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SCHEDULE 14C
(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:
[ ] Preliminary Information Statement
[ ] Confidential, for use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[X] 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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3) Filing Party:
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4) Date Filed:
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THE TARGET PORTFOLIO TRUST(SM)
INTERNATIONAL BOND PORTFOLIO
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077
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INFORMATION STATEMENT
NOVEMBER 20, 1997
------------------------
TO THE SHAREHOLDERS:
On August 27, 1997, at a regular meeting of the Board of Trustees of The
Target Portfolio Trust(SM) (the Trust), the Trustees approved a new subadvisory
agreement for the International Bond Portfolio (the Portfolio). The subadvisory
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 Delaware International Advisers Ltd. (Delaware
International). Delaware International assumed investment advisory
responsibility for the Portfolio on August 28, 1997. This information statement
informs you of the circumstances surrounding the Board's approval of the new
subadvisory agreement and provides you with an overview of its terms.
By order of the Board
S. JANE ROSE
Secretary
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)
INTERNATIONAL BOND 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
NOVEMBER 20, 1997
------------------------
This information statement is being furnished to the shareholders of the
International Bond 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 received from the Securities and Exchange Commission (SEC). The
exemptive order permits the Trust's manager to hire new subadvisers and to make
certain changes to existing subadvisory contracts with the approval of the Board
of 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 October 24, 1997 with
the information statement. This information statement relates to the approval by
the Trustees of a new subadvisory agreement dated as of August 28, 1997
(Subadvisory Agreement) between the Trust's Manager and Delaware International
Advisers Ltd. (Delaware International). Delaware International assumed its
advisory duties with respect to the Portfolio on August 28, 1997. The Trustees
approved the Subadvisory Agreement, a copy of which is attached as Exhibit A, on
August 27, 1997. The material terms of the new Subadvisory Agreement are
substantially the same as those of the previous subadvisory agreement. The
previous subadvisory agreement, dated April 1, 1994, between the Trust's Manager
and Fiduciary International, Inc. was last approved by the Trustees, including a
majority of the Trustees who were not parties to the contract and were not
interested persons of those parties (as defined in the Investment Company Act)
on May 28, 1997.
The Portfolio will pay for the costs associated with preparing and
distributing this information statement, which will be mailed on or about
November 21, 1997.
THE TARGET PROGRAM
The Trust consists of ten separate investment portfolios, including the
International Bond 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 1.0% of assets invested in income portfolios, such as the
International Bond Portfolio. For Plan accounts, the quarterly advisory fee is
charged at the maximum annual rate of 1.35% of assets invested in income
portfolios.
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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 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
(Prudential) and is a part of Prudential Investments, which is a business group
of the Prudential. As of September 30, 1997, PIFM served as the manager to 41
open-end investment companies and as manager or administrator to 22 closed-end
investment companies with aggregate assets of approximately $59.9 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 Trust's most recent annual report for the fiscal year ended December
31, 1996 and semi-annual report for the period ended June 30, 1997, have
previously been sent to shareholders and may be obtained without charge by
writing the Trust at Gateway Center Three, 100 Mulberry Street, Newark, New
Jersey 07102-4077 or by calling (800) 225-1852 (toll free).
SHAREHOLDINGS
As of September 30, 1997, the Portfolio's net asset value was approximately
$33,782,000. As of October 24, 1997, there were 3,524,293 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 October 24, 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 that date.
NEW SUBADVISORY AGREEMENT
On August 27, 1997, the Trustees, including a majority of the Trustees who
are not parties to the Subadvisory Agreement or interested persons of such
parties (as defined in the Investment Company Act) (the non-interested
Trustees), unanimously approved the Subadvisory Agreement and the selection by
PIFM of Delaware International as Adviser to replace Fiduciary International,
Inc. At that time, the Trustees also unanimously approved termination of the
previous subadvisory agreement between the Trust's Manager and Fiduciary
International, Inc. for performance-related reasons. Delaware International was
recommended to the Trustees by PIFM after the Trustees requested PIFM to
recommend a replacement for Fiduciary International, Inc.
The new Subadvisory Agreement contains substantially the same terms and
conditions as the subadvisory agreement with Fiduciary International, Inc. See
"Terms of Subadvisory Agreement," below. Delaware International renders
investment advice in accordance with the Portfolio's investment objective and
policies and also makes investment decisions to purchase and sell securities on
behalf of the Portfolio, subject to the supervision of PIFM.
Section 15 of the Investment Company Act requires that a majority of the
Portfolio's outstanding voting securities approve the Subadvisory Agreement.
However, 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 subadvisory agreements on behalf of the Trust without receiving prior
shareholder approval. Thus, execution and implementation of the Subadvisory
Agreement did not require shareholder consent.
BOARD CONSIDERATION OF SUBADVISORY AGREEMENT
At a regular meeting of the Board, at which all of the Trustees were in
attendance, the Board of Trustees considered and unanimously approved the
Subadvisory Agreement on August 27, 1997. In considering
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approval of the Subadvisory Agreement, the Trustees, including the
non-interested Trustees, considered whether approval of the Subadvisory
Agreement was in the best interests of the Trust and shareholders of the
Portfolio. At the meeting, the Trust's Manager stressed Delaware International's
investment experience and reputation as an international bond portfolio manager
and its performance record. The Trustees reviewed materials furnished by
management and Delaware International and met with representatives of Delaware
International. Among other things, the Trustees considered the investment
philosophy and style of Delaware International, its relative performance record,
its security selection experience and preferences, personnel, facilities,
financial strength, quality of service and client communications. The Board also
considered the nature, quality and extent of services expected to be provided to
the Portfolio by Delaware International as well as its reputation in the asset
management industry.
The Trustees discussed and reviewed the terms of the Subadvisory Agreement.
It was noted that, other than the identity of the Adviser and the dates of
execution, effectiveness and termination, the terms of the Subadvisory Agreement
were substantially the same as those in the prior subadvisory agreement. Based
upon their review, the Trustees concluded that the Subadvisory 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 Subadvisory Agreement (the same
as in the prior subadvisory 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 Subadvisory Agreement.
INFORMATION CONCERNING DELAWARE INTERNATIONAL
Delaware International, Third Floor, 80 Cheapside, London, EC2V 6EE, began
managing the Portfolio effective August 28, 1997. Delaware International
commenced operations as a registered investment adviser in December 1990 and
specializes in international and global investing. Delaware International
manages money for separate account portfolios and U.S. registered mutual funds.
As of September 30, 1997, Delaware International had over $6.8 billion in assets
under management with over $2.5 billion in assets in global/international fixed
income. Delaware International is affiliated with Delaware Management Company,
Inc. (Delaware Management). Delaware International and Delaware Management are
indirect, wholly-owned subsidiaries of Lincoln National Corporation. Lincoln
National Corporation, headquartered in Ft. Wayne, Indiana, is a diversified
financial services organization with operations that include the insurance and
investment management businesses.
Exhibit D contains information about other funds managed by Delaware
International with an investment objective and strategies similar to the
Portfolio's. Exhibit D also lists the principal executive officer and directors
of Delaware International.
TERMS OF SUBADVISORY AGREEMENT
Under the Subadvisory Agreement, Delaware International is compensated by
PIFM (and not the Portfolio) at an annual rate of .30 of 1% of the Portfolio's
average net assets, the same fee that was paid under the previous advisory
agreement with the former subadviser to the Portfolio. The Subadvisory Agreement
provides that, subject to PIFM's and the Board of Trustees' supervision,
Delaware International is responsible for managing the investment operations of
the Portfolio and for making investment decisions and placing orders to purchase
and sell securities for the Portfolio, 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, Delaware International also provides PIFM with all
books and records relating to the transactions it executes and renders to the
Trustees such periodic and special reports as the Board of Trustees may
reasonably request.
Duration and Termination. The Subadvisory Agreement will remain in full
force and effect for a period of two years from the date of its execution, and
will continue thereafter as long as its continuance is specifically approved at
least annually by vote of a majority of the outstanding voting securities (as
that term is defined in the Investment Company Act) of the Portfolio, or by the
Board of Trustees, including the approval by a majority of non-interested
Trustees, at a meeting called for the purpose of voting on such approval;
provided,
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however, that (1) the Subadvisory Agreement may be terminated at any time
without the payment of any penalty, either by vote of the Board of Trustees or
by vote of a majority of the outstanding voting securities of the Portfolio, (2)
the Subadvisory Agreement will 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
Subadvisory Agreement may be terminated at any time by Delaware International or
PIFM on not more than 60 days' nor less than 30 days' written notice to the
other party to the Subadvisory Agreement.
Liability. The Subadvisory 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, Delaware
International will not be liable for any act or omission in connection with its
activities as subadviser 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 the 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: November 20, 1997
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EXHIBIT A
THE TARGET PORTFOLIO TRUST
(INTERNATIONAL BOND PORTFOLIO)
SUBADVISORY AGREEMENT
Agreement made as of this 28th day of August, 1997, between Prudential
Investments Fund Management LLC (PIFM or the Manager), a Delaware Corporation,
and Delaware International Advisers Ltd. (the Adviser), a company organized
under the laws of England.
WHEREAS, PIFM 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 PIFM will
act as manager of the Trust.
WHEREAS, shares of the Trust are divided into separate series or portfolios
(each a portfolio), each of which is established pursuant to a resolution of the
Trustees of the Trust and the Trustees may from time to time terminate such
portfolios or establish and terminate additional portfolios.
WHEREAS, PIFM has the responsibility of evaluating, recommending,
supervising and compensating investment advisers to each portfolio of the Trust
and desires to retain the Adviser to provide investment advisory services to the
International Bond Portfolio of the Trust (the Portfolio) in connection with the
management of the Trust and the Adviser is willing to render such investment
advisory services.
NOW, THEREFORE, the Parties agree as follows:
1. (a) Subject to the supervision of the Manager and of the Trustees
of the Trust, the Adviser shall manage the investment operations of the
Portfolio and the composition of its portfolio, including the purchase,
retention and disposition thereof, in accordance with the Portfolio's
investment objectives, policies and restrictions as stated in the
Prospectus (such Prospectus and Statement of Additional Information as
currently in effect and as amended or supplemented from time to time, being
herein called the "Prospectus") as delivered to the Adviser from time to
time by the Manager and subject to the following understandings:
(i) The Adviser shall provide supervision of the Portfolio's
investments and determine from time to time what investments and
securities will be purchased, retained, sold or loaned by the Portfolio,
and what portion of the assets will be invested or held uninvested as
cash.
(ii) In the performance of its duties and obligations under this
Agreement, the Adviser shall act in conformity with the Declaration of
Trust, By-Laws and Prospectus of the Trust and the Portfolio as provided
to the Adviser by the Manager in the Directory of Fund Organization
Documents, Agreements and Procedures and with the written instructions
and directions of the Manager and of the Trustees of the Trust and will
conform to and comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986 and all other applicable federal and state
laws and regulations.
(iii) The Adviser shall determine the securities and commodities or
other assets to be purchased or sold by the Portfolio and will place
orders pursuant to its determination with or through such persons,
brokers, dealers or futures commission merchants (including but not
limited to Prudential Securities Incorporated) 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
best execution. Within the framework of this policy, the Adviser may
consider the financial responsibility, research and investment
information and other services provided by brokers, dealers or futures
commission merchants who may effect or be a party to any
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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 best
execution. Therefore, the Adviser is authorized to place orders for the
purchase and sale of securities and commodities or other assets 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, commodity or other asset 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, commodities or other
assets to be sold or purchased in order to obtain best execution. In
such event, allocation of the securities, commodities or other assets so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by 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 Portfolio's assets and shall provide the Manager with such
information upon request of the Manager.
(vi) The investment management services provided by the Adviser
hereunder are not exclusive, and the Adviser shall be free to render
similar services to others; provided, however, that the Adviser agrees
that it shall not, during the term of this Agreement and for the period
of one year after the termination of this Agreement, serve or accept
retention as investment adviser, investment manager or similar service
provider with or for the benefit of an international fixed income fund
that is an investment company registered under the 1940 Act and that
seeks as a primary market for its shares asset allocation programs
similar in nature and market to the Prudential Securities Target
Program. For purposes of this Agreement, an asset allocation program
shall be deemed to be similar in nature and market to the Prudential
Securities Target Program only if it (A) is sponsored by a retail
broker-dealer, (B) provides for the provision of investment advice to
investors wherein one or more investment companies sponsored by the
retail broker-dealer serve as potential investment vehicles into which
investment may be recommended, and (C) is marketed primarily to
investors domiciled in the United States. In addition, notwithstanding
the foregoing, the provisions of this Section 1(a)(vi) shall be of no
further force and effect 90 days after written notice to the Adviser by
the Trust or the Manager of the termination of the Adviser's services
hereunder, and provided further, that nothing herein shall be deemed to
prohibit the Adviser from continuing to serve in its existing capacity
as investment adviser or investment manager for its existing clients.
(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
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of the Trust required by Rule 31a-1 under the 1940 Act. The Adviser agrees
that all records which it maintains for the Portfolio are the property of
the Trust and the Adviser will surrender promptly to the Trust any of such
records upon the Trust's request. The Adviser further agrees to preserve
for the periods prescribed by Rule 31a-2 under the 1940 Act any such
records as are required to be maintained by it pursuant to paragraph 1(a)
hereof.
(d) The Adviser agrees to maintain adequate compliance procedures
to ensure its compliance with the 1940 Act, the Investment Advisers Act of
1940 (Advisers Act) and other applicable state and federal laws and
regulations.
(e) The Adviser shall furnish to the Manager copies of all records
prepared in connection with (i) the performance of this Agreement and (ii)
the reports prepared in accordance with the compliance procedures
maintained pursuant to paragraph 1(d) hereof as the Manager may reasonably
request.
2. The Manager shall continue to have responsibility for all services
to be provided to the 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
the annual rate of .30 of 1% of the average daily net assets of the
Portfolio. This fee will be computed daily and paid monthly.
4. The Adviser shall not be liable for any error of judgment or for
any loss suffered by the Portfolio, the Trust or the Manager in connection
with the matters to which this Agreement relates, except a loss resulting
from willful misfeasance, bad faith or gross negligence on the Adviser's
part in the performance of its duties or from its reckless disregard of its
obligations and duties under this Agreement.
5. 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
dissimilar nature, nor limit the Adviser's right to engage in any other
business or to render services of any kind to any other corporation, firm,
individual or association, except as described in Paragraph 1(a)(vi) above.
7. During the term of this Agreement, the Manager agrees to furnish
the Adviser at its principal office all prospectuses, proxy statements,
reports to shareholders, sales literature or other material prepared for
distribution to shareholders of the Trust or the public, which refer to the
Adviser in any 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 overnight mail or courier service,
facsimile transmission equipment or hand delivery or at least ten business
days prior to the intended date of first use.
8. This Agreement may be amended by mutual consent, but the consent of
the Trust must be obtained in conformity with the requirements of the 1940
Act.
9. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK.
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IN WITNESS WHEREOF, the Parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
PRUDENTIAL INVESTMENTS FUND
MANAGEMENT LLC
By: /s/ ROBERT F. GUNIA
------------------------------------
Robert F. Gunia
Executive Vice President
DELAWARE INTERNATIONAL
ADVISERS LTD.
By: /s/ IAN G. SIMS
------------------------------------
Ian G. Sims
Deputy Managing Director, Chief
Investment Officer -- Global Fixed
Income
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EXHIBIT B
MANAGEMENT OF THE TRUST
THE MANAGER
Prudential Investments Fund Management LLC (PIFM or the Manager), Gateway
Center Three, 100 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 and renewed thereafter as required by the Investment Company
Act of 1940, as amended (the Investment Company Act).
The Management Agreement was last approved by the Trustees of the Trust,
including a majority of the Trustees who were not parties to the contract and
were not interested persons of those parties (as defined in the Investment
Company Act) on May 28, 1997. It was approved by the sole shareholder of the
Trust on October 14, 1992.
TERMS OF THE MANAGEMENT AGREEMENT
Pursuant to 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 subadvisory 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 subadvisers, 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 Prudential
Mutual Fund Services LLC (PMFS), 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 subadviser;
(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 subadviser pursuant to the
subadvisory agreements between PIFM and each subadviser.
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 .50% of the
average daily net assets of 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 PIFM will be reduced by the amount of such excess.
Reductions in excess of the
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<PAGE> 12
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 subadviser 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 and
qualifying the Trust's 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
07102-4077. PIFM is organized in New York as a limited liability company.
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 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 International Bond 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-Cap
Quantum Fund, Inc., Prudential Small Company Value Fund, Inc., Prudential
Special Money Market Fund, Inc., Prudential Structured Maturity Fund, Inc.,
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<PAGE> 13
Prudential Tax-Free Money Fund, Inc., Prudential Utility Fund, Inc.,
Prudential World Fund, Inc. and The Target Portfolio Trust.
Closed-End Management Investment Company: The High Yield Income Fund,
Inc.
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 07102-4077.
<TABLE>
<CAPTION>
NAME POSITION WITH PIFM PRINCIPAL OCCUPATIONS
- ---------------------- ------------------------------ -----------------------------------------------
<S> <C> <C>
Thomas A. Early....... Executive Vice President, Vice President and General Counsel, Prudential
Secretary and General Mutual Funds & Annuities (PMF&A); Executive
Counsel Vice President, Secretary and General
Counsel, PIFM
Robert F. Gunia....... Executive Vice President and Comptroller, Prudential Investments; Executive
Treasurer Vice President and Treasurer, PIFM; Senior Vice
President, Prudential Securities
Neil A. McGuinness.... Executive Vice President Executive Vice President and Director of
Marketing, PMF&A; Executive Vice President,
PIFM
Robert J. Sullivan.... Executive Vice President Executive Vice President, PMF&A; Executive Vice
President, PIFM
Brian Storms.......... Officer-in-Charge, President, President, PMF&A, Officer-in-Charge; President,
Chief Executive Officer and Chief Executive Officer and Chief Operating
Chief Operating Officer Officer, 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 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> 14
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<PAGE> 15
EXHIBIT C
OFFICER INFORMATION
<TABLE>
<CAPTION>
NAME (AGE) OFFICE WITH THE TRUST (SINCE) PRINCIPAL OCCUPATIONS
- ------------------------------------ ----------------------------- -----------------------------------
<S> <C> <C>
Richard A. Redeker (53)............. President and Trustee (1995) Employee of Prudential Investments;
formerly President, Chief
Executive Officer and Director
(October 1993-September 1996) of
Prudential Mutual Fund
Management, Inc.
Thomas A. Early (42)................ Vice President (1997) Vice President and General Counsel
of Prudential Mutual Funds &
Annuities; 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
Marguerite E.H. Morrison (41)....... Assistant Secretary (1997) Vice President and Associate
General Counsel of PIFM; Vice
President and Associate General
Counsel (June 1991-September
1996) of Prudential Mutual Fund
Management, Inc.; Vice President
and Associate General Counsel of
Prudential Securities
Grace C. Torres (38)................ Treasurer (1995) First Vice President of PIFM; First
Vice President of Prudential
Securities
Stephen M. Ungerman (44)............ Assistant Treasurer (1995) Tax Director of Prudential
Investments and the Private Asset
Group of The Prudential Insurance
Company of America
</TABLE>
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<PAGE> 16
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<PAGE> 17
EXHIBIT D
DELAWARE INTERNATIONAL 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 Delaware International acts as investment
adviser and/or subadviser:
<TABLE>
<CAPTION>
NET ASSETS
ADVISORY FEE RATE ADVISORY FEES WAIVED AS OF
FUNDS (BASED ON AVERAGE NET ASSETS) FOR LAST FISCAL YEAR SEPTEMBER 30, 1997
- ---------------------------------- ------------------------------ -------------------- ------------------
<S> <C> <C> <C>
Delaware Group 0.75% per annum(1) $29,065(2) $ 17,328,699
Global & International Funds,
Inc.
Global Bond Series
Delaware Pooled Trust, Inc. 0.50% per annum(1) $101,650(3) $389,434,094
The Global Fixed Income
Portfolio
Delaware Pooled Trust, Inc. 0.50% per annum N/A(4) $ 33,181,642
The International Fixed Income
Portfolio
Delaware Group Premium Fund, Inc. 0.75% per annum $13,906(5) $ 18,590,196
Global Bond Series
</TABLE>
- ---------------
1. All fees are reduced by fees paid to the unaffiliated directors of the fund.
2. Amount is for the fiscal year ended November 30, 1996. Delaware International
has elected voluntarily to waive that portion, if any, of the annual
management fees payable by Global Bond Series and to pay the series' expenses
to the extent necessary to ensure that the Total Operating Expenses (after
voluntary waivers and payments) of the series do not exceed 0.95% (exclusive
of taxes, interest, brokerage commissions, extraordinary expenses and 12b-1
fees) through May 31, 1998.
3. Amount is for the fiscal year ended October 31, 1996. Delaware International
has elected voluntarily to waive that portion, if any, of the annual
management fees payable by The Global Fixed Income Portfolio and to pay the
portfolio's expenses to the extent necessary to ensure that the Total
Operating Expenses (after voluntary waivers and payments) of the portfolio do
not exceed 0.60% (exclusive of taxes, interest, brokerage commissions, and
extraordinary expenses) through April 30, 1998.
4. Delaware Pooled Trust, Inc.'s fiscal year ended on October 31, 1996. Because
The International Fixed Income Portfolio did not commence operations until
April 11, 1997, Delaware International did not waive any fees in the fiscal
year ended October 31, 1996. Information for the fiscal year ended October
31, 1997 is not yet available. Delaware International has elected voluntarily
to waive that portion, if any, of the annual management fees payable by The
International Fixed Income Portfolio and to pay the portfolio's expenses to
the extent necessary to ensure that the Total Operating Expenses (after
voluntary waivers and payments) of the portfolio do not exceed 0.60%
(exclusive of taxes, interest, brokerage commissions, and extraordinary
expenses) through April 30, 1998.
5. Amount is for the period May 2, 1996 (date of initial sale of Global Bond
Series) through December 31, 1996 (the end of Delaware Group Premium Fund,
Inc.'s last fiscal year). Delaware International has elected voluntarily to
waive that portion, if any, of the annual management fees payable by Global
Bond Series and to pay the series' expenses to the extent necessary to ensure
that the Total Operating Expenses (after voluntary waivers and payments) of
the series do not exceed 0.80% (exclusive of taxes, interest, brokerage
commissions, and extraordinary expenses) through December 31, 1997.
D-1
<PAGE> 18
DELAWARE INTERNATIONAL MANAGEMENT
The following table sets forth the name and principal occupation of the
principal executive officer and the directors of Delaware International.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
- ------------------------------------ ----------------------------------------------------------------
<S> <C>
Wayne A. Stork(1)................... Chairman/Chief Executive Officer and Director of Delaware
Management Holdings, Inc., Delaware International Advisers
Ltd. and Delaware International Holdings Ltd.;
Chairman/President/Chief Executive Officer/Chief Investment
Officer and Director of Delaware Management Company, Inc.;
Chairman/President/Chief Executive Officer and Director of DMH
Corp., Delaware Distributors, Inc., Delvoy, Inc. and Founders
Holdings, Inc.; Chairman/Director and/or Trustee of each of
the 33 investment companies in the Delaware Group and Delaware
Capital Management, Inc.; Director of Delaware Service
Company, Inc. and Delaware Investment & Retirement Services,
Inc.
David G. Tilles..................... Managing Director/Chief Investment Officer and Director of
Delaware International Advisers Ltd.; Chief Investment Officer
and Director of Delaware International Holdings Ltd.
G. Roger Kitson..................... Vice Chairman and Director of Delaware International Advisers
Ltd.
Ian G. Sims......................... Deputy Managing Director/Chief Investment Officer-Global Fixed
Income and Director of Delaware International Advisers Ltd.
Hamish O. Parker.................... Senior Portfolio Manager/Director of U.S. Marketing Liaison and
Director of Delaware International Advisers Ltd.
Timothy W. Sanderson................ Senior Portfolio Manager/Deputy Compliance Officer/Director of
Equity Research and Director of Delaware International Advisers
Ltd.
Clive A. Gillmore................... Senior Portfolio Manager/Director of U.S. Mutual Fund Liaison
and Director of Delaware International Advisers Ltd.
John Emberson....................... Secretary/Compliance Officer/Finance Director and Director of
Delaware International Advisers Ltd.
Nigel G. May........................ Senior Portfolio Manager/Head of European Group and Director of
Delaware International Advisers Ltd.
Elizabeth A. Desmond................ Senior Portfolio Manager/Head of Pacific Basin Group and
Director of Delaware International Advisers Ltd.
David K. Downes(1).................. Director of Delaware International Advisers Ltd.; Executive Vice
President/Chief Operating Officer/Chief Financial Officer of
each of the 33 investment companies in the Delaware Group,
Delaware Management Holdings, Inc., Founders CBO Corporation,
Delaware Capital Management, Inc., Delvoy, Inc. and Delaware
Distributors, L.P.; Executive Vice President/Chief Operating
Officer/Chief Financial Officer and Director of Delaware
Management Company, Inc., DMH Corp., Delaware Distributors,
Inc. and Founders Holdings, Inc.; President/Chief Operating
Officer/Chief Financial Officer and Director of Delaware
International Holdings Ltd.; Chairman/Chief Executive Officer
and Director of Delaware Investment & Retirement Services,
Inc.; Chairman and Director of Delaware Management Trust
Company; President/Chief Executive Officer/Chief Financial
Officer and Director of Delaware Service Company, Inc.; Vice
President of Lincoln Funds Corporation
</TABLE>
D-2
<PAGE> 19
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
- ------------------------------------ ----------------------------------------------------------------
<S> <C>
Richard G. Unruh(1)................. Director of Delaware International Advisers Ltd.; Executive Vice
President of each of the 33 investment companies in the
Delaware Group, Delaware Management Holdings, Inc. and
Delaware Capital Management, Inc.; Executive Vice President
and Director of Delaware Management Company, Inc.
George M. Chamberlain, Jr.(1)....... Director of Delaware International Advisers Ltd.; Senior Vice
President/ Secretary and General Counsel of each of the 33
investment companies in the Delaware Group, Delaware
Management Holdings, Inc. and Delaware Distributors, L.P.;
Executive Vice President/ Secretary/General Counsel and
Director of Delaware Management Trust Company; Senior Vice
President/Secretary/General Counsel and Director of DMH Corp.,
Delaware Management Company, Inc., Delaware Distributors,
Inc., Delaware Service Company, Inc., Founders Holdings, Inc.,
Delaware Investment & Retirement Services, Inc., Delvoy, Inc.
and Delaware Capital Management, Inc.; Senior Vice President
and Director of Delaware International Holdings Ltd; Secretary
of Lincoln Funds Corporation
Richard J. Flannery(1).............. Director of Delaware International Advisers Ltd.; Senior Vice
President/ Corporate & International Affairs of each of the 33
investment companies in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware Management
Company, Inc., Delaware Distributors, Inc., Delaware
Distributors, L.P., Delaware Management Trust Company,
Delaware Capital Management, Inc., Delaware Service Company,
Inc. and Delaware Investment & Retirement Services, Inc.;
Senior Vice President/Corporate & International Affairs and
Director of Founders Holdings, Inc. and Delvoy, Inc.;
Executive Vice President and Director of Delaware
International Holdings Ltd.; Senior Vice President of Founders
CBO Corporation; Director of HYPPCO Finance Company Ltd.
John C.E. Campbell(1)............... Director of Delaware International Advisers Ltd.; Senior Vice
President/ International Marketing of Delaware Investment
Advisers, a division of Delaware Management Company, Inc.
George E. Deming(1)................. Director of Delaware International Advisers Ltd.; Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers, a division of Delaware Management Company, Inc.
</TABLE>
The address of those listed above is Third Floor, 80 Cheapside, London,
EC2V 6EE, unless otherwise noted.
None of the Trust's Trustees or officers is affiliated with Delaware
Management or Delaware International or any of their affiliates. Except for
payments to Delaware International pursuant to the new Subadvisory Agreement,
the Portfolio has not made any payments to and has no other arrangements with
Delaware International or any of its affiliates.
- ---------------
(1)Business address is One Commerce Square, 39th Floor, Philadelphia,
Pennsylvania 19103.
D-3