<PAGE> 1
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Information Statement [ ] Confidential, for Use of
[X] Definitive Information Statement the Commission Only (as
permitted by Rule 14c-5(d)(2))
</TABLE>
THE TARGET PORTFOLIO TRUST
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Information Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] 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(R)
SMALL CAPITALIZATION GROWTH PORTFOLIO
TARGET FUNDS
SMALL CAPITALIZATION GROWTH FUND
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077
------------------------
INFORMATION STATEMENT
OCTOBER 30, 2000
------------------------
TO THE SHAREHOLDERS:
On May 24, 2000, at a regular meeting of the Boards of Trustees of The
Target Portfolio Trust(R) (Target I) and the Target Funds (Target II), the
Trustees approved new subadvisory agreements for the Small Capitalization Growth
Portfolio of Target I and the Small Capitalization Growth Fund of Target II. The
subadvisory agreements approved by the Boards of Trustees were entered into
between Prudential Investments Fund Management LLC, each Trust's investment
manager, and Chase Fleming Asset Management USA (Chase Fleming), a division of
Robert Fleming Inc., an indirect subsidiary of The Chase Manhattan Corporation.
This information statement informs you of the circumstances surrounding the
Boards' approval of the new subadvisory agreements and provides you with an
overview of their terms.
By order of the Boards,
WILLIAM V. HEALEY
Assistant 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.
<PAGE> 3
THE TARGET PORTFOLIO TRUST()(R)
SMALL CAPITALIZATION
GROWTH PORTFOLIO
TARGET FUNDS
SMALL CAPITALIZATION GROWTH FUND
(800) 225-1852
------------------------
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077
------------------------
INFORMATION STATEMENT
OCTOBER 30, 2000
------------------------
This information statement is being furnished to the shareholders of the
Small Capitalization Growth Portfolio of The Target Portfolio Trust (Target I),
and the Small Capitalization Growth Fund of Target Funds (Target II)
(collectively, Target I and Target II are the Trusts) in lieu of a proxy
statement, pursuant to the terms of an exemptive order issued by the Securities
and Exchange Commission (SEC). The exemptive order permits the Trusts' manager
to hire new subadvisers and to make certain changes to existing subadvisory
contracts with the approval of the Boards of Trustees, without obtaining
shareholder approval.
Each Trust is a management investment company registered under the
Investment Company Act of 1940, as amended (the Investment Company Act), and is
organized as a Delaware business trust. The Trusts' trustees are referred to
here as the "Boards," "Board Members" or "Trustees." The Trusts' principal
executive office is Gateway Center Three, 100 Mulberry Street, Newark, New
Jersey 07102-4077.
We are providing shareholders of the Small Capitalization Growth Portfolio
of Target I and the Small Capitalization Growth Fund of Target II (collectively,
the Portfolios) as of August 1, 2000 with this information statement. This
information statement relates to the approval by the Trustees of new subadvisory
agreements dated August 1, 2000 between Prudential Investments Fund Management
LLC (PIFM or the Manager) and Robert Fleming Inc., doing business as Chase
Fleming Asset Management USA (Chase Fleming), a division of Robert Fleming Inc.,
which is an indirect subsidiary of The Chase Manhattan Corporation, with respect
to: (i) the Small Capitalization Growth Portfolio of Target I; and (ii) the
Small Capitalization Growth Fund of Target II (collectively, the Subadvisory
Agreements). The Trustees approved the Subadvisory Agreements, copies of which
are attached hereto as Exhibit A, on May 24, 2000. Chase Fleming (formerly known
as Fleming Asset Management USA) had served as subadviser to each of the
Portfolios under subadvisory agreements dated August 26, 1999, in the case of
the Small Capitalization Growth Portfolio of Target I, and August 31, 1999, in
the case of the Small Capitalization Growth Fund of Target II. Each of those
subadvisory agreements terminated on August 1, 2000 as a result of a change in
the ownership of Chase Fleming. The previous subadvisory agreements were last
approved by the Trustees, including a majority of the Trustees who were not
parties to the contracts and were not interested persons of those parties as
defined in the Investment Company Act (the "Independent Trustees"), on August
25, 1999.
Chase Fleming will pay for the costs associated with preparing and
distributing this information statement to each Portfolio's respective
shareholders. This information statement will be mailed on or about October 30,
2000.
THE TARGET PROGRAM
Target I consists of ten separate investment portfolios, including the
Small Capitalization Growth Portfolio. Shares of the portfolios are offered to
participants in the Prudential Securities Target Program (the
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Target Program), an investment advisory service that provides to investors asset
allocation recommendations with respect to the portfolios based on an evaluation
of the investor's investment objectives and risk tolerances. The Target Program
or shares of Target I (without participation in the Target Program) are also
available to banks, trust companies and other investment advisory services that
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 1.50% of assets held in a Target Program account invested
in equity portfolios, such as the Small Capitalization Growth Portfolio, and
1.00% of assets invested in income portfolios. For Plans, the quarterly advisory
fee is charged at the maximum annual rate of 1.25% and 1.35% of assets invested
in equity portfolios and income portfolios respectively.
THE MANAGER
Prudential Investments Fund Management LLC, Gateway Center Three, 100
Mulberry Street, Newark, New Jersey 07102-4077, serves as the Trusts' manager
under management agreements dated as of November 9, 1992 in the case of Target
I, and August 25, 1999 in the case of Target II. PIFM is a subsidiary of
Prudential Securities and The Prudential Insurance Company of America
(Prudential) and is a part of Prudential Investments, which is a business group
of Prudential. As of August 31, 2000, PIFM managed and/or administered open-end
and closed-end management investment companies with assets of approximately
$76.4 billion. Information concerning the Trusts' current management
arrangements can be found in Exhibit B. Information concerning officers of the
Trusts is set forth in Exhibit C.
SHAREHOLDER REPORTS
Target I's most recent annual report for the fiscal year ended December 31,
1999 and semi-annual report for the six month period ended June 30, 2000 have
been sent to its shareholders. Target II's annual report for the fiscal year
ended July 31, 2000 has been sent to its shareholders. Each Trust's most recent
annual and semi-annual reports 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
The table below sets forth each Portfolio's net asset value and number of
outstanding shares as of July 31, 2000 for Target II and as of June 30, 2000 for
Target I.
<TABLE>
<CAPTION>
PORTFOLIO NET ASSET VALUE SHARES OUTSTANDING
--------- --------------- ------------------
<S> <C> <C>
Small Capitalization Growth Portfolio (Target I)............ $208,408,717 11,448,616
Small Capital Growth Fund (Target II)
Class A................................................... $ 4,666,941 369,696
Class B................................................... $ 8,588,146 648,757
Class C................................................... $ 7,659,285 610,671
</TABLE>
Management does not know of any person who owned beneficially 5% or more of
the shares of the Small Capitalization Growth Portfolio of Target I as of
October 13, 2000. Information on shareholders owning beneficially 5% or more of
any class of shares of the Small Capitalization Growth Fund of Target II on
October 6, 2000 is set forth in Exhibit D. To the knowledge of management, the
executive officers and Board Members of the Trusts, as a group, owned less than
1% of the outstanding shares of the Small Capitalization Growth Fund of Target
II as of October 6, 2000 and as of October 13, 2000 for the Small Capitalization
Growth Portfolio of Target I.
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NEW SUBADVISORY AGREEMENTS
On May 24, 2000, the Trustees, including a majority of the Independent
Trustees, unanimously approved the Subadvisory Agreements and the selection by
PIFM of Chase Fleming to continue to manage the Portfolios. Chase Fleming served
as subadviser to the Portfolios under subadvisory agreements that automatically
terminated on August 1, 2000. For the fiscal year ended December 31, 1999 Chase
Fleming received advisory fees of $248,570.71 in connection with the management
of the Small Capitalization Growth Portfolio of Target I. It received advisory
fees of $23,268.77 in connection with the management of the Small Capitalization
Growth Fund of Target II for the fiscal year ended July 31, 2000.
Prior to August 1, 2000, Fleming Asset Management USA was a Division of
Robert Fleming Inc., the U.S. equity asset management affiliate of Robert
Fleming Holdings Ltd. (Fleming Group).
In a transaction that closed on August 1, 2000 (the Transaction), The Chase
Manhattan Corporation (Chase) acquired the Fleming Group, the parent of Fleming
Asset Management USA. As a result of the Transaction, Chase Fleming, a division
of Robert Fleming Inc., manages the portfolios.
The Transaction constituted a change in control of Chase Fleming, causing
an assignment of Chase Fleming's original subadvisory agreements with respect to
the Portfolios. Under Section 15 of the Investment Company Act and the terms of
the original subadvisory agreements, the agreements automatically terminated
when this assignment occurred.
The Subadvisory Agreements contain the identical terms and conditions as
the subadvisory agreements in effect with Chase Fleming prior to August 1, 2000.
See "Terms of Subadvisory Agreements" below. Chase Fleming renders investment
advice to each Portfolio in accordance with its investment objective and
policies and also makes investment decisions to purchase and sell securities on
behalf of each Portfolio, subject to the supervision of PIFM.
Section 15 of the Investment Company Act requires that a majority of each
Portfolio's outstanding voting securities approve its subadvisory agreement.
However, on September 11, 1996, the SEC issued an order granting exemptive
relief from certain requirements of Section 15 to Target I, PIFM and any future
open end management investment company managed by PIFM, provided that such
investment company operates in substantially the same manner as Target I and
complies with the conditions of the order (including Target II which commenced
operations on November 3, 1999). According to the SEC's order, which is subject
to a number of conditions (including approval by each Trust's shareholders,
which approval was received on October 30, 1996 in the case of Target I, and on
September 13, 1999 in the case of Target II), PIFM may now enter into
subadvisory agreements on behalf of each Trust without receiving prior
shareholder approval. Thus, execution and implementation of the Subadvisory
Agreements did not require shareholder consent.
BOARD CONSIDERATION OF SUBADVISORY AGREEMENTS
At a regular meeting of the Boards at which all of the Trustees were in
attendance, the Boards of Trustees considered and unanimously approved the
Subadvisory Agreements on May 24, 2000. In considering the approval of the
Subadvisory Agreements, the Trustees, including the Independent Trustees,
considered whether the approval of each Subadvisory Agreement was in the best
interests of the relevant Trust and the shareholders of the relevant Portfolio.
At the meeting, the Trustees reviewed materials furnished by management and
Chase Fleming and met with representatives of Chase Fleming. Among other things,
the Trustees considered the financial strength of Fleming Group and Chase, how
the combination of Fleming Group with Chase would benefit both organizations,
because of the complementary nature of their businesses, the measures Fleming
Group was taking to ensure that the transaction would not be disruptive to its
clients, and the financial incentives Fleming Group was providing to key
personnel in order to keep its investment team intact after the acquisition, and
Fleming Group's representations that it did not expect the transaction to lead
to any change in the portfolio management personnel assigned to the Portfolios.
The Trustees discussed and reviewed the terms of the Subadvisory
Agreements. With the exception of Chase Fleming's new name and the dates of
execution, effectiveness and termination, the terms of the Subadvisory
Agreements are identical to those of the corresponding subadvisory agreements in
effect with
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Chase Fleming prior to August 1, 2000. Based upon their review, the Trustees
concluded that each Subadvisory Agreement was in the best interests of the
relevant Trust and the shareholders of the relevant Portfolios, and that the fee
would remain unchanged. Accordingly, after consideration of the above factors,
and such other factors and information as they deemed relevant, the Trustees,
including the Independent Trustees, unanimously approved the Subadvisory
Agreements.
INFORMATION CONCERNING CHASE FLEMING
Chase Fleming is a subsidiary of Chase. The address of Chase Fleming is 320
Park Avenue, New York, New York 10022. As of October 12, 2000, Chase Fleming was
responsible for managing global assets of around $178 billion on behalf of
individual investors, companies, institutions, government and central banks
world wide.
Exhibit E contains information about the other mutual funds managed by
Chase Fleming with investment objectives and strategies similar to those of the
Portfolios. Exhibit E also lists the principal executive officer, managing
directors and parent companies of Chase Fleming.
Pursuant to each Subadvisory Agreement, Chase Fleming manages a portion of
the assets of the Portfolios. Sawgrass Asset Management LLC, 4337 Pablo Oaks
Court, Building 200, Jacksonville, Florida 32224, manages the remaining portion
of the Portfolios.
TERMS OF SUBADVISORY AGREEMENTS
Under the Subadvisory Agreements, Chase Fleming is compensated by PIFM (and
not the Portfolios) at an annual rate of .40 of 1% of each Portfolio's average
net assets managed by Chase Fleming. The Subadvisory Agreements provide that,
subject to PIFM's and the Board of Trustees' supervision, Chase Fleming is
responsible for managing the investment operations of each Portfolio and for
making investment decisions and placing orders to purchase and sell securities
for each Portfolio, all in accordance with the investment objective and policies
of each Portfolio as reflected in its current prospectus and statement of
additional information and as may be adopted from time to time by the Board of
Trustees. In accordance with the requirements of the Investment Company Act,
Chase Fleming 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 Boards of Trustees may reasonably request.
Duration and Termination. Each 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 relevant Portfolio,
or by the Board of Trustees, including the approval by a majority of the
Independent Trustees, at a meeting called for the purpose of voting on such
approval; provided, 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 relevant Portfolios, (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 Chase
Fleming 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 Agreements provide 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, Chase
Fleming will not be liable for any act or omission in connection with its
activities as subadviser to the Portfolios.
SHAREHOLDER PROPOSALS
As Delaware business trusts, the Trusts are 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
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with the Investment Company Act or the Trusts' Trust Instruments. A shareholder
proposal intended to be presented at any meeting of shareholders of a 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.
WILLIAM V. HEALEY,
Assistant
Secretary
Dated: October 30, 2000
5
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EXHIBIT A
TARGET FUNDS
(SMALL CAPITALIZATION GROWTH FUND)
SUBADVISORY AGREEMENT
Agreement made on this first (1) day of August, 2000, between Prudential
Investments Fund Management LLC (PIFM or the Manager), a New York limited
liability company, and Robert Fleming Inc. (the Adviser), a division of Robert
Fleming, Inc., a Delaware corporation.
WHEREAS, PIFM has entered into a management agreement (the Management
Agreement) with Target Funds (the Trust), a Delaware business trust and an
open-end management investment company registered under the Investment Company
Act of 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
Small Capitalization Growth Fund of the Trust (the Fund) in connection with the
management of the Trust and to manage such portion of the Fund as the Manager
shall from time to time direct, and the Adviser is willing to render such
investment advisory services.
NOW, THEREFORE, the Parties agree as follows:
1. (a) Subject to the supervision of the Manager and of the Trustees
of the Trust, the Adviser shall manage such portion of the investment
operations of the Fund as the Manager shall direct and shall manage the
composition of such portion of the Fund, including the purchase, retention
and disposition thereof, in accordance with the Fund's investment
objective, policies and restrictions as stated in the Prospectus (such
Prospectus and Statement of Additional Information as currently in effect
and as amended or supplemented from time to time being herein called the
"Prospectus") as delivered to the Adviser from time to time by the Manager
and subject to the following understandings:
(i) The Adviser shall provide supervision of such portion of the
Fund's investments and determine from time to time what investments and
securities will be purchased, retained, sold or loaned by the Fund, and
what portion of the assets it manages will be invested or held
uninvested as cash.
(ii) In the performance of its duties and obligations under this
Agreement, the Adviser shall act in conformity with the Agreement and
Declaration of Trust, By-Laws and Prospectus of the Trust and the Fund
as provided to the Adviser by the Manager and with the written
instructions and directions of the Manager and of the Trustees of the
Trust and will conform to and comply with the requirements of the 1940
Act, the Internal Revenue Code of 1986, as amended, and all other
applicable federal and state laws and regulations.
(iii) The Adviser shall determine the securities and commodities or
other assets to be purchased or sold by such portion of the Fund and
will place orders pursuant to its determination with or through such
persons, brokers, dealers or futures commission merchants (including but
not limited to Prudential Securities Incorporated) to carry out the
policy with respect to brokerage as set forth in the Trust's
Registration Statement and Prospectus or as the Trustees may direct from
time to time. In providing the Fund with investment supervision, it is
recognized that the Adviser will give primary consideration to securing
best execution. Within the framework of this policy, the Adviser may
consider the financial responsibility, research and investment
information and other services provided by brokers, dealers or futures
commission merchants who may effect or be a party to any
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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 a broker for securities transactions but
that no formula has been adopted for allocation of the Fund's investment
transaction business. It is also understood that it is desirable for the
Trust that the Adviser have access to supplemental investment and market
research and security and economic analysis provided by brokers or
futures commission merchants who may execute brokerage transactions at a
higher cost to the Trust than may result when allocating brokerage to
other brokers solely on the basis of seeking lowest price. Therefore,
the Adviser is authorized to place orders for the purchase and sale of
securities and commodities or other assets for the Fund with such
brokers or futures commission merchants, subject to review by the
Trustees from time to time with respect to the extent and continuation
of this practice. It is understood that the services provided by such
brokers or futures commission merchants may be useful to the Adviser in
connection with the Adviser's services to other clients.
On occasions when the Adviser deems the purchase or sale of a
security, commodity or other asset to be in the best interest of the
Fund as well as other clients of the Adviser, the Adviser, to the extent
permitted by applicable laws and regulations, may, but shall be under no
obligation to, aggregate the securities, commodities or other assets to
be sold or purchased in order to obtain best execution. In such event,
allocation of the securities, commodities or other assets so purchased
or sold, as well as the expenses incurred in the transaction, will be
made by the Adviser in the manner the Adviser considers to be the most
equitable and consistent with its fiduciary obligations to the Trust and
to such other clients.
(iv) The Adviser shall maintain all books and records with respect
to the portfolio transactions required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940
Act and shall render to the Trustees such periodic and special reports
as the Board may reasonably request.
(v) The Adviser shall provide the Trust's custodian (the Custodian)
on each business day with information relating to all transactions
concerning the portion of the Fund's assets it manages and shall provide
the Manager with such information upon request of the Manager. The
Adviser shall reconcile its records of the Fund's securities and cash
managed by the Adviser with statements provided by the Custodian at
least once each month. The Adviser shall provide the Manager with a
written report on each such reconciliation, including information on any
discrepancies noted and actions taken by the Adviser in response
thereto, within five business days after the Adviser receives the
above-referenced statement from the Custodian, to the extent reasonably
practicable.
(vi) The investment management services provided by the Adviser
hereunder are not exclusive, and the Adviser shall be free to render
similar services to others.
(vii) The Manager shall forward to the Adviser or its proxy voting
agent any proxy materials relating to portfolio securities held by the
portion of the Fund managed by the Adviser.
(b) Services to be furnished by the Adviser under this Agreement
may be furnished through the medium of any of its directors, officers or
employees.
(c) The Adviser shall keep the Fund's books and records required to
be maintained by the Adviser pursuant to paragraph 1(a)(iv) hereof and
shall timely furnish to the Manager all information relating to the
Adviser's services hereunder needed by the Manager to keep the other books
and records of the Trust required by Rule 31a-1 under the 1940 Act. The
Adviser agrees that all records which it maintains for the Fund are the
property of the Trust and the Adviser will 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.
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(d) The Adviser agrees to maintain adequate compliance procedures
to ensure its compliance with the 1940 Act, the Investment Advisers Act of
1940 (Advisers Act) and other applicable state and federal laws and
regulations.
(e) The Adviser shall furnish to the Manager copies of all records
prepared in connection with (i) the performance of this Agreement and (ii)
the reports prepared in accordance with the compliance procedures
maintained pursuant to paragraph 1(d) hereof as the Manager may reasonably
request.
2. The Manager shall continue to have responsibility for all services
to be provided to the Fund pursuant to the Management Agreement and shall
oversee and review the Adviser's performance of its duties under this
Agreement.
3. The Manager shall compensate the Adviser for the services provided
and the expenses assumed pursuant to this Subadvisory Agreement at the
annual rate of .40 of 1% of the average daily net assets of the portion of
the Fund managed by the Adviser. This fee will be computed daily and paid
monthly.
4. The Adviser shall not be liable for any error of judgment or for
any loss suffered by the Fund, the Trust or the Manager in connection with
the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the Adviser's part in
the performance of its duties or from its reckless disregard of its
obligations and duties under this Agreement, provided, however, that
nothing in this Agreement shall be deemed to waive any rights the Manager
or the Trust may have against the Adviser under federal or state securities
laws, including for acts of good faith.
5. This Agreement shall continue in effect for a period of more than
two years from the date hereof only so long as such continuance is
specifically approved at least annually in conformity with the requirements
of the 1940 Act; provided, however, that this Agreement may be terminated
by the Trust at any time, without the payment of any penalty, by the
Trustees or by vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund, or by the Manager or the Adviser at
any time, without the payment of any penalty, on not more than 60 days' nor
less than 30 days' written notice to the other party. This Agreement shall
terminate automatically in the event of its assignment (as defined in the
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.
7. During the term of this Agreement, the Manager agrees to furnish
the Adviser at its principal office all prospectuses, proxy statements,
reports to shareholders, sales literature or other material prepared for
distribution to shareholders of the Trust or the public, which refer to the
Adviser in any way; provided, however, that any such item which describes
or characterizes the Adviser's investment process with respect to the Fund,
the names of any of its clients (other than the Trust or advisory clients
of PIFM and its affiliates) or any of its performance results shall be
furnished to the Adviser by first class or overnight mail, facsimile
transmission equipment or hand delivery prior to use thereof, and such item
shall not be used if the Adviser reasonably objects to such use in writing
within forty-eight (48) hours (or such other time as may be mutually
agreed) after receipt thereof (provided, however, that if such item is not
received by the Adviser during normal business hours on a business day,
such period shall end forty-eight (48) hours after the start of normal
business hours on the next succeeding business day).
8. This Agreement may be amended by mutual consent, but the consent of
the Trust must be obtained in conformity with the requirements of the 1940
Act.
9. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below on the day and year first above
written.
PRUDENTIAL INVESTMENTS FUND
MANAGEMENT LLC
By: /s/ ROBERT F. GUNIA
------------------------------------
Robert F. Gunia
Executive Vice President
ROBERT FLEMING INC.
By: /s/ CHRISTOPHER JAMES
------------------------------------
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<PAGE> 12
THE TARGET PORTFOLIO TRUST
(SMALL CAPITALIZATION GROWTH PORTFOLIO)
SUBADVISORY AGREEMENT
Agreement made on this first 1 day of August, 2000, between Prudential
Investments Fund Management LLC (PIFM or the Manager), a New York limited
liability company, and Chase Fleming Asset Management (the Adviser), an indirect
subsidiary of The Chase Manhattan Corporation, a Delaware corporation.
WHEREAS, PIFM has entered into a management agreement (the Management
Agreement) with The Target Portfolio Trust (the Trust), a Delaware business
trust and an 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
Small Capitalization Growth Portfolio of the Trust (the Fund) in connection with
the management of the Trust and to manage such portion of the Fund as the
Manager shall from time to time direct, and the Adviser is willing to render
such investment advisory services.
NOW, THEREFORE, the Parties agree as follows:
1. (a) Subject to the supervision of the Manager and of the Trustees
of the Trust, the Adviser shall manage such portion of the investment
operations of the Fund as the Manager shall direct and shall manage the
composition of such portion of the Fund, including the purchase, retention
and disposition thereof, in accordance with the Fund's investment
objective, policies and restrictions as stated in the Prospectus (such
Prospectus and Statement of Additional Information as currently in effect
and as amended or supplemented from time to time being herein called the
"Prospectus") as delivered to the Adviser from time to time by the Manager
and subject to the following understandings:
(i) The Adviser shall provide supervision of such portion of the
Fund's investments and determine from time to time what investments and
securities will be purchased, retained, sold or loaned by the Fund, and
what portion of the assets it manages will be invested or held
uninvested as cash.
(ii) In the performance of its duties and obligations under this
Agreement, the Adviser shall act in conformity with the Agreement and
Declaration of Trust, By-Laws and Prospectus of the Trust and the Fund
as provided to the Adviser by the Manager and with the written
instructions and directions of the Manager and of the Trustees of the
Trust and will conform to and comply with the requirements of the 1940
Act, the Internal Revenue Code of 1986, as amended, and all other
applicable federal and state laws and regulations.
(iii) The Adviser shall determine the securities and commodities or
other assets to be purchased or sold by such portion of the Fund and
will place orders pursuant to its determination with or through such
persons, brokers, dealers or futures commission merchants (including but
not limited to Prudential Securities Incorporated) to carry out the
policy with respect to brokerage as set forth in the Trust's
Registration Statement and Prospectus or as the Trustees may direct from
time to time. In providing the Fund with investment supervision, it is
recognized that the Adviser will give primary consideration to securing
best execution. Within the framework of this policy, the Adviser may
consider the financial responsibility, research and investment
information and other services provided by brokers, dealers or futures
commission merchants who may effect or be a party to any such
transaction or other transactions to which the Adviser's other clients
may be a party. It is understood that Prudential Securities Incorporated
may be used as a broker for securities transactions but that no formula
has been adopted for allocation of the Fund's investment transaction
A-5
<PAGE> 13
business. It is also understood that it is desirable for the Trust that
the Adviser have access to supplemental investment and market research
and security and economic analysis provided by brokers or futures
commission merchants who may execute brokerage transactions at a higher
cost to the Trust than may result when allocating brokerage to other
brokers solely on the basis of seeking lowest price. Therefore, the
Adviser is authorized to place orders for the purchase and sale of
securities and commodities or other assets for the Fund with such
brokers or futures commission merchants, subject to review by the
Trustees from time to time with respect to the extent and continuation
of this practice. It is understood that the services provided by such
brokers or futures commission merchants may be useful to the Adviser in
connection with the Adviser's services to other clients.
On occasions when the Adviser deems the purchase or sale of a
security, commodity or other asset to be in the best interest of the
Fund as well as other clients of the Adviser, the Adviser, to the extent
permitted by applicable laws and regulations, may, but shall be under no
obligation to, aggregate the securities, commodities or other assets to
be sold or purchased in order to obtain best execution. In such event,
allocation of the securities, commodities or other assets so purchased
or sold, as well as the expenses incurred in the transaction, will be
made by the Adviser in the manner the Adviser considers to be the most
equitable and consistent with its fiduciary obligations to the Trust and
to such other clients.
(iv) The Adviser shall maintain all books and records with respect
to the portfolio transactions required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940
Act and shall render to the Trustees such periodic and special reports
as the Board may reasonably request.
(v) The Adviser shall provide the Trust's custodian (the Custodian)
on each business day with information relating to all transactions
concerning the portion of the Fund's assets it manages and shall provide
the Manager with such information upon request of the Manager. The
Adviser shall reconcile its records of the Fund's securities and cash
managed by the Adviser with statements provided by the Custodian at
least once each month. The Adviser shall provide the Manager with a
written report on each such reconciliation, including information on any
discrepancies noted and actions taken by the Adviser in response
thereto, within five business days after the Adviser receives the
above-referenced statement from the Custodian, to the extent reasonably
practicable.
(vi) The investment management services provided by the Adviser
hereunder are not exclusive, and the Adviser shall be free to render
similar services to others.
(vii) The Manager shall forward to the Adviser or its proxy voting
agent any proxy materials relating to portfolio securities held by the
portion of the Fund managed by the Adviser.
(b) Services to be furnished by the Adviser under this Agreement
may be furnished through the medium of any of its directors, officers or
employees.
(c) The Adviser shall keep the Fund's books and records required to
be maintained by the Adviser pursuant to paragraph 1(a)(iv) hereof and
shall timely furnish to the Manager all information relating to the
Adviser's services hereunder needed by the Manager to keep the other books
and records of the Trust required by Rule 31a-1 under the 1940 Act. The
Adviser agrees that all records which it maintains for the Fund are the
property of the Trust and the Adviser will 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.
A-6
<PAGE> 14
(e) The Adviser shall furnish to the Manager copies of all records
prepared in connection with (i) the performance of this Agreement and (ii)
the reports prepared in accordance with the compliance procedures
maintained pursuant to paragraph 1(d) hereof as the Manager may reasonably
request.
2. The Manager shall continue to have responsibility for all services
to be provided to the Fund pursuant to the Management Agreement and shall
oversee and review the Adviser's performance of its duties under this
Agreement.
3. The Manager shall compensate the Adviser for the services provided
and the expenses assumed pursuant to this Subadvisory Agreement at the
annual rate of .40 of 1% of the average daily net assets of the portion of
the Fund managed by the Adviser. This fee will be computed daily and paid
monthly.
4. The Adviser shall not be liable for any error of judgment or for
any loss suffered by the Fund, the Trust or the Manager in connection with
the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the Adviser's part in
the performance of its duties or from its reckless disregard of its
obligations and duties under this Agreement, provided, however, that
nothing in this Agreement shall be deemed to waive any rights the Manager
or the Trust may have against the Adviser under federal or state securities
laws, including for acts of good faith.
5. This Agreement shall continue in effect for a period of more than
two years from the date hereof only so long as such continuance is
specifically approved at least annually in conformity with the requirements
of the 1940 Act; provided, however, that this Agreement may be terminated
by the Trust at any time, without the payment of any penalty, by the
Trustees or by vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund, or by the Manager or the Adviser at
any time, without the payment of any penalty, on not more than 60 days' nor
less than 30 days' written notice to the other party. This Agreement shall
terminate automatically in the event of its assignment (as defined in the
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.
7. During the term of this Agreement, the Manager agrees to furnish
the Adviser at its principal office all prospectuses, proxy statements,
reports to shareholders, sales literature or other material prepared for
distribution to shareholders of the Trust or the public, which refer to the
Adviser in any way; provided, however, that any such item which describes
or characterizes the Adviser's investment process with respect to the Fund,
the names of any of its clients (other than the Trust or advisory clients
of PIFM and its affiliates) or any of its performance results shall be
furnished to the Adviser by first class or overnight mail, facsimile
transmission equipment or hand delivery prior to use thereof, and such item
shall not be used if the Adviser reasonably objects to such use in writing
within forty-eight (48) hours (or such other time as may be mutually
agreed) after receipt thereof (provided, however, that if such item is not
received by the Adviser during normal business hours on a business day,
such period shall end forty-eight (48) hours after the start of normal
business hours on the next succeeding business day).
8. This Agreement may be amended by mutual consent, but the consent of
the Trust must be obtained in conformity with the requirements of the 1940
Act.
9. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK.
A-7
<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below on the day and year first above
written.
PRUDENTIAL INVESTMENTS FUND
MANAGEMENT LLC
By: /s/ ROBERT F. GUNIA
------------------------------------
Robert F. Gunia
Executive Vice President
CHASE FLEMING ASSET MANAGEMENT
By: /s/ A. G. WILLIAMS
------------------------------------
A-8
<PAGE> 16
EXHIBIT B
MANAGEMENT OF THE TRUSTS
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
Trusts' Manager under management agreements (the Management Agreements) dated as
of November 9, 1992 in the case of Target I, and August 25, 1999 in the case of
Target II, and renewed thereafter as required by the Investment Company Act of
1940, as amended (the Investment Company Act).
The Management Agreements were 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 24, 2000, in the case of Target I, and August 25, 1999 in
the case of Target II. The Management Agreements were approved by the sole
shareholder of the Trusts on October 14, 1992 in the case of Target I, and on
September 13, 1999 in the case of Target II.
TERMS OF THE MANAGEMENT AGREEMENT
Pursuant to the Management Agreement for each Trust, PIFM is 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 each 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 each Trust. PIFM also administers each 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 Trusts' custodian and
Prudential Mutual Fund Services LLC (PMFS), the Trusts' transfer and dividend
disbursing agent. The management services of PIFM for the Trusts are not
exclusive under the terms of the Management Agreements 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 Trusts to serve in the capacities in
which they have been elected. All services furnished by PIFM under the
Management Agreements may be furnished by any such directors, officers or
employees of PIFM.
In connection with its management of the business affairs of the Trusts,
PIFM bears the following expenses:
(a) the salaries and expenses of all of its and each Trust's personnel
except the fees and expenses of Trustees who are not affiliated persons of
PIFM or each portfolio's subadviser(s);
(b) all expenses incurred by PIFM or by each 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 fees payable to each subadviser pursuant to the subadvisory
agreements between PIFM and the subadviser.
B-1
<PAGE> 17
For its services, PIFM is compensated by each portfolio of the Trust. The
table below sets forth the annual management fee for each Portfolio (shown as a
percentage of the average daily net assets of each Portfolio).
<TABLE>
<CAPTION>
PORTFOLIO MANAGEMENT FEE
--------- --------------
<S> <C>
Small Capitalization Growth Portfolio (Target I)............ .60%
Small Capitalization Growth Fund (Target II)................ .70%
</TABLE>
Each 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 total compensation payable to PIFM will be paid by
PIFM to each Trust. No such reductions were required during each Trust's last
fiscal year. No jurisdiction currently limits the Trusts' expenses.
Under the terms of the Management Agreements, each Trust is responsible for
the payment of the following expenses: (a) the fees payable to the Manager, (b)
the fees and expenses of Trustees who are not affiliated persons of the Manager
or the Trust's subadvisers, (c) the fees and certain expenses of the Trust's
custodian and transfer and dividend disbursing agent, including the cost of
providing records to the Manager in connection with its obligation of
maintaining required 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 associations of which the Trust may be a member, (h) the cost of 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 Agreements provide that PIFM will not be liable for any
error of judgment or for any loss suffered by a 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 Agreements 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. Each Management Agreement also provides that it will terminate
automatically if assigned and that it may be terminated without penalty by the
Trustees of the relevant Trust, by vote of a majority of the relevant 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
to the Trust.
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: Prudential Equity Fund, Inc.,
Prudential Index Series Fund (Prudential Stock Index Fund), The Prudential
Investment Portfolios, Inc. (Prudential Jennison Equity
B-2
<PAGE> 18
Opportunity Fund, and Prudential Jennison Growth Fund), Prudential Real Estate
Securities Fund, Prudential Sector Funds, Inc. (Prudential Financial Services
Fund, Prudential Health Sciences Fund, Prudential Technology Fund, and
Prudential Utility Fund), Prudential Small Company Fund, Inc., Prudential
Tax-Managed Funds (Prudential Tax-Managed Equity Fund), Prudential Tax-Managed
Managed Small-Cap Fund, Inc., Prudential 20/20 Focus Fund, Prudential U.S.
Emerging Growth Fund, Inc., Prudential Value Fund, Nicholas-Applegate Fund, Inc.
(Nicholas-Applegate Growth Equity Fund), Target Funds (Large Capitalization
Growth Fund, Large Capitalization Value Fund, Small Capitalization Growth Fund,
Small Capitalization Value Fund), Prudential Diversified Funds (Conservative
Growth Fund, Moderate Growth Fund, and High Growth Fund), The Prudential
Investment Portfolios, Inc. (Prudential Active Balanced Fund), Prudential Europe
Growth Fund, Inc., Prudential Natural Resources Fund, Inc., Prudential Pacific
Growth Fund, Inc., Prudential World Fund, Inc. (Prudential Global Growth Fund,
Prudential International Value Fund, and Prudential Jennison International
Growth Fund), Global Utility Fund, Inc., Target Funds (International Equity
Fund), Prudential Global Total Return Fund, Inc., Prudential Government Income
Fund, Inc., Prudential High Yield Fund, Inc., Prudential High Yield Total Return
Fund, Inc., Prudential Short-Term Corporate Bond Fund, Inc. (Income Portfolio),
Prudential Total Return Bond Fund, Inc., Target Funds (Total Return Bond Fund),
Prudential California Municipal Fund (California Series and California Income
Series), Prudential Municipal Bond Fund (High Income Series and Insured Series),
Prudential Municipal Series Fund (Florida Series, New Jersey Series, New York
Series and Pennsylvania Series), Prudential National Municipals Fund, Inc., Cash
Accumulation Trust (Liquid Assets Fund and National Money Market Fund),
Prudential Government Securities Trust (Money Market Series and U.S. Treasury
Money Market Series), Prudential Special Money Market Fund, Inc. (Money Market
Series), Prudential MoneyMart Assets, Inc., Prudential Tax-Free Money Fund,
Inc., Prudential California Municipal Fund (California Money Market Series),
Prudential Municipal Series Fund (New Jersey Money Market Series and New York
Money Market Series); COMMAND Funds (COMMAND Money Fund, COMMAND Government
Fund, and COMMAND Tax-Free Fund), Institutional Money Market Funds: Prudential
Institutional Liquidity Portfolio, Inc. (Institutional Money Market Series),
Strategic Partners Series (Strategic Partners Focused Growth Fund and the
Strategic Partners New Era Growth Fund).
Closed-End Management 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>
David R. Odenath, Officer in Charge, President, Officer in Charge, President, Chief Executive
Jr. .................. Chief Executive Officer and Officer and Chief Operating Officer, PIFM;
Chief Operating Officer Senior Vice President, The Prudential
Insurance Company of America (Prudential)
Robert F. Gunia......... Executive Vice President, Executive Vice President & Chief
Chief Administrative Administrative Officer, PIFM; Vice President,
Officer and Treasurer Prudential; President, Prudential Investment
Management Services LLC (PIMS)
William V. Healey....... Executive Vice President, Executive Vice President, Chief Legal Officer
Chief Legal Officer and and Secretary, PIFM; Vice President and
Secretary Associate General Counsel, Prudential;
Senior Vice President, Chief Legal Officer
and Secretary, PIMS
</TABLE>
B-3
<PAGE> 19
THE DISTRIBUTOR AND TRANSFER AGENT
Prudential Investment Management Services LLC (PIMS or the Distributor),
Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102-4077, acts
as the distributor of the shares of the Trusts. PIMS is a subsidiary of
Prudential. Pursuant to distribution and service plans (the Plans) adopted under
Rule 12b-1 under the Investment Company Act, the Portfolios of Target II bear
the expense of distribution and service fees paid to PIMS with respect to their
respective Class A, Class B and Class C shares. For the fiscal year ended July
31, 2000, PIMS received distribution and servicing fees aggregating $141,307
($88,879 for Class A, $8,884 for Class B and $43,544 for Class C) with respect
to the Small Capitalization Growth Fund of Target II.
PIMS has advised Target II of its receipt of front-end sales charges of
$52,900 and $66,900 resulting from sales of Class A and Class C of Target II
shares respectively during the period ended July 31, 2000. From these fees, PIMS
paid sales charges to affiliated broker-dealers, who in turn paid commissions to
salespersons and incurred other distribution costs. PIMS has advised Target II
that for the period ended July 31, 2000, it received the $84,000 and $6,000 in
contingent deferred sales charges imposed upon certain redemptions by certain
Class B and Class C shareholders of Target II, respectively.
The Trusts' transfer agent is PMFS, 194 Wood Avenue South, Iselin New
Jersey 08830. PMFS received $114,400 for its services in connection with the
Small Capitalization Growth Portfolio of Target I during the fiscal year ended
December 31, 1999 and $62,400 for the six month period ended June 30, 2000. PMFS
received $15,000 for its services in connection with the Small Capitalization
Growth Fund of Target II during the fiscal year ended July 31, 2000.
BROKERAGE
The Small Capitalization Growth Portfolio of Target I paid $40,200 and
$76,739 in commissions to Prudential Securities for the fiscal year ended
December 31, 1999 and the six months ended June 30, 2000, respectively. During
the fiscal year ended July 31, 2000, the Small Capitalization Growth Fund of
Target II paid $2,986 in commissions to Prudential Securities.
B-4
<PAGE> 20
EXHIBIT C
OFFICER INFORMATION
<TABLE>
<CAPTION>
OFFICE(S) WITH THE TRUSTS
NAME (AGE) (TARGET I AND II) PRINCIPAL OCCUPATIONS
---------- ------------------------- ---------------------
<S> <C> <C>
John R. Strangfeld (45)........... Trustee and President Chief Executive Officer, Chairman,
President and Director of The Prudential
Investment Corporation (since January
1990); Executive Vice President of the
Prudential Global Asset Management Group
of Prudential (since February 1998);
Chairman of PRICOA Capital Group (since
August 1989); formerly various positions
to Chief Executive Officer of Private
Asset Management Group of Prudential
(November 1994-December 1998); and
Senior Vice President (January 1986-
August 1989), Prudential Capital Group,
a unit of Prudential.
Robert F. Gunia (53).............. Trustee and Vice President Executive Vice President and Chief
Administrative Officer (since June 1999)
of Prudential Investments; Executive
Vice President and Treasurer (since
December 1996) of Prudential Investments
Fund Management LLC (PIFM); President
(since April 1999) of Prudential
Investment Management Services LLC
(PIMS); formerly Corporate Vice
President (September 1997-March 1999) of
The Prudential Insurance Company of
America (Prudential); Senior Vice
President (March 1987-May 1999) of
Prudential Securities Incorporated
(Prudential Securities); and Chief
Administrative Officer (July
1990-September 1996), Director (January
1989-September 1996), and Executive Vice
President, Treasurer and Chief Financial
Officer (June 1987-September 1996) of
Prudential Mutual Fund Management, Inc.;
Vice President and Director (since May
1989) of The Asia Pacific Fund, Inc.
David R. Odenath, Jr. (42)........ Trustee and Vice President Officer in Charge, President, Chief
Executive Officer and Chief Operating
Officer (since June 1999), PIFM; Senior
Vice President (since June 1999),
Prudential; formerly Senior Vice
President (August 1993-May 1999),
PaineWebber Group, Inc.
</TABLE>
C-1
<PAGE> 21
<TABLE>
<CAPTION>
OFFICE(S) WITH THE TRUSTS
NAME (AGE) (TARGET I AND II) PRINCIPAL OCCUPATIONS
---------- ------------------------- ---------------------
<S> <C> <C>
Grace C. Torres (40).............. Treasurer and Principal First Vice President (since December 1996)
Financial and Accounting of PIFM; First Vice President (since March
Officer 1993) of Prudential Securities; formerly
First Vice President (March
1994-September 1996) of Prudential
Mutual Fund Management, Inc.
William V. Healey (46)............ Assistant Secretary Vice President and Associate General
Counsel of Prudential and Chief Legal
Officer of Prudential Investments (since
August 1998); Director, ICI Mutual
Insurance Company (since June 1999);
formerly Associate General Counsel of
The Dreyfus Corporation (Dreyfus), a
subsidiary of Mellon Bank, N.A. (Mellon
Bank), and an officer and/or director of
various affiliates of Mellon Bank and
Dreyfus.
</TABLE>
C-2
<PAGE> 22
EXHIBIT D
5% SHAREHOLDERS
The table below sets forth information about persons who owned beneficially
5% or more of the outstanding shares of any class of the Small Capitalization
Growth Fund of Target II as of October 6, 2000.
<TABLE>
<CAPTION>
NAME AND ADDRESS CLASS NUMBER PERCENT
PORTFOLIO OF SHAREHOLDER OF SHARES OF SHARES OF CLASS
--------- ---------------- --------- --------- --------
<S> <C> <C> <C> <C>
Small Capitalization Growth Fund Edward Unger TTEE Radiology Class A 35,000 8.8%
Target II Consultants PS Plan DTD
06/06/86 FBO Edward Unger 1
Ingallis Mem Hosp Harvey Il
60426-3558
</TABLE>
D-1
<PAGE> 23
EXHIBIT E
OTHER FUNDS MANAGED BY CHASE FLEMING
The following table sets forth information relating to the only other
registered investment company portfolio with investment objectives, policies and
strategies that are substantially similar to those of the Portfolios (or portion
thereof) for which Chase Fleming acts as investment adviser or subadviser:
<TABLE>
<CAPTION>
APPROXIMATE
NET ASSETS
AS OF
FUND MANAGEMENT FEE JULY 31, 2000
---- -------------- -------------
<S> <C> <C>
Fleming Small Cap Growth Fund
(f/k/a Fleming Fledgling Fund) .80% $3,762,000
----------
</TABLE>
CHASE FLEMING MANAGEMENT
The following table sets forth the name and principal occupation of the
principal executive officer and the directors of Robert Fleming Inc.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
---- --------------------
<S> <C>
Iain Saunders Director, Robert Fleming Inc.; Deputy
Chairman,
Robert Fleming Asset Management
Christopher Jones Director, Robert Fleming Inc.
Eduardo Canet Director and Director of Latin America
Capital Markets, Robert Fleming Inc.
Jonathan Simon Director, Robert Fleming Inc.
Arthur Levy President, Vice Chairman and Director,
Robert Fleming Inc.
Larry Kimmel Senior Vice President and Director of
Compliance, Robert Fleming Inc.
Charles Bridge Director, Head of Sales, Trading Director,
Robert Fleming Inc.
Leonard Lubrano Senior Vice President and Chief Financial
Officer, Robert Fleming Inc.
Henry Strutt Director, Robert Fleming Inc.; Managing
Director, Robert Fleming Holdings Ltd.
Simon Ball Chairman of the Board, Robert Fleming Inc.;
Group Finance Director, Robert Fleming
Holdings Ltd.
Henry Lartique Director, Robert Fleming Inc.; President, CIO,
Managing Director and Director, Chase Asset
Management, Inc., and CIO and Executive Vice
President, The Chase Manhattan Bank/Chase Bank
of Texas, N.A.
Michael Moran Director, Robert Fleming, Inc.; Director,
Controller, Chase Asset Management, Inc.;
Controller of Mutual Funds, The Chase
Manhattan Bank
</TABLE>
E-1
<PAGE> 24
PARENTS OF ROBERT FLEMING INC.
The following table sets forth the name and address of the parent companies
of Robert Fleming Inc.
<TABLE>
<CAPTION>
NAME AND ADDRESS STATUS
---------------- ------
<S> <C>
Robert Fleming Holdings Inc. Sole Shareholder of Robert Fleming Inc.
320 Park Avenue
New York, New York 10022
Copthall Overseas LTD. Sole Shareholder of Robert Fleming Holdings
Inc.
10 Aldermanbury
London, England EC2V 7RF
Robert Fleming Holdings Ltd. Sole Shareholder of Copthall Overseas LTD.
10 Aldermanbury
London, England EC2V 7RF
The Chase Manhattan Corporation Sole Shareholder of Robert Fleming Holdings
Ltd.
270 Park Avenue
New York, New York 10017
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