadviser under
federal or state securities laws. The Manager shall indemnify the Subadviser,
its affiliated persons, its officers, directors and employees, for any liability
and expenses, including attorneys fees, which may be sustained as a result of
the Manager's willful misfeasance, bad faith, gross negligence, reckless
disregard of its duties hereunder or violation of applicable law, including,
without limitation, the 1940 Act and federal and state securities laws. The
Subadviser shall indemnify the Manager, its affiliated persons, its officers,
directors and employees, for any liability and expenses, including attorneys'
fees, which may be sustained as a result of the Subadviser's willful
misfeasance, bad faith, gross negligence, reckless disregard of its duties
hereunder or violation of applicable law, including, without limitation, the
1940 Act and federal and state securities laws.
5. This Agreement shall continue in effect for a period of more than
two years from the date hereof only so long as such continuance is specifically
approved at least annually in conformity with the requirements of the 1940 Act;
provided, however, that this Agreement may be 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. The Subadviser agrees that it will
promptly notify the Fund and the Manager of the occurrence or anticipated
occurrence of any event that would result in the assignment (as defined in the
0000 Xxx) of this Agreement, including, but not limited to, a change or
anticipated change in control (as defined in the 0000 Xxx) of the Subadviser;
provided that the Subadviser need not provide notice of such an anticipated
event before the anticipated event is a matter of public record.
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 Gateway Center Three, 000 Xxxxxxxx
Xxxxxx, 0xx Xxxxx, Xxxxxx, XX 00000-
4077, Attention: Secretary; (2) to the Fund at Gateway Center Three, 4th Floor,
000 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000-0000, Attention: Secretary; or (3) to the
Subadviser at Gateway Center Two, 000 Xxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxx, Xxx
Xxxxxx 00000.
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 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 shareholders, 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. 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.
9. This Agreement shall be governed by the laws of the State of New York.
10. Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the 1940 Act, shall be resolved by reference to such term or provision of the
1940 Act and to interpretations thereof, if any, by the United States courts or,
in the absence of any controlling decision of any such court, by rules,
regulations or orders of the Commission issued pursuant to the 1940 Act. In
addition, where the effect of a requirement of the 1940 Act, reflected in any
provision of this Agreement, is related by rules, regulation or order of the
Commission, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
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 LLC
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Vice President
PRUDENTIAL INVESTMENT MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: President
SCHEDULE A
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
JennisonDryden Asset Allocation Funds
As compensation for services provided by the Quantitative Management department
of Prudential Investment Management, Inc. (QM), Prudential Investments LLC (PI)
will pay to QM a fee equal, on an annualized basis, to the following:
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SUBADVISORY FEE (AS A % OF
NAME OF FUND AVERAGE DAILY NET ASSETS)
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JennisonDryden Conservative Allocation Fund 0.05%
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JennisonDryden Moderate Allocation Fund 0.05%
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JennisonDryden Growth Allocation Fund 0.05%
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Dated as of February 17, 2004.
