[Federal Register Volume 78, Number 135 (Monday, July 15, 2013)]
[Pages 42122-42125]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-16855]



[Investment Company Act Release No. 30592; 812-14118]

Bridge Builder Trust and Olive Street Investment Advisers, LLC; 
Notice of Application

July 9, 2013.
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.


SUMMARY OF APPLICATION: Applicants request an order that would permit 
them to enter into and materially amend sub-advisory agreements without 
shareholder approval and that would grant relief from certain 
disclosure requirements.

APPLICANTS: Bridge Builder Trust (the ``Trust'') and Olive Street 
Investment Advisers (the ``Adviser'') (collectively, ``Applicants'').

DATES: Filing Dates: The application was filed February 1, 2013, and 
amended on June 18, 2013.

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 August 5, 2013, and should be accompanied by proof of service 
on the 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 who wish to be notified of a hearing may request 
notification by writing to the Commission's Secretary.

ADDRESSES: Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange 
Commission, 100 F Street NE., Washington, DC 20549-1090. Applicants: 
The Trust: Joseph C. Neuberger, 2020 East Financial Way, Suite 100, 
Glendora, CA 91741; The Adviser: James A. Tricarico, Olive Street 
Investment Advisers, LLC, 12555 Manchester Road, St. Louis, MO 63131.

FOR FURTHER INFORMATION CONTACT: Jennifer L. Sawin, Branch Chief, at 
(202) 551-6724 (Division of Investment Management, Office of Investment 
Company Regulation).

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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.

Applicants' Representations

    1. The Trust, a Delaware statutory trust, is registered under the 
Act as an open-end management investment company. The Trust is 
organized as a series trust and currently consists of one series, which 
will be advised by the Adviser.\1\ The Adviser is a limited liability 
company organized under Missouri law. The Adviser is, and any future 
Adviser will be, registered as an investment adviser under the 
Investment Advisers Act of 1940 (``Advisers Act''). The Adviser will 
serve as the investment adviser to the Funds pursuant to an investment 
advisory agreement with the Trust or Fund (the ``Advisory 
Agreement'').\2\ Each Advisory Agreement was approved or will be 
approved by the Fund's board of trustees (the ``Board''), including a 
majority of the trustees who are not ``interested persons,'' as defined 
in section 2(a)(19) of the Act, of the Trust, the Fund, or the Adviser 
(``Independent Trustees''), and by the Fund's shareholder(s) in the 
manner required by sections 15(a) and 15(c) of the Act and rule 18f-2 
under the Act. The terms of each Advisory Agreement will comply with 
section 15(a) of the Act.

    \1\ Applicants request relief with respect to any existing and 
any future series of the Trust or any other registered open-end 
management company that: (a) Is advised by the Adviser or a person 
controlling, controlled by, or under common control with the Adviser 
or its successor (each, also an ``Adviser''); (b) uses the manager 
of managers structure described in the application; and (c) complies 
with the terms and conditions of the requested order (any such 
series, a ``Fund'' and collectively, the ``Funds''). The only 
existing registered open-end management investment company that 
currently intends to rely on the requested order is named as an 
Applicant, and the only series that currently intends to rely on the 
requested order as a Fund is the Bridge Builder Bond Fund. 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. If the name of any 
Fund contains the name of a Sub-Adviser (as defined below), that 
name will be preceded by the name of the Adviser.
    \2\ ``Advisory Agreement'' includes advisory agreements with an 
Adviser for the Bridge Builder Bond Fund and any future Funds.

    2. Under the terms of each Advisory Agreement, the Adviser will 
provide the Funds with overall management services and will 
continuously review, supervise and administer each Fund's investment 
program, subject to the supervision of, and policies established by the 
Board. For the investment management services it will provide to each 
Fund the Adviser will receive the fee specified in the Advisory 
Agreement from such Fund, based on the average daily net assets of the 
Fund. The Advisory Agreement permits the Adviser, subject to the 
approval of the Board, to delegate certain responsibilities to one or 
more sub-advisers (``Sub-Advisers'') to provide investment advisory 
services to the Funds. As of the date of the amended application, the 
Adviser had not entered into sub-advisory agreements with any Sub-
Advisers (``Sub-Advisory Agreements''). Each Sub-Adviser will be an 
investment adviser as defined in section 2(a)(20) of the Act and, if 
required, registered with the Commission as an ``investment adviser'' 
under the Advisers Act. The Adviser evaluates, allocates assets to and 
oversees the Sub-Advisers, and makes recommendations about their 
hiring, termination and replacement to the Board, at all times subject 
to the authority of the Board. The Adviser will compensate the Sub-
Advisers out of the advisory fee paid by a Fund to the Adviser under 
the Advisory Agreement.
    3. Applicants request an order to permit the Adviser, subject to 
Board approval, to select certain Sub-Advisers to manage all or a 
portion of the assets of a Fund or Funds pursuant to a Sub-Advisory 
Agreement and materially amend existing Sub-Advisory Agreements without 
obtaining shareholder approval. The requested relief will not extend to 
any Sub-Adviser that is an affiliated person, as defined in section 
2(a)(3) of the Act, of the Trust, a Fund, or the Adviser, other than by 
reason of serving as a sub-adviser to one or more of the Funds 
(``Affiliated Sub-Adviser'').
    4. Applicants also request an order exempting the Funds from 
certain disclosure provisions described below that may require the 
Applicants to disclose fees paid by the Adviser or a Fund to each Sub-
Adviser. Applicants seek an order to permit a Fund to disclose (as both 
a dollar amount and a percentage of the Fund's net assets): (a) The 
aggregate fees paid to the Adviser and any Affiliated Sub-Adviser; and 
(b) the aggregate fees paid to Sub-Advisers other than Affiliated Sub-
Advisers (collectively, ``Aggregate Fee Disclosure''). Any Fund that 
employs an Affiliated Sub-Adviser will provide separate disclosure of 
any fees paid to the Affiliated Sub-Adviser.

Applicants' Legal Analysis

    1. Section 15(a) of the Act provides, in relevant part, that is 
unlawful for any person to act as an investment adviser to a registered 
investment company except pursuant to a written contract that has been 
approved by a vote of a majority of the company's outstanding voting 
securities. 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 disclosure of 
the method and amount of the investment adviser's compensation.
    3. Rule 20a-1 under the Act requires proxies solicited with respect 
to a registered investment company to comply with Schedule 14A under 
the Securities Exchange Act of 1934 (``1934 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 fees,'' 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.
    4. 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 investment advisory fees.
    5. Section 6(c) 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 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 the requested relief meets this standard for 
the reasons discussed below.
    6. Applicants assert that the shareholders expect the Adviser, 
subject to the review and approval of the Board, to select the Sub-
Advisers who are best

[[Page 42124]]

suited to achieve the Fund's investment objectives. Applicants assert 
that, from the perspective of the shareholder, the role of the Sub-
Advisers is substantially equivalent to that of the individual 
portfolio managers employed by traditional investment company advisory 
firms. Applicants state that requiring shareholder approval of each 
Sub-Advisory Agreement would impose unnecessary delays and expenses on 
the Funds and may preclude the Funds from acting promptly when the 
Adviser and Board consider it appropriate to hire Sub-Advisers or amend 
Sub-Advisory Agreements. Applicants note that the Advisory Agreements 
and any Sub-Advisory Agreements with Affiliated Sub-Advisers will 
remain subject to the shareholder approval requirements of section 
15(a) of the Act and rule 18f-2 under the Act.
    7. If a new Sub-Adviser is retained in reliance on the requested 
order, the applicable Fund will inform its shareholders of the hiring 
of a new Sub-Adviser pursuant to the following procedures (``Modified 
Notice and Access Procedures''): (a) Within 90 days after a new Sub-
Adviser is hired for the Fund, the Fund will send its shareholders 
either a Multi-manager Notice or a Multi-manager Notice and Multi-
manager Information Statement; \3\ and (b) the Fund 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 assert that a proxy 
solicitation to approve the appointment of new Sub-Advisers would 
provide no more meaningful information to shareholders than the 
proposed Multi-manager Information Statement. Moreover, as indicated 
above, 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.

    \3\ A ``Multi-manager Notice'' will be modeled on a Notice of 
Internet Availability as defined in rule 14a-16 under the Exchange 
Act, and specifically will, among other things: (a) Summarize the 
relevant information regarding the new Sub-Adviser; (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 Fund.
    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 requested order to permit Aggregate Fee Disclosure. 
Multi-manager Information Statements will be filed electronically 
with the Commission via the EDGAR system.

    8. Applicants assert that the requested disclosure relief will 
benefit shareholders of the Funds because it will improve the Adviser's 
ability to negotiate the fees paid to Sub-Advisers. Applicants state 
that the Adviser may be able to negotiate rates that are below a Sub-
Adviser's ``posted'' amounts if the Adviser is not required to disclose 
the Sub-Advisers' fees to the public.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. Before a Fund may rely on the order requested in the 
application, the operation of the Fund in the manner described in the 
application will be approved by a majority of the Fund's outstanding 
voting securities, as defined in the Act, or, in the case of a Fund 
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 Fund's shares to the 
    2. The prospectus for each Fund will disclose the existence, 
substance, and effect of any order granted pursuant to the application. 
Each Fund will hold itself out to the public as employing the manager 
of managers structure described in the application. The prospectus will 
prominently disclose that the Adviser has ultimate responsibility 
(subject to oversight by the Board) to oversee the Sub-Advisers and 
recommend their hiring, termination, and replacement.
    3. Funds will inform shareholders of the hiring of a new Sub-
Adviser (other than an Affiliated Sub-Adviser) within 90 days after the 
hiring of that new Sub-Adviser pursuant to the Modified Notice and 
Access Procedures.
    4. The Adviser will not enter into a Sub-Advisory Agreement with 
any Affiliated Sub-Adviser without that agreement, including the 
compensation to be paid thereunder, being approved by the shareholders 
of the applicable Fund.
    5. At all times, at least a majority of the Board will be 
Independent Trustees, and the nomination and selection of new or 
additional Independent Trustees will be placed within the discretion of 
the then-existing Independent Trustees.
    6. When a Sub-Adviser change is proposed for a Fund with an 
Affiliated Sub-Adviser, the Board, including a majority of the 
Independent Trustees, will make a separate finding, reflected in the 
applicable Board minutes, that such change is in the best interests of 
the Fund and its shareholders and does not involve a conflict of 
interest from which the Adviser or the Affiliated Sub-Adviser derives 
an inappropriate advantage.
    7. Independent legal counsel, as defined in rule 0-1(a)(6) under 
the Act, will be engaged to represent the Independent Trustees. The 
selection of such counsel will be within the discretion of the then 
existing Independent Trustees.
    8. Each Adviser will provide the Board, no less frequently than 
quarterly, with information about the profitability of the Adviser on a 
per-Fund basis. The information will reflect the impact on 
profitability of the hiring or termination of any Sub-Adviser during 
the applicable quarter.
    9. Whenever a Sub-Adviser is hired or terminated, the Adviser will 
provide the Board with information showing the expected impact on the 
profitability of the Adviser.
    10. The Adviser will provide general management services to a Fund, 
including overall supervisory responsibility for the general management 
and investment of the Fund's assets and, subject to review and approval 
of the Board, will (i) set a Fund's overall investment strategies; (ii) 
evaluate, select and recommend Sub-Advisers to manage all or part of a 
Fund's assets; (iii) when appropriate, allocate and reallocate a Fund's 
assets among multiple Sub-Advisers; (iv) monitor and evaluate the 
performance of Sub-Advisers; and (v) implement procedures reasonably 
designed to ensure that the Sub-Advisers comply with a Fund's 
investment objective, policies and restrictions.
    11. No trustee or officer of the Trust, or of a Fund, or director 
or officer of the Adviser, will own directly or indirectly (other than 
through a pooled investment vehicle that is not controlled by such 
person) any interest in a Sub-Adviser, except for (i) ownership of 
interests in the Adviser or any entity that controls, is controlled by, 
or is under common control with the Adviser; or (ii) ownership of less 
than 1% of the outstanding securities of any class of equity or debt of 
a publicly traded company that is either a Sub-Adviser or an entity 
that controls, is controlled by, or is under common control with a Sub-
    12. Each Fund will disclose in its registration statement the 
Aggregate Fee Disclosure.

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    13. In the event the Commission adopts a rule under the Act 
providing substantially similar relief to that in the order requested 
in the application, the requested order will expire on the effective 
date of that rule.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-16855 Filed 7-12-13; 8:45 am]