THE PRUDENTIAL SERIES FUND, INC.
SUBADVISORY AGREEMENT
This Agreement, dated _____________, 2000, supersedes the agreement made
as of the 1st day of May, 1999, between The Prudential Insurance Company of
America (the "Prudential"), a New Jersey insurance company and Pacific
Investment Management Company LLC (the "Adviser"), a Delaware limited liability
company.
WHEREAS, Prudential entered into a management agreement (the "Management
Agreement") with The Prudential Series Fund, Inc. (the "Fund"), a Maryland
corporation and a diversified open-end management investment company registered
under the Investment Company Act of 1940 (the "1940 Act"), pursuant to which the
Manager acts as manager of the Fund; and
WHEREAS, shares of the Fund are divided into separate series or
portfolios, each of which is established pursuant to a resolution of the
Directors of the Fund, and the Directors may from time to time terminate such
portfolios or establish and terminate additional portfolios; and
WHEREAS, Prudential has retained the Adviser to provide investment
advisory services to the Diversified Conservative Growth Portfolio of the Fund
(the "DCG Portfolio") and now Prudential's subsidiary, Prudential Investments
Fund Management LLC (the "Manager"), a New York limited liability company,
wishes to retain Adviser to provide investment advisory services to the SP PIMCO
Total Return Portfolio and the SP PIMCO High Yield Portfolio as well as to the
DCG Portfolio of the Fund (collectively, the "Portfolios") in connection with
the management of the Fund and to manage such portion of the Portfolios as the
Manager shall from time to time direct, and the Adviser is willing to render
such investment advisory services; and
WHEREAS, with respect to the DCG Portfolio, this Agreement once executed
will supersede the existing agreement between Prudential and PIMCO concerning
the DCG Portfolio; and
NOW, THEREFORE, the Parties agree as follows:
1. (a) Subject to the supervision of the Manager and of the
Directors of the Fund, the Adviser shall manage investment operations of
the Portfolios as the Manager shall direct and shall manage the
composition of the Portfolios, including the purchase, retention and
disposition thereof, in accordance with each Portfolio's 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") as delivered to the Adviser from time to time by the Manager
and subject to the following understandings:
(i) The Adviser shall provide supervision of each Portfolio's
investments and determine from time to time what investments and
securities will be purchased, retained, sold or loaned by the Portfolio,
and what portion of the assets it manages will be invested or held
uninvested as cash.
(ii) In the performance of its duties and obligations under this
Agreement, the Adviser shall act in conformity with the Agreement and
Articles of Incorporation, By-Laws and Prospectus of the Fund and each
Portfolio as provided to the Adviser by the Manager and with the written
instructions and directions of the Manager and of the Directors of the
Fund and will conform to and comply with the requirements of the 1940 Act,
the Internal Revenue Code of 1986, as amended (including the
diversification requirements of section 817(h) of the Code), and all other
applicable federal and state laws and regulations.
(iii) The Adviser shall determine the securities and futures
commodities or other assets to be purchased or sold by each Portfolio and
will place orders pursuant to its determination with or through such
persons, brokers, dealers or futures commission merchants (including but
not limited to Prudential Securities
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Incorporated) to carry out the policy with respect to brokerage as set
forth in the Fund's Registration Statement and Prospectus or as the
Directors may direct from time to time. In providing each Portfolio with
investment supervision, it is recognized that the Adviser will give
primary consideration to securing the most favorable price and best
execution. Within the framework of this policy, the Adviser 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 Adviser's other clients may be a party. It is
understood that Prudential Securities Incorporated may be used as broker
for securities transactions but that no formula has been adopted for
allocation of each Portfolio's investment transaction business. It is also
understood that it is desirable for the Fund that the Adviser 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 best execution. Therefore, the Adviser is
authorized to place orders for the purchase and sale of securities and
commodities or other assets for each Portfolio with such brokers or
futures commission merchants, subject to review by the 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 Adviser in connection with the
Adviser's services to other clients.
On occasions when the Adviser deems the purchase or sale of a
security, commodity or other asset to be in the best interest of one
Portfolio as well as other clients of the Adviser, the Adviser, to the
extent permitted by applicable laws and regulations, may, but shall be
under no obligation to, aggregate the securities,
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commodities or other assets to be sold or purchased in order to obtain the
most favorable price or lower brokerage commissions and best execution. In
such event, allocation of the securities, commodities or other assets so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Adviser in the manner the Adviser considers to be the
most equitable and consistent with its fiduciary obligations to the Fund,
the Portfolios, and such other clients.
(iv) The Adviser shall maintain all books and records with respect
to the 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 Directors such periodic and special reports as the
Board may reasonably request.
(v) The Adviser shall provide the Fund's custodian (the "Custodian")
on each business day with information relating to all transactions
concerning each Portfolio's assets it manages and shall provide the
Manager with such information upon request of the Manager. The Adviser
shall reconcile its records of each Portfolio's securities and cash
managed by the Adviser with statements provided by the Custodian at least
once each month. The Adviser shall provide the Manager with a written
report on each such reconciliation, including information on any material
discrepancies noted and actions taken by the Adviser in response thereto,
by the tenth business day of the following month.
(vi) The investment management services provided by the Adviser
hereunder are not exclusive, and the Adviser shall be free to render
similar services to others.
(b) Services to be furnished by the Adviser under this Agreement may
be furnished through the medium of any of its partners, officers or employees.
(c) The Adviser shall keep each Portfolio's books and records
required to be maintained by the Adviser pursuant to paragraph 1(a)(iv) hereof
and shall timely furnish to the Manager all information relating to the
Adviser's services hereunder needed by the
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Manager to keep the other books and records of the Fund required by Rule 31a-1
under the 1940 Act. The Adviser agrees that all records which it maintains for
each Portfolio are the property of the Fund, and the Adviser will surrender
promptly to the Fund any of such records upon the Fund's request. The Adviser
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 it pursuant to
paragraph 1(a) hereof.
(d) The Adviser agrees to maintain adequate compliance procedures to
ensure its compliance with the 1940 Act, the Investment Advisers Act of 1940
("Advisers Act") and other applicable state and federal laws and regulations.
(e) The Adviser shall furnish to the Manager copies of all records
prepared in connection with (i) the performance of this Agreement and (ii) the
maintenance of reports prepared in accordance with the compliance procedures
maintained pursuant to paragraph 1(d) hereof as the Manager may reasonably
request.
(f) The Adviser shall furnish to the Manager, within 15 days after
the end of each calendar quarter, a report detailing (i) the average annual
total return of each Portfolio for the preceding quarter and for the preceding
1, 5 and 10 year periods (the "Portfolio Return"); and (ii) a comparison of the
Portfolio Return with the return of an appropriate securities index and with an
appropriate mutual fund peer group.
(g) At least once annually, the Adviser, at its expense, shall
require its representative for the Portfolios to make a presentation at such
regular or special meeting of the Fund's Board that the Fund may convene.
2. The Manager shall continue to have responsibility for all services to
be provided to each Portfolio pursuant to the Management Agreement and shall
oversee and review the Adviser's performance of its duties under this Agreement.
3. For each Portfolio, the Manager shall compensate the Adviser for the
services provided and the expenses assumed pursuant to this Subadvisory
Agreement at the annual
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rate of .25 of 1% of the average daily net assets of the portion of each
Portfolio managed by the Adviser. This fee will be computed daily and paid
quarterly.
4. The Adviser shall not be liable for any error of judgment or for any
loss suffered by a Portfolio, 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 Adviser'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 Fund at any
time, without the payment of any penalty, by the Directors or by vote of a
majority of the outstanding voting securities (as defined in the 0000 Xxx) of a
Portfolio, or by the Manager or the Adviser 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. Adviser shall promptly notify Manager in the event that
there is a change in the directors of Adviser that may constitute an assignment
of this Agreement.
6. Nothing in this Agreement shall limit or restrict the right of any of
the Adviser's directors, officers or employees 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
the Adviser'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
Adviser 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,
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which refer to the Adviser in any way; provided, however, that any such item
which describes or characterizes the Adviser's investment process with respect
to a Portfolio, the names of any of its clients (other than the Fund or advisory
clients of the Manager and its affiliates) or any of its performance results
shall be furnished to the Adviser by first class or overnight mail, facsimile
transmission equipment or hand delivery prior to use thereof, and such item
shall not be used if the Adviser reasonably objects to such use in writing
within twenty-four (24) hours (or such other time as may be mutually agreed)
after receipt thereof (provided, however, that if such item is not received by
the Adviser during normal business hours on a business day, such period shall
end twenty-four (24) hours after the start of normal business hours on the next
succeeding business day).
8. Any written notice required by or pertaining to this Agreement shall be
personally delivered to the party for whom it is intended, at the address stated
below, or shall be sent to such party by prepaid first class mail or facsimile.
If to Prudential: The Prudential Series Fund Inc.
0 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000-0000
Fax: (000) 000-0000
Attention: General Counsel
If to the Adviser: Pacific Investment Management Company LLC
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Executive Vice President
cc: Chief Administrative Officer
10. 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. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK.
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11. Miscellaneous.
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(a) Concurrently with the execution of this Agreement, the Adviser is
delivering to the Manager a copy of Part II of its Form ADV, as revised,
on file with the Securities and Exchange Commission. Manager acknowledges
receipt of such copy.
(b) The Adviser's investment authority shall include the authority to
purchase, sell, cover open positions, and generally deal in financial
futures contracts and options thereon, in accordance with each Portfolio's
investment objective, policies, and restrictions as stated in the
Prospectus. Manager will (i) open and maintain brokerage accounts for
financial futures and options (such accounts hereinafter referred to as
"brokerage accounts") on behalf of and in the name of each of the
Portfolios and (ii) execute for and on behalf of the Portfolios, standard
customer agreements with a broker or brokers. The Adviser may, using such
of the securities and other property in the Portfolios as the Adviser
deems necessary or desirable, direct the custodian to deposit on behalf of
the Portfolios, original and maintenance brokerage deposits and otherwise
direct payments of cash, cash equivalents and securities and other
property into such brokerage accounts and to such brokers as the Adviser
deems desirable or appropriate. The Adviser has delivered to Manager a
copy of its Disclosure Document, as amended, dated June 15, 2000, on file
with the Commodity Futures Trading Commission. Manager hereby acknowledges
receipt of such copy
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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________________________________
Name:
Title:
PACIFIC INVESTMENT MANAGEMENT COMPANY LLC
By________________________________
Name:
Title:
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