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Exhibit 5(b)(vii)
THE TARGET PORTFOLIO TRUST
SUBADVISORY AGREEMENT
Agreement made as this 14th day of November, 1994, between Prudential
Mutual Fund Management, Inc. (PMF or the Manager), a Delaware corporation, and
Pacific Investment Management Company (the Adviser), a Deleware general
partnership.
WHEREAS, PMF has entered into a management agreement (the Management
Agreement) with The Target Portfolio Trust (the Trust), a Delaware business
trust and a diversified open-end management investment company registered under
the Investment Company Act of 0000 (xxx 0000 Xxx), pursuant to which PMF acts
as Manager of the Trust.
WHEREAS, shares of the Trust are divided into separate series or
portfolios (each a portfolio), each of which is established pursuant to a
resolution of the Trustees of the Trust and the Trustees may from time to time
terminate such portfolios or establish and terminate additional portfolios.
WHEREAS, PMF has the responsibility of evaluating, recommending,
supervising and compensating investment advisers to each portfolio of the Trust
and shall enter into subadvisory agreements with one or more subadvisers with
respect to the management of the Intermediate-Term Bond Portfolio and Total
Return Bond Portfolio of the Trust (the Portfolios) in connection with the
management of the Trust.
WHEREAS, the Manager desires to retain the Adviser to provide
investment advisory services to the Portfolios and to manage such portion of
the Portfolios as the Manager shall from time to time direct and the Adviser is
willing to render such investment advisory services.
NOW, THEREFORE, the Parties agree as follows:
1. (a) Subject to the supervision of the Manager and of the Trustees
of the Trust, the Adviser shall manage such portion the investment operations
of the Portfolios as the Manager shall direct and shall manage the composition
of such Portfolios, including the purchase, retention and disposition thereof,
in accordance with each Portfolios' 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 Adviser shall provide supervision of such portion
of the Portfolios' investments as the Manager shall direct and determine from
time to time what investments and securities will be purchased, retained, sold
or loaned by a Portfolio, and what portion of the assets it manages will be
invested or held uninvested as cash.
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(ii) In the performance of its duties and obligations
under this Agreement, the Adviser shall act in conformity with the Declaration
of Trust, By-Laws and Prospectus of the Trust and the Portfolios and with the
instructions and directions of the Manager and to the Trustees of the Trust and
will conform to and comply with the requirements of the 1940 act, the Internal
Revenue Code of 1986 and all other applicable federal and state laws and
regulations.
(iii) The Adviser shall determine the securities and
futures contracts to be purchased or sold by such portion of a Portfolio and
will place orders with or through such persons, brokers, dealers or futures
commission merchants (including but not limited to Prudential Securities
Incorporated) to carry out the policy with respect to brokerage as set forth in
the Trust's Registration Statement and Prospectus or as the Trustees may direct
from time to time. In providing the Portfolios with investment supervision, it
is recognized that the Adviser will give primary consideration to securing the
most favorable price and efficient 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
principal broker for securities transactions but that no formula has been
adopted for allocation of the Portfolios' investment transaction business. It
is also understood that it is desirable for the Trust 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 Trust than may result when
allocating brokerage to other brokers on the basis of seeking the most
favorable price and efficient execution. Therefore, the Adviser is authorized
to place orders for the purchase and sale of securities and futures contracts
for the Portfolios with such brokers or futures commission merchants, subject
to review by the Trustees 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 or futures contract to be in the best interest of a Portfolio as well
as other clients of the Adviser, the Adviser, to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation to,
aggregate the securities 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 Adviser in the manner the Adviser considers to
be the most equitable and consistent with its fiduciary obligations to the
Trust and to such other clients.
(iv) The Adviser shall maintain all books and records with
respect to the portfolio transactions required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act and
shall render to the Trustees such periodic and special reports as the Board may
reasonably request.
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(v) The Adviser shall provide the Trust's Custodian on
each business day with information relating to all transactions concerning the
portion of the Portfolios' assets it manages and shall provide the Manager with
such information upon request of the Manager.
(vi) The investment management services provided by the
Adviser hereunder are not exclusive, and the Adviser shall be free to render
similar services to others; provided, however, that the Adviser agrees that
neither it, nor any person controlled by it, nor any successor shall serve or
accept retention as investment adviser, investment manager or similar service
provider during the term of this Agreement and for the period of one year after
the termination of this Agreement with or for the benefit of any investment
company registered under the 1940 Act that seeks as a primary market for its
shares asset allocation programs sponsored by U.S. broker-dealers similar in
nature or market to the Prudential Securities Target Program.
(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 Portfolios' books and records
required to be maintained by the Adviser pursuant to paragraph 1(a)(iv) hereof
and shall timely furnish to the Manager all information relating to the
Adviser's services hereunder needed by the Manager to keep the other books and
records of the Trust required by Rule 31a-1 under the 1940 Act. The Adviser
agrees that all records which it maintains for the Portfolios are the property
of the Trust and the Adviser will surrender promptly to the Trust any of such
records upon the Trust'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 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 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 Portfolios 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, a fee
at an annual rate of .25 of 1% of the average daily net assets of the portion
of the Portfolios managed by the Adviser. This fee will be computed daily and
paid monthly.
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4. The Adviser shall not be liable for any error of judgment or
for any loss suffered by a Portfolio, the Trust or the Manager in connection
with the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the Adviser's part in the
performance of its duties or from its reckless disregard of its obligations and
duties under this Agreement.
5. To the extent indemnification is provided to the Manager by
the Trust under the Management Agreement, the Manager shall indemnify the
Adviser and hold it harmless from and against all damages, liabilities, costs
and expenses (including reasonable attorneys' fees and amounts reasonably paid
in settlement) incurred by the Adviser in or by reason of any pending,
threatened or completed action, suit, investigation or other proceeding
(including an action or suit by or in the right of the Trust or its security
holders) arising out of or otherwise based upon any action actually or
allegedly taken or omitted to be taken by the Manager, the Trust or the Adviser
in connection with this Agreement; provided, however, that nothing contained
herein shall protect or be deemed to protect the Adviser against or entitle or
be deemed to entitle the Adviser to indemnification in respect of any liability
to the Trust or its security holders to which the Adviser would otherwise be
subject by reason of this willful misfeasance, bad faith or gross negligence in
the performance of its duties, by reason of its reckless disregard of its
duties and obligations under this Agreement.
6. 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
Trust at any time, without the payment of any penalty, by the Trustees or by
vote of a majority of the outstanding voting securities (as defined in the 0000
Xxx) of a Portfolio, or by the Manager or the Adviser at any time, without the
payment of any penalty, on not more than 60 days' nor less than 30 days'
written notice to the other party. This Agreement shall terminate
automatically in the event of its assignment (as defined in the 0000 Xxx) or
upon the termination of the Management Agreement.
7. 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 a dissimilar nature,
nor limit or restrict 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, except as described in Paragraph 1(a)(vi) above.
8. 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 Trust or the public, which refer to the
Adviser in any way, prior to use thereof and not to use material if the Adviser
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 Adviser hereunder by first class or overnight mail, facsimile transmission
equipment or hand delivery.
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9. It is understood that the name "Pacific Investment Management
Company" or "PIMCO" or any derivative thereof or logo associated with that name
is the valuable property of the Adviser and that the Manager or the Trust has
the right to use such name (or derivative or logo) in offering materials of the
Trust and/or Portfolios with the approval of the Adviser and for so long as the
Adviser is a subadviser to the Trust and/or the Portfolios. Upon termination
of this Agreement between the Adviser and the Manager, the Trust and the
Manager shall forthwith cease to use such name (or derivative or logo), except
as may be required by applicable law or regulation.
10. This Agreement may be amended by mutual consent, but the
consent of the Trust 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.
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 Mutual Fund Management, Inc.
By /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
Executive Vice President
Pacific Investment Management Company
By /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Managing Director
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