Document ID: SEC-2014-1989-0001
Agency: sec
Document Type: Notice
Title: Applications: Advanced Series Trust, et al.
Posted Date: 2014-11-26T05:00Z

[Federal Register Volume 79, Number 228 (Wednesday, November 26, 2014)]
[Notices]
[Pages 70578-70582]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-27981]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31342; File No. 812-14159]

Advanced Series Trust, et al.; Notice of Application

November 20, 2014.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (``Act'') for an exemption from section 15(a) of 
the Act and rule 18f-2 under the Act, as well as from certain 
disclosure requirements.

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SUMMARY: Applicants request an order that would permit them to enter 
into and materially amend subadvisory agreements with Non-Affiliated 
Sub-Advisors (as defined below) and Wholly-Owned Sub-Advisors (as 
defined below) without shareholder approval and would grant relief from 
certain disclosure requirements. The requested order would supersede a 
prior order that granted exemptive relief from section 15(a) of the Act 
and rule 18f-2 under the Act solely with respect to Non-Affiliated Sub-
Advisors (``Prior Order'').\1\
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    \1\ The Target Portfolio Trust and Prudential Mutual Fund 
Management, Inc., Investment Company Act Release Nos. 22139 (Aug. 
13, 1996) (notice) and 22215 (Sep. 11, 1996) (order).
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    Applicants: Advanced Series Trust; Prudential's Gibraltar Fund, 
Inc.; The Prudential Series Fund (collectively, the ``Insurance 
Funds''); Prudential Global Total Return Fund, 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 12; Prudential Investment Portfolios 16; 
Prudential Investment Portfolios 18; Prudential Investment Portfolios, 
Inc.; Prudential Investment Portfolios, Inc. 10; Prudential Investment 
Portfolios, Inc. 14; Prudential Investment Portfolios, Inc. 15; 
Prudential Investment Portfolios, Inc. 17; 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 Money Mart Assets, 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; The 
Target Portfolio Trust (collectively, the ``Retail Funds'' and together 
with the Insurance Funds, the ``Prudential Investment Companies''); 
Prudential Investments LLC (``PI''); and AST Investment Services, Inc. 
(``ASTIS'').

DATES: The application was filed on May 24, 2013, and amended on 
October 4, 2013, February 21, 2014, October 3, 2014 and November 18, 
2014.
    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 December 15, 2014, and should be accompanied by proof of 
service on 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: Brent J. Fields, Secretary, U.S. Securities and Exchange 
Commission, 100 F Street NE., Washington, DC 20549-1090. Applicants: 
Prudential Investments LLC, 100 Mulberry Street, Gateway Center Three, 
14th Floor, Newark, New Jersey 07102.

FOR FURTHER INFORMATION CONTACT: Laura J. Riegel, Senior Counsel, at 
(202) 551-6873, or Mary Kay Frech, 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 for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090.

Applicants' Representations

    1. Each Prudential Investment Company is organized as a either a 
Massachusetts business trust, a Delaware trust, a Maryland corporation 
or a New Jersey insurance company separate account, and is registered 
with the Commission as an open-end management investment company under 
the Act. Each Prudential Investment Company (other than Prudential's 
Gibraltar Fund, Inc., The Prudential Variable Contract Account-2, The 
Prudential Variable Contract Account-10, and The Prudential Variable 
Contract Account-11) may offer shares of one or more series (each, a 
``Series'' and collectively, the ``Series'') with its own distinct 
investment objectives, policies and restrictions.\2\ PI is a New York 
limited liability company and ASTIS is a Connecticut corporation, and 
each is registered as an investment adviser

[[Page 70579]]

under the Investment Advisers Act of 1940 (``Advisers Act''). PI and 
ASTIS are indirect wholly-owned subsidiaries of Prudential Financial, 
Inc., a financial services organization.
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    \2\ The term ``Series'' includes the Prudential Investment 
Companies that do not offer multiple series. A Prudential Investment 
Company or Subadvised Series (as defined below) may in the future be 
organized as a master fund (each, a ``Master Fund'') in a master-
feeder structure pursuant to section 12(d)(1)(E) of the Act. Certain 
Series, including any other investment company or series thereof 
that is advised by an Advisor (as defined below), may invest 
substantially all of their assets in a Master Fund pursuant to 
section 12(d)(1)(E) of the Act (each a ``Feeder Fund''). No Feeder 
Fund will engage any investment adviser or sub-advisors other than 
through approving the engagement of the applicable Master Fund's 
investment adviser and any sub-advisors.
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    2. Applicants request an order to permit the Advisor,\3\ subject to 
the approval of the board of directors or trustees of the applicable 
Series (each a ``Board''),\4\ including a majority of the directors or 
trustees who are not ``interested persons'' of the Series or the 
Advisor as defined in section 2(a)(19) of the Act (the ``Independent 
Board Members''), to, without obtaining shareholder approval: (i) 
Select Sub-Advisors \5\ to manage all or a portion of the assets of a 
Series and enter into Sub-Advisory Agreements (as defined below) with 
the Sub-Advisors; and (ii) materially amend Sub-Advisory Agreements 
with the Sub-Advisors.\6\ Applicants request that the relief apply to 
the named applicants, as well as to any future Series and any other 
existing or future registered open-end management investment company or 
series thereof that is advised by the Advisor, uses the multi-manager 
structure described in the application (``Multi-Manager Structure''), 
and complies with the terms and conditions set forth in the application 
(each, a ``Subadvised Series'').\7\ The requested relief will not 
extend to any sub-advisor, other than a Wholly-Owned Sub-Advisor, who 
is an affiliated person, as defined in section 2(a)(3) of the Act, of 
the Subadvised Series, of any Feeder Fund, or of the Advisor, other 
than by reason of serving as a sub-advisor to one or more of the 
Subadvised Series (``Affiliated Sub-Advisor'').
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    \3\ The term ``Advisor'' means PI, ASTIS, or any entity 
controlling, controlled by or under common control with, PI, ASTIS, 
or successors to either of them. For purposes of the requested 
order, ``successor'' is limited to an entity that results from a 
reorganization into another jurisdiction or a change in the type of 
business organization. Each Advisor is, or will be, registered with 
the Commission as an investment adviser under the Advisers Act.
    \4\ The term ``Board'' includes the board of directors or 
trustees of any future Subadvised Series.
    \5\ A ``Sub-Advisor'' for a Series is (a) an indirect or direct 
``wholly-owned subsidiary'' (as such term is defined in the Act) of 
the Advisor for that Series, (b) a sister company of the Advisor for 
that Series that is an indirect or direct ``wholly-owned 
subsidiary'' (as such term is defined in the Act) of the same 
company that, indirectly or directly, wholly owns the Advisor (each 
of (a) and (b), a ``Wholly-Owned Sub-Advisor'' and collectively, the 
``Wholly-Owned Sub-Advisors''), or (c) an investment sub-advisor for 
that Series that is not an ``affiliated person'' (as such term is 
defined in section 2(a)(3) of the Act) of the Series, any Feeder 
Fund invested in a Series that is a Master Fund, the applicable 
Prudential Investment Company, or the Advisor, except to the extent 
that an affiliation arises solely because the sub-advisor serves as 
a sub-advisor to a Series (each, a ``Non-Affiliated Sub-Advisor'').
    \6\ Shareholder approval will continue to be required for any 
other sub-advisor changes (not otherwise permitted by rule or other 
action of the Commission or staff) and material amendments to an 
existing Sub-Advisory Agreement (as defined below) with any sub-
advisor other than a Non-Affiliated Sub-Advisor or Wholly-Owned Sub-
Advisor (all such changes referred to as ``Ineligible Sub-Advisor 
Changes'').
    \7\ All registered open-end investment companies that currently 
intend to rely on the requested order are named as applicants. All 
Series that currently are, or that currently intend to be, 
Subadvised Series are identified in the application. Any entity that 
relies on the requested order will do so only in accordance with the 
terms and conditions contained in the application. If the name of 
any Subadvised Series contains the name of a Sub-Advisor, the 
trademark or trade name that is owned by or publicly used to 
identify the Advisor that serves as the primary adviser to the 
Subadvised Series will precede the name of the Sub-Advisor.
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    3. PI serves as the investment adviser to each Prudential 
Investment Company pursuant to an investment advisory agreement with 
the applicable Prudential Investment Company, and ASTIS serves as co-
investment adviser to certain Series of Advanced Series Trust pursuant 
to an investment advisory agreement with PI and Advanced Series Trust 
(each, an ``Investment Management Agreement'' and together the 
``Investment Management Agreements''). The Investment Management 
Agreement for each existing Series was approved by the applicable 
Board, including a majority the Independent Board Members, and by the 
shareholders of that Series in the manner required by sections 15(a) 
and 15(c) of the Act and rule 18f-2 thereunder. The terms of these 
Investment Management Agreements comply with section 15(a) of the Act. 
Each other Investment Management Agreement will comply with section 
15(a) of the Act and will be similarly approved.
    4. Under the terms of each Investment Management Agreement, the 
Advisor, subject to the supervision of the Board, provides continuous 
investment management of the assets of each Series. The Advisor 
periodically reviews a Series' investment policies and strategies and, 
based on the need of a particular Series, may recommend changes to the 
investment policies and strategies of the Series for consideration by 
the Board. For its services to each Series under the applicable 
Investment Management Agreement, the Advisor receives an investment 
management fee from the Series based on the average net assets of that 
Series.
    5. Consistent with the terms of each Investment Management 
Agreement, the Advisor may, subject to the approval of the applicable 
Board, including a majority of the Independent Board Members, and the 
shareholders of the applicable Subadvised Series (if required), 
delegate portfolio management responsibilities of all or a portion of 
the assets of a Subadvised Series to one or more Sub-Advisors. The 
Advisor continues to have overall responsibility for the management and 
investment of the assets of each Subadvised Series, and the Advisor's 
responsibilities include, for example, recommending the removal or 
replacement of Sub-Advisors and determining the portion of that 
Subadvised Series' assets to be managed by any given Sub-Advisor and 
reallocating those assets as necessary from time to time.
    6. The Advisor has entered into sub-advisory agreements with 
various Sub-Advisors (``Sub-Advisory Agreements'') on behalf of the 
Subadvised Series. The Advisor may also, in the future, enter into Sub-
Advisory Agreements on behalf of other Series. Each current Sub-Advisor 
is, and any future Sub-Advisor will be, an ``investment adviser'' as 
defined in section 2(a)(20)(B) of the Act and registered as an 
investment adviser under the Advisers Act or not subject to such 
registration. The Sub-Advisory Agreements were approved by the 
applicable Board, including a majority of the Independent Board 
Members, and to the extent that the Prior Order did not apply, the 
shareholders of the applicable Subadvised Series in accordance with 
sections 15(a) and 15(c) of the Act and rule 18f-2 thereunder. In 
addition, the terms of each Sub-Advisory Agreement comply fully with 
the requirements of section 15(a) of the Act. The Sub-Advisors, subject 
to the supervision of the Advisor and oversight of the applicable 
Board, determine the securities and other instruments to be purchased, 
sold or entered into by a Subadvised Series' portfolio or a portion 
thereof, and place orders with brokers or dealers that they select. The 
Advisor will compensate each Sub-Advisor out of the fee paid to the 
Advisor under the relevant Investment Management Agreement.
    7. Each Subadvised Series will inform shareholders of the hiring of 
a new Sub-Advisor pursuant to the following procedures (``Modified 
Notice and Access Procedures''): (a) Within 90 days after a new Sub-
Advisor is hired for any Subadvised Series, that Subadvised Series will 
send its shareholders \8\ either

[[Page 70580]]

a Multi-manager Notice or a Multi-manager Notice and Multi-manager 
Information Statement; \9\ and (b) the Subadvised Series will make the 
Multi-manager Information Statement available on the Web site 
identified in the Multi-manager Notice no later than when the Multi-
manager Notice (or Multi-manager Notice and Multi-manager Information 
Statement) is first sent to shareholders, and will maintain it on that 
Web site for at least 90 days. Applicants state that, in the 
circumstances described in the application, a proxy solicitation to 
approve the appointment of new Sub-Advisors provides no more meaningful 
information to shareholders than the proposed Multi-manager Information 
Statement. Applicants also state that the applicable Board would comply 
with the requirements of sections 15(a) and 15(c) of the Act before 
entering into or amending Sub-Advisory Agreements.
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    \8\ If the Subadvised Series is a Master Fund, for purposes of 
the Modified Notice and Access Procedures, ``shareholders'' include 
both the shareholders of the applicable Master Fund and the 
shareholders of its Feeder Funds.
    \9\ A ``Multi-manager Notice'' will be modeled on a Notice of 
Internet Availability as defined in rule 14a-16 under the Securities 
Exchange Act of 1934 (``Exchange Act''), and specifically will, 
among other things: (a) Summarize the relevant information regarding 
the new Sub-Advisor (except as modified to permit Aggregate Fee 
Disclosure (as defined below); (b) inform shareholders that the 
Multi-manager Information Statement is available on a Web site; (c) 
provide the Web site address; (d) state the time period during which 
the Multi-manager Information Statement will remain available on 
that Web site; (e) provide instructions for accessing and printing 
the Multi-manager Information Statement; and (f) instruct the 
shareholder that a paper or email copy of the Multi-manager 
Information Statement may be obtained, without charge, by contacting 
the Subadvised Series.
    A ``Multi-manager Information Statement'' will meet the 
requirements of Regulation 14C, Schedule 14C and Item 22 of Schedule 
14A under the Exchange Act for an information statement, except as 
modified by the order to permit Aggregate Fee Disclosure. Multi-
manager Information Statements will be filed with the Commission via 
the EDGAR system.
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    8. Applicants also request an order exempting the Subadvised Series 
from certain disclosure obligations that may require each Subadvised 
Series to disclose fees paid by the Advisor to each Sub-Advisor. 
Applicants seek relief to permit each Subadvised Series to disclose (as 
a dollar amount and a percentage of the Subadvised Series' net assets): 
(a) The aggregate fees paid to the Advisor and any Wholly-Owned Sub-
Advisors; (b) the aggregate fees paid to Non-Affiliated Sub-Advisors; 
and (c) the fee paid to each Affiliated Sub-Advisor (collectively, the 
``Aggregate Fee Disclosure''). An exemption is requested to permit the 
Subavised Series to include only the Aggregate Fee Disclosure. All 
other items required by Sections 6-07(2)(a), (b), and (c) of Regulation 
S-X will be disclosed.

Applicants' Legal Analysis

    1. Section 15(a) of the Act states, in part, that it is unlawful 
for any person to act as an investment adviser to a registered 
investment company ``except pursuant to a written contract, which 
contract, whether with such registered company or with an investment 
adviser of such registered company, has been approved by the vote of a 
majority of the outstanding voting securities of such registered 
company.'' Rule 18f-2 under the Act provides that each series or class 
of stock in a series investment company affected by a matter must 
approve that matter if the Act requires shareholder approval.
    2. Form N-1A is the registration statement used by open-end 
investment companies. Item 19(a)(3) of Form N-1A requires a registered 
investment company to disclose in its statement of additional 
information the method of computing the ``advisory fee payable'' by the 
investment company, including the total dollar amounts that the 
investment company ``paid to the adviser (aggregated with amounts paid 
to affiliated advisers, if any), and any advisers who are not 
affiliated persons of the adviser, under the investment advisory 
contract for the last three fiscal years.''
    3. Form N-3 is the registration statement used by separate accounts 
offering variable annuity contracts. Item 21(a)(iii) of Form N-3 
requires the separate account to disclose the method of computing the 
``advisory fee payable'' by the separate account, including the total 
dollar amounts ``paid to the adviser by the [r]egistrant or its 
[i]nsurance [c]ompany under the investment advisory contract for the 
last three fiscal years.''
    4. Rule 20a-1 under the Act requires proxies solicited with respect 
to a registered investment company to comply with Schedule 14A under 
the Exchange Act. Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) and 
22(c)(9) of Schedule 14A, taken together, require a proxy statement for 
a shareholder meeting at which the advisory contract will be voted upon 
to include the ``rate of compensation of the investment adviser,'' the 
``aggregate amount of the investment adviser's fee,'' a description of 
the ``terms of the contract to be acted upon,'' and, if a change in the 
advisory fee is proposed, the existing and proposed fees and the 
difference between the two fees.
    5. Regulation S-X sets forth the requirements for financial 
statements required to be included as part of a registered investment 
company's registration statement and shareholder reports filed with the 
Commission. Sections 6-07(2)(a), (b), and (c) of Regulation S-X require 
a registered investment company to include in its financial statement 
information about the investment advisory fees.
    6. Section 6(c) of the Act provides that the Commission by order 
upon application may conditionally or unconditionally exempt any 
person, security, or transaction or any class or classes of persons, 
securities, or transactions from any provisions of the Act, or from any 
rule thereunder, 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. 
Applicants state that their requested relief meets this standard for 
the reasons discussed below.
    7. Applicants assert that the shareholders expect the Advisor, 
subject to the review and approval of the applicable Board, to select 
the Sub-Advisors who are in the best position to achieve the Subadvised 
Series' investment objective. Applicants assert that, from the 
perspective of the shareholder, the role of the Sub-Advisors is 
substantially equivalent to the role of the individual portfolio 
managers employed by an investment adviser to a traditional investment 
company. Applicants believe that permitting the Advisor to perform the 
duties for which the shareholders of the Subadvised Series are paying 
the Advisor--the selection, supervision and evaluation of the Sub-
Advisors--without incurring unnecessary delays or expenses is 
appropriate in the interest of the Subadvised Series' shareholders and 
will allow such Subadvised Series to operate more efficiently. 
Applicants state that each Investment Management Agreement will 
continue to be fully subject to section 15(a) of the Act and rule 18f-2 
under the Act and approved by the Board, including a majority of the 
Independent Board Members, in the manner required by sections 15(a) and 
15(c) of the Act. Applicants are not seeking an exemption with respect 
to the Investment Management Agreements.
    8. Applicants assert that disclosure of the individual fees that 
the Advisor would pay to the Sub-Advisors of Subadvised Series that 
operate under the multi-manager structure described in the application 
would not serve any meaningful purpose. Applicants contend that the 
primary reasons for requiring disclosure of individual fees paid to 
Sub-Advisors are to inform

[[Page 70581]]

shareholders of expenses to be charged by a particular Subadvised 
Series and to enable shareholders to compare the fees to those of other 
comparable investment companies. Applicants believe that the requested 
relief satisfies these objectives because the advisory fee paid to the 
Advisor will be fully disclosed and therefore, shareholders will know 
what the Subadvised Series' fees and expenses are and will be able to 
compare the advisory fees a Subadvised Series is charged to those of 
other investment companies. Applicants assert that the requested 
disclosure relief would benefit shareholders of the Subadvised Series 
because it would improve the Advisor's ability to negotiate the fees 
paid to Sub-Advisors. Applicants state that the Advisor may be able to 
negotiate rates that are below a Sub-Advisor's ``posted'' amounts if 
the Advisor is not required to disclose the Sub-Advisors' fees to the 
public. Applicants submit that the relief requested to use Aggregate 
Fee Disclosure will also encourage Sub-Advisors to negotiate lower sub-
advisory fees with the Advisor if the lower fees are not required to be 
made public.
    9. Applicants submit that the requested relief meets the standards 
for relief under section 6(c) of the Act. Applicants state that the 
operation of the Subadvised Series in the manner described in the 
application must be approved by shareholders of a Subadvised Series 
before that Subadvised Series may rely on the requested relief. 
Applicants assert that conditions 6, 7, 10, and 11 are designed to 
provide the Board with sufficient independence and the resources and 
information it needs to monitor and address any conflicts of interest. 
Applicants state that, accordingly, they believe the requested relief 
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.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions: \10\
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    \10\ A Subadvised Series relying on the order granted hereunder 
will comply with conditions 8, 9, and 12 only if it relies on the 
relief that would allow it to provide Aggregate Fee Disclosure.
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    1. Before a Subadvised Series may rely on the order requested in 
the application, the operation of the Subadvised Series in the manner 
described in the application, including the hiring of Wholly-Owned Sub-
Advisors, will be, or has been, approved by a majority of the/
Subadvised Series' outstanding voting securities as defined in the Act, 
which in the case of a Master Fund will include voting instructions 
provided by shareholders of the Feeder Funds investing in such Master 
Fund or other voting arrangements that comply with section 
12(d)(1)(E)(iii)(aa) of the Act (or, in the case on an insurance-
related Subadvised Series, pursuant to the voting instructions provided 
by contract owners with assets allocated to any registered separate 
account for which the Subadvised Series serves as a funding medium), 
or, in the case of a new Subadvised Series whose public shareholders 
purchase shares on the basis of a prospectus containing the disclosure 
contemplated by condition 2 below, by the sole initial shareholder 
before offering the Subadvised Series' shares to the public.
    2. The prospectus for each Subadvised Series, and in the case of a 
Master Fund relying on the requested relief, the prospectus for each 
Feeder Fund investing in such Master Fund, will disclose the existence, 
substance and effect of any order granted pursuant to the application. 
Each Subadvised Series (and any such Feeder Fund) will hold itself out 
to the public as employing the Multi-Manager Structure described in the 
application. Each prospectus will prominently disclose that the Advisor 
has the ultimate responsibility, subject to oversight by the applicable 
Board, to oversee the Sub-Advisors and recommend their hiring, 
termination, and replacement.
    3. The Advisor will provide general management services to a 
Subadvised Series, including overall supervisory responsibility for the 
general management and investment of the Subadvised Series' assets. 
Subject to review and approval of the applicable Board, the Advisor 
will (a) set a Subadvised Series' overall investment strategies, (b) 
evaluate, select, and recommend Sub-Advisors to manage all or a portion 
of a Subadvised Series' assets, and (c) implement procedures reasonably 
designed to ensure that Sub-Advisors comply with a Subadvised Series' 
investment objective, policies and restrictions. Subject to review by 
the applicable Board, the Advisor will (a) when appropriate, allocate 
and reallocate a Subadvised Series' assets among Sub-Advisors; and (b) 
monitor and evaluate the performance of Sub-Advisors.
    4. A Subadvised Series will not make any Ineligible Sub-Advisor 
Changes without the approval of the shareholders of the applicable 
Subadvised Series, which in the case of a Master Fund will include 
voting instructions provided by shareholders of the Feeder Fund 
investing in such Master Fund or other voting arrangements that comply 
with section 12(d)(1)(E)(iii)(aa) of the Act.
    5. A Subadvised Series will inform shareholders, and if the 
Subadvised Series is a Master Fund, shareholders of any Feeder Funds, 
of the hiring of a new Sub-Advisor within 90 days after the hiring of 
the new Sub-Advisor pursuant to the Modified Notice and Access 
Procedures.
    6. At all times, at least a majority of the applicable Board will 
be Independent Board Members, and the selection and nomination of new 
or additional Independent Board Members will be placed within the 
discretion of the then-existing Independent Board Members.
    7. Independent Legal Counsel, as defined in rule 0-1(a)(6) under 
the Act, will be engaged to represent the Independent Board Members. 
The selection of such counsel will be within the discretion of the 
then-existing Independent Board Members.
    8. The Advisor will provide the applicable Board, no less 
frequently than quarterly, with information about the profitability of 
the Advisor on a per Subadvised Series basis. The information will 
reflect the impact on profitability of the hiring or termination of any 
sub-advisor during the applicable quarter.
    9. Whenever a sub-advisor is hired or terminated, the Advisor will 
provide the applicable Board with information showing the expected 
impact on the profitability of the Advisor.
    10. Whenever a sub-advisor change is proposed for a Subadvised 
Series with an Affiliated Sub-Advisor or a Wholly-Owned Sub-Advisor, 
the applicable Board, including a majority of the Independent Board 
Members, will make a separate finding, reflected in the applicable 
Board minutes, that such change is in the best interests of the 
Subadvised Series and its shareholders, and if the Subadvised Series is 
a Master Fund, the best interests of any applicable Feeder Funds and 
their respective shareholders, and does not involve a conflict of 
interest from which the Advisor or the Affiliated Sub-Advisor or 
Wholly-Owned Sub-Advisor derives an inappropriate advantage.
    11. No Board member or officer of a Prudential Investment Company, 
a Subadvised Series, or a Feeder Fund that invests in a Subadvised 
Series that is a Master Fund, or director, manager or officer of the 
Advisor, will own directly or indirectly (other than through a pooled 
investment vehicle

[[Page 70582]]

that is not controlled by such person) any interest in a Sub-Advisor 
except for (a) ownership of interests in the Advisor or any entity, 
other than a Wholly-Owned Sub-Advisor, that controls, is controlled by, 
or is under common control with the Advisor, or (b) ownership of less 
than 1% of the outstanding securities of any class of equity or debt of 
any publicly traded company that is either a Sub-Advisor or an entity 
that controls, is controlled by, or is under common control with, a 
Sub-Advisor.
    12. Each Subadvised Series and any Feeder Fund that invests in a 
Subadvised Series that is a Master Fund will disclose the Aggregate Fee 
Disclosure in its registration statement.
    13. In the event the Commission adopts a rule under the Act 
providing substantially similar relief to that requested in the 
application, the requested order will expire on the effective date of 
that rule.
    14. Any new Sub-Advisory Agreement or any amendment to a Subadvised 
Series' existing Investment Management Agreement or Sub-Advisory 
Agreement that directly or indirectly results in an increase in the 
aggregate advisory fee rate payable by the Subadvised Series will be 
submitted to the Subadvised Series' shareholders for approval.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-27981 Filed 11-25-14; 8:45 am]
BILLING CODE 8011-01-P