<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
THE TARGET PORTFOLIO TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
PRUDENTIAL MUTUAL FUNDS
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
------------------------
August 28, 1996
Dear Shareholder:
Enclosed is a proxy statement asking you to vote in favor of several
proposals relating to the management and operation of The Target Portfolio
Trust.
Meetings of the Trust and of other Funds within the Prudential Mutual Fund
Complex are being held on October 30, 1996 to consider several of these
proposals and to transact any other business that may properly come before the
meetings. This proxy statement contains detailed information about each of the
proposals relating to the Trust, and we recommend that you read it carefully.
One of the proposals relates only to the Large Capitalization Value Portfolio
and its shareholders. We have also attached some Questions and Answers that we
hope will assist you in evaluating the proposals.
We have retained an outside proxy solicitation firm to assist us with any
necessary follow-up. If we have not received your vote as the meeting date
approaches, you may receive a telephone call from Shareholder Communications
Corporation to ask for your vote. We hope that their telephone call does not
inconvenience you.
You will receive a separate proxy card for each portfolio of the Trust that
you own. If you have more than one account holding Trust shares (E.G., an
individual account AND an IRA), you will receive multiple copies of this Proxy
Statement and proxy cards for each of your accounts. Please vote each proxy card
you receive.
Thank you for your attention to this matter and for your continuing
investment in the Prudential Mutual Funds.
Very truly yours,
[LOGO]
RICHARD A. REDEKER
PRESIDENT
Prudential Mutual Fund Management
PROXY CARDS FOR EACH OF YOUR PORTFOLIOS ARE ENCLOSED ALONG WITH THE PROXY
STATEMENT. PLEASE VOTE YOUR SHARES TODAY BY SIGNING AND RETURNING EACH
ENCLOSED PROXY CARD IN THE POSTAGE PREPAID ENVELOPE PROVIDED. THE TRUSTEES
RECOMMEND THAT YOU VOTE "FOR" THE NOMINEES FOR TRUSTEE AND "FOR" EACH
PROPOSAL.
<PAGE>
QUESTIONS AND ANSWERS
Q: WHAT IS THE PURPOSE OF THIS PROXY SOLICITATION?
A:The purpose of this proxy is to ask you to vote on four primary issues:
- to elect four Trustees;
- to approve a proposal to permit Prudential Mutual Fund Management, Inc.
(PMF), the Manager, to enter into or make material changes to subadvisory
agreements without shareholder approval;
- for the Large Capitalization Value Portfolio, to approve a new subadvisory
agreement between Hotchkis and Wiley and PMF; and
- to ratify the selection of the Trust's independent accountants for the
current year.
Q: WHY ARE YOU RECOMMENDING A NEW BOARD FOR THE TRUST?
A:An advisory group comprised of independent directors of the Prudential Mutual
Funds, including a number of the existing Board members of the Funds (the
Advisory Group), assisted by representatives of Prudential Mutual Fund
Management, formed a corporate governance task force and considered issues
relating to the management and governance of the Funds. The Advisory Group
recommended to the Fund Boards, as part of an overall plan to coordinate and
enhance the efficiency of the operation of the Funds, that the Prudential
Mutual Funds should be restructured with fewer boards in the Complex. The
Trust's Board adopted the recommendations of the Advisory Group and nominated
four individuals to the Board of Trustees for the Trust drawn primarily from
existing Boards. Three of the individual Board nominees are independent of
Prudential. Said differently, if the Shareholders approve the proposal and the
nominees are elected, more of the Prudential Mutual Funds would have an
identical composition than presently is the case. The Board believes that
coordinated governance through this Board restructuring will benefit the
Trust.
Q: WILL THE PROPOSED CHANGES RESULT IN HIGHER MANAGEMENT FEES?
A:No. The management fees charged to the Trust will remain the same.
Q: WILL THE PROPOSED CHANGES RESULT IN HIGHER TRUSTEES' FEES?
A:It is anticipated that, for the most part on a Fund by Fund basis, Trustees'
fees in the aggregate will not be higher than they are currently.
Q: WHAT ARE MY BOARD'S RECOMMENDATIONS?
A:The Board of the Trust has recommended that you vote "FOR" the nominees for
Board member and "FOR" each proposal.
THE ATTACHED PROXY STATEMENT CONTAINS MORE DETAILED INFORMATION ABOUT EACH
OF THE PROPOSALS RELATING TO THE TRUST. PLEASE READ IT CAREFULLY.
(i)
<PAGE>
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Enclosed you will find one or more proxy cards relating to each of the
Portfolios of the Trust for which you are entitled to vote. Please indicate
your voting instructions on EACH of the enclosed proxy cards, date and sign
them, and return them in the envelope provided. IF YOU SIGN, DATE AND RETURN
A PROXY CARD BUT GIVE NO VOTING INSTRUCTIONS, YOUR SHARES WILL BE VOTED
"FOR" THE NOMINEES FOR TRUSTEE NAMED IN THE ATTACHED PROXY STATEMENT AND
"FOR" ALL OTHER PROPOSALS INDICATED ON THE CARDS. In order to avoid the
additional expense to the Trust of further solicitation, we ask your
cooperation in mailing in your proxy cards promptly. Unless proxy cards are
signed by the appropriate persons as indicated in the instructions below,
they will not be voted.
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and avoid the time and expense to the Trust in validating your vote if you
fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to the name shown in the registration on the
proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration. For
example:
<TABLE>
<CAPTION>
REGISTRATION VALID SIGNATURE
- -------------------------------------------------------------------------- ----------------------------
<S> <C>
Corporate Accounts
(1) XYZ Corp.......................................................... XYZ Corp.
Jane L. Doe, Treasurer
(2) XYZ Corp.......................................................... Jane L. Doe, Treasurer
(3) XYZ Corp. c/o Jane L. Doe, Treasurer.............................. Jane L. Doe
(4) XYZ Corp. Profit Sharing Plan..................................... Jane L. Doe, Trustee
Partnership Accounts
(1) The ABC Partnership............................................... Robert Fogg, Partner
(2) Fogg and Hale, Limited Partnership................................ Robert Fogg, General Partner
Trust Accounts
(1) ABC Trust Account................................................. William X. Smith, Trustee
(2) Ron F. Anderson, Trustee u/t/d 12/28/78........................... Ron F. Anderson
Custodial or Estate Accounts
(1) Katherine T. John, Cust. F/b/o Albert T. John, Jr. UGMA/UTMA..... Katherine T. John
(2) Estate of Katherine T. John....................................... Albert T. John, Executor
</TABLE>
(ii)
<PAGE>
THE TARGET PORTFOLIO TRUST
---------------------
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
------------------------
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
OCTOBER 30, 1996
------------------------
TO THE SHAREHOLDERS:
A special meeting of the shareholders of the Target Portfolio Trust (Trust)
will be held at One Seaport Plaza, 199 Water Street, 35th Floor, New York, New
York, on October 30, 1996 at 9:00 a.m., Eastern time, for the purpose of
considering the following proposals with respect to the Trust:
(1) to elect four members to its Board of Trustees.
(2) to approve a proposal to permit Prudential Mutual Fund
Management, Inc. to enter into or make material changes to subadvisory
agreements without shareholder approval;
(3) for the Large Capitalization Value Portfolio, to approve a new
subadvisory agreement between Hotchkis and Wiley and Prudential Mutual
Fund Management, Inc.
(4) to ratify the selection of independent accountants for the
fiscal year ending December 31, 1996.
(5) to transact such other business as may properly come before the
meeting and any adjournments thereof.
You are entitled to vote at the meeting, and at any adjournments thereof, of
the Trust if you owned shares at the close of business on August 9, 1996. If you
attend the meeting, you may vote your shares in person. IF YOU DO NOT EXPECT TO
ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN EACH ENCLOSED PROXY
CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE.
By order of the Board.
S. JANE ROSE
SECRETARY
August 28, 1996
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND PROMPTLY
RETURN THE ENCLOSED PROXY(S) IN THE ENCLOSED SELF-ADDRESSED, STAMPED
ENVELOPE. IN ORDER TO AVOID THE ADDITIONAL EXPENSE TO THE TRUST OF FURTHER
SOLICITATION. WE ASK YOUR COOPERATION IN MAILING IN YOUR PROXY PROMPTLY.
<PAGE>
THE TARGET PORTFOLIO TRUST
---------------------
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
(800)225-1852
------------------------
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 30, 1996
------------------------
This proxy statement is being furnished to holders of Shares of the Target
Portfolio Trust (Trust) in connection with the solicitation by the Board of
proxies to be used at the meeting (Meeting) of Shareholders to be held at One
Seaport Plaza, 199 Water Street, 35th Floor, New York, New York on October 30,
1996, at 9:00 a.m., Eastern time, or any adjournment or adjournments thereof.
This proxy statement is being first mailed to Shareholders on or about August
29, 1996.
The Trust is a registered, management investment company under the
Investment Company Act of 1940, as amended (the Investment Company Act) and is
organized as a Delaware business trust. The Trust's shares of beneficial
interest are referred to as "Shares," and the holders of the Shares are
"Shareholders"; and the Trust's trustees are referred to as the "Board,", "Board
Members" or "Trustees."
THE TARGET PROGRAM
The Trust consists of ten separate investment portfolios (the Portfolios).
Shares of the Portfolios are offered to participants in the Prudential
Securities Target Program (the Target Program), an investment advisory service
that provides to investors asset allocation recommendations with respect to the
Portfolios based on an evaluation of an investor's investment objectives and
risk tolerances. The Target Program or shares of the Trust (without
participation in the Target Program) are also available to banks, trust
companies, other investment advisory services which maintain securities accounts
with Prudential Securities Incorporated (Prudential Securities) and to certain
asset allocation programs of investments in registered investment companies
sponsored by Prudential Securities. Participation in the Target Program is
subject to payment of a program fee that is separate from the Portfolios'
management fees. For all accounts other than Individual Retirement Accounts
(IRAs) and qualified employee benefit plans (collectively, Plans) the quarterly
advisory fee is charged at a maximum annual rate of 1.5% of assets invested in
equity Portfolios and 1.0% of assets invested in income Portfolios. For Plan
accounts, the quarterly advisory fee is charged at the maximum annual rate of
1.25% of assets invested in equity Portfolios and 1.35% of assets invested in
income Portfolios.
THE MANAGER
Prudential Mutual Fund Management, Inc. (PMF or the Manager), One Seaport
Plaza, New York, New York 10292, serves as the Trust's Manager under a
management agreement (the Management Agreement) dated as of November 9, 1992.
PMF is a subsidiary of The Prudential Insurance Company of America (Prudential)
and is a part of Prudential's Money Management Group. As of June 30, 1996, PMF
served as the manager to 39 open-end investment companies and as manager or
administrator to 22 closed-end investment companies with aggregate assets of
more than $52 billion. As part of a corporate restructuring, PMF intends to
reorganize as a limited liability company on or before December 31, 1996. This
reorganization will have no impact on the provision of services to the Trust.
This reorganization will not result in a change of management or control within
the meaning of the Investment Company Act and does not require Shareholder
approval. The Trust has a Board of Trustees which, in addition to overseeing the
actions of the Trust's Manager and Advisers, decides upon matters of general
policy.
1
<PAGE>
THE ADVISERS
Investment advisory services are provided for the Portfolios under separate
subadvisory agreements (Subadvisory Agreements) between the subadvisors
(Advisers) listed below and PMF:
LARGE CAPITALIZATION GROWTH PORTFOLIO -- Columbus Circle Investors, Metro
Center, One Station Place, 8th Floor, Stamford, Connecticut 06902 and Oak
Associates, Ltd., 3875 Embassy Parkway, Suite 250, Akron, Ohio 44333.
LARGE CAPITALIZATION VALUE PORTFOLIO -- INVESCO Capital Management, Inc.
(INVESCO), 1315 Peachtree Street, Suite 500, Atlanta, Georgia 30309 and Hotchkis
and Wiley L.P. (Hotchkis and Wiley), 800 West Sixth Street, Fifth Floor, Los
Angeles, California 90017.
SMALL CAPITALIZATION GROWTH PORTFOLIO -- Nicholas-Applegate Capital
Management, 600 West Broadway, 29th Floor, San Diego, California 92101 and
Investment Advisers, Inc., 3700 First Bank Place, P.O. Box 357, Minneapolis,
Minnesota 55440.
SMALL CAPITALIZATION VALUE PORTFOLIO -- Lazard Freres Asset Management, 30
Rockefeller Plaza, New York, New York 10020 and Wood, Struthers & Winthrop
Management Corp., 277 Park Avenue, New York, New York 10172.
INTERNATIONAL EQUITY PORTFOLIO -- Lazard Freres Asset Management, 30
Rockefeller Plaza, New York, New York 10020.
INTERNATIONAL BOND PORTFOLIO -- Fiduciary International, Inc., 2 World Trade
Center, 90th Floor, New York, New York 10048-0772.
TOTAL RETURN BOND PORTFOLIO AND INTERMEDIATE-TERM BOND PORTFOLIO -- Pacific
Investment Management Company, 840 Newport Center Drive, Newport Beach,
California 92658.
MORTGAGE BACKED SECURITIES PORTFOLIO AND U.S. GOVERNMENT MONEY MARKET
PORTFOLIO -- Wellington Management Company, 75 State Street, Boston,
Massachusetts 02109.
THE DISTRIBUTOR AND TRANSFER AGENT
Prudential Securities Incorporated, One Seaport Plaza, New York, New York
10292 serves as the distributor of the Trust's shares. The Trust's transfer
agent is Prudential Mutual Fund Services, Inc. (PMFS), Raritan Plaza One,
Edison, New Jersey 08837.
VOTING INFORMATION
The presence, in person or by proxy, of one-third (1/3) of the Shares of the
Trust outstanding and entitled to vote will constitute a quorum for the
transaction of business at the Meeting.
If a quorum is not present at the Meeting, or if a quorum is present at the
Meeting but sufficient votes to approve any of the proposals are not received,
the persons named as proxies may propose one or more adjournments of the Meeting
to permit further solicitation of proxies. An adjournment as to the Trust will
require the affirmative vote of a majority of those Shares represented at the
Meeting in person or by proxy. The persons named as proxies will vote those
proxies which they are entitled to vote FOR any proposal in favor of the
adjournment and will vote those proxies required to be voted AGAINST any
proposal against the adjournment. A Shareholder vote may be taken on one or more
of the proposals in this proxy statement prior to any such adjournment if
sufficient votes have been received and it is otherwise appropriate.
If a proxy that is properly executed and returned is accompanied by
instructions to withhold authority to vote (an abstention) or represents a
broker "non-vote" (that is, a proxy from a broker or nominee indicating that
such person has not received instructions from the beneficial owner or other
person entitled to vote shares on a particular matter with respect to which the
broker or nominee does not have discretionary power), the shares represented
thereby, will be considered present for purposes of determining the existence of
a quorum for the transaction of business. If no instructions are received by the
broker or nominee from the shareholder with reference to routine matters, the
shares represented thereby may be considered for purposes of determining the
existence of a quorum for the transaction of business and will be deemed cast
2
<PAGE>
with respect to such proposal. Also, a properly executed and returned Proxy
marked with an abstention will be considered present at the Meeting for purposes
of determining the existence of a quorum for the transaction of business.
Accordingly, abstentions and broker non-votes will have no effect on Proposals
Nos. 1 and 4, for which the required vote is a plurality and a majority of the
votes cast, respectively, but effectively will be a vote against Proposal No. 2
and 3, which require approval of a majority of the outstanding voting securities
under the Investment Company Act.
The individuals named as proxies on the enclosed proxy cards will vote in
accordance with your direction as indicated thereon, if your proxy card is
received properly executed by you or by your duly appointed agent or
attorney-in-fact. If your card is properly executed and you give no voting
instructions, your Shares will be voted FOR the nominees named herein for the
Board of the Trust and FOR the remaining proposals described in this proxy
statement and referenced on the proxy card. If any nominee for the Board should
withdraw or otherwise become unavailable for election, your Shares will be voted
in favor of such other nominee or nominees as management may recommend. You may
revoke any proxy card by giving another proxy or by letter or telegram revoking
the initial proxy. To be effective, your revocation must be received by the
Trust prior to the Meeting and must indicate your name and account number. In
addition, if you attend the Meeting in person you may, if you wish, vote by
ballot at the Meeting, thereby canceling any proxy previously given.
The close of business on August 9, 1996 has been fixed as the record date
for the determination of Shareholders entitled to notice of, and to vote at, the
Meeting. Information as to the number of outstanding Shares for each Portfolio
of the Trust as of the record date is set forth below:
<TABLE>
<CAPTION>
NUMBER OF
SHARES
PORTFOLIO OUTSTANDING
- -------------------------------------------------------------------------------- ------------
<S> <C>
Large Capitalization Growth Portfolio........................................... 16,925,685
Large Capitalization Value Portfolio............................................ 15,640,969
Small Capitalization Growth Portfolio........................................... 9,252,714
Small Capitalization Value Portfolio............................................ 8,025,066
International Equity Portfolio.................................................. 15,644,835
International Bond Portfolio.................................................... 4,008,241
Total Return Bond Portfolio..................................................... 4,660,026
Intermediate-Term Bond Portfolio................................................ 8,139,402
Mortgage Backed Securities Portfolio............................................ 7,214,093
U.S. Government Money Market Portfolio.......................................... 21,824,134
</TABLE>
Management does not know of any person who owned beneficially 5% or more of
the Shares of the Trust or any Portfolio thereof as of August 9, 1996. To the
knowledge of management, the executive officers and Board Members of the Trust,
as a group, owned less than 1% of the outstanding Shares of each Portfolio as of
August 9, 1996. As of August 9, 1996, the only beneficial owner directly or
indirectly, of more than 5% of the outstanding shares of any Portfolio of the
Trust was Cambell Union High School Dist. Special Building Fund, attn Agnes
Valdez, 3235 Union Avenue, San Jose CA 95124-2009 who held 907,306 shares
(12.5%) of the Mortgaged Backed Securities Portfolio.
COPIES OF THE TRUST'S MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS, INCLUDING
FINANCIAL STATEMENTS, HAVE PREVIOUSLY BEEN DELIVERED TO SHAREHOLDERS OR ARE
ENCLOSED WITH THIS PROXY STATEMENT. SHAREHOLDERS OF THE TRUST MAY OBTAIN WITHOUT
CHARGE ADDITIONAL COPIES OF THE ANNUAL AND SEMI-ANNUAL REPORTS BY WRITING THE
TRUST AT ONE SEAPORT PLAZA, NEW YORK, NEW YORK 10292, OR BY CALLING
1-800-225-1852 (TOLL FREE).
Each full Share of each Portfolio outstanding is entitled to one vote, and
each fractional Share of each Portfolio outstanding is entitled to a
proportionate share of one vote, with respect to each matter to be voted upon by
the Shareholders of the Trust or any Portfolio thereof. Information about the
vote necessary with respect to each proposal is discussed below in connection
with the proposal.
------------------------
3
<PAGE>
ELECTION OF DIRECTORS OR TRUSTEES
PROPOSAL NO. 1
The Board of Trustees has nominated the four individuals identified below
for election to the Board at the Meeting. Under Proposal No.1, Shareholders are
being asked to vote on those nominees. Pertinent information about each nominee
is set forth in the listing below and in Exhibits A through D hereto. Each
nominee has indicated a willingness to serve if elected. If elected, the
nominees will hold office until the earlier to occur of the next meeting of
Shareholders at which Board Members are elected and until their successors are
elected and qualified or until their terms expire in accordance with the Trust's
retirement policy. The Trust does not intend to hold annual meetings of
shareholders unless the election of Trustees is required under the Investment
Company Act. Accordingly, Board members elected at the Meeting will serve for a
term of unlimited duration until their terms expire in accordance with the
Trust's retirement policy or until the next meeting of shareholders, whichever
is earlier. The retirement policy generally calls for the retirement of Trustees
on December 31 of the year in which they reach the age of 72, except that there
is a phase-in period for Board Members who were 68 and older as of December 31,
1993. Under this phase-in period, such Board Members will retire on or before
December 31, 1999.
The nomination of the nominees described below to serve as the Board Members
for the Trust reflects an overall plan to coordinate and enhance the efficiency
of the governance of the Trust and of certain other investment companies that
are part of the Prudential Mutual Fund Complex (the Funds). This plan was
developed by an advisory group of current Board Members who are not "interested
persons" of the Funds, as defined in the Investment Company Act (independent
Board Members), with the assistance of representatives of Prudential Mutual Fund
Management, who formed a corporate governance task force. The Advisory Group
considered various matters related to the management and governance of the Funds
and made recommendations to the Boards, including proposals concerning the
number of mutual fund boards, the size and composition of such Boards,
retirement policies and related matters. These proposals were adopted by the
Trust's Board at meetings in November 1995 and during the first quarter of 1996,
and are summarized below. The Board acted in 1996 to establish the size of the
Board at four. The nominees for independent Board memberships were selected by
the nominating committee of the Board. With the exception of the nominations for
Board membership, which are the subject of Proposal No. 1, no Shareholder action
is required with respect to the Advisory Group recommendations. It is
anticipated that Trustees fees in the aggregate will not be higher than they
currently are. Board fees are reviewed periodically by the Board and may be
changed in the Future.
The Trust's Board believes that coordinated governance through this Board
restructuring will benefit the Trust. Despite some recent consolidations, the
Prudential Mutual Fund Complex has grown substantially in size in the years
since many of the current Board structures were created. This growth has been
due to the creation of new Funds intended to serve a wide variety of investment
needs. The Advisory Group concluded that the Prudential Mutual Fund Complex
would operate more efficiently and economically with fewer boards. The
Prudential Mutual Fund Complex currently includes over 70 portfolios of open-end
and closed-end funds having a wide variety of investment objectives and policies
with over 12 different boards (clusters). The Advisory Group recommended that
the number of Board clusters be reduced from the present level to four. The
proposed Board cluster that includes the Trust Board would include funds with
outside (non-Prudential) Fund subadvisers. The other Board clusters would focus
on specified types of investments. The Board believes that the Trust will
benefit from this reclustering and that greater efficiencies would result
through the holding of joint Board and shareholder meetings. Coordinated
governance within the Prudential Mutual Fund Complex also will reduce the
possibility that separate Boards might arrive at conflicting decisions regarding
the operation and management of the Funds.
The Trust's Board also believes that the Trust will benefit from the
diversity and experience of the nominees that would comprise the restructured
Board. These nominees have had distinguished careers in business, finance,
government and other areas and will bring a wide range of expertise to the
Board. Three of the four nominees have no affiliation with PMF, Prudential
Securities or Prudential and would be independent Board Members. Independent
Board Members are charged with special responsibilities, among other things, to
approve advisory, distribution and similar agreements between the Trust and
management.
4
<PAGE>
Currently, they also constitute the members of the Board's audit and nominating
committees. In the course of their duties, Board Members must review and
understand large amounts of financial and technical material and must be willing
to devote substantial amounts of time to their duties. Due to the demands of
service on the Boards, independent nominees may need to reject other attractive
opportunities. Each of the independent nominees already serves as an independent
Board Member for one or more funds within the Prudential Mutual Fund Complex and
understands the operations of the complex.
As recommended by the Advisory Group, the compensation paid to independent
Board Members will change. The Advisory Group has recommended that, initially,
under the new structure, each independent Board Member be paid annual fees in
the aggregate of $25,000 for this Fund cluster, which also includes four other
investment companies not subject to this proxy statement. There will be no
additional compensation for serving on committees or for attending meetings.
Thus, Trustees' fees in the aggregate will not be higher than they are
currently. Board Members affiliated with PMF, Prudential Securities or
Prudential who are affiliated with the Manager and/or Subadviser will continue
to receive no compensation from any Fund. Board Members will continue to be
reimbursed for any expenses incurred in attending meetings and for other
incidental expenses. The Board fees per Fund and per cluster are subject to the
approval of the new Boards upon their election; Shareholders are not being asked
to vote on these fees. Thereafter, Board fees may be reviewed periodically and
changed by each Fund's Board.
The following table shows (i) the compensation paid by each Fund to each
Board Member and nominee for the most recent fiscal year and (ii) the
compensation paid by the Prudential Mutual Fund Complex to each Board Member and
nominee for the calendar year ended December 31, 1995. "Interested" Board
Members do not receive any compensation from the Funds.
COMPENSATION TABLE
<TABLE>
<CAPTION>
THE TARGET
PORTFOLIO TOTAL 1995 COMPENSATION PAID TO BOARD
BOARD MEMBER AND NOMINEE TRUST MEMBERS FROM FUND AND FUND COMPLEX (2)
- ------------------------------------------------------------ ----------- ----------------------------------------
<S> <C> <C>
Dorsey, Eugene C.**......................................... $ 10,000 $ 85,783(10/34)+
Lennox, Donald D.*.......................................... $ 10,000 $ 86,250(10/22)+
McCorkindale, Douglas....................................... -- $ 63,750(7/10)+
Mooney, Thomas T............................................ -- $ 125,625(14/19)+
Richard A. Redeker (1)...................................... 0 $ 0
Shirk, Stanley E.*.......................................... $ 10,000 $ 79,000(10/19)+
Smith, Robin B.*/**......................................... $ 10,000 $ 100,741(10/19)+
</TABLE>
- --------------
* Indicates Board Member who is not standing for reelection.
**All compensation from the Trust for the fiscal year ended December 31, 1995
represents deferred compensation. Aggregate compensation from the Trust and
the Fund Complex for the calendar year ended December 31, 1995, including
accrued interest, amounted to approximately $11,375 and $10,781, for the Trust
for Mr. Dorsey and Ms. Smith.
+ Indicates number of Funds/portfolios in Fund Complex (including the Trust)
to which aggregate compensation relates.
(1) Board members who are "interested", as defined in the Investment Company
Act, do not receive compensation from the Trust.
(2) No fund within the fund complex has a bonus, pension, profit sharing or
retirement plan.
In connection with the Advisory Group recommendations for a restructuring of
the Prudential Mutual Fund Boards, PMF offered to pay from its own resources a
one-time retirement package to the independent Board Members. The purpose of the
one-time retirement package was to reduce the overall number of Board Members in
the Prudential Mutual Fund Complex. The retirement package would be equal to
twice the current aggregate annual Board fees but not to exceed $75,000 per
Trustee plus $2,000 for every year of service in excess of ten years. Retirement
would be effective in late 1996 or early 1997 after the Shareholder Meetings. On
a complex-wide basis, fourteen independent Board Members have accepted this
offer and are
5
<PAGE>
not standing for re-election to any Fund's Board. On a complex-wide basis, there
will be seventeen Board Members who are not affiliated with PMF or Prudential
Securities standing for re-election to one or more of the four Fund clusters.
Board Members may elect to receive their Trustees' fees pursuant to a
deferred fee agreement with the Trust. Under the terms of the agreement, the
Trust accrues daily the amount of such Board member's fee in installments which
accrue interest at a rate equivalent to the prevailing rate applicable to 90-day
U.S. Treasury Bills at the beginning of each calendar quarter or, pursuant to an
exemptive order of the Securities and Exchange Commission (SEC), at the daily
rate of return of the applicable Portfolio of the Trust. Payment of the interest
so accrued is also deferred and accruals become payable at the option of the
Board member. The Trust's obligation to make payments of deferred Trustees'
fees, together with interest thereon, is a general obligation of the Trust.
The nominees for election as Board members, their ages and a description of
their principal occupations are listed below. Further information about the
nominees and current Board members standing for reelection is set forth in
Exhibits A and B. A table indicating each nominee's ownership of Trust shares is
attached as Exhibit B.
NAME, AGE, BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS AND OTHER
DIRECTORSHIPS.
EUGENE C. DORSEY (69), Retired president, Chief Executive Officer and
Trustee of the Gannett Foundation (now Freedom Forum); former Publisher of four
Gannett newspapers and Vice President of Gannett Company; former chairman,
Independent Sector, Washington, D.C. (national coalition of philanthropic
organizations); former Chairman of the American Council for the Arts; Director
of the Advisory Board of Chase Manhattan Bank of Rochester; Director of The High
Yield Income Fund, Inc., Prudential Diversified Bond Fund, Inc., Prudential
Equity Fund, Inc., Prudential Europe Growth Fund, Inc., Prudential Institutional
Liquidity Portfolio, Inc., Prudential Jennison Fund, Inc. and Prudential
Mortgage Income Fund, Inc.; Trustee of Prudential California Municipal Fund and
Prudential Municipal Series Fund.
DOUGLAS H. MCCORKINDALE (57), Vice Chairman of Gannett Co. Inc. (publishing
and media) (since March 1984); Director of Gannett Co. Inc., Frontier
Corporation, Continental Airlines, Inc., The Global Government Plus Fund, Inc.,
Prudential Distressed Securities Fund, Inc., Prudential Global Genesis Fund,
Inc., Prudential Multi-Sector Fund, Inc. and Prudential Natural Resources Fund,
Inc.; Trustee of Prudential Allocation Fund, Prudential Equity Income Fund and
Prudential Municipal Bond Fund.
THOMAS T. MOONEY (54), President of the Greater Rochester Metro Chamber of
Commerce; former Rochester City Manager; Trustee of Center for Governmental
Research, Inc.; Director of Blue Cross of Rochester, The Business Council of New
York State, Monroe County Water Authority, Rochester Jobs, Inc., Executive
Service Corps of Rochester, Monroe County Industrial Development Corporation,
Northeast Midwest Institute, First Financial Fund, Inc., The Global Government
Plus Fund, Inc., The Global Total Return Fund, Inc., Global Utility Fund, Inc.,
The High Yield Plus Fund, Inc., Prudential Distressed Securities Fund, Inc.,
Prudential Equity Fund, Inc., Prudential Global Genesis Fund, Inc., Prudential
Government Income Fund, Inc., Prudential Mortgage Income Fund, Inc., Prudential
Multi-Sector Fund, Inc. and Prudential Natural Resources Fund, Inc.; Trustee of
Prudential Allocation Fund, Prudential California Municipal Fund, Prudential
Equity Income Fund, Prudential Municipal Bond Fund and Prudential Municipal
Series Fund.
*RICHARD A. REDEKER (53), President, Chief Executive Officer and Director
(since October 1993), PMF; Executive Vice President, Director and Member of the
Operating Committee (since October 1993), Prudential Securities Incorporated;
Director (since October 1993) of Prudential Securities Group, Inc; formerly
Senior Executive Vice President and Director of Kemper Financial Services, Inc.
(September 1978 - September 1993); Director of The Global Government Plus Fund,
Inc., The Global Total Return Fund, Inc., Global Utility Fund, Inc., The High
Yield Income Fund, Inc., Prudential Distressed Securities Fund, Inc., Prudential
Diversified Bond Fund, Inc., Prudential Equity Fund, Inc., Prudential Europe
Growth Fund, Inc., Prudential Global Genesis Fund, Inc., Prudential Global
Limited Maturity Fund, Inc., Prudential
6
<PAGE>
Government Income Fund, Inc., Prudential High Yield Fund, Inc., Prudential
Institutional Liquidity Portfolio, Inc., Prudential Intermediate Global Income
Fund, Inc., Prudential Jennison Fund, Inc., Prudential MoneyMart Assets, Inc.,
Prudential Mortgage Income Fund, Inc., Prudential Multi-Sector Fund, Inc.,
Prudential National Municipals Fund, Inc., Prudential Natural Resources Fund,
Inc., Prudential Pacific Growth Fund, Inc., Prudential Small Companies Fund,
Inc., Prudential Special Money Market Fund, Inc., Prudential Structured Maturity
Fund, Inc., Prudential Tax-Free Money Fund, Inc., Prudential Utility Fund, Inc.
and Prudential World Fund, Inc.; Trustee of Command Government Fund, Command
Money Fund, Command Tax-Free Fund, Prudential Allocation Fund, Prudential
California Municipal Fund, Prudential Equity Income Fund, Prudential Government
Securities Trust, Prudential Municipal Bond Fund and Prudential Municipal Series
Fund.**
- --------------
* Indicates "interested" trustee, as defined by the Investment Company Act, by
reason of his affiliation with PMF, Prudential Securities or Prudential.
** Mr. Redeker has resigned as President and Chief Executive Officer and
Director of PMF effective on or before December 31, 1996. Although he will no
longer oversee the operations of the Manager on a day-to-day basis, it is
anticipated that Mr. Redeker will remain associated with PMF and Prudential
and will continue to serve as President of the Funds.
The Trust has a Nominating Committee and an Audit Committee, the members of
which are the independent Board members. The Audit Committee makes
recommendations to the Board with respect to the engagement of independent
accountants and reviews with the independent accountants the plan and results of
the audit engagement and matters having a material effect upon the Trust's
financial operations. The Nominating Committee makes recommendations to the
Board with respect to candidates for election as Board Members. The Nominating
Committee does not consider nominees recommended by Shareholders to fill
vacancies on the Board. Information about the number of Board and Committee
meetings held during the most recent fiscal year ended for each Fund is included
in Exhibit C. Information concerning Trust officers is set forth in Exhibit D.
REQUIRED VOTE. The nominees receiving the affirmative vote of a plurality
of the votes cast for the election of Board Members will be elected, provided a
quorum is present.
THE BOARD, INCLUDING ITS INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" EACH OF THE NOMINEES UNDER PROPOSAL NO. 1.
APPROVAL OF PROPOSAL TO PERMIT THE MANAGER TO ENTER INTO OR
MAKE MATERIAL CHANGES TO SUBADVISORY AGREEMENTS WITHOUT
SHAREHOLDER APPROVAL
PROPOSAL NO. 2
The Trustees recommend that shareholders of the Trust approve a proposal
which would permit the Manager from time to time to enter into new or materially
amended Subadvisory Agreements with Advisers to a Portfolio without obtaining
shareholder approval. Information concerning the Trust's current management
arrangements, including a description of the Subadvisory Agreements, is
contained in Exhibit E. Approval by the Trustees, including a majority of
Trustees who are not parties to such contract or interested persons of any such
party (the non-interested Trustees), will continue to be required for such
agreements. The proposal will apply to Subadvisory Agreements entered into by
PMF with Advisers that are not otherwise affiliated persons (as defined in the
Investment Company Act) of the Trust or the Manager, including but not limited
to Subadvisory Agreements which have been terminated as a result of an
assignment (as defined in the Investment Company Act).
The operation of the Portfolios in the manner described is contingent on the
Trust's obtaining an order of the Securities and Exchange Commission (the
Commission) granting exemptive relief from certain provisions of the Investment
Company Act and certain rules thereunder. The Trust's application for an order
7
<PAGE>
is discussed below. A notice of application for exemption with respect to the
Trust's application was issued August 13, 1996. Although the Commission is
expected to grant an order to the Trust on or about September 9, 1996, until the
order is issued there can be no assurance that the Commission will grant the
order.
REASON WHY SHAREHOLDER APPROVAL IS SOUGHT
Section 15 of the Investment Company Act makes its unlawful for any person
to act as investment adviser to an investment company except pursuant to a
written contract which has been approved by shareholders. For purposes of
Section 15, the term "investment adviser" includes any sub-adviser to an
investment company. Section 15 also requires that an investment advisory
agreement provide that it will terminate automatically upon its assignment.
"Assignment," for purposes of the Investment Company Act, includes in substance
the transfer of an advisory agreement or the transfer of control (through the
transfer of a controlling block of the adviser's outstanding voting securities)
of the investment adviser.
In conformity with Section 15 of the Investment Company Act, each Portfolio
currently obtains shareholder approval of Subadvisory Agreements in three
general situations:
A. (i) The employment of a new Adviser to replace an existing Adviser; (ii)
the allocation of a portion of assets of a Portfolio to an additional
Adviser; and (iii) the employment of a new Adviser for a new Portfolio;
B. A change in the terms of a Subadvisory Agreement; and
C. The continued employment of an existing Adviser on the same terms where
there has been or is expected to be an assignment of a Subadvisory
Agreement as a result of a change of control of the Adviser.
The Investment Company Act does not require shareholder approval for the
termination of a Subadvisory Agreement, although Shareholders of a Portfolio may
terminate a Subadvisory Agreement at any time by a vote of a majority of the
Portfolio's outstanding shares, as defined in the Investment Company Act.
DISCUSSION
As a "multi-manager" type of fund, the Trust employs the Manager, subject to
the supervision of the Trustees, to manage or provide for the management of each
Portfolio. The Manager selects Advisers to invest the assets of each Portfolio,
subject to the review and approval of the Trustees, and, currently, subject to
the approval of the Portfolio's shareholders, and on an ongoing basis reviews
each Advisers' performance. The Manager is responsible for communicating
performance expectations and evaluations to Advisers and for recommending to the
Trustees whether the Advisers' contracts should be renewed, modified or
terminated. The Manager pays an advisory fee to each Adviser from the management
fee. The Manager and Trustees believe that requiring shareholders to approve
changes in Advisers and Subadvisory Agreements (including continuation of
assigned Subadvisory Agreements) not only results in unnecessary administrative
expenses to the Portfolios, but may also cause delays in executing changes that
the Manager and the Trustees have determined are necessary or desirable. The
Manager and Trustees believe that such expenses, and the possibility of delays,
may result in shareholders receiving less satisfactory service than would be the
case if this proposal is implemented.
The operating history of the Trust reflects the frequency with which, and
the circumstances under which, the Manager and the Trustees have made the types
of advisory changes described above. Since the Portfolios commenced operations
as of January 5, 1993 (the International Bond Portfolio commenced operations as
of May 17, 1994), eight changes in Advisers or material changes in Subadvisory
Agreements have been submitted for shareholder approval. Adviser changes
requiring shareholder votes have been made by the
8
<PAGE>
Portfolios for a variety of reasons, including: (i) allocating a portion of a
Portfolio's assets to an additional Adviser; (ii) a change in control of an
Adviser that automatically causes the Subadvisory Agreement to terminate; and
(iii) changes in Advisers reflecting the Manager's view that the new Advisers'
investment philosophy and style, past performance of their clients, security
selection experience and preferences, and personnel, facilities, financial
strength, quality of service and client communication were more consistent with
the best interests of the Portfolio and its shareholders. The Manager believes
that it can achieve the types of advisory changes described above more
efficiently, without sacrificing the quality of service to shareholders, if the
Trust and the Portfolios were permitted to operate in the manner described in
this Proposal. The Manager further believes that such efficiency gains would
ultimately benefit each Portfolio and each of its shareholders.
If this Proposal is approved, the Shareholders of a Portfolio will receive
an informal information statement complying with certain provisions of the
Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder, following an Adviser change and/or the entry into a new or
materially amended Subadvisory Agreement that would have otherwise required
shareholder approval. It is expected that shareholders of record as of
approximately thirty days prior to the date of the mailing of the information
statement will receive such statement. The information statement will contain
substantially all of the information about the Adviser and the Subadvisory
Agreement that would otherwise be contained in a written proxy statement. The
information statement will include disclosure as to the level of fees to be paid
to the Manager and each Adviser and will disclose Adviser changes or changes in
Subadvisory Agreements.
The Trustees and Manager intend that this information statement and
adherence to the conditions below will protect shareholders of each Portfolio,
including enabling Portfolio shareholders to receive adequate disclosure about
the Advisers. If this proposal is approved and an exemptive order is granted by
the Commission, amendments to the Management Agreement between the Manager and
the Trust will remain subject to the shareholder and Trustee approval
requirements of Section 15 of the Investment Company Act and related proxy
disclosure requirements. Moreover, although approval of the proposal will
generally permit the Manager and the Trustees to change the fees payable to an
Adviser, such changes will not permit the Manager and the Trustees to increase
the rate of the fees payable by the Portfolios to the Manager without first
obtaining shareholder approval. The fees paid to the Manager are described in
Exhibit E.
The Trustees believe that approval of the proposal to permit the Manager to
enter into or make material changes to Subadvisory Agreements without
shareholder approval is in the best interests of the shareholders of the
Portfolios. Based upon their review of the information provided by the Manager
and of the application for exemptive relief made to the Commission, the Trustees
concluded that the Proposal is reasonable, fair and in the best interests of
each Portfolio and its shareholders. Accordingly, the Trustees, including the
non-interested Trustees, unanimously approved the Proposal and voted to
recommend its approval by each Portfolio's shareholders.
CONDITIONS
In addition to approval of this Proposal by shareholders of each Portfolio,
the Commission must grant the Trust relief from Section 15(a) of the Investment
Company Act and certain rules thereunder in order for the Trust and the
Portfolios to operate in the manner described in this Proposal. This Proposal
will not be implemented unless and until a Commission exemptive order has been
obtained. The Trust has filed an application for such an exemptive order with
the Commission. A notice of application for exemption with respect to the
Trust's application was issued August 13, 1996. Although the Commission is
expected to grant the order on or about September 9, 1996, until the order is
issued there is no assurance that the Commission will approve this application,
or that the Commission will not impose additional conditions on the Trust. The
Trust's application for the order proposes that the Trust will observe certain
conditions if the requested exemptive relief is granted.
The conditions proposed by the Trust to the Commission are as follows:
1. The Manager will provide general management and administrative
services to the Trust, including overall supervisory responsibility for the
general management and investment of the Trust's
9
<PAGE>
securities portfolio, and, subject to review and approval by the Board, will
(i) set the Portfolios' overall investment strategies; (ii) select Advisers;
(iii) monitor and evaluate the performance of Advisers; (iv) allocate and,
when appropriate, reallocate a Portfolio's assets among its Advisers in
those cases where a Portfolio has more than one Adviser; and (v) implement
procedures reasonably designed to ensure that the Advisers comply with the
Trust's investment objectives, policies, and restrictions.
2. Before a Portfolio may operate in the manner described in this
Proposal, the Proposal must be approved by a majority of its outstanding
voting securities, as defined in the Investment Company Act, or, in the case
of a new Portfolio whose public shareholders purchased shares on the basis
of a prospectus containing the disclosure contemplated by condition 4 below,
by the sole shareholder before offering of shares of such Portfolio to the
public. The submission of this Proposal by proxy statement is in fulfillment
of this condition with respect to the existing Portfolios.
3. The Trust will furnish to shareholders all information about a new
Adviser or Subadvisory Agreement that would be included in a proxy
statement. Such information will include disclosure as to the level of fees
to be paid to the Manager and each Adviser and will disclose advisory
changes or material changes in Subadvisory Agreements. The Trust will meet
this condition by providing Shareholders with an informal information
statement complying with certain provisions of the Securities Exchange Act
of 1934, as amended, and the rules promulgated thereunder. With respect to a
newly retained Adviser, or a change in a Subadvisory Agreement, the
information statement will be provided to shareholders of the Portfolios a
maximum of ninety (90) days after the addition of the new Adviser or the
implementation of any change in a Subadvisory Agreement.
4. The Trust will disclose in its prospectus the existence, substance
and effect of the order.
5. No Trustee or officer of the Trust or director or officer of the
Manager will own directly or indirectly (other than through a pooled
investment vehicle that is not controlled by such director, Trustee or
officer) any interest in any Adviser except for (i) ownership of interests
in the Manager or any entity that controls, is controlled by or is under
common control with the Manager, or (ii) ownership of less than 1% of the
outstanding securities of any class of equity or debt of a publicly-traded
company that is either an Adviser or any entity that controls, is controlled
by or is under common control with an Adviser.
6. The Manager will not enter into a Subadvisory Agreement with any
Adviser that is an affiliated person, as defined in Section 2(a)(3) of the
Act, of the Trust or the Manager other than by reason of serving as an
Adviser to one or more Portfolios (an Affiliated Adviser), without such
Agreement, including the compensation to be paid thereunder, being approved
by the shareholders of the applicable Portfolio.
7. At all times, a majority of the members of the Board will be persons
each of whom is not an "interested person" of the Trust as defined in
Section 2(a)(19) of the Act (Independent Trustees), and the nomination of
new or additional Independent Trustees will be placed within the discretion
of the then existing Independent Trustees.
8. When an Adviser change is proposed for a Portfolio with an
Affiliated Adviser, the Board, including a majority of the Independent
Trustees, will make a separate finding, reflected in the Board's minutes,
that such change is in the best interest of the Portfolio and its
shareholders and does not involve a conflict of interest from which the
Manager or the Affiliated Adviser derives an inappropriate advantage.
REQUIRED VOTE
Approval of Proposal No. 2 for a Portfolio requires approval by a majority
of the outstanding voting securities of the Portfolio, as defined by the
Investment Company Act. For purposes of the Investment Company Act, a majority
of a Portfolio's outstanding voting securities is the lesser of (i) 67% of the
Portfolio's outstanding voting shares represented at a meeting at which more
than 50% of the Portfolio's outstanding voting shares are present in person or
represented by proxy, or (ii) more than 50% of the
10
<PAGE>
Portfolio's outstanding voting shares. If the Proposal is not approved by
shareholders of a particular Portfolio, shareholder approval of every new
Adviser or new or amended Subadvisory Agreement will continue to be required
with respect to that Portfolio. If the Proposal is approved by the shareholders
of a particular Portfolio, the Proposal will be effective for that Portfolio as
described above, notwithstanding that another Portfolio does not approve the
Proposal.
THE BOARD, INCLUDING ITS INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 2.
APPROVAL OF SUBADVISORY AGREEMENT
FOR THE LARGE CAPITALIZATION VALUE PORTFOLIO
PROPOSAL NO. 3
Hotchkis and Wiley, L.P., a California limited partnership (Hotchkis and
Wiley) currently acts as Adviser with respect to approximately 50% of the assets
of the Large Capitalization Value Portfolio. Information concerning the Trust's
management arrangements, including a discussion of the Subadvisory Agreements,
is contained in Exhibit E. As described below, Hotchkis and Wiley has entered
into a definitive agreement to sell all of its assets to Merrill Lynch & Co.,
Inc. (Merrill Lynch) and as a result operate as a separate business unit called
Hotchkis and Wiley, a division of Merrill Lynch Capital Management Group (the
Transaction). The Transaction will result in a change of control constituting an
"assignment" (within the meaning of the Investment Company Act) of the
Portfolio's Subadvisory Agreement, which would result in its automatic
termination.
On July 9, 1996, the Trustees, including a majority of the Trustees, who are
not "interested" persons (within the meaning of the Investment Company Act),
unanimously approved a successor subadvisory agreement (the Successor
Subadvisory Agreement) subject to shareholder approval and the consummation of
the Transaction. The Trustees and the Manager seek approval by shareholders of
the Portfolio of the Successor Subadvisory Agreement, which is identical in all
material respects to the current subadvisory agreement (the Current Subadvisory
Agreement), in order that Hotchkis and Wiley continue as an Adviser to the
Portfolio after the Transaction. The form of Successor Subadvisory Agreement is
set forth as Exhibit F to this Proxy Statement.
The Current Subadvisory Agreement was approved by the Trustees of the Trust
including a majority of the Trustees who are not parties to such agreement or
interested persons of such parties, on September 7, 1994, and by the
shareholders of the Trust on October 27, 1994. For the period from January 1,
1995 through December 31, 1995 and the six-month period ended June 30, 1996,
Hotchkis and Wiley received advisory fees from the Manager of $238,848 and
$149,038, respectively. Neither Hotchkis and Wiley nor any affiliated persons
(within the meaning of the Investment Company Act) have received during the most
recent fiscal year, or expect to receive, any other fees from the Large
Capitalization Value Portfolio.
THE HOTCHKIS AND WILEY TRANSACTION
On June 19, 1996, John F. Hotchkis, George Wiley and the other members of
Hotchkis and Wiley, a Delaware Limited Liability Company and the general partner
of Hotchkis and Wiley, entered into a definitive agreement (the Purchase
Agreement) to sell all of the partnership interests in Hotchkis and Wiley to
Merrill Lynch, a Delaware corporation. In connection with the sale, Merrill
Lynch has provided incentives for certain key personnel to remain employed with
Hotchkis and Wiley. As a result of the Transaction, which is subject to various
approvals and consents and is expected to close by the end of the fourth quarter
of 1996, Hotchkis and Wiley will become part of Merrill Lynch Asset Management
and will operate as a separate business unit called Hotchkis and Wiley, a
division of Merrill Lynch Capital Management Group (CMG).
In connection with the Transaction, John F. Hotchkis will enter into an
employment agreement with CMG to serve as Chairman of the Hotchkis and Wiley
unit of Merrill Lynch, while Mr. Wiley, who is retiring, will enter into a
services agreement with CMG to serve as a special advisor to CMG. Michael L.
Quinn, the
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<PAGE>
head of CMG, will serve as Hotchkis and Wiley's Chief Executive Officer. It is
expected that all other managing directors, and all principals (except for Laird
Landmann and Tad Rivelle who have resigned) and key employees of Hotchkis and
Wiley will sign long-term employment agreements with CMG.
The same personnel who currently provide investment management and
administrative service to the Large Capitalization Value Portfolio are expected
to continue to do so after the Transaction. Dr. Roger DeBard will remain
primarily responsible for the day-to-day management of the portion of assets
Hotchkis and Wiley manages for the Portfolio. No change is anticipated in the
investment philosophies and practices currently followed by the Portfolio.
If the Successor Subadvisory Agreement is approved by the shareholders of
the Large Capitalization Value Portfolio, it will become effective upon
consummation of the Transaction.
Although approval of the Successor Subadvisory Agreement is a condition to
the consummation of the Transaction, the condition may be waived and the
Transaction may nevertheless proceed, even if the Successor Subadvisory
Agreement is not approved. In the event the Transaction is not consummated,
Hotchkis and Wiley would continue to serve as an Adviser to the Large
Capitalization Value Portfolio pursuant to the terms of the Current Subadvisory
Agreement.
DESCRIPTION OF HOTCHKIS AND WILEY
Hotchkis and Wiley is located at 800 West 6th Street, 5th Floor, Los
Angeles, CA 90017. The Managing Directors of Hotchkis and Wiley are John
Hotchkis, George Wiley, Roger DeBard, George Davis, Michael Baxter and Gail
Bardin. Each of these individuals, whose address is also 800 West 6th Street,
Los Angeles, CA 90017, is also a portfolio manager of Hotchkis and Wiley.
Hotchkis and Wiley is a California limited partnership which, in 1995,
reorganized through a transaction in which all the General Partners of the
Adviser contributed their interests to Hotchkis and Wiley, a newly organized
Delaware limited liability company (the LLC). The General Partners then became
members of the LLC and the LLC became the new general partner of Hotchkis and
Wiley. Effective upon the reorganization, the majority of the voting interests
in the LLC were held by Mr. Hotchkis and Mr. Wiley and entities controlled by
Mr. Wiley.
Each of the foregoing individuals, except for Mr. Wiley, who is retiring,
also has signed a long-term employment agreement with CMG and will serve as
managing director of CMG.
In addition to the Portfolio, Hotchkis and Wiley also acts as the investment
adviser or subadviser for the following investment companies having an
investment objective similar to the Portfolio:
<TABLE>
<CAPTION>
ANNUAL FEE (AS A PERCENTAGE ASSETS AS OF JUNE 30,
NAME OF FUND OF AVERAGE NET ASSETS) 1996
- ----------------------------- ------------------------------------ ------------------------
<S> <C> <C>
Hotchkis and Wiley
Equity Income Fund.......... .75 of 1% of average daily net $ 182,538,112
assets (annual expenses of the Fund
are limited to 1% of the Fund's
average net assets)
Hirtle Callaghan Trust
The Value Portfolio......... .30 of 1% of average daily net $ 69,632,505
assets
American AAdvantage
Growth and Income Fund...... For all accounts (including separate $ 233,800,475
accounts) combined:
.60% of the first $10 million
.50% of the next $140 million
.30% of the next $50 million
.20% over $200 million
</TABLE>
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<PAGE>
INFORMATION REGARDING MERRILL LYNCH
The following information regarding Merrill Lynch has been provided to the
Trust by Hotchkis and Wiley and Merrill Lynch.
Merrill Lynch, a Delaware corporation, is a holding company formed in 1973
that, through its subsidiaries and affiliates, provides investment, financing,
insurance and related services on a global basis. Such services include
securities brokering, trading and underwriting; investment banking and other
corporate finance advisory activities, including loan syndication; asset
management and other investment advisory services; trading of foreign exchange
instruments, futures, commodities and derivatives; securities clearance
services; banking, trust and lending services; and insurance sales and
underwriting services. These services are provided to individual investors,
corporations, governments and governmental agencies and financial institutions.
Merrill Lynch conducts its business from its World Headquarters facility in
New York City, New York, additional principal locations in New Jersey, London,
Tokyo, Hong Kong, various regional facilities located in the United States and
in other countries, and numerous retail sales and other offices throughout the
world. At December 29, 1995, Merrill Lynch employed approximately 46,000 people.
Merrill Lynch's asset management activities are conducted through or managed
by Merrill Lynch Asset Management, L.P., Fund Asset Management, L.P., and their
affiliates (together MLAM). MLAM constitutes the investment management arm of
Merrill Lynch. At the end of 1995, MLAM managed 217 portfolios representing a
wide variety of investment objectives ranging from money market funds to
long-term taxable and tax-exempt fixed income funds, along a broad spectrum of
quality ratings and maturities, as well as a wide variety of equity funds which
in the aggregate invest in more than 48 markets globally. By the end of 1995,
total assets under management by MLAM approximated $196 billion, as compared
with $164 billion at year-end 1994.
Merrill Lynch Asset Management, L.P. is located at 800 Scudders Mill Road,
Plainsboro, New Jersey 08536. It is a limited partnership, 100% of the interests
in which are owned by Merrill Lynch or its subsidiaries. Princeton Services,
Inc. is its general partner (owned through a holding company by Merrill Lynch).
THE SUCCESSOR SUBADVISORY AGREEMENT
The terms and conditions of the Successor Subadvisory Agreement, attached as
Exhibit F, are identical in all respects to those of the Current Subadvisory
Agreement, with the exception of the identity of the service provider, the
effective date and termination date and certain conforming changes which will
make the agreement like the other subadvisory agreements of the Trust.
Under the Current Subadvisory Agreement and the Successor Subadvisory
Agreement the fee payable by the Manager to Hotchkis and Wiley will be the same,
which is at an annual rate of 0.30 of 1% of the Portfolio's average daily net
assets allocated to Hotchkis and Wiley. No change in the Large Capitalization
Value Portfolio's overall fee rate will occur if this Proposal No. 3 is
approved.
Under the Current Subadvisory Agreement and the Successor Subadvisory
Agreement, Hotchkis and Wiley provides, and will continue to provide, the
Portfolio with investment advisory services.
For Hotchkis and Wiley to act under the Successor Subadvisory Agreement, the
agreement must be approved by the vote of the holders of a majority of the
voting securities of the Portfolio, as defined in the Investment Company Act. If
the shareholders approve the Successor Subadvisory Agreement, it will continue
in effect for a period of more than two years from the date of execution only so
long as such continuance is specifically approved at least annually by (i) the
vote of a majority of the Trustees of the Trust, or by the vote of the holders
of a majority of the Portfolio's outstanding voting securities and (ii) the vote
of a majority of those Trustees who are not parties to the Successor Subadvisory
Agreement or interested persons (as defined in the Investment Company Act) of
the Manager or Hotchkis and Wiley cast in person at a meeting called for the
purpose of voting on such approval.
13
<PAGE>
The Successor Subadvisory Agreement and Current Subadvisory Agreement will
terminate automatically in the event of assignment, and may be terminated at any
time, without the payment of any penalty, by the vote of the Trustees or by a
vote of a majority of the outstanding voting securities (as defined in the
Investment Company Act) of the Portfolio or by the Manager or Hotchkis and Wiley
upon not more than 60 days' nor less than 30 days' written notice. For more
information regarding the Successor Subadvisory Agreement, including the
provisions relating to indemnification, see Exhibits E and F.
THE EVALUATION BY THE TRUSTEES
The Trustees believe that approval of the Successor Subadvisory Agreement is
in the best interests of the shareholders of the Trust.
The Trustees have determined that, by approving the Successor Subadvisory
Agreement on behalf of the Trust, the Trust can best assure itself that services
currently provided to the Large Capitalization Value Portfolio by Hotchkis and
Wiley will continue to be provided after the Transaction without interruption.
The Trustees believe that, like the Current Subadvisory Agreement, the Successor
Subadvisory Agreement will enable the Portfolio to continue to obtain high
quality services at costs deemed appropriate, reasonable, and in the best
interests of each Portfolio and its shareholders.
In considering approval of the Successor Subadvisory Agreement, the
Trustees, including the non-interested Trustees, were provided information they
deemed necessary to enable them to consider whether that agreement was in the
best interest of the Portfolio and its shareholders. The Trustees considered
such information including, among other things, representations by Hotchkis and
Wiley and concluded that the transaction would not materially affect the
investment advisory operations of Hotchkis and Wiley or the level or quality of
advisory services provided to the Portfolio; that the same personnel at Hotchkis
and Wiley who currently provide services to the Portfolio would continue to do
so after the Transaction; and that therefore the Portfolio would be unaffected
in any negative way by the Transaction.
Based upon their review, the Trustees concluded that the Successor
Subadvisory Agreement is reasonable, fair and in the best interests of the
Portfolio and its shareholders, and that the fees provided in the Successor
Subadvisory Agreement are fair and reasonable. Accordingly, after consideration
of the above factors, and such other factors and information as they deemed
relevant, the Trustees, including the non-interested Trustees, unanimously
approved the Successor Subadvisory Agreement and voted to recommend its approval
by the Portfolio's shareholders.
REQUIRED VOTE
Proposal No. 3 must be approved by a majority of the outstanding voting
securities of the Large Capitalization Value Portfolio, as defined by the
Investment Company Act and described in Proposal No. 2. If the Successor
Subadvisory Agreement is approved by the shareholders of the Portfolio, it will
become effective upon consummation of the Transaction. In the event that the
shareholders of the Portfolio do not approve the Successor Subadvisory Agreement
and the Transaction is consummated, if Proposal No. 2 is approved by the
Portfolio and the order referred to therein is granted, the Trustees may
consider retaining Hotchkis and Wiley pursuant to the terms of the order. If
Proposal No. 2 is not approved or the order not granted, subject to Commission
approval, the Trustees would seek to obtain for the Portfolio interim advisory
services at the lesser of cost or the current fee rate either from Hotchkis and
Wiley or from another investment adviser. Thereafter, the Trustees would either
negotiate a new investment advisory agreement with an investment advisory
organization selected by them or make other appropriate arrangements in either
event subject to approval by the shareholders of the Portfolio.
THE BOARD, INCLUDING ITS INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THIS PROPOSAL NO. 3.
14
<PAGE>
RATIFICATION OF SELECTION
OF INDEPENDENT ACCOUNTANTS
PROPOSAL NO. 4
Under Proposal No. 4, Shareholders of the Trust are asked to ratify the
Board's selection of independent accountants for the Trust. The accountants for
the Trust audit the Trust's financial statements for each fiscal year.
The policy of the Board of the Trust regarding engaging independent
accountants' services is that management may engage the Trust's principal
independent public accountants to perform any service(s) normally provided by
independent accounting firms, provided that such service(s) meet(s) any and all
of the independence requirements of the American Institute of Certified Public
Accountants and the Commission. In accordance with this policy, the Audit
Committee of the Trust reviews and approves all services provided by the
independent public accountants prior to their being rendered. The Board of the
Trust receives a report from its Audit Committee relating to all services after
they have been performed by the Trust's independent accountants.
During the last fiscal year, Deloitte & Touche LLP served as independent
accountants for the Trust. The Board has selected this firm continue to serve in
that capacity for the current fiscal year, subject to ratification by
Shareholders of the Trust at the Meeting.
Representatives of Deliotte & Touche LLP are not expected to be present at
the Meetings but will be available to answer any questions or make any
statements should any matters arise requiring their presence. Deloitte & Touche
LLP has informed the Trust that they have no material direct or indirect
financial interest in the Trust.
The persons named in the accompanying proxy will vote FOR ratification of
the selection of the Trust's accountant unless contrary instructions are given.
REQUIRED VOTE. Approval of Proposal No. 4 requires a vote of a majority of
the votes cast with respect to Proposal No. 4 at the Meeting, provided a quorum
is present.
EACH BOARD, INCLUDING ITS INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 4.
ADDITIONAL INFORMATION
The solicitation of proxies, the cost of which will be borne by the Trust
and, for Proposal No. 3 by Hotchkis and Wiley, will be made primarily by mail
but also may include telephone or oral communications by regular employees of
Prudential Securities or Prudential Mutual Fund Management, who will not receive
any compensation therefor from the Trust, or by Shareholder Communications
Corporation, a proxy solicitation firm retained by the Trust, who will be paid
the approximate fees and expenses for soliciting services set forth below.
Proxies may be recorded pursuant to (i) electronically transmitted instructions
or (ii) telephone instructions obtained through procedures reasonably designed
to verify that the instructions have been authorized. Soliciting fees and
expenses payable to Shareholder Communications Corporation by the Trust are a
function of the number of Shareholders in each Portfolio of the Trust.
<TABLE>
<CAPTION>
ESTIMATED
SOLICITATION
PORTFOLIO FEES AND EXPENSES
- -------------------------------------------------------------------------------------------- --------------------
<S> <C>
Large Capitalization Growth Portfolio....................................................... $ 16,090
Large Capitalization Value Portfolio........................................................ $ 14,715
Small Capitalization Growth Portfolio....................................................... $ 16,755
Small Capitalization Value Portfolio........................................................ $ 15,160
International Equity Portfolio.............................................................. $ 14,025
International Bond Portfolio................................................................ $ 2,815
Total Return Bond Portfolio................................................................. $ 3,475
Intermediate-Term Bond Portfolio............................................................ $ 6,465
Mortgage Backed Securities Portfolio........................................................ $ 5,295
U.S. Government Money Market Portfolio...................................................... $ 570
</TABLE>
15
<PAGE>
SHAREHOLDER PROPOSALS
Any Shareholder who wishes to submit a proposal to be considered at the
Trust's next annual meeting of Shareholders should send the proposal to the
Trust at One Seaport Plaza, New York, New York 10292, so as to be received
within a reasonable time before the Board makes the solicitation relating to
such meeting, in order to be included in the proxy statement and form of proxy
relating to such meeting.
The Trust will not be required to hold annual meetings of shareholders if
the election of Board Members is not required under the Investment Company Act.
It is the present intention of the Board of the Trust not to hold annual
meetings of Shareholders unless such Shareholder action is required.
Shareholder proposals that are submitted in a timely manner will not
necessarily be included in the Trust's proxy materials. Inclusion of such
proposals is subject to limitations under the federal securities laws.
OTHER BUSINESS
Management knows of no business to be presented at the Meetings other than
the matters set forth in this proxy statement, but should any other matter
requiring a vote of Shareholders arise, the proxies will vote according to their
best judgment in the interest of the Trust.
S. JANE ROSE
SECRETARY
August 28, 1996
IT IS IMPORTANT THAT YOU EXECUTE AND RETURN ALL OF YOUR PROXIES PROMPTLY.
16
<PAGE>
INDEX TO EXHIBITS TO PROXY STATEMENT
<TABLE>
<S> <C> <C> <C>
Exhibit A -- Year in Which Current Board Member Standing for Reelection Became a
Member of the Board.................................................. A-1
Exhibit B -- Fund Ownership of Nominees and Current Board Members.................. B-1
Exhibit C -- Board and Committee Information....................................... C-1
Exhibit D -- Officer Information................................................... D-1
Exhibit E -- Information about the Management Agreement and the Subadvisory
Agreements of the Trust.............................................. E-1
Exhibit F -- Successor Subadvisory Agreement between Hotchkis and Wiley and
Prudential Mutual Fund Management, Inc. ............................. F-1
</TABLE>
17
<PAGE>
EXHIBIT A
YEAR IN WHICH CURRENT BOARD MEMBER STANDING
FOR REELECTION BECAME A MEMBER OF THE BOARD
<TABLE>
<CAPTION>
DIRECTORS/TRUSTEES THE TARGET PORTFOLIO TRUST
- ---------------------------------------------------------------------------------------- ---------------------------
<S> <C>
Eugene C. Dorsey........................................................................ 1992
Douglas H. McCorkindale................................................................. 1996
Thomas T. Mooney........................................................................ 1996
Richard A. Redeker...................................................................... 1993
</TABLE>
A-1
<PAGE>
EXHIBIT B
FUND OWNERSHIP OF NOMINEES AND BOARD MEMBERS
NUMBER OF SHARES HELD AS OF AUGUST 19, 1996
<TABLE>
<CAPTION>
THE TARGET PORTFOLIO
TRUSTEES TRUST
- ---------------------------------------------------------------------------------------- -------------------------
<S> <C>
Eugene C. Dorsey........................................................................ 675
Douglas H. McCorkindale................................................................. 0
Thomas T. Mooney........................................................................ 0
Richard A. Redeker...................................................................... 14,095
</TABLE>
B-1
<PAGE>
EXHIBIT C
BOARD AND COMMITTEE INFORMATION
<TABLE>
<CAPTION>
THE TARGET PORTFOLIO
TRUST
------------------------
<S> <C>
Annual Fee*............................................................................. $ 10,000
Fee for Attendance of Board Meetings*................................................... NA
Fee for Attendance of Committee Meetings*............................................... NA
Number of Board Meetings During Last Fiscal Year........................................ 3
Number of Audit Committee Meetings During
Last Fiscal Year....................................................................... 3
Number of Nominating Committee Meetings During
Last Fiscal Year....................................................................... 1
</TABLE>
- --------------
* Reflects compensation rates in effect prior to changes described in proxy
statement. Board Members who were not independent did not receive
compensation from the Funds.
C-1
<PAGE>
EXHIBIT D
OFFICER INFORMATION
<TABLE>
<CAPTION>
OFFICER SINCE
---------------------------
NAME, AGE; PRINCIPAL BUSINESS OCCUPATION FOR THE PAST FIVE YEARS OFFICE THE TARGET PORTFOLIO TRUST
- ----------------------------------------------------------------- --------------------- ---------------------------
<S> <C> <C>
Richard A. Redeker, (52) President 1995
President, Chief Executive Officer and Director (Since October
1993), PMF; Executive Vice President, Director and Member of the
Operating Committee (Since October 1993), Prudential Securities;
Director (Since October 1993) of Prudential Securities Group,
Inc. (PSG); Executive Vice President, The Prudential Investment
Corporation (PIC) (Since July 1994); Director (Since January
1994) of Prudential Mutual Fund Distributors, Inc. (PMFD) and
Prudential Mutual Fund Services, Inc. (PMFS); formerly Senior
Executive Vice President and Director of Kemper Financial
Services, Inc. (September 1978-September 1993); President and
Director of The High Yield Income Fund, Inc.
Robert F. Gunia, (49) Vice President 1992
Director (Since January 1989), Chief Administrative Officer
(Since July 1990), and Executive Vice President, Treasurer and
Chief Financial Officer (Since June 1987) of PMF; Senior Vice
President (Since March 1987) of Prudential Securities; Executive
Vice President, Treasurer and Comptroller (Since March 1991) of
PMFD; Director (Since June 1987) of PMFS; Vice President and
Director of the Asia Pacific Fund, Inc. (Since May 1989)
Grace Torres, (37) Treasurer 1995
First Vice President (Since March 1994) of PMF; First Vice
President of Prudential Securities (Since March 1994); prior
thereto Vice President of Bankers Trust Corporation
Stephen Ungerman, (42) Assistant Treasurer 1995
First Vice President (Since February 1993) of PMF; prior
thereto, Senior Tax Manager of Price Waterhouse (1981-January
1993)
S. Jane Rose, (50) Secretary 1992
Senior Vice President and Senior Counsel of PMF; Senior Vice
President and Senior Counsel of Prudential Securities (Since
July 1992); formerly Vice President and Associate General
Counsel of Prudential Securities
Marguerite Morrison, (40) Assistant Secretary 1993
Vice President and Associate General Counsel (Since June 1991)
of PMF; Vice President and Associate General Counsel of
Prudential Securities
</TABLE>
D-1
<PAGE>
EXHIBIT E
MANAGEMENT OF THE TRUST
THE MANAGER
Prudential Mutual Fund Management, Inc., One Seaport Plaza, New York, New
York 10292, serves as the Trust's Manager under a management agreement dated as
of November 9, 1992 (the Management Agreement).
The Management Agreement was last approved by the Trustees of the Trust,
including a majority of the Trustees who are not parties to such contract or
interested persons of such parties (as defined in the Investment Company Act of
1940, as amended (the Investment Company Act)) (non-interested Trustees) on
April 9, 1996 and was approved by the sole shareholder of the Trust on October
14, 1992.
TERMS OF THE MANAGEMENT AGREEMENT
Pursuant to the Management Agreement, PMF, subject to the supervision of the
Trust's Trustees and in conformity with the stated policies of the Trust, is
responsible for managing or providing for the management of the investment of
the assets of each portfolio. In this regard, PMF provides supervision of the
Trust's investments, furnishes a continuous investment program for the Trust's
portfolios and is responsible for the placement of purchase and sale orders for
portfolio securities of the Trust and other investments. PMF has the ability to
delegate this responsibility to one or more investment advisers unaffiliated
with PMF (the Advisers).
Pursuant to the Management Agreement with the Trust, PMF selects, subject to
the review and approval of the Trustees, the Advisers for the portfolios and
reviews their continued performance. The selection is based upon, among other
things, the Advisers' respective areas of expertise in asset management. PMF
recommends portfolio managers who have a demonstrable track record of strong
relative performance. PMF also administers the Trust's business affairs, subject
to the supervision of the Trustees, and, in connection therewith, furnishes the
Trust with office facilities, together with those ordinary clerical and
bookkeeping services which are not being furnished by the Trust's Transfer and
Dividend Disbursing Agent and Custodian.
PMF has authorized any of its directors, officers and employees who have
been elected as Trustees or officers of the Trust to serve in the capacities in
which they have been elected. All services furnished by PMF under the Management
Agreement may be furnished by any such directors, officers or employees of PMF.
In connection with its administration of the corporate affairs of the Trust, PMF
bears the following expenses:
(a) the salaries and expenses of all personnel of the Trust and PMF,
except the fees and expenses of Trustees not affiliated with PMF or each
portfolio's Adviser;
(b) all expenses incurred by PMF or by the Trust in connection with
administering the ordinary course of the Trust's business, other than those
assumed by the Trust, as described below; and
(c) the costs and expenses payable to each Adviser pursuant to the
subadvisory agreements.
E-1
<PAGE>
For its services, PMF is compensated by each portfolio of the Trust. The fee
is computed daily and paid monthly. For the fiscal year ended December 31, 1995,
PMF received the following fees from the Portfolios.
<TABLE>
<CAPTION>
1995
---------------------------------------------------------------------
MANAGEMENT FEE PAID MANAGEMENT FEE WAIVED
----------------------------------- --------------------------------
ANNUALIZED PERCENTAGE ANNUALIZED PERCENTAGE
PORTFOLIO OF AVERAGE NET ASSETS AMOUNT OF AVERAGE NET ASSETS AMOUNT
- ------------------------------------------- --------------------- ------------ --------------------- ---------
<S> <C> <C> <C> <C>
Large Capitalization Growth Portfolio...... 0.60% $ 977,893 -- --
Large Capitalization Value Portfolio....... 0.60% 978,742 -- --
Small Capitalization Growth Portfolio...... 0.60% 645,895 -- --
Small Capitalization Value Portfolio....... 0.60% 528,512 -- --
International Equity Portfolio............. 0.70% 1,283,896 -- --
International Bond Portfolio............... 0.35% 102,710 0.15% $ 44,839
Total Return Bond Portfolio................ 0.26% 97,987 0.19% 68,615
Intermediate-Term Bond Portfolio........... 0.45% 308,827 -- --
Mortgage Backed Securities Portfolio....... 0.38% 245,215 0.07% 47,957
U.S. Government Money Market Portfolio..... 0.20% 41,031 0.05% 9,401
</TABLE>
The Management Agreement provides that, if the expenses of the Trust
(including the fees of PMF, but excluding interest, taxes, brokerage
commissions, distribution fees and litigation and indemnification expenses and
other extraordinary expenses not incurred in the ordinary course of the Trust's
business) for any fiscal year exceed the lowest applicable annual expense
limitation established and enforced pursuant to the statutes or regulations of
any jurisdiction in which shares of the Trust are then qualified for offer and
sale, the compensation due PMF will be reduced by the amount of such excess, or
if such reduction exceeds the compensation payable to PMF, PMF will pay the
Trust the amount of such reduction which exceeds the amount of such
compensation. Any such reductions or payments are subject to readjustment during
the year. No such reductions or payments were required during the fiscal year
ended December 31, 1995. The Trust believes the most restrictive of such annual
limitations is 2 1/2% of a portfolio's average daily net assets up to $30
million, 2% of the next $70 million of such assets and 1 1/2% of such assets in
excess of $100 million.
Except as indicated above, the Trust is responsible under the Management
Agreement for the payment of its expenses, including (a) the fees payable to
PMF, (b) the fees and expenses of Trustees who are not affiliated with PMF or
the Adviser of each portfolio, (c) the fees and certain expenses of the Trust's
Custodian and Transfer and Dividend Disbursing Agent, including the cost of
providing records of the Trust and of pricing Trust shares, (d) the charges and
expenses of the Trust's legal counsel and independent accountants, (e) brokerage
commissions and any issue or transfer taxes chargeable to the Trust in
connection with its securities transactions, (f) all taxes and corporate fees
payable by the Trust to governmental agencies, (g) the fees of any trade
association of which the Trust may be a member, (h) the cost of any stock
certificates representing shares of the Trust, (i) the cost of fidelity and
liability insurance, (j) certain organizational expenses of the Trust and the
fees and expenses involved in registering and maintaining registration of the
Trust and of its shares with the SEC and registering the Trust and qualifying
its shares under state securities laws, including the preparation and printing
of the Trust's registration statements and prospectuses for such purposes, (k)
allocable communications expenses with respect to investor services and all
expenses of shareholders' and Trustees' meetings and of preparing, printing and
mailing reports, proxy statements and prospectuses to shareholders in the amount
necessary for distribution to the shareholders and (l) litigation and
indemnification expenses and other extraordinary expenses not incurred in the
ordinary course of the Trust's business.
The Management Agreement provides that PMF will not be liable to the Trust
for any error of judgment by PMF or for any loss suffered by the Trust in
connection with the matters to which the Management Agreement relates except a
loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or willful misfeasance, bad faith, gross negligence or
reckless disregard of duty. The Management Agreement also provides that it will
terminate automatically if assigned and that it may be
E-2
<PAGE>
terminated without penalty by the Trustees of the Trust, by vote of a majority
of the Trust's outstanding voting securities (as defined in the Investment
Company Act) or by the Manager, upon not more than 60 days' nor less than 30
days' written notice.
INFORMATION ABOUT PMF
PMF is a subsidiary of Prudential Securities and an indirect, wholly-owned
subsidiary of The Prudential Insurance Company of America (Prudential).
Prudential's address is Prudential Plaza, Newark, New Jersey 07102. PMF was
organized in May 1987 under the laws of the State of Delaware. PMF acts as
manager for the following investment companies:
Open-End Management Investment Companies: The BlackRock Government
Income Trust, Command Government Fund, Command Money Fund, Command Tax-Free
Fund, The Global Government Plus Fund, Inc., The Global Total Return Fund,
Inc., Global Utility Fund, Inc., Nicholas-Applegate Fund, Inc., Prudential
Allocation Fund, Prudential California Municipal Fund, Prudential Distressed
Securities Fund, Inc., Prudential Diversified Bond Fund, Inc., Prudential
Equity Fund, Inc., Prudential Equity Income Fund, Prudential Europe Growth
Fund, Inc., Prudential Global Fund, Inc., Prudential Global Genesis Fund,
Inc., Prudential Global Limited Maturity Fund, Inc., Prudential Government
Income Fund, Inc., Prudential Government Securities Trust, Prudential High
Yield Fund, Inc., Prudential Institutional Liquidity Portfolio, Inc.,
Prudential Intermediate Global Income Fund, Inc., Prudential Jennison Fund,
Inc., Prudential-Bache MoneyMart Assets Fund, Inc. (d/b/a Prudential
MoneyMart Assets), Prudential Mortgage Income Fund, Inc., Prudential
Multi-Sector Fund, Inc., Prudential Municipal Bond Fund, Prudential
Municipal Series Fund, Prudential National Municipals Fund, Inc., Prudential
Natural Resources Fund, Inc., Prudential Pacific Growth Fund, Inc.,
Prudential Small Companies Fund, Inc., Prudential-Bache Special Money Market
Fund, Inc. (d/b/a Prudential Special Money Market Fund), Prudential
Structured Maturity Fund, Inc., Prudential Tax-Free Money Fund, Inc.,
Prudential U.S. Government Fund, Prudential Utility Fund, Inc. and The
Target Portfolio Trust.
Closed-End Management Investment Companies: The High Yield Income Fund,
Inc.
E-3
<PAGE>
Certain information regarding the directors and principal executive officers
of PMF is set forth below. Except as otherwise indicated, the address of each
person is One Seaport Plaza, New York, New York 10292.
<TABLE>
<CAPTION>
NAME POSITION WITH PMF PRINCIPAL OCCUPATION
- ------------------------- ----------------------------- -------------------------------------------------------
<S> <C> <C>
Stephen P. Fisher Senior Vice President Senior Vice President, PMF; Senior Vice President,
Prudential Securities; Vice President, PMFD
Frank W. Giordano Executive Vice President, Executive Vice President, General Counsel, Secretary
General Counsel, Secretary and Director, PMF and PMFD; Senior Vice President,
and Director Prudential Securities; Director, Prudential Mutual
Fund Services, Inc. (PMFS)
Robert F. Gunia Executive Vice President, Executive Vice President, Chief Financial and
Chief Financial and Administrative Officer, Treasurer and Director, PMF;
Administrative Officer, Senior Vice President, Prudential Securities;
Treasurer and Director Executive Vice President, Chief Financial Officer,
Treasurer, and Director, PMFD; Director, PMFS
Theresa A. Hamacher Director Director, PMF; Vice President, Prudential; Vice
President, Prudential Investment Corporation (PIC);
President, Prudential Mutual Fund Investment
Management
Timothy J. O'Brien Director President, Chief Executive Officer, Chief Operating
Officer and Director, PMFD; Chief Executive Officer
and Director, PMFS; Director, PMF
Richard A. Redeiker President, Chief Executive President, Chief Executive Officer and Director, PMF;
Officer and Director Executive Vice President, Director and Member of
Operating Committee, Prudential Securities; Director,
Prudential Securities Group, Inc.; Executive Vice
President, PIC; Director, PMFD; Director, PMFS
S. Jane Rose Senior Vice President, Senior Senior Vice President, Senior Counsel and Assistant
Counsel and Assistant Secretary, PMF; Senior Vice President and Senior
Secretary Counsel, Prudential Securities
Donald Webber Executive Vice President and Executive Vice President and Director of Sales, PMF
Director of Sales
</TABLE>
TERMS OF THE SUBADVISORY AGREEMENT
Pursuant to the Subadvisory Agreement, each Adviser, subject to the
supervision of PMF and the Trustees and in conformity with the stated policies
of the Portfolios, manages the investment operations of the a portion of the
Portfolio and the composition of that portion of the Portfolio, including the
purchase, retention and disposition of securities and other investments. The
Advisers are compensated by PMF for the services provided and the expenses
assessed pursuant to the Subadvisory Agreement.
Each Adviser keeps certain books and records required to be maintained
pursuant to the Investment Company Act. The investment advisory services of each
Adviser to the Portfolio are not exclusive under the terms of the Subadvisory
Agreement and the Adviser is free to, and does, render investment advisory
services to others, subject to certain limitations.
The Subadvisory Agreement provides that each Adviser shall not be liable for
any error of judgment or for any loss suffered by the Trust or PMF in connection
with the matters to which the Subadvisory
E-4
<PAGE>
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 duty. The Subadvisory Agreement provides that it
shall terminate automatically if assigned or upon termination of the Management
Agreement and that it may be terminated without penalty by the Trust, PMF or the
Adviser upon not more than 60 days' nor less than 30 days' written notice.
E-5
<PAGE>
EXHIBIT F
THE TARGET PORTFOLIO TRUST
SUBADVISORY AGREEMENT
Agreement made as of this day of , 1996, between
Prudential Mutual Fund Management, Inc. (PMF or the Manager), a Delaware
corporation, and Hotchkis and Wiley (the Adviser), a division of Merrill Lynch
Capital Management Group.
WHEREAS, PMF has entered 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 1940 (the 1940 Act), pursuant to which PMF 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, PMF 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 Portfolio 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 each 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 a 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
F-1
<PAGE>
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 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; provided, however, that the Adviser agrees
that neither it, nor any person controlled by it, nor any successor 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 that
seeks as a primary market for its shares asset allocation programs
sponsored by U.S. broker-dealers similar in nature or market to the
Prudential Securities Target Program.
(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.
F-2
<PAGE>
(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 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 1940 Act) 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 1940 Act) 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 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.
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.
F-3
<PAGE>
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 ___________________________________
Robert F. Gunia
EXECUTIVE VICE PRESIDENT
Hotchkis and Wiley
By ___________________________________
Nancy Celick
CHIEF FINANCIAL OFFICER
F-4
<PAGE>
PROXY
THE TARGET PORTFOLIO TRUST
(LARGE CAPITALIZATION GROWTH PORTFOLIO)
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES
The undersigned hereby appoints Marguerite E.H. Morrison, S. Jane Rose
and Grace C. Torres as Proxies, each with the power of substitution, and
hereby authorizes each of them, to represent and vote, as designated below,
all of the shares of beneficial interest of The Target Portfolio Trust (Large
Capitalization Growth Portfolio) held of record by the undersigned on August
9, 1996 at the Special Meeting of Shareholders to be held on October 30,
1996, or any adjournments thereof.
THE TRUSTEES RECOMMEND A VOTE "FOR" ALL OF THE NOMINEES AND "FOR" EACH OF
THE FOLLOWING PROPOSALS.
1. Election of Trustees
Nominees: Eugene C. Dorsey, Douglas H.
McCorkindale, Thomas T. Mooney and
Richard A. Redeker
2. To permit the Manager to enter into, or make material changes to,
subadvisory agreements without shareholder approval.
3. N/A.
4. To ratify the selection by the Trustees of Deloitte & Touche LLP as
independent accountants for the fiscal year ending December 31, 1996.
5. To transact such other business as may properly come before the Meeting and
any adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 4 AND 5.
PLACE "X" ONLY IN ONE BOX
1. Election of Nominees
For Withhold For All Except
All All As Listed Below
/ / / / / /
List Exceptions: _________________________
_________________________
_________________________
VOTING INSTRUCTIONS: Mark your vote (For, Against, Abstain) IN THE BOX.
For Against Abstain
2. / / / / / /
4. / / / / / /
5. / / / / / /
___________________________________
_______________
Date
X
- -----------------------------------
Signature
x
- -----------------------------------
Signature If Held Jointly
[Shares/name/address]
TRGT LG CAP GRWTH
[LOGO]
<PAGE>
PROXY
THE TARGET PORTFOLIO TRUST
(LARGE CAPITALIZATION VALUE PORTFOLIO)
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES
The undersigned hereby appoints Marguerite E.H. Morrison, S. Jane Rose
and Grace C. Torres as Proxies, each with the power of substitution, and
hereby authorizes each of them, to represent and vote, as designated below,
all of the shares of beneficial interest of The Target Portfolio Trust (Large
Capitalization Value Portfolio) held of record by the undersigned on August
9, 1996 at the Special Meeting of Shareholders to be held on October 30,
1996, or any adjournments thereof.
THE TRUSTEES RECOMMEND A VOTE "FOR" ALL OF THE NOMINEES AND "FOR" EACH OF
THE FOLLOWING PROPOSALS.
1. Election of Trustees
Nominees: Eugene C. Dorsey, Douglas H. McCorkindale, Thomas T. Mooney and
Richard A. Redeker
2. To permit the Manager to enter into, or make material changes to,
subadvisory agreements without shareholder approval.
3. To approve a new subadvisory agreement with Hotchkis and Wiley.
4. To ratify the selection by the Trustees of Deloitte & Touche LLP as
independent accountants for the fiscal year ending December 31, 1996.
5. To transact such other business as may properly come before the Meeting and
any adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 3, 4 AND 5.
PLACE "X" ONLY IN ONE BOX
1. Election of Nominees
For Withhold For All Except
All All As Listed Below
/ / / / / /
List Exceptions: _________________________
_________________________
_________________________
VOTING INSTRUCTIONS: Mark your vote (For, Against, Abstain) IN THE BOX.
For Against Abstain
2. / / / / / /
3. / / / / / /
4. / / / / / /
5. / / / / / /
___________________________________
_______________
Date
X
- -----------------------------------
Signature
x
- -----------------------------------
Signature If Held Jointly
[Shares/name/address]
TRGT LG CAP GRWTH
[LOGO]
<PAGE>
PROXY
THE TARGET PORTFOLIO TRUST
(SMALL CAPITALIZATION GROWTH PORTFOLIO)
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES
The undersigned hereby appoints Marguerite E.H. Morrison, S. Jane Rose
and Grace C. Torres as Proxies, each with the power of substitution, and
hereby authorizes each of them, to represent and vote, as designated below,
all of the shares of beneficial interest of The Target Portfolio Trust (Small
Capitalization Growth Portfolio) held of record by the undersigned on August
9, 1996 at the Special Meeting of Shareholders to be held on October 30,
1996, or any adjournments thereof.
THE TRUSTEES RECOMMEND A VOTE "FOR" ALL OF THE NOMINEES AND "FOR" EACH OF
THE FOLLOWING PROPOSALS.
1. Election of Trustees
Nominees: Eugene C. Dorsey, Douglas H. McCorkindale, Thomas T. Mooney and
Richard A. Redeker
2. To permit the Manager to enter into, or make material changes to,
subadvisory agreements without shareholder approval.
3. N/A.
4. To ratify the selection by the Trustees of Deloitte & Touche LLP as
independent accountants for the fiscal year ending December 31, 1996.
5. To transact such other business as may properly come before the Meeting and
any adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 4 AND 5.
PLACE "X" ONLY IN ONE BOX
1. Election of Nominees
For Withhold For All Except
All All As Listed Below
/ / / / / /
List Exceptions: _________________________
_________________________
_________________________
VOTING INSTRUCTIONS: Mark your vote (For, Against, Abstain) IN THE BOX.
For Against Abstain
2. / / / / / /
4. / / / / / /
5. / / / / / /
___________________________________
_______________
Date
X
- -----------------------------------
Signature
x
- -----------------------------------
Signature If Held Jointly
[Shares/name/address]
TRGT LG CAP GRWTH
[LOGO]
<PAGE>
PROXY
THE TARGET PORTFOLIO TRUST
(SMALL CAPITALIZATION VALUE PORTFOLIO)
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES
The undersigned hereby appoints Marguerite E.H. Morrison, S. Jane Rose
and Grace C. Torres as Proxies, each with the power of substitution, and
hereby authorizes each of them, to represent and vote, as designated below,
all of the shares of beneficial interest of The Target Portfolio Trust (Small
Capitalization Value Portfolio) held of record by the undersigned on August
9, 1996 at the Special Meeting of Shareholders to be held on October 30,
1996, or any adjournments thereof.
THE TRUSTEES RECOMMEND A VOTE "FOR" ALL OF THE NOMINEES AND "FOR" EACH OF
THE FOLLOWING PROPOSALS.
1. Election of Trustees
Nominees: Eugene C. Dorsey, Douglas H. McCorkindale, Thomas T. Mooney and
Richard A. Redeker
2. To permit the Manager to enter into, or make material changes to,
subadvisory agreements without shareholder approval.
3. N/A.
4. To ratify the selection by the Trustees of Deloitte & Touche LLP as
independent accountants for the fiscal year ending December 31, 1996.
5. To transact such other business as may properly come before the Meeting and
any adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 4 AND 5.
PLACE "X" ONLY IN ONE BOX
1. Election of Nominees
For Withhold For All Except
All All As Listed Below
/ / / / / /
List Exceptions: _________________________
_________________________
_________________________
VOTING INSTRUCTIONS: Mark your vote (For, Against, Abstain) IN THE BOX.
For Against Abstain
2. / / / / / /
4. / / / / / /
5. / / / / / /
___________________________________
_______________
Date
X
- -----------------------------------
Signature
x
- -----------------------------------
Signature If Held Jointly
[Shares/name/address]
TRGT LG CAP GRWTH
[LOGO]
<PAGE>
PROXY
THE TARGET PORTFOLIO TRUST
(INTERNATIONAL EQUITY PORTFOLIO)
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES
The undersigned hereby appoints Marguerite E.H. Morrison, S. Jane Rose
and Grace C. Torres as Proxies, each with the power of substitution, and
hereby authorizes each of them, to represent and vote, as designated below,
all of the shares of beneficial interest of The Target Portfolio Trust
(International Equity Portfolio) held of record by the undersigned on August
9, 1996 at the Special Meeting of Shareholders to be held on October 30,
1996, or any adjournments thereof.
THE TRUSTEES RECOMMEND A VOTE "FOR" ALL OF THE NOMINEES AND "FOR" EACH OF
THE FOLLOWING PROPOSALS.
1. Election of Trustees
Nominees: Eugene C. Dorsey, Douglas H. McCorkindale, Thomas T. Mooney and
Richard A. Redeker
2. To permit the Manager to enter into, or make material changes to,
subadvisory agreements without shareholder approval.
3. N/A.
4. To ratify the selection by the Trustees of Deloitte & Touche LLP as
independent accountants for the fiscal year ending December 31, 1996.
5. To transact such other business as may properly come before the Meeting and
any adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 4 AND 5.
PLACE "X" ONLY IN ONE BOX
1. Election of Nominees
For Withhold For All Except
All All As Listed Below
/ / / / / /
List Exceptions: _________________________
_________________________
_________________________
VOTING INSTRUCTIONS: Mark your vote (For, Against, Abstain) IN THE BOX.
For Against Abstain
2. / / / / / /
4. / / / / / /
5. / / / / / /
___________________________________
_______________
Date
X
- -----------------------------------
Signature
x
- -----------------------------------
Signature If Held Jointly
[Shares/name/address]
TRGT LG CAP GRWTH
[LOGO]
<PAGE>
PROXY
THE TARGET PORTFOLIO TRUST
(INTERNATIONAL BOND PORTFOLIO)
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES
The undersigned hereby appoints Marguerite E.H. Morrison, S. Jane Rose
and Grace C. Torres as Proxies, each with the power of substitution, and
hereby authorizes each of them, to represent and vote, as designated below,
all of the shares of beneficial interest of The Target Portfolio Trust
(International Bond Portfolio) held of record by the undersigned on August 9,
1996 at the Special Meeting of Shareholders to be held on October 30, 1996,
or any adjournments thereof.
THE TRUSTEES RECOMMEND A VOTE "FOR" ALL OF THE NOMINEES AND "FOR" EACH OF
THE FOLLOWING PROPOSALS.
1. Election of Trustees
Nominees: Eugene C. Dorsey, Douglas H. McCorkindale, Thomas T. Mooney and
Richard A. Redeker
2. To permit the Manager to enter into, or make material changes to,
subadvisory agreements without shareholder approval.
3. N/A.
4. To ratify the selection by the Trustees of Deloitte & Touche LLP as
independent accountants for the fiscal year ending December 31, 1996.
5. To transact such other business as may properly come before the Meeting and
any adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 4 AND 5.
PLACE "X" ONLY IN ONE BOX
1. Election of Nominees
For Withhold For All Except
All All As Listed Below
/ / / / / /
List Exceptions: _________________________
_________________________
_________________________
VOTING INSTRUCTIONS: Mark your vote (For, Against, Abstain) IN THE BOX.
For Against Abstain
2. / / / / / /
4. / / / / / /
5. / / / / / /
___________________________________
_______________
Date
X
- -----------------------------------
Signature
x
- -----------------------------------
Signature If Held Jointly
[Shares/name/address]
TRGT LG CAP GRWTH
[LOGO]
<PAGE>
PROXY
THE TARGET PORTFOLIO TRUST
(TOTAL RETURN BOND PORTFOLIO)
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES
The undersigned hereby appoints Marguerite E.H. Morrison, S. Jane Rose
and Grace C. Torres as Proxies, each with the power of substitution, and
hereby authorizes each of them, to represent and vote, as designated below,
all of the shares of beneficial interest of The Target Portfolio Trust (Total
Return Bond Portfolio) held of record by the undersigned on August 9, 1996 at
the Special Meeting of Shareholders to be held on October 30, 1996, or any
adjournments thereof.
THE TRUSTEES RECOMMEND A VOTE "FOR" ALL OF THE NOMINEES AND "FOR" EACH OF
THE FOLLOWING PROPOSALS.
1. Election of Trustees
Nominees: Eugene C. Dorsey, Douglas H. McCorkindale, Thomas T. Mooney and
Richard A. Redeker
2. To permit the Manager to enter into, or make material changes to,
subadvisory agreements without shareholder approval.
3. N/A.
4. To ratify the selection by the Trustees of Deloitte & Touche LLP as
independent accountants for the fiscal year ending December 31, 1996.
5. To transact such other business as may properly come before the Meeting and
any adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 4 AND 5.
PLACE "X" ONLY IN ONE BOX
1. Election of Nominees
For Withhold For All Except
All All As Listed Below
/ / / / / /
List Exceptions: _________________________
_________________________
_________________________
VOTING INSTRUCTIONS: Mark your vote (For, Against, Abstain) IN THE BOX.
For Against Abstain
2. / / / / / /
4. / / / / / /
5. / / / / / /
___________________________________
_______________
Date
X
- -----------------------------------
Signature
x
- -----------------------------------
Signature If Held Jointly
[Shares/name/address]
TRGT LG CAP GRWTH
[LOGO]
<PAGE>
PROXY
THE TARGET PORTFOLIO TRUST
(INTERMEDIATE-TERM BOND PORTFOLIO)
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES
The undersigned hereby appoints Marguerite E.H. Morrison, S. Jane Rose
and Grace C. Torres as Proxies, each with the power of substitution, and
hereby authorizes each of them, to represent and vote, as designated below,
all of the shares of beneficial interest of The Target Portfolio Trust
(Intermediate-Term Bond Portfolio) held of record by the undersigned on
August 9, 1996 at the Special Meeting of Shareholders to be held on October
30, 1996, or any adjournments thereof.
THE TRUSTEES RECOMMEND A VOTE "FOR" ALL OF THE NOMINEES AND "FOR" EACH OF
THE FOLLOWING PROPOSALS.
1. Election of Trustees
Nominees: Eugene C. Dorsey, Douglas H. McCorkindale, Thomas T. Mooney and
Richard A. Redeker
2. To permit the Manager to enter into, or make material changes to,
subadvisory agreements without shareholder approval.
3. N/A.
4. To ratify the selection by the Trustees of Deloitte & Touche LLP as
independent accountants for the fiscal year ending December 31, 1996.
5. To transact such other business as may properly come before the Meeting and
any adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 4 AND 5.
PLACE "X" ONLY IN ONE BOX
1. Election of Nominees
For Withhold For All Except
All All As Listed Below
/ / / / / /
List Exceptions: _________________________
_________________________
_________________________
VOTING INSTRUCTIONS: Mark your vote (For, Against, Abstain) IN THE BOX.
For Against Abstain
2. / / / / / /
4. / / / / / /
5. / / / / / /
___________________________________
_______________
Date
X
- -----------------------------------
Signature
x
- -----------------------------------
Signature If Held Jointly
[Shares/name/address]
TRGT LG CAP GRWTH
[LOGO]
<PAGE>
PROXY
THE TARGET PORTFOLIO TRUST
(MORTGAGE BACKED SECURITIES PORTFOLIO)
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES
The undersigned hereby appoints Marguerite E.H. Morrison, S. Jane Rose
and Grace C. Torres as Proxies, each with the power of substitution, and
hereby authorizes each of them, to represent and vote, as designated below,
all of the shares of beneficial interest of The Target Portfolio Trust
(Mortgage Backed Securities Portfolio) held of record by the undersigned on
August 9, 1996 at the Special Meeting of Shareholders to be held on October
30, 1996, or any adjournments thereof.
THE TRUSTEES RECOMMEND A VOTE "FOR" ALL OF THE NOMINEES AND "FOR" EACH OF
THE FOLLOWING PROPOSALS.
1. Election of Trustees
Nominees: Eugene C. Dorsey, Douglas H. McCorkindale, Thomas T. Mooney and
Richard A. Redeker
2. To permit the Manager to enter into, or make material changes to,
subadvisory agreements without shareholder approval.
3. N/A.
4. To ratify the selection by the Trustees of Deloitte & Touche LLP as
independent accountants for the fiscal year ending December 31, 1996.
5. To transact such other business as may properly come before the Meeting and
any adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 4 AND 5.
PLACE "X" ONLY IN ONE BOX
1. Election of Nominees
For Withhold For All Except
All All As Listed Below
/ / / / / /
List Exceptions: _________________________
_________________________
_________________________
VOTING INSTRUCTIONS: Mark your vote (For, Against, Abstain) IN THE BOX.
For Against Abstain
2. / / / / / /
4. / / / / / /
5. / / / / / /
___________________________________
_______________
Date
X
- -----------------------------------
Signature
x
- -----------------------------------
Signature If Held Jointly
[Shares/name/address]
TRGT LG CAP GRWTH
[LOGO]
<PAGE>
PROXY
THE TARGET PORTFOLIO TRUST
(U.S. GOVERNMENT MONEY MARKET PORTFOLIO)
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES
The undersigned hereby appoints Marguerite E.H. Morrison, S. Jane Rose
and Grace C. Torres as Proxies, each with the power of substitution, and
hereby authorizes each of them, to represent and vote, as designated below,
all of the shares of beneficial interest of The Target Portfolio Trust (U.S.
Government Money Market Portfolio) held of record by the undersigned on
August 9, 1996 at the Special Meeting of Shareholders to be held on October
30, 1996, or any adjournments thereof.
THE TRUSTEES RECOMMEND A VOTE "FOR" ALL OF THE NOMINEES AND "FOR" EACH OF
THE FOLLOWING PROPOSALS.
1. Election of Trustees
Nominees: Eugene C. Dorsey, Douglas H. McCorkindale, Thomas T. Mooney and
Richard A. Redeker
2. To permit the Manager to enter into, or make material changes to,
subadvisory agreements without shareholder approval.
3. N/A.
4. To ratify the selection by the Trustees of Deloitte & Touche LLP as
independent accountants for the fiscal year ending December 31, 1996.
5. To transact such other business as may properly come before the Meeting and
any adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 4 AND 5.
PLACE "X" ONLY IN ONE BOX
1. Election of Nominees
For Withhold For All Except
All All As Listed Below
/ / / / / /
List Exceptions: _________________________
_________________________
_________________________
VOTING INSTRUCTIONS: Mark your vote (For, Against, Abstain) IN THE BOX.
For Against Abstain
2. / / / / / /
4. / / / / / /
5. / / / / / /
___________________________________
_______________
Date
X
- -----------------------------------
Signature
x
- -----------------------------------
Signature If Held Jointly
[Shares/name/address]
TRGT LG CAP GRWTH
[LOGO]
<PAGE>
To ensure the accuracy of the information, we have graphically imaged the
issuer's card. Therefore, please be aware that there may be some references
to "reverse side" which do not pertain.
PROXY CARD INSTRUCTIONS...
This Proxy Card is made up of two sections.
The Proposal Section has been designed to present the issuer's proposals for
your consideration. You may wish to retain this section for your records.
The Voting Section has been designed to accommodate the various proposals and
offer quick and accurate tabulation of your valued vote.
- - For Election of Nominee:
- Mark "FOR ALL" if you wish to vote for all nominees.
- Mark "WITHHOLD ALL" if you wish to vote against all nominees.
- Mark "FOR ALL EXCEPT AS LISTED BELOW" if you wish to withhold
authority for any individual nominee. Then, write the name of the
nominee for whom you wish to withhold authority in the space
provided. If you wish to withhold authority for more than one
nominee, simply list the names in the spaces provided and on the
back of the voting section of the Proxy Card.
- - Please read the issuer's proposals and make your selection. For detailed
information refer to the additional literature enclosed. In order to
facilitate electronic scanning please:
- Make dark, heavy marks within the appropriate box to indicate your
selection.
- Use a pencil or pen -- black or blue ink only -- to complete the
form.
- Do not make any stray marks on the form.
- Erase all unwanted marks completely.
Proper Marks For Against Abstain
[EXAMPLE OF PROPER MARKS APPEARS HERE]
Improper Marks For Against Abstain
[EXAMPLE OF IMPROPER MARKS APPEARS HERE]
- - If you wish to attend the meeting and vote your shares, mark the box for
a "Legal Proxy" and one will be mailed to you.
- - If you wish to attend the meeting, and have your vote included with ours,
mark the box for an "Admission Pass" and one will be mailed to you.
- - NOTE: Please sign as name appears. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, give
full title as such.
- - It is very important that you date and sign your card. Failure to do so
may result in your proxy being declared invalid.
- - After making your selections, signing and dating the card, carefully
detach the Voting Section and return it to us for tabulation, using the
enclosed postage paid envelope. Please do not enclose anything else in
this envelope, as doing so may delay the tabulation of your vote.
Proposal Section. Please retain for your records
Voting Section. Enter your vote, date and sign. Detach and return in the
enclosed envelope, right side up, without additional enclosures.
ADDITIONAL EXCEPTED NOMINEES
----------------------------
---------------------------- PROXY SERVICES
----------------------------
<PAGE>
YOUR VOTE IS IMPORTANT! PROXY SERVICES, PO BOX 550, NEW YORK, NY 10013-055
To Our Clients:
The enclosed proxy material pertains to shares we hold in your account in
"Street" name (that is, not registered in your name). As the holder of record,
only we can vote these shares at the stockholders' meeting.
To allow us to vote your shares in accordance with your direction, please
indicate your instructions on the enclosed proxy, sign it and return it to us in
the enclosed self-addressed stamped envelope. The Exchange rules state that if
your instructions are not received by the tenth day before the meeting, the
proxy may be voted at our discretion. If you are unable to return the proxy by
that date, you may still communicate your instructions by contacting your
financial advisor. As long as we receive your instructions prior to the
stockholders' meeting, we will follow them, even if your discretionary vote has
already been given.
If you sign without otherwise marking the form, the shares will be voted as
recommended by management on the meeting agenda. If you wish to attend the
meeting in person or have a legal proxy covering your shares, please contact
your financial advisor.
Form 2502 (REV. 7-96)
<PAGE>
YOUR VOTE IS IMPORTANT! PROXY SERVICES, PO BOX 550 , NEW YORK, NY 10013-055
To our Clients:
The enclosed proxy material pertains to shares we hold in your account in
"Street" name (that is, not registered in your name). As the holder of record,
only we can vote these shares at the stockholders' meeting.
Because all the proposals are non-routine, the Exchange rules state that to
represent your shares at the meeting, we must have your specific voting
instructions.
Please mark your choices on the proxy and be sure to sign it. Return the form
to us promptly in the enclosed self-addressed stamped envelope.
If you sign without otherwise marking the form, the shares will be voted as
recommended by the management on a meeting agenda.
If you wish to attend the meeting in person or have a legal proxy covering your
shares, please contact your financial advisor.
FORM 2503 (REV. 7-96)
