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Exhibit (d)(2)(vi)
TARGET FUNDS
(Large Capitalization Value Fund)
SUBADVISORY AGREEMENT
Agreement made as of this 17th day of September, 1999, between Prudential
Investments Fund Management LLC (PIFM or the Manager), a New York limited
liability company, and HOTCHKIS AND WILEY, a division of Xxxxxxx Xxxxx Asset
Management, L.P. (the "Adviser").
WHEREAS, PIFM has entered into a management agreement (the Management
Agreement) with Target Funds (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 PIFM 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, PIFM 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 Large Capitalization Value Fund of the Trust
(the Portfolio) in connection with the management of the Trust.
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WHEREAS, the Manager desires to retain the Adviser to provide investment
advisory services to the Portfolio 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 Trustees of
the Trust, the Adviser shall manage such portion of the investment operations of
the Portfolio as the Manager shall direct and shall manage the composition of
such 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 such portion of the
Portfolio'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 Portfolio, and what portion of the assets it manages 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 such portion of the Portfolio and will place orders
with or through such persons, brokers, dealers or futures commission merchants
(including but not limited to Prudential
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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 Portfolio 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 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
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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.
(v) The Adviser shall provide the Trust's Custodian on each business
day with information relating to all transactions concerning the portion of the
Portfolio'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 Adviser
hereunder are not exclusive, and the Adviser shall be free to render similar
services to others.
(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)(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
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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 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 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 .30 of 1% of the average daily net assets of the portion 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 Trust or the Manager in connection with the
matters to which this Agreement relates, except a loss resulting from the
willful misfeasance, bad faith or gross negligence of the Adviser's 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
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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 attention in part to the management or other
aspects of any business, whether of a similar or 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.
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. Sales literature may be furnished to the Adviser
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
Trust 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.
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IN WITNESS WHEREOF, the Parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
Executive Vice President
HOTCHKIS AND WILEY
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Co-Head
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