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Exhibit (d)(2)(v)
TARGET FUNDS
SUBADVISORY AGREEMENT
Agreement made as of this _____ day of September, 1999, between
Prudential Investments Fund Management LLC (PIFM or the Manager), a New York
limited liability company, and Pacific Investment Management Company (the
Adviser), a Delaware general partnership.
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 Total Return Bond Fund of the Trust (the
Portfolio) in connection with the management of the Trust.
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,
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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 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 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
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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 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-l 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
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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 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 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 .25 of 1% of the average daily net assets of the portion of the
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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 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
its 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
the Portfolio, or by the Manager or the Adviser at any time, without the
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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.
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 Portfolio with the approval of the Adviser and for so long as the
Adviser is a subadviser to the Trust and/or the Portfolio. 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.
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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 INVESTMENTS FUND MANAGEMENT LLC
By: __________________________________
PACIFIC INVESTMENT MANAGEMENT COMPANY
By: ___________________________________
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