EXHIBIT (b)(v)(1)
INVESTMENT ADVISORY AGREEMENT
SIXTH AMENDMENT
This Agreement is made as of the 14th day of July, 1988, between The Prudential
Series Fund, Inc. (the "Fund"), an open-end management investment company
registered under the Investment Company Act of 1940 (the "1940 Act"), and The
Prudential Insurance Company of America ("Prudential"), and supersedes the
Investment Advisory Agreement between the Fund and Prudential made as of the
18th day of February, 1988. This Agreement deals with the performance by
Prudential of investment management services for the Fund.
The parties agree:
1. INVESTMENT MANAGEMENT SERVICES
Subject to the direction and approval of the Board of Directors of the Fund,
Prudential will manage the investments of the Fund and determine the composition
of the assets of each of the Fund's Portfolios, including the purchase,
retention, or sale of the securities and cash contained in those Portfolios.
These duties will be performed in accordance with the investment objectives and
policies of each Portfolio, as stated in the Fund's Articles of Incorporation,
By-Laws, Prospectus, Statement of Additional Information and in resolutions
adopted by the Fund's Board of Directors. Prudential will provide investment
research and conduct a continuous program of evaluation, investment, sales, and
reinvestment of the Fund's assets by determining which securities shall be
purchased, sold or exchanged for each Portfolio, when these transactions should
be executed, and what portion of the assets of each Portfolio should be held in
the various securities in which it may invest. Prudential will exercise its best
judgment in performing the services described above.
The Fund understands that Prudential now serves, and will continue to serve, as
investment manager or adviser to other investment companies and to clients that
are not investment companies, and that Prudential also performs similar
functions in managing its own assets, the assets of its separate accounts, and
the assets of certain of its subsidiaries. The Fund understands that the
employees of Prudential who assist in the performance of the services described
above will also devote time to rendering similar services to the other entities
for which Prudential also acts as investment manager or adviser.
When investment opportunities arise that may be appropriate for more than one
entity for which Prudential serves as investment manager or adviser, Prudential
will not favor one over another and may allocate investments among them in an
impartial manner believed to be equitable to each entity involved. The
allocations will be based on each entity's investment objectives and its current
cash and investment positions. Because the various entities for which Prudential
acts as investment manager or adviser have different investment objectives and
positions, Prudential may from time to time buy a particular security for one or
more such entities while at the same time its sells such securities for another.
2. EXECUTION OF TRANSACTIONS
Prudential will determine all securities to be bought or sold for each Portfolio
and will be responsible for the selection of brokers and dealers to effect all
transactions. Prudential will place all necessary orders with brokers, dealers
or issuers and will negotiate brokerage commissions, if applicable. In placing
orders for securities transactions, Prudential will attempt to obtain the best
net price and most favorable execution. Prudential will seek to effect each
transaction at a price and commission, if any, that provides the most favorable
total cost or proceeds reasonably attainable in the circumstances. Prudential
may, however, pay a higher spread or commission for a particular transaction
than otherwise would be necessary if that would further the goal of obtaining
the best available execution.
For those securities transactions that involve commission payments. Prudential
will negotiate the commission on the basis of the quality and quantity of
execution services provided by the broker, in light of generally prevailing
commission rates. Prudential's present policy is not to pay higher spreads or
commissions in order to obtain research and statistical services from brokers or
dealers, although in selecting a broker-dealer in connection with a transaction
for any Portfolio, Prudential will consider whether the broker or dealer can
furnish Prudential with such services. If Prudential determines that it is
necessary to pay higher spreads or commissions to secure desired research
services that would benefit the Fund, such higher commissions may be paid only
after Prudential has obtained the approval of the Fund's Board of Directors to
make payments of this kind, provided that the higher spread or commission is
reasonable in relation to all services that the broker or dealer provides. The
Fund agrees that Prudential may use any such research or statistical information
that it obtains from brokers in providing investment management or advice to its
other clients or accounts.
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In executing brokerage transactions, Prudential may use a broker who is an
affiliated person of Prudential, as that term is defined in the 1940 Act, only
if the commission rate obtained from the affiliated broker is as favorable as
the broker's contemporaneous charges to its most favored unaffiliated customers.
Before employing an affiliated broker, Prudential must also make the good faith
judgment that the affiliated broker is qualified to obtain the best price on the
particular transaction and that the commission is at least as favorable as that
charged by other qualified, but unaffiliated, brokers
3. REPORTS AND ADMINISTRATIVE SERVICES
Prudential shall also perform administrative services for the Fund, and shall
maintain and furnish the Fund with statistical information concerning its
investments, and with such periodic or special reports as the Fund's Board of
Directors may reasonably request, or as may be required under the 1940 Act and
rules promulgated thereunder. The administrative services shall include (i)
supervising all aspects of the Fund's operation, including coordinating matters
relating to the custodians of securities owned by the Fund, the transfer agent,
shareholder services, accountants, attorneys, and other parties performing
services for the Fund; (ii) providing to the Fund personnel to perform the
necessary administrative functions; and (iii) providing the Fund with office
space and related services necessary for the Fund's operations.
4. INVESTMENT MANAGEMENT FEE
As compensation for the services performed, the facilities furnished, and
expenses incurred by PrudentIal under this Agreement, the Fund shall pay to
Prudential an investment management fee. The fee will be a daily charge, payable
quarterly, based on an annual percentage rate of each Portfolio's average daily
net assets. For the Conservatively Managed Flexible Portfolio and the High Yield
Bond Portfolio, the annual rate of the fee is .55% of the average daily net
assets of each Portfolio. For the Aggressively Managed Flexible Portfolio, the
annual rate of the fee is .60% of the average daily net assets of the Portfolio.
For the Common Stock Portfolio and the Natural Resources Portfolio, the annual
rate of the fee is .45% of the average daily net assets of the Portfolio. For
the Stock Index Portfolio, the annual rate of the fee is .35% of the average
daily net assets of the Portfolio. For the Global Equity Portfolio the annual
rate of the fee is .75% of the average daily net assets of the Portfolio. For
all other Portfolios, the annual rate of the fee is .40% of the average daily
net assets of each Portfolio.
5. ALLOCATION OF COMPENSATION EXPENSES
Each Portfolio will bear expenses incurred in its individual operation,
including but not limited to redemption and transaction expenses, daily
accounting services (including maintaining for each Portfolio a daily trial
balance, investment ledger, and other accounts and documents, computing each
Portfolio's daily net asset value per share, and computing daily cash flow and
transaction status information), advisory fees, brokerage, shareholder servicing
costs, pricing costs, interest, taxes, and the charges of the custodians and
transfer agent. The Fund will pay all other expenses not attributable to a
specific Portfolio, but these expenses will be allocated among the Portfolios on
the basis of their respective net asset sites. These expenses include, without
limitation: insurance, legal expenses, auditing fees, state franchise and Blue
Sky qualification fees, if any, the cost of printing stock certificates,
proxies, and shareholder reports, Securities & Exchange Commission fees, the
expense of registering securities issued by the fund under applicable securities
laws, the fees and expenses of all directors of the Fund who are not affiliated
persons of The Prudential or of any Prudential subsidiary, the expense of
reimbursing Prudential for the Fund's organization costs, and litigation and
other extraordinary or non-recurring expenses.
The Prudential shall pay for maintaining any Prudential staff and personnel who
perform accounting services in connection with the preparation of financial
statements required for the Fund's semiannual reports to shareholders and
clerical, administrative and similar services for the Fund, other than investor
services and daily Fund accounting services. Prudential shall also pay for the
equipment, office space, and related facilities necessary to perform these
services and shall pay the fees or salaries of all officers and directors of the
Fund who are affiliated persons of The Prudential or of any Prudential
subsidiary. The Fund shall reimburse Prudential for the expenses of maintaining
personnel who perform investor services and daily accounting services for the
Fund. The Prudential has paid the organizational costs of the Fund and will be
reimbursed for those over a ten-year period by the Fund.
If in any fiscal year the aggregate annual ordinary operating expenses of any
Portfolio other than the Global Equity Portfolio, including the investment
management fee but excluding interest, taxes, and brokerage commissions, exceed
.75% of the Portfolio's net assets, Prudential wi1I waive that portion of the
investment management fee for the Portfolio for that fiscal year that is equal
to the excess.
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6. LIMITATION ON LIABILITY OF PRUDENTIAL
Prudential will not be liable for any error of judgment or mistake of law or for
any loss suffered by the Fund in connection with the matters to which this
Agreement relates, except for a loss resulting from willful misfeasance, bad
faith, or gross negligence in the performance of its duties on behalf of the
Fund or from reckless disregard of its obligations and duties under this
Agreement.
7. PRUDENTIAL'S SERVICE MARKS
The word "Prudential" is a registered service xxxx of Prudential, Registration
No. 693,628, registered February 23 1960, and the design (the "Design") of a
rock representing the Rock of Gibraltar, within a circle and without legend is
also a registered service xxxx of Prudential, United States Registration No.
1,121,163, registered June 26, 1979. Both the word "Prudential" and the Design
have been used in connection with Prudential's business for many years. The
words "The Prudential" and the design (also referred to as the "Design") of a
rock representing the Rock of Gibraltar within a circle and without legend, are
also covered by applications for registration Nos. 73/565085, 73/565084 and
73/565014, all filed on October 25, 1985.
Prudential hereby grants to the Fund a license to use the words "Prudential" and
"The Prudential" in the Fund's corporate name, "The Prudential Series Fund,
Inc.," and a license to use those words and the Design in connection with the
Fund's operations as an investment company. This license is granted on a
royalty-free, non-exclusive basis. Prudential retains the right to use, or
license the use of, those words and any derivative thereof, as well as the
Design, in connection with other. Investment companies, subject to the
requirements of the investment Company Act of 1940, or in connection with any
other business enterprise.
The Fund acknowledges that the words "Prudential" and "The Prudential" and the
Design represent good will of great value to Prudential and that Prudential must
be able to protect and preserve such good will by terminating the license herein
granted if Prudential, in its sole discretion, decides that it is necessary to
do so or if Prudential decides that it is no longer in a position to assure that
high quality standards will be associated with the use by the Fund of the words
"Prudential" and "The Prudential" and the Design. Accordingly, if the holders of
the outstanding voting Securities of any Portfolio of the Fund fail to approve
this Agreement, or if at any time after such approval Prudential or a company
controlled by it ceases to be investment manager of any Portfolio, Prudential
shall have the absolute right to terminate the license herein granted forthwith
upon written notice to the Fund.
Prudential shall have the absolute right to terminate the license herein granted
for any other reason upon 60 days' written notice of such termination to the
Fund, but in such event this Agreement shall terminate on the 120th day
following receipt by the Fund of such notice unless on or prior to such day the
holders of a majority of the outstanding voting securities of all of the
Portfolios of the Fund shall have voted in favor of Prudential (or a company
controlled by it) continuing to act as investment manager to each such Portfolio
in accordance with the terms hereof notwithstanding the termination of the
license herein granted.
Upon termination of the license herein granted, the Fund shall immediately
change its corporate name to one which does not include the word "Prudential" or
any derivative thereof, and will discontinue all use by it of such word, the
Design or anything resembling the Design, in connection with its business. The
terms of the license herein granted shall inure to the benefit of and be binding
upon any successors or assigns of the Fund or Prudential.
8. DURATION AND TERMINATION OF THE AGREEMENT
This Agreement will continue in effect until the date of the next meeting of
shareholders of the Fund, at which meeting it must be approved by a majority
vote of the shareholders to remain effective. The required shareholder approval
of the Agreement shall be effective, with respect to any Portfolio, if a
majority of the voting shares of that Portfolio vote to approve the Agreement,
notwithstanding that the Agreement may not yet have been approved by a majority
of the voting shares of the Fund. The Agreement will continue in effect
thereafter so long as it is approved at least annually by a (i) majority of the
non-interested members of the Fund's Board of Directors, and (ii) by a majority
of the entire Board of Directors or a majority vote of the persons participating
in each Portfolio.
If the shareholders of any Portfolio fail to approve the Agreement, Prudential
will continue to act as investment adviser with respect to such Portfolio
pending the required approval of the Agreement, of a new contract with
Prudential or a different investment adviser, or other definitive action,
including termination of this Agreement pursuant to the penultimate paragraph of
Section 7 hereof; provided that the compensation received by Prudential during
such period will be no more than its actual costs incurred in furnishing
investment management services with respect to such Portfolio or the amount it
would have received under this Agreement, whichever is less.
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The Agreement may be terminated without penalty on at least 60 days' notice by
the Fund's Board of Directors or a majority vote of its shareholders, or by
Prudential on 90 days' notice. The Agreement will terminate automatically in the
event of its assignment (as defined in the 1940 Act).
THE PRUDENTIAL SERIES FUND, INC.
By /s/
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THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By /s/
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