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Exhibit (d)(1)
PRUDENTIAL DIVERSIFIED FUNDS
Management Agreement
Agreement made this 12th day of November, 1998, between
Prudential Diversified Funds (the Trust), and Prudential Investments Fund
Management LLC, a New York limited liability company (the Manager).
W I T N E S S E T H
WHEREAS, the Trust is a diversified, open-end management
investment company registered under the Investment Company Act of 1940, as
amended (the 1940 Act);
WHEREAS, the shares of beneficial interest of the Trust are
divided into separate series or funds (each a Fund), each of which is
established pursuant to a resolution of the Board of Trustees of the Trust
(Board of Trustees), and the Trustees may from time to time terminate such Funds
or establish and terminate additional Funds; and
WHEREAS, the Trust desires to retain the Manager to render or
contract to obtain as hereinafter provided investment advisory services to the
Trust and the Trust also desires to avail itself of the facilities available to
the Manager with respect to the administration of its day-to-day corporate
affairs, and the Manager is willing to render such investment advisory and
administrative services;
NOW, THEREFORE, the parties agree as follows:
1. The Trust hereby appoints the Manager to act as manager of
the Trust and administrator of its corporate affairs for the period and on the
terms set forth in this
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Agreement. The Manager accepts such appointment and agrees to render the
services herein described, for the compensation herein provided. The Manager is
authorized to enter into sub-advisory agreements for investment advisory
services in connection with the management of the Trust and each Fund thereof.
Any such agreement may be entered into by the Manager on such terms and in such
manner as may be permitted by the 1940 Act and the rules thereunder. The Manager
will continue to have responsibility for all investment advisory services
furnished pursuant to any such sub-advisory agreements. The Manager will review
the performance of all sub-advisers (each an Adviser), and make recommendations
to the Trustees of the Trust with respect to the retention and renewal of
contracts.
2. Subject to the supervision of the Board of Trustees of the
Trust, the Manager shall administer the Trust's corporate affairs and, in
connection therewith, shall furnish the Trust with office facilities and with
clerical, bookkeeping and recordkeeping services at such office facilities and,
subject to Section 1 hereof, the Manager shall manage the investment operations
of the Trust and each Fund thereof and the composition of each Fund of the
Trust, including the purchase, retention and disposition thereof, in accordance
with each Fund's investment objective, policies and restrictions as stated in
the Prospectus (hereinafter defined) and subject to the following
understandings:
(a) The Manager shall provide supervision of each Fund's
investments and determine from time to time what investments or
securities will be purchased, retained, sold or loaned by the Fund, and
what portion of its assets will be
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invested or held uninvested as cash.
(b) The Manager, in the performance of its duties and
obligations under this Agreement, shall act in conformity with the
Declaration of Trust, By-Laws and Prospectus (hereinafter defined) of
the Trust and with the instructions and directions of the Board of
Trustees and will conform to and comply with the requirements of the
1940 Act and all other applicable federal and state laws and
regulations.
(c) The Manager shall determine the securities and futures
contracts to be purchased or sold by each Fund and will place orders
pursuant to its determinations with or through such persons, brokers,
dealers or futures commission merchants (including but not limited to
Prudential Securities Incorporated, and brokers, dealers and futures
commissions merchants which are "affiliated persons" of an Adviser) in
conformity with the policy with respect to brokerage as set forth in the
Trust's Registration Statement and Prospectus (hereinafter defined) or
as the Board of Trustees may direct from time to time. In providing the
Trust with investment supervision, it is recognized that the Manager
will give primary consideration to securing the most favorable price and
efficient execution. Consistent with this policy, the Manager 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 other clients of the Manager
or an Adviser may be a party. It is understood that Prudential
Securities
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Incorporated or a broker which is an "affiliated person" of an Adviser
may be used as principal broker for securities transactions but that no
formula has been adopted for allocation of the Trust's investment
transaction business. It is also understood that it is desirable for
the Trust that the Manager and each Adviser have access to supplemental
investment and market research and security and economic analysis
provided by brokers or futures commission merchants and that such
brokers may execute brokerage transactions at a higher cost to the
Trust than may result when allocating brokerage to other brokers or
futures commission merchants on the basis of seeking the most favorable
price and efficient execution. Therefore, the Manager and each Adviser
is authorized to pay higher brokerage commissions for the purchase and
sale of securities and futures contracts for the Trust to brokers or
futures commission merchants who provide such research and analysis,
subject to review by the Board of Trustees from time to time with
respect to the extent and continuation of this practice. It is
understood that the services provided by such broker or futures
commission merchant may be useful to the Manager or an Adviser in
connection with its services to other clients.
On occasions when the Manager or an Adviser deems the purchase
or sale of a security or a futures contract to be in the best interest
of the Trust as well as other clients of the Manager or the Adviser, the
Manager or the Adviser, 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 so sold or
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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 Manager or the Adviser in the manner it considers to be the most
equitable and consistent with its fiduciary obligations to the Fund,
the Trust and to such other clients.
(d) The Manager shall maintain all books and records with
respect to the Trust's portfolio transactions and shall render to the
Board of Trustees such periodic and special reports as the Board may
reasonably request.
(e) The Manager shall be responsible for the financial and
accounting records to be maintained by the Trust (including those being
maintained by the Trust's custodian (the Custodian)).
(f) The Manager shall provide the Trust's Custodian on each
business day with information relating to all transactions concerning
the Trust's assets.
(g) The investment management services of the Manager to the
Trust under this Agreement are not to be deemed exclusive, and the
Manager shall be free to render similar services to others.
3. The Trust has delivered to the Manager copies of each of the
following documents and will deliver to it all future amendments and
supplements, if any:
(a) Agreement and Declaration of Trust (such Agreement and
Declaration of Trust, as in effect on the date hereof and as amended
from time to time, is hereinafter called the "Declaration of Trust");
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(b) By-Laws of the Trust (such By-Laws, as in effect on the
date hereof and as amended from time to time, are hereinafter called the
"By-Laws");
(c) Certified resolutions of the Board of Trustees of the Trust
authorizing the appointment of the Manager and approving the form of
this Agreement;
(d) Registration Statement under the 1940 Act and the
Securities Act of 1933, as amended, on Form N-1A (the Registration
Statement), as filed with the Securities and Exchange Commission (the
Commission) relating to the Trust and its shares of beneficial interest
and all amendments thereto;
(e) Notification of Registration of the Trust under the 1940
Act on Form N-8A as filed with the Commission and all amendments
thereto; and
(f) Prospectus and Statement of Additional Information of the
Trust (such Prospectus and Statement of Additional Information, as
currently in effect and as amended or supplemented from time to time,
being hereinafter called the "Prospectus").
4. The Manager shall authorize and permit any of its officers
and employees who may be elected as Trustees or officers of the Trust to serve
in the capacities in which they are elected. All services to be furnished by the
Manager under this Agreement may be furnished through the medium of any such
officers or employees of the Manager.
5. The Manager shall keep the Trust's books and records
required to be maintained by it pursuant to Paragraph 2 hereof, including all
books and records prescribed by Rule 31a-1 under the 1940 Act other than those
books and records
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maintained by the Trust or its other service providers. The Manager agrees that
all records which it maintains for the Trust are the property of the Trust and
it will surrender promptly to the Trust any such records upon the Trust's
request, provided however that the Manager may retain a copy of such records.
The Manager 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 the
Manager pursuant to Paragraph 2 hereof.
6. During the term of this Agreement, the Manager shall pay
the following expenses:
(i) the salaries and expenses of all personnel of the Trust
and the Manager except the fees and expenses of Trustees who are not
affiliated persons of the Manager or of any Adviser;
(ii) all expenses incurred by the Manager or by the Trust in
connection with managing the ordinary course of the Trust's business
other than those assumed by the Trust herein; and
(iii) the costs and expenses payable to any Adviser pursuant
to any sub-advisory agreements. The Trust assumes and will pay the
expenses described below:
(a) the fees and expenses incurred by the Trust in connection
with the management of the investment and reinvestment of each Fund's
assets;
(b) the fees and expenses of Trustees who are not affiliated
persons of the Manager or the Trust's Advisers;
(c) the fees and expenses of the Custodian that relate to (i)
the custodial
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function and the recordkeeping connected therewith; (ii) preparing and
maintaining the general accounting records of the Trust and the
providing of any such records to the Manager useful to the Manager in
connection with the Manager's responsibility for the accounting records
of the Trust pursuant to Section 31 of the 1940 Act and the rules
promulgated thereunder; (iii) the pricing of the shares of the Trust,
including the cost of any pricing service or services which may be
retained pursuant to the authorization of the Board of Trustees; and
(iv) for both mail and wire orders, the cashiering function in
connection with the issuance and redemption of the Trust's securities;
(d) the fees and expenses of the Trust's transfer and dividend
disbursing agent, which may be the Custodian, that relate to the
maintenance of each shareholder account;
(e) the charges and expenses of legal counsel and independent
accountants for the Trust;
(f) brokers' commissions and any issue or transfer taxes
chargeable to the Trust in connection with its securities and futures
transactions;
(g) all taxes and corporate fees payable by the Trust to
federal, state or other governmental agencies;
(h) the fees of any trade associations of which the Trust may
be a member;
(i) the cost of share certificates representing, and/or
non-negotiable share deposit receipts evidencing, shares of the Trust;
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(j) the cost of fidelity, trustees and officers and errors and
omissions insurance;
(k) the fees and expenses involved in registering and
maintaining registration of the Trust and of its shares with the
Commission, registering the Trust as a broker or dealer and qualifying
its shares under state securities laws, including the preparation and
printing of the Trust's registration statements, prospectuses and
statements of additional information for filing under federal and state
securities laws for such purposes;
(l) allocable communications expenses with respect to investor
services and all expenses of shareholders' and Trustees' meetings and
of preparing, printing and mailing reports to shareholders in the
amount necessary for distribution to the shareholders;
(m) litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the
Trust's business; and
(n) any expenses assumed by the Trust pursuant to a plan of
distribution adopted in conformity with Rule 12b-1 under the 1940 Act.
7. For the services provided and the expenses assumed pursuant to this
Agreement, the Trust will pay to the Manager as full compensation therefor a fee
as set forth below. This fee will be computed daily and will be paid to the
Manager monthly. Any reduction in the fee payable shall be made monthly. Any
such reductions or payments are subject to readjustment during the year.
Rate as a percentage of
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Name of Fund average daily net assets
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Prudential Diversified Conservative Growth Fund .75%
Prudential Diversified Moderate Growth Fund .75%
Prudential Diversified High Growth Fund .75%
8. The Manager shall not be liable for any error of judgment or
for any loss suffered by the Trust in connection with the matters to which this
Agreement relates, except a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services (in which case any award of
damages shall be limited to the period and the amount set forth in Section
36(b)(3) of the 0000 Xxx) or loss resulting from willful misfeasance, bad faith
or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement.
9. 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 with
respect to any Fund by the Trust at any time, without the payment of any
penalty, by the Board of Trustees or by vote of a majority of the outstanding
voting securities (as defined in the 0000 Xxx) of the Fund, or by the Manager 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 1940 Act).
10. Nothing in this Agreement shall limit or restrict the right
of any officer or employee of the Manager who may also be a Trustee, officer or
employee of the Trust
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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 or restrict the right of the Manager to engage in
any other business or to render services of any kind to any other corporation,
firm, individual or association.
11. Except as otherwise provided herein or authorized by the
Board of Trustees from time to time, the Manager shall for all purposes herein
be deemed to be an independent contractor and shall have no authority to act for
or represent the Trust in any way or otherwise be deemed an agent of the Trust.
12. During the term of this Agreement, the Trust agrees to
furnish the Manager 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 in any way
to the Manager, prior to use thereof and not to use such material if the Manager
reasonably objects in writing within five business days (or such other time as
may be mutually agreed) after receipt thereof. In the event of termination of
this Agreement, the Trust will continue to furnish to the Manager copies of any
of the above-mentioned materials which refer in any way to the Manager. Sales
literature may be furnished to the Manager hereunder by first-class or overnight
mail, facsimile transmission equipment or hand delivery. The Trust shall furnish
or otherwise make available to the Manager such other information relating to
the business affairs of the Trust as the Manager at any time, or from time to
time, reasonably requests in order to discharge its obligations hereunder.
13. This Agreement may be amended by mutual consent, but the
consent
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of the Trust must be obtained in conformity with the requirements of the 1940
Act.
14. 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, Xxxxxx, XX 00000-0000, Attention: Secretary; or (2) to the
Trust at Gateway Center Three, 000 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000-0000,
Attention: President.
15. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
16. The Trust may use the name "Prudential Diversified Funds"
or any name including the word "Prudential" only for so long as this Agreement
or any extension, renewal or amendment hereof remains in effect, including any
similar agreement with any organization which shall have succeeded to the
Manager's business as Manager or any extension, renewal or amendment thereof
remaining in effect. At such time as such an agreement shall no longer be in
effect, the Trust will (to the extent that it lawfully can) cease to use such a
name or any other name indicating that it is advised by, managed by or otherwise
connected with the Manager, or any organization which shall have so succeeded to
such businesses. In no event shall the Trust use the name "Prudential
Diversified Funds" or any name including the word "Prudential" if the Manager's
function is transferred or assigned to a company of which The Prudential
Insurance Company of America does not have control.
17. The Trust is a business trust organized under the Delaware
Business Trust Act pursuant to a Certificate of Trust dated July 29, 1998. The
Trust is a series
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trust and all debts, liabilities, obligations and expenses of a particular Fund
shall be enforceable only against the assets of that Fund and not against the
assets of any other Fund or of the Trust as a whole. This Agreement is executed
by a Trustee or officer of the Trust in such capacity and not individually.
Neither the Trustees, officers, agents or shareholders of the Trust assume any
personal liability for obligations entered into on behalf of the Trust (or a
Fund thereof).
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 DIVERSIFIED FUNDS
By:/s/Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
President
PRUDENTIAL INVESTMENTS FUND
MANAGEMENT LLC
By:/s/Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
Executive Vice President
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