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Exhibit (d)(2)(ii)
TARGET FUNDS
(Small Capitalization Growth Fund)
SUBADVISORY AGREEMENT
Agreement made on this 17th day of September, 1999, between Prudential
Investments Fund Management LLC (PIFM or the Manager), a New York limited
liability company, and Sawgrass Asset Management, L.L.C. (the Adviser), a
Delaware limited liability company.
WHEREAS, PIFM has entered into a management agreement (the Management
Agreement) with Target Funds (the Trust), a Delaware business trust and an
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 Small Capitalization Growth Fund of the Trust (the Fund) in connection with
the management of the Trust and to manage such portion of the Fund 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:
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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 Fund as the Manager shall direct and shall manage the composition of
such portion of the Fund, including the purchase, retention and disposition
thereof, in accordance with the Fund's investment objective, 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") as delivered to the
Adviser from time to time by the Manager and subject to the following
understandings:
(i) The Adviser shall provide supervision of such portion of the Fund's
investments and determine from time to time what investments and securities
will be purchased, retained, sold or loaned by the Fund, 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 Agreement and
Declaration of Trust, By-Laws and Prospectus of the Trust and the Fund as
provided to the Adviser by the Manager and with the written 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, as amended, and all other applicable federal and state laws and
regulations.
(iii) The Adviser shall determine the securities and commodities or
other assets to be purchased or sold by such portion of the Fund 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) to carry out the policy with respect to
brokerage as set forth in the Trust's Registration Statement and Prospectus or
as the
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Trustees may direct from time to time. In providing the Fund with investment
supervision, it is recognized that the Adviser will give primary consideration
to securing best 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 a broker for securities transactions but
that no formula has been adopted for allocation of the Fund'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 solely on the basis
of seeking lowest price. Therefore, the Adviser is authorized to place orders
for the purchase and sale of securities and commodities or other assets for the
Fund 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,
commodity or other asset to be in the best interest of the Fund 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, commodities or other assets to be sold or purchased in order to
obtain best execution. In such event, allocation of the securities, commodities
or other assets so purchased or sold, as well as the expenses incurred in the
transaction, will be made by
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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 (the Custodian) on
each business day with information relating to all transactions concerning the
portion of the Fund's assets it manages and shall provide the Manager with such
information upon request of the Manager. The Adviser shall reconcile its records
of the Fund's securities and cash managed by the Adviser with statements
provided by the Custodian at least once each month. The Adviser shall provide
the Manager with a written report on each such reconciliation, including
information on any discrepancies noted and actions taken by the Adviser in
response thereto, by the tenth business day of the following month to the extent
reasonably practicable.
(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 Fund'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 Fund are the property of the Trust and the Adviser
will
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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
reports prepared in accordance with the compliance procedures maintained
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 Fund 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 at the annual rate
of .40% of 1% of the average daily net assets of the portion of the Fund 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 Fund, 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, provided, however, that nothing in this Agreement
shall be deemed
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to waive any rights the Manager or the Trust may have against the Adviser under
federal or state securities laws, including for acts of good faith.
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 Fund, 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 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 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.
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;
provided, however, that any such item which describes or characterizes the
Adviser's investment process with respect to the Fund, the names of any of its
clients (other than the Trust or advisory clients of PIFM and its affiliates)
or any of its performance results shall be furnished to the Adviser by first
class or overnight mail, facsimile transmission equipment or
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hand delivery prior to use thereof, and such item shall not be used if the
Adviser reasonably objects to such use in writing within forty-eight (48) hours
(or such other time as may be mutually agreed) after receipt thereof (provided,
however, that if such item is not received by the Adviser during normal
business hours on a business day, such period shall end forty-eight (48) hours
after the start of normal business hours on the next succeeding business day).
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 on 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
SAWGRASS ASSET MANAGEMENT, L.L.C.
By: /s/ Xxxxx X. Xxxxxx
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Principal Owner
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