PRUDENTIAL SECTOR FUNDS, INC.
PRUDENTIAL FINANCIAL SERVICES FUND
SUBADVISORY AGREEMENT
Agreement made as of this 17th day of May, 1999, and amended and
restated as of January 1, 2000, between Prudential Investments Fund
Management LLC, a New York limited liability company (PIFM or the Manager),
and The Prudential Investment Corporation, a New Jersey Corporation (the
Subadviser).
WHEREAS, the Manager has entered into a Management Agreement, dated
May 17, 1999 (the Management Agreement), with Prudential Sector Funds, Inc.
(the Company), a Maryland corporation and an open-end, management investment
company registered under the Investment Company Act of 0000 (xxx 0000 Xxx) on
behalf of its Series the Prudential Financial Services Fund (the Series),
pursuant to which PIFM will act as Manager of the Series.
WHEREAS, PIFM desires to retain the Subadviser to provide investment
advisory services to the Series in connection with the management of the
portfolio of the Series 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 Manager and of the Board of
Directors of the Company, the Subadviser shall manage the investment
operations of the portfolio of the Series and the composition of the
Series' portfolio, including the purchase, retention and disposition
thereof, in accordance with the Series' investment objective, policies and
restrictions as stated in the Prospectus (such Prospectus and Statement of
Additional Information as currently in effect and as amended or
supplemented from time to time, being herein called the Prospectus), and
subject to the following understandings:
(i) The Subadviser shall provide supervision of the Series'
investments and determine from time to time what investments and
securities will be purchased, retained, sold or loaned by the Series,
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 Articles of
Incorporation and By-Laws of the Company and Prospectus of the Series
and with the instructions and directions of the Manager and of the
Board of Directors of the Company and will conform to and comply with
the requirements of the 1940 Act, the Internal Revenue Code of 1986
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and 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 the Series and will place orders
with or through such persons, brokers, dealers or futures commission
merchants (including but not limited to Prudential Securities
Incorporated) to carry out the policy with respect to brokerage as set
forth in the Company's Registration Statement and the Series'
Prospectus or as the Board of Directors may direct from time to time.
In providing the Series 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 Securities Incorporated may be used as principal broker for
securities transactions but that no formula has been adopted for
allocation of the Series' investment transaction business. It is also
understood that it is desirable for the Series 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 Series 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 the Series with such brokers or futures commission merchants,
subject to review by the Company's Board of Directors 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 Series
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
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the manner the Subadviser considers to be the most equitable and
consistent with its fiduciary obligations to the Series and to such
other clients.
(iv) The Subadviser shall maintain all books and records with
respect to the Series' 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 Company's
Board of Directors such periodic and special reports as the Directors
may reasonably request.
(v) The Subadviser shall provide the Series' Custodian on each
business day with information relating to all transactions concerning
the Series' 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 Directors or officers of the
Company 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 Series' 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 Series required by Rule 31a-1 under the 1940 Act. The
Subadviser agrees that all records which it maintains for the Series are
the property of the Series and the Subadviser will surrender promptly to
the Series any of such records upon the Series' 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 Series pursuant to the Management Agreement and shall
oversee and review the Subadviser's performance of its duties under this
Agreement.
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3. The Manager shall pay the Subadviser at the annual rate of .375 of
1% of the Fund's average daily net assets for 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 Series 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.
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 Series
at any time, without the payment of any penalty, by the Board of Directors
of the Company or by vote of a majority of the outstanding voting
securities (as defined in the 0000 Xxx) of the Series, 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
director, officer or employee of the Company 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 Company 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 Company must be obtained in conformity with the requirements of the
1940 Act.
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9. This Agreement shall be governed by the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC
BY: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
Executive Vice President
THE PRUDENTIAL INVESTMENT CORPORATION
BY: /s/ Xxxx X. Xxxxxxxxxx, Xx.
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President
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