PRUDENTIAL SECTOR FUNDS, INC.
PRUDENTIAL FINANCIAL SERVICES FUND
AMENDED AND RESTATED MANAGEMENT AGREEMENT
Agreement made this 17th day of May, 1999, as amended and restated
this 23rd day of February, 2001, between Prudential Sector Funds, Inc. (the
Fund), a Maryland corporation, 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 Fund is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the 1940
Act); and
WHEREAS, the Fund desires to retain the Manager to render or contract
to obtain as hereinafter provided investment advisory services to the Fund and
the Fund also desires to avail itself of the facilities available to the Manager
with respect to the administration of its day-to-day business affairs, and the
Manager is willing to render such investment advisory and administrative
services;
NOW, THEREFORE, the parties agree as follows:
1. The Fund hereby appoints the Manager to act as manager of
the Fund and its series Prudential Financial Services Fund (the Portfolio),
and as administrator of its business affairs for the period and on the terms
set forth in this Agreement. The Manager accepts such appointment and agrees
to render the services herein described, for the compensation herein
provided. Subject to the approval of the Board of Directors of the Fund, the
Manager is authorized to enter into a subadvisory agreement with The
Prudential Investment Corporation, Xxxxxxxx Associates LLC, or any other
subadviser, whether or not affiliated with the Manager (each, a Subadviser),
pursuant to which such Subadviser
shall furnish to the Fund the investment advisory services in connection with
the management of the Fund (each, a Subadvisory Agreement). Subject to the
approval of the Board of Directors of the Fund, the Manager is authorized to
retain more than one Subadviser for the Portfolio, and if the Portfolio has
more than one Subadviser, the Manager is authorized to allocate the
Portfolio's assets among the Subadvisers. The Manager will continue to have
responsibility for all investment advisory services furnished pursuant to any
Subadvisory Agreement. The Fund and Manager understand and agree that the
Manager may manage the Fund in a "manager-of-managers" style with either a
single or multiple subadvisers, which contemplates that the Manager will,
among other things and pursuant to an Order issued by the Securities and
Exchange Commission (SEC): (i) continually evaluate the performance of the
Subadviser to the Portfolio through quantitative and qualitative analysis and
consultations with such Subadviser; (ii) periodically make recommendations to
the Fund's Board as to whether the contract with one or more Subadvisers
should be renewed, modified, or terminated; and (iii) periodically report to
the Fund's Board regarding the results of its evaluation and monitoring
functions. The Fund recognizes that a Subadviser's services may be terminated
or modified pursuant to the "manager-of-managers" process, and that the
Manager may appoint a new Subadviser for a Subadviser that is so removed.
2. Subject to the supervision of the Board of Directors of
the Fund, the Manager shall administer the Fund's business affairs and, in
connection therewith, shall furnish the Fund with office facilities and with
clerical, bookkeeping and recordkeeping services at such office facilities
and, subject to Section 1 hereof and any Subadvisory Agreement, the Manager
shall manage the investment operations of the Fund and the composition of the
Portfolio's portfolio including the purchase, retention and disposition
thereof, in accordance with the Portfolio's investment objectives, policies
and restrictions as stated in the Fund's SEC registration statement, and
subject to the following understandings:
(a) The Manager (or a Subadviser under the Manager's
supervision) shall provide supervision of the Portfolio's
investments, and shall determine
from time to time what investments or securities will be purchased,
retained, sold or loaned by the Portfolio, and what portion of the
assets will be 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
Articles of Incorporation and By-Laws of the Fund and the Fund's
SEC registration statement and with the instructions and directions
of the Board of Directors of the Fund, and will conform to and
comply with the requirements of the 1940 Act and all other
applicable federal and state laws and regulations. In connection
therewith, the Manager shall, among other things, prepare and file
(or cause to be prepared and filed) such reports as are, or may in
the future be, required by the SEC.
(c) The Manager (or the Subadviser under the Manager's
supervision) shall determine the securities and futures contracts
to be purchased or sold by the Portfolio 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) in conformity with
the policy with respect to brokerage as set forth in the Fund's
Registration Statement or as the Board of Directors may direct from
time to time. In providing the Fund with investment supervision, it
is recognized that the Manager (or the Subadviser under the
Manager's supervision) will give primary consideration to securing
the most favorable price and efficient execution. Consistent with
this policy, the Manager (or Subadviser under the Manager's
supervision) 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 Subadviser) may be a party. It is
understood that Prudential Securities Incorporated (or a
broker-dealer affiliated with a Subadviser) 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 Manager (or
Subadviser) have access to supplemental investment and market research
and security and economic analysis provided by brokers or futures
commission merchants, and that such brokers or futures commission
merchants may execute brokerage transactions at a higher cost to the
Fund 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 (or
the Subadviser under the Manager's supervision) is authorized to pay
higher brokerage commissions for the purchase and sale of securities
and futures contracts for the Fund to brokers or futures commission
merchants who provide such research and analysis, subject to review by
the Fund'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 broker or futures commission merchant may be
useful to the Manager (or the Subadviser) in connection with its
services to other clients.
On occasions when the Manager (or a Subadviser under the
Manager's supervision) deems the purchase or sale of a security or a
futures contract to be in the best interest of the Fund as well as
other clients of the Manager (or the Subadviser), the Manager (or
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 so 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 Manager (or the
Subadviser) in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Fund and to such
other clients.
(d) The Manager (or the Subadviser under the Manager's
supervision) shall maintain all books and records with respect to the
Fund's portfolio transactions and shall render to the Fund's Board of
Directors such periodic and special reports as the Board
may reasonably request.
(e) The Manager (or the Subadviser under the Manager's
supervision) shall be responsible for the financial and accounting
records to be maintained by the Fund (including those being maintained
by the Fund's Custodian).
(f) The Manager (or the Subadviser under the Manager's
supervision) shall provide the Fund's Custodian on each business day
information relating to all transactions concerning the Fund's assets.
(g) The investment management services of the Manager to the
Fund under this Agreement are not to be deemed exclusive, and the
Manager shall be free to render similar services to others.
(h) The Manager shall make reasonably available its employees
and officers for consultation with any of the Directors or officers or
employees of the Fund with respect to any matter discussed herein,
including, without limitation, the valuation of the Fund's securities.
3. The Fund 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) Articles of Incorporation;
(b) By-Laws of the Fund (such By-Laws, as in effect on the date
hereof and as amended from time to time, are herein called the
"By-Laws");
(c) Certified resolutions of the Board of Directors of the Fund
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
SEC relating to the Fund and its shares of common stock and all
amendments thereto; and
(e) Prospectus and Statement of Additional Information of the
Fund and the Portfolio.
4. The Manager shall authorize and permit any of its officers
and employees who may be elected as Directors or officers of the Fund
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 Fund's books and records required
to be maintained by it pursuant to Paragraph 2 hereof. The Manager
agrees that all records which it maintains for the Fund are the
property of the Fund, and it will surrender promptly to the Fund any
such records upon the Fund'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 employees of the Fund and
the Manager, except the fees and expenses of Directors who are not
affiliated persons of the Manager or any Subadviser,
(ii) all expenses incurred by the Manager in connection with
managing the ordinary course of the Fund's business, other than those
assumed by the Fund herein, and
(iii) the fees, costs and expenses payable to a Subadviser
pursuant to a
Subadvisory Agreement.
The Fund assumes and will pay the expenses described below:
(a) the fees and expenses incurred by the Fund in connection
with the management of the investment and reinvestment of the Fund's
assets,
(b) the fees and expenses of Fund Directors who are not
"interested persons" of the Fund within the meaning of the 1940 Act,
(c) the fees and expenses of the Custodian that relate to (i)
the custodial function and the recordkeeping connected therewith, (ii)
preparing and maintaining the general accounting records of the Fund
and the provision of any such records to the Manager useful to the
Manager in connection with the Manager's responsibility for the
accounting records of the Fund pursuant to Section 31 of the 1940 Act
and the rules promulgated thereunder, (iii) the pricing or valuation
of the shares of the Fund, including the cost of any pricing or
valuation service or services which may be retained pursuant to the
authorization of the Board of Directors of the Fund, and (iv) for both
mail and wire orders, the cashiering function in connection with the
issuance and redemption of the Fund's securities,
(d) the fees and expenses of the Fund's Transfer and
Dividend Disbursing Agent that relate to the maintenance of each
shareholder account,
(e) the charges and expenses of legal counsel and independent
accountants for the Fund,
(f) brokers' commissions and any issue or transfer taxes
chargeable to the Fund in connection with its securities and futures
transactions,
(g) all taxes and corporate fees payable by the Fund to federal,
state or other governmental agencies,
(h) the fees of any trade associations of which the Fund may be
a member,
(i) the cost of share certificates representing, and/or
non-negotiable share deposit receipts evidencing, shares of the Fund,
(j) the cost of fidelity, directors' and officers' and errors
and omissions insurance,
(k) the fees and expenses involved in registering and
maintaining registration of the Fund and of its shares with the
Securities and Exchange Commission, and paying notice filing fees
under state securities laws, including the preparation and printing of
the Fund's Registration Statement and the Fund's 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 Directors' meetings and
of preparing, printing and mailing reports and notices 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
Fund's business, and
(n) any expenses assumed by the Fund pursuant to a Distribution
and Service Plan adopted in a manner that is consistent with Rule
12b-1 under the 1940 Act.
7. For the services provided and the expenses assumed pursuant
to this Agreement, the Fund will pay to the Manager as full compensation
therefor a fee at the annual
rate(s) as described on the attached Schedule A with respect to the average
daily net assets of the Portfolio. This fee will be computed daily, and will
be paid to the Manager monthly.
8. The Manager shall not be liable for any error of judgment or
for any loss suffered by the Fund 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 the Portfolio by the Fund at any time, without the payment of any
penalty, by the Board of Directors of the Fund or by vote of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of the Portfolio, 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 Director, 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 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 Directors of the Fund 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
Fund in any way or otherwise be deemed an agent of the Fund.
12. During the term of this Agreement, the Fund 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 Fund 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 Fund 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 Fund shall furnish
or otherwise make available to the Manager such other information relating to
the business affairs of the Fund 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 of the Fund 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, 0xx Xxxxx, Xxxxxx, XX 00000-0000, Attention: Secretary; or
(2) to the Fund 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 Fund may use the name "Prudential Sector Funds,
Inc.," 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
remain in effect. At such time as such an agreement shall no longer be in
effect, the Fund 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 Fund use the name
"Prudential Sector Funds, Inc." 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.
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 SECTOR FUNDS, INC.
By: /s/ Xxxxx X. Xxxxxxx, Xx.
-------------------------
Xxxxx X. Xxxxxxx, Xx.
President
PRUDENTIAL INVESTMENTS FUND
MANAGEMENT LLC
By: /s/ Xxxxxx X. Xxxxx
-------------------------
Xxxxxx X. Xxxxx
Executive Vice President
SCHEDULE A
Prudential Sector Funds, Inc.
Prudential Financial Services Fund 0.75%
