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EXHIBIT 5(b)(iii)
THE TARGET PORTFOLIO TRUST
(International Equity Portfolio)
SUBADVISORY AGREEMENT
Agreement made as of this 9th day of November, 1992, between Prudential
Mutual Fund Management, Inc. (PMF or the Manager), a Delaware Corporation, and
Lazard Freres Asset Management, a division of Lazard Freres & Co. (the Adviser),
a New York limited partnership.
WHEREAS, PMF will enter 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 will
act 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 desires to retain the Adviser to provide investment advisory services to the
International Equity Portfolio of the Trust (the Portfolio) in connection with
the management of the Trust 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 the investment operations of the
Portfolio and the composition of its
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portfolio, including the purchase, retention and disposition thereof,
in accordance with the Portfolio'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 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 will be invested or held
uninvested as cash.
(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
Portfolio and with the instructions and directions of the Manager and
of 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 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 and Lazard Freres & Co.)
in conformity with 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 Portfolio with
investment supervision, it is recognized that the Adviser will give
primary
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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 and Lazard Freres & Co. may each 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 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 Portfolio 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 the
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
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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.
(v) The Adviser shall provide the Trust's Custodian on each
business day with information relating to all transactions concerning
the Portfolio's assets 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, 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 (A)
that has an investment objective of capital appreciation which it seeks
to achieve by investing in equity securities of companies domiciled
outside the United States, (B) the shares of which are sold primarily
through an asset allocation program which is similar to the Prudential
Securities Target Program, as described in the registration
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statement of the Trust filed with the Securities and Exchange
Commission, and (C) which is sponsored by a "major retail
broker-dealer" as may be agreed from time to time in writing by the
Manager and the Adviser.
(b) Services to be furnished by the Adviser under this Agreement may be
furnished through the medium of any of its partners, officers or
employees.
(c) The Adviser shall keep the Portfolio's books and records required
to be maintained by the Adviser pursuant to paragraph l(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
Portfolio 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 l(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 compliance procedures pursuant to paragraph
l(d) hereof as the Manager may reasonably request.
2. The Manager shall continue to have responsibility for all services to
be provided to
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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, a fee at an
annual rate of .40 of 1% of the average daily net assets of the Portfolio. This
fee will be computed daily and paid monthly in arrears.
4. The Adviser shall not be liable for any error of judgment or for any
loss suffered by the 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. 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
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 0000 Xxx) or upon the termination of the
Management Agreement.
6. Nothing in this Agreement shall limit or restrict the right of any
of the Adviser's partners, officers or employees to engage in any other business
or to devote his or her time and
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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, except as described in Paragraph l(a)(vi) above.
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 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. In the event of the termination of this Agreement, the
Manager will continue to furnish the Adviser copies of such materials which
refer to the Adviser. Sales literature may be furnished to the Adviser hereunder
by first class or overnight mail, facsimile transmission equipment or hand
delivery.
8. The Manager has delivered to the Adviser copies of each of the
following documents and will deliver to it all future amendments and
supplements, if any:
(a) Declaration of Trust, as filed with the Secretary of State of
Delaware (such Declaration of Trust, as in effect on the date hereof
and as amended from time to time, are herein called the Declaration of
Trust);
(b) By-Laws of the Trust (such By-Laws, as in effect on the date
hereof and as amended from time to time, are herein called the
By-Laws);
(c) Certified resolutions of the Trustees of the Trust authorizing
the appointment of the Manager and the Adviser and approving the form
of this Agreement;
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(d) Registration Statement under the 1940 Act and the Securities Act
of 1933, as amended, on Form N-1A (the Registration Statement), as
filed with the Securities and Exchange Commission (the Commission)
relating to the Portfolios and shares of beneficial interest of each
Portfolio and all amendments thereto;
(e) Notification of Registration of the Trust under the 1940 Act on
Form N-8A as filed with the commission and all amendments thereto; and
(f) Prospectus of the Portfolios (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).
9. 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.
10. 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
--------------------------------
Xxxxxx X. Xxxxx
Executive Vice President
LAZARD FRERES ASSET MANAGEMENT
By: /s/ Xxxxxx X. Xxxxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxxxx
General Partner
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Lazard Freres & Co.
Lazard Freres Asset Management
0 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
November 9, 1992
Prudential Mutual Fund Management, Inc.
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: The Target Portfolio Trust
Ladies and Gentlemen:
The Subadvisory Agreement for the International Equity Portfolio of the
Target Portfolio Trust (the Agreement) between Prudential Mutual Fund
Management, Inc. (the Manager) and Lazard Freres Asset Management (the Adviser)
provides that, during the term of the Agreement and for the period of one year
after the termination of the Agreement, neither the Adviser nor any person
controlled by the Adviser shall serve or accept retention as investment adviser,
investment manager or similar service provider with or for the benefit of any
investment company registered under the 1940 Act (A) that has an investment
objective of capital appreciation which it seeks to achieve by investing in
equity securities of companies domiciled outside the United States, (B) the
shares of which are sold primarily through an asset allocation program which is
similar to the Prudential Securities Target Program, as described in the
registration statement of the Trust filed with the Securities and Exchange
Commission, and (C) which is sponsored by a "major retail broker-dealer" as may
be agreed from time to time in writing by the Manager and the Adviser. It is
understood and agreed that each of the following brokerage firms, including any
successor firms, constitutes a "major retail broker-dealer" within the meaning
of the Agreement:
Xxxxxxx Xxxxx & Co., Inc.
Shearson Xxxxxx Brothers Inc.
Xxxxx Xxxxxx Group Inc.
Xxxx Xxxxxx Xxxxxxxx Inc.
Xxxxx Xxxxxx, Xxxxxx Xxxxx & Co., Incorporated
X. X. Xxxxxxx, Inc.
Xxxxxxx Xxxxxx & Co., Inc.
Very truly yours,
LAZARD FRERES ASSET MANAGEMENT
By
/s/ Xxxxxx Xxxxxxxxxx
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Xxxxxx Xxxxxxxxxx, General Partner
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Agreed to this 9th day of November, 1992
Prudential Mutual Fund Management, Inc.
By
/s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx, Executive Vice President
