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Exhibit (d)(2)(x)
TARGET FUNDS
(International Equity Fund)
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 Lazard Asset Management, a division of Lazard
Freres & Co. (the Adviser), a New York limited partnership.
WHEREAS, PIFM will enter 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 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, PIFM 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 Fund 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 portfolio, including the purchase, retention and
disposition thereof, in accordance with the Portfolio's investment objectives,
policies and restrictions as stated in the Prospectus
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(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
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
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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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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.
(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 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 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 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
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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 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 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
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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;
(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 Portfolio and shares of beneficial interest of the 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 Portfolio (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.
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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 INVESTMENTS FUND MANAGEMENT LLC
By: ______________________________________
LAZARD ASSET MANAGEMENT
By: ______________________________________
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