PRUDENTIAL-BACHE MUNICIPAL SERIES FUND
SUBADVISORY AGREEMENT
Agreement made as of this 30th day of December, 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 has entered into a Management Agreement, dated
December 30, 1988 (the "Management Agreement"), with Prudential-Bache Municipal
Series Fund (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 sefices 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 Manager 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 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 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 it 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 placed orders for the purchase and sale of
securities and futures contracts for each series of the Fund
with such brokers or futures commission merchants, 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
obtained 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 Fund's Custodian on
each business day with information relating 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 Subadivser shall authorize and permit any of its directors,
officers and employees who may be elected as Trustee or officers of
the Fund to serve in the capacities in which they are elected.
Services to be furnished by the Subadviser under this Agreement may
be furnished through the medium of any of such directors, officers
or employees.
(c) The Subadviser shall keep the Fund's books and records required
to be maintained by the Subadviser pursuant to paragraph 1(a) hereof
and shall timely furnish to the Manager all information relating to
the Subadviser's services hereunder needed by the Manager to keep
the other books and records of the Fund required by Rule 31a-1 under
the 1940 Act. The Subadviser agrees that all records which it
maintains for the Fund are the property of the Fund and the
Subadviser will surrender promptly to the Fund any of such records
upon the Fund's request, provided however that the Subadviser may
retain a copy of such records. The Subadviser further agrees to
preserve for the periods prescribed by Rule 31a-2 of the Commission
under the 1940 Act any such records as are required to be maintained
by it pursuant to paragraph 1(a) hereof.
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 from 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 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 each 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/ Xxxxxxx X. Xxxxxx
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THE PRUDENTIAL INVESTMENT CORPORATION
By /s/ [ILLEGIBLE]
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