SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
(Amendment No. __)
Check the appropriate box:
[x] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[ ] Definitive Information Statement
The Prudential Series Fund, Inc.
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(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
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THE PRUDENTIAL SERIES FUND, INC.
Diversified Conservative Growth Portfolio
751 Broad Street
Newark, New Jersey 07102-3777
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INFORMATION STATEMENT
August 4, 2000
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TO THE CONTRACT OWNERS:
On February 29, 2000, at a regular meeting of the Board of Directors of
The Prudential Series Fund, Inc., the Board approved a new subadvisory agreement
for the Diversified Conservative Growth Portfolio. This new subadvisory
agreement was entered into between The Prudential Insurance Company of America
and Pacific Investment Management Company LLC. This information statement
informs you of the circumstances surrounding the Board's approval of this new
subadvisory agreement and provides you with an overview of its terms.
By order of the Board,
LEE AUGSBURGER
Secretary
THIS IS NOT A PROXY STATEMENT. WE ARE NOT ASKING YOU TO COMPLETE ANY PROXY OR
VOTING CARD. YOU ARE REQUESTED NOT TO SEND US ANY PROXY OR VOTING CARD.
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THE PRUDENTIAL SERIES FUND, INC.
Diversified Conservative Growth Portfolio
(800) 778-2255
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751 Broad Street
Newark, New Jersey 07102-3777
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INFORMATION STATEMENT
August 4, 2000
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This information statement is being furnished to the contract owners
with investments in the Diversified Conservative Growth Portfolio (the
"Portfolio") of The Prudential Series Fund, Inc. (the "Fund"). This information
statement will first be mailed on or about August 4, 2000. The Fund is a
diversified open-end 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 as the
"Board," "Board Members" or "Directors." The Fund's principal executive office
is located at 751 Broad Street, Newark, New Jersey 07102-3777.
In accordance with the terms of an order from the Securities and
Exchange Commission ("SEC"), the Board may enter into new subadvisory agreements
for the Portfolio without receiving prior approval of contract owners. The
Prudential Insurance Company of America ("Prudential" or the "Manager") serves
as the overall manager of the Portfolio and is responsible for monitoring the
performance of subadvisers that handle the actual day-to-day investment
management of the Portfolio.
This information statement informs you that on February 29, 2000, the
Directors, including the Directors who are not "interested persons" of the Fund
or Prudential as defined in the Investment Company Act (the "Independent
Directors"), unanimously approved a new subadvisory agreement dated May 5, 2000
between Prudential and Pacific Investment Management Company LLC ("PIMCO") (the
"New Subadvisory Agreement"). A form of the New Subadvisory Agreement is
attached hereto as Exhibit A.
PIMCO has served as a subadviser to the Portfolio since the Portfolio
commenced operations under a subadvisory agreement dated May 1, 1999 (the "Old
Subadvisory Agreement). The Directors, approved the Old Subadvisory Agreement on
February 25, 1999. The Old Subadvisory Agreement was approved by Prudential on
April 5, 1999, as sole shareholder of the Portfolio. The Old Subadvisory
Agreement automatically terminated on May 5, 2000 as a result of a change of
control affecting PIMCO.
PIMCO will pay for the costs associated with entering into the New
Subadvisory Agreement and preparing and distributing this information statement.
In a transaction that closed on May 5, 2000 (the "Transaction"),
Allianz of America, Inc. ("Allianz of America") acquired approximately 70% of
the outstanding partnership interests in PIMCO
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Advisors L.P. ("PIMCO Advisors"), the parent of PIMCO, for a total consideration
of approximately $3.3 billion. The address of PIMCO is 840 Newport Center Drive,
Suite 300, Newport Beach, CA 92660. The address of PIMCO Advisors is 800 Newport
Center Drive, Newport Beach, CA 92660. The address of Allianz of America is
_________. Allianz of America is a subsidiary of Allianz AG, a large,
publicly-traded insurance company based in Germany. The remainder of the
outstanding partnership interests in PIMCO Advisors is owned by Pacific Life
Insurance Company ("Pacific Life"). The address of Pacific Life is 700 Newport
Center Drive, Newport Beach, CA 92660.
In connection with the closing, Allianz of America entered into a
put/call arrangement for the possible disposition of Pacific Life's interest in
PIMCO Advisors. The put option held by Pacific Life allows it to require Allianz
of America, on the last business day of each calendar quarter following the
closing of the Transaction, to purchase at a formula-based price all of the
PIMCO Advisors units owned directly or indirectly by Pacific Life. The call
option held by Allianz of America allows it, beginning January 31, 2003 or upon
a change in control of Pacific Life, to require Pacific Life to sell or cause to
be sold to Allianz of America, at the same price, all of the PIMCO Advisors
units owned directly or indirectly by Pacific Life.
As part of the Transaction, PIMCO Advisors and PIMCO entered into
employment, retention and incentive arrangements with key employees of PIMCO
Advisors and PIMCO. These benefits included new employment agreements, retention
and incentive awards vesting over a term of years and restricted stock grants.
In addition, certain key employees of PIMCO Advisors' investment advisory
subsidiaries received payments in respect of previously existing non-competition
arrangements in connection with the acquisition by Allianz of America of the
PIMCO Advisors units on which such arrangements were based.
The Transaction constituted a change of control of PIMCO. Under the
Investment Company Act, this change of control is treated as an assignment that
automatically terminated the Old Subadvisory Agreement as of the closing date.
POST-TRANSACTION STRUCTURE AND OPERATIONS
As a result of the Transaction, PIMCO Advisors and PIMCO are now
controlled by Allianz of America. Allianz of America controls PIMCO Advisors and
PIMCO through its managing member interest in Pacific-Allianz Partners LLC
("PacPartners LLC"), which is the sole general partner of PIMCO Advisors
following the Transaction. The address of PacPartners LLC is _______________.
While Allianz of America controls PacPartners LLC, Pacific Life holds a portion
of its continuing interest in PIMCO Advisors through an interest in PacPartners
LLC. Allianz of America, through subsidiaries, is managing member of PacPartners
LLC and has control over all actions taken by PacPartners LLC as the general
partner of PIMCO Advisors, although Pacific Life's consent is required for
certain extraordinary actions.
Operationally, PIMCO remains independent and leads the global fixed
income investment efforts of Allianz AG. In this regard, PIMCO coordinates its
activities with Allianz Asset Management ("AAM"), a subsidiary of Allianz AG
that coordinates global Allianz asset management activities. To permit the
provision of advisory services to non-U.S. clients of Allianz AG, PIMCO
personnel, including personnel with portfolio management responsibility for the
Portfolio, may become affiliated with AAM or other Allianz-controlled advisory
firms. PIMCO also may call upon the research capabilities and resources of
Allianz AG and its advisory affiliates in connection with providing investment
advice to its clients. PIMCO will continue to operate in the United States under
its existing name.
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Both William S. Thompson Jr., the current Chief Executive Officer of
PIMCO, and William H. Gross, the current Chief Investment Officer of PIMCO, have
roles on the Executive Committee of AAM, with Mr. Thompson serving as the
Executive Committee's Deputy Chairman. Messrs. Thompson and Gross entered into
employment contracts with a term of seven years following the Transaction. Other
key employees of PIMCO and PIMCO Advisors also contractually agreed to remain
with PIMCO for significant periods following the Transaction.
DESCRIPTION OF ALLIANZ AG AND ITS AFFILIATES
Allianz AG, the parent of Allianz of America, is a publicly-traded
German Aktiengesellschaft (a German publicly-traded company) which, together
with its subsidiaries, comprises the world's second largest insurance group as
measured by premium income. Allianz AG is a leading provider of financial
services, particularly in Europe, and is represented in 68 countries worldwide
through subsidiaries, branch and representative offices, and other affiliated
entities. In its last fiscal year, the Allianz group wrote approximately $50
billion in gross insurance premiums. After completion of the Transaction, PIMCO
and the Allianz group combined have over $650 billion in assets under
management. Allianz AG's address is: Koniginstrasse 28, D-80802, Munich,
Germany.
Significant institutional shareholders of Allianz AG currently include,
among others, Dresdner Bank AG, Deutsche Bank AG, Munich Reinsurance and
HypoVereinsbank. BNP Paribas, Credit Lyonnais, Munich Reinsurance,
HypoVereinsbank, Dresdner Bank AG and Deutsche Bank AG, as well as certain
broker-dealers that might be deemed to be affiliated with these entities, such
as Bankers Trust Company, DB Alex Brown LLC, Deutsche Bank Securities, Inc. and
Dresdner Kleinwort Benson North America LLC (collectively, the "Affiliated
Brokers"), may be considered to be affiliated persons of PIMCO. Absent an SEC
exemption or other relief, the Portfolio generally is precluded from effecting
principal transactions with the Affiliated Brokers, and its ability to purchase
securities being underwritten by an Affiliated Broker or to utilize the
Affiliated Brokers for agency transactions is subject to restrictions. PIMCO
does not believe that the applicable restrictions on transactions with the
Affiliated Brokers described above materially adversely affects its ability to
provide services to the Portfolio, the Portfolio's ability to take advantage of
market opportunities, or the Portfolio's overall performance. Other portfolios
of the Fund for which PIMCO (or an affiliate) does not serve as investment
subadviser are not, in general, subject to these same restrictions.
ANTICIPATED IMPACT OF THE TRANSACTION ON MANAGEMENT OF THE PORTFOLIO
PIMCO received structural and contractual protections as terms of the
Transaction that ensure PIMCO's operational autonomy and continuity of
management. PIMCO is confident that Allianz AG is committed to the people and
process that have led to PIMCO's success over the years. Accordingly, PIMCO
believes that the Transaction should not have an immediate impact, other than as
already noted above, on the management of the Portfolio or PIMCO's capacity to
provide the type, quality, or quantity of services that it has provided, and
that the Portfolio should continue to receive the same high quality of service
after the Transaction. As discussed below, however, PIMCO believes that the
Transaction offers the potential to enhance significantly its future ability to
deliver quality investment services.
THE BENEFITS OF THE TRANSACTION
PIMCO anticipates that the Transaction with Allianz AG benefits PIMCO
and the Portfolio in a variety of ways, including the following:
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o PIMCO's investment expertise is enhanced because of the business
experience and relationships that Allianz AG has built around the
globe, particularly in Europe. PIMCO's access to European markets and
business opportunities is greatly enhanced by Allianz AG's experience
and relationships. The combined global resources of PIMCO and Allianz
AG allow PIMCO to take advantage of the growth in international markets
and the explosive potential for premier money managers in the global
marketplace.
o Allianz AG has a team of fixed income professionals in place that
currently manages more than $100 billion in assets. Integration of
these professionals and assets with PIMCO provides an excellent
opportunity for furthering PIMCO's global fixed income expertise.
o The rotation of many of PIMCO's key investment professionals through
international offices and overseas personnel through PIMCO's offices
will result in more seasoned professionals with global experience.
o The combination provides additional career opportunities for PIMCO
professionals, furthering PIMCO's ability to attract and retain the
best people.
o Allianz AG has a stated growth strategy to be among the top five
providers of its services in the world's key markets, which is a key
factor in PIMCO's decision to proceed with the Transaction. The
combined entity is the sixth largest investment manager in the world.
The Transaction significantly increases assets under PIMCO's
management, and offers the opportunity for continued growth in the
future. Strong relative investment results depend on a sound,
disciplined investment process and effective execution; size can be a
benefit to both.
SECTION 15(F) OF THE INVESTMENT COMPANY ACT
Section 15(f) provides a non-exclusive safe harbor for an investment
adviser to an investment company or any affiliated persons to receive any amount
or benefit in connection with a "change in control" of the investment adviser as
long as two conditions are satisfied. First, an "unfair burden" must not be
imposed on investment company clients of the adviser as a result of the
transaction, or any express or implied terms, conditions or understandings
applicable to the transaction. The term "unfair burden" (as defined in the
Investment Company Act) includes any arrangement during the two-year period
after the transaction whereby the investment adviser (or predecessor or
successor adviser), or any "interested person" (as defined in the Investment
Company Act) of any such adviser, receives or is entitled to receive any
compensation, directly or indirectly, from such an investment company or its
security holders (other than fees for bona fide investment advisory or other
services) or from any other person in connection with the purchase or sale of
securities or other property to, from or on behalf of such investment company.
The Board has been advised that PIMCO is aware of no circumstances arising from
the Transaction that might result in an unfair burden being imposed on the Fund.
The second condition of Section 15(f) is that during the three-year period after
the transaction, at least 75% of each such investment company's board of
directors must not be "interested persons" (as defined in the Investment Company
Act) of the investment adviser (or predecessor or successor adviser). The Board,
as currently constituted, complies with this requirement.
NEW SUBADVISORY AGREEMENT
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The New Subadvisory Agreement contains substantially the same terms and
conditions as the Old Subadvisory Agreement. See Exhibit A for a form of the New
Subadvisory Agreement.
The New Subadvisory Agreement has three minor differences from the Old
Subadvisory Agreement. First, the new agreement recognizes that PIMCO has
changed from a partnership to a limited liability company. Second, the new
agreement is dated May 5, 2000 rather than May 1, 1999. Third, the new agreement
recognizes that PIMCO may, from time to time, seek research assistance and rely
on other investment management resources of its affiliated companies. The
Portfolio will disclose that a portion of the compensation received by PIMCO
from the Manager may be paid to those affiliates in return for such services
provided. These arrangements have no impact on PIMCO's continuing responsibility
for the management of the Portfolio and do not cause any increase in the overall
fees or expenses borne by the Portfolio.
Other than the three minor differences noted above, the terms of the
two agreements are the same, including the subadvisory fee the Manager (and not
the Portfolio) pays to PIMCO. Under the Subadvisory Agreement, PIMCO is
compensated by Prudential at an annual rate of 0.25% of the Portfolio's average
net assets managed by PIMCO. During 1999, PIMCO's aggregate fee was $49,666.
The New Subadvisory Agreement provides that, subject to Prudential's
and the Board's supervision, PIMCO is responsible for managing the investment
operations of the Portfolio (or portion thereof allocated to PIMCO) and for
making investment decisions and placing orders to purchase and sell securities
for it (or portion of it allocated to PIMCO), all in accordance with the
investment objectives 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. In accordance with the requirements of the Investment
Company Act, PIMCO also provides Prudential with all books and records relating
to the transactions it executes and renders to the Directors such periodic and
special reports as the Board may reasonably request.
The New Subadvisory Agreement will remain in effect for a period of two
years from the date of its execution, and will continue thereafter as long as
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 and a majority of Independent Directors, at a meeting
called for the purpose of voting on such approval; provided, however, that (1)
the 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 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
Prudential with respect to the Portfolio, and (3) the agreement may be
terminated without penalty at any time by PIMCO or Prudential on not more than
60 days' nor less than 30 days' written notice to the other party.
The New 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, PIMCO will not be
liable for any act or omission in connection with its activities as subadviser
to the Portfolio.
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BOARD CONSIDERATION OF NEW SUBADVISORY AGREEMENT
At a regular meeting of the Board which all the Directors attended, the
Directors considered and unanimously approved the New Subadvisory Agreement on
February 29, 2000. The Directors, including the Independent Directors,
considered whether the approval of the New Subadvisory Agreement was in the best
interests of the Portfolio and its contract owners. At the meeting, the
Directors reviewed materials furnished by the Manager. Among other things, the
Directors considered the investment philosophy and style of PIMCO, its relative
performance record, its personnel and its financial strength. The Board also
considered the investment management services provided by PIMCO to the Portfolio
prior to February 29, 2000, and PIMCO's representation that the new ownership
structure would not adversely affect the nature and quality of those services.
The Directors also considered that the terms of the New Subadvisory
Agreement, are substantially the same as the subadvisory agreement in effect
with PIMCO prior to May 5, 2000. The Directors concluded that the New
Subadvisory Agreement was reasonable, fair and in the best interests of the
Portfolio and contract owners, and that the fee provided in the New Subadvisory
Agreement (the same as in the Old Subadvisory Agreement with PIMCO) was fair and
reasonable. 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 New Subadvisory Agreement
with PIMCO.
ADDITIONAL INFORMATION ABOUT PIMCO
PIMCO has specialized in fixed income investing since the firm was
established in 1971. PIMCO is registered as an investment adviser under the
Investment Advisers Act of 1940 and is registered as a commodity trading adviser
with the Commodity Futures Trading Commission. The address of PIMCO is 840
Newport Center Drive, Suite 300, Newport Beach, CA 92660. As of December 31,
1999, PIMCO had approximately $186 billion in assets under management. Exhibit B
contains information about the other mutual funds managed by PIMCO with
investment objectives and strategies similar to those of the Portfolio (or
portion thereof) managed by PIMCO. Exhibit C lists the principal executive
officer and managing directors of PIMCO.
Pursuant to the New Subadvisory Agreement, PIMCO manages a portion of
the assets of the Portfolio. The other portions of the Portfolio are managed by
Jennison Associates LLC, 466 Lexington Avenue, New York, NY 10017; Prudential
Investment Corporation, 751 Broad Street, Newark, NJ 07102; Franklin Advisers,
Inc., 777 Mariners Island Blvd., San Mateo, CA 94404; and The Dreyfus
Corporation, 200 Park Avenue, New York, NY 10066.
CONTRACT OWNER REPORTS
The Fund's most recent annual report for the year ended December 31,
1999 has previously been sent to contract owners.
THE FUND'S MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS MAY BE OBTAINED
WITHOUT CHARGE BY WRITING TO THE PRUDENTIAL SERIES FUND, INC., 751 BROAD STREET,
NEWARK, NEW JERSEY 07102-3777 OR BY CALLING (800) 778-2255 (TOLL FREE).
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THE MANAGER
Prudential serves as the overall investment manager and administrator
for the Fund under a contract dated July 14, 1988 and renewed thereafter as
required by the Investment Company Act. It was most recently renewed by the
Board on May 23, 2000. Under the Fund's management agreement, Prudential,
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 assets of the Fund's portfolios, including the purchase,
retention and disposition thereof. The Manager is authorized to enter into
subadvisory agreements for investment advisory services in connection with the
management of the Fund and each of its portfolios. The Manager will continue to
have responsibility for all investment advisory services furnished pursuant to
any such investment advisory agreements. As of December 31, 1999, Prudential had
total assets under management of approximately $364 billion. The principal
business address of Prudential is 751 Broad Street, Newark, New Jersey
07102-3777.
Prudential is currently considering reorganizing itself into a publicly
traded stock company through a process known as "demutualization." On February
10, 1998, the company's Board of Directors authorized management to take the
preliminary steps necessary to allow the company to demutualize. Demutualization
is a complex process involving development of a plan of reorganization, adoption
of a plan by the company's Board of Directors, a public hearing, voting by
qualified policyholders and regulatory approval. Prudential is working toward
completing this process in 2001 and currently expects adoption of a plan by
Prudential's Board to take place in the latter part of 2000. However, there is
no certainty that demutualization will be completed in this time frame or that
the necessary approvals will be obtained. Also it is possible that after careful
review, Prudential could decide not to demutualize or could decide to delay its
plans.
Prudential Investment Corporation ("PIC"), a wholly-owned subsidiary
of Prudential, provides substantially all of the investment advisory services to
the Portfolios in the Fund, except the services provided by the subadvisers, and
has served as an investment adviser to investment companies since 1984.
SHAREHOLDINGS AND BROKERAGE
To the knowledge of management, the executive officers and Directors of
the Fund, as a group, beneficially owned less than 1% of the outstanding shares
of the Portfolio as of June 30, 2000. The Portfolio did not pay any commissions
to affiliated brokers.
THE DISTRIBUTOR AND TRANSFER AGENT
Prudential Investment Management Services LLC ("PIMS" or the
"Distributor") distributes the Fund's shares under a Distribution Agreement with
the Fund. PIMS' principal business address is 751 Broad Street, Newark, New
Jersey 07102-3777. PIMS is an indirect wholly-owned subsidiary of Prudential. No
distribution fee is paid with respect to any outstanding shares.
The Fund's transfer agent is Prudential Mutual Fund Services LLC
("PMFS"), Raritan Plaza One, Edison, New Jersey 08837. PMFS is an indirect
wholly-owned subsidiary of Prudential. During 1999, PMFS received $125,000 for
its performance under the Transfer Agency and Service Agreement and
reimbursement of certain out-of-pocket expenses including, but not limited to,
postage, stationery, printing, allocable communication costs, microfilm or
microfiche, and expenses incurred at the specific direction of the Fund.
LEE AUGSBURGER
Secretary
August 4, 2000
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EXHIBIT A
THE PRUDENTIAL SERIES FUND, INC.
SUBADVISORY AGREEMENT
Agreement made as of this 5th day of May, 2000, between The Prudential
Insurance Company of America (the "Manager"), a New Jersey insurance company,
and Pacific Investment Management Company LLC (the "Adviser"), a Delaware
limited liability company.
WHEREAS, the Manager has 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.
WHEREAS, shares of the Fund are divided into separate series or
portfolios (each a portfolio), 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.
WHEREAS, the Manager has retained the Adviser to provide investment
advisory services to the Diversified Conservative Growth Portfolio of the Fund
(the "Portfolio") in connection with the management of the Fund and to manage
such portion of the Portfolio as the Manager shall from time to time direct, and
the Adviser is willing to render such investment advisory services.
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 Portfolio as
the Manager shall direct and shall manage the composition of the Portfolio,
including the purchase, retention and disposition thereof, in accordance with
the 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:
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(i) The Adviser shall provide supervision of the 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) The Adviser may from time to time seek research assistance and
rely on investment management resources available to it
through its affiliated companies, but in no case shall such
reliance relieve the Adviser of any of its obligations
hereunder, nor shall the Portfolio be responsible for any
additional fees or expenses hereunder as a result.
(iii) 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 the 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, and all
other applicable federal and state laws and regulations.
(iv) The Adviser shall determine the securities and futures
commodities or other assets to be purchased or sold by the
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 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 the Portfolio with investment supervision,
it is recognized that the Adviser will give primary
consideration to securing
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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 the 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 the 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
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under no obligation to, aggregate the securities, 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 and to such other clients.
(v) 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.
(vi) The Adviser shall provide the Fund's custodian (the
"Custodian") on each business day with information relating to
all transactions concerning the 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 the 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.
(vii) The investment management services provided by the Adviser
hereunder are not exclusive, and the Adviser shall be free to
render similar services to others.
A-4
<PAGE>
(b) Services to be furnished by the Adviser under this
Agreement may be furnished through the medium of any of its directors, officers
or employees.
(c) The Adviser shall keep the Portfolio's books and records
required to be maintained by the Adviser pursuant to paragraph 1(a)(v) hereof
and shall timely furnish to the Manager all information relating to the
Adviser'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 Adviser
agrees that all records which it maintains for the 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.
2. The Manager shall continue to have responsibility for all services
to be provided to the Portfolio pursuant to the Management Agreement and shall
oversee and review the Adviser's performance of its duties under this Agreement.
3. The Manager shall compensate the Adviser for the services provided
and the expenses assumed pursuant to this Subadvisory Agreement at the annual
rate of .25 of 1% of the average daily net assets of the Portfolio managed by
the Adviser. This fee will be computed daily and paid monthly.
4. The Adviser shall not be liable for any error of judgment or for any
loss suffered by the 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
A-5
<PAGE>
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 1940 Act) of
the 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 1940 Act) or upon the termination of the
Management Agreement. Adviser shall promptly notify Manager in the event that
there is a change in control 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, 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
A-6
<PAGE>
(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. The Adviser has delivered to the manager a copy of Part II of its
Form ADV, as revised, on file with the Securities and Exchange Commission and a
copy of its Disclosure Document, dated December 31, 1998, on file with the
Commodity Futures Trading Commission. The Manager acknowledges receipt of such
documents.
9. 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.
751 Broad Street
Newark, NJ 07102-3777
Fax: (973) 802-2909
Attention: Secretary
If to the Adviser: Pacific Investment Management Company LLC
840 Newport Center Drive, Suite 360
Newport Beach, CA 92660
Fax: (714) 720-1376
Attention: Tamara J. Arnold, Senior 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.
11. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK.
A-7
<PAGE>
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.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By_________________________________________
Name:
Title:
PACIFIC INVESTMENT MANAGEMENT COMPANY LLC
By_________________________________________
Name:
Title:
A-8
<PAGE>
EXHIBIT B
OTHER FUNDS MANAGED BY PIMCO
The following table sets forth information relating to the other
registered investment company portfolios for which PIMCO acts as investment
adviser or subadviser with investment objectives, policies and strategies that
are substantially similar to those of the Portfolios (or portion thereof)
managed by PIMCO:
<TABLE>
<CAPTION>
APPROXIMATE NET ASSETS
AS OF
NAME OF FUND ADVISORY FEE RATE JUNE 30, 2000
------------ ----------------- ----------------------
<S> <C> <C>
PIMCO FUNDS:
PACIFIC INVESTMENT
MANAGEMENT SERIES
Total Return Fund Annual rate of 0.25% of average daily net $ 33,167,215
assets
Total Return Fund II Annual rate of 0.25% of average daily net $ 1,461,976,059
assets
Total Return Fund III Annual rate of 0.25% of average daily net $ 736,774,303
assets
Moderate Duration Fund Annual rate of 0.25% of average daily net $ 465,847,818
assets
PIMCO VARIABLE INSURANCE TRUST
Total Return Bond Portfolio Annual rate of 0.25% of average daily net $ 13,163,500
assets
Total Return Bond Portfolio II Annual rate of 0.25% of average daily net $ 5,364,298
assets
AMERICAN SKANDIA TRUST
Total Return Bond Portfolio Annual rate of 0.30% of average daily net $ 1,134,495,018
assets on first $150 million; 0.25% of
average daily net assets on assets over
$150 million paid monthly
Master Trust Total Return Portfolio Annual rate of 0.25% of average daily $ 183,204,053
net assets
</TABLE>
B-1
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE NET ASSETS
AS OF
NAME OF FUND ADVISORY FEE RATE JUNE 30, 2000
------------ ----------------- ----------------------
<S> <C> <C>
FRANK RUSSELL INVESTMENT COMPANY
Fixed Income I Fund Annual rate of 0.25% of net assets based $ 159,888,088
on the average of ending monthly market
values over 3 months, paid in arrears
Diversified Bond Fund Annual rate of 0.25% of net assets based $ 109,239,663
on the average of ending monthly market
values over 3 months, paid in arrears
Fixed Income III Fund Annual rate of 0.25% of net assets based $ 172,642,437
on the average of ending monthly market
values over 3 months, paid in arrears
Multistrategy Bond Fund Annual rate of 0.25% of net assets based
on the average of ending monthly market $ 203,374,657
values over 3 months, paid in arrears
Total Return Fund Annual rate of 0.25% of average daily net $ 167,534,180
assets paid quarterly
JACKSON NATIONAL LIFE SERIES TRUST
JNL Series Trust Annual rate of 0.25% of average daily net $ 14,379,758
assets excluding the value of client
contributed capital
MANULIFE
Manulife Total Return Trust Annual rate of 0.30% on first $50 million; $ 310,936,876
0.30% on $50-150 million; 0.25% on $150-200
million; 0.25% on $200-500 million and over
of daily net assets computed daily and paid
monthly
PACIFIC SELECT SERIES TRUST
Managed Bond Series Annual rate of 0.50% of average daily net $1,263,122,366
assets on first $25 million; 0.375% on next
$25 million; 0.25% on remaining assets
Government Securities Series Annual rate of 0.50% of average daily net $ 455,401,494
assets on first $25 million; 0.375% on next
$25 million; 0.25% on remaining assets
</TABLE>
B-2
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE NET ASSETS
AS OF
NAME OF FUND ADVISORY FEE RATE JUNE 30, 2000
------------ ----------------- ----------------------
<S> <C> <C>
PAINEWEBBER MANAGED ACCOUNTS
SERVICES PORTFOLIO TRUST
Pace Strategic Fixed Income Annual rate of 0.25% of daily net assets $234,558,469
Investment Fund
PAINEWEBBER SERIES TRUST
Strategic Fixed Income Annual rate of 0.25% of daily net assets $ 4,697,601
RUSSELL INSURANCE FUNDS
Core Bond Fund Annual rate of 0.25% of daily net assets $ 41,379,825
THE HARBOR GROUP
Harbor Bond Fund Annual rate of 0.50% of average daily net $618,839,958
assets on first $25 million; 0.375% of
average daily net assets on next $25
million; 0.25% of average daily net assets
on assets over $50 million
SALOMON SMITH BARNEY/CONSULTING
GROUPS CAPITAL MARKET FUND
Intermediate Fixed Income Investment Annual rate of 0.25%, multiplied by a $292,921,795
Portfolio fraction, the numerator of which is the
average daily value of allocated assets
and the denominator of which is the
average daily value of the Portfolio's
total assets computed daily
</TABLE>
B-3
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE NET ASSETS
AS OF
NAME OF FUND ADVISORY FEE RATE JUNE 30, 2000
------------ ----------------- ----------------------
<S> <C> <C>
OPPENHEIMER CAPITAL
OCC Accumulation Trust Managed Annual rate of 0.25% of average daily net $77,537,249
Portfolio assets
</TABLE>
B-4
<PAGE>
EXHIBIT C
PIMCO MANAGEMENT
The following table sets forth the name and principal occupation of the
principal executive officer and the managing directors of PIMCO. The address for
the principal executive officer and the managing directors is:
Pacific Investments Management Company LLC
840 Newport Center Drive, Suite 300
Newport Beach, CA 92660
<TABLE>
<CAPTION>
NAME AND LENGTH OF POSITION AND
SERVICE WITH PIMCO PRINCIPAL OCCUPATION
------------------ --------------------
<S> <C>
William S. Thompson, Jr. Managing Director, Chief Executive Officer and Executive Committee
(April 1993 to Present) Member, PIMCO; Member of Management Board and Executive Committee,
PIMCO Advisors L.P.; President, Chief Executive Officer and Member,
PIMCO Partners LLC.
William R. Benz, II Managing Director, PIMCO; Member of PIMCO Partners LLC.
(June 1986 to Present)
Robert Wesley Burns Managing Director and Executive Committee Member, PIMCO; Member of
(February 1987 to Present) PIMCO Partners LLC.
Chris P. Dialynas Managing Director, PIMCO; Member of PIMCO Partners LLC
(July 1983 to Present)
</TABLE>
C-1
<PAGE>
<TABLE>
<CAPTION>
NAME AND LENGTH OF POSITION AND
SERVICE WITH PIMCO PRINCIPAL OCCUPATION
------------------ --------------------
<S> <C>
Mohamed A. El-Erian Managing Director, PIMCO.
(May 1999 to Present)
William H. Gross Managing Director, PIMCO; Director and Vice President, StocksPLUS
(June 1971 to Present) Management, Inc.; Member of Management Board, PIMCO Advisors L.P.;
Member of PIMCO Partners LLC.
John L. Hague Managing Director and Executive Committee Member, PIMCO; Member of
(September 1987 to Present) PIMCO Partners LLC.
Pasi M. Hamalainen Managing Director, PIMCO.
(January 1994 to Present)
Brent R. Harris Managing Director and Executive Committee Member, PIMCO; Director
(June 1985 to Present) and Vice President, StocksPLUS Management, Inc.; Member of
Management Board and Executive
Committee, PIMCO Advisors L.P.;
Member of PIMCO Partners LLC.
Brent L. Holden Managing Director, PIMCO.
(December 1989 to Present)
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
NAME AND LENGTH OF POSITION AND
SERVICE WITH PIMCO PRINCIPAL OCCUPATION
------------------ --------------------
<S> <C>
Margaret E. Isberg Managing Director, PIMCO; Member of PIMCO Partners LLC.
(August 1983 to Present)
John S. Loftus Managing Director, PIMCO.
(August 1986 to Present)
Dean S. Meiling Managing Director, PIMCO; Member of PIMCO Partners LLC.
(December 1976 to Present)
James F. Muzzy Managing Director and Executive Committee Member, PIMCO; Director
(September 1971 to Present) and Vice President, StocksPLUS Management, Inc; Member of PIMCO
Partners LLC.
William F. Podlich, III Managing Director, PIMCO; Managing Director and Director, PIMCO
(June 1966 to Present) Management, Inc.; Member of Management Board, PIMCO Advisors L.P.;
Member of PIMCO Partners LLC.
William C. Powers Managing Director, PIMCO; Member of PIMCO Partners LLC.
(January 1991 to Present)
Ernest L. Schmider Managing Director and Secretary, PIMCO; Director and Assistant
(March 1994 to Present) Secretary, StocksPLUS Management, Inc.; Senior Vice President, PIMCO
Advisors L.P.; Secretary, PIMCO Partners LLC.
Lee R. Thomas Managing Director, PIMCO; Member of PIMCO Partners LLC.
(April 1995 to Present)
Benjamin L. Trosky Managing Director, PIMCO; Member of Management Board, PIMCO Advisors
(October 1990 to Present) L.P.; Member of PIMCO Partners, LLC.
</TABLE>
C-3
