-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PGH9jUXlrGmsX1033Mh1EMU4qAXKvbeQP/6ZE0L0kxiOpvffazqi0iX/MWQ/TCxY bxaS2uSGwnEoRvx9UT12WQ== 0000912057-02-007211.txt : 20020414 0000912057-02-007211.hdr.sgml : 20020414 ACCESSION NUMBER: 0000912057-02-007211 CONFORMED SUBMISSION TYPE: DEF 14C PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020222 FILED AS OF DATE: 20020222 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRUDENTIAL SERIES FUND INC CENTRAL INDEX KEY: 0000711175 IRS NUMBER: 860446842 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14C SEC ACT: 1934 Act SEC FILE NUMBER: 811-03623 FILM NUMBER: 02555658 BUSINESS ADDRESS: STREET 1: 213 WASHINGTON STREET CITY: NEWARK STATE: NJ ZIP: 07102-2992 BUSINESS PHONE: 9738026196 MAIL ADDRESS: STREET 1: 213 WASHINGTON ST CITY: NEWARK STATE: NJ ZIP: 07102 DEF 14C 1 a2071136zdef14c.txt DEF 14C UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14C INFORMATION Information Statement Pursuant to Section 14(c) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: / / Preliminary Information Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2)) /X/ Definitive Information Statement THE PRUDENTIAL SERIES FUND, INC. - -------------------------------------------------------------------------------- (Name of Registrant As Specified In Its Charter) ------------------------------------------------------------------- (Name of Person(s) Filing Information Statement, if other than Registrant) Payment of Filing Fee (Check the appropriate box): /X/ No fee required / / Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11 (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------ (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------ (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------ (5) Total fee paid: ------------------------------------------------------------------------ / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------ (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------ (3) Filing Party: ------------------------------------------------------------------------ (4) Date Filed: ------------------------------------------------------------------------ THE PRUDENTIAL SERIES FUND, INC. DIVERSIFIED CONSERVATIVE GROWTH PORTFOLIO ------------------- GATEWAY CENTER THREE 100 MULBERRY STREET NEWARK, NEW JERSEY 07102-4077 ------------------- FEBRUARY 22, 2002 ------------------- TO THE CONTRACT OWNERS: On November 28, 2001, at a regular meeting of the Board of Directors of The Prudential Series Fund, Inc., the Directors approved a new subadvisory agreement for the Fund's Diversified Conservative Growth Portfolio. The parties to the subadvisory agreement are Prudential Investments LLC, formerly Prudential Investments Fund Management LLC, the Fund's investment manager, and EARNEST Partners LLC, a new subadviser for the Portfolio. This information statement describes the circumstances surrounding the Board's approval of the new subadvisory agreement and provides you with an overview of its terms. Prudential Investments LLC will continue as your Fund's investment manager. This information statement does not require any action by you. It is provided to inform you about the new subadviser. By order of the Board, JONATHAN D. SHAIN SECRETARY THE PRUDENTIAL SERIES FUND, INC. DIVERSIFIED CONSERVATIVE GROWTH PORTFOLIO (800) 778-2255 ------------------- GATEWAY CENTER THREE 100 MULBERRY STREET NEWARK, NEW JERSEY 07102-4077 ------------------- INFORMATION STATEMENT FEBRUARY 22, 2002 ------------------- This information statement is being furnished to contract owners investing in the Diversified Conservative Growth Portfolio (the Portfolio), which is a series of The Prudential Series Fund, Inc. (the Fund), in lieu of a proxy statement, pursuant to the terms of an exemptive order issued by the Securities and Exchange Commission (SEC). The exemptive order permits the Fund's manager to hire new subadvisers and to make certain changes to existing subadvisory contracts with the approval of the Board of Directors, without obtaining shareholder approval. The Fund is a management investment company registered under the Investment Company Act of 1940, as amended (the Investment Company Act), and is organized as a Maryland corporation. The Fund's directors are referred to here as the "Board," "Board Members" or "Directors." The Fund's principal executive office is Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102-4077. We are providing contract owners investing in the Portfolio as of November 28, 2001 with this information statement. This information statement relates to the approval by the Directors of a new subadvisory agreement dated December 12, 2001 between Prudential Investments LLC (PI or the Manager) and EARNEST Partners LLC (EARNEST Partners), with respect to the Portfolio (the Subadvisory Agreement), a copy of which is attached hereto as Exhibit A. EARNEST Partners replaced The Dreyfus Corporation (Dreyfus), which had served as subadviser to the small/mid-cap value segment of the Portfolio since May 1, 1999. The subadvisory agreement between PI and Dreyfus terminated effective at the close of business on December 19, 2001 at which time EARNEST Partners assumed responsibility for managing the Portfolio's small/mid-cap value segment The previous subadvisory agreement between PI and Dreyfus was last approved by the Directors, including a majority of the Directors who were not parties to the contract and were not interested persons of those parties, as defined in the Investment Company Act (the Independent Directors), on May 23, 2001. The Fund will pay for the costs associated with preparing and distributing this information statement to its respective shareholders. This information statement will be mailed on or about February 22, 2002. THIS IS NOT A PROXY STATEMENT. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. 1 THE MANAGER Prudential Investments LLC, (PI or the Manager), Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102-4077, serves as the Fund's manager under a management agreement dated as of September 7, 2000. PI is a wholly-owned subsidiary of PIFM Holdco, Inc., which is a wholly-owned subsidiary of Prudential Asset Management Holding Company, which is a wholly-owned subsidiary of Prudential Financial, Inc. As of September 30, 2001, PI served as the investment manager to all of the Prudential U.S. and offshore registered investment companies, and as the administrator to closed-end investment companies, with aggregate assets of approximately $97.1 billion. Information concerning the Fund's current management arrangements can be found in Exhibit B. Information concerning officers of the Fund is set forth in Exhibit C. SHAREHOLDER REPORTS The Fund's most recent annual report for the fiscal year ended December 31, 2001 has been sent to its shareholders. The Fund's most recent annual and semi-annual reports may be obtained without charge by writing the Fund at Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102-4077 or by calling (800) 778-2255 (toll free). NEW SUBADVISORY AGREEMENT On November 28, 2001, a majority of the Directors, including a majority of the Independent Directors, unanimously approved the Subadvisory Agreement and the selection by PI of EARNEST Partners to replace Dreyfus as a subadviser to the Portfolio. At that time, the Directors also unanimously approved termination of the previous subadvisory agreement between PI and Dreyfus. The Directors considered many factors in deciding to replace Dreyfus as a subadviser, including the uncompetitive performance of the segment of the Portfolio managed by Dreyfus. In addition to management's belief (based on its own research as presented to the Board) that EARNEST Partners is likely to improve the performance of the segment of the Portfolio previously subadvised by Dreyfus, the Board also considered the following factors in approving EARNEST Partners as subadviser: - CLEAR INVESTMENT DISCIPLINE: EARNEST Partners employs a quantitative process for screening the stock universe, but most of the effort focuses on fundamental analysis. - STRONG PERSONNEL: EARNEST Partners currently managed over $3 billion in investment products, had 30 professionals and its principals averaged over 20 years' experience. - REDUCED FEE: The fee payable by PI to EARNEST Partners is .05% lower than the fee previously paid to Dreyfus. For the fiscal year ended December 31, 2001, Dreyfus received $49,700 for managing its portion of the Portfolio. The Subadvisory Agreement contains terms and conditions similar to those of the subadvisory agreement with Dreyfus, except as more fully described below under "Board Consideration of Subadvisory Agreement." See also "Terms of Subadvisory Agreement" below for a description of the new agreement. EARNEST Partners renders investment advice to the Portfolio in accordance with the investment objective and policies of the Portfolio as established by the Fund and also makes investment decisions to purchase and sell securities on behalf of the Portfolio, subject to the supervision of PI. Section 15 of the Investment Company Act requires that a majority of a mutual fund's outstanding voting securities approve the fund's subadvisory agreements. However, on September 11, 1996, the SEC issued an order granting exemptive relief from certain requirements of Section 15 to PI and any future open-end management investment company managed by PI, provided that such investment company complies with the conditions of the order. According to the SEC's order, which is subject to a number of 2 conditions, PI may enter into subadvisory agreements on behalf of certain funds without receiving prior shareholder approval. On January 31, 2001, shareholders of the Fund authorized the manager to enter into new subadvisory agreements without shareholder approval and on November 29, 2000, the staff of the Division of Investment Management of the SEC confirmed that the Fund may rely on the 1996 order. Thus, execution and implementation of the Subadvisory Agreement did not require shareholder consent. BOARD CONSIDERATION OF SUBADVISORY AGREEMENT At a regular in-person meeting of the Board at which a majority of the Directors were in attendance (including a majority of the Independent Directors), the Board of Directors considered and unanimously approved the Subadvisory Agreement. In considering the approval of the Subadvisory Agreement, the Directors, including those Directors who are not interested persons of the Fund, PI or EARNEST Partners (the Independent Directors), considered whether the approval of the Subadvisory Agreement was in the best interests of the Portfolio. At the meeting, the Directors reviewed materials furnished by PI and EARNEST Partners. The Directors discussed and reviewed the terms of the Subadvisory Agreement. With the exception of revisions to the fee schedule, the material terms of the Subadvisory Agreement are substantially the same as those in the prior subadvisory agreement in effect with Dreyfus. Under the prior subadvisory agreement in effect between PI and Dreyfus, the subadvisory fee was payable at the rate of 0.45% of the Portfolio's average daily net assets managed by Dreyfus. Under the new subadvisory agreement between PI and EARNEST Partners, the subadvisory fee is payable at the rate of 0.40% of the Portfolio's average daily net assets managed by EARNEST Partners. The reduction in the fee payable by PI to EARNEST will not result in a reduction of the management fee paid by the Fund to PI. Based upon their review, the Directors concluded that the Subadvisory Agreement was in the best interests of the Portfolio and its investors. Accordingly, after consideration of the above factors, and such other factors and information as they deemed relevant, the Directors, including the Independent Directors, unanimously approved the Subadvisory Agreement. INFORMATION CONCERNING EARNEST PARTNERS EARNEST Partners is a wholly owned subsidiary of EARNEST Holdings, LLC, an employee-owned company in which Paul E. Viera Jr., holds a controlling interest. Founded in 1998, EARNEST Partners had $3.550 billion in assets under management as of December 31, 2001. The address of EARNEST Partners is 75 14th Street, Suite 2300, Atlanta, GA 30309. Exhibit D contains information about the other mutual funds managed by EARNEST Partners with investment objectives and strategies similar to those of the Portfolio. Exhibit D also lists the principal executive officers and directors of EARNEST Partners. Pursuant to the Subadvisory Agreement, EARNEST Partners manages a portion of the assets of the Portfolio. Franklin Advisers, Inc., a wholly owned subsidiary of Franklin Resources, Inc., located at 920 Park Place, San Mateo, CA 94403, Jennison Associates LLC, a wholly owned subsidiary of Prudential, located at 466 Lexington Avenue, New York, NY 10017, Prudential Investment Management, Inc., a wholly owned subsidiary of Prudential, located at Gateway Center Two, 100 Mulberry Street, Newark, NJ 07102, and Pacific Investment Management Company, a subsidiary of Allianz Dresdner Asset Management of America, L.P., located at 840 Newport Center Drive, Suite 300, Newport Beach, CA 92660, manage the remaining portion of the Portfolio. TERMS OF SUBADVISORY AGREEMENT The following summary of the Subadvisory Agreement is qualified in its entirety by reference to the copy of the Subadvisory Agreement attached as Exhibit A to this information statement. 3 Under the Subadvisory Agreement, EARNEST Partners is compensated by PI (and not the Fund) at an annual rate of 0.40% of the Portfolio's average daily net assets managed by EARNEST Partners. The Subadvisory Agreement provides that, subject to PI's and the Board of Directors' supervision, EARNEST Partners is responsible for managing the investment operations of the Portfolio for the portion of the Portfolio that it manages, and for making investment decisions and placing orders to purchase and sell securities for such portion of the Portfolio , all in accordance with the investment objective and policies of the Portfolio as reflected in its current prospectus and statement of additional information and as may be adopted from time to time by the Board of Directors. In accordance with the requirements of the Investment Company Act, EARNEST Partners also provides PI with all books and records relating to the transactions it executes and renders to the Directors such periodic and special reports as the Board of Directors may reasonably request. DURATION AND TERMINATION. The Subadvisory Agreement will remain in full force and effect for a period of two years from the date of its execution, and will continue thereafter as long as its continuance is specifically approved at least annually by vote of a majority of the outstanding voting securities (as that term is defined in the Investment Company Act) of the Portfolio, or by the Board of Directors, including the approval by a majority of the Independent Directors, at a meeting called for the purpose of voting on such approval; provided, however, that (1) the Subadvisory Agreement may be terminated at any time without the payment of any penalty, either by vote of the Board of Directors or by vote of a majority of the outstanding voting securities of the Portfolio, (2) the Subadvisory Agreement will terminate immediately in the event of its assignment (within the meaning of the Investment Company Act) or upon the termination of the Fund's management agreement with PI, and (3) the Subadvisory Agreement may be terminated at any time by EARNEST Partners or PI on not more than 60 days' nor less than 30 days' written notice to the other party to the Subadvisory Agreement. LIABILITY. The Subadvisory Agreement provides that, in the absence of willful misfeasance, bad faith, gross negligence in the performance of its duties, or reckless disregard of its obligations and duties thereunder, EARNEST Partners will not be liable for any act or omission in connection with its activities as subadviser to the Fund. SHAREHOLDER PROPOSALS As a Maryland corporation, the Fund is not required to hold annual meetings of shareholders and the Directors currently do not intend to hold such meetings unless shareholder action is required in accordance with the Investment Company Act or the Fund's Articles of Incorporation. A shareholder proposal intended to be presented at any meeting of shareholders of the Fund must be received by the Fund a reasonable time before the Directors' solicitation relating thereto is made in order to be included in the Fund's proxy statement and form of proxy relating to that meeting and presented at the meeting. The mere submission of a proposal by a shareholder does not guarantee that the proposal will be included in the proxy statement because certain rules under the federal securities laws must be complied with before inclusion of the proposal is required. Jonathan D. Shain SECRETARY Dated: February 22, 2002 4 EXHIBIT A SUBADVISORY AGREEMENT WITH EARNEST PARTNERS LLC THE PRUDENTIAL SERIES FUND, INC. DIVERSIFIED CONSERVATIVE GROWTH PORTFOLIO SUBADVISORY AGREEMENT Agreement made as of this 12th day of December, 2001 between Prudential Investments LLC (PI or the Manager), a New York limited liability company and EARNEST Partners, LLC (the Subadviser), a Georgia limited liability company. WHEREAS, the Manager has entered into a Management Agreement, dated September 7, 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 1940 as amended (the 1940 Act), pursuant to which PI acts as Manager of the Fund; and WHEREAS, PI desires to retain the Subadviser to provide investment advisory services to the Fund and one or more of its series as specified in Schedule A hereto (individually and collectively, with the Fund, referred to herein as the Fund) and to manage such portion of the Fund as the Manager shall from time to time direct, and the Subadviser is willing to render such investment advisory services; 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 such portion of the Fund's portfolio, including the purchase, retention and disposition thereof, in accordance with the Fund's 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 such portion of the Fund's investments as the Manager shall direct and shall determine from time to time what investments and securities will be purchased, retained, sold or loaned by 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 copies of the Articles of Incorporation, By-Laws and Prospectus of the Fund provided to it by the Manager (the Fund Documents) and with the instructions and directions of the Manager and of the Board of Directors of the Fund, co-operate with the Manager's (or its designee's) personnel responsible for monitoring the Fund's compliance and will conform to and comply with the requirements of the 1940 Act, the Internal Revenue Code of 1986, as amended, 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. The Manager shall provide Subadviser timely with copies of any updated Fund documents. (iii) The Subadviser shall determine the securities and futures contracts to be purchased or sold by such portion of the Fund's portfolio, as applicable, and will place orders with or through such persons, brokers, dealers or futures commission merchants (including but not limited to Prudential Securities Incorporated (or any broker or dealer affiliated with the Subadviser) 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 Fund A-1 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 (or any broker or dealer affiliated with the 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 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 place orders for the purchase and sale of securities and futures contracts for the Fund 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 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 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 Fund's portfolio transactions effected by it as 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 or its affiliate shall provide the Fund's Custodian on each business day with information relating to all transactions concerning the portion of the Fund's assets it manages, 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 if the Manager manages the Fund in a 'manager-of-managers' style, the Manager will, among other things, (i) continually evaluate the performance of the Subadviser 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. A-2 (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 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. (d) In connection with its duties under this Agreement, the Subadviser agrees to maintain adequate compliance procedures to ensure its compliance with the 1940 Act, the Investment Advisers Act of 1940, as amended, and other applicable state and federal regulations. (e) The Subadviser shall furnish to the Manager copies of all records prepared in connection with (i) the performance of this Agreement and (ii) the maintenance of compliance procedures pursuant to paragraph 1(d) hereof as the Manager may reasonably request. 2. The Manager shall continue to have responsibility for all services to be provided to the Fund 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. The Manager shall provide (or cause the Fund's custodian to provide) timely information to the Subadviser regarding such matters as the composition of assets in the portion of the Fund managed by the Subadviser, cash requirements and cash available for investment in such portion of the Fund, and all other information as may be reasonably necessary for the Subadviser to perform its duties hereunder (including any excerpts of minutes of meetings of the Board of Directors of the Fund that affect the duties of the Subadviser). 3. For the services provided and the expenses assumed pursuant to this Agreement, the Manager shall pay the Subadviser as full compensation therefor, a fee equal to the percentage of the Fund's average daily net assets of the portion of the Fund managed by the Subadviser as described in the attached Schedule A. 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. 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 1940 Act) 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 1940 Act) or upon the termination of the Management Agreement. The Subadviser agrees that it will promptly notify the Fund and the Manager of the occurrence or anticipated occurrence of any event that would result in the assignment (as defined in the 1940 Act) of this Agreement, including, but not limited to, a change or anticipated A-3 change in control (as defined in the 1940 Act) of the Subadviser; provided that the Subadviser need not provide notice of such an anticipated event before the anticipated event is a matter of public record. Any notice or other communication required to be given pursuant to Section 5 of this Agreement shall be deemed duly given if delivered or mailed by registered mail, postage prepaid, (1) to the Manager at Gateway Center Three, 100 Mulberry Street, 4th Floor, Newark, NJ 07102-4077, Attention: Secretary; (2) to the Fund at Gateway Center Three, 4th Floor, 100 Mulberry Street, Newark, NJ 07102-4077, Attention: Secretary; or (3) to the Subadviser at 75 14th Street, Suite 2300, Atlanta, GA 30309, Attention: James Wilson. 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 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 INVESTMENTS LLC By: /s/ ROBERT F. GUNIA ----------------------------------- Robert F. Gunia Executive Vice President EARNEST PARTNERS LLC By: /s/ PAUL E. VIERA ----------------------------------- Paul E. Viera Chief Executive Officer Dated as of December 12, 2001 A-4 SCHEDULE A The Prudential Series Fund, Inc. Diversified Conservative Growth Portfolio As compensation for services provided by EARNEST Partners, LLC (EARNEST), Prudential Investments LLC (PI) will pay EARNEST a fee equal, on an annualized basis, to the following: 0.40 of 1% of the average daily net assets of the portion of the Diversified Conservative Growth Portfolio managed by EARNEST. A-5 EXHIBIT B MANAGEMENT OF THE FUND THE MANAGER Prudential Investments LLC (PI or the Manager), Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102-4077, serves as the Fund's Manager under a management agreement (the Management Agreement) dated as of September 7, 2000, and renewed thereafter as required by the Investment Company Act. The Management Agreement was last approved by the Directors of the Fund, including a majority of the Directors who were not parties to the contract and were not interested persons of those parties (as defined in the Investment Company Act) on May 23, 2001. The Management Agreement was approved by contract owners on January 31, 2001. TERMS OF THE MANAGEMENT AGREEMENT Pursuant to the Management Agreement for the Fund, PI is subject to the supervision of the Directors and, in conformity with the stated policies of the Fund, manages both the investment operations of the Fund, and the composition of the Fund's portfolios, including the purchase, retention and disposition of portfolio securities. The Manager is authorized to enter into subadvisory agreements for investment advisory services in connection with the management of the Fund and each Portfolio thereof. The Manager will continue to have responsibility for all investment advisory services furnished pursuant to any such investment advisory agreements. The Manager reviews the performance of all subadvisers, and makes recommendations to the Directors with respect to the retention and renewal of contracts. In connection therewith, PI is obligated to keep certain books and records of the Fund. PI also administers the Fund's business affairs and, in connection therewith, furnishes the Fund with office facilities, together with those ordinary clerical and bookkeeping services which are not being furnished by State Street Bank and Trust Company, the Fund's custodian and Prudential Mutual Fund Services LLC (PMFS), the Fund's transfer and dividend disbursing agent. The management services of PI for the Fund are not exclusive under the terms of the Management Agreements and PI is free to, and does, render management services to others. PI has authorized any of its directors, officers and employees who have been elected as Directors or officers of the Fund to serve in the capacities in which they have been elected. All services furnished by PI under the Management Agreement may be furnished by any such directors, officers or employees of PI. In connection with its management of the business affairs of the Fund, PI bears the following expenses: (a) the salaries and expenses of all of its and the Fund's personnel, except the fees and expenses of Directors who are not affiliated persons of PI or the Fund's subadviser; (b) all expenses incurred by PI or by the Fund in connection with managing the ordinary course of the Fund's business, other than those assumed by the Fund, as described below; and (c) the fees payable to each subadviser pursuant to the subadvisory agreement between PI and each subadviser. For its services, PI is compensated by the Fund at the rate of 0.75% of the Portfolio's average daily net assets. Under the terms of the Management Agreement, the Fund is responsible for the payment of the following expenses: (a) the fees payable to the Manager, (b) the fees and expenses of Directors who are not affiliated persons of the Manager or the Fund's subadviser, (c) the fees and certain expenses of the B-1 Fund's custodian and transfer and dividend disbursing agent, including the cost of providing records to the Manager in connection with its obligation of maintaining required records of the Fund and of pricing Fund shares, (d) the charges and expenses of the Fund's legal counsel and independent accountants, (e) brokerage commissions and any issue or transfer taxes chargeable to the Fund in connection with its securities transactions, (f) all taxes and corporate fees payable by the Fund to governmental agencies, (g) the fees of any trade associations of which the Fund may be a member, (h) the cost of share certificates representing shares of the Fund, (i) the cost of fidelity and liability insurance, (j) the fees and expenses involved in registering and maintaining registration of the Fund and of its shares with the SEC and qualifying the Fund's shares under state securities laws, including the preparation and printing of the Fund's registration statements and prospectuses for such purposes, (k) allocable communications expenses with respect to investor services and all expenses of contract owner and Board meetings and of preparing, printing and mailing reports, proxy statements and prospectuses to contract owners in the amount necessary for distribution to the shareholders, and (l) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the Fund's business. The Management Agreement provides that PI will not be liable for any error of judgment or for any loss suffered by the Fund in connection with the matters to which the Management Agreement relates, except a loss resulting from willful misfeasance, bad faith, gross negligence or reckless disregard of duty. The Management Agreement will continue in effect for a period of more than two years from the date of execution only so long as such continuance is specifically approved at least annually in conformity with the Investment Company Act. The Management Agreement also provides that it will terminate automatically if assigned and that it may be terminated without penalty by the Directors of the Fund, by vote of a majority of the Fund's outstanding voting securities (as defined in the Investment Company Act) or by the Manager, upon not more than 60 days' nor less than 30 days' written notice to the Fund. INFORMATION ABOUT PI PI is a wholly-owned subsidiary of PIFM Holdco, Inc., which is a wholly-owned subsidiary of Prudential Asset Management Holding Company, which is a wholly-owned subsidiary of Prudential Financial, Inc. (Prudential), a major, diversified insurance and financial services company. Prudential's address is Prudential Plaza, Newark, New Jersey 07102-4077. PI is organized in New York as a limited liability company. PI acts as manager for the following investment companies, in addition to the Fund: Cash Accumulation Trust, COMMAND Money Fund, COMMAND Government Fund, COMMAND Tax-Free Fund, Nicholas-Applegate Fund, Inc., (Nicholas-Applegate Growth Equity Fund), Prudential California Municipal Fund, Prudential Equity Fund, Inc., Prudential Europe Growth Fund, Inc., Prudential Gibraltar Fund, Inc., Prudential Global Total Return Fund, Inc., Prudential Government Income Fund, Inc., Prudential Government Securities Trust, Prudential High Yield Fund, Inc., Prudential High Yield Total Return Fund, Inc., Prudential Index Series Fund, Prudential Institutional Liquidity Portfolio, Inc., Prudential MoneyMart Assets, Inc., Prudential Municipal Bond Fund, Prudential Municipal Series Fund, Prudential National Municipals Fund, Inc., Prudential Natural Resources Fund, Inc., Prudential Pacific Growth Fund, Inc., Prudential Real Estate Securities Fund, Prudential Sector Funds, Inc., Prudential Short-Term Corporate Bond Fund, Inc., Prudential Small Company Fund, Inc., Prudential Tax-Free Money Fund, Inc., Prudential Tax-Managed Funds, Prudential Tax-Managed Small-Cap Fund, Inc., Prudential Total Return Bond Fund, Inc., Prudential 20/20 Focus Fund, Prudential U.S. Emerging Growth Fund, Inc., Prudential Value Fund, Prudential World Fund, Inc., Special Money Market Fund, Inc., Strategic Partners Asset Allocation Funds, Strategic Partners Opportunity Funds, Strategic Partners Style Specific Funds, The Prudential Investment Portfolios, Inc., The Prudential Variable Contract Account-2, The Prudential Variable Contract Account-10, The Prudential Variable Contract Account-11 and The Target Portfolio Trust. B-2 PI'S DIRECTORS AND OFFICERS The business and other connections of PI's directors and principal executive officers are set forth below. The address of each person is Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102-4077.
NAME POSITION WITH PI PRINCIPAL OCCUPATIONS - ---- ---------------- --------------------- David R. Odenath, Jr........... President, Chief Executive President, Chief Executive Officer and Chief Officer and Chief Operating Operating Officer, PI; Senior Vice President, Officer The Prudential Insurance Company of America (Prudential) Catherine Brauer............... Executive Vice President Executive Vice President, PI John L. Carter................. Executive Vice President Executive Vice President, PI Robert F. Gunia................ Executive Vice President, Chief Executive Vice President & Chief Administrative Administrative Officer and Officer, PI; Vice President, Prudential; Treasurer President, Prudential Investment Management Services LLC (PIMS) William V. Healey.............. Executive Vice President, Chief Executive Vice President, Chief Legal Officer Legal Officer and Secretary and Secretary, PI; Vice President and Associate General Counsel, Prudential; Senior Vice President, Chief Legal Officer and Secretary, PIMS Marc S. Levine................. Executive Vice President Executive Vice President, PI Judy A. Rice................... Executive Vice President Executive Vice President, PI Ajay Sawhney................... Executive Vice President Executive Vice President, PI Lynn M. Waldvogel.............. Executive Vice President Executive Vice President, PI
THE TRANSFER AGENT The Fund's transfer agent is Prudential Mutual Fund Services LLC (PMFS), 194 Wood Avenue South, Iselin, New Jersey 08830. PMFS received $1,100 for its services in connection with the Portfolio during the fiscal year ended December 31, 2001. BROKERAGE During the fiscal year ended December 31, 2001, the Portfolio paid no commissions to Prudential Securities Incorporated. B-3 EXHIBIT C OFFICER INFORMATION
NAME (AGE) OFFICE(S) WITH THE FUND PRINCIPAL OCCUPATIONS - ---------- ----------------------- --------------------- David R. Odenath, Jr. (44)..... President President, Chief Executive Officer and Chief Operating Officer (since June 1999) of PI; Senior Vice President (since June 1999) of Prudential; formerly Senior Vice President (August 1993-May 1999) of PaineWebber Group, Inc. Robert F. Gunia (55)........... Vice President Executive Vice President and Chief Administrative Officer (since June 1999) of Prudential Investments; Executive Vice President and Treasurer (since December 1996) of Prudential Investments LLC (PI); President (since April 1999) of Prudential Investment Management Services LLC (PIMS); Corporate Vice President (since September 1997) of The Prudential Insurance Company of America (Prudential); formerly Senior Vice President (March 1987-May 1999) of Prudential Securities Incorporated (Prudential Securities); formerly Chief Administrative Officer (July 1989-September 1996), Director (January 1989-September 1996) and Executive Vice President, Treasurer and Chief Financial Officer (June 1987-December 1996) of Prudential Mutual Fund Management, Inc. (PMF); Vice President and Director (since May 1989) of The Asia Pacific Fund, Inc. Judy A. Rice (53).............. Vice President Executive Vice President (since 1999) of Prudential Investments; Executive Vice President (since 1999) of PI; formerly various positions to Senior Vice President (1992-1999) of Prudential Securities; and various positions to Managing Director (1975-1992) of Salomon Smith Barney; Governor of the Money Management Institute; Member of the Prudential Securities Operating Council and the National Association for Variable Annuities. Grace C. Torres (42)........... Treasurer and Principal Senior Vice President (since January 2000) of Financial and Accounting PI; formerly First Vice President (December Officer 1996-January 2000) of PI and First Vice President (March 1993-1999) of Prudential Securities. Jonathan D. Shain (43)......... Secretary Vice President and Corporate Counsel (since August 1998) of Prudential; formerly Attorney with Fleet Bank, N.A. (January 1997-July 1998) and Associate Counsel (August 1994-January 1997) of New York Life Insurance Company. William V. Healey (48)......... Assistant Secretary Vice President and Associate General Counsel (since 1998) of Prudential; Executive Vice President, Secretary and Chief Legal Officer (since February 1999) of Prudential Investments LLC; Senior Vice President, Chief Legal Officer and Secretary (since December 1998) of Prudential Investment Management Services LLC; Executive Vice President, Chief Legal Officer and Secretary (since February 1999) of Prudential Mutual Fund Services LLC; Director (since June 1999) of ICI Mutual Insurance Company; prior to August 1998, Associate General Counsel of the Dreyfus Corporation (Dreyfus), a subsidiary of Mellon Bank, N.A. (Mellon Bank), and an officer and/or director of various affiliates of Mellon Bank and Dreyfus.
C-1 EXHIBIT D OTHER FUNDS MANAGED BY EARNEST PARTNERS The following table sets forth information relating to the other registered investment company portfolios for which EARNEST Partners acts as an investment adviser or subadviser with investment objectives, policies and strategies that are substantially similar to those of the Portfolio.
ANNUAL MANAGEMENT FEE APPROXIMATE NET FUND (AS A % OF AVERAGE NET ASSETS) ASSETS AS OF 12/31/01* - ---- ------------------------------ ---------------------- Harbor Small Cap Value 0.75% $2,419,124 Fund.....................
- ------------------------ * Net assets of the portion advised by EARNEST Partners (on which fee is based) EARNEST PARTNERS MANAGEMENT The table below lists the name, address, position with EARNEST Partners and principal occupation during the past five years for the principal executive officers and directors of EARNEST Partners.
POSITION WITH EARNEST PARTNERS NAME AND ADDRESS AND PRINCIPAL OCCUPATION - ---------------- ------------------------ Paul E. Viera, Jr........................................ Chief Executive Officer and Partner of EARNEST Partners; founding member of EARNEST Partners; formerly Global Partner of, and portfolio manager with, INVESCO Capital Management (1991-1998). John M. Friedman......................................... Partner, EARNEST Partners; formerly Vice President of Investek Capital Management, Inc. (1989-1999).
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