SCHEDULE 14C INFORMATION
(Rule 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934 (Amendment No. )
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for use of the Commission Only (as permitted by
Rule 14c-5(d)(2))
[ ] Definitive Information Statement
The Target Portfolio Trust
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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:
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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Preliminary Copy
THE TARGET PORTFOLIO TRUST(SM)
LARGE CAPITALIZATION VALUE PORTFOLIO
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GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102
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INFORMATION STATEMENT
MAY __, 1997
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TO THE SHAREHOLDERS:
On February 18, 1997, at a regular meeting of the Board of Trustees of The
Target Portfolio Trust(SM) (the Trust), the Trustees approved a new sub-advisory
agreement for the Large Capitalization Value Portfolio (the Portfolio). The
sub-advisory agreement approved by the Board of Trustees was entered into
between Prudential Investments Fund Management LLC (formerly Prudential Mutual
Fund Management LLC), the Trust's manager, and INVESCO Capital Management, Inc.
(INVESCO), one of the Portfolio's investment sub-advisers. The parent company of
INVESCO merged with another company which necessitates a new sub-advisory
agreement with INVESCO. This information statement is being furnished to you in
order to inform you of the circumstances surrounding the Board's approval of the
new sub-advisory agreement and to provide you with an overview of its terms.
By order of the Board.
S. JANE ROSE
Secretary
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THIS IS NOT A PROXY STATEMENT. WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
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THE TARGET PORTFOLIO TRUST(SM)
LARGE CAPITALIZATION VALUE PORTFOLIO
(800) 225-1852
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GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077
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INFORMATION STATEMENT
MAY __, 1997
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This information statement is being furnished to the shareholders of the
Large Capitalization Value Portfolio (the Portfolio) of The Target Portfolio
Trust(SM) (the Trust) in lieu of a proxy statement, pursuant to the terms of an
exemptive order the Trust has received from the Securities and Exchange
Commission (SEC). The exemptive order permits the Trust's manager to hire new
sub-advisers and to make certain changes to existing sub-advisory contracts with
the approval of the Trustees, without obtaining shareholder approval.
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 trustees are referred to
here as the "Board," "Board Members" or "Trustees." The Trust's principal
executive office is Gateway Center Three, 100 Mulberry Street, Newark, New
Jersey 07102-4077.
We are providing shareholders of the Portfolio as of April 16, 1997 with
the information statement. This information statement relates to the approval by
the Trustees of a new sub-advisory agreement between the Trust's Manager and
INVESCO Capital Management, Inc. (INVESCO), one of the Portfolio's sub-advisers,
in connection with the merger between INVESCO PLC, the former parent of INVESCO,
and A I M Management Group, Inc. The terms of the new sub-advisory agreement are
identical in all material respects to those of the previous sub-advisory
agreement. The INVESCO/A I M merger and the new sub-advisory agreement are
discussed in greater detail below.
INVESCO has agreed to pay for the costs associated with preparing and
distributing this information statement, which will be mailed on or about
May __, 1997.
THE TARGET PROGRAM
The Trust consists of ten separate investment portfolios, including the
Large Capitalization Value Portfolio. 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 and other investment advisory services which
maintain securities accounts with Prudential Securities Incorporated (Prudential
Securities) and to certain fee based programs sponsored by Prudential Securities
and its affiliates which include mutual funds as investment options and for
which the portfolios are an available option without payment of the Target
Program fee. 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. For Plan
accounts, the quarterly advisory fee is charged at the maximum annual rate of
1.25% of assets invested in equity portfolios.
THE MANAGER
Prudential Investments Fund Management LLC (formerly Prudential Mutual Fund
Management LLC), as successor to Prudential Mutual Fund Management, Inc. (PIFM
or the Manager), Gateway Center Three, 100
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Mulberry Street, Newark, New Jersey 07102-4077, serves as the Trust's Manager
under a management agreement (the Management Agreement) dated as of November 9,
1992. PIFM is an indirect, wholly-owned subsidiary of the Prudential Insurance
Company of America and is a part of Prudential Investments. As of March 31,
1997, PIFM served as the manager to 40 open-end investment companies and as
manager or administrator to 22 closed-end investment companies with aggregate
assets of approximately $[____] billion. Information concerning the Trust's
current management arrangements can be found in Exhibit B. Information
concerning officers of the Trust is set forth in Exhibit C.
SHAREHOLDER REPORTS
The most recent annual report for the Trust has previously been sent to
shareholders and may be obtained without charge by writing the Trust at Gateway
Center Three, Newark, New Jersey 07102-4077 or by calling (800) 225-1852 (toll
free).
SHAREHOLDINGS
As of April 16, 1997, there were 16,190,832 outstanding shares of the
Portfolio. Management does not know of any person who owned beneficially 5% or
more of the shares of the Portfolio as of April 16, 1997. In addition, 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 the Portfolio as of
April 16, 1997.
THE ADVISERS
Investment advisory services are provided for the Portfolio under separate
sub-advisory agreements between the sub-advisers listed below and PIFM:
(i) INVESCO Capital Management, Inc., 1315 Peachtree Street, Suite 500,
Atlanta, Georgia 30309; and
(ii) Hotchkis and Wiley, a division of the Capital Management Group of
Merrill Lynch Asset Management, L.P., 800 West Sixth Street, Fifth
Floor, Los Angeles, California 90017.
NEW SUB-ADVISORY AGREEMENT
INVESCO PLC, the former ultimate parent of INVESCO, entered into an
agreement of merger (the Agreement) with A I M Management Group, Inc. (A I M) on
November 4, 1996. Pursuant to the Agreement, on February 28, 1997, a subsidiary
of INVESCO PLC, acquired all of the issued and outstanding shares of A I M
capital stock in exchange for shares of INVESCO PLC capital stock (the Merger).
As a result of the Merger, A I M shareholders own approximately 45% of INVESCO
PLC's total outstanding capital stock.
The Merger resulted in an "assignment" of the sub-advisory agreement
between PIFM and INVESCO within the meaning of Section 15 of the Investment
Company Act. As required by the Investment Company Act, the sub-advisory
agreement provided for its automatic termination upon assignment. Under Section
15 of the Investment Company Act, a change of control of an adviser or a
sub-adviser generally is deemed to result in an assignment of its investment
advisory and sub-advisory agreements. Because INVESCO PLC capital stock
constituting more than 25% of the outstanding voting securities of INVESCO PLC
was issued to the shareholders of A I M in the Merger, there was deemed to be a
change in control of INVESCO PLC and, therefore, INVESCO. Under the Investment
Company Act, such a change in control resulted in an automatic termination of
the then existing sub-advisory agreement between PIFM and INVESCO. Accordingly,
to ensure the continuity of sub-advisory services provided to the Portfolio by
INVESCO, a new sub-advisory agreement (the Sub-Advisory Agreement) between PIFM
and INVESCO was approved by the Trust's Board of Trustees. The Sub-Advisory
Agreement is attached as Exhibit A.
Although Section 15 of the Investment Company Act requires that a majority
of the Portfolio's outstanding voting securities also approve the Sub-Advisory
Agreement, on September 11, 1996, the SEC issued an order granting the Trust and
PIFM exemptive relief from the requirements of Section 15. According to the
SEC's order, which is subject to a number of conditions (including approval by
the Trust's shareholders, which was received on October 30, 1996), PIFM may now
enter into sub-advisory agreements on behalf of the Trust without receiving
prior shareholder approval. Thus, execution and implementation of the
Sub-Advisory Agreement did not require shareholder consent.
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The terms of the Sub-Advisory Agreement dated as of February 28, 1997 are
identical to those contained in the prior sub-advisory agreement between PIFM
and INVESCO. The prior sub-advisory agreement dated November 9, 1992 was
approved by the shareholders of the Portfolio on October 27, 1994 and most
recently continued by the Trustees, 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 (non-interested Trustees), on April 9, 1996.
INVESCO will continue to render investment advice in accordance with the
Portfolio's investment objective and policies and also will continue to make
investment decisions and to purchase and sell securities on behalf of that
portion of the Portfolio for which it currently serves as sub-adviser, subject
to the supervision of PIFM. Prior to the Merger, INVESCO advised the Board of
Trustees that the Merger was not expected to result in material changes in the
sub-advisory services provided to the Fund by INVESCO.
BOARD CONSIDERATION OF SUB-ADVISORY AGREEMENT
At a regular meeting of the Board, at which all of the non-interested
Trustees were in attendance, the Board of Trustees considered and unanimously
approved the Sub-Advisory Agreement on February 18, 1997 because it believed
that approval of the Sub-Advisory Agreement was in the best interests of the
Trust and the shareholders of the Portfolio.
In considering approval of the Sub-Advisory Agreement, the Trustees,
including the non-interested Trustees, considered whether approval of the
Sub-Advisory Agreement was in the best interests of the Trust and shareholders
of the Portfolio. At the meeting, the Trustees reviewed material furnished by
management and spoke with a representative of INVESCO. Among other things, the
Trustees noted that senior members of the management team of INVESCO would
continue to be responsible for managing the day-to-day affairs of INVESCO. In
particular, the Trustees noted that Neilson Brown, the INVESCO portfolio manager
for the Portfolio since inception of the Portfolio, would continue in that
capacity. The Board also considered the nature, quality and extent of services
provided and expected to be provided to the Portfolio by INVESCO as well as
INVESCO's and A I M's reputations in the asset management industry. Moreover,
the Trustees considered the possible effects of the Merger on INVESCO and the
Portfolio. In that regard, the Board considered INVESCO's representations that
the Merger would not adversely affect the services rendered by INVESCO to the
Portfolio.
The Trustees also discussed and reviewed the terms of the Sub-Advisory
Agreement. The Board specifically noted that, other than the dates of execution,
effectiveness and termination, the terms of the Sub-Advisory Agreement were the
same as those of the prior sub-advisory agreement. Based upon their review, the
Trustees concluded that the Sub-Advisory Agreement was reasonable, fair and in
the best interests of the Trust and the shareholders of the Portfolio, and that
the fee provided in the Sub-Advisory Agreement was 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 Sub-Advisory Agreement.
INFORMATION CONCERNING INVESCO, A I M AND AMVESCO
INVESCO, based in Atlanta, Georgia, is one of the largest investment
management firms in the U.S. The majority of INVESCO's client base is
institutional and includes numerous Fortune 500 pension funds, other U.S.
tax-exempt institutions, and international accounts.
INVESCO is an indirect, wholly-owned subsidiary of AMVESCO PLC, the
successor to INVESCO PLC, which is domiciled in the United Kingdom.(1) INVESCO
and its global affiliates, including A I M, had total assets under management as
of March 31, 1997 of approximately $160 billion. INVESCO currently maintains
primary domestic offices in Atlanta, Boston, Dallas and Louisville, and
international offices in Bermuda, Buenos Aires, Hong Kong, London, Paris,
Toronto and Tokyo.
Prior to the Merger, A I M was a holding company that, together with its
affiliates, advised or managed 38 investment company portfolios consisting of
the A I M Family of Funds(R). As of March 31, 1997, A I M(2) managed or advised
investment company portfolios with assets of approximately $64.8 billion. A I M
and INVESCO are continuing to manage their respective assets under management in
the same way they did prior to the Merger.
Exhibit D contains information about other funds managed by INVESCO and its
affiliates with investment objectives similar to the Portfolio's. Exhibit D also
lists the principal executive officer and directors of INVESCO.
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(1) The intermediary companies between INVESCO and AMVESCO PLC are as follows:
INVESCO North American Holding, Inc. (INAH), INVESCO, Inc., INVESCO Group
Services, Inc. and AVZ, Inc. The address of each of these companies, other
than INAH and AMVESCO PLC, is 1315 Peachtree Street, N.E., Atlanta, Georgia
30309. INAH is located at 7800 East Union Avenue, Denver, Colorado 80237.
(2) Address is Greenway Plaza, Houston, Texas 77046.
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TERMS OF SUB-ADVISORY AGREEMENT
The terms of the Sub-Advisory Agreement other than the dates of
effectiveness and termination are identical to those contained in the previous
sub-advisory agreement between PIFM and INVESCO approved by the shareholders of
the Portfolio on October 27, 1994. The Sub-Advisory Agreement provides that,
subject to PIFM's and the Board of Trustees' supervision, INVESCO is responsible
for managing the investment operations of part of the Portfolio and for making
investment decisions and placing orders to purchase and sell securities on
behalf of that portion of the Portfolio that it manages, all in accordance with
the investment objective and policies of the Portfolio as reflected in the
current Prospectus and Statement of Additional Information of the Trust, and as
may be adopted from time to time by the Board of Trustees. In accordance with
the requirements of the Investment Company Act, INVESCO will also provide PIFM
with all books and records relating to the transactions it executes and shall
render to the Trustees such periodic and special reports as the Board of
Trustees may reasonably request.
Sub-Advisory Fee. Under the Sub-Advisory Agreement, PIFM pays INVESCO, as
compensation for services rendered thereunder, a fee at an annual rate of 0.30%
of the average Daily net assets of the portion of the Portfolio managed by
INVESCO, the same fee as was paid under the old sub-advisory agreement. For the
fiscal year ended December 31, 1996, the sub-advisory fee paid by PIFM to
INVESCO was $315,764.
Duration and Termination. The Sub-Advisory Agreement will remain in full
force and effect for a period of two years from the date of its execution, and
shall continue thereafter so long as its continuance is specifically approved at
least annually by vote of a majority of the outstanding voting securities (as
such term is defined in the Investment Company Act) of the Portfolio, or by the
Board of Trustees of the Trust, including the approval by a majority of
non-interested Trustees of the Trust, at a meeting called for the purpose of
voting on such approval; provided, however, that (1) the Sub-Advisory Agreement
may be terminated at any time without the payment of any penalty, either by vote
of the Board of Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Portfolio, (2) the Sub-Advisory Agreement
shall terminate immediately in the event of its assignment (within the meaning
of the Investment Company Act) or upon the termination of the Trust's management
agreement with PIFM, and (3) the Sub-Advisory Agreement may be terminated at any
time by INVESCO or PIFM on not more than 60 days' nor less than 30 days' written
notice to the other party to the Sub-Advisory Agreement.
Liability. The Sub-Advisory Agreement provides that, in the absence of
willful misfeasance, bad faith, gross negligence in the performance of its
duties, or reckless disregard of its obligations and duties thereunder, INVESCO
will not be liable for any act or omission in connection with its activities as
sub-adviser to the Portfolio.
SHAREHOLDER PROPOSALS
As a Delaware business trust, the Trust is not required to hold annual
meetings of shareholders and the Trustees currently do not intend to hold such
meetings unless shareholder action is required in accordance with the Investment
Company Act or the Trust's Declaration of Trust. A shareholder proposal intended
to be presented at any meeting of shareholders of the Trust must be received by
the Trust a reasonable time before the Trustees' solicitation relating thereto
is made in order to be included in the Trust's proxy statement and form of proxy
relating to that meeting and presented at the meeting. The mere submission of a
proposal by a shareholder does not guarantee that such proposal will be included
in the proxy statement because certain rules under the federal securities laws
must be complied with before inclusion of the proposal is required.
S. Jane Rose
Secretary
Dated: May __, 1997
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EXHIBIT A
THE TARGET PORTFOLIO TRUST
SUBADVISORY AGREEMENT
Agreement made as of this 28th day of February, 1997, between Prudential
Mutual Fund Management LLC (PMF or the Manager), a Delaware corporation, and
INVESCO Capital Management, Inc. (the "Adviser").
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 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
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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.
(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
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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.
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 LLC
By /s/ Robert F. Gunia
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Robert F. Gunia
Executive Vice President
INVESCO Capital Management, Inc.
By /s/ Neilson Brown
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Neilson Brown
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EXHIBIT B
MANAGEMENT OF THE TRUST
THE MANAGER
Prudential Investments Fund Management LLC, Gateway Center Three, 100
Mulberry Street, Newark, New Jersey 07102-4077, serves as the Trust's Manager
under a management agreement dated as of November 9, 1992 (the Management
Agreement) and renewed thereafter as required by the Investment Company Act.
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
non-interested persons of such parties (as defined in the Investment Company Act
of 1940, as amended (the Investment Company Act)) 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 with the Trust (the Management
Agreement), PIFM, subject to the supervision of the Trustees and in conformity
with the stated policies of the Trust, manages both the investment operations of
the Trust and the composition of the Trust's Portfolios, including the purchase,
retention and disposition thereof. The Manager is authorized to enter into
sub-advisory agreements for investment advisory services in connection with the
management of the Trust and each Portfolio thereof. The Manager will continue to
have responsibility for all investment advisory services furnished pursuant to
any such investment advisory agreements.
The Manager reviews the performance of all sub-advisers, and makes
recommendations to the Trustees with respect to the retention and renewal of
contracts. In connection therewith, PIFM is obligated to keep certain books and
records of the Trust. PIFM also administers the Trust's business affairs and, in
connection therewith, furnishes the Trust with office facilities, together with
those ordinary clerical and bookkeeping services which are not being furnished
by State Street Bank and Trust Company, the Trust's custodian and PFMS, the
Trust's transfer and dividend disbursing agent. The management services of PIFM
for the Trust are not exclusive under the terms of the Management Agreement and
PIFM is free to, and does, render management services to others.
PIFM 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 PIFM under the
Management Agreement may be furnished by any such directors, officers or
employees of PIFM.
In connection with its management of the business affairs of the Trust,
PIFM bears the following expenses:
(a) the salaries and expenses of all of its and the Trust's personnel
except the fees and expenses of Trustees who are not affiliated persons
of PIFM or each portfolio's sub-adviser;
(b) all expenses incurred by PIFM or by the Trust in connection with
managing 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 sub-adviser pursuant to the
sub-advisory agreements between PIFM and each sub-adviser.
For its services, PIFM is compensated by each portfolio of the Trust. The
annual management fee for the Portfolio is paid at the rate of .60% of the
Portfolio's average daily net assets. Of this amount, .30% of the average daily
net assets of the Portfolio is retained by PIFM and .30% of the Portfolio's
average daily net assets is paid to the Portfolio's sub-advisers, based upon the
amount of such assets actually managed by the respective sub-advisers. The fee
is computed daily and paid monthly. For the fiscal year ended December 31, 1996,
PIFM received $1,235,390 from the Portfolio.
The Management Agreement also provides that, in the event the expenses of
the Trust (including the fees of PIFM, 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 the Trust's shares are qualified for offer and sale,
the compensation due to
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<PAGE>
PIFM will be reduced by the amount of such excess. Reductions in excess of the
total compensation payable to PIFM will be paid by PIFM to the Trust. No such
reductions were required during the fiscal year ended December 31, 1996. No
jurisdiction currently limits the Trust's expenses.
Except as indicated above, the Trust is responsible under the Management
Agreement for the payment of its expenses, including (a) the fees payable to
PIFM, (b) the fees and expenses of Trustees who are not affiliated persons of
PIFM or the sub-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
share certificates representing shares of the Trust, (i) the cost of fidelity
and liability insurance, (j) the fees and expenses involved in registering and
maintaining registration of the Trust and of its shares with the SEC,
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 PIFM will not be liable for any
error of judgment or for any loss suffered by the Trust in connection with the
matters to which the Management Agreement relates, except a loss resulting from
willful misfeasance, bad faith, gross negligence or reckless disregard of duty.
The Management Agreement 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 in conformity with the Investment
Company Act. The Management Agreement also provides that it will terminate
automatically if assigned and that it may be 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 PIFM
PIFM is a subsidiary of Prudential Securities Incorporated (Prudential
Securities) and an indirect, wholly-owned subsidiary of The Prudential Insurance
Company of America (Prudential), a major, diversified insurance and financial
services company. Prudential's address is Prudential Plaza, Newark, New Jersey
07102. PIFM, formerly known as Prudential Mutual Fund Management LLC, was
organized in New York as a limited liability company. It is the successor to
Prudential Mutual Fund Management, Inc., which transferred its assets to PIFM in
September 1996.
PIFM 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.
(Nicholas-Applegate Growth Equity Fund), Prudential Allocation Fund,
Prudential California Municipal Fund, Prudential Distressed Securities
Fund, Inc., Prudential Diversified Bond Fund, Inc., Prudential Dryden Fund,
Prudential Emerging Growth Fund, Inc., Prudential Equity Fund, Inc.,
Prudential Equity Income Fund, Prudential Europe Growth 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 Series Fund, Inc., Prudential
MoneyMart Assets, Inc., 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 Special Money
Market Fund, Inc., Prudential Structured Maturity Fund, Inc., Prudential
Tax-Free Money Fund, Inc., Prudential Utility Fund, Inc., Prudential World
Fund, Inc. and The Target Portfolio Trust.
Closed-End Management Investment Companies: The High Yield Income
Fund, Inc.
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<PAGE>
PIFM'S DIRECTORS AND OFFICERS
The business and other connections of PIFM's directors and principal
executive officers are set forth below. The address of each person is Gateway
Center Three, 100 Mulberry Street, Newark, New Jersey 07102.
<TABLE>
<CAPTION>
NAME POSITION WITH PIFM PRINCIPAL OCCUPATIONS
- ---- ------------------ ---------------------
<S> <C> <C>
Brian Storms Officer-in-Charge, President, Officer-in-Charge, President, Chief Executive
Chief Executive Officer and Officer and Chief Operating Officer, PIFM
Chief Operating Officer
Robert F. Gunia Executive Vice President and Executive Vice President and Treasurer, PIFM;
Treasurer Senior Vice President of Prudential
Securities Incorporated
Thomas A. Early Executive Vice President, Executive Vice President, Secretary and
Secretary and General Counsel General Counsel, PIFM
Susan C. Cote Executive Vice President and Executive Vice President, Chief Financial
Chief Financial Officer Officer, PIFM and PIC
Neil A. McGuinness Executive Vice President Executive Vice President, PIFM
Robert J. Sullivan Executive Vice President Executive Vice President, PIFM
</TABLE>
THE DISTRIBUTOR AND TRANSFER AGENT
Prudential Securities, One Seaport Plaza, New York, New York 10292 serves
as the distributor of the Trust's shares. Prudential Securities is an indirect,
wholly-owned subsidiary of Prudential. It received no compensation for
distributing the Portfolio's shares during the fiscal year ended December 31,
1996.
Pruco Securities Corporation (Prusec), 111 Durham Avenue, South Plainfield,
New Jersey 07080-2398, a wholly-owned subsidiary of Prudential, is distributing
shares of the Trust pursuant to a dealer agreement between Prusec and Prudential
Securities. Prusec received no compensation for distributing the Portfolio's
shares during the fiscal year ended December 31, 1996.
The Trust's transfer agent is Prudential Mutual Fund Services LLC (PMFS),
Raritan Plaza One, Edison, New Jersey 08837. PMFS received $93,300 for its
services in connection with the Portfolio during the fiscal year ended December
31, 1996.
BROKERAGE
During the fiscal year ended December 31, 1996, the Portfolio paid $5,910
in commissions to Prudential Securities, which represented 5.1% of total
commissions paid.
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<PAGE>
EXHIBIT C
OFFICER INFORMATION
<TABLE>
<CAPTION>
OFFICE WITH THE TRUST PRINCIPAL OCCUPATIONS
NAME (AGE) (SINCE) DURING PAST FIVE YEARS
--------- --------------------- ----------------------
<S> <C> <C>
Richard A. Redeker (53) President and Trustee Employee of Prudential Investments; formerly
(1995) President, Chief Executive Officer and Director
(October 1993-September 1996) of Prudential
Mutual Fund Management, Inc.
Susan C. Cote (42) Vice President (1997) Executive Vice President and Chief Financial Officer
of Prudential Investments Fund Management LLC
(PIFM).
Thomas A. Early (42) Vice President (1997) Executive Vice President, Secretary and General
Counsel of PIFM.
S. Jane Rose (51) Secretary (1992) Senior Vice President of PIFM; Senior Vice President
and Senior Counsel of Prudential Securities.
Grace C. Torres (38) Treasurer (1995) First Vice President of PIFM; First Vice President of
Prudential Securities.
Marguerite E. H. Morrison (40) Assistant Secretary Vice President and Associate General Counsel of PIFM;
(1993) Vice President and Associate General Counsel of
Prudential Securities.
Stephen M. Ungerman (43) Assistant Treasurer Tax Director of Prudential Investments and the
(1995) Private Asset Group of The Prudential Insurance
Company of America.
</TABLE>
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<PAGE>
EXHIBIT D
INVESCO FUNDS
The following table sets forth information relating to the registered
investment companies with an investment objective and strategies similar to
those of the Portfolio for which INVESCO, A I M and their affiliates act as
investment adviser and/or sub-adviser:
<TABLE>
<CAPTION>
SUB-ADVISORY
FEE RATE
ADVISORY FEE RATE (BASED ON NET ASSETS
(BASED ON AVERAGE AVERAGE NET AS OF
FUNDS ADVISER SUB-ADVISER NET ASSETS) ASSETS) MARCH 31, 1997
----- ------- ----------- ----------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
INVESCO INVESCO Trust INVESCO Capital up to $250,000 2.75%; 0.20% on total $ 305,000,000
Retirement Trust Company Management, Inc. $250,000 to $500,000 assets.
Equity Fund 2.50%; $500,000 to
$750,000 2.25%;
$750,000 to
$1,000,000 2.00%;
$1,000,000 to
$2,500,000 1.75%; in
excess of $2,500,000
1.50%.
INVESCO Value INVESCO Funds INVESCO Capital 0.75% on the first 0.20% on the $ 300,000,000
Equity Fund Group, Inc. Management, Inc. $500 million; 0.65% first $500
on the next $500 million; 0.17%
million; 0.50% on on the net asset
average net assets value in excess
in excess of $1 of $500 million;
billion. and 0.13% on net
assets in excess
of $1 billion.
AIM Value AIM Management N/A 0.80% on the first N/A $10,300,000,000
Fund Group, Inc. $150 million; amount
over $150 million
0.625%.
INVESCO INVESCO Trust INVESCO Capital 0.75% on the first first $10 million $ 650,000,000
Retirement Trust Company Management, Inc. $10 million; 0.50% 0.70%; next $10
Ameritech on the next $10 million 0.45%;
Collective million; amount over 0.20% on amounts
Equity $20 million 0.25%. over $20 million.
</TABLE>
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<PAGE>
INVESCO MANAGEMENT
The following table sets forth the name and principal occupation of the
principal executive officer and the directors of INVESCO:
NAME PRINCIPAL OCCUPATION
- ---- --------------------
Wendell Moore Starke Chairman and Chief Executive Officer of INVESCO
and INVESCO, Inc.; Director and Chief Investment
Officer of AMVESCO PLC.
Edward Colston Mitchell, Jr. President and Director of INVESCO; Portfolio
Manager of INVESCO.
Donald Barrett Sallee Director, Vice President and Portfolio Manager
of INVESCO.
Thomas William Norwood Director, Vice President and Portfolio Manager
of INVESCO.
Frank Moss Bishop Director of INVESCO, INVESCO Management &
Research, Inc., INVESCO, Inc., INVESCO Funds
Group, Inc., INVESCO Trust Company and Private
Capital Management, Inc.; President, Chief
Executive Officer and Chief Operating Officer of
INVESCO, Inc.; Portfolio Manager of INVESCO.
Stephen Albright Dana Director, Vice President and Portfolio Manager
of INVESCO.
George William Herring, Jr. Director, Vice President and Portfolio Manager
of INVESCO.
Thomas Lawrence Shields, Jr. Director, Vice President and Portfolio Manager
of INVESCO.
- --------------------------------------------------------------------------------
The address of those listed above is 1315 Peachtree Street, N.E. Atlanta,
Georgia 30309.
None of the Trust's Trustees or officers is affiliated with INVESCO or
A I M or any of their affiliates. Except for payments to INVESCO pursuant to
the old sub-advisory agreement and the new Sub-Advisory Agreement, the
Portfolio has not made any payments to and has no other arrangements with
INVESCO or any of its affiliates.
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