Securities and Exchange Commission (“Commission”).
Notice of an application under section 6(c) of the Investment Company Act of 1940 (the “Act”) for an exemption from rule 12d1-2(a) under the Act.
Summary of Application:
Applicants request an order to permit registered open-end management investment companies relying on rule 12d1-2 under the Act to invest in certain financial instruments.
Advanced Series Trust (the “AST Trust”), The Prudential Series Fund (the “PSF Trust” and, together with the AST Trust, the “Trusts”), AST Investment Services, Inc. (“AST”), Prudential Investments LLC (“PI”), Prudential Annuities Distributors, Inc. (“PAD”), and Prudential Investment Management Services LLC (“PIMS”).
The application was filed on June 2, 2008. Applicants have agreed to file an amendment during the notice period, the substance of which is reflected in this notice.
Hearing or Notification of Hearing:
An order granting the application 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 September 2, 2008 and should be accompanied by proof of service on applicants, in the form of an affidavit or, for lawyers, a certificate of service. Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons may request notification of a hearing by writing to the Commission's Secretary.
Secretary, U.S. Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090; Applicants, c/o John P. Schwartz, Prudential Investments LLC, Gateway Center Three, 100 Mulberry Street, Fourth Floor, Newark, New Jersey 07102-4061.
FOR FURTHER INFORMATION CONTACT:
Stephen P. Smith, Research Specialist, at (202) 551-6819 or Julia Kim Gilmer, Branch Chief, at (202) 551-6871 (Division of Investment Management, Office of Investment Company Regulation).
The following is a summary of the application. The complete application may be obtained for a fee at the Commission's Public Reference Room, 100 F Street, NE., Washington, DC 20549-1520 (telephone (202) 551-5850).
1. The AST Trust is organized as a Massachusetts business trust and the PSF Trust is organized as a Delaware statutory trust. The Trusts are registered under the Act as open-end management investment companies. Applicants request the exemption to the extent necessary to permit any existing or future registered open-end management investment company or series thereof advised by AST or PI or an entity controlling, controlled by, or under common control with AST or PI and which invests in other registered open-end management investment companies in reliance on section 12(d)(1)(G) of the Act, and which is also eligible to invest in securities (as defined in section 2(a)(36) of the Act) in reliance on rule 12d1-2 under the Act (together with the Trusts and their series, the “Applicant Funds”), to also invest, to the extent consistent with its investment objective, policies, strategies and limitations, in financial instruments that may not be securities within the meaning of section 2(a)(36) of the Act (“Other Investments”).
2. AST and PI serve as the investment advisers for the Applicant Funds that are organized as series of the AST Trust, while PI serves as the sole investment adviser for the Applicant Funds that are organized as series of the PSF Trust. AST is organized as a Connecticut corporation while PI is organized as a New York limited liability company. Each of AST and PI is a wholly owned, indirect subsidiary of Prudential Financial Inc. and a registered investment adviser under the Investment Advisers Act of 1940, as amended. PAD, a Delaware corporation, and PIMS, a Delaware limited liability company, each a registered broker-dealer under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), serve as co-distributors for the AST Trust. PIMS serves as the sole distributor for the PSF Trust.
3. Consistent with its fiduciary obligations under the Act, each Applicant Fund's board of trustees will review the advisory fees charged by the Applicant Fund's investment adviser to ensure that they are based on services Start Printed Page 47635provided that are in addition to, rather than duplicative of, services provided pursuant to the advisory agreement of any investment company in which the Applicant Fund may invest.
Applicants' Legal Analysis
1. Section 12(d)(1)(A) of the Act provides that no registered investment company (“acquiring company”) may acquire securities of another investment company (“acquired company”) if such securities represent more than 3% of the acquired company's outstanding voting stock or more than 5% of the acquiring company's total assets, or if such securities, together with the securities of other investment companies, represent more than 10% of the acquiring company's total assets. Section 12(d)(1)(B) of the Act provides that no registered open-end investment company may sell its securities to another investment company if the sale will cause the acquiring company to own more than 3% of the acquired company's voting stock, or cause more than 10% of the acquired company's voting stock to be owned by investment companies.
2. Section 12(d)(1)(G) of the Act provides that section 12(d)(1) will not apply to securities of an acquired company purchased by an acquiring company if: (i) The acquired company and acquiring company are part of the same group of investment companies; (ii) the acquiring company holds only securities of acquired companies that are part of the same group of investment companies, government securities, and short-term paper; (iii) the aggregate sales loads and distribution fees of the acquiring company and the acquired company are not excessive under rules adopted pursuant to section 22(b) or section 22(c) of the Act by a securities association registered under section 15A of the Exchange Act or by the Commission; and (iv) the acquired company has a policy that prohibits it from acquiring securities of registered open-end management investment companies or registered unit investment trusts in reliance on section 12(d)(1)(F) or (G) of the Act.
3. Rule 12d1-2 under the Act permits a registered open-end investment company or a registered unit investment trust that relies on section 12(d)(1)(G) of the Act to acquire, in addition to securities issued by another registered investment company in the same group of investment companies, government securities, and short-term paper: (i) Securities issued by an investment company that is not in the same group of investment companies, when the acquisition is in reliance on section 12(d)(1)(A) or 12(d)(1)(F) of the Act; (ii) securities (other than securities issued by an investment company); and (iii) securities issued by a money market fund, when the investment is made in reliance on rule 12d1-1 under the Act. For the purposes of rule 12d1-2, “securities” means any security as that term is defined in section 2(a)(36) of the Act.
4. Section 6(c) of the Act provides that the Commission may exempt any person, security, or transaction from any provision of the Act, or from any rule under the Act, if such exemption is necessary or 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.
5. The Applicants state that the proposed arrangement would comply with the provisions of rule 12d1-2 under the Act, but for the fact that the Applicant Funds may invest a portion of their assets in Other Investments. Applicants request an order under section 6(c) of the Act for an exemption from rule 12d1-2(a) to allow the Applicant Funds to invest in Other Investments. The Applicants state that permitting the Applicant Funds to invest in Other Investments as described in the application would not raise any of the concerns that the requirements of section 12(d)(1) of the Act were designed to address.
The Applicants agree that any order granting the requested relief will be subject to the following condition:
Applicants will comply with all provisions of rule 12d1-2 under the Act, except for paragraph (a)(2), to the extent that it restricts any Applicant Fund from investing in Other Investments as described in the application.Start Signature
For the Commission, by the Division of Investment Management, under delegated authority.
Florence E. Harmon,
[FR Doc. E8-18802 Filed 8-13-08; 8:45 am]
BILLING CODE 8010-01-P