EXHIBIT 5(b)
PRUDENTIAL-BACHE GOVERNMENT SECURITIES TRUST
SUBADVISORY AGREEMENT
Agreement made as of this 9th day of August, 1988 between Prudential
Mutual Fund Management Inc., a Delaware Corporation ("PMF" or the "Manager"),
and The Prudential Investment Corporation, a New Jersey Corporation (the
"Subadviser").
WHEREAS, the manager entered into a Management Agreement, dated August
9, 1988 (the "Management Agreement"), with Prudential-Bache Government
Securities Trust (the "Fund"), a Massachusetts business trust and a diversified
open-end management investment company registered under the Investment Company
Act of 1940 (the "1940 Act"), pursuant to which PMF will act as Manager of the
Fund.
WHEREAS the shares of beneficial interest of the Fund are divided into
separate series, each of which is established pursuant to a written instrument
executed by the Trustees of the Fund, and the Trustees may from time to time
terminate such series or establish and terminate additional series; and
WHEREAS, PMF desires to retain the Subadviser to provide investment
advisory services to the Fund in connection with the management of the Fund 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 Manger and of the Trustees
of the Fund, the Subadviser shall manage the investment operations
of each series of the Fund and the composition of the portfolio of
each series, including the purchase, retention and disposition
thereof, in accordance with the investment objectives, policies
and restrictions of each such series 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 each series'
investments and determine from time to time what
investments and securities will be purchased, retained,
sold or loaned by each series of 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 Declaration of Trust, By-Laws and Prospectus of
the Fund and with the instructions and directions of the
Manager and of the Trustees of the Fund and will conform
to and comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986 all other applicable federal
and state laws and regulations.
(iii) The Subadviser shall determine the securities and
futures contracts to be purchased or sold by each series
of the Fund and will place orders with or through such
persons, brokers, dealers or futures commission merchants
(including but not limited to Prudential-Bache Securities
Inc.) to carry out the policy with respect to brokerage as
set forth in the Fund'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 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-Bache Securities Inc. may be
used as principal 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 is desirable for the Fund 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 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 each series of the
Fund with such brokers or futures commission merchant,
subject to review by the Fund's 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 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 Fund (and each series 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 each series of the Fund) and
to such other clients.
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(iv) The Subadviser shall maintain all books and records
with respect to the Fund's 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 Fund's Trustees such periodic and special
reports as the Trustees may reasonably request.
(v) The Subadviser shall provide the relating Fund's
Custodian on each business day with information relation
to all transactions concerning the Fund's assets 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.
(b) The Subadviser shall authorize and permit any of its
directors, officers and employees who may be elected as Trustees
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 relation 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.
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 Subadviser's
performance of its duties under this Agreement.
3. The Manager shall reimburse the Subadviser for reasonable costs
and expenses incurred by the Subadviser determined in a manner
acceptable to the Manager in furnishing the services described in
paragraph 1 hereof.
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 form
its reckless disregard of its obligations and duties under this
Agreement.
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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 with
respect to each series in conformity with the requirements of the
1940 Act; provided, however, that this Agreement may be terminated
with respect to any series by the Fund at any time, without the
payment of any penalty, by the Trustees 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 Trustee, 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 a series 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.
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/ illegible
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PRESIDENT
THE PRUDENTIAL INVESTMENT CORPORATION
B /s/ illegible
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