55182 Federal Register / Vol. 70, No. 181 / Tuesday, September 20, 2005 / Notices 

2Applied states that consolidation provides a 

more accurate picture of its primary business of 

developing, manufacturing, marketing and servicing 

integrated circuit fabrication equipment because 

Applied does not have any independent business 

operations separate from the activities of its whollyowned subsidiaries. Applied has not sold any 

subsidiaries in over 20 years, and those sales were 

related to its business as a supplier of integrated 

circuit fabrication equipment and services. Since 

the subsidiaries being consolidated are all whollyowned, consolidation will not result in the type of 

distortions that could result from consolidating 

other types of subsidiaries. Applied also has a 50% 

owned subsidiary that is dormant, has no 

operations and has not been consolidated for 

purposes of determining Applied’s status under the 

Act. 

3For the reasons stated above, revenues of 

Applied’s wholly-owned subsidiaries were 

consolidated for purposes of this discussion. 

Applied consolidates its wholly-owned subsidiaries 

when preparing its financial statements in 

accordance with Generally Accepted Accounting 

Principles. 

investment securities (as defined in 

Section 3(a)(2) of the Act) of $5.1 billion 

constituted approximately 48% of 

Applied’s total assets (excluding 

Government securities and cash items), 

consolidated with its wholly-owned 

subsidiaries.2 More than 99% of 

Applied’s investment securities 

consisted of Capital Preservation 

Investments. Applied’s remaining 

investment securities consisted of 

investments in businesses with 

complementary products, services and/ 

or technologies and an interest in a 

limited partnership that invests in earlystage companies involving 

nanotechnology and/or communications 

technology. Applied anticipates that its 

investment securities other than Capital 

Preservation Investments will not 

exceed 10% of Applied’s total 

consolidated assets (excluding 

Government securities and cash items) 

in the future. Applied further states that 

a significant portion of its assets consist 

of intangible assets such as internallydeveloped intellectual property that are 

not included in the value of Applied’s 

total assets for purposes of determining 

Applied’s status under the Act. Applied 

states that the asset tests used in 

connection with sections 3(a)(1)(c) and 

3(b) of the Act therefore significantly 

understate the relative value of 

Applied’s non-investment security 

assets. 

e. Sources of Income and Revenue. 

Applied states that for the four quarters 

ended January 30, 2005, its operating 

activities produced 94% of its net 

income after taxes, while its investment 

securities produced 6% of its net 

income on a tax-equivalent basis. 

However, for the fiscal year ended 

October 26, 2003, Applied had 

operating losses while deriving net 

income from its investment securities. 

Applied states that its net income does 

not always accurately reflect its 

operating activities since its net income 

fluctuates unpredictably with the cycles 

of the semiconductor industry. Applied 

thus believes that its activities as an 

operating company are more 

appropriately analyzed by looking at its 

revenues. Applied states that, for the 

four quarters ending January 30, 2005, 

its revenues from operations 3

represented approximately 99% of its 

total revenues, and its revenues from 

investments, or net investment income, 

represented approximately 1% of its 

total revenues. Applied expects that as 

its business continues in the future, the 

percentage of its total revenues derived 

from operating activities will ordinarily 

be over 90% and the percentage derived 

from investments will ordinarily be 

under 10%. 

7. Applied thus asserts that it satisfies 

the standards for an order under section 

3(b)(2) of the Act. 

Applicant’s Conditions 

1. Applied will continue to allocate 

and use its accumulated cash and 

investment securities for bona fide 

business purposes. 

2. Applied will refrain from investing 

or trading in securities for short-term 

speculative purposes. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Jonathan G. Katz, 

Secretary. 

[FR Doc. 05–18614 Filed 9–19–05; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

27066; 813–357] 

Peter Kiewit Sons’, Inc. and Kiewit 

Investment Fund LLLP; Notice of 

Application 

September 14, 2005. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application for an 

order under section 6(b) of the 

Investment Company Act of 1940 (the 

‘‘Act’’) granting an exemption from 

section 15(a) of the Act and the rules 

and regulations thereunder. 

SUMMARY OF THE APPLICATION: 

Applicants request an order to permit 

the board of directors of an ‘‘employees’’

securities company’’ as defined in 

section 2(a)(13) of the Act to enter into 

and materially amend investment 

advisory contracts without the approval 

of holders of the company’s outstanding 

voting securities. 

APPLICANTS: Peter Kiewit Sons’’, Inc. 

(‘‘Kiewit’’) and Kiewit Investment Fund 

LLLP (the ‘‘Fund’’). 

FILING DATES: The application was filed 

on July 25, 2005 and amended on 

August 29, 2005 and September 13, 

2005. 

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 October 11, 2005, 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, U.S. Securities 

and Exchange Commission, 100 F 

Street, NE., Washington, DC 20549–

9303. Applicants, Tobin A. Schropp, 

Peter Kiewit Sons’, Inc., Kiewit Plaza, 

Omaha, Nebraska, 68131 and Robert A. 

Giles, Jr., Kiewit Investment Fund LLLP, 

73 Tremont Street, Boston 

Massachusetts 02108. 

FOR FURTHER INFORMATION CONTACT: 

Shannon Conaty, Senior Counsel, at 

(202) 551–6827 or Janet M. Grossnickle, 

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 for a fee at the 

Commission’s Public Reference Desk, 

100 F Street, NE., Washington, DC, 

20549–0102 (tel. (202) 551–5850). 

Applicants’ Representations 

1. Kiewit, a Delaware corporation, is 

a large construction contractor operating 

primarily in the North American 

market. Through various subsidiaries, 

joint ventures and partnerships, Kiewit 

provides construction services to a 

broad range of public and private 

customers. It also owns and operates 

several coal mining operations. 

Pursuant to the terms of its 

organizational documents, Kiewit’s 

common stock (‘‘Kiewit Stock’’) 

Federal Register / Vol. 70, No. 181 / Tuesday, September 20, 2005 / Notices 55183 

1Applicants represent that the delegation of 

duties by the General Partner to the Fund Board 

will be substantially identical to the delegation 

described in Federated Core Trust II, SEC NoAction Letter (Feb. 6, 2002). 2The Fund has filed a registration statement in 

connection with a proposed public offering of 

Units. The registration statement was declared 

effective and the Fund commenced a public offering 

on July 26, 2005. 3The term ‘‘Kiewit Group’’ refers to Kiewit and 

any affiliated company of Kiewit of which Kiewit 

is an affiliated company, as defined in section 

2(a)(2) of the Act. 4Applicants are not asking the Commission to 

decide, nor is the Commission deciding, whether 

any particular person (or group of persons) would 

be considered an ‘‘employee’’ or ‘‘person on 

retainer’’ within the meaning of section 2(a)(13) of 

the Act. 5The Fund, subject to approval by the Fund 

Board, will conduct tender offers for 5% to 25% of 

the Fund’s outstanding Units at least semi-annually 

commencing in January 2006. No repurchase, 

redemption or other fee will be assessed by the 

Fund on any repurchase of Units. 

6As discussed more fully in the application, the 

Fund, at Kiewit’s expense, will make available to 

each offeree that does not meet the standard of an 

‘‘accredited investor’’ as set forth in rule 501(a) 

under the Securities Act (a ‘‘Non-Accredited 

Offeree’’) an investment adviser registered under 

the Investment Advisers Act of 1940, as amended 

(‘‘Advisers Act’’) that meets the requirements set 

forth in rule 501(h) under the Securities Act and is 

independent from Kiewit, the Fund and the Fund 

Advisers (the ‘‘Investment Professional’’). Prior to 

an investment in the Fund whether during the 

initial sale of Units or any subsequent sale of Units, 

each Non-Accredited Offeree will be given the 

opportunity to consult on a one-on-one basis with 

such Investment Professional for the purpose of 

assisting the Non-Accredited Offeree in evaluating 

the merits and risks of a prospective investment in 

the Fund and the appropriateness of an investment 

in the Fund in light of his or her particular 

circumstances. 

7The Fund Board will consider the following 

factors, among others, prior to any such approval: 

the nature and quality of services to be rendered, 

the expected total revenue and profit of a Fund 

Adviser as a result of its relationship with the Fund, 

any economies of scale that a Fund Adviser may 

experience as the Fund grows, and the 

competitiveness of fees, costs and expense ratios. 

generally may only be owned by 

directors and full-time employees of 

Kiewit and its current or former 

subsidiaries, joint ventures and 

partnerships. 

2. The Fund, a Delaware limited 

liability limited partnership, is 

registered under the Act as a nondiversified, closed-end management 

investment company, and will at all 

times operate as an ‘‘employees’’

securities company’’ within the 

meaning of section 2(a)(13) of the Act. 

Kiewit, or a wholly-owned subsidiary, 

will be the general partner of the Fund 

(the ‘‘General Partner’’). To the fullest 

extent permitted under the Delaware 

Revised Uniform Limited Partnership 

Act (‘‘DRULPA’’), the General Partner 

pursuant to the Fund’s amended and 

restated limited partnership agreement 

(‘‘Partnership Agreement’’) will 

irrevocably delegate management, 

control and operation of the Fund and 

its business and affairs to the Fund’s 

Board of Directors (‘‘Fund Board’’, and 

each member thereof a ‘‘Director’’) 

pursuant to section 17–403 of the 

DRULPA.1 All but two of the five 

current Directors are directors, officers 

or employees of Kiewit and Directors 

that are officers, directors or employees 

of Kiewit will comprise a majority of the 

Fund Board in the future. 

3. The Fund is designed as a longterm investment vehicle for key 

employees and former key employees of 

Kiewit and its affiliated companies and 

their immediate family members. Units 

of limited partnership interests of the 

Fund (‘‘Units’’) will be offered pursuant 

to offerings registered under the 

Securities Act of 1933, as amended 

(‘‘Securities Act’’) and will be sold only 

to Eligible Holders.2 Eligible Holders 

consist of (i) current and former 

employees or persons on retainer of the 

Kiewit Group,3 within the meaning of 

section 2(a)(13) of the Act (‘‘Eligible 

Employees’’); (ii) Directors retained by 

the Fund; (iii) immediate family 

members, within the meaning of section 

2(a)(13) of the Act, of such Directors or 

Eligible Employees; or (iv) members of 

the Kiewit Group.4 After the initial 

offering, the Fund intends to offer Units 

continuously and accept applications to 

purchase Units at the end of the second 

and fourth calendar quarters of each 

year. Units will not be transferable 

except with the prior written consent of 

the Fund and then only to Eligible 

Holders. Units are not redeemable at the 

option of a holder of Units 

(‘‘Unitholder’’).5

4. Applicants believe that the Fund 

will provide a cost-effective opportunity 

to access types of investments and 

professional investment management 

that otherwise may not be available to 

key employees of the Kiewit Group on 

an individual basis. The Fund’s 

investment objective is long-term capital 

growth with consideration given to 

consistency of returns. Under normal 

market conditions, the Fund’s assets 

will be invested in a variety of 

securities, including U.S. and non-U.S. 

equities and fixed-income instruments 

and other investment funds that are 

registered investment companies or 

private investment funds excepted from 

the definition of ‘‘investment company’’

pursuant to section 3(c)(1) or 3(c)(7) of 

the Act (‘‘Private Portfolio Funds’’), 

including Private Portfolio Funds that 

are commonly referred to as hedge 

funds.6

5. The Fund will retain a primary 

investment adviser and it may 

determine to retain other investment 

advisers in the future (each, a ‘‘Fund 

Adviser’’). Any Fund Adviser will be 

registered under the Advisers Act. The 

Fund’s primary Fund Adviser will make 

recommendations to the Fund Board 

regarding the allocation of portions of 

the Fund’s assets to the management of 

other Fund Advisers. Within the 

framework of the investment policies set 

forth in the Fund’s registration 

statement, and subject to supervision 

and oversight by the Fund Board, a 

Fund Adviser will develop an 

investment program with respect to its 

allocated assets. Each investment 

advisory contract or material 

amendment to such a contract will be 

approved by the Fund Board, including 

a majority of the Directors that are not 

interested persons of the Fund within 

the meaning of section 2(a)(19) of the 

Act, in accordance with section 15(c) of 

the Act.7 All Fund Advisers will be 

subject to removal by the Fund Board at 

any time, without penalty, on not more 

than sixty days’ written notice. 

6. There will be no sales load or any 

other distribution fee charged to Eligible 

Holders during the initial sale of Units 

or any subsequent sale of Units. The 

Fund will not issue senior securities or 

borrow money for investment purposes. 

The Fund also will not invest in 

securities issued by Kiewit, any 

affiliated person of Kiewit or any 

investment company, Private Portfolio 

Fund or alternative investment vehicle 

sponsored by or affiliated with Kiewit or 

any of its affiliated persons; provided 

that the Fund may invest in an 

investment company, Private Portfolio 

Fund or alternative investment vehicle 

that is an affiliated person of an 

employee or former employee of Kiewit 

or its affiliated companies (that is not a 

current or former director or officer of 

Kiewit or its affiliated companies) solely 

by virtue of such person holding a 

limited partnership interest in such 

entity. 

Applicants’ Legal Analysis 

1. Section 6(b) of the Act provides, in 

part, that the Commission will exempt 

employees’ securities companies from 

the provisions of the Act to the extent 

that the exemption is consistent with 

the protection of investors. Section 6(b) 

provides that the Commission will 

consider, in determining the provisions 

of the Act from which the company 

should be exempt, the company’s form 

of organization and capital structure, the 

persons owning and controlling its 

securities, the price of the company’s 

securities and the amount of any sales 

load, the disposition of the proceeds of 

any sales of the company’s securities, 

55184 Federal Register / Vol. 70, No. 181 / Tuesday, September 20, 2005 / Notices 

8Applicants state that the Fund Board’s sole 

obligation with respect to the Fund is managing the 

Fund in the Fund’s and Unitholders’ best interests 

and that the Fund Board and the Directors will not 

have any obligation to any person or entity that 

benefits from the Fund. 

9Unitholders also will be able to elect Directors 

in accordance with section 16(a) of the Act and, 

under the Partnership Agreement, Unitholders that 

own, in the aggregate, 10% of outstanding Units 

may call a special meeting of Unitholders for the 

purpose of electing Directors. As a result, 

Unitholders have the ability to replace the Fund 

Board if a sufficient amount of Unitholders so 

desire. 

10Applicants also note that the Fund’s method of 

operation, including its proposed investment 

strategy, is analogous to the operation of certain 

employee benefit plans, where employers or their 

delegates have the discretion to replace and retain 

advisers or terminate investment options and 

reinvest the assets without employee consent. 

11This overall supervisory responsibility 

includes: (i) Evaluating and selecting Fund 

Advisers to manage all or a part of the Fund’s 

assets; (ii) negotiating and approving contracts with 

Fund Advisers; (iii) when appropriate, approving 

the allocation and reallocation of the Fund’s assets 

among multiple Fund Advisers; (iv) monitoring and 

evaluating the performance of the Fund Advisers; 

and (v) approving and monitoring the 

implementation of procedures reasonably designed 

to ensure that the Fund Advisers comply with the 

Fund’s investment objective, policies and 

restrictions and with the Act. 

how the company’s funds are invested, 

and the relationship between the 

company and the issuers of the 

securities in which it invests. Section 

2(a)(13) defines an employees’ securities 

company as any investment company 

all of whose securities (other than shortterm paper) are beneficially owned (a) 

by current or former employees, or 

persons on retainer, of one or more 

affiliated employers, (b) by immediate 

family members of such persons, or (c) 

by such employer or employers together 

with any of the persons in (a) or (b). 

2. Section 15(a) of the Act provides, 

in relevant part, that it is unlawful for 

any person to act as an investment 

adviser to a registered investment 

company except pursuant to a written 

contract that has been approved by the 

vote of a majority of the company’s 

outstanding voting securities. 

Applicants request an order under 

section 6(b) of the Act exempting the 

Fund from section 15(a) of the Act and 

the rules and regulations thereunder 

solely to the extent necessary to permit 

the Fund to enter into and materially 

amend investment advisory contracts 

with Fund Advisers without approval 

by Unitholders holding a majority of the 

outstanding voting securities of the 

Fund. Each investment advisory 

contract with any Fund Adviser will 

comply with all other requirements of 

the Act and the Advisers Act, including 

that the renewal of the contract is 

subject to annual review by the Fund 

Board after its initial term. For the 

reasons discussed below, applicants 

believe that the requested exemption 

from section 15(a) is consistent with the 

protection of investors and the purposes 

of the Act. 

3. Applicants state that, because the 

Fund may engage multiple Fund 

Advisers, it is important that the Fund 

Board have the capability to quickly 

reallocate assets among Fund Advisers 

and retain a new Fund Adviser in the 

event that any such Fund Adviser 

performs poorly or the Fund Board 

determines that Fund assets should be 

reallocated to asset classes, strategies or 

styles for which existing Fund Advisers 

are not able to manage most efficiently. 

Unitholder approval each time that a 

new Fund Adviser is retained or an 

existing contract with a Fund Adviser is 

materially amended or assigned would 

impose a substantial burden on the 

Fund. Applicants assert that the 

requested relief will result in substantial 

cost-savings to the Fund and other 

efficiencies. 

4. Applicants state that Kiewit (not 

any Fund Adviser or any affiliated 

person of any Fund Adviser) is the 

sponsor of the Fund and no member of 

the Kiewit Group will receive any 

compensation from the Fund. No 

Director will be an interested person of 

any Fund Adviser within the meaning 

of section 2(a)(19) of the Act and it is 

expected that all Directors will be 

Unitholders in the Fund.8 Further, 

applicants state that most of the 

Directors are directors, officers and 

employees of Kiewit who share an 

essential community of interest with 

key employees and their immediate 

family members and have a 

considerable interest in seeing that the 

Fund is managed consistent with the 

interests of such key employees and 

their immediate family members. 

Applicants believe that the arms-length 

relationship between the Fund Board 

and any Fund Adviser, the community 

of interest that will exist among 

Unitholders and Directors and the 

Directors’ fiduciary duties will reduce 

the risk of abuses that section 15(a) of 

the Act is designed to prevent.9

5. Applicants further believe that 

Unitholders will expect the Fund Board 

to select and monitor Fund Advisers. 

The Fund will disclose in its prospectus 

the existence, substance, and effect of 

the relief requested in the application 

and it will hold itself out to Eligible 

Holders as employing the management 

structure described in the application. 

The prospectus also will prominently 

disclose that the Fund Board has 

ultimate responsibility to oversee Fund 

Advisers and recommend their hiring, 

termination, and replacement. 

6. Key employees of the Kiewit Group 

have historically invested significant 

portions of their personal financial 

assets in Kiewit Stock, which effectively 

results in Kiewit directors, officers and 

other senior management being 

responsible for such employees’

financial well being through their 

management of Kiewit. Because of this 

historical and ongoing relationship 

between Kiewit’s stockholders and 

senior management of Kiewit and the 

disclosure discussed above,10

Applicants believe that key employees 

of the Kiewit Group that invest in the 

Fund would expect the Fund Board to 

exercise overall supervisory 

responsibility for the management and 

investment of the Fund’s assets on an 

ongoing basis.11

7. Applicants further represent that 

the following additional safeguards exist 

to protect Unitholders: (i) The Fund’s 

financial statements will be audited by 

a nationally recognized independent 

certified public accounting firm; (ii) 

each Fund Adviser will be registered 

with the Commission and will be 

retained pursuant to an arms-length 

negotiation; (iii) participation in the 

Fund is entirely voluntary; (iv) 

Unitholders will not be charged a sales 

load or any other distribution fee; and 

(v) the Fund will not invest, directly or 

indirectly, in securities issued by any 

member of the Kiewit Group. 

Applicants’ Condition 

The applicants agree that any order 

granting the requested relief will be 

subject to the following condition: 

The Fund will operate in compliance 

with the Act pending final 

determination of the application, 

provided that the Fund may rely on rule 

6b–1 under the Act solely to implement 

the relief specifically requested in the 

application from section 15(a) of the 

Act. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Jonathan G. Katz, 

Secretary. 

[FR Doc. 05–18612 Filed 9–19–05; 8:45 am] 

BILLING CODE 8010–01–P