SUB-INVESTMENT MANAGEMENT AGREEMENT
This Sub-Investment Management Agreement (this "Agreement") between THE
PRUDENTIAL INVESTMENT CORPORATION ("PIC"), a corporation organized and existing
under the laws of the State of New Jersey. ("Investment Manager"), and PRICOA
ASSET MANAGEMENT LTD ("PRICOA"), a private limited company organized and
existing under the laws of England and regulated by IMRO in the conduct of its
investment business ("Sub-Investment Manager"), is made as of September 30, 1997
and will come into force at the commencement of business on the next business
day after that date. No services will be provided under this Agreement until it
comes into force.
W I T N E S S E T H:
WHEREAS, Investment Manager desires Sub-Investment Manager to manage and
control the investment of the assets contained in the Client Accounts;
WHEREAS, Sub-Investment Manager is willing to accept the duties and
responsibilities of an investment manager with respect to the Client Accounts;
and
WHEREAS, Sub-Investment Manager is regulated in the conduct of its
investment business by IMRO.
NOW THEREFORE, in consideration of the premises and mutual considerations
provided in this Agreement, and intending to be legally bound, Investment
Manager and Sub-Investment Manager agree as follows:
1. APPOINTMENT. Sub-Investment Manager will act as an investment manager
with respect to the Client Accounts which are detailed in Schedule A annexed to
this Agreement. In providing its services Sub-Investment Manager will act for
Investment Manager on the basis that Investment Manager is a non-private
customer (as defined for the purposes of IMRO rules). The parties acknowledge
that with respect to the Client Accounts listed on Schedule A as of the date
hereof, the Investment Manager is the customer of Sub-Investment Manager for
purposes of IMRO.
2. FEES. Investment Manager will pay Sub-Investment Manager, as
compensation for its services under this Agreement, a fee determined in
accordance with Schedule A annexed to this Agreement.
3. AUTHORITY OF INVESTMENT MANAGER. Subject to section 4 of this
Agreement, Sub-Investment Manager shall have the discretionary authority to
manage and control the assets in the Client Accounts, including the power to
acquire assets for and dispose of assets in the Client Accounts. When exercising
its authority under this section 3, Sub-Investment Manager shall be under no
obligation to consult with or obtain the consent of
Investment Manager, subject to any written instructions and procedures which
Investment Manager shall communicate to Sub-Investment Manager.
Provided Sub-Investment Manager manages the Client Accounts in accordance
with the guidelines set out in Schedule B (as altered from time to time by
agreement in writing), neither Sub-Investment Manager nor any of its agents,
executives or employees shall be liable for any depreciation in the value of the
Client Accounts or the consequences of any investment decisions made in good
faith and in the absence of negligence or willful default. In this connection,
Investment Manager accepts and agrees to the provisions of Schedule E
(Ratification, Indemnity and Exclusion of Liability) which forms part of this
Agreement.
All transactions shall be subject to IMRO rules and the rules of any other
regulatory authority to which Sub-Investment Manager is subject and to the
dealing, settlement and other applicable rules or customs of the market or
exchange (if any) on which such transaction is effected. In the event of any
conflict between the terms of this Agreement and any such rules or customs, the
latter shall prevail.
The authority given to Sub-Investment Manager to manage the Client
Accounts shall be irrevocable until this Agreement is terminated pursuant to
clause 12 below and shall continue in force despite any event which might
otherwise terminate it, until Sub-Investment Manager has actual notice of such
event.
4. INVESTMENT LIMITATIONS AND GUIDELINES. Investment Manager may from time
to time communicate general investment guidelines to Sub-Investment Manager with
respect to the Client Accounts, and Sub-Investment Manager shall be obligated to
act in accordance therewith. Until contrary general investment guidelines are
communicated from Investment Manager to Sub-Investment Manager, the Client
Accounts shall be managed in accordance with the guidelines contained in
Schedule B annexed hereto.
5. CUSTODY OF MONEY AND INVESTMENTS AND SETTLEMENT PROCEDURES. Investment
Manager shall appoint a custodian or custodians for the Client Accounts ("the
Custodian") and will establish the Client Accounts by paying or delivering to
the Custodian such cash sum or securities holdings as may be agreed. The initial
composition and value of the Client Accounts will be as set out in Schedule C
annexed to this Agreement.
The Client Accounts shall be accounted for, and will be valued, in the
Client Account's currency. Sub-Investment Manager may, at its discretion, buy
and sell other currencies on behalf of Investment Manager if this is required
for the efficient management of the Client Accounts.
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In respect of Sub-Investment Manager's equity operations, Investment
Manager's Equity Operations Department is responsible for issuing settlement
instructions to the Custodian and Sub-Investment Manager has no authority to
issue such instructions.
In respect of Sub-Investment Manager's equity operations, Investment
Manager will instruct the Custodian duly to settle all transactions in
accordance with Investment Manager's Equity Operations Department's
instructions, to deal with all stock benefits as directed by Investment
Manager's Equity Operations Department and to deliver to Investment Manager's
Equity Operations Department on such basis as may be agreed detailed statements
of Investment Manager's securities and cash accounts.
In respect of Sub-Investment Manager's bond operations, Sub-Investment
Manager is responsible for issuing settlement instructions to the Custodian.
Investment Manager will instruct the Custodian duly to settle all transactions
in accordance with Sub-Investment Manager's instructions, to deal with all stock
benefits as directed by Sub-Investment Manager and to deliver to Sub-Investment
Manager on such basis as may be agreed detailed statements of Investment
Manager's securities and cash accounts.
The Custodian is the custodian of the Client Accounts for Investment
Manager and not for Sub-Investment Manager and, accordingly, Sub-Investment
Manager cannot accept responsibility for any default on the part of the
Custodian or any nominee or agent for it. Investment Manager shall be
responsible for the fees and charges of the Custodian.
The Custodian shall duly settle every transaction not closed out by
Sub-Investment Manager hereunder by its settlement date and shall deal with
stock benefits. Sub-Investment Manager's responsibility shall be limited to the
issue (or procuring the issue) to the Custodian of delivery, payment or other
investment instructions in respect of Sub-Investment Manager's bond operations.
Investment Manager shall forthwith settle all transactions not settled by
the Custodian or closed out by Sub-Investment Manager. Sub-Investment Manager
shall be entitled to close out any such transaction not so settled or which
Sub-Investment Manager reasonably believes will or may not be duly settled; all
losses shall be for Investment Manager's account and all costs Sub-Investment
Manager incurs shall be debited to the Client Accounts. Sub-Investment Manager's
obligations are limited to those expressly provided for herein and, in
particular, Sub-Investment Manager shall have no responsibility for the
settlement of any transaction (including, for the avoidance of doubt, the
payment of any margin).
Investment Manager may at any time deliver or transfer further investments
or funds to the Custodian for credit to the Client Accounts and shall notify, or
cause the Custodian to notify, Sub-Investment Manager accordingly. Investment
Manager agrees that it will not withdraw any investments or money from the
Client Accounts without prior notification to Sub-Investment Manager. Unless
Investment Manager notifies Sub-Investment Manager
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otherwise, Sub-Investment Manager shall direct the cash investments acquired
under any transaction entered into by Sub-Investment Manager hereunder to be
delivered to (and any transfer form to be executed in favour of) the Custodian.
Sub-Investment Manager shall not hold the Client Accounts nor be entitled
to call for delivery of the Client Accounts to itself; accordingly,
Sub-Investment Manager will not itself hold money on behalf of Investment
Manager nor be the registered holder of any of Investment Manager's Investments.
6. BROKERAGE. Subject to any guidelines annexed hereto, Sub-Investment
Manager shall use its best efforts to obtain execution of orders at the most
favorable prices reasonably obtainable. When determining the most favorable
prices reasonably obtainable, Sub-Investment Manager may consider, in accordance
with Section 28(e) of the Securities Exchange Act of 1934, the value of the
receipt by Sub-Investment Manager of services that affect securities
transactions and incidental functions, such as clearance and settlement
services, and advice as to the value of securities, the advisability of
investing in securities, the availability of securities or purchasers or buyers
of securities, and analyses and reports concerning issues, industries,
securities, economic factors, trends, portfolio strategy, and the performance of
accounts. Commissions charged by brokers who provide these services may be
somewhat higher than the commissions charged by brokers who do not provide these
services, provided that if Sub-Investment Manager should at any time enter into
any arrangement with a broker to provide Sub-Investment Manager with research
and other facilities or any other services or benefits in return for placing
business with it, the arrangement will provide that all transactions for the
Client Accounts with or through that broker will be effected by that broker so
as to secure best execution (disregarding any benefit which may ensure directly
or indirectly to Investment Manager from the facilities, services or benefits
provided under the arrangement). Sub-Investment Manager will, in any event,
disclose to Investment Manager any such arrangements in existence at the date of
this Agreement and will thereafter disclose any such arrangement to Investment
Manager on each anniversary thereof. Details of Sub-Investment Manager' policy
on Soft Commission (Soft Dollar) Agreements are set out in Schedule D (Soft
Commission) annexed on this Agreement.
In the course of its business Sub-Investment Manager intends to perform
investment management and advisory services for other clients. Investment
Manager's attention is drawn to the contents of Schedule F (Conflicts) which
sets out the basis on which Sub-Investment Manager is to act both having regard
to its duties to Investment Manager and its other clients and in transactions in
which Sub-Investment Manager or connected persons may be involved (whether as
principal or as agent).
7. OTHER ACTIVITIES OF SUB-INVESTMENT MANAGER. In addition to the
investment management services performed under this Agreement, Sub-Investment
Manager may engage in any other business and may render investment advisory
services to any other person. Sub-Investment Manager may render investment
advisory services to any other
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person, even if Sub-Investment Manager or the other person may have investment
policies similar to those followed by Sub-Investment Manager for the Client
Accounts. Sub-Investment Manager may, at any time, buy or sell, or may direct or
recommend that another person buy or sell, securities of the same kind or class
that are purchased or sold for the Client Accounts upon the directions of
Sub-Investment Manager.
8. REPORTS. In respect of Sub-Investment Manager's bond operations,
Sub-Investment Manager shall promptly review any custodian's periodic statements
of account for investments in the Client Accounts, reconcile any differences,
and certify the correctness of the statements of account, as reconciled, to
Investment Manager.
In respect of Sub-Investment Manager's equity operations, Sub-Investment
Manager will not have any responsibility for the reconciliation of investments
in the Client Accounts with any custodian's periodic statements, such
responsibility lying with Investment Manager's Equity Operations Department.
Sub-Investment Manager shall not be responsible for preparing valuations
of the Clients Accounts. Sub-Investment Manager will provide to Investment
Manager such advice or information as it may reasonably require for the purpose
of preparing statements and calculating the value of the Client Accounts.
Sub-Investment Manager will also provide Investment Manager with periodic
reviews and analysis of the Client Accounts and any other reports and
information that Investment Manager may reasonably require. Investment Manager
hereby confirms that it does not want Sub-Investment Manager to send Investment
Manager periodic statements as defined by IMRO Rules.
Sub-Investment Manager will arrange for Investment Manager to receive
promptly copies of confirmation slips and any contract notes relating to each
transaction effected for the Client Accounts directly from the agents executing
those transactions.
9. WARRANTIES. Each party hereby warrants to the other that it has full
power and authority to enter into and perform this Agreement.
SUB-INVESTMENT MANAGER WARRANTIES
a. Sub-Investment Manager warrants that it is registered as an
investment adviser under the Investment Advisers Act of 1940
(the "Advisers Act") and is regulated by IMRO in the conduct
of its investment business. Sub-Investment Manager shall
immediately notify Investment Manager of any change in its
status as such.
b. Sub-Investment Manager will carry out its duties and
obligations under this Agreement in accordance with the
requirements and fiduciary
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standards applicable to it which are contained in ERISA or any
regulations promulgated thereunder.
c. To the extent that any provision of this Agreement, schedule
or other documents annexed hereto, or written or oral
instruction given to Sub-Investment Manager in connection with
the management of the Client Accounts shall conflict with any
provision of ERISA or the Advisers Act or any regulation
promulgated thereunder, the provision of ERISA or the Advisers
Act or the regulation shall be followed.
INVESTMENT MANAGER WARRANTIES
Investment Manager warrants and undertakes to Sub-Investment Manager
that:
a. for so long as Sub-Investment Manager's appointment remains in
force Investment Manager will ensure that the Client Accounts
remain free from any lien, charge or other encumbrance (unless
effected by Sub-Investment Manager). Investment Manager will
not sell, assign or otherwise dispose of any part of the
Client Accounts or agree to do so (except through
Sub-Investment Manager) or appoint any other investment
manager or investment adviser in respect of the whole or any
part of the Client Accounts without Sub-Investment Manager's
prior written consent;
b. Investment Manager is not resident or domiciled in the United
Kingdom for taxation purposes and Investment Manager will
advise Sub-Investment Manager forthwith of any change in such
status; and
c. Investment Manager will comply with all legal and regulatory
requirements of the United Kingdom or elsewhere of which it is
aware which apply to the Client Accounts or to Investment
Manager and will promptly supply Sub-Investment Manager with
any information or other assistance reasonably necessary to
enable Sub-Investment Manager to properly discharge any
duties or responsibilities which such requirements may at
any time impose upon Sub-Investment Manager; and
d. Investment Manager does not carry on investment business (as
defined by the FSA) in the UK.
10. VOTING OF PORTFOLIO SECURITIES. Unless Investment Manager otherwise
specifically requests in writing, Sub-Investment Manager will not be required to
take any action, or render any advice, with respect to the voting of portfolio
securities.
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11. COMPLAINTS PROCEDURE. If Investment Manager has any complaint about
Sub-Investment Manager's performance under this Agreement Investment Manager
should direct that complaint, in the first instance, to the appropriate
portfolio manager. If the portfolio manager is unable to resolve the complaint
within two (2) business days or the sums involved are material, he will refer it
to one of Sub-Investment Manager's directors who will investigate and attempt to
resolve the complaint in accordance with Sub-Investment Manager's complaints
procedure (a copy of which is available on request). If the director is unable
to do so, he will refer the matter to Sub-Investment Manager's compliance
officer. Investment Manager also has a right of complaint direct to the
Investment Ombudsman.
12. TERMINATION. Sub-Investment Manager may terminate this Agreement on 30
days' written notice to Investment Manager. Investment Manager may terminate
Sub-Investment Manager's appointment as an investment manager at any time upon
written notice which will take effect immediately upon receipt. Termination of
this Agreement will be without prejudice to the completion of transactions
already initiated and accordingly, despite the termination of this Agreement,
Sub-Investment Manager shall be entitled to:
a. settle or close out all transactions entered into or for which
the order was placed with a broker or which was otherwise
initiated or agreed by Sub-Investment Manager on Investment
Manager's behalf hereunder, in good faith before
Sub-Investment Manager received notice of termination (or, if
later, the expire of any such notice); and
b. require Investment Manager to pay all outstanding fees and
expenses including those incurred pursuant to paragraph (a)
above.
Investment Manager shall pay Sub-Investment Manager on demand the amount
of any costs incurred in closing out any transaction and shall also pay
Sub-Investment Manager all unpaid fees and expenses which Sub-Investment Manager
shall discharge on Investment Manager's behalf. Any losses incurred on a closing
out shall be for Investment Manager's account. On termination of this Agreement,
Investment Manager shall pay to Sub-Investment Manager such proportion of
Sub-Investment Manager's fees and expenses as may have accrued to the date such
termination takes effect.
The provisions relating to ratification, indemnity and exclusion of
liability set out in Schedule E shall apply notwithstanding termination of this
Agreement.
13. NO ASSIGNMENT. Sub-Investment Manager may not assign (as that term is
defined by the Advisers Act) this Agreement without the prior written consent of
Investment Manager.
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14. CONFIDENTIAL RELATIONSHIP. Each party shall use its best efforts to
treat all information and advice furnished by the other party to it as
confidential and to avoid disclosing same to third parties (other than
associates of Sub-Investment Manager) except as agreed to in writing by both
parties or where Sub-Investment Manager is requested or required to do so by
IMRO or any other regulatory or fiscal authority or as required by law.
Conversely, Sub-Investment Manager shall not be required to disclose or
use for the benefit of Investment Manager any confidential information relating
to or acquired while working on the managed Client Accounts or affairs of
another client or to disclose or use any other information not known to the
manager of the Client Accounts even though it is known to any of Sub-Investment
Manager's employees, directors or agents.
15. DISCLOSURE STATEMENT. Investment Manager acknowledges receipt of
Sub-Investment Manager's Disclosure Statement, as required by Rule 204-3 under
the Advisers Act, more than 48 hours prior to the date of execution of this
Agreement as written above.
16. TERMINOLOGY: In this Agreement (including the Schedules), the
following terms bear the following respective meanings:
"THE FSA" means the Financial Services Xxx 0000.
"INVESTMENTS" mean all shares, debt securities, warrants, options and
futures (other than options and futures relating to land) and any other assets,
rights or interests which constitute an investment for the purposes of Part I of
Schedule 1 to the FSA (or which would do so apart from the Notes to the
respective paragraphs in Part I of that Schedule) and commodity options and
currencies.
"OPTIONS" means options other than options to subscribe shares or debt
securities.
"THE CLIENT ACCOUNTS" means all investments, money, assets (including the
benefit of contracts) or borrowings for the time being subject to Sub-Investment
Manager's discretionary authority hereunder, including, for the avoidance of
doubt, liabilities relating to investments sold short (that is sold even though
not yet so held). The term does not include any portion of an account managed by
Investment Manager that is not subject to Sub-Investment Manager's discretionary
authority.
"THE CLIENT ACCOUNTS CURRENCY" means US$
"CONNECTED PERSON" means any person who is Sub-Investment Manager's
holding company or controller, any person who is a controller or subsidiary of
any such person and any company of which Sub-Investment Manager or any connected
person is a controller or who (whether or not such a person) is Sub-Investment
Manager's associate, and "controller" bears the same meaning as in the FSA.
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"IMRO" means The Investment Management Regulatory Organization Limited.
"IMRO RULES" means the rules and regulations of and guidance issued by
IMRO as for the time being in force (and so that if Sub-Investment Manager
obtains any waiver or dispensation from an IMRO rule that rule shall to the
extent of that waiver or dispensation be deemed not to be in force) and "rules"
shall be construed accordingly in relation to any other regulator, market or
exchange.
"THE SIB" means the Securities and Investments Board, the supervisory
regulatory agency under the FSA.
"STOCK BENEFITS" means rights attaching to investments (other than voting
rights) and takeover, rights or other offers relating to investments, and
references to dealing with stock benefits or stock benefit situations are
references to exercising any such rights and accepting any such offers or
refraining from doing so.
In this Agreement (including the Schedules):
(a) References to acquiring investments include references to writing
put options and exercising call options.
(b) References to selling investments include references to writing or
granting futures contracts or call options, selling investments
short (that is, selling investments which are not yet part of the
Client Accounts) and exercising put options.
(c) References to settling transactions include references to paying
margin calls, premiums and deposits and delivering collateral as
required in relation to any investment acquired or sold by
Sub-Investment Manager hereunder.
Terms and expressions defined in IMRO rules and not specifically defined herein
bear the same respective meanings herein.
17. COMMUNICATIONS. To the extent reasonable and practical, communications
from Investment Manager to Sub-Investment Manager, or vice versa, shall be in
writing or in another reasonable manner and promptly confirmed in writing.
18. GENERAL. This Agreement constitutes the entire agreement of the
parties with respect to the management of the assets in the Client Accounts and
may be amended only by a written instrument signed by Investment Manager and
Sub-Investment Manager.
For all purposes of this Agreement, Sub-Investment Manager shall act as an
independent contractor and nothing in this Agreement shall constitute
Sub-Investment
9
Manager as Investment Manager's dependent agent or as creating any form of
partnership or joint venture between Sub-Investment Manager and Investment
Manager. Except as provided in this Agreement, neither party shall have any
authority to bind, obligate or represent the other
19. GOVERNING LAWS. This Agreement shall be construed in accordance with
the laws of the State of New Jersey (without regard to the legislative or
judicial conflict of laws/rules of any state), except to the extent superseded
by federal law.
IN WITNESS WHEREOF, Investment Manager and Sub-Investment Manager have
executed this Agreement as of the day and year written above.
THE PRUDENTIAL INVESTMENT CORPORATION
By: /s/ Xxxxxxxx Xxxxxx
Name: Xxxxxxxx Xxxxxx
Title: Senior Vice President
PRICOA ASSET MANAGEMENT LTD.
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxx Xxxxxxxxxx
Name: Xxxxx Xxxxxxx Name: Xxxx Xxxxxxxxxx
Title: Director Title: Director
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SCHEDULE A
TO THE SUB-INVESTMENT MANAGEMENT AGREEMENT BETWEEN
THE PRUDENTIAL INVESTMENT CORPORATION AND
PRICOA ASSET MANAGEMENT LIMITED
SCHEDULE OF REMUNERATION
Fund Annual Fee
Prudential International Bond Fund 30 basis points
(formerly The Global Government Plus Fund, Inc.)
The Global Total Return Fund, Inc. 30 basis points
Prudential Intermediate Global Income Fund, Inc. 30 basis points
Prudential Global Limited Maturity Fund, Inc. 30 basis points
PRICOA World Wide Investors Portfolio 30 basis points
PRICOA Money Market Portfolio, Deutsche Xxxx Series 30 basis points
PRICOA Money Market Portfolio, Pound Sterling Series 0 basis points
European Portion of Prudential Global Genesis
Fund, Inc. 55 basis points
Prudential General Account:
-European Portion of the Small Cap Account 65 basis points
-European Small Cap Account 65 basis points
-European Portion of Global Small Cap Account 65 basis points
Prudential Group Trust Account (Pru Plan)
-European Portion of International Large Cap Account 100 basis points
-European Portion of International Small Cap Account 100 basis points
TOLI GLOBAL-Roche Retiree Welfare Investment Trust 100 basis points
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1. The fee payable for each quarter is calculated at the above rates on
the average funds under management during the quarter.
2. Fees are due and invoiced on the first day of each calendar quarter (1
January, 1 April, 1 July and 1 October), calculated at the above rates on
funds under management at the end of the previous quarter (i.e. on 31
December, 31 March, 30 June and 30 September).
3. The difference between the fee paid on the first day of the quarter (2
above) and the fee payable for the quarter (1 above) is added to/deducted
from the next quarter's fee payment.
4. Fees are payable with 30 days of invoice date.
5. Fees are calculated pro-rata where funds are not managed for the full
term of a calendar quarter.
SCHEDULE B
TO THE SUB-INVESTMENT MANAGEMENT AGREEMENT BETWEEN
THE PRUDENTIAL INVESTMENT CORPORATION AND
PRICOA ASSET MANAGEMENT LTD
INVESTMENT GUIDELINES FOR CLIENT ACCOUNTS
The investment guidelines for the following Prudential Mutual Funds are as set
out in each fund's statutory documentation (i.e., the Prospectuses and
Statements of Additional Information). The following are highlights from those
documents, however, Sub-Investment Manager is subject to them in their entirety.
PRUDENTIAL INTERNATIONAL BOND FUND, INC. (formerly, The Global Government Plus
Fund, Inc.)
The Fund's investment objective is to seek total return, the components of which
are current income and capital appreciation. The Fund attempts to achieve its
objective by investing primarily in debt securities issued or guaranteed by
governments, semi-government entities, governmental agencies, supranational
entities and other governmental entities in the United States and in other
countries and denominated in the currencies of such countries.
The Fund's detailed investment polices and investment restrictions are set out
in the Fund's Prospectus dated February 28, 1997 and the Fund's Statement of
Additional Information dated February 28, 1997.
THE GLOBAL TOTAL RETURN FUND, INC.
The Fund's investment objective is to seek total return, the components of which
are current income and capital appreciation. The Fund attempts to achieve its
objective by investing, under normal circumstances, at least 65% of its total
assets in governmental (including supranational), semi-governmental or
government agency debt securities or in short-term bank debt securities or
deposits in the United States and in foreign countries denominated in US dollars
or in foreign currencies, including debt securities issued or guaranteed by the
US Government and foreign governments, their agencies, authorities or
instrumentalities. The remainder is generally invested in corporate debt
securities or longer term bank debt securities.
The Fund will invest primarily in investment grade securities or in non-rated
securities determined by the Fund's investment adviser to be of equivalent
quality. The Fund may invest up to 10% of its total assets in debt securities
rated below investment grade, with a minimum rating of B, by either S&P or
Xxxxx'x or by another NRSRO, or, if unrated, are deemed to be of equivalent
quality by the investment adviser.
The Fund's detailed investment policies and investment restrictions are set out
in the Fund's Prospectus dated February 28, 1997.
PRUDENTIAL INTERMEDIATE GLOBAL INCOME FUND, INC.
The Fund's objective is to seek to maximise total return, the components of
which are current income and capital appreciation. The Fund will attempt to
achieve its objective by investing primarily in obligations issued or guaranteed
by the US Government, its agencies, authorities or instrumentalities and in
obligations issued or guaranteed by certain foreign governments,
quasi-governmental entities, governmental agencies, supranational entities or
any of their political subdivisions or instrumentalities. The Fund will invest
primarily in investment grade securities or in non-rated securities determined
by the Fund's investment adviser to be of equivalent quality. The Fund may
invest up to 10% of its total assets in debt securities rated below investment
grade, with a minimum rating of B, by either S&P or Xxxxx'x or by another NRSRO,
or if unrated, are deemed to be of equivalent quality by the investment adviser.
The Fund's detailed investment policies and investment restrictions are set out
in the Fund's Prospectus dated February 28, 1997 and the Fund's Statement of
Additional Information dated February 28, 1997.
PRUDENTIAL GLOBAL LIMITED MATURITY FUND, INC.
The Fund's investment objective is to maximise total return, the components of
which are current income and capital appreciation. The Fund seeks to achieve its
objective by investing primarily in a portfolio of debt securities denominated
in the US dollar and a range of foreign currencies. The Fund will maintain a
weighted average maturity of more than 2, but less than 5, years with the
maturity for any individual security generally not exceeding 10 years. The Fund
may also invest up to 20% of its total assets in debt securities rated below
investment grade, with a minimum rating of B, by either S&P or Xxxxx'x or by
another NRSRO, or, if unrated, are deemed to be of equivalent quality by the
investment adviser.
The Fund's detailed investment policies and investment restrictions are set out
in the Fund's Prospectus dated December 30, 1996 and the Fund's Statement of
Additional Information dated December 30, 1996.
PRICOA WORLDWIDE INVESTORS PORTFOLIO
The Fund's investment objective is to seek total return, the components of which
are current income and capital appreciation. The Fund seeks to achieve its
investment objective by investing primarily in investment grade bonds issued by
governments and corporations with varying maturities. It may also have limited
exposure to non-investment grade issues from emerging markets.
The Fund's detailed investment policies and investment restrictions are set out
in the Fund's Prospectus dated October 28, 1996.
PRICOA MONEY MARKET PORTFOLIO
The Fund's investment objective is to provide the highest level of current
income in each designated currency consistent with safety of principal. Each
Series seeks to achieve this objective by investing in a portfolio of high
quality money market instruments and short-term debt obligations having a
maturity of one year or less denominated (1) in the designated currency of the
Series or (2) in US dollars (or other currencies) in combination with forward
currency exchange contracts to purchase matching amounts of the designated
currency.
The Fund's detailed investment policies and investment restrictions are set out
in the Fund's Prospectus dated June 12, 1991.
PRUDENTIAL GLOBAL GENESIS FUND, INC.
The Fund's investment objective is long-term growth of capital. The Fund seeks
to achieve its investment objective by investing primarily in common stocks,
common stock equivalents (such as warrants and convertible debt securities) and
other equity securities (including preferred stocks) of smaller foreign and
domestic companies. Under normal circumstances, the Fund will invest 65% of its
total assets in such securities.
The Fund's detailed investment policies and investment restrictions are set out
in the Fund's Prospectus dated July 30, 1997 and the Fund's Statement of
Additional Information dated
July 30,1997.
The investment guidelines for the remaining funds are as follows:
PRUDENTIAL GENERAL ACCOUNT
EUROPEAN PORTION OF THE SMALL CAP ACCOUNT
1. Investments will be composed primarily of securities publicly traded in
Europe.
2. Investments will be targeted in securities of small capitalization
companies. The majority of investments to be in the stocks with market
capitalization less than $1.5 billion.
3. No more than 10% of the portfolio will be invested in any one company at
the time of purchase.
4. The portfolio will not purchase more than 10% of the issued capital of any
one company.
5. Investments in cash and related instruments will not exceed 25% of the
portfolio, except during initial portfolio building.
6. Currency hedging of underlying stock positions only (requires approval of
Global Equities CIO). Foreign currency futures and options contracts can
only be employed to hedge underlying currency exposure (i.e., up to but
not more than 100% of underlying exposure to a foreign currency as
measured by the value of cash plus securities held in that foreign
currency).
EUROPEAN SMALL CAP ACCOUNT
1. Investments will be composed primarily of securities publicly traded in
Europe.
2. Investments will be targeted in securities of small capitalization
companies. The majority of investments to be in the stocks with market
capitalization less than $1.5 billion.
3. No more than 10% of the portfolio will be invested in stocks larger than
$1.5 billion and not represented in the Salomon Brothers Extended Market
Index ("EMI").
4. No more than 10% of the portfolio will be invested in any one company at
the time of purchase.
5. The portfolio will not purchase more than 10% of the issued capital of any
one company.
6. Investments in cash and related instruments will not exceed 25% of the
portfolio, except during portfolio building.
7. Currency hedging of underlying stock positions only (requires approval of
Global Small Cap Equities CIO). Foreign currency futures and options
contracts can only be employed to hedge underlying currency exposure
(i.e., up to but not more than 100% of underlying exposure to a foreign
currency as measured by the value of cash plus securities held in that
foreign currency).
EUROPEAN PORTION OF THE GLOBAL SMALL CAP ACCOUNT
1. Investments will be composed primarily of securities publicly traded in
Europe.
2. Investments will be targeted in securities of small capitalization
companies. The majority of investments to be in the stocks with market
capitalization less than $750 million.)
3. No more than 10% of the portfolio will be invested in any one company at
the time of purchase.
4. The portfolio will not purchase more than 10% of the issued capital of any
one company.
5. Investments in cash and related instruments will not exceed 25% of the
portfolio, except during initial portfolio building.
6. Currency hedging of underlying stock positions only (requires approval of
Global Small Cap Equities CIO). Foreign currency futures and options
contracts can only be employed to hedge underlying currency exposure
(i.e., up to but not more than 100% of underlying exposure to a foreign
currency as measured by the value of cash plus securities held in that
foreign currency).
PRUDENTIAL GROUP TRUST ACCOUNT (PRU PLAN)
EUROPEAN PORTION OF THE INTERNATIONAL LARGE CAP ACCOUNT
1. The investment objective will be long term capital appreciation through
investment in a broadly diversified portfolio from outside the United
States. The portfolio will be measured against the Xxxxxx Xxxxxxx
International "EAFE" Index.
2. Investments will be composed primarily of securities publicly traded in
Europe.
3. Portfolio will be invested primarily in securities of large capitalization
companies.
4. No more than 10% of the portfolio will be invested in any one company at
the time of purchase.
5. The portfolio will not purchase more than 10% of the issued capital of any
one company.
6. Investments in cash and related instruments will not exceed 15% of the
portfolio, except during initial portfolio building.
7. Currency hedging of underlying stock positions only (requires approval of
Global Small Cap Equities CIO).
EUROPEAN PORTION OF THE INTERNATIONAL SMALL CAP ACCOUNT
1. Investments will be composed primarily of securities publicly traded in
Europe.
2. Portfolio will be primarily in securities of small capitalization
companies. The majority of investments to be in the stocks with market
capitalization less than $750 billion.
3. No more than 10% of the portfolio will be invested in stocks larger than
$1.5 billion and not represented in the Salomon Brothers Extended Market
Index ("EMI").
3. No more than 10% of the portfolio will be invested in any one company at
the time of purchase.
4. The portfolio will not purchase more than 10% of the issued capital of any
one company.
5. Investments in cash and related instruments will not exceed 15% of the
portfolio, except during initial portfolio building.
6. Currency hedging of underlying stock positions only (requires approval of
Global Small Cap Equities CIO).
TOLI GLOBAL- ROCHE RETIREE WELFARE INVESTMENT TRUST (EUROPEAN PORTION OF THE
GLOBAL ACCOUNT)
1. Investment will be composed primarily of securities publicly traded
represented in the EMI as well as the stock exchanges of Mexico,
Thailand, Indonesia, Philippines, Taiwan, and South Korea, as well as
options and futures contracts related to those securities and
convertible bonds of small capitalization companies. No options,
futures, or other derivatives will add any leverage to the portfolio.
Investment may also be made in cash or in the equivalents of cash
or in any commingled money market account maintained by Prudential.
2. Investments will be targeted primarily in securities of companies of small
market capitalization less than Stocks which are included in the
portfolio not meeting the cap size definition should normally be ones
which are constituents of the EMI, except for Southeast Asia where larger
traded stocks may be used.
3. No more than 7% of any regional sub-portfolio will be invested in any one
company at the time of purchase; no more than 3% of the total global
portfolio will be so invested.
4. The portfolio will not purchase more than 10% of the issued capital of any
one company. The regional portfolios are generally kept diversified in 30
to 60 names. Industry weights are determined on a bottom up basis but
monitored at the portfolio level and may cut back to limit potential
sector risk.
5. Investments in cash and related instruments will not exceed 17% of the
portfolio, except during initial building.
6. Currency hedging will be allowed, although it is not anticipated that
Global Small Cap Equity will employ an active currency overlay program.
Any currency hedging must be covered by an underlying cash/stock position.
GENERAL
SUBJECT TO THE INVESTMENT GUIDELINES FOR THE CLIENT ACCOUNTS DESCRIBED HEREIN OR
AS SUBSEQUENTLY NOTIFIED TO SUB-INVESTMENT MANAGER IN WRITING:
1. The Client Accounts may contain securities which are or were the subject
of a relevant offer or issue, whether at the time Sub-Investment Manager
acquires them on behalf of Investment Manager, within a period of 12
months preceding that or otherwise. For the purpose of this paragraph, a
"relevant offer or issue" is an offer or issue of any securities (whether
or not those securities are to be listed on the London Stock Exchange or
any other recognized or designated investment exchange) which is or was
sponsored, underwritten, managed or arranged, or in connection with which
other services were provided, by Sub-Investment Manager or a connected
person.
2. Sub-Investment Manager may not commit Investment Manager to any obligation
to underwrite any issue or offer for sale of securities.
3. Sub-Investment Manager may, on behalf of Investment Manager, acquire or
dispose of units in a regulated collective investment scheme, whether or
not operated, managed or advised by Sub-Investment Manager or a connected
person.
4. Sub-Investment Manager may enter into repo or reverse repo transactions
but may not otherwise lend or borrow securities for any purpose.
5. Sub-Investment Manager is authorized by Investment Manager to deal in
warrants, options (including traded options) futures or contracts for
differences on behalf of Investment Manager (provided they are investments
as defined herein). The limits on margins will vary as between the Client
Accounts as set out in Schedule B above and the Prospectuses and
Statements of Additional Information mentioned therein.
6. Where the requisite currency of settlement is not the Client Accounts
Currency Sub-Investment Manager shall be entitled to use spot or forward
foreign exchange contracts (and accordingly enter into them on Investment
Manager's behalf) to fund the acquisition of spot or forward investments
or dispose of sale proceeds in a foreign currency. Notwithstanding
Sub-Investment Manager's right to do this, Investment Manager accepts that
if a liability in one currency is matched by an asset in a different
currency, or if any investment acquired or sold hereunder is denominated
or paid for in a currency other than the Client Accounts Currency, a
movement of exchange rates may be unfavourable rather than favourable, on
the gain or loss otherwise experienced on the investment.
SCHEDULE C
TO THE SUB-INVESTMENT AGREEMENT BETWEEN
THE PRUDENTIAL INVESTMENT CORPORATION AND
PRICOA ASSET MANAGEMENT LIMITED
THE INITIAL COMPOSITION AND VALUE OF CLIENT ACCOUNTS
[See Attached Documents]
SCHEDULE D
TO THE SUB-INVESTMENT AGREEMENT BETWEEN
THE PRUDENTIAL INVESTMENT CORPORATION AND
PRICOA ASSET MANAGEMENT LIMITED
SOFT COMMISSION
1. Soft Commission Agreements
A list of the Soft Commission Agreements which Sub-Investment Manager has
entered into from time to time is available from Sub-Investment Manager upon
request. Details of the Soft Commission Agreements are also available from
Sub-Investment Manager upon request.
2. Soft Commission Policy Statement
The provision of commissions under a Soft Commission Agreement will allow
Sub-Investment Manager to provide Investment Manager with services that could
not otherwise be provided as cost effectively.
Sub-Investment Manager will not enter into Soft Commission Agreements unless:
(a) the benefits provided under the agreement are goods or services which can
reasonably be expected to assist in the provision of Sub-Investment Manager's
services to customers, and are in fact so used and fall within the permitted
categories of goods and services under the Rules;
(b) the broker concerned agrees to provide Best Execution on transactions
effected for customers;
(c) Sub-Investment Manager is satisfied that the terms of business and methods
by which the relevant broking services will be supplied do not involve any
potential for a comparative price disadvantage to customers.
Sub-Investment Manager will send Investment Manager annual reports on
Sub-Investment Manager's Soft Commission Arrangements as required by the IMRO
rules.
SCHEDULE E
TO THE SUB-INVESTMENT AGREEMENT BETWEEN
THE PRUDENTIAL INVESTMENT CORPORATION AND
PRICOA ASSET MANAGEMENT LIMITED
RATIFICATION, INDEMNITY AND EXCLUSION OF LIABILITY
1. Investment Manager hereby undertakes to ratify and confirm everything done by
Sub-Investment Manager in the performance or purported performance in good faith
of Sub-Investment Manager's duties hereunder and by the Custodian or depository
in settlement of any transactions entered into by Sub-Investment Manager on
Investment Manager's behalf hereunder and not closed out prior to the settlement
date.
2. Investment Manager shall indemnify Sub-Investment Manager against all costs,
expenses, claims, actions, demands or liabilities (including costs and expenses
incurred in any proceedings relating there to and including any liability for
payment of tax on Investment Manager's income or profits) which may be suffered
or incurred by or made against Sub-Investment Manager in connection with
Sub-Investment Manager's appointment hereunder or the performance or purported
performance in good faith, of Sub-Investment Manager's duties hereunder.
However, this indemnity shall not apply where Sub-Investment Manager has been
negligent or has willfully defaulted or in relation to breaches by
Sub-Investment Manager of IMRO rules or the requirements of the FSA.
3. Sub-Investment Manager shall use its best efforts and judgment and shall
exercise due care in performing its duties and acting as investment manager
hereunder. However, Sub-Investment Manager shall not be liable for any
depreciation in value of the Client Accounts, loss of profit, gain or income
suffered by Investment Manager in relation to the Client Accounts unless it
results from Sub-Investment Manager's negligence or willful default and for this
purpose the failure to use or disclose confidential information relating to
another client or any other person shall not be regarded as negligence or
willful default.
4. Sub-Investment Manager shall not be responsible or required to indemnify
Investment Manager for any loss resulting from the failure or default of any
broker, or other agent, or counter-party.
5. In this Schedule, references to Sub-Investment Manager include references to
all Sub-Investment Manager's connected persons and or their directors, employees
or agents.
SCHEDULE F
TO THE SUB-INVESTMENT AGREEMENT BETWEEN
THE PRUDENTIAL INVESTMENT CORPORATION AND
PRICOA ASSET MANAGEMENT LIMITED
CONFLICTS
1. Sub-Investment Manager (and any connected person) may carry on investment and
trading activities for its own account and may act as investment manager or
investment adviser for other clients (whether or not connected persons) on terms
including provisions for remuneration on terms which may be different from those
under this Agreement, including payment of a performance fee.
2. Provided that Sub-Investment Manager acts in good faith and fairly as between
Investment Manager and all other clients concerned and conforms to IMRO rules,
Sub-Investment Manager shall not be required to prefer Investment Manager's
interests to its own interests or to the interests of its other clients or to
subordinate the interests of itself or such other clients to Investment
Manager's interests. In particular in case of competition Sub-Investment Manager
may acquire or dispose of investments on a pro rata basis, or such other basis
as Sub-Investment Manager considers fair and reasonable, as between Investment
Manager and itself or such other clients. When considering or deciding whether
or not to acquire or dispose of an investment for Investment Manager or
executing a decision to do so, Sub-Investment Manager may also consider or
decide upon such acquisition or disposal or execute such a decision for itself
or other clients at the same time (whether by way of block trading or otherwise)
and may advise advisory clients accordingly without having first to initiate or
effect the relevant transaction for Investment Manager.
3. Sub-Investment Manager shall not be required to acquire for Investment
Manager any investment which Sub-Investment Manager in good faith considers not
to be suitable for Investment Manager even though Sub-Investment Manager may
consider that investment suitable for either itself or any connected person or
for other clients and accordingly acquire that investment for its own account or
for any connected person or for, (or recommended that investment to) such other
clients. This applies similarly in the case of sales.
4. Sub-Investment Manager and its connected persons may carry on investment and
trading activities for its own account and may carry out investment advisory or
management services for other clients. Accordingly, Investment Manager accepts
that when Sub-Investment Manager deals for Investment Manager Sub-Investment
Manager, or any connected person may have an interest that is material to the
investment or transaction concerned. In particular, Investment Manager
acknowledges that Sub-Investment Manager may acquire or dispose of investments
on Investments Manager's behalf hereunder notwithstanding that Sub-Investment
Manager or any connected person may have or simultaneously acquire or dispose of
positions in such investments in such investments for its own account or for
other clients.
