Updated
December 2008
CODE OF
ETHICS
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KINETICS
PORTFOLIO TRUST
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KINETICS
MUTUAL FUNDS, INC.
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KINETICS
FUNDS DISTRIBUTOR, INC.
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KINETICS
ASSET MANAGEMENT,
INC. and
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Kinetics Portfolios Trust (the
“Trust”), on behalf each of its series listed on Schedule A attached
hereto and any other series that may hereafter be created (each a “Portfolio”
and collectively the “Portfolios”), Kinetics Mutual Funds, Inc.
(the “Company”) on behalf each of its series listed on Schedule B attached
hereto and any other series that may hereafter be created (each a “Fund” and
collectively the “Funds”) (the Trust and the Company sometimes referred to
hereinafter as the “Companies”), Kinetics Funds Distributor, Inc.,
the distributor/underwriter of shares of the Company (the “Distributor”),
KBD Securities, LLC, a
registered broker/dealer and an affiliate of the Distributor (“KBD”), Kinetics Asset Management, Inc.,
investment adviser to the Funds (the “Adviser”), and Kinetics Advisers, LLC, an
affiliate of the Adviser and the investment adviser to various private
investment products (“KA”) (the Companies, Distributor, Adviser, KBD, and KA
sometimes referred to individually as a “Kinetics Entity” and collectively as
the “Kinetics Entities”)
have adopted this Code of Ethics (the “Code”) to specify and prohibit certain
types of personal securities transactions deemed to create a conflict of
interest and to establish reporting requirements and preventive procedures
pursuant to the provisions of Rule 17j-1(b)(1) under the Investment Company Act
of 1940 (the “1940 Act”) and Section 204A of the Investment Advisers Act of
1940, as amended (the “Advisers Act”).
This Code
is adopted by the Board of Trustees of the Trust and the Board of Directors of
the Company (collectively the “Boards”) pursuant to Rule 17j-1 (the “Rule”) of
the 1940 Act which makes it unlawful affiliated person (as defined in the 1940
Act) of the Kinetics Entities, in connection with the purchase or sale, directly
or indirectly, by the person of a security held or to be acquired (as defined
below) by the Companies or any other investment products managed by the Adviser
or KA:
(i) to employ any device, scheme or
artifice to defraud the Companies or any other investment products managed by
the Adviser or KA;
(ii) to make any untrue statement of a
material fact to the Companies or any other investment products managed by the
Adviser or KA or omit to state a material fact necessary in order to make the
statements made to the Companies or any other investment products managed by the
Adviser or KA, in light of the circumstances under which they are made, not
misleading;
(iii) to engage in any act, practice or
course of business that operates or would operate as a fraud or deceit on the
Companies or any other investment products managed by the Adviser or KA;
or
(iv) to engage in any manipulative
practice with respect to the Companies or any other investment products managed
by the Adviser or KA.
Similarly, Section 206 of the Advisers
Act provides that it is unlawful for any investment adviser, directly or
indirectly:
1.
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To
employ any device, scheme or artifice to defraud any client or prospective
client;
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2.
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To
engage in any transaction, practice or course of business which operates
as a fraud or deceit upon any client or prospective client;
or
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3.
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To
engage in any act, practice or course of business which is fraudulent,
deceptive or manipulative.
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In addition, Section 204A of the
Advisers Act requires every investment adviser to establish, maintain and
enforce written policies and procedures reasonably designed to prevent the
misuse in violation of the Advisers Act or the Securities Exchange Act of 1934,
as amended (the “Securities Exchange Act”), or the rules or regulations
thereunder of material, non-public information by such investment adviser or any
person associated with such investment adviser. Pursuant to
Section 204A, the Securities and Exchange Commission (the “Commission”) has
adopted Rule 204A-1 which requires the Adviser and KA to establish, maintain and
enforce a written code of ethics.
In compliance with paragraph (c)(1) of
Rule 17j-1 of the 1940 Act and Section 204A of the Advisers Act, this Code has
been adopted and approved by the Boards, including by a majority of the Trustees
and Directors (hereinafter collectively referred to as the “Board Members”) who
are not “interested persons” of the Companies for the purpose of implementing
policies and procedures reasonably necessary to prevent Access Persons (as
defined below) of the Kinetics Entities from engaging in any conduct prohibited
by Rule 17j-1. All personnel of the Kinetics Entities must follow not
only the letter of this Code but also abide by the spirit of this Code and the
principles articulated herein.
Every Supervised Person (as defined
below) shall promptly report any violation of this Code of Ethics to the Chief
Compliance Officer (as defined below). Every Supervised Person shall
be provided a copy of this Code and any amendments and be required to provide a
written acknowledgement of their receipt of this Code and any
amendments.
I. DEFINITIONS
A. An
“Access Person” of the Distributor or of KBD means any director, officer or
general partner who, in the ordinary course of business, makes, participates in
or obtains information regarding the purchase or sale of Covered Securities (as
defined below) by (1) the Company or the Trust or any other investment product
managed by the Adviser of KA or (2) the Adviser or KA or whose functions or
duties in the ordinary course of business relate to the making of any
recommendation to (1) the Company or the Trust or any other investment product
managed by the Adviser or KA or (2) the Adviser or KA regarding the purchase or
sale of Covered Securities. “Access Person” with respect to the
Adviser or KA means any of its Supervised Persons (as defined below)
who: (1) have access to (a) non-public information regarding any
client’s purchase or sale of securities, or (b) non-public information regarding
the portfolio holdings of any Reportable Fund (as defined below) or other
investment product managed by the Adviser or KA, or (2) is involved in making
securities recommendations to clients or who has access to such recommendations
that are non-public. For these purposes, all of the Adviser’s and
KA’s directors, officers and partners are considered to be Access
Persons. In addition, “Access Person” means (1) any employee of the
Adviser or KA (and any director, officer, general partner or employee of any
company in a control relationship to the Adviser or KA) who, in connection with
his or her regular functions or duties, makes, participates in or obtains
information regarding the purchase or sale of a Covered Security, or whose
functions relate to the making of any recommendations with respect to such
purchases or sales; and (2) any natural person in a control relationship to the
Adviser or KA who obtains information concerning the recommendations made to (1)
the Company or the Trust or any other investment product managed by the Adviser
or KA or (2) the Adviser or KA with regard to the purchase or sale of a Covered
Security. All of the Company’s and Trust’s directors/trustees and
officers are presumed to be Access Persons. All directors/trustees
and officers associated in any way with KA are considered to be Access
Persons. The President of each Kinetics Entities will maintain a list
of all Access Persons of that Kinetics Entity and will notify each such Access
Person in writing that such person is an Access Person. Once a person
has been so identified, he or she shall continue to be an Access Person until
otherwise notified in writing by the President of the applicable Kinetics
Entity, provided however, if such person is an Access Person solely because he
or she is a Board Member, such person shall cease to be an Access Person at the
time such person ceases to be a Board Member.
B. “Advisory
Person” means:
(i)
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any
director, officer, general partner or employee of the Kinetics
Entities (or of any company in a control relationship to the
Kinetics Entities), who, in connection with his or her regular functions
or duties, makes, participates in or obtains information regarding the
purchase or sale of Covered Securities by the Company or the Trust or by
any other investment product managed by the Adviser or KA or whose
functions relate to any recommendations with respect to such purchases or
sales and any natural person in a control relationship with the Kinetics
Entities who obtains information regarding the purchase or sale of Covered
Securities;
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(ii)
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any
natural person who controls the Kinetics Entities and who obtains or
provides information (other than publicly available information)
concerning recommendations made about the Company or the Trust or by any
other investment product managed by the Adviser or KA with regard to the
purchase or sale of Covered
Securities.
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C. “Access
Persons” and “Advisory Persons” shall not include any individual who is required
to and does file quarterly reports with any sub-adviser or administrator of the
Trust or the Company substantially in conformity with Rule 17j-1 of the 1940 Act
and Section 204A of the Advisers Act, provided however, that the legal
compliance officer or president of any sub-adviser or administrator shall (i)
file an annual certification with the Boards stating that such entity has
adopted or approved the continuation of its code of ethics, substantially in the
form that was provided to the Boards; and (ii) notify the Chief Compliance
Officer (as defined below) of any violation of such entity’s code of ethics upon
actual knowledge by such compliance officer that a violation had
occurred. The Chief Compliance Officer shall report any such
violations to the Boards in accordance with the provisions of this Code as if
the report of the violation(s) had been made under this Code.
D. “Affiliated
Persons” or “Affiliate” means
(i)
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any
employee or Access Person, and any member of the immediate family (defined
as spouse, child, mother, father, brother, sister or any other relative)
of any such person who lives in the same household as such person or who
is financially dependent upon such
person;
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(ii)
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any
account for which any of the persons described in D(i) hereof is a
custodian, trustee or otherwise acting in a fiduciary capacity, or with
respect to which any such person either has the authority to make
investment decisions or from time to time gives investment
advice;
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(iii)
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any
partnership, corporation, joint venture, trust or other entity in which
any employee of the Kinetics Entities or Access Person of the Kinetics
Entities directly or indirectly, in the aggregate, has a 10% or
more beneficial interest or for which any such person is a general partner
or an executive officer.
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E. “Automatic
Investment Plan” means a program in which regular periodic purchases or
withdrawals are made automatically in (or from) investment accounts in
accordance with a predetermined schedule and allocation. An Automatic
Investment Plan includes a dividend reinvestment plan.
F. A
security is “being considered for purchase or sale” or is “being purchased or
sold” when a recommendation to purchase or sell a Covered Security has been made
and communicated to the Adviser’s or KA’s Trading Desk, which includes when the
Company or the Trust or any other investment product managed by the Adviser or
KA has a pending “buy” or “sell” order with respect to a Covered Security, and,
with respect to the person making the recommendation, when such person seriously
considers making such a recommendation.
G. The term
“beneficial ownership” shall be defined in and interpreted in the same manner as
it would be in determining whether a person is subject to the provisions of
Section 16 of the Securities Exchange Act and the rules and regulations
thereunder which generally encompasses those situations where the beneficial
owner has the right to enjoy some economic benefit from the ownership of a
Covered Security regardless of the identity of the registered
owner. This would include:
(i)
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Covered
Securities which a person holds for his or her own benefit either in
bearer form, registered in his or her name or otherwise, regardless of
whether the securities are owned individually or
jointly;
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(ii)
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Covered
Securities held in the name of a member of his or her immediate family
(spouse or minor child) sharing the same
household;
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(iii)
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Covered
Securities held by a trustee, executor, administrator, custodian or
broker;
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(iv)
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Covered
Securities owned by a general partnership of which the person is a member
or a limited partnership of which such person is a general
partner;
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(v)
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Covered
Securities held by a corporation (other than with respect to treasury
shares of the corporation) of which such person is an officer, director,
trustee or 10% stockholder or by a corporation which can be regarded as a
personal holding company of a
person;
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(vi)
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Covered
Securities recently purchased by a person and awaiting transfer into his
or her name;
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(vii)
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Covered
Securities held by any other person if, by reason of contract,
understanding, relationship, agreement or other arrangement, such person
obtains therefrom benefits substantially equivalent to those of ownership;
and
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(viii)
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Covered
Securities held by such person’s spouse or minor children or any other
person, if, even though such person does not obtain therefrom the
above-mentioned benefits of ownership, such person can vest or revest
title in himself or herself at once or at some future
time.
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A
beneficial owner of a Covered Security also includes any person who directly or
indirectly, through contract, arrangement, understanding, relationship or
otherwise, has or shares voting power and/or investment power with respect to
such Covered Security. Voting power includes the power to vote, or
includes the power to dispose, or to direct disposition of such
security.
H. “Control”
shall have the same meaning as set forth in Section 2(a)(9) of the 1940
Act.
I. “Covered
Security” means a security as defined in Section 202(a)(18) of the Advisers Act
or Section 2(a)(36) of the 1940 Act, and shall include any note, stock, treasury
stock, security future, bond, including corporate bond, zero coupon bond and
Treasury bond, debenture, evidence of indebtedness, certificate of interest or
participation in any profit-sharing agreement, collateral-trust certificate,
preorganization certificate or subscription, transferable share, investment
contract, voting trust certificate, certificate of deposit of a security,
fractional undivided interest in oil, gas, or other mineral rights, any put,
call, straddle, option, or privilege on any security (including a certificate of
deposit) or any group or index of securities (including any interest therein or
based on the value thereof), or any put, call, straddle, option or privilege
entered into in a national securities exchange relating to a foreign currency,
or, in general, any interest or instrument commonly known as a “security,” or
any certificate of interest or participation in, temporary or interim
certificate for, receipt for, guarantee of, or warrant or right to subscribe to
or purchase, any of the foregoing, including without limitation rights in ADRs,
except, however, that it shall not include:
(i)
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Direct
obligations of the Government of the United
States;
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(ii)
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Bankers’
acceptances, bank certificates of deposit, commercial paper and high
quality short-term debt instruments, including repurchase
agreements;
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(iii)
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Shares
issued by open-end Funds (other than Reportable Funds) and open-end
Exchange Traded Funds;
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(iv)
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Shares
issued by unit investment trusts that are invested exclusively in one or
more open-end investment companies registered under the 1940 Act, none of
which are Reportable Funds; and
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(iv)
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municipal
bonds and other fixed income instruments that are based on municipal
bonds, such as principal protected notes and variable rate demand
notes.
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J. “Disinterested
Board Member” means a Trustee of the Trust or a Director of the Company who is
not an “interested person” within the meaning of Section 2(a)(19) of the 1940
Act.
K. “Investment
Company” means a company registered as such under the 1940 Act, or any services
thereof, for which the Adviser is the investment adviser, sub-adviser or
principal underwriter.
L. “Investment
Personnel” means:
(i)
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any
employee of the Kinetics Entities (or of any company in a
control relationship to the Kinetics Entities) who, in connection with his
or her regular functions or duties, makes or participates in making
recommendations regarding the purchase or sale of securities by the
Company or the Trust or by any other investment product managed by the
Adviser or KA.
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(ii)
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any
natural person who controls any of the Kinetics Entities and
who obtains information concerning recommendations made to the Company or
the Trust or any other investment product managed by the Adviser or KA
regarding the purchase or sale of securities by the Company or
the Trust or any other investment product managed by the Adviser or
KA.
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M. “Federal
Securities Laws” means the Securities Act of 1933, the Securities Exchange Act,
the Sarbanes-Oxley Act of 2002, the 1940 Act, the Advisers Act, Title V of the
Gramm-Leach-Bliley Act, any rules adopted by the Commission under any of these
statutes, the Bank Secrecy Act as it applies to investment companies and
investment advisers, and any rules adopted thereunder by the Commission,
applicable Self-Regulatory Organizations, or the Department of the Treasury, as
they may apply to the Kinetics Entities.
N. “Initial
Public Offering” (“IPO”) means an offering of securities registered under the
Securities Act of 1933, the issuer of which, immediately before the
registration, was not subject to the reporting requirements of Sections 13 or
15(d) of the Securities Exchange Act of 1934.
O. “Chief
Compliance Officer” means Andrew Fishman or his successor appointed by the
Boards. In the absence of any such designation, the Chief Compliance
Officer shall be the President of the Trust and the Company.
P. “Limited
Offering” means an offering that is exempt from registration under the
Securities Act of 1933 pursuant to Section 4(2) or section 4(6) or pursuant to
rule 504, rule 505, or rule 506 under the Securities Act of 1933.
Q. “Purchase
or sale of a Covered Security” includes, among other things, the writing of an
option to purchase or sell a Covered Security.
R. “Purchase
or sale of a security” includes, among other things, the purchase or writing of
an option to purchase or sell a Covered Security.
S. “Reportable
Fund” means any investment company registered under the 1940 Act for which the
Adviser serves as an investment adviser as defined in Section 2(a)(20) of the
1940 Act or any investment company registered under the 1940 Act whose
investment adviser or principal underwriter controls the Adviser, is controlled
by the Adviser or is under common control with the Adviser. For
purposes of this definition, control has the same meaning as it does in Section
2(a)(9) of the 1940 Act.
T. “Security
Held or to be Acquired” means:
(i)
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any
Covered Security which, within the most recent 15
days:
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(A)
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is
or has been held by the Company, the Trust or any other investment product
managed by the Adviser or KA; or
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(B)
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is
being or has been considered for purchase by the Company, the Trust, or
any other investment products managed by the Adviser or KA;
and
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(ii)
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any
option to purchase or sell, and any security convertible into or
exchangeable for, a Covered Security described in paragraph (i) of this
definition.
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U. “Supervised
Person” means any partner, officer, director (or other person occupying a
similar status or performing similar functions), or employee of the Adviser or
KA or other person who provides investment advice on behalf the Adviser or KA
and is subject to the supervision and control of either the Adviser or
KA.
II. STATEMENT OF GENERAL
PRINCIPLES
It is the
policy of the Adviser and KA that Supervised Persons comply with applicable
Federal Securities Laws and that no Supervised Person engage in any act or
practice or course of conduct that would violate the provisions of Rule 17j-1 of
the 1940 Act or Sections 204 or 206 of the Advisers Act. The
following general fiduciary principles shall govern the personal investment
activities of all Supervised Persons.
Each
Supervised Person shall adhere to the highest ethical standards and
shall:
A.
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at
all times, place the interests of the Company, the Trust, any other
investment products managed by the Adviser or KA before his or her
personal interests;
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B.
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conduct
all personal securities transactions in a manner consistent with this
Code, so as to avoid any actual or potential conflicts of interest, or an
abuse of position of trust and responsibility;
and
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C.
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not
take any inappropriate advantage of his or her position with or on behalf
of the Adviser or KA.
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III. RESTRICTIONS ON PERSONAL
INVESTING ACTIVITIES
A. General
Restrictions
1. No
Access Person shall recommend to, or cause or attempt to cause,
the Company or the Trust or any other investment products managed by
the Adviser or KA to acquire, dispose of or hold any Covered Security (including
any option, warrant or other right or interest relating to such Covered
Security) in which such Access Person, Affiliate or Affiliated Person has direct
or indirect beneficial ownership unless such Access Person, Affiliate or
Affiliated Person shall first disclose in writing to the Chief Compliance
Officer, or his authorized designee, all facts reasonably necessary to identify
the nature of the ownership of such Access Person, Affiliate or Affiliated
Person in such Covered Security.
(a). Access
Person shall be responsible for disclosures and filings made
with the
Chief Compliance Officer for themselves, and any Affiliates or Affiliated
Persons who are required to make such disclosures or filings based on their
relationship with the Access Person.
2. If,
as a result of fiduciary obligations to other persons or entities, an Access
Person believes that such person or an Affiliate of such person is unable to
comply with certain provisions of the Code, such Access Person or Affiliate
thereof shall so advise the Boards or the Chief Compliance Officer in writing,
setting forth with reasonable specificity the nature of such fiduciary
obligations and the reasons why such Access Person or Affiliate believes such
person is unable to comply with any such provisions. The Boards or
the Chief Compliance Officer may, in their or his discretion, exempt such Access
Person or Affiliate from any such provisions, if they or he shall determine that
the services of such Access Person are valuable to any of the Kinetics Entities
and the failure to grant such exemptions is likely to cause such Access Person
to be unable to render services to any of the Kinetics Entities. Any
Access Person granted an exemption (including, an exception for an Affiliate of
such person), pursuant to this paragraph 4 shall, within 3 business days after
engaging in a purchase or sale of a Covered Security held or to be acquired by
the Company, the Trust or any other investment products managed by the Adviser
or KA, furnish the Board Members or the Chief Compliance Officer with a written
report concerning such transaction setting forth the information specified in
Section VI. B. 2. hereof.
3. From
time to time, the Directors, Trustees, officers or employees of the Kinetics
Entities may establish special “insider” relationships with one or more issuers
of Covered Securities (i. e. Director, Trustee, officer or employee may become
an officer, director, or trustee of an issuer, a member of a creditors committee
which engages in material negotiations with an issuer, etc.). In such
cases, the “insider” relationships must first be disclosed to the Chief
Compliance Officer who will make a determination on whether the issuer should be
put on a restricted list of securities that are not eligible for purchase or
sale by the Company, the Trust or any other investment product managed by the
Adviser or KA or any Access person thereof.
4. No Access
Person, Affiliate or Affiliated Person shall engage in personal securities
transactions involving purchases of Covered Securities held in any of the
investment products managed by the Kinetics Entities unless the Access Person
attests that he or she intends to hold the securities for at least a one-year
period, and the purchase has been pre-approved by the Chief Compliance Officer,
or his authorized designee. No Access Person, Affiliate or Affiliated
Person shall engage in personal securities transactions involving a sale of
securities held in any of the investment products managed by the Kinetics
Entities unless the sale is preapproved by the Chief Compliance Officer, or his
authorized designee, and he or she demonstrates, through documentary evidence,
that he or she has in fact held the security for at least one year from the date
of purchase. Exceptions may be made to this policy only when
extenuating circumstances warrant and approval is granted by the Chief
Compliance Officer, or his designee. Access Persons shall bear the
responsibility of production for any evidence that is required under this Code
which relates to an Affiliate or Affiliated Person.
B. Initial Public
Offerings
Access
Persons, Affiliates and Affiliated Persons may not acquire, directly or
indirectly, any beneficial ownership in any securities in an initial public
offering without prior approval in writing from the Chief Compliance Officer or
other person designated by the Boards. Furthermore, should written
consent of the Boards be given, Access Persons, Affiliates or Affiliates Persons
are required to disclose such investment when they participate, in any manner,
in subsequent consideration of the Company, the Trust or any other investment
product managed by the Adviser or KA to make investments in such
issuer. In such circumstances, the decision by the Company, the Trust
or any other investment product managed by the Adviser or KA to purchase
securities of the issuer should be subject to an independent review by Access
Persons with no personal interest in the issuer.
C. Limited
Offering
Access
Persons, Affiliates and Affiliates Persons may not acquire, directly or
indirectly, any beneficial ownership in any securities in a limited offering
without the prior written consent of the Chief Compliance
Officer. Furthermore, should written consent be given, Access Persons
are required to disclose such investment when they or an Affiliate or Affiliated
Person, participate, in any manner, in the subsequent consideration of the
Company, the Trust or any other investment product managed by the Adviser or KA
to make investments in such issuer. In such circumstances, the
decision by the Company, the Trust or any other investment product managed by
the Adviser or KA to purchase securities of the issuer should be subject to an
independent review by Access Persons with no personal interest in the
issuer.
Any
express prior written approval received from the Chief Compliance Officer shall
be valid only on the day on which it was issued. If the Company, the
Trust or any other investment product managed by the Adviser or KA decides to
purchase securities of an issuer the shares of which have been previously
obtained for personal investment by such Access Persons, Affiliate or Affiliated
Person that decision shall be subject to an independent review by Access Persons
with no personal interest in the issuer.
D. Short-Term Trading
Profits
No
Advisory Person shall profit from the purchase and sale, or sale and purchase,
of the same (or equivalent) securities of which such Advisory Person has
beneficial ownership within sixty (60) calendar days, except for the excluded
securities set forth in Section I.H, and for any Exempted Transactions or
pre-cleared trades as defined in Section III.G. Any profit so
realized on Covered Securities not exempted or pre-cleared shall, unless the
Boards approve otherwise, be disgorged as directed by the Boards.
E. Gifts
No
Advisory Person shall receive any gift or other things of value from any person
or entity that does business with or on behalf of any of the Kinetics Entities ,
which could pose a potential conflict of interest or appearance of
impropriety.
F. Service as a
Trustee
1. No
Advisory Person shall serve on a board of trustees/directors of a publicly
traded company without prior authorization from the Chief Compliance Officer or
Boards, based upon a determination that such board service would be consistent
with the interests of the Company, the Trust or any other investment product
managed by the Adviser or KA and their respective investors.
2. If
board service of an Advisory Person is authorized by the Chief Compliance
Officer or Boards, such Advisory Person shall be isolated from the investment
making decisions regarding the purchase or sale by the Company, the Trust or any
other investment product managed by the Adviser or KA of the securities of the
company upon whose board they serve.
G. Exempted
Transactions
The
prohibitions of Section III shall not apply to:
1. purchases
or sales effected in any account over which the Access Person, Affiliate or
Affiliated Person has no direct or indirect influence or control;
2. purchases
or sales that are non-volitional on the part of the Access Person, Affiliate or
Affiliated Person including mergers, recapitalizations or similar
transactions;
3. purchases
which are part of an Automatic Investment Plan;
4. purchases
effected upon the exercise of rights issued by an issuer pro rata to all holders of a
class of its securities, to the extent such rights were acquired from such
issuer, and sales of such rights so acquired;
5. purchases
and sales of shares of index or sector basket “proxies” (e.g., SPX,
QQQ, and Merrill Holders (BBH, HH, HHH,) etc. ); and
6. purchases
and sales that receive prior approval in writing by the Chief Compliance Officer
as (a) only remotely potentially harmful to the Company, the Trust or any other
investment product managed by the Adviser or KA because they would be
very unlikely to affect a highly institutional market, (b) clearly not
economically related to the securities to be purchased or sold or held by the
Company, the Trust or any other investment products managed by the Adviser or KA
- or (c) not representing any danger of the abuses prescribed by Rule 17j-1
under the 1940 Act or Rule 204A under the Advisers Act, but only if, in each
case, the prospective purchaser has identified to the Chief Compliance Officer
all factors of which he or she is aware which are potentially relevant to a
conflict of interest analysis, including but not limited to, the existence of
any substantial economic relationship between his or her transaction and
securities held or to be held by the Company, the Trust or any other investment
product managed by the Adviser or KA.
IV. COMPLIANCE
PROCEDURES
A. Preclearance
An Access
Person, Affiliate or Affiliated Person (other than a Disinterested Board Member)
may not, directly or indirectly, acquire or dispose of beneficial ownership of a
Covered Security except as provided below unless:
1. such
purchase or sale has been approved by the Chief Compliance Officer, or his
authorized designee;
2. the
approved transaction is completed on the same day approval is received;
and
3. the
Chief Compliance Officer has not rescinded such approval prior to execution of
the transaction.
B. Approval
Period
Good
until cancel orders or any orders extending beyond one day are not
permitted.
C. Reporting
1. Quarterly
Reporting: Each Access Person (other than Disinterested Board
Members) shall file with the Chief Compliance Officer confidential quarterly
reports containing the information required in Section IV. B. 2. of
this Code with respect to all transactions
during the preceding quarter in any securities in which such person has, or by
reason of such transaction acquires, any direct or indirect beneficial ownership
in a Covered Security, provided that no
Access Person shall be required to report (1) transactions effected for any
account over which such Access Person has no direct or indirect influence or
control (except that such an Access Person must file a written certification
stating that he or she has no direct or indirect influence or control over the
account in question); (2) transactions pursuant to an Automatic Investment Plan;
and (3) any information that would duplicate information contained in broker
trade confirmations or account statements received by the Chief Compliance
Officer so long as the information is received no later than 30 days after the
end of the applicable calendar quarter. All such Access Persons shall
file reports, even when no transactions have been effected, representing that no
transactions subject to reporting requirements were effected.
2. Filings: Every
report made pursuant to Section IV.B.1 shall be made no later than 30 days after
the end of the calendar quarter in which the transaction to which the report
relates was effected, and shall contain the following information:
(a) the
date of any transactions involving Covered Securities, the title, and as
applicable, the exchange ticker symbol or CUSIP number, interest rate and
maturity date, and the number of shares and the principal amount of each Covered
Security involved;
(b) the
nature of the transaction (i. e., purchase, sale or any other type of
acquisition or disposition);
(c) the
price at which the transaction was effected; and
(d) the
name of the broker, dealer or bank with or through whom the transaction was
effected.
3. Annual
Reporting. No later than 10 days after becoming an Access
Person, provided that the information must be current as of a date no more than
45 days prior to the date the person becomes an Access Person, and thereafter on
an annual basis as of December 31 of each year, each Access Person shall report
to the Boards or the Chief Compliance Officer annually the following
information, which information must be current as of a date no more than 45 days
before the report is submitted:
(i)
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the
title, type of security, and as applicable, the exchange ticker symbol or
CUSIP number, number of shares and principle amount of each Covered
Security in which the Access Person had any direct or indirect beneficial
ownership and the date the Access Person submits the
report;
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(ii)
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the
name of any broker, dealer or bank with whom the Access Person maintains
an account in which any Covered Securities are held for the direct or
indirect benefit of the Access Person;
and
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(iii)
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a
statement that he or she (1) has reviewed and understands the Code of
Ethics, (2) recognizes that he or she is subject to it, and (3) if such
Access Person was subject to the Code of Ethics during the past year, has
complied with its requirements, including the requirements regarding
reporting of personal securities
transactions.
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4. No Admission of
Ownership: Any report filed with the Boards or Chief
Compliance Officer pursuant to this Section IV. may contain a
statement that it shall not be construed as an admission by the person making
the report that he or she has any direct or indirect beneficial ownership in the
security to which the report relates.
5. Confirmations: All
Access Persons shall direct any brokerage firm, bank or other custodian at which
the Access Person, Affiliate or Affiliated Person has a brokerage account to
supply the Boards or the Chief Compliance Officer, on a timely basis, duplicate
copies of the confirmation of all securities transactions in such account and
copies of all periodic statements for such account. All Access
Persons, except a Disinterested Board Member (unless such Disinterested Board
Member knew or, in the ordinary course of fulfilling his or her official duties
as a Board Member, should have known that during the 15 day period immediately
preceding or after the date of the transaction in a Covered Security by the
Board Members, such Covered Security is or was purchased or sold, or considered
for purchase or sale by the Company, the Trust), and such other persons as the
Boards shall determine, shall promptly inform the Boards or the Chief Compliance
Officer of any newly established brokerage account on behalf of the Access
Person, Affiliate or Affiliated Person at any brokerage firm, bank or other
custodian.
D. Review
1. The
Chief Compliance Officer shall notify each Access Person that he or she is
subject to the reporting requirements set forth herein and shall deliver a copy
of this Code to each such Access Person upon request.
2. The
Chief Compliance Officer or his designee shall review all personal holdings
reports submitted by each Access Person, Affiliate and Affiliated Person,
including confirmations of personal securities transactions, to ensure that no
trading has taken place in violation of Rule 17j-1 of the 1940 Act, Section 204A
of the Advisers Act, or the Code. In addition, the Chief Compliance
Officer shall compare the reported personal securities transactions, with
completed and contemplated portfolio transactions for the Company, the Trust or
any other investment products managed by the Adviser or KA to determine whether
a violation of this Code may have occurred. In reviewing
transactions, the Chief Compliance Officer shall take into account the
exemptions allowed under Section III.G. Before making any
determination that a violation has been committed by any person, the Chief
Compliance Officer shall give such person an opportunity to supply additional
information regarding the transaction in question. The Chief
Compliance Officer shall maintain a list of personnel responsible for reviewing
transaction and personal holdings reports.
V. REQUIREMENTS FOR
DISINTERESTED BOARD MEMBER
A. Every
Disinterested Board Member need not make an initial or annual holdings report
but shall file with the Chief Compliance Officer a quarterly report indicating
that he or she had no reportable transactions or a report containing the
information required in Section IV.B. of this Code with respect to
transactions (other than exempted transactions listed under Section III.G.) in
any Covered Security in which such Disinterested Board Member has, or by reason
of such transactions acquires, any direct or indirect beneficial ownership, if
such Board Member, at the time of that transaction, knew or should have known,
in the ordinary course of pursuing his or her official duties as a Board Member,
that during the fifteen (15) day period immediately preceding or after the
transaction by the Board Member:
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1.
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such
security was being purchased or sold by the Company or the Trust;
or
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2.
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such
security was being considered for purchase or sale by the Company or the
Trust.
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B. Notwithstanding
the preceding section, any Disinterested Board Member may, at his or her option,
report the information described in Section IV.B. with respect to any
one or more transactions and may include a statement that the report shall not
be construed as an admission that the person knew or should have known of
portfolio transactions by the Trust or the Company of the Trust in such
securities.
VI. REVIEW BY THE
BOARDS
Annually,
the Chief Compliance Officer shall submit for review by the Boards a written
report containing the following:
(i) A copy of
the existing Code of Ethics;
(ii) All
existing procedures concerning Access Persons’ personal trading activities and
any procedural changes made during the past year;
(iii) A report
completed by the Chief Compliance Officer identifying any issues arising under
the Code, including any material violations of the Code during the past year and
sanctions or other remedial action imposed in response to such material
violations of the Code; and
(iv) A list of
recommendations, if any, to change the existing Code based upon experience,
evolving industry practices or developments in applicable laws or
regulations.
VII. ANNUAL APPROVAL BY THE
BOARDS
Annually,
the Boards, including a majority of the Disinterested Board Members, shall
approve this Code and any material changes to the Code. The Boards
shall each approve any material change to this Code which affects the Kinetics
Entities no later than 6 months after the adoption of the material change,
provided however, that before approving this Code or any amendment to this Code
the Boards shall have received a certification from the Adviser, KA, the
Distributor and KBD that the Adviser, KA, the Distributor and KBD have adopted
procedures reasonably necessary to prevent Access Persons of the Adviser, KA,
the Distributor and KBD from violating the Code.
VIII. ANNUAL CERTIFICATION OF
COMPLIANCE
Each
Access Person is required to certify annually that he or she has received, read
and understood this Code and recognizes that he or she is subject to such
Code. Further, each Access Person is required to certify annually
that he or she has complied with all the requirements of this Code and that he
or she has disclosed or reported all personal securities transactions pursuant
to the requirements of this Code.
IX. SANCTIONS
A. Sanctions for Violations by
Access Persons
If the
Chief Compliance Officer determines that a violation of this Code has occurred,
he or she shall so advise the Boards, in the case of violations pertaining to
the Trust, Company, the Adviser or the Distributor, or senior management, in the
case of violations pertaining to KA or KBD and the Boards and or senior
management may impose such sanctions they deem appropriate, including, among
other things, disgorgement of profits, censure, suspension and/or termination of
the employment of the violator. All material violations of this Code
and any sanctions imposed as a result thereof, which pertain to the Trust, the
Company, the Adviser or KBD, shall be reported quarterly to the
Boards.
B. Sanctions for Violations by
Disinterested Board Members
If the
Chief Compliance Officer determines that any Disinterested Board Member has
violated this Code, he shall so advise the President of the Trust and the
Company and also a committee consisting of the Disinterested Board Members
(other than the person whose transaction is at issue) and shall provide the
committee with a report, including the record of pertinent actual or
contemplated portfolio transactions of the Trust or the Company and any
additional information supplied by the person whose transaction is at
issue. The committee, at its option, shall either impose such
sanctions as it deems appropriate or refer the matter to the full complement of
each Board, which shall impose such sanctions as it deems
appropriate.
X. RECORDS
A. Records
The
Administrator for the Trust and the Company shall maintain records in the manner
and to the extent set forth below, which records may be maintained on microfilm
under the conditions described in Rule 204-2(g) of the Advisers Act and Rule
17j-1 and Rule 31a-2(f) under the 1940 Act, and shall be available for
examination by representatives of the Commission:
1. a
copy of this Code and any other code of the Trust which is, or at any time
within the past five years has been, in effect shall be preserved in an easily
accessible place;
2. a
record of any decision and the reasons supporting the decision to approve any
acquisition or sale by Access Persons of Covered Securities in an IPO or Limited
Offering;
3. each
memorandum made by the Chief Compliance Officer hereunder;
4. a
record of any violation of this Code and of any action taken as a result of such
violation shall be preserved in an easily accessible place for a period of not
less than five (5) years following the end of the fiscal year in which the
violation occurs;
5. a
copy of each report made pursuant to this Code shall be preserved for a period
of not less than five (5) years from the end of the fiscal year in which it is
made, the first two (2) years in an easily accessible place;
6. a
copy of all written acknowledgements for each person who is currently, or within
the past five years was, a Supervised Person of the Adviser; and
7. a
list of all persons who are required, or within the past five (5) years have
been required, to make reports pursuant to this Code or who are or were
responsible for reviewing the reports shall be maintained in an easily
accessible place.
B. Confidentiality
The
current portfolio positions and current portfolio transactions pertaining to the
Company, the Trust or other investment products managed by the Adviser or KA
must be kept confidential.
If
nonpublic information regarding the Company, the Trust or any other investment
products managed by the Adviser or KA should become known to any Access Person,
whether in the line of duty or otherwise, he or she should not reveal it to
anyone unless it is properly part of his or her work to do so.
If anyone
is asked about investment portfolios or whether a security has been sold or
bought, his or her reply should be that this is an improper question and that
this answer does not mean that the Company, the Trust or any other investment
product managed by the Adviser or KA have bought, sold or retained the
particular security. Reference, however, may, of course, be made to
the latest published report of the investment portfolios for the Company, the
Trust or any investment product managed by the Adviser or KA.
C. Nonpublic Material
Information
From time
to time the Kinetics Entities have circulated and discussed with Access Persons
the latest administrative and judicial decisions regarding the absolute
prohibition against the use of nonpublic material information, also known as
“inside information.” In view of the many forms in which the subject can arise,
the Kinetics Entities must reiterate that a careful and conservative approach
must prevail and no action should be taken where “inside information” may be
involved, without a thorough review by the Chief Compliance
Officer.
Material
inside information is any information about a company or the market for the
company’s securities which has come directly or indirectly from the company and
which has not been disclosed generally to the marketplace, the dissemination of
which is likely to affect the market price of any of the company’s securities or
is likely to be considered important by reasonable investors, including
reasonable speculative investors, in determining whether to trade in such
securities.
Information
should be presumed “material” if it relates to such matters as dividend
increases or decreases, earnings estimates, changes in previously released
earnings estimates, significant expansion or curtailment of operations, a
significant increase or decline of orders, significant merger or acquisition
proposals or agreements, significant new products or discoveries, extraordinary
borrowing, major litigation, liquidity problems, extraordinary management
developments, purchase or sale of substantial assets, etc.
“Inside
information” is information that has not been publicly
disclosed. Information received about a company under circumstances
which indicate that it is not yet in general circulation and that such
information may be attributable, directly or indirectly, to the company (or its
insiders) should be deemed to be inside information.
Whenever
an Access Person receives material information about a company which he or she
knows or has reason to believe is directly or indirectly attributable to such
company (or its insiders), the Access Person must determine that the information
is public before trading or recommending trading on the basis of such
information or before divulging such information to any person who is not an
employee of the Kinetics Entities or a party to the transaction. As a
rule, one should be able to point to some fact to show that the information is
generally available; for example, its announcement on the broad tape or by Reuters, The Wall Street
Journal or trade publications. If the Access Person has any
question at all as to whether the information is material or whether it is
inside and not public, he or she must resolve the question or questions before
trading, recommending trading or divulging the information. If any
doubt at all remains, the Access Person must consult with the Chief Compliance
Officer.
D. Interpretation of
Provisions
The
Boards may from time to time adopt such interpretations of this Code as they
deem appropriate.
KINETICS
ASSET MANAGEMENT, INC.
(the
“Adviser”)
KINETICS
FUNDS DISTRIBUTOR, INC.
(the
“Distributor”)
KINETICS
MUTUAL FUNDS, INC.
(the
“Company”)
and
KINETICS
PORTFOLIOS TRUST
(the
“Trust”)
KBD
SECURITIES, LLC
(“KBD”)
KINETICS
ADVISERS, LLC
(“KA”)
(Collectively,
“KINETICS ENTITIES”)
TRANSACTION
REPORT
To: ________________________,
Chief Compliance Officer
From: _______________________________________________
(Your Name)
This Transaction Report (the “Report”)
is submitted pursuant to Section IV of the Code of Ethics of the Kinetics
Entities and supplies (below) information with respect to
transactions in any security in which I may be deemed to have, or by reason of
such transaction acquire, any direct or indirect beneficial ownership interest
(whether or not such security is a Covered Security held or to be acquired by
the Company, the Trust or any other investment products managed by the Adviser
or KA) for the calendar quarter ended _______________________.
Unless the context otherwise requires,
all terms used in the Report shall have the same meaning as set forth in the
Code of Ethics.
For purposes of the Report beneficial
ownership shall be interpreted subject to the provisions of the Code of Ethics
and Rule 16a-1(a) (exclusive of Section (a)(1) of such Rule) of the Securities
Exchange Act of 1934.
Title
of
Securities
and
CUSIP
Number
or
Exchange
Ticker
|
Date
of
Transaction
|
Nature
of Transaction (whether
Purchase,
Sale
or
Other Type
of
Disposition
Or Acquisition
|
Interest
Rate and Maturity Date or Principal Amount of
Securities
Acquired
Or Disposed Of
|
Price
At
Which
the
Transaction
Was Effected
|
Name
of the
Broker,
Dealer Or
Bank
With Whom
The
Transaction
Was Effected
|
Nature
Of
Ownership
of
Securities*
|
|
|
|
|
|
|
|
___________________
* if
appropriate, you may disclaim beneficial ownership of any security listed in
this report.
KINETICS
ASSET MANAGEMENT, INC.
(the
“Adviser”)
KINETICS
FUNDS DISTRIBUTOR, INC.
(the
“Distributor”)
KINETICS
MUTUAL FUNDS, INC.
(the
“Company”)
and
KINETICS
PORTFOLIOS TRUST
(the
“Trust”)
KBD
SECURITIES, LLC
(“KBD”)
KINETICS
ADVISERS, LLC
(“KA”)
[Initial/Annual]
Holdings Report
To: Chief
Compliance Officer of
On [date] I became an “Access Person”
of one of the Kinetics Entities, As of the date specified below
(which cannot be more than 45 days before I became an Access Person), I had a
direct or indirect beneficial ownership interest* in the securities listed below
which are required to be reported pursuant to this Code of Ethics:
Date
of
Information
|
Title
and
Type of Security
|
Exchange
Ticker
Symbol or CUSIP#
|
Number
of Shares
|
Principal
Amount
|
|
|
|
|
|
As of the same date as specified in the
above table, the following accounts were maintained with brokers, dealers and
banks in which securities were held for my direct or indirect
benefit*:
Name of Broker, Dealer or
Bank
This report (i) excludes
securities and accounts over which I had no direct or indirect influence or
control; (ii) excludes securities not required to be reported (that is,
direct obligations of the U.S. Government, shares issued by mutual funds and
unit investment trusts that are not advised or distributed by the Adviser or KA
or any of their affiliates, bankers’ acceptances, bank certificates
of deposit, commercial paper and high quality short-term debt instruments); and
(iii) is not an admission that I have or had any direct or indirect
beneficial ownership* in the securities or accounts listed above.
Date:
|
|
|
Signature:
|
|
|
|
|
Print
Name:
|
|
______________________________
|
*
For interpretive guidance, you should consult
counsel.
|
KINETICS
ASSET MANAGEMENT, INC.
(the
“Adviser”)
KINETICS
FUNDS DISTRIBUTOR, INC.
(the
“Distributor”)
KINETICS
MUTUAL FUNDS, INC.
(the
“Company”)
and
KINETICS
PORTFOLIOS TRUST
(the
“Trust”)
KBD
SECURITIES, LLC
(“KBD”)
KINETICS
ADVISERS, LLC
(“KA”)
(Collectively,
“KINETICS ENTITIES”)
ANNUAL
CERTIFICATION
I hereby certify that I (1) have read
and understand the Code of Ethics dated, 2008, (2) recognize that I am subject
to the Code of Ethics, (3) have complied with the requirements of the Code of
Ethics over the past year, (4) have disclosed all personal securities
transactions, over the past year, required to be disclosed by the Code of
Ethics, (5) have sought and obtained preclearance whenever required by the Code
of Ethics and (6) certify that to the best of my knowledge the information
furnished in this report is true and correct.
Name
(Print)
|
|
|
|
|
|
Signature
|
|
|
|
|
|
Date
|
|
|
KINETICS
ASSET MANAGEMENT, INC.
(the
“Adviser”)
KINETICS
FUNDS DISTRIBUTOR, INC.
(the
“Distributor”)
KINETICS
MUTUAL FUNDS, INC.
(the
“Company”)
and
KINETICS
PORTFOLIOS TRUST
(the
“Trust”)
KBD
SECURITIES, LLC
(“KBD”)
KINETICS
ADVISERS, LLC
(“KA”)
(Collectively,
“KINETICS ENTITIES”)
PERSONAL
TRADING REQUEST AND AUTHORIZATION
Personal Trading Request (to
be completed by Access Person prior to any personal
trade):
Name: _____________________________________________________________________________________
Date For
Which You Seek
Approval: ______________________________________________________________
Name of
the issuer and dollar amount or number of securities of the issuer to be
purchased or sold: _______________
___________________________________________________________________________________________
Nature of
the transaction (i.e.,
purchase, sale):1
_______________________________________________________
___________________________________________________________________________________________
___________________________________________________________________________________________
Are you
or is a member of your immediate family an officer, trustee, or director of the
issuer of the securities or any affiliate
___________________________________________________________________________________________
___________________________________________________________________________________________
Do you
have any material nonpublic information concerning the issuer?
Yes___
No___
Are you
aware of any facts regarding the proposed transaction, including the existence
of any substantial economic relationship, between the proposed transaction and
any securities held or to be acquired by the Company, the Trust or any other
investment product managed by the Adviser or KA that may be relevant to a
determination as to the existence of a potential conflict of interest?2
_________________________
1 A “professional relationship” includes,
for example, the provision of legal counsel or accounting services. A
“business relationship” includes, for example, the provision of consulting
services or insurance coverage.
Yes___
No___
If yes, please describe:
___________________________________________________________________________________________
___________________________________________________________________________________________
To the best of my knowledge and belief,
the answers that I have provided above are true and correct.
Signature: ______________________________
Approval or Disapproval of
Personal Trading Request
(to be
completed by Chief Compliance Officer):
I do not
believe the above-described proposed transaction is consistent with the policies
described in the Code or that the conditions necessary for approval of the
proposed transaction have been satisfied.
Dated: ____________________________ Signed: ___________________________
Title: _______________________
3 In the case of a personal securities
transaction by an Access Person, Affiliate or Affiliated Person, the Code of
Ethics requires that the Chief Compliance Officer determine that the proposed
personal securities transaction (a) is only remotely potentially harmful to the
Company, the Trust or any other investment product managed by the Adviser or KA
because they would be very unlikely to affect a highly institutional market, (b)
is clearly not economically related to the securities to be purchased or sold or
held by the Company, the Trust or any other investment product managed by the
Adviser or KA or (c) does not represent any danger of the abuses prescribed by
Rule 17j-1, but only if in each case the prospective purchaser has identified to
the Chief Compliance Officer all factors of which he or she is aware which are
potentially relevant to a conflict of interest analysis, including the existence
of any substantial economic relationship between his or her transaction and
securities held or to be held by the Company, the Trust or any other investment
product managed the Adviser or KA.