82 FR 13529 - Advanced Series Trust, et al.; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 47 (March 13, 2017)

[Federal Register Volume 82, Number 47 (Monday, March 13, 2017)]
[Notices]
[Pages 13529-13531]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-04812]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32523; File No. 812-14608]


Advanced Series Trust, et al.; Notice of Application

March 7, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order pursuant to: (a) Section 
6(c) of the Investment Company Act of 1940 (``Act'') granting an 
exemption from sections 18(f) and 21(b) of the Act; (b) section 
12(d)(1)(J) of the Act granting an exemption from section 12(d)(1) of 
the Act; (c) sections 6(c) and 17(b) of the Act granting an exemption 
from sections 17(a)(1), 17(a)(2) and 17(a)(3) of the Act; and (d) 
section 17(d) of the Act and rule 17d-1 under the Act to permit certain 
joint arrangements and transactions. Applicants request an order that 
would permit certain registered open-end management investment 
companies to participate in a joint lending and borrowing facility.

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Applicants: Advanced Series Trust, Prudential's Gibraltar Fund, Inc., 
The Prudential Series Fund, Prudential Global Total Return Fund, Inc., 
Prudential Government Money Market Fund, Inc., The Prudential 
Investment Portfolios, Inc., Prudential Investment Portfolios 2, 
Prudential Investment Portfolios 3, Prudential Investment Portfolios 4, 
Prudential Investment Portfolios 5, Prudential Investment Portfolios 6, 
Prudential Investment Portfolios 7, Prudential Investment Portfolios 8, 
Prudential Investment Portfolios 9, Prudential Investment Portfolios, 
Inc. 10, Prudential

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Investment Portfolios 12, Prudential Investment Portfolios, Inc. 14, 
Prudential Investment Portfolios, Inc. 15, Prudential Investment 
Portfolios 16, Prudential Investment Portfolios, Inc. 17, Prudential 
Investment Portfolios 18, Prudential Jennison Blend Fund, Inc., 
Prudential Jennison Mid-Cap Growth Fund, Inc., Prudential Jennison 
Natural Resources Fund, Inc., Prudential Jennison Small Company Fund, 
Inc., Prudential National Muni Fund, Inc., Prudential Sector Funds, 
Inc., Prudential Short-Term Corporate Bond Fund, Inc., Prudential World 
Fund, Inc., The Prudential Variable Contract Account-2, The Prudential 
Variable Contract Account-10, The Prudential Variable Contract Account-
11, and The Target Portfolio Trust, each registered under the Act as an 
open-end management investment company with one or more series or 
portfolios, and Prudential Investments LLC and AST Investment Services, 
Inc., each registered as an investment adviser under the Investment 
Advisers Act of 1940.

Filing Dates: The application was filed on February 3, 2016, and 
amended on June 30, 2016, February 7, 2017 and March 1, 2017.

Hearing or Notification of Hearing: An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on April 3, 2017 and should be accompanied by proof of 
service on the applicants, in the form of an affidavit, or, for 
lawyers, a certificate of service. Pursuant to Rule 0-5 under the Act, 
hearing requests should state the nature of the writer's interest, any 
facts bearing upon the desirability of a hearing on the matter, the 
reason for the request, and the issues contested. Persons who wish to 
be notified of a hearing may request notification by writing to the 
Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street NE., Washington, DC 20549-1090; Applicants, c/o Jonathan D. 
Shain, Esq., Prudential Investments LLC, 655 Broad Street, 17th Floor, 
Newark, NJ 07102.

FOR FURTHER INFORMATION CONTACT: Kaitlin C. Bottock, Senior Counsel, at 
(202) 551-8658 or David J. Marcinkus, Branch Chief, at (202) 551-6821 
(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's Web site by searching for the file number, or an applicant 
using the Company name box, at http://www.sec.gov/search/search.htm or 
by calling (202) 551-8090.

Summary of the Application

    1. Applicants request an order that would permit the applicants to 
participate in an interfund lending facility where each Fund could lend 
money directly to and borrow money directly from other Funds to cover 
unanticipated cash shortfalls, such as unanticipated redemptions or 
trade fails.\1\ The Funds will not borrow under the facility for 
leverage purposes and the loans' duration will be no more than 7 
days.\2\
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    \1\ Applicants request that the order apply to the applicants 
and to any existing or future registered open-end management 
investment company or series thereof for which Prudential 
Investments LLC, AST Investment Services, Inc., or any successor 
thereto or an investment adviser controlling, controlled by, or 
under common control with Prudential Investments LLC, AST Investment 
Services, Inc., or any successor thereto serves as investment 
adviser (each a ``Fund'' and collectively the ``Funds'' and each 
such investment adviser an ``Adviser''). For purposes of the 
requested order, ``successor'' is limited to any entity that results 
from a reorganization into another jurisdiction or a change in the 
type of a business organization.
    \2\ Any Fund, however, will be able to call a loan on one 
business day's notice.
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    2. Applicants anticipate that the proposed facility would provide a 
borrowing Fund with a source of liquidity at a rate lower than the bank 
borrowing rate at times when the cash position of the Fund is 
insufficient to meet temporary cash requirements. In addition, Funds 
making short-term cash loans directly to other Funds would earn 
interest at a rate higher than they otherwise could obtain from 
investing their cash in repurchase agreements or certain other short-
term money market instruments. Thus, applicants assert that the 
facility would benefit both borrowing and lending Funds.
    3. Applicants agree that any order granting the requested relief 
will be subject to the terms and conditions stated in the application. 
Among others, an Adviser, through a designated committee, would 
administer the facility as a disinterested fiduciary as part of its 
duties under the investment management and administrative agreements 
with the Funds and would receive no additional fee as compensation for 
its services in connection with the administration of the facility. The 
facility would be subject to oversight and certain approvals by the 
Funds' Board, including, among others, approval of the interest rate 
formula and of the method for allocating loans across Funds, as well as 
review of the process in place to evaluate the liquidity implications 
for the Funds. A Fund's aggregate outstanding interfund loans will not 
exceed 15% of its net assets, and the Fund's loans to any one Fund will 
not exceed 5% of the lending Fund's net assets.\3\
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    \3\ Under certain circumstances, a borrowing Fund will be 
required to pledge collateral to secure the loan.
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    4. Applicants assert that the facility does not raise the concerns 
underlying section 12(d)(1) of the Act given that the Funds are part of 
the same group of investment companies and there will be no duplicative 
costs or fees to the Funds.\4\ Applicants also assert that the proposed 
transactions do not raise the concerns underlying sections 17(a)(1), 
17(a)(3), 17(d) and 21(b) of the Act as the Funds would not engage in 
lending transactions that unfairly benefit insiders or are detrimental 
to the Funds. Applicants state that the facility will offer both 
reduced borrowing costs and enhanced returns on loaned funds to all 
participating Funds and each Fund would have an equal opportunity to 
borrow and lend on equal terms based on an interest rate formula that 
is objective and verifiable. With respect to the relief from section 
17(a)(2) of the Act, applicants note that any collateral pledged to 
secure an interfund loan would be subject to the same conditions 
imposed by any other lender to a Fund that imposes conditions on the 
quality of or access to collateral for a borrowing (if the lender is 
another Fund) or the same or better conditions (in any other 
circumstance).\5\
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    \4\ Applicants state that the obligation to repay an interfund 
loan could be deemed to constitute a security for the purposes of 
sections 17(a)(1) and 12(d)(1) of the Act.
    \5\ Applicants state that any pledge of securities to secure an 
interfund loan could constitute a purchase of securities for 
purposes of section 17(a)(2) of the Act.
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    5. Applicants also believe that the limited relief from section 
18(f)(1) of the Act that is necessary to implement the facility 
(because the lending Funds are not banks) is appropriate in light of 
the conditions and safeguards described in the application and because 
the Funds would remain subject to the requirement of section 18(f)(1) 
that all borrowings of a Fund, including combined interfund loans and 
bank borrowings, have at least 300% asset coverage.
    6. Section 6(c) of the Act permits the Commission to exempt any 
persons or transactions from any provision of the Act if such exemption 
is necessary or

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appropriate in the public interest and consistent with the protection 
of investors and the purposes fairly intended by the policy and 
provisions of the Act. Section 12(d)(1)(J) of the Act provides that the 
Commission may exempt any person, security, or transaction, or any 
class or classes of persons, securities, or transactions, from any 
provision of section 12(d)(1) if the exemption is consistent with the 
public interest and the protection of investors. Section 17(b) of the 
Act authorizes the Commission to grant an order permitting a 
transaction otherwise prohibited by section 17(a) if it finds that (a) 
the terms of the proposed transaction are fair and reasonable and do 
not involve overreaching on the part of any person concerned; (b) the 
proposed transaction is consistent with the policies of each registered 
investment company involved; and (c) the proposed transaction is 
consistent with the general purposes of the Act. Rule 17d-1(b) under 
the Act provides that in passing upon an application filed under the 
rule, the Commission will consider whether the participation of the 
registered investment company in a joint enterprise, joint arrangement 
or profit sharing plan on the basis proposed is consistent with the 
provisions, policies and purposes of the Act and the extent to which 
such participation is on a basis different from or less advantageous 
than that of the other participants.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-04812 Filed 3-10-17; 8:45 am]
 BILLING CODE 8011-01-P