U.S. Bancorp Fund Services, LLC
615 E. Michigan Street
| KINETICS MUTUAL FUNDS, INC. |
| Table of Contents |
| December 31, 2016 |
| | Page |
| Shareholders' Letter | 2 |
| Year 2016 Annual Investment Commentary | 5 |
| KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS | |
| Growth of $10,000 Investment | 11 |
| Expense Example | 22 |
| Statements of Assets & Liabilities | 28 |
| Statements of Operations | 32 |
| Statements of Changes in Net Assets | 36 |
| Notes to Financial Statements | 47 |
| Financial Highlights | 64 |
| Report of Independent Registered Public Accounting Firm | 93 |
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS | |
| Allocation of Portfolio Assets | 94 |
| Portfolio of Investments — The Internet Portfolio | 102 |
| Portfolio of Investments — The Global Portfolio | 106 |
| Portfolio of Investments — The Paradigm Portfolio | 110 |
| Portfolio of Investments — The Medical Portfolio | 116 |
| Portfolio of Investments — The Small Cap Opportunities Portfolio | 119 |
| Portfolio of Investments — The Market Opportunities Portfolio | 123 |
| Portfolio of Investments — The Alternative Income Portfolio | 127 |
| Portfolio of Investments — The Multi-Disciplinary Income Portfolio | 130 |
| Portfolio of Options Written — The Alternative Income Portfolio | 137 |
| Portfolio of Options Written — | |
| The Multi-Disciplinary Income Portfolio | 142 |
| Statements of Assets & Liabilities | 143 |
| Statements of Operations | 147 |
| Statements of Changes in Net Assets | 151 |
| Notes to Financial Statements | 155 |
| Report of Independent Registered Public Accounting Firm | 180 |
| Management of the Funds and the Portfolios | 181 |
| Privacy Policy | 189 |
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| KINETICS MUTUAL FUNDS, INC. |
| Shareholders' Letter |
Dear Fellow Shareholders:
We are pleased to present the Kinetics Mutual Funds ("Funds") Annual Report for the twelve-month period ended December 31, 2016. Despite a volatile start to the year, investors embracing risk assets were rewarded handsomely, while conservative allocators, particularly those with high interest rate sensitivity fared less well. It should be noted that risk assets rallied sharply following the U.S. Presidential election through year end. While we are hopeful for the future of the United States, this has not changed the cautious positioning of the Funds. Against that backdrop, we believe that the Funds performed well during the year. A performance summary follows (No-Load Class): The Internet Fund +2.59%, The Global Fund +14.40%, The Paradigm Fund +20.45%, The Medical Fund -8.01%, The Small Cap Opportunities Fund +24.39%, The Market Opportunities Fund +20.45%, The Alternative Income Fund +4.00% and The Multi-Disciplinary Income Fund +10.41%. This compares to returns of +11.96% for the S&P 500 and +7.86% for the MSCI All Country World Index. The Paradigm Fund, Small Cap Opportunities Fund, Global Fund, and Market Opportunities Fund outperformed largely as a result of the funds' exposure to energy companies. For the Internet Fund, a lack of exposure to information technology companies contributed to underperformance. The Medical Fund underperformed due, in part, to investments in the biotechnology and pharmaceutical sectors.
The investment management industry may have reached an inflection point in 2016, or at the very least may be rapidly approaching one this coming year, although confirmation of this is likely years out. For years now, a chasm has been widening between the valuations of "sets" of securities – such as the large-cap liquid securities that are significant components of major indexes, and those with less trading liquidity, which tend to be excluded. This divergence has mostly to do with the way that assets are invested and allocated, but also has profound implications for the prices of these very assets. More importantly, the industry and market reactions are poised to shape investor returns for many years to come.
Passive investing has been gaining popularity for over a decade, with approximately $3 trillion now invested directly in domestic equity ETFs and passive index mutual funds. The scale of these flows is such that it is apparent to many that the demand for passive, indexed products is now a major driver of the prices of the stocks that comprise the underlying indexes. This represents a
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fundamental change in the role of passive products in the markets. Indexes, as originally conceived, were simply tools to track the performance of a set of securities. But in the current environment, these "passive" investments are primary determinants of security prices – in one sense, they have become quite active. Institutions have been in a furor to compete for this business, as fee compression and investor attrition has plagued the active management industry.
What ensues is a vicious cycle: Continued flows into passive products have artificially inflated the valuations of the securities that make up these indexes, to a point where a rational investor would not choose to invest in the index constituents at their current prices. Yet, the performance of active managers is evaluated relative to that benchmark – the index, which as explained above is no longer "tracking" market performance, but driving it. Compared to the inflated index level, active managers have underperformed (even if their absolute performance is solid, and the companies they hold are prospering). Cue additional asset flows out of active products and toward passive ones, exacerbating the underperformance of the active managers – who paradoxically become forced sellers of their own non-index-centric stocks – and further inflating valuations of the stocks that comprise the passive indexes.
As value managers, we have little doubt that this cycle is unsustainable, but what will make it change? An inflection point has probably been reached in the ETF industry, if not for all passive investing. In October 2016, BlackRock Inc., the owner of iShares ETFs, announced management fee reductions on several of its largest ETFs to 0.05% or even lower, with fee cuts applying to nearly 18% of iShares assets. Passive management is rapidly approaching a break-even proposition, from the perspective of the ETF providers.
At the same time, many "active" managers have contributed to this trend, by likewise focusing on asset gathering as a means of increasing profitability. That is, they have become asset gatherers, too, rather than investors. For those focused on investing, it is the generation of high investment returns that begets an increase in assets under management. The largest pools of capital are controlled by institutional investors allocating on behalf of pensions, endowments, municipalities and high net worth individuals. The individuals at these institutions are generally well-versed in academic approaches to asset allocation. They control portfolio risk by constraining their managers using these tools, discrete quantitative data, such as comparative short-term relative
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returns and backward looking volatility statistics such as beta and standard deviation. Superficial though these might be, they are readily applied across any list of managers, which allows them to aggregate a portfolio from those managers with the best numbers per these discrete parameters. Under this pressure, these asset managers have come to the realization that in order to attract investments from large institutions, they must conform. The alternative is to resign themselves to manage assets from smaller pools of capital – and work harder do it, through rigorous fundamental research and analysis! It is under these conditions that many "active" managers have all but transitioned into asset gatherers. Those that successfully execute within these guidelines often raise considerable assets – success! At least temporarily. For when one's returns are compared to a benchmark from which one's security selections have barely deviated, future returns are all but assured to be mediocre. This simply reinforces the growing perception that active management is not value-additive.
But what of those who are true active managers? We have made a very conscious effort to grow our capital organically, not via asset gathering, and as a result have remained dedicated to our value investment principles. Despite the fact that many of our Funds had high cash positions – which is a strategic asset that the market indexes don't have – and the fact that index levels rose meaningfully and passive products continued to garner the lion's share of inflows, our investors did quite well this year.
Though there are indications that increasing numbers of allocators are beginning to see the writing on the wall, passive ETFs remain the most crowded trade in the market. The impact of these strategies will pose many obstacles and risks to investors down the road, at least if one is blind to them. Though attractive investments are less plentiful than we have seen in some periods in the past, there are always opportunities. At present, we believe that sourcing certain investments, largely outside of the "indexation vortex", offers exceptional long-term opportunities; it is merely a matter, as it always is, of remaining true to one's convictions, and taking what the market gives you.
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| KINETICS MUTUAL FUNDS, INC. |
| Investment Commentary |
Dear Fellow Shareholders:
Last year marked the 20th anniversary of Kinetics Mutual Funds, although the Firm's principals have been investing together since 1985. Over their thirty plus years of joined experience, there have been many variations in business and market cycles, with corresponding periods of crisis and exuberance. All the while, consistent with our methodical approach, we have continued to pore over company filings and industry data to find attractive outlets for our principal and client capital. This is consonant with the notion espoused by Warren Buffett and Charlie Munger sitting in Omaha, Nebraska, roughly 1,300 miles from the New York Stock Exchange floor, that favors identifying a handful of companies per year available for purchase at attractive valuations, and allowing these to compound in value over many years. During exceptional periods when this framework wasn't feasible, due to excessive valuations, there were always opportunities outside of that playbook – this is where we specialize. It is often precisely when the risk/reward tradeoffs in common stocks are the most unappealing that selective convertible bonds, deeply discounted debt, discounted closed-end funds or other instruments become alluring, as can cash. The ability to invest across the capital structure can be a great advantage.
In truth, past periods of excessive valuations have been fairly easy to identify (with the exception of 2007), but the greater challenge is having the discipline to eschew the allure of buying into ever rising asset prices. The technology bubble was a tailor made precondition for value managers to be derided (see Barron's Cover Story, December, 27, 1999, titled What's Wrong Warren?, castigating Mr. Buffett's abilities), only to be exalted afterwards for the perspicacity of avoiding the eventual collapse. We were not alone in recognizing, avoiding (and even profiting from) the technology bubble. As investors piled into technology stocks with ever more unrealistic assumptions, they cast away securities deemed to have inadequate growth. (Why bother with 10% revenue growth when you could buy 30%, 50%, 100%?) Our boring corner of the market – the conventional blue chips of that era, like Merck and Pfizer, AIG and American Express – ended up providing materially positive returns, even as the broader indexes, saturated with excessively valued companies, plummeted. However, it wasn't only equities; during the market decline between 2002 and 2003, an investor in a 10-Year U.S. Treasury would have earned 6.28% annual yield, compared to less than 3% annual inflation (this doesn't include the capital appreciation on the bond as the rates dropped to 3.81%).
The past several years have been unpleasant for value investors, similar to the period leading up to the technology bubble collapse, but this is a very different set of circumstances. First and foremost, the 10-year Treasury at year end 2016 was only 2.49%. If the Federal Reserve meets its inflation target of 2%, that means a real, pre-tax yield of only 0.49% – hardly fodder for nest egg building. Second,
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while today's valuations are not quite as extreme as in 1999, both are meaningful outliers in terms of long-term average earnings and cyclically adjusted earnings multiples. Thus, conservative investors are without a reasonable safe haven in the form of bonds, and equities are dangerously expensive as well, but in ways that are less obvious to the average investor (is 25x earnings today for the leading S&P 500 companies with no meaningful revenue growth less expensive than a P/E of 29x in 2000 when they at least manifested reasonably robust growth?). There is clearly an element of attrition from among bond investors who are seeking return in equities – a 3.5% dividend yield in a 'Dividend Aristocrat' or utility stock ETF beats a 2.5% Treasury. This is an added element to the money flows driving prices higher, in addition to our oft-mentioned artificial inflation of stock prices from the flow of money out of active equity management into indexation instruments like ETFs. We will resist our inclination to elaborate further upon this topic (our website has an extensive archive on these topics, awaiting any sleepless nights you may encounter) – although, to be sure, we will not turn down investments opportunities that arise as a result of these trends.
The days of true alpha generation through the previously described strategy employed in Omaha may be limited, at least as it applies to the stock market as most people understand it – 'the market'. Why? Well it's a complicated answer, but in short, the pricing mechanism in the market – which has shifted to the automatic purchases by index funds, which represent the marginal trade across the large-cap spectrum – has made it virtually impossible to find a company of adequate trading liquidity, with a capable management that is compounding book value at double digit rates, at a reasonable price. An index fund purchases its constituent stocks without regard to valuation; there is no factor for that in its rule set. Yet, this is the mechanism that is establishing the asset clearing prices. This is of paramount importance. The return from any investment is highly sensitive to the value at which it is purchased. Buying a company with these characteristics at over 30x adjusted earnings is far less likely to result in a positive investment experience than if purchased at a GAAP P/E of 15x.
We note adjusted because companies are now very fond of adjusting their GAAP earnings to exclude expenses for multiple one-time items (the ever-recurring non-recurring charges) and, more importantly, for non-cash based (stock based) compensation. True, this is not a cash expense, but it is also true that shareholders pay these employees in the form of future claims on earnings (dilution)! That is far more expensive. Back to the point, high quality businesses at low or even fair prices are few and far between. The days of stock picking within the S&P 500 Index and generating long-term excess returns without excess risk are likely a luxury of the past.
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Fortunately for us, and for you as our investors, this is not the game that we play. Our strategy has always been to take the opportunities that are available, rather than rigidly adhere to a specific set of criteria regardless of changing market conditions. In fact, we have, at times, embraced selected companies with high sensitivity to broad market exposure ("beta") when we believed that valuations were unduly low and fundamentals poised to improve. However, for us, that has been an exception rather than the norm, and we do not believe this to be the case at present. In contrast, most managers do focus on such systemic exposures, for fear of underperforming their benchmark, especially in a period of prolonged market gains as we are currently experiencing.
So we still pore over our annual reports and industry data, completely undeterred by the scarcity of "easy" opportunities. Why? Because there will always be securities that are underfollowed or rejected due to institutional constraints and which will offer compelling opportunities based on company-specific fundamentals as opposed to the systemic factors that drive valuations of the broader market. Thus, the decidedly 'off market' exposure we incorporate, security by security, into a portfolio should mitigate market level influences.
We are satisfied with the absolute and relative returns of the Funds for the year. We believe that we achieved these results not by increasing the risk, but in fact by decreasing it. Additionally, we are far more comfortable accepting the type of risk embedded in the companies in the Funds than that of the overall market. We expect to compound upon the returns achieved this year, as the individual businesses grow intrinsic value over time. In the likely event that broad market valuations normalize to lower levels in the future, we are poised to deploy our cash allocation, positioning the portfolios for years to come.
Shareholders can continue to access additional information from our website, www.kineticsfunds.com. This website provides a broad array of information, including recent portfolio holdings, quarterly investment commentaries, conference call transcripts, newsflashes, recent performance data, and online access to account information.
Kinetics offers the following funds to investors:
The Paradigm Fund focuses on companies that we believe are valued attractively and currently have, or are expected to soon have, sustainable high business returns. The Fund has produced attractive risk adjusted returns since its inception, while maintaining amongst the lowest turnover rates in the industry. The Paradigm Fund is Kinetics' flagship fund.
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The Multi-Disciplinary Income Fund seeks to utilize stock options and fixed-income investments in order to provide investors with equity-like returns, but with more muted volatility. At times, the options strategies of the Fund may cause the manager to purchase equity securities.
The Small Cap Opportunities Fund focuses on undervalued and special situation small capitalization equities that we believe have the potential for rewarding long-term investment results. The same investment fundamentals employed by The Paradigm Fund are used to identify such opportunities.
The Medical Fund is a sector fund, offering an investment in scientific discovery within the promising field of medical research, particularly in the development of cancer treatments and therapies. As a sector fund, The Medical Fund is likely to have heightened volatility.
The Internet Fund is a sector fund that focuses on companies engaged in the evolution of Internet-related developments. As such, this Fund has been, and is likely to continue to be, quite volatile. The Internet Fund is not designed to be a major component of one's equity exposure. More recently, this Fund has been focusing on content companies, which we believe will be the winners in the next generation of Internet development.
The Global Fund's mandate is focused on selecting long life cycle international companies that we believe can generate long-term wealth through their business operations. This Fund is presently identifying exciting opportunities in the more developed markets.
The Market Opportunities Fund focuses on those companies that benefit from increasing transactional volume or throughput, such as publicly-traded exchanges and credit card processors, or companies that act as facilitators, such as gaming companies, airports and publicly-traded toll roads.
The Alternative Income Fund seeks to provide current income and gains, with a secondary objective of obtaining long-term growth of capital. The Fund utilizes stock options and fixed-income investments and seeks to generate a total return that exceeds most short-term U.S. fixed income indexes, with limited market value variability.
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Disclosure
This material is intended to be reviewed in conjunction with a current prospectus, which includes all fees and expenses that apply to a continued investment, as well as information regarding the risk factors, policies and objectives of the Funds. Read it carefully before investing.
Mutual Fund investing involves risk. Principal loss is possible. Because The Internet Fund, The Medical Fund and The Market Opportunities Fund invest in a single industry or geographic region, their shares are subject to a higher degree of risk than funds with a higher level of diversification. Internet, biotechnology and certain capital markets or gaming stocks are subject to a rate of change in technology, obsolescence and competition that is generally higher than that of other industries, hence they may experience extreme price and volume fluctuations.
International investing [for all Funds] presents special risks including currency exchange fluctuation, government regulations, and the potential for political and economic instability. Accordingly, the share prices for these Funds are expected to be more volatile than that of U.S.-only funds. Past performance is no guarantee of future performance.
Because smaller companies [for The Small Cap Opportunities Fund] often have narrower markets and limited financial resources, they present more risk than larger, more well established, companies.
Non-investment grade debt securities [for all Funds], i.e., junk bonds, are subject to greater credit risk, price volatility and risk of loss than investment grade securities.
Further, options contain special risks including the imperfect correlation between the value of the option and the value of the underlying asset. Investments [for The Multi- Disciplinary Income Fund and The Alternative Income Fund] in futures, swaps and other derivative instruments may result in loss as derivative instruments may be illiquid, difficult to price and leveraged so that small changes may produce disproportionate losses to the Funds. To the extent the Funds segregate assets to cover derivative positions, they may impair their ability to meet current obligations, to honor requests for redemption and to manage the investments in a manner consistent with their respective investment objectives. Purchasing and writing put and call
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options and, in particular, writing "uncovered" options are highly specialized activities that entail greater than ordinary investment risk.
As non-diversified Funds, except The Global Fund, The Alternative Income Fund and The Multi-Disciplinary Income Fund, the value of Fund shares may fluctuate more than shares invested in a broader range of industries and companies. Unlike other investment companies that directly acquire and manage their own portfolios of securities, the Kinetics Mutual Funds pursue their investment objectives by investing all of their investable assets in a corresponding portfolio series of the Kinetics Portfolios Trust.
The information concerning the Funds included in the shareholder report contains certain forward-looking statements about the factors that may affect the performance of the Funds in the future. These statements are based on Fund management's predictions and expectations concerning certain future events and their expected impact on the Funds, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors that may influence the future performance of the Funds. Management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed.
The MSCI All Country World Index (MSCI ACWI) and the Standard & Poor's 500 Index (S&P 500) each represent an unmanaged, broad-basket of stocks. They are typically used as a proxy for overall market performance.
Distributor: Kinetics Funds Distributor LLC is not an affiliate of Kinetics Mutual Funds, Inc. Kinetics Funds Distributor LLC is an affiliate of Kinetics Asset Management LLC, Investment Adviser to Kinetics Mutual Funds, Inc.
For more information, log onto www.kineticsfunds.com. January 1, 2017 — Kinetics Asset Management LLC®
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How a $10,000 Investment Has Grown:
The charts show the growth of a $10,000 investment in the Feeder Funds as compared to the performance of two or more representative market indices. The tables below the charts show the average annual total returns on an investment over various periods. Returns for periods greater than one year are average annual total returns. The annual returns assume the reinvestment of all dividends and distributions, however, the graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is not predictive of future performance. Current performance may be lower or higher than the returns quoted below. The performance data reflects voluntary fee waivers and expense reimbursements made by the Adviser and the returns would have been lower if these waivers and expense reimbursements were not in effect. Investment return and principal value will fluctuate, so that your shares, when redeemed, may be worth more or less than their original costs.
S&P 500 Index — is a capital-weighted index, representing the aggregate market value of the common equity of 500 stocks primarily traded on the New York Stock Exchange. The S&P 500 is unmanaged and includes the reinvestment of dividends and does not reflect the payments of transaction costs and advisory fees associated with an investment in the Funds. The securities that comprise the S&P 500 may differ substantially from the securities in the Funds' portfolios. It is not possible to directly invest in an index.
NASDAQ Composite Index — is a broad-based capitalization-weighted index of all NASDAQ stocks. The NASDAQ Composite is unmanaged and does not include the reinvestment of dividends and does not reflect the payment of transaction costs or advisory fees associated with an investment in the Funds. The securities that comprise the NASDAQ Composite may differ substantially from the securities in the Funds' portfolios. It is not possible to directly invest in an index.
MSCI ACWI (All Country World Index) Index — is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI ACWI consists of 46 country indices comprising 23 developed and 23 emerging market country indices. The developed market country indices included are: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States. The emerging
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market country indices included are: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey, and United Arab Emirates. The securities that compromise the MSCI ACWI may differ substantially from the securities in the Funds' portfolios. It is not possible to directly invest in an index.
Russell 2000 Index — is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership. The Russell 2000 Index is constructed to provide a comprehensive and unbiased small-cap barometer and is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small-cap opportunity set. The securities that compromise the Russell 2000 may differ substantially from the securities in the Funds' portfolio. It is not possible to directly invest in an index.
S&P 600 SmallCap Index — measures the small-cap segment of the U.S. equity market. The index is designed to track companies that meet specific inclusion criteria to ensure that they are liquid and financially viable. The securities that comprise the S&P 600 may differ substantially from the securities in the Funds' portfolios. It is not possible to directly invest in an index.
MSCI EAFE® Index (Europe, Australasia, Far East) — is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the United States and Canada. The MSCI EAFE Index consisted of the following 21 developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. The securities that compromise the MSCI EAFE may differ substantially from the securities in the Funds' portfolio. It is not possible to directly invest in an index.
Bloomberg Barclays U.S. 1-3 Year Credit Index — measures the performance of investment grade corporate debt and sovereign, supranational, local authority and non-U.S. agency bonds that are U.S. dollar denominated and have a remaining maturity of greater than or equal to one year and less than three years. The securities that compromise the Bloomberg Barclays U.S. 1-3 Year Credit Index may differ substantially from the securities in the Funds' portfolio. It is not possible to directly invest in an index.
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Bloomberg Barclays U.S. Aggregate Bond Index — covers the USD-denominated, investment-grade, fixed-rate, taxable bond market of SEC-registered securities. The Index includes multiple types of government and corporate-issued bonds, some of which are asset-backed. The securities that compromise the Bloomberg Barclays U.S. Aggregate Bond Index may differ substantially from the securities in the Funds' portfolio. It is not possible to directly invest in an index.
Bloomberg Barclays U.S. Corporate High Yield Bond Index — is composed of fixed-rate, publicly issued, non-investment grade debt. The securities that comprise the Bloomberg Barclays U.S. Corporate High Yield Bond Index may differ substantially from the securities in the Funds' portfolio. It is not possible to directly invest in an index.
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| The Internet Fund |
| December 31, 2006 — December 31, 2016 |
| |
| | | | Ended 12/31/2016 |
| | | | | | Advisor | | Advisor | | | | | | |
| | | | No Load | | Class A | | Class A | | Advisor | | | | NASDAQ |
| | | | Class | | (No Load) | (Load Adjusted)(1) | | Class C | | S&P 500 | | Composite |
| One Year | | | 2.59 | % | | 2.32 | % | | -3.55 | % | | 1.83 | % | | 11.96 | % | | 7.50 | % |
| Five Years | | | 11.49 | % | | 11.21 | % | | 9.90 | % | | 10.66 | % | | 14.66 | % | | 15.62 | % |
| Ten Years | | | 8.34 | % | | 8.14 | % | | 7.51 | % | | N/A | | | 6.95 | % | | 8.34 | % |
| Twenty Years | | | 14.09 | % | | N/A | | | N/A | | | N/A | | | 7.68 | % | | 7.40 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | |
| No Load Class | | | | | | | | | | | | | | | | | | | |
| (10/21/96) | | | 13.60 | % | | N/A | | | N/A | | | N/A | | | 7.85 | % | | 7.56 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | |
| Advisor Class A | | | | | | | | | | | | | | | | | | | |
| (4/26/01) | | | N/A | | | 6.49 | % | | 6.08 | % | | N/A | | | 5.97 | % | | 6.40 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | |
| Advisor Class C | | | | | | | | | | | | | | | | | | | |
| (2/16/07) | | | N/A | | | N/A | | | N/A | | | 7.49 | % | | 6.73 | % | | 8.10 | % |
(1) | Reflects front-end sales charge of 5.75%. |
Returns for periods greater than one year are average annual total returns.
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| The Global Fund |
| December 31, 2006 — December 31, 2016 |
| |
| | | Ended 12/31/2016 |
| | | | | Advisor | | Advisor | | | | | | |
| | | No Load | | Class A | | Class A | | Advisor | | | | MSCI |
| | | Class | | (No Load) | (Load Adjusted)(1) | | Class C | | S&P 500 | | ACWI |
| One Year | | | 14.40 | % | | 14.03 | % | | 7.44 | % | | 13.63 | % | | 11.96 | % | | 7.86 | % |
| Five Years | | | 6.58 | % | | 6.38 | % | | 5.13 | % | | 5.81 | % | | 14.66 | % | | 9.36 | % |
| Ten Years | | | 1.84 | % | | N/A | | | N/A | | | N/A | | | 6.95 | % | | 3.56 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | |
| No Load Class | | | | | | | | | | | | | | | | | | | |
| (12/31/99) | | | -2.32 | % | | N/A | | | N/A | | | N/A | | | 4.51 | % | | 3.18 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | |
| Advisor Class A | | | | | | | | | | | | | | | | | | | |
| (5/19/08) | | | N/A | | | 2.33 | % | | 1.63 | % | | N/A | | | 7.69 | % | | 2.88 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | |
| Advisor Class C | | | | | | | | | | | | | | | | | | | |
| (5/19/08) | | | N/A | | | N/A | | | N/A | | | 1.73 | % | | 7.69 | % | | 2.88 | % |
(1) | Reflects front-end sales charge of 5.75%. |
Returns for periods greater than one year are average annual total returns.
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| The Paradigm Fund |
| December 31, 2006 — December 31, 2016 |
| |
| | | Ended 12/31/2016 |
| | | | | Advisor | | Advisor | | | | | | | | |
| | | No Load | | Class A | | Class A | | Advisor | | Institutional | | | | MSCI |
| | | Class | | (No Load) | (Load Adjusted)(1) | | Class C | | Class | | S&P 500 | | ACWI |
| One Year | | | 20.45 | % | | 20.18 | % | | 13.28 | % | | 19.55 | % | | 20.73 | % | | 11.96 | % | | 7.86 | % |
| Five Years | | | 13.96 | % | | 13.68 | % | | 12.34 | % | | 13.11 | % | | 14.19 | % | | 14.66 | % | | 9.36 | % |
| Ten Years | | | 4.46 | % | | 4.20 | % | | 3.59 | % | | 3.67 | % | | 4.66 | % | | 6.95 | % | | 3.56 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | | | | |
| No Load Class | | | | | | | | | | | | | | | | | | | | | | |
| (12/31/99) | | | 8.73 | % | | N/A | | | N/A | | | N/A | | | N/A | | | 4.51 | % | | 3.18 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | | | | |
| Advisor Class A | | | | | | | | | | | | | | | | | | | | | | |
| (4/26/01) | | | N/A | | | 8.92 | % | | 8.51 | % | | N/A | | | N/A | | | 5.97 | % | | 4.96 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | | | | |
| Advisor Class C | | | | | | | | | | | | | | | | | | | | | | |
| (6/28/02) | | | N/A | | | N/A | | | N/A | | | 8.97 | % | | N/A | | | 7.97 | % | | 6.77 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | | | | |
| Institutional Class | | | | | | | | | | | | | | | | | | | | | | |
| (5/27/05) | | | N/A | | | N/A | | | N/A | | | N/A | | | 7.31 | % | | 7.79 | % | | 5.77 | % |
(1) | Reflects front-end sales charge of 5.75%. |
Returns for periods greater than one year are average annual total returns.
16
| The Medical Fund |
| December 31, 2006 — December 31, 2016 |
| |
| | | Ended 12/31/2016 |
| | | | | Advisor | | Advisor | | | | | | |
| | | No Load | | Class A | | Class A | | Advisor | | | | NASDAQ |
| | | Class | | (No Load) | (Load Adjusted)(1) | | Class C | | S&P 500 | | Composite |
| One Year | | | -8.01 | % | | -8.24 | % | | -13.50 | % | | -8.69 | % | | 11.96 | % | | 7.50 | % |
| Five Years | | | 13.15 | % | | 12.88 | % | | 11.55 | % | | 12.31 | % | | 14.66 | % | | 15.62 | % |
| Ten Years | | | 8.81 | % | | 8.56 | % | | 7.92 | % | | N/A | | | 6.95 | % | | 8.34 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | |
| No Load Class | | | | | | | | | | | | | | | | | | | |
| (9/30/99) | | | 9.08 | % | | N/A | | | N/A | | | N/A | | | 5.29 | % | | 3.98 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | |
| Advisor Class A | | | | | | | | | | | | | | | | | | | |
| (4/26/01) | | | N/A | | | 5.60 | % | | 5.20 | % | | N/A | | | 5.97 | % | | 6.40 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | |
| Advisor Class C | | | | | | | | | | | | | | | | | | | |
| (2/16/07) | | | N/A | | | N/A | | | N/A | | | 7.61 | % | | 6.73 | % | | 8.10 | % |
(1) | Reflects front-end sales charge of 5.75%. |
Returns for periods greater than one year are average annual total returns.
17
| The Small Cap Opportunities Fund |
December 31, 2006 — December 31, 2016 $30,000 |
| |
| | | Ended 12/31/2016 |
| | | | | Advisor | | Advisor | | | | | | | | | | |
| | | No Load | | Class A | | Class A | | Advisor | | Institutional | | S&P | | Russell | | S&P |
| | | Class | | (No Load) | (Load Adjusted) (1) | | Class C | | Class | | 500 | | 2000 | | 600* |
| One Year | | | 24.39 | % | | 24.06 | % | | 16.94 | % | | 23.45 | % | | 24.61 | % | | 11.96 | % | | 21.31 | % | | 26.56 | % |
| Five Years | | | 15.37 | % | | 15.09 | % | | 13.73 | % | | 14.51 | % | | 15.61 | % | | 14.66 | % | | 14.46 | % | | 16.62 | % |
| Ten Years | | | 4.83 | % | | 4.56 | % | | 3.95 | % | | N/A | | | 5.03 | % | | 6.95 | % | | 7.07 | % | | 9.03 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | | | | | | | |
| No Load Class | | | | | | | | | | | | | | | | | | | | | | | | | |
| (3/20/00) | | | 9.46 | % | | N/A | | | N/A | | | N/A | | | N/A | | | 4.61 | % | | 6.96 | % | | 9.73 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | | | | | | | |
| Advisor Class A | | | | | | | | | | | | | | | | | | | | | | | | | |
| (12/31/01) | | | N/A | | | 7.67 | % | | 7.25 | % | | N/A | | | N/A | | | 6.69 | % | | 8.49 | % | | 10.17 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | | | | | | | |
| Advisor Class C | | | | | | | | | | | | | | | | | | | | | | | | | |
| (2/16/07) | | | N/A | | | N/A | | | N/A | | | 3.38 | % | | N/A | | | 6.73 | % | | 6.74 | % | | 8.68 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | | | | | | | |
| Institutional Class | | | | | | | | | | | | | | | | | | | | | | | | | |
| (8/12/05) | | | N/A | | | N/A | | | N/A | | | N/A | | | 7.03 | % | | 7.66 | % | | 8.00 | % | | 9.40 | % |
(1) | Reflects front-end sales charge of 5.75%. |
| | |
| * | Effective April 30, 2017, the S&P 600 SmallCap Index will replace the Russell 2000 Index as a more appropriate comparative index for the Small Cap Opportunities Fund. |
Returns for periods greater than one year are average annual total returns.
18
| The Market Opportunities Fund |
| December 31, 2006 — December 31, 2016 |
| |
| | | Ended 12/31/2016 |
| | | | | Advisor | | Advisor | | | | | | | | |
| | | No Load | | Class A | | Class A | | Advisor | | Institutional | | | | |
| | | Class | | (No Load) | (Load Adjusted)(1) | | Class C | | Class | | S&P 500 | | MSCI EAFE |
| One Year | | | 20.45 | % | | 20.15 | % | | 13.22 | % | | 19.52 | % | | 20.73 | % | | 11.96 | % | | 1.00 | % |
| Five Years | | | 12.26 | % | | 12.00 | % | | 10.67 | % | | 11.43 | % | | 12.53 | % | | 14.66 | % | | 6.53 | % |
| Ten Years | | | 5.22 | % | | 4.95 | % | | 4.34 | % | | N/A | | | N/A | | | 6.95 | % | | 0.75 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | | | | |
| No Load Class | | | | | | | | | | | | | | | | | | | | | | |
| (1/31/06) | | | 6.61 | % | | N/A | | | N/A | | | N/A | | | N/A | | | 7.53 | % | | 2.31 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | | | | |
| Advisor Class A | | | | | | | | | | | | | | | | | | | | | | |
| (1/31/06) | | | N/A | | | 6.34 | % | | 5.77 | % | | N/A | | | N/A | | | 7.53 | % | | 2.31 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | | | | |
| Advisor Class C | | | | | | | | | | | | | | | | | | | | | | |
| (2/16/07) | | | N/A | | | N/A | | | N/A | | | 3.71 | % | | N/A | | | 6.73 | % | | 0.33 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | | | | |
| Institutional Class | | | | | | | | | | | | | | | | | | | | | | |
| (5/19/08) | | | N/A | | | N/A | | | N/A | | | N/A | | | 4.73 | % | | 7.69 | % | | -0.30 | % |
(1) | Reflects front-end sales charge of 5.75%. |
Returns for periods greater than one year are average total returns.
19
| The Alternative Income Fund |
| June 29, 2007 — December 31, 2016 |
| |
| | | Ended 12/31/2016 |
| | | | | | | | | | | | | Bloomberg | | Bloomberg |
| | | | | | | | | | | | | Barclays | | Barclays |
| | | | | Advisor | | Advisor | | | | | | U.S. 1-3 | | U.S. |
| | | No Load | | Class A | | Class A | | Advisor | | Institutional | | Year | | Aggregate |
| | | Class | | (No Load) | (Load Adjusted)(1) | | Class C | | Class | | Credit | | Bond |
| One Year | | | 4.00 | % | | 3.76 | % | | -2.21 | % | | 3.23 | % | | 4.22 | % | | 2.11 | % | | 2.65 | % |
| Five Years | | | 4.67 | % | | 4.39 | % | | 3.17 | % | | 3.87 | % | | 4.88 | % | | 1.84 | % | | 2.23 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | | | | |
| No Load Class | | | | | | | | | | | | | | | | | | | | | | |
| (6/29/07) | | | 0.21 | % | | N/A | | | N/A | | | N/A | | | N/A | | | 3.18 | % | | 4.47 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | | | | |
| Advisor Class A | | | | | | | | | | | | | | | | | | | | | | |
| (6/29/07) | | | N/A | | | -0.04 | % | | -0.66 | % | | N/A | | | N/A | | | 3.18 | % | | 4.47 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | | | | |
| Advisor Class C | | | | | | | | | | | | | | | | | | | | | | |
| (6/29/07) | | | N/A | | | N/A | | | N/A | | | -0.53 | % | | N/A | | | 3.18 | % | | 4.47 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | | | | |
| Institutional Class | | | | | | | | | | | | | | | | | | | | | | |
| (6/29/07) | | | N/A | | | N/A | | | N/A | | | N/A | | | 0.46 | % | | 3.18 | % | | 4.47 | % |
(1) | Reflects front-end sales charge of 5.75%. |
Returns for periods greater than one year are average total returns.
20
| The Multi-Disciplinary Income Fund |
| February 11, 2008 — December 31, 2016 |
| | | Ended 12/31/2016 |
| | | | | | | | | | | | | | | Bloomberg |
| | | | | | | | | | | | | Bloomberg | | Barclays |
| | | | | | | | | | | | | Barclays | | U.S. |
| | | | | Advisor | | Advisor | | | | | | U.S. | | Corporate |
| | | No Load | | Class A | | Class A | | Advisor | | Institutional | | Aggregate | | High |
| | | Class | | (No Load) | (Load Adjusted)(1) | | Class C | | Class | | Bond | | Yield Bond |
| One Year | | | 10.41 | % | | 10.17 | % | | 3.80 | % | | 9.51 | % | | 10.61 | % | | 2.65 | % | | 17.13 | % |
| Five Years | | | 5.90 | % | | 5.65 | % | | 4.41 | % | | 5.10 | % | | 6.10 | % | | 2.23 | % | | 7.36 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | | | | |
| No Load Class | | | | | | | | | | | | | | | | | | | | | | |
| (2/11/08) | | | 4.86 | % | | N/A | | | N/A | | | N/A | | | N/A | | | 3.91 | % | | 8.51 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | | | | |
| Advisor Class A | | | | | | | | | | | | | | | | | | | | | | |
| (2/11/08) | | | N/A | | | 4.61 | % | | 3.91 | % | | N/A | | | N/A | | | 3.91 | % | | 8.51 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | | | | |
| Advisor Class C | | | | | | | | | | | | | | | | | | | | | | |
| (2/11/08) | | | N/A | | | N/A | | | N/A | | | 4.08 | % | | N/A | | | 3.91 | % | | 8.51 | % |
| Since Inception | | | | | | | | | | | | | | | | | | | | | | |
| Institutional Class | | | | | | | | | | | | | | | | | | | | | | |
| (2/11/08) | | | N/A | | | N/A | | | N/A | | | N/A | | | 5.06 | % | | 3.91 | % | | 8.51 | % |
(1) | Reflects front-end sales charge of 5.75%. |
Returns for periods greater than one year are average total returns.
21
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
| Expense Example |
| December 31, 2016 |
Shareholders incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvestments of dividends or other distributions made by a Fund, redemption fees, and exchange fees, and (2), ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help investors understand the ongoing costs (in dollars) of investing in a series of Kinetics Mutual Funds, Inc. (each a "Feeder Fund" and collectively the "Feeder Funds"), and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested on July 1, 2016 and held for the entire period from July 1, 2016 to December 31, 2016.
Actual Expenses
The first line items of the table below provides information about actual account values and actual expenses before and after expense reimbursement. Unlike other mutual funds that directly acquire and manage their own portfolio securities, each Feeder Fund invests all or generally all of its investable assets in a corresponding series of The Kinetics Portfolios Trust (each, a "Master Portfolio", and together the "Master Portfolios"), a separately registered investment company. The Master Portfolio, in turn, invests in securities. With this type of organization, expenses can accrue specifically to the Master Portfolio or the Feeder Fund or both. Each Feeder Fund records its proportionate share of the Master Portfolio's expenses, including directed brokerage credits, on a daily basis. Any expense reductions include Fund-specific expenses as well as the expenses allocated from the Master Portfolio.
The Feeder Funds will charge shareholder fees for outgoing wire transfers, returned checks, and exchanges executed by telephone between a Feeder Fund and any other Feeder Fund. The Feeder Funds' transfer agent charges a $5.00 transaction fee to shareholder accounts for telephone exchanges between any two Feeder Funds. The Feeder Funds' transfer agent does not charge a transaction fee for written exchange requests. IRA accounts are assessed a $15.00 annual fee. Finally, as a disincentive to market-timing transactions, the Feeder Funds will assess a 2.00% fee on the redemption or exchange of Fund shares held for less than 30 days. These fees will be paid to the Feeder Funds to help offset transaction costs. The Feeder Funds reserve the right to waive the redemption fee, subject to their sole discretion, in instances deemed not to be disadvantageous to the Feeder Funds or shareholders as described in the Feeder Funds' prospectus.
22
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Expense Example — (Continued) |
| December 31, 2016 |
You may use the information provided in the first line, together with the amounts you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line item of the table below provides information about hypothetical account values and hypothetical expenses before and after expense reimbursements based on the Feeder Funds' actual expense ratios and an assumed rate of return of 5% per year before expenses, which are not the Feeder Funds' actual returns. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses one paid for the period. You may use this information to compare the ongoing costs of investing in the Feeder Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight one's ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help one determine the relative total costs of owning different funds. If these transactional costs had been included, one's costs would have been higher.
23
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Expense Example — (Continued) |
| December 31, 2016 |
| | | | | | | | | Expenses Paid |
| | | Beginning | | Ending | | | | During |
| | | Account | | Account | | Annualized | | Period* |
| | | Value | | Value | | Expense | | (7/1/16 to |
| | | (7/1/16) | | (12/31/16) | | Ratio | | 12/31/16) |
| | | | | | | | | | | | | | |
| The Internet Fund | | | | | | | | | | | | | |
| No Load Class Actual | | $ | 1,000.00 | | $ | 1,067.40 | | | 1.87 | % | $ | 9.72 | |
| No Load Class Hypothetical (5% return before expenses) | | $ | 1,000.00 | | $ | 1,015.70 | | | 1.87 | % | $ | 9.47 | |
| Advisor Class A Actual | | $ | 1,000.00 | | $ | 1,065.80 | | | 2.12 | % | $ | 11.01 | |
| Advisor Class A Hypothetical (5% return before expenses) | | $ | 1,000.00 | | $ | 1,014.44 | | | 2.12 | % | $ | 10.73 | |
| Advisor Class C Actual | | $ | 1,000.00 | | $ | 1,063.30 | | | 2.62 | % | $ | 13.59 | |
| Advisor Class C Hypothetical (5% return before expenses) | | $ | 1,000.00 | | $ | 1,011.93 | | | 2.62 | % | $ | 13.25 | |
| The Global Fund | | | | | | | | | | | | | |
| No Load Class Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,069.40 | | | 1.39 | % | $ | 7.23 | |
| No Load Class Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,018.11 | | | 1.39 | % | $ | 7.05 | |
| Advisor Class A Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,067.80 | | | 1.64 | % | $ | 8.52 | |
| Advisor Class A Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,016.86 | | | 1.64 | % | $ | 8.31 | |
| Advisor Class C Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,066.20 | | | 2.14 | % | $ | 11.11 | |
| Advisor Class C Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,014.34 | | | 2.14 | % | $ | 10.84 | |
24
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Expense Example — (Continued) |
| December 31, 2016 |
| | | | | | | | | Expenses Paid |
| | | Beginning | | Ending | | | | During |
| | | Account | | Account | | Annualized | | Period* |
| | | Value | | Value | | Expense | | (7/1/16 to |
| | | (7/1/16) | | (12/31/16) | | Ratio | | 12/31/16) |
| | | | | | | | | | | | | | |
| The Paradigm Fund | | | | | | | | | | | | | |
| No Load Class Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,152.50 | | | 1.64 | % | $ | 8.87 | |
| No Load Class Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,016.86 | | | 1.64 | % | $ | 8.31 | |
| Advisor Class A Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,151.20 | | | 1.89 | % | $ | 10.22 | |
| Advisor Class A Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,015.60 | | | 1.89 | % | $ | 9.58 | |
| Advisor Class C Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,148.00 | | | 2.39 | % | $ | 12.90 | |
| Advisor Class C Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,013.08 | | | 2.39 | % | $ | 12.09 | |
| Institutional Class Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,153.50 | | | 1.44 | % | $ | 7.79 | |
| Institutional Class Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,017.86 | | | 1.44 | % | $ | 7.30 | |
| The Medical Fund | | | | | | | | | | | | | |
| No Load Class Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,003.40 | | | 1.39 | % | $ | 7.00 | |
| No Load Class Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,018.11 | | | 1.39 | % | $ | 7.05 | |
| Advisor Class A Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,002.40 | | | 1.64 | % | $ | 8.25 | |
| Advisor Class A Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,016.86 | | | 1.64 | % | $ | 8.31 | |
| Advisor Class C Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 999.90 | | | 2.14 | % | $ | 10.76 | |
| Advisor Class C Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,014.34 | | | 2.14 | % | $ | 10.84 | |
25
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Expense Example — (Continued) |
| December 31, 2016 |
| | | | | | | | | Expenses Paid |
| | | Beginning | | Ending | | | | During |
| | | Account | | Account | | Annualized | | Period* |
| | | Value | | Value | | Expense | | (7/1/16 to |
| | | (7/1/16) | | (12/31/16) | | Ratio | | 12/31/16) |
| | | | | | | | | | | | | | |
| The Small Cap Opportunities Fund | | | | | | | | | | | | | |
| No Load Class Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,169.40 | | | 1.64 | % | $ | 8.94 | |
| No Load Class Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,016.86 | | | 1.64 | % | $ | 8.31 | |
| Advisor Class A Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,167.70 | | | 1.89 | % | $ | 10.30 | |
| Advisor Class A Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,015.60 | | | 1.89 | % | $ | 9.58 | |
| Advisor Class C Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,164.70 | | | 2.39 | % | $ | 13.00 | |
| Advisor Class C Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,013.08 | | | 2.39 | % | $ | 12.09 | |
| Institutional Class Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,170.30 | | | 1.44 | % | $ | 7.86 | |
| Institutional Class Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,017.86 | | | 1.44 | % | $ | 7.30 | |
| The Market Opportunities Fund | | | | | | | | | | | | | |
| No Load Class Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,147.00 | | | 1.64 | % | $ | 8.85 | |
| No Load Class Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,016.86 | | | 1.64 | % | $ | 8.31 | |
| Advisor Class A Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,145.80 | | | 1.89 | % | $ | 10.19 | |
| Advisor Class A Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,015.60 | | | 1.89 | % | $ | 9.58 | |
| Advisor Class C Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,143.00 | | | 2.39 | % | $ | 12.87 | |
| Advisor Class C Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,013.08 | | | 2.39 | % | $ | 12.09 | |
| Institutional Class Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,148.00 | | | 1.44 | % | $ | 7.78 | |
| Institutional Class Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,017.86 | | | 1.44 | % | $ | 7.30 | |
26
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Expense Example — (Continued) |
| December 31, 2016 |
| | | | | | | | | Expenses Paid |
| | | Beginning | | Ending | | | | During |
| | | Account | | Account | | Annualized | | Period* |
| | | Value | | Value | | Expense | | (7/1/16 to |
| | | (7/1/16) | | (12/31/16) | | Ratio | | 12/31/16) |
| | | | | | | | | | | | | | |
| The Alternative Income Fund | | | | | | | | | | | | | |
| No Load Class Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,020.10 | | | 0.95 | % | $ | 4.82 | |
| No Load Class Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,020.32 | | | 0.95 | % | $ | 4.82 | |
| Advisor Class A Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,018.90 | | | 1.20 | % | $ | 6.09 | |
| Advisor Class A Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,019.07 | | | 1.20 | % | $ | 6.09 | |
| Advisor Class C Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,016.40 | | | 1.70 | % | $ | 8.62 | |
| Advisor Class C Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,016.55 | | | 1.70 | % | $ | 8.62 | |
| Institutional Class Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,021.30 | | | 0.75 | % | $ | 3.81 | |
| Institutional Class Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,021.33 | | | 0.75 | % | $ | 3.81 | |
| The Multi-Disciplinary Income Fund | | | | | | | | | | | | | |
| No Load Class Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,044.10 | | | 1.49 | % | $ | 7.66 | |
| No Load Class Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,017.61 | | | 1.49 | % | $ | 7.56 | |
| Advisor Class A Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,043.10 | | | 1.74 | % | $ | 8.94 | |
| Advisor Class A Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,016.35 | | | 1.74 | % | $ | 8.82 | |
| Advisor Class C Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,039.70 | | | 2.24 | % | $ | 11.48 | |
| Advisor Class C Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,013.84 | | | 2.24 | % | $ | 11.34 | |
| Institutional Class Actual - after expense reimbursement | | $ | 1,000.00 | | $ | 1,045.10 | | | 1.29 | % | $ | 6.63 | |
| Institutional Class Hypothetical (5% return before expenses) - after expense reimbursement | | $ | 1,000.00 | | $ | 1,018.61 | | | 1.29 | % | $ | 6.55 | |
| | | |
| Note: | Each Feeder Fund records its proportionate share of the respective Master Portfolio's expenses on a daily basis. Any expense reductions include Feeder Fund-specific expenses as well as the expenses allocated for the Master Portfolio. |
| | | |
| * | Expenses are equal to the Feeder Fund's annualized expense ratio after expense reimbursement multiplied by the average account value over the period, multiplied by 184/366. |
27
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
| Statements of Assets & Liabilities |
| December 31, 2016 |
| | | The Internet | | The Global | |
| | | | Fund | | | Fund | |
| ASSETS: | | | | | | | |
| Investments in the Master Portfolio, at value* | | $ | 112,610,869 | | $ | 7,534,930 | |
| Receivable from Adviser | | | — | | | 9,178 | |
| Receivable for Master Portfolio interest sold | | | 829,292 | | | 1,513 | |
| Receivable for Fund shares sold | | | 40,649 | | | 724 | |
| Prepaid expenses and other assets | | | 24,917 | | | 17,237 | |
| Total Assets | | | 113,505,727 | | | 7,563,582 | |
| LIABILITIES: | | | | | | | |
| Payable to Directors | | | 3,052 | | | 193 | |
| Payable to Chief Compliance Officer | | | 217 | | | 8 | |
| Payable for Fund shares repurchased | | | 663,038 | | | 1,173 | |
| Payable for shareholder servicing fees | | | 25,088 | | | 1,591 | |
| Payable for distribution fees | | | 1,035 | | | 1,395 | |
| Fund distribution payable | | | 206,903 | | | 1,064 | |
| Accrued expenses and other liabilities | | | 49,860 | | | 12,711 | |
| Total Liabilities | | | 949,193 | | | 18,135 | |
| Net Assets | | $ | 112,556,534 | | $ | 7,545,447 | |
| NET ASSETS CONSIST OF: | | | | | | | |
| Paid in capital | | $ | 68,446,546 | | $ | 6,483,901 | |
| Accumulated net investment loss | | | (230,532 | ) | | (14,759 | ) |
| Accumulated net realized gain (loss) on investments and foreign currency | | | 6,141,296 | | | (4,451 | ) |
| Net unrealized appreciation on: | | | | | | | |
| Investments and foreign currency | | | 38,199,224 | | | 1,080,756 | |
| Net Assets | | $ | 112,556,534 | | $ | 7,545,447 | |
| CALCULATION OF NET ASSET VALUE PER SHARE - NO LOAD CLASS: | | | | | | | |
| Net Assets | | $ | 109,929,729 | | $ | 5,316,303 | |
| Shares outstanding | | | 2,795,324 | | | 1,015,936 | |
| Net asset value per share (offering price and redemption price) | | $ | 39.33 | | $ | 5.23 | |
| CALCULATION OF NET ASSET VALUE PER SHARE - ADVISOR CLASS A: | | | | | | | |
| Net Assets | | $ | 1,923,261 | | $ | 308,769 | |
| Shares outstanding | | | 51,193 | | | 59,483 | |
| Net asset value per share (redemption price) | | $ | 37.57 | | $ | 5.19 | |
| Offering price per share ($37.57 divided by .9425 and $5.19 divided by .9425) | | $ | 39.86 | | $ | 5.51 | |
| CALCULATION OF NET ASSET VALUE PER SHARE - ADVISOR CLASS C: | | | | | | | |
| Net Assets | | $ | 703,544 | | $ | 1,920,375 | |
| Shares outstanding | | | 20,381 | | | 384,815 | |
| Net asset value per share (offering price and redemption price) | | $ | 34.52 | | $ | 4.99 | |
| * | Each Feeder Fund invests all or generally all its assets directly in the corresponding Master Portfolio. The financial statements for the Master Portfolios, along with the portfolio of investments in securities, are contained elsewhere in this report and should be read in conjunction with the Feeder Funds' financial statements. |
The accompanying notes are an integral part of these financial statements.
28
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Statements of Assets & Liabilities — (Continued) |
| December 31, 2016 |
| | | The Paradigm | | The Medical | |
| | | | Fund | | | Fund | |
| ASSETS: | | | | | | | |
| Investments in the Master Portfolio, at value* | | $ | 824,030,966 | | $ | 21,661,494 | |
| Receivable from Adviser | | | — | | | 12,121 | |
| Receivable for Master Portfolio interest sold | | | 47,758 | | | 136,721 | |
| Receivable for Fund shares sold | | | 1,147,676 | | | 13,984 | |
| Prepaid expenses and other assets | | | 44,538 | | | 18,618 | |
| Total Assets | | | 825,270,938 | | | 21,842,938 | |
| LIABILITIES: | | | | | | | |
| Payable to Directors | | | 20,086 | | | 620 | |
| Payable to Chief Compliance Officer | | | 1,281 | | | 44 | |
| Payable for Fund shares repurchased | | | 1,195,434 | | | 115,244 | |
| Payable for shareholder servicing fees | | | 129,235 | | | 4,651 | |
| Payable for distribution fees | | | 121,466 | | | 1,073 | |
| Fund distribution payable | | | — | | | 35,461 | |
| Accrued expenses and other liabilities | | | 192,768 | | | 16,766 | |
| Total Liabilities | | | 1,660,270 | | | 173,859 | |
| Net Assets | | $ | 823,610,668 | | $ | 21,669,079 | |
| NET ASSETS CONSIST OF: | | | | | | | |
| Paid in capital | | $ | 1,107,476,195 | | $ | 14,982,120 | |
| Accumulated net investment income (loss) | | | (7,293,652 | ) | | 22,162 | |
| Accumulated net realized gain (loss) on investments and foreign currency | | | (543,167,570 | ) | | 499,785 | |
| Net unrealized appreciation on: | | | | | | | |
| Investments and foreign currency | | | 266,595,695 | | | 6,165,012 | |
| Net Assets | | $ | 823,610,668 | | $ | 21,669,079 | |
| CALCULATION OF NET ASSET VALUE PER SHARE - NO LOAD CLASS: | | | | | | | |
| Net Assets | | $ | 336,837,026 | | $ | 17,560,088 | |
| Shares outstanding | | | 8,951,296 | | | 659,557 | |
| Net asset value per share (offering price and redemption price) | | $ | 37.63 | | $ | 26.62 | |
| CALCULATION OF NET ASSET VALUE PER SHARE - ADVISOR CLASS A: | | | | | | | |
| Net Assets | | $ | 103,920,557 | | $ | 3,686,562 | |
| Shares outstanding | | | 2,832,767 | | | 143,401 | |
| Net asset value per share (redemption price) | | $ | 36.69 | | $ | 25.71 | |
| Offering price per share ($36.69 divided by .9425 and $25.71 divided by .9425) | | $ | 38.93 | | $ | 27.28 | |
| CALCULATION OF NET ASSET VALUE PER SHARE - ADVISOR CLASS C: | | | | | | | |
| Net Assets | | $ | 111,973,446 | | $ | 422,429 | |
| Shares outstanding | | | 3,228,483 | | | 16,907 | |
| Net asset value per share (offering price and redemption price) | | $ | 34.68 | | $ | 24.99 | |
| CALCULATION OF NET ASSET VALUE PER SHARE - INSTITUTIONAL CLASS: | | | | | | | |
| Net Assets | | $ | 270,879,639 | | | N/A | |
| Shares outstanding | | | 7,167,924 | | | N/A | |
| Net asset value per share (offering price and redemption price) | | $ | 37.79 | | | N/A | |
| * | Each Feeder Fund invests all or generally all its assets directly in the corresponding Master Portfolio. The financial statements for the Master Portfolios, along with the portfolio of investments in securities, are contained elsewhere in this report and should be read in conjunction with the Feeder Funds' financial statements. |
The accompanying notes are an integral part of these financial statements.
29
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Statements of Assets & Liabilities — (Continued) |
| December 31, 2016 |
| | | The Small Cap | | The Market | |
| | | Opportunities | | Opportunities | |
| | | Fund | | Fund | |
| ASSETS: | | | | | | | |
| Investments in the Master Portfolio, at value* | | $ | 205,154,299 | | $ | 43,565,871 | |
| Receivable from Adviser | | | 7,303 | | | 7,715 | |
| Receivable for Fund shares sold | | | 334,550 | | | 324,781 | |
| Prepaid expenses and other assets | | | 25,211 | | | 29,372 | |
| Total Assets | | | 205,521,363 | | | 43,927,739 | |
| LIABILITIES: | | | | | | | |
| Payable for Master Portfolio interest purchased | | | 146,991 | | | 318,449 | |
| Payable to Directors | | | 5,353 | | | 1,084 | |
| Payable to Chief Compliance Officer | | | 347 | | | 63 | |
| Payable for Fund shares repurchased | | | 187,559 | | | 6,332 | |
| Payable for shareholder servicing fees | | | 35,516 | | | 8,797 | |
| Payable for distribution fees | | | 8,683 | | | 3,755 | |
| Accrued expenses and other liabilities | | | 57,417 | | | 20,804 | |
| Total Liabilities | | | 441,866 | | | 359,284 | |
| Net Assets | | $ | 205,079,497 | | $ | 43,568,455 | |
| NET ASSETS CONSIST OF: | | | | | | | |
| Paid in capital | | $ | 298,650,352 | | $ | 43,765,633 | |
| Accumulated net investment loss | | | (6,504,924 | ) | | (860,651 | ) |
| Accumulated net realized loss on investments and foreign currency | | | (92,752,344 | ) | | (8,763,938 | ) |
| Net unrealized appreciation on: | | | | | | | |
| Investments and foreign currency | | | 5,686,413 | | | 9,427,411 | |
| Net Assets | | $ | 205,079,497 | | $ | 43,568,455 | |
| CALCULATION OF NET ASSET VALUE PER SHARE - NO LOAD CLASS: | | | | | | | |
| Net Assets | | $ | 132,442,791 | | $ | 32,177,983 | |
| Shares outstanding | | | 3,262,431 | | | 1,762,277 | |
| Net asset value per share (offering price and redemption price) | | $ | 40.60 | | $ | 18.26 | |
| CALCULATION OF NET ASSET VALUE PER SHARE - ADVISOR CLASS A: | | | | | | | |
| Net Assets | | $ | 13,693,815 | | $ | 4,537,124 | |
| Shares outstanding | | | 346,214 | | | 251,079 | |
| Net asset value per share (redemption price) | | $ | 39.55 | | $ | 18.07 | |
| Offering price per share ($39.55 divided by .9425 and $18.07 divided by .9425) | | $ | 41.96 | | $ | 19.17 | |
| CALCULATION OF NET ASSET VALUE PER SHARE - ADVISOR CLASS C: | | | | | | | |
| Net Assets | | $ | 8,426,288 | | $ | 4,427,645 | |
| Shares outstanding | | | 221,028 | | | 252,896 | |
| Net asset value per share (offering price and redemption price) | | $ | 38.12 | | $ | 17.51 | |
| CALCULATION OF NET ASSET VALUE PER SHARE - INSTITUTIONAL CLASS: | | | | | | | |
| Net Assets | | $ | 50,516,603 | | $ | 2,425,703 | |
| Shares outstanding | | | 1,227,263 | | | 131,417 | |
| Net asset value per share (offering price and redemption price) | | $ | 41.16 | | $ | 18.46 | |
| * | Each Feeder Fund invests all or generally all its assets directly in the corresponding Master Portfolio. The financial statements for the Master Portfolios, along with the portfolio of investments in securities, are contained elsewhere in this report and should be read in conjunction with the Feeder Funds' financial statements. |
The accompanying notes are an integral part of these financial statements.
30
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Statements of Assets & Liabilities — (Continued) |
| December 31, 2016 |
| | | | | The Multi- | |
| | | The Alternative | | Disciplinary | |
| | | Income | | Income | |
| | | Fund | | Fund | |
| ASSETS: | | | | | | | |
| Investments in the Master Portfolio, at value* | | $ | 27,919,194 | | $ | 99,604,318 | |
| Receivable from Adviser | | | 14,625 | | | 26,760 | |
| Receivable for Master Portfolio interest sold | | | 227,777 | | | — | |
| Receivable for Fund shares sold | | | 47,564 | | | 470,693 | |
| Prepaid expenses and other assets | | | 15,795 | | | 36,520 | |
| Total Assets | | | 28,224,955 | | | 100,138,291 | |
| LIABILITIES: | | | | | | | |
| Payable for Master Portfolio interest purchased | | | — | | | 120,778 | |
| Payable to Directors | | | 709 | | | 2,463 | |
| Payable to Chief Compliance Officer | | | 48 | | | 138 | |
| Payable for Fund shares repurchased | | | 275,056 | | | 326,734 | |
| Payable for shareholder servicing fees | | | 2,629 | | | 7,813 | |
| Payable for distribution fees | | | 1,733 | | | 6,618 | |
| Fund distribution payable | | | 285 | | | 23,181 | |
| Accrued expenses and other liabilities | | | 17,649 | | | 32,372 | |
| Total Liabilities | | | 298,109 | | | 520,097 | |
| Net Assets | | $ | 27,926,846 | | $ | 99,618,194 | |
| NET ASSETS CONSIST OF: | | | | | | | |
| Paid in capital | | $ | 33,105,492 | | $ | 102,632,454 | |
| Accumulated net investment income | | | 13,501 | | | 37,906 | |
| Accumulated net realized loss on investments, foreign currency and written option contracts | | | (5,373,084 | ) | | (1,375,249 | ) |
| Net unrealized appreciation (depreciation) on: | | | | | | | |
| Investments and foreign currency | | | (34,679 | ) | | (1,681,452 | ) |
| Written option contracts | | | 215,616 | | | 4,535 | |
| Net Assets | | $ | 27,926,846 | | $ | 99,618,194 | |
| CALCULATION OF NET ASSET VALUE PER SHARE - NO LOAD CLASS: | | | | | | | |
| Net Assets | | $ | 5,663,573 | | $ | 6,808,778 | |
| Shares outstanding | | | 59,389 | | | 621,820 | |
| Net asset value per share (offering price and redemption price) | | $ | 95.36 | | $ | 10.95 | |
| CALCULATION OF NET ASSET VALUE PER SHARE - ADVISOR CLASS A: | | | | | | | |
| Net Assets | | $ | 2,458,183 | | $ | 6,935,321 | |
| Shares outstanding | | | 26,029 | | | 636,494 | |
| Net asset value per share (redemption price) | | $ | 94.44 | | $ | 10.90 | |
| Offering price per share ($94.44 divided by .9425 and $10.90 divided by .9425) | | $ | 100.20 | | $ | 11.56 | |
| CALCULATION OF NET ASSET VALUE PER SHARE - ADVISOR CLASS C: | | | | | | | |
| Net Assets | | $ | 1,639,877 | | $ | 7,789,607 | |
| Shares outstanding | | | 17,956 | | | 721,850 | |
| Net asset value per share (offering price and redemption price) | | $ | 91.33 | | $ | 10.79 | |
| CALCULATION OF NET ASSET VALUE PER SHARE - INSTITUTIONAL CLASS: | | | | | | | |
| Net Assets | | $ | 18,165,213 | | $ | 78,084,488 | |
| Shares outstanding | | | 187,936 | | | 7,119,893 | |
| Net asset value per share (offering price and redemption price) | | $ | 96.66 | | $ | 10.97 | |
| * | Each Feeder Fund invests all or generally all its assets directly in the corresponding Master Portfolio. The financial statements for the Master Portfolios, along with the portfolio of investments in securities, are contained elsewhere in this report and should be read in conjunction with the Feeder Funds' financial statements. |
The accompanying notes are an integral part of these financial statements.
31
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
| Statements of Operations |
| For the Year Ended December 31, 2016 |
| | | The Internet | | The Global | |
| | | Fund | | Fund | |
| INVESTMENT INCOME (LOSS) ALLOCATED FROM MASTER PORTFOLIOS: | | | | | | | |
| Dividends† | | $ | 92,200 | | $ | 75,828 | |
| Interest | | | 87,002 | | | 7,680 | |
| Income from securities lending | | | 43,909 | | | 2,136 | |
| Expenses allocated from Master Portfolio | | | (1,594,906 | ) | | (116,396 | ) |
| Net investment loss from Master Portfolio | | | (1,371,795 | ) | | (30,752 | ) |
| EXPENSES: | | | | | | | |
| Distribution fees — Advisor Class A | | | 6,406 | | | 790 | |
| Distribution fees — Advisor Class C | | | 5,747 | | | 13,203 | |
| Shareholder servicing fees — Advisor Class A | | | 6,406 | | | 790 | |
| Shareholder servicing fees — Advisor Class C | | | 1,916 | | | 4,401 | |
| Shareholder servicing fees — No Load Class | | | 281,521 | | | 12,367 | |
| Transfer agent fees and expenses | | | 118,908 | | | 18,114 | |
| Reports to shareholders | | | 27,422 | | | 3,413 | |
| Administration fees | | | 48,242 | | | 4,688 | |
| Professional fees | | | 19,103 | | | 8,709 | |
| Directors' fees | | | 11,493 | | | 683 | |
| Chief Compliance Officer fees | | | 2,463 | | | 146 | |
| Registration fees | | | 42,809 | | | 42,836 | |
| Fund accounting fees | | | 5,702 | | | 340 | |
| Other expenses | | | 5,837 | | | 321 | |
| Total expenses | | | 583,975 | | | 110,801 | |
| Less, expense reimbursement | | | — | | | (115,583 | ) |
| Net expenses | | | 583,975 | | | (4,782 | ) |
| Net investment loss | | | (1,955,770 | ) | | (25,970 | ) |
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | | | | | | | |
| ALLOCATED FROM MASTER PORTFOLIOS: | | | | | | | |
| Net realized gain on: | | | | | | | |
| Investments and foreign currency | | | 13,022,035 | | | 111,804 | |
| Net change in unrealized appreciation (depreciation) of: | | | | | | | |
| Investments and foreign currency | | | (8,519,074 | ) | | 854,717 | |
| Net gain on investments | | | 4,502,961 | | | 966,521 | |
| Net increase in net assets resulting from operations | | $ | 2,547,191 | | $ | 940,551 | |
| † Net of foreign taxes withheld of: | | $ | — | | $ | 12,648 | |
The accompanying notes are an integral part of these financial statements.
32
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Statements of Operations — (Continued) |
| For the Year Ended December 31, 2016 |
| | | The Paradigm | | The Medical | |
| | | Fund | | Fund | |
| INVESTMENT INCOME (LOSS) ALLOCATED FROM MASTER PORTFOLIOS: | | | | | | | |
| Dividends† | | $ | 3,041,000 | | $ | 487,614 | |
| Interest | | | 209,613 | | | 1,759 | |
| Income from securities lending | | | 728,339 | | | 13,293 | |
| Expenses allocated from Master Portfolio | | | (10,294,746 | ) | | (342,964 | ) |
| Net investment income (loss) from Master Portfolio | | | (6,315,794 | ) | | 159,702 | |
| EXPENSES: | | | | | | | |
| Distribution fees — Advisor Class A | | | 264,934 | | | 11,194 | |
| Distribution fees — Advisor Class C | | | 815,534 | | | 3,719 | |
| Shareholder servicing fees — Advisor Class A | | | 264,934 | | | 11,194 | |
| Shareholder servicing fees — Advisor Class C | | | 271,845 | | | 1,240 | |
| Shareholder servicing fees — No Load Class | | | 685,969 | | | 48,102 | |
| Shareholder servicing fees — Institutional Class | | | 526,286 | | | — | |
| Transfer agent fees and expenses | | | 235,463 | | | 25,311 | |
| Reports to shareholders | | | 109,209 | | | 6,294 | |
| Administration fees | | | 312,746 | | | 10,155 | |
| Professional fees | | | 78,119 | | �� | 10,430 | |
| Directors' fees | | | 72,894 | | | 2,458 | |
| Chief Compliance Officer fees | | | 15,529 | | | 524 | |
| Registration fees | | | 65,536 | | | 42,894 | |
| Fund accounting fees | | | 36,363 | | | 1,213 | |
| Other expenses | | | 38,395 | | | 1,220 | |
| Total expenses | | | 3,793,756 | | | 175,948 | |
| Less, expense waiver for Institutional Class shareholder servicing fees | | | (394,714 | ) | | — | |
| Less, expense reimbursement | | | (802,836 | ) | | (167,424 | ) |
| Net expenses | | | 2,596,206 | | | 8,524 | |
| Net investment income (loss) | | | (8,912,000 | ) | | 151,178 | |
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | | | | | | | |
| ALLOCATED FROM MASTER PORTFOLIOS: | | | | | | | |
| Net realized gain on: | | | | | | | |
| Investments and foreign currency | | | 77,793,743 | | | 1,820,994 | |
| Net change in unrealized appreciation (depreciation) of: | | | | | | | |
| Investments and foreign currency | | | 64,985,193 | | | (4,341,168 | ) |
| Net gain (loss) on investments | | | 142,778,936 | | | (2,520,174 | ) |
| Net increase (decrease) in net assets resulting from operations | | $ | 133,866,936 | | $ | (2,368,996 | ) |
| † Net of foreign taxes withheld of: | | $ | 189,900 | | $ | 17,717 | |
The accompanying notes are an integral part of these financial statements.
33
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Statements of Operations — (Continued) |
| For the Year Ended December 31, 2016 |
| | | The Small Cap | | The Market | |
| | | Opportunities | | Opportunities | |
| | | Fund | | Fund | |
| INVESTMENT INCOME (LOSS) ALLOCATED FROM MASTER PORTFOLIOS: | | | | | | | |
| Dividends† | | $ | 883,055 | | $ | 244,631 | |
| Interest | | | 38,879 | | | 22,825 | |
| Income from securities lending | | | 299,492 | | | 4,643 | |
| Expenses allocated from Master Portfolio | | | (2,722,288 | ) | | (564,979 | ) |
| Net investment loss from Master Portfolio | | | (1,500,862 | ) | | (292,880 | ) |
| EXPENSES: | | | | | | | |
| Distribution fees — Advisor Class A | | | 32,444 | | | 10,228 | |
| Distribution fees — Advisor Class C | | | 60,723 | | | 30,814 | |
| Shareholder servicing fees — Advisor Class A | | | 32,444 | | | 10,228 | |
| Shareholder servicing fees — Advisor Class C | | | 20,241 | | | 10,271 | |
| Shareholder servicing fees — No Load Class | | | 322,890 | | | 74,806 | |
| Shareholder servicing fees — Institutional Class | | | 100,045 | | | 3,894 | |
| Transfer agent fees and expenses | | | 63,745 | | | 27,922 | |
| Reports to shareholders | | | 35,086 | | | 6,673 | |
| Administration fees | | | 82,838 | | | 18,377 | |
| Professional fees | | | 26,612 | | | 11,818 | |
| Directors' fees | | | 19,265 | | | 3,924 | |
| Chief Compliance Officer fees | | | 4,107 | | | 826 | |
| Registration fees | | | 55,574 | | | 51,410 | |
| Fund accounting fees | | | 9,417 | | | 1,935 | |
| Other expenses | | | 10,351 | | | 2,009 | |
| Total expenses | | | 875,782 | | | 265,135 | |
| Less, expense waiver for Institutional Class shareholder servicing fees | | | (75,034 | ) | | (2,920 | ) |
| Less, expense reimbursement | | | (245,774 | ) | | (132,910 | ) |
| Net expenses | | | 554,974 | | | 129,305 | |
| Net investment loss | | | (2,055,836 | ) | | (422,185 | ) |
| REALIZED AND UNREALIZED GAIN ON INVESTMENTS | | | | | | | |
| ALLOCATED FROM MASTER PORTFOLIOS: | | | | | | | |
| Net realized gain on: | | | | | | | |
| Investments and foreign currency | | | 3,396,417 | | | 2,288,261 | |
| Net change in unrealized appreciation of: | | | | | | | |
| Investments and foreign currency | | | 41,387,172 | | | 5,650,095 | |
| Net gain on investments | | | 44,783,589 | | | 7,938,356 | |
| Net increase in net assets resulting from operations | | $ | 42,727,753 | | $ | 7,516,171 | |
| † Net of foreign taxes withheld of: | | $ | 25,622 | | $ | 10,201 | |
The accompanying notes are an integral part of these financial statements.
34
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Statements of Operations — (Continued) |
| For the Year Ended December 31, 2016 |
| | | | | | | The Multi- | |
| | | | The Alternative | | | Disciplinary | |
| | | | Income | | | Income | |
| | | | Fund | | | Fund | |
| INVESTMENT INCOME (LOSS) ALLOCATED FROM MASTER PORTFOLIOS: | | | | | | | |
| Dividends | | $ | 96,244 | | $ | 592,985 | |
| Interest | | | 153,526 | | | 4,182,675 | |
| Income from securities lending | | | — | | | 131,014 | |
| Expenses allocated from Master Portfolio | | | (293,119 | ) | | (1,231,242 | ) |
| Net investment income (loss) from Master Portfolio | | | (43,349 | ) | | 3,675,432 | |
| EXPENSES: | | | | | | | |
| Distribution fees — Advisor Class A | | | 5,412 | | | 16,985 | |
| Distribution fees — Advisor Class C | | | 11,600 | | | 63,469 | |
| Shareholder servicing fees — Advisor Class A | | | 5,412 | | | 16,985 | |
| Shareholder servicing fees — Advisor Class C | | | 3,867 | | | 21,156 | |
| Shareholder servicing fees — No Load Class | | | 11,943 | | | 15,291 | |
| Shareholder servicing fees — Institutional Class | | | 36,414 | | | 135,515 | |
| Transfer agent fees and expenses | | | 25,292 | | | 36,945 | |
| Reports to shareholders | | | 6,750 | | | 24,310 | |
| Administration fees | | | 13,186 | | | 38,960 | |
| Professional fees | | | 10,570 | | | 16,159 | |
| Directors' fees | | | 2,623 | | | 8,503 | |
| Chief Compliance Officer fees | | | 559 | | | 1,789 | |
| Registration fees | | | 52,152 | | | 58,945 | |
| Fund accounting fees | | | 1,297 | | | 4,110 | |
| Other expenses | | | 1,404 | | | 4,578 | |
| Total expenses | | | 188,481 | | | 463,700 | |
| Less, expense waiver for Institutional Class shareholder servicing fees | | | (27,311 | ) | | (101,637 | ) |
| Less, expense reimbursement | | | (220,079 | ) | | (320,325 | ) |
| Net expenses | | | (58,909 | ) | | 41,738 | |
| Net investment income | | | 15,560 | | | 3,633,694 | |
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | | | | | | | |
| ALLOCATED FROM MASTER PORTFOLIOS: | | | | | | | |
| Net realized gain (loss) on: | | | | | | | |
| Investments and foreign currency | | | (33,320 | ) | | (927,068 | ) |
| Written option contracts expired or closed | | | 1,006,671 | | | — | |
| Long term realized gain distributions received from other investment companies | | | — | | | 5,217 | |
| Net change in unrealized appreciation (depreciation) of: | | | | | | | |
| Investments and foreign currency | | | 85,041 | | | 5,842,910 | |
| Written option contracts | | | (9,203 | ) | | 4,535 | |
| Net gain on investments | | | 1,049,189 | | | 4,925,594 | |
| Net increase in net assets resulting from operations | | $ | 1,064,749 | | $ | 8,559,288 | |
The accompanying notes are an integral part of these financial statements.
35
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
| Statements of Changes in Net Assets |
| | | The Internet Fund | | The Global Fund | |
| | | For the | | For the | | For the | | For the | |
| | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | | 2016 | | | 2015 | | | 2016 | | | 2015 | |
| OPERATIONS: | | | | | | | | | | | | | |
| Net investment loss | | $ | (1,955,770 | ) | $ | (2,189,641 | ) | $ | (25,970 | ) | $ | (38,520 | ) |
| Net realized gain (loss) on sale of investments and foreign currency | | | 13,022,035 | | | 29,301,430 | | | 111,804 | | | (13,187 | ) |
| Net change in unrealized appreciation (depreciation) of investments and foreign currency | | | (8,519,074 | ) | | (34,664,097 | ) | | 854,717 | | | (1,093,822 | ) |
| Net increase (decrease) in net assets resulting from operations | | | 2,547,191 | | | (7,552,308 | ) | | 940,551 | | | (1,145,529 | ) |
| DISTRIBUTIONS TO SHAREHOLDERS — | | | | | | | | | | | | | |
| NO LOAD CLASS: | | | | | | | | | | | | | |
| Net realized gains | | | (8,879,758 | ) | | (26,681,831 | ) | | (21,202 | ) | | (2,696 | ) |
| Total distributions | | | (8,879,758 | ) | | (26,681,831 | ) | | (21,202 | ) | | (2,696 | ) |
| DISTRIBUTIONS TO SHAREHOLDERS — | | | | | | | | | | | | | |
| ADVISOR CLASS A: | | | | | | | | | | | | | |
| Net realized gains | | | (169,077 | ) | | (694,561 | ) | | (1,243 | ) | | (214 | ) |
| Total distributions | | | (169,077 | ) | | (694,561 | ) | | (1,243 | ) | | (214 | ) |
| DISTRIBUTIONS TO SHAREHOLDERS — | | | | | | | | | | | | | |
| ADVISOR CLASS C: | | | | | | | | | | | | | |
| Net realized gains | | | (63,603 | ) | | (208,100 | ) | | (8,029 | ) | | (950 | ) |
| Total distributions | | | (63,603 | ) | | (208,100 | ) | | (8,029 | ) | | (950 | ) |
| CAPITAL SHARE TRANSACTIONS — | | | | | | | | | | | | | |
| NO LOAD CLASS: | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 1,046,833 | | | 2,001,938 | | | 484,783 | | | 629,971 | |
| Redemption fees | | | 94 | | | 280 | | | 26 | | | 16 | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | 8,711,883 | | | 26,075,719 | | | 20,774 | | | 2,651 | |
| Cost of shares redeemed | | | (15,786,204 | ) | | (22,965,971 | ) | | (584,869 | ) | | (1,850,431 | ) |
| Net increase (decrease) in net assets resulting from capital share transactions | | | (6,027,394 | ) | | 5,111,966 | | | (79,286 | ) | | (1,217,793 | ) |
| CAPITAL SHARE TRANSACTIONS — | | | | | | | | | | | | | |
| ADVISOR CLASS A: | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 368,808 | | | 498,273 | | | 15,934 | | | 32,700 | |
| Redemption fees | | | — | | | — | | | 20 | | | — | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | 132,819 | | | 486,647 | | | 910 | | | 144 | |
| Cost of shares redeemed | | | (1,422,733 | ) | | (2,255,954 | ) | | (123,596 | ) | | (88,790 | ) |
| Net decrease in net assets resulting from capital share transactions | | | (921,106 | ) | | (1,271,034 | ) | | (106,732 | ) | | (55,946 | ) |
The accompanying notes are an integral part of these financial statements.
36
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Statements of Changes in Net Assets — (Continued) |
| | | The Internet Fund | | The Global Fund | |
| | | | For the | | | For the | | | For the | | | For the | |
| | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | |
| | | | December 31, | | | December 31, | | | December 31, | | | December 31, | |
| | | | 2016 | | | 2015 | | | 2016 | | | 2015 | |
| CAPITAL SHARE TRANSACTIONS — | | | | | | | | | | | | | |
| ADVISOR CLASS C: | | | | | | | | | | | | | |
| Proceeds from shares sold | | $ | 177,434 | | $ | 64,898 | | $ | 181,562 | | $ | 376,565 | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | 60,833 | | | 184,873 | | | 7,727 | | | 913 | |
| Cost of shares redeemed | | | (325,978 | ) | | (244,020 | ) | | (103,278 | ) | | (95,637 | ) |
| Net increase (decrease) in net assets resulting from capital share transactions | | | (87,711 | ) | | 5,751 | | | 86,011 | | | 281,841 | |
| TOTAL INCREASE (DECREASE) | | | | | | | | | | | | | |
| IN NET ASSETS: | | | (13,601,458 | ) | | (31,290,117 | ) | | 810,070 | | | (2,141,287 | ) |
| NET ASSETS: | | | | | | | | | | | | | |
| Beginning of year | | | 126,157,992 | | | 157,448,109 | | | 6,735,377 | | | 8,876,664 | |
| End of year* | | $ | 112,556,534 | | $ | 126,157,992 | | $ | 7,545,447 | | $ | 6,735,377 | |
| * Including undistributed net investment income (loss) of: | | $ | (230,532 | ) | $ | 169,841 | | $ | (14,759 | ) | $ | 20,652 | |
| CHANGES IN SHARES OUTSTANDING — | | | | | | | | | | | | | |
| NO LOAD CLASS: | | | | | | | | | | | | | |
| Shares sold | | | 25,912 | | | 36,786 | | | 99,946 | | | 120,133 | |
| Shares issued in reinvestments of dividends and distributions | | | 221,507 | | | 626,220 | | | 3,972 | | | 579 | |
| Shares redeemed | | | (387,166 | ) | | (423,965 | ) | | (121,826 | ) | | (358,003 | ) |
| Net increase (decrease) in shares outstanding | | | (139,747 | ) | | 239,041 | | | (17,908 | ) | | (237,291 | ) |
| CHANGES IN SHARES OUTSTANDING — | | | | | | | | | | | | | |
| ADVISOR CLASS A: | | | | | | | | | | | | | |
| Shares sold | | | 9,415 | | | 10,165 | | | 3,331 | | | 5,948 | |
| Shares issued in reinvestments of dividends and distributions | | | 3,535 | | | 12,157 | | | 175 | | | 32 | |
| Shares redeemed | | | (36,091 | ) | | (42,328 | ) | | (26,471 | ) | | (17,182 | ) |
| Net decrease in shares outstanding | | | (23,141 | ) | | (20,006 | ) | | (22,965 | ) | | (11,202 | ) |
| CHANGES IN SHARES OUTSTANDING — | | | | | | | | | | | | | |
| ADVISOR CLASS C: | | | | | | | | | | | | | |
| Shares sold | | | 4,936 | | | 1,442 | | | 39,782 | | | 72,350 | |
| Shares issued in reinvestments of dividends and distributions | | | 1,762 | | | 4,964 | | | 1,548 | | | 208 | |
| Shares redeemed | | | (9,057 | ) | | (5,004 | ) | | (22,287 | ) | | (18,599 | ) |
Net increase (decrease) in shares outstanding | | | (2,359 | ) | | 1,402 | | | 19,043 | | | 53,959 | |
The accompanying notes are an integral part of these financial statements.
37
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Statements of Changes in Net Assets — (Continued) |
| | | The Paradigm Fund | | The Medical Fund | |
| | | | For the | | | For the | | | For the | | | For the | |
| | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | | 2016 | | | 2015 | | | 2016 | | | 2015 | |
| OPERATIONS: | | | | | | | | | | | | | |
| Net investment income (loss) | | $ | (8,912,000 | ) | $ | (10,293,286 | ) | $ | 151,178 | | $ | 55,412 | |
| Net realized gain on sale of investments and foreign currency | | | 77,793,743 | | | 126,371,030 | | | 1,820,994 | | | 1,638,460 | |
| Net change in unrealized appreciation (depreciation) of investments and foreign currency | | | 64,985,193 | | | (195,382,777 | ) | | (4,341,168 | ) | | (49,483 | ) |
| Net increase (decrease) in net assets resulting from operations | | | 133,866,936 | | | (79,305,033 | ) | | (2,368,996 | ) | | 1,644,389 | |
| DISTRIBUTIONS TO SHAREHOLDERS — | | | | | | | | | | | | | |
| NO LOAD CLASS: | | | | | | | | | | | | | |
| Net investment income | | | — | | | — | | | (137,517 | ) | | (84,526 | ) |
| Net realized gains | | | — | | | — | | | (830,858 | ) | | (1,347,587 | ) |
| Total distributions | | | — | | | — | | | (968,375 | ) | | (1,432,113 | ) |
| DISTRIBUTIONS TO SHAREHOLDERS — | | | | | | | | | | | | | |
| ADVISOR CLASS A: | | | | | | | | | | | | | |
| Net investment income | | | — | | | — | | | (13,525 | ) | | (15,037 | ) |
| Net realized gains | | | — | | | — | | | (182,376 | ) | | (399,324 | ) |
| Total distributions | | | — | | | — | | | (195,901 | ) | | (414,361 | ) |
| DISTRIBUTIONS TO SHAREHOLDERS — | | | | | | | | | | | | | |
| ADVISOR CLASS C: | | | | | | | | | | | | | |
| Net investment income | | | — | | | — | | | — | | | (1,491 | ) |
| Net realized gains | | | — | | | — | | | (21,406 | ) | | (39,592 | ) |
| Total distributions | | | — | | | — | | | (21,406 | ) | | (41,083 | ) |
| CAPITAL SHARE TRANSACTIONS — | | | | | | | | | | | | | |
| NO LOAD CLASS: | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 71,124,008 | | | 17,121,608 | | | 734,660 | | | 1,611,927 | |
| Redemption fees | | | 5,502 | | | 3,163 | | | 68 | | | 167 | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | — | | | — | | | 954,798 | | | 1,415,177 | |
| Cost of shares redeemed | | | (77,240,016 | ) | | (219,664,621 | ) | | (3,621,222 | ) | | (2,631,095 | ) |
| Net increase (decrease) in net assets resulting from capital share transactions | | | (6,110,506 | ) | | (202,539,850 | ) | | (1,931,696 | ) | | 396,176 | |
The accompanying notes are an integral part of these financial statements.
38
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Statements of Changes in Net Assets — (Continued) |
| | | The Paradigm Fund | | The Medical Fund | |
| | | | For the | | | For the | | | For the | | | For the | |
| | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | | 2016 | | | 2015 | | | 2016 | | | 2015 | |
| CAPITAL SHARE TRANSACTIONS — | | | | | | | | | | | | | |
| ADVISOR CLASS A: | | | | | | | | | | | | | |
| Proceeds from shares sold | | $ | 7,383,372 | | $ | 12,953,817 | | $ | 451,900 | | $ | 2,509,621 | |
| Redemption fees | | | 267 | | | 288 | | | 60 | | | 36 | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | — | | | — | | | 180,459 | | | 342,177 | |
| Cost of shares redeemed | | | (49,899,412 | ) | | (42,179,329 | ) | | (2,471,535 | ) | | (965,699 | ) |
| Net increase (decrease) in net assets resulting from capital share transactions | | | (42,515,773 | ) | | (29,225,224 | ) | | (1,839,116 | ) | | 1,886,135 | |
| CAPITAL SHARE TRANSACTIONS — | | | | | | | | | | | | | |
| ADVISOR CLASS C: | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 4,653,364 | | | 9,780,718 | | | 6,374 | | | 124,759 | |
| Redemption fees | | | 861 | | | 14 | | | — | | | — | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | — | | | — | | | 14,965 | | | 26,746 | |
| Cost of shares redeemed | | | (26,116,371 | ) | | (19,394,054 | ) | | (132,593 | ) | | (169,942 | ) |
| Net decrease in net assets resulting from capital share transactions | | | (21,462,146 | ) | | (9,613,322 | ) | | (111,254 | ) | | (18,437 | ) |
| CAPITAL SHARE TRANSACTIONS — | | | | | | | | | | | | | |
| INSTITUTIONAL CLASS: | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 57,494,542 | | | 70,078,418 | | | N/A | | | N/A | |
| Redemption fees | | | 4,908 | | | 3,111 | | | N/A | | | N/A | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | — | | | — | | | N/A | | | N/A | |
| Cost of shares redeemed | | | (135,527,003 | ) | | (86,840,860 | ) | | N/A | | | N/A | |
| Net decrease in net assets resulting from capital share transactions | | | (78,027,553 | ) | | (16,759,331 | ) | | N/A | | | N/A | |
| TOTAL INCREASE (DECREASE) | | | | | | | | | | | | | |
| IN NET ASSETS: | | | (14,249,042 | ) | | (337,442,760 | ) | | (7,436,744 | ) | | 2,020,706 | |
| NET ASSETS: | | | | | | | | | | | | | |
| Beginning of year | | | 837,859,710 | | | 1,175,302,470 | | | 29,105,823 | | | 27,085,117 | |
| End of year* | | $ | 823,610,668 | | $ | 837,859,710 | | $ | 21,669,079 | | $ | 29,105,823 | |
| * Including undistributed net investment income (loss) of: | | $ | (7,293,652 | ) | $ | (6,856,178 | ) | $ | 22,162 | | $ | 22,011 | |
The accompanying notes are an integral part of these financial statements.
39
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Statements of Changes in Net Assets — (Continued) |
| | | The Paradigm Fund | | The Medical Fund | |
| | | | For the | | | For the | | | For the | | | For the | |
| | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | | 2016 | | | 2015 | | | 2016 | | | 2015 | |
| CHANGES IN SHARES OUTSTANDING — | | | | | | | | | | | | | |
| NO LOAD CLASS: | | | | | | | | | | | | | |
| Shares sold | | | 2,015,977 | | | 493,728 | | | 26,060 | | | 48,158 | |
| Shares issued in reinvestments of dividends and distributions | | | — | | | — | | | 35,868 | | | 45,725 | |
| Shares redeemed | | | (2,413,372 | ) | | (6,455,849 | ) | | (129,197 | ) | | (80,322 | ) |
| Net increase (decrease) in shares outstanding | | | (397,395 | ) | | (5,962,121 | ) | | (67,269 | ) | | 13,561 | |
| CHANGES IN SHARES OUTSTANDING — | | | | | | | | | | | | | |
| ADVISOR CLASS A: | | | | | | | | | | | | | |
| Shares sold | | | 223,808 | | | 383,607 | | | 16,960 | | | 76,179 | |
| Shares issued in reinvestments of dividends and distributions | | | — | | | — | | | 7,019 | | | 11,452 | |
| Shares redeemed | | | (1,639,715 | ) | | (1,285,358 | ) | | (91,635 | ) | | (30,673 | ) |
| Net increase (decrease) in shares outstanding | | | (1,415,907 | ) | | (901,751 | ) | | (67,656 | ) | | 56,958 | |
| CHANGES IN SHARES OUTSTANDING — | | | | | | | | | | | | | |
| ADVISOR CLASS C: | | | | | | | | | | | | | |
| Shares sold | | | 156,056 | | | 301,266 | | | 255 | | | 3,988 | |
| Shares issued in reinvestments of dividends and distributions | | | — | | | — | | | 599 | | | 918 | |
| Shares redeemed | | | (857,941 | ) | | (615,520 | ) | | (5,051 | ) | | (5,439 | ) |
| Net decrease in shares outstanding | | | (701,885 | ) | | (314,254 | ) | | (4,197 | ) | | (533 | ) |
| CHANGES IN SHARES OUTSTANDING — | | | | | | | | | | | | | |
| INSTITUTIONAL CLASS: | | | | | | | | | | | | | |
| Shares sold | | | 1,715,989 | | | 2,051,253 | | | N/A | | | N/A | |
| Shares issued in reinvestments of dividends and distributions | | | — | | | — | | | N/A | | | N/A | |
| Shares redeemed | | | (4,199,430 | ) | | (2,559,551 | ) | | N/A | | | N/A | |
| Net decrease in shares outstanding | | | (2,483,441 | ) | | (508,298 | ) | | N/A | | | N/A | |
The accompanying notes are an integral part of these financial statements.
40
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Statements of Changes in Net Assets — (Continued) |
| | | The Small Cap | | The Market | |
| | | Opportunities Fund | | Opportunities Fund | |
| | | | For the | | | For the | | | For the | | | For the | |
| | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | | 2016 | | | 2015 | | | 2016 | | | 2015 | |
| OPERATIONS: | | | | | | | | | | | | | |
| Net investment loss | | $ | (2,055,836 | ) | $ | (2,872,798 | ) | $ | (422,185 | ) | $ | (495,653 | ) |
| Net realized gain on sale of investments and foreign currency | | | 3,396,417 | | | 40,425,317 | | | 2,288,261 | | | 5,054,165 | |
| Net change in unrealized appreciation (depreciation) of investments and foreign currency | | | 41,387,172 | | | (72,350,360 | ) | | 5,650,095 | | | (8,992,319 | ) |
| Net increase (decrease) in net assets resulting from operations | | | 42,727,753 | | | (34,797,841 | ) | | 7,516,171 | | | (4,433,807 | ) |
| CAPITAL SHARE TRANSACTIONS — | | | | | | | | | | | | | |
| NO LOAD CLASS: | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 6,517,422 | | | 6,489,018 | | | 621,393 | | | 452,522 | |
| Redemption fees | | | 3,423 | | | 5,582 | | | 80 | | | — | |
| Cost of shares redeemed | | | (46,268,511 | ) | | (90,933,245 | ) | | (5,340,260 | ) | | (3,387,672 | ) |
| Net decrease in net assets resulting from capital share transactions | | | (39,747,666 | ) | | (84,438,645 | ) | | (4,718,787 | ) | | (2,935,150 | ) |
| CAPITAL SHARE TRANSACTIONS — | | | | | | | | | | | | | |
| ADVISOR CLASS A: | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 1,044,917 | | | 4,354,298 | | | 518,836 | | | 464,968 | |
| Redemption fees | | | 126 | | | 164 | | | — | | | 4 | |
| Cost of shares redeemed | | | (4,883,859 | ) | | (12,725,934 | ) | | (1,215,323 | ) | | (4,206,822 | ) |
| Net decrease in net assets resulting from capital share transactions | | | (3,838,816 | ) | | (8,371,472 | ) | | (696,487 | ) | | (3,741,850 | ) |
| CAPITAL SHARE TRANSACTIONS — | | | | | | | | | | | | | |
| ADVISOR CLASS C: | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 425,153 | | | 1,540,034 | | | 69,290 | | | 147,771 | |
| Redemption fees | | | 99 | | | — | | | — | | | — | |
| Cost of shares redeemed | | | (2,510,620 | ) | | (4,144,013 | ) | | (470,568 | ) | | (727,287 | ) |
| Net decrease in net assets resulting from capital share transactions | | | (2,085,368 | ) | | (2,603,979 | ) | | (401,278 | ) | | (579,516 | ) |
The accompanying notes are an integral part of these financial statements.
41
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Statements of Changes in Net Assets — (Continued) |
| | | The Small Cap | | The Market | |
| | | Opportunities Fund | | Opportunities Fund | |
| | | | For the | | | For the | | | For the | | | For the | |
| | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | | 2016 | | | 2015 | | | 2016 | | | 2015 | |
| CAPITAL SHARE TRANSACTIONS — | | | | | | | | | | | | | |
| INSTITUTIONAL CLASS: | | | | | | | | | | | | | |
| Proceeds from shares sold | | $ | 18,338,379 | | $ | 37,700,129 | | $ | 851,210 | | $ | 277,363 | |
| Redemption fees | | | 68 | | | 5,630 | | | — | | | — | |
| Cost of shares redeemed | | | (30,302,253 | ) | | (40,526,909 | ) | | (1,148,652 | ) | | (772,372 | ) |
| Net decrease in net assets resulting from capital share transactions | | | (11,963,806 | ) | | (2,821,150 | ) | | (297,442 | ) | | (495,009 | ) |
| TOTAL INCREASE (DECREASE) | | | | | | | | | | | | | |
| IN NET ASSETS: | | | (14,907,903 | ) | | (133,033,087 | ) | | 1,402,177 | | | (12,185,332 | ) |
| NET ASSETS: | | | | | | | | | | | | | |
| Beginning of year | | | 219,987,400 | | | 353,020,487 | | | 42,166,278 | | | 54,351,610 | |
| End of year* | | $ | 205,079,497 | | $ | 219,987,400 | | $ | 43,568,455 | | $ | 42,166,278 | |
* Including undistributed net investment loss of: | | $ | (6,504,924 | ) | $ | (4,080,361 | ) | $ | (860,651 | ) | $ | (587,426 | ) |
| CHANGES IN SHARES OUTSTANDING — | | | | | | | | | | | | | |
| NO LOAD CLASS: | | | | | | | | | | | | | |
| Shares sold | | | 174,596 | | | 176,696 | | | 36,332 | | | 26,996 | |
| Shares redeemed | | | (1,355,350 | ) | | (2,482,816 | ) | | (334,070 | ) | | (204,096 | ) |
| Net decrease in shares outstanding | | | (1,180,754 | ) | | (2,306,120 | ) | | (297,738 | ) | | (177,100 | ) |
| CHANGES IN SHARES OUTSTANDING — | | | | | | | | | | | | | |
| ADVISOR CLASS A: | | | | | | | | | | | | | |
| Shares sold | | | 29,681 | | | 120,018 | | | 30,539 | | | 27,989 | |
| Shares redeemed | | | (149,461 | ) | | (356,455 | ) | | (78,792 | ) | | (260,043 | ) |
| Net decrease in shares outstanding | | | (119,780 | ) | | (236,437 | ) | | (48,253 | ) | | (232,054 | ) |
The accompanying notes are an integral part of these financial statements.
42
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Statements of Changes in Net Assets — (Continued) |
| | | The Small Cap | | The Market | |
| | | Opportunities Fund | | Opportunities Fund | |
| | | | For the | | | For the | | | For the | | | For the | |
| | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | | 2016 | | | 2015 | | | 2016 | | | 2015 | |
| CHANGES IN SHARES OUTSTANDING — | | | | | | | | | | | | | |
| ADVISOR CLASS C: | | | | | | | | | | | | | |
| Shares sold | | | 12,743 | | | 44,364 | | | 4,450 | | | 9,142 | |
| Shares redeemed | | | (77,943 | ) | | (122,629 | ) | | (30,070 | ) | | (45,272 | ) |
| Net decrease in shares outstanding | | | (65,200 | ) | | (78,265 | ) | | (25,620 | ) | | (36,130 | ) |
| CHANGES IN SHARES OUTSTANDING — | | | | | | | | | | | | | |
| INSTITUTIONAL CLASS: | | | | | | | | | | | | | |
| Shares sold | | | 517,218 | | | 999,079 | | | 48,793 | | | 16,350 | |
| Shares redeemed | | | (841,757 | ) | | (1,134,556 | ) | | (71,360 | ) | | (47,445 | ) |
| Net decrease in shares outstanding | | | (324,539 | ) | | (135,477 | ) | | (22,567 | ) | | (31,095 | ) |
The accompanying notes are an integral part of these financial statements.
43
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Statements of Changes in Net Assets — (Continued) |
| | | The Alternative | | The Multi- | |
| | | Income Fund | | Disciplinary Income Fund | |
| | | | For the | | | For the | | | For the | | | For the | |
| | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | | 2016 | | | 2015 | | | 2016 | | | 2015 | |
| OPERATIONS: | | | | | | | | | | | | | |
| Net investment income | | $ | 15,560 | | $ | 38,206 | | $ | 3,633,694 | | $ | 4,426,691 | |
| Net realized gain (loss) on sale of investments, foreign currency and written options and distributions received from other investment companies | | | 973,351 | | | 1,242,092 | | | (921,851 | ) | | (1,550,562 | ) |
| Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options | | | 75,838 | | | (331,341 | ) | | 5,847,445 | | | (4,902,242 | ) |
| Net increase (decrease) in net assets resulting from operations | | | 1,064,749 | | | 948,957 | | | 8,559,288 | | | (2,026,113 | ) |
| DISTRIBUTIONS TO SHAREHOLDERS — | | | | | | | | | | | | | |
| NO LOAD CLASS: | | | | | | | | | | | | | |
| Net investment income | | | — | | | — | | | (243,392 | ) | | (191,179 | ) |
| Net realized gains | | | — | | | — | | | — | | | (7,624 | ) |
| Total distributions | | | — | | | — | | | (243,392 | ) | | (198,803 | ) |
| DISTRIBUTIONS TO SHAREHOLDERS — | | | | | | | | | | | | | |
| ADVISOR CLASS A: | | | | | | | | | | | | | |
| Net investment income | | | — | | | — | | | (244,116 | ) | | (227,693 | ) |
| Net realized gains | | | — | | | — | | | — | | | (9,565 | ) |
| Total distributions | | | — | | | — | | | (244,116 | ) | | (237,258 | ) |
| DISTRIBUTIONS TO SHAREHOLDERS — | | | | | | | | | | | | | |
| ADVISOR CLASS C: | | | | | | | | | | | | | |
| Net investment income | | | — | | | — | | | (270,362 | ) | | (157,175 | ) |
| Net realized gains | | | — | | | — | | | — | | | (8,371 | ) |
| Total distributions | | | — | | | — | | | (270,362 | ) | | (165,546 | ) |
| DISTRIBUTIONS TO SHAREHOLDERS — | | | | | | | | | | | | | |
| INSTITUTIONAL CLASS: | | | | | | | | | | | | | |
| Net investment income | | | (20,871 | ) | | (19,394 | ) | | (2,878,143 | ) | | (2,377,868 | ) |
| Net realized gains | | | — | | | — | | | — | �� | | (85,793 | ) |
| Total distributions | | | (20,871 | ) | | (19,394 | ) | | (2,878,143 | ) | | (2,463,661 | ) |
| CAPITAL SHARE TRANSACTIONS — | | | | | | | | | | | | | |
| NO LOAD CLASS: | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 3,521,065 | | | 1,687,199 | | | 3,282,631 | | | 471,133 | |
| Redemption fees | | | 83 | | | 3,409 | | | — | | | 40 | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | — | | | — | | | 217,222 | | | 186,758 | |
| Cost of shares redeemed | | | (2,617,868 | ) | | (5,521,196 | ) | | (3,147,154 | ) | | (4,348,492 | ) |
| Net increase (decrease) in net assets resulting from capital share transactions | | | 903,280 | | | (3,830,588 | ) | | 352,699 | | | (3,690,561 | ) |
The accompanying notes are an integral part of these financial statements.
44
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Statements of Changes in Net Assets — (Continued) |
| | | The Alternative | | The Multi- | |
| | | Income Fund | | Disciplinary Income Fund | |
| | | | For the | | | For the | | | For the | | | For the | |
| | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | | 2016 | | | 2015 | | | 2016 | | | 2015 | |
| CAPITAL SHARE TRANSACTIONS — | | | | | | | | | | | | | |
| ADVISOR CLASS A: | | | | | | | | | | | | | |
| Proceeds from shares sold | | $ | 2,413,212 | | $ | 761,205 | | $ | 1,787,413 | | $ | 886,482 | |
| Redemption fees | | | 121 | | | — | | | — | | | 367 | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | — | | | — | | | 196,656 | | | 215,606 | |
| Cost of shares redeemed | | | (1,610,735 | ) | | (775,056 | ) | | (4,202,005 | ) | | (4,138,991 | ) |
| Net increase (decrease) in net assets resulting from capital share transactions | | | 802,598 | | | (13,851 | ) | | (2,217,936 | ) | | (3,036,536 | ) |
| CAPITAL SHARE TRANSACTIONS — | | | | | | | | | | | | | |
| ADVISOR CLASS C: | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 557,339 | | | 151,620 | | | 337,454 | | | 516,516 | |
| Redemption fees | | | — | | | 488 | | | — | | | — | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | — | | | — | | | 259,640 | | | 154,744 | |
| Cost of shares redeemed | | | (325,872 | ) | | (331,488 | ) | | (2,571,306 | ) | | (1,365,971 | ) |
| Net increase (decrease) in net assets resulting from capital share transactions | | | 231,467 | | | (179,380 | ) | | (1,974,212 | ) | | (694,711 | ) |
| CAPITAL SHARE TRANSACTIONS — | | | | | | | | | | | | | |
| INSTITUTIONAL CLASS: | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 5,245,676 | | | 3,555,305 | | | 24,968,968 | | | 29,981,522 | |
| Redemption fees | | | 844 | | | 1,283 | | | 101 | | | 804 | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | 20,587 | | | 19,163 | | | 2,872,502 | | | 2,462,293 | |
| Cost of shares redeemed | | | (8,066,853 | ) | | (10,871,931 | ) | | (19,634,005 | ) | | (64,984,222 | ) |
| Net increase (decrease) in net assets resulting from capital share transactions | | | (2,799,746 | ) | | (7,296,180 | ) | | 8,207,566 | | | (32,539,603 | ) |
| TOTAL INCREASE (DECREASE) | | | | | | | | | | | | | |
| IN NET ASSETS: | | | 181,477 | | | (10,390,436 | ) | | 9,291,392 | | | (45,052,792 | ) |
| NET ASSETS: | | | | | | | | | | | | | |
| Beginning of year | | | 27,745,369 | | | 38,135,805 | | | 90,326,802 | | | 135,379,594 | |
| End of year* | | $ | 27,926,846 | | $ | 27,745,369 | | $ | 99,618,194 | | $ | 90,326,802 | |
| * Including undistributed net investment income of: | | $ | 13,501 | | $ | 18,812 | | $ | 37,906 | | $ | 40,102 | |
The accompanying notes are an integral part of these financial statements.
45
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Statements of Changes in Net Assets — (Continued) |
| | | The Alternative | | The Multi- | |
| | | Income Fund | | Disciplinary Income Fund | |
| | | | For the | | | For the | | | For the | | | For the | |
| | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | | 2016 | | | 2015 | | | 2016 | | | 2015 | |
| CHANGES IN SHARES OUTSTANDING — | | | | | | | | | | | | | |
| NO LOAD CLASS: | | | | | | | | | | | | | |
| Shares sold | | | 37,588 | | | 18,558 | | | 300,961 | | | 43,279 | |
| Shares issued in reinvestments of dividends and distributions | | | — | | | — | | | 20,220 | | | 17,449 | |
| Shares redeemed | | | (28,043 | ) | | (60,805 | ) | | (291,199 | ) | | (405,296 | ) |
| Net increase (decrease) in shares outstanding | | | 9,545 | | | (42,247 | ) | | 29,982 | | | (344,568 | ) |
| CHANGES IN SHARES OUTSTANDING — | | | | | | | | | | | | | |
| ADVISOR CLASS A: | | | | | | | | | | | | | |
| Shares sold | | | 26,098 | | | 8,362 | | | 164,532 | | | 82,960 | |
| Shares issued in reinvestments of dividends and distributions | | | — | | | — | | | 18,414 | | | 20,254 | |
| Shares redeemed | | | (17,258 | ) | | (8,696 | ) | | (398,656 | ) | | (393,862 | ) |
| Net increase (decrease) in shares outstanding | | | 8,840 | | | (334 | ) | | (215,710 | ) | | (290,648 | ) |
| CHANGES IN SHARES OUTSTANDING — | | | | | | | | | | | | | |
| ADVISOR CLASS C: | | | | | | | | | | | | | |
| Shares sold | | | 6,247 | | | 1,735 | | | 31,674 | | | 48,420 | |
| Shares issued in reinvestments of dividends and distributions | | | — | | | — | | | 24,563 | | | 14,642 | |
| Shares redeemed | | | (3,618 | ) | | (3,794 | ) | | (244,973 | ) | | (129,094 | ) |
| Net increase (decrease) in shares outstanding | | | 2,629 | | | (2,059 | ) | | (188,736 | ) | | (66,032 | ) |
| CHANGES IN SHARES OUTSTANDING — | | | | | | | | | | | | | |
| INSTITUTIONAL CLASS: | | | | | | | | | | | | | |
| Shares sold | | | 55,022 | | | 38,472 | | | 2,287,520 | | | 2,758,151 | |
| Shares issued in reinvestments of dividends and distributions | | | 213 | | | 206 | | | 266,595 | | | 229,675 | |
| Shares redeemed | | | (85,460 | ) | | (118,650 | ) | | (1,838,511 | ) | | (6,066,130 | ) |
| Net increase (decrease) in shares outstanding | | | (30,225 | ) | | (79,972 | ) | | 715,604 | | | (3,078,304 | ) |
The accompanying notes are an integral part of these financial statements.
46
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
| Notes to Financial Statements |
| December 31, 2016 |
1. Organization
Kinetics Mutual Funds, Inc. (the "Company") is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), and is incorporated in the State of Maryland. The Company is an open-end management investment company issuing its shares in series. One billion shares are authorized for the Company with a par value of $0.001 per share. The series of the Company presently authorized are The Internet Fund ("Internet"), The Global Fund ("Global"), The Paradigm Fund ("Paradigm"), The Medical Fund ("Medical"), The Small Cap Opportunities Fund ("Small Cap"), The Market Opportunities Fund ("Market Opportunities"), The Alternative Income Fund ("Alternative Income"), and The Multi-Disciplinary Income Fund ("Multi-Disciplinary Income"). Investment operations of the Company began on October 21, 1996 (Internet), September 30, 1999 (Medical), December 31, 1999 (Global and Paradigm), March 20, 2000 (Small Cap), January 31, 2006 (Market Opportunities), June 29, 2007 (Alternative Income), and February 11, 2008 (Multi-Disciplinary Income). Each series, unlike many other investment companies which directly acquire and manage their own portfolios of securities, seeks to achieve its investment objective by investing all of its investable assets in a corresponding portfolio series (each a "Master Portfolio" and collectively the "Master Portfolios") of Kinetics Portfolios Trust (the "Trust").
On April 28, 2000 (January 31, 2006, with respect to Market Opportunities, June 29, 2007, with respect to Alternative Income, and February 11, 2008, with respect to Multi-Disciplinary Income), each series in the Company entered into a master-feeder fund structure. By entering into this structure, each series (each a "Feeder Fund" and collectively, the "Feeder Funds") invested all of its assets in a corresponding Master Portfolio which had the same investment objective as the Feeder Fund. Each Master Portfolio has multiple feeder funds. Each Feeder Fund receives a proportionate amount of interest in the Master Portfolio equal to its relative contribution of capital. Thus, each Feeder Fund is allocated its portion of income, gains (losses) and expenses from the Master Portfolio.
47
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
Each Feeder Fund's respective interest in the corresponding Master Portfolio as of December 31, 2016, is as follows:
| | Interest in |
| | Master Portfolio |
| The Internet Fund | 99.983% |
| The Global Fund | 99.906% |
| The Paradigm Fund | 98.551% |
| The Medical Fund | 99.853% |
| The Small Cap Opportunities Fund | 99.978% |
| The Market Opportunities Fund | 99.960% |
| The Alternative Income Fund | 99.562% |
| The Multi-Disciplinary Income Fund | 99.830% |
Prior to the conversion to a master-feeder fund structure on April 28, 2000, each then existing series conducted its own investment operations.
As of December 31, 2016, each of the Feeder Funds offers Advisor Class A shares. Advisor Class A shares are subject to an annual Rule 12b-1 fee of 0.25% of average daily net assets and a shareholder servicing fee of 0.25% of average daily net assets. The Advisor Class A shares are also subject to a front-end sales charge of 5.75%.
As of December 31, 2016, each of the Feeder Funds offers Advisor Class C shares. Advisor Class C shares are subject to an annual Rule 12b-1 fee of 0.75% of average daily net assets and a shareholder servicing fee of 0.25% of average daily net assets. If you sell your Advisor Class C shares within 12 months of purchase, you will have to pay a contingent deferred sales charge of 1.00%, which is applied to the NAV of the shares on the date of original purchase or on the date of redemption, whichever is less.
As of December 31, 2016, each of the Feeder Funds offers No Load Class shares. No Load Class shares are subject to a shareholder servicing fee of 0.25% of average daily net assets but do not have 12b-1 fees or a sales charge.
As of December 31, 2016, the Paradigm, Small Cap, Market Opportunities, Alternative Income, and Multi-Disciplinary Income Funds offer Institutional Class shares. Institutional Class shares are subject to a shareholder servicing fee of 0.20% of average daily net assets but do not have 12b-1 fees or a sales charge. The Adviser has voluntarily agreed to waive the portion of the Institutional Class shareholder servicing fee in excess of 0.05%.
48
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
Each class of shares for each Fund has identical rights and privileges except with respect to the Rule 12b-1 fees paid by the Advisor Class A and Advisor Class C shares, the front-end sales charge on the Advisor Class A shares, the contingent deferred sales charge on Class C, the shareholder servicing fees paid by the Advisor Class A, Advisor Class C, No Load Class and Institutional Class shares, voting rights on matters pertaining to a single class of shares and the exchange privileges of each class of shares. Shares of each Feeder Fund will assess a 2.00% redemption fee (with exceptions) on shares redeemed or exchanged within 30 days of purchase. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class based on its relative net assets.
Refer to the Master Portfolios' financial statements to obtain information about the investment objective of the corresponding Feeder Fund. The financial statements of the Master Portfolios, including the portfolios of investments, are contained elsewhere in this report and should be read in conjunction with the Feeder Funds' financial statements.
2. Significant Accounting Policies
Security Valuation
Master Portfolio securities that are listed on a U.S. securities exchange for which market quotations are readily available are valued at the last quoted sale price on the day the valuation is made. Price information on listed securities is taken from the exchange where the security is primarily traded. All equity securities, including exchange-traded funds, that are traded using the National Association of Securities Dealers' Automated Quotation System ("NASDAQ") are valued using the NASDAQ Official Closing Price ("NOCP"). Foreign securities are valued by an independent pricing service. In the event market quotations are not readily available or if events occur that may materially affect the value of a particular security between the time trading ends on a particular security and the close of regular trading on the New York Stock Exchange ("NYSE"), "fair value" will be determined. Unlisted U.S. securities and listed U.S. securities not traded on the valuation date for which market quotations are readily available are valued at the last bid price. Exchange-traded options are valued at the composite price, using the National Best Bid and Offer quotes ("NBBO"). NBBO consists of the highest bid price and lowest ask price across any of the exchanges on which an option is quoted, thus providing a view across the entire U.S. options marketplace. Composite option pricing calculates
49
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
the mean of the highest bid price and the lowest ask price across the exchanges where the option is traded. If the composite option price is not available, the mean between the highest bid and the lowest asked quotations at the close of the exchanges will be used. If none of the above are available, exchange-traded options are valued at a quote provided by third party pricing agents. Non-exchange-traded options for which over-the-counter quotations are not readily available are valued at the mean of the current bid and asked prices. If none of the third party pricing agents publish a price and it is the day of expiration, expiring options will be priced at intrinsic value. Debt obligations (including convertible securities) that are either investment grade or non-investment grade and irrespective of days to maturity will be valued as follows: Debt securities are valued at evaluated mean by one of the authorized third party pricing agents which rely on various valuation methodologies such as matrix pricing and other analytical pricing models as well as market transactions and dealer quotations. Certain instruments, such as repurchase agreements and demand notes, do not have values from third parties and are valued at amortized cost. Investments in registered open-end investment companies (including money market funds), other than exchange-traded funds are valued at their reported net asset value ("NAV").
Other assets and securities for which no quotations are readily available (including restricted securities) will be valued in good faith at fair value using methods determined by the Board of Trustees of the Master Portfolios. In determining the fair value of a security, the Board of Trustees shall take into account the relevant factors and surrounding circumstances, which may include: (i) the nature and pricing history (if any) of the security; (ii) whether any dealer quotations for the security are available; (iii) possible valuation methodologies that could be used to determine the fair value of the security; (iv) the recommendation of the portfolio manager of the Portfolios with respect to the valuation of the security; (v) whether the same or similar securities are held by other funds managed by the Advisor or other funds and the method used to price the security in those funds; (vi) the extent to which the fair value to be determined for the security will result from the use of data or formula produced by third parties independent of the Advisor; and (vii) the liquidity or illiquidity of the market for the security; and (viii) the value of a foreign security traded on other foreign markets. At December 31, 2016, 0.02%, 0.00% and 0.00% of the net assets of The Internet Portfolio, The Paradigm Portfolio and The Market Opportunities Portfolio, respectively, were fair valued securities. The other Master Portfolios did not hold any fair valued securities at December 31, 2016.
50
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
Repurchase Agreements
Each Master Portfolio may enter into repurchase agreements with banks that are members of the Federal Reserve System or securities dealers who are members of a national securities exchange or are primary dealers in U.S. Government Securities. In connection with transactions in repurchase agreements, it is the Trust's policy that the Master Portfolios receive, as collateral, securities whose market value, including accrued interest, at all times will be at least equal to 102% of the amount invested by the Master Portfolio in each repurchase agreement. If the seller defaults and the value of the collateral declines, realization of the collateral by the Master Portfolio may be delayed or limited.
Written Options
The Master Portfolios may write (sell) call or put options for trading or hedging purposes. When a Master Portfolio writes an option, an amount equal to the premium received by the Master Portfolio is included in the Statement of Assets and Liabilities as an asset and an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current value of the option written. By writing the option, the Master Portfolio may become obligated during the term of the option to deliver or purchase the securities underlying the option at the exercise price if the option is exercised. When an option expires on its stipulated expiration date or the Master Portfolio enters into a closing purchase transaction, the Master Portfolio realizes a gain or loss if the cost of the closing transaction differs from the premium received when the option was sold, without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is eliminated. When an option is exercised, the premium originally received decreases the cost basis of the underlying security (or increases the proceeds on the security sold short) and the Master Portfolio realizes a gain or loss from the sale of the security (or closing of the short sale). As collateral for uncovered written options, the Master Portfolio is required under the 1940 Act to maintain assets consisting of cash, cash equivalents or unencumbered, liquid securities. This collateral is required to be adjusted daily to reflect the exercise price of the purchase obligation for put options or the market value of the instrument underlying the contract for call options.
Foreign Currency Translations
The books and records of the Master Portfolios are maintained in U.S. dollars. For the Master Portfolios, foreign currency transactions are translated into U.S. dollars on the following basis: (i) market values of investment securities and
51
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
other assets and liabilities are translated at the exchange rate of such currencies against the U.S. dollar, as provided by an approved pricing service, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. The Master Portfolios do not isolate and treat as ordinary income that portion of the results of operations arising as a result of changes in the exchange rate from the fluctuations arising from changes in the market prices of securities held during the year. Such fluctuations are included with the net realized and unrealized gain or loss from investments. However, for federal income tax purposes, the Master Portfolios do isolate and treat as ordinary income the effect of changes in foreign exchange rates arising from actual foreign currency transactions and the effect of changes in foreign exchange rates arising between trade date and settlement date.
Restricted and Illiquid Securities
The Master Portfolios may invest in restricted securities. These securities are valued by the Master Portfolios after giving due consideration to pertinent factors including recent private sales, market conditions and the issuer's financial performance. The Master Portfolios have no right to require registration of unregistered securities. At December 31, 2016, the following Master Portfolios held securities restricted to institutional investors (144A securities):
| | | | | | | | Percentage of |
| | | | | Market Value | | Net Assets |
| The Multi-Disciplinary Income Portfolio | | | | | $ | 24,007,197 | | | | 24.06 | % |
An illiquid asset is any asset which may not be sold or disposed of in the ordinary course of business within seven days at approximately the value at which a Master Portfolio has valued the investment. At December 31, 2016, the following Master Portfolios held illiquid securities:
| | | | | | | | Percentage of |
| | | | | Market Value | | Net Assets |
| The Internet Portfolio | | | | | $ | 26,368 | | | | 0.02 | % |
| The Paradigm Portfolio | | | | | | — | * | | | 0.00 | % |
| The Market Opportunities Portfolio | | | | | | — | * | | | 0.00 | % |
| The Multi-Disciplinary Income Portfolio | | | | | | 189,000 | | | | 0.19 | % |
| | | |
| * | Amount is less than $0.50. |
52
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
When-Issued Securities
The Master Portfolios may purchase securities on a when-issued or delayed delivery basis. Although the purchase amounts of these securities are established at the time the purchaser enters into the agreement, these securities may be delivered and paid for at a future date. The Master Portfolios record purchases of when-issued securities and reflect the values of such securities in determining net asset value in the same manner as other portfolio securities. The Master Portfolios maintain at all times cash or other liquid assets in an amount at least equal to the amount of outstanding commitments for when-issued securities.
Securities Lending
Each Master Portfolio may lend its portfolio securities to broker-dealers by entering directly into lending arrangements with such broker-dealers or indirectly through repurchase agreements with respect to no more than 331/3% of the total assets of each Master Portfolio (including any collateral posted) or 50% of the total assets of each Master Portfolio (excluding any collateral posted). Securities lending and repurchase transactions will be fully collateralized at all times with cash and/or short-term debt obligations. The Master Portfolios receive interest on the collateral received as well as a fee for the securities loaned.
Expense Allocation
Common expenses incurred by Feeder Funds are allocated among the Feeder Funds (i) based upon relative average net assets, (ii) as incurred on a specific identification basis, or (iii) equally among the Feeder Funds, depending on the nature of the expenditure.
Each Feeder Fund records its proportionate share of the corresponding Master Portfolio's expenses on a daily basis. In addition, each Feeder Fund accrues its own separate expenses. Any cap on expenses includes Feeder Fund-specific expenses as well as the expenses allocated from the Master Portfolio.
Federal Income Taxes
Each Master Portfolio will be treated as a partnership for federal income tax purposes. As such, each investor in the Master Portfolio via its investment in a Feeder Fund will be subject to taxation on its share of the Master Portfolio's ordinary income and capital gains. It is intended that the Master Portfolio's
53
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
assets will be managed so an investor in the Master Portfolio via its investment in a Feeder Fund can satisfy the requirements of subchapter M of the Internal Revenue Code.
It is the Feeder Funds' policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and the Feeder Funds intend to distribute investment company net taxable income and net capital gains to shareholders. Therefore, no federal income tax provision is recorded.
Dividends from net investment income and distributions of net realized capital gains, if any, will be declared and paid at least annually. The character of distributions made during the year from net investment income or net realized gains may differ from the characterization for federal income tax purposes due to differences in the recognition of income, expenses and gain items for financial statement and tax purposes. Additionally, the Feeder Funds may utilize earnings and profits distributed to shareholders on redemption of shares as part of the dividends paid deduction for income tax purposes. Where appropriate, reclassifications between capital accounts are made for such differences that are permanent in nature.
There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken in future tax returns. As of December 31, 2016, open tax years include the tax years ended December 31, 2013, through 2016. The Funds are also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ from those estimates.
Other
Realized gains and losses on the sale of investments are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date. Interest income is accounted for on the accrual basis and includes amortization of premiums and accretion of discounts on the effective interest method. Other
54
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
noncash dividends are recognized as investment income at the fair value of the property received. Withholding taxes on foreign dividends have been provided for in accordance with the Company's understanding of the applicable country's tax rules and rates.
3. Investment Adviser
The Trust has entered into Investment Advisory Agreements (the "Agreements") with Kinetics Asset Management LLC (the "Adviser"), with whom certain officers and trustees of the Trust are affiliated, to furnish investment advisory services to the Master Portfolios. The Adviser is a wholly-owned subsidiary of Horizon Kinetics LLC. Under the terms of the Agreements, the Master Portfolios, except the Alternative Income Portfolio, compensate the Adviser for its management services at the annual rate of 1.25% of each Master Portfolio's average daily net assets. The Alternative Income Portfolio compensates the Adviser for its management services at the annual rate of 0.90% of the Master Portfolio's average daily net assets.
The Adviser has agreed to waive a portion of its advisory fee and/or reimburse certain operating expenses as deemed appropriate through at least May 1, 2017. The Adviser may discontinue the waiver/reimbursement at any time after May 1, 2017; these waivers/reimbursements are not subject to recapture. Below are operating expense limitations by Feeder Fund and share class:
| | | | The Internet | | The Global |
| | | | Fund | | Fund |
| No Load Class | | | 1.89 | % | | 1.39 | % |
| Class A | | | 2.14 | % | | 1.64 | % |
| Class C | | | 2.64 | % | | 2.14 | % |
| | | | The Paradigm | | The Medical |
| | | | Fund | | Fund |
| No Load Class | | | 1.64 | % | | 1.39 | % |
| Class A | | | 1.89 | % | | 1.64 | % |
| Class C | | | 2.39 | % | | 2.14 | % |
| Institutional Class | | | 1.44 | % | | NA | |
| | | | The Small Cap | | The Market |
| | | | Opportunities | | Opportunities |
| | | | Fund | | Fund |
| No Load Class | | | 1.64 | % | | 1.64 | % |
| Class A | | | 1.89 | % | | 1.89 | % |
| Class C | | | 2.39 | % | | 2.39 | % |
| Institutional Class | | | 1.44 | % | | 1.44 | % |
55
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
| | | | The Alternative | | The Multi- |
| | | | Income | | Disciplinary Income |
| | | | Fund | | Fund |
| No Load Class | | | 0.95 | % | | 1.49 | % |
| Class A | | | 1.20 | % | | 1.74 | % |
| Class C | | | 1.70 | % | | 2.24 | % |
| Institutional Class | | | 0.75 | % | | 1.29 | % |
For the year ended December 31, 2016, the rate earned by the Adviser from the Master Portfolios and the waived fees/reimbursed expenses for the Feeder Funds are as follows:
| | | | The Internet | | The Global |
| | | | Fund | | Fund |
| Annual Advisory Rate | | | 1.25% | | | 1.25% | |
| Expenses Reimbursed by Adviser through voluntary waiver | | $ | — | | $ | 115,583 | |
| | | | The Paradigm | | The Medical |
| | | | Fund | | Fund |
| Annual Advisory Rate | | | 1.25% | | | 1.25% | |
| Expenses Reimbursed by Adviser through voluntary waiver | | $ | 802,836 | | $ | 167,424 | |
| Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver | | $ | 394,714 | | | N/A | |
| | | | The Small Cap | | The Market |
| | | | Opportunities | | Opportunities |
| | | | Fund | | Fund |
| Annual Advisory Rate | | | 1.25% | | | 1.25% | |
| Expenses Reimbursed by Adviser through voluntary waiver | | $ | 245,774 | | $ | 132,910 | |
| Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver | | $ | 75,034 | | $ | 2,920 | |
| | | | The Alternative | | The Multi- |
| | | | Income | | Disciplinary Income |
| | | | Fund | | Fund |
| Annual Advisory Rate | | | 0.90% | | | 1.25% | |
| Expenses Reimbursed by Adviser through voluntary waiver | | $ | 220,079 | | $ | 320,325 | |
| Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver | | $ | 27,311 | | $ | 101,637 | |
56
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
The Adviser receives the shareholder servicing fees from the No Load Class, Advisor Class A and Advisor Class C shares of a Feeder Fund pursuant to a Shareholder Servicing Agreement in the amount equal to 0.25% of the Feeder Fund's average daily net assets attributable to No Load Class, Advisor Class A and Advisor Class C shares, respectively. For the Institutional Class, the Adviser receives a shareholder servicing fee pursuant to a shareholder servicing agreement in the amount equal to 0.20% of a Feeder Fund's average daily net assets attributable to Institutional Class shares. At this time, the Adviser has contractually agreed to waive and/or reimburse the portion of the Institutional Class shareholder servicing fee in excess of 0.05% of a Feeder Fund's average daily net assets attributable to Institutional Class shares until at least May 1, 2017. For the year ended December 31, 2016, the Adviser waived amounts depicted in the above table in shareholder servicing fees for the Institutional Class of the Paradigm, Small Cap, Market Opportunities, Alternative Income, and Multi-Disciplinary Income Funds.
| | | | Shareholder Servicing |
| | | | Expenses for the |
| | | | year ended |
| | | | December 31, 2016 |
| The Internet Fund | | $ | 289,843 | |
| The Global Fund | | | 17,558 | |
| The Paradigm Fund | | | 1,749,034 | |
| The Medical Fund | | | 60,536 | |
| The Small Cap Opportunities Fund | | | 475,620 | |
| The Market Opportunities Fund | | | 99,199 | |
| The Alternative Income Fund | | | 57,636 | |
| The Multi-Disciplinary Income Fund | | | 188,947 | |
The Adviser is responsible for paying a portion of these shareholder servicing fees to various agents that have a written shareholder servicing agreement with the Adviser and that perform shareholder servicing functions and maintenance of shareholder accounts on behalf of their clients who own shares of the Feeder Funds.
For the year ended December 31, 2016, the Feeder Funds were allocated $26,000 for the services of the Chief Compliance Officer employed by the Adviser.
The Company, on behalf of the Feeder Funds, has adopted two Retail Distribution Plans pursuant to Rule 12b-1 under the 1940 Act (each a "12b-1 Plan"). One 12b-1 Plan is for Advisor Class A shares, while the other
57
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
12b-1 Plan is for Advisor Class C shares. Under the 12b-1 Plan for Advisor Class A shares, Advisor Class A shares may pay up to an annual rate of 0.50% of the average daily net asset value of Advisor Class A shares to the Distributor or other qualified recipients under the 12b-1 Plan. During the year ended December 31, 2016, payments under the 12b-1 Plan for the Advisor Class A shares of the Internet, Global, Paradigm, Medical, Small Cap, Market Opportunities, Alternative Income, and Multi-Disciplinary Income Funds were limited to 0.25% of the average daily net asset value of such shares of such Funds. Under the second 12b-1 Plan, Advisor Class C shares pay an annual rate of 0.75% of the average daily net asset value of such shares.
| | | | 12b-1 Expenses for |
| | | | the year ended |
| | | | December 31, 2016 |
| | | | Advisor Class A | | Advisor Class C |
| The Internet Fund | | $ | 6,406 | | $ | 5,747 | |
| The Global Fund | | | 790 | | | 13,203 | |
| The Paradigm Fund | | | 264,934 | | | 815,534 | |
| The Medical Fund | | | 11,194 | | | 3,719 | |
| The Small Cap Opportunities Fund | | | 32,444 | | | 60,723 | |
| The Market Opportunities Fund | | | 10,228 | | | 30,814 | |
| The Alternative Income Fund | | | 5,412 | | | 11,600 | |
| The Multi-Disciplinary Income Fund | | | 16,985 | | | 63,469 | |
Kinetics Funds Distributor, LLC (the "Distributor") acts as the Funds' principal underwriter in a continuous public offering of the Funds' shares. The Distributor is an affiliate of the Adviser.
| | | | Distributor Sales |
| | | | Load Fees for |
| | | | the year ended |
| | | | December 31, 2016 |
| The Internet Fund | | $ | 593 | |
| The Global Fund | | | — | |
| The Paradigm Fund | | | 10,531 | |
| The Medical Fund | | | 1,757 | |
| The Small Cap Opportunities Fund | | | 2,158 | |
| The Market Opportunities Fund | | | 1,710 | |
| The Alternative Income Fund | | | 1,760 | |
| The Multi-Disciplinary Income Fund | | | 1,497 | |
58
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
4. Reclassification of Capital Accounts
GAAP requires that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the year ended December 31, 2016, each Feeder Fund recorded the following reclassifications to the accounts listed below:
| | | INCREASE/(DECREASE) |
| | | Accumulated | | | | | |
| | | Net | | Accumulated | | | |
| | | Investment | | Net Realized | | | |
| | | Income | | Gain | | | |
| | | (Loss) | | (Loss) | | Paid In Capital | |
| The Internet Fund | | $ | 1,555,397 | | $ | (908,996 | ) | $ | (646,401 | ) |
| The Global Fund | | | (9,441 | ) | | (1,573 | ) | | 11,014 | |
| The Paradigm Fund | | | 8,474,526 | | | 642,233 | | | (9,116,759 | ) |
| The Medical Fund | | | 15 | | | (219,758 | ) | | 219,743 | |
| The Small Cap Opportunities Fund | | | (368,727 | ) | | 1,467,202 | | | (1,098,475 | ) |
| The Market Opportunities Fund | | | 148,960 | | | 5,760,607 | | | (5,909,567 | ) |
| The Alternative Income Fund | | | — | | | — | | | — | |
| The Multi-Disciplinary Income Fund | | | 123 | | | (123 | ) | | — | |
5. Income Taxes
At December 31, 2016, the components of accumulated earnings (losses) on a tax basis were as follows:
| | | | Internet | | | Global | | | Paradigm | | | Medical | |
| Net Unrealized Appreciation | | $ | 37,973,570 | | $ | 1,045,546 | | $ | 256,738,996 | | $ | 6,098,201 | |
| Undistributed Ordinary Income | | | — | | | 17,088 | | | — | | | 25,066 | |
| Undistributed Long-Term | | | | | | | | | | | | | |
| Capital Gains | | | 6,573,853 | | | — | | | — | | | 599,153 | |
| Total Distributable Earnings | | $ | 6,573,853 | | $ | 17,088 | | $ | — | | $ | 624,219 | |
| Other Accumulated Loss | | | (437,435 | ) | | (1,088 | ) | | (540,604,523 | ) | | (35,461 | ) |
| Total Accumulated Gain (Loss) | | $ | 44,109,988 | | $ | 1,061,546 | | $ | (283,865,527 | ) | $ | 6,686,959 | |
| | | | | | | | | Multi- | |
| | | Small Cap | | Market | | Alternative | | Disciplinary | |
| | | Opportunities | | Opportunities | | Income | | Income | |
| Net Unrealized Appreciation | | | | | | | | | | | | | |
| (Depreciation) | | $ | 1,292,420 | | $ | 8,923,941 | | $ | 180,935 | | $ | (1,010,154 | ) |
| Undistributed Ordinary Income | | | — | | | — | | | 13,786 | | | 77,449 | |
| Undistributed Long-Term | | | | | | | | | | | | | |
| Capital Gains | | | — | | | — | | | — | | | — | |
| Total Distributable Earnings | | $ | — | | $ | — | | $ | 13,786 | | $ | 77,449 | |
| Other Accumulated Loss | | | (94,863,275 | ) | | (9,121,119 | ) | | (5,373,367 | ) | | (2,081,555 | ) |
| Total Accumulated Loss | | $ | (93,570,855 | ) | $ | (197,178 | ) | $ | (5,178,646 | ) | $ | (3,014,260 | ) |
59
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
At December 31, 2016, the Feeder Funds had accumulated net realized capital loss carryforwards expiring in the following years:
| | | | 2018 | | | 2017 | | | Total | |
| The Internet Fund | | $ | — | | $ | — | | $ | — | |
| The Global Fund | | | — | | | — | | | — | |
| The Paradigm Fund | | | (115,786,082 | ) | | (422,440,169 | ) | | (538,226,251 | ) |
| The Medical Fund | | | — | | | — | | | — | |
| The Small Cap Opportunities Fund | | | (8,224,702 | ) | | (82,550,372 | ) | | (90,775,074 | ) |
| The Market Opportunities Fund | | | (2,108,533 | ) | | (6,623,055 | ) | | (8,731,588 | ) |
| The Alternative Income Fund | | | (2,203,647 | ) | | (3,175,804 | ) | | (5,379,451 | ) |
| The Multi-Disciplinary Income Fund | | | — | | | — | | | — | |
As a result of the Regulated Investment Company Modernization Act of 2010 (the "Modernization Act"), losses incurred in this fiscal year and beyond retain their character, short-term or long-term, have no expiration date and are utilized prior to capital loss carryforwards accumulated before the enactment of the Modernization Act.
At December 31, 2016, the Multi-Disciplinary Income Fund had $37,407 in short-term capital loss carryforwards without expiration and $2,020,967 in long-term capital loss carryforwards without expiration.
For the year ended December 31, 2016, the following Feeder Funds utilized capital loss carryforwards:
| | | Capital Loss | |
| | | Carryforward | |
| The Internet Fund | | $ | — | |
| The Global Fund | | | 27,489 | |
| The Paradigm Fund | | | 68,024,114 | |
| The Medical Fund | | | — | |
| The Small Cap Opportunities Fund | | | 3,401,434 | |
| The Market Opportunities Fund | | | 2,274,754 | |
| The Alternative Income Fund | | | 948,174 | |
| The Multi-Disciplinary Income Fund | | | — | |
60
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
At December 31, 2016, the following Feeder Funds deferred, on a tax basis, post-October losses:
| | | Late Year | | Post-October | |
| | | Ordinary | | Capital Loss | |
| | | Loss Deferral | | Deferral | |
| The Internet Fund | | $ | (221 | ) | $ | — | |
| The Global Fund | | | — | | | — | |
| The Paradigm Fund | | | (1,659,349 | ) | | — | |
| The Medical Fund | | | — | | | — | |
| The Small Cap Opportunities Fund | | | (3,290,280 | ) | | — | |
| The Market Opportunities Fund | | | (201,031 | ) | | — | |
| The Alternative Income Fund | | | — | | | — | |
| The Multi-Disciplinary Income Fund | | | — | | | — | |
The tax components of dividends paid during the year ended December 31, 2016, and the year ended December 31, 2015, are:
| | | The Internet Fund | | The Global Fund | |
| | | Ordinary | | Long-Term | | Ordinary | | Long-Term | |
| | | Income | | Capital Gains | | Income | | Capital Gains | |
| | | Distribution | | Distribution | | Distribution | | Distribution | |
| 2016 | | $ | — | | $ | 9,112,438 | | $ | — | | $ | 30,474 | |
| 2015 | | $ | — | | $ | 27,584,492 | | $ | — | | $ | 3,860 | |
| | | The Paradigm Fund | | The Medical Fund | |
| | | Ordinary | | Long-Term | | Ordinary | | Long-Term | |
| | | Income | | Capital Gains | | Income | | Capital Gains | |
| | | Distribution | | Distribution | | Distribution | | Distribution | |
| 2016 | | $ | — | | $ | — | | $ | 155,355 | | $ | 1,030,327 | |
| 2015 | | $ | — | | $ | — | | $ | 1,201,551 | | $ | 686,006 | |
| | | The Small Cap | | The Market | |
| | | Opportunities Fund | | Opportunities Fund | |
| | | Ordinary | | Long-Term | | Ordinary | | Long-Term | |
| | | Income | | Capital Gains | | Income | | Capital Gains | |
| | | Distribution | | Distribution | | Distribution | | Distribution | |
| 2016 | | $ | — | | $ | — | | $ | — | | $ | — | |
| 2015 | | $ | — | | $ | — | | $ | — | | $ | — | |
| | | The Alternative | | The Multi-Disciplinary | |
| | | Income Fund | | Income Fund | |
| | | Ordinary | | Long-Term | | Ordinary | | Long-Term | |
| | | Income | | Capital Gains | | Income | | Capital Gains | |
| | | Distribution | | Distribution | | Distribution | | Distribution | |
| 2016 | | $ | 20,871 | | $ | — | | $ | 3,636,013 | | $ | — | |
| 2015 | | $ | 19,394 | | $ | — | | $ | 3,065,268 | | $ | — | |
Each Feeder Fund designated as long-term capital gain dividend, pursuant to Internal Revenue Code Section 852(b)(3), the amount necessary to reduce the earnings and profits of the Feeder Fund related to net capital gain to zero for the tax year ended December 31, 2016.
61
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
6. Tax Information (Unaudited)
The Global and Medical Funds designated 100% and 92%, respectively, of dividends declared after December 31, 2016, from net investment income as qualified dividend income under the Jobs and Growth Tax Relief Reconciliation Act of 2003.
The Global, Medical, Alternative Income, and Multi-Disciplinary Income Funds designated 100%, 13%, 100% and 100%, respectively, as ordinary income distributions and 100% and 87%, respectively, for the Internet and Medical Funds as long-term capital gain distribution for the purposes of the dividends paid deduction, which include earnings and profits distributed to shareholders on redemptions of Fund shares.
For corporate shareholders in the Global and Medical Funds, the percentage of ordinary dividend income distributed for the year ended December 31, 2016, which was designated as qualifying for the dividends-received deduction, is 2% and 89%, respectively. The Global, Medical, Alternative Income and Multi-Disciplinary Income Funds designated 4%, less than 1%, 97% and 86%, respectively, of their ordinary income distributions for the fiscal year ended December 31, 2016, as interest-related dividends under Internal Revenue Code Section 871(k)(l)(C).
The Global and Medical Funds designated 100% and 3%, respectively, of their ordinary income distributions as short-term capital gain distributions under Internal Revenue Code Section 871(k)(2)(C).
7. Information about Proxy Voting (Unaudited)
Information regarding how the Feeder Funds and the Master Portfolios vote proxies relating to portfolio securities is available without charge, upon request by calling toll-free at 1-800-930-3828 or by accessing the Company's website at www.kineticsfunds.com and by accessing the SEC's website at www.sec.gov. Information regarding how the Feeder Funds and the Master Portfolios voted proxies relating to portfolio securities during the most recent twelve month period ended June 30, is available without charge, upon request, by calling toll-free at 1-800-930-3828 or by accessing the SEC's website at www.sec.gov.
62
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
8. Information about the Portfolio Holdings (Unaudited)
The Feeder Funds file their complete schedule of portfolio holdings for their first and third fiscal quarters with the SEC on Form N-Q. The Feeder Funds' Form N-Q is available without charge, upon request, by calling toll-free at 1-800-930-3828. Furthermore, you can obtain the Form N-Q on the SEC's website at www.sec.gov. Finally, the Form N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
9. Subsequent Events
In preparing these financial statements, management has evaluated Fund related events and transactions for potential recognition or disclosure through the date the financial statements were issued. There were no events or translations that occurred during the year that materially impacted the amounts or disclosures in the Funds' financial statements.
63
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
| Financial Highlights |
| | | The Internet Fund | |
| | | No Load Class | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 41.68 | | $ | 56.08 | | $ | 59.27 | | $ | 43.18 | | $ | 36.26 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment loss(2) | | | (0.68 | ) | | (0.84 | ) | | (0.77 | ) | | (0.67 | ) | | (0.15 | ) |
| Net realized and unrealized gain (loss) on investments | | | 1.76 | | | (2.21 | ) | | 0.69 | | | 19.78 | | | 8.56 | |
| Total from Investment Operations | | | 1.08 | | | (3.05 | ) | | (0.08 | ) | | 19.11 | | | 8.41 | |
| Redemption Fees | | | 0.00 | (3) | | 0.00 | (3) | | 0.01 | | | 0.00 | (3) | | 0.00 | (3) |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net realized gains | | | (3.43 | ) | | (11.35 | ) | | (3.12 | ) | | (3.02 | ) | | (1.49 | ) |
| Total Distributions | | | (3.43 | ) | | (11.35 | ) | | (3.12 | ) | | (3.02 | ) | | (1.49 | ) |
| Net Asset Value, End of Year | | $ | 39.33 | | $ | 41.68 | | $ | 56.08 | | $ | 59.27 | | $ | 43.18 | |
| Total return | | | 2.59 | % | | (5.42 | )% | | (0.16 | )% | | 44.28 | % | | 23.24 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 109,930 | | $ | 122,332 | | $ | 151,200 | | $ | 172,332 | | $ | 155,036 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 1.87 | % | | 1.82 | % | | 1.78 | % | | 1.84 | % | | 1.94 | % |
After expense reimbursement(4) | | | 1.87 | % | | 1.82 | % | | 1.78 | % | | 1.84 | % | | 1.89 | % |
| Ratio of net investment loss to average net assets | | | (1.68 | )% | | (1.51 | )% | | (1.34 | )% | | (1.30 | )% | | (0.36 | )% |
Portfolio turnover rate(5) | | | 2 | % | | 1 | % | | 1 | % | | 8 | % | | 9 | % |
| | | |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (5) | Portfolio turnover of The Internet Portfolio. |
The accompanying notes are an integral part of these financial statements.
64
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Internet Fund | |
| | | Advisor Class A | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 40.07 | | $ | 54.51 | | $ | 57.84 | | $ | 42.30 | | $ | 35.63 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment loss(2) | | | (0.75 | ) | | (0.95 | ) | | (0.89 | ) | | (0.81 | ) | | (0.24 | ) |
| Net realized and unrealized gain (loss) on investments | | | 1.68 | | | (2.14 | ) | | 0.68 | | | 19.36 | | | 8.40 | |
| Total from Investment Operations | | | 0.93 | | | (3.09 | ) | | (0.21 | ) | | 18.55 | | | 8.16 | |
| Redemption Fees | | | — | | | — | | | 0.00 | (3) | | 0.01 | | | — | |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net realized gains | | | (3.43 | ) | | (11.35 | ) | | (3.12 | ) | | (3.02 | ) | | (1.49 | ) |
| Total Distributions | | | (3.43 | ) | | (11.35 | ) | | (3.12 | ) | | (3.02 | ) | | (1.49 | ) |
| Net Asset Value, End of Year | | $ | 37.57 | | $ | 40.07 | | $ | 54.51 | | $ | 57.84 | | $ | 42.30 | |
Total return(4) | | | 2.32 | % | | (5.65 | )% | | (0.41 | )% | | 43.94 | % | | 22.92 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 1,923 | | $ | 2,978 | | $ | 5,143 | | $ | 5,506 | | $ | 1,379 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 2.12 | % | | 2.07 | % | | 2.03 | % | | 2.09 | % | | 2.19 | % |
After expense reimbursement(5) | | | 2.12 | % | | 2.07 | % | | 2.03 | % | | 2.09 | % | | 2.14 | % |
| Ratio of net investment loss to average net assets | | | (1.93 | )% | | (1.76 | )% | | (1.59 | )% | | (1.55 | )% | | (0.61 | )% |
Portfolio turnover rate(6) | | | 2 | % | | 1 | % | | 1 | % | | 8 | % | | 9 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares. |
| (5) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (6) | Portfolio turnover of The Internet Portfolio. |
The accompanying notes are an integral part of these financial statements.
65
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Internet Fund | |
| | | Advisor Class C | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 37.27 | | $ | 51.81 | | $ | 55.38 | | $ | 40.79 | | $ | 34.58 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment loss(2) | | | (0.88 | ) | | (1.15 | ) | | (1.11 | ) | | (1.03 | ) | | (0.43 | ) |
| Net realized and unrealized gain (loss) on investments | | | 1.56 | | | (2.04 | ) | | 0.64 | | | 18.64 | | | 8.13 | |
| Total from Investment Operations | | | 0.68 | | | (3.19 | ) | | (0.47 | ) | | 17.61 | | | 7.70 | |
| Redemption Fees | | | — | | | — | | | 0.02 | | | — | | | — | |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net realized gains | | | (3.43 | ) | | (11.35 | ) | | (3.12 | ) | | (3.02 | ) | | (1.49 | ) |
| Total Distributions | | | (3.43 | ) | | (11.35 | ) | | (3.12 | ) | | (3.02 | ) | | (1.49 | ) |
| Net Asset Value, End of Year | | $ | 34.52 | | $ | 37.27 | | $ | 51.81 | | $ | 55.38 | | $ | 40.79 | |
| Total return | | | 1.83 | % | | (6.14 | )% | | (0.86 | )% | | 43.20 | % | | 22.32 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 704 | | $ | 848 | | $ | 1,105 | | $ | 913 | | $ | 185 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 2.62 | % | | 2.57 | % | | 2.53 | % | | 2.59 | % | | 2.69 | % |
After expense reimbursement(3) | | | 2.62 | % | | 2.57 | % | | 2.53 | % | | 2.59 | % | | 2.64 | % |
| Ratio of net investment loss to average net assets | | | (2.43 | )% | | (2.26 | )% | | (2.09 | )% | | (2.05 | )% | | (1.11 | )% |
Portfolio turnover rate(4) | | | 2 | % | | 1 | % | | 1 | % | | 8 | % | | 9 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (4) | Portfolio turnover of The Internet Portfolio. |
The accompanying notes are an integral part of these financial statements.
66
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Global Fund | |
| | | No Load Class | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 4.59 | | $ | 5.33 | | $ | 6.05 | | $ | 4.71 | | $ | 3.92 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss)(2) | | | (0.01 | ) | | (0.02 | ) | | (0.02 | ) | | 0.01 | | | 0.03 | |
| Net realized and unrealized gain (loss) on investments | | | 0.67 | | | (0.72 | ) | | (0.70 | ) | | 1.34 | | | 0.88 | |
| Total from Investment Operations | | | 0.66 | | | (0.74 | ) | | (0.72 | ) | | 1.35 | | | 0.91 | |
Redemption Fees(3) | | | 0.00 | | | 0.00 | | | 0.00 | | | 0.00 | | | 0.00 | |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | — | | | — | | | (0.01 | ) | | (0.12 | ) |
| From net realized gains | | | (0.02 | ) | | (0.00 | )(3) | | (0.00 | )(3) | | — | | | — | |
| Total Distributions | | | (0.02 | ) | | (0.00 | )(3) | | (0.00 | )(3) | | (0.01 | ) | | (0.12 | ) |
| Net Asset Value, End of Year | | $ | 5.23 | | $ | 4.59 | | $ | 5.33 | | $ | 6.05 | | $ | 4.71 | |
| Total return | | | 14.40 | % | | (13.83 | )% | | (11.89 | )% | | 28.59 | % | | 23.16 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 5,316 | | $ | 4,745 | | $ | 6,771 | | $ | 8,705 | | $ | 5,069 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 3.04 | % | | 2.87 | % | | 2.61 | % | | 2.83 | % | | 3.38 | % |
After expense reimbursement(4) | | | 1.39 | % | | 1.39 | % | | 1.39 | % | | 1.39 | % | | 1.39 | % |
| Ratio of net investment income (loss) to average net assets | | | (0.17 | )% | | (0.29 | )% | | (0.32 | )% | | 0.22 | % | | 0.77 | % |
Portfolio turnover rate(5) | | | 11 | % | | 16 | % | | 14 | % | | 15 | % | | 23 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (5) | Portfolio turnover of The Global Portfolio. |
The accompanying notes are an integral part of these financial statements.
67
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Global Fund | |
| | | Advisor Class A | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 4.57 | | $ | 5.31 | | $ | 6.03 | | $ | 4.71 | | $ | 3.92 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss)(2) | | | (0.02 | ) | | (0.03 | ) | | (0.03 | ) | | (0.00 | )(3) | | 0.02 | |
| Net realized and unrealized gain (loss) on investments | | | 0.66 | | | (0.71 | ) | | (0.70 | ) | | 1.33 | | | 0.88 | |
| Total from Investment Operations | | | 0.64 | | | (0.74 | ) | | (0.73 | ) | | 1.33 | | | 0.90 | |
| Redemption Fees | | | 0.00 | (3) | | — | | | 0.01 | | | 0.00 | (3) | | 0.00 | (3) |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | — | | | — | | | (0.01 | ) | | (0.11 | ) |
| From net realized gains | | | (0.02 | ) | | (0.00 | )(3) | | (0.00 | )(3) | | — | | | — | |
| Total Distributions | | | (0.02 | ) | | (0.00 | )(3) | | (0.00 | )(3) | | (0.01 | ) | | (0.11 | ) |
| Net Asset Value, End of Year | | $ | 5.19 | | $ | 4.57 | | $ | 5.31 | | $ | 6.03 | | $ | 4.71 | |
Total return(4) | | | 14.03 | % | | (13.89 | )% | | (11.93 | )% | | 28.16 | % | | 22.94 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 309 | | $ | 376 | | $ | 497 | | $ | 1,992 | | $ | 1,093 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 3.29 | % | | 3.12 | % | | 2.86 | % | | 3.08 | % | | 3.63 | % |
After expense reimbursement(5) | | | 1.64 | % | | 1.64 | % | | 1.64 | % | | 1.64 | % | | 1.64 | % |
| Ratio of net investment income (loss) to average net assets | | | (0.42 | )% | | (0.54 | )% | | (0.57 | )% | | (0.03 | )% | | 0.52 | % |
Portfolio turnover rate(6) | | | 11 | % | | 16 | % | | 14 | % | | 15 | % | | 23 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares. |
| (5) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (6) | Portfolio turnover of The Global Portfolio. |
The accompanying notes are an integral part of these financial statements.
68
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Global Fund | |
| | | Advisor Class C | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 4.41 | | $ | 5.16 | | $ | 5.90 | | $ | 4.62 | | $ | 3.87 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss)(2) | | | (0.04 | ) | | (0.05 | ) | | (0.06 | ) | | (0.03 | ) | | 0.00 | (3) |
| Net realized and unrealized gain (loss) on investments | | | 0.64 | | | (0.70 | ) | | (0.68 | ) | | 1.32 | | | 0.85 | |
| Total from Investment Operations | | | 0.60 | | | (0.75 | ) | | (0.74 | ) | | 1.29 | | | 0.85 | |
| Redemption Fees | | | — | | | — | | | 0.00 | (3) | | — | | | — | |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | — | | | — | | | (0.01 | ) | | (0.10 | ) |
| From net realized gains | | | (0.02 | ) | | (0.00 | )(3) | | (0.00 | )(3) | | — | | | — | |
| Total Distributions | | | (0.02 | ) | | (0.00 | )(3) | | (0.00 | )(3) | | (0.01 | ) | | (0.10 | ) |
| Net Asset Value, End of Year | | $ | 4.99 | | $ | 4.41 | | $ | 5.16 | | $ | 5.90 | | $ | 4.62 | |
| Total return | | | 13.63 | % | | (14.48 | )% | | (12.53 | )% | | 27.84 | % | | 22.04 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 1,920 | | $ | 1,614 | | $ | 1,608 | | $ | 1,523 | | $ | 383 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 3.79 | % | | 3.62 | % | | 3.36 | % | | 3.58 | % | | 4.13 | % |
After expense reimbursement(4) | | | 2.14 | % | | 2.14 | % | | 2.14 | % | | 2.14 | % | | 2.14 | % |
| Ratio of net investment income (loss) to average net assets | | | (0.92 | )% | | (1.04 | )% | | (1.07 | )% | | (0.53 | )% | | 0.02 | % |
Portfolio turnover rate(5) | | | 11 | % | | 16 | % | | 14 | % | | 15 | % | | 23 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (5) | Portfolio turnover of The Global Portfolio. |
The accompanying notes are an integral part of these financial statements.
69
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Paradigm Fund | |
| | | No Load Class | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 31.24 | | $ | 34.08 | | $ | 34.35 | | $ | 23.99 | | $ | 19.81 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss)(2) | | | (0.36 | ) | | (0.32 | ) | | (0.36 | ) | | (0.15 | ) | | 0.05 | |
| Net realized and unrealized gain (loss) on investments | | | 6.75 | | | (2.52 | ) | | 0.09 | | | 10.72 | | | 4.25 | |
| Total from Investment Operations | | | 6.39 | | | (2.84 | ) | | (0.27 | ) | | 10.57 | | | 4.30 | |
Redemption Fees(3) | | | 0.00 | | | 0.00 | | | 0.00 | | | 0.00 | | | 0.00 | |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | — | | | — | | | (0.21 | ) | | (0.12 | ) |
| Total Distributions | | | — | | | — | | | — | | | (0.21 | ) | | (0.12 | ) |
| Net Asset Value, End of Year | | $ | 37.63 | | $ | 31.24 | | $ | 34.08 | | $ | 34.35 | | $ | 23.99 | |
| Total return | | | 20.45 | % | | (8.33 | )% | | (0.79 | )% | | 44.07 | % | | 21.78 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 336,837 | | $ | 292,014 | | $ | 521,738 | | $ | 597,746 | | $ | 416,696 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 1.75 | % | | 1.71 | % | | 1.68 | % | | 1.72 | % | | 1.78 | % |
After expense reimbursement(4) | | | 1.64 | % | | 1.64 | % | | 1.64 | % | | 1.64 | % | | 1.64 | % |
| Ratio of net investment income (loss)to average net assets | | | (1.11 | )% | | (0.92 | )% | | (1.02 | )% | | (0.52 | )% | | 0.22 | % |
Portfolio turnover rate(5) | | | 2 | % | | 2 | % | | 7 | % | | 4 | % | | 6 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (5) | Portfolio turnover of The Paradigm Portfolio. |
The accompanying notes are an integral part of these financial statements.
70
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Paradigm Fund | |
| | | Advisor Class A | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 30.53 | | $ | 33.39 | | $ | 33.74 | | $ | 23.59 | | $ | 19.45 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment loss(2) | | | (0.43 | ) | | (0.39 | ) | | (0.43 | ) | | (0.22 | ) | | (0.01 | ) |
| Net realized and unrealized gain (loss) on investments | | | 6.59 | | | (2.47 | ) | | 0.08 | | | 10.53 | | | 4.18 | |
| Total from Investment Operations | | | 6.16 | | | (2.86 | ) | | (0.35 | ) | | 10.31 | | | 4.17 | |
Redemption Fees(3) | | | 0.00 | | | 0.00 | | | 0.00 | | | 0.00 | | | 0.00 | |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | — | | | — | | | (0.16 | ) | | (0.03 | ) |
| Total Distributions | | | — | | | — | | | — | | | (0.16 | ) | | (0.03 | ) |
| Net Asset Value, End of Year | | $ | 36.69 | | $ | 30.53 | | $ | 33.39 | | $ | 33.74 | | $ | 23.59 | |
Total return(4) | | | 20.18 | % | | (8.57 | )% | | (1.04 | )% | | 43.70 | % | | 21.49 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 103,921 | | $ | 129,707 | | $ | 171,958 | | $ | 204,548 | | $ | 135,747 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 2.00 | % | | 1.96 | % | | 1.93 | % | | 1.97 | % | | 2.03 | % |
After expense reimbursement(5) | | | 1.89 | % | | 1.89 | % | | 1.89 | % | | 1.89 | % | | 1.89 | % |
| Ratio of net investment loss to average net assets | | | (1.36 | )% | | (1.17 | )% | | (1.27 | )% | | (0.77 | )% | | (0.03 | )% |
Portfolio turnover rate(6) | | | 2 | % | | 2 | % | | 7 | % | | 4 | % | | 6 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares. |
| (5) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (6) | Portfolio turnover of The Paradigm Portfolio. |
The accompanying notes are an integral part of these financial statements.
71
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Paradigm Fund | |
| | | Advisor Class C | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 29.01 | | $ | 31.88 | | $ | 32.38 | | $ | 22.66 | | $ | 18.76 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment loss(2) | | | (0.56 | ) | | (0.53 | ) | | (0.58 | ) | | (0.35 | ) | | (0.11 | ) |
| Net realized and unrealized gain (loss) on investments | | | 6.23 | | | (2.34 | ) | | 0.08 | | | 10.10 | | | 4.01 | |
| Total from Investment Operations | | | 5.67 | | | (2.87 | ) | | (0.50 | ) | | 9.75 | | | 3.90 | |
Redemption Fees(3) | | | 0.00 | | | 0.00 | | | 0.00 | | | 0.00 | | | 0.00 | |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | — | | | — | | | (0.03 | ) | | — | |
| Total Distributions | | | — | | | — | | | — | | | (0.03 | ) | | — | |
| Net Asset Value, End of Year | | $ | 34.68 | | $ | 29.01 | | $ | 31.88 | | $ | 32.38 | | $ | 22.66 | |
| Total return | | | 19.55 | % | | (9.00 | )% | | (1.54 | )% | | 43.01 | % | | 20.85 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 111,973 | | $ | 114,008 | | $ | 135,333 | | $ | 138,355 | | $ | 101,405 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 2.50 | % | | 2.46 | % | | 2.43 | % | | 2.47 | % | | 2.53 | % |
After expense reimbursement(4) | | | 2.39 | % | | 2.39 | % | | 2.39 | % | | 2.39 | % | | 2.39 | % |
| Ratio of net investment loss to average net assets | | | (1.86 | )% | | (1.67 | )% | | (1.77 | )% | | (1.27 | )% | | (0.53 | )% |
Portfolio turnover rate(5) | | | 2 | % | | 2 | % | | 7 | % | | 4 | % | | 6 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (5) | Portfolio turnover of The Paradigm Portfolio. |
The accompanying notes are an integral part of these financial statements.
72
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Paradigm Fund | |
| | | Institutional Class | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 31.30 | | $ | 34.08 | | $ | 34.28 | | $ | 23.93 | | $ | 19.79 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss)(2) | | | (0.30 | ) | | (0.25 | ) | | (0.29 | ) | | (0.09 | ) | | 0.10 | |
| Net realized and unrealized gain (loss) on investments | | | 6.79 | | | (2.53 | ) | | 0.09 | | | 10.70 | | | 4.24 | |
| Total from Investment Operations | | | 6.49 | | | (2.78 | ) | | (0.20 | ) | | 10.61 | | | 4.34 | |
Redemption Fees(3) | | | 0.00 | | | 0.00 | | | 0.00 | | | 0.00 | | | 0.00 | |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | — | | | — | | | (0.26 | ) | | (0.20 | ) |
| Total Distributions | | | — | | | — | | | — | | | (0.26 | ) | | (0.20 | ) |
| Net Asset Value, End of Year | | $ | 37.79 | | $ | 31.30 | | $ | 34.08 | | $ | 34.28 | | $ | 23.93 | |
| Total return | | | 20.73 | % | | (8.16 | )% | | (0.61 | )% | | 44.40 | % | | 21.99 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 270,880 | | $ | 302,130 | | $ | 346,273 | | $ | 333,682 | | $ | 192,478 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 1.70 | % | | 1.66 | % | | 1.63 | % | | 1.67 | % | | 1.73 | % |
After expense reimbursement(4) | | | 1.44 | % | | 1.44 | % | | 1.44 | % | | 1.44 | % | | 1.44 | % |
| Ratio of net investment income (loss) to average net assets | | | (0.91 | )% | | (0.72 | )% | | (0.82 | )% | | (0.32 | )% | | 0.42 | % |
Portfolio turnover rate(5) | | | 2 | % | | 2 | % | | 7 | % | | 4 | % | | 6 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (5) | Portfolio turnover of The Paradigm Portfolio. |
The accompanying notes are an integral part of these financial statements.
73
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Medical Fund | |
| | | No Load Class | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 30.62 | | $ | 30.67 | | $ | 26.38 | | $ | 17.82 | | $ | 18.75 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss)(2) | | | 0.19 | | | 0.08 | | | 0.13 | | | (0.00 | )(3) | | 0.33 | |
| Net realized and unrealized gain (loss) on investments | | | (2.64 | ) | | 1.96 | | | 4.21 | | | 8.77 | | | 1.32 | |
| Total from Investment Operations | | | (2.45 | ) | | 2.04 | | | 4.34 | | | 8.77 | | | 1.65 | |
Redemption Fees(3) | | | 0.00 | | | 0.00 | | | 0.00 | | | 0.00 | | | 0.00 | |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | (0.22 | ) | | (0.12 | ) | | — | | | (0.06 | ) | | (0.36 | ) |
| From net realized gains | | | (1.33 | ) | | (1.97 | ) | | (0.05 | ) | | (0.15 | ) | | (2.22 | ) |
| Total Distributions | | | (1.55 | ) | | (2.09 | ) | | (0.05 | ) | | (0.21 | ) | | (2.58 | ) |
| Net Asset Value, End of Year | | $ | 26.62 | | $ | 30.62 | | $ | 30.67 | | $ | 26.38 | | $ | 17.82 | |
| Total return | | | (8.01 | )% | | 6.59 | % | | 16.44 | % | | 49.25 | % | | 8.86 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 17,560 | | $ | 22,257 | | $ | 21,876 | | $ | 20,489 | | $ | 14,254 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 2.08 | % | | 1.99 | % | | 2.02 | % | | 2.09 | % | | 2.22 | % |
After expense reimbursement(4) | | | 1.39 | % | | 1.39 | % | | 1.39 | % | | 1.39 | % | | 1.39 | % |
| Ratio of net investment income to average net assets | | | 0.69 | % | | 0.25 | % | | 0.46 | % | | 0.00 | % | | 1.66 | % |
Portfolio turnover rate(5) | | | 0 | % | | 12 | % | | 3 | % | | 12 | % | | 0 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (5) | Portfolio turnover of The Medical Portfolio. |
The accompanying notes are an integral part of these financial statements.
74
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Medical Fund | |
| | | Advisor Class A | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 29.57 | | $ | 29.71 | | $ | 25.62 | | $ | 17.33 | | $ | 18.29 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss)(2) | | | 0.12 | | | 0.00 | (3) | | 0.06 | | | (0.06 | ) | | 0.27 | |
| Net realized and unrealized gain (loss) on investments | | | (2.55 | ) | | 1.90 | | | 4.08 | | | 8.52 | | | 1.29 | |
| Total from Investment Operations | | | (2.43 | ) | | 1.90 | | | 4.14 | | | 8.46 | | | 1.56 | |
| Redemption Fees | | | 0.00 | (3) | | 0.00 | (3) | | 0.00 | (3) | | 0.01 | | | 0.00 | (3) |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | (0.10 | ) | | (0.07 | ) | | — | | | (0.03 | ) | | (0.30 | ) |
| From net realized gains | | | (1.33 | ) | | (1.97 | ) | | (0.05 | ) | | (0.15 | ) | | (2.22 | ) |
| Total Distributions | | | (1.43 | ) | | (2.04 | ) | | (0.05 | ) | | (0.18 | ) | | (2.52 | ) |
| Net Asset Value, End of Year | | $ | 25.71 | | $ | 29.57 | | $ | 29.71 | | $ | 25.62 | | $ | 17.33 | |
Total return(4) | | | (8.24 | )% | | 6.34 | % | | 16.15 | % | | 48.90 | % | | 8.60 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 3,687 | | $ | 6,241 | | $ | 4,578 | | $ | 3,746 | | $ | 2,583 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 2.33 | % | | 2.24 | % | | 2.27 | % | | 2.34 | % | | 2.47 | % |
After expense reimbursement(5) | | | 1.64 | % | | 1.64 | % | | 1.64 | % | | 1.64 | % | | 1.64 | % |
| Ratio of net investment income (loss) to average net assets | | | 0.44 | % | | 0.00 | % | | 0.21 | % | | (0.25 | )% | | 1.41 | % |
Portfolio turnover rate(6) | | | 0 | % | | 12 | % | | 3 | % | | 12 | % | | 0 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares. |
| (5) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (6) | Portfolio turnover of The Medical Portfolio. |
The accompanying notes are an integral part of these financial statements.
75
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Medical Fund | |
| | | Advisor Class C | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 28.82 | | $ | 29.15 | | $ | 25.27 | | $ | 17.19 | | $ | 18.15 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss)(2) | | | (0.02 | ) | | (0.16 | ) | | (0.08 | ) | | (0.16 | ) | | 0.17 | |
| Net realized and unrealized gain (loss) on investments | | | (2.48 | ) | | 1.87 | | | 4.01 | | | 8.42 | | | 1.29 | |
| Total from Investment Operations | | | (2.50 | ) | | 1.71 | | | 3.93 | | | 8.26 | | | 1.46 | |
| Redemption Fees | | | — | | | — | | | — | | | — | | | — | |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | (0.07 | ) | | — | | | (0.03 | ) | | (0.20 | ) |
| From net realized gains | | | (1.33 | ) | | (1.97 | ) | | (0.05 | ) | | (0.15 | ) | | (2.22 | ) |
| Total Distributions | | | (1.33 | ) | | (2.04 | ) | | (0.05 | ) | | (0.18 | ) | | (2.42 | ) |
| Net Asset Value, End of Year | | $ | 24.99 | | $ | 28.82 | | $ | 29.15 | | $ | 25.27 | | $ | 17.19 | |
| Total return | | | (8.69 | )% | | 5.81 | % | | 15.54 | % | | 48.08 | % | | 8.08 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 422 | | $ | 608 | | $ | 631 | | $ | 531 | | $ | 450 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 2.83 | % | | 2.74 | % | | 2.77 | % | | 2.84 | % | | 2.97 | % |
After expense reimbursement(3) | | | 2.14 | % | | 2.14 | % | | 2.14 | % | | 2.14 | % | | 2.14 | % |
| Ratio of net investment income (loss) to average net assets | | | (0.06 | )% | | (0.50 | )% | | (0.29 | )% | | (0.75 | )% | | 0.91 | % |
Portfolio turnover rate(4) | | | 0 | % | | 12 | % | | 3 | % | | 12 | % | | 0 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (4) | Portfolio turnover of The Medical Portfolio. |
The accompanying notes are an integral part of these financial statements.
76
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Small Cap Opportunities Fund | |
| | | No Load Class | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 32.64 | | $ | 37.21 | | $ | 40.12 | | $ | 25.17 | | $ | 19.85 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss)(2) | | | (0.36 | ) | | (0.35 | ) | | (0.36 | ) | | (0.10 | ) | | 0.01 | |
| Net realized and unrealized gain (loss) on investments | | | 8.32 | | | (4.22 | ) | | (2.56 | ) | | 15.05 | | | 5.31 | |
| Total from Investment Operations | | | 7.96 | | | (4.57 | ) | | (2.92 | ) | | 14.95 | | | 5.32 | |
| Redemption Fees | | | 0.00 | (3) | | 0.00 | (3) | | 0.01 | | | 0.00 | (3) | | 0.00 | (3) |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | — | | | — | | | — | | | — | |
| Total Distributions | | | — | | | — | | | — | | | — | | | — | |
| Net Asset Value, End of Year | | $ | 40.60 | | $ | 32.64 | | $ | 37.21 | | $ | 40.12 | | $ | 25.17 | |
| Total return | | | 24.39 | % | | (12.26 | )% | | (7.28 | )% | | 59.40 | % | | 26.74 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 132,443 | | $ | 145,032 | | $ | 251,110 | | $ | 277,816 | | $ | 63,947 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 1.76 | % | | 1.73 | % | | 1.71 | % | | 1.73 | % | | 1.96 | % |
After expense reimbursement(4) | | | 1.64 | % | | 1.64 | % | | 1.64 | % | | 1.64 | % | | 1.64 | % |
| Ratio of net investment income (loss) to average net assets | | | (1.03 | )% | | (0.94 | )% | | (0.89 | )% | | (0.29 | )% | | 0.07 | % |
Portfolio turnover rate(5) | | | 4 | % | | 2 | % | | 19 | % | | 6 | % | | 22 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (5) | Portfolio turnover of The Small Cap Opportunities Portfolio. |
The accompanying notes are an integral part of these financial statements.
77
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Small Cap Opportunities Fund | |
| | | Advisor Class A | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 31.88 | | $ | 36.43 | | $ | 39.39 | | $ | 24.77 | | $ | 19.59 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment loss(2) | | | (0.43 | ) | | (0.43 | ) | | (0.45 | ) | | (0.18 | ) | | (0.04 | ) |
| Net realized and unrealized gain (loss) on investments | | | 8.10 | | | (4.12 | ) | | (2.51 | ) | | 14.79 | | | 5.22 | |
| Total from Investment Operations | | | 7.67 | | | (4.55 | ) | | (2.96 | ) | | 14.61 | | | 5.18 | |
| Redemption Fees | | | 0.00 | (3) | | 0.00 | (3) | | 0.00 | (3) | | 0.01 | | | 0.00 | (3) |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | — | | | — | | | — | | | — | |
| Total Distributions | | | — | | | — | | | — | | | — | | | — | |
| Net Asset Value, End of Year | | $ | 39.55 | | $ | 31.88 | | $ | 36.43 | | $ | 39.39 | | $ | 24.77 | |
Total return(4) | | | 24.06 | % | | (12.47 | )% | | (7.54 | )% | | 59.02 | % | | 26.44 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 13,694 | | $ | 14,857 | | $ | 25,591 | | $ | 21,871 | | $ | 7,558 | |
| Ratio of operating expenses to average | | | | | | | | | | | | | | | | |
| net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 2.01 | % | | 1.98 | % | | 1.96 | % | | 1.98 | % | | 2.21 | % |
After expense reimbursement(5) | | | 1.89 | % | | 1.89 | % | | 1.89 | % | | 1.89 | % | | 1.89 | % |
| Ratio of net investment loss to average net assets | | | (1.28 | )% | | (1.19 | )% | | (1.14 | )% | | (0.54 | )% | | (0.18 | )% |
Portfolio turnover rate(6) | | | 4 | % | | 2 | % | | 19 | % | | 6 | % | | 22 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares. |
| (5) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (6) | Portfolio turnover of The Small Cap Opportunities Portfolio. |
The accompanying notes are an integral part of these financial statements.
78
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Small Cap Opportunities Fund | |
| | | Advisor Class C | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 30.88 | | $ | 35.47 | | $ | 38.53 | | $ | 24.35 | | $ | 19.36 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment loss(2) | | | (0.58 | ) | | (0.59 | ) | | (0.63 | ) | | (0.34 | ) | | (0.15 | ) |
| Net realized and unrealized gain (loss) on investments | | | 7.82 | | | (4.00 | ) | | (2.44 | ) | | 14.51 | | | 5.14 | |
| Total from Investment Operations | | | 7.24 | | | (4.59 | ) | | (3.07 | ) | | 14.17 | | | 4.99 | |
| Redemption Fees | | | 0.00 | (3) | | — | | | 0.01 | | | 0.01 | | | — | |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | — | | | — | | | — | | | — | |
| Total Distributions | | | — | | | — | | | — | | | — | | | — | |
| Net Asset Value, End of Year | | $ | 38.12 | | $ | 30.88 | | $ | 35.47 | | $ | 38.53 | | $ | 24.35 | |
| Total return | | | 23.45 | % | | (12.92 | )% | | (7.97 | )% | | 58.23 | % | | 25.77 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 8,426 | | $ | 8,840 | | $ | 12,928 | | $ | 7,178 | | $ | 2,536 | |
| Ratio of operating expenses to average | | | | | | | | | | | | | | | | |
| net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 2.51 | % | | 2.48 | % | | 2.46 | % | | 2.48 | % | | 2.71 | % |
After expense reimbursement(4) | | | 2.39 | % | | 2.39 | % | | 2.39 | % | | 2.39 | % | | 2.39 | % |
| Ratio of net investment loss to average net assets | | | (1.78 | )% | | (1.69 | )% | | (1.64 | )% | | (1.04 | )% | | (0.68 | )% |
Portfolio turnover rate(5) | | | 4 | % | | 2 | % | | 19 | % | | 6 | % | | 22 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (5) | Portfolio turnover of The Small Cap Opportunities Portfolio. |
The accompanying notes are an integral part of these financial statements.
79
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Small Cap Opportunities Fund | |
| | | Institutional Class | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 33.03 | | $ | 37.57 | | $ | 40.44 | | $ | 25.32 | | $ | 19.93 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss)(2) | | | (0.29 | ) | | (0.28 | ) | | (0.28 | ) | | (0.03 | ) | | 0.06 | |
| Net realized and unrealized gain (loss) on investments | | | 8.42 | | | (4.26 | ) | | (2.59 | ) | | 15.15 | | | 5.33 | |
| Total from Investment Operations | | | 8.13 | | | (4.54 | ) | | (2.87 | ) | | 15.12 | | | 5.39 | |
| Redemption Fees | | | 0.00 | (3) | | 0.00 | (3) | | 0.00 | (3) | | — | | | 0.00 | (3) |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | — | | | — | | | — | | | — | |
| Total Distributions | | | — | | | — | | | — | | | — | | | — | |
| Net Asset Value, End of Year | | $ | 41.16 | | $ | 33.03 | | $ | 37.57 | | $ | 40.44 | | $ | 25.32 | |
| Total return | | | 24.61 | % | | (12.06 | )% | | (7.12 | )% | | 59.72 | % | | 27.04 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 50,517 | | $ | 51,258 | | $ | 63,392 | | $ | 41,032 | | $ | 7,482 | |
| Ratio of operating expenses to average | | | | | | | | | | | | | | | | |
| net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 1.71 | % | | 1.68 | % | | 1.66 | % | | 1.68 | % | | 1.91 | % |
After expense reimbursement(4) | | | 1.44 | % | | 1.44 | % | | 1.44 | % | | 1.44 | % | | 1.44 | % |
| Ratio of net investment income (loss) to average net assets | | | (0.83 | )% | | (0.74 | )% | | (0.69 | )% | | (0.09 | )% | | 0.27 | % |
Portfolio turnover rate(5) | | | 4 | % | | 2 | % | | 19 | % | | 6 | % | | 22 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (5) | Portfolio turnover of The Small Cap Opportunities Portfolio. |
The accompanying notes are an integral part of these financial statements.
80
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Market Opportunities Fund | |
| | | No Load Class | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 15.16 | | $ | 16.68 | | $ | 17.66 | | $ | 12.08 | | $ | 10.45 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss)(2) | | | (0.15 | ) | | (0.15 | ) | | (0.10 | ) | | 0.00(3 | ) | | 0.03 | |
| Net realized and unrealized gain (loss) on investments | | | 3.25 | | | (1.37 | ) | | (0.88 | ) | | 5.65 | | | 1.80 | |
| Total from Investment Operations | | | 3.10 | | | (1.52 | ) | | (0.98 | ) | | 5.65 | | | 1.83 | |
| Redemption Fees | | | 0.00 | (3) | | — | | | 0.00 | (3) | | 0.00 | (3) | | 0.00 | (3) |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | — | | | — | | | (0.07 | ) | | (0.20 | ) |
| Total Distributions | | | — | | | — | | | — | | | (0.07 | ) | | (0.20 | ) |
| Net Asset Value, End of Year | | $ | 18.26 | | $ | 15.16 | | $ | 16.68 | | $ | 17.66 | | $ | 12.08 | |
| Total return | | | 20.45 | % | | (9.11 | )% | | (5.55 | )% | | 46.74 | % | | 17.52 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 32,178 | | $ | 31,230 | | $ | 37,318 | | $ | 47,466 | | $ | 32,929 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 1.97 | % | | 1.90 | % | | 1.86 | % | | 1.88 | % | | 1.97 | % |
After expense reimbursement(4) | | | 1.64 | % | | 1.64 | % | | 1.64 | % | | 1.64 | % | | 1.64 | % |
| Ratio of net investment income (loss) to average net assets | | | (0.96 | )% | | (0.91 | )% | | (0.55 | )% | | 0.03 | % | | 0.23 | % |
Portfolio turnover rate(5) | | | 5 | % | | 2 | % | | 18 | % | | 21 | % | | 26 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (5) | Portfolio turnover of The Market Opportunities Portfolio. |
The accompanying notes are an integral part of these financial statements.
81
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Market Opportunities Fund | |
| | | Advisor Class A | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 15.04 | | $ | 16.59 | | $ | 17.60 | | $ | 12.07 | | $ | 10.43 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss)(2) | | | (0.19 | ) | | (0.19 | ) | | (0.14 | ) | | (0.03 | ) | | 0.00 | (3) |
| Net realized and unrealized gain (loss)on investments | | | 3.22 | | | (1.36 | ) | | (0.87 | ) | | 5.63 | | | 1.80 | |
| Total from Investment Operations | | | 3.03 | | | (1.55 | ) | | (1.01 | ) | | 5.60 | | | 1.80 | |
| Redemption Fees | | | — | | | 0.00 | (3) | | — | | | 0.00 | (3) | | 0.00 | (3) |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | — | | | — | | | (0.07 | ) | | (0.16 | ) |
| Total Distributions | | | — | | | — | | | — | | | (0.07 | ) | | (0.16 | ) |
| Net Asset Value, End of Year | | $ | 18.07 | | $ | 15.04 | | $ | 16.59 | | $ | 17.60 | | $ | 12.07 | |
Total return(4) | | | 20.15 | % | | (9.34 | )% | | (5.74 | )% | | 46.36 | % | | 17.26 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 4,537 | | $ | 4,502 | | $ | 8,817 | | $ | 11,742 | | $ | 6,518 | |
| Ratio of operating expenses to average | | | | | | | | | | | | | | | | |
| net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 2.22 | % | | 2.15 | % | | 2.11 | % | | 2.13 | % | | 2.22 | % |
After expense reimbursement(5) | | | 1.89 | % | | 1.89 | % | | 1.89 | % | | 1.89 | % | | 1.89 | % |
| Ratio of net investment loss to average net assets | | | (1.21 | )% | | (1.16 | )% | | (0.80 | )% | | (0.22 | )% | | (0.02 | )% |
Portfolio turnover rate(6) | | | 5 | % | | 2 | % | | 18 | % | | 21 | % | | 26 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares. |
| (5) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (6) | Portfolio turnover of The Market Opportunities Portfolio. |
The accompanying notes are an integral part of these financial statements.
82
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Market Opportunities Fund | |
| | | Advisor Class C | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 14.65 | | $ | 16.24 | | $ | 17.32 | | $ | 11.94 | | $ | 10.32 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment loss(2) | | | (0.26 | ) | | (0.27 | ) | | (0.22 | ) | | (0.11 | ) | | (0.06 | ) |
| Net realized and unrealized gain (loss) on investments | | | 3.12 | | | (1.32 | ) | | (0.86 | ) | | 5.56 | | | 1.78 | |
| Total from Investment Operations | | | 2.86 | | | (1.59 | ) | | (1.08 | ) | | 5.45 | | | 1.72 | |
| Redemption Fees | | | — | | | — | | | 0.00 | (3) | | 0.00 | (3) | | 0.00 | (3) |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | — | | | — | | | (0.07 | ) | | (0.10 | ) |
| Total Distributions | | | — | | | — | | | — | | | (0.07 | ) | | (0.10 | ) |
| Net Asset Value, End of Year | | $ | 17.51 | | $ | 14.65 | | $ | 16.24 | | $ | 17.32 | | $ | 11.94 | |
| Total return | | | 19.52 | % | | (9.79 | )% | | (6.24 | )% | | 45.61 | % | | 16.70 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 4,428 | | $ | 4,079 | | $ | 5,109 | | $ | 5,525 | | $ | 3,932 | |
| Ratio of operating expenses to average | | | | | | | | | | | | | | | | |
| net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 2.72 | % | | 2.65 | % | | 2.61 | % | | 2.63 | % | | 2.72 | % |
After expense reimbursement(4) | | | 2.39 | % | | 2.39 | % | | 2.39 | % | | 2.39 | % | | 2.39 | % |
| Ratio of net investment loss to average net assets | | | (1.71 | )% | | (1.66 | )% | | (1.30 | )% | | (0.72 | )% | | (0.52 | )% |
Portfolio turnover rate(5) | | | 5 | % | | 2 | % | | 18 | % | | 21 | % | | 26 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (5) | Portfolio turnover of The Market Opportunities Portfolio. |
The accompanying notes are an integral part of these financial statements.
83
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Market Opportunities Fund | |
| | | Institutional Class | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 15.29 | | $ | 16.80 | | $ | 17.74 | | $ | 12.10 | | $ | 10.46 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss)(2) | | | (0.12 | ) | | (0.12 | ) | | (0.06 | ) | | 0.03 | | | 0.05 | |
| Net realized and unrealized gain (loss) on investments | | | 3.29 | | | (1.39 | ) | | (0.88 | ) | | 5.67 | | | 1.81 | |
| Total from Investment Operations | | | 3.17 | | | (1.51 | ) | | (0.94 | ) | | 5.70 | | | 1.86 | |
| Redemption Fees | | | — | | | — | | | — | | | 0.01 | | | — | |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | — | | | — | | | (0.07 | ) | | (0.22 | ) |
| Total Distributions | | | — | | | — | | | — | | | (0.07 | ) | | (0.22 | ) |
| Net Asset Value, End of Year | | $ | 18.46 | | $ | 15.29 | | $ | 16.80 | | $ | 17.74 | | $ | 12.10 | |
| Total return | | | 20.73 | % | | (8.93 | )% | | (5.36 | )% | | 47.15 | % | | 17.83 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 2,426 | | $ | 2,355 | | $ | 3,108 | | $ | 1,809 | | $ | 229 | |
| Ratio of operating expenses to average | | | | | | | | | | | | | | | | |
| net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 1.92 | % | | 1.85 | % | | 1.81 | % | | 1.83 | % | | 1.92 | % |
After expense reimbursement(3) | | | 1.44 | % | | 1.44 | % | | 1.44 | % | | 1.44 | % | | 1.44 | % |
| Ratio of net investment income (loss) to average net assets | | | (0.76 | )% | | (0.71 | )% | | (0.35 | )% | | 0.23 | % | | 0.43 | % |
Portfolio turnover rate(4) | | | 5 | % | | 2 | % | | 18 | % | | 21 | % | | 26 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (4) | Portfolio turnover of The Market Opportunities Portfolio. |
The accompanying notes are an integral part of these financial statements.
84
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Alternative Income Fund | |
| | | No Load Class | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012(1) | |
PER SHARE DATA:(2) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 91.68 | | $ | 89.06 | | $ | 87.88 | | $ | 83.31 | | $ | 77.90 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss)(3) | | | (0.01 | ) | | 0.01 | | | (0.12 | ) | | (0.21 | ) | | 1.53 | |
| Net realized and unrealized gain on investments | | | 3.69 | | | 2.56 | | | 1.30 | | | 4.78 | | | 6.09 | |
| Total from Investment Operations | | | 3.68 | | | 2.57 | | | 1.18 | | | 4.57 | | | 7.62 | |
| Redemption Fees | | | 0.00 | (4) | | 0.05 | | | 0.00 | (4) | | 0.00 | (4) | | 0.00 | (4) |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | — | | | — | | | — | | | (2.21 | ) |
| Total Distributions | | | — | | | — | | | — | | | — | | | (2.21 | ) |
| Net Asset Value, End of Year | | $ | 95.36 | | $ | 91.68 | | $ | 89.06 | | $ | 87.88 | | $ | 83.31 | |
| Total return | | | 4.00 | % | | 2.94 | % | | 1.50 | % | | 5.22 | % | | 9.90 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 5,664 | | $ | 4,570 | | $ | 8,202 | | $ | 11,848 | | $ | 4,699 | |
| Ratio of operating expenses to average | | | | | | | | | | | | | | | | |
| net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 1.78 | % | | 1.74 | % | | 1.80 | % | | 2.23 | % | | 2.55 | % |
After expense reimbursement(5) | | | 0.95 | % | | 0.95 | % | | 0.95 | % | | 0.95 | % | | 1.64 | % |
| Ratio of net investment income (loss) to average net assets | | | (0.01 | )% | | 0.01 | % | | (0.14 | )% | | (0.24 | )% | | 1.84 | % |
Portfolio turnover rate(6) | | | 1 | % | | 6 | % | | 17 | % | | 19 | % | | 56 | % |
| (1) | Per share data adjusted for 1:10 reverse stock split completed as of May 31, 2013. |
| (2) | Information presented relates to a share of capital stock outstanding for each year. |
| (3) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (4) | Amount calculated is less than $0.005. |
| (5) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (6) | Portfolio turnover of The Alternative Income Portfolio. |
The accompanying notes are an integral part of these financial statements.
85
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Alternative Income Fund | |
| | | Advisor Class A | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012(1) | |
PER SHARE DATA:(2) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 91.02 | | $ | 88.69 | | $ | 87.73 | | $ | 83.38 | | $ | 77.76 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss)(3) | | | (0.24 | ) | | (0.22 | ) | | (0.34 | ) | | (0.43 | ) | | 1.31 | |
| Net realized and unrealized gain on investments | | | 3.65 | | | 2.55 | | | 1.30 | | | 4.77 | | | 6.09 | |
| Total from Investment Operations | | | 3.41 | | | 2.33 | | | 0.96 | | | 4.34 | | | 7.40 | |
| Redemption Fees | | | 0.01 | | | — | | | 0.00 | (4) | | 0.01 | | | 0.00 | (4) |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | — | | | — | | | — | | | (1.78 | ) |
| Total Distributions | | | — | | | — | | | — | | | — | | | (1.78 | ) |
| Net Asset Value, End of Year | | $ | 94.44 | | $ | 91.02 | | $ | 88.69 | | $ | 87.73 | | $ | 83.38 | |
Total return(5) | | | 3.76 | % | | 2.63 | % | | 1.24 | % | | 4.91 | % | | 9.61 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 2,458 | | $ | 1,565 | | $ | 1,554 | | $ | 2,898 | | $ | 2,597 | |
| Ratio of operating expenses to average | | | | | | | | | | | | | | | | |
| net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 2.03 | % | | 1.99 | % | | 2.05 | % | | 2.48 | % | | 2.80 | % |
After expense reimbursement(6) | | | 1.20 | % | | 1.20 | % | | 1.20 | % | | 1.20 | % | | 1.89 | % |
| Ratio of net investment income (loss) to average net assets | | | (0.26 | )% | | (0.24 | )% | | (0.39 | )% | | (0.49 | )% | | 1.59 | % |
Portfolio turnover rate(7) | | | 1 | % | | 6 | % | | 17 | % | | 19 | % | | 56 | % |
| (1) | Per share data adjusted for 1:10 reverse stock split completed as of May 31, 2013. |
| (2) | Information presented relates to a share of capital stock outstanding for each year. |
| (3) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (4) | Amount calculated is less than $0.005. |
| (5) | The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares. |
| (6) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (7) | Portfolio turnover of The Alternative Income Portfolio. |
The accompanying notes are an integral part of these financial statements.
86
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Alternative Income Fund | |
| | | Advisor Class C | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012(1) | |
PER SHARE DATA:(2) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 88.46 | | $ | 86.60 | | $ | 86.10 | | $ | 82.26 | | $ | 76.75 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss)(3) | | | (0.68 | ) | | (0.65 | ) | | (0.77 | ) | | (0.84 | ) | | 0.89 | |
| Net realized and unrealized gain on investments | | | 3.55 | | | 2.48 | | | 1.27 | | | 4.68 | | | 6.00 | |
| Total from Investment Operations | | | 2.87 | | | 1.83 | | | 0.50 | | | 3.84 | | | 6.89 | |
| Redemption Fees | | | — | | | 0.03 | | | — | | | — | | | 0.00 | (4) |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | — | | | — | | | — | | | (1.38 | ) |
| Total Distributions | | | — | | | — | | | — | | | — | | | (1.38 | ) |
| Net Asset Value, End of Year | | $ | 91.33 | | $ | 88.46 | | $ | 86.60 | | $ | 86.10 | | $ | 82.26 | |
| Total return | | | 3.23 | % | | 2.15 | % | | 0.74 | % | | 4.46 | % | | 8.96 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 1,640 | | $ | 1,356 | | $ | 1,506 | | $ | 1,862 | | $ | 1,763 | |
| Ratio of operating expenses to average | | | | | | | | | | | | | | | | |
| net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 2.53 | % | | 2.49 | % | | 2.55 | % | | 2.98 | % | | 3.30 | % |
After expense reimbursement(5) | | | 1.70 | % | | 1.70 | % | | 1.70 | % | | 1.70 | % | | 2.39 | % |
| Ratio of net investment income (loss) to average net assets | | | (0.76 | )% | | (0.74 | )% | | (0.89 | )% | | (0.99 | )% | | 1.09 | % |
Portfolio turnover rate(6) | | | 1 | % | | 6 | % | | 17 | % | | 19 | % | | 56 | % |
| (1) | Per share data adjusted for 1:10 reverse stock split completed as of May 31, 2013. |
| (2) | Information presented relates to a share of capital stock outstanding for each year. |
| (3) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (4) | Amount calculated is less than $0.005. |
| (5) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (6) | Portfolio turnover of The Alternative Income Portfolio. |
The accompanying notes are an integral part of these financial statements.
87
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Alternative Income Fund | |
| | | Institutional Class | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012(1) | |
PER SHARE DATA:(2) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 92.84 | | $ | 90.14 | | $ | 88.76 | | $ | 84.00 | | $ | 78.49 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment income (loss)(3) | | | 0.18 | | | 0.19 | | | 0.06 | | | (0.04 | ) | | 1.72 | |
| Net realized and unrealized gain on investments | | | 3.75 | | | 2.60 | | | 1.32 | | | 4.80 | | | 6.16 | |
| Total from Investment Operations | | | 3.93 | | | 2.79 | | | 1.38 | | | 4.76 | | | 7.88 | |
| Redemption Fees | | | 0.00 | (4) | | 0.00 | (4) | | 0.00 | (4) | | — | | | 0.01 | |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | (0.11 | ) | | (0.09 | ) | | — | | | — | | | (2.38 | ) |
| Total Distributions | | | (0.11 | ) | | (0.09 | ) | | — | | | — | | | (2.38 | ) |
Net Asset Value, End of Year | | $ | 96.66 | | $ | 92.84 | | $ | 90.14 | | $ | 88.76 | | $ | 84.00 | |
| Total return | | | 4.22 | % | | 3.09 | % | | 1.72 | % | | 5.39 | % | | 10.17 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 18,165 | | $ | 20,255 | | $ | 26,874 | | $ | 6,854 | | $ | 1,629 | |
| Ratio of operating expenses to average | | | | | | | | | | | | | | | | |
| net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 1.73 | % | | 1.69 | % | | 1.75 | % | | 2.18 | % | | 2.50 | % |
After expense reimbursement(5) | | | 0.75 | % | | 0.75 | % | | 0.75 | % | | 0.75 | % | | 1.44 | % |
| Ratio of net investment income (loss) to average net assets | | | 0.19 | % | | 0.21 | % | | 0.06 | % | | (0.04 | )% | | 2.04 | % |
Portfolio turnover rate(6) | | | 1 | % | | 6 | % | | 17 | % | | 19 | % | | 56 | % |
| (1) | Per share data adjusted for 1:10 reverse stock split completed as of May 31, 2013. |
| (2) | Information presented relates to a share of capital stock outstanding for each year. |
| (3) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (4) | Amount calculated is less than $0.005. |
| (5) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (6) | Portfolio turnover of The Alternative Income Portfolio. |
The accompanying notes are an integral part of these financial statements.
88
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Multi-Disciplinary Income Fund | |
| | | No Load Class | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 10.32 | | $ | 10.79 | | $ | 11.02 | | $ | 11.08 | | $ | 10.09 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment income(2) | | | 0.43 | | | 0.37 | | | 0.33 | | | 0.20 | | | 0.34 | |
| Net realized and unrealized gain (loss) on investments | | | 0.63 | | | (0.60 | ) | | (0.06 | ) | | 0.28 | | | 1.20 | |
| Total from Investment Operations | | | 1.06 | | | (0.23 | ) | | 0.27 | | | 0.48 | | | 1.54 | |
| Redemption Fees | | | — | | | 0.00 | (3) | | 0.00 | (3) | | 0.00 | (3) | | 0.00 | (3) |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | (0.43 | ) | | (0.23 | ) | | (0.29 | ) | | (0.28 | ) | | (0.43 | ) |
| From net realized gains | | | — | | | (0.01 | ) | | (0.21 | ) | | (0.26 | ) | | (0.12 | ) |
| Total Distributions | | | (0.43 | ) | | (0.24 | ) | | (0.50 | ) | | (0.54 | ) | | (0.55 | ) |
| Net Asset Value, End of Year | | $ | 10.95 | | $ | 10.32 | | $ | 10.79 | | $ | 11.02 | | $ | 11.08 | |
| Total return | | | 10.41 | % | | (2.17 | )% | | 2.46 | % | | 4.28 | % | | 15.38 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 6,809 | | $ | 6,108 | | $ | 10,105 | | $ | 19,553 | | $ | 19,566 | |
| Ratio of operating expenses to average | | | | | | | | | | | | | | | | |
| net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 1.85 | % | | 1.79 | % | | 1.79 | % | | 1.83 | %(4) | | 2.00 | % |
After expense reimbursement(5) | | | 1.49 | % | | 1.49 | % | | 1.49 | % | | 1.50 | %(4) | | 1.49 | % |
| Ratio of net investment income to average net assets | | | 4.02 | % | | 3.38 | % | | 2.93 | % | | 1.74 | %(6) | | 3.16 | % |
Portfolio turnover rate(7) | | | 9 | % | | 10 | % | | 35 | % | | 54 | % | | 41 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | The ratio of expenses includes borrowing expense on securities sold short. The expense ratio excluding borrowing expenses on securities sold short was 1.82% before expense reimbursement and 1.49% after expense reimbursement. |
| (5) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (6) | The ratio of net investment income includes borrowing expense on securities sold short. |
| (7) | Portfolio turnover of The Multi-Disciplinary Income Portfolio. |
The accompanying notes are an integral part of these financial statements.
89
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | The Multi-Disciplinary Income Fund | |
| | | Advisor Class A | |
| | | For the | | For the | | For the | | For the | | For the | |
| | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended | |
| | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 | |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 10.27 | | $ | 10.75 | | $ | 10.98 | | $ | 11.03 | | $ | 10.05 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment income(2) | | | 0.40 | | | 0.34 | | | 0.30 | | | 0.17 | | | 0.31 | |
| Net realized and unrealized gain (loss) on investments | | | 0.63 | | | (0.60 | ) | | (0.06 | ) | | 0.29 | | | 1.20 | |
| Total from Investment Operations | | | 1.03 | | | (0.26 | ) | | 0.24 | | | 0.46 | | | 1.51 | |
| Redemption Fees | | | — | | | 0.00 | (3) | | 0.00 | (3) | | 0.00 | (3) | | 0.00 | (3) |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | (0.40 | ) | | (0.21 | ) | | (0.26 | ) | | (0.25 | ) | | (0.41 | ) |
| From net realized gains | | | — | | | (0.01 | ) | | (0.21 | ) | | (0.26 | ) | | (0.12 | ) |
| Total Distributions | | | (0.40 | ) | | (0.22 | ) | | (0.47 | ) | | (0.51 | ) | | (0.53 | ) |
| Net Asset Value, End of Year | | $ | 10.90 | | $ | 10.27 | | $ | 10.75 | | $ | 10.98 | | $ | 11.03 | |
Total return(4) | | | 10.17 | % | | (2.46 | )% | | 2.17 | % | | 4.15 | % | | 15.12 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 6,935 | | $ | 8,754 | | $ | 12,281 | | $ | 36,170 | | $ | 25,764 | |
| Ratio of operating expenses to average | | | | | | | | | | | | | | | | |
| net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 2.10 | % | | 2.04 | % | | 2.04 | % | | 2.08 | %(5) | | 2.25 | % |
After expense reimbursement(6) | | | 1.74 | % | | 1.74 | % | | 1.74 | % | | 1.75 | %(5) | | 1.74 | % |
| Ratio of net investment income to average net assets | | | 3.77 | % | | 3.13 | % | | 2.68 | % | | 1.49 | %(7) | | 2.91 | % |
Portfolio turnover rate(8) | | | 9 | % | | 10 | % | | 35 | % | | 54 | % | | 41 | % |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares. |
| (5) | The ratio of expenses includes borrowing expense on securities sold short. The expense ratio excluding borrowing expenses on securities sold short was 2.07% before expense reimbursement and 1.74% after expense reimbursement. |
| (6) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (7) | The ratio of net investment income includes borrowing expense on securities sold short. |
| (8) | Portfolio turnover of The Multi-Disciplinary Income Portfolio. |
The accompanying notes are an integral part of these financial statements.
90
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | | The Multi-Disciplinary Income Fund | |
| | | | | | | | Advisor Class C | | | | |
| | | | For the | | For the | | For the | | For the | | For the |
| | | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended |
| | | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, |
| | | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 10.18 | | $ | 10.65 | | $ | 10.90 | | $ | 10.96 | | $ | 10.00 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment income(2) | | | 0.34 | | | 0.28 | | | 0.24 | | | 0.11 | | | 0.26 | |
| Net realized and unrealized gain (loss) on investments | | | 0.62 | | | (0.58 | ) | | (0.06 | ) | | 0.29 | | | 1.18 | |
| Total from Investment Operations | | | 0.96 | | | (0.30 | ) | | 0.18 | | | 0.40 | | | 1.44 | |
| Redemption Fees | | | — | | | — | | | 0.00 | (3) | | — | | | — | |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | (0.35 | ) | | (0.16 | ) | | (0.22 | ) | | (0.20 | ) | | (0.36 | ) |
| From net realized gains | | | — | | | (0.01 | ) | | (0.21 | ) | | (0.26 | ) | | (0.12 | ) |
| Total Distributions | | | (0.35 | ) | | (0.17 | ) | | (0.43 | ) | | (0.46 | ) | | (0.48 | ) |
| Net Asset Value, End of Year | | $ | 10.79 | | $ | 10.18 | | $ | 10.65 | | $ | 10.90 | | $ | 10.96 | |
| Total return | | | 9.51 | % | | (2.84 | )% | | 1.61 | % | | 3.59 | % | | 14.48 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 7,790 | | $ | 9,266 | | $ | 10,403 | | $ | 11,209 | | $ | 7,485 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 2.60 | % | | 2.54 | % | | 2.54 | % | | 2.58 | %(4) | | 2.75 | % |
After expense reimbursement(5) | | | 2.24 | % | | 2.24 | % | | 2.24 | % | | 2.25 | %(4) | | 2.24 | % |
| Ratio of net investment income to average net assets | | | 3.27 | % | | 2.63 | % | | 2.18 | % | | 0.99 | %(6) | | 2.41 | % |
Portfolio turnover rate(7) | | | 9 | % | | 10 | % | | 35 | % | | 54 | % | | 41 | % |
| | | |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | The ratio of expenses includes borrowing expense on securities sold short. The expense ratio excluding borrowing expenses on securities sold short was 2.57% before expense reimbursement and 2.24% after expense reimbursement. |
| (5) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (6) | The ratio of net investment income includes borrowing expense on securities sold short. |
| (7) | Portfolio turnover of The Multi-Disciplinary Income Portfolio. |
The accompanying notes are an integral part of these financial statements.
91
| KINETICS MUTUAL FUNDS, INC. — THE FEEDER FUNDS |
Financial Highlights — (Continued) |
| | | | The Multi-Disciplinary Income Fund | |
| | | | | | | | Institutional Class | | | | |
| | | | For the | | For the | | For the | | For the | | For the |
| | | | Year Ended | | Year Ended | | Year Ended | | Year Ended | | Year Ended |
| | | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, |
| | | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, Beginning of Year | | $ | 10.34 | | $ | 10.82 | | $ | 11.06 | | $ | 11.11 | | $ | 10.12 | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | |
Net investment income(2) | | | 0.45 | | | 0.39 | | | 0.35 | | | 0.22 | | | 0.36 | |
| Net realized and unrealized gain (loss) on investments | | | 0.63 | | | (0.59 | ) | | (0.06 | ) | | 0.29 | | | 1.20 | |
| Total from Investment Operations | | | 1.08 | | | (0.20 | ) | | 0.29 | | | 0.51 | | | 1.56 | |
| Redemption Fees | | | 0.00 | (3) | | 0.00 | (3) | | — | | | — | | | — | |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | (0.45 | ) | | (0.27 | ) | | (0.32 | ) | | (0.30 | ) | | (0.45 | ) |
| From net realized gains | | | — | | | (0.01 | ) | | (0.21 | ) | | (0.26 | ) | | (0.12 | ) |
| Total Distributions | | | (0.45 | ) | | (0.28 | ) | | (0.53 | ) | | (0.56 | ) | | (0.57 | ) |
| Net Asset Value, End of Year | | $ | 10.97 | | $ | 10.34 | | $ | 10.82 | | $ | 11.06 | | $ | 11.11 | |
| Total return | | | 10.61 | % | | (1.96 | )% | | 2.61 | % | | 4.58 | % | | 15.55 | % |
| | | | | | | | | | | | | | | | | |
| SUPPLEMENTAL DATA AND RATIOS | | | | | | | | | | | | | | | | |
| Net assets, end of year (000's) | | $ | 78,084 | | $ | 66,199 | | $ | 102,590 | | $ | 23,227 | | $ | 6,576 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 1.80 | % | | 1.74 | % | | 1.74 | % | | 1.78 | %(4) | | 1.95 | % |
After expense reimbursement(5) | | | 1.29 | % | | 1.29 | % | | 1.29 | % | | 1.30 | %(4) | | 1.29 | % |
| Ratio of net investment income to average net assets | | | 4.22 | % | | 3.58 | % | | 3.13 | % | | 1.94 | %(6) | | 3.36 | % |
Portfolio turnover rate(7) | | | 9 | % | | 10 | % | | 35 | % | | 54 | % | | 41 | % |
| | | |
| (1) | Information presented relates to a share of capital stock outstanding for each year. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the year. |
| (3) | Amount calculated is less than $0.005. |
| (4) | The ratio of expenses includes borrowing expense on securities sold short. The expense ratio excluding borrowing expenses on securities sold short was 1.77% before expense reimbursement and 1.29% after expense reimbursement. |
| (5) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (6) | The ratio of net investment income includes borrowing expense on securities sold short. |
| (7) | Portfolio turnover of The Multi-Disciplinary Income Portfolio. |
The accompanying notes are an integral part of these financial statements.
92
| KINETICS MUTUAL FUNDS, INC. |
| Report of Independent Registered |
| Public Accounting Firm |
Board of Directors and Shareholders of
Kinetics Mutual Funds, Inc.
New York, NY
We have audited the accompanying statements of assets and liabilities of The Internet Fund, The Global Fund, The Paradigm Fund, The Medical Fund, The Small Cap Opportunities Fund, The Market Opportunities Fund, The Alternative Income Fund and The Multi-Disciplinary Income Fund, each a series of shares of Kinetics Mutual Funds, Inc. (the "Funds"), as of December 31, 2016, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform, nor were the Funds required to have, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly in all material respects, the financial position of each of the eight funds of the Kinetics Mutual Funds, Inc. as of December 31, 2016, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended and financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Philadelphia, Pennsylvania
February 28, 2017
93
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| Allocation of Portfolio Assets |
| December 31, 2016 |
The Internet Portfolio
| | | | | | Percentage |
| | | | Market | | of Total |
| Sector Allocation* | | | Value | | Net Assets |
| Information | | $ | 34,185,571 | | | 30.3 | % |
| Finance and Insurance | | | 9,222,214 | | | 8.2 | % |
| Management of Companies and Enterprises | | | 8,943,296 | | | 7.9 | % |
| Manufacturing | | | 4,685,810 | | | 4.2 | % |
| Retail Trade | | | 3,663,174 | | | 3.3 | % |
| Administrative and Support and Waste Management and Remediation Services | | | 2,680,434 | | | 2.4 | % |
| Arts, Entertainment, and Recreation | | | 372,400 | | | 0.3 | % |
| Petroleum and Gas | | | 29,677 | | | 0.0 | % |
| * | Excludes Short-Term Investments |
94
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| Allocation of Portfolio Assets |
December 31, 2016 — (Continued) |
The Global Portfolio
| | | | | | Percentage |
| | | | Market | | of Total |
| Country Allocation* | | | Value | | Net Assets |
| United States | | $ | 2,228,323 | | | 29.5 | % |
| Canada | | | 1,489,383 | | | 19.7 | % |
| France | | | 335,498 | | | 4.5 | % |
| Denmark | | | 100,800 | | | 1.3 | % |
| United Kingdom | | | 92,755 | | | 1.2 | % |
| Brazil | | | 48,009 | | | 0.6 | % |
| Argentina | | | 28,354 | | | 0.4 | % |
| Netherlands | | | 7,929 | | | 0.1 | % |
| Spain | | | 4,667 | | | 0.1 | % |
| Sweden | | | 3,737 | | | 0.1 | % |
| Japan | | | 745 | | | 0.0 | % |
| * | Excludes Short-Term Investments |
95
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| Allocation of Portfolio Assets |
December 31, 2016 — (Continued) |
The Paradigm Portfolio
| | | | | | Percentage |
| | | | Market | | of Total |
| Sector Allocation* | | | Value | | Net Assets |
| Petroleum and Gas | | $ | 179,426,549 | | | 21.5 | % |
| Information | | | 113,006,248 | | | 13.5 | % |
| Real Estate and Rental and Leasing | | | 94,819,615 | | | 11.3 | % |
| Finance and Insurance | | | 94,654,702 | | | 11.3 | % |
| Management of Companies and Enterprises | | | 69,316,013 | | | 8.3 | % |
| Manufacturing | | | 32,720,693 | | | 3.9 | % |
| Arts, Entertainment, and Recreation | | | 29,078,130 | | | 3.5 | % |
| Mining, Quarrying, and Oil and Gas Extraction | | | 28,731,885 | | | 3.4 | % |
| Retail Trade | | | 21,715,830 | | | 2.6 | % |
| Utilities | | | 2,942,013 | | | 0.4 | % |
| Transportation and Warehousing | | | 1,206,400 | | | 0.1 | % |
| Industrials | | | 664,149 | | | 0.1 | % |
| Professional, Scientific, and Technical Services | | | 463,107 | | | 0.1 | % |
| * | Excludes Short-Term Investments |
96
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| Allocation of Portfolio Assets |
December 31, 2016 — (Continued) |
The Medical Portfolio
| | | | | | Percentage |
| | | | Market | | of Total |
| Sector Allocation* | | | Value | | Net Assets |
| Manufacturing | | $ | 20,198,626 | | | 93.1 | % |
| Professional, Scientific, and Technical Services | | | 1,127,419 | | | 5.2 | % |
| Finance and Insurance | | | 2,169 | | | 0.0 | % |
| * | Excludes Short-Term Investments |
97
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| Allocation of Portfolio Assets |
December 31, 2016 — (Continued) |
The Small Cap Opportunities Portfolio
| | | | | | Percentage |
| | | | Market | | of Total |
| Sector Allocation* | | | Value | | Net Assets |
| Petroleum and Gas | | $ | 53,656,313 | | | 26.2 | % |
| Finance and Insurance | | | 32,744,827 | | | 16.0 | % |
| Real Estate and Rental and Leasing | | | 29,502,627 | | | 14.4 | % |
| Manufacturing | | | 24,714,032 | | | 12.0 | % |
| Management of Companies and Enterprises | | | 20,618,706 | | | 10.0 | % |
| Accommodation and Food Services | | | 7,787,810 | | | 3.8 | % |
| Arts, Entertainment, and Recreation | | | 6,743,100 | | | 3.3 | % |
| Utilities | | | 3,961,932 | | | 1.9 | % |
| Retail Trade | | | 3,151,631 | | | 1.5 | % |
| Mining, Quarrying, and Oil and Gas Extraction | | | 1,786,400 | | | 0.9 | % |
| Information | | | 1,702,406 | | | 0.8 | % |
| Wholesale Trade | | | 1,154,348 | | | 0.6 | % |
| * | Excludes Short-Term Investments |
98
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| Allocation of Portfolio Assets |
December 31, 2016 — (Continued) |
The Market Opportunities Portfolio
| | | | | | Percentage |
| | | | Market | | of Total |
| Sector Allocation* | | | Value | | Net Assets |
| Finance and Insurance | | $ | 13,856,776 | | | 31.8 | % |
| Petroleum and Gas | | | 8,932,777 | | | 20.5 | % |
| Real Estate and Rental and Leasing | | | 3,958,200 | | | 9.1 | % |
| Management of Companies and Enterprises | | | 3,436,684 | | | 7.9 | % |
| Accommodation and Food Services | | | 2,367,300 | | | 5.5 | % |
| Manufacturing | | | 47,600 | | | 0.1 | % |
| Industrials | | | 42,848 | | | 0.1 | % |
| Wholesale Trade | | | 31,200 | | | 0.1 | % |
| Administrative and Support and Waste Management and Remediation Services | | | 7,082 | | | 0.0 | % |
| Support Activities for Water Transportation | | | 6,971 | | | 0.0 | % |
| Retail Trade | | | 5,993 | | | 0.0 | % |
| Mining, Quarrying, and Oil and Gas Extraction | | | 1,932 | | | 0.0 | % |
| * | Excludes Short-Term Investments |
99
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| Allocation of Portfolio Assets |
December 31, 2016 — (Continued) |
The Alternative Income Portfolio
| | | | | | Percentage |
| | | | Market | | of Total |
| Sector Allocation* | | | Value | | Net Assets |
| Finance and Insurance | | $ | 7,021,190 | | | 25.0 | % |
| Manufacturing | | | 2,642,925 | | | 9.4 | % |
| Public Administration | | | 1,551,224 | | | 5.5 | % |
| Information | | | 450,676 | | | 1.6 | % |
| Mining, Quarrying, and Oil and Gas Extraction | | | 351,981 | | | 1.3 | % |
| Wholesale Trade | | | 299,918 | | | 1.1 | % |
| Retail Trade | | | 250,010 | | | 0.9 | % |
| * | Excludes Short-Term Investments & Written Options |
100
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| Allocation of Portfolio Assets |
December 31, 2016 — (Continued) |
The Multi-Disciplinary Income Portfolio
| | | | | | Percentage |
| | | | Market | | of Total |
| Sector Allocation* | | | Value | | Net Assets |
| Information | | $ | 17,877,709 | | | 17.9 | % |
| Manufacturing | | | 16,364,862 | | | 16.4 | % |
| Real Estate and Rental and Leasing | | | 13,909,155 | | | 13.9 | % |
| Mining, Quarrying, and Oil and Gas Extraction | | | 9,131,190 | | | 9.2 | % |
| Finance and Insurance | | | 9,008,496 | | | 9.0 | % |
| Retail Trade | | | 6,678,500 | | | 6.7 | % |
| Construction | | | 6,518,938 | | | 6.5 | % |
| Administrative and Support and Waste Management and | | | | | | | |
| Remediation Services | | | 4,370,675 | | | 4.4 | % |
| Accommodation and Food Services | | | 3,687,940 | | | 3.7 | % |
| Utilities | | | 1,362,640 | | | 1.4 | % |
| Professional, Scientific, and Technical Services | | | 772,188 | | | 0.8 | % |
| Health Care and Social Assistance | | | 467,685 | | | 0.5 | % |
| Transportation and Warehousing | | | 448,375 | | | 0.4 | % |
| * | Excludes Short-Term Investments & Written Options |
101
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Internet Portfolio |
| Portfolio of Investments — December 31, 2016 |
| COMMON STOCKS — 56.63% | | | Shares | | | Value | |
| Administrative and Support Services — 2.38% | | | | | | | |
| CreditRiskMonitor.com, Inc. | | | 780 | | $ | 2,036 | |
| Ctrip.com International Limited — ADR* | | | 4,400 | | | 176,000 | |
| PayPal Holdings, Inc.* | | | 63,400 | | | 2,502,398 | |
| | | | | | | 2,680,434 | |
| Broadcasting (except Internet) — 10.48% | | | | | | | |
| The E.W. Scripps Company — Class A* | | | 60,000 | | | 1,159,800 | |
| Liberty SiriusXM Group — Class A* | | | 54,800 | | | 1,891,696 | |
| Liberty SiriusXM Group — Class C* | | | 144,000 | | | 4,884,480 | |
| The Madison Square Garden Company — Class A* | | | 16,366 | | | 2,806,933 | |
| MSG Networks Inc. — Class A* | | | 49,100 | | | 1,055,650 | |
| | | | | | | 11,798,559 | |
| Cable Distributor — 5.76% | | | | | | | |
| Liberty Broadband Corporation — Series A* | | | 18,000 | | | 1,304,280 | |
| Liberty Broadband Corporation — Series C* | | | 36,000 | | | 2,666,520 | |
| Liberty Global plc — Series C* | | | 73,000 | | | 2,168,100 | |
| Liberty Global plc LiLAC — Series C* | | | 16,496 | | | 349,220 | |
| | | | | | | 6,488,120 | |
| Credit Intermediation and Related Activities — 0.74% | | | | | | | |
| LendingTree, Inc.*^ | | | 8,233 | | | 834,414 | |
| Data Processing, Hosting and Related Services — 0.34% | | | | | | | |
| CoStar Group, Inc.* | | | 2,000 | | | 376,980 | |
| Data Processor — 3.77% | | | | | | | |
| MasterCard, Inc. — Class A | | | 14,700 | | | 1,517,775 | |
| Verisk Analytics, Inc. — Class A* | | | 7,600 | | | 616,892 | |
| Visa, Inc. — Class A | | | 27,000 | | | 2,106,540 | |
| | | | | | | 4,241,207 | |
| Defense — 4.16% | | | | | | | |
| CACI International, Inc. — Class A* | | | 29,200 | | | 3,629,560 | |
| ManTech International Corporation — Class A | | | 25,000 | | | 1,056,250 | |
| | | | | | | 4,685,810 | |
The accompanying notes are an integral part of these financial statements.
102
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Internet Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| | | | Shares | | | Value | |
| E-Commerce — 2.93% | | | | | | | |
| CommerceHub, Inc. — Series A* | | | 6,600 | | $ | 99,066 | |
| CommerceHub, Inc. — Series C* | | | 13,200 | | | 198,396 | |
| eBay, Inc.* | | | 53,200 | | | 1,579,508 | |
| Liberty Expedia Holdings, Inc. — Class A* | | | 1,800 | | | 71,406 | |
| Liberty Interactive Corporation — Class A* | | | 32,800 | | | 655,344 | |
| Liberty Ventures — Series A* | | | 18,960 | | | 699,055 | |
| | | | | | | 3,302,775 | |
| Holding Company — 0.95% | | | | | | | |
| Icahn Enterprises LP | | | 17,863 | | | 1,070,348 | |
| Media — 2.09% | | | | | | | |
| Liberty Braves Group — Class A* | | | 8,800 | | | 180,312 | |
| Liberty Braves Group — Class C* | | | 10,800 | | | 222,372 | |
| Liberty Media Group — Class A* | | | 21,200 | | | 664,620 | |
| Lions Gate Entertainment Corporation — Class B* | | | 52,644 | | | 1,291,880 | |
| | | | | | | 2,359,184 | |
| Non-Store Retailers — 1.79% | | | | | | | |
| Copart, Inc.* | | | 36,000 | | | 1,994,760 | |
| Overstock.com, Inc.* | | | 1,000 | | | 17,500 | |
| | | | | | | 2,012,260 | |
| Oil and Gas — 0.03% | | | | | | | |
| Texas Pacific Land Trust | | | 100 | | | 29,677 | |
| Other Information Services — 8.70% | | | | | | | |
| Alphabet, Inc. — Class A* | | | 6,000 | | | 4,754,700 | |
| Alphabet, Inc. — Class C* | | | 6,000 | | | 4,630,920 | |
| Yahoo! Inc.* | | | 10,800 | | | 417,636 | |
| | | | | | | 9,803,256 | |
| Performing Arts, Spectator Sports, and Related Industries — 0.33% | | | | | | | |
| Live Nation Entertainment, Inc.* | | | 14,000 | | | 372,400 | |
| Satellite Telecommunications — 8.50% | | | | | | | |
| DISH Network Corp. — Class A* | | | 29,400 | | | 1,703,142 | |
| EchoStar Corporation — Class A* | | | 153,200 | | | 7,872,948 | |
| | | | | | | 9,576,090 | |
The accompanying notes are an integral part of these financial statements.
103
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Internet Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| | | | Shares | | | Value | |
| Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 3.68% | | | | | | | |
| The Bitcoin Investment Trust*^ | | | 21,200 | | $ | 2,578,980 | |
The Bitcoin Investment Trust Private Placement Certificate*+1 | | | 289 | | | 26,368 | |
| MarketAxess Holdings, Inc. | | | 5,700 | | | 837,444 | |
| OTC Markets Group Inc. — Class A | | | 30,600 | | | 703,800 | |
| | | | | | | 4,146,592 | |
| Telecommunications — 0.00% | | | | | | | |
| ICTC Group Inc.* | | | 149 | | | 4,470 | |
| TOTAL COMMON STOCKS | | | | | | | |
| (cost $25,578,931) | | | | | | 63,782,576 | |
| | | | | | | | |
| | | | Principal | | | | |
| ESCROW NOTES — 0.00% | | | Amount | | | | |
| Special Purpose Entity — 0.00% | | | | | | | |
| Adelphia Communications Corp. Preferred*+ | | $ | 190,000 | | | — | |
| TOTAL ESCROW NOTES | | | | | | | |
| (cost $0) | | | | | | — | |
The accompanying notes are an integral part of these financial statements.
104
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Internet Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| SHORT-TERM INVESTMENTS — 44.04% | | | Shares | | | Value | |
| Money Market Funds — 0.00% | | | | | | | |
Fidelity Institutional Government Portfolio — Class I, 0.39%b | | | 760 | | $ | 760 | |
| | | | | | | | |
| | | | Principal | | | | |
| | | | Amount | | | | |
| U.S. Treasury Obligations — 44.04% | | | | | | | |
| United States Treasury Bills | | | | | | | |
| Maturity Date: 01/05/2017, Yield to Maturity 0.24% | | $ | 38,000 | | | 38,000 | |
| Maturity Date: 02/02/2017, Yield to Maturity 0.42% | | | 1,435,000 | | | 1,434,502 | |
| Maturity Date: 02/09/2017, Yield to Maturity 0.40% | | | 112,000 | | | 111,949 | |
| Maturity Date: 02/16/2017, Yield to Maturity 0.40% | | | 48,017,000 | | | 47,991,455 | |
| Maturity Date: 02/23/2017, Yield to Maturity 0.40% | | | 27,000 | | | 26,982 | |
| | | | | | | 49,602,888 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | |
| (cost $49,604,611) | | | | | | 49,603,648 | |
| | | | | | | | |
| INVESTMENTS PURCHASED WITH THE CASH | | | | | | | |
| PROCEEDS FROM SECURITIES LENDING — 0.65% | | | Shares | | | | |
| Money Market Funds — 0.65% | | | | | | | |
First American Government Obligations Fund — Class X, 0.47%b | | | 724,893 | | | 724,893 | |
| TOTAL INVESTMENTS PURCHASED WITH THE CASH | | | | | | | |
| PROCEEDS FROM SECURITIES LENDING | | | | | | | |
| (cost $724,893) | | | | | | 724,893 | |
| TOTAL INVESTMENTS — 101.32% | | | | | | | |
| (cost $75,908,435) | | | | | $ | 114,111,117 | |
| | | |
| Percentages are stated as a percent of net assets. |
| * — | Non-income producing security. |
| ^ — | This security or a portion of this security was out on loan at December 31, 2016. Total loaned securities had a market value of $713,993 at December 31, 2016. The remaining contractual maturities of all of the securities lending transactions were overnight and continuous. |
| + — | Security is considered illiquid and was fair valued. The aggregate value of such securities is $26,368 or 0.02% of net assets. |
1 — | The Private Placement Certificates will automatically convert into unrestricted shares of The Bitcoin Investment Trust (GBTC) at the end of the restricted period. |
| b — | The rate quoted is the annualized seven-day yield as of December 31, 2016. |
| ADR — American Depository Receipt. |
The accompanying notes are an integral part of these financial statements.
105
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Global Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| COMMON STOCKS — 56.63% | | | Shares | | | Value | |
| Asset Management — 7.10% | | | | | | | |
| Brookfield Asset Management Inc. — Class A | | | 5,800 | | $ | 191,458 | |
| JZ Capital Partners Limited | | | 4,800 | | | 29,992 | |
| Onex Corporation | | | 4,000 | | | 271,081 | |
| Partners Value Investments LP* | | | 1,993 | | | 43,047 | |
| | | | | | | 535,578 | |
| Broadcasting (except Internet) — 3.40% | | | | | | | |
| Liberty SiriusXM Group — Class A* | | | 3,500 | | | 120,820 | |
| Liberty SiriusXM Group — Class C* | | | 4,000 | | | 135,680 | |
| | | | | | | 256,500 | |
| Cable Distributor — 0.93% | | | | | | | |
| Altice N.V. — Class A* | | | 400 | | | 7,928 | |
| Liberty Broadband Corporation — Series A* | | | 700 | | | 50,722 | |
| Liberty Global plc — Series A* | | | 74 | | | 2,264 | |
| Liberty Global plc — Series C* | | | 182 | | | 5,405 | |
| Liberty Global plc LiLAC — Series A* | | | 9 | | | 198 | |
| Liberty Global plc LiLAC — Series C* | | | 22 | | | 466 | |
| SFR Group SA* | | | 100 | | | 2,824 | |
| | | | | | | 69,807 | |
| Crop Production — 0.38% | | | | | | | |
| Cresud S.A.C.I.F.y A. — ADR* | | | 1,798 | | | 28,355 | |
| Global Exchanges — 0.64% | | | | | | | |
| BM&FBovespa SA | | | 9,470 | | | 48,009 | |
| Holding Company — 12.32% | | | | | | | |
| Bollore SA | | | 92,000 | | | 324,428 | |
| Clarke Inc. | | | 25,600 | | | 178,465 | |
| Dundee Corporation — Class A* | | | 13,000 | | | 57,590 | |
| HRG Group, Inc.* | | | 200 | | | 3,112 | |
| Icahn Enterprises LP | | | 6,038 | | | 361,794 | |
| Investor AB — B Shares | | | 100 | | | 3,738 | |
| | | | | | | 929,127 | |
| Industrial Services — 0.04% | | | | | | | |
| Brookfield Business Partners LP*^ | | | 116 | | | 2,791 | |
| Insurance Carriers and Related Activities — 3.87% | | | | | | | |
| Fairfax Financial Holdings Limited | | | 600 | | | 292,020 | |
The accompanying notes are an integral part of these financial statements.
106
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Global Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| | | | Shares | | | Value | |
| Lessors of Nonresidential Buildings (except Miniwarehouses) — 2.42% | | | | | | | |
| The Howard Hughes Corporation* | | | 1,600 | | $ | 182,560 | |
| Media — 0.87% | | | | | | | |
| Liberty Media Group — Class A* | | | 900 | | | 28,215 | |
| Liberty Media Group — Class C* | | | 1,200 | | | 37,596 | |
| | | | | | | 65,811 | |
| Mining (except Oil and Gas) — 3.49% | | | | | | | |
| Franco-Nevada Corporation | | | 2,100 | | | 125,496 | |
| NovaGold Resources Inc.* | | | 4,000 | | | 18,240 | |
| Sandstorm Gold Limited*^ | | | 3,600 | | | 14,040 | |
| Silver Wheaton Corporation | | | 5,450 | | | 105,294 | |
| Trilogy Metals, Inc.* | | | 666 | | | 336 | |
| | | | | | | 263,406 | |
| Oil and Gas — 10.94% | | | | | | | |
| PrairieSky Royalty Limited | | | 100 | | | 2,379 | |
| Texas Pacific Land Trust | | | 2,772 | | | 822,646 | |
| | | | | | | 825,025 | |
| Oil and Gas Extraction — 0.96% | | | | | | | |
| Continental Resources, Inc.* | | | 1,400 | | | 72,156 | |
| Other Information Services — 0.01% | | | | | | | |
| Internet Initiative Japan Inc. — ADR | | | 100 | | | 745 | |
| Pipeline Transportation — 0.11% | | | | | | | |
| Rubis SCA | | | 100 | | | 8,245 | |
| Publishing Industries (except Internet) — 0.06% | | | | | | | |
| Promotora de Informaciones S.A. — ADR* | | | 240 | | | 1,296 | |
| Promotora de Informaciones S.A. — Class A* | | | 610 | | | 3,371 | |
| | | | | | | 4,667 | |
| Real Estate — 2.34% | | | | | | | |
| Dream Unlimited Corp. — Class A* | | | 35,100 | | | 176,722 | |
| Satellite Telecommunications — 1.63% | | | | | | | |
| EchoStar Corporation — Class A* | | | 2,400 | | | 123,336 | |
| Securities, Commodity Contracts, and Other Financial Investments and | | | | | | | |
| Related Activities — 2.58% | | | | | | | |
| The Bitcoin Investment Trust* | | | 1,600 | | | 194,640 | |
| Shipping Services — 0.64% | | | | | | | |
| Clarkson plc | | | 1,800 | | | 48,204 | |
The accompanying notes are an integral part of these financial statements.
107
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Global Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| | | | Shares | | | Value | |
| Transportation — 0.04% | | | | | | | |
| Braemar Shipping Services plc | | | 1,000 | | $ | 3,435 | |
| Transportation Equipment Manufacturing — 0.52% | | | | | | | |
| HEICO Corporation — Class A | | | 575 | | | 39,043 | |
| Water Transportation — 1.34% | | | | | | | |
| A.P. Moeller-Maersk A/S — Class B — ADR | | | 12,600 | | | 100,800 | |
| TOTAL COMMON STOCKS | | | | | | | |
| (cost $3,176,638) | | | | | | 4,270,982 | |
| | | | | | | | |
| PREFERRED STOCKS — 0.13% | | | | | | | |
| Asset Management — 0.13% | | | | | | | |
| Partners Value Investments LP — Class A | | | 515 | | | 10,043 | |
| TOTAL PREFERRED STOCKS | | | | | | | |
| (cost $5,334) | | | | | | 10,043 | |
| | | | | | | | |
| | | | Principal | | | | |
| CORPORATE BONDS — 0.50% | | | Amount | | | | |
| General Merchandise Stores — 0.50% | | | | | | | |
| Sears Holdings Corporation, 8.000%, 12/15/2019 | | $ | 39,500 | | | 38,118 | |
| TOTAL CORPORATE BONDS | | | | | | | |
| (cost $39,500) | | | | | | 38,118 | |
| | | | | | | | |
| PURCHASED PUT OPTIONS — 0.17% | | | Contractsd | | | | |
| Funds, Trusts, and Other Financial Vehicles — 0.17% | | | | | | | |
| ProShares Ultra VIX Short-Term Futures ETF* | | | | | | | |
| Expiration Date: January 2017, Exercise Price: $20.00 | | | 2 | | | 3,670 | |
| Expiration Date: January 2017, Exercise Price: $25.00 | | | 4 | | | 9,280 | |
| TOTAL PURCHASED PUT OPTIONS | | | | | | | |
| (cost $9,106) | | | | | | 12,950 | |
| | | | | | | | |
| WARRANTS — 0.11% | | | Shares | | | | |
| Asset Management — 0.04% | | | | | | | |
| Partners Value Investments LP* | | | 1,893 | | | 3,172 | |
| General Merchandise Stores — 0.07% | | | | | | | |
| Sears Holdings Corporation*^ | | | 1,390 | | | 4,935 | |
| TOTAL WARRANTS | | | | | | | |
| (cost $26,599) | | | | | | 8,107 | |
The accompanying notes are an integral part of these financial statements.
108
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Global Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| SHORT-TERM INVESTMENTS — 42.19% | | | Shares | | | Value | |
| Money Market Funds — 0.01% | | | | | | | |
Fidelity Institutional Government Portfolio — Class I, 0.39%b | | | 414 | | $ | 414 | |
| | | | | | | | |
| | | | Principal | | | | |
| | | | Amount | | | | |
| U.S. Treasury Obligations — 42.18% | | | | | | | |
| United States Treasury Bills | | | | | | | |
| Maturity Date: 01/12/2017, Yield to Maturity 0.25% | | $ | 100,000 | | | 99,990 | |
| Maturity Date: 02/02/2017, Yield to Maturity 0.36% | | | 7,000 | | | 6,997 | |
| Maturity Date: 02/16/2017, Yield to Maturity 0.40% | | | 3,076,000 | | | 3,074,364 | |
| | | | | | | 3,181,351 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | |
| (cost $3,181,830) | | | | | | 3,181,765 | |
| | | | | | | | |
| INVESTMENTS PURCHASED WITH THE CASH | | | | | | | |
| PROCEEDS FROM SECURITIES LENDING — 0.30% | | | Shares | | | | |
| Money Market Funds — 0.30% | | | | | | | |
First American Government Obligations Fund — Class X, 0.47%b | | | 22,557 | | | 22,557 | |
| TOTAL INVESTMENTS PURCHASED WITH THE CASH | | | | | | | |
| PROCEEDS FROM SECURITIES LENDING | | | | | | | |
| (cost $22,557) | | | | | | 22,557 | |
| TOTAL INVESTMENTS — 100.03% | | | | | | | |
| (cost $6,461,564) | | | | | $ | 7,544,522 | |
| | | |
| Percentages are stated as a percent of net assets. |
| * — | Non-income producing security. |
| ^ — | This security or a portion of this security was out on loan at December 31, 2016. Total loaned securities had a market value of $20,959 at December 31, 2016. The remaining contractual maturities of all of the securities lending transactions were overnight and continuous. |
| b — | The rate quoted is the annualized seven-day yield as of December 31, 2016. |
| d — | 100 shares per contract. |
| ADR – American Depository Receipt. |
| ETF — Exchange Traded Fund. |
The accompanying notes are an integral part of these financial statements.
109
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Paradigm Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| COMMON STOCKS — 79.93% | | | Shares | | | Value | |
| Asset Management — 6.82% | | | | | | | |
| Associated Capital Group, Inc. — Class A | | | 267,600 | | $ | 8,790,660 | |
| Brookfield Asset Management Inc. — Class A | | | 898,500 | | | 29,659,485 | |
| Onex Corporation^ | | | 266,800 | | | 18,081,090 | |
| Partners Value Investments LP* | | | 800 | | | 17,279 | |
| RIT Capital Partners plc | | | 20,600 | | | 478,556 | |
| | | | | | | 57,027,070 | |
| Beverage and Tobacco Product Manufacturing — 0.13% | | | | | | | |
| Brown-Forman Corporation — Class A | | | 900 | | | 41,625 | |
| Crimson Wine Group Limited* | | | 112,400 | | | 1,053,188 | |
| | | | | | | 1,094,813 | |
| Broadcasting (except Internet) — 5.01% | | | | | | | |
| CBS Corporation — Class B | | | 109,000 | | | 6,934,580 | |
| Liberty SiriusXM Group — Class A* | | | 390,200 | | | 13,469,704 | |
| Liberty SiriusXM Group — Class C* | | | 634,300 | | | 21,515,456 | |
| | | | | | | 41,919,740 | |
| Cable Distributor — 2.52% | | | | | | | |
| Liberty Broadband Corporation — Series A* | | | 74,700 | | | 5,412,762 | |
| Liberty Broadband Corporation — Series C* | | | 211,400 | | | 15,658,398 | |
| | | | | | | 21,071,160 | |
| Chemical Manufacturing — 0.09% | | | | | | | |
| Platform Specialty Products Corporation* | | | 73,700 | | | 722,997 | |
| Computer and Electronic Product Manufacturing — 0.00% | | | | | | | |
| Fortive Corporation | | | 50 | | | 2,681 | |
| E-Commerce — 1.69% | | | | | | | |
| CommerceHub, Inc. — Series A* | | | 19,300 | | | 289,693 | |
| CommerceHub, Inc. — Series C* | | | 38,600 | | | 580,158 | |
| Liberty Expedia Holdings, Inc. — Class A* | | | 45,000 | | | 1,785,150 | |
| Liberty Interactive Corporation — Class A* | | | 376,600 | | | 7,524,468 | |
| Liberty Ventures — Series A* | | | 107,040 | | | 3,946,565 | |
| | | | | | | 14,126,034 | |
| Electrical Equipment, Appliance, and Component Manufacturing — 0.00% | | | | | | | |
| Danaher Corporation | | | 100 | | | 7,784 | |
The accompanying notes are an integral part of these financial statements.
110
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Paradigm Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| | | | Shares | | | Value | |
| Gaming — 1.18% | | | | | | | |
| Las Vegas Sands Corp. | | | 89,900 | | $ | 4,801,559 | |
| MGM Resorts International* | | | 79,100 | | | 2,280,453 | |
| Wynn Resorts Limited | | | 31,800 | | | 2,751,018 | |
| | | | | | | 9,833,030 | |
| General Merchandise Stores — 0.13% | | | | | | | |
| Sears Canada Inc.*^ | | | 213,400 | | | 362,780 | |
| Sears Holdings Corporation*^ | | | 76,000 | | | 706,040 | |
| | | | | | | 1,068,820 | |
| Global Exchanges — 0.04% | | | | | | | |
| JSE Limited | | | 28,000 | | | 334,909 | |
| Holding Company — 6.71% | | | | | | | |
| Bollore SA | | | 422,600 | | | 1,490,252 | |
| Dundee Corporation — Class A* | | | 136,800 | | | 606,024 | |
| Icahn Enterprises LP | | | 732,285 | | | 43,878,501 | |
| Leucadia National Corporation | | | 347,000 | | | 8,067,750 | |
| Siem Industries Inc.* | | | 33,500 | | | 2,077,000 | |
| | | | | | | 56,119,527 | |
| Household and Personal Products — 1.38% | | | | | | | |
| Newell Brands, Inc. | | | 259,300 | | | 11,577,745 | |
| Industrial Services — 0.05% | | | | | | | |
| Brookfield Business Partners LP*^ | | | 19,248 | | | 463,107 | |
| Insurance Carriers and Related Activities — 1.70% | | | | | | | |
| Markel Corporation* | | | 15,700 | | | 14,200,650 | |
| Lessors of Nonresidential Buildings (except Miniwarehouses) — 9.60% | | | | | | | |
| The Howard Hughes Corporation* | | | 703,300 | | | 80,246,530 | |
| Lessors of Residential Buildings and Dwellings — 0.72% | | | | | | | |
| Equity Lifestyle Properties, Inc. — REIT | | | 83,200 | | | 5,998,720 | |
The accompanying notes are an integral part of these financial statements.
111
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Paradigm Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| | | | Shares | | | Value | |
| Media — 2.91% | | | | | | | |
| Discovery Communications, Inc. — Class A* | | | 166,600 | | $ | 4,566,506 | |
| Discovery Communications, Inc. — Class C* | | | 84,400 | | | 2,260,232 | |
| Liberty Braves Group — Class A* | | | 42,700 | | | 874,923 | |
| Liberty Braves Group — Class C* | | | 60,000 | | | 1,235,400 | |
| Liberty Media Group — Class A* | | | 98,300 | | | 3,081,705 | |
| Liberty Media Group — Class C* | | | 138,300 | | | 4,332,939 | |
| Lions Gate Entertainment Corporation — Class B* | | | 235,133 | | | 5,770,175 | |
| Scripps Networks Interactive — Class A | | | 19,200 | | | 1,370,304 | |
| Viacom Inc. — Class B | | | 23,300 | | | 817,830 | |
| | | | | | | 24,310,014 | |
| Mining (except Oil and Gas) — 1.70% | | | | | | | |
| Franco-Nevada Corporation | | | 234,800 | | | 14,031,648 | |
| Silver Wheaton Corporation | | | 10,000 | | | 193,200 | |
| | | | | | | 14,224,848 | |
| Motor Vehicle and Parts Dealers — 2.22% | | | | | | | |
| AutoNation, Inc.* | | | 380,800 | | | 18,525,920 | |
| Oil and Gas — 21.46% | | | | | | | |
| PrairieSky Royalty Limited | | | 1,000 | | | 23,789 | |
Texas Pacific Land Trustc | | | 604,598 | | | 179,426,549 | |
| | | | | | | 179,450,338 | |
| Oil and Gas Extraction — 1.48% | | | | | | | |
| Atlas Energy Group LLC* | | | 613,600 | | | 441,792 | |
| Canadian Natural Resources Limited | | | 28,400 | | | 905,392 | |
| Continental Resources, Inc.* | | | 93,400 | | | 4,813,836 | |
| Tourmaline Oil Corp.* | | | 232,200 | | | 6,210,332 | |
| | | | | | | 12,371,352 | |
| Oil Refining — 0.00% | | | | | | | |
| Par Pacific Holdings, Inc.* | | | 2,400 | | | 34,896 | |
| Other Exchanges — 2.40% | | | | | | | |
| CBOE Holdings Inc. | | | 261,000 | | | 19,285,290 | |
| Urbana Corporation — Class A | | | 363,300 | | | 809,047 | |
| | | | | | | 20,094,337 | |
| Performing Arts, Spectator Sports, and Related Industries — 2.30% | | | | | | | |
| Live Nation Entertainment, Inc.* | | | 723,500 | | | 19,245,100 | |
The accompanying notes are an integral part of these financial statements.
112
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Paradigm Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| | | | Shares | | | Value | |
| Real Estate — 1.03% | | | | | | | |
| Dream Unlimited Corp. — Class A*^ | | | 304,800 | | $ | 1,534,613 | |
| Forest City Realty Trust, Inc. — Class A — REIT | | | 337,800 | | | 7,039,752 | |
| | | | | | | 8,574,365 | |
| Restaurants — 2.31% | | | | | | | |
| The Wendy's Company | | | 1,428,600 | | | 19,314,672 | |
| Satellite Telecommunications — 3.50% | | | | | | | |
| DISH Network Corp. — Class A* | | | 230,700 | | | 13,364,451 | |
| EchoStar Corporation — Class A* | | | 309,000 | | | 15,879,510 | |
| | | | | | | 29,243,961 | |
| Securities, Commodity Contracts, and Other Financial Investments and | | | | | | | |
| Related Activities — 0.28% | | | | | | | |
| The Bitcoin Investment Trust*^ | | | 19,000 | | | 2,311,350 | |
| Shipping Services — 0.08% | | | | | | | |
| Clarkson plc | | | 24,800 | | | 664,149 | |
| Utilities — 0.35% | | | | | | | |
| Brookfield Infrastructure Partners LP^ | | | 87,900 | | | 2,942,013 | |
| Water Transportation — 0.14% | | | | | | | |
| A.P. Moeller-Maersk A/S — Class B — ADR | | | 150,800 | | | 1,206,400 | |
| TOTAL COMMON STOCKS | | | | | | | |
| (cost $390,908,627) | | | | | | 668,329,032 | |
| | | | | | | | |
| PREFERRED STOCKS — 0.00% | | | | | | | |
| Asset Management — 0.00% | | | | | | | |
| Partners Value Investments LP — Class A | | | 217 | | | 4,231 | |
| TOTAL PREFERRED STOCKS | | | | | | | |
| (cost $1,764) | | | | | | 4,231 | |
| | | | | | | | |
| | | | Principal | | | | |
| ESCROW NOTES — 0.00% | | | Amount | | | | |
| Special Purpose Entity — 0.00% | | | | | | | |
| Adelphia Communications Corp.*+ | | $ | 200,000 | | | — | |
| TOTAL ESCROW NOTES | | | | | | | |
| (cost $0) | | | | | | — | |
The accompanying notes are an integral part of these financial statements.
113
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Paradigm Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| PURCHASED PUT OPTIONS — 0.01% | | | Contractsd | | | Value | |
| Funds, Trusts, and Other Financial Vehicles — 0.01% | | | | | | | |
| ProShares Ultra VIX Short-Term Futures ETF* | | | | | | | |
| Expiration Date: January 2017, Exercise Price: $20.00 | | | 18 | | $ | 33,030 | |
| Expiration Date: January 2017, Exercise Price: $25.00 | | | 18 | | | 41,760 | |
| TOTAL PURCHASED PUT OPTIONS | | | | | | | |
| (cost $52,507) | | | | | | 74,790 | |
| | | | | | | | |
| WARRANTS — 0.04% | | | Shares | | | | |
| Asset Management — 0.00% | | | | | | | |
| Partners Value Investments LP* | | | 800 | | | 1,341 | |
| General Merchandise Stores — 0.04% | | | | | | | |
| Sears Holdings Corporation*^ | | | 94,631 | | | 335,940 | |
| TOTAL WARRANTS | | | | | | | |
| (cost $1,570,024) | | | | | | 337,281 | |
| | | | | | | | |
| SHORT-TERM INVESTMENTS — 19.79% | | | | | | | |
| Money Market Funds — 0.02% | | | | | | | |
Fidelity Institutional Government Portfolio — Class I, 0.39%b | | | 213,464 | | | 213,464 | |
| | | | | | | | |
| | | | Principal | | | | |
| | | | Amount | | | | |
| U.S. Treasury Obligations — 19.77% | | | | | | | |
| United States Treasury Bills | | | | | | | |
| Maturity Date: 01/05/2017, Yield to Maturity 0.24% | | $ | 7,874,000 | | | 7,873,866 | |
| Maturity Date: 01/12/2017, Yield to Maturity 0.29% | | | 5,119,000 | | | 5,118,503 | |
| Maturity Date: 01/19/2017, Yield to Maturity 0.29% | | | 2,016,000 | | | 2,015,635 | |
| Maturity Date: 01/26/2017, Yield to Maturity 0.31% | | | 7,085,000 | | | 7,083,137 | |
| Maturity Date: 02/02/2017, Yield to Maturity 0.40% | | | 6,337,000 | | | 6,334,801 | |
| Maturity Date: 02/09/2017, Yield to Maturity 0.41% | | | 2,037,000 | | | 2,036,075 | |
| Maturity Date: 02/16/2017, Yield to Maturity 0.40% | | | 111,572,000 | | | 111,512,644 | |
| Maturity Date: 02/23/2017, Yield to Maturity 0.37% | | | 23,327,000 | | | 23,311,604 | |
| | | | | | | 165,286,265 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | |
| (cost $165,505,223) | | | | | | 165,499,729 | |
The accompanying notes are an integral part of these financial statements.
114
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Paradigm Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| INVESTMENTS PURCHASED WITH THE CASH | | | | | | | |
| PROCEEDS FROM SECURITIES LENDING — 0.74% | | | Shares | | | Value | |
| Money Market Funds — 0.74% | | | | | | | |
First American Government Obligations Fund — Class X, 0.47%b | | | 6,177,797 | | $ | 6,177,797 | |
| TOTAL INVESTMENTS PURCHASED WITH THE CASH | | | | | | | |
| PROCEEDS FROM SECURITIES LENDING | | | | | | | |
| (cost $6,177,797) | | | | | | 6,177,797 | |
| TOTAL INVESTMENTS — 100.51% | | | | | | | |
| (cost $564,215,942) | | | | | $ | 840,422,860 | |
| | | |
| Percentages are stated as a percent of net assets. |
| * — | Non-income producing security. |
| ^ — | This security or a portion of this security was out on loan at December 31, 2016. Total loaned securities had a market value of $6,059,226 at December 31, 2016. The remaining contractual maturities of all of the securities lending transactions were overnight and continuous. |
| + — | Security is considered illiquid and was fair valued. The aggregate value of such securities is $0 or 0.00% of net assets. |
b — | The rate quoted is the annualized seven-day yield as of December 31, 2016. |
c — | Affiliated issuer. See note 10. |
d — | 100 shares per contract. |
| ADR — American Depository Receipt. |
| ETF — Exchange Traded Fund. |
| REIT — Real Estate Investment Trust. |
The accompanying notes are an integral part of these financial statements.
115
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Medical Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| COMMON STOCKS — 98.28% | | | Shares | | | Value | |
| Chemical Manufacturing — 4.83% | | | | | | | |
| Agenus, Inc.* | | | 148 | | $ | 610 | |
| AmpliPhi Biosciences Corp.* | | | 20 | | | 9 | |
| Lonza Group AG* | | | 6,000 | | | 1,038,790 | |
| Madrigal Pharmaceuticals, Inc.* | | | 514 | | | 7,658 | |
| | | | | | | 1,047,067 | |
| Pharmaceutical and Biotechnology — 88.28% | | | | | | | |
| AbbVie Inc. | | | 13,000 | | | 814,060 | |
| Alkermes plc* | | | 25,000 | | | 1,389,500 | |
| Arena Pharmaceuticals, Inc.* | | | 45,000 | | | 63,900 | |
| AstraZeneca plc — ADR | | | 28,000 | | | 764,960 | |
| Biogen Inc.* | | | 5,750 | | | 1,630,585 | |
| Bristol-Myers Squibb Company | | | 28,000 | | | 1,636,320 | |
| Celgene Corporation* | | | 7,000 | | | 810,250 | |
| Celldex Therapeutics Inc.* | | | 26,294 | | | 93,081 | |
| Eli Lilly & Company | | | 20,000 | | | 1,471,000 | |
| Gilead Sciences, Inc. | | | 9,000 | | | 644,490 | |
| GlaxoSmithKline plc — ADR | | | 22,673 | | | 873,137 | |
| Immune Pharmaceuticals Inc.* | | | 17 | | | 3 | |
| Ionis Pharmaceuticals, Inc.* | | | 17,000 | | | 813,110 | |
| Johnson & Johnson | | | 11,000 | | | 1,267,310 | |
| Merck & Co., Inc. | | | 16,000 | | | 941,920 | |
| Merrimack Pharmaceuticals, Inc.*^ | | | 25,000 | | | 102,000 | |
| Novartis AG — ADR | | | 14,000 | | | 1,019,760 | |
| Onconova Therapeutics, Inc.* | | | 2,400 | | | 5,448 | |
| Osiris Therapeutics, Inc.*^ | | | 21,000 | | | 103,110 | |
| Pfizer, Inc. | | | 43,000 | | | 1,396,640 | |
| Progenics Pharmaceuticals, Inc.* | | | 67,200 | | | 580,608 | |
| Roche Holding AG Limited — ADR | | | 23,000 | | | 656,190 | |
| Sanofi — ADR | | | 26,000 | | | 1,051,440 | |
| Shire plc — ADR | | | 6,000 | | | 1,022,280 | |
| | | | | | | 19,151,102 | |
| Professional, Scientific, and Technical Services — 5.17% | | | | | | | |
| Albany Molecular Research, Inc.*^ | | | 56,000 | | | 1,050,560 | |
| Codexis, Inc.* | | | 5,611 | | | 25,811 | |
| Pacific Biosciences of California Inc.* | | | 12,000 | | | 45,600 | |
| | | | | | | 1,121,971 | |
| TOTAL COMMON STOCKS | | | | | | | |
| (cost $15,156,012) | | | | | | 21,320,140 | |
The accompanying notes are an integral part of these financial statements.
116
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Medical Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| RIGHTS — 0.04% | | | Shares | | | Value | |
| Funds, Trusts, and Other Financial Vehicles — 0.01% | | | | | | | |
| Ligand Pharmaceuticals Inc.* | | | 44,000 | | $ | 625 | |
| Ligand Pharmaceuticals Inc.* | | | 44,000 | | | 770 | |
| Ligand Pharmaceuticals Inc.* | | | 44,000 | | | 660 | |
| Ligand Pharmaceuticals Inc.*# | | | 44,000 | | | 114 | |
| | | | | | | 2,169 | |
| Pharmaceutical and Biotechnology — 0.03% | | | | | | | |
| Sanofi*# | | | 15,538 | | | 5,905 | |
| TOTAL RIGHTS | | | | | | | |
| (cost $0) | | | | | | 8,074 | |
| | | | | | | | |
| SHORT-TERM INVESTMENTS — 2.33% | | | | | | | |
| Money Market Funds — 0.57% | | | | | | | |
Fidelity Institutional Government Portfolio — Class I, 0.39%b | | | 122,523 | | | 122,523 | |
| | | | | | | | |
| | | | Principal | | | | |
| | | | Amount | | | | |
| U.S. Treasury Obligations — 1.76% | | | | | | | |
| United States Treasury Bills, Maturity Date: 02/23/2017, Yield to Maturity 0.40% | | $ | 383,000 | | | 382,747 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | |
| (cost $505,297) | | | | | | 505,270 | |
| | | | | | | | |
| INVESTMENTS PURCHASED WITH THE CASH | | | | | | | |
| PROCEEDS FROM SECURITIES LENDING — 5.85% | | | Shares | | | | |
| Money Market Funds — 5.85% | | | | | | | |
First American Government Obligations Fund — Class X, 0.47%b | | | 1,269,382 | | | 1,269,382 | |
| TOTAL INVESTMENTS PURCHASED WITH THE CASH | | | | | | | |
| PROCEEDS FROM SECURITIES LENDING | | | | | | | |
| (cost $1,269,382) | | | | | | 1,269,382 | |
| TOTAL INVESTMENTS — 106.50% | | | | | | | |
| (cost $16,930,691) | | | | | $ | 23,102,866 | |
The accompanying notes are an integral part of these financial statements.
117
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Medical Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| | |
| Percentages are stated as a percent of net assets. |
| * — | Non-income producing security. |
| ^ — | This security or a portion of this security was out on loan at December 31, 2016. Total loaned securities had a market value of $1,231,382 at December 31, 2016. The remaining contractual maturities of all of the securities lending transactions were overnight and continuous. |
| # — | Contingent value right (contingent upon profitability of company). |
b — | The rate quoted is the annualized seven-day yield as of December 31, 2016. |
| ADR — American Depository Receipt. |
The accompanying notes are an integral part of these financial statements.
118
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Small Cap Opportunities Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| COMMON STOCKS — 90.72% | | | Shares | | | Value | |
| Asset Management — 10.53% | | | | | | | |
| Associated Capital Group, Inc. — Class A | | | 164,250 | | $ | 5,395,613 | |
| GAMCO Investors, Inc. — Class A | | | 19,200 | | | 593,088 | |
| JZ Capital Partners Limited | | | 190,400 | | | 1,189,677 | |
| Onex Corporation | | | 117,580 | | | 8,002,428 | |
| Partners Value Investments LP* | | | 191,000 | | | 4,125,424 | |
| RIT Capital Partners plc | | | 99,200 | | | 2,304,503 | |
| Sprott, Inc. | | | 1,680 | | | 3,141 | |
| | | | | | | 21,613,874 | |
| Beverage and Tobacco Product Manufacturing — 0.55% | | | | | | | |
| Crimson Wine Group Limited* | | | 119,600 | | | 1,120,652 | |
| Chemical Manufacturing — 2.99% | | | | | | | |
| Inter Parfums, Inc. | | | 102,600 | | | 3,360,150 | |
| Platform Specialty Products Corporation* | | | 283,600 | | | 2,782,116 | |
| | | | | | | 6,142,266 | |
| Construction of Buildings — 0.54% | | | | | | | |
| Green Brick Partners, Inc.* | | | 109,300 | | | 1,098,465 | |
| Credit Intermediation and Related Activities — 0.43% | | | | | | | |
| Emergent Capital, Inc.*^ | | | 735,250 | | | 889,653 | |
| Forestry and Logging — 0.02% | | | | | | | |
| Keweenaw Land Association Limited* | | | 380 | | | 37,430 | |
| Gaming — 3.80% | | | | | | | |
| Tropicana Entertainment Inc.* | | | 256,600 | | | 7,787,810 | |
| General Merchandise Stores — 0.72% | | | | | | | |
| Sears Canada Inc.*^ | | | 613,100 | | | 1,042,270 | |
| Sears Holdings Corporation*^ | | | 46,500 | | | 431,985 | |
| | | | | | | 1,474,255 | |
| Holding Company — 11.67% | | | | | | | |
| Dundee Corporation — Class A* | | | 854,700 | | | 3,786,321 | |
| Icahn Enterprises LP | | | 336,294 | | | 20,150,736 | |
| | | | | | | 23,937,057 | |
| Household and Personal Products — 1.76% | | | | | | | |
| Newell Brands, Inc. | | | 80,659 | | | 3,601,424 | |
The accompanying notes are an integral part of these financial statements.
119
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Small Cap Opportunities Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| | | | Shares | | | Value | |
| Insurance Carriers and Related Activities — 1.12% | | | | | | | |
| AmTrust Financial Services, Inc. | | | 49,800 | | $ | 1,363,524 | |
| Greenlight Capital Re, Limited — Class A* | | | 41,000 | | | 934,800 | |
| | | | | | | 2,298,324 | |
| Lessors of Nonresidential Buildings (except Miniwarehouses) — 8.35% | | | | | | | |
| The Howard Hughes Corporation* | | | 150,200 | | | 17,137,820 | |
| Machinery Manufacturing — 0.60% | | | | | | | |
| Colfax Corporation* | | | 34,500 | | | 1,239,585 | |
| Manufactured Brands — 0.65% | | | | | | | |
| Movado Group, Inc. | | | 46,700 | | | 1,342,625 | |
| Media — 0.53% | | | | | | | |
| Lions Gate Entertainment Corporation — Class B* | | | 44,096 | | | 1,082,116 | |
| Merchant Wholesalers, Durable Goods — 0.56% | | | | | | | |
| Dorman Products, Inc.* | | | 15,800 | | | 1,154,348 | |
| Mining (except Oil and Gas) — 0.23% | | | | | | | |
| McEwen Mining Inc.^ | | | 160,600 | | | 467,346 | |
| Motor Vehicle and Parts Dealers — 0.80% | | | | | | | |
| Penske Automotive Group, Inc. | | | 31,700 | | | 1,643,328 | |
| Oil and Gas — 26.77% | | | | | | | |
| Permian Basin Royalty Trust^ | | | 165,500 | | | 1,276,005 | |
| Texas Pacific Land Trust | | | 180,801 | | | 53,656,313 | |
| | | | | | | 54,932,318 | |
| Oil and Gas Extraction — 0.00% | | | | | | | |
| Biloxi Marsh Lands Corporation | | | 100 | | | 1,265 | |
| Oil Refining — 0.64% | | | | | | | |
| Par Pacific Holdings, Inc.* | | | 90,719 | | | 1,319,054 | |
| Other Exchanges — 0.75% | | | | | | | |
| Urbana Corporation — Class A | | | 695,071 | | | 1,547,881 | |
| Performing Arts, Spectator Sports, and Related Industries — 3.29% | | | | | | | |
| Live Nation Entertainment, Inc.* | | | 253,500 | | | 6,743,100 | |
| Pipeline Transportation — 1.93% | | | | | | | |
| Rubis SCA | | | 48,050 | | | 3,961,932 | |
The accompanying notes are an integral part of these financial statements.
120
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Small Cap Opportunities Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| | | | Shares | | | Value | |
| Publishing Industries (except Internet) — 0.24% | | | | | | | |
| Promotora de Informaciones S.A. — ADR* | | | 64,644 | | $ | 349,078 | |
| Value Line, Inc. | | | 7,615 | | | 148,492 | |
| | | | | | | 497,570 | |
| Real Estate — 5.47% | | | | | | | |
| Dream Unlimited Corp. — Class A*^ | | | 2,230,000 | | | 11,227,647 | |
| Restaurants — 4.52% | | | | | | | |
| The Wendy's Company | | | 686,000 | | | 9,274,720 | |
| Satellite Telecommunications — 0.23% | | | | | | | |
| Loral Space & Communications Inc.* | | | 11,400 | | | 467,970 | |
| Telecommunications — 0.06% | | | | | | | |
| CIBL, Inc.* | | | 18 | | | 24,480 | |
| ICTC Group Inc.* | | | 208 | | | 6,240 | |
| LICT Corporation* | | | 16 | | | 92,000 | |
| | | | | | | 122,720 | |
| Transportation Equipment Manufacturing — 0.97% | | | | | | | |
| American Railcar Industries, Inc.^ | | | 44,000 | | | 1,992,760 | |
| TOTAL COMMON STOCKS | | | | | | | |
| (cost $180,749,251) | | | | | | 186,157,315 | |
| | | | | | | | |
| PREFERRED STOCKS — 0.49% | | | | | | | |
| Asset Management — 0.49% | | | | | | | |
| Partners Value Investments LP — Class A | | | 51,933 | | | 1,012,693 | |
| TOTAL PREFERRED STOCKS | | | | | | | |
| (cost $420,822) | | | | | | 1,012,693 | |
| | | | | | | | |
| WARRANTS — 0.17% | | | | | | | |
| Asset Management — 0.15% | | | | | | | |
| Partners Value Investments LP* | | | 191,000 | | | 320,076 | |
| General Merchandise Stores — 0.02% | | | | | | | |
| Sears Holdings Corporation*^ | | | 9,591 | | | 34,048 | |
| TOTAL WARRANTS | | | | | | | |
| (cost $662,409) | | | | | | 354,124 | |
The accompanying notes are an integral part of these financial statements.
121
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Small Cap Opportunities Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| SHORT-TERM INVESTMENTS — 8.62% | | | Shares | | | Value | |
| Money Market Funds — 0.00% | | | | | | | |
Fidelity Institutional Government Portfolio — Class I, 0.39%b | | | 745 | | $ | 745 | |
| | | | | | | | |
| | | | Principal | | | | |
| | | | Amount | | | | |
| U.S. Treasury Obligations — 8.62% | | | | | | | |
| United States Treasury Bills | | | | | | | |
| Maturity Date: 02/09/2017, Yield to Maturity 0.41% | | $ | 1,357,000 | | | 1,356,384 | |
| Maturity Date: 02/16/2017, Yield to Maturity 0.40% | | | 16,259,000 | | | 16,250,350 | |
| Maturity Date: 02/23/2017, Yield to Maturity 0.40% | | | 80,000 | | | 79,947 | |
| | | | | | | 17,686,681 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | |
| (cost $17,687,790) | | | | | | 17,687,426 | |
| | | | | | | | |
| INVESTMENTS PURCHASED WITH THE CASH | | | | | | | |
| PROCEEDS FROM SECURITIES LENDING — 2.43% | | | Shares | | | | |
| Money Market Funds — 2.43% | | | | | | | |
First American Government Obligations Fund — Class X, 0.47%b | | | 4,976,122 | | | 4,976,122 | |
| TOTAL INVESTMENTS PURCHASED WITH THE CASH | | | | | | | |
| PROCEEDS FROM SECURITIES LENDING | | | | | | | |
| (cost $4,976,122) | | | | | | 4,976,122 | |
| TOTAL INVESTMENTS — 102.43% | | | | | | | |
| (cost $204,496,394) | | | | | $ | 210,187,680 | |
| | |
| Percentages are stated as a percent of net assets. |
| * — | Non-income producing security. |
| ^ — | This security or a portion of this security was out on loan at December 31, 2016. Total loaned securities had a market value of $4,760,931 at December 31, 2016. The remaining contractual maturities of all of the securities lending transactions were overnight and continuous. |
b — | The rate quoted is the annualized seven-day yield as of December 31, 2016. |
| ADR — American Depository Receipt. |
The accompanying notes are an integral part of these financial statements.
122
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Market Opportunities Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| COMMON STOCKS — 74.25% | | | Shares | | | Value | |
| Asset Management — 11.57% | | | | | | | |
| Associated Capital Group, Inc. — Class A | | | 33,400 | | $ | 1,097,190 | |
| Federated Investors, Inc. — Class B | | | 3,600 | | | 101,808 | |
| Oaktree Capital Group LLC^ | | | 9,000 | | | 337,500 | |
| Onex Corporation | | | 36,500 | | | 2,473,612 | |
| Partners Value Investments LP* | | | 43,516 | | | 939,906 | |
| Senvest Capital Inc.* | | | 120 | | | 15,283 | |
| Sprott, Inc. | | | 41,155 | | | 76,937 | |
| | | | | | | 5,042,236 | |
| Beverage and Tobacco Product Manufacturing — 0.11% | | | | | | | |
| Crimson Wine Group Limited* | | | 5,080 | | | 47,600 | |
| Credit Intermediation and Related Activities — 0.30% | | | | | | | |
| Emergent Capital, Inc.* | | | 109,500 | | | 132,495 | |
| Data Processor — 2.75% | | | | | | | |
| MasterCard, Inc. — Class A | | | 4,800 | | | 495,600 | |
| Visa, Inc. — Class A | | | 9,000 | | | 702,180 | |
| | | | | | | 1,197,780 | |
| Gaming — 5.43% | | | | | | | |
| Tropicana Entertainment Inc.* | | | 78,000 | | | 2,367,300 | |
| Global Exchanges — 1.20% | | | | | | | |
| JSE Limited | | | 43,600 | | | 521,502 | |
| Holding Company — 9.51% | | | | | | | |
| Clarke Inc. | | | 1,000 | | | 6,971 | |
| Dundee Corporation — Class A* | | | 158,600 | | | 702,598 | |
| Icahn Enterprises LP | | | 57,355 | | | 3,436,684 | |
| | | | | | | 4,146,253 | |
| Insurance Carriers and Related Activities — 1.31% | | | | | | | |
| Fairfax Financial Holdings Limited | | | 60 | | | 29,202 | |
| Markel Corporation* | | | 600 | | | 542,700 | |
| | | | | | | 571,902 | |
| Lessors of Nonresidential Buildings (except Miniwarehouses) — 5.92% | | | | | | | |
| The Howard Hughes Corporation* | | | 22,600 | | | 2,578,660 | |
| Merchant Wholesalers, Durable Goods — 0.07% | | | | | | | |
| A-Mark Precious Metals, Inc. | | | 1,600 | | | 31,200 | |
| Mining (except Oil and Gas) — 0.00% | | | | | | | |
| Silver Wheaton Corporation | | | 100 | | | 1,932 | |
The accompanying notes are an integral part of these financial statements.
123
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Market Opportunities Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| | | | Shares | | | Value | |
| Oil and Gas — 20.50% | | | | | | | |
| Texas Pacific Land Trust | | | 30,100 | | $ | 8,932,777 | |
| Other Exchanges — 3.37% | | | | | | | |
| CBOE Holdings Inc. | | | 5,600 | | | 413,784 | |
| NZX Limited | | | 359,002 | | | 261,869 | |
| Urbana Corporation — Class A | | | 356,004 | | | 792,799 | |
| | | | | | | 1,468,452 | |
| Publishing Industries (except Internet) — 0.02% | | | | | | | |
| IHS Markit Limited* | | | 200 | | | 7,082 | |
| Real Estate — 3.16% | | | | | | | |
| Dream Unlimited Corp. — Class A* | | | 274,000 | | | 1,379,540 | |
| Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 8.65% | | | | | | | |
| The Bitcoin Investment Trust* | | | 5,990 | | | 728,683 | |
| CME Group, Inc. | | | 4,000 | | | 461,400 | |
| IntercontinentalExchange Group, Inc. | | | 10,000 | | | 564,200 | |
| Ladenburg Thalmann Financial Services Inc.* | | | 12,000 | | | 29,280 | |
| OTC Markets Group Inc. — Class A | | | 86,385 | | | 1,986,855 | |
| | | | | | | 3,770,418 | |
| Shipping Services — 0.10% | | | | | | | |
| Clarkson plc | | | 1,600 | | | 42,848 | |
| U.S. Equity Exchanges — 0.28% | | | | | | | |
| NASDAQ, Inc. | | | 1,800 | | | 120,816 | |
| TOTAL COMMON STOCKS | | | | | | | |
| (cost $23,007,580) | | | | | | 32,360,793 | |
| | | | | | | | |
| PREFERRED STOCKS — 0.53% | | | | | | | |
| Asset Management — 0.53% | | | | | | | |
| Partners Value Investments LP — Class A | | | 11,832 | | | 230,724 | |
| TOTAL PREFERRED STOCKS | | | | | | | |
| (cost $96,929) | | | | | | 230,724 | |
| | | | | | | | |
| | | | Principal | | | | |
| CORPORATE BONDS — 0.01% | | | Amount | | | | |
| General Merchandise Stores — 0.01% | | | | | | | |
| Sears Holdings Corporation, 8.000%, 12/15/2019 | | $ | 5,500 | | | 5,307 | |
| TOTAL CORPORATE BONDS | | | | | | | |
| (cost $5,500) | | | | | | 5,307 | |
The accompanying notes are an integral part of these financial statements.
124
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Market Opportunities Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| PURCHASED PUT OPTIONS — 0.06% | | | Contractsd | | | Value | |
| Funds, Trusts, and Other Financial Vehicles — 0.06% | | | | | | | |
| ProShares Ultra VIX Short-Term Futures ETF* | | | | | | | |
| Expiration Date: January 2017, Exercise Price: $20.00 | | | 6 | | $ | 11,010 | |
| Expiration Date: January 2017, Exercise Price: $25.00 | | | 6 | | | 13,920 | |
| TOTAL PURCHASED PUT OPTIONS | | | | | | | |
| (cost $17,472) | | | | | | 24,930 | |
| | | | | | | | |
| RIGHTS — 0.00% | | | Shares | | | | |
| Asset Management — 0.00% | | | | | | | |
| W.P. Stewart & Co., Limited*+ | | | 205 | | | — | |
| TOTAL RIGHTS | | | | | | | |
| (cost $0) | | | | | | — | |
| | | | | | | | |
| WARRANTS — 0.17% | | | | | | | |
| Asset Management — 0.17% | | | | | | | |
| Partners Value Investments LP* | | | 43,516 | | | 72,924 | |
| General Merchandise Stores — 0.00% | | | | | | | |
| Sears Holdings Corporation*^ | | | 193 | | | 685 | |
| TOTAL WARRANTS | | | | | | | |
| (cost $133,174) | | | | | | 73,609 | |
| | | | | | | | |
| SHORT-TERM INVESTMENTS — 24.35% | | | | | | | |
| Money Market Funds — 0.00% | | | | | | | |
Fidelity Institutional Government Portfolio — Class I, 0.39%b | | | 827 | | | 827 | |
| | | | | | | | |
| | | | Principal | | | | |
| | | | Amount | | | | |
| U.S. Treasury Obligations — 24.35% | | | | | | | |
| United States Treasury Bills | | | | | | | |
| Maturity Date: 01/05/2017, Yield to Maturity 0.27% | | $ | 1,017,000 | | | 1,016,983 | |
| Maturity Date: 02/16/2017, Yield to Maturity 0.40% | | | 9,326,000 | | | 9,321,039 | |
| Maturity Date: 02/23/2017, Yield to Maturity 0.38% | | | 272,000 | | | 271,820 | |
| | | | | | | 10,609,842 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | |
| (cost $10,610,877) | | | | | | 10,610,669 | |
The accompanying notes are an integral part of these financial statements.
125
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Market Opportunities Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| INVESTMENTS PURCHASED WITH THE CASH | | | | | | | |
| PROCEEDS FROM SECURITIES LENDING — 0.01% | | | Shares | | | Value | |
| Money Market Funds — 0.01% | | | | | | | |
First American Government Obligations Fund — Class X, 0.47%b | | | 4,966 | | $ | 4,966 | |
| TOTAL INVESTMENTS PURCHASED WITH THE CASH | | | | | | | |
| PROCEEDS FROM SECURITIES LENDING | | | | | | | |
| (cost $4,966) | | | | | | 4,966 | |
| TOTAL INVESTMENTS — 99.38% | | | | | | | |
| (cost $33,876,498) | | | | | $ | 43,310,998 | |
| | |
| Percentages are stated as a percent of net assets. |
| * — | Non-income producing security. |
| ^ — | This security or a portion of this security was out on loan at December 31, 2016. Total loaned securities had a market value of $4,428 at December 31, 2016. The remaining contractual maturities of all of the securities lending transactions were overnight and continuous. |
| + — | Security is considered illiquid and was fair valued. The aggregate value of such securities is $0 or 0.00% of net assets. |
b — | The rate quoted is the annualized seven-day yield as of December 31, 2016. |
d — | 100 shares per contract. |
| ETF — Exchange Traded Fund. |
The accompanying notes are an integral part of these financial statements.
126
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Alternative Income Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| | | | Principal | | | | |
| CORPORATE BONDS — 18.73% | | | Amount | | | Value | |
| Beverage and Tobacco Product Manufacturing — 0.71% | | | | | | | |
| PepsiCo, Inc., 0.950%, 02/22/2017 | | $ | 200,000 | | $ | 199,926 | |
| Computer and Electronic Product Manufacturing — 0.89% | | | | | | | |
| Apple, Inc., 1.050%, 05/05/2017 | | | 250,000 | | | 250,188 | |
| Credit Intermediation and Related Activities — 1.96% | | | | | | | |
| Capital One Bank (USA), NA, 1.200%, 02/13/2017 | | | 250,000 | | | 249,956 | |
| Manufacturers and Traders Trust Company, 1.400%, 07/25/2017# | | | 300,000 | | | 300,180 | |
| | | | | | | 550,136 | |
| Electrical Equipment, Appliance, and Component Manufacturing — 0.36% | | | | | | | |
| Whirlpool Corporation, 1.350%, 03/01/2017 | | | 100,000 | | | 100,023 | |
| Household and Personal Products — 0.72% | | | | | | | |
| Colgate-Palmolive Company, 1.300%, 01/15/2017 | | | 200,000 | | | 200,014 | |
| Insurance Carriers and Related Activities — 2.52% | | | | | | | |
| Aetna Inc., 1.750%, 05/15/2017 | | | 300,000 | | | 300,293 | |
| American International Group, Inc., 5.450%, 05/18/2017 | | | 400,000 | | | 406,082 | |
| | | | | | | 706,375 | |
| Machinery Manufacturing — 1.93% | | | | | | | |
| Cameron International Corporation, 1.400%, 06/15/2017 | | | 242,000 | | | 241,923 | |
| Illinois Tool Works, Inc., 0.900%, 02/25/2017 | | | 300,000 | | | 299,913 | |
| | | | | | | 541,836 | |
| Medical Supply — 1.07% | | | | | | | |
| AmerisourceBergen Corporation, 1.150%, 05/15/2017 | | | 300,000 | | | 299,918 | |
| Miscellaneous Manufacturing — 2.14% | | | | | | | |
| Becton Dickinson and Co. | | | | | | | |
| 1.450%, 05/15/2017 | | | 300,000 | | | 300,241 | |
| 1.800%, 12/15/2017 | | | 300,000 | | | 300,753 | |
| | | | | | | 600,994 | |
| Motor Vehicle and Parts Dealers — 0.89% | | | | | | | |
| AutoZone, Inc., 1.300%, 01/13/2017 | | | 250,000 | | | 250,010 | |
| Petroleum and Coal Products Manufacturing — 1.97% | | | | | | | |
| Exxon Mobil Corporation, 0.921%, 03/15/2017 | | | 200,000 | | | 200,060 | |
| Phillips 66, 2.950%, 05/01/2017 | | | 350,000 | | | 351,981 | |
| | | | | | | 552,041 | |
The accompanying notes are an integral part of these financial statements.
127
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Alternative Income Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| | | | Principal | | | | |
| | | | Amount | | | Value | |
| Pharmaceutical and Biotechnology — 1.96% | | | | | | | |
| Medtronic, Inc., 0.875%, 02/27/2017 | | $ | 250,000 | | $ | 249,863 | |
| Pfizer, Inc., 1.100%, 05/15/2017 | | | 300,000 | | | 300,020 | |
| | | | | | | 549,883 | |
| Telecommunications — 1.61% | | | | | | | |
| AT&T, Inc., 2.400%, 03/15/2017 | | | 250,000 | | | 250,626 | |
| Vodafone Group plc, 1.625%, 03/20/2017 | | | 200,000 | | | 200,050 | |
| | | | | | | 450,676 | |
| TOTAL CORPORATE BONDS | | | | | | | |
| (cost $5,249,716) | | | | | | 5,252,020 | |
| | | | | | | | |
| U.S. TREASURY OBLIGATIONS — 5.53% | | | | | | | |
| United States Treasury Notes — 5.53% | | | | | | | |
| 0.625%, 02/15/2017 | | | 200,000 | | | 200,051 | |
| 0.750%, 06/30/2017 | | | 500,000 | | | 500,293 | |
| 0.875%, 08/15/2017# | | | 850,000 | | | 850,880 | |
| TOTAL U.S. TREASURY OBLIGATIONS | | | | | | | |
| (cost $1,547,910) | | | | | | 1,551,224 | |
| | | | | | | | |
| EXCHANGE TRADED FUNDS — 20.56% | | | Shares | | | | |
| Funds, Trusts, and Other Financial Vehicles — 20.56% | | | | | | | |
| iShares 1-3 Year Credit Bond ETF | | | 27,000 | | | 2,833,380 | |
| PIMCO Enhanced Short Maturity ETF | | | 4,700 | | | 476,251 | |
| SPDR Barclays Short Term Corporate Bond ETF# | | | 24,000 | | | 732,720 | |
| Vanguard Short-Term Corporate Bond ETF | | | 21,700 | | | 1,722,329 | |
| TOTAL EXCHANGE TRADED FUNDS | | | | | | | |
| (cost $5,804,792) | | | | | | 5,764,680 | |
| | | | | | | | |
| SHORT-TERM INVESTMENTS — 55.80% | | | | | | | |
| Money Market Funds — 3.83% | | | | | | | |
Fidelity Institutional Government Portfolio — Class I, 0.39%#b | | | 1,074,529 | | | 1,074,529 | |
The accompanying notes are an integral part of these financial statements.
128
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Alternative Income Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| | | | Principal | | | | |
| | | | Amount | | | Value | |
| U.S. Treasury Obligations — 51.97% | | | | | | | |
| United States Treasury Bills | | | | | | | |
| Maturity Date: 01/05/2017, Yield to Maturity 0.26% | | $ | 1,719,000 | | $ | 1,718,971 | |
| Maturity Date: 01/12/2017, Yield to Maturity 0.30% | | | 826,000 | | | 825,920 | |
| Maturity Date: 01/26/2017, Yield to Maturity 0.31% | | | 276,000 | | | 275,927 | |
| Maturity Date: 02/02/2017, Yield to Maturity 0.36% | | | 1,296,000 | | | 1,295,550 | |
| Maturity Date: 02/09/2017, Yield to Maturity 0.41% | | | 1,301,000 | | | 1,300,409 | |
| Maturity Date: 02/16/2017, Yield to Maturity 0.40% | | | 8,394,000 | | | 8,389,534 | |
| Maturity Date: 02/23/2017, Yield to Maturity 0.39% | | | 769,000 | | | 768,493 | |
| | | | | | | 14,574,804 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | |
| (cost $15,649,621) | | | | | | 15,649,333 | |
| TOTAL INVESTMENTS — 100.62% | | | | | | | |
| (cost $28,252,039) | | | | | $ | 28,217,257 | |
| | |
| Percentages are stated as a percent of net assets. |
| # — | All or a portion of the securities have been committed as collateral for written option contracts. |
b — | The rate quoted is the annualized seven-day yield as of December 31, 2016. |
| ETF — Exchange Traded Fund. |
The accompanying notes are an integral part of these financial statements.
129
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Multi-Disciplinary Income Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| | | | Principal | | | | |
| CONVERTIBLE BONDS — 6.47% | | | Amount | | | Value | |
| Computer and Electronic Product Manufacturing — 0.49% | | | | | | | |
| Quantum Corp., 4.500%, 11/15/2017 | | $ | 500,000 | | $ | 491,563 | |
| Energy Transportation — 0.31% | | | | | | | |
| Cheniere Energy, Inc., 4.250%, 03/15/2045 | | | 500,000 | | | 305,312 | |
| Mining (except Oil and Gas) — 5.18% | | | | | | | |
| Detour Gold Corporation, 5.500%, 11/30/2017, | | | | | | | |
| Acquired 04/01/2013 at $1,004,301■ | | | 1,000,000 | | | 1,015,000 | |
| Kirkland Lake Gold, Inc., 6.000%, 06/30/2017 | CAD | | 350,000 | | | 267,521 | |
| Royal Gold, Inc., 2.875%, 06/15/2019 | | | 3,664,000 | | | 3,888,420 | |
| | | | | | | 5,170,941 | |
| Real Estate — 0.49% | | | | | | | |
| Forest City Enterprises, Inc., 4.250%, 08/15/2018 | | | 446,000 | | | 488,928 | |
| TOTAL CONVERTIBLE BONDS | | | | | | | |
| (cost $6,366,519) | | | | | | 6,456,744 | |
| | | | | | | | |
| CORPORATE BONDS — 79.06% | | | | | | | |
| Apparel Manufacturing — 3.01% | | | | | | | |
| L Brands, Inc. | | | | | | | |
| 6.625%, 04/01/2021 | | | 200,000 | | | 225,500 | |
| 5.625%, 02/15/2022 | | | 2,600,000 | | | 2,778,750 | |
| | | | | | | 3,004,250 | |
| Broadcasting (except Internet) — 4.00% | | | | | | | |
| Cablevision Systems Corporation, 5.875%, 09/15/2022 | | | 200,000 | | | 195,500 | |
| CCO Holdings LLC/Capital Corporation, 5.250%, 09/30/2022 | | | 1,150,000 | | | 1,193,125 | |
| Sinclair Television Group, Inc., 5.375%, 04/01/2021 | | | 250,000 | | | 258,125 | |
| Sirius XM Radio, Inc. | | | | | | | |
| 5.750%, 08/01/2021, Acquired 02/28/2014-03/20/2014 at $777,450■ | | | 750,000 | | | 782,588 | |
| 4.625%, 05/15/2023, Acquired 04/11/2014-07/14/2015 at $1,010,918■ | | | 1,050,000 | | | 1,043,437 | |
| TEGNA, Inc. | | | | | | | |
| 5.125%, 10/15/2019 | | | 250,000 | | | 256,875 | |
| 5.125%, 07/15/2020 | | | 250,000 | | | 259,687 | |
| | | | | | | 3,989,337 | |
The accompanying notes are an integral part of these financial statements.
130
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Multi-Disciplinary Income Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| | | | Principal | | | | |
| | | | Amount | | | Value | |
| Cable Distributor — 1.30% | | | | | | | |
| Altice Luxembourg SA, 7.750%, 05/15/2022, | | | | | | | |
| Acquired 07/02/2014 at $265,117■ | | $ | 250,000 | | $ | 267,500 | |
| Numericable Group SA, 6.000%, 05/15/2022, | | | | | | | |
| Acquired 06/11/2014-11/04/2014 at $1,040,901■ | | | 1,000,000 | | | 1,030,000 | |
| | | | | | | 1,297,500 | |
| Chemical Manufacturing — 6.37% | | | | | | | |
| Ashland Inc., 4.750%, 08/15/2022 | | | 3,800,000 | | | 3,956,750 | |
| The Chemours Company | | | | | | | |
| 6.625%, 05/15/2023 | | | 474,000 | | | 471,630 | |
| 7.000%, 05/15/2025 | | | 214,000 | | | 211,860 | |
| LSB Industries, Inc., 8.500%, 08/01/2019 | | | 1,850,000 | | | 1,711,250 | |
| | | | | | | 6,351,490 | |
| Construction of Buildings — 6.43% | | | | | | | |
| Lennar Corporation, 4.750%, 11/15/2022 | | | 2,960,000 | | | 3,048,800 | |
| TRI Pointe Holdings, Inc., 4.375%, 06/15/2019 | | | 3,295,000 | | | 3,369,138 | |
| | | | | | | 6,417,938 | |
| Credit Intermediation and Related Activities — 0.18% | | | | | | | |
| Ally Financial, Inc., 8.000%, 03/15/2020 | | | 161,000 | | | 182,735 | |
| Dialysis Equipment, Electromedical, Manufacturing — 0.32% | | | | | | | |
| DaVita HealthCare Partners, Inc., 5.750%, 08/15/2022 | | | 300,000 | | | 314,625 | |
| E-Commerce — 4.09% | | | | | | | |
| IAC/InterActiveCorp, 4.750%, 12/15/2022^ | | | 4,250,000 | | | 4,080,000 | |
| Energy Transportation — 1.13% | | | | | | | |
| ONEOK Inc., 4.250%, 02/01/2022 | | | 1,114,000 | | | 1,125,140 | |
| Food Manufacturing — 5.53% | | | | | | | |
| Post Holdings, Inc. | | | | | | | |
| 6.750%, 12/01/2021, Acquired 04/17/2014-07/14/2015 at $513,933■ | | | 500,000 | | | 535,000 | |
| 7.375%, 02/15/2022^ | | | 4,775,000 | | | 4,983,906 | |
| | | | | | | 5,518,906 | |
The accompanying notes are an integral part of these financial statements.
131
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Multi-Disciplinary Income Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| | | | | | | | |
| | | | Principal | | | | |
| | | | Amount | | | Value | |
| Gaming — 3.70% | | | | | | | |
| MGM Resorts International, 6.625%, 12/15/2021 | | $ | 756,000 | | $ | 846,720 | |
| Wynn Las Vegas LLC | | | | | | | |
| 5.375%, 03/15/2022 | | | 2,300,000 | | | 2,363,250 | |
| 4.250%, 05/30/2023, Acquired 07/02/2014-07/29/2014 at $489,173■ | | | 500,000 | | | 477,970 | |
| | | | | | | 3,687,940 | |
| Holding Company — 4.00% | | | | | | | |
| Icahn Enterprises, 5.875%, 02/01/2022 | | | 4,000,000 | | | 3,990,000 | |
| Hospitals — 0.15% | | | | | | | |
| Community Health System, Inc., 7.125%, 07/15/2020 | | | 200,000 | | | 153,060 | |
| Lessors of Nonresidential Buildings (except Miniwarehouses) — 3.61% | | | | | | | |
| The Howard Hughes Corporation, 6.875%, 10/01/2021, | | | | | | | |
| Acquired 03/05/2014-04/17/2014 at $3,560,720■ | | | 3,400,000 | | | 3,599,920 | |
| Mining (except Oil and Gas) — 1.54% | | | | | | | |
| Freeport-McMoRan Inc., 3.550%, 03/01/2022^ | | | 1,100,000 | | | 1,028,500 | |
| Teck Resources Limited, 4.750%, 01/15/2022 | | | 274,000 | | | 276,055 | |
| Vulcan Materials Co., 7.500%, 06/15/2021 | | | 200,000 | | | 236,500 | |
| | | | | | | 1,541,055 | |
| Motor Vehicle and Parts Dealers — 3.68% | | | | | | | |
| Penske Automotive Group, Inc., 5.750%, 10/01/2022 | | | 3,550,000 | | | 3,674,250 | |
| Nonmetallic Mineral Product Manufacturing — 0.27% | | | | | | | |
| USG Corporation, 9.500%, 01/15/2018 | | | 250,000 | | | 265,938 | |
| Non-Store Retailers — 4.38% | | | | | | | |
| Sotheby's, 5.250%, 10/01/2022, | | | | | | | |
| Acquired 03/03/2014-10/03/2014 at $4,354,213■ | | | 4,426,000 | | | 4,370,675 | |
| Oil and Gas Extraction — 2.12% | | | | | | | |
| Continental Resources, Inc. | | | | | | | |
| 5.000%, 09/15/2022 | | | 600,000 | | | 607,884 | |
| 4.500%, 04/15/2023 | | | 72,000 | | | 70,920 | |
| Murphy Oil Corp., 4.700%, 12/01/2022 | | | 1,208,000 | | | 1,171,386 | |
| QEP Resources, Inc., 6.875%, 03/01/2021 | | | 250,000 | | | 266,875 | |
| | | | | | | 2,117,065 | |
| Oil and Gas Service Company — 1.17% | | | | | | | |
| Ensco plc, 4.700%, 03/15/2021 | | | 600,000 | | | 580,152 | |
| Rowan Companies, Inc., 4.875%, 06/01/2022 | | | 619,000 | | | 588,050 | |
| | | | | | | 1,168,202 | |
The accompanying notes are an integral part of these financial statements.
132
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Multi-Disciplinary Income Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| | | | Principal | | | | |
| | | | Amount | | | Value | |
| Pharmaceuticals — 0.27% | | | | | | | |
| Forest Laboratories, Inc., 5.000%, 12/15/2021, | | | | | | | |
| Acquired 04/01/2014 at $260,863■ | | $ | 250,000 | | $ | 270,580 | |
| Professional, Scientific, and Technical Services — 0.26% | | | | | | | |
| Nielsen Finance LLC, 4.500%, 10/01/2020 | | | 250,000 | | | 254,687 | |
| Rail Transportation — 0.26% | | | | | | | |
| Florida East Coast Holdings Corporation, 6.750%, 05/01/2019, | | | | | | | |
| Acquired 07/09/2014 at $258,447■ | | | 250,000 | | | 259,375 | |
| Real Estate — 8.22% | | | | | | | |
| Brookfield Residential Properties | | | | | | | |
| 6.500%, 12/15/2020, Acquired 07/14/2014-07/08/2016 at $6,936,739■ | | | 6,750,000 | | | 6,935,625 | |
| 6.125%, 07/01/2022, Acquired 04/09/2015 at $103,750■ | | | 100,000 | | | 101,000 | |
| 6.375%, 05/15/2025, Acquired 06/19/2015 at $641,235^■ | | | 651,000 | | | 652,627 | |
| Lamar Media Corp., 5.000%, 05/01/2023 | | | 500,000 | | | 517,500 | |
| | | | | | | 8,206,752 | |
| Rental and Leasing Services — 2.24% | | | | | | | |
| Hertz Corp., 6.750%, 04/15/2019 | | | 72,000 | | | 72,180 | |
| International Lease Finance Corp., 8.250%, 12/15/2020 | | | 1,850,000 | | | 2,159,875 | |
| | | | | | | 2,232,055 | |
| Satellite Telecommunications — 3.16% | | | | | | | |
| Dish DBS Corp. | | | | | | | |
| 4.625%, 07/15/2017 | | | 3,000,000 | | | 3,041,250 | |
| 7.875%, 09/01/2019 | | | 100,000 | | | 111,250 | |
| | | | | | | 3,152,500 | |
| Software and Services — 0.72% | | | | | | | |
| Nuance Communications, Inc., 5.375%, 08/15/2020, | | | | | | | |
| Acquired 02/14/2014-07/29/2014 at $704,838■ | | | 700,000 | | | 720,563 | |
The accompanying notes are an integral part of these financial statements.
133
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Multi-Disciplinary Income Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| | | | Principal | | | | |
| | | | Amount | | | Value | |
| Telecommunications — 4.65% | | | | | | | |
| CenturyLink, Inc., 5.800%, 03/15/2022 | | $ | 500,000 | | $ | 512,940 | |
| Crown Castle International Corp., 4.875%, 04/15/2022 | | | 723,000 | | | 771,658 | |
| Hughes Satellite Systems Corp. | | | | | | | |
| 6.500%, 06/15/2019 | | | 450,000 | | | 491,062 | |
| 7.625%, 06/15/2021 | | | 500,000 | | | 550,625 | |
| Millicom International Cellular SA, 4.750%, 05/22/2020, | | | | | | | |
| Acquired 08/28/2014 at $390,975■ | | | 390,000 | | | 396,337 | |
| SoftBank Group Corp., 4.500%, 04/15/2020, | | | | | | | |
| Acquired 04/24/2014-06/19/2015 at $1,411,267■ | | | 1,400,000 | | | 1,438,500 | |
| Sprint Communications Inc., 9.000%, 11/15/2018, | | | | | | | |
| Acquired 12/30/2013 at $108,573■ | | | 100,000 | | | 110,500 | |
| T-Mobile USA, Inc., 6.633%, 04/28/2021 | | | 350,000 | | | 366,188 | |
| | | | | | | 4,637,810 | |
| Transportation Equipment Manufacturing — 2.30% | | | | | | | |
| Dana Holding Corp., 5.375%, 09/15/2021 | | | 250,000 | | | 260,000 | |
| Lear Corp., 4.750%, 01/15/2023# | | | 500,000 | | | 512,500 | |
| Navistar International Corp., 8.250%, 11/01/2021^ | | | 1,500,000 | | | 1,522,500 | |
| | | | | | | 2,295,000 | |
| TOTAL CORPORATE BONDS | | | | | | | |
| (cost $78,131,311) | | | | | | 78,879,348 | |
| | | | | | | | |
| MUNICIPAL BONDS — 0.19% | | | | | | | |
| Air Transportation — 0.19% | | | | | | | |
| Branson Missouri Regional Airport Transportation Development District | | | | | | | |
6.000%, 07/01/2025a+ | | | 2,000,000 | | | 108,000 | |
6.000%, 07/01/2037a+ | | | 1,500,000 | | | 81,000 | |
| TOTAL MUNICIPAL BONDS | | | | | | | |
| (cost $2,245,112) | | | | | | 189,000 | |
| | | | | | | | |
| ESCROW NOTES — 0.24% | | | | | | | |
| Holding Company — 0.24% | | | | | | | |
Energy Future Intermediate Holdings Co. LLCa | | | 1,000,000 | | | 237,500 | |
| TOTAL ESCROW NOTES | | | | | | | |
| (cost $38,521) | | | | | | 237,500 | |
The accompanying notes are an integral part of these financial statements.
134
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Multi-Disciplinary Income Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| EXCHANGE TRADED NOTES — 0.01% | | | Shares | | | Value | |
| Credit Intermediation and Related Activities — 0.01% | | | | | | | |
| VelocityShares Daily Inverse VIX Medium Term ETN* | | | 100 | | $ | 4,654 | |
| TOTAL EXCHANGE TRADED NOTES | | | | | | | |
| (cost $3,971) | | | | | | 4,654 | |
| | | | | | | | |
| MUTUAL FUNDS — 4.84% | | | | | | | |
| Funds, Trusts, and Other Financial Vehicles — 4.84% | | | | | | | |
| DoubleLine Income Solutions Fund | | | 2,100 | | | 39,879 | |
| DoubleLine Opportunistic Credit Fund | | | 50,900 | | | 1,175,790 | |
| Duff & Phelps Select Energy MLP Fund Inc. | | | 400 | | | 3,032 | |
| Nuveen Energy MLP Total Return Fund | | | 400 | | | 5,416 | |
| PIMCO Dynamic Income Fund^ | | | 88,000 | | | 2,437,600 | |
| PIMCO Income Opportunity Fund^ | | | 9,000 | | | 208,440 | |
| PIMCO Income Strategy Fund | | | 10,000 | | | 105,700 | |
| PIMCO Income Strategy Fund II | | | 10,000 | | | 94,900 | |
| Special Opportunities Fund Inc. | | | 17,200 | | | 234,780 | |
| Tortoise Energy Infrastructure Corp.^ | | | 600 | | | 18,414 | |
| Tortoise MLP Fund Inc. | | | 1,400 | | | 26,712 | |
| Western Asset Mortgage Defined Opportunity Fund Inc. | | | 19,200 | | | 437,568 | |
| Western Asset/Claymore Inflation-Linked Opportunities & Income Fund | | | 2,200 | | | 24,508 | |
| Western Asset/Claymore Inflation-Linked Securities & Income Fund | | | 1,600 | | | 18,368 | |
| TOTAL MUTUAL FUNDS | | | | | | | |
| (cost $5,495,354) | | | | | | 4,831,107 | |
| | | | | | | | |
| SHORT-TERM INVESTMENTS — 7.98% | | | | | | | |
| Money Market Funds — 0.13% | | | | | | | |
Fidelity Institutional Government Portfolio — Class I, 0.39%b | | | 131,653 | | | 131,653 | |
The accompanying notes are an integral part of these financial statements.
135
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Multi-Disciplinary Income Portfolio |
Portfolio of Investments — December 31, 2016 — (Continued) |
| | | | Principal | | | | |
| | | | Amount | | | Value | |
| U.S. Treasury Obligations — 7.85% | | | | | | | |
| United States Treasury Bills | | | | | | | |
| Maturity Date: 01/05/2017, Yield to Maturity 0.25% | | $ | 1,129,000 | | $ | 1,128,981 | |
| Maturity Date: 01/12/2017, Yield to Maturity 0.28% | | | 31,000 | | | 30,997 | |
| Maturity Date: 02/02/2017, Yield to Maturity 0.42% | | | 224,000 | | | 223,922 | |
| Maturity Date: 02/09/2017, Yield to Maturity 0.39% | | | 676,000 | | | 675,693 | |
| Maturity Date: 02/16/2017, Yield to Maturity 0.40% | | | 5,778,000 | | | 5,774,926 | |
| | | | | | | 7,834,519 | |
| TOTAL SHORT-TERM INVESTMENTS | | | | | | | |
| (cost $7,966,294) | | | | | | 7,966,172 | |
| | | | | | | | |
| INVESTMENTS PURCHASED WITH THE CASH | | | | | | | |
| PROCEEDS FROM SECURITIES LENDING — 3.48% | | | Shares | | | | |
| Money Market Funds — 3.48% | | | | | | | |
First American Government Obligations Fund — Class X, 0.47%b | | | 3,475,888 | | | 3,475,888 | |
| TOTAL INVESTMENTS PURCHASED WITH THE CASH | | | | | | | |
| PROCEEDS FROM SECURITIES LENDING | | | | | | | |
| (cost $3,475,888) | | | | | | 3,475,888 | |
| TOTAL INVESTMENTS — 102.27% | | | | | | | |
| (cost $103,722,970) | | | | | $ | 102,040,413 | |
Percentages are stated as a percent of net assets.
| * — | Non-income producing security. |
| # — | All or a portion of the securities have been committed as collateral for written option contracts. |
| ^ — | This security or a portion of this security was out on loan at December 31, 2016. Total loaned securities had a market value of $3,402,893 at December 31, 2016. The remaining contractual maturities of all of the securities lending transactions were overnight and continuous. |
| ■ — | Restricted security restricted to institutional investors (144a securities); the percentage of net assets comprised of 144a securities was 24.06%. |
a — | Default or other conditions exist and the security is not presently accruing income. |
| + — | Security is considered illiquid. The aggregate value of such securities is $189,000 or 0.19% of net assets. |
b — | The rate quoted is the annualized seven-day yield as of December 31, 2016. |
| CAD — Canadian Dollars. |
| ETN — Exchange Traded Note. |
The accompanying notes are an integral part of these financial statements.
136
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Alternative Income Portfolio |
| Portfolio of Options Written — December 31, 2016 |
| PUT OPTIONS WRITTEN | | | Contractsd | | | Value | |
| Accommodation | | | | | | | |
| Marriott International Inc. — Class A | | | | | | | |
| Expiration: January 2017, Exercise Price: $50.00 | | | 4 | | $ | 10 | |
| Expiration: January 2017, Exercise Price: $54.35 | | | 12 | | | 30 | |
| Expiration: January 2017, Exercise Price: $55.00 | | | 9 | | | 22 | |
| | | | | | | 62 | |
| Administrative and Support Services | | | | | | | |
| The Priceline Group Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $860.00 | | | 1 | | | 20 | |
| Beverage and Tobacco Product Manufacturing | | | | | | | |
| The Coca-Cola Company | | | | | | | |
| Expiration: January 2017, Exercise Price: $35.00 | | | 17 | | | 25 | |
| Molson Coors Brewing Company — Class B | | | | | | | |
| Expiration: January 2017, Exercise Price: $60.00 | | | 2 | | | 10 | |
| PepsiCo, Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $80.00 | | | 3 | | | 2 | |
| | | | | | | 37 | |
| Broadcasting (except Internet) | | | | | | | |
| Twenty-First Century Fox, Inc. — Class A | | | | | | | |
| Expiration: January 2017, Exercise Price: $25.00 | | | 16 | | | 120 | |
| Building Material and Garden Equipment and Supplies Dealers | | | | | | | |
| Fastenal Company | | | | | | | |
| Expiration: January 2017, Exercise Price: $30.00 | | | 4 | | | 10 | |
| Expiration: January 2017, Exercise Price: $33.00 | | | 16 | | | 40 | |
| | | | | | | 50 | |
| Clothing and Clothing Accessories Stores | | | | | | | |
| DSW Inc. — Class A | | | | | | | |
| Expiration: January 2017, Exercise Price: $20.00 | | | 35 | | | 350 | |
| Expiration: January 2017, Exercise Price: $22.50 | | | 2 | | | 110 | |
| Nordstrom, Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $50.15 | | | 8 | | | 2,404 | |
| Tiffany & Co. | | | | | | | |
| Expiration: January 2017, Exercise Price: $65.00 | | | 2 | | | 36 | |
| Expiration: January 2017, Exercise Price: $70.00 | | | 4 | | | 188 | |
| | | | | | | 3,088 | |
| Computer and Electronic Product Manufacturing | | | | | | | |
| Agilent Technologies, Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $30.00 | | | 6 | | | 24 | |
The accompanying notes are an integral part of these financial statements.
137
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Alternative Income Portfolio |
Portfolio of Options Written — December 31, 2016 — (Continued) |
| | | | Contractsd | | | Value | |
| Computer and Electronic Product Manufacturing — (Continued) | | | | | | | |
| Apple, Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $80.00 | | | 6 | | $ | 9 | |
| Cisco Systems, Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $20.00 | | | 12 | | | 6 | |
| Dell Technologies, Inc. — VMware, Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $23.00 | | | 11 | | | 27 | |
| International Business Machines Corporation | | | | | | | |
| Expiration: January 2017, Exercise Price: $125.00 | | | 1 | | | 3 | |
| Expiration: January 2017, Exercise Price: $130.00 | | | 4 | | | 24 | |
| Texas Instruments Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $38.00 | | | 7 | | | 4 | |
| | | | | | | 97 | |
| Construction of Buildings | | | | | | | |
| Lennar Corporation — Class A | | | | | | | |
| Expiration: January 2017, Exercise Price: $30.00 | | | 21 | | | 52 | |
| Expiration: January 2017, Exercise Price: $33.00 | | | 6 | | | 15 | |
| TRI Pointe Group, Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $10.00 | | | 75 | | | 3,375 | |
| | | | | | | 3,442 | |
| Couriers and Messengers | | | | | | | |
| FedEx Corp. | | | | | | | |
| Expiration: January 2017, Exercise Price: $125.00 | | | 6 | | | 21 | |
| Expiration: January 2017, Exercise Price: $130.00 | | | 4 | | | 10 | |
| | | | | | | 31 | |
| Credit Intermediation and Related Activities | | | | | | | |
| Bank of America Corporation | | | | | | | |
| Expiration: January 2017, Exercise Price: $13.00 | | | 15 | | | 7 | |
| Wells Fargo & Company | | | | | | | |
| Expiration: January 2017, Exercise Price: $45.00 | | | 3 | | | 5 | |
| | | | | | | 12 | |
| Diversified Financial Services | | | | | | | |
| The Goldman Sachs Group, Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $150.00 | | | 2 | | | 4 | |
| Electrical Equipment, Appliance, and Component Manufacturing | | | | | | | |
| Corning Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $15.00 | | | 23 | | | 23 | |
The accompanying notes are an integral part of these financial statements.
138
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Alternative Income Portfolio |
Portfolio of Options Written — December 31, 2016 — (Continued) |
| | | | Contractsd | | | Value | |
| Electrical Equipment, Appliance, and Component Manufacturing — (Continued) | | | | | | | |
| Johnson Controls International plc | | | | | | | |
| Expiration: January 2017, Exercise Price: $30.00 | | | 13 | | $ | 26 | |
| Expiration: January 2017, Exercise Price: $33.00 | | | 6 | | | 15 | |
| | | | | | | 64 | |
| Equity Index | | | | | | | |
| S&P 500 Index | | | | | | | |
| Expiration: January 2017, Exercise Price: $2,165.00 | | | 4 | | | 500 | |
| Expiration: January 2017, Exercise Price: $2,175.00 | | | 4 | | | 4,920 | |
| Expiration: January 2017, Exercise Price: $2,180.00 | | | 7 | | | 6,910 | |
| Expiration: January 2017, Exercise Price: $2,185.00 | | | 8 | | | 5,160 | |
| Expiration: January 2017, Exercise Price: $2,190.00 | | | 3 | | | 1,540 | |
| Expiration: January 2017, Exercise Price: $2,195.00 | | | 13 | | | 11,425 | |
| Expiration: January 2017, Exercise Price: $2,200.00 | | | 26 | | | 29,370 | |
| Expiration: January 2017, Exercise Price: $2,205.00 | | | 5 | | | 4,800 | |
| | | | | | | 64,625 | |
| Food and Beverage Stores | | | | | | | |
| Whole Foods Market, Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $28.00 | | | 25 | | | 213 | |
| Food Manufacturing | | | | | | | |
| Tyson Foods, Inc. — Class A | | | | | | | |
| Expiration: January 2017, Exercise Price: $28.00 | | | 55 | | | 138 | |
| Expiration: January 2017, Exercise Price: $30.00 | | | 34 | | | 85 | |
| | | | | | | 223 | |
| Insurance Carriers and Related Activities | | | | | | | |
| Aflac, Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $47.50 | | | 4 | | | 12 | |
| Machinery Manufacturing | | | | | | | |
| Baker Hughes Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $40.00 | | | 8 | | | 60 | |
| Eaton Corporation plc | | | | | | | |
| Expiration: January 2017, Exercise Price: $45.00 | | | 10 | | | 50 | |
| | | | | | | 110 | |
| Merchant Wholesalers, Nondurable Goods | | | | | | | |
| Express Scripts Holding Company | | | | | | | |
| Expiration: January 2017, Exercise Price: $60.00 | | | 4 | | | 68 | |
| Miscellaneous Manufacturing | | | | | | | |
| 3M Co. | | | | | | | |
| Expiration: January 2017, Exercise Price: $125.00 | | | 2 | | | 3 | |
The accompanying notes are an integral part of these financial statements.
139
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Alternative Income Portfolio |
Portfolio of Options Written — December 31, 2016 — (Continued) |
| | | | Contractsd | | | Value | |
| Miscellaneous Manufacturing — (Continued) | | | | | | | |
| Intuitive Surgical, Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $340.00 | | | 1 | | $ | 107 | |
| Expiration: January 2017, Exercise Price: $370.00 | | | 2 | | | 215 | |
| Expiration: January 2017, Exercise Price: $390.00 | | | 1 | | | 108 | |
| | | | | | | 433 | |
| Motor Vehicle and Parts Dealers | | | | | | | |
| CarMax, Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $35.00 | | | 6 | | | 15 | |
| Expiration: January 2017, Exercise Price: $40.00 | | | 10 | | | 100 | |
| | | | | | | 115 | |
| Nonmetallic Mineral Product Manufacturing | | | | | | | |
| USG Corporation | | | | | | | |
| Expiration: January 2017, Exercise Price: $20.00 | | | 9 | | | 23 | |
| Non-Store Retailers | | | | | | | |
| Sotheby's | | | | | | | |
| Expiration: January 2017, Exercise Price: $25.00 | | | 8 | | | 60 | |
| Oil and Gas Extraction | | | | | | | |
| EOG Resources, Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $65.00 | | | 5 | | | 10 | |
| Petroleum and Coal Products Manufacturing | | | | | | | |
| Marathon Petroleum Corporation | | | | | | | |
| Expiration: January 2017, Exercise Price: $32.50 | | | 18 | | | 45 | |
| Phillips 66 | | | | | | | |
| Expiration: January 2017, Exercise Price: $55.00 | | | 14 | | | 245 | |
| Expiration: January 2017, Exercise Price: $60.00 | | | 3 | | | 15 | |
| | | | | | | 305 | |
| Pharmaceutical and Biotechnology | | | | | | | |
| AbbVie Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $45.00 | | | 10 | | | 80 | |
| Expiration: January 2017, Exercise Price: $47.50 | | | 8 | | | 36 | |
| Amgen Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $95.00 | | | 1 | | | 2 | |
| Expiration: January 2017, Exercise Price: $100.00 | | | 2 | | | 7 | |
| Expiration: January 2017, Exercise Price: $105.00 | | | 1 | | | 4 | |
| Expiration: January 2017, Exercise Price: $110.00 | | | 2 | | | 7 | |
| Expiration: January 2017, Exercise Price: $115.00 | | | 2 | | | 12 | |
| Expiration: January 2017, Exercise Price: $120.00 | | | 5 | | | 48 | |
The accompanying notes are an integral part of these financial statements.
140
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Alternative Income Portfolio |
Portfolio of Options Written — December 31, 2016 — (Continued) |
| | | | Contractsd | | | Value | |
| Pharmaceutical and Biotechnology — (Continued) | | | | | | | |
| Biogen Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $230.00 | | | 2 | | $ | 140 | |
| Expiration: January 2017, Exercise Price: $240.00 | | | 3 | | | 277 | |
| Celgene Corporation | | | | | | | |
| Expiration: January 2017, Exercise Price: $70.00 | | | 3 | | | 5 | |
| Eli Lilly & Company | | | | | | | |
| Expiration: January 2017, Exercise Price: $50.00 | | | 7 | | | 39 | |
| Gilead Sciences, Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $75.00 | | | 1 | | | 390 | |
| Merck & Co., Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $40.00 | | | 3 | | | 4 | |
| Expiration: January 2017, Exercise Price: $42.50 | | | 15 | | | 30 | |
| Expiration: January 2017, Exercise Price: $45.00 | | | 17 | | | 51 | |
| Expiration: January 2017, Exercise Price: $47.50 | | | 3 | | | 14 | |
| | | | | | | 1,146 | |
| Publishing Industries (except Internet) | | | | | | | |
| Autodesk, Inc. | | | | | | | |
| Expiration: January 2017, Exercise Price: $40.00 | | | 17 | | | 51 | |
| Expiration: January 2017, Exercise Price: $42.50 | | | 4 | | | 16 | |
| | | | | | | 67 | |
| Securities, Commodity Contracts, and Other Financial Investments and | | | | | | | |
| Related Activities | | | | | | | |
| Morgan Stanley | | | | | | | |
| Expiration: January 2017, Exercise Price: $25.00 | | | 20 | | | 20 | |
| Support Activities for Mining | | | | | | | |
| Halliburton Company | | | | | | | |
| Expiration: January 2017, Exercise Price: $35.00 | | | 2 | | | 3 | |
| Schlumberger Limited | | | | | | | |
| Expiration: January 2017, Exercise Price: $65.00 | | | 2 | | | 4 | |
| Expiration: January 2017, Exercise Price: $70.00 | | | 12 | | | 42 | |
| | | | | | �� | 49 | |
| Transportation Equipment Manufacturing | | | | | | | |
| United Technologies Corporation | | | | | | | |
| Expiration: January 2017, Exercise Price: $75.00 | | | 4 | | | 26 | |
| TOTAL PUT OPTIONS WRITTEN | | | | | | | |
| (premiums received $291,088) | | | | | $ | 74,532 | |
| | | |
| d – | 100 shares per contract. |
The accompanying notes are an integral part of these financial statements.
141
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| The Multi-Disciplinary Income Portfolio |
Portfolio of Options Written — December 31, 2016 — (Continued) |
| PUT OPTIONS WRITTEN | | | Contractsd | | | Value | |
| Mining (except Oil and Gas) | | | | | | | |
| Silver Wheaton Corporation | | | | | | | |
| Expiration: January 2017, Exercise Price: $8.00 | | | 4 | | $ | 4 | |
| Oil and Gas Extraction | | | | | | | |
| Continental Resources, Inc. | | | | | | | |
| Expiration : January 2017, Exercise Price: $17.50 | | | 16 | | | 40 | |
| TOTAL PUT OPTIONS WRITTEN | | | | | | | |
| (premiums received $4,586) | | | | | $ | 44 | |
| | | |
| d – | 100 shares per contract. |
The accompanying notes are an integral part of these financial statements.
142
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| Statements of Assets & Liabilities |
| December 31, 2016 |
| | | | The Internet | | | The Global | |
| | | | Portfolio | | | Portfolio | |
| ASSETS: | | | | | | | |
Investments, at value(1)(2) | | $ | 114,111,117 | | $ | 7,544,522 | |
| Receivable for contributed capital | | | 40,649 | | | 724 | |
| Receivable for investments sold | | | 173,881 | | | 62,237 | |
| Dividends and interest receivable | | | 16 | | | 14,138 | |
| Securities litigation receivable | | | 99,877 | | | — | |
| Prepaid expenses and other assets | | | 2,687 | | | 271 | |
| Total Assets | | | 114,428,227 | | | 7,621,892 | |
| LIABILITIES: | | | | | | | |
| Payable to Adviser | | | 121,144 | | | 7,955 | |
| Payable to Custodian | | | — | | | 5,219 | |
| Payable to Trustees | | | 3,012 | | | 195 | |
| Payable to Chief Compliance Officer | | | 215 | | | 8 | |
| Payable for securities purchased | | | 49,818 | | | 29,707 | |
| Payable for collateral received for securities loaned | | | 724,893 | | | 22,557 | |
| Payable for withdrawn capital | | | 869,941 | | | 2,237 | |
| Accrued expenses and other liabilities | | | 29,429 | | | 11,963 | |
| Total Liabilities | | | 1,798,452 | | | 79,841 | |
| Net Assets | | $ | 112,629,775 | | $ | 7,542,051 | |
(1) Cost of investments | | $ | 75,908,435 | | $ | 6,461,564 | |
(2) Includes loaned securities with a market value of | | $ | 713,993 | | $ | 20,959 | |
The accompanying notes are an integral part of these financial statements.
143
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Statements of Assets & Liabilities — (Continued) |
| December 31, 2016 |
| | | | The Paradigm | | | The Medical | |
| | | | Portfolio | | | Portfolio | |
| ASSETS: | | | | | | | |
| Investments, at value | | | | | | | |
Unaffiliated issuers(1) | | $ | 660,996,311 | | $ | 23,102,866 | |
Affiliated issuers(2) | | | 179,426,549 | | | — | |
Total investments, at value(3)(4) | | | 840,422,860 | | | 23,102,866 | |
| Cash | | | 34,246 | | | — | |
| Receivable for contributed capital | | | 1,147,676 | | | 13,984 | |
| Receivable for investments sold | | | 2,819,161 | | | — | |
| Dividends and interest receivable | | | 171,466 | | | 32,017 | |
| Prepaid expenses and other assets | | | 65,216 | | | 1,693 | |
| Total Assets | | | 844,660,625 | | | 23,150,560 | |
| LIABILITIES: | | | | | | | |
| Payable to Adviser | | | 889,729 | | | 23,297 | |
| Payable to Trustees | | | 20,145 | | | 607 | |
| Payable to Chief Compliance Officer | | | 1,286 | | | 44 | |
| Payable for securities purchased | | | 74,541 | | | — | |
| Payable for collateral received for securities loaned | | | 6,177,797 | | | 1,269,382 | |
| Payable for withdrawn capital | | | 1,195,434 | | | 150,705 | |
| Accrued expenses and other liabilities | | | 152,122 | | | 13,169 | |
| Total Liabilities | | | 8,511,054 | | | 1,457,204 | |
| Net Assets | | $ | 836,149,571 | | $ | 21,693,356 | |
(1) Unaffiliated issuers cost | | $ | 508,977,497 | | $ | 16,930,691 | |
(2) Affiliated issuers cost | | | 55,238,445 | | | — | |
(3) Total issuers cost | | $ | 564,215,942 | | $ | 16,930,691 | |
(4) Includes loaned securities with a market value of | | $ | 6,059,226 | | $ | 1,231,382 | |
The accompanying notes are an integral part of these financial statements.
144
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Statements of Assets & Liabilities — (Continued) |
| December 31, 2016 |
| | | | The Small Cap | | The Market |
| | | | Opportunities | | Opportunities |
| | | | Portfolio | | Portfolio |
| ASSETS: | | | | | | | |
Investments, at value(1)(2) | | $ | 210,187,680 | | $ | 43,310,998 | |
| Receivable for contributed capital | | | 334,550 | | | 324,781 | |
| Receivable for investments sold | | | — | | | 16,380 | |
| Dividends and interest receivable | | | 67,081 | | | 30,025 | |
| Securities litigation receivable | | | 20,977 | | | — | |
| Prepaid expenses and other assets | | | 22,864 | | | 1,073 | |
| Total Assets | | | 210,633,152 | | | 43,683,257 | |
| LIABILITIES: | | | | | | | |
| Payable to Adviser | | | 222,305 | | | 45,991 | |
| Payable to Trustees | | | 5,313 | | | 1,076 | |
| Payable to Chief Compliance Officer | | | 344 | | | 63 | |
| Payable for securities purchased | | | — | | | 24,889 | |
| Payable for collateral received for securities loaned | | | 4,976,122 | | | 4,966 | |
| Payable for withdrawn capital | | | 187,559 | | | 6,332 | |
| Accrued expenses and other liabilities | | | 42,810 | | | 16,766 | |
| Total Liabilities | | | 5,434,453 | | | 100,083 | |
| Net Assets | | $ | 205,198,699 | | $ | 43,583,174 | |
(1) Cost of investments | | $ | 204,496,394 | | $ | 33,876,498 | |
(2) Includes loaned securities with a market value of | | $ | 4,760,931 | | $ | 4,428 | |
The accompanying notes are an integral part of these financial statements.
145
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Statements of Assets & Liabilities — (Continued) |
| December 31, 2016 |
| | | | | | The Multi- |
| | | The Alternative | | Disciplinary |
| | | | Income | | Income |
| | | | Portfolio | | Portfolio |
| ASSETS: | | | | | | | |
Investments, at value(1)(2) | | $ | 28,217,257 | | $ | 102,040,413 | |
| Cash | | | 132,923 | | | 100,584 | |
| Receivable for contributed capital | | | 47,564 | | | 470,693 | |
| Receivable for investments sold | | | 4,156 | | | — | |
| Dividends and interest receivable | | | 26,044 | | | 1,120,292 | |
| Prepaid expenses and other assets | | | 357 | | | 8,038 | |
| Total Assets | | | 28,428,301 | | | 103,740,020 | |
| LIABILITIES: | | | | | | | |
Written options, at value(3) | | | 74,532 | | | 44 | |
| Payable to Adviser | | | 20,354 | | | 105,345 | |
| Payable to Trustees | | | 704 | | | 2,508 | |
| Payable to Chief Compliance Officer | | | 48 | | | 138 | |
| Payable for securities purchased | | | 46 | | | 5,691 | |
| Payable for collateral received for securities loaned | | | — | | | 3,475,888 | |
| Payable for withdrawn capital | | | 275,341 | | | 349,915 | |
| Accrued expenses and other liabilities | | | 15,267 | | | 26,389 | |
| Total Liabilities | | | 386,292 | | | 3,965,918 | |
| Net Assets | | $ | 28,042,009 | | $ | 99,774,102 | |
(1) Cost of investments | | $ | 28,252,039 | | $ | 103,722,970 | |
(2) Includes loaned securities with a market value of | | $ | — | | $ | 3,402,893 | |
(3) Premiums received | | $ | 291,088 | | $ | 4,586 | |
The accompanying notes are an integral part of these financial statements.
146
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| Statements of Operations |
| For the Year Ended December 31, 2016 |
| | | | The Internet | | | The Global | |
| | | | Portfolio | | | Portfolio | |
| INVESTMENT INCOME: | | | | | | | |
| Dividends† | | $ | 92,218 | | $ | 75,899 | |
| Interest | | | 87,016 | | | 7,688 | |
| Income from securities lending | | | 43,915 | | | 2,138 | |
| Total investment income | | | 223,149 | | | 85,725 | |
| EXPENSES: | | | | | | | |
| Investment advisory fees | | | 1,450,156 | | | 87,667 | |
| Administration fees | | | 55,859 | | | 4,545 | |
| Professional fees | | | 19,021 | | | 8,702 | |
| Fund accounting fees | | | 27,057 | | | 5,889 | |
| Trustees' fees | | | 13,662 | | | 813 | |
| Chief Compliance Officer fees | | | 2,451 | | | 136 | |
| Custodian fees and expenses | | | 21,164 | | | 8,436 | |
| Other expenses | | | 5,782 | | | 316 | |
| Total expenses | | | 1,595,152 | | | 116,504 | |
| Net investment loss | | | (1,372,003 | ) | | (30,779 | ) |
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | |
| Net realized gain on: | | | | | | | |
| Investments and foreign currency | | | 13,023,048 | | | 111,901 | |
| Net change in unrealized appreciation (depreciation) of: | | | | | | | |
| Investments and foreign currency | | | (8,519,309 | ) | | 855,533 | |
| Net realized and unrealized gain on investments | | | 4,503,739 | | | 967,434 | |
| Net increase in net assets resulting from operations | | $ | 3,131,736 | | $ | 936,655 | |
| † Net of foreign taxes withheld of: | | $ | — | | $ | 12,660 | |
The accompanying notes are an integral part of these financial statements.
147
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Statements of Operations — (Continued) |
| For the Year Ended December 31, 2016 |
| | | | The Paradigm | | The Medical |
| | | | Portfolio | | Portfolio |
| INVESTMENT INCOME: | | | | | | | |
| Dividends† | | $ | 2,894,842 | | $ | 488,239 | |
| Interest | | | 212,602 | | | 1,770 | |
| Income from securities lending | | | 738,334 | | | 13,302 | |
| Dividends from affiliated issuer | | | 189,174 | | | — | |
| Total investment income | | | 4,034,952 | | | 503,311 | |
| EXPENSES: | | | | | | | |
| Investment advisory fees | | | 9,538,932 | | | 303,169 | |
| Administration fees | | | 361,623 | | | 12,253 | |
| Professional fees | | | 78,494 | | | 10,408 | |
| Fund accounting fees | | | 161,612 | | | 7,353 | |
| Trustees' fees | | | 88,331 | | | 2,903 | |
| Chief Compliance Officer fees | | | 15,604 | | | 522 | |
| Custodian fees and expenses | | | 156,526 | | | 5,600 | |
| Other expenses | | | 38,611 | | | 1,204 | |
| Total expenses | | | 10,439,733 | | | 343,412 | |
| Net investment income (loss) | | | (6,404,781 | ) | | 159,899 | |
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | |
| Net realized gain on: | | | | | | | |
| Investments and foreign currency | | | 79,640,572 | | | 1,823,092 | |
| Affiliated issuer | | | 2,295,530 | | | — | |
| Net change in unrealized appreciation (depreciation) of: | | | | | | | |
| Investments and foreign currency | | | 63,009,898 | | | (4,346,253 | ) |
| Net realized and unrealized gain (loss) on investments | | | 144,946,000 | | | (2,523,161 | ) |
| Net increase (decrease) in net assets resulting from operations | | $ | 138,541,219 | | $ | (2,363,262 | ) |
| † Net of foreign taxes withheld of: | | $ | 192,585 | | $ | 17,739 | |
The accompanying notes are an integral part of these financial statements.
148
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Statements of Operations — (Continued) |
| For the Year Ended December 31, 2016 |
| | | | The Small Cap | | The Market |
| | | | Opportunities | | Opportunities |
| | | | Portfolio | | Portfolio |
| INVESTMENT INCOME: | | | | | | | |
| Dividends† | | $ | 883,220 | | $ | 244,972 | |
| Interest | | | 38,886 | | | 22,836 | |
| Income from securities lending | | | 299,548 | | | 4,661 | |
| Total investment income | | | 1,221,654 | | | 272,469 | |
| EXPENSES: | | | | | | | |
| Investment advisory fees | | | 2,503,829 | | | 501,452 | |
| Administration fees | | | 95,510 | | | 19,949 | |
| Professional fees | | | 26,447 | | | 11,788 | |
| Fund accounting fees | | | 44,286 | | | 11,399 | |
| Trustees' fees | | | 23,110 | | | 4,673 | |
| Chief Compliance Officer fees | | | 4,072 | | | 823 | |
| Custodian fees and expenses | | | 15,287 | | | 13,118 | |
| Other expenses | | | 10,268 | | | 1,989 | |
| Total expenses | | | 2,722,809 | | | 565,191 | |
| Net investment loss | | | (1,501,155 | ) | | (292,722 | ) |
| REALIZED AND UNREALIZED GAIN ON INVESTMENTS: | | | | | | | |
| Net realized gain on: | | | | | | | |
| Investments and foreign currency | | | 3,399,767 | | | 2,288,438 | |
| Net change in unrealized appreciation of: | | | | | | | |
| Investments and foreign currency | | | 41,392,916 | | | 5,652,984 | |
| Net realized and unrealized gain on investments | | | 44,792,683 | | | 7,941,422 | |
| Net increase in net assets resulting from operations | | $ | 43,291,528 | | $ | 7,648,700 | |
| † Net of foreign taxes withheld of: | | $ | 25,627 | | $ | 10,205 | |
The accompanying notes are an integral part of these financial statements.
149
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Statements of Operations — (Continued) |
| For the Year Ended December 31, 2016 |
| | | | | | The Multi- |
| | | | The Alternative | | Disciplinary |
| | | | Income | | Income |
| | | | Portfolio | | Portfolio |
| INVESTMENT INCOME: | | | | | | | |
| Dividends | | $ | 96,680 | | $ | 594,048 | |
| Interest | | | 154,216 | | | 4,190,311 | |
| Income from securities lending | | | — | | | 131,255 | |
| Total investment income | | | 250,896 | | | 4,915,614 | |
| EXPENSES: | | | | | | | |
| Investment advisory fees | | | 240,843 | | | 1,115,274 | |
| Administration fees | | | 16,501 | | | 44,543 | |
| Professional fees | | | 10,562 | | | 16,093 | |
| Fund accounting fees | | | 16,401 | | | 32,065 | |
| Trustees' fees | | | 3,129 | | | 10,188 | |
| Chief Compliance Officer fees | | | 550 | | | 1,776 | |
| Custodian fees and expenses | | | 5,059 | | | 9,000 | |
| Other expenses | | | 1,397 | | | 4,546 | |
| Total expenses | | | 294,442 | | | 1,233,485 | |
| Net investment income (loss) | | | (43,546 | ) | | 3,682,129 | |
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | |
| Net realized gain (loss) on: | | | | | | | |
| Investments and foreign currency | | | (33,572 | ) | | (926,509 | ) |
| Written option contracts expired or closed | | | 1,011,323 | | | — | |
| Long term realized gain distributions received from | | | | | | | |
| other investment companies | | | — | | | 5,225 | |
| Net change in unrealized appreciation (depreciation) of: | | | | | | | |
| Investments and foreign currency | | | 85,475 | | | 5,851,790 | |
| Written option contracts | | | (9,263 | ) | | 4,542 | |
| Net realized and unrealized gain on investments | | | 1,053,963 | | | 4,935,048 | |
| Net increase in net assets resulting from operations | | $ | 1,010,417 | | $ | 8,617,177 | |
The accompanying notes are an integral part of these financial statements.
150
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| Statements of Changes in Net Assets |
| | | The Internet Portfolio | | The Global Portfolio | |
| | | For the
Year Ended
December 31,
2016 | | For the
Year Ended
December 31,
2015 | | For the
Year Ended
December 31,
2016 | | For the
Year Ended
December 31,
2015 | |
| OPERATIONS: | | | | | | | | | | | | | |
| Net investment loss | | $ | (1,372,003 | ) | $ | (1,509,847 | ) | $ | (30,779 | ) | $ | (48,686 | ) |
| Net realized gain (loss) on sale of investments and foreign currency | | | 13,023,048 | | | 29,301,715 | | | 111,901 | | | (13,117 | ) |
| Net change in unrealized appreciation (depreciation) of investments and foreign currency | | | (8,519,309 | ) | | (34,665,263 | ) | | 855,533 | | | (1,094,934 | ) |
| Net increase (decrease) in net assets resulting from operations | | | 3,131,736 | | | (6,873,395 | ) | | 936,655 | | | (1,156,737 | ) |
| NET DECREASE IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS: | | | | | | | | | | | | | |
| Contributions | | | 72,053 | | | 125,717 | | | 631,868 | | | 712,605 | |
| Withdrawals | | | (16,820,631 | ) | | (24,551,767 | ) | | (760,370 | ) | | (1,701,358 | ) |
| Net decrease in net assets resulting from beneficial interest transactions | | | (16,748,578 | ) | | (24,426,050 | ) | | (128,502 | ) | | (988,753 | ) |
| Total increase (decrease) in net assets | | | (13,616,842 | ) | | (31,299,445 | ) | | 808,153 | | | (2,145,490 | ) |
| NET ASSETS: | | | | | | | | | | | | | |
| Beginning of year | | | 126,246,617 | | | 157,546,062 | | | 6,733,898 | | | 8,879,388 | |
| End of year | | $ | 112,629,775 | | $ | 126,246,617 | | $ | 7,542,051 | | $ | 6,733,898 | |
The accompanying notes are an integral part of these financial statements.
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| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Statements of Changes in Net Assets — (Continued) |
| | | The Paradigm Portfolio | | The Medical Portfolio |
| | | For the
Year Ended
December 31,
2016 | | For the
Year Ended
December 31,
2015 | | For the
Year Ended
December 31,
2016 | | For the
Year Ended
December 31,
2015 | |
| OPERATIONS: | | | | | | | | | | | | | |
| Net investment income (loss) | | $ | (6,404,781 | ) | $ | (6,650,534 | ) | $ | 159,899 | | $ | 71,634 | |
| Net realized gain on sale of investments and foreign currency | | | 81,936,102 | | | 131,929,769 | | | 1,823,092 | | | 1,640,497 | |
| Net change in unrealized appreciation (depreciation) of investments and foreign currency | | | 63,009,898 | | | (202,056,024 | ) | | (4,346,253 | ) | | (49,516 | ) |
| Net increase (decrease) in net assets resulting from operations | | | 138,541,219 | | | (76,776,789 | ) | | (2,363,262 | ) | | 1,662,615 | |
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS: | | | | | | | | | | | | | |
| Contributions | | | 56,523,799 | | | 2,767,699 | | | 706,562 | | | 3,148,519 | |
| Withdrawals | | | (207,335,022 | ) | | (269,901,615 | ) | | (5,789,417 | ) | | (2,788,288 | ) |
| Net increase (decrease) in net assets resulting from beneficial interest transactions | | | (150,811,223 | ) | | (267,133,916 | ) | | (5,082,855 | ) | | 360,231 | |
| Total increase (decrease) in net assets | | | (12,270,004 | ) | | (343,910,705 | ) | | (7,446,117 | ) | | 2,022,846 | |
| NET ASSETS: | | | | | | | | | | | | | |
| Beginning of year | | | 848,419,575 | | | 1,192,330,280 | | | 29,139,473 | | | 27,116,627 | |
| End of year | | $ | 836,149,571 | | $ | 848,419,575 | | $ | 21,693,356 | | $ | 29,139,473 | |
The accompanying notes are an integral part of these financial statements.
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| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Statements of Changes in Net Assets — (Continued) |
| | | The Small Cap
Opportunities Portfolio | | The Market
Opportunities Portfolio |
| | | For the
Year Ended
December 31,
2016 | | For the
Year Ended
December 31,
2015 | | For the
Year Ended
December 31,
2016 | | For the
Year Ended
December 31,
2015 | |
| OPERATIONS: | | | | | | | | | | | | | |
| Net investment loss | | $ | (1,501,155 | ) | $ | (1,973,202 | ) | $ | (292,722 | ) | $ | (326,358 | ) |
| Net realized gain on sale of investments and foreign currency | | | 3,399,767 | | | 40,437,004 | | | 2,288,438 | | | 5,055,001 | |
| Net change in unrealized appreciation (depreciation) of investments and foreign currency | | | 41,392,916 | | | (72,366,337 | ) | | 5,652,984 | | | (8,994,782 | ) |
| Net increase (decrease) in net assets resulting from operations | | | 43,291,528 | | | (33,902,535 | ) | | 7,648,700 | | | (4,266,139 | ) |
| NET DECREASE IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS: | | | | | | | | | | | | | |
| Contributions | | | 3,378,417 | | | 4,181,520 | | | 1,669,526 | | | 626,085 | |
| Withdrawals | | | (61,584,399 | ) | | (103,323,128 | ) | | (7,920,328 | ) | | (8,550,561 | ) |
| Net decrease in net assets resulting from beneficial interest transactions | | | (58,205,982 | ) | | (99,141,608 | ) | | (6,250,802 | ) | | (7,924,476 | ) |
| Total increase (decrease) in net assets | | | (14,914,454 | ) | | (133,044,143 | ) | | 1,397,898 | | | (12,190,615 | ) |
| NET ASSETS: | | | | | | | | | | | | | |
| Beginning of year | | | 220,113,153 | | | 353,157,296 | | | 42,185,276 | | | 54,375,891 | |
| End of year | | $ | 205,198,699 | | $ | 220,113,153 | | $ | 43,583,174 | | $ | 42,185,276 | |
The accompanying notes are an integral part of these financial statements.
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| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Statements of Changes in Net Assets — (Continued) |
| | | The Alternative Income Portfolio | | The Multi-Disciplinary Income Portfolio |
| | | For the
Year Ended
December 31,
2016 | | For the
Year Ended
December 31,
2015 | | For the
Year Ended
December 31,
2016 | | For the
Year Ended
December 31,
2015 | |
| OPERATIONS: | | | | | | | | | | | | | |
| Net investment income (loss) | | $ | (43,546 | ) | $ | (68,129 | ) | $ | 3,682,129 | | $ | 4,496,480 | |
| Net realized gain (loss) on sale of investments, foreign currency and written options and distributions received from other investment companies | | | 977,751 | | | 1,248,888 | | | (921,284 | ) | | (1,551,198 | ) |
| Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options | | | 76,212 | | | (334,592 | ) | | 5,856,332 | | | (4,910,270 | ) |
| Net increase (decrease) in net assets resulting from operations | | | 1,010,417 | | | 846,167 | | | 8,617,177 | | | (1,964,988 | ) |
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS: | | | | | | | | | | | | | |
| Contributions | | | 8,604,731 | | | 3,765,782 | | | 15,622,153 | | | 11,325,447 | |
| Withdrawals | | | (9,431,198 | ) | | (14,984,082 | ) | | (14,931,782 | ) | | (54,428,755 | ) |
| Net increase (decrease) in net assets resulting from beneficial interest transactions | | | (826,467 | ) | | (11,218,300 | ) | | 690,371 | | | (43,103,308 | ) |
| Total increase (decrease) in net assets | | | 183,950 | | | (10,372,133 | ) | | 9,307,548 | | | (45,068,296 | ) |
| NET ASSETS: | | | | | | | | | | | | | |
| Beginning of year | | | 27,858,059 | | | 38,230,192 | | | 90,466,554 | | | 135,534,850 | |
| End of year | | $ | 28,042,009 | | $ | 27,858,059 | | $ | 99,774,102 | | $ | 90,466,554 | |
The accompanying notes are an integral part of these financial statements.
154
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| Notes to Financial Statements |
| December 31, 2016 |
1. Organization
The Kinetics Portfolios Trust (the "Trust") was organized as a Delaware Statutory Trust on March 14, 2000, and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company issuing its beneficial interests in series, each series representing a distinct portfolio with its own investment objective and policies. The series currently authorized are: The Internet Portfolio, The Global Portfolio, The Paradigm Portfolio, The Medical Portfolio, The Small Cap Opportunities Portfolio, The Market Opportunities Portfolio, The Alternative Income Portfolio and The Multi-Disciplinary Income Portfolio (collectively, the "Master Portfolios"). Pursuant to the 1940 Act, the Master Portfolios, are "non-diversified" series of the Trust, except The Global Portfolio, The Alternative Income Portfolio and The Multi-Disciplinary Income Portfolio. The Market Opportunities Portfolio commenced operations on January 31, 2006, The Alternative Income Portfolio commenced operations on June 29, 2007 and The Multi-Disciplinary Income Portfolio commenced operations on February 11, 2008. Each of the remaining Master Portfolios commenced operations on April 28, 2000.
Each Master Portfolio is a Master Investment Portfolio in a master-feeder fund structure. Each Master Portfolio has multiple feeder funds invested in the Master Portfolio. By contributing assets to the Master Portfolio, the feeder funds receive a beneficial interest in the Master Portfolio. The Master Portfolio then invests the contributed assets in portfolio securities and allocates income, gains (losses) and expenses to the feeder funds based on the feeder funds' proportionate interests in the Master Portfolio.
Each of the Master Portfolios, except for The Alternative Income Portfolio and The Multi-Disciplinary Income Portfolio, seeks to provide investors with long-term capital growth. The Alternative Income Portfolio seeks to provide current income and gains. The Multi-Disciplinary Income Portfolio seeks to provide investors with total return. The Internet Portfolio invests primarily in the equity securities of U.S. and foreign companies engaged in the Internet and Internet-related activities. The Global Portfolio generally invests in the equity securities of foreign companies that have the ability to facilitate an increase in the growth of their traditional business lines and in U.S. companies benefiting from international economic growth. The Paradigm Portfolio invests primarily in the equity securities of U.S. and foreign companies that the investment adviser believes are undervalued and that have high returns on equity and are well
155
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
positioned to reduce their costs, extend the reach of their distribution channels and experience significant growth in their assets or revenues. The Medical Portfolio invests primarily in the equity securities of U.S. and foreign companies engaged in medical research, pharmaceutical treatments and related medical technology industries and related technology industries, generally, with a focus on companies engaged in cancer research and drug development. The Small Cap Opportunities Portfolio invests primarily in the equity securities of U.S. and foreign small capitalized companies that provide attractive valuation opportunities due to special situations such as lack of institutional ownership, lack of significant analyst coverage or companies with sound fundamentals that have experienced a short-term earnings shortfall. The Market Opportunities Portfolio invests primarily in the equity securities of U.S. and foreign companies engaged in capital markets or related to capital markets, as well as companies involved in the gaming industry. The Alternative Income and Multi-Disciplinary Income Portfolios utilize a two-part investment strategy, which includes fixed income and derivatives components.
2. Significant Accounting Policies
Security Valuation
Master Portfolio securities that are listed on a U.S. securities exchange for which market quotations are readily available are valued at the last quoted sale price on the day the valuation is made. Price information on listed securities is taken from the exchange where the security is primarily traded. All equity securities, including exchange-traded funds, that are traded using the National Association of Securities Dealers' Automated Quotation System ("NASDAQ") are valued using the NASDAQ Official Closing Price ("NOCP"). Foreign securities are valued by an independent pricing service. In the event market quotations are not readily available or if events occur that may materially affect the value of a particular security between the time trading ends on a particular security and the close of regular trading on the New York Stock Exchange ("NYSE"), "fair value" will be determined. Unlisted U.S. securities and listed U.S. securities not traded on the valuation date for which market quotations are readily available are valued at the last bid price. Exchange traded options are valued at the composite price, using the National Best Bid and Offer quotes ("NBBO"). NBBO consists of the highest bid price and lowest ask price across any of the exchanges on which an option is quoted thus providing a view across the entire U.S. options marketplace. Composite option pricing calculates the mean of the highest bid price and the lowest asked price across the
156
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
exchanges where the option is traded. If the composite option price is not available, the mean between the highest bid and the lowest asked quotations at the close of the exchanges will be used. If none of the above are available, exchange traded options are valued at a quote provided by third party pricing agents. Non-exchange traded options for which over-the-counter quotations are not readily available are valued at the mean of the current bid and asked prices. If none of the third party pricing agents publish a price and it is the day of expiration, expiring options will be priced at intrinsic value. Debt obligations (including convertible securities) that are either investment grade or non-investment grade and irrespective of days to maturity will be valued as follows: Debt securities are valued at evaluated mean by one of the authorized third party pricing agents which rely on various valuation methodologies such as matrix pricing and other analytical pricing models as well as market transactions and dealer quotations. Certain instruments, such as repurchase agreements and demand notes, do not have values from third parties and are valued at amortized cost. Investments in registered open-end investment companies (including money market funds), other than exchange-traded funds are valued at their reported net asset value ("NAV").
Other assets and securities for which no quotations are readily available (including restricted securities) will be valued in good faith at fair value using methods determined by the Board of Trustees of the Master Portfolios. In determining the fair value of a security, the Board of Trustees shall take into account the relevant factors and surrounding circumstances, which may include: (i) the nature and pricing history (if any) of the security; (ii) whether any dealer quotations for the security are available; (iii) possible valuation methodologies that could be used to determine the fair value of the security; (iv) the recommendation of the portfolio manager of the Portfolios with respect to the valuation of the security; (v) whether the same or similar securities are held by other funds managed by the Adviser or other funds and the method used to price the security in those funds; (vi) the extent to which the fair value to be determined for the security will result from the use of data or formula produced by third parties independent of the Adviser; (vii) the liquidity or illiquidity of the market for the security; and (viii) the value of a foreign security traded on other foreign markets. At December 31, 2016, 0.02%, 0.00%, and 0.00% of the net assets of The Internet Portfolio, The Paradigm Portfolio and The Market Opportunities Portfolio, respectively, were fair valued securities. The other Master Portfolios did not hold any fair valued securities at December 31, 2016.
157
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
Repurchase Agreements
Each Master Portfolio may enter into repurchase agreements with banks that are members of the Federal Reserve System or securities dealers who are members of a national securities exchange or are primary dealers in U.S. Government Securities. In connection with transactions in repurchase agreements, it is the Trust's policy that the Master Portfolio receive, as collateral, securities whose market value, including accrued interest, at all times will be at least equal to 102% of the amount invested by the Master Portfolio in each repurchase agreement. If the seller defaults, and the value of the collateral declines, realization of the collateral by the Master Portfolio may be delayed or limited.
Written Options
The Master Portfolios may write (sell) call or put options for trading or hedging purposes. When a Master Portfolio writes an option, an amount equal to the premium received by the Master Portfolio is included in the Statement of Assets and Liabilities as an asset and an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current value of the option written. By writing the option, the Master Portfolio may become obligated during the term of the option to deliver or purchase the securities underlying the option at the exercise price if the option is exercised. When an option expires on its stipulated expiration date or the Master Portfolio enters into a closing purchase transaction, the Master Portfolio realizes a gain or loss if the cost of the closing transaction differs from the premium received when the option was sold, without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is eliminated. When an option is exercised, the premium originally received decreases the cost basis of the underlying security (or increases the proceeds on the security sold short) and the Master Portfolio realizes a gain or loss from the sale of the security (or closing of the short sale). As collateral for uncovered written options, the Master Portfolio is required under the 1940 Act to maintain assets consisting of cash, cash equivalents or unencumbered, liquid securities. This collateral is required to be adjusted daily to reflect the exercise price of the purchase obligation for put options or the market value of the instrument underlying the contract for call options.
Foreign Currency Translations
The books and records of the Master Portfolios are maintained in U.S. dollars. For the Master Portfolios, foreign currency transactions are translated into U.S. dollars on the following basis: (i) market values of investment securities and
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| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
other assets and liabilities are translated at the exchange rate of such currencies against the U.S. dollar, as provided by an approved pricing service, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. The Master Portfolios do not isolate and treat as ordinary income that portion of the results of operations arising as a result of changes in the exchange rate from the fluctuations arising from changes in the market prices of securities held during the year. Such fluctuations are included with the net realized and unrealized gain or loss from investments. However, for federal income tax purposes, the Master Portfolios do isolate and treat as ordinary income the effect of changes in foreign exchange rates arising from actual foreign currency transactions and the effect of changes in foreign exchange rates arising between trade date and settlement date.
Restricted and Illiquid Securities
The Master Portfolios may invest in restricted securities. These securities are valued by the Master Portfolios after giving due consideration to pertinent factors including recent private sales, market conditions and the issuer's financial performance. The Master Portfolios have no right to require registration of unregistered securities. At December 31, 2016, the following Master Portfolios held securities restricted to institutional investors (144A Securities):
| | | | | | | Percentage of |
| | | Market Value | | Net Assets |
| The Multi-Disciplinary Income Portfolio | | $ | 24,007,197 | | | 24.06 | % |
An illiquid asset is any asset which may not be sold or disposed of in the ordinary course of business within seven days at approximately the value at which the Master Portfolio has valued the investment. At December 31, 2016, the following Master Portfolios held illiquid securities:
| | | | | | | Percentage of |
| | | Market Value | | Net Assets |
| The Internet Portfolio | | $ | 26,368 | | | 0.02 | % |
| The Paradigm Portfolio | | | — | * | | 0.00 | % |
| The Market Opportunities Portfolio | | | — | * | | 0.00 | % |
| The Multi-Disciplinary Income Portfolio | | | 189,000 | | | 0.19 | % |
| | |
| * | Amount is less than $0.50. |
159
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
When-Issued Securities
The Master Portfolios may purchase securities on a when-issued or delayed delivery basis. Although the purchase amounts of these securities are established at the time the purchaser enters into the agreement, these securities may be delivered and paid for at a future date. The Master Portfolios record purchases of when-issued securities and reflect the values of such securities in determining net asset value in the same manner as other portfolio securities. The Master Portfolios maintain at all times cash or other liquid assets in an amount at least equal to the amount of outstanding commitments for when-issued securities.
Securities Lending
Each Master Portfolio may lend its portfolio securities to broker-dealers by entering directly into lending arrangements with such broker dealers or indirectly through repurchase agreements with respect to no more than 331/3% of the total assets of each Master Portfolio (including any collateral posted) or 50% of the total assets of each Master Portfolio (excluding any collateral posted). Securities lending and repurchase transactions will be fully collateralized at all times with cash and/or short-term debt obligations. The Master Portfolios receive interest on the collateral received as well as a fee for the securities loaned.
Significant Investments
The Portfolios may invest a greater percentage of their assets in one or more individual securities at any time. The greater percentage of assets in individual securities expose the Portfolios to the risk of unanticipated industry conditions, the risks particular to a single company or security, and the risk of potentially lower liquidity. For the fiscal year ended December 31, 2016, The Paradigm Portfolio, The Small Cap Opportunities Portfolio and The Market Opportunities Portfolio invested approximately 21%, 26% and 20% of their respective net assets in individual securities.
Short-Term Investments
The Portfolios may invest in money market funds and short-term high quality debt securities such as commercial paper, repurchase agreements and certificates of deposit. Money market funds typically invest in short-term
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| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
instruments and attempt to maintain a stable net asset value. While the risk is low, these funds may lose value.
Expense Allocation
Common expenses incurred by the Master Portfolios are allocated among the Master Portfolios (i) based upon relative average net assets, (ii) as incurred on a specific identification basis, or (iii) equally among the Master Portfolios, depending on the nature of the expenditure. All expenses incurred by the Master Portfolios are allocated to the feeder funds daily based on their proportionate interests in the respective Master Portfolios.
Federal Income Taxes
Each Master Portfolio will be treated as a partnership for federal income tax purposes. As such, each investor in a Master Portfolio will be subject to taxation on its share of the Master Portfolio's ordinary income and capital gains. It is intended that each Master Portfolio's assets will be managed so an investor in the Master Portfolio can satisfy the requirements of subchapter M of the Internal Revenue Code.
There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken in future tax returns. As of December 31, 2016, open tax years include the tax years ended December 31, 2013, through 2016. The Master Portfolios are also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ from those estimates.
Other
Realized gains and losses on the sale of investments are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date. Interest income is accounted for on the accrual basis and includes amortization of premiums and accretion of discounts on the effective interest method. Other
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| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
noncash dividends are recognized as investment income at the fair value of the property received. Withholding taxes on foreign dividends have been provided for in accordance with the Trust's understanding of the applicable country's tax rules and rates.
3. Investment Adviser
The Trust has entered into Investment Advisory Agreements (the "Agreements") with Kinetics Asset Management LLC (the "Adviser"), with whom certain officers and trustees of the Trust are affiliated, to furnish investment advisory services to the Master Portfolios. The Adviser is a wholly-owned subsidiary of Horizon Kinetics LLC. Under the terms of the Agreements, the Master Portfolios, except the Alternative Income Portfolio, compensate the Adviser for its management services at the annual rate of 1.25% of each Master Portfolio's average daily net assets. The Alternative Income Portfolio compensates the Adviser for its management services at the annual rate of 0.90% of the Master Portfolio's average daily net assets.
For the year ended December 31, 2016, Master Portfolios incurred the following expenses pursuant to the Agreements:
| | Investment Advisory Fees |
| The Internet Portfolio | | $ | 1,450,156 | |
| The Global Portfolio | | | 87,667 | |
| The Paradigm Portfolio | | | 9,538,932 | |
| The Medical Portfolio | | | 303,169 | |
| The Small Cap Opportunities Portfolio | | | 2,503,829 | |
| The Market Opportunities Portfolio | | | 501,452 | |
| The Alternative Income Portfolio | | | 240,843 | |
| The Multi-Disciplinary Income Portfolio | | | 1,115,274 | |
For the year ended December 31, 2016, the Trust was allocated $26,000 for the services of the Chief Compliance Officer employed by the Adviser.
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| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
4. Securities Transactions
Purchases and sales of investment securities, other than short-term investments and short-term options, for the year ended December 31, 2016, were as follows:
| | | Purchases | | Sales | |
| | | U.S. | | | | | U.S. | | | | |
| | | Government | | Other | | Government | | Other | |
| The Internet Portfolio | | $ | — | | $ | 1,587,546 | | $ | — | | $ | 26,325,600 | |
| The Global Portfolio | | | — | | | 506,414 | | | — | | | 2,077,105 | |
| The Paradigm Portfolio | | | — | | | 14,862,128 | | | — | | | 204,732,179 | |
| The Medical Portfolio | | | — | | | — | | | — | | | 3,361,816 | |
| The Small Cap Opportunities Portfolio | | | — | | | 7,754,155 | | | — | | | 49,697,503 | |
| The Market Opportunities Portfolio | | | — | | | 1,482,086 | | | — | | | 6,220,546 | |
| The Alternative Income Portfolio | | | — | | | 148,944 | | | 1,550,000 | | | 11,298,818 | |
| The Multi-Disciplinary Income Portfolio | | | — | | | 7,931,169 | | | — | | | 9,851,072 | |
As of December 31, 2016, the cost of investments and unrealized appreciation (depreciation) on investment securities for federal income tax purposes was as follows:
| | | Internet | | Global | | Paradigm | | Medical | |
| Tax Cost of Investments | | $ | 76,134,089 | | $ | 6,496,774 | | $ | 574,072,640 | | $ | 16,997,502 | |
| Unrealized Appreciation | | | 38,337,797 | | | 1,552,631 | | | 329,581,363 | | | 8,060,850 | |
| Unrealized Depreciation | | | (360,769 | ) | | (504,883 | ) | | (63,231,143 | ) | | (1,955,486 | ) |
| Net Unrealized Appreciation | | $ | 37,977,028 | | $ | 1,047,748 | | $ | 266,350,220 | | $ | 6,105,364 | |
| | | Small Cap
Opportunities | | Market
Opportunities | | Alternative
Income | | Multi-
Disciplinary
Income | |
| Tax Cost of Investments | | $ | 208,890,387 | | $ | 34,379,968 | | $ | 28,252,041 | | $ | 103,056,207 | |
| Unrealized Appreciation | | | 62,473,919 | | | 15,396,641 | | | 238,277 | | | 2,391,599 | |
| Unrealized Depreciation | | | (61,176,626 | ) | | (6,465,611 | ) | | (273,061 | ) | | (3,407,393 | ) |
| Net Unrealized Appreciation (Depreciation) | | $ | 1,297,293 | | $ | 8,931,030 | | $ | (34,784 | ) | $ | (1,015,794 | ) |
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Notes to Financial Statements — (Continued) |
| December 31, 2016 |
For the year ended December 31, 2016, the Master Portfolios wrote the following options:
| | | | Number | | Premium | |
| | | | of Contracts | | Amount | |
The Alternative Income Portfolio | | | | | | | |
| Outstanding at January 1, 2016 | | | 1,490 | | $ | 531,242 | |
| Options Written | | | 1,179 | | | 1,598,298 | |
| Options Exercised | | | (11 | ) | | (7,309 | ) |
| Options Expired | | | (418 | ) | | (129,224 | ) |
| Options Closed | | | (1,449 | ) | | (1,701,919 | ) |
| Outstanding at December 31, 2016 | | | 791 | | $ | 291,088 | |
| | | | | | | | |
The Multi-Disciplinary Income Portfolio | | | | | | | |
| Outstanding at January 1, 2016 | | | — | | $ | — | |
| Options Written | | | 20 | | | 4,586 | |
| Options Exercised | | | — | | | — | |
| Options Expired | | | — | | | — | |
| Options Closed | | | — | | | — | |
| Outstanding at December 31, 2016 | | | 20 | | $ | 4,586 | |
5. Portfolio Securities Loaned
As of December 31, 2016, the Master Portfolios had loaned securities that were collateralized by cash. The cash collateral is invested by the custodian in a money market pooled account approved by the Adviser. Although risk is mitigated by the collateral, a Master Portfolio could experience a delay in recovering its securities and possible loss of income or value if the borrower fails to return them. The Master Portfolio receives interest on the collateral received as well as a fee for the securities loaned. The Master Portfolios will continue to receive dividends and interest on all securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan will be accounted for by the Master Portfolios. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions. As the securities loans are subject to termination by the Funds or the borrower at any time, the remaining maturities of the outstanding securities lending transactions are considered to be overnight and continuous. The value
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Notes to Financial Statements — (Continued) |
| December 31, 2016 |
of the securities on loan and the value of the related collateral at December 31, 2016, were as follows:
| | | | Securities | | | Collateral | |
| The Internet Portfolio | | $ | 713,993 | | $ | 724,893 | |
| The Global Portfolio | | | 20,959 | | | 22,557 | |
| The Paradigm Portfolio | | | 6,059,226 | | | 6,177,797 | |
| The Medical Portfolio | | | 1,231,382 | | | 1,269,382 | |
| The Small Cap Opportunities Portfolio | | | 4,760,931 | | | 4,976,122 | |
| The Market Opportunities Portfolio | | | 4,428 | | | 4,966 | |
| The Alternative Income Portfolio | | | — | | | — | |
| The Multi-Disciplinary Income Portfolio | | | 3,402,893 | | | 3,475,888 | |
6. Selected Financial Highlights
Financial highlights for the Master Portfolios were as follows:
| | | | The Internet Portfolio |
| | | | For the Year Ended
December 31, 2016 | | For the Year Ended
December 31, 2015 | | For the Year Ended
December 31, 2014 | | For the Year Ended
December 31, 2013 | | For the Year Ended
December 31, 2012 |
| Total Return* | | | 3.09 | % | | (4.95 | )% | | 0.28 | % | | 44.75 | % | | 23.76 | % |
| Ratio of expenses to | | | | | | | | | | | | | | | | |
| average net assets: | | | 1.37 | % | | 1.35 | % | | 1.34 | % | | 1.37 | % | | 1.37 | % |
| Ratio of net investment | | | | | | | | | | | | | | | | |
| income (loss) to | | | | | | | | | | | | | | | | |
| average net assets: | | | (1.18 | )% | | (1.05 | )% | | (0.90 | )% | | (0.84 | )% | | 0.16 | % |
| Portfolio turnover rate | | | 2 | % | | 1 | % | | 1 | % | | 8 | % | | 9 | % |
| | | | The Global Portfolio |
| | | | For the Year Ended
December 31,
2016 | | For the Year Ended
December 31, 2015 | | For the Year Ended
December 31, 2014 | | For the Year Ended
December 31, 2013 | | For the Year Ended
December 31, 2012 |
| Total Return* | | | 14.13 | % | | (14.13 | )% | | (12.10 | )% | | 28.25 | % | | 22.78 | % |
| Ratio of expenses to | | | | | | | | | | | | | | | | |
| average net assets: | | | 1.66 | % | | 1.69 | % | | 1.60 | % | | 1.73 | % | | 1.77 | % |
| Ratio of net investment | | | | | | | | | | | | | | | | |
| income (loss) to | | | | | | | | | | | | | | | | |
| average net assets: | | | (0.44 | )% | | (0.59 | )% | | (0.52 | )% | | (0.12 | )% | | 0.40 | % |
| Portfolio turnover rate | | | 11 | % | | 16 | % | | 14 | % | | 15 | % | | 23 | % |
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Notes to Financial Statements — (Continued) |
| December 31, 2016 |
| | | | The Paradigm Portfolio |
| | | | For the Year Ended December 31, 2016 | | For the Year Ended December 31, 2015 | | For the Year Ended December 31, 2014 | | For the Year Ended December 31, 2013 | | For the Year Ended December 31, 2012 | |
| Total Return* | | | 20.72 | % | | (8.04 | )% | | (0.48 | )% | | 44.36 | % | | 22.06 | % | |
| Ratio of expenses to | | | | | | | | | | | | | | | | | |
| average net assets: | | | 1.37 | % | | 1.35 | % | | 1.33 | % | | 1.35 | % | | 1.36 | % | |
| Ratio of net investment | | | | | | | | | | | | | | | | | |
| income (loss) to | | | | | | | | | | | | | | | | | |
| average net assets: | | | (0.84 | )% | | (0.63 | )% | | (0.72 | )% | | (0.23 | )% | | 0.50 | % | |
| Portfolio turnover rate | | | 2 | % | | 2 | % | | 7 | % | | 4 | % | | 6 | % | |
| | | | |
| | | | |
| | | | The Medical Portfolio |
| | | | For the Year Ended December 31, 2016 | | For the Year Ended December 31, 2015 | | For the Year Ended December 31, 2014 | | For the Year Ended December 31, 2013 | | For the Year Ended December 31, 2012 | |
| Total Return* | | | (8.04 | )% | | 6.58 | % | | 16.42 | % | | 49.23 | % | | 8.81 | % | |
| Ratio of expenses to | | | | | | | | | | | | | | | | | |
| average net assets: | | | 1.42 | % | | 1.40 | % | | 1.41 | % | | 1.41 | % | | 1.44 | % | |
| Ratio of net investment | | | | | | | | | | | | | | | | | |
| income (loss) to | | | | | | | | | | | | | | | | | |
| average net assets: | | | 0.66 | % | | 0.24 | % | | 0.44 | % | | (0.02 | )% | | 1.62 | % | |
| Portfolio turnover rate | | | 0 | % | | 12 | % | | 3 | % | | 12 | % | | 0 | % | |
| | | | The Small Cap Opportunities Portfolio |
| | | | For the Year Ended December 31, 2016 | | For the Year Ended December 31, 2015 | | For the Year Ended December 31, 2014 | | For the Year Ended December 31, 2013 | | For the Year Ended December 31, 2012 | |
| Total Return* | | | 24.67 | % | | (11.97 | )% | | (6.98 | )% | | 59.69 | % | | 26.94 | % | |
| Ratio of expenses to | | | | | | | | | | | | | | | | | |
| average net assets: | | | 1.36 | % | | 1.35 | % | | 1.34 | % | | 1.35 | % | | 1.44 | % | |
| Ratio of net investment | | | | | | | | | | | | | | | | | |
| income (loss) to | | | | | | | | | | | | | | | | | |
| average net assets: | | | (0.75 | )% | | (0.65 | )% | | (0.59 | )% | | 0.01 | % | | 0.27 | % | |
| Portfolio turnover rate | | | 4 | % | | 2 | % | | 19 | % | | 6 | % | | 22 | % | |
| | | | The Market Opportunities Portfolio | |
| | | | For the Year Ended December 31, 2016 | | For the Year Ended December 31, 2015 | | For the Year Ended December 31, 2014 | | For the Year Ended December 31, 2013 | | For the Year Ended December 31, 2012 | |
| Total Return* | | | 20.68 | % | | (8.87 | )% | | (5.30 | )% | | 46.98 | % | | 17.73 | % | |
| Ratio of expenses to | | | | | | | | | | | | | | | | | |
| average net assets: | | | 1.41 | % | | 1.40 | % | | 1.39 | % | | 1.40 | % | | 1.43 | % | |
| Ratio of net investment | | | | | | | | | | | | | | | | | |
| income (loss) to | | | | | | | | | | | | | | | | | |
| average net assets: | | | (0.73 | )% | | (0.66 | )% | | (0.30 | )% | | 0.27 | % | | 0.44 | % | |
| Portfolio turnover rate | | | 5 | % | | 2 | % | | 18 | % | | 21 | % | | 26 | % | |
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Notes to Financial Statements — (Continued) |
| December 31, 2016 |
| | | The Alternative Income Portfolio | |
| | | | For the Year Ended | | For the Year Ended | | For the Year Ended | | For the Year Ended | | For the Year Ended |
| | | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, |
| | | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 |
| Total Return* | | | 3.85 | % | | 2.73 | % | | 1.23 | % | | 4.92 | % | | 10.05 | % |
| Ratio of expenses to average net assets: | | | 1.10 | % | | 1.16 | % | | 1.22 | % | | 1.25 | % | | 1.49 | % |
| Ratio of net investment income (loss) to average net assets: | | | (0.16 | )% | | (0.20 | )% | | (0.40 | )% | | (0.54 | )% | | 1.99 | % |
| Portfolio turnover rate | | | 1 | % | | 6 | % | | 17 | % | | 19 | % | | 56 | % |
| | | The Multi-Disciplinary Income Portfolio | |
| | | | For the Year Ended | | For the Year Ended | | For the Year Ended | | For the Year Ended | | For the Year Ended |
| | | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, |
| | | | 2016 | | 2015 | | 2014 | | 2013 | | 2012 |
| Total Return* | | | 10.52 | % | | (2.05 | )% | | 2.58 | % | | 4.39 | % | | 15.42 | % |
| Ratio of expenses to average net assets: | | | 1.38 | % | | 1.37 | % | | 1.37 | % | | 1.39 | % | | 1.45 | % |
| Ratio of net investment income to average net assets: | | | 4.13 | % | | 3.50 | % | | 3.06 | % | | 1.87 | % | | 3.23 | % |
| Portfolio turnover rate | | | 9 | % | | 10 | % | | 35 | % | | 54 | % | | 41 | % |
7. Summary of Fair Value Exposure
Various inputs are used in determining the value of a Master Portfolio's investments. These inputs are summarized in the three broad levels listed below:
| | Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that a Master Portfolio has the ability to access. |
| | |
| | Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
| | |
| | Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing a Master Portfolio's own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
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Notes to Financial Statements — (Continued) |
| December 31, 2016 |
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The Internet Portfolio
The following is a summary of the inputs used to value The Internet Portfolio's net assets as of December 31, 2016:
| Assets^ | | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| Common Stocks | | $ | 61,232,382 | | $ | 2,523,826 | (1) | $ | 26,368 | (2) | $ | 63,782,576 | |
| Escrow Notes | | | — | | | — | | | — | * | | — | * |
| Short-Term Investments | | | 760 | | | 49,602,888 | | | — | | | 49,603,648 | |
| Investments Purchased with the Cash | | | | | | | | | | | | | |
| Proceeds from Securities Lending | | | 724,893 | | | — | | | — | | | 724,893 | |
| Total Investments in Securities | | $ | 61,958,035 | | $ | 52,126,714 | | $ | 26,368 | | $ | 114,111,117 | |
| (1) | The Common Stocks Level 2 balance consists of the market value of the associated Level 2 investments in the following industries: |
| Administrative and Support Services | | $ | 2,036 | |
| Cable Distributor | | | 2,517,320 | |
| Telecommunications | | | 4,470 | |
| | | $ | 2,523,826 | |
| (2) | The Common Stocks Level 3 balance consists of the market value of the associated Level 3 investment in the following industry: |
| Securities, Commodity Contracts, and | | | | |
| Other Financial Investments and Related Activities | | $ | 26,368 | |
| | | | | |
| Transfers out of Level 1 into Level 2 | | $ | 2,517,320 | |
For the year ended December 31, 2016, there were no transfers into or out of Level 3. Transfers were made out of Level 1 into Level 2 due to a decrease in market activity. Transfers between levels are recognized at the end of the reporting period.
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Notes to Financial Statements — (Continued) |
| December 31, 2016 |
Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
| Description | Investments in Securities | |
| Balance as of December 31, 2015 | | $ | — | * |
| Accrued discounts/premiums | | | — | |
| Realized gain (loss) | | | — | |
| Change in unrealized appreciation (depreciation) | | | 5,468 | |
| Net purchases and/or acquisitions | | | 20,900 | |
| Net sales and/or write-offs | | | — | |
| Transfer in and/or out of Level 3 | | | — | |
| Balance as of December 31, 2016 | | $ | 26,368 | |
| | | | Fair Value at | | | Valuation | | Unobservable | | | | |
| Description | | | 12/31/2016 | | | Techniques | | Input | | | Range | |
| Common Stocks | | | $91.24 | | | Accreting or | | | No active | | $ | 72.32-$91.24 | |
| | | | | | | amortizing the | | | market | | | | |
| | | | | | | premium or discount | | | | | | | |
| | | | | | | until maturity of the | | | | | | | |
| | | | | | | restriction period. | | | | | | | |
| Escrow Notes | | | — | * | | Conservative Value | | | No active | | $ | 0.00-$0.00 | |
| | | | | | | Assigned Pending | | | market | | | | |
| | | | | | | Bankruptcy Litigation | | | | | | | |
| | | | | | | Proceedings/Market | | | | | | | |
| | | | | | | Comparables | | | | | | | |
There is no active market for the Level 3 securities, so a conservative value is being assigned until such time as a market exists.
| ^ | See Portfolio of Investments for breakout of investments by industry classification. |
| * | Amount is less than $0.50. |
The Global Portfolio
The following is a summary of the inputs used to value The Global Portfolio's net assets as of December 31, 2016:
| Assets^ | | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| Common Stocks | | $ | 3,771,799 | | $ | 499,183 | (1) | $ | — | | $ | 4,270,982 | |
| Preferred Stocks | | | — | | | 10,043 | | | — | | | 10,043 | |
| Corporate Bonds | | | — | | | 38,118 | | | — | | | 38,118 | |
| Purchased Put Options | | | — | | | 12,950 | | | — | | | 12,950 | |
| Warrants | | | 4,935 | | | 3,172 | | | — | | | 8,107 | |
| Short-Term Investments | | | 414 | | | 3,181,351 | | | — | | | 3,181,765 | |
| Investments Purchased with the Cash Proceeds from Securities Lending | | | 22,557 | | | — | | | — | | | 22,557 | |
| Total Investments in Securities | | $ | 3,799,705 | | $ | 3,744,817 | | $ | — | | $ | 7,544,522 | |
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Notes to Financial Statements — (Continued) |
| December 31, 2016 |
| (1) | The Common Stocks Level 2 balance consists of the market value of the associated Level 2 investments in the following industries: |
| Asset Management | | $ | 314,128 | |
| Cable Distributor | | | 8,333 | |
| Real Estate | | | 176,722 | |
| | | $ | 499,183 | |
For the year ended December 31, 2016, there were no transfers into or out of Level 1 or Level 2, or investments in Level 3 securities.
| ^ | See Portfolio of Investments for breakout of investments by industry classification. |
The Paradigm Portfolio
The following is a summary of the inputs used to value The Paradigm Portfolio's net assets as of December 31, 2016:
| Assets^ | | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| Common Stocks | | $ | 642,485,718 | | $ | 25,843,314 | (1) | $ | — | | $ | 668,329,032 | |
| Preferred Stocks | | | — | | | 4,231 | | | — | | | 4,231 | |
| Escrow Notes | | | — | | | — | | | — | * | | — | * |
| Purchased Put Options | | | — | | | 74,790 | | | — | | | 74,790 | |
| Warrants | | | 335,940 | | | 1,341 | | | — | | | 337,281 | |
| Short-Term Investments | | | 213,464 | | | 165,286,265 | | | — | | | 165,499,729 | |
| Investments Purchased with the Cash | | | | | | | | | | | | | |
| Proceeds from Securities Lending | | | 6,177,797 | | | — | | | — | | | 6,177,797 | |
| Total Investments in Securities | | $ | 649,212,919 | | $ | 191,209,941 | | $ | — | * | $ | 840,422,860 | |
| (1) | The Common Stocks Level 2 balance consists of the market value of the associated Level 2 investments in the following industries: |
| Asset Management | | $ | 18,098,369 | |
| Oil and Gas Extraction | | | 6,210,332 | |
| Real Estate | | | 1,534,613 | |
| | | $ | 25,843,314 | |
For the year ended December 31, 2016, there were no transfers into or out of Level 1, Level 2 or Level 3.
Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
| Description | Investments in Securities | |
| Balance as of December 31, 2015 | | $ | — | * |
| Accrued discounts/premiums | | | — | |
| Realized gain (loss) | | | — | |
| Change in unrealized appreciation (depreciation) | | | — | |
| Net purchases and/or acquisitions | | | — | |
| Net sales and/or write-offs | | | — | |
| Transfer in and/or out of Level 3 | | | — | |
| Balance as of December 31, 2016 | | $ | — | * |
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Notes to Financial Statements — (Continued) |
| December 31, 2016 |
| | | | Fair Value at | | Valuation | Unobservable | | | | |
| Description | | | 12/31/16 | | Techniques | Input | | | Range | |
| Escrow Notes | | $ | — | * | | Conservative Value | | No active | | | $0.00-$0.00 | |
| | | | | | | Assigned Pending | | market | | | | |
| | | | | | | Bankruptcy Litigation | | | | | | |
| | | | | | | Proceedings/Market | | | | | | |
| | | | | | | Comparables | | | | | | |
There is no active market for the Level 3 securities, so a conservative value is being assigned until such time as a market exists.
| | | |
| ^ | See Portfolio of Investments for breakout of investments by industry classification. |
| * | Amount is less than $0.50. |
The Medical Portfolio
The following is a summary of the inputs used to value The Medical Portfolio's net assets as of December 31, 2016:
| Assets^ | | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| Common Stocks | | $ | 21,320,140 | | $ | — | | $ | — | | $ | 21,320,140 | |
| Rights | | | 5,905 | | | 2,169 | | | — | | | 8,074 | |
| Short-Term Investments | | | 122,523 | | | 382,747 | | | — | | | 505,270 | |
| Investments Purchased with the Cash Proceeds from Securities Lending | | | 1,269,382 | | | — | | | — | | | 1,269,382 | |
| Total Investments in Securities | | $ | 22,717,950 | | $ | 384,916 | | $ | — | | $ | 23,102,866 | |
| Transfers out of Level 1 into Level 2 | | $ | 2,169 | |
Transfers were made out of Level 1 into Level 2 due to a decrease in market activity. Transfers between levels are recognized at the end of the reporting period.
For the year ended December 31, 2016, there were no investments in Level 3 securities.
| ^ | See Portfolio of Investments for breakout of investments by industry classification. |
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Notes to Financial Statements — (Continued) |
| December 31, 2016 |
The Small Cap Opportunities Portfolio
The following is a summary of the inputs used to value The Small Cap Opportunities Portfolio's net assets as of December 31, 2016:
| Assets^ | | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| Common Stocks | | $ | 162,703,576 | | $ | 23,453,739 | (1) | $ | — | | $ | 186,157,315 | |
| Preferred Stocks | | | — | | | 1,012,693 | | | — | | | 1,012,693 | |
| Warrants | | | 34,048 | | | 320,076 | | | — | | | 354,124 | |
| Short-Term Investments | | | 745 | | | 17,686,681 | | | — | | | 17,687,426 | |
| Investments Purchased with the Cash Proceeds from Securities Lending | | | 4,976,122 | | | — | | | — | | | 4,976,122 | |
| Total Investments in Securities | | $ | 167,714,491 | | $ | 42,473,189 | | $ | — | | $ | 210,187,680 | |
| (1) | The Common Stocks Level 2 balance consists of the market value of the associated Level 2 investments in the following industries: |
| Asset Management | | $ | 12,127,852 | |
| Real Estate | | | 11,227,647 | |
| Telecommunications | | | 98,240 | |
| | | $ | 23,453,739 | |
| | | | | |
| Transfers out of Level 2 into Level 1 | | $ | 25,745 | |
Transfers were made out of Level 2 into Level 1 due to an increase in market activity. Transfers between levels are recognized at the end of the reporting period.
For the year ended December 31, 2016, there were no investments in Level 3 securities.
| ^ | See Portfolio of Investments for breakout of investments by industry classification. |
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| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
The Market Opportunities Portfolio
The following is a summary of the inputs used to value The Market Opportunities Portfolio's net assets as of December 31, 2016:
| Assets^ | | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| Common Stocks | | $ | 27,552,452 | | $ | 4,808,341 | (1) | $ | — | | $ | 32,360,793 | |
| Preferred Stocks | | | — | | | 230,724 | | | — | �� | | 230,724 | |
| Corporate Bonds | | | — | | | 5,307 | | | — | | | 5,307 | |
| Purchased Put Options | | | — | | | 24,930 | | | — | | | 24,930 | |
| Rights | | | — | | | — | | | — | * | | — | * |
| Warrants | | | 685 | | | 72,924 | | | — | | | 73,609 | |
| Short-Term Investments | | | 827 | | | 10,609,842 | | | — | | | 10,610,669 | |
| Investments Purchased with the Cash Proceeds from Securities Lending | | | 4,966 | | | — | | | — | | | 4,966 | |
| Total Investments in Securities | | $ | 27,558,930 | | $ | 15,752,068 | | $ | — | * | $ | 43,310,998 | |
| (1) | The Common Stocks Level 2 balance consists of the market value of the associated Level 2 investments in the following industries: |
| Asset Management | | $ | 3,428,801 | |
| Real Estate | | | 1,379,540 | |
| | | $ | 4,808,341 | |
For the year ended December 31, 2016, there were no transfers into or out of Level 1, Level 2 or Level 3.
Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
| Description | Investments in Securities | |
| | | | | |
| Balance as of December 31, 2015 | | $ | — | * |
| Accrued discounts/premiums | | | — | |
| Realized gain (loss) | | | — | |
| Change in unrealized appreciation (depreciation) | | | — | |
| Net purchases and/or acquisitions | | | — | |
| Net sales and/or write-offs | | | — | |
| Transfer in and/or out of Level 3 | | | — | |
| Balance as of December 31, 2016 | | $ | — | * |
| | Fair Value at | | Valuation | | Unobservable | | | | |
| Description | 12/31/16 | | Techniques | | Input | | | Range | |
| Rights | $—* | | Market | | | No active | | | $0.00-$0.00 | |
| | | | Comparables | | | market | | | | |
There is no active market for the Level 3 securities, so a conservative value is being assigned until such time as a market exists.
| ^ | See Portfolio of Investments for breakout of investments by industry classification. |
| * | Amount is less than $0.50. |
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| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
The Alternative Income Portfolio
The following is a summary of the inputs used to value The Alternative Income Portfolio's net assets as of December 31, 2016:
| Assets^ | | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| Corporate Bonds | | $ | — | | $ | 5,252,020 | | $ | — | | $ | 5,252,020 | |
| U.S. Treasury Obligations | | | — | | | 1,551,224 | | | — | | | 1,551,224 | |
| Exchange Traded Funds | | | 5,764,680 | | | — | | | — | | | 5,764,680 | |
| Short-Term Investments | | | 1,074,529 | | | 14,574,804 | | | — | | | 15,649,333 | |
| Total Investments in Securities | | $ | 6,839,209 | | $ | 21,378,048 | | $ | — | | $ | 28,217,257 | |
Liabilities | | | | | | | | | | | | | |
| Put Options Written | | $ | — | | $ | 74,532 | | $ | — | | $ | 74,532 | |
For the year ended December 31, 2016, there were no transfers into or out of Level 1 or Level 2, or investments in Level 3 securities.
| ^ | See Portfolio of Investments for breakout of investments by industry classification. |
The Multi-Disciplinary Income Portfolio
The following is a summary of the inputs used to value The Multi-Disciplinary Income Portfolio's net assets as of December 31, 2016:
| Assets^ | | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| Convertible Bonds | | $ | — | | $ | 6,456,744 | | $ | — | | $ | 6,456,744 | |
| Corporate Bonds | | | — | | | 78,879,348 | | | — | | | 78,879,348 | |
| Municipal Bonds | | | — | | | 189,000 | | | — | | | 189,000 | |
| Escrow Notes | | | — | | | 237,500 | | | — | | | 237,500 | |
| Exchange Traded Notes | | | 4,654 | | | — | | | — | | | 4,654 | |
| Mutual Funds | | | 4,831,107 | | | — | | | — | | | 4,831,107 | |
| Short-Term Investments | | | 131,653 | | | 7,834,519 | | | — | | | 7,966,172 | |
| Investments Purchased with the Cash Proceeds from Securities Lending | | | 3,475,888 | | | — | | | — | | | 3,475,888 | |
| Total Investments in Securities | | $ | 8,443,302 | | $ | 93,597,111 | | $ | — | | $ | 102,040,413 | |
Liabilities | | | | | | | | | | | | | |
| Put Options Written | | $ | — | | $ | 44 | | $ | — | | $ | 44 | |
For the year ended December 31, 2016, there were no transfers into or out of Level 1 or Level 2, or investments in Level 3 securities.
| ^ | See Portfolio of Investments for breakout of investments by industry classification. |
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| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
8. Disclosures about Derivative Instruments and Hedging Activities
The Master Portfolios have adopted authoritative standards regarding disclosure of derivatives and hedging activity intended to improve financial reporting of derivative instruments by enabling investors to understand how and why a Master Portfolio uses derivatives, how derivatives are accounted for by the Master Portfolios, and how derivative instruments affect a Master Portfolio's results of operations and financial position. The Master Portfolios utilized options to implement or to gain further exposure to their respective investment strategies.
The following is a summary of the fair value and location of derivative instruments on the Statement of Assets and Liabilities as of December 31, 2016:
| | | | Statement of Assets & Liabilities |
| | Derivative | | Asset | | | Asset | | Liability | | | Liability |
| | Equity Contracts | | Description | | | Fair Value | | Description | | | Fair Value |
| The Global Portfolio | Purchased Put Options | | Investments, at value | | $ | 12,950 | | | | $ | — |
| The Paradigm Portfolio | Purchased Put Options | | Investments, at value | | | 74,790 | | | | | — |
| The Market Opportunities Portfolio | Purchased Put Options | | Investments, at value | | | 24,930 | | | | | — |
| The Alternative Income Portfolio | Put Options Written | | | | | — | | Written options, at value | | | 74,532 |
| The Multi-Disciplinary Income Portfolio | Put Options Written | | | | | — | | Written options, at value | | | 44 |
175
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
The following is a summary of the transactions in and effect of derivative instruments on the Statement of Operations for the year ended December 31, 2016:
| | | | | Statement of Operations |
| | | | | | | Change in Unrealized |
| | | Derivative Equity Contracts | | Realized Gain (Loss) | | Appreciation (Depreciation) |
| The Global Portfolio | | Purchased Put Options | | $ | — | | | $ | 4,885 | |
| The Paradigm Portfolio | | Purchased Put Options | | | — | | | | 28,621 | |
| The Market Opportunities Portfolio | | Purchased Put Options | | | — | | | | 9,541 | |
| The Alternative Income Portfolio | | Purchased Put Options | | | (41,016 | ) | | | 13,122 | |
| The Alternative Income Portfolio | | Put Options Written | | | 1,011,323 | | | | (9,263 | ) |
| The Multi-Disciplinary Income Portfolio | | Purchased Put Options | | | (10,651 | ) | | | (3,412 | ) |
| The Multi-Disciplinary Income Portfolio | | Put Options Written | | | — | | | | 4,542 | |
The following is a summary of the volume of derivative instrument activity during the year ended December 31, 2016:
| | | | | Number of | | | | |
| | | | | Contracts | | Premiums | | Average |
| | | | | Purchased | | Paid or | | Quarterly |
| | | Derivative Equity Contracts | | or Written | | Received | | Market Value |
| The Global Portfolio | | Purchased Put Options | | — | | | $ | — | | | $ | 10,455 | |
| The Paradigm Portfolio | | Purchased Put Options | | — | | | | — | | | | 60,030 | |
| The Market Opportunities Portfolio | | Purchased Put Options | | — | | | | — | | | | 20,010 | |
| The Alternative Income Portfolio | | Put Options Written | | 1,179 | | | | 1,598,298 | | | | 138,777 | |
| The Multi-Disciplinary Income Portfolio | | Purchased Put Options | | — | | | | — | | | | 540 | |
| The Multi-Disciplinary Income Portfolio | | Put Options Written | | 20 | | | | 4,586 | | | | 989 | |
| 9. Offsetting Assets and Liabilities |
The Master Portfolios are subject to various Master Netting Arrangements, which govern the terms of certain transactions with select counterparties. The Master Netting Arrangements allow a Portfolio to close out and net its total exposure to a counterparty in the event of a default with respect to all the transactions governed under a single agreement with a counterparty. The Master Netting Arrangements also specify collateral posting arrangements at pre-arranged exposure levels. Under the Master Netting Arrangements, collateral is routinely transferred if the
176
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
total net exposure to certain transactions (net of existing collateral already in place) governed under the relevant Master Netting Arrangement with a counterparty in a given account exceeds a specific threshold depending on the counterparty and the type of Master Netting Arrangement.
The following is a summary of the Assets and Liabilities subject to offsetting in the Master Portfolios as of December 31, 2016:
| | | | | | | | | | Net | | | Gross Amounts not Offset | | | | |
| | | | | | | Gross | | | Amounts | | | in the Statement of | | | | |
| | | | | | | Amounts | | | Presented | | | Assets & Liabilities | | | | |
| | | | Gross | | | Offset in the | | | in the | | | | | | | | | | |
| | | | Amounts of | | | Statement | | | Statement | | | | | | Collateral | | | | |
| | | | Recognized | | | of Assets & | | | of Assets & | | | Financial | | | Pledged | | | Net | |
| | | | Liabilities | | | Liabilities | | | Liabilities | | | Instruments | | | (Received) | | | Amount | |
| The Internet Portfolio | | | | | | | | | | | | | | | | | | | |
| Securities Lending | | $ | 724,893 | | $ | — | | $ | 724,893 | | $ | 724,893 | | $ | — | | $ | — | |
| | | $ | 724,893 | | $ | — | | $ | 724,893 | | $ | 724,893 | | $ | — | | $ | — | |
| The Global Portfolio | | | | | | | | | | | | | | | | | | | |
| Securities Lending | | $ | 22,557 | | $ | — | | $ | 22,557 | | $ | 22,557 | | $ | — | | $ | — | |
| | | $ | 22,557 | | $ | — | | $ | 22,557 | | $ | 22,557 | | $ | — | | $ | — | |
| The Paradigm Portfolio | | | | | | | | | | | | | | | | | | | |
| Securities Lending | | $ | 6,177,797 | | $ | — | | $ | 6,177,797 | | $ | 6,177,797 | | $ | — | | $ | — | |
| | | $ | 6,177,797 | | $ | — | | $ | 6,177,797 | | $ | 6,177,797 | | $ | — | | $ | — | |
| The Medical Portfolio | | | | | | | | | | | | | | | | | | | |
| Securities Lending | | $ | 1,269,382 | | $ | — | | $ | 1,269,382 | | $ | 1,269,382 | | $ | — | | $ | — | |
| | | $ | 1,269,382 | | $ | — | | $ | 1,269,382 | | $ | 1,269,382 | | $ | — | | $ | — | |
| The Small Cap | | | | | | | | | | | | | | | | | | | |
| Opportunities Portfolio | | | | | | | | | | | | | | | | | | | |
| Securities Lending | | $ | 4,976,122 | | $ | — | | $ | 4,976,122 | | $ | 4,976,122 | | $ | — | | $ | — | |
| | | $ | 4,976,122 | | $ | — | | $ | 4,976,122 | | $ | 4,976,122 | | $ | — | | $ | — | |
| The Market | | | | | | | | | | | | | | | | | | | |
| Opportunities Portfolio | | | | | | | | | | | | | | | | | | | |
| Securities Lending | | $ | 4,966 | | $ | — | | $ | 4,966 | | $ | 4,966 | | $ | — | | $ | — | |
| | | $ | 4,966 | | $ | — | | $ | 4,966 | | $ | 4,966 | | $ | — | | $ | — | |
| The Alternative | | | | | | | | | | | | | | | | | | | |
| Income Portfolio | | | | | | | | | | | | | | | | | | | |
| Written Options | | $ | 74,532 | | $ | — | | $ | 74,532 | | $ | — | | $ | 74,532 | | $ | — | |
| | | $ | 74,532 | | $ | — | | $ | 74,532 | | $ | — | | $ | 74,532 | | $ | — | |
| The Multi-Disciplinary | | | | | | | | | | | | | | | | | | | |
| Income Portfolio | | | | | | | | | | | | | | | | | | | |
| Securities Lending | | $ | 3,475,888 | | $ | — | | $ | 3,475,888 | | $ | 3,475,888 | | $ | — | | $ | — | |
| Written Options | | | 44 | | | — | | | 44 | | | — | | | 44 | | | — | |
| | | $ | 3,475,932 | | $ | — | | $ | 3,475,932 | | $ | 3,475,888 | | $ | 44 | | $ | — | |
177
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
10. Affiliated Issuers
Under section 2(a)(3) of the 1940 Act, an investment company is defined as being an affiliated person of a company if it owns five percent or more of a company's outstanding voting stock.
Investments in affiliated companies for The Paradigm Portfolio as of December 31, 2016, are shown below:
| | | Fair value at | | | | | | Net | | Change in | | Fair value at | | | |
| Name | | December 31, | | | | Sales | | Realized | | Unrealized | | December 31, | | Dividend | |
| of Issuer | | 2015 | | Purchases | | Proceeds | | Gain | | Appreciation | | 2016 | | Income | |
| Texas Pacific Land Trust | | $ | 79,609,834 | | $ | 825,990 | | $ | 2,391,726 | | $ | 2,295,530 | | $ | 99,086,921 | | $ | 179,426,549 | | $ | 189,174 | |
| | | Number of | | | | | | | | Number of | |
| | | shares held at | | | | | | | | shares held at | |
| | | December 31, | | | | | | Sales | | December 31, | |
| Name of Issuer | | | 2015 | | | Purchases | | | Proceeds | | | 2016 | |
| Texas Pacific Land Trust | | | 608,080 | | | 6,160 | | | (9,642 | ) | | 604,598 | |
11. Information about Proxy Voting (Unaudited)
Information regarding how the Feeder Funds and the Master Portfolios vote proxies relating to portfolio securities is available without charge upon request by calling toll-free at 1-800-930-3828 or by accessing the Funds' website at www.kineticsfunds.com and by accessing the SEC's website at www.sec.gov. Information regarding how the Feeder Funds and the Master Portfolios voted proxies relating to portfolio securities during the most recent twelve month period ended June 30, is available without charge, upon request, by calling toll-free at 1-800-930-3828 or by accessing the SEC's website at www.sec.gov.
12. Information about the Portfolio Holdings (Unaudited)
The Master Portfolios file their complete schedules of portfolio holdings for its first and third fiscal quarters with the SEC on Form N-Q. The Master Portfolios' Form N-Q is available without charge, upon request, by calling toll-free at 1-800-930-3828. Furthermore, you can obtain the Form N-Q on the SEC's website at www.sec.gov. Finally, the Form N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
178
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Notes to Financial Statements — (Continued) |
| December 31, 2016 |
13. Subsequent Events
In preparing these financial statements, management has evaluated Portfolio related events and transactions for potential recognition or disclosure through the date the financial statements were issued. There were no events or translations that occurred during the year that materially impacted the amounts or disclosures in the Master Portfolios' financial statements.
179
| KINETICS PORTFOLIOS TRUST |
| Report of Independent Registered |
| Public Accounting Firm |
Board of Trustees and Shareholders of
Kinetics Portfolios Trust
New York, NY
We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of The Internet Portfolio, The Global Portfolio, The Paradigm Portfolio, The Medical Portfolio, The Small Cap Opportunities Portfolio, The Market Opportunities Portfolio, The Alternative Income Portfolio, and The Multi-Disciplinary Income Portfolio, each a series of shares of Kinetics Portfolios Trust (the "Trust"), as of December 31, 2016, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Trusts' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform, nor was the Trust required to have, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2016, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly in all material respects, the financial position of each of the eight portfolios of the Kinetics Portfolios Trust as of December 31, 2016, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended and financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Philadelphia, Pennsylvania
February 28, 2017
180
| KINETICS PORTFOLIOS TRUST |
| Management of the Funds and the Portfolios |
| (Unaudited) |
Management of the Funds and the Portfolios
The management and affairs of the Funds and the Portfolios are supervised by the Board of Directors of the Company and the Board of Trustees of the Trust, respectively. Each Board consists of the same eight individuals, five of whom are not "interested persons" of the Company or the Trust as that term is defined in the Investment Company Act of 1940, as amended (the "1940 Act"). The Directors are fiduciaries for the Funds' shareholders and are governed by the laws of the State of Maryland in this regard. The Trustees are fiduciaries for the Portfolios' shareholders and are governed by the laws of the State of Delaware in this regard.
Each Board establishes policies for the operation of the Funds and the Portfolios and appoints the officers who conduct the daily business of the Funds and the Portfolios. Directors/Trustees of the Company and the Trust are listed below with their addresses, present positions with the Company and Trust, length of time served, principal occupations over at least the last five years, number of Funds and Portfolios overseen and any other Directorships held. The SAI includes additional information about the Funds' officers and directors and is available, without charge, upon request by calling 1-800-930-3828.
Board of Directors/Board of Trustees
Independent Directors/Trustees
| | | | Term of |
| | Position(s) | | Office and |
| | Held with | | Length of |
| Name, Address and Year of Birth | Company/ Trust | | Time Served |
| Steven T. Russell | Independent Director/ | | Indefinite/ |
| Year Born: 1963 | Independent Trustee | | 16 years |
| c/o Kinetics Asset Management LLC | | | | |
| 470 Park Avenue South | | | | |
| New York, New York 10016 | | | | |
| | | | | |
| Douglas Cohen, CPA | Independent Director/ | | Indefinite/ |
| Year Born: 1961 | Independent Trustee | | 16 years |
| c/o Kinetics Asset Management LLC | | | | |
| 470 Park Avenue South | | | | |
| New York, New York 10016 | | | | |
181
| KINETICS PORTFOLIOS TRUST |
Management of the Funds and the Portfolios—(Continued) |
| (Unaudited) |
| | | # of Portfolios | | |
| | | in Fund Complex(1) | | |
| | | Overseen by | | |
| Principal Occupation(s) | | Director/ | | Other Directorships |
| During Past Five Years | | Trustee | | Held by Director/Trustee(2) |
| Steven Russell Law Firm (April 2010 | | 16 | | N/A |
| to present); Professor of Business Law and | | | | |
| Finance, Suffolk County Community | | | | |
| College (1997 to present). | | | | |
| | | | | |
| Chief Financial Officer, Sunrise Credit | | 16 | | N/A |
| Services, Inc. (2005 to present). | | | | |
182
| KINETICS PORTFOLIOS TRUST |
Management of the Funds and the Portfolios—(Continued) |
| (Unaudited) |
Board of Directors/Board of Trustees (Continued)
Independent Directors/Trustees (Continued)
| | | | Term of |
| | | Position(s) | Office and |
| | | Held with | Length of |
| Name, Address and Year of Birth | | Company/ Trust | Time Served |
| William J. Graham | | Independent Director/ | | Indefinite/ |
| Year Born: 1962 | | Independent Trustee | | 16 years |
| c/o Kinetics Asset Management LLC | | | | |
| 470 Park Avenue South | | | | |
| New York, New York 10016 | | | | |
| | | | | |
| Joseph E. Breslin | | Independent Director/ | | Indefinite/ |
| Year Born: 1953 | | Independent Trustee | | 16 years |
| c/o Kinetics Asset Management LLC | | | | |
| 470 Park Avenue South | | | | |
| New York, New York 10016 | | | | |
| James M. Breen | | Independent Director/ | | Indefinite/ |
| Year Born: 1959 | | Independent Trustee | | 8 years |
| c/o Kinetics Asset Management LLC | | | | |
| 470 Park Avenue South | | | | |
| New York, New York 10016 | | | | |
183
| KINETICS PORTFOLIOS TRUST |
Management of the Funds and the Portfolios—(Continued) |
| (Unaudited) |
| | | # of Portfolios | | |
| | | in Fund Complex(1) | | |
| | | Overseen by | | |
| Principal Occupation(s) | | Director/ | | Other Directorships |
| During Past Five Years | | Trustee | | Held by Director/Trustee(2) |
| Attorney, William J. Graham, PC | | 16 | | N/A |
| (2001 to present). | | | | |
| | | | | |
J.E. Breslin & Co. – Consulting
(2010 to present). | | 16 | | Trustee, Forethought Variable Insurance Trust (5 portfolios); Trustee, Hatteras Alternative Mutual Funds Trust (8 portfolios) (2004-2016); Trustee, Underlying Funds Trust (2 portfolios) (2004-2016); Trustee, HCIM Trust (2 portfolios) (2013-2015); Manager, Hatteras Global Private Equity Partners Institutional, LLC (2012-2016); Manager, Hatteras GPEP Fund II, LLC (2012-2016); Manager, Hatteras VC Co-Investment Fund II LLC (2012-2016); Manager, Hatteras Master Fund, L.P. (2012-2016); Manager, Hatteras Core Alternatives TEI Fund, L.P. (2012-2016); Manager, Hatteras Core Alternatives Fund, L.P. (2012-2016); Manager, Hatteras Core Alternatives Institutional Fund, L.P. (2012-2016); Manager, Hatteras Core Alternatives TEI Institutional Fund, L.P. (2012-2016); and Trustee, Hatteras Variable Trust (2012-2013). |
| | | | | |
| Vice President, HBES Consulting, Inc. (2014 to present); Senior Special Agent, Homeland Security Investigations, Miami, FL (2011 to 2014); Assistant Attaché Immigration & Customs Enforcement, Pretoria, South Africa (2008 to 2011). | | 16 | | N/A |
184
| KINETICS PORTFOLIOS TRUST |
Management of the Funds and the Portfolios—(Continued) |
| (Unaudited) |
Board of Directors/Board of Trustees (Continued)
Interested Directors/Trustees and Officers
| | | | Term of |
| | Position(s) | Office and |
| | Held with the | Length of |
| Name, Address and Year of Birth | Company/ Trust | Time Served |
Murray Stahl(3) | | Director/Trustee | | Indefinite/ |
| Year Born: 1953 | | & Secretary | | 16 years |
| c/o Kinetics Asset Management LLC | | | | |
| 470 Park Avenue South | | | | |
| New York, New York 10016 | | | | |
| | | | | |
Peter B. Doyle(3) | | Director/Trustee, | | Indefinite/ |
| Year Born: 1962 | | President & Chairman | | 14 years |
| c/o Kinetics Asset Management LLC | | of the Board | | |
| 470 Park Avenue South | | | | |
| New York, New York 10016 | | | | |
| | | | | |
Leonid Polyakov(3) | | Director/Trustee | | Indefinite/ |
| Year Born: 1959 | | & Treasurer | | 14 years |
| c/o Kinetics Asset Management LLC | | | | |
| 470 Park Avenue South | | | | |
| New York, New York 10016 | | | | |
| (1) | The term "fund complex" refers to the Company and the Trust, which hold themselves out as related for investment purposes. |
| | |
| (2) | "Other Directorships Held" includes only directorships of companies required to register or file reports with the SEC under the Securities Exchange Act of 1934, as amended, (that is, "public companies") or investment companies registered under the 1940 Act. |
185
| KINETICS PORTFOLIOS TRUST |
Management of the Funds and the Portfolios—(Continued) |
| (Unaudited) |
| | | # of Portfolios | | |
| | | in Fund Complex(1) | | |
| | | Overseen by | | |
| Principal Occupation(s) | | Director/ | | Other Directorships |
| During Past Five Years | | Trustee | | Held by Director/Trustee(2) |
| Chairman, FRMO Corp. (2001 to present) (provides consulting services to private investment funds and research services with respect to marketable securities); Chairman and Chief Investment Officer, Horizon Kinetics LLC, (including Horizon Asset Management LLC (an investment adviser) (1994 to present); Kinetics Asset Management LLC and Kinetics Advisers LLC (2000 to present)); CEO, Horizon Kinetics LLC (2015 to present). | | 16 | | Director and Officer of
FRMO Corp. |
| | | | | |
| Vice President, Horizon Asset Management LLC (1994 to 2011); Vice President, FMRO Corp. 2001 to present) (provides consulting services (to private investment funds and research services with respect to marketable securities); Managing Director, Horizon Kinetics LLC (including Horizon Asset Management LLC (an investment adviser) (1994 to present); Kinetics Asset Management LLC and Kinetics Advisers LLC (2000 to present)); and President of Kinetics Mutual Funds, Inc. (1998 to present). | | 16 | | Director and Officer of FRMO Corp. |
| | | | | |
| CFO, Kinetics Asset Management LLC (2000 to 2011); CFO and FINOP, Kinetics Funds Distributor LLC (2002 to 2011); Director, Kinetics Advisers LLC (2000 to 2011). | | 16 | | N/A |
| (3) | Directors/Trustees who are considered "interested persons" as defined in Section 2(a)(19) of the 1940 Act because of their association with the Adviser and its affiliates. |
186
| KINETICS PORTFOLIOS TRUST |
Management of the Funds and the Portfolios—(Continued) |
| (Unaudited) |
Board of Directors/Board of Trustees (Continued)
Officers
| | | | Term of |
| | | Position(s) | Office and |
| | | Held with the | Length of |
| Name, Address and Age | | Company/ Trust | Time Served |
| Andrew M. Fishman | | Chief Compliance | | Indefinite/ |
| Year Born: 1950 | | Officer | | 12 years |
| c/o Kinetics Asset Management LLC | | | | |
| 470 Park Avenue South | | | | |
| New York, New York 10016 | | | | |
| | | | | |
| | | | | |
| Jay H. Kesslen | | Vice President and | | Indefinite/ |
| Year Born: 1973 | | Assistant Secretary | | 12 years |
| c/o Kinetics Asset Management LLC | | | | |
| 470 Park Avenue South | | | | |
| New York, New York 10016 | | | | |
187
| KINETICS PORTFOLIOS TRUST |
Management of the Funds and the Portfolios—(Continued) |
| (Unaudited) |
| Principal Occupation(s) | | Other Directorships |
| During Past Five Years | | Held by Officer |
| Associate General Counsel, Horizon Kinetics LLC (2011 to present); General Counsel, Horizon Asset Management, Inc. (1997 to 2011); Secretary, Horizon Asset Management, Inc. (2006 to 2011); Chief Compliance Officer, Horizon Asset Management, Inc. (1997 to 2008); Chief Compliance Officer, Kinetics Asset Management LLC. (1999 to 2011); Chief Compliance Officer, Kinetics Advisers LLC (2000 to 2011). | | N/A |
| | | |
| General Counsel, Horizon Kinetics LLC (including Horizon Asset Management LLC (an investment adviser) (2011 to present), Kinetics Asset Management LLC (2000 to present), Kinetics Advisers LLC (2000 to present), Kinetics Funds Distributor LLC (2000 to present), KBDSecurities LLC (2000 to present)); FRMO Corp. (2014 to present); Chief Compliance Officer, Horizon Kinetics LLC (2015-2016). | | N/A |
188
| KINETICS MUTUAL FUNDS, INC. & KINETICS PORTFOLIOS TRUST |
Privacy Policy (Unaudited) |
We collect the following nonpublic personal information about you:
| • | Information we receive from you on or in applications or other forms, correspondence, or conversations, including, but not limited to, your name, address, phone number, social security number, assets, income and date of birth; and |
| | |
| • | Information about your transactions with us, our affiliates, or others, including, but not limited to, your account number and balance, payments history, parties to transactions, cost basis information, and other financial information. |
We do not disclose any nonpublic personal information about our current or former shareholders to nonaffiliated third parties, except as permitted by law. For example, we are permitted by law to disclose all of the information we collect, as described above, to our transfer agent to process your transactions. Furthermore, we restrict access to your nonpublic personal information to those persons who require such information to provide products or services to you. We maintain physical, electronic, and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
In the event that you hold shares of the fund(s) through a financial intermediary, including, but not limited to, a broker-dealer, bank, or trust company, the privacy policy of your financial intermediary would govern how your nonpublic personal information would be shared with nonaffiliated third parties.
This privacy policy is not part of the annual report.
189
Kinetics Mutual
Funds, Inc.
615 East Michigan Street
Milwaukee, WI 53202
INVESTMENT ADVISER AND
SHAREHOLDER SERVICING AGENT
Kinetics Asset Management LLC
470 Park Avenue South
New York, NY 10016
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Tait, Weller & Baker LLP
1818 Market Street
Suite 2400
Philadelphia, PA 19103
DISTRIBUTOR
Kinetics Funds Distributor LLC
470 Park Avenue South
New York, NY 10016
ADMINISTRATOR
FUND ACCOUNTANT AND
TRANSFER AGENT
U.S. Bancorp Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
CUSTODIAN
U.S. Bank, N.A.
Custody Operations
1555 River Center Drive, Suite 302
Milwaukee, WI 53212
THIS MATERIAL MUST BE PRECEDED OR
ACCOMPANIED BY A PROSPECTUS
The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer and principal financial officer. The registrant has not made any amendments to its code of ethics during the period covered by this report. The registrant has not granted any waivers from any provisions of the code of ethics during the period covered by this report. A copy of the registrant’s Code of Ethics is filed herewith.
The registrant’s board of trustees/directors has determined that there is at least one audit committee financial expert serving on its audit committee. Mr. Douglas Cohen and Mr. Joseph Breslin are the “audit committee financial experts” and are considered to be “independent” as each term is defined in Item 3 of Form N‑CSR.
The registrant has engaged its principal accountant to perform audit services, audit-related services, tax services and other services during the past two fiscal years. “Audit services” refer to performing an audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. “Audit-related services” refer to the assurance and related services by the principal accountant that are reasonably related to the performance of the audit. “Tax services” refer to professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. There were no “Other services” provided by the principal accountant. The following table details the aggregate fees billed or expected to be billed for each of the last two fiscal years for audit fees, audit-related fees, tax fees and other fees by the principal accountant.
The audit committee has adopted pre-approval policies and procedures that require the audit committee to pre‑approve all audit and non‑audit services of the registrant, including services provided to any entity affiliated with the registrant.
All of the principal accountant’s hours spent on auditing the registrant’s financial statements were attributed to work performed by full‑time permanent employees of the principal accountant.
Not applicable to registrants who are not listed issuers (as defined in Rule 10A-3 under the Securities Exchange Act of 1934).
The Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.
Not applicable to open-end investment companies.
Not applicable to open-end investment companies.
Not applicable to open-end investment companies.
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees.
(3) Not applicable to open-end investment companies.
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Peter B. Doyle, President
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Peter B. Doyle, President
Leonid Polyakov, Treasurer
* Print the name and title of each signing officer under his or her signature.
