Exhibit 99.(d)(3)
PRUDENTIAL SERIES FUND, INC.
SUBADVISORY AGREEMENT
Agreement made as of this 1st day of February, 2001 between Prudential
Investments Fund Management LLC (PIFM or the Manager), Xxxxxxxx Associates LLC
(the Subadviser or Xxxxxxxx), and The Prudential Series Fund, Inc.
WHEREAS, the Manager has entered into a Management Agreement, dated
September 7/th/, 2000 (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
0000 (xxx 0000 Xxx), pursuant to which PIFM acts as Manager of the Fund; and
WHEREAS, PIFM desires to retain the Subadviser to provide investment
advisory services to certain series of the Fund specified below (the Series, or
Portfolios), and the Subadviser is willing to render such investment advisory
services; and
WHEREAS, this Agreement between PIFM and the Subadviser is intended to
supersede (i) the agreement, dated May 1, 1999, among the Fund, The Prudential
Insurance Company of America (Prudential), and the Subadviser concerning the
Fund's 20/20 Focus and Diversified Conservative Growth Portfolios and (ii) the
agreement, dated April 27, 1995, among the Fund, Prudential, and the Subadviser
concerning the Prudential Xxxxxxxx Portfolio, and (iii) the Agreements, dated
August 11, 2000 among Prudential Investments Fund Management LLC, Xxxxxxxx
Associates LLC, and the Prudential Series Fund, Inc.; and
NOW, THEREFORE, the Parties agree as follows:
1. (a) Subject to the supervision of the Manager and the Board of
Directors of the Fund, the Subadviser shall manage the investment
operations of the Series of the Fund and the composition of the Series'
portfolio, including the purchase, retention and disposition thereof, in
accordance with the Series' investment objectives, 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, By-Laws and Prospectus of the Fund and with the
instructions and directions of the Manager and of the Board of
Directors of the Fund, and, for multi-manager portfolios, cooperate
with the Manager's (or its designee's) personnel responsible for
ensuring
compliance with the requirements of the 1940 Act, the Internal Revenue
Code of 1986 and all other applicable federal and state laws and
regulations. In connection therewith, the Subadviser shall, among
other things, prepare and file such reports as are, or may in the
future be, required by the Securities and Exchange Commission.
(iii) The Subadviser shall determine the securities and futures
contracts to be purchased or sold by each 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 Fund's 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 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 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 the manner the Subadviser considers to be
the most equitable and consistent with its fiduciary obligations to
the Fund 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 Fund's Board
of Directors such periodic and special reports as the Directors may
reasonably request. The Subadviser 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.
(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.
Conversely, Subadviser and Manager understand and agree that Manager
manages the Fund in a "manager-of-managers" style, which contemplates
that Manager will, among other things, (i) continually evaluate the
performance of the subadviser to each 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.
Subadviser recognizes that its services may be terminated or modified
pursuant to this process. Manager is authorized to retain more than
one subadvisor for any Portfolio, and for any Portfolio with more than
one subadviser, the Manager is authorized to allocate the Portfolio's
assets among the subadvisors.
(b) The Subadviser shall authorize and permit any of its directors,
officers and employees who may be elected as directors 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 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 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 Series pursuant to the Management Agreement and, as more
particularly discussed above, shall oversee and review the Subadviser's
performance of its duties under this Agreement.
3. 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.
4. For the services provided pursuant to this Agreement, the Manager shall
pay the Subadviser as full compensation therefor, an annual fee (payable
quarterly) equal to the following percentages of each listed series' average
daily net assets under the management of the Subadviser:
Diversified Conservative Growth Portfolio.
.30 of 1% on the first $300 million of average daily net assets under the
Subadviser's management, and 0.25 of 1% with respect to the average daily net
assets under the Subadviser's management in excess of $300 million.
Growth Equity Sleeve of the 20/20 Focus Portfolio
.30 of 1% on the first $300 million of average daily net assets under the
Subadviser's management, and 0.25 of 1% with respect to the average daily net
assets under the Subadviser's management in excess of $300 million.
Prudential Xxxxxxxx Portfolio
0.75% on the first $10,000,000 of the Portfolio's average daily net assets; and
0.50% on the next $30,000,000 of the Portfolio's average daily net assets; and
0.35% on the next $25,000,000 of the Portfolio's average daily net assets; and
0.25% on the next $335,000,000 of the Portfolio's average daily net assets; and
0.22% on the next $600,000,000 of the Portfolio's average daily net assets; and
0.20% on the balance of the Portfolio's average daily net assets.
XX Xxxxxxxx International Growth Portfolio.
0.60 of 1% of average daily net assets up to and including $300 million,
0.50 of 1% of average daily net assets in excess of $300 million and up to and
including $1.5 billion, and 0.45 of 1% of the average daily net assets over $1.5
billion.
SP Prudential U.S. Emerging Growth Portfolio.
0.30 of 1% of the Portfolio's average daily net assets.
SP Strategic Partners Focused Growth Portfolio.
.30 of 1% on the first $300 million of average daily net assets under the
Subadviser's management, and 0.25 of 1% with respect to the average daily net
assets under the Subadviser's management in excess of $300 million.
For the following Fund Portfolios, PIFM will pay Xxxxxxxx, with respect to
the assets that Xxxxxxxx manages, the following annualized fees:
Equity Portfolio (0.225%)
Prudential Value Portfolio (0.20%)
Global Portfolio (0.375%)
Natural Resources Portfolio (0.225%)
Value Sleeve of 20/20 Focus Portfolio (0.375%)
Value Sleeve of Diversified Conservative Growth Portfolio (0.375%)
Xxxxxxxx will not commence its services under this Agreement with respect
to a given Portfolio until shareholders of that Portfolio have approved 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 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 Fund, or by the Manager or the Subadviser at any time, without
the payment of any penalty, on not more than 60 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 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 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
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
Jersey.
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
XXXXXXXX ASSOCIATES LLC
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Senior Vice President
THE PRUDENTIAL SERIES FUND, INC.
By: /s/ Xxxxx X. Xxxxxxx, Xx.
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Xxxxx X. Xxxxxxx, Xx.
President
