EX.99.CODE ETH
CODE OF ETHICS
FOR
CHIEF EXECUTIVE AND SENIOR FINANCIAL OFFICERS
OF
KINETICS MUTUAL FUNDS, INC. AND KINETICS PORTFOLIOS TRUST
Kinetics Mutual Funds, Inc. (the "Company") and Kinetics Portfolios
Trust (the "Trust," and together with the Company, the "Funds") are committed to
conducting business in accordance with applicable laws, rules and regulations
and the highest standards of business ethics, and to full and accurate
disclosure -- financial and otherwise -- in compliance with applicable law. This
Code of Ethics, applicable to the Funds' Chief Executive Officer (the President
and Chairman of the Board) and Chief Financial Officer (the Treasurer) (or
persons performing similar functions) (together, "Senior Officers"), sets forth
policies to guide you in the performance of your duties and is for the purpose
of promoting:
o honest and ethical conduct, including the ethical handling of
actual or apparent conflicts of interest between personal and
professional relationships;
o full, fair, accurate, timely and understandable disclosure in
reports and documents that the Funds file with, or submit to,
the Securities and Exchange Commission and in other public
communications made by the Funds;
o compliance with applicable laws and governmental rules and
regulations;
o the prompt internal reporting of violations of the Code of
Ethics to an appropriate person or persons identified in this
Code; and
o accountability for adherence to this Code.
As a Senior Officer, you must comply with applicable law. You
also have a responsibility to conduct yourself in an honest and ethical manner.
You have leadership responsibilities that include creating a culture of high
ethical standards and a commitment to compliance, maintaining a work environment
that encourages the internal reporting of compliance concerns and promptly
addressing compliance concerns.
This Code of Ethics recognizes that the Senior Officers are
subject to certain conflicts of interest inherent in the operation of investment
companies, because, among other reasons, the Senior Officers currently or may in
the future serve as officers or employees of the Funds' investment advisor (the
"Advisor") and/or affiliates of the Funds' investment advisor (collectively,
"Kinetics"). This Code of Ethics also recognizes that certain laws and
regulations applicable to, and certain policies and procedures adopted by, the
Funds or Kinetics govern your conduct in connection with many of the conflict of
interest situations that arise in connection with the operations of the Funds,
including:
o the Investment Company Act of 1940, as amended, and the rules
and regulation promulgated thereunder by the Securities and
Exchange Commission (the "1940 Act");
o the Investment Advisers Act of 1940, as amended, and the rules
and regulations promulgated thereunder by the Securities and
Exchange Commission (the "Advisers Act");
o the Code of Ethics adopted by the Funds pursuant to Rule
17j-1(c) under the 1940 Act (the "Funds' 1940 Act Code of
Ethics");
6
o one or more codes of ethics adopted by Kinetics that have been
reviewed and approved by those directors of the Company and
trustees of the Trust that are not "interested persons" of the
Company and the Trust, respectively, (the "Independent
Directors/Trustees"), within the meaning of the 1940 Act
("Kinetics' 1940 Act Code of Ethics" and, together with the
Funds' 1940 Act Code of Ethics, the "1940 Act Codes of
Ethics"); and
o Kinetics 's general policies and procedures to address, among
other things, conflict of interest situations and related
matters (collectively, the "Kinetics Policies").
The provisions of the 1940 Act, the Advisers Act, the 1940 Act Codes of Ethics,
and the Kinetics Policies are referred to herein collectively as the "Additional
Conflict Rules".
This Code of Ethics is different from, and is intended to
supplement, the Additional Conflict Rules. Accordingly, a violation of the
Additional Conflict Rules by a Senior Officer is hereby deemed not to be a
violation of this Code of Ethics, unless and until the Independent
Directors/Trustees shall determine that any such violation of the Additional
Conflict Rules is also a violation of this Code of Ethics.
SENIOR OFFICERS SHOULD ACT HONESTLY AND CANDIDLY
Each Senior Officer has a responsibility to the Funds to act
with integrity. Integrity requires, among other things, being honest and candid.
Deceit and subordination of principle are inconsistent with integrity.
Each Senior Officer must:
o act with integrity, including being honest and candid while
still maintaining the confidentiality of information where
required by law or the Additional Conflict Rules;
o comply with the laws, rules and regulations that govern the
conduct of the Funds' operations and report any suspected
violations thereof in accordance with the section below
entitled "Compliance"; and
o adhere to a high standard of business ethics.
CONFLICTS OF INTEREST
A conflict of interest for the purpose of this Code of Ethics
occurs when your private interests, or those of your family members, interfere
in any way, or even appear to interfere, with the interests of the Funds.
Senior Officers are expected to use objective and unbiased
standards when making decisions that affect the Funds, keeping in mind that
Senior Officers are subject to certain inherent conflicts of interest because
Senior Officers of the Funds, or a member of a Senior Officer's family, also are
or may be officers of Kinetics (as a result of which it is incumbent upon you to
be familiar with and to seek to comply with the Additional Conflict Rules).
You are required to conduct the business of the Funds in an
honest and ethical manner, including the ethical handling of actual or apparent
conflicts of interest between personal and business relationships. When making
any investment, accepting any position or benefits, participating in any
transaction or business arrangement or otherwise acting in a manner that creates
or appears to create a conflict of interest with respect to the Funds where you
are
7
receiving a personal benefit, you should act in accordance with the letter and
spirit of this Code of Ethics.
If you are in doubt as to the application or interpretation of
this Code of Ethics to you as a Senior Officer of the Funds, you should make
full disclosure of all relevant facts and circumstances to the Audit Committees
of the Funds and obtain approval prior to taking action.
Each Senior Officer must:
o avoid conflicts of interest wherever possible;
o handle any actual or apparent conflict of interest ethically;
o not use his or her personal influence or personal
relationships to influence investment decisions or financial
reporting by the Funds whereby the Senior Officer would
benefit personally to the detriment of the Funds;
o not cause the Funds to take action, or fail to take action,
for the personal benefit of the Senior Officer rather than the
benefit of the Funds;
o not use material non-public knowledge of portfolio
transactions made or contemplated for the Funds to trade
personally or cause others to trade personally in
contemplation of the market effect of such transactions; and
o report at least annually affiliations or other relationships
with the Funds, the Advisor or the distributor, including any
related conflict of interest.
Some conflict of interest situations that should always be
approved by the Audit Committees, if material, include the following:
o the receipt of any entertainment or non-nominal gift by the
Senior Officer, or a member of his or her family, from any
company with which the Funds have current or prospective
business dealings (other than Kinetics), unless such
entertainment or gift is business related, reasonable in cost,
appropriate as to time and place, and not so frequent as to
raise any question of impropriety;
o any ownership interest in, or any consulting or employment
relationship with, any of the Funds' service providers, other
than Kinetics; or
o a direct or indirect financial interest in commissions,
transaction charges or spreads paid by the Funds for effecting
portfolio transactions or for selling or redeeming shares
other than an interest arising from the Senior Officer's
employment by Kinetics, such as compensation or equity
ownership.
DISCLOSURES
It is the policy of the Funds to make full, fair, accurate,
timely and understandable disclosure in compliance with all applicable laws and
regulations in all reports and documents that the Funds file with, or submits
to, the Securities and Exchange Commission and in all other public
communications made by the Funds. As a Senior Officer, you are required to
promote compliance with this policy and to abide by the Funds' standards,
policies and procedures designed to promote compliance with this policy.
Each Senior Officer must:
o familiarize himself or herself with the disclosure
requirements applicable to the Funds as well as the business
and financial operations of the Funds; and
8
o not knowingly misrepresent, or cause others to misrepresent,
facts about the Funds to others, including to the
Trustees/Directors, the Funds' independent auditors, the
Funds' counsel, counsel to the Independent Trustees/Directors,
governmental regulators or self-regulatory organizations.
Unless otherwise required by law, this Code shall be disclosed
as required by the Securities and Exchange Commission.
COMPLIANCE
It is the Funds' policy to comply with all applicable
governmental laws, rules and regulations. It is the personal responsibility of
each Senior Officer to adhere to the standards and restrictions imposed by those
laws, rules and regulations, including those relating to affiliated
transactions, accounting and auditing matters.
ACCOUNTABILITY
Each Senior Officer must:
o upon receipt of the Code of Ethics, sign and submit to the
Funds' Boards an acknowledgement stating that he has received,
read and understands the Code on the certification attached
hereto as Appendix A.
o annually thereafter affirm to the Funds' Boards that he has
complied with the requirements of the Code and reported any
violations of the Code on the certification attached hereto as
Appendix A.
o notify the Audit Committee promptly if he knows of any
violation of this Code. Failure to do so is itself a violation
of this Code.
o not retaliate against any other Senior Officer or any employee
of the Funds or affiliated persons of the Funds or the Funds'
service providers for reports of potential violations that are
made in good faith.
REPORTING VIOLATIONS
The Funds' Audit Committees are responsible for applying this
Code to specific situations in which questions are presented under it and has
the authority to interpret this Code in any particular situation. The Funds'
Audit Committees may consult Fund counsel in order to effectively discharge its
responsibilities.
INVESTIGATION PROCEDURES
The Funds will follow these procedures in investigating and
enforcing this Code of Ethics:
o The Audit Committee will take all appropriate action to
investigate any potential violations of the Code;
o If, after such investigation, the Audit Committee believes
that no violation has occurred, the Audit Committee is not
required to take any further action;
o Any matter that the Audit Committee believes is a violation of
this Code will be reported to the Funds' Board; and
o If the Board concurs that a violation has occurred, it will
take action which it considers appropriate. Such action may
include a review of, and appropriate modifications to,
applicable policies and procedures; notification to
appropriate personnel of each service provider or its
governing body; or a recommendation to dismiss the Senior
Officer.
WAIVERS OF CODE OF ETHICS
The Audit Committees are responsible for granting waivers,
implicit or otherwise, of this Code of Ethics, as appropriate. Such Committees
will be responsible for granting waivers, as appropriate; and any changes to or
waivers of this Code will, to the extent required, be disclosed as provided by
SEC rules.
A waiver is the approval of a material departure from a
provision of this Code. An implicit waiver is the Funds' failure to take action
within a reasonable period of time
9
regarding a material departure from a provision of this Code that has been made
known to the Audit Committees.
RECORDKEEPING
The Funds will maintain and preserve for a period of not less
than six (6) years from the date an action is taken, the first two (2) years in
an easily accessible place, a copy of the information or materials supplied to
the Audit Committees: (i) that provided the basis for any amendment or waiver to
this Code of Ethics; and (ii) relating to any violation of this Code of Ethics
and sanctions imposed for such violation, together with a written record of the
approval or action taken by the Audit Committees.
CONFIDENTIALITY
All reports and records prepared or maintained pursuant to
this Code of Ethics shall be considered confidential and shall be maintained and
protected accordingly. Except as otherwise required by law or this Code of
Ethics, such matters shall not be disclosed to anyone other than the Audit
Committees, the Funds and their counsel, Kinetics and its counsel and any other
advisors, consultants or counsel retained by the Boards of the Company or the
Trust or the Audit Committees.
AMENDMENTS
This Code of Ethics, other than Exhibit A, may not be amended
except in written form, which is specifically approved by a majority vote of the
Boards of the Company and the Trust, including a majority of the Independent
Directors/Trustees.
NO RIGHTS CREATED
This Code of Ethics is a statement of certain fundamental
principles, policies and procedures that govern each of the Senior Officers in
the conduct of the Funds' business. It is not intended to and does not create
any rights in any employee, investor, supplier, competitor, shareholder or any
other person or entity.
10
APPENDIX A
KINETICS MUTUAL FUNDS, INC. AND KINETICS PORTFOLIOS TRUST
CERTIFICATION AND ACKNOWLEDGEMENT OF RECEIPT OF CODE OF ETHICS
I acknowledge and certify that I have received a copy of the Code of Ethics for
the Chief Executive Officer (President/Chairman of the Board) and Chief
Financial Officer (the Treasurer) of Kinetics Mutual Funds, Inc. and Kinetics
Portfolios Trust (the "Code"). I understand and agree that it is my
responsibility to read and familiarize myself with the policies and procedures
contained in the Code and to abide by those policies and procedures.
I acknowledge my commitment to comply with the Code.
APPLICABLE NEXT YEAR:
I acknowledge that I complied with the Code for the one-year period ended
__________.
I acknowledge that I reported all violations of this Code of Ethics for the
one-year period ended ___________ of which I am aware.
(Please submit on a separate piece of paper, exceptions to these
acknowledgements.)
- ----------------------------------- --------------------------------------
Officer Name (Please Print) Officer Signature
- ----------------------------------- --------------------------------------
Date
Insert Code of Ethics
11