[Federal Register Volume 75, Number 98 (Friday, May 21, 2010)]
[Notices]
[Pages 28665-28667]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-12260]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 29270; 812-13745]
Kinetics Mutual Funds, Inc., et al.; Notice of Application
May 17, 2010.
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 rule 12d1-2(a)
under the Act.
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SUMMARY OF APPLICATION: Applicants request an order to permit
registered open-end investment companies relying on rule 12d1-2 under
the Act to invest in certain financial instruments.
[[Page 28666]]
APPLICANTS: Kinetics Mutual Funds, Inc. (``Company''), Kinetics
Portfolios Trust (``Trust''), Kinetics Asset Management, Inc.
(``Adviser''), and Kinetics Funds Distributor, Inc. (``KFDI'').
FILING DATES: The application was filed on January 19, 2010, and
amended on May 12, 2010.
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 June 11, 2010 and should be accompanied by proof of service on
applicants, in the form of an affidavit or, for lawyers, a certificate
of service. Hearing requests should state the nature of the writer's
interest, the reason for the request, and the issues contested. Persons
who wish to be notified of a hearing may request notification by
writing to the Commission's Secretary.
ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street,
NE., Washington, DC 20549-1090; Applicants, c/o Jay H. Kesslen,
Kinetics Asset Management, Inc., 555 Taxter Road, Suite 175, Elmsford,
NY 10523.
FOR FURTHER INFORMATION CONTACT: Keith A. Gregory, Senior Counsel, at
(202) 551-6815, or Mary Kay Frech, Branch Chief, at (202) 551-6821
(Division of Investment Management, Office of Investment Company
Regulation).
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 Company is organized as a Maryland corporation and the Trust
is organized as a Delaware statutory trust and each is registered under
the Act as an open-end management investment company. The Adviser is a
New York corporation registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and currently serves as
investment adviser to the The Tactical Paradigm Fund, a series of the
Company, and to each series of the Trust. KFDI is a New York
corporation registered as a broker-dealer under the Securities Exchange
Act of 1934, as amended (``Exchange Act''), that serves as the
distributor for the Company and all of its series and as the private
placement agent for the Trust and all of its series.
2. Applicants request the exemption to the extent necessary to
permit any existing or future registered open-end management investment
company or series thereof (i) that is advised by the Adviser or an
entity controlling, controlled by, under common control with the
Adviser (each, an ``Adviser'') that is in the same group of investment
companies as defined in section 12(d)(1)(G) of the Act and (ii) that
invests in other registered open-end management investment companies in
reliance on section 12(d)(1)(G) of the Act, and (iii) that is also
eligible to invest in securities (as defined in section 2(a)(36) of the
Act) in reliance on rule 12d1-2 under the Act (together with such
series of the Company and the Trust, the ``Funds of Funds'') to also
invest, to the extent consistent with its investment objective,
policies, strategies and limitations, in financial instruments that may
not be securities within the meaning of section 2(a)(36) of the Act
(``Other Investments'').\1\
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\1\ Applicants also request that the order exempt any entity
controlling, controlled by or under common control with the Adviser
or KFDI that now or in the future acts as principal underwriter with
respect to the transactions described in the application. Every
existing entity that currently intends to rely on the requested
order is named as an applicant. Any existing or future entity that
relies on the order in the future will do so only in accordance with
the terms and condition in the application.
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3. Consistent with its fiduciary obligations under the Act, each
Fund of Fund's board of directors or trustees will review the advisory
fees charged by the Fund of Fund's investment adviser to ensure that
they are based on services provided that are in addition to, rather
than duplicative of, services provided pursuant to the advisory
agreement of any investment company in which the Fund of Funds may
invest.
Applicants' Legal Analysis
1. Section 12(d)(1)(A) of the Act provides that no registered
investment company (``acquiring company'') may acquire securities of
another investment company (``acquired company'') if such securities
represent more than 3% of the acquired company's outstanding voting
stock or more than 5% of the acquiring company's total assets, or if
such securities, together with the securities of other investment
companies, represent more than 10% of the acquiring company's total
assets. Section 12(d)(1)(B) of the Act provides that no registered
open-end investment company may sell its securities to another
investment company if the sale will cause the acquiring company to own
more than 3% of the acquired company's voting stock, or cause more than
10% of the acquired company's voting stock to be owned by investment
companies and companies controlled by them.
2. Section 12(d)(1)(G) of the Act provides that section 12(d)(1)
will not apply to securities of an acquired company purchased by an
acquiring company if: (i) The acquiring company and acquired company
are part of the same group of investment companies; (ii) the acquiring
company holds only securities of acquired companies that are part of
the same group of investment companies, government securities, and
short-term paper; (iii) the aggregate sales loads and distribution-
related fees of the acquiring company and the acquired company are not
excessive under rules adopted pursuant to section 22(b) or section
22(c) of the Act by a securities association registered under section
15A of the Exchange Act or by the Commission; and (iv) the acquired
company has a policy that prohibits it from acquiring securities of
registered open-end management investment companies or registered unit
investment trusts in reliance on section 12(d)(1)(F) or 12(d)(1)(G) of
the Act.
3. Rule 12d1-2 under the Act permits a registered open-end
investment company or a registered unit investment trust that relies on
section 12(d)(1)(G) of the Act to acquire, in addition to securities
issued by another registered investment company in the same group of
investment companies, government securities, and short-term paper: (1)
Securities issued by an investment company that is not in the same
group of investment companies, when the acquisition is in reliance on
section 12(d)(1)(A) or 12(d)(1)(F) of the Act; (2) securities (other
than securities issued by an investment company); and (3) securities
issued by a money market fund, when the investment is in reliance on
rule 12d1-1 under the Act. For the purposes of rule 12d1-2,
``securities'' means any security as defined in section 2(a)(36) of the
Act.
4. Section 6(c) of the Act provides that the Commission may exempt
any person, security, or transaction from any provision of the Act, or
from any rule under the Act, if such exemption is necessary or
appropriate in the public interest and consistent with the protection
of investors and the purposes fairly intended by the policies and
provisions of the Act.
5. Applicants state that the proposed arrangement would comply with
the provisions of rule 12d1-2 under the Act,
[[Page 28667]]
but for the fact that the Funds of Funds may invest a portion of their
assets in Other Investments. Applicants request an order under section
6(c) of the Act for an exemption from rule 12d1-2(a) to allow the Funds
of Funds to invest in Other Investments. Applicants assert that
permitting the Funds of Funds to invest in Other Investments as
described in the application would not raise any of the concerns that
the requirements of section 12(d)(1) were designed to address.
Applicants' Condition
Applicants agree that the order granting the requested relief will
be subject to the following condition:
Applicants will comply with all provisions of rule 12d1-2 under the
Act, except for paragraph (a)(2) to the extent that it restricts any
Fund of Funds from investing in Other Investments as described in the
application.
For the Commission, by the Division of Investment Management,
under delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-12260 Filed 5-20-10; 8:45 am]
BILLING CODE 8010-01-P