As filed with the Securities and Exchange Commission on March 9, 2010
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-09303 & 811-09923
Kinetics Mutual Funds, Inc. & Kinetics Portfolios Trust
(Exact name of registrant as specified in charter)
555 Taxter Road, Suite 175Elmsford, NY 10523
(Address of principal executive offices) (Zip code)
U.S. Bancorp Fund Services, LLC
615 E. Michigan StreetMilwaukee, WI 53202
(Name and address of agent for service)
Registrant’s telephone number, including area code
Date of fiscal year end: December 31, 2009
Date of reporting period: December 31, 2009
Item 1. Reports to Stockholders.
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| | | December 31, 2009 www.kineticsfunds.com |
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| | | Annual Report |
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| | | The Internet Fund
The Global Fund
The Paradigm Fund
The Medical Fund
The Small Cap Opportunities Fund
The Kinetics Government Money Market Fund
The Market Opportunities Fund
The Water Infrastructure Fund
The Multi-Disciplinary Fund
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| | | Each a series of Kinetics Mutual Funds, Inc. |
(Kinetics Mutual Funds, Inc. Logo)
KINETICS MUTUAL FUNDS, INC.
Table of Contents
December 31, 2009
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| | | Page | |
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| Shareholders’ Letter | | | 2 | |
| Year 2009 Annual Investment Commentary | | | 5 | |
| KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS | | | | |
| Growth of 10,000 Investment | | | 12 | |
| Expense Example | | | 22 | |
| Statement of Assets & Liabilities | | | 31 | |
| Statement of Operations | | | 36 | |
| Statements of Changes in Net Assets | | | 41 | |
| Notes to Financial Statements | | | 51 | |
| Financial Highlights | | | 66 | |
| Report of Independent Registered Public Accounting Firm | | | 86 | |
| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
| Allocation of Portfolio Assets | | | 88 | |
| Portfolio of Investments The Internet Portfolio | | | 92 | |
| Portfolio of Investments The Global Portfolio | | | 99 | |
| Portfolio of Investments The Paradigm Portfolio | | | 106 | |
| Portfolio of Investments The Medical Portfolio | | | 116 | |
| Portfolio of Investments The Small Cap Opportunities Portfolio | | | 119 | |
| Portfolio of Investments The Kinetics Government Money Market Portfolio | | | 126 | |
| Portfolio of Investments The Market Opportunities Portfolio | | | 127 | |
| Portfolio of Investments The Water Infrastructure Portfolio | | | 132 | |
| Portfolio of Investments The Multi-Disciplinary Portfolio | | | 135 | |
| Portfolio of Options Written The Internet Portfolio | | | 137 | |
| Portfolio of Options Written The Market Opportunities Portfolio | | | 138 | |
| Portfolio of Options Written The Multi-Disciplinary Portfolio | | | 139 | |
| Statement of Assets & Liabilities | | | 148 | |
| Statement of Operations | | | 153 | |
| Statements of Changes in Net Assets | | | 158 | |
| Notes to Financial Statements | | | 163 | |
| Report of Independent Registered Public Accounting Firm | | | 186 | |
| Management of the Funds and the Portfolios | | | 187 | |
| Privacy Policy | | | 192 | |
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KINETICS MUTUAL FUNDS, INC.
Shareholders’ Letter
Dear Fellow Shareholders:
We are pleased to present the Kinetics Mutual Funds’ Annual Report for the period ending December 31, 2009. On balance, the Kinetics Family of Mutual Funds had solid investment results for 2009, with gains of 41.02% for The Paradigm Fund, 58.16% for the Small-Cap Opportunities Fund, 50.21% for the Market Opportunities Funds, 48.61% for the Internet Fund, 24.47% for the Medical Fund, 16.46% for the Water Infrastructure Fund, 66.86% for The Global Fund, and 22.90% for the Multi-Disciplinary Fund. This compares with the 2009 returns of 26.46% and 43.89% for the S&P 500 Index(1) and for the NASDAQ Composite Index(2), respectively. The comparison of our funds to these two indices is merely for illustrative purposes and is not an indication that we are trying to replicate or exceed the performance of a certain index during a discrete short timeframe. Our investment goal is to provide you with very satisfactory investment results, without particular concern as to how an index is positioned in relationship to our funds. We encourage you to use whatever index you feel appropriate for your own comparison purposes.
We have always maintained that our long-term investment results will be driven by the underlying business operations of the companies we own. In this regard, nothing has changed. As global investors continue to re-assess risk, those companies that have rebounded the most in price have been those which performed well operationally throughout the crisis. We still believe our Funds offer noteworthy value for long-term investors, as we believe the price recovery for our holdings is still in the earlier stages. Markets will have down periods, sometimes extreme, such as seen during 2008, but if your focus is upon the business fundamentals, you should, and hopefully will, in the longer term, be rewarded for your steadfastness.
We continue to inform our shareholders through our website, www.kineticsfunds.com. This website provides a broad array of information, including recent portfolio holdings, quarterly investment commentaries, newsflashes, recent performance data, and online access to account information.
Kinetics offers the following funds to investors:
The Paradigm Fund focuses on companies that currently have, or which should soon have, sustainable high returns on equity. The
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Fund has produced attractive returns over the last 10 years in an environment that should be described as difficult for equity investors. The Paradigm Fund is Kinetics’ flagship fund. We have recently registered a new fund, The Tactical Paradigm Fund, which, like the Paradigm Fund, will invest in the Paradigm Portfolio, but will attempt to use options and futures to mitigate risk. This new fund has not yet commenced operations. For those interested in potentially controlling volatility, we encourage you to examine this new fund, as well as our Multi-Disciplinary Fund listed below.
The Tactical Paradigm Fund, when it commences operations will seek to provide long-term growth of capital by generally investing all of its assets in the Paradigm Portfolio, while also dynamically hedging market risk with futures, options and short sales of ETFs. The Tactical Paradigm Fund may also purchase or write options in combination with each other to adjust market risk and return of its overall investment positions. Broadmark Asset Management, LLC, serves as the sub-adviser for the hedged portion of the Fund.
The Small Cap Opportunities Fund focuses on undervalued and special situation small capitalization equities that have the potential for rewarding long-term investment results.
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. In some cases, we view this Fund’s holdings as publicly traded venture capital and are quite aware that many of these investments will not fulfill their promise. However, we hope and expect that, over time, some small percentage will develop into excellent investments, allowing the Fund to produce overall attractive, albeit, lumpy returns.
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The Global Fund’s mandate was changed in early April 2008 to an emphasis on international investments, with particular attention to China and other Asian markets. We believe that emerging markets may offer better growth rates, and potentially better returns, for the coming decade in comparison to more established markets, such as those of the United States and Europe.
The Market Opportunities Fund focuses on those companies that benefit from increasing transactional volume or throughput, such as publicly-traded exchanges, or that act as facilitators, such as gaming companies, airports and publicly-traded toll roads.
The Water Infrastructure Fund is a sector fund that invests in global companies engaged in water infrastructure and water-specific natural resources, as well as related activities. This Fund is sub-advised by Brennan Investment Partners, LLC.
The Multi-Disciplinary Fund is a fund that 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 Kinetics Government Money Market Fund is a short-term investment vehicle that provides a useful service for those participating in our equity product offerings.
Peter B. Doyle
President
Kinetics Mutual Funds, Inc.
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| (1) | | The S&P 500 Index is a broad based unmanaged index of 500 stocks, which is widely recognized as representative of the equity market in general. You cannot invest directly in an index. |
| |
| (2) | | The NASDAQ Composite Index is a market capitalization-weighted index that is designed to represent the performance of the National Market System which includes over 5,000 stocks traded only over-the-counter and not on an exchange. You cannot invest directly in an index. |
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KINETICS MUTUAL FUNDS, INC.
Investment Commentary
Dear Fellow Shareholders,
For the first several months of 2009, the global equity markets were essentially in free fall. It was commonly believed that the demise of the global banking system was imminent, that the U.S. Government was going to nationalize its largest banks, and that the residential sub-prime mortgage crisis was but a small prelude to a larger commercial real estate crisis, as well as a credit card crisis. Furthermore, the financial system was going to de-lever in a way that was likely to place downward pressure on security prices ad infinitum. Then something happened. The stock market started to rebound, and the rebound strengthened until year-end. The real economy then followed. At the height of the crisis, it was our belief that the world’s central banks’ liquidity responses would lessen the selling pressure in equities and that business fundamentals would ultimately start to drive stock performance, as occurs under most circumstances. We felt confident that our holdings would bounce back quite strongly. This is what happened, to a large extent, across all of our funds. While we have not recouped the entire decline of 2008, we hope and believe that with time we will.
While much of the equity selling was related to institutional liquidity needs, there were also a fair amount of individuals who sold out of fear. If you are an equity investor and you cannot tolerate or afford to have your account fluctuate by more than $1,000 in value, then it is probably best to have only a maximum exposure of $1,500 to $2,000 in a diversified basket of stocks. You can scale this up or down based on your financial condition. The surest way to limit account value fluctuation is based on the dollar amount invested. The recent crisis taught that many individuals were over-exposed to stocks. Unfortunately, this led to forced selling and a permanent erosion of capital for investors. It is our goal to help you accumulate wealth. In order for us to do that effectively, all parties concerned must have similar time horizons. A minimum time horizon of three years should be the benchmark. We would much rather have less of your assets than see you forced out of equities at the exact moment when you should be investing.
While there is no question that the financial crisis and the subsequent economic fallout have done lasting damage to certain
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businesses, particularly those that required significant leverage to achieve adequate returns, many businesses have not experienced any meaningful diminution in the demand for their goods and services. In their recently published book, “This Time It’s Different,” Professors Carmen Reinhart and Kenneth Rogoff investigate 800 hundred years of financial crises. “If there is one common theme to the vast range of crises, it is that excessive debt accumulation whether it be by governments, banks, corporations, or consumers, often poses greater systemic risks than it seems during a boom.” This was certainly true of the recent crisis. The potential good news: based on their historical studies, recessions caused by financial crises typically last an average of 1.7 years, and stocks take between two and three years to reach their previous levels. These parameters are quite consistent with the current economic recovery and the stocks’ performance over the last 10 months. Of course there can be no guarantees; however, we would not be surprised if current events evolved in accordance with historical averages.
Interest rates are to financial assets what gravity is to the physical world, with low interest rates being a boon for financial assets. Typically, price-earnings multiples expand in a low interest rate environment, as investors switch out of risk-free assets, which offer a very low return. The debt burden of this country, including Federal Government debt, municipal debt, consumer installment debt, mortgages, corporate debt, excluding financial companies, and Governmental Agency debt, is over $40 trillion dollars. This staggering debt figure has significant implications for investors in financial assets.
A one percent rise in the cost of the servicing of this debt would shift $400 billion annually from the borrowers to the lenders. Since our Federal Government, along with state governments and municipalities, is a big borrower, a rise in interest rates is not something desirable. Historically, governments have inflated their way out of excessive debt, but given that longer term rates are set in the market, not by the Federal Reserve, which controls short-term rates, market participants would react very quickly to such a plan, choking off economic activity. Thus, we believe that it is quite likely that low interest rates will remain with us longer than is commonly expected. Stocks with good earnings growth rates should do extremely well in this type of environment.
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Anyone who has ever read our commentaries or has listened to us over the years knows that our model of investing has a strong resemblance to that of Warren Buffett. We focus upon the underlying business returns; we try not to let emotions cloud our judgment; we own companies, in most circumstances, with very long product lifecycles; we usually avoid companies with substantial leverage; and we try to exercise patience. This strategy is to us the most straightforward and reasonable if your goal is the accumulation of wealth. The financial crisis has not invalidated this style of investing, which, in the fullness of time, we expect will demonstrate its true merits.
When recently reading Andrew Carnegie’s autobiography, I came across this passage: “Nothing tells in the long run like good judgment, and no sound judgment can remain with the man whose mind is disturbed by the mercurial changes of the Stock Exchange. It places him under an influence akin to intoxication. What is not, he sees, and what he sees, is not. He cannot judge of relative values or get the true perspective of things. The molehill seems to him a mountain and the mountain a molehill, and he jumps at conclusions which he should arrive at by reason. His mind is upon the stock quotations and not upon the points that require calm thought. Speculation is a parasite feeding upon values, creating none.”
Our minds are focused upon tranquil thoughts. Moreover, we ardently aspire to assist you in your accumulation of wealth. We ask nothing of you other than the use of an appropriate fraction of your assets and sufficient time so we can effectively do our work on your behalf.
The following discussion includes the factors that materially affected each Fund’s performance:
Small Cap
The performance of the Small Cap Opportunities Fund was largely a result of holdings in financial companies, industrial companies and consumer-related companies, most of which saw their share prices rise as the financial crisis abated and as investors began to anticipate an economic recovery.
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Market Opportunities
The Market Opportunities Fund benefitted from wide exposure to the financial sector, which saw share prices increase as the financial crisis abated, producing more normal market environments. Investments in companies such as securities exchanges, banks, insurance companies and asset managers were also significant contributors to performance.
Internet
The Internet Fund’s performance resulted from holdings of media related companies, whose products and services are relatively recession resistant, and technology and information related businesses and other areas that were not affected by the financial crisis. We continue to believe that these companies are exposed to secular trends that will continue for some time.
Global
The Global Fund benefitted from a recovery in equity markets, particularly in the Hong Kong-traded shares of mainland Chinese companies, and in India, as both countries saw strong economic recoveries. Holdings of financial companies, consumer related companies and infrastructure related businesses also contributed to the performance.
Paradigm
The largest contributors to the Paradigm Fund’s performance were diversified financial companies and energy companies. Companies with operations in mainland China were also significant contributors to the Fund’s performance during 2009.
Multi-Disciplinary
The largest contributors to the Multi-Disciplinary Fund’s performance were from both accrued interest on debt positions, and expired options in financial companies and energy companies.
Medical
The performance of the Medical Fund resulted from investments in discounted pharmaceutical and bio-tech companies. In addition to appreciation, many of these companies paid handsome dividends throughout the credit crisis, and several bio-tech positions were revalued dramatically to the upside due to acquisition.
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Water
The Water Fund’s performance benefitted from a recovery in the water industrials and a core concentration in global water utilities. The Fund did hold considerable cash throughout the first three quarters of 2009 due to inconsistent spending patterns brought on by the housing market, a slowdown in the municipal bond market and the U.S. stimulus package.
We thank you for your confidence.
Peter B. Doyle
Chief Investment Strategist
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 program, 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 Funds [other than The Global Fund, The Paradigm Fund, The Small Cap Opportunities Fund, The Market Opportunities Fund, The Kinetics Government Money Market Fund and The Multi-Disciplinary 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 and biotechnology stocks are subject to a rate of change in technology, obsolescence and competition that is generally higher than that of other industries and have experienced extreme price and volume fluctuations. International investing [for The Global Fund, The Water Infrastructure Fund, The Paradigm Fund, The Market Opportunities Fund, The Small Cap Opportunities Fund and The Internet Fund] presents special risks including currency exchange fluctuation, government regulations, and the potential for political and economic instability. Accordingly, the share price for these Funds is expected to be more volatile than that of a U.S.-only fund. Past performance is no guarantee of future performance.
Because smaller companies [for The Global Fund, The Small Cap Opportunities Fund and the Water Infrastructure 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 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 Fund. 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 Funds in a manner consistent with their respective
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investment objectives. Purchasing and writing put and call options and, in particular, writing “uncovered” options are highly specialized activities that entail greater than ordinary investment risk.
As non-diversified [other than The Kinetics Government Money Market Fund] Funds, the value of Fund shares may fluctuate more than shares invested in a broader range of industries and companies.
An investment in the Kinetics Government Money Market Fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
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 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 Nasdaq Composite (NASDAQ) 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, Inc. is not an affiliate of Kinetics Mutual Funds, Inc. Kinetics Funds Distributor, Inc. is an affiliate of Kinetics Asset Management, Inc., Investment Adviser to Kinetics Mutual Funds, Inc.
For more information, log onto www.kineticsfunds.com.
January 1, 2010 — Kinetics Asset Management, Inc.
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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 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 — The 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 — The 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 EAFE Index — The 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 US and Canada. The MSCI EAFE is unmanaged and includes 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 MSCI EAFE may differ substantially from the securities in the Funds’ portfolios. It is not possible to directly invest in an index.
CBOE S&P 500 BuyWrite Index (BXM) — The CBOE S&P 500 BuyWrite Index (BXM) is a benchmark index designed to track the performance of a hypothetical buy-write strategy on the S&P 500 Index. The securities that
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comprise the CBOE S&P 500 BuyWrite Index may differ substantially from the securities in the Multi-Disciplinary Fund’s portfolio. It is not possible to directly invest in an index.
S&P Global Water Index — The S&P Global Water Index is comprised of fifty of the largest publicly traded companies in water-related businesses that meet specific investability requirements. The index is designed to provide liquid exposure to the leading publicly listed companies in the global water industry, from both developed markets and emerging markets. The securities that comprise the S&P Global Water Index may differ substantially from the securities in the Water Infrastructure Fund’s portfolio. It is not possible to directly invest in an index.
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The Internet Fund
December 31, 1999 — December 31, 2009
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Ended 12/31/2009 |
| | | | | Advisor
| | Advisor
| | | | | | |
| | | No Load
| | Class A
| | Class A
| | Advisor
| | | | NASDAQ
|
| | | Class | | (No Load) | | (Load Adjusted)(1) | | Class C | | S&P 500 | | Composite |
| |
| |
| One Year | | | 48.61 | % | | | 48.23 | % | | | 39.71 | % | | | 47.51 | % | | | 26.46 | % | | | 43.89 | % |
| |
| |
| Five Years | | | 4.51 | % | | | 4.46 | % | | | 3.24 | % | | | N/A | | | | 0.42 | % | | | 0.85 | % |
| |
| |
| Ten Years | | | −4.28 | % | | | N/A | | | | N/A | | | | N/A | | | | −0.95 | % | | | −5.67 | % |
| |
| |
Since Inception
No Load Class (10/21/96) | | | 15.14 | % | | | N/A | | | | N/A | | | | N/A | | | | 5.30 | % | | | 4.71 | % |
| |
| |
Since Inception
Advisor Class A (4/26/01) | | | N/A | | | | 3.36 | % | | | 2.65 | % | | | N/A | | | | 0.73 | % | | | 1.26 | % |
| |
| |
Since Inception
Advisor Class C (2/16/07) | | | N/A | | | | N/A | | | | N/A | | | | 1.73 | % | | | −6.80 | % | | | −3.27 | % |
| |
| |
| | |
| (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, 1999 — December 31, 2009
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Ended 12/31/2009 |
| | | | | Advisor
| | Advisor
| | | | | | | | |
| | | No Load
| | Class A
| | Class A
| | Advisor
| | | | NASDAQ
| | |
| | | Class | | (No Load) | | (Load Adjusted)(1) | | Class C | | S&P 500 | | Composite | | MSCI EAFE |
| |
| |
| One Year | | | 66.86 | % | | | 67.11 | % | | | 57.75 | % | | | 65.08 | % | | | 26.46 | % | | | 43.89 | % | | | 31.78 | % |
| |
| |
| Five Years | | | 0.57 | % | | | N/A | | | | N/A | | | | N/A | | | | 0.42 | % | | | 0.85 | % | | | 3.54 | % |
| |
| |
| Ten Years | | | −7.09 | % | | | N/A | | | | N/A | | | | N/A | | | | −0.95 | % | | | −5.67 | % | | | 1.17 | % |
| |
| |
Since Inception
No Load Class (12/31/99) | | | −7.09 | % | | | N/A | | | | N/A | | | | N/A | | | | −0.95 | % | | | −5.67 | % | | | 1.17 | % |
| |
| |
Since Inception
Advisor Class A (5/19/08) | | | N/A | | | | −7.35 | % | | | −10.70 | % | | | N/A | | | | 11.97 | % | | | −6.18 | % | | | −16.28 | % |
| |
| |
Since Inception
Advisor Class C (5/19/08) | | | N/A | | | | N/A | | | | N/A | | | | −8.07 | % | | | −11.97 | % | | | −6.18 | % | | | −16.28 | % |
| |
| |
| | |
| (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, 1999 — December 31, 2009
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Ended 12/31/2009 |
| | | | | Advisor
| | Advisor
| | | | | | | | | | |
| | | No Load
| | Class A
| | Class A
| | Advisor
| | Institutional
| | | | NASDAQ
| | |
| | | Class | | (No Load) | | (Load Adjusted)(1) | | Class C | | Class | | S&P 500 | | Composite | | MSCI EAFE |
| |
| |
| One Year | | | 41.02 | % | | | 40.64 | % | | | 32.59 | % | | | 39.97 | % | | | 41.31 | % | | | 26.46 | % | | | 43.89 | % | | | 31.78 | % |
| |
| |
| Five Years | | | 3.49 | % | | | 3.17 | % | | | 1.95 | % | | | 2.65 | % | | | N/A | | | | 0.42 | % | | | 0.85 | % | | | 3.54 | % |
| |
| |
| Ten years | | | 7.94 | % | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | −0.95 | % | | | −5.67 | % | | | 1.17 | % |
| |
| |
Since Inception
No Load Class (12/31/99) | | | 7.94 | % | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | −0.95 | % | | | −5.67 | % | | | 1.17 | % |
| |
| |
Since Inception
Advisor Class A (4/26/01) | | | N/A | | | | 8.37 | % | | | 7.63 | % | | | N/A | | | | N/A | | | | 0.73 | % | | | 1.26 | % | | | 4.19 | % |
| |
| |
Since Inception
Advisor Class C (6/28/02) | | | N/A | | | | N/A | | | | N/A | | | | 8.89 | % | | | N/A | | | | 3.63 | % | | | 6.02 | % | | | 7.27 | % |
| |
| |
Since Inception
Institutional Class (5/27/05) | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | 3.21 | % | | | 0.53 | % | | | 1.96 | % | | | 4.28 | % |
| |
| |
| | |
| (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 Medical Fund
September 30, 1999 — December 31, 2009
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Ended 12/31/2009 |
| | | | | Advisor
| | Advisor
| | | | | | |
| | | No Load
| | Class A
| | Class A
| | Advisor
| | | | NASDAQ
|
| | | Class | | (No Load) | | (Load Adjusted)(1) | | Class C | | S&P 500 | | Composite |
| |
| |
| One Year | | | 24.47 | % | | | 24.17 | % | | | 17.02 | % | | | 23.50 | % | | | 26.46 | % | | | 43 | .89% | |
| |
| |
| Five Years | | | 5.45 | % | | | 5.22 | % | | | 3.98 | % | | | N/A | | | | 0.42 | % | | | 0 | .85% | |
| |
| |
| Ten Years | | | 5.12 | % | | | N/A | | | | N/A | | | | N/A | | | | −0.95 | % | | | −5 | .67% | |
| |
| |
Since Inception
No Load Class (9/30/99) | | | 8.00 | % | | | N/A | | | | N/A | | | | N/A | | | | 0.42 | % | | | −1 | .84% | |
| |
| |
Since Inception
Advisor Class A (4/26/01) | | | N/A | | | | 1.88 | % | | | 1.19 | % | | | N/A | | | | 0.73 | % | | | 1 | .26% | |
| |
| |
Since Inception
Advisor Class C (2/16/07) | | | N/A | | | | N/A | | | | N/A | | | | 2.36 | % | | | −6.80 | % | | | −3 | .27% | |
| |
| |
| | |
| (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
March 20, 2000 — December 31, 2009
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Ended 12/31/2009 |
| | | | | Advisor
| | Advisor
| | | | | | | | | | |
| | | No Load
| | Class A
| | Class A
| | Advisor
| | Institutional
| | | | NASDAQ
| | |
| | | Class | | (No Load) | | (Load Adjusted)(1) | | Class C | | Class | | S&P 500 | | Composite | | MSCI EAFE |
| |
| |
| One Year | | | 58.16 | % | | | 57.80 | % | | | 48.77 | % | | | 56.97 | % | | | 58.45 | % | | | 26.46 | % | | | 43.89 | % | | | 31.78 | % |
| |
| |
| Five Years | | | 2.98 | % | | | 2.71 | % | | | 1.49 | % | | | N/A | | | | N/A | | | | 0.42 | % | | | 0.85 | % | | | 3.54 | % |
| |
| |
Since Inception
No Load Class (3/20/00) | | | 8.73 | % | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | −0.91 | % | | | −6.99 | % | | | 1.34 | % |
| |
| |
Since Inception
Advisor Class A
(12/31/01) | | | N/A | | | | 5.50 | % | | | 4.73 | % | | | N/A | | | | N/A | | | | 1.60 | % | | | 1.91 | % | | | 6.59 | % |
| |
| |
Since Inception
Advisor Class C (2/16/07) | | | N/A | | | | N/A | | | | N/A | | | | −10.48 | % | | | N/A | | | | −6.80 | % | | | −3.27 | % | | | −7.66 | % |
| |
| |
Since Inception
Institutional Class (8/12/05) | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | 1.41 | % | | | −0.12 | % | | | 1.16 | % | | | 2.65 | % |
| |
| |
| | |
| (1) | | Reflects front-end sales charge of 5.75%. |
Returns for periods greater than one year are average annual total returns.
18
The Market Opportunities Fund
January 31, 2006 — December 31, 2009
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Ended 12/31/2009 |
| | | | | Advisor
| | Advisor
| | | | | | | | | | |
| | | No Load
| | Class A
| | Class A
| | Advisor
| | Institutional
| | | | NASDAQ
| | |
| | | Class | | (No Load) | | (Load Adjusted)(1) | | Class C | | Class | | S&P 500 | | Composite | | MSCI EAFE |
| |
| |
| One Year | | | 50.21 | % | | | 49.66 | % | | | 41.06 | % | | | 49.17 | % | | | 50.70 | % | | | 26.46 | % | | | 43.89 | % | | | 31.78 | % |
| |
| |
Since Inception
No Load Class (1/31/06) | | | 2.44 | % | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | −1.35 | % | | | −0.41 | % | | | −0.32 | % |
| |
| |
Since Inception
Advisor Class A (1/31/06) | | | N/A | | | | 2.16 | % | | | 0.63 | % | | | N/A | | | | N/A | | | | −1.35 | % | | | −0.41 | % | | | −0.32 | % |
| |
| |
Since Inception
Advisor Class C (2/16/07) | | | N/A | | | | N/A | | | | N/A | | | | −6.48 | % | | | N/A | | | | −6.80 | % | | | −3.27 | % | | | −7.66 | % |
| |
| |
Since Inception
Institutional Class (5/19/08) | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | −12.73 | % | | | −11.97 | % | | | −6.18 | % | | | −16.28 | % |
| |
| |
| | |
| (1) | | Reflects front-end sales charge of 5.75%. |
Returns for periods greater than one year are average annual total returns.
19
The Water Infrastructure Fund
June 29, 2007 — December 31, 2009
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Ended 12/31/2009 |
| | | | | Advisor
| | Advisor
| | | | | | | | | | |
| | | No Load
| | Class A
| | Class A
| | Advisor
| | Institutional
| | | | NASDAQ
| | S&P Global
|
| | | Class | | (No Load) | | (Load Adjusted)(1) | | Class C | | Class | | S&P 500 | | Composite | | Water Index |
| |
| |
| One Year | | | 16.46 | % | | | 16.21 | % | | | 9.57 | % | | | 15.52 | % | | | 16.94 | % | | | 26.46 | % | | | 43.89 | % | | | 32 | .67% | |
| |
| |
Since Inception
No Load Class (6/29/07) | | | −4.35 | % | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | −9.17 | % | | | −5.33 | % | | | −7 | .20% | |
| |
| |
Since Inception
Advisor Class A (6/29/07) | | | N/A | | | | −4.57 | % | | | −6.80 | % | | | N/A | | | | N/A | | | | −9.17 | % | | | −5.33 | % | | | −7 | .20% | |
| |
| |
Since Inception
Advisor Class C (6/29/07) | | | N/A | | | | N/A | | | | N/A | | | | −5.09 | % | | | N/A | | | | −9.17 | % | | | −5.33 | % | | | −7 | .20% | |
| |
| |
Since Inception
Institutional Class (6/29/07) | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | −4.09 | % | | | −9.17 | % | | | −5.33 | % | | | −7 | .20% | |
| |
| |
| | |
| (1) | | Reflects front-end sales charge of 5.75%. |
Returns for periods greater than one year are average annual total returns.
20
The Multi-Disciplinary Fund
February 11, 2008 — December 31, 2009
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Ended 12/31/2009 |
| | | | | Advisor
| | Advisor
| | | | | | | | | | |
| | | No Load
| | Class A
| | Class A
| | Advisor
| | Institutional
| | | | NASDAQ
| | |
| | | Class | | (No Load) | | (Load Adjusted)(1) | | Class C | | Class | | S&P 500 | | Composite | | CBOE |
| |
| |
| One Year | | | 22.90 | % | | | 22.73 | % | | | 15.67 | % | | | 22.03 | % | | | 23.25 | % | | | 26.46 | % | | | 43.89 | % | | | 32 | .67% | |
| |
| |
Since Inception
No Load Class (2/11/08) | | | 0.57 | % | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | −7.01 | % | | | −1.17 | % | | | −2 | .33% | |
| |
| |
Since Inception
Advisor Class A (2/11/08) | | | N/A | | | | 0.35 | % | | | −2.75 | % | | | N/A | | | | N/A | | | | −7.01 | % | | | −1.17 | % | | | −2 | .33% | |
| |
| |
Since Inception
Advisor Class C (2/11/08) | | | N/A | | | | N/A | | | | N/A | | | | −0.16 | % | | | N/A | | | | −7.01 | % | | | −1.17 | % | | | −2 | .33% | |
| |
| |
Since Inception
Institutional Class (2/11/08) | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | 0.79 | % | | | −7.01 | % | | | −1.17 | % | | | −2 | .33% | |
| |
| |
| | |
| (1) | | Reflects front-end sales charge of 5.75%. |
Returns for periods greater than one year are average annual total returns.
21
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Expense Example
December 31, 2009
Shareholders incur two type of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvestments of dividends or other distributions made by the 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 the 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, 2009 and held for the entire period from July 1, 2009 to December 31, 2009.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. Unlike other mutual funds that directly acquire and manage their own portfolio securities, each Feeder Fund invests all of its investable assets in a corresponding Master Portfolio, 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. The Adviser for the Master Portfolios has directed a certain amount of the Master Portfolio’s trades to brokers believed to provide the best execution and, as a result, the Master Portfolios have generated direct brokerage credits to reduce certain service provider fees. 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 Feeder 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 the Feeder Fund and any other series of Kinetics Mutual Funds, Inc. The Feeder Fund’s transfer agent charges a $5.00 transaction fee to shareholder accounts for telephone exchanges between any two series of Kinetics Mutual Funds, Inc. The Feeder Fund’s 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.
22
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Expense Example — (Continued)
December 31, 2009
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 of the table below provides information about hypothetical account values and hypothetical expenses based on the Feeder Funds’ actual expense ratio 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. In if these transactional costs were included, one’s costs would have been higher.
23
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Expense Example — (Continued)
December 31, 2009
| | | | | | | | | | | | | | | | | |
| | | Beginning
| | Ending
| | | | |
| | | Account
| | Account
| | | | Expenses Paid
|
| | | Value
| | Value
| | Annualized
| | During Period*
|
| | | (7/1/09) | | (12/31/09) | | Expense Ratio | | (7/1/09 to 12/31/09) |
The Internet Fund | | | | | | | | | | | | | | | | |
| No Load Class Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,254.16 | | | | 1.95 | % | | $ | 11.08 | |
| No Load Class Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,254.16 | | | | 1.89 | % | | $ | 10.74 | |
| No Load Class Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,015.38 | | | | 1.95 | % | | $ | 9.91 | |
| No Load Class Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,015.68 | | | | 1.89 | % | | $ | 9.60 | |
| Advisor Class A Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,253.07 | | | | 2.20 | % | | $ | 12.49 | |
| Advisor Class A Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,253.07 | | | | 2.14 | % | | $ | 12.15 | |
| Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,014.12 | | | | 2.20 | % | | $ | 11.17 | |
| Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,014.42 | | | | 2.14 | % | | $ | 10.87 | |
| Advisor Class C Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,249.83 | | | | 2.70 | % | | $ | 15.31 | |
| Advisor Class C Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,249.83 | | | | 2.64 | % | | $ | 14.97 | |
| Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,011.59 | | | | 2.70 | % | | $ | 13.69 | |
| Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,011.90 | | | | 2.64 | % | | $ | 13.39 | |
The Global Fund | | | | | | | | | | | | | | | | |
| No Load Class Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,196.93 | | | | 4.90 | % | | $ | 27.13 | |
| No Load Class Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,196.93 | | | | 1.39 | % | | $ | 7.70 | |
| No Load Class Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,000.51 | | | | 4.90 | % | | $ | 24.70 | |
| No Load Class Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,018.20 | | | | 1.39 | % | | $ | 7.07 | |
| Advisor Class A Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,195.08 | | | | 5.15 | % | | $ | 28.49 | |
| Advisor Class A Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,195.08 | | | | 1.64 | % | | $ | 9.07 | |
24
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Expense Example — (Continued)
December 31, 2009
| | | | | | | | | | | | | | | | | |
| | | Beginning
| | Ending
| | | | |
| | | Account
| | Account
| | | | Expenses Paid
|
| | | Value
| | Value
| | Annualized
| | During Period*
|
| | | (7/1/09) | | (12/31/09) | | Expense Ratio | | (7/1/09 to 12/31/09) |
| Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 999.25 | | | | 5.15 | % | | $ | 25.95 | |
| Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,016.94 | | | | 1.64 | % | | $ | 8.34 | |
| Advisor Class C Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,192.82 | | | | 5.65 | % | | $ | 31.22 | |
| Advisor Class C Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,192.82 | | | | 2.14 | % | | $ | 11.83 | |
| Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 996.73 | | | | 5.65 | % | | $ | 28.43 | |
| Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,014.42 | | | | 2.14 | % | | $ | 10.87 | |
The Paradigm Fund | | | | | | | | | | | | | | | | |
| No Load Class Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,192.10 | | | | 1.73 | % | | $ | 9.56 | |
| No Load Class Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,192.10 | | | | 1.64 | % | | $ | 9.06 | |
| No Load Class Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,016.48 | | | | 1.73 | % | | $ | 8.79 | |
| No Load Class Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,016.94 | | | | 1.64 | % | | $ | 8.34 | |
| Advisor Class A Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,189.77 | | | | 1.98 | % | | $ | 10.93 | |
| Advisor Class A Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,189.77 | | | | 1.89 | % | | $ | 10.43 | |
| Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,015.22 | | | | 1.98 | % | | $ | 10.06 | |
| Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,015.68 | | | | 1.89 | % | | $ | 9.60 | |
| Advisor Class C Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,187.35 | | | | 2.48 | % | | $ | 13.67 | |
| Advisor Class C Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,187.35 | | | | 2.39 | % | | $ | 13.18 | |
| Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,012.70 | | | | 2.48 | % | | $ | 12.58 | |
| Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,013.16 | | | | 2.39 | % | | $ | 12.13 | |
25
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Expense Example — (Continued)
December 31, 2009
| | | | | | | | | | | | | | | | | |
| | | Beginning
| | Ending
| | | | |
| | | Account
| | Account
| | | | Expenses Paid
|
| | | Value
| | Value
| | Annualized
| | During Period*
|
| | | (7/1/09) | | (12/31/09) | | Expense Ratio | | (7/1/09 to 12/31/09) |
| Institutional Class Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,192.61 | | | | 1.68 | % | | $ | 9.28 | |
| Institutional Class Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,192.61 | | | | 1.44 | % | | $ | 7.96 | |
| Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,016.74 | | | | 1.68 | % | | $ | 8.54 | |
| Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,017.95 | | | | 1.44 | % | | $ | 7.32 | |
The Medical Fund | | | | | | | | | | | | | | | | |
| No Load Class Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,123.69 | | | | 2.08 | % | | $ | 11.13 | |
| No Load Class Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,123.69 | | | | 1.39 | % | | $ | 7.44 | |
| No Load Class Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,014.72 | | | | 2.08 | % | | $ | 10.56 | |
| No Load Class Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,018.20 | | | | 1.39 | % | | $ | 7.07 | |
| Advisor Class A Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,121.26 | | | | 2.33 | % | | $ | 12.46 | |
| Advisor Class A Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,121.26 | | | | 1.64 | % | | $ | 8.77 | |
| Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,013.46 | | | | 2.33 | % | | $ | 11.82 | |
| Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,016.94 | | | | 1.64 | % | | $ | 8.34 | |
| Advisor Class C Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,118.82 | | | | 2.83 | % | | $ | 15.11 | |
| Advisor Class C Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,118.82 | | | | 2.14 | % | | $ | 11.43 | |
| Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,010.94 | | | | 2.83 | % | | $ | 14.34 | |
| Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,014.42 | | | | 2.14 | % | | $ | 10.87 | |
The Small Cap Opportunities Fund | | | | | | | | | | | | | | | | |
| No Load Class Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,188.25 | | | | 1.88 | % | | $ | 10.37 | |
| No Load Class Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,188.25 | | | | 1.64 | % | | $ | 9.05 | |
26
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Expense Example — (Continued)
December 31, 2009
| | | | | | | | | | | | | | | | | |
| | | Beginning
| | Ending
| | | | |
| | | Account
| | Account
| | | | Expenses Paid
|
| | | Value
| | Value
| | Annualized
| | During Period*
|
| | | (7/1/09) | | (12/31/09) | | Expense Ratio | | (7/1/09 to 12/31/09) |
| No Load Class Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,015.73 | | | | 1.88 | % | | $ | 9.55 | |
| No Load Class Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,016.94 | | | | 1.64 | % | | $ | 8.34 | |
| Advisor Class A Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,186.71 | | | | 2.13 | % | | $ | 11.74 | |
| Advisor Class A Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,186.71 | | | | 1.89 | % | | $ | 10.42 | |
| Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,014.47 | | | | 2.13 | % | | $ | 10.82 | |
| Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,015.68 | | | | 1.89 | % | | $ | 9.60 | |
| Advisor Class C Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,183.89 | | | | 2.63 | % | | $ | 14.48 | |
| Advisor Class C Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,183.89 | | | | 2.39 | % | | $ | 13.16 | |
| Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,011.95 | | | | 2.63 | % | | $ | 13.34 | |
| Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,013.16 | | | | 2.39 | % | | $ | 12.13 | |
| Institutional Class Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,189.53 | | | | 1.83 | % | | $ | 10.10 | |
| Institutional Class Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,189.53 | | | | 1.44 | % | | $ | 7.95 | |
| Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,015.98 | | | | 1.83 | % | | $ | 9.30 | |
| Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,017.95 | | | | 1.44 | % | | $ | 7.32 | |
The Kinetics Government Money Market Fund | | | | | | | | | | | | | | | | |
| No Load Class Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,000.00 | | | | 3.17 | % | | $ | 15.98 | |
| No Load Class Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,000.00 | | | | 0.04 | % | | $ | 0.20 | |
| No Load Class Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,009.23 | | | | 3.17 | % | | $ | 16.05 | |
| No Load Class Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,025.00 | | | | 0.04 | % | | $ | 0.20 | |
27
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Expense Example — (Continued)
December 31, 2009
| | | | | | | | | | | | | | | | | |
| | | Beginning
| | Ending
| | | | |
| | | Account
| | Account
| | | | Expenses Paid
|
| | | Value
| | Value
| | Annualized
| | During Period*
|
| | | (7/1/09) | | (12/31/09) | | Expense Ratio | | (7/1/09 to 12/31/09) |
The Market Opportunities Fund | | | | | | | | | | | | | | | | |
| No Load Class Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,157.47 | | | | 1.89 | % | | $ | 10.28 | |
| No Load Class Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,157.47 | | | | 1.64 | % | | $ | 8.92 | |
| No Load Class Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,015.68 | | | | 1.89 | % | | $ | 9.60 | |
| No Load Class Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,016.94 | | | | 1.64 | % | | $ | 8.34 | |
| Advisor Class A Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,154.41 | | | | 2.14 | % | | $ | 11.62 | |
| Advisor Class A Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,154.41 | | | | 1.89 | % | | $ | 10.26 | |
| Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,014.42 | | | | 2.14 | % | | $ | 10.87 | |
| Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,015.68 | | | | 1.89 | % | | $ | 9.60 | |
| Advisor Class C Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,151.25 | | | | 2.64 | % | | $ | 14.31 | |
| Advisor Class C Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,151.25 | | | | 2.39 | % | | $ | 12.96 | |
| Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,011.90 | | | | 2.64 | % | | $ | 13.39 | |
| Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,013.16 | | | | 2.39 | % | | $ | 12.13 | |
| Institutional Class Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,140.24 | | | | 1.84 | % | | $ | 9.93 | |
| Institutional Class Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,140.24 | | | | 1.44 | % | | $ | 7.77 | |
| Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,015.93 | | | | 1.84 | % | | $ | 9.35 | |
| Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,017.95 | | | | 1.44 | % | | $ | 7.32 | |
The Water Infrastructure Fund | | | | | | | | | | | | | | | | |
| No Load Class Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,094.10 | | | | 2.29 | % | | $ | 12.09 | |
| No Load Class Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,094.10 | | | | 1.64 | % | | $ | 8.66 | |
28
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Expense Example — (Continued)
December 31, 2009
| | | | | | | | | | | | | | | | | |
| | | Beginning
| | Ending
| | | | |
| | | Account
| | Account
| | | | Expenses Paid
|
| | | Value
| | Value
| | Annualized
| | During Period*
|
| | | (7/1/09) | | (12/31/09) | | Expense Ratio | | (7/1/09 to 12/31/09) |
| No Load Class Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,013.66 | | | | 2.29 | % | | $ | 11.62 | |
| No Load Class Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,016.94 | | | | 1.64 | % | | $ | 8.34 | |
| Advisor Class A Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,092.94 | | | | 2.54 | % | | $ | 13.40 | |
| Advisor Class A Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,092.94 | | | | 1.89 | % | | $ | 9.97 | |
| Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,012.40 | | | | 2.54 | % | | $ | 12.88 | |
| Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,015.66 | | | | 1.89 | % | | $ | 9.60 | |
| Advisor Class C Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,090.11 | | | | 3.04 | % | | $ | 16.02 | |
| Advisor Class C Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,090.11 | | | | 2.39 | % | | $ | 12.59 | |
| Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,009.88 | | | | 3.04 | % | | $ | 16.02 | |
| Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,013.16 | | | | 2.39 | % | | $ | 12.13 | |
| Institutional Class Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,096.10 | | | | 2.24 | % | | $ | 11.83 | |
| Institutional Class Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,096.10 | | | | 1.44 | % | | $ | 7.61 | |
| Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,013.91 | | | | 2.24 | % | | $ | 11.37 | |
| Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,017.95 | | | | 1.44 | % | | $ | 7.32 | |
The Multi-Disciplinary Fund | | | | | | | | | | | | | | | | |
| No Load Class Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,121.38 | | | | 11.00 | % | | $ | 58.82 | |
| No Load Class Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,121.38 | | | | 1.49 | % | | $ | 7.97 | |
| No Load Class Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 969.75 | | | | 11.00 | % | | $ | 54.61 | |
| No Load Class Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,017.69 | | | | 1.49 | % | | $ | 7.58 | |
29
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Expense Example — (Continued)
December 31, 2009
| | | | | | | | | | | | | | | | | |
| | | Beginning
| | Ending
| | | | |
| | | Account
| | Account
| | | | Expenses Paid
|
| | | Value
| | Value
| | Annualized
| | During Period*
|
| | | (7/1/09) | | (12/31/09) | | Expense Ratio | | (7/1/09 to 12/31/09) |
| Advisor Class A Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,121.90 | | | | 11.25 | % | | $ | 60.17 | |
| Advisor Class A Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,121.90 | | | | 1.74 | % | | $ | 9.31 | |
| Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 968.49 | | | | 11.25 | % | | $ | 55.82 | |
| Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,016.43 | | | | 1.74 | % | | $ | 8.84 | |
| Advisor Class C Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,118.92 | | | | 11.75 | % | | $ | 62.75 | |
| Advisor Class C Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,118.92 | | | | 2.24 | % | | $ | 11.96 | |
| Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 965.97 | | | | 11.75 | % | | $ | 58.23 | |
| Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,013.91 | | | | 2.24 | % | | $ | 11.37 | |
| Institutional Class Actual — before expense reimbursement | | $ | 1,000.00 | | | $ | 1,123.29 | | | | 10.95 | % | | $ | 58.60 | |
| Institutional Class Actual — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,123.29 | | | | 1.29 | % | | $ | 6.90 | |
| Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement | | $ | 1,000.00 | | | $ | 970.01 | | | | 10.95 | % | | $ | 54.37 | |
| Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement | | $ | 1,000.00 | | | $ | 1,018.70 | | | | 1.29 | % | | $ | 6.56 | |
| |
| Note: | Each Feeder Fund records its proportionate share of the respective Master Portfolio’s expenses, including directed brokerage credits, on a daily basis. Any expense reductions includes Feeder Fund-specific expenses as well as the expenses allocated for the Master Portfolio. |
| |
| * | Expenses are equal to the Fund’s annualized expense ratio before expense reimbursement and after expense reimbursement multiplied by the average account value over the period, multiplied by 184/365. |
30
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Assets & Liabilities
December 31, 2009
| | | | | | | | | |
| | | The Internet
| | | The Global
| |
| | | Fund | | | Fund | |
| | |
| |
ASSETS: | | | | | | | | |
| Investments in the Master Portfolios, at value* | | $ | 105,609,810 | | | $ | 4,763,296 | |
| Receivable from Adviser | | | — | | | | 8,941 | |
| Receivable for Master Portfolio interest sold | | | 121,193 | | | | — | |
| Receivable for Fund shares sold | | | 16,402 | | | | 8,586 | |
| Prepaid expenses and other assets | | | 14,316 | | | | 16,336 | |
| | | | | | | | | |
| Total assets | | | 105,761,721 | | | | 4,797,159 | |
| | | | | | | | | |
LIABILITIES: | | | | | | | | |
| Payable for Master Portfolio interest purchased | | | — | | | | 8,570 | |
| Payable to Adviser | | | 1,406 | | | | — | |
| Payable to Directors and Officers | | | 1,466 | | | | 41 | |
| Payable for Fund shares repurchased | | | 137,596 | | | | 17 | |
| Payable for service fees | | | 22,124 | | | | 1,023 | |
| Payable for distribution fees | | | 281 | | | | 93 | |
| Accrued expenses and other liabilities | | | 74,956 | | | | 13,866 | |
| | | | | | | | | |
| Total liabilities | | | 237,829 | | | | 23,610 | |
| | | | | | | | | |
| Net assets | | $ | 105,523,892 | | | $ | 4,773,549 | |
| | | | | | | | | |
NET ASSETS CONSIST OF: | | | | | | | | |
| Paid in capital | | $ | 241,926,630 | | | $ | 8,397,880 | |
| Accumulated net investment loss | | | (912,146 | ) | | | (8,321 | ) |
| Accumulated net realized loss on investments, foreign currency and written option contracts | | | (163,959,606 | ) | | | (3,936,918 | ) |
| Net unrealized appreciation on: | | | | | | | | |
| Investments and foreign currency | | | 28,463,611 | | | | 320,908 | |
| Written option contracts | | | 5,403 | | | | — | |
| | | | | | | | | |
| Net Assets | | $ | 105,523,892 | | | $ | 4,773,549 | |
| | | | | | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS: | | | | | | | | |
| Net assets | | $ | 104,666,332 | | | $ | 4,370,098 | |
| Shares outstanding | | | 3,404,920 | | | | 1,114,306 | |
| Net asset value per share (offering and redemption price) | | $ | 30.74 | | | $ | 3.92 | |
| | | | | | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A: | | | | | | | | |
| Net assets | | $ | 738,121 | | | $ | 367,608 | |
| Shares outstanding | | | 24,318 | | | | 93,529 | |
| Net asset value per share (redemption price) | | $ | 30.35 | | | $ | 3.93 | |
| | | | | | | | | |
| Offering price per share ($30.35 divided by .9425 and $3.93 divided by .9425) | | $ | 32.20 | | | $ | 4.17 | |
| | | | | | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C: | | | | | | | | |
| Net assets | | $ | 119,439 | | | $ | 35,843 | |
| Shares outstanding | | | 4,014 | | | | 9,179 | |
| Net asset value per share (offering and redemption price) | | $ | 29.76 | | | $ | 3.90 | |
| | | | | | | | | |
| |
| * | Each Feeder Fund invests 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 Fund’s financial statements. |
See Notes to the Financial Statements.
31
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Assets & Liabilities
December 31, 2009
| | | | | | | | | |
| | | The Paradigm
| | | The Medical
| |
| | | Fund | | | Fund | |
| | |
| |
ASSETS: | | | | | | | | |
| Investments in the Master Portfolios, at value* | | $ | 1,373,149,379 | | | $ | 25,927,985 | |
| Receivable from Adviser | | | — | | | | 14,609 | |
| Receivable for Fund shares sold | | | 3,179,526 | | | | 177,225 | |
| Prepaid expenses and other assets | | | 38,383 | | | | 12,979 | |
| | | | | | | | | |
| Total assets | | | 1,376,367,288 | | | | 26,132,798 | |
| | | | | | | | | |
LIABILITIES: | | | | | | | | |
| Payable for Master Portfolio interest purchased | | | 399,758 | | | | 121,670 | |
| Payable to Adviser | | | 10,912 | | | | — | |
| Payable to Directors and Officers | | | 21,087 | | | | 358 | |
| Payable for Fund shares repurchased | | | 2,779,768 | | | | 55,555 | |
| Payable for service fees | | | 270,453 | | | | 5,456 | |
| Payable for distribution fees | | | 189,932 | | | | 1,163 | |
| Accrued expenses and other liabilities | | | 361,493 | | | | 21,614 | |
| | | | | | | | | |
| Total liabilities | | | 4,033,403 | | | | 205,816 | |
| | | | | | | | | |
| Net assets | | $ | 1,372,333,885 | | | $ | 25,926,982 | |
| | | | | | | | | |
NET ASSETS CONSIST OF: | | | | | | | | |
| Paid in capital | | $ | 2,280,509,827 | | | $ | 27,049,983 | |
| Accumulated net investment income | | | 2,487,370 | | | | 29,613 | |
| Accumulated net realized loss on investments, foreign currency and written option contracts | | | (914,239,078 | ) | | | (458,870 | ) |
| Net unrealized appreciation (depreciation) on: | | | | | | | | |
| Investments and foreign currency | | | 3,575,766 | | | | (693,744 | ) |
| | | | | | | | | |
| Net Assets | | $ | 1,372,333,885 | | | $ | 25,926,982 | |
| | | | | | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS: | | | | | | | | |
| Net assets | | $ | 825,278,442 | | | $ | 21,126,348 | |
| Shares outstanding | | | 40,898,960 | | | | 1,125,353 | |
| Net asset value per share (offering and redemption price) | | $ | 20.18 | | | $ | 18.77 | |
| | | | | | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A: | | | | | | | | |
| Net assets | | $ | 252,105,530 | | | $ | 4,346,905 | |
| Shares outstanding | | | 12,684,526 | | | | 236,765 | |
| Net asset value per share (redemption price) | | $ | 19.88 | | | $ | 18.36 | |
| | | | | | | | | |
| Offering price per share ($19.88 divided by .9425 and 18.36 divided by .9425) | | $ | 21.09 | | | $ | 19.48 | |
| | | | | | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C: | | | | | | | | |
| Net assets | | $ | 169,578,363 | | | $ | 453,729 | |
| Shares outstanding | | | 8,773,463 | | | | 24,840 | |
| Net asset value per share (offering and redemption price) | | $ | 19.33 | | | $ | 18.27 | |
| | | | | | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS: | | | | | | | | |
| Net assets | | $ | 125,371,550 | | | | | |
| Shares outstanding | | | 6,227,453 | | | | | |
| Net asset value per share (offering and redemption price) | | $ | 20.13 | | | | | |
| | | | | | | | | |
| |
| * | Each Feeder Fund invests 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 Fund’s financial statements. |
See Notes to the Financial Statements.
32
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Assets & Liabilities
December 31, 2009
| | | | | | | | | |
| | | | | | The Kinetics
| |
| | | The Small Cap
| | | Government
| |
| | | Opportunities
| | | Money Market
| |
| | | Fund | | | Fund | |
| | |
| |
ASSETS: | | | | | | | | |
| Investments in the Master Portfolios, at value* | | $ | 199,761,644 | | | $ | 1,644,431 | |
| Receivable from Adviser | | | 13,798 | | | | 4,357 | |
| Receivable for Master Portfolio interest sold | | | 644,802 | | | | — | |
| Receivable for Fund shares sold | | | 126,806 | | | | — | |
| Prepaid expenses and other assets | | | 22,435 | | | | 10,881 | |
| | | | | | | | | |
| Total assets | | | 200,569,485 | | | | 1,659,669 | |
| | | | | | | | | |
LIABILITIES: | | | | | | | | |
| Payable to Directors and Officers | | | 3,314 | | | | 18 | |
| Payable for Fund shares repurchased | | | 771,608 | | | | — | |
| Payable for service fees | | | 38,839 | | | | 343 | |
| Payable for distribution fees | | | 6,209 | | | | — | |
| Accrued expenses and other liabilities | | | 106,263 | | | | 7,931 | |
| | | | | | | | | |
| Total liabilities | | | 926,233 | | | | 8,292 | |
| | | | | | | | | |
| Net assets | | $ | 199,643,252 | | | $ | 1,651,377 | |
| | | | | | | | | |
NET ASSETS CONSIST OF: | | | | | | | | |
| Paid in capital | | $ | 376,046,715 | | | $ | 1,651,460 | |
| Accumulated net investment income | | | 870,062 | | | | — | |
| Accumulated net realized loss on investments, foreign currency and written option contracts | | | (187,377,385 | ) | | | (83 | ) |
| Net unrealized appreciation on: | | | | | | | | |
| Investments and foreign currency | | | 10,103,860 | | | | — | |
| | | | | | | | | |
| Net Assets | | $ | 199,643,252 | | | $ | 1,651,377 | |
| | | | | | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS: | | | | | | | | |
| Net assets | | $ | 161,204,946 | | | $ | 1,651,377 | |
| Shares outstanding | | | 7,738,819 | | | | 1,651,377 | |
| Net asset value per share (offering and redemption price) | | $ | 20.83 | | | $ | 1.00 | |
| | | | | | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A: | | | | | | | | |
| Net assets | | $ | 14,244,324 | | | | | |
| Shares outstanding | | | 693,753 | | | | | |
| Net asset value per share (redemption price) | | $ | 20.53 | | | | | |
| | | | | | | | | |
| Offering price per share ($20.53 divided by .9425) | | $ | 21.78 | | | | | |
| | | | | | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C: | | | | | | | | |
| Net assets | | $ | 4,445,392 | | | | | |
| Shares outstanding | | | 219,195 | | | | | |
| Net asset value per share (offering and redemption price) | | $ | 20.28 | | | | | |
| | | | | | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS: | | | | | | | | |
| Net assets | | $ | 19,748,590 | | | | | |
| Shares outstanding | | | 944,745 | | | | | |
| Net asset value per share (offering and redemption price) | | $ | 20.90 | | | | | |
| | | | | | | | | |
| |
| * | Each Feeder Fund invests 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 Fund’s financial statements. |
See Notes to the Financial Statements.
33
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Assets & Liabilities
December 31, 2009
| | | | | | | | | |
| | | The Market
| | | The Water
| |
| | | Opportunities
| | | Infrastructure
| |
| | | Fund | | | Fund | |
| | |
| |
ASSETS: | | | | | | | | |
| Investments in the Master Portfolios, at value* | | $ | 66,109,900 | | | $ | 23,117,750 | |
| Receivable from Adviser | | | 15,711 | | | | 14,835 | |
| Receivable for Fund shares sold | | | 66,217 | | | | 329,217 | |
| Prepaid expenses and other assets | | | 26,431 | | | | 14,071 | |
| | | | | | | | | |
| Total assets | | | 66,218,259 | | | | 23,475,873 | |
| | | | | | | | | |
LIABILITIES: | | | | | | | | |
| Payable for Master Portfolio interest purchased | | | 317 | | | | 273,478 | |
| Payable to Directors and Officers | | | 982 | | | | 283 | |
| Payable for Fund shares repurchased | | | 65,900 | | | | 55,739 | |
| Payable for service fees | | | 13,970 | | | | 4,222 | |
| Payable for distribution fees | | | 7,670 | | | | 2,943 | |
| Accrued expenses and other liabilities | | | 29,852 | | | | 18,859 | |
| | | | | | | | | |
| Total liabilities | | | 118,691 | | | | 355,524 | |
| | | | | | | | | |
| Net assets | | $ | 66,099,568 | | | $ | 23,120,349 | |
| | | | | | | | | |
NET ASSETS CONSIST OF: | | | | | | | | |
| Paid in capital | | $ | 98,957,454 | | | $ | 29,737,309 | |
| Accumulated net investment income | | | 57,267 | | | | 3,244 | |
| Accumulated net realized loss on investments, foreign currency, options and written option contracts | | | (33,980,758 | ) | | | (6,998,191 | ) |
| Net unrealized appreciation on: | | | | | | | | |
| Investments and foreign currency | | | 1,027,783 | | | | 377,987 | |
| Written option contracts | | | 37,822 | | | | — | |
| | | | | | | | | |
| Net Assets | | $ | 66,099,568 | | | $ | 23,120,349 | |
| | | | | | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS: | | | | | | | | |
| Net assets | | $ | 41,255,426 | | | $ | 7,175,586 | |
| Shares outstanding | | | 3,807,507 | | | | 810,149 | |
| Net asset value per share (offering and redemption price) | | $ | 10.84 | | | $ | 8.86 | |
| | | | | | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A: | | | | | | | | |
| Net assets | | $ | 18,770,064 | | | $ | 10,339,555 | |
| Shares outstanding | | | 1,737,243 | | | | 1,172,600 | |
| Net asset value per share (redemption price) | | $ | 10.80 | | | $ | 8.82 | |
| | | | | | | | | |
| Offering price per share ($10.80 divided by .9425 and $8.82 divided by .9425) | | $ | 11.46 | | | $ | 9.36 | |
| | | | | | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C: | | | | | | | | |
| Net assets | | $ | 6,054,985 | | | $ | 2,699,788 | |
| Shares outstanding | | | 566,231 | | | | 309,891 | |
| Net asset value per share (offering and redemption price) | | $ | 10.69 | | | $ | 8.71 | |
| | | | | | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS: | | | | | | | | |
| Net assets | | $ | 19,093 | | | $ | 2,905,420 | |
| Shares outstanding | | | 1,758 | | | | 326,547 | |
| Net asset value per share (offering and redemption price) | | $ | 10.86 | | | $ | 8.90 | |
| | | | | | | | | |
| |
| * | Each Feeder Fund invests 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 Fund’s financial statements. |
See Notes to the Financial Statements.
34
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Assets & Liabilities
December 31, 2009
| | | | | |
| | | The Multi-
| |
| | | Disciplinary
| |
| | | Fund | |
| | |
| |
ASSETS: | | | | |
| Investments in the Master Portfolios, at value* | | $ | 1,226,993 | |
| Receivable from Adviser | | | 9,569 | |
| Prepaid expenses and other assets | | | 26,239 | |
| | | | | |
| Total assets | | | 1,262,801 | |
| | | | | |
LIABILITIES: | | | | |
| Payable to Directors and Officers | | | 8 | |
| Payable for service fees | | | 230 | |
| Payable for distribution fees | | | 85 | |
| Accrued expenses and other liabilities | | | 14,988 | |
| | | | | |
| Total liabilities | | | 15,311 | |
| | | | | |
| Net assets | | $ | 1,247,490 | |
| | | | | |
NET ASSETS CONSIST OF: | | | | |
| Paid in capital | | $ | 1,146,799 | |
| Accumulated net investment income | | | 705 | |
| Accumulated net realized gain on investments and written option contracts | | | 15,899 | |
| Net unrealized appreciation on: | | | | |
| Investments | | | 33,679 | |
| Written option contracts | | | 50,408 | |
| | | | | |
| Net Assets | | $ | 1,247,490 | |
| | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS: | | | | |
| Net assets | | $ | 938,039 | |
| Shares outstanding | | | 95,117 | |
| Net asset value per share (offering and redemption price) | | $ | 9.86 | |
| | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A: | | | | |
| Net assets | | $ | 102,970 | |
| Shares outstanding | | | 10,456 | |
| Net asset value per share (redemption price) | | $ | 9.85 | |
| | | | | |
| Offering price per share ($9.85 divided by .9425) | | $ | 10.45 | |
| | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C: | | | | |
| Net assets | | $ | 104,975 | |
| Shares outstanding | | | 10,711 | |
| Net asset value per share (offering and redemption price) | | $ | 9.80 | |
| | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS: | | | | |
| Net assets | | $ | 101,506 | |
| Shares outstanding | | | 10,262 | |
| Net asset value per share (offering and redemption price) | | $ | 9.89 | |
| | | | | |
| |
| * | Each Feeder Fund invests 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 Fund’s financial statements. |
See Notes to the Financial Statements.
35
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Operations
For the Year Ended December 31, 2009
| | | | | | | | | |
| | | The Internet
| | | The Global
| |
| | | Fund | | | Fund | |
| | |
| |
INVESTMENT INCOME ALLOCATED FROM MASTER | | | | | | | | |
PORTFOLIOS: | | | | | | | | |
| Dividends† | | $ | 628,830 | | | $ | 66,934 | |
| Interest | | | 417,736 | | | | 299 | |
| Income from securities lending | | | 133,745 | | | | 1,072 | |
| Expenses only from Master Portfolio | | | (1,213,369 | ) | | | (92,765 | ) |
| | | | | | | | | |
| Net investment loss from Master Portfolio | | | (33,058 | ) | | | (24,460 | ) |
| | | | | | | | | |
EXPENSES: | | | | | | | | |
| Distribution fees — Advisor Class A | | | 1,133 | | | | 390 | |
| Distribution fees — Advisor Class C | | | 780 | | | | 142 | |
| Shareholder servicing fees — Advisor Class A | | | 1,133 | | | | 390 | |
| Shareholder servicing fees — Advisor Class C | | | 260 | | | | 47 | |
| Shareholder servicing fees — No Load Class | | | 219,580 | | | | 7,893 | |
| Transfer Agent fees and expenses | | | 140,805 | | | | 18,885 | |
| Reports to shareholders | | | 55,754 | | | | 2,799 | |
| Administration fees | | | 33,052 | | | | 1,213 | |
| Professional fees | | | 20,100 | | | | 7,072 | |
| Directors’ and Officers’ fees and expenses | | | 6,529 | | | | 220 | |
| Registration fees | | | 43,649 | | | | 45,435 | |
| Fund accounting fees | | | 3,704 | | | | 176 | |
| Other expenses | | | 8,508 | | | | 336 | |
| | | | | | | | | |
| Total expenses | | | 534,987 | | | | 84,998 | |
| Less, expense reimbursement | | | (75,887 | ) | | | (130,914 | ) |
| | | | | | | | | |
| Net expenses | | | 459,100 | | | | (45,916 | ) |
| | | | | | | | | |
| Net investment income (loss) | | | (492,158 | ) | | | 21,456 | |
| | | | | | | | | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS: | | | | | | | | |
| Net realized gain (loss) on: | | | | | | | | |
| Investments and foreign currency | | | 3,597,660 | | | | (418,155 | ) |
| Net change in unrealized appreciation of: | | | | | | | | |
| Investments and foreign currency | | | 31,629,895 | | | | 1,899,110 | |
| Written option contracts | | | 459,289 | | | | — | |
| | | | | | | | | |
| Net gain on investments | | | 35,686,844 | | | | 1,480,955 | |
| | | | | | | | | |
| Net increase in net assets resulting from operations | | $ | 35,194,686 | | | $ | 1,502,411 | |
| | | | | | | | | |
| † Net of Foreign Taxes Withheld of: | | $ | 28,720 | | | $ | 4,261 | |
| | | | | | | | | |
See Notes to the Financial Statements.
36
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Operations
For the Year Ended December 31, 2009
| | | | | | | | | |
| | | The Paradigm
| | | The Medical
| |
| | | Fund | | | Fund | |
| | |
| |
INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIOS: | | | | | | | | |
| Dividends† | | $ | 24,205,787 | | | $ | 420,603 | |
| Interest | | | 3,477,551 | | | | 1,155 | |
| Other income | | | 231,158 | | | | 103,156 | |
| Income from securities lending | | | 4,217,659 | | | | 13,174 | |
| Expenses allocated from Master Portfolio | | | (17,455,729 | ) | | | (298,574 | ) |
| | | | | | | | | |
| Net investment income from Master Portfolio | | | 14,676,426 | | | | 239,514 | |
| | | | | | | | | |
EXPENSES: | | | | | | | | |
| Distribution fees — Advisor Class A | | | 594,084 | | | | 8,481 | |
| Distribution fees — Advisor Class C | | | 1,148,858 | | | | 3,291 | |
| Shareholder servicing fees — Advisor Class A | | | 594,084 | | | | 8,481 | |
| Shareholder servicing fees — Advisor Class C | | | 382,953 | | | | 1,097 | |
| Shareholder servicing fees — No Load Class | | | 1,912,548 | | | | 42,894 | |
| Shareholder servicing fees — Institutional Class | | | 245,726 | | | | — | |
| Transfer Agent fees and expenses | | | 536,519 | | | | 25,607 | |
| Reports to shareholders | | | 92,241 | | | | 7,639 | |
| Administration fees | | | 436,385 | | | | 7,446 | |
| Professional fees | | | 49,321 | | | | 13,077 | |
| Directors’ and Officers’ fees and expenses | | | 80,093 | | | | 1,647 | |
| Registration fees | | | 112,755 | | | | 40,801 | |
| Fund accounting fees | | | 64,264 | | | | 1,048 | |
| Other expenses | | | 101,109 | | | | 2,428 | |
| | | | | | | | | |
| Total expenses | | | 6,350,940 | | | | 163,937 | |
| Less, expense waiver for Institutional Class service fees | | | (184,295 | ) | | | — | |
| Less, expense reimbursement | | | (1,154,490 | ) | | | (158,994 | ) |
| | | | | | | | | |
| Net expenses | | | 5,012,155 | | | | 4,943 | |
| | | | | | | | | |
| Net investment income | | | 9,664,271 | | | | 234,571 | |
| | | | | | | | | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | | | | | | | | |
ALLOCATED FROM MASTER PORTFOLIOS: | | | | | | | | |
| Net realized gain (loss) on: | | | | | | | | |
| Investments and foreign currency | | | (281,292,053 | ) | | | (171,671 | ) |
| Written option contracts expired or closed | | | — | | | | 19,458 | |
| Net change in unrealized appreciation (depreciation) of: | | | | | | | | |
| Investments and foreign currency | | | 685,169,758 | | | | 4,244,154 | |
| Written option contracts | | | — | | | | (18,418 | ) |
| | | | | | | | | |
| Net gain on investments | | | 403,877,705 | | | | 4,073,523 | |
| | | | | | | | | |
| Net increase in net assets resulting from operations | | $ | 413,541,976 | | | $ | 4,308,094 | |
| | | | | | | | | |
| † Net of Foreign Taxes Withheld of: | | $ | 1,262,415 | | | $ | 19,117 | |
| | | | | | | | | |
See Notes to the Financial Statements.
37
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Operations
For the Year Ended December 31, 2009
| | | | | | | | | |
| | | | | | The Kinetics
| |
| | | The Small Cap
| | | Government
| |
| | | Opportunities
| | | Money Market
| |
| | | Fund | | | Fund | |
| | |
| |
INVESTMENT INCOME ALLOCATED FROM MASTER | | | | | | | | |
PORTFOLIOS: | | | | | | | | |
| Dividends† | | $ | 2,675,328 | | | $ | — | |
| Interest | | | 96,978 | | | | 1,268 | |
| Income from securities lending | | | 134,281 | | | | — | |
| Expenses only from Master Portfolio | | | (3,004,286 | ) | | | (21,528 | ) |
| | | | | | | | | |
| Net investment loss from Master Portfolio | | | (97,699 | ) | | | (20,260 | ) |
| | | | | | | | | |
EXPENSES: | | | | | | | | |
| Distribution fees — Advisor Class A | | | 31,360 | | | | — | |
| Distribution fees — Advisor Class C | | | 25,397 | | | | — | |
| Shareholder servicing fees — Advisor Class A | | | 31,360 | | | | — | |
| Shareholder servicing fees — Advisor Class C | | | 8,466 | | | | — | |
| Shareholder servicing fees — No Load Class | | | 355,359 | | | | 5,321 | |
| Shareholder servicing fees — Institutional Class | | | 106,584 | | | | — | |
| Transfer Agent fees and expenses | | | 92,191 | | | | 5,393 | |
| Reports to shareholders | | | 87,361 | | | | 5,104 | |
| Administration fees | | | 78,217 | | | | 762 | |
| Professional fees | | | 24,740 | | | | 5,275 | |
| Directors’ and Officers’ fees and expenses | | | 14,063 | | | | 180 | |
| Registration fees | | | 67,344 | | | | 20,040 | |
| Fund accounting fees | | | 10,507 | | | | 109 | |
| Other expenses | | | 14,174 | | | | 966 | |
| | | | | | | | | |
| Total expenses | | | 947,123 | | | | 43,150 | |
| Less, expense waiver for Institutional Class service fees | | | (79,938 | ) | | | — | |
| Less, expense reimbursement | | | (454,896 | ) | | | (63,410 | ) |
| | | | | | | | | |
| Net expenses | | | 412,289 | | | | (20,260 | ) |
| | | | | | | | | |
| Net investment loss | | | (509,988 | ) | | | — | |
| | | | | | | | | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS: | | | | | | | | |
| Net realized loss on: | | | | | | | | |
| Investments and foreign currency | | | (45,656,563 | ) | | | — | |
| Net change in unrealized appreciation of: | | | | | | | | |
| Investments and foreign currency | | | 143,851,148 | | | | — | |
| Written option contracts | | | 1,310 | | | | — | |
| | | | | | | | | |
| Net gain on investments | | | 98,195,895 | | | | — | |
| | | | | | | | | |
| Net increase in net assets resulting from operations | | $ | 97,685,907 | | | $ | — | |
| | | | | | | | | |
| † Net of Foreign Taxes Withheld of: | | $ | 90,034 | | | $ | — | |
| | | | | | | | | |
See Notes to the Financial Statements.
38
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Operations
For the Year Ended December 31, 2009
| | | | | | | | | |
| | | The Market
| | | The Water
| |
| | | Opportunities
| | | Infrastructure
| |
| | | Fund | | | Fund | |
| | |
| |
INVESTMENT INCOME ALLOCATED FROM MASTER | | | | | | | | |
PORTFOLIOS: | | | | | | | | |
| Dividends† | | $ | 894,420 | | | $ | 346,776 | |
| Interest | | | 4,167 | | | | 3,630 | |
| Income from securities lending | | | 98,138 | | | | 10,471 | |
| Expenses only from Master Portfolio | | | (843,738 | ) | | | (253,722 | ) |
| | | | | | | | | |
| Net investment income from Master Portfolio | | | 152,987 | | | | 107,155 | |
| | | | | | | | | |
EXPENSES: | | | | | | | | |
| Distribution fees — Advisor Class A | | | 45,935 | | | | 18,690 | |
| Distribution fees — Advisor Class C | | | 39,077 | | | | 15,970 | |
| Shareholder servicing fees — Advisor Class A | | | 45,935 | | | | 18,690 | |
| Shareholder servicing fees — Advisor Class C | | | 13,026 | | | | 5,323 | |
| Shareholder servicing fees — No Load Class | | | 89,460 | | | | 17,086 | |
| Shareholder servicing fees — Institutional Class | | | 14 | | | | 1,455 | |
| Transfer Agent fees and expenses | | | 36,984 | | | | 23,176 | |
| Reports to shareholders | | | 10,715 | | | | 8,312 | |
| Administration fees | | | 21,588 | | | | 5,859 | |
| Professional fees | | | 15,849 | | | | 12,699 | |
| Directors’ and Officers’ fees and expenses | | | 4,149 | | | | 1,415 | |
| Registration fees | | | 52,714 | | | | 54,310 | |
| Fund accounting fees | | | 3,034 | | | | 772 | |
| Other expenses | | | 6,146 | | | | 1,724 | |
| | | | | | | | | |
| Total expenses | | | 384,626 | | | | 185,481 | |
| Less, expense waiver for Institutional Class service fees | | | (10 | ) | | | (1,091 | ) |
| Less, expense reimbursement | | | (169,602 | ) | | | (123,364 | ) |
| | | | | | | | | |
| Net expenses | | | 215,014 | | | | 61,026 | |
| | | | | | | | | |
| Net investment income (loss) | | | (62,027 | ) | | | 46,129 | |
| | | | | | | | | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS: | | | | | | | | |
| Net realized loss on: | | | | | | | | |
| Investments and foreign currency | | | (7,399,154 | ) | | | (1,419,347 | ) |
| Net change in unrealized appreciation of: | | | | | | | | |
| Investments and foreign currency | | | 29,812,832 | | | | 3,683,013 | |
| Written option contracts | | | 264,761 | | | | — | |
| | | | | | | | | |
| Net gain on investments | | | 22,678,439 | | | | 2,263,666 | |
| | | | | | | | | |
| Net increase in net assets resulting from operations | | $ | 22,616,412 | | | $ | 2,309,795 | |
| | | | | | | | | |
| † Net of Foreign Taxes Withheld of: | | $ | 38,811 | | | $ | 26,735 | |
| | | | | | | | | |
See Notes to the Financial Statements.
39
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Operations
For the Year Ended December 31, 2009
| | | | | |
| | | The Multi-
| |
| | | Disciplinary
| |
| | | Fund | |
| | |
| |
INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIOS: | | | | |
| Interest | | $ | 20,326 | |
| Expenses only from Master Portfolio | | | (29,734 | ) |
| | | | | |
| Net investment loss from Master Portfolio | | | (9,408 | ) |
| | | | | |
EXPENSES: | | | | |
| Distribution fees — Advisor Class A | | | 228 | |
| Distribution fees — Advisor Class C | | | 698 | |
| Shareholder servicing fees — Advisor Class A | | | 228 | |
| Shareholder servicing fees — Advisor Class C | | | 233 | |
| Shareholder servicing fees — No Load Class | | | 1,417 | |
| Shareholder servicing fees — Institutional Class | | | 179 | |
| Transfer Agent fees and expenses | | | 20,125 | |
| Reports to shareholders | | | 768 | |
| Administration fees | | | 1,305 | |
| Professional fees | | | 9,654 | |
| Directors’ and Officers’ fees and expenses | | | 50 | |
| Registration fees | | | 46,108 | |
| Fund accounting fees | | | 46 | |
| Other expenses | | | 353 | |
| | | | | |
| Total expenses | | | 81,392 | |
| Less, expense waiver for Institutional Class service fees | | | (134 | ) |
| Less, expense reimbursement | | | (97,718 | ) |
| | | | | |
| Net expenses | | | (16,460 | ) |
| | | | | |
| Net investment gain | | | 7,052 | |
| | | | | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS: | | | | |
| Net realized gain (loss) on: | | | | |
| Investments | | | (17,264 | ) |
| Written option contracts expired or closed | | | 116,361 | |
| Net change in unrealized appreciation of: | | | | |
| Investments | | | 34,497 | |
| Written option contracts | | | 64,531 | |
| | | | | |
| Net gain on investments | | | 198,125 | |
| | | | | |
| Net increase in net assets resulting from operations | | $ | 205,177 | |
| | | | | |
See Notes to the Financial Statements.
40
KINETICS MUTUAL FUNDS, INC. — 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, 2009 | | | December 31, 2008 | | | December 31, 2009 | | | December 31, 2008 | |
| | |
| |
OPERATIONS: | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | $ | (492,158 | ) | | $ | 1,162,085 | | | $ | 21,456 | | | $ | 52,359 | |
| Net realized gain (loss) on sale of investments, foreign currency and written option contracts expired or closed | | | 3,597,660 | | | | 1,853,798 | | | | (418,155 | ) | | | 188,701 | |
| Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options | | | 32,089,184 | | | | (65,383,744 | ) | | | 1,899,110 | | | | (2,272,129 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from operations | | | 35,194,686 | | | | (62,367,861 | ) | | | 1,502,411 | | | | (2,031,069 | ) |
| | | | | | | | | | | | | | | | | |
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS: | | | | | | | | | | | | | | | | |
| Net investment income | | | (127,292 | ) | | | (180,775 | ) | | | (19,692 | ) | | | (42,183 | ) |
| | | | | | | | | | | | | | | | | |
| Total distributions | | | (127,292 | ) | | | (180,775 | ) | | | (19,692 | ) | | | (42,183 | ) |
| | | | | | | | | | | | | | | | | |
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A:(1) | | | | | | | | | | | | | | | | |
| Net investment income | | | (930 | ) | | | (751 | ) | | | (1,275 | ) | | | (2,180 | ) |
| | | | | | | | | | | | | | | | | |
| Total distributions | | | (930 | ) | | | (751 | ) | | | (1,275 | ) | | | (2,180 | ) |
| | | | | | | | | | | | | | | | | |
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C:(1) | | | | | | | | | | | | | | | | |
| Net investment income | | | (145 | ) | | | (235 | ) | | | (22 | ) | | | (88 | ) |
| | | | | | | | | | | | | | | | | |
| Total distributions | | | (145 | ) | | | (235 | ) | | | (22 | ) | | | (88 | ) |
| | | | | | | | | | | | | | | | | |
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS: | | | | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 4,869,857 | | | | 6,464,409 | | | | 2,868,282 | | | | 1,558,631 | |
| Redemption fees | | | 1,370 | | | | 4,900 | | | | 6,702 | | | | 772 | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | 123,697 | | | | 173,127 | | | | 19,427 | | | | 41,443 | |
| Cost of shares redeemed | | | (10,313,179 | ) | | | (36,080,016 | ) | | | (1,808,229 | ) | | | (862,547 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from capital share transactions | | | (5,318,255 | ) | | | (29,437,580 | ) | | | 1,086,182 | | | | 738,299 | |
| | | | | | | | | | | | | | | | | |
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A:(1) | | | | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 489,536 | | | | 156,223 | | | | 312,466 | | | | 182,086 | |
| Redemption fees | | | 201 | | | | 20 | | | | — | | | | — | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | 825 | | | | 615 | | | | 417 | | | | 2,065 | |
| Cost of shares redeemed | | | (225,140 | ) | | | (241,742 | ) | | | (101,796 | ) | | | (21,680 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from capital share transactions | | | 265,422 | | | | (84,884 | ) | | | 211,087 | | | | 162,471 | |
| | | | | | | | | | | | | | | | | |
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C:(1) | | | | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 302 | | | | 44,894 | | | | 21,000 | | | | 10,000 | |
| Redemption fees | | | — | | | | — | | | | — | | | | — | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | 43 | | | | 105 | | | | 22 | | | | 88 | |
| Cost of shares redeemed | | | (33,452 | ) | | | (147,129 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from capital share transactions | | | (33,107 | ) | | | (102,130 | ) | | | 21,022 | | | | 10,088 | |
| | | | | | | | | | | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS: | | | 29,980,379 | | | | (92,174,216 | ) | | | 2,799,713 | | | | (1,164,662 | ) |
NET ASSETS: | | | | | | | | | | | | | | | | |
| Beginning of year | | | 75,543,513 | | | | 167,717,729 | | | | 1,973,836 | | | | 3,138,498 | |
| | | | | | | | | | | | | | | | | |
| End of year* | | $ | 105,523,892 | | | $ | 75,543,513 | | | $ | 4,773,549 | | | $ | 1,973,836 | |
| | | | | | | | | | | | | | | | | |
| *Including undistributed net investment loss of: | | $ | (912,146 | ) | | $ | (494,997 | ) | | $ | (8,321 | ) | | $ | (8 | ) |
| | | | | | | | | | | | | | | | | |
| |
| (1) | Advisor Class A and Advisor Class C shares of the Global Fund commenced operations on May 19, 2008. |
See Notes to the Financial Statements.
41
KINETICS MUTUAL FUNDS, INC. — 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, 2009 | | | December 31, 2008 | | | December 31, 2009 | | | December 31, 2008 | |
| | |
| |
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS: | | | | | | | | | | | | | | | | |
| Shares sold | | | 175,734 | | | | 208,819 | | | | 878,509 | | | | 372,985 | |
| Shares issued in reinvestments of dividends and distributions | | | 4,000 | | | | 8,491 | | | | 4,994 | | | | 17,711 | |
| Shares redeemed | | | (401,239 | ) | | | (1,231,700 | ) | | | (557,975 | ) | | | (243,058 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in shares outstanding | | | (221,505 | ) | | | (1,014,390 | ) | | | 325,528 | | | | 147,638 | |
| | | | | | | | | | | | | | | | | |
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A:(1) | | | | | | | | | | | | | | | | |
| Shares sold | | | 17,431 | | | | 6,346 | | | | 84,996 | | | | 52,744 | |
| Shares issued in reinvestments of dividends and distributions | | | 27 | | | | 30 | | | | 107 | | | | 882 | |
| Shares redeemed | | | (8,671 | ) | | | (8,709 | ) | | | (36,346 | ) | | | (8,854 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in shares outstanding | | | 8,787 | | | | (2,333 | ) | | | 48,757 | | | | 44,772 | |
| | | | | | | | | | | | | | | | | |
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C:(1) | | | | | | | | | | | | | | | | |
| Shares sold | | | 12 | | | | 2,063 | | | | 6,943 | | | | 2,193 | |
| Shares issued in reinvestments of dividends and distributions | | | 2 | | | | 5 | | | | 6 | | | | 37 | |
| Shares redeemed | | | (1,599 | ) | | | (4,784 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in shares outstanding | | | (1,585 | ) | | | (2,716 | ) | | | 6,949 | | | | 2,230 | |
| | | | | | | | | | | | | | | | | |
| |
| (1) | Advisor Class A and Advisor Class C shares of the Global Fund commenced operations on May 19, 2008. |
See Notes to the Financial Statements.
42
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statements of Changes in Net Assets
| | | | | | | | | | | | | | | | | |
| | | The Paradigm Fund | | | The Medical Fund | |
| | | For the
| | | For the
| | | For the
| | | For the
| |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
| | | December 31, 2009 | | | December 31, 2008 | | | December 31, 2009 | | | December 31, 2008 | |
| | |
| |
OPERATIONS: | | | | | | | | | | | | | | | | |
| Net investment income | | $ | 9,664,271 | | | $ | 14,464,539 | | | $ | 234,571 | | | $ | 187,354 | |
| Net realized gain (loss) on sale of investments, foreign currency and written option contracts expired or closed | | | (281,292,053 | ) | | | (630,047,922 | ) | | | (152,213 | ) | | | 369,226 | |
| Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options | | | 685,169,758 | | | | (1,574,418,489 | ) | | | 4,225,736 | | | | (5,656,013 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from operations | | | 413,541,976 | | | | (2,190,001,872 | ) | | | 4,308,094 | | | | (5,099,433 | ) |
| | | | | | | | | | | | | | | | | |
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS: | | | | | | | | | | | | | | | | |
| Net investment income | | | (6,864,283 | ) | | | — | | | | (175,656 | ) | | | (160,902 | ) |
| Net realized gains | | | — | | | | (4,119,453 | ) | | | (22,795 | ) | | | (379,210 | ) |
| | | | | | | | | | | | | | | | | |
| Total distributions | | | (6,864,283 | ) | | | (4,119,453 | ) | | | (198,451 | ) | | | (540,112 | ) |
| | | | | | | | | | | | | | | | | |
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A: | | | | | | | | | | | | | | | | |
| Net investment income | | | (741,228 | ) | | | — | | | | (28,347 | ) | | | (25,786 | ) |
| Net realized gains | | | — | | | | (1,395,788 | ) | | | (4,778 | ) | | | (72,741 | ) |
| | | | | | | | | | | | | | | | | |
| Total distributions | | | (741,228 | ) | | | (1,395,788 | ) | | | (33,125 | ) | | | (98,527 | ) |
| | | | | | | | | | | | | | | | | |
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C: | | | | | | | | | | | | | | | | |
| Net investment income | | | — | | | | — | | | | (618 | ) | | | (1,481 | ) |
| Net realized gains | | | — | | | | (850,989 | ) | | | (507 | ) | | | (7,780 | ) |
| | | | | | | | | | | | | | | | | |
| Total distributions | | | — | | | | (850,989 | ) | | | (1,125 | ) | | | (9,261 | ) |
| | | | | | | | | | | | | | | | | |
DISTRIBUTIONS TO SHAREHOLDERS — INSTITUTIONAL CLASS: | | | | | | | | | | | | | | | | |
| Net investment income | | | (1,674,477 | ) | | | — | | | | N/A | | | | N/A | |
| Net realized gains | | | — | | | | (706,833 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
| Total distributions | | | (1,674,477 | ) | | | (706,833 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS: | | | | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 228,538,793 | | | | 777,766,342 | | | | 8,877,756 | | | | 12,391,571 | |
| Redemption fees | | | 96,505 | | | | 414,514 | | | | 5,196 | | | | 5,119 | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | 6,669,240 | | | | 3,983,262 | | | | 196,171 | | | | 534,949 | |
| Cost of shares redeemed | | | (392,483,046 | ) | | | (1,675,903,934 | ) | | | (6,974,443 | ) | | | (6,247,291 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from capital share transactions | | | (157,178,508 | ) | | | (893,739,816 | ) | | | 2,104,680 | | | | 6,684,348 | |
| | | | | | | | | | | | | | | | | |
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A: | | | | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 52,590,755 | | | | 237,905,995 | | | | 2,336,497 | | | | 3,411,318 | |
| Redemption fees | | | — | | | | 85,557 | | | | 1,395 | | | | 5,045 | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | 642,068 | | | | 1,172,121 | | | | 18,350 | | | | 67,566 | |
| Cost of shares redeemed | | | (123,719,278 | ) | | | (207,346,143 | ) | | | (1,638,705 | ) | | | (1,198,061 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from capital share transactions | | | (70,486,455 | ) | | | 31,817,530 | | | | 717,537 | | | | 2,285,868 | |
| | | | | | | | | | | | | | | | | |
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C: | | | | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 15,759,105 | | | | 112,960,292 | | | | 354,523 | | | | 501,414 | |
| Redemption fees | | | 532 | | | | 14,030 | | | | 4 | | | | 336 | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | — | | | | 763,533 | | | | 689 | | | | 5,511 | |
| Cost of shares redeemed | | | (44,568,229 | ) | | | (86,079,004 | ) | | | (307,788 | ) | | | (240,952 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from capital share transactions | | | (28,808,592 | ) | | | 27,658,851 | | | | 47,428 | | | | 266,309 | |
| | | | | | | | | | | | | | | | | |
See Notes to the Financial Statements.
43
KINETICS MUTUAL FUNDS, INC. — 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, 2009 | | | December 31, 2008 | | | December 31, 2009 | | | December 31, 2008 | |
| | |
| |
CAPITAL SHARE TRANSACTIONS — INSTITUTIONAL CLASS : | | | | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 52,022,093 | | | | 234,720,520 | | | | N/A | | | | N/A | |
| Redemption fees | | | 2,858 | | | | 27,867 | | | | N/A | | | | N/A | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | 1,564,877 | | | | 624,496 | | | | N/A | | | | N/A | |
| Cost of shares redeemed | | | (95,494,884 | ) | | | (517,865,576 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
| Net decrease in net assets resulting from capital share transactions | | | (41,905,056 | ) | | | (282,492,693 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS: | | | 105,883,377 | | | | (3,313,831,063 | ) | | | 6,945,038 | | | | 3,489,192 | |
NET ASSETS: | | | | | | | | | | | | | | | | |
| Beginning of year | | | 1,266,450,508 | | | | 4,580,281,571 | | | | 18,981,944 | | | | 15,492,752 | |
| | | | | | | | | | | | | | | | | |
| End of year* | | $ | 1,372,333,885 | | | $ | 1,266,450,508 | | | $ | 25,926,982 | | | $ | 18,981,944 | |
| | | | | | | | | | | | | | | | | |
| *Including undistributed net investment income of: | | $ | 2,487,370 | | | $ | 1,990,250 | | | $ | 29,613 | | | $ | 62 | |
| | | | | | | | | | | | | | | | | |
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS: | | | | | | | | | | | | | | | | |
| Shares sold | | | 13,500,735 | | | | 30,563,817 | | | | 503,291 | | | | 644,585 | |
| Shares issued in reinvestments of dividends and distributions | | | 331,473 | | | | 282,239 | | | | 10,374 | | | | 35,404 | |
| Shares redeemed | | | (24,319,939 | ) | | | (73,373,736 | ) | | | (421,096 | ) | | | (349,528 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in shares outstanding | | | (10,487,731 | ) | | | (42,527,680 | ) | | | 92,569 | | | | 330,461 | |
| | | | | | | | | | | | | | | | | |
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A: | | | | | | | | | | | | | | | | |
| Shares sold | | | 3,318,616 | | | | 9,802,715 | | | | 140,646 | | | | 199,403 | |
| Shares issued in reinvestments of dividends and distributions | | | 32,395 | | | | 84,490 | | | | 993 | | | | 4,568 | |
| Shares redeemed | | | (8,280,037 | ) | | | (10,100,248 | ) | | | (102,207 | ) | | | (80,265 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in shares outstanding | | | (4,929,026 | ) | | | (213,043 | ) | | | 39,432 | | | | 123,706 | |
| | | | | | | | | | | | | | | | | |
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C: | | | | | | | | | | | | | | | | |
| Shares sold | | | 1,011,821 | | | | 4,474,742 | | | | 22,768 | | | | 27,549 | |
| Shares issued in reinvestments of dividends and distributions | | | — | | | | 56,496 | | | | 37 | | | | 374 | |
| Shares redeemed | | | (2,955,060 | ) | | | (4,547,903 | ) | | | (19,133 | ) | | | (14,415 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in shares outstanding | | | (1,943,239 | ) | | | (16,665 | ) | | | 3,672 | | | | 13,508 | |
| | | | | | | | | | | | | | | | | |
CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS: | | | | | | | | | | | | | | | | |
| Shares sold | | | 3,148,491 | | | | 9,395,948 | | | | N/A | | | | N/A | |
| Shares issued in reinvestments of dividends and distributions | | | 77,932 | | | | 44,196 | | | | N/A | | | | N/A | |
| Shares redeemed | | | (5,875,213 | ) | | | (26,545,295 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
| Net decrease in shares outstanding | | | (2,648,790 | ) | | | (17,105,151 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
See Notes to the Financial Statements.
44
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statements of Changes in Net Assets
| | | | | | | | | | | | | | | | | |
| | | | | | The Kinetics Government
| |
| | | The Small Cap Opportunities Fund | | | Money Market Fund | |
| | | For the
| | | For the
| | | For the
| | | For the
| |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
| | | December 31, 2009 | | | December 31, 2008 | | | December 31, 2009 | | | December 31, 2008 | |
| | |
| |
OPERATIONS: | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | $ | (509,988 | ) | | $ | 1,530,590 | | | $ | — | | | $ | 17,670 | |
| Net realized loss on sale of investments, foreign currency and written option contracts expired or closed | | | (45,656,563 | ) | | | (139,814,506 | ) | | | — | | | | (83 | ) |
| Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options | | | 143,852,458 | | | | (332,379,674 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from operations | | | 97,685,907 | | | | (470,663,590 | ) | | | — | | | | 17,587 | |
| | | | | | | | | | | | | | | | | |
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS: | | | | | | | | | | | | | | | | |
| Net investment income | | | — | | | | — | | | | — | | | | (17,587 | ) |
| Net realized gains | | | — | | | | (2,580,104 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | | |
| Total distributions | | | — | | | | (2,580,104 | ) | | | — | | | | (17,587 | ) |
| | | | | | | | | | | | | | | | | |
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A: | | | | | | | | | | | | | | | | |
| Net realized gains | | | — | | | | (242,741 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
| Total distributions | | | — | | | | (242,741 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C: | | | | | | | | | | | | | | | | |
| Net realized gains | | | — | | | | (57,484 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
| Total distributions | | | — | | | | (57,484 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
DISTRIBUTIONS TO SHAREHOLDERS — INSTITUTIONAL CLASS: | | | | | | | | | | | | | | | | |
| Net realized gains | | | — | | | | (1,390,250 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
| Total distributions | | | — | | | | (1,390,250 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS: | | | | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 36,310,875 | | | | 124,972,348 | | | | 1,874,921 | | | | 4,422,225 | |
| Redemption fees | | | 8,109 | | | | 67,878 | | | | — | | | | — | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | — | | | | 2,547,716 | | | | — | | | | 15,599 | |
| Cost of shares redeemed | | | (64,086,132 | ) | | | (447,983,662 | ) | | | (2,911,485 | ) | | | (2,939,399 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from capital share transactions | | | (27,767,148 | ) | | | (320,395,720 | ) | | | (1,036,564 | ) | | | 1,498,425 | |
| | | | | | | | | | | | | | | | | |
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A: | | | | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 4,027,254 | | | | 12,727,793 | | | | N/A | | | | N/A | |
| Redemption fees | | | 472 | | | | 4,012 | | | | N/A | | | | N/A | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | — | | | | 216,516 | | | | N/A | | | | N/A | |
| Cost of shares redeemed | | | (7,399,034 | ) | | | (16,402,510 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
| Net decrease in net assets resulting from capital share transactions | | | (3,371,308 | ) | | | (3,454,189 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
See Notes to the Financial Statements.
45
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statements of Changes in Net Assets — (Continued)
| | | | | | | | | | | | | | | | | |
| | | | | | The Kinetics Government
| |
| | | The Small Cap Opportunities Fund | | | Money Market Fund | |
| | | For the
| | | For the
| | | For the
| | | For the
| |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
| | | December 31, 2009 | | | December 31, 2008 | | | December 31, 2009 | | | December 31, 2008 | |
| | |
| |
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C: | | | | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 1,109,508 | | | | 3,622,686 | | | | N/A | | | | N/A | |
| Redemption fees | | | 101 | | | | 59 | | | | N/A | | | | N/A | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | — | | | | 28,520 | | | | N/A | | | | N/A | |
| Cost of shares redeemed | | | (1,004,506 | ) | | | (2,146,275 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
| Net increase in net assets resulting from capital share transactions | | | 105,103 | | | | 1,504,990 | | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
CAPITAL SHARE TRANSACTIONS — INSTITUTIONAL CLASS: | | | | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 9,645,168 | | | | 33,049,688 | | | | N/A | | | | N/A | |
| Redemption fees | | | 269 | | | | 1,510 | | | | N/A | | | | N/A | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | — | | | | 1,357,045 | | | | N/A | | | | N/A | |
| Cost of shares redeemed | | | (86,994,949 | ) | | | (114,107,993 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
| Net decrease in net assets resulting from capital share transactions | | | (77,349,512 | ) | | | (79,699,750 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS: | | | (10,696,958 | ) | | | (876,978,838 | ) | | | (1,036,564 | ) | | | 1,498,425 | |
NET ASSETS: | | | | | | | | | | | | | | | | |
| Beginning of year | | | 210,340,210 | | | | 1,087,319,048 | | | | 2,687,941 | | | | 1,189,516 | |
| | | | | | | | | | | | | | | | | |
| End of year* | | $ | 199,643,252 | | | $ | 210,340,210 | | | $ | 1,651,377 | | | $ | 2,687,941 | |
| | | | | | | | | | | | | | | | | |
| *Including undistributed net investment income (loss) of: | | $ | 870,062 | | | $ | (387,918 | ) | | $ | — | | | $ | 83 | |
| | | | | | | | | | | | | | | | | |
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS: | | | | | | | | | | | | | | | | |
| Shares sold | | | 2,125,038 | | | | 4,796,386 | | | | 1,874,921 | | | | 4,422,225 | |
| Shares issued in reinvestments of dividends and distributions | | | — | | | | 196,884 | | | | — | | | | 15,599 | |
| Shares redeemed | | | (4,028,266 | ) | | | (18,197,054 | ) | | | (2,911,485 | ) | | | (2,939,399 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in shares outstanding | | | (1,903,228 | ) | | | (13,203,784 | ) | | | (1,036,564 | ) | | | 1,498,425 | |
| | | | | | | | | | | | | | | | | |
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A: | | | | | | | | | | | | | | | | |
| Shares sold | | | 229,236 | | | | 530,590 | | | | N/A | | | | N/A | |
| Shares issued in reinvestments of dividends and distributions | | | — | | | | 16,941 | | | | N/A | | | | N/A | |
| Shares redeemed | | | (464,677 | ) | | | (768,900 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
| Net decrease in shares outstanding | | | (235,441 | ) | | | (221,369 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C: | | | | | | | | | | | | | | | | |
| Shares sold | | | 60,451 | | | | 162,488 | | | | N/A | | | | N/A | |
| Shares issued in reinvestments of dividends and distributions | | | — | | | | 2,247 | | | | N/A | | | | N/A | |
| Shares redeemed | | | (63,523 | ) | | | (99,012 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in shares outstanding | | | (3,072 | ) | | | 65,723 | | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS: | | | | | | | | | | | | | | | | |
| Shares sold | | | 659,244 | | | | 1,421,164 | | | | N/A | | | | N/A | |
| Shares issued in reinvestments of dividends and distributions | | | — | | | | 104,710 | | | | N/A | | | | N/A | |
| Shares redeemed | | | (4,901,031 | ) | | | (6,261,434 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
| Net decrease in shares outstanding | | | (4,241,787 | ) | | | (4,735,560 | ) | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
See Notes to the Financial Statements.
46
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statements of Changes in Net Assets
| | | | | | | | | | | | | | | | | |
| | | The Market Opportunities Fund | | | The Water Infrastructure Fund | |
| | | For the
| | | For the
| | | For the
| | | For the
| |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
| | | December 31, 2009 | | | December 31, 2008 | | | December 31, 2009 | | | December 31, 2008 | |
| | |
| |
OPERATIONS: | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | $ | (62,027 | ) | | $ | 726,380 | | | $ | 46,129 | | | $ | 187,272 | |
| Net realized loss on sale of investments, foreign currency and written option contracts expired or closed | | | (7,399,154 | ) | | | (26,771,823 | ) | | | (1,419,347 | ) | | | (5,802,786 | ) |
| Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options | | | 30,077,593 | | | | (46,310,390 | ) | | | 3,683,013 | | | | (3,337,404 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from operations | | | 22,616,412 | | | | (72,355,833 | ) | | | 2,309,795 | | | | (8,952,918 | ) |
| | | | | | | | | | | | | | | | | |
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS: | | | | | | | | | | | | | | | | |
| Net investment income | | | (20,768 | ) | | | (285,733 | ) | | | (1,817 | ) | | | — | |
| | | | | | | | | | | | | | | | | |
| Total distributions | | | (20,768 | ) | | | (285,733 | ) | | | (1,817 | ) | | | — | |
| | | | | | | | | | | | | | | | | |
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A: | | | | | | | | | | | | | | | | |
| Net investment income | | | (9,381 | ) | | | (62,736 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | | |
| Total distributions | | | (9,381 | ) | | | (62,736 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | | |
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C: | | | | | | | | | | | | | | | | |
| Net investment income | | | (2,890 | ) | | | (8,853 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | | |
| Total distributions | | | (2,890 | ) | | | (8,853 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | | |
DISTRIBUTIONS TO SHAREHOLDERS — INSTITUTIONAL CLASS:(1) | | | | | | | | | | | | | | | | |
| Net investment income | | | (10 | ) | | | (62 | ) | | | (7,282 | ) | | | — | |
| | | | | | | | | | | | | | | | | |
| Total distributions | | | (10 | ) | | | (62 | ) | | | (7,282 | ) | | | — | |
| | | | | | | | | | | | | | | | | |
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS: | | | | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 7,876,163 | | | | 44,566,651 | | | | 3,525,885 | | | | 27,335,651 | |
| Redemption fees | | | 47,139 | | | | 27,450 | | | | 635 | | | | 489 | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | 20,440 | | | | 283,718 | | | | 1,579 | | | | — | |
| Cost of shares redeemed | | | (14,496,784 | ) | | | (32,158,187 | ) | | | (3,951,117 | ) | | | (16,642,255 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from capital share transactions | | | (6,553,042 | ) | | | 12,719,632 | | | | (423,018 | ) | | | 10,693,885 | |
| | | | | | | | | | | | | | | | | |
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A: | | | | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 3,438,842 | | | | 19,183,719 | | | | 7,953,554 | | | | 7,936,561 | |
| Redemption fees | | | 8,744 | | | | 7,471 | | | | 997 | | | | 2,093 | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | 7,753 | | | | 51,974 | | | | — | | | | — | |
| Cost of shares redeemed | | | (10,299,115 | ) | | | (18,476,958 | ) | | | (6,109,558 | ) | | | (869,788 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from capital share transactions | | | (6,843,776 | ) | | | 766,206 | | | | 1,844,993 | | | | 7,068,866 | |
| | | | | | | | | | | | | | | | | |
(1)Institutional Class shares of the Market Opportunities Fund commenced operations on May 19, 2008.
See Notes to the Financial Statements.
47
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statements of Changes in Net Assets — (Continued)
| | | | | | | | | | | | | | | | | |
| | | The Market Opportunities Fund | | | The Water Infrastructure Fund | |
| | | For the
| | | For the
| | | For the
| | | For the
| |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
| | | December 31, 2009 | | | December 31, 2008 | | | December 31, 2009 | | | December 31, 2008 | |
| | |
| |
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C: | | | | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 1,574,137 | | | | 4,664,077 | | | | 1,341,247 | | | | 1,298,685 | |
| Redemption fees | | | 7 | | | | 186 | | | | 101 | | | | — | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | 2,366 | | | | 7,291 | | | | — | | | | — | |
| Cost of shares redeemed | | | (2,210,676 | ) | | | (3,618,752 | ) | | | (542,169 | ) | | | (388,456 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from capital share transactions | | | (634,166 | ) | | | 1,052,802 | | | | 799,179 | | | | 910,229 | |
| | | | | | | | | | | | | | | | | |
CAPITAL SHARE TRANSACTIONS — INSTITUTIONAL CLASS:(1) | | | | | | | | | | | | | | | | |
| Proceeds from shares sold | | | 10,807 | | | | 10,000 | | | | 2,665,048 | | | | 329,302 | |
| Redemption fees | | | — | | | | — | | | | 500 | | | | 69 | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | 10 | | | | 62 | | | | 4,823 | | | | — | |
| Cost of shares redeemed | | | — | | | | — | | | | (153,009 | ) | | | (116,019 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase in net assets resulting from capital share transactions | | | 10,817 | | | | 10,062 | | | | 2,517,362 | | | | 213,352 | |
| | | | | | | | | | | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS: | | | 8,563,196 | | | | (58,164,515 | ) | | | 7,039,212 | | | | 9,933,414 | |
NET ASSETS: | | | | | | | | | | | | | | | | |
| Beginning of year | | | 57,536,372 | | | | 115,700,887 | | | | 16,081,137 | | | | 6,147,723 | |
| | | | | | | | | | | | | | | | | |
| End of year* | | $ | 66,099,568 | | | $ | 57,536,372 | | | $ | 23,120,349 | | | $ | 16,081,137 | |
| | | | | | | | | | | | | | | | | |
| *Including undistributed net investment income (loss) of: | | $ | 57,267 | | | $ | 73,246 | | | $ | 3,244 | | | $ | (27,093 | ) |
| | | | | | | | | | | | | | | | | |
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS: | | | | | | | | | | | | | | | | |
| Shares sold | | | 840,758 | | | | 3,752,788 | | | | 439,147 | | | | 2,786,011 | |
| Shares issued in reinvestments of dividends and distributions | | | 1,569 | | | | 40,416 | | | | 177 | | | | — | |
| Shares redeemed | | | (1,774,870 | ) | | | (2,962,139 | ) | | | (495,881 | ) | | | (2,153,711 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in shares outstanding | | | (932,543 | ) | | | 831,065 | | | | (56,557 | ) | | | 632,300 | |
| | | | | | | | | | | | | | | | | |
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A: | | | | | | | | | | | | | | | | |
| Shares sold | | | 407,710 | | | | 1,638,020 | | | | 992,317 | | | | 875,948 | |
| Shares issued in reinvestments of dividends and distributions | | | 657 | | | | 7,414 | | | | — | | | | — | |
| Shares redeemed | | | (1,235,063 | ) | | | (1,813,295 | ) | | | (828,509 | ) | | | (108,948 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in shares outstanding | | | (826,696 | ) | | | (167,861 | ) | | | 163,808 | | | | 767,000 | |
| | | | | | | | | | | | | | | | | |
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C: | | | | | | | | | | | | | | | | |
| Shares sold | | | 177,257 | | | | 445,382 | | | | 169,781 | | | | 141,741 | |
| Shares issued in reinvestments of dividends and distributions | | | 211 | | | | 1,047 | | | | — | | | | — | |
| Shares redeemed | | | (276,951 | ) | | | (329,688 | ) | | | (68,264 | ) | | | (51,559 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in shares outstanding | | | (99,483 | ) | | | 116,741 | | | | 101,517 | | | | 90,182 | |
| | | | | | | | | | | | | | | | | |
CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS:(1) | | | | | | | | | | | | | | | | |
| Shares sold | | | 1,019 | | | | 729 | | | | 311,808 | | | | 36,839 | |
| Shares issued in reinvestments of dividends and distributions | | | 1 | | | | 9 | | | | 540 | | | | — | |
| Shares redeemed | | | — | | | | — | | | | (18,661 | ) | | | (14,073 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase in shares outstanding | | | 1,020 | | | | 738 | | | | 293,687 | | | | 22,766 | |
| | | | | | | | | | | | | | | | | |
(1)Institutional Class shares of the Market Opportunities Fund commenced operations on May 19, 2008.
See Notes to the Financial Statements.
48
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statements of Changes in Net Assets
| | | | | | | | | |
| | | The Multi-Disciplinary Portfolio | |
| | | | | | From
| |
| | | For the
| | | February 11, 2008ˆ
| |
| | | Year Ended
| | | through
| |
| | | December 31, 2009 | | | December 31, 2008 | |
| | |
| |
OPERATIONS: | | | | | | | | |
| Net investment income (loss) | | $ | 7,052 | | | $ | (358 | ) |
| Net realized gain (loss) on sale of investments and written option contracts expired or closed | | | 99,097 | | | | (60,467 | ) |
| Net change in unrealized appreciation (depreciation) of investments and written options | | | 99,028 | | | | (14,941 | ) |
| | | | | | | | | |
| Net increase (decrease) in net assets resulting from operations | | | 205,177 | | | | (75,766 | ) |
| | | | | | | | | |
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS: | | | | | | | | |
| Net investment income | | | (7,818 | ) | | | (48 | ) |
| Net realized gains | | | (14,757 | ) | | | — | |
| | | | | | | | | |
| Total distributions | | | (22,575 | ) | | | (48 | ) |
| | | | | | | | | |
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A: | | | | | | | | |
| Net investment income | | | (559 | ) | | | (27 | ) |
| Net realized gains | | | (1,623 | ) | | | — | |
| | | | | | | | | |
| Total distributions | | | (2,182 | ) | | | (27 | ) |
| | | | | | | | | |
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C: | | | | | | | | |
| Net investment income | | | (116 | ) | | | (5 | ) |
| Net realized gains | | | (1,672 | ) | | | — | |
| | | | | | | | | |
| Total distributions | | | (1,788 | ) | | | (5 | ) |
| | | | | | | | | |
DISTRIBUTIONS TO SHAREHOLDERS — INSTITUTIONAL CLASS: | | | | | | | | |
| Net investment income | | | (947 | ) | | | (48 | ) |
| Net realized gains | | | (1,587 | ) | | | — | |
| | | | | | | | | |
| Total distributions | | | (2,534 | ) | | | (48 | ) |
| | | | | | | | | |
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS: | | | | | | | | |
| Proceeds from shares sold | | | 695,920 | | | | 119,689 | |
| Redemption fees | | | — | | | | — | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | 20,528 | | | | 44 | |
| Cost of shares redeemed | | | (3,410 | ) | | | (4 | ) |
| | | | | | | | | |
| Net increase in net assets resulting from capital share transactions | | | 713,038 | | | | 119,729 | |
| | | | | | | | | |
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A: | | | | | | | | |
| Proceeds from shares sold | | | — | | | | 102,357 | |
| Redemption fees | | | — | | | | — | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | 2,182 | | | | 27 | |
| Cost of shares redeemed | | | — | | | | — | |
| | | | | | | | | |
| Net increase in net assets resulting from capital share transactions | | | 2,182 | | | | 102,384 | |
| | | | | | | | | |
| |
| ˆ | Commencement of operations. |
See Notes to the Financial Statements.
49
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statements of Changes in Net Assets — (Continued)
| | | | | | | | | |
| | | The Multi-Disciplinary Portfolio | |
| | | | | | From
| |
| | | For the
| | | February 11, 2008ˆ
| |
| | | Year Ended
| | | through
| |
| | | December 31, 2009 | | | December 31, 2008 | |
| | |
| |
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C: | | | | | | | | |
| Proceeds from shares sold | | | 5,000 | | | | 107,839 | |
| Redemption fees | | | — | | | | — | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | 1,696 | | | | 5 | |
| Cost of shares redeemed | | | (7,169 | ) | | | — | |
| | | | | | | | | |
| Net increase (decrease) in net assets resulting from capital share transactions | | | (473 | ) | | | 107,844 | |
| | | | | | | | | |
CAPITAL SHARE TRANSACTIONS — INSTITUTIONAL CLASS: | | | | | | | | |
| Proceeds from shares sold | | | — | | | | 100,000 | |
| Redemption fees | | | — | | | | — | |
| Proceeds from shares issued to holders in reinvestment of dividends | | | 2,534 | | | | 48 | |
| Cost of shares redeemed | | | — | | | | — | |
| | | | | | | | | |
| Net increase in net assets resulting from capital share transactions | | | 2,534 | | | | 100,048 | |
| | | | | | | | | |
TOTAL INCREASE IN NET ASSETS: | | | 893,379 | | | | 354,111 | |
NET ASSETS: | | | | | | | | |
| Beginning of year | | | 354,111 | | | | — | |
| | | | | | | | | |
| End of year* | | $ | 1,247,490 | | | $ | 354,111 | |
| | | | | | | | | |
| *Including undistributed net investment income of: | | $ | 705 | | | $ | — | |
| | | | | | | | | |
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS: | | | | | | | | |
| Shares sold | | | 81,319 | | | | 12,091 | |
| Shares issued in reinvestments of dividends and distributions | | | 2,082 | | | | 5 | |
| Shares redeemed | | | (380 | ) | | | — | |
| | | | | | | | | |
| Net increase in shares outstanding | | | 83,021 | | | | 12,096 | |
| | | | | | | | | |
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A: | | | | | | | | |
| Shares sold | | | — | | | | 10,231 | |
| Shares issued in reinvestments of dividends and distributions | | | 222 | | | | 3 | |
| Shares redeemed | | | — | | | | — | |
| | | | | | | | | |
| Net increase in shares outstanding | | | 222 | | | | 10,234 | |
| | | | | | | | | |
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C: | | | | | | | | |
| Shares sold | | | 538 | | | | 10,828 | |
| Shares issued in reinvestments of dividends and distributions | | | 173 | | | | 1 | |
| Shares redeemed | | | (829 | ) | | | — | |
| | | | | | | | | |
| Net increase (decrease) in shares outstanding | | | (118 | ) | | | 10,829 | |
| | | | | | | | | |
CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS: | | | | | | | | |
| Shares sold | | | — | | | | 10,000 | |
| Shares issued in reinvestments of dividends and distributions | | | 256 | | | | 6 | |
| Shares redeemed | | | — | | | | — | |
| | | | | | | | | |
| Net increase in shares outstanding | | | 256 | | | | 10,006 | |
| | | | | | | | | |
| |
| ˆ | Commencement of operations. |
See Notes to the Financial Statements.
50
KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS
Notes to Financial Statements
December 31, 2009
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 Kinetics Government Money Market Fund (“Government”), The Market Opportunities Fund (“Market Opportunities”), The Water Infrastructure Fund (“Water Infrastructure”) and The Multi-Disciplinary Fund (“Multi-Disciplinary”). Investment operations of the Company began on October 21, 1996 (Internet), September 30, 1999 (Medical), December 31, 1999 (Global and Paradigm), February 3, 2000 (Government), March 20, 2000 (Small Cap), January 31, 2006 (Market Opportunities), June 29, 2007 (Water Infrastructure) and February 11, 2008 (Multi-Disciplinary). 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 Water Infrastructure and February 11, 2008 with respect to Multi-Disciplinary), 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.
51
KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS
Notes to Financial Statements — (Continued)
December 31, 2009
Each Feeder Fund’s respective interest in the corresponding Master Portfolio as of December 31, 2009 is as follows:
| | | | | |
| | | Interest in
|
| | | Master Portfolio |
| |
| Internet Fund | | | 99.991% | |
| Global Fund | | | 99.895% | |
| Paradigm Fund | | | 97.716% | |
| Medical Fund | | | 99.944% | |
| Small Cap Fund | | | 99.988% | |
| Government Fund | | | 98.354% | |
| Market Opportunities Fund | | | 99.984% | |
| Water Infrastructure Fund | | | 99.619% | |
| Multi-Disciplinary Fund | | | 92.769% | |
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, 2009, each of the Feeder Funds, except the Government Fund, offer 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 service 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, 2009, each of the Feeder Funds, except the Government Fund, offer 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 service fee of 0.25% of average daily net assets. Advisor Class C shares do not have a sales charge.
As of December 31, 2009, each of the Feeder Funds offer No Load Class shares. No Load Class shares are subject to a service fee of 0.25% of average daily net assets but do not have 12b-1 fees or a sales charge.
As of December 31, 2009, the Paradigm, Small Cap, Market Opportunities, Water Infrastructure and Multi-Disciplinary Funds offer Institutional Class shares. Institutional Class shares are subject to a service fee of 0.20% of average daily net assets but do not have 12b-1 fees or a sales charge.
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 sales charge on the Advisor Class A shares, the service 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,
52
KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS
Notes to Financial Statements — (Continued)
December 31, 2009
except the Government 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 Portfolio’s 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 (other than securities held by the Kinetics Government Money Market Portfolio) 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 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. Purchased non-exchange traded options, futures, 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 mean of the most recent bid and asked prices. Exchange traded options are valued at the last reported sale price on an exchange on which the option is traded. If no sales are reported on a particular day, the mean between the highest bid and the lowest asked quotations at the close of the exchanges will be used. Fixed-income securities (other than obligations having a maturity of 60 days or less) are normally valued on the basis of quotes obtained from pricing services, which take into account appropriate factors such as institutional-sized trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data.
53
KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS
Notes to Financial Statements — (Continued)
December 31, 2009
Investment securities in The Kinetics Government Money Market Portfolio and instruments with remaining maturities of 60 days or less are valued at amortized cost, which approximates fair value. Other assets and securities for which no quotations are readily available (including restricted securities) are valued in good faith at fair value using methods determined by the Board of Trustees of the Master Portfolios. At December 31, 2009, 0.00%, 0.19% and 0.00% of the net assets of the Internet Portfolio, Paradigm Portfolio, and Small Cap Portfolio, respectively, were fair valued securities.
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 100% 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 Option Accounting
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
54
KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS
Notes to Financial Statements — (Continued)
December 31, 2009
consisting of cash, cash equivalents or 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 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 period. 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, 2009 none of the Master Portfolios held restricted securities. 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, 2009, the following Master Portfolios held illiquid securities:
| | | | | | | | | |
| | | Market
| | Percentage of
|
| | | Value | | Net Assets |
| |
| The Internet Portfolio | | $ | 0 | | | | 0.00 | % |
| The Paradigm Portfolio | | | 2,620,751 | | | | 0.19 | |
| The Small Cap Opportunities Portfolio | | | 0 | | | | 0.00 | |
55
KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS
Notes to Financial Statements — (Continued)
December 31, 2009
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 Portfolio (including any collateral posted) or 50% of the total assets of each 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 Portfolio will be subject to taxation on its share of the Portfolio’s ordinary income and capital gains. It is intended that the Portfolio’s assets will be managed so an investor in the Portfolio 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
56
KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS
Notes to Financial Statements — (Continued)
December 31, 2009
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, 2009, open tax years include the tax years ended December 31, 2006 through 2009. 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 accounting principles generally accepted in the United States of America 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 and interest income is recognized on the accrual basis. Other 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, Inc. (the “Adviser”), with whom certain officers and trustees of the Trust are affiliated, to furnish investment advisory services to the Master Portfolios. Under the terms of the Agreements, the Master Portfolios compensate the Adviser for its management services at the
57
KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS
Notes to Financial Statements — (Continued)
December 31, 2009
annual rate of 1.25% of each Master Portfolio’s average daily net assets, except for The Kinetics Government Money Market Portfolio, which compensates the Adviser at an annual rate of 0.50% of the Master Portfolio’s average daily net assets. The Sub-Adviser to the Water Infrastructure Portfolio, Brennan Investment Partners, LLC, receives its compensation from the Adviser at the annual rate of 0.35% of the daily net assets of the Water Infrastructure Portfolio.
The Adviser has voluntarily agreed to waive a portion of its advisory fee and/or reimburse certain operating expenses as deemed appropriate. The Adviser may discontinue the voluntary waiver/reimbursement at any time; these waivers/reimbursements are not subject to recapture.
For the year ended December 31, 2009, the rate earned by the Adviser from the Master Portfolios and the waived fees/reimbursed expenses for the Feeder Funds are as follows:
| | | | | | | | | |
| | | Internet | | Global |
| |
| Annual Advisory Rate | | | 1.25% | | | | 1.25% | |
| Expenses Reimbursed by Adviser through voluntary waiver | | $ | 75,887 | | | $ | 130,914 | |
| Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver | | $ | — | | | $ | — | |
| | | | | | | | | |
| | | | | | | | | |
| | | Paradigm | | Medical |
| |
| Annual Advisory Rate | | | 1.25% | | | | 1.25% | |
| Expenses Reimbursed by Adviser through voluntary waiver | | $ | 1,154,490 | | | $ | 158,994 | |
| Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver | | $ | 184,295 | | | $ | — | |
| | | | | | | | | |
| | | | | | | | | |
| | | Small Cap | | Government |
| |
| Annual Advisory Rate | | | 1.25% | | | | 0.50% | |
| Expenses Reimbursed by Adviser through voluntary waiver | | $ | 454,896 | | | $ | 63,410 | |
| Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver | | $ | 79,938 | | | $ | — | |
| | | | | | | | | |
| | | | | | | | | |
| | | Market
| | Water
|
| | | Opportunities | | Infrastructure |
| |
| Annual Advisory Rate | | | 1.25% | | | | 1.25% | |
| Expenses Reimbursed by Adviser through voluntary waiver | | $ | 169,602 | | | $ | 123,364 | |
| Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver | | $ | 10 | | | $ | 1,091 | |
| | | | | | | | | |
| | | | | | | | | |
58
KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS
Notes to Financial Statements — (Continued)
December 31, 2009
| | | | | | | | | |
| | | Multi-
| | |
| | | Disciplinary | | |
| |
| Annual Advisory Rate | | | 1.25% | | | | | |
| Expenses Reimbursed by Adviser through voluntary waiver | | $ | 97,718 | | | | | |
| Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver | | $ | 134 | | | | | |
The Adviser receives a shareholder servicing fee from the No Load Class, Class A and 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, Class A and 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 Investment 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, 2010. For the year ended December 31, 2009, the Adviser waived amounts depicted in the above table in shareholder servicing fees for the Institutional Class of the Paradigm Fund, the Small Cap Fund, the Market Opportunities Fund, the Water Infrastructure Fund and the Multi-Disciplinary Fund. 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, 2009, the Feeder Funds were allocated $24,000 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 (the “12b-1 Plans”). One Plan is for Advisor Class A shares, while the other Plan is for Advisor Class C shares. Under the first Plan, 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 Plan. During the year ended December 31, 2009, payments under the 12b-1 Plan for the Advisor Class A shares of the Internet, Global, Paradigm, Medical, Small Cap, Market Opportunities, Water and Multi-Disciplinary Funds were limited to 0.25% of
59
KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS
Notes to Financial Statements — (Continued)
December 31, 2009
the average daily net asset value of such shares of such Funds. During the year ended December 31, 2009, the Advisor Class A shares of the Internet, Global, Paradigm, Medical, Small Cap, Market Opportunities, Water Infrastructure and Multi-Disciplinary Funds incurred expenses of $1,133, $390, $594,084, $8,481, $31,360, $45,935, $18,690 and $228 respectively, pursuant to the 12b-1 Plan. Under the second Plan, Advisor Class C shares pay an annual rate of 0.75% of the average daily net asset value of such shares. During the year ended December 31, 2009, Internet, Global, Paradigm, Medical, Small Cap, Market Opportunities, Water Infrastructure and Multi-Disciplinary Funds Advisor Class C Shares incurred expenses of $780, $142, $1,148,858, $3,291, $25,397, $39,077, $15,970, and $698 respectively, pursuant to the 12b-1 Plan.
Kinetics Funds Distributor, Inc. (the “Distributor”) acts as the Feeder Funds’ principal underwriter in a continuous public offering of the Feeder Funds’ shares. The Distributor is an affiliate of the Adviser. For the year ended December 31, 2009, the Distributor received $882, $1,603, $51,627, $5,642, $6,227, $6,941, $12,905, and $0 from sales loads from the Internet, Global, Paradigm, Medical, Small Cap, Market Opportunities, Water Infrastructure, and Multi-Disciplinary Funds.
4. Reclassification of Capital Accounts
Accounting principles generally accepted in the United States of America require 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
60
KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS
Notes to Financial Statements — (Continued)
December 31, 2009
December 31, 2009, each Fund recorded the following reclassifications to the accounts listed below:
| | | | | | | | | | | | | |
| | | INCREASE (DECREASE) |
| | | | | Accumulated
| | |
| | | | | Net
| | Accumulated
|
| | | | | Investment
| | Net Realized
|
| | | Paid-in-Capital | | Income(Loss) | | Loss |
| |
| The Internet Fund | | $ | (13,902,578 | ) | | $ | 203,376 | | | $ | 13,699,202 | |
| The Global Fund | | | (5,481,052 | ) | | | (8,780 | ) | | | 5,489,832 | |
| The Paradigm Fund | | | 140,643 | | | | 112,837 | | | | (253,480 | ) |
| The Medical Fund | | | — | | | | (399 | ) | | | 399 | |
| The Small Cap Opportunities Fund | | | (1,576,792 | ) | | | 1,767,968 | | | | (191,176 | ) |
| The Kinetics Government Money Market Fund | | | 83 | | | | — | | | | (83 | ) |
| The Market Opportunities Fund | | | (192,923 | ) | | | 79,097 | | | | 113,826 | |
| The Water Infrastructure Fund | | | 1 | | | | (6,693 | ) | | | 6,692 | |
| The Multi-Disciplinary Fund | | | (1 | ) | | | 3,093 | | | | (3,092 | ) |
5. Income Taxes
At December 31, 2009 the Internet, Global, Paradigm, Medical, Small Cap, Government, Market Opportunities, Water Infrastructure, and Multi-Disciplinary Funds had $0, $4,817, $13,952,984, $29,613, $2,944,401, $0, $0, $3,244 and $18,872, respectively, of undistributed net investment income on a tax basis.
At December 31, 2009 none of the Funds had accumulated gains on a tax basis.
At December 31, 2009, the Feeder Funds had accumulated net realized capital loss carryforwards expiring in the following years:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Feeder Fund | | 2017 | | 2016 | | 2015 | | 2014 | | 2013 | | 2011 | | 2010 |
| |
| Internet | | $ | — | | | $ | — | | | $ | — | | | $ | 16,077,777 | | | $ | 6,777,871 | | | $ | — | | | $ | 140,178,775 | |
| Global | | | 408,711 | | | | — | | | | — | | | | — | | | | 4,885 | | | | 887,154 | | | | 2,635,504 | |
| Paradigm | | | 445,866,806 | | | | 417,659,386 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Medical | | | 116,113 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Small Cap | | | 96,486,615 | | | | 78,193,634 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Government | | | 67 | | | | 16 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Market Opportunities | | | 6,623,055 | | | | 25,221,869 | | | | 40,803 | | | | 21 | | | | — | | | | — | | | | — | |
| Water Infrastructure | | | 4,868,599 | | | | 2,088,692 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Multi-Disciplinary | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
To the extent that the Feeder Funds realize future net capital gains, those gains will be offset by any unused capital loss carryforwards. For the year ended December 31, 2009, Internet and Multi-Disciplinary Funds utilized $3,592,586 and $43,829, respectively, of capital loss carryforwards.
61
KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS
Notes to Financial Statements — (Continued)
December 31, 2009
At December 31, 2009, the following Feeder Funds deferred, on a tax basis, post-October losses and straddle losses of:
| | | | | | | | | | | | | |
| | | | | Post-October
| | |
Feeder Fund | | Post-October Losses | | Currency Losses | | Straddle Losses |
| |
| Internet | | $ | — | | | $ | 528 | | | $ | — | |
| Global | | | 664 | | | | 509 | | | | — | |
| Paradigm | | | 1,684,598 | | | | 323,210 | | | | — | |
| Medical | | | 187,224 | | | | — | | | | — | |
| Small Cap | | | 692,392 | | | | 10,340 | | | | — | |
| Government | | | — | | | | — | | | | — | |
| Market Opportunities | | | 735,020 | | | | 1,887 | | | | — | |
| Water Infrastructure | | | — | | | | — | | | | — | |
| Multi-Disciplinary | | | — | | | | — | | | | — | |
The tax components of dividends paid during the years ended December 31, 2009 and December 31, 2008, are:
| | | | | | | | | | | | | | | | | |
| | | Internet | | Global |
| | | Ordinary
| | Long-Term
| | Ordinary
| | Long-Term
|
| | | Income
| | Capital Gains
| | Income
| | Capital Gains
|
| | | Distribution | | Distribution | | Distribution | | Distribution |
| |
| 2009 | | $ | 128,367 | | | $ | — | | | $ | 20,989 | | | $ | — | |
| 2008 | | $ | 181,761 | | | $ | — | | | $ | 44,451 | | | $ | — | |
| | | | | | | | | | | | | | | | | |
| | | Paradigm | | Medical |
| | | Ordinary
| | Long-Term
| | Ordinary
| | Long-Term
|
| | | Income
| | Capital Gains
| | Income
| | Capital Gains
|
| | | Distribution | | Distribution | | Distribution | | Distribution |
| |
| 2009 | | $ | 9,279,988 | | | $ | — | | | $ | 232,701 | | | $ | — | |
| 2008 | | $ | — | | | $ | 7,073,063 | | | $ | 463,919 | | | $ | 183,981 | |
| | | | | | | | | | | | | | | | | |
| | | Small Cap | | Government |
| | | Ordinary
| | Long-Term
| | Ordinary
| | Long-Term
|
| | | Income
| | Capital Gains
| | Income
| | Capital Gains
|
| | | Distribution | | Distribution | | Distribution | | Distribution |
| |
| 2009 | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| 2008 | | $ | — | | | $ | 4,270,579 | | | $ | 17,587 | | | $ | — | |
| | | | | | | | | | | | | | | | | |
| | | Market Opportunities | | Water Infrastructure |
| | | Ordinary
| | Long-Term
| | Ordinary
| | Long-Term
|
| | | Income
| | Capital Gains
| | Income
| | Capital Gains
|
| | | Distribution | | Distribution | | Distribution | | Distribution |
| |
| 2009 | | $ | 33,049 | | | $ | — | | | $ | 9,099 | | | $ | — | |
| 2008 | | $ | 357,384 | | | $ | — | | | $ | — | | | $ | — | |
62
KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS
Notes to Financial Statements — (Continued)
December 31, 2009
| | | | | | | | | |
| | | Multi-Disciplinary |
| | | Ordinary
| | Long-Term
|
| | | Income
| | Capital Gains
|
| | | Distribution | | Distribution |
| |
| 2009 | | $ | 29,079 | | | $ | — | |
| 2008 | | $ | 128 | | | $ | — | |
6. Subsequent Events
In preparing these financial statements, management has evaluated Fund related events and transactions for potential recognition or disclosure through February 26, 2010, the date the financial statements were issued. There were no events or translations that occurred during the period that materially impacted the amounts or disclosures in the Funds’ financial statements.
7. Tax Information (Unaudited)
The Internet, Global, Paradigm, Medical, Market Opportunities, and Water Infrastructure Funds designate 100%, 100%, 100%, 97%, 100%, and 100%, respectively, of dividends declared after December 31, 2009 from net investment income as qualified dividend income under the Jobs and Growth Tax Relief Reconciliation Act of 2003.
The Internet, Global, Paradigm, Medical, Market Opportunities, Water Infrastructure and Multi-Disciplinary Funds hereby designate 100%, 100%, 100%, 100%, 100%, 100%, and 100% respectively, as ordinary income distributions and 0% for all of the funds as long-term capital gain distributions 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 Funds, the percentage of ordinary dividend income distributed for the year ended December 31, 2009, which is designated as qualifying for the dividends-received deduction, is as follows: Internet 100%, Global 7%, Paradigm 65%, Medical 95%, Market Opportunities 100%, and Water Infrastructure 100%.
The Internet, Paradigm, Medical, Market Opportunities, Water Infrastructure, and Multi-Disciplinary Funds designate 9%, 13%, 1%, 10%, 1% and 17%, respectively, of their ordinary income distributions for the fiscal year as interest-related dividends under Internal Revenue Code Section 871(k)(l)(C).
63
KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS
Notes to Financial Statements — (Continued)
December 31, 2009
The Medical and Multi-Disciplinary Funds designate 12 and 68%, respectively, of their ordinary income distributions as short-term capital gain distributions under Internal Revenue Code Section 871(k)(2)(C).
8. Information about Proxy Voting (Unaudited)
Information regarding how Kinetics Mutual Funds, Inc. votes 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 Funds 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.
9. Information about the Portfolio Holdings (Unaudited)
The Funds file their complete schedule of portfolio holdings for their first and third fiscal quarters with the SEC on Form N-Q. The 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.
64
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65
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | |
| | | The Internet Fund | |
| | | No Load Class
| | | Advisor Class A
| | | Advisor Class C
| | | No Load Class
| | | 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,
| |
| | | 2009 | | | 2009 | | | 2009 | | | 2008 | | | 2008 | |
| | |
| |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | | | | | |
| Net Asset Value | | | | | | | | | | | | | | | | | | | | |
| Beginning of Year | | $ | 20.71 | | | $ | 20.50 | | | $ | 20.20 | | | $ | 35.94 | | | $ | 35.66 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income from Investment Operations: |
Net investment income (loss)(2) | | | (0.14 | ) | | | (0.21 | ) | | | (0.31 | ) | | | 0.29 | | | | 0.22 | |
| Net realized and unrealized gain (loss) on investments | | | 10.21 | | | | 10.09 | | | | 9.91 | | | | (15.47 | ) | | | (15.33 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Total from investment operations | | | 10.07 | | | | 9.88 | | | | 9.60 | | | | (15.18 | ) | | | (15.11 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Redemption Fees | | | 0.00 | (3) | | | 0.01 | | | | — | | | | 0.00 | (3) | | | 0.00 | (3) |
| Less Distributions: | | | | | | | | | | | | | | | | | | | | |
| From net investment income | | | (0.04 | ) | | | (0.04 | ) | | | (0.04 | ) | | | (0.05 | ) | | | (0.05 | ) |
| From net realized gains | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Total distributions | | | (0.04 | ) | | | (0.04 | ) | | | (0.04 | ) | | | (0.05 | ) | | | (0.05 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net Asset Value, End of Year | | $ | 30.74 | | | $ | 30.35 | | | $ | 29.76 | | | $ | 20.71 | | | $ | 20.50 | |
| | | | | | | | | | | | | | | | | | | | | |
Total Return(4) | | | 48.61 | % | | | 48.23 | % | | | 47.51 | % | | | (42.24 | )% | | | (42.37 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| |
SUPPLEMENTAL DATA AND RATIOS |
| Net assets, end of Year (000’s) | | $ | 104,666 | | | $ | 738 | | | $ | 120 | | | $ | 75,112 | | | $ | 318 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 1.98 | % | | | 2.23 | % | | | 2.73 | % | | | 2.03 | % | | | 2.28 | % |
After expense reimbursement(7) | | | 1.89 | % | | | 2.14 | % | | | 2.64 | % | | | 1.90 | % | | | 2.15 | % |
| Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | (0.64 | )% | | | (0.89 | )% | | | (1.39 | )% | | | 0.90 | % | | | 0.65 | % |
After expense reimbursement(7) | | | (0.55 | )% | | | (0.80 | )% | | | (1.30 | )% | | | 1.03 | % | | | 0.78 | % |
| Portfolio turnover rate | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
ˆ Commencement of operations.
| |
| (1) | Information presented relates to a share of capital stock outstanding for each period. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the period. |
| (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) | Not annualized. |
| (6) | Annualized. |
| (7) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
See Notes to the Financial Statements.
66
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| The Internet Fund | |
| | | Advisor Class C
| | | No Load Class
| | | Advisor Class A
| | | Advisor Class C
| | | No Load Class
| | | Advisor Class A
| | | No Load Class
| | | Advisor Class A
| |
| | | For the
| | | For the
| | | For the
| | | February 16, 2007ˆ
| | | For the
| | | For the
| | | For the
| | | For the
| |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | through
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| |
| | | 2008 | | | 2007 | | | 2007 | | | 2007 | | | 2006 | | | 2006 | | | 2005 | | | 2005 | |
| | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 35.31 | | | $ | 28.62 | | | $ | 28.24 | | | $ | 28.66 | | | $ | 24.66 | | | $ | 24.40 | | | $ | 25.29 | | | $ | 24.93 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0.08 | | | | 0.30 | | | | 0.23 | | | | 0.07 | | | | (0.08 | ) | | | (0.14 | ) | | | 0.11 | | | | 0.05 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (15.15 | ) | | | 7.37 | | | | 7.49 | | | | 6.87 | | | | 4.15 | | | | 4.09 | | | | (0.54 | ) | | | (0.44 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (15.07 | ) | | | 7.67 | | | | 7.72 | | | | 6.94 | | | | 4.07 | | | | 3.95 | | | | (0.43 | ) | | | (0.39 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | — | | | | 0.00 | (3) | | | — | | | | 0.00 | (3) | | | 0.00 | (3) | | | — | | | | 0.00 | (3) | | | 0.00 | (3) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (0.04 | ) | | | (0.35 | ) | | | (0.30 | ) | | | (0.29 | ) | | | (0.11 | ) | | | (0.11 | ) | | | (0.20 | ) | | | (0.14 | ) |
| | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (0.04 | ) | | | (0.35 | ) | | | (0.30 | ) | | | (0.29 | ) | | | (0.11 | ) | | | (0.11 | ) | | | (0.20 | ) | | | (0.14 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 20.20 | | | $ | 35.94 | | | $ | 35.66 | | | $ | 35.31 | | | $ | 28.62 | | | $ | 28.24 | | | $ | 24.66 | | | $ | 24.40 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (42.67 | )% | | | 26.81 | % | | | 27.35 | % | | | 24.22 | %(5) | | | 16.50 | % | | | 16.18 | % | | | (1.69 | )% | | | (1.55 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 113 | | | $ | 166,787 | | | $ | 637 | | | $ | 294 | | | $ | 137,012 | | | $ | 235 | | | $ | 148,260 | | | $ | 300 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 2.78 | % | | | 1.99 | % | | | 2.24 | % | | | 2.73 | %(6) | | | 1.98 | % | | | 2.23 | % | | | 2.35 | % | | | 2.60 | % |
| | | | 2.65 | % | | | 1.98 | % | | | 2.23 | % | | | 2.72 | %(6) | | | 1.85 | % | | | 2.10 | % | | | 2.35 | % | | | 2.60 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0.15 | % | | | 0.94 | % | | | 0.70 | % | | | 0.22 | %(6) | | | (0.42 | )% | | | (0.67 | )% | | | 0.46 | % | | | 0.21 | % |
| | | | 0.28 | % | | | 0.95 | % | | | 0.71 | % | | | 0.23 | %(6) | | | (0.29 | )% | | | (0.54 | )% | | | 0.46 | % | | | 0.21 | % |
| | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
See Notes to the Financial Statements.
67
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Financial Highlights
| | | | | | | | | | | | | | | | | |
| | | The Global Fund | |
| | | No Load Class
| | | Advisor Class A
| | | Advisor Class C
| | | No Load Class
| |
| | | For the
| | | For the
| | | For the
| | | For the
| |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| |
| | | 2009 | | | 2009 | | | 2009 | | | 2008 | |
| | |
| |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | |
| Net Asset Value, | | | | | | | | | | | | | | | | |
| Beginning of Year | | $ | 2.36 | | | $ | 2.36 | | | $ | 2.37 | | | $ | 4.90 | |
| | | | | | | | | | | | | | | | | |
| Income from Investment Operations: |
| Net investment income (loss) | | | 0.02 | (2) | | | 0.01 | (2) | | | (0.00 | )(2)(3) | | | 0.07 | (2) |
| Net realized and unrealized gain (loss) on investments | | | 1.55 | | | | 1.57 | | | | 1.53 | | | | (2.56 | ) |
| | | | | | | | | | | | | | | | | |
| Total from investment operations | | | 1.57 | | | | 1.58 | | | | 1.53 | | | | (2.49 | ) |
| | | | | | | | | | | | | | | | | |
| Redemption Fees | | | 0.01 | | | | — | | | | — | | | | 0.00 | (3) |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | (0.02 | ) | | | (0.01 | ) | | | (0.00 | )(3) | | | (0.05 | ) |
| From net realized gains | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | |
| Total distributions | | | (0.02 | ) | | | (0.01 | ) | | | (0.00 | )(3) | | | (0.05 | ) |
| | | | | | | | | | | | | | | | | |
| Net Asset Value, End of Year | | $ | 3.92 | | | $ | 3.93 | | | $ | 3.90 | | | $ | 2.36 | |
| | | | | | | | | | | | | | | | | |
Total Return(4) | | | 66.86 | % | | | 67.11 | % | | | 65.08 | % | | | (50.72 | )% |
| |
SUPPLEMENTAL DATA AND RATIOS |
| Net assets, end of year (000’s) | | $ | 4,370 | | | $ | 368 | | | $ | 36 | | | $ | 1,863 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 5.32 | % | | | 5.57 | % | | | 6.07 | % | | | 5.98 | % |
After expense reimbursement(7) | | | 1.39 | % | | | 1.64 | % | | | 2.14 | % | | | 1.41 | % |
| Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | (3.27 | )% | | | (3.52 | )% | | | (4.02 | )% | | | (2.72 | )% |
After expense reimbursement(7) | | | 0.66 | % | | | 0.41 | % | | | (0.09 | )% | | | 1.85 | % |
| Portfolio turnover rate | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
| |
| ˆ | Commencement of operations. |
| |
| (1) | Information presented relates to a share of capital stock outstanding for each period. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the period. |
| (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) | Not annualized. |
| (6) | Annualized. |
| (7) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
See Notes to the Financial Statements.
68
| | | | | | | | | | | | | | | | | | | | | |
| | | The Global Fund | |
| | | Advisor Class A
| | | Advisor Class C
| | | No Load Class
| | | No Load Class
| | | No Load Class
| |
| | | May 19, 2008ˆ
| | | May 19, 2008ˆ
| | | For the
| | | For the
| | | For the
| |
| | | through
| | | through
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| |
| | | 2008 | | | 2008 | | | 2007 | | | 2006 | | | 2005 | |
| | |
| |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | $ | 4.56 | | | $ | 4.56 | | | $ | 5.00 | | | $ | 4.43 | | | $ | 4.50 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | 0.03 | (2) | | | 0.02 | (2) | | | 0.22 | | | | 0.13 | | | | 0.15 | |
| | | | (2.18 | ) | | | (2.17 | ) | | | (0.01 | ) | | | 0.62 | | | | (0.03 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| | | | (2.15 | ) | | | (2.15 | ) | | | 0.21 | | | | 0.75 | | | | 0.12 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | — | | | | — | | | | 0.00 | (3) | | | 0.00 | (3) | | | 0.00 | (3) |
| | | | (0.05 | ) | | | (0.04 | ) | | | (0.31 | ) | | | (0.18 | ) | | | (0.19 | ) |
| | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | (0.05 | ) | | | (0.04 | ) | | | (0.31 | ) | | | (0.18 | ) | | | (0.19 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| | | $ | 2.36 | | | $ | 2.37 | | | $ | 4.90 | | | $ | 5.00 | | | $ | 4.43 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | (47.12 | )%(5) | | | (47.14 | )%(5) | | | 4.27 | % | | | 16.90 | % | | | 2.65 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | $ | 106 | | | $ | 5 | | | $ | 3,138 | | | $ | 3,991 | | | $ | 3,896 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | 8.28 | %(6) | | | 8.78 | %(6) | | | 3.84 | % | | | 3.09 | % | | | 3.22 | % |
| | | | 1.65 | %(6) | | | 2.15 | %(6) | | | 1.48 | % | | | 1.39 | % | | | 2.69 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | (5.16 | )%(6) | | | (5.66 | )%(6) | | | 1.87 | % | | | 3.00 | % | | | 2.80 | % |
| | | | 1.47 | %(6) | | | 0.97 | %(6) | | | 4.23 | % | | | 1.30 | % | | | 3.33 | % |
| | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
See Notes to the Financial Statements.
69
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Financial Highlights
| | | | | | | | | | | | | | | | | |
| | | The Paradigm Fund | |
| | | No Load Class
| | | Advisor Class A
| | | Advisor Class C
| | | Institutional Class
| |
| | | For the
| | | For the
| | | For the
| | | For the
| |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| |
| | | 2009 | | | 2009 | | | 2009 | | | 2009 | |
| | |
| |
PER SHARE DATA:(1) |
| Net Asset Value, | | | | | | | | | | | | | | | | |
| Beginning of Year | | $ | 14.42 | | | $ | 14.16 | | | $ | 13.80 | | | $ | 14.44 | |
| | | | | | | | | | | | | | | | | |
| Income from Investment Operations: |
Net investment income (loss)(2) | | | 0.15 | | | | 0.10 | | | | 0.02 | | | | 0.18 | |
| Net realized and unrealized gain (loss) on investments | | | 5.78 | | | | 5.68 | | | | 5.51 | | | | 5.78 | |
| | | | | | | | | | | | | | | | | |
| Total from investment operations | | | 5.93 | | | | 5.78 | | | | 5.53 | | | | 5.96 | |
| | | | | | | | | | | | | | | | | |
| Redemption Fees | | | 0.00 | (3) | | | — | | | | 0.00 | (3) | | | 0.00 | (3) |
| Less Distributions: | | | | | | | | | | | | | | | | |
| From net investment income | | | (0.17 | ) | | | (0.06 | ) | | | — | | | | (0.27 | ) |
| From net realized gains | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | |
| Total distributions | | | (0.17 | ) | | | (0.06 | ) | | | — | | | | (0.27 | ) |
| | | | | | | | | | | | | | | | | |
| Net Asset Value, End of Year | | $ | 20.18 | | | $ | 19.88 | | | $ | 19.33 | | | $ | 20.13 | |
| | | | | | | | | | | | | | | | | |
Total Return(4) | | | 41.02 | % | | | 40.64 | % | | | 39.97 | % | | | 41.31 | % |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| |
SUPPLEMENTAL DATA AND RATIOS |
| Net assets, end of Year (000’s) | | $ | 825,278 | | | $ | 252,106 | | | $ | 169,578 | | | $ | 125,372 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 1.73 | % | | | 1.98 | % | | | 2.48 | % | | | 1.68 | % |
After expense reimbursement(7) | | | 1.64 | % | | | 1.89 | % | | | 2.39 | % | | | 1.44 | % |
| Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 0.78 | % | | | 0.53 | % | | | 0.03 | % | | | 0.83 | % |
After expense reimbursement(7) | | | 0.87 | % | | | 0.62 | % | | | 0.12 | % | | | 1.07 | % |
| Portfolio turnover rate | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
ˆ Commencement of operations.
| |
| (1) | Information presented relates to a share of capital stock outstanding for each period. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the period. |
| (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) | Not annualized. |
| (6) | Annualized. |
| (7) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (8) | Includes adviser reimbursement from net realized losses on the disposal of investments in violation of restrictions and trading errors. This reimbursement comprises less than $0.005 of the NAVs for each class at the time of the reimbursement and 0.03% of the total return for the Institutional Class for the fiscal year ended December 31, 2008. There was no impact on the other classes. |
See Notes to the Financial Statements.
70
| | | | | | | | | | | | | | | | | | | | | | | | | |
| The Paradigm Fund | |
| | | No Load Class
| | | Advisor Class A
| | | Advisor Class C
| | | Institutional Class
| | | No Load Class
| | | Advisor Class A
| |
| | | For the
| | | For the
| | | For the
| | | For the
| | | For the
| | | For the
| |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| |
| | | 2008 | | | 2008 | | | 2008 | | | 2008 | | | 2007 | | | 2007 | |
| | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 30.99 | | | $ | 30.52 | | | $ | 29.90 | | | $ | 30.97 | | | $ | 25.79 | | | $ | 25.43 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0.12 | | | | 0.06 | | | | (0.05 | ) | | | 0.18 | | | | 0.11 | | | | 0.04 | |
| | | | (16.62 | )(8) | | | (16.34 | )(8) | | | (15.97 | )(8) | | | (16.63 | )(8) | | | 5.35 | | | | 5.27 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (16.50 | ) | | | (16.28 | ) | | | (16.02 | ) | | | (16.45 | ) | | | 5.46 | | | | 5.31 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0.01 | | | | 0.00 | (3) | | | 0.00 | (3) | | | 0.00 | (3) | | | 0.00 | (3) | | | 0.00 | (3) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | — | | | | — | | | | — | | | | — | | | | (0.13 | ) | | | (0.09 | ) |
| | | | (0.08 | ) | | | (0.08 | ) | | | (0.08 | ) | | | (0.08 | ) | | | (0.13 | ) | | | (0.13 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (0.08 | ) | | | (0.08 | ) | | | (0.08 | ) | | | (0.08 | ) | | | (0.26 | ) | | | (0.22 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 14.42 | | | $ | 14.16 | | | $ | 13.80 | | | $ | 14.44 | | | $ | 30.99 | | | $ | 30.52 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (53.17 | )%(8) | | | (53.30 | )%(8) | | | (53.54 | )%(8) | | | (53.11 | )%(8) | | | 21.15 | % | | | 20.87 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 740,983 | | | $ | 249,424 | | | $ | 147,915 | | | $ | 128,129 | | | $ | 2,910,518 | | | $ | 544,046 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 1.72 | % | | | 1.97 | % | | | 2.47 | % | | | 1.67 | % | | | 1.68 | % | | | 1.93 | % |
| | | | 1.66 | % | | | 1.91 | % | | | 2.41 | % | | | 1.46 | % | | | 1.68 | % | | | 1.93 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0.46 | % | | | 0.21 | % | | | (0.29 | )% | | | 0.51 | % | | | 0.39 | % | | | 0.14 | % |
| | | | 0.52 | % | | | 0.27 | % | | | (0.23 | )% | | | 0.72 | % | | | 0.39 | % | | | 0.14 | % |
| | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
See Notes to the Financial Statements.
71
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | |
| | | The Paradigm Fund | |
| | | Advisor Class C
| | | Institutional Class
| | | No Load Class
| | | Advisor Class A
| | | 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,
| |
| | | 2007 | | | 2007 | | | 2006 | | | 2006 | | | 2006 | |
| | |
| |
PER SHARE DATA:(1) | | | | | | | | | | | | | | | | | | | | |
| Net Asset Value, | | | | | | | | | | | | | | | | | | | | |
| Beginning of Year | | $ | 24.98 | | | $ | 25.76 | | | $ | 20.33 | | | $ | 20.08 | | | $ | 19.76 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income from Investment Operations: |
| Net investment income (loss) | | | (0.10 | ) | | | 0.17 | | | | 0.14 | | | | 0.08 | | | | (0.03 | ) |
| Net realized and unrealized gain (loss) on investments | | | 5.15 | | | | 5.34 | | | | 5.52 | | | | 5.43 | | | | 5.33 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total from investment operations | | | 5.05 | | | | 5.51 | | | | 5.66 | | | | 5.51 | | | | 5.30 | |
| | | | | | | | | | | | | | | | | | | | | |
| Redemption Fees | | | 0.00 | (3) | | | 0.00 | (3) | | | 0.00 | (3) | | | (0.00 | )(3) | | | 0.00 | (3) |
| Less Distributions: | | | | | | | | | | | | | | | | | | | | |
| From net investment income | | | (0.00 | ) | | | (0.17 | ) | | | (0.16 | ) | | | (0.12 | ) | | | (0.04 | ) |
| From net realized gains | | | (0.13 | ) | | | (0.13 | ) | | | (0.04 | ) | | | (0.04 | ) | | | (0.04 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Total distributions | | | (0.13 | ) | | | (0.30 | ) | | | (0.20 | ) | | | (0.16 | ) | | | (0.08 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net Asset Value, End of Year | | $ | 29.90 | | | $ | 30.97 | | | $ | 25.79 | | | $ | 25.43 | | | $ | 24.98 | |
| | | | | | | | | | | | | | | | | | | | | |
Total Return(4) | | | 20.20 | % | | | 21.37 | % | | | 27.81 | % | | | 27.42 | % | | | 26.82 | % |
| |
SUPPLEMENTAL DATA AND RATIOS |
| Net assets, end of period (000’s) | | $ | 320,962 | | | $ | 804,755 | | | $ | 1,337,761 | | | $ | 183,031 | | | $ | 116,226 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 2.43 | % | | | 1.63 | % | | | 1.79 | % | | | 2.04 | % | | | 2.54 | % |
After expense reimbursement(7) | | | 2.43 | % | | | 1.48 | % | | | 1.63 | % | | | 1.88 | % | | | 2.38 | % |
| Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | (0.36 | )% | | | 0.44 | % | | | 0.44 | % | | | 0.19 | % | | | (0.31 | )% |
After expense reimbursement(7) | | | (0.36 | )% | | | 0.59 | % | | | 0.60 | % | | | 0.35 | % | | | (0.15 | )% |
| Portfolio turnover rate | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
ˆ Commencement of operations.
| |
| (1) | Information presented relates to a share of capital stock outstanding for each period. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the period. |
| (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) | Not annualized. |
| (6) | Annualized. |
| (7) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (8) | Includes adviser reimbursement from net realized losses on the disposal of investments in violation of restrictions and trading errors. This reimbursement comprises less than $0.005 of the NAVs for each class at the time of the reimbursement and 0.03% of the total return for the Institutional Class for the fiscal year ended December 31, 2008. There was no impact on the other classes. |
See Notes to the Financial Statements.
72
| | | | | | | | | | | | | | | | | | | | | |
| | | The Paradigm Fund | |
| | | Institutional Class
| | | No Load Class
| | | Advisor Class A
| | | Advisor Class C
| | | Institutional Class
| |
| | | For the
| | | For the
| | | For the
| | | For the
| | | May 27, 2005ˆ
| |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | through
| |
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| |
| | | 2006 | | | 2005 | | | 2005 | | | 2005 | | | 2005 | |
| | |
| |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | $ | 20.31 | | | $ | 17.54 | | | $ | 17.40 | | | $ | 17.21 | | | $ | 18.13 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | 0.19 | | | | (0.03 | ) | | | (0.07 | ) | | | (0.17 | ) | | | 0.01 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | 5.49 | | | | 2.82 | | | | 2.77 | | | | 2.74 | | | | 2.23 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | 5.68 | | | | 2.79 | | | | 2.70 | | | | 2.57 | | | | 2.24 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | — | | | | 0.03 | | | | (0.00 | )(3) | | | 0.00 | (3) | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | (0.19 | ) | | | (0.01 | ) | | | — | | | | — | | | | (0.04 | ) |
| | | | (0.04 | ) | | | (0.02 | ) | | | (0.02 | ) | | | (0.02 | ) | | | (0.02 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| | | | (0.23 | ) | | | (0.03 | ) | | | (0.08 | ) | | | (0.02 | ) | | | (0.06 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| | | $ | 25.76 | | | $ | 20.33 | | | $ | 20.08 | | | $ | 19.76 | | | $ | 20.31 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | 27.96 | % | | | 16.11 | % | | | 15.54 | % | | | 14.96 | % | | | 12.35 | %(5) |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | $ | 507,314 | | | $ | 418,914 | | | $ | 60,421 | | | $ | 38,740 | | | $ | 10,895 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | 1.74 | % | | | 1.93 | % | | | 2.18 | % | | | 2.68 | % | | | 1.88 | %(6) |
| | | | 1.43 | % | | | 1.69 | % | | | 1.94 | % | | | 2.44 | % | | | 1.49 | %(6) |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | 0.48 | % | | | (0.41 | )% | | | (0.66 | )% | | | (1.16 | )% | | | (0.37 | )%(6) |
| | | | 0.79 | % | | | (0.17 | )% | | | (0.42 | )% | | | (0.92 | )% | | | 0.02 | %(6) |
| | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
See Notes to the Financial Statements.
73
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | The Medical Fund | |
| | | No Load Class
| | | Advisor Class A
| | | Advisor Class C
| | | No Load Class
| | | Advisor Class A
| | | Advisor Class C
| |
| | | For the
| | | For the
| | | For the
| | | For the
| | | For the
| | | For the
| |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| |
| | | 2009 | | | 2009 | | | 2009 | | | 2008 | | | 2008 | | | 2008 | |
| | |
| |
PER SHARE DATA:(1) |
| Net Asset Value, | | | | | | | | | | | | | | | | | | | | | | | | |
| Beginning of Year | | $ | 15.23 | | | $ | 14.90 | | | $ | 14.83 | | | $ | 19.82 | | | $ | 19.39 | | | $ | 19.34 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss)(2) | | | 0.20 | | | | 0.15 | | | | 0.07 | | | | 0.19 | | | | 0.13 | | | | 0.05 | |
| Net realized and unrealized gain (loss) on investments | | | 3.51 | | | | 3.44 | | | | 3.41 | | | | (4.25 | ) | | | (4.15 | ) | | | (4.13 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total from investment operations | | | 3.71 | | | | 3.59 | | | | 3.48 | | | | (4.06 | ) | | | (4.02 | ) | | | (4.08 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Redemption Fees | | | 0.01 | | | | 0.01 | | | | 0.00 | (3) | | | 0.01 | | | | 0.04 | | | | 0.02 | |
| Less Distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
| From net investment income | | | (0.16 | ) | | | (0.12 | ) | | | (0.02 | ) | | | (0.16 | ) | | | (0.13 | ) | | | (0.07 | ) |
| From net realized gains | | | (0.02 | ) | | | (0.02 | ) | | | (0.02 | ) | | | (0.38 | ) | | | (0.38 | ) | | | (0.38 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total distributions | | | (0.18 | ) | | | (0.14 | ) | | | (0.04 | ) | | | (0.54 | ) | | | (0.51 | ) | | | (0.45 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Asset Value, End of Year | | $ | 18.77 | | | $ | 18.36 | | | $ | 18.27 | | | $ | 15.23 | | | $ | 14.90 | | | $ | 14.83 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Total Return(4) | | | 24.47 | % | | | 24.17 | % | | | 23.50 | % | | | (20.42 | )% | | | (20.49 | )% | | | (20.97 | )% |
SUPPLEMENTAL DATA AND RATIOS |
| Net assets, end of year (000’s) | | $ | 21,126 | | | $ | 4,347 | | | $ | 454 | | | $ | 15,727 | | | $ | 2,941 | | | $ | 314 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 2.15 | % | | | 2.40 | % | | | 2.90 | % | | | 2.26 | % | | | 2.51 | % | | | 3.01 | % |
After expense reimbursement(7) | | | 1.39 | % | | | 1.64 | % | | | 2.14 | % | | | 1.41 | % | | | 1.66 | % | | | 2.16 | % |
| Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 0.42 | % | | | 0.17 | % | | | (0.33 | )% | | | 0.18 | % | | | (0.07 | )% | | | (0.57 | )% |
After expense reimbursement(7) | | | 1.17 | % | | | 0.92 | % | | | 0.42 | % | | | 1.03 | % | | | 0.78 | % | | | 0.28 | % |
| Portfolio turnover rate | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
| | |
| | ˆ | Commencement of operations. |
| |
| (1) | Information presented relates to a share of capital stock outstanding for each period. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the period. |
| (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) | Not annualized. |
| (6) | Annualized. |
| (7) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
See Notes to the Financial Statements.
74
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| The Medical Fund | |
| | | No Load Class
| | | Advisor Class A
| | | Advisor Class C
| | | No Load Class
| | | Advisor Class A
| | | No Load Class
| | | Advisor Class A
| |
| | | For the
| | | For the
| | | February 16, 2007ˆ
| | | For the
| | | For the
| | | For the
| | | For the
| |
| | | Year Ended
| | | Year Ended
| | | through
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| |
| | | 2007 | | | 2007 | | | 2007 | | | 2006 | | | 2006 | | | 2005 | | | 2005 | |
| | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 17.83 | | | $ | 17.47 | | | $ | 18.29 | | | $ | 16.64 | | | $ | 16.34 | | | $ | 16.76 | | | $ | 16.49 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0.10 | | | | 0.05 | | | | (0.04 | ) | | | 0.06 | | | | 0.01 | | | | (0.18 | ) | | | (0.22 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 2.67 | | | | 2.62 | | | | 1.79 | | | | 2.40 | | | | 2.35 | | | | 0.06 | | | | 0.07 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 2.77 | | | | 2.67 | | | | 1.75 | | | | 2.46 | | | | 2.36 | | | | (0.12 | ) | | | (0.15 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0.01 | | | | 0.00 | (3) | | | 0.00 | (3) | | | 0.00 | (3) | | | — | | | | 0.00 | (3) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (0.10 | ) | | | (0.06 | ) | | | (0.01 | ) | | | (0.04 | ) | | | — | | | | — | | | | — | |
| | | | (0.69 | ) | | | (0.69 | ) | | | (0.69 | ) | | | (1.23 | ) | | | (1.23 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (0.79 | ) | | | (0.75 | ) | | | (0.70 | ) | | | (1.27 | ) | | | (1.23 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 19.82 | | | $ | 19.39 | | | $ | 19.34 | | | $ | 17.83 | | | $ | 17.47 | | | $ | 16.64 | | | $ | 16.34 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 15.47 | % | | | 15.16 | % | | | 9.55 | %(5) | | | 14.81 | % | | | 14.49 | % | | | (0.72 | )% | | | (0.91 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 13,917 | | | $ | 1,427 | | | $ | 148 | | | $ | 15,527 | | | $ | 711 | | | $ | 13,943 | | | $ | 559 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 2.41 | % | | | 2.66 | % | | | 3.19 | %(6) | | | 2.28 | % | | | 2.53 | % | | | 2.48 | % | | | 2.73 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 1.40 | % | | | 1.65 | % | | | 2.15 | %(6) | | | 1.44 | % | | | 1.69 | % | | | 2.44 | % | | | 2.69 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (0.51 | )% | | | (0.76 | )% | | | (1.30 | )%(6) | | | (0.51 | )% | | | (0.76 | )% | | | (1.14 | )% | | | (1.39 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0.50 | % | | | 0.25 | % | | | (0.26 | )%(6) | | | 0.33 | % | | | 0.08 | % | | | (1.10 | )% | | | (1.35 | )% |
| | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
See Notes to the Financial Statements.
75
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | |
| | | The Small Cap Opportunities Fund | |
| | | No Load Class
| | | Advisor Class A
| | | Advisor Class C
| | | Institutional Class
| | | 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,
| |
| | | 2009 | | | 2009 | | | 2009 | | | 2009 | | | 2008 | |
| | |
| |
PER SHARE DATA:(1) |
| Net Asset Value, Beginning of Year | | $ | 13.17 | | | $ | 13.01 | | | $ | 12.92 | | | $ | 13.19 | | | $ | 31.92 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss)(2) | | | (0.04 | ) | | | (0.08 | ) | | | (0.16 | ) | | | (0.01 | ) | | | 0.05 | |
| Net realized and unrealized gain (loss) on investments | | | 7.70 | | | | 7.60 | | | | 7.52 | | | | 7.72 | | | | (18.53 | )(8) |
| | | | | | | | | | | | | | | | | | | | | |
| Total from investment operations | | | 7.66 | | | | 7.52 | | | | 7.36 | | | | 7.71 | | | | (18.48 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Redemption Fees | | | 0.00 | (3) | | | 0.00 | (3) | | | 0.00 | (3) | | | 0.00 | (3) | | | 0.00 | (3) |
| Less Distributions: | | | | | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | | — | | | | — | | | | — | | | | — | |
| From net realized gains | | | — | | | | — | | | | — | | | | — | | | | (0.27 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Total distributions | | | — | | | | — | | | | — | | | | — | | | | (0.27 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net Asset Value, End of Year | | $ | 20.83 | | | $ | 20.53 | | | $ | 20.28 | | | $ | 20.90 | | | $ | 13.17 | |
| | | | | | | | | | | | | | | | | | | | | |
Total Return(4) | | | 58.16 | % | | | 57.80 | % | | | 56.97 | % | | | 58.45 | % | | | (57.88 | )%(8) |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| |
SUPPLEMENTAL DATA AND RATIOS |
| Net assets, end of year (000’s) | | $ | 161,205 | | | $ | 14,244 | | | $ | 4,445 | | | $ | 19,749 | | | $ | 126,971 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 1.86 | % | | | 2.11 | % | | | 2.61 | % | | | 1.81 | % | | | 1.79 | % |
After expense reimbursement(7) | | | 1.64 | % | | | 1.89 | % | | | 2.39 | % | | | 1.44 | % | | | 1.67 | % |
| Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | (0.48 | )% | | | (0.73 | )% | | | (1.23 | )% | | | (0.43 | )% | | | 0.09 | % |
After expense reimbursement(7) | | | (0.26 | )% | | | (0.51 | )% | | | (1.01 | )% | | | (0.06 | )% | | | 0.21 | % |
| Portfolio turnover rate | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
| | |
| | ˆ | Commencement of operations. |
| |
| (1) | Information presented relates to a share of capital stock outstanding for each period. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the period. |
| (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) | Not annualized. |
| (6) | Annualized. |
| (7) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (8) | Includes adviser reimbursement from the net realized loss on the disposal of investments in violation of restrictions. This reimbursement comprises less than $0.005 of the NAVs for each class at the time of the reimbursement and 0.03% of the total return for the Adviser Class C for the fiscal year ended December 31, 2008. There was no impact on the other classes. |
See Notes to the Financial Statements.
76
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| The Small Cap Opportunities Fund | |
| | | Advisor Class A
| | | Advisor Class C
| | | Institutional Class
| | | No Load Class
| | | Advisor Class A
| | | Advisor Class C
| | | Institutional Class
| |
| | | For the
| | | For the
| | | For the
| | | For the
| | | For the
| | | February 16, 2007ˆ
| | | For the
| |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | through
| | | Year Ended
| |
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| |
| | | 2008 | | | 2008 | | | 2008 | | | 2007 | | | 2007 | | | 2007 | | | 2007 | |
| | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 31.63 | | | $ | 31.57 | | | $ | 31.92 | | | $ | 26.92 | | | $ | 26.71 | | | $ | 28.70 | | | $ | 26.91 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (0.01 | ) | | | (0.12 | ) | | | 0.10 | | | | 0.01 | | | | (0.07 | ) | | | (0.21 | ) | | | 0.07 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (18.34 | )(8) | | | (18.26 | )(8) | | | (18.56 | )(8) | | | 5.29 | | | | 5.25 | | | | 3.33 | | | | 5.29 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (18.35 | ) | | | (18.38 | ) | | | (18.46 | ) | | | 5.30 | | | | 5.18 | | | | 3.12 | | | | 5.36 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0.00 | (3) | | | 0.00 | (3) | | | 0.00 | (3) | | | 0.00 | (3) | | | 0.00 | (3) | | | 0.02 | | | | 0.00 | (3) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | — | | | | — | | | | — | | | | (0.23 | ) | | | (0.19 | ) | | | (0.20 | ) | | | (0.28 | ) |
| | | | (0.27 | ) | | | (0.27 | ) | | | (0.27 | ) | | | (0.07 | ) | | | (0.07 | ) | | | (0.07 | ) | | | (0.07 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (0.27 | ) | | | (0.27 | ) | | | (0.27 | ) | | | (0.30 | ) | | | (0.26 | ) | | | (0.27 | ) | | | (0.35 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 13.01 | | | $ | 12.92 | | | $ | 13.19 | | | $ | 31.92 | | | $ | 31.63 | | | $ | 31.57 | | | $ | 31.92 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (58.00 | )%(8) | | | (58.20 | )%(8) | | | (57.82 | )%(8) | | | 19.65 | % | | | 19.36 | % | | | 10.94 | %(5) | | | 19.91 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| |
| | | $ | 12,090 | | | $ | 2,871 | | | $ | 68,408 | | | $ | 729,278 | | | $ | 36,390 | | | $ | 4,942 | | | $ | 316,709 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 2.04 | % | | | 2.54 | % | | | 1.74 | % | | | 1.71 | % | | | 1.96 | % | | | 2.47 | %(6) | | | 1.66 | % |
| | | | 1.92 | % | | | 2.42 | % | | | 1.47 | % | | | 1.69 | % | | | 1.94 | % | | | 2.45 | %(6) | | | 1.49 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (0.16 | )% | | | (0.66 | )% | | | 0.14 | % | | | 0.00 | % | | | (0.25 | )% | | | (0.76 | )%(6) | | | 0.05 | % |
| | | | (0.04 | )% | | | (0.54 | )% | | | 0.41 | % | | | 0.02 | % | | | (0.23 | )% | | | (0.75 | )%(6) | | | 0.22 | % |
| | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
See Notes to the Financial Statements.
77
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | The Small Cap Opportunities Fund | |
| | | No Load Class
| | | Advisor Class A
| | | Institutional Class
| | | No Load Class
| | | Advisor Class A
| | | Institutional Class
| |
| | | For the
| | | For the
| | | For the
| | | For the
| | | For the
| | | August 12, 2005ˆ
| |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | through
| |
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| |
| | | 2006 | | | 2006 | | | 2006 | | | 2005 | | | 2005 | | | 2005 | |
| | |
| |
PER SHARE DATA:(1) |
| Net Asset Value, Beginning of Year | | $ | 21.02 | | | $ | 20.89 | | | $ | 21.00 | | | $ | 18.69 | | | $ | 18.63 | | | $ | 20.48 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss)(2) | | | 0.03 | | | | (0.03 | ) | | | 0.08 | | | | 0.12 | | | | 0.02 | | | | 0.00 | (3) |
| Net realized and unrealized gain (loss) on investments | | | 5.92 | | | | 5.88 | | | | 5.91 | | | | 2.35 | | | | 2.38 | | | | 0.67 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total from investment operations | | | 5.95 | | | | 5.85 | | | | 5.99 | | | | 2.47 | | | | 2.40 | | | | 0.67 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Redemption Fees | | | 0.00 | (3) | | | 0.00 | (3) | | | 0.00 | (3) | | | 0.00 | (3) | | | 0.00 | (3) | | | — | |
| Less Distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
| From net investment income | | | (0.05 | ) | | | (0.03 | ) | | | (0.08 | ) | | | (0.01 | ) | | | (0.01 | ) | | | (0.02 | ) |
| From net realized gains | | | — | | | | — | | | | — | | | | (0.13 | ) | | | (0.13 | ) | | | (0.13 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total distributions | | | (0.05 | ) | | | (0.03 | ) | | | (0.08 | ) | | | (0.14 | ) | | | (0.14 | ) | | | (0.15 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Asset Value, End of Year | | $ | 26.92 | | | $ | 26.71 | | | $ | 26.91 | | | $ | 21.02 | | | $ | 20.89 | | | $ | 21.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Total Return(4) | | | 28.37 | % | | | 28.03 | % | | | 28.52 | % | | | 13.17 | % | | | 12.83 | % | | | 3.23 | %(5) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| |
SUPPLEMENTAL DATA AND RATIOS |
| Net assets, end of year (000’s) | | $ | 268,875 | | | $ | 12,144 | | | $ | 209,592 | | | $ | 55,979 | | | $ | 5,205 | | | $ | 67,586 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 1.83 | % | | | 2.08 | % | | | 1.78 | % | | | 1.93 | % | | | 2.16 | % | | | 1.77 | %(6) |
After expense reimbursement(7) | | | 1.58 | % | | | 1.83 | % | | | 1.38 | % | | | 1.66 | % | | | 1.94 | % | | | 1.59 | %(6) |
| Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | (0.14 | )% | | | (0.39 | )% | | | (0.09 | )% | | | 0.18 | % | | | (0.17 | )% | | | (0.21 | )%(6) |
After expense reimbursement(7) | | | 0.11 | % | | | (0.14 | )% | | | 0.31 | % | | | 0.45 | % | | | 0.06 | % | | | (0.03 | )%(6) |
| Portfolio turnover rate | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
| | |
| | ˆ | Commencement of operations. |
| |
| (1) | Information presented relates to a share of capital stock outstanding for each period. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the period. |
| (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) | Not annualized. |
| (6) | Annualized. |
| (7) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
| (8) | Includes adviser reimbursement from the net realized loss on the disposal of investments in violation of restrictions. This reimbursement comprises less than $0.005 of the NAVs for each class at the time of the reimbursement and 0.03% of the total return for the Adviser Class C for the fiscal year ended December 31, 2008. There was no impact on the other classes. |
See Notes to the Financial Statements.
78
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | |
| | | The Kinetics Government Money Market Fund | |
| | | 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,
| |
| | | 2009 | | | 2008 | | | 2007 | | | 2006 | | | 2005 | |
| | |
| |
PER SHARE DATA:(1) |
| Net Asset Value, Beginning of Year | | $ | 1.00 | | | $ | 1.00 | | | $ | 1.00 | | | $ | 1.00 | | | $ | 1.00 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income from Investment Operations: |
| Net investment income | | | — | | | | 0.01 | | | | 0.04 | | | | 0.04 | | | | 0.02 | |
| Net realized and unrealized gain on investments | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Total from investment operations | | | — | | | | 0.01 | | | | 0.04 | | | | 0.04 | | | | 0.02 | |
| | | | | | | | | | | | | | | | | | | | | |
| Less Distributions: | | | | | | | | | | | | | | | | | | | | |
| From net investment income | | | — | | | | (0.01 | ) | | | (0.04 | ) | | | (0.04 | ) | | | (0.02 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Total distributions | | | — | | | | (0.01 | ) | | | (0.04 | ) | | | (0.04 | ) | | | (0.02 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net Asset Value, End of Year | | $ | 1.00 | | | $ | 1.00 | | | $ | 1.00 | | | $ | 1.00 | | | $ | 1.00 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total Return | | | 0.00 | % | | | 0.91 | % | | | 3.77 | % | | | 4.45 | % | | | 1.88 | % |
SUPPLEMENTAL DATA AND RATIOS |
| Net assets, end of year (000’s) | | $ | 1,651 | | | $ | 2,688 | | | $ | 1,190 | | | $ | 1,425 | | | $ | 1,052 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 3.04 | % | | | 3.55 | % | | | 6.42 | % | | | 3.94 | % | | | 5.08 | % |
After expense reimbursement(2) | | | 0.06 | % | | | 0.76 | % | | | 0.98 | % | | | 0.22 | % | | | 1.06 | % |
| Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | (2.98 | )% | | | (1.98 | )% | | | (1.74 | )% | | | 0.73 | % | | | (2.17 | )% |
After expense reimbursement(2) | | | (0.00 | )% | | | 0.81 | % | | | 3.70 | % | | | 4.45 | % | | | 1.85 | % |
| Portfolio turnover rate | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
(1) Information presented relates to a share of capital stock outstanding for each period.
(2) See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion.
See Notes to the Financial Statements.
79
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | |
| | | The Market Opportunities Fund | |
| | | No Load Class
| | | Advisor Class A
| | | Advisor Class C
| | | Institutional Class
| | | 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,
| |
| | | 2009 | | | 2009 | | | 2009 | | | 2009 | | | 2008 | |
| | |
| |
PER SHARE DATA:(1) |
| Net Asset Value, Beginning of Year | | $ | 7.22 | | | $ | 7.22 | | | $ | 7.17 | | | $ | 7.21 | | | $ | 16.12 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income from Investment Operations: |
| Net investment income (loss) | | | 0.00 | (2)(3) | | | (0.02 | )(2) | | | (0.06 | )(2) | | | 0.02 | (2) | | | 0.11 | (2) |
| Net realized and unrealized gain (loss) on investments | | | 3.62 | | | | 3.61 | | | | 3.59 | | | | 3.64 | | | | (9.02 | ) |
Payment by adviser(7) | | | — | | | | — | | | | — | | | | — | | | | 0.06 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total from investment operations | | | 3.62 | | | | 3.59 | | | | 3.53 | | | | 3.66 | | | | (8.85 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Redemption Fees | | | 0.01 | | | | 0.00 | (3) | | | 0.00 | (3) | | | — | | | | 0.01 | |
| Less Distributions: | | | | | | | | | | | | | | | | | | | | |
| From net investment income | | | (0.01 | ) | | | (0.01 | ) | | | (0.01 | ) | | | (0.01 | ) | | | (0.06 | ) |
| From net realized gains | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Total distributions | | | (0.01 | ) | | | (0.01 | ) | | | (0.01 | ) | | | (0.01 | ) | | | (0.06 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net Asset Value, End of Year | | $ | 10.84 | | | $ | 10.80 | | | $ | 10.69 | | | $ | 10.86 | | | $ | 7.22 | |
| | | | | | | | | | | | | | | | | | | | | |
Total Return(4) | | | 50.21 | % | | | 49.66 | % | | | 49.17 | % | | | 50.70 | % | | | (54.82 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| |
SUPPLEMENTAL DATA AND RATIOS |
| Net assets, end of year (000’s) | | $ | 41,254 | | | $ | 18,770 | | | $ | 6,055 | | | $ | 19 | | | $ | 34,246 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 1.93 | % | | | 2.18 | % | | | 2.68 | % | | | 1.88 | % | | | 1.82 | % |
After expense reimbursement(7) | | | 1.64 | % | | | 1.89 | % | | | 2.39 | % | | | 1.44 | % | | | 1.66 | % |
| Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | (0.25 | )% | | | (0.50 | )% | | | (1.00 | )% | | | (0.20 | )% | | | 0.78 | % |
After expense reimbursement(7) | | | 0.04 | % | | | (0.21 | )% | | | (0.71 | )% | | | 0.24 | % | | | 0.94 | % |
| Portfolio turnover rate | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
| | |
| | ˆ | Commencement of operations. |
| |
| (1) | Information presented relates to a share of capital stock outstanding for each period. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the period. |
| (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) | Not annualized. |
| (6) | Annualized. |
| (7) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
See Notes to the Financial Statements.
80
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| The Market Opportunities Fund | |
| | | Advisor Class A
| | | Advisor Class C
| | | Institutional Class
| | | No Load Class
| | | Advisor Class A
| | | Advisor Class C
| | | No Load Class
| | | Advisor Class A
| |
| | | For the
| | | For the
| | | May 19, 2008ˆ
| | | For the
| | | For the
| | | February 16, 2007ˆ
| | | January 31, 2006ˆ
| | | January 31, 2006ˆ
| |
| | | Year Ended
| | | Year Ended
| | | through
| | | Year Ended
| | | Year Ended
| | | through
| | | through
| | | through
| |
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| |
| | | 2008 | | | 2008 | | | 2008 | | | 2007 | | | 2007 | | | 2007 | | | 2006 | | | 2006 | |
| | |
| |
| |
| | | $ | 16.07 | | | $ | 16.01 | | | $ | 13.71 | | | $ | 12.05 | | | $ | 12.04 | | | $ | 12.99 | | | $ | 10.00 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0.08 | (2) | | | 0.02 | (2) | | | 0.08 | (2) | | | 0.04 | (2) | | | 0.00 | (2) | | | (0.05 | )(2) | | | 0.04 | | | | 0.02 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (8.97 | ) | | | (8.91 | ) | | | (6.55 | ) | | | 4.05 | | | | 4.04 | | | | 3.07 | | | | 2.05 | | | | 2.05 | |
| | | | 0.06 | | | | 0.06 | | | | 0.06 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (8.83 | ) | | | (8.83 | ) | | | (6.41 | ) | | | 4.09 | | | | 4.04 | | | | 3.02 | | | | 2.09 | | | | 2.07 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0.00 | (3) | | | 0.00 | (3) | | | — | | | | 0.01 | | | | 0.00 | (3) | | | 0.00 | (3) | | | 0.00 | (3) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (0.02 | ) | | | (0.01 | ) | | | (0.09 | ) | | | (0.03 | ) | | | (0.01 | ) | | | — | | | | (0.04 | ) | | | (0.03 | ) |
| | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (0.02 | ) | | | (0.01 | ) | | | (0.09 | ) | | | (0.03 | ) | | | (0.01 | ) | | | — | | | | (0.04 | ) | | | (0.03 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 7.22 | | | $ | 7.17 | | | $ | 7.21 | | | $ | 16.12 | | | $ | 16.07 | | | $ | 16.01 | | | $ | 12.05 | | | $ | 12.04 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (54.91 | )% | | | (55.13 | )% | | | (46.77 | )%(5) | | | 34.03 | % | | | 33.54 | % | | | 23.25 | %(5) | | | 20.85 | %(5) | | | 20.68 | %(5) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 18,514 | | | $ | 771 | | | $ | 5 | | | $ | 63,004 | | | $ | 43,907 | | | $ | 8,790 | | | $ | 7,994 | | | $ | 9,591 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 2.07 | % | | | 2.57 | % | | | 1.82 | %(6) | | | 1.91 | % | | | 2.16 | % | | | 2.66 | %(6) | | | 2.68 | %(6) | | | 2.93 | %(6) |
| | | | 1.91 | % | | | 2.41 | % | | | 1.44 | %(6) | | | 1.74 | % | | | 1.99 | % | | | 2.49 | %(6) | | | 1.46 | %(6) | | | 1.71 | %(6) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0.53 | % | | | 0.03 | % | | | 0.94 | %(6) | | | 0.12 | % | | | (0.14 | )% | | | (0.60 | )%(6) | | | (0.76 | )%(6) | | | (1.01 | )%(6) |
| | | | 0.69 | % | | | 0.19 | % | | | 1.32 | %(6) | | | 0.29 | % | | | 0.03 | % | | | (0.43 | )%(6) | | | 0.46 | %(6) | | | (0.21 | )%(6) |
| | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
See Notes to the Financial Statements.
81
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | |
| | | The Water Infrastructure Fund | |
| | | No Load Class
| | | Advisor Class A
| | | Advisor Class C
| | | Institutional Class
| | | 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,
| |
| | | 2009 | | | 2009 | | | 2009 | | | 2009 | | | 2008 | |
| | |
| |
PER SHARE DATA:(1) |
| Net Asset Value, | | | | | | | | | | | | | | | | | | | | |
| Beginning of Year | | $ | 7.61 | | | $ | 7.59 | | | $ | 7.54 | | | $ | 7.63 | | | $ | 10.17 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income from Investment Operations: |
Net investment income (loss)(2) | | | 0.04 | | | | 0.02 | | | | (0.02 | ) | | | 0.05 | | | | 0.10 | |
| Net realized and unrealized gain (loss) on investments | | | 1.21 | | | | 1.21 | | | | 1.19 | | | | 1.23 | | | | (2.66 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Total from investment operations | | | 1.25 | | | | 1.23 | | | | 1.17 | | | | 1.28 | | | | (2.56 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Redemption Fees | | | 0.00 | (3) | | | 0.00 | (3) | | | 0.00 | (3) | | | 0.01 | | | | 0.00 | (3) |
| Less Distributions: | | | | | | | | | | | | | | | | | | | | |
| From net investment income | | | (0.00 | )(3) | | | — | | | | — | | | | (0.02 | ) | | | — | |
| From net realized gains | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Total distributions | | | (0.00 | )(3) | | | — | | | | — | | | | (0.02 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Net Asset Value, End of Year | | $ | 8.86 | | | $ | 8.82 | | | $ | 8.71 | | | $ | 8.90 | | | $ | 7.61 | |
| | | | | | | | | | | | | | | | | | | | | |
Total Return(4) | | | 16.46 | % | | | 16.21 | % | | | 15.52 | % | | | 16.94 | % | | | (25.17 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| |
SUPPLEMENTAL DATA AND RATIOS |
| Net assets, end of year (000’s) | | $ | 7,176 | | | $ | 10,339 | | | $ | 2,700 | | | $ | 2,905 | | | $ | 6,598 | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 2.36 | % | | | 2.61 | % | | | 3.11 | % | | | 2.31 | % | | | 2.20 | % |
After expense reimbursement(7) | | | 1.64 | % | | | 1.89 | % | | | 2.39 | % | | | 1.44 | % | | | 1.65 | % |
| Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | (0.26 | )% | | | (0.51 | )% | | | (1.01 | )% | | | (0.21 | )% | | | 0.55 | % |
After expense reimbursement(7) | | | 0.46 | % | | | 0.21 | % | | | (0.29 | )% | | | 0.66 | % | | | 1.10 | % |
| Portfolio turnover rate | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
| | |
| | ˆ | Commencement of operations. |
| |
| (1) | Information presented relates to a share of capital stock outstanding for each period. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the period. |
| (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) | Not annualized. |
| (6) | Annualized. |
| (7) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
See Notes to the Financial Statements.
82
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| The Water Infrastructure Fund | |
| | | Advisor Class A
| | | Advisor Class C
| | | Institutional Class
| | | No Load Class
| | | Advisor Class A
| | | Advisor Class C
| | | Institutional Class
| |
| | | For the
| | | For the
| | | For the
| | | June 29, 2007ˆ
| | | June 29, 2007ˆ
| | | June 29, 2007ˆ
| | | June 29, 2007ˆ
| |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | through
| | | through
| | | through
| | | through
| |
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| |
| | | 2008 | | | 2008 | | | 2008 | | | 2007 | | | 2007 | | | 2007 | | | 2007 | |
| | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 10.17 | | | $ | 10.16 | | | $ | 10.18 | | | $ | 10.00 | | | $ | 10.00 | | | $ | 10.00 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0.07 | | | | 0.03 | | | | 0.12 | | | | 0.06 | | | | 0.05 | | | | 0.02 | | | | 0.06 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (2.65 | ) | | | (2.65 | ) | | | (2.67 | ) | | | 0.20 | | | | 0.20 | | | | 0.21 | | | | 0.21 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (2.58 | ) | | | (2.62 | ) | | | (2.55 | ) | | | 0.26 | | | | 0.25 | | | | 0.23 | | | | 0.27 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0.00 | (3) | | | — | | | | 0.00 | (3) | | | — | | | | 0.00 | (3) | | | 0.00 | (3) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | — | | | | — | | | | — | | | | (0.04 | ) | | | (0.03 | ) | | | (0.02 | ) | | | (0.04 | ) |
| | | | — | | | | — | | | | — | | | | (0.05 | ) | | | (0.05 | ) | | | (0.05 | ) | | | (0.05 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | — | | | | — | | | | — | | | | (0.09 | ) | | | (0.08 | ) | | | (0.07 | ) | | | (0.09 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 7.59 | | | $ | 7.54 | | | $ | 7.63 | | | $ | 10.17 | | | $ | 10.17 | | | $ | 10.16 | | | $ | 10.18 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | (25.37 | )% | | | (25.79 | )% | | | (25.05 | )% | | | 2.64 | %(5) | | | 2.55 | %(5) | | | 2.33 | %(5) | | | 2.76 | %(5) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 7,661 | | | $ | 1,571 | | | $ | 251 | | | $ | 2,385 | | | $ | 2,459 | | | $ | 1,201 | | | $ | 103 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 2.45 | % | | | 2.95 | % | | | 2.15 | % | | | 3.62 | %(6) | | | 3.87 | %(6) | | | 4.37 | %(6) | | | 3.58 | %(6) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 1.90 | % | | | 2.40 | % | | | 1.45 | % | | | 1.74 | %(6) | | | 1.99 | %(6) | | | 2.49 | %(6) | | | 1.54 | %(6) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0.30 | % | | | (0.20 | )% | | | 0.60 | % | | | (0.73 | )%(6) | | | (0.98 | )%(6) | | | (1.48 | )%(6) | | | (0.69 | )%(6) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0.85 | % | | | 0.35 | % | | | 1.30 | % | | | 1.15 | %(6) | | | 0.90 | %(6) | | | 0.40 | %(6) | | | 1.35 | %(6) |
| | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
See Notes to the Financial Statements.
83
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | |
| | | The Multi-Disciplinary Fund | | | | |
| | | No Load Class
| | | Advisor Class A
| | | Advisor Class C
| | | Institutional Class
| | | | |
| | | For the
| | | For the
| | | For the
| | | For the
| | | | |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | | |
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| | | | |
| | | 2009 | | | 2009 | | | 2009 | | | 2009 | | | | |
| | |
| |
PER SHARE DATA:(1) |
| Net Asset Value, Beginning of Year | | $ | 8.22 | | | $ | 8.20 | | | $ | 8.17 | | | $ | 8.23 | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Income from Investment Operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss)(2) | | | 0.09 | | | | 0.06 | | | | 0.02 | | | | 0.10 | | | | | |
| Net realized and unrealized gain (loss) on investments | | | 1.79 | | | | 1.80 | | | | 1.78 | | | | 1.81 | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total from investment operations | | | 1.88 | | | | 1.86 | | | | 1.80 | | | | 1.91 | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Redemption Fees | | | — | | | | — | | | | — | | | | — | | | | | |
| Less Distributions: | | | | | | | | | | | | | | | | | | | | |
| From net investment income | | | (0.08 | ) | | | (0.05 | ) | | | (0.01 | ) | | | (0.09 | ) | | | | |
| From net realized gains | | | (0.16 | ) | | | (0.16 | ) | | | (0.16 | ) | | | (0.16 | ) | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total distributions | | | (0.24 | ) | | | (0.21 | ) | | | (0.17 | ) | | | (0.25 | ) | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Net Asset Value, End of Year | | $ | 9.86 | | | $ | 9.85 | | | $ | 9.80 | | | $ | 9.89 | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Total Return(4) | | | 22.90 | % | | | 22.73 | % | | | 22.03 | % | | | 23.25 | % | | | | |
SUPPLEMENTAL DATA AND RATIOS |
| Net assets, end of year (000’s) | | $ | 938 | | | $ | 103 | | | $ | 105 | | | $ | 101 | | | | | |
| Ratio of operating expenses to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | 13.11 | % | | | 13.36 | % | | | 13.86 | % | | | 13.06 | % | | | | |
After expense reimbursement(7) | | | 1.49 | % | | | 1.74 | % | | | 2.24 | % | | | 1.29 | % | | | | |
| Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reimbursement | | | (10.69 | )% | | | (10.94 | )% | | | (11.44 | )% | | | (10.64 | )% | | | | |
After expense reimbursement(7) | | | 0.93 | % | | | 0.68 | % | | | 0.18 | % | | | 1.13 | % | | | | |
| Portfolio turnover rate | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | | |
| | |
| | ˆ | Commencement of operations. |
| |
| (1) | Information presented relates to a share of capital stock outstanding for each period. |
| (2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the period. |
| (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) | Not annualized. |
| (6) | Annualized. |
| (7) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
See Notes to the Financial Statements.
84
| | | | | | | | | | | | | | | | | |
| The Multi-Disciplinary Fund | |
| | | No Load Class
| | | Advisor Class A
| | | Advisor Class C
| | | Institutional Class
| |
| | | For The Period
| | | For The Period
| | | For The Period
| | | For The Period
| |
| | | February 11, 2008ˆ
| | | February 11, 2008ˆ
| | | February 11, 2008ˆ
| | | February 11, 2008ˆ
| |
| | | through
| | | through
| | | through
| | | through
| |
| | | December 31, 2008 | | | December 31, 2008 | | | December 31, 2008 | | | December 31, 2008 | |
| | |
| |
| | | | | | | | | | | | | | | | | |
| | | $ | 10.00 | | | $ | 10.00 | | | $ | 10.00 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | |
| | | | 0.01 | | | | (0.01 | ) | | | (0.05 | ) | | | 0.02 | |
| | | | (1.79 | ) | | | (1.79 | ) | | | (1.78 | ) | | | (1.79 | ) |
| | | | | | | | | | | | | | | | | |
| | | | (1.78 | ) | | | (1.80 | ) | | | (1.83 | ) | | | (1.77 | ) |
| | | | | | | | | | | | | | | | | |
| | | | — | | | | — | | | | — | | | | — | |
| | | | (0.00 | )(3) | | | (0.00 | )(3) | | | (0.00 | )(3) | | | (0.00 | )(3) |
| | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | |
| | | | (0.00 | ) | | | (0.00 | ) | | | (0.00 | ) | | | (0.00 | ) |
| | | | | | | | | | | | | | | | | |
| | | $ | 8.22 | | | $ | 8.20 | | | $ | 8.17 | | | $ | 8.23 | |
| | | | | | | | | | | | | | | | | |
| | | | (17.76 | )%(5) | | | (17.97 | )%(5) | | | (18.30 | )%(5) | | | (17.65 | )%(5) |
| | | $ | 99 | | | $ | 84 | | | $ | 88 | | | $ | 82 | |
| | | | 17.58 | %(6) | | | 17.83 | %(6) | | | 18.33 | %(6) | | | 17.53 | %(6) |
| | | | 1.49 | %(6) | | | 1.74 | %(6) | | | 2.24 | %(6) | | | 1.29 | %(6) |
| | | | (15.99 | )%(6) | | | (16.24 | )%(6) | | | (16.74 | )%(6) | | | (15.94 | )%(6) |
| | | | 0.10 | %(6) | | | (0.15 | )%(6) | | | (0.65 | )%(6) | | | 0.30 | %(6) |
| | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
See Notes to the Financial Statements.
85
KINETICS MUTUAL FUNDS, INC.
Report of Independent Registered
Public Accounting Firm
To the Shareholders of and Board of Directors
Kinetics Mutual Funds, Inc.
Elmsford, New York
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 Kinetics Government Money Market Fund, The Market Opportunities Fund, The Water Infrastructure Fund, and The Multi-Disciplinary Fund, each a series of shares of Kinetics Mutual Funds, Inc. (the “Funds”), as of December 31, 2009, and the related statements of operations, the statements of changes in net assets and financial highlights for the periods indicated thereon. These financial statements and financial highlights are the responsibility of the Fund’s 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 the above mentioned Funds as of December 31, 2009, the results of their operations, the changes in their net assets and financial highlights for the periods indicated thereon, in conformity with accounting principles generally accepted in the United States of America.
TAIT, WELLER & BAKER LLP
Philadelphia, Pennsylvania
February 26, 2010
86
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
ALLOCATION OF PORTFOLIO ASSETS
December 31, 2009
The Internet Portfolio
The Global Portfolio
87
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
ALLOCATION OF PORTFOLIO ASSETS
December 31, 2009 — (Continued)
The Paradigm Portfolio
The Medical Portfolio
88
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
ALLOCATION OF PORTFOLIO ASSETS
December 31, 2009 — (Continued)
The Small Cap Opportunities Portfolio
The Kinetics Government Money Market Portfolio
89
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
ALLOCATION OF PORTFOLIO ASSETS
December 31, 2009 — (Continued)
The Market Opportunities Portfolio
The Water Infrastructure Portfolio
90
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
ALLOCATION OF PORTFOLIO ASSETS
December 31, 2009 — (Continued)
The Multi-Disciplinary Portfolio
91
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Internet Portfolio
Portfolio of Investments — December 31, 2009
| | | | | | | | | | | |
| Identifier | | COMMON STOCKS — 96.94% | | Shares | | | Value | |
| | |
| |
| | | Administrative and Support Services — 4.10% |
| CTRP | | Ctrip.com International Ltd. — ADR* | | | 3,000 | | | $ | 215,580 | |
| IILG | | Interval Leisure Group, Inc.*(1) | | | 200 | | | | 2,494 | |
| ID | | L-1 Identity Solutions, Inc.*(1) | | | 20,000 | | | | 149,800 | |
| MANT | | ManTech International Corporation — Class A* | | | 82,000 | | | | 3,958,960 | |
| TKTM | | Ticketmaster*(1) | | | 200 | | | | 2,444 | |
| | | | | | | | | | | |
| | | | | | | | | | 4,329,278 | |
| | | | | | | | | | | |
| | | Amusement, Gambling, and Recreation Industries — 0.35% |
| DIS | | The Walt Disney Co.(1) | | | 11,380 | | | | 367,005 | |
| | | | | | | | | | | |
| | | Asian Exchanges — 0.65% |
| 8697 JP | | Osaka Securities Exchange Co., Ltd. | | | 144 | | | | 684,941 | |
| | | | | | | | | | | |
| | | Asset Management — 0.92% |
| URB/A CN | | Urbana Corp. — Class A* | | | 240,000 | | | | 339,628 | |
| GROW | | US Global Investors, Inc. — Class A(1) | | | 48,000 | | | | 590,880 | |
| WSDT | | WisdomTree Investments, Inc.*(1) | | | 24,000 | | | | 44,400 | |
| | | | | | | | | | | |
| | | | | | | | | | 974,908 | |
| | | | | | | | | | | |
| | | Broadcasting (except Internet) — 4.66% |
| LBTYK | | Liberty Global, Inc. — Series C* | | | 100,707 | | | | 2,200,448 | |
| SNI | | Scripps Networks Interactive — Class A | | | 65,000 | | | | 2,697,500 | |
| SIRI | | Sirius XM Radio, Inc.* | | | 46,000 | | | | 27,600 | |
| | | | | | | | | | | |
| | | | | | | | | | 4,925,548 | |
| | | | | | | | | | | |
| | | Cable TV — 0.85% |
| TWC | | Time Warner Cable, Inc.(1) | | | 21,754 | | | | 900,398 | |
| | | | | | | | | | | |
| | | Computer and Electronic Product Manufacturing — 5.79% |
| AAPL | | Apple, Inc.* | | | 5,000 | | | | 1,054,300 | |
| EMC | | EMC Corporation* | | | 140,000 | | | | 2,445,800 | |
| JDSU | | JDS Uniphase Corporation* | | | 45,000 | | | | 371,250 | |
| NTAP | | NetApp, Inc.*(1) | | | 45,000 | | | | 1,547,550 | |
| QCOM | | QUALCOMM Inc. | | | 15,000 | | | | 693,900 | |
| | | | | | | | | | | |
| | | | | | | | | | 6,112,800 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
92
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Internet Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Credit Intermediation and Related Activities — 2.84% |
| AXP | | American Express Company(1) | | | 10,000 | | | $ | 405,200 | |
| NTRS | | Northern Trust Corp. | | | 2,000 | | | | 104,800 | |
| STT | | State Street Corporation | | | 4,000 | | | | 174,160 | |
| TREE | | Tree.com, Inc.*(1) | | | 10,033 | | | | 91,802 | |
| V | | Visa, Inc. — Class A(1) | | | 20,000 | | | | 1,749,200 | |
| WU | | The Western Union Company | | | 25,000 | | | | 471,250 | |
| | | | | | | | | | | |
| | | | | | | | | | 2,996,412 | |
| | | | | | | | | | | |
| | | Data Processing, Hosting and Related Services — 0.64% |
| ACXM | | Acxiom Corporation* | | | 30,150 | | | | 404,613 | |
| AOL | | AOL Inc.*(1) | | | 7,878 | | | | 183,400 | |
| CSGP | | CoStar Group, Inc.*(1) | | | 2,000 | | | | 83,540 | |
| | | | | | | | | | | |
| | | | | | | | | | 671,553 | |
| | | | | | | | | | | |
| | | Educational Services — 0.37% |
| APOL | | Apollo Group, Inc. — Class A* | | | 2,000 | | | | 121,160 | |
| EDU | | New Oriental Education & Technology Group, Inc. — ADR*(1) | | | 3,550 | | | | 268,416 | |
| | | | | | | | | | | |
| | | | | | | | | | 389,576 | |
| | | | | | | | | | | |
| | | European Exchanges — 0.31% |
| DB1 GR | | Deutsche Boerse AG | | | 4,000 | | | | 332,583 | |
| | | | | | | | | | | |
| | | Funds, Trusts, and Other Financial Vehicles — 0.19% |
| HHH | | Internet HOLDRs Trust | | | 3,500 | | | | 203,840 | |
| | | | | | | | | | | |
| | | Global Exchanges — 5.82% |
| 388 HK | | Hong Kong Exchanges & Clearing Limited | | | 110,000 | | | | 1,977,713 | |
| JSE SJ | | JSE Limited | | | 60,000 | | | | 490,081 | |
| SGX SP | | Singapore Exchange Limited | | | 620,000 | | | | 3,676,265 | |
| | | | | | | | | | | |
| | | | | | | | | | 6,144,059 | |
| | | | | | | | | | | |
| | | Holding Company — 7.08% |
| GBLB BB | | Groupe Bruxelles Lambert S.A. | | | 18,000 | | | | 1,704,345 | |
| GBLS BB | | Groupe Bruxelles Lambert S.A. Strip VVPR* | | | 2,000 | | | | 23 | |
| LUK | | Leucadia National Corporation*(1) | | | 242,540 | | | | 5,770,027 | |
| | | | | | | | | | | |
| | | | | | | | | | 7,474,395 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
93
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Internet Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Hotels, Restaurants & Leisure — 0.65% |
| 200 HK | | Melco International Development Limited* | | | 1,500,000 | | | $ | 692,599 | |
| | | | | | | | | | | |
| | | Management of Companies and Enterprises — 0.19% |
| SATS | | EchoStar Corporation — Class A* | | | 10,000 | | | | 201,400 | |
| | | | | | | | | | | |
| | | Motion Picture and Sound Recording Industries — 9.23% |
| DWA | | DreamWorks Animation SKG, Inc. — Class A* | | | 150,000 | | | | 5,992,500 | |
| NFLX | | Netflix, Inc.* | | | 1,000 | | | | 55,140 | |
| SINA | | SINA Corporation*(1) | | | 26,000 | | | | 1,174,680 | |
| TWX | | Time Warner, Inc. | | | 86,666 | | | | 2,525,447 | |
| | | | | | | | | | | |
| | | | | | | | | | 9,747,767 | |
| | | | | | | | | | | |
| | | Nonstore Retailers — 3.70% |
| EBAY | | eBay, Inc.*(1) | | | 40,000 | | | | 941,600 | |
| HSNI | | HSN, Inc.* | | | 200 | | | | 4,038 | |
| IACI | | IAC/InterActiveCorp*(1) | | | 60,740 | | | | 1,243,955 | |
| OSTK | | Overstock.com, Inc.* | | | 1,000 | | | | 13,560 | |
| SOHU | | Sohu.com Inc.*(1) | | | 18,000 | | | | 1,031,040 | |
| BID | | Sotheby’s(1) | | | 30,000 | | | | 674,400 | |
| | | | | | | | | | | |
| | | | | | | | | | 3,908,593 | |
| | | | | | | | | | | |
| | | Other Exchanges — 0.61% |
| ASX AU | | ASX Ltd. | | | 18,000 | | | | 564,925 | |
| NZX NZ | | NZX Ltd.* | | | 48,000 | | | | 82,247 | |
| | | | | | | | | | | |
| | | | | | | | | | 647,172 | |
| | | | | | | | | | | |
| | | Other Information Services — 5.78% |
| BIDU | | Baidu.com, Inc. — ADR*(1) | | | 9,700 | | | | 3,988,931 | |
| EXPE | | Expedia, Inc.*(1) | | | 4,000 | | | | 102,840 | |
| GOOG | | Google Inc. — Class A*(1) | | | 3,200 | | | | 1,983,936 | |
| MVL | | Marvel Entertainment, Inc.* | | | 322 | | | | 17,414 | |
| NTES | | NetEase.com Inc. — ADR* | | | 200 | | | | 7,522 | |
| | | | | | | | | | | |
| | | | | | | | | | 6,100,643 | |
| | | | | | | | | | | |
| | | Performing Arts, Spectator Sports, and Related Industries — 1.66% |
| WMG | | Warner Music Group Corp.* | | | 310,000 | | | | 1,754,600 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
94
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Internet Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Prepackaged Software — 0.67% |
| CHKP | | Check Point Software Technologies Ltd.* | | | 21,000 | | | $ | 711,480 | |
| | | | | | | | | | | |
| | | Professional, Scientific, and Technical Services — 14.02% |
| BR | | Broadridge Financial Solutions, Inc. | | | 100,000 | | | | 2,256,000 | |
| CAI | | CACI International, Inc. — Class A* | | | 55,000 | | | | 2,686,750 | |
| JRJC | | China Finance Online Company — ADR*(1) | | | 10,000 | | | | 73,000 | |
| CTSH | | Cognizant Technology Solutions Corporation — Class A* | | | 39,000 | | | | 1,766,700 | |
| FTIS LI | | Financial Technologies (India) Ltd. — GDR | | | 144,000 | | | | 604,800 | |
| INFY | | Infosys Technologies Limited — ADR(1) | | | 30,000 | | | | 1,658,100 | |
| ICGE | | Internet Capital Group, Inc.* | | | 15,000 | | | | 99,750 | |
| MA | | Mastercard, Inc. — Class A(1) | | | 6,000 | | | | 1,535,880 | |
| MWW | | Monster Worldwide, Inc.* | | | 2,000 | | | | 34,800 | |
| MCO | | Moody’s Corporation(1) | | | 4,000 | | | | 107,200 | |
| PCLN | | Priceline.com Incorporated*(1) | | | 500 | | | | 109,250 | |
| RHD | | R.H. Donnelley Corporation*(1) | | | 484,000 | | | | 1,839 | |
| RBA | | Ritchie Bros. Auctioneers, Incorporated(1) | | | 162,000 | | | | 3,633,660 | |
| SAPE | | Sapient Corporation* | | | 20,000 | | | | 165,400 | |
| UNTD | | United Online, Inc. | | | 10,000 | | | | 71,900 | |
| | | | | | | | | | | |
| | | | | | | | | | 14,805,029 | |
| | | | | | | | | | | |
| | | Publishing Industries (except Internet) — 13.55% |
| SSP | | The E.W. Scripps Company — Class A*(1) | | | 898,065 | | | | 6,250,532 | |
| IAR | | Idearc Inc.* | | | 364,000 | | | | 1,201 | |
| MFE | | McAfee, Inc.* | | | 15,000 | | | | 608,550 | |
| MSFT | | Microsoft Corp. | | | 15,000 | | | | 457,350 | |
| ROVI | | Rovi Corporation*(1) | | | 152,880 | | | | 4,872,286 | |
| SYMC | | Symantec Corporation* | | | 30,000 | | | | 536,700 | |
| WPO | | The Washington Post Company — Class B | | | 3,600 | | | | 1,582,560 | |
| | | | | | | | | | | |
| | | | | | | | | | 14,309,179 | |
| | | | | | | | | | | |
| | | Real Estate — 0.68% |
| IEP | | Icahn Enterprises LP | | | 18,000 | | | | 719,100 | |
| | | | | | | | | | | |
| | | Rental and Leasing Services — 1.84% |
| CDCO | | Comdisco Holding Company, Inc.*(1) | | | 194,400 | | | | 1,944,000 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
95
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Internet Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 4.78% |
| CLE LN | | Climate Exchange PLC* | | | 40,000 | | | $ | 410,906 | |
| CME | | CME Group, Inc. | | | 7,100 | | | | 2,385,245 | |
| CLST LN | | Collins Stewart plc | | | 4,000 | | | | 4,474 | |
| ICE | | IntercontinentalExchange Inc.*(1) | | | 13,000 | | | | 1,459,900 | |
| LAB | | LaBranche & Co. Inc.* | | | 210,000 | | | | 596,400 | |
| MKTX | | MarketAxess Holdings, Inc.(1) | | | 6,000 | | | | 83,400 | |
| RMG | | Riskmetrics Group Inc.* | | | 5,700 | | | | 90,687 | |
| TLPR LN | | Tullett Prebon plc | | | 4,000 | | | | 18,019 | |
| | | | | | | | | | | |
| | | | | | | | | | 5,049,031 | |
| | | | | | | | | | | |
| | | Special Purpose Entity — 0.00% |
| ADPAO | | Adelphia Contingent Value Vehicle CVV Servies ACC-4 Int*+ | | | 250,827 | | | | 0 | |
| ADPAL | | Adelphia Recovery Trust Ser ACC-6 E/F Int*+ | | | 4,878,645 | | | | 0 | |
| | | | | | | | | | | |
| | | | | | | | | | 0 | |
| | | | | | | | | | | |
| | | Telecommunications — 3.04% |
| CHU | | China Unicom (Hong Kong) Limited — ADR | | | 159,793 | | | | 2,094,886 | |
| 215 HK | | Hutchison Telecommunications Hong Kong Holdings Limited | | | 2,300,000 | | | | 391,570 | |
| HTHKY | | Hutchison Telecommunications Hong Kong Holdings Limited — ADR | | | 45,000 | | | | 111,600 | |
| 2332 HK | | Hutchison Telecommunications International Limited* | | | 2,300,000 | | | | 477,597 | |
| HTX | | Hutchison Telecommunications International Limited — ADR* | | | 45,000 | | | | 135,450 | |
| SNSHA | | Sunshine PCS Corp. — Class A* | | | 149,890 | | | | 3,748 | |
| | | | | | | | | | | |
| | | | | | | | | | 3,214,851 | |
| | | | | | | | | | | |
| | | U.S. Equity Exchanges — 1.84% |
| NDAQ | | The Nasdaq OMX Group* | | | 54,470 | | | | 1,079,596 | |
| NYX | | NYSE Euronext | | | 34,000 | | | | 860,200 | |
| | | | | | | | | | | |
| | | | | | | | | | 1,939,796 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
96
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Internet Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Warehousing and Storage — 0.13% |
| IRM | | Iron Mountain Incorporated*(1) | | | 6,000 | | | $ | 136,560 | |
| | | | | | | | | | | |
| | | TOTAL COMMON STOCKS
(cost $72,264,751) | | | | | | | 102,389,096 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | Principal
| | | | |
| | | ESCROW NOTES — 0.00% | | Amount | | | | |
| | |
| |
| | | Special Purpose Entity — 0.00% |
| 006ESCBG1 | | Adelphia Communications Corp.*+ | | $ | 200,000 | | | | 0 | |
| 006ESC958 | | Adelphia Communications Corp. Preferred*+ | | | 190,000 | | | | 0 | |
| | | | | | | | | | | |
| | | TOTAL ESCROW NOTES
(cost $0) | | | | | | | 0 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | CONVERTIBLE BONDS — 1.89% | | | | | | |
| | |
| |
| | | Telecommunications — 1.89% |
| 52729NAS9 | | Level 3 Communications, Inc., CLB(1)
6.000%, 03/15/2010 | | | 2,000,000 | | | | 2,000,000 | |
| | | | | | | | | | | |
| | | TOTAL CONVERTIBLE BONDS
(cost $1,937,086) | | | | | | | 2,000,000 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | RIGHTS — 1.45% | | Shares | | | | |
| | |
| |
| | | Rental and Leasing Services — 1.45% |
| CDCOR | | Comdisco Holding Company, Inc. | | | | | | | | |
| | | Expiration Date: 12/31/2050 | | | | | | | | |
| | | Strike Price $1.00# | | | 12,240,699 | | | | 1,530,087 | |
| | | | | | | | | | | |
| | | TOTAL RIGHTS
(cost $3,253,775) | | | | | | | 1,530,087 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | SHORT-TERM INVESTMENTS — 0.89% | | | | | | |
| | |
| |
| | | Money Market Funds — 0.89% |
| FIUXX | | First American Prime Obligations Fund — Class I, 0.00%ˆb | | | 935,678 | | | | 935,678 | |
| | | | | | | | | | | |
| | | TOTAL SHORT-TERM INVESTMENTS
(cost $935,678) | | | | | | | 935,678 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
97
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Internet Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| | | INVESTMENTS PURCHASED WITH
| | | | | | |
| | | THE CASH PROCEEDS FROM
| | | | | | |
| Identifier | | SECURITIES LENDING — 36.00% | | Shares | | | Value | |
| | |
| |
| | | Investment Companies — 36.00% |
| | | Mount Vernon Securities Lending Trust — Prime Portfolio, 0.21%b | | | 38,026,523 | | | $ | 38,026,523 | |
| | | | | | | | | | | |
| | | TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING
(cost $38,026,523) | | | | | | | 38,026,523 | |
| | | | | | | | | | | |
| | | TOTAL INVESTMENTS — 137.17% (cost $116,417,813) | | | | | | $ | 144,881,384 | |
| | | | | | | | | | | |
Percentages are stated as a percent of net assets.
| |
| * — | Non-income producing security. |
ˆ — All or a portion of the shares have been committed as collateral for written option contracts.
| |
| # — | Contingent value right (contingent upon profitability of company). |
| |
| + — | Security is considered illiquid. 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, 2009. |
| |
| ADR — | American Depository Receipt. |
| |
| GDR — | Global Depository Receipt. |
| |
| (1) — | This security or a portion of this security was out on loan at December 31, 2009. Total loaned securities had a market value of $36,061,381 at December 31, 2009. |
See Notes to the Financial Statements.
98
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Global Portfolio
Portfolio of Investments — December 31, 2009
| | | | | | | | | | | |
| Identifier | | COMMON STOCKS — 98.29% | | Shares | | | Value | |
| | |
| |
| | | Administrative and Support Services — 0.55% |
| 144 HK | | China Merchants Holdings International Company Limited | | | 8,000 | | | $ | 26,053 | |
| | | | | | | | | | | |
| | | Air Transportation — 3.67% |
| 694 HK | | Beijing Capital International Airport Company Limited — Class H* | | | 205,000 | | | | 135,902 | |
| 357 HK | | Hainan Meilan International Airport Company Limited — Class H | | | 32,000 | | | | 38,878 | |
| | | | | | | | | | | |
| | | | | | | | | | 174,780 | |
| | | | | | | | | | | |
| | | Amusement, Gambling, and Recreation Industries — 0.53% |
| 555 HK | | REXLot Holdings | | | 225,000 | | | | 25,247 | |
| | | | | | | | | | | |
| | | Asset Management — 3.90% |
| URB/A CN | | Urbana Corp. — Class A* | | | 59,300 | | | | 83,916 | |
| GROW | | US Global Investors, Inc. — Class A(1) | | | 3,655 | | | | 44,993 | |
| 806 HK | | Value Partners Group Limited* | | | 111,000 | | | | 56,836 | |
| | | | | | | | | | | |
| | | | | | | | | | 185,745 | |
| | | | | | | | | | | |
| | | Beverage and Tobacco Product Manufacturing — 3.94% |
| SMCB PM | | San Miguel Corporation — Class B | | | 21,700 | | | | 32,388 | |
| 168 HK | | Tsingtao Brewery Co. Limited — Class H | | | 28,000 | | | | 155,287 | |
| | | | | | | | | | | |
| | | | | | | | | | 187,675 | |
| | | | | | | | | | | |
| | | Chemical Manufacturing — 5.44% |
| GSK | | GlaxoSmithKline plc — ADR | | | 1,000 | | | | 42,250 | |
| MRK GR | | Merck KGaA | | | 330 | | | | 30,825 | |
| SNY | | Sanofi-Aventis — ADR | | | 1,750 | | | | 68,723 | |
| SHPGY | | Shire PLC — ADR(1) | | | 2,000 | | | | 117,400 | |
| | | | | | | | | | | |
| | | | | | | | | | 259,198 | |
| | | | | | | | | | | |
| | | Commercial Banking — 3.73% |
| | | Axis Bank Limited — PN | | | 2,790 | | | | 59,307 | |
| 3988 HK | | Bank of China Ltd. — Class H | | | 20,000 | | | | 10,834 | |
| 939 HK | | China Construction Bank Corp. — Class H | | | 12,000 | | | | 10,323 | |
| 1398 HK | | Industrial & Commercial Bank of China — Class H | | | 13,000 | | | | 10,798 | |
| | | State Bank of India — PN | | | 1,780 | | | | 86,791 | |
| | | | | | | | | | | |
| | | | | | | | | | 178,053 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
99
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Global Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Computer and Electronic Product Manufacturing — 2.40% |
| MR | | Mindray Medical International Limited — ADR(1) | | | 1,855 | | | $ | 62,922 | |
| 8199 HK | | Shandong Weigao Group Medical Polymer Company Limited — Class H | | | 15,400 | | | | 51,443 | |
| | | | | | | | | | | |
| | | | | | | | | | 114,365 | |
| | | | | | | | | | | |
| | | Credit Intermediation and Related Activities — 3.74% |
| COMPARTO MM | | Banco Compartamos SA de CV | | | 8,000 | | | | 41,302 | |
| HDB | | HDFC Bank Ltd. — ADR(1) | | | 620 | | | | 80,650 | |
| IBN | | ICICI Bank Ltd. — ADR | | | 1,500 | | | | 56,565 | |
| | | | | | | | | | | |
| | | | | | | | | | 178,517 | |
| | | | | | | | | | | |
| | | Crop Production — 3.57% |
| CRESY | | Cresud S.A.C.I.F.y A. — ADR | | | 3,590 | | | | 51,624 | |
| KWS GR | | KWS Saat AG | | | 200 | | | | 34,262 | |
| VT CN | | Viterra, Inc.* | | | 8,915 | | | | 84,134 | |
| | | | | | | | | | | |
| | | | | | | | | | 170,020 | |
| | | | | | | | | | | |
| | | Food Manufacturing — 0.87% |
| BARN SW | | Barry Callebaut AG | | | 40 | | | | 25,250 | |
| 2897 JP | | Nissin Foods Holdings Co., Ltd. | | | 500 | | | | 16,267 | |
| | | | | | | | | | | |
| | | | | | | | | | 41,517 | |
| | | | | | | | | | | |
| | | Food Services and Drinking Places — 0.44% |
| JFC PM | | Jollibee Foods Corporation | | | 17,700 | | | | 21,058 | |
| | | | | | | | | | | |
| | | Funds, Trusts, and Other Financial Vehicles — 3.99% |
| BRK-U CN | | The Brick Group Income Fund — Class A | | | 49,500 | | | | 62,949 | |
| GAPFF | | Groupe Aeroplan, Inc. | | | 4,050 | | | | 42,171 | |
| JAARF | | Jazz Air Income Fund | | | 11,775 | | | | 49,651 | |
| MEW-U CN | | Menu Foods Income Fund — UT* | | | 8,040 | | | | 22,063 | |
| WTE-U CN | | Westshore Terminals Income Fund | | | 1,000 | | | | 13,673 | |
| | | | | | | | | | | |
| | | | | | | | | | 190,507 | |
| | | | | | | | | | | |
| | | Global Exchanges — 8.19% |
| BURSA MK | | Bursa Malaysia Bhd | | | 22,700 | | | | 52,971 | |
| 388 HK | | Hong Kong Exchanges & Clearing Limited | | | 6,500 | | | | 116,865 | |
| JSE SJ | | JSE Limited | | | 2,225 | | | | 18,174 | |
| PSE PM | | Philippine Stock Exchange, Inc. | | | 3,200 | | | | 21,631 | |
| SGX SP | | Singapore Exchange Limited | | | 30,500 | | | | 180,848 | |
| | | | | | | | | | | |
| | | | | | | | | | 390,489 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
100
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Global Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Health and Personal Care Stores — 0.39% |
| | | Dabur India Ltd. — PN | | | 5,415 | | | $ | 18,479 | |
| | | | | | | | | | | |
| | | Heavy and Civil Engineering Construction — 7.07% | | | | |
| 1186 HK | | China Railway Construction Corp. — Class H | | | 36,000 | | | | 46,199 | |
| 390 HK | | China Railway Group Ltd. — Class H* | | | 48,000 | | | | 37,393 | |
| | | Engineers India Limited — PN | | | 1,775 | | | | 59,122 | |
| | | Gammon India Limited — PN | | | 35,600 | | | | 173,046 | |
| | | Noida Toll Bridge Company Ltd. — PN* | | | 26,350 | | | | 21,376 | |
| | | | | | | | | | | |
| | | | | | | | | | 337,136 | |
| | | | | | | | | | | |
| | | Insurance Carriers and Related Activities — 0.18% |
| 2318 HK | | Ping An Insurance Group Company of China Limited — Class H | | | 1,000 | | | | 8,770 | |
| | | | | | | | | | | |
| | | Management of Companies and Enterprises — 1.64% |
| 656 HK | | Fosun International | | | 112,000 | | | | 78,293 | |
| | | | | | | | | | | |
| | | Merchant Wholesalers, Durable Goods — 2.49% |
| 3323 HK | | China National Building Material Company Ltd. — Class H | | | 8,000 | | | | 16,571 | |
| HEI GR | | HeidelbergCement AG | | | 502 | | | | 34,708 | |
| HOLN VX | | Holcim Ltd. | | | 250 | | | | 19,455 | |
| LG FP | | Lafarge SA | | | 285 | | | | 23,619 | |
| OLAM SP | | Olam International Limited | | | 13,000 | | | | 24,615 | |
| | | | | | | | | | | |
| | | | | | | | | | 118,968 | |
| | | | | | | | | | | |
| | | Merchant Wholesalers, Nondurable Goods — 1.70% |
| AWB AU | | AWB Limited* | | | 54,570 | | | | 55,390 | |
| NOBL SP | | Noble Group Limited | | | 11,000 | | | | 25,447 | |
| | | | | | | | | | | |
| | | | | | | | | | 80,837 | |
| | | | | | | | | | | |
| | | Mining (except Oil and Gas) — 0.32% |
| | | Hindalco Industries Limited — PN | | | 4,370 | | | | 15,105 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
101
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Global Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Oil & Gas & Consumable Fuels — 9.85% |
| SNP | | China Petroleum & Chemical Corp. — ADR | | | 450 | | | $ | 39,631 | |
| 386 HK | | China Petroleum & Chemical Corp. — Class H | | | 64,000 | | | | 57,038 | |
| 1088 HK | | China Shenhua Energy Company Limited — Class H | | | 14,000 | | | | 68,615 | |
| CEO | | CNOOC Limited — ADR | | | 300 | | | | 46,635 | |
| EC | | Ecopetrol SA — ADR(1) | | | 3,615 | | | | 87,411 | |
| | | GAIL India Limited — PN | | | 1,975 | | | | 17,541 | |
| PTR | | PetroChina Company Limited — ADR | | | 350 | | | | 41,636 | |
| | | Petronet LNG Ltd. — PN | | | 33,590 | | | | 51,466 | |
| PTBA IJ | | PT Tambang Batubara Bukit Asam Tbk | | | 8,000 | | | | 14,689 | |
| | | Reliance Industries Ltd. — PN | | | 1,920 | | | | 44,995 | |
| | | | | | | | | | | |
| | | | | | | | | | 469,657 | |
| | | | | | | | | | | |
| | | Other Information Services — 1.18% |
| CPU AU | | Computershare Limited | | | 5,450 | | | | 56,053 | |
| | | | | | | | | | | |
| | | Port and Harbor Operations — 1.12% |
| 3382 HK | | Tianjin Port Development Holdings Ltd.* | | | 148,000 | | | | 53,639 | |
| | | | | | | | | | | |
| | | Professional, Scientific, and Technical Services — 0.27% |
| BXB AU | | Brambles Limited | | | 2,145 | | | | 13,063 | |
| | | | | | | | | | | |
| | | Rail Transportation — 0.82% |
| CNI | | Canadian National Railway Company | | | 345 | | | | 18,754 | |
| CP | | Canadian Pacific Railway Limited(1) | | | 375 | | | | 20,250 | |
| | | | | | | | | | | |
| | | | | | | | | | 39,004 | |
| | | | | | | | | | | |
| | | Real Estate — 5.90% |
| 1 HK | | Cheung Kong (Holdings) Limited | | | 4,000 | | | | 51,745 | |
| | | DLF Ltd. — PN | | | 2,330 | | | | 18,085 | |
| 12 HK | | Henderson Land Development Company Limited | | | 12,000 | | | | 90,386 | |
| | | Housing Development & Infrastructure Limited — PN* | | | 3,120 | | | | 24,194 | |
| 823 HK | | The Link REIT | | | 31,000 | | | | 79,245 | |
| XIN | | Xinyuan Real Estate Co. Ltd. — ADR* | | | 4,000 | | | | 17,880 | |
| | | | | | | | | | | |
| | | | | | | | | | 281,535 | |
| | | | | | | | | | | |
| | | Retail Trade — 0.26% |
| | | Pantaloon Retail India Limited — PN | | | 1,500 | | | | 12,272 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
102
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Global Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 4.81% |
| 111 HK | | Cinda International Holdings Ltd.* | | | 188,000 | | | $ | 47,767 | |
| | | Crisil Ltd. — PN | | | 240 | | | | 22,922 | |
| | | ICRA Limited — PN | | | 650 | | | | 11,554 | |
| | | Infrastructure Development Finance Company Ltd. — PN | | | 25,360 | | | | 84,088 | |
| LIQ-U CN | | Liquor Stores Income Fund | | | 870 | | | | 13,019 | |
| | | Power Finance Corporation — PN | | | 4,620 | | | | 25,957 | |
| | | Reliance Capital Limited — PN | | | 1,310 | | | | 24,144 | |
| | | | | | | | | | | |
| | | | | | | | | | 229,451 | |
| | | | | | | | | | | |
| | | Software Publishers — 1.64% |
| | | Financial Technologies (India) Ltd. — PN | | | 2,715 | | | | 78,440 | |
| | | | | | | | | | | |
| | | Support Activities for Transportation — 6.68% |
| 995 HK | | Anhui Expressway Co. Ltd. — Class H | | | 66,000 | | | | 45,967 | |
| AIO AU | | Asciano Group* | | | 19,650 | | | | 32,124 | |
| ICT PM | | International Container Terminal Services, Inc. | | | 60,600 | | | | 29,494 | |
| 177 HK | | Jiangsu Expressway Company Ltd. — Class H | | | 54,000 | | | | 48,196 | |
| | | Mundra Port and Special Economic Zone Ltd. — PN | | | 2,645 | | | | 31,457 | |
| 177 HK | | Shenzhen Expressway Company Limited — Class H | | | 54,000 | | | | 26,605 | |
| 107 HK | | Sichuan Expressway Co. Limited — Class H | | | 114,000 | | | | 60,430 | |
| 576 HK | | Zhejiang Expressway Co., Limited — Class H | | | 48,000 | | | | 44,512 | |
| | | | | | | | | | | |
| | | | | | | | | | 318,785 | |
| | | | | | | | | | | |
| | | Telecommunications — 2.39% |
| AXIATA MK | | Axiata Group Berhad* | | | 44,000 | | | | 39,194 | |
| HTX | | Hutchison Telecommunications International Limited — ADR* | | | 20,000 | | | | 60,200 | |
| TCL | | Tata Communications Limited — ADR(1) | | | 1,000 | | | | 14,450 | |
| | | | | | | | | | | |
| | | | | | | | | | 113,844 | |
| | | | | | | | | | | |
| | | Transportation Equipment Manufacturing — 1.24% |
| TTM | | Tata Motors Limited — ADR(1) | | | 3,500 | | | | 59,010 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
103
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Global Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Utilities — 3.38% |
| 855 HK | | China Water Affairs Group Limited | | | 76,000 | | | $ | 30,289 | |
| 991 HK | | Datang International Power Generation Company Limited — Class H | | | 48,000 | | | | 20,739 | |
| HNP | | Huaneng Power International, Inc. — ADR | | | 600 | | | | 13,440 | |
| | | Power Grid Corporation of India Limited — PN | | | 12,460 | | | | 29,493 | |
| | | PTC India Ltd. — PN | | | 15,800 | | | | 38,333 | |
| | | Reliance Power Limited — PN* | | | 8,650 | | | | 28,830 | |
| | | | | | | | | | | |
| | | | | | | | | | 161,124 | |
| | | | | | | | | | | |
| | | TOTAL COMMON STOCKS
(cost $4,362,231) | | | | | | | 4,686,689 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | PREFERRED STOCKS — 0.00% | | | | | | |
| | |
| |
| | | Telecommunications — 0.00% |
| PTVI | | PTV, Inc. — Series A, CLB* | | | 487 | | | | 39 | |
| | | | | | | | | | | |
| | | TOTAL PREFERRED STOCKS
(cost $3,399) | | | | | | | 39 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | SHORT-TERM INVESTMENTS — 4.80% | | | | | | |
| | |
| |
| | | Money Market Funds — 4.80% |
| FGVXX | | First American Government Obligations Fund — Class Y, 0.00%b | | | 7,160 | | | | 7,160 | |
| FIUXX | | First American Prime Obligations Fund — Class I, 0.00%b | | | 112,959 | | | | 112,959 | |
| FAIXX | | First American Prime Obligations Fund — Class Y, 0.00%b | | | 30,449 | | | | 30,449 | |
| FFCXX | | First American Tax Free Obligations Fund — Class Y, 0.00%b | | | 78,510 | | | | 78,510 | |
| | | | | | | | | | | |
| | | TOTAL SHORT-TERM INVESTMENTS
(cost $229,078) | | | | | | | 229,078 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
104
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Global Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| | | INVESTMENTS PURCHASED WITH
| | | | | | |
| Identifier | | THE CASH PROCEEDS FROM SECURITIES LENDING — 8.16% | | Shares | | | Value | |
| | |
| |
| | | Investment Companies — 8.16% |
| | | Mount Vernon Securities Lending Trust — | | | | | | | | |
| | | Prime Portfolio, 0.21%b | | | 388,881 | | | $ | 388,881 | |
| | | | | | | | | | | |
| | | TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING
(cost $388,881) | | | | | | | 388,881 | |
| | | | | | | | | | | |
| | | TOTAL INVESTMENTS — 111.25%
(cost $4,983,589) | | | | | | $ | 5,304,687 | |
| | | | | | | | | | | |
Percentages are stated as a percent of net assets.
| |
| * — | Non-income producing security. |
| |
| b — | The rate quoted is the annualized seven-day yield as of December 31, 2009. |
| |
| ADR — | American Depository Receipt. |
| |
| (1) — | This security or a portion of this security was out on loan at December 31, 2009. Total loaned securities had a market value of $371,588 at December 31, 2009. |
See Notes to the Financial Statements.
105
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Paradigm Portfolio
Portfolio of Investments — December 31, 2009
| | | | | | | | | | | |
| Identifier | | COMMON STOCKS — 98.89% | | Shares | | | Value | |
| | |
| |
| | | Air Transportation — 2.36% |
| 694 HK | | Beijing Capital International Airport Company Limited — Class H* | | | 33,277,000 | | | $ | 22,060,487 | |
| 670 HK | | China Eastern Airlines Corporation Limited — Class H* | | | 8,460,000 | | | | 3,022,442 | |
| 1055 HK | | China Southern Airlines Company Limited — Class H* | | | 14,158,000 | | | | 4,419,011 | |
| 357 HK | | Hainan Meilan International Airport Company Limited — Class H | | | 3,073,720 | | | | 3,734,419 | |
| | | | | | | | | | | |
| | | | | | | | | | 33,236,359 | |
| | | | | | | | | | | |
| | | Asian Exchanges — 1.76% |
| 8697 JP | | Osaka Securities Exchange Co., Ltd. | | | 5,212 | | | | 24,791,067 | |
| | | | | | | | | | | |
| | | Asset Management — 5.48% |
| BLK | | BlackRock, Inc.(1) | | | 35,113 | | | | 8,153,239 | |
| BX | | The Blackstone Group LP(1) | | | 210,314 | | | | 2,759,320 | |
| BAM | | Brookfield Asset Management Inc. — Class A(1) | | | 1,689,560 | | | | 37,474,441 | |
| CNS | | Cohen & Steers, Inc.(1) | | | 180,067 | | | | 4,112,730 | |
| EV | | Eaton Vance Corp.(1) | | | 246,228 | | | | 7,487,793 | |
| LM | | Legg Mason, Inc.(1) | | | 108,399 | | | | 3,269,314 | |
| POW CN | | Power Corporation of Canada | | | 358,565 | | | | 10,014,518 | |
| PZN | | Pzena Investment Management, Inc. — Class A*(1) | | | 213,518 | | | | 1,738,037 | |
| URB/A CN | | Urbana Corp. — Class A* | | | 449,500 | | | | 636,095 | |
| GROW | | US Global Investors, Inc. — Class A(1) | | | 82,687 | | | | 1,017,877 | |
| 806 HK | | Value Partners Group Limited* | | | 700,000 | | | | 358,423 | |
| WSDT | | WisdomTree Investments, Inc.*(1) | | | 12,000 | | | | 22,200 | |
| | | | | | | | | | | |
| | | | | | | | | | 77,043,987 | |
| | | | | | | | | | | |
| | | Beverage and Tobacco Product Manufacturing — 2.13% |
| 168 HK | | Tsingtao Brewery Co. Limited — Class H | | | 5,388,000 | | | | 29,881,600 | |
| | | | | | | | | | | |
| | | Broadcasting (except Internet) — 0.27% |
| SNI | | Scripps Networks Interactive — Class A | | | 90,209 | | | | 3,743,674 | |
| | | | | | | | | | | |
| | | Cable TV — 0.11% |
| TWC | | Time Warner Cable, Inc.(1) | | | 36,920 | | | | 1,528,119 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
106
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Paradigm Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Chemical Manufacturing — 0.99% |
| CCJ | | Cameco Corporation(1) | | | 133,464 | | | $ | 4,293,537 | |
| FRX | | Forest Laboratories, Inc.* | | | 115,991 | | | | 3,724,471 | |
| NVO | | Novo-Nordisk A/S — ADR | | | 62,913 | | | | 4,016,995 | |
| SNY | | Sanofi-Aventis — ADR | | | 48,930 | | | | 1,921,481 | |
| | | | | | | | | | | |
| | | | | | | | | | 13,956,484 | |
| | | | | | | | | | | |
| | | Coal Mining — 0.30% |
| 1898 HK | | China Coal Energy Company — Class H | | | 2,264,000 | | | | 4,158,093 | |
| | | | | | | | | | | |
| | | Commercial Banking — 1.17% |
| 3988 HK | | Bank of China Ltd. — Class H | | | 7,441,000 | | | | 4,030,774 | |
| 939 HK | | China Construction Bank Corp. — Class H | | | 3,565,500 | | | | 3,067,285 | |
| 1398 HK | | Industrial & Commercial Bank of China — Class H | | | 11,261,000 | | | | 9,353,424 | |
| | | | | | | | | | | |
| | | | | | | | | | 16,451,483 | |
| | | | | | | | | | | |
| | | Credit Intermediation and Related Activities — 3.54% |
| BK | | The Bank of New York Mellon Corp.(1) | | | 483,833 | | | | 13,532,809 | |
| CLFC | | Center Financial Corporation* | | | 146,392 | | | | 673,403 | |
| EWBC | | East West Bancorp, Inc.(1) | | | 76,326 | | | | 1,205,951 | |
| FRE | | Federal Home Loan Mortgage Corporation*(1) | | | 6,664,522 | | | | 9,796,847 | |
| FNM | | Federal National Mortgage Association*(1) | | | 5,989,431 | | | | 7,067,529 | |
| HAFC | | Hanmi Financial Corporation*(1) | | | 156,563 | | | | 187,876 | |
| MTB | | M&T Bank Corporation(1) | | | 11,430 | | | | 764,553 | |
| NARA | | Nara Bancorp, Inc.* | | | 137,714 | | | | 1,561,677 | |
| NTRS | | Northern Trust Corp. | | | 21,514 | | | | 1,127,334 | |
| SBKFF | | State Bank of India — GDR(1) | | | 65,898 | | | | 6,523,902 | |
| STT | | State Street Corporation(1) | | | 82,020 | | | | 3,571,151 | |
| STU | | The Student Loan Corporation(1) | | | 16,167 | | | | 752,897 | |
| UCBH | | UCBH Holdings, Inc. | | | 115,052 | | | | 3,797 | |
| V | | Visa, Inc. — Class A(1) | | | 4,735 | | | | 414,123 | |
| WU | | The Western Union Company | | | 134,757 | | | | 2,540,169 | |
| | | | | | | | | | | |
| | | | | | | | | | 49,724,018 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
107
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Paradigm Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Data Processing, Hosting and Related Services — 0.01% |
| AOL | | AOL Inc.*(1) | | | 6,436 | | | $ | 149,830 | |
| | | | | | | | | | | |
| | | European Exchanges — 0.69% |
| BME SM | | Bolsas y Mercados Espanoles | | | 36,828 | | | | 1,187,881 | |
| DB1 GR | | Deutsche Boerse AG | | | 103,095 | | | | 8,571,914 | |
| | | | | | | | | | | |
| | | | | | | | | | 9,759,795 | |
| | | | | | | | | | | |
| | | Funds, Trusts, and Other Financial Vehicles — 0.80% |
| ALX | | Alexander’s, Inc.*(1) | | | 6,164 | | | | 1,876,445 | |
| GDX | | Market Vectors Gold Miners ETF(1) | | | 201,979 | | | | 9,333,449 | |
| | | | | | | | | | | |
| | | | | | | | | | 11,209,894 | |
| | | | | | | | | | | |
| | | Gaming — 2.41% |
| LVS | | Las Vegas Sands Corp.*(1) | | | 325,968 | | | | 4,869,962 | |
| MGM | | MGM Mirage*(1) | | | 258,420 | | | | 2,356,790 | |
| WYNN | | Wynn Resorts Limited(1) | | | 456,834 | | | | 26,601,444 | |
| | | | | | | | | | | |
| | | | | | | | | | 33,828,196 | |
| | | | | | | | | | | |
| | | General Merchandise Stores — 0.87% |
| SHLD | | Sears Holdings Corporation*(1) | | | 147,302 | | | | 12,292,352 | |
| | | | | | | | | | | |
| | | Global Exchanges — 9.65% |
| 388 HK | | Hong Kong Exchanges & Clearing Limited | | | 5,373,840 | | | | 96,617,393 | |
| JSE SJ | | JSE Limited | | | 558,125 | | | | 4,558,777 | |
| SGX SP | | Singapore Exchange Limited | | | 5,797,197 | | | | 34,374,240 | |
| | | | | | | | | | | |
| | | | | | | | | | 135,550,410 | |
| | | | | | | | | | | |
| | | Heavy and Civil Engineering Construction — 0.35% |
| JOE | | The St. Joe Company*(1) | | | 170,051 | | | | 4,912,773 | |
| | | | | | | | | | | |
| | | Holding Company — 6.83% |
| BRK/A | | Berkshire Hathaway Inc. — Class A* | | | 294 | | | | 29,164,800 | |
| BRK/B | | Berkshire Hathaway Inc. — Class B*(1) | | | 4,747 | | | | 15,598,642 | |
| GBLS BB | | Groupe Bruxelles Lambert S.A. Strip VVPR* | | | 24,000 | | | | 275 | |
| LUK | | Leucadia National Corporation*(1) | | | 2,152,047 | | | | 51,197,198 | |
| | | | | | | | | | | |
| | | | | | | | | | 95,960,915 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
108
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Paradigm Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Hotels, Restaurants & Leisure — 0.07% |
| 200 HK | | Melco International Development Limited* | | | 2,213,000 | | | $ | 1,021,815 | |
| | | | | | | | | | | |
| | | Insurance Carriers and Related Activities — 5.31% |
| AGO | | Assured Guaranty Ltd.(1) | | | 974,094 | | | | 21,196,286 | |
| LFC | | China Life Insurance Co., Limited — ADR(1) | | | 217,977 | | | | 15,988,613 | |
| 2628 HK | | China Life Insurance Co., Limited — Class H | | | 492,000 | | | | 2,433,539 | |
| MKL | | Markel Corporation*(1) | | | 43,935 | | | | 14,937,900 | |
| MBI | | MBIA Inc.*(1) | | | 1,315,930 | | | | 5,237,401 | |
| 2328 HK | | PICC Property & Casualty Co. Ltd. — Class H* | | | 3,014,000 | | | | 2,721,129 | |
| 2318 HK | | Ping An Insurance Group Company of China Limited — Class H | | | 1,386,245 | | | | 12,157,848 | |
| | | | | | | | | | | |
| | | | | | | | | | 74,672,716 | |
| | | | | | | | | | | |
| | | Management of Companies and Enterprises — 0.20% |
| ABK | | Ambac Financial Group, Inc.*(1) | | | 1,172,286 | | | | 972,997 | |
| CATY | | Cathay General Bancorp(1) | | | 90,191 | | | | 680,942 | |
| WIBC | | Wilshire Bancorp, Inc.(1) | | | 137,619 | | | | 1,127,100 | |
| | | | | | | | | | | |
| | | | | | | | | | 2,781,039 | |
| | | | | | | | | | | |
| | | Merchant Wholesalers, Nondurable Goods — 1.71% |
| SIAL | | Sigma-Aldrich Corp.(1) | | | 475,768 | | | | 24,040,557 | |
| | | | | | | | | | | |
| | | Mining (except Oil and Gas) — 6.08% |
| AAUKY | | Anglo American PLC — ADR*(1) | | | 1,942,165 | | | | 42,106,137 | |
| FNV CN | | Franco-Nevada Corporation | | | 1,117,592 | | | | 30,027,571 | |
| RTP | | Rio Tinto Plc — ADR | | | 53,783 | | | | 11,584,321 | |
| 1171 HK | | Yanzhou Coal Mining Company Limited — Class H | | | 809,000 | | | | 1,790,497 | |
| | | | | | | | | | | |
| | | | | | | | | | 85,508,526 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
109
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Paradigm Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Motion Picture and Sound Recording Industries — 1.33% |
| DWA | | DreamWorks Animation SKG, Inc. — Class A* | | | 329,669 | | | $ | 13,170,277 | |
| TWX | | Time Warner, Inc.(1) | | | 187,603 | | | | 5,466,751 | |
| | | | | | | | | | | |
| | | | | | | | | | 18,637,028 | |
| | | | | | | | | | | |
| | | Nonstore Retailers — 0.41% |
| BID | | Sotheby’s(1) | | | 254,708 | | | | 5,725,836 | |
| | | | | | | | | | | |
| | | Oil & Gas & Consumable Fuels — 0.48% |
| CEO | | CNOOC Limited — ADR(1) | | | 43,324 | | | | 6,734,716 | |
| | | | | | | | | | | |
| | | Oil and Gas Extraction — 11.98% |
| CNQ | | Canadian Natural Resources Ltd. | | | 471,978 | | | | 33,958,817 | |
| COSWF | | Canadian Oil Sands Trust(1) | | | 1,480,088 | | | | 42,227,722 | |
| CVE | | Cenovus Energy Inc. | | | 270,838 | | | | 6,825,117 | |
| 135 HK | | CNPC Hong Kong Limited | | | 933,000 | | | | 1,241,850 | |
| EP | | El Paso Corporation | | | 661,446 | | | | 6,502,014 | |
| ECA | | EnCana Corporation | | | 270,835 | | | | 8,772,346 | |
| IMO | | Imperial Oil Ltd.(1) | | | 235,335 | | | | 9,098,051 | |
| NXY | | Nexen Inc. | | | 438,482 | | | | 10,492,874 | |
| PWE | | Penn West Energy Trust(1) | | | 353,375 | | | | 6,219,400 | |
| PBR | | Petroleo Brasileiro S.A. — ADR(1) | | | 36,459 | | | | 1,738,365 | |
| SD | | SandRidge Energy, Inc.*(1) | | | 121,590 | | | | 1,146,594 | |
| STO | | StatoilHydro ASA — ADR(1) | | | 108,309 | | | | 2,697,977 | |
| SU | | Suncor Energy, Inc. | | | 1,053,699 | | | | 37,206,112 | |
| WZGRF | | WesternZagros Resources Ltd.* | | | 297,410 | | | | 218,966 | |
| | | | | | | | | | | |
| | | | | | | | | | 168,346,205 | |
| | | | | | | | | | | |
| | | Other Exchanges — 1.67% |
| ASX AU | | ASX Ltd. | | | 627,352 | | | | 19,689,278 | |
| X CN | | TMX Group Inc. | | | 119,192 | | | | 3,775,714 | |
| | | | | | | | | | | |
| | | | | | | | | | 23,464,992 | |
| | | | | | | | | | | |
| | | Performing Arts, Spectator Sports, and Related Industries — 0.65% |
| WMG | | Warner Music Group Corp.* | | | 1,622,302 | | | | 9,182,229 | |
| | | | | | | | | | | |
| | | Plastics and Rubber Products Manufacturing — 0.81% |
| JAH | | Jarden Corporation | | | 366,986 | | | | 11,343,537 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
110
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Paradigm Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Port and Harbor Operations — 0.04% |
| 3382 HK | | Tianjin Port Development Holdings Ltd.* | | | 1,639,000 | | | $ | 594,009 | |
| | | | | | | | | | | |
| | | Professional, Scientific, and Technical Services — 1.88% |
| BR | | Broadridge Financial Solutions, Inc. | | | 64,192 | | | | 1,448,172 | |
| CACI | | CACI International, Inc. — Class A* | | | 142,727 | | | | 6,972,214 | |
| FTIS LI | | Financial Technologies (India) Ltd. — GDR | | | 277,368 | | | | 1,164,946 | |
| MA | | Mastercard, Inc. — Class A(1) | | | 65,752 | | | | 16,831,197 | |
| RHDCQ | | R.H. Donnelley Corporation*(1) | | | 49,000 | | | | 186 | |
| | | | | | | | | | | |
| | | | | | | | | | 26,416,715 | |
| | | | | | | | | | | |
| | | Publishing Industries (except Internet) — 0.48% |
| SSP | | The E.W. Scripps Company — Class A*(1) | | | 47,980 | | | | 333,941 | |
| WPO | | The Washington Post Company — Class B(1) | | | 14,426 | | | | 6,341,669 | |
| | | | | | | | | | | |
| | | | | | | | | | 6,675,610 | |
| | | | | | | | | | | |
| | | Rail Transportation — 2.68% |
| CSX | | CSX Corp. | | | 288,956 | | | | 14,011,477 | |
| NSC | | Norfolk Southern Corp. | | | 226,839 | | | | 11,890,900 | |
| UNP | | Union Pacific Corp. | | | 184,371 | | | | 11,781,307 | |
| | | | | | | | | | | |
| | | | | | | | | | 37,683,684 | |
| | | | | | | | | | | |
| | | Real Estate — 6.62% |
| 1 HK | | Cheung Kong (Holdings) Limited | | | 1,261,000 | | | | 16,312,624 | |
| FCE/A | | Forest City Enterprises, Inc. — Class A*(1) | | | 985,029 | | | | 11,603,642 | |
| 10 HK | | Hang Lung Group Limited | | | 239,000 | | | | 1,191,393 | |
| 12 HK | | Henderson Land Development Company Limited | | | 3,086,000 | | | | 23,244,306 | |
| IEP | | Icahn Enterprises LP(1) | | | 390,225 | | | | 15,589,489 | |
| 823 HK | | The Link REIT | | | 5,289,000 | | | | 13,520,260 | |
| TPL | | Texas Pacific Land Trust | | | 157,445 | | | | 4,746,967 | |
| VNO | | Vornado Realty Trust(1) | | | 31,058 | | | | 2,172,197 | |
| 4 HK | | Wharf Holdings Ltd. | | | 799,000 | | | | 4,611,558 | |
| | | | | | | | | | | |
| | | | | | | | | | 92,992,436 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
111
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Paradigm Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Rental and Leasing Services — 0.03% |
| WSC | | Wesco Financial Corporation | | | 1,382 | | | $ | 474,026 | |
| | | | | | | | | | | |
| | | Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 6.71% |
| CLE LN | | Climate Exchange PLC* | | | 66,602 | | | | 684,179 | |
| CME | | CME Group, Inc.(1) | | | 106,266 | | | | 35,700,063 | |
| ICE | | IntercontinentalExchange Inc.*(1) | | | 339,848 | | | | 38,164,930 | |
| LAB | | LaBranche & Co. Inc.*(1) | | | 1,122,462 | | | | 3,187,792 | |
| LSE LN | | London Stock Exchange Group plc | | | 1,431,836 | | | | 16,605,153 | |
| | | | | | | | | | | |
| | | | | | | | | | 94,342,117 | |
| | | | | | | | | | | |
| | | Special Purpose Entity — 1.30% |
| CPN | | Calpine Corporation*(1) | | | 1,658,356 | | | | 18,241,916 | |
| | | | | | | | | | | |
| | | Support Activities for Mining — 0.64% |
| OGZPY | | Gazprom OAO — ADR | | | 370,222 | | | | 9,033,417 | |
| | | | | | | | | | | |
| | | Support Activities for Transportation — 1.75% |
| 995 HK | | Anhui Expressway Co. Ltd. — Class H | | | 3,918,000 | | | | 2,728,764 | |
| 177 HK | | Jiangsu Expressway Company Ltd. — Class H | | | 4,450,500 | | | | 3,972,123 | |
| 548 HK | | Shenzhen Expressway Company Limited — Class H | | | 6,650,000 | | | | 3,276,369 | |
| 107 HK | | Sichuan Expressway Co. Limited — Class H | | | 17,960,000 | | | | 9,520,417 | |
| 576 HK | | Zhejiang Expressway Co., Limited — Class H | | | 5,436,000 | | | | 5,040,994 | |
| | | | | | | | | | | |
| | | | | | | | | | 24,538,667 | |
| | | | | | | | | | | |
| | | Telecommunications — 1.02% |
| CHL | | China Mobile Limited — ADR(1) | | | 129,347 | | | | 6,005,581 | |
| CHU | | China Unicom (Hong Kong) Limited — ADR(1) | | | 584,358 | | | | 7,660,934 | |
| 762 HK | | China Unicom Limited | | | 461,000 | | | | 611,226 | |
| | | | | | | | | | | |
| | | | | | | | | | 14,277,741 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
112
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Paradigm Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | U.S. Equity Exchanges — 3.20% |
| NDAQ | | The Nasdaq OMX Group*(1) | | | 1,205,796 | | | $ | 23,898,877 | |
| NYX | | NYSE Euronext(1) | | | 833,606 | | | | 21,090,232 | |
| | | | | | | | | | | |
| | | | | | | | | | 44,989,109 | |
| | | | | | | | | | | |
| | | Utilities — 2.12% |
| BIP | | Brookfield Infrastucture Partners LP(1) | | | 79,901 | | | | 1,339,940 | |
| 991 HK | | Datang International Power Generation Company Limited — Class H | | | 23,717,000 | | | | 10,247,369 | |
| DYN | | Dynegy, Inc. — Class A* | | | 1,714,996 | | | | 3,104,143 | |
| NRG | | NRG Energy, Inc.* | | | 78,768 | | | | 1,859,712 | |
| RRI | | RRI Energy, Inc.* | | | 2,320,563 | | | | 13,273,620 | |
| | | | | | | | | | | |
| | | | | | | | | | 29,824,784 | |
| | | | | | | | | | | |
| | | TOTAL COMMON STOCKS
(cost $1,381,082,411) | | | | | | | 1,389,722,476 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | Principal
| | | | |
| | | ESCROW NOTES — 0.00% | | Amount | | | | |
| | |
| |
| | | Special Purpose Entity — 0.00% |
| | | Calpine Corporation
(converted from Calpine Corp.,
8.750%, 07/15/2008)*+ | | $ | 200,000 | | | | 0 | |
| | | Calpine Corporation
(converted from Calpine Corp.,
8.500%, 02/15/2011)*+ | | | 1,000,000 | | | | 0 | |
| | | Calpine Corporation
(converted from Calpine Corp.,
7.875%, 04/01/2008)*+ | | | 200,000 | | | | 0 | |
| | | Calpine Corporation
(converted from Calpine Corp.,
7.625%, 04/15/2050)*+ | | | 100,000 | | | | 0 | |
| | | Calpine Corporation
(converted from Calpine Corp.,
4.750%, 11/15/2023)*+ | | | 42,200,000 | | | | 0 | |
| | | | | | | | | | | |
| | | TOTAL ESCROW NOTES
(cost $0) | | | | | | | 0 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
113
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Paradigm Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| | | | | Principal
| | | | |
| Identifier | | CONVERTIBLE BONDS — 0.88% | | Amount | | | Value | |
| | |
| |
| | | Real Estate — 0.88% |
| 029169AA7 | | American Real Estate
4.000%, 08/15/2013 | | $ | 10,000,000 | | | $ | 8,300,000 | |
| 345550AK3 | | Forest City Enterprises, Inc.
3.625%, 10/15/2014, | | | 4,000,000 | | | | 3,985,000 | |
| | | | | | | | | | | |
| | | TOTAL CONVERTIBLE BONDS
(cost $9,625,966) | | | | | | | 12,285,000 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | CORPORATE BONDS — 0.04% | | | | | | |
| | |
| |
| | | Credit Intermediation and Related Activities — 0.04% |
| 317928AA7 | | FINOVA Group, Inc.
7.500%, 11/15/2009, Acquired | | | | | | | | |
| | | 10/19/2006-3/29/2007 at $7,902,157 | | | | | | | | |
| | | (Default Effective 4/29/2005) | | | 9,503,880 | | | | 582,112 | |
| | | | | | | | | | | |
| | | TOTAL CORPORATE BONDS
(cost $7,902,157) | | | | | | | 582,112 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | SHORT-TERM INVESTMENTS — 0.33% | | Shares | | | | |
| | |
| |
| | | Money Market Funds — 0.33% |
| FIUXX | | First American Prime Obligations Fund — Class I, 0.00%b | | | 4,687,061 | | | | 4,687,061 | |
| | | | | | | | | | | |
| | | TOTAL SHORT-TERM INVESTMENTS (cost $4,687,061) | | | | | | | 4,687,061 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
114
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Paradigm Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| | | INVESTMENTS PURCHASED WITH
| | | | | | |
| | | THE CASH PROCEEDS FROM
| | | | | | |
| Identifier | | SECURITIES LENDING — 27.68% | | Shares | | | Value | |
| | |
| |
| | | Investment Companies — 27.68% |
| | | DWS Money Market Series Institutional Shares, 0.16%b | | | 17,000,000 | | | $ | 17,000,000 | |
| | | First American Prime Obligations Fund — Class Z, 0.05%b | | | 84,435,000 | | | | 84,435,000 | |
| | | JP Morgan Prime Money Market Fund, 0.11%b | | | 17,156,763 | | | | 17,156,763 | |
| | | Mount Vernon Securities Lending Trust — Prime Portfolio, 0.21%b | | | 267,726,886 | | | | 267,726,886 | |
| | | Reserve Primary Fund+, 0.00%b | | | 3,117,324 | | | | 2,620,751 | |
| | | | | | | | | | | |
| | | TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING
(cost $389,435,973) | | | | | | | 388,939,400 | |
| | | | | | | | | | | |
| | | TOTAL INVESTMENTS — 127.82%
(cost $1,792,733,568) | | | | | | $ | 1,796,216,049 | |
| | | | | | | | | | | |
Percentages are stated as a percent of net assets.
| |
| * — | Non-income producing security. |
| |
| + — | Security is considered illiquid. The aggregate value of such securities is $2,620,751 or 0.19% of net assets. |
| |
| b — | The rate quoted is the annualized seven-day yield as of December 31, 2009. |
| |
| ADR — | American Depository Receipt. |
| |
| ETF — | Exchange Traded Fund. |
| |
| GDR — | Global Depository Receipt. |
| |
| (1) — | This security or a portion of this security was out on loan at December 31, 2009. Cash collateral for loaned securities totaled $389,435,973 of which $3,117,324 was illiquid. Total loaned securities had a market value of $366,244,969 at December 31, 2009. |
See Notes to the Financial Statements.
115
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Medical Portfolio
Portfolio of Investments — December 31, 2009
| | | | | | | | | | | |
| Identifier | | COMMON STOCKS — 94.18% | | Shares | | | Value | |
| | |
| |
| | | Ambulatory Health Care Services — 0.03% |
| AVXT | | AVAX Technologies, Inc.* | | | 50,000 | | | $ | 8,500 | |
| | | | | | | | | | | |
| | | Chemical Manufacturing — 80.47% |
| ABT | | Abbott Laboratories | | | 23,000 | | | | 1,241,770 | |
| AEZS | | AEterna Zentaris Inc.*(1) | | | 102,500 | | | | 82,717 | |
| AGEN | | Antigenics, Inc.* | | | 892 | | | | 571 | |
| ARNA | | Arena Pharmaceuticals, Inc.*(1) | | | 45,000 | | | | 159,750 | |
| AZN | | AstraZeneca PLC — ADR | | | 11,000 | | | | 516,340 | |
| ATB CN | | Atrium Innovations Inc.*(1) | | | 4,884 | | | | 73,597 | |
| BIIB | | Biogen Idec, Inc.* | | | 33,250 | | | | 1,778,875 | |
| BPAX | | BioSante Pharmaceuticals, Inc.*(1) | | | 13,476 | | | | 19,540 | |
| BMY | | Bristol-Myers Squibb Company(1) | | | 43,000 | | | | 1,085,750 | |
| CLDX | | Celldex Therapeutics Inc.*(1) | | | 26,294 | | | | 123,056 | |
| 1093 HK | | China Pharmaceutical Group Limited | | | 1,640,000 | | | | 911,652 | |
| DCGN | | deCODE genetics, Inc.*(1) | | | 11,000 | | | | 1,535 | |
| DNDN | | Dendreon Corporation*(1) | | | 29,000 | | | | 762,120 | |
| LLY | | Eli Lilly & Company | | | 32,000 | | | | 1,142,720 | |
| EPCT | | EpiCept Corporation*(1) | | | 2,039 | | | | 1,183 | |
| GENZ | | Genzyme Corporation* | | | 24,538 | | | | 1,202,607 | |
| GSK | | GlaxoSmithKline plc — ADR | | | 33,673 | | | | 1,422,684 | |
| IMGN | | ImmunoGen, Inc.* | | | 14,000 | | | | 110,040 | |
| ISA CN | | Isotechnika Pharma Inc.* | | | 40,000 | | | | 6,311 | |
| JNJ | | Johnson & Johnson | | | 27,000 | | | | 1,739,070 | |
| LIFE | | Life Technologies Corporation* | | | 32,000 | | | | 1,671,360 | |
| LONN SW | | Lonza Group AG* | | | 14,000 | | | | 987,965 | |
| MBRX | | Metabasis Therapeutics, Inc.* | | | 44,000 | | | | 16,940 | |
| MMRF | | MMR Information Systems Inc.* | | | 43,000 | | | | 3,440 | |
| COX FP | | NicOx SA* | | | 41,535 | | | | 346,954 | |
| NVS | | Novartis AG — ADR | | | 31,000 | | | | 1,687,330 | |
| ONTY | | Oncothyreon, Inc.*(1) | | | 20,333 | | | | 109,595 | |
| PTIE | | Pain Therapeutics, Inc.* | | | 34,000 | | | | 182,240 | |
| PFE | | Pfizer, Inc. | | | 49,000 | | | | 891,310 | |
| PGNX | | Progenics Pharmaceuticals, Inc.* | | | 42,200 | | | | 187,368 | |
| SNY | | Sanofi-Aventis — ADR | | | 32,000 | | | | 1,256,640 | |
| SVNT | | Savient Pharmaceuticals Inc.*(1) | | | 25,000 | | | | 340,250 | |
| SCR | | Simcere Pharmaceutical Group — ADR* | | | 53,000 | | | | 489,720 | |
| TGEN | | Targeted Genetics Corp.* | | | 1,000 | | | | 280 | |
See Notes to the Financial Statements.
116
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Medical Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Chemical Manufacturing (Continued) |
| TELK | | Telik, Inc.*(1) | | | 111,000 | | | $ | 84,848 | |
| VICL | | Vical Incorporated*(1) | | | 72,500 | | | | 238,525 | |
| | | | | | | | | | | |
| | | | | | | | | | 20,876,653 | |
| | | | | | | | | | | |
| | | Computer and Electronic Product Manufacturing — 0.01% |
| TGX | | Theragenics Corporation* | | | 2,000 | | | | 2,680 | |
| | | | | | | | | | | |
| | | Funds, Trusts, and Other Financial Vehicles — 0.03% |
| IBLTZ | | IMPATH Bankruptcy Liquidating Trust — Class A* | | | 26,000 | | | | 6,500 | |
| | | | | | | | | | | |
| | | Pharmaceutical and Medicine Manufacturing — 1.06% |
| 4508 JP | | Mitsubishi Tanabe Pharma Corporation | | | 22,000 | | | | 274,247 | |
| | | | | | | | | | | |
| | | Professional, Scientific, and Technical Services — 12.58% |
| AFFX | | Affymetrix, Inc.* | | | 130,000 | | | | 759,200 | |
| AMRI | | Albany Molecular Research, Inc.* | | | 50,000 | | | | 454,000 | |
| CEPH | | Cephalon, Inc.* | | | 12,000 | | | | 748,920 | |
| CBST | | Cubist Pharmaceuticals, Inc.*(1) | | | 31,000 | | | | 588,070 | |
| HGSI | | Human Genome Sciences, Inc.*(1) | | | 21,000 | | | | 642,600 | |
| MYRX | | Myriad Pharmaceuticals Inc.*(1) | | | 14,000 | | | | 70,420 | |
| | | | | | | | | | | |
| | | | | | | | | | 3,263,210 | |
| | | | | | | | | | | |
| | | TOTAL COMMON STOCKS
(cost $25,125,395) | | | | | | | 24,431,790 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | SHORT-TERM INVESTMENTS — 5.00% | | | | | | |
| | |
| | | Money Market Funds — 5.00% |
| FIUXX | | First American Prime Obligations Fund — Class I, 0.00%b | | | 956,669 | | | | 956,669 | |
| FAIXX | | First American Prime Obligations Fund — Class Y, 0.00%b | | | 340,859 | | | | 340,859 | |
| | | | | | | | | | | |
| | | TOTAL SHORT-TERM INVESTMENTS
(cost $1,297,528) | | | | | | | 1,297,528 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
117
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Medical Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| | | INVESTMENTS PURCHASED WITH THE
| | | | | | |
| | | CASH PROCEEDS FROM SECURITIES
| | | | | | |
| Identifier | | LENDING — 13.34% | | Shares | | | Value | |
| | |
| |
| | | Investment Companies — 13.34% |
| | | Mount Vernon Securities Lending Trust — Prime Portfolio, 0.21%b | | | 3,462,232 | | | $ | 3,462,232 | |
| | | | | | | | | | | |
| | | TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING
(cost $3,462,232) | | | | | | | 3,462,232 | |
| | | | | | | | | | | |
| | | TOTAL INVESTMENTS — 112.52%
(cost $29,885,155) | | | | | | $ | 29,191,550 | |
| | | | | | | | | | | |
Percentages are stated as a percent of net assets.
| |
| * — | Non-income producing security. |
| |
| b — | The rate quoted is the annualized seven-day yield as of December 31, 2009. |
| |
| ADR — | American Depository Receipt. |
| |
| (1) — | This security or a portion of this security was out on loan at December 31, 2009. Total loaned securities had a market value of $3,180,354 at December 31, 2009. |
See Notes to the Financial Statements.
118
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Small Cap Opportunities Portfolio
Portfolio of Investments — December 31, 2009
| | | | | | | | | | | |
| Identifier | | COMMON STOCKS — 99.66% | | Shares | | | Value | |
| | |
| |
| | | Administrative and Support Services — 0.56% |
| MANT | | ManTech International Corporation — Class A* | | | 23,388 | | | $ | 1,129,173 | |
| | | | | | | | | | | |
| | | Air Transportation — 9.84% |
| 694 HK | | Beijing Capital International Airport Company Limited — Class H* | | | 10,937,000 | | | | 7,250,520 | |
| CEA | | China Eastern Airlines Corporation Limited — ADR*(1) | | | 35,814 | | | | 1,257,788 | |
| 670 HK | | China Eastern Airlines Corporation Limited — Class H* | | | 4,104,000 | | | | 1,466,206 | |
| ZNH | | China Southern Airlines Company Limited — ADR*(1) | | | 84,326 | | | | 1,300,307 | |
| 1055 HK | | China Southern Airlines Company Limited — Class H* | | | 11,439,000 | | | | 3,570,353 | |
| 357 HK | | Hainan Meilan International Airport Company Limited — Class H | | | 3,961,000 | | | | 4,812,420 | |
| | | | | | | | | | | |
| | | | | | | | | | 19,657,594 | |
| | | | | | | | | | | |
| | | Asian Exchanges — 2.58% |
| 8697 JP | | Osaka Securities Exchange Co., Ltd. | | | 1,086 | | | | 5,165,598 | |
| | | | | | | | | | | |
| | | Asset Management — 3.69% |
| CNS | | Cohen & Steers, Inc.(1) | | | 101,472 | | | | 2,317,620 | |
| EV | | Eaton Vance Corp. | | | 43,076 | | | | 1,309,941 | |
| PZN | | Pzena Investment Management, Inc. — Class A* | | | 125,498 | | | | 1,021,554 | |
| SII CN | | Sprott, Inc. | | | 1,680 | | | | 7,229 | |
| URB/A CN | | Urbana Corp. — Class A* | | | 560,871 | | | | 793,698 | |
| GROW | | US Global Investors, Inc. — Class A(1) | | | 125,128 | | | | 1,540,326 | |
| 806 HK | | Value Partners Group Limited* | | | 700,000 | | | | 358,423 | |
| WSDT | | WisdomTree Investments, Inc.*(1) | | | 14,420 | | | | 26,677 | |
| | | | | | | | | | | |
| | | | | | | | | | 7,375,468 | |
| | | | | | | | | | | |
| | | Beverage and Tobacco Product Manufacturing — 10.53% |
| 168 HK | | Tsingtao Brewery Co. Limited — Class H | | | 3,591,700 | | | | 19,919,403 | |
| WEN | | Wendy’s/Arby’s Group, Inc. — Class A | | | 237,040 | | | | 1,111,718 | |
| | | | | | | | | | | |
| | | | | | | | | | 21,031,121 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
119
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Small Cap Opportunities Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Chemical Manufacturing — 0.37% |
| 1093 HK | | China Pharmaceutical Group Limited | | | 1,341,000 | | | $ | 745,442 | |
| | | | | | | | | | | |
| | | Commercial Banking — 1.00% |
| BLBD LB | | BLOM Bank s.a.l. — GDR | | | 22,780 | | | | 2,004,640 | |
| | | | | | | | | | | |
| | | Credit Intermediation and Related Activities — 1.33% |
| CLFC | | Center Financial Corporation* | | | 103,259 | | | | 474,992 | |
| EWBC | | East West Bancorp, Inc.(1) | | | 38,577 | | | | 609,517 | |
| FBOD | | First Bank of Delaware* | | | 97,167 | | | | 121,459 | |
| HAFC | | Hanmi Financial Corporation*(1) | | | 129,747 | | | | 155,696 | |
| NARA | | Nara Bancorp, Inc.* | | | 104,254 | | | | 1,182,240 | |
| PFBC | | Preferred Bank Los Angeles(1) | | | 55,700 | | | | 100,260 | |
| UCBH | | UCBH Holdings, Inc.(1) | | | 182,396 | | | | 6,019 | |
| | | | | | | | | | | |
| | | | | | | | | | 2,650,183 | |
| | | | | | | | | | | |
| | | Food Services and Drinking Places — 0.34% |
| OCX CN | | Onex Corporation | | | 30,087 | | | | 678,924 | |
| | | | | | | | | | | |
| | | Funds, Trusts, and Other Financial Vehicles — 1.18% |
| ALX | | Alexander’s, Inc.* | | | 7,727 | | | | 2,352,253 | |
| | | | | | | | | | | |
| | | Global Exchanges — 6.60% |
| JSE SJ | | JSE Limited | | | 489,836 | | | | 4,000,991 | |
| SGX SP | | Singapore Exchange Limited | | | 1,549,000 | | | | 9,184,732 | |
| | | | | | | | | | | |
| | | | | | | | | | 13,185,723 | |
| | | | | | | | | | | |
| | | Hotels, Restaurants & Leisure — 0.56% |
| 200 HK | | Melco International Development Limited* | | | 2,425,000 | | | | 1,119,702 | |
| | | | | | | | | | | |
| | | Insurance Carriers and Related Activities — 0.78% |
| MBI | | MBIA Inc.*(1) | | | 391,555 | | | | 1,558,389 | |
| | | | | | | | | | | |
| | | Management of Companies and Enterprises — 0.77% |
| ABK | | Ambac Financial Group, Inc.*(1) | | | 302,629 | | | | 251,182 | |
| CATY | | Cathay General Bancorp(1) | | | 59,766 | | | | 451,233 | |
| WIBC | | Wilshire Bancorp, Inc.(1) | | | 101,755 | | | | 833,374 | |
| | | | | | | | | | | |
| | | | | | | | | | 1,535,789 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
120
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Small Cap Opportunities Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Mining (except Oil and Gas) — 7.73% |
| FMG AU | | Fortescue Metals Group Ltd.* | | | 652,741 | | | $ | 2,603,271 | |
| FNV CN | | Franco-Nevada Corporation | | | 230,369 | | | | 6,189,577 | |
| GLW CN | | Gold Wheaton Gold Corporation* | | | 481,160 | | | | 167,924 | |
| IMN CN | | Inmet Mining Corporation | | | 90,265 | | | | 5,504,711 | |
| 1171 HK | | Yanzhou Coal Mining Company Limited — Class H | | | 440,000 | | | | 973,818 | |
| | | | | | | | | | | |
| | | | | | | | | | 15,439,301 | |
| | | | | | | | | | | |
| | | Motion Picture and Sound Recording Industries — 2.82% |
| DWA | | DreamWorks Animation SKG, Inc. — Class A* | | | 141,079 | | | | 5,636,106 | |
| | | | | | | | | | | |
| | | Nonstore Retailers — 1.23% |
| BID | | Sotheby’s(1) | | | 109,578 | | | | 2,463,313 | |
| | | | | | | | | | | |
| | | Oil and Gas Extraction — 2.24% |
| 2883 HK | | China Oilfield Services Limited — Class H | | | 257,000 | | | | 308,264 | |
| 135 HK | | CNPC Hong Kong Limited | | | 1,763,000 | | | | 2,346,604 | |
| NEGI | | National Energy Group, Inc.* | | | 251,902 | | | | 995,013 | |
| PVG | | Penn Virginia GP Holdings LP | | | 49,310 | | | | 822,491 | |
| | | | | | | | | | | |
| | | | | | | | | | 4,472,372 | |
| | | | | | | | | | | |
| | | Other Exchanges — 0.48% |
| NZX NZ | | NZX Ltd.* | | | 560,696 | | | | 960,737 | |
| | | | | | | | | | | |
| | | Performing Arts, Spectator Sports, and Related Industries — 3.13% |
| WMG | | Warner Music Group Corp.*(1) | | | 1,103,357 | | | | 6,245,001 | |
| | | | | | | | | | | |
| | | Pipeline Transportation — 0.00% |
| SUG | | Southern Union Company | | | 1 | | | | 11 | |
| | | | | | | | | | | |
| | | Plastics and Rubber Products Manufacturing — 2.89% |
| JAH | | Jarden Corporation | | | 186,641 | | | | 5,769,073 | |
| | | | | | | | | | | |
| | | Port and Harbor Operations — 0.10% |
| 3382 HK | | Tianjin Port Development Holdings Ltd.* | | | 559,000 | | | | 202,594 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
121
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Small Cap Opportunities Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Professional, Scientific, and Technical Services — 1.55% |
| BBD/B CN | | Bombardier Inc. — Class B | | | 108,466 | | | $ | 497,812 | |
| BR | | Broadridge Financial Solutions, Inc. | | | 2,468 | | | | 55,678 | |
| CACI | | CACI International, Inc. — Class A* | | | 21,835 | | | | 1,066,640 | |
| FTIS LI | | Financial Technologies (India) Ltd. — GDR | | | 252,835 | | | | 1,061,907 | |
| RHDCQ | | R.H. Donnelley Corporation*(1) | | | 1,356,700 | | | | 5,155 | |
| RBA | | Ritchie Bros. Auctioneers, Incorporated(1) | | | 18,298 | | | | 410,424 | |
| | | | | | | | | | | |
| | | | | | | | | | 3,097,616 | |
| | | | | | | | | | | |
| | | Publishing Industries (except Internet) — 0.67% |
| IDARQ | | Idearc Inc.* | | | 1,317,000 | | | | 4,346 | |
| ROVI | | Rovi Corporation* | | | 41,816 | | | | 1,332,676 | |
| | | | | | | | | | | |
| | | | | | | | | | 1,337,022 | |
| | | | | | | | | | | |
| | | Rail Transportation — 0.01% |
| 525 HK | | Guangshen Railway Company Limited — Class H | | | 64,000 | | | | 26,167 | |
| | | | | | | | | | | |
| | | Real Estate — 11.81% |
| BLMC | | Biloxi Marsh Lands Corporation | | | 100 | | | | 1,400 | |
| IEP | | Icahn Enterprises LP | | | 294,670 | | | | 11,772,067 | |
| 823 HK | | The Link REIT | | | 2,229,000 | | | | 5,697,988 | |
| TPL | | Texas Pacific Land Trust | | | 202,888 | | | | 6,117,073 | |
| | | | | | | | | | | |
| | | | | | | | | | 23,588,528 | |
| | | | | | | | | | | |
| | | Rental and Leasing Services — 0.20% |
| CDCO | | Comdisco Holding Company, Inc.* | | | 9,000 | | | | 90,000 | |
| WSC | | Wesco Financial Corporation | | | 916 | | | | 314,188 | |
| | | | | | | | | | | |
| | | | | | | | | | 404,188 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
122
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Small Cap Opportunities Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 7.49% |
| BNB CN | | BAM Investments Ltd.* | | | 149,395 | | | $ | 1,449,882 | |
| CLE LN | | Climate Exchange PLC* | | | 60,649 | | | | 623,026 | |
| ICE | | IntercontinentalExchange Inc.* | | | 21,464 | | | | 2,410,407 | |
| JEF | | Jefferies Group, Inc.*(1) | | | 421,203 | | | | 9,995,147 | |
| LAB | | LaBranche & Co. Inc.* | | | 80,366 | | | | 228,240 | |
| RHJI BB | | RHJ International* | | | 800 | | | | 6,124 | |
| SWS | | SWS Group, Inc. | | | 1,000 | | | | 12,100 | |
| VALU | | Value Line, Inc.(1) | | | 9,246 | | | | 232,167 | |
| | | | | | | | | | | |
| | | | | | | | | | 14,957,093 | |
| | | | | | | | | | | |
| | | Special Purpose Entity — 1.49% |
| CPN | | Calpine Corporation* | | | 270,302 | | | | 2,973,322 | |
| | | | | | | | | | | |
| | | Specialty Trade Contractors — 0.24% |
| PWR | | Quanta Services, Inc.* | | | 22,740 | | | | 473,902 | |
| | | | | | | | | | | |
| | | Support Activities for Mining — 1.38% |
| KEWL | | Keweenaw Land Association Ltd. | | | 290 | | | | 50,170 | |
| SEMUF | | Siem Industries Inc.* | | | 35,617 | | | | 1,691,808 | |
| UTS CN | | UTS Energy Corporation*(1) | | | 466,985 | | | | 1,018,048 | |
| | | | | | | | | | | |
| | | | | | | | | | 2,760,026 | |
| | | | | | | | | | | |
| | | Support Activities for Transportation — 5.54% |
| 548 HK | | Shenzhen Expressway Company Limited — Class H | | | 655,000 | | | | 322,710 | |
| 107 HK | | Sichuan Expressway Co. Limited — Class H | | | 19,311,100 | | | | 10,236,622 | |
| 576 HK | | Zhejiang Expressway Co., Limited — Class H | | | 547,000 | | | | 507,252 | |
| | | | | | | | | | | |
| | | | | | | | | | 11,066,584 | |
| | | | | | | | | | | |
| | | Telecommunications — 0.03% |
| CIBY | | CIBL, Inc.* | | | 18 | | | | 5,706 | |
| LICT | | Lynch Interactive Corporation* | | | 18 | | | | 52,200 | |
| | | | | | | | | | | |
| | | | | | | | | | 57,906 | |
| | | | | | | | | | | |
| | | U.S. Equity Exchanges — 0.78% |
| NDAQ | | The Nasdaq OMX Group* | | | 79,011 | | | | 1,565,998 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
123
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Small Cap Opportunities Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Utilities — 5.05% |
| 991 HK | | Datang International Power Generation Company Limited — Class H | | | 7,130,000 | | | $ | 3,080,648 | |
| DYN | | Dynegy, Inc. — Class A* | | | 87,801 | | | | 158,920 | |
| 1071 HK | | Huadian Power International Corporation — Class H* | | | 970,000 | | | | 257,719 | |
| PICO | | PICO Holdings, Inc.* | | | 35,016 | | | | 1,146,074 | |
| RRI | | RRI Energy, Inc.* | | | 951,468 | | | | 5,442,397 | |
| | | | | | | | | | | |
| | | | | | | | | | 10,085,758 | |
| | | | | | | | | | | |
| | | Waste Management and Remediation Services — 2.67% |
| CVA | | Covanta Holding Corporation*(1) | | | 294,545 | | | | 5,328,319 | |
| | | | | | | | | | | |
| | | TOTAL COMMON STOCKS (cost $186,627,566) | | | | | | | 199,100,936 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | Principal
| | | | |
| | | ESCROW NOTES — 0.00% | | Amount | | | Value | |
| | |
| |
| | | Special Purpose Entity — 0.00% |
| | | Calpine Corporation (converted from Calpine Corp.,
4.750%, 11/15/2023)*+ | | $ | 14,400,000 | | | | 0 | |
| | | | | | | | | | | |
| | | TOTAL ESCROW NOTES
(cost $0) | | | | | | | 0 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | CORPORATE BONDS — 0.08% | | | | | | |
| | |
| |
| | | Credit Intermediation and Related Activities — 0.08% |
| 317928AA7 | | FINOVA Group, Inc.
7.500%, 11/15/2009, Acquired | | | | | | | | |
| | | 10/19/2006-5/17/2007 at $741,082 | | | | | | | | |
| | | (Default Effective 4/29/2005) | | | 2,783,965 | | | | 170,518 | |
| | | | | | | | | | | |
| | | TOTAL CORPORATE BONDS
(cost $1,396,960) | | | | | | | 170,518 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
124
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Small Cap Opportunities Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | RIGHTS — 0.43% | | Shares | | | Value | |
| | |
| |
| | | Rental and Leasing Services — 0.43% |
| CDCOR | | Comdisco Holding Company, Inc. | | | | | | | | |
| | | Expiration Date 12/31/2050, | | | | | | | | |
| | | Strike Price $1.00*# | | | 6,839,908 | | | $ | 854,989 | |
| | | | | | | | | | | |
| | | TOTAL RIGHTS
(cost $1,996,634) | | | | | | | 854,989 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | SHORT-TERM INVESTMENTS — 0.21% | | | | |
| | |
| |
| | | Money Market Funds — 0.21% |
| FIUXX | | First American Prime Obligations Fund — Class I, 0.00%b | | | 412,802 | | | | 412,802 | |
| | | | | | | | | | | |
| | | TOTAL SHORT-TERM INVESTMENTS
(cost $412,802) | | | | | | | 412,802 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | INVESTMENTS PURCHASED WITH
| | | | | | |
| | | THE CASH PROCEEDS FROM
| | | | | | |
| | | SECURITIES LENDING — 13.42% | | | | | | |
| | |
| |
| | | Investment Companies — 13.42% |
| | | Mount Vernon Securities Lending Trust — | | | | | | | | |
| | | Prime Portfolio, 0.21%b | | | 26,818,709 | | | | 26,818,709 | |
| | | | | | | | | | | |
| | | TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING
(cost $26,818,709) | | | | | | | 26,818,709 | |
| | | | | | | | | | | |
| | | TOTAL INVESTMENTS — 113.80%
(cost $217,252,671) | | | | | | $ | 227,357,954 | |
| | | | | | | | | | | |
Percentages are stated as a percent of net assets.
| |
| * — | Non-income producing security. |
| # — | Contingent value right (contingent upon profitability of company). |
| |
| + — | Security is considered illiquid. The aggregate value of such securities is $0 or 0% of net assets. |
| |
| b — | The rate quoted is the annualized seven-day yield as of December 31, 2009. |
| |
| ADR — | American Depository Receipt. |
| GDR — | Global Depository Receipt |
| |
| (1) — | This security or a portion of this security was out on loan at December 31, 2009. Total loaned securities had a market value of $24,885,913 at December 31, 2009. |
See Notes to the Financial Statements.
125
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Kinetics Government Money Market Portfolio
Portfolio of Investments — December 31, 2009
| | | | | | | | | | | |
| | | | | Principal
| | | | |
| Identifier | | SHORT-TERM INVESTMENTS — 99.88% | | Amount | | | Value | |
| | |
| |
| | | US Government Agency Issues — 99.88% |
| 313385SF3 | | Federal Home Loan Bank Discount Note
0.004%, 01/25/2010b | | $ | 1,520,000 | | | $ | 1,519,996 | |
| 313385SP3 | | Federal Home Loan Bank Discount Note
0.010%, 02/02/2010b | | | 150,000 | | | | 149,998 | |
| | | | | | | | | | | |
| | | TOTAL SHORT-TERM INVESTMENTS
(cost $1,669,994) | | | | | | | 1,669,994 | |
| | | | | | | | | | | |
| | | TOTAL INVESTMENTS — 99.88%
(cost $1,669,994) | | | | | | $ | 1,669,994 | |
| | | | | | | | | | | |
Percentages are stated as a percent of net assets
| |
| b — | The rate quoted is the yield to maturity. |
See Notes to the Financial Statements.
126
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Market Opportunities Portfolio
Portfolio of Investments — December 31, 2009
| | | | | | | | | | | |
| Identifier | | COMMON STOCKS — 98.87% | | Shares | | | Value | |
| | |
| |
| | | Asian Exchanges — 1.19% |
| 8697 JP | | Osaka Securities Exchange Co., Ltd. | | | 165 | | | $ | 784,829 | |
| | | | | | | | | | | |
| | | Asset Management — 17.17% |
| BLK | | BlackRock, Inc.(1) | | | 6,607 | | | | 1,534,145 | |
| BX | | The Blackstone Group LP | | | 71,209 | | | | 934,262 | |
| BAM | | Brookfield Asset Management Inc. — Class A | | | 43,595 | | | | 966,937 | |
| CNS | | Cohen & Steers, Inc.(1) | | | 49,527 | | | | 1,131,197 | |
| EV | | Eaton Vance Corp.(1) | | | 32,959 | | | | 1,002,283 | |
| LM | | Legg Mason, Inc. | | | 42,688 | | | | 1,287,470 | |
| POW CN | | Power Corporation of Canada | | | 42,688 | | | | 1,192,252 | |
| PZN | | Pzena Investment Management, Inc. — Class A*(1) | | | 174,617 | | | | 1,421,382 | |
| SII CN | | Sprott, Inc. | | | 44,945 | | | | 193,386 | |
| URB/A CN | | Urbana Corp. — Class A* | | | 370,714 | | | | 524,604 | |
| GROW | | US Global Investors, Inc. — Class A(1) | | | 38,390 | | | | 472,581 | |
| 806 HK | | Value Partners Group Limited* | | | 1,311,000 | | | | 671,276 | |
| WSDT | | WisdomTree Investments, Inc.*(1) | | | 11,580 | | | | 21,423 | |
| | | | | | | | | | | |
| | | | | | | | | | 11,353,198 | |
| | | | | | | | | | | |
| | | Commercial Banking — 6.98% |
| 3988 HK | | Bank of China Ltd. — Class H | | | 1,834,000 | | | | 993,474 | |
| 939 HK | | China Construction Bank Corp. — Class H | | | 2,012,000 | | | | 1,730,859 | |
| 1398 HK | | Industrial & Commercial Bank of China — Class H | | | 2,278,000 | | | | 1,892,114 | |
| | | | | | | | | | | |
| | | | | | | | | | 4,616,447 | |
| | | | | | | | | | | |
| | | Credit Intermediation and Related Activities — 7.50% |
| BK | | The Bank of New York Mellon Corp. | | | 29,470 | | | | 824,276 | |
| CLFC | | Center Financial Corporation* | | | 5,674 | | | | 26,101 | |
| EWBC | | East West Bancorp, Inc.(1) | | | 3,344 | | | | 52,835 | |
| FRE | | Federal Home Loan Mortgage Corporation*(1) | | | 458,805 | | | | 674,443 | |
| FNM | | Federal National Mortgage Association*(1) | | | 445,190 | | | | 525,324 | |
| HAFC | | Hanmi Financial Corporation*(1) | | | 6,417 | | | | 7,700 | |
| NARA | | Nara Bancorp, Inc.* | | | 6,424 | | | | 72,848 | |
| NTRS | | Northern Trust Corp. | | | 15,984 | | | | 837,562 | |
| PFBC | | Preferred Bank Los Angeles(1) | | | 2,605 | | | | 4,689 | |
| STT | | State Street Corporation | | | 14,435 | | | | 628,500 | |
See Notes to the Financial Statements.
127
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Market Opportunities Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Credit Intermediation and Related Activities (Continued) |
| UCBH | | UCBH Holdings, Inc. | | | 6,803 | | | $ | 225 | |
| V | | Visa, Inc. — Class A(1) | | | 14,935 | | | | 1,306,215 | |
| | | | | | | | | | | |
| | | | | | | | | | 4,960,718 | |
| | | | | | | | | | | |
| | | Data Processing, Hosting and Related Services — 0.62% |
| DST | | DST Systems, Inc.* | | | 5,220 | | | | 227,331 | |
| FISV | | Fiserv, Inc.* | | | 3,746 | | | | 181,606 | |
| | | | | | | | | | | |
| | | | | | | | | | 408,937 | |
| | | | | | | | | | | |
| | | European Exchanges — 1.37% |
| DB1 GR | | Deutsche Boerse AG | | | 10,928 | | | | 908,617 | |
| | | | | | | | | | | |
| | | Food Services and Drinking Places — 0.96% |
| OCX CN | | Onex Corporation | | | 28,090 | | | | 633,861 | |
| | | | | | | | | | | |
| | | Global Exchanges — 10.16% |
| 388 HK | | Hong Kong Exchanges & Clearing Limited | | | 184,650 | | | | 3,319,861 | |
| JSE SJ | | JSE Limited | | | 164,795 | | | | 1,346,049 | |
| SGX SP | | Singapore Exchange Limited | | | 346,387 | | | | 2,053,888 | |
| | | | | | | | | | | |
| | | | | | | | | | 6,719,798 | |
| | | | | | | | | | | |
| | | Holding Company — 1.80% |
| BRK/A | | Berkshire Hathaway Inc. — Class A* | | | 12 | | | | 1,190,400 | |
| | | | | | | | | | | |
| | | Insurance Carriers and Related Activities — 8.50% |
| LFC | | China Life Insurance Co., Limited — ADR | | | 25,410 | | | | 1,863,824 | |
| 2628 HK | | China Life Insurance Co., Limited — Class H | | | 165,000 | | | | 816,126 | |
| MKL | | Markel Corporation* | | | 693 | | | | 235,620 | |
| MBI | | MBIA Inc.*(1) | | | 103,530 | | | | 412,049 | |
| 2318 HK | | Ping An Insurance Group Company of China Limited — Class H | | | 243,300 | | | | 2,133,825 | |
| VRSK | | Verisk Analytics, Inc. — Class A* | | | 5,337 | | | | 161,604 | |
| | | | | | | | | | | |
| | | | | | | | | | 5,623,048 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
128
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Market Opportunities Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Management of Companies and Enterprises — 0.14% |
| ABK | | Ambac Financial Group, Inc.*(1) | | | 18,914 | | | $ | 15,699 | |
| CATY | | Cathay General Bancorp(1) | | | 3,377 | | | | 25,496 | |
| WIBC | | Wilshire Bancorp, Inc.(1) | | | 6,601 | | | | 54,062 | |
| | | | | | | | | | | |
| | | | | | | | | | 95,257 | |
| | | | | | | | | | | |
| | | Mining (except Oil and Gas) — 6.82% |
| FNV CN | | Franco-Nevada Corporation | | | 167,841 | | | | 4,509,568 | |
| | | | | | | | | | | |
| | | Nonstore Retailers — 1.50% |
| BID | | Sotheby’s(1) | | | 44,008 | | | | 989,300 | |
| | | | | | | | | | | |
| | | Other Exchanges — 2.78% |
| ASX AU | | ASX Ltd. | | | 48,174 | | | | 1,511,928 | |
| IMAREX NO | | IMAREX ASA* | | | 1,930 | | | | 19,001 | |
| NZX NZ | | NZX Ltd.* | | | 178,004 | | | | 305,005 | |
| | | | | | | | | | | |
| | | | | | | | | | 1,835,934 | |
| | | | | | | | | | | |
| | | Professional, Scientific, and Technical Services — 5.67% |
| BR | | Broadridge Financial Solutions, Inc. | | | 64,031 | | | | 1,444,539 | |
| FTIS LI | | Financial Technologies (India) Ltd. — GDR | | | 135,464 | | | | 568,949 | |
| MA | | Mastercard, Inc. — Class A(1) | | | 6,788 | | | | 1,737,592 | |
| | | | | | | | | | | |
| | | | | | | | | | 3,751,080 | |
| | | | | | | | | | | |
| | | Publishing Industries (except Internet) — 0.94% |
| MXB | | MSCI Inc. — Class A* | | | 19,460 | | | | 618,828 | |
| | | | | | | | | | | |
| | | Real Estate — 1.30% |
| IEP | | Icahn Enterprises LP | | | 21,578 | | | | 862,041 | |
| | | | | | | | | | | |
| | | Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 18.33% |
| AB | | AllianceBernstein Holding LP(1) | | | 7,472 | | | | 209,963 | |
| BNB CN | | BAM Investments Ltd.* | | | 32,340 | | | | 313,861 | |
| CLE LN | | Climate Exchange PLC* | | | 49,626 | | | | 509,790 | |
| CME | | CME Group, Inc.(1) | | | 9,141 | | | | 3,070,919 | |
| BEN | | Franklin Resources, Inc. | | | 1,651 | | | | 173,933 | |
| GFIG | | GFI Group, Inc. | | | 1,737 | | | | 7,938 | |
| IBKR | | Interactive Brokers Group, Inc. — Class A* | | | 3,405 | | | | 60,337 | |
| ICE | | IntercontinentalExchange Inc.* | | | 27,847 | | | | 3,127,218 | |
| JEF | | Jefferies Group, Inc.*(1) | | | 149,859 | | | | 3,556,154 | |
See Notes to the Financial Statements.
129
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Market Opportunities Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Securities, Commodity Contracts, and Other Financial Investments and Related Activities (Continued) |
| LAB | | LaBranche & Co. Inc.* | | | 134,848 | | | $ | 382,968 | |
| LSE LN | | London Stock Exchange Group plc | | | 22,003 | | | | 255,171 | |
| RMG | | Riskmetrics Group Inc.* | | | 5,777 | | | | 91,912 | |
| TROW | | T. Rowe Price Group, Inc. | | | 6,219 | | | | 331,162 | |
| TLPR LN | | Tullett Prebon plc | | | 5,790 | | | | 26,083 | |
| | | | | | | | | | | |
| | | | | | | | | | 12,117,409 | |
| | | | | | | | | | | |
| | | Support Activities for Transportation — 0.26% |
| 995 HK | | Anhui Expressway Co. Ltd. — Class H | | | 56,000 | | | | 39,002 | |
| 177 HK | | Jiangsu Expressway Company Ltd. — Class H | | | 29,000 | | | | 25,883 | |
| 548 HK | | Shenzhen Expressway Company Limited — Class H | | | 25,000 | | | | 12,317 | |
| 107 HK | | Sichuan Expressway Co. Limited — Class H | | | 118,000 | | | | 62,551 | |
| 576 HK | | Zhejiang Expressway Co., Limited — Class H | | | 34,000 | | | | 31,529 | |
| | | | | | | | | | | |
| | | | | | | | | | 171,282 | |
| | | | | | | | | | | |
| | | Telecommunications — 0.02% |
| IRDM | | Iridium Communications, Inc.* | | | 1,737 | | | | 13,948 | |
| | | | | | | | | | | |
| | | U.S. Equity Exchanges — 4.78% |
| NDAQ | | The Nasdaq OMX Group* | | | 44,505 | | | | 882,089 | |
| NYX | | NYSE Euronext | | | 90,080 | | | | 2,279,024 | |
| | | | | | | | | | | |
| | | | | | | | | | 3,161,113 | |
| | | | | | | | | | | |
| | | Utilities — 0.08% |
| BIP | | Brookfield Infrastucture Partners LP | | | 2,936 | | | | 49,237 | |
| | | | | | | | | | | |
| | | TOTAL COMMON STOCKS
(cost $64,346,620) | | | | | | | 65,374,850 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
130
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Market Opportunities Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| | | SHORT-TERM INVESTMENTS — 0.82% | | | | | | |
| | |
| |
| | | Money Market Funds — 0.82% |
| FIUXX | | First American Prime Obligations Fund — Class I@, 0.00%b | | | 540,525 | | | $ | 540,525 | |
| | | | | | | | | | | |
| | | TOTAL SHORT-TERM INVESTMENTS
(cost $540,525) | | | | | | | 540,525 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | INVESTMENTS PURCHASED WITH
| | | | | | |
| | | THE CASH PROCEEDS FROM
| | | | | | |
| Identifier | | SECURITIES LENDING — 22.62% | | Shares | | | Value | |
| | |
| |
| | | Investment Companies — 22.62% |
| | | Mount Vernon Securities Lending Trust — | | | | | | | | |
| | | Prime Portfolio, 0.21%b | | | 14,955,121 | | | | 14,955,121 | |
| | | | | | | | | | | |
| | | TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING
(cost $14,955,121) | | | | | | | 14,955,121 | |
| | | | | | | | | | | |
| | | TOTAL INVESTMENTS — 122.31%
(cost $79,842,266) | | | | | | $ | 80,870,496 | |
| | | | | | | | | | | |
Percentages are stated as a percent of net assets.
| |
| * — | Non-income producing security. |
@ — All or a portion of the shares have been committed as collateral for written option contracts.
b — The rate quoted is the annualized seven-day yield as of December 31, 2009.
| |
| ADR — | American Depository Receipt. |
| GDR — | Global Depository Receipt. |
| |
| (1) — | This security or a portion of this security was out on loan at December 31, 2009. Total loaned securities had a market value of $14,034,189 at December 31, 2009. |
See Notes to the Financial Statements.
131
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Water Infrastructure Portfolio
Portfolio of Investments — December 31, 2009
| | | | | | | | | | | |
| Identifier | | COMMON STOCKS — 88.21% | | Shares | | | Value | |
| | |
| |
| | | Administrative and Support Services — 1.78% |
| ACM | | Aecom Technology Corp.* | | | 15,000 | | | $ | 412,500 | |
| | | | | | | | | | | |
| | | Building Supplies — 10.15% |
| SOLK GA | | Corinth Pipeworks SA* | | | 100,000 | | | | 206,431 | |
| GEBN VX | | Geberit AG | | | 6,108 | | | | 1,083,492 | |
| 6485 JP | | Maezawa Kyuso Industries Co. Ltd. | | | 4,500 | | | | 64,068 | |
| NWPX | | Northwest Pipe Company*(1) | | | 23,000 | | | | 617,780 | |
| PAP TB | | Pacific Pipe Public Company Limited | | | 2,286,500 | | | | 112,473 | |
| SPIP SP | | Sinopipe Holdings Limited* | | | 2,000,000 | | | | 270,492 | |
| | | | | | | | | | | |
| | | | | | | | | | 2,354,736 | |
| | | | | | | | | | | |
| | | Chemical Manufacturing — 0.47% |
| YARIY | | Yara International ASA — ADR | | | 2,400 | | | | 109,555 | |
| | | | | | | | | | | |
| | | Funds, Trusts, and Other Financial Vehicles — 1.07% |
| SLV | | iShares Silver Trust* | | | 15,000 | | | | 248,550 | |
| | | | | | | | | | | |
| | | Heavy and Civil Engineering Construction — 1.18% |
| PUR CN | | Pure Technologies Ltd.* | | | 20,000 | | | | 82,804 | |
| STRL | | Sterling Construction Company, Inc.* | | | 10,000 | | | | 191,800 | |
| | | | | | | | | | | |
| | | | | | | | | | 274,604 | |
| | | | | | | | | | | |
| | | Machinery Manufacturing — 16.19% |
| ARF-U CN | | Armtec Infrastructure Income Fund | | | 30,000 | | | | 731,462 | |
| CVVT | | China Valves Technology, Inc.*(1) | | | 48,300 | | | | 446,292 | |
| ERII | | Energy Recovery Inc.*(1) | | | 53,000 | | | | 364,640 | |
| ESE | | ESCO Technologies, Inc. | | | 15,000 | | | | 537,750 | |
| FLOW | | Flow International Corporation* | | | 40,000 | | | | 123,200 | |
| LNN | | Lindsay Corporation(1) | | | 23,000 | | | | 916,550 | |
| MPR | | Met-Pro Corporation | | | 39,800 | | | | 422,676 | |
| 840 HK | | Xinjiang Tianye Water Saving Irrigation System Co. Ltd. — Class H* | | | 1,826,000 | | | | 214,314 | |
| | | | | | | | | | | |
| | | | | | | | | | 3,756,884 | |
| | | | | | | | | | | |
| | | Management of Companies and Enterprises — 0.65% |
| HEK | | Heckmann Corporation*(1) | | | 30,300 | | | | 151,197 | |
| | | | | | | | | | | |
| | | Merchant Wholesalers, Nondurable Goods — 0.66% |
| HWKN | | Hawkins, Inc.(1) | | | 7,000 | | | | 152,810 | |
| | | | | | | | | | | |
| | | Petroleum and Coal Products Manufacturing — 5.47% |
| AMN | | Ameron International Corporation | | | 20,000 | | | | 1,269,200 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
132
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Water Infrastructure Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Shares | | | Value | |
| | |
| |
| | | Professional, Scientific, and Technical Services — 10.42% |
| ITRI | | Itron, Inc.* | | | 8,000 | | | $ | 540,560 | |
| TTEK | | Tetra Tech, Inc.* | | | 20,000 | | | | 543,400 | |
| URS | | URS Corp.* | | | 30,000 | | | | 1,335,600 | |
| | | | | | | | | | | |
| | | | | | | | | | 2,419,560 | |
| | | | | | | | | | | |
| | | Utilities — 40.17% |
| ACE IM | | ACEA S.P.A. | | | 50,000 | | | | 536,147 | |
| AWR | | American States Water Company | | | 6,200 | | | | 219,542 | |
| AWK | | American Water Works Co., Inc. | | | 15,000 | | | | 336,150 | |
| WTR | | Aqua America, Inc.(1) | | | 16,700 | | | | 292,417 | |
| ARTNA | | Artesian Resources Corp. — Class A(1) | | | 20,610 | | | | 377,369 | |
| AENV SP | | Asia Environment Holdings Limited* | | | 410,000 | | | | 86,095 | |
| BRC-U CN | | Brookfield Renewable Power Fund | | | 13,000 | | | | 238,657 | |
| CDZI | | Cadiz Inc.*(1) | | | 18,660 | | | | 223,360 | |
| HOO | | Cascal N.V. | | | 50,000 | | | | 270,500 | |
| 1038 HK | | Cheung Kong Infrastructure Holdings Limited | | | 75,000 | | | | 285,842 | |
| CTWS | | Connecticut Water Service, Inc. | | | 21,206 | | | | 525,273 | |
| CWCO | | Consolidated Water Co., Ltd.(1) | | | 13,252 | | | | 189,371 | |
| EDE | | The Empire District Electric Co. | | | 20,000 | | | | 374,600 | |
| GSZ FP | | GDF Suez | | | 6,205 | | | | 269,370 | |
| 270 HK | | Guangdong Investment Limited | | | 1,000,000 | | | | 584,260 | |
| MWC PM | | Manila Water Company | | | 1,050,000 | | | | 357,722 | |
| MSEX | | Middlesex Water Co. | | | 30,000 | | | | 528,900 | |
| NWG LN | | Northumbrian Water Group Plc | | | 90,200 | | | | 393,802 | |
| PNAL MK | | Puncak Niaga Holdings Berhad* | | | 84,320 | | | | 16,007 | |
| SVT LN | | Severn Trent plc | | | 30,000 | | | | 526,231 | |
| SINO SP | | Sinomem Technology Limited* | | | 850,000 | | | | 338,826 | |
| SJW | | SJW Corp. | | | 20,000 | | | | 451,400 | |
| SWWC | | Southwest Water Company(1) | | | 20,000 | | | | 117,800 | |
| SEV FP | | Suez Environnement Co. | | | 10,000 | | | | 231,160 | |
| EYAPS GA | | Thessaloniki Water Supply & Sewage Co. SA | | | 10,000 | | | | 68,524 | |
| UU/ LN | | United Utilities Group PLC | | | 55,000 | | | | 440,359 | |
| VE | | Veolia Environnement — ADR | | | 19,500 | | | | 641,160 | |
| YORW | | York Water Company(1) | | | 27,611 | | | | 400,636 | |
| | | | | | | | | | | |
| | | | | | | | | | 9,321,480 | |
| | | | | | | | | | | |
| | | TOTAL COMMON STOCKS
(cost $20,102,767) | | | | | | | 20,471,076 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
133
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Water Infrastructure Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| | | PREFERRED STOCKS — 1.56% | | | | | | |
| | |
| |
| | | Utilities — 1.56% |
| CIG | | Companhia Energetica de Minas Gerais — ADR | | | 20,000 | | | $ | 361,200 | |
| | | | | | | | | | | |
| | | TOTAL PREFERRED STOCKS (cost $333,293) | | | | | | | 361,200 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | SHORT-TERM INVESTMENTS — 8.15% | | | | | | |
| | |
| |
| | | Money Market Funds — 8.15% |
| FIUXX | | First American Prime Obligations Fund — Class I, 0.00%b | | | 912,657 | | | | 912,657 | |
| FAIXX | | First American Prime Obligations Fund — Class Y, 0.00%b | | | 208,536 | | | | 208,536 | |
| FFCXX | | First American Tax Free Obligations Fund — Class Y, 0.00%b | | | 771,525 | | | | 771,525 | |
| | | | | | | | | | | |
| | | TOTAL SHORT-TERM INVESTMENTS
(cost $1,892,718) | | | | | | | 1,892,718 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | INVESTMENTS PURCHASED WITH THE
| | | | | | |
| | | CASH PROCEEDS FROM SECURITIES
| | | | | | |
| | | LENDING — 12.28% | | | | | | |
| | |
| |
| | | Investment Companies — 12.28% |
| | | Mount Vernon Securities Lending Trust — | | | | | | | | |
| | | Prime Portfolio, 0.21%b | | | 2,849,007 | | | | 2,849,007 | |
| | | | | | | | | | | |
| | | TOTAL INVESTMENTS PURCHASED WITH
THE CASH PROCEEDS FROM SECURITIES LENDING
(cost $2,849,007) | | | | | | | 2,849,007 | |
| | | | | | | | | | | |
| | | TOTAL INVESTMENTS — 110.20%
(cost $25,177,785) | | | | | | $ | 25,574,001 | |
| | | | | | | | | | | |
Percentages are stated as a percent of net assets.
| |
| * — | Non-income producing security. |
b — The rate quoted is the annualized seven-day yield as of December 31, 2009.
| |
| ADR — | American Depository Receipt. |
| |
| (1) — | This security or a portion of this security was out on loan at December 31, 2009. Total loaned securities had a market value of $2,618,453 at December 31, 2009. |
See Notes to the Financial Statements.
134
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Multi-Disciplinary Portfolio
Portfolio of Investments — December 31, 2009
| | | | | | | | | | | |
| | | | | Principal
| | | | |
| Identifier | | CONVERTIBLE BONDS — 30.01% | | Amount | | | Value | |
| | |
| |
| | | Computer and Electronic Product Manufacturing — 7.98% |
| 502413AW7 | | L-3 Communications Holdings, Inc.
3.000%, 08/01/2035ˆ | | $ | 100,000 | | | $ | 105,500 | |
| | | | | | | | | | | |
| | | Funds, Trusts, and Other Financial Vehicles — 14.90% |
| 10112RAK0 | | Boston Properties LP
2.875%, 02/15/2037ˆ | | | 100,000 | | | | 98,625 | |
| 939653AK7 | | Washington Real Estate Investment Trust
3.875%, 09/15/2026ˆ | | | 100,000 | | | | 98,500 | |
| | | | | | | | | | | |
| | | | | | | | | | 197,125 | |
| | | | | | | | | | | |
| | | Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 7.13% |
| 631103AA6 | | The Nasdaq OMX Group
2.500%, 08/15/2013ˆ | | | 100,000 | | | | 94,250 | |
| | | | | | | | | | | |
| | | TOTAL CONVERTIBLE BONDS
(cost $367,569) | | | | | | | 396,875 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | CORPORATE BONDS — 38.92% | | | | | | |
| | |
| |
| | | Administrative and Support Services — 7.60% |
| 22025YAJ9 | | Corrections Corp. of America
6.750%, 01/31/2014ˆ | | | 100,000 | | | | 100,500 | |
| | | | | | | | | | | |
| | | Mining (except Oil and Gas) — 15.82% |
| 20854PAB5 | | CONSOL Energy, Inc.
7.875%, 03/01/2012ˆ | | | 100,000 | | | | 107,625 | |
| 704549AC8 | | Peabody Energy Corp.
6.875%, 03/15/2013ˆ | | | 100,000 | | | | 101,625 | |
| | | | | | | | | | | |
| | | | | | | | | | 209,250 | |
| | | | | | | | | | | |
| | | Telecommunications — 7.83% |
| 27876GAQ1 | | Echostar DBS Corp.
6.375%, 10/01/2011ˆ | | | 100,000 | | | | 103,500 | |
| | | | | | | | | | | |
| | | Utilities — 7.67% |
| 629377AT9 | | Nrg Energy, Inc.
7.250%, 02/01/2014ˆ | | | 100,000 | | | | 101,500 | |
| | | | | | | | | | | |
| | | TOTAL CORPORATE BONDS
(cost $506,452) | | | | | | | 514,750 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
135
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Multi-Disciplinary Portfolio
Portfolio of Investments — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | CALL OPTIONS PURCHASED — 0.01% | | Contracts | | | Value | |
| | |
| |
| | | Computer and Electronis Product Manufacturing — 0.01% |
| ODY.MV | | L-3 Communications Holdings, Inc.ˆ | | | | | | | | |
| | | Expiration: January 2011, Exercise Price: $25.00 | | | 18 | | | $ | 135 | |
| | | | | | | | | | | |
| | | TOTAL CALL OPTIONS PURCHASED
(cost $1,224) | | | | | | | 135 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | SHORT-TERM INVESTMENTS — 10.62% | | Shares | | | | |
| | |
| |
| | | Money Market Funds — 10.62% |
| FGVXX | | First American Government Obligations Fund — Class Y, 0.00%ˆb | | | 40,000 | | | | 40,000 | |
| FIUXX | | First American Prime Obligations Fund — Class I, 0.00%ˆb | | | 33,019 | | | | 33,019 | |
| FAIXX | | First American Prime Obligations Fund — Class Y, 0.00%ˆb | | | 39,508 | | | | 39,508 | |
| FOCXX | | First American Treasury Obligations Fund — Class Y, 0.00%ˆb | | | 28,000 | | | | 28,000 | |
| | | | | | | | | | | |
| | | TOTAL SHORT-TERM INVESTMENTS
(cost $140,527) | | | | | | | 140,527 | |
| | | | | | | | | | | |
| | | TOTAL INVESTMENTS — 79.56%
(cost $1,015,772) | | | | | | $ | 1,052,287 | |
| | | | | | | | | | | |
Percentages are stated as a percent of net assets.
ˆ — All or a portion of the shares have been committed as collateral for written option contracts.
b — The rate quoted is the annualized seven-day yield as of December 31, 2009.
See Notes to the Financial Statements.
136
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Internet Portfolio
Portfolio of Options Written — December 31, 2009
| | | | | | | | | | | |
| Identifier | | PUT OPTIONS WRITTEN | | Contracts | | | Value | |
| | |
| |
| CME.MT | | CME Group, Inc.
Expiration: January 2010,
Exercise Price: $400.00 | | | 2 | | | $ | 12,650 | |
| | | | | | | | | | | |
| | | TOTAL PUT OPTIONS WRITTEN
(premiums received $18,054) | | | | | | $ | 12,650 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
137
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Market Opportunities Portfolio
Portfolio of Options Written — December 31, 2009
| | | | | | | | | | | |
| Identifier | | PUT OPTIONS WRITTEN | | Contracts | | | Value | |
| | |
| |
| CME.MT | | CME Group, Inc.
Expiration: January 2010,
Exercise Price: $400.00 | | | 14 | | | $ | 88,550 | |
| | | | | | | | | | | |
| | | TOTAL PUT OPTIONS WRITTEN
(premiums received $126,377) | | | | | | $ | 88,550 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
138
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Multi-Disciplinary Portfolio
Portfolio of Options Written — December 31, 2009
| | | | | | | | | | | |
| Identifier | | PUT OPTIONS WRITTEN | | Contracts | | | Value | |
| | |
| |
| | | Activities Related to Credit Intermediation |
| ZZH.MW | | The Western Union Company | | | | | | | | |
| | | Expiration: January 2011, Exercise Price: $17.50 | | | 4 | | | $ | 770 | |
| | | | | | | | | | | |
| | | Air Transportation |
| ZNH.OC | | China Southern Airlines Company Limited — ADR | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $15.00 | | | 8 | | | | 960 | |
| | | | | | | | | | | |
| | | Amusement Parks and Arcades |
| DIS.MX | | The Walt Disney Co. | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $22.50 | | | 3 | | | | 7 | |
| | | | | | | | | | | |
| | | Asset Management |
| BX.OM | | The Blackstone Group LP | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $13.00 | | | 12 | | | | 1,284 | |
| BAM.MW | | Brookfield Asset Management — Class A | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $17.50 | | | 3 | | | | 7 | |
| BAM.OX | | Brookfield Asset Management — Class A | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $22.50 | | | 3 | | | | 420 | |
| | | | | | | | | | | |
| | | | | | | | | | 1,711 | |
| | | | | | | | | | | |
| | | Beverages |
| DEO.MK | | Diageo plc — ADR | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $55.00 | | | 1 | | | | 5 | |
| DEO.PL | | Diageo plc — ADR | | | | | | | | |
| | | Expiration: April 2010, Exercise Price: $60.00 | | | 2 | | | | 172 | |
| | | | | | | | | | | |
| | | | | | | | | | 177 | |
| | | | | | | | | | | |
| | | Beverage and Tobacco Product Manufacturing |
| MO.OR | | Altria Group, Inc. | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $17.00 | | | 5 | | | | 60 | |
| | | | | | | | | | | |
| | | Chemical and Allied Products Merchant Wholesalers |
| IAQ.MI | | Sigma-Aldrich Corp. | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $45.00 | | | 1 | | | | 5 | |
| IAQ.PK | | Sigma-Aldrich Corp. | | | | | | | | |
| | | Expiration: April 2010, Exercise Price: $55.00 | | | 2 | | | | 1,070 | |
| IAQ.SJ | | Sigma-Aldrich Corp. | | | | | | | | |
| | | Expiration: July 2010, Exercise Price: $50.00 | | | 3 | | | | 1,080 | |
| | | | | | | | | | | |
| | | | | | | | | | 2,155 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
139
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Multi-Disciplinary Portfolio
Portfolio of Options Written — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Contracts | | | Value | |
| | |
| |
| | | Chemical Manufacturing |
| CCJ.MX | | Cameco Corporation | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $22.50 | | | 2 | | | $ | 5 | |
| | | | | | | | | | | |
| | | Clothing and Clothing Accessories Stores |
| VFF.MF | | Tiffany & Co. | | | | | | | | |
| | | Expiration: January 2011, Exercise Price: $30.00 | | | 2 | | | | 410 | |
| VFF.MH | | Tiffany & Co. | | | | | | | | |
| | | Expiration: January 2011, Exercise Price: $40.00 | | | 2 | | | | 1,060 | |
| | | | | | | | | | | |
| | | | | | | | | | 1,470 | |
| | | | | | | | | | | |
| | | Couriers and Messengers |
| FDX.MI | | FedEx Corp. | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $45.00 | | | 3 | | | | 7 | |
| UPS.MI | | United Parcel Service — Class B | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $45.00 | | | 1 | | | | 3 | |
| UPS.PK | | United Parcel Service — Class B | | | | | | | | |
| | | Expiration: April 2010, Exercise Price: $55.00 | | | 1 | | | | 175 | |
| | | | | | | | | | | |
| | | | | | | | | | 185 | |
| | | | | | | | | | | |
| | | Credit Intermediation and Related Activities |
| AXP.MA | | American Express Company | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $24.00 | | | 1 | | | | 2 | |
| BK.MY | | The Bank of New York Mellon Corp. | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $27.50 | | | 1 | | | | 35 | |
| BYX.OF | | The Bank of New York Mellon Corp. | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $30.00 | | | 2 | | | | 550 | |
| DFS.MB | | Discover Financial Services | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $10.00 | | | 2 | | | | 5 | |
| WFC.MX | | Wells Fargo & Company | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $22.50 | | | 6 | | | | 36 | |
| | | | | | | | | | | |
| | | | | | | | | | 628 | |
| | | | | | | | | | | |
| | | Depository Credit Intermediation |
| HDB.PB | | HDFC Bank Ltd. — ADR | | | | | | | | |
| | | Expiration: April 2010, Exercise Price: $110.00 | | | 1 | | | | 385 | |
| IBN.MC | | ICIC Bank Ltd. — ADR | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $15.00 | | | 2 | | | | 5 | |
See Notes to the Financial Statements.
140
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Multi-Disciplinary Portfolio
Portfolio of Options Written — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Contracts | | | Value | |
| | |
| |
| | | Depository Credit Intermediation (continued) |
| IBN.OP | | ICIC Bank Ltd. — ADR | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $34.00 | | | 2 | | | $ | 350 | |
| MTB.MJ | | M&T Bank Corporation | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $50.00 | | | 2 | | | | 5 | |
| NRQ.MK | | Northern Trust Corp. | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $55.00 | | | 2 | | | | 535 | |
| NRQ.PJ | | Northern Trust Corp. | | | | | | | | |
| | | Expiration: April 2010, Exercise Price: $50.00 | | | 1 | | | | 203 | |
| OLD.MI | | State Street Corporation | | | | | | | | |
| | | Expiration: January 2011, Exercise Price: $45.00 | | | 3 | | | | 2,250 | |
| | | | | | | | | | | |
| | | | | | | | | | 3,733 | |
| | | | | | | | | | | |
| | | Electric Power Generation, Transmission and Distribution |
| CPN.OV | | Calpine Corp. | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $12.50 | | | 16 | | | | 2,800 | |
| HNP.NF | | Huaneng Power International, Inc. — ADR | | | | | | | | |
| | | Expiration: February 2010, Exercise Price: $30.00 | | | 2 | | | | 1,510 | |
| HNP.QE | | Huaneng Power International, Inc. — ADR | | | | | | | | |
| | | Expiration: May 2010, Exercise Price: $25.00 | | | 3 | | | | 1,245 | |
| OBD.ME | | Nrg Energy, Inc. | | | | | | | | |
| | | Expiration: January 2011, Exercise Price: $25.00 | | | 6 | | | | 2,670 | |
| | | | | | | | | | | |
| | | | | | | | | | 8,225 | |
| | | | | | | | | | | |
| | | Equity Fund |
| UTH.QR | | Utilities HOLDRs Trust | | | | | | | | |
| | | Expiration: May 2010, Exercise Price: $90.00 | | | 2 | | | | 420 | |
| | | | | | | | | | | |
| | | Fabricated Metal Product Manufacturing |
| CMC.MV | | Commercial Metals Company | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $12.50 | | | 8 | | | | 20 | |
| CMC.OW | | Commercial Metals Company | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $17.50 | | | 3 | | | | 747 | |
| FO.OI | | Fortune Brands, Inc. | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $45.00 | | | 2 | | | | 700 | |
| | | | | | | | | | | |
| | | | | | | | | | 1,467 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
141
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Multi-Disciplinary Portfolio
Portfolio of Options Written — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Contracts | | | Value | |
| | |
| |
| | | Food Manufacturing |
| ADM.OM | | Archer-Daniels-Midland Company | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $27.00 | | | 3 | | | $ | 120 | |
| BGW.MJ | | Bunge Limited | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $50.00 | | | 1 | | | | 5 | |
| BGW.ML | | Bunge Limited | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $60.00 | | | 1 | | | | 40 | |
| UN.NE | | Unilever NV | | | | | | | | |
| | | Expiration: February 2010, Exercise Price: $25.00 | | | 2 | | | | 10 | |
| | | | | | | | | | | |
| | | | | | | | | | 175 | |
| | | | | | | | | | | |
| | | Gaming |
| VEG.ML | | Wynn Resorts Limited | | | | | | | | |
| | | Expiration: January 2011, Exercise Price: $60.00 | | | 1 | | | | 1,315 | |
| | | | | | | | | | | |
| | | Insurance Carriers and Related Activities |
| LFC.MK | | China Life Insurance Co., Limited — ADR | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $55.00 | | | 1 | | | | 2 | |
| MMC.MW | | Marsh & McLennan Companies, Inc. | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $17.50 | | | 2 | | | | 5 | |
| MBI.MA | | MBIA Inc. | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $5.00 | | | 4 | | | | 400 | |
| | | | | | | | | | | |
| | | | | | | | | | 407 | |
| | | | | | | | | | | |
| | | Leather and Allied Product Manufacturing |
| COH.MD | | Coach, Inc. | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $20.00 | | | 1 | | | | 2 | |
| VZF.ME | | Coach, Inc. | | | | | | | | |
| | | Expiration: January 2011, Exercise Price: $25.00 | | | 1 | | | | 163 | |
| | | | | | | | | | | |
| | | | | | | | | | 165 | |
| | | | | | | | | | | |
| | | Lessors of Real Estate |
| VNO.OM | | Vornado Realty Trust | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $65.00 | | | 5 | | | | 1,500 | |
| | | | | | | | | | | |
| | | Metal Ore Mining |
| RTP.MG | | Rio Tinto plc — ADR | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $135.00 | | | 1 | | | | 8 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
142
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Multi-Disciplinary Portfolio
Portfolio of Options Written — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Contracts | | | Value | |
| | |
| |
| | | Mining (except Oil and Gas) |
| FHZ.QO | | Freeport-McMoRan Copper & Gold Inc. | | | | | | | | |
| | | Expiration: May 2010, Exercise Price: $75.00 | | | 1 | | | $ | 575 | |
| OBQ.MP | | Freeport-McMoRan Copper & Gold Inc. | | | | | | | | |
| | | Expiration: January 2011, Exercise Price: $80.00 | | | 3 | | | | 4,005 | |
| NEM.RQ | | Newmont Mining Corporation | | | | | | | | |
| | | Expiration: June 2010, Exercise Price: $43.00 | | | 1 | | | | 320 | |
| VIE.MV | | Newmont Mining Corporation | | | | | | | | |
| | | Expiration: January 2011, Exercise Price: $42.50 | | | 2 | | | | 1,070 | |
| | | | | | | | | | | |
| | | | | | | | | | 5,970 | |
| | | | | | | | | | | |
| | | Miscellaneous Manufacturing |
| BDX.ON | | Becton, Dickinson and Company | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $70.00 | | | 2 | | | | 130 | |
| | | | | | | | | | | |
| | | Oil & Gas & Consumable Fuels |
| SNP.MO | | China Petroleum & Chemical Corp. — ADR | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $75.00 | | | 1 | | | | 5 | |
| CEO.OG | | CNOOC Limited — ADR | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $135.00 | | | 2 | | | | 470 | |
| | | | | | | | | | | |
| | | | | | | | | | 475 | |
| | | | | | | | | | | |
| | | Oil and Gas Extraction |
| CNQ.MJ | | Canadian Natural Resources Ltd. | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $50.00 | | | 4 | | | | 10 | |
| CNQ.OM | | Canadian Natural Resources Ltd. | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $65.00 | | | 2 | | | | 455 | |
| ECA.MH | | EnCana Corporation | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $40.00 | | | 2 | | | | 10 | |
| IMO.NG | | Imperial Oil Ltd. | | | | | | | | |
| | | Expiration: February 2010, Exercise Price: $35.00 | | | 1 | | | | 40 | |
| IMO.QG | | Imperial Oil Ltd. | | | | | | | | |
| | | Expiration: May 2010, Exercise Price: $35.00 | | | 2 | | | | 285 | |
| NXY.MC | | Nexen Inc. | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $15.00 | | | 2 | | | | 5 | |
| NXY.OX | | Nexen Inc. | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $22.50 | | | 3 | | | | 345 | |
| PMJ.PU | | Petroleo Brasileiro S.A. | | | | | | | | |
| | | Expiration: April 2010, Exercise Price: $49.00 | | | 2 | | | | 920 | |
See Notes to the Financial Statements.
143
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Multi-Disciplinary Portfolio
Portfolio of Options Written — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Contracts | | | Value | |
| | |
| |
| | | Oil and Gas Extraction (continued) |
| STO.MW | | StatoilHydro ASA — ADR | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $17.50 | | | 2 | | | $ | 10 | |
| STO.PX | | StatoilHydro ASA — ADR | | | | | | | | |
| | | Expiration: April 2010, Exercise Price: $22.50 | | | 2 | | | | 155 | |
| SXH.OG | | Suncor Energy, Inc. | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $35.00 | | | 5 | | | | 1,175 | |
| | | | | | | | | | | |
| | | | | | | | | | 3,410 | |
| | | | | | | | | | | |
| | | Other Financial Investment Activities |
| BEN.MM | | Franklin Resources, Inc. | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $65.00 | | | 1 | | | | 2 | |
| BEN.PT | | Franklin Resources, Inc. | | | | | | | | |
| | | Expiration: April 2010, Exercise Price: $100.00 | | | 1 | | | | 340 | |
| NQD.MC | | The Nasdaq OMX Group | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $15.00 | | | 6 | | | | 15 | |
| NQD.MX | | The Nasdaq OMX Group | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $22.50 | | | 5 | | | | 1,125 | |
| QGW.RV | | U.S. Global Investors, Inc. — Class A | | | | | | | | |
| | | Expiration: June 2010, Exercise Price: $12.50 | | | 6 | | | | 1,425 | |
| | | | | | | | | | | |
| | | | | | | | | | 2,907 | |
| | | | | | | | | | | |
| | | Other Professional, Scientific, and Technical Services |
| MCO.MF | | Moody’s Corporation | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $30.00 | | | 1 | | | | 310 | |
| | | | | | | | | | | |
| | | Other Wood Product Manufacturing |
| LUK.MC | | Leucadia National Corporation | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $15.00 | | | 6 | | | | 30 | |
| LUK.OE | | Leucadia National Corporation | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $25.00 | | | 2 | | | | 410 | |
| | | | | | | | | | | |
| | | | | | | | | | 440 | |
| | | | | | | | | | | |
| | | Pipeline Transportation of Crude Oil |
| SUG.OD | | Southern Union Company | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $20.00 | | | 7 | | | | 210 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
144
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Multi-Disciplinary Portfolio
Portfolio of Options Written — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Contracts | | | Value | |
| | |
| |
| | | Primary Metal Manufacturing |
| NUE.MB | | Nucor Corp. | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $42.00 | | | 1 | | | $ | 15 | |
| | | | | | | | | | | |
| | | Professional, Scientific, and Technical Services |
| OLJ.MA | | Automatic Data Processing, Inc. | | | | | | | | |
| | | Expiration: January 2011, Exercise Price: $37.50 | | | 1 | | | | 210 | |
| OLJ.MH | | Automatic Data Processing, Inc. | | | | | | | | |
| | | Expiration: January 2011, Exercise Price: $40.00 | | | 2 | | | | 600 | |
| CAI.OI | | CACI International, Inc. — Class A | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $45.00 | | | 2 | | | | 245 | |
| CRL.NG | | Charles River Laboratories International, Inc. | | | | | | | | |
| | | Expiration: February 2010, Exercise Price: $35.00 | | | 1 | | | | 225 | |
| | | | | | | | | | | |
| | | | | | | | | | 1,280 | |
| | | | | | | | | | | |
| | | Publishing Industries (except Internet) |
| MHP.MF | | The McGraw-Hill Companies, Inc. | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $30.00 | | | 2 | | | | 20 | |
| VMP.ME | | The McGraw-Hill Companies, Inc. | | | | | | | | |
| | | Expiration: January 2011, Exercise Price: $25.00 | | | 2 | | | | 385 | |
| | | | | | | | | | | |
| | | | | | | | | | 405 | |
| | | | | | | | | | | |
| | | Rail Transportation |
| BNI.PQ | | Burlington Northern Santa Fe Corporation | | | | | | | | |
| | | Expiration: April 2010, Exercise Price: $85.00 | | | 1 | | | | 63 | |
| OBC.MI | | CSX Corp. | | | | | | | | |
| | | Expiration: January 2011, Exercise Price: $45.00 | | | 3 | | | | 1,680 | |
| CP.OJ | | Canadian Pacific Railway Limited | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $50.00 | | | 2 | | | | 325 | |
| OGO.MI | | Norfolk Southern Corporation | | | | | | | | |
| | | Expiration: January 2011, Exercise Price: $45.00 | | | 3 | | | | 1,143 | |
| UNP.QL | | Union Pacific Corporation | | | | | | | | |
| | | Expiration: May 2010, Exercise Price: $60.00 | | | 2 | | | | 616 | |
| | | | | | | | | | | |
| | | | | | | | | | 3,827 | |
| | | | | | | | | | | |
See Notes to the Financial Statements.
145
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Multi-Disciplinary Portfolio
Portfolio of Options Written — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Contracts | | | Value | |
| | |
| |
| | | Real Estate |
| CBG.OV | | CB Richard Ellis Group, Inc. — Class A | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $12.50 | | | 7 | | | $ | 525 | |
| JLL.OJ | | Jones Lang LaSalle Incorporated | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $50.00 | | | 5 | | | | 663 | |
| JOE.OF | | The St. Joe Company | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $30.00 | | | 6 | | | | 1,440 | |
| | | | | | | | | | | |
| | | | | | | | | | 2,628 | |
| | | | | | | | | | | |
| | | Securities, Commodity Contracts, and Other Financial Investments and Related Activities |
| SHQ.OQ | | The Charles Schwab Corporation | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $17.00 | | | 10 | | | | 450 | |
| LAZ.OG | | Lazard Ltd. — Class A | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $35.00 | | | 5 | | | | 775 | |
| | | | | | | | | | | |
| | | | | | | | | | 1,225 | |
| | | | | | | | | | | |
| | | Securities and Commodity Contracts Intermediation and Brokerage |
| AMG.OL | | Affiliated Managers Group Inc. | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $60.00 | | | 2 | | | | 375 | |
| GQG.OI | | GFI Group, Inc. | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $7.50 | | | 5 | | | | 1,525 | |
| | | | | | | | | | | |
| | | | | | | | | | 1,900 | |
| | | | | | | | | | | |
| | | Telecommunications |
| CHU.MB | | China Unicom (Hong Kong) Limited — ADR | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $10.00 | | | 4 | | | | 10 | |
| CHU.PV | | China Unicom (Hong Kong) Limited — ADR | | | | | | | | |
| | | Expiration: April 2010, Exercise Price: $12.50 | | | 2 | | | | 150 | |
| | | | | | | | | | | |
| | | | | | | | | | 160 | |
| | | | | | | | | | | |
| | | Transportation Equipment Manufacturing |
| VBO.MI | | Boeing Co. | | | | | | | | |
| | | Expiration: January 2011, Exercise Price: $45.00 | | | 1 | | | | 370 | |
| VBO.MJ | | Boeing Co. | | | | | | | | |
| | | Expiration: January 2011, Exercise Price: $50.00 | | | 1 | | | | 535 | |
See Notes to the Financial Statements.
146
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Multi-Disciplinary Portfolio
Portfolio of Options Written — December 31, 2009 — (Continued)
| | | | | | | | | | | |
| Identifier | | | | Contracts | | | Value | |
| | |
| |
| | | Transportation Equipment Manufacturing (continued) |
| VOJ.MI | | Northrop Grumman Corporation | | | | | | | | |
| | | Expiration: January 2011, Exercise Price: $45.00 | | | 1 | | | $ | 220 | |
| OSK.SG | | Oshkosh Corporation | | | | | | | | |
| | | Expiration: July 2010, Exercise Price: $35.00 | | | 3 | | | | 1,440 | |
| | | | | | | | | | | |
| | | | | | | | | | 2,565 | |
| | | | | | | | | | | |
| | | Securities and Commodity Exchanges |
| NYX.OJ | | NYSE Euronext | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $28.00 | | | 5 | | | | 1,650 | |
| | | | | | | | | | | |
| | | Securities and Commodity Contracts Intermediation and Brokerage |
| RQW.MH | | T. Rowe Price Group, Inc. | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $40.00 | | | 1 | | | | 3 | |
| | | | | | | | | | | |
| | | Utilities |
| AYE.ME | | Allegheny Energy, Inc. | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $25.00 | | | 2 | | | | 320 | |
| AYE.MF | | Allegheny Energy, Inc. | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $30.00 | | | 1 | | | | 655 | |
| AYE.PE | | Allegheny Energy, Inc. | | | | | | | | |
| | | Expiration: April 2010, Exercise Price: $25.00 | | | 2 | | | | 455 | |
| ETR.OP | | Entergy Corporation | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $80.00 | | | 2 | | | | 535 | |
| GXP.OW | | Great Plains Energy Incorporated | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $17.50 | | | 5 | | | | 90 | |
| MIR.OC | | Mirant Corporation | | | | | | | | |
| | | Expiration: March 2010, Exercise Price: $15.00 | | | 7 | | | | 630 | |
| | | | | | | | | | | |
| | | | | | | | | | 2,685 | |
| | | | | | | | | | | |
| | | Warehousing and Storage |
| IRM.ME | | Iron Mountain Incorporated | | | | | | | | |
| | | Expiration: January 2010, Exercise Price: $25.00 | | | 4 | | | | 900 | |
| IRM.PE | | Iron Mountain Incorporated | | | | | | | | |
| | | Expiration: April 2010, Exercise Price: $25.00 | | | 2 | | | | 545 | |
| | | | | | | | | | | |
| | | | | | | | | | 1,445 | |
| | | | | | | | | | | |
| | | TOTAL PUT OPTIONS WRITTEN
(premiums received ($114,271)) | | | | | | $ | 59,183 | |
| | | | | | | | | | | |
| |
| ADR — | American Depository Receipt. |
See Notes to the Financial Statements.
147
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Statement of Assets & Liabilities
December 31, 2009
| | | | | | | | | |
| | | The Internet
| | | The Global
| |
| | | Portfolio | | | Portfolio | |
| | |
| |
ASSETS: | | | | | | | | |
Investments, at value(1)(2) | | $ | 144,881,384 | | | $ | 5,304,687 | |
| Cash | | | — | | | | 46 | |
| Receivable for contributed capital | | | 16,402 | | | | 8,586 | |
| Receivable for investments sold | | | — | | | | 137 | |
| Dividends and interest receivable | | | 53,916 | | | | 2,653 | |
| Other assets | | | 10,834 | | | | 95 | |
| | | | | | | | | |
| Total assets | | | 144,962,536 | | | | 5,316,204 | |
| | | | | | | | | |
LIABILITIES: | | | | | | | | |
Written options, at value(3) | | | 12,650 | | | | — | |
| Payable to Adviser | | | 110,717 | | | | 5,130 | |
| Payable to Custodian | | | 1,028,645 | | | | 72 | |
| Payable to Trustees and Officers | | | 1,533 | | | | 76 | |
| Payable for securities purchased | | | — | | | | 138,507 | |
| Payable for collateral received for securities loaned | | | 38,026,523 | | | | 388,881 | |
| Payable for withdrawn capital | | | 137,596 | | | | 17 | |
| Accrued expenses and other liabilities | | | 25,923 | | | | 15,225 | |
| | | | | | | | | |
| Total liabilities | | | 39,343,587 | | | | 547,908 | |
| | | | | | | | | |
| Net assets | | $ | 105,618,949 | | | $ | 4,768,296 | |
| | | | | | | | | |
(1)Cost of investments | | $ | 116,417,813 | | | $ | 4,983,589 | |
| | | | | | | | | |
(2)Includes loaned securities with a market value of | | $ | 36,061,381 | | | $ | 371,588 | |
| | | | | | | | | |
(3)Premiums received | | $ | 18,054 | | | $ | — | |
| | | | | | | | | |
See Notes to the Financial Statements.
148
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Statement of Assets & Liabilities
December 31, 2009
| | | | | | | | | |
| | | The
| | | The
| |
| | | Paradigm
| | | Medical
| |
| | | Portfolio | | | Portfolio | |
| | |
| |
ASSETS: | | | | | | | | |
Investments, at value(1)(2) | | $ | 1,796,216,049 | | | $ | 29,191,550 | |
| Cash | | | 264,000 | | | | 40,986 | |
| Receivable for contributed capital | | | 3,259,526 | | | | 177,225 | |
| Receivable for investments sold | | | 35 | | | | 60,582 | |
| Dividends and interest receivable | | | 892,483 | | | | 30,260 | |
| Other assets | | | 408,418 | | | | 1,149 | |
| | | | | | | | | |
| Total assets | | | 1,801,040,511 | | | | 29,501,752 | |
| | | | | | | | | |
LIABILITIES: | | | | | | | | |
| Payable to Adviser | | | 1,493,124 | | | | 27,271 | |
| Payable to Securities Lending Agent | | | 127,427 | | | | — | |
| Payable to Trustees and Officers | | | 22,207 | | | | 363 | |
| Payable for collateral received for securities loaned | | | 389,435,973 | | | | 3,462,232 | |
| Payable for withdrawn capital | | | 4,429,767 | | | | 55,555 | |
| Accrued expenses and other liabilities | | | 210,256 | | | | 13,696 | |
| | | | | | | | | |
| Total liabilities | | | 395,718,754 | | | | 3,559,117 | |
| | | | | | | | | |
| Net assets | | $ | 1,405,321,757 | | | $ | 25,942,635 | |
| | | | | | | | | |
(1)Cost of investments | | $ | 1,792,733,568 | | | $ | 29,885,155 | |
| | | | | | | | | |
(2)Includes loaned securities with a market value of | | $ | 366,244,969 | | | $ | 3,180,354 | |
| | | | | | | | | |
See Notes to the Financial Statements.
149
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Statement of Assets & Liabilities
December 31, 2009
| | | | | | | | | |
| | | | | | The Kinetics
| |
| | | The Small Cap
| | | Government
| |
| | | Opportunities
| | | Money Market
| |
| | | Portfolio | | | Portfolio | |
| | |
| |
ASSETS: | | | | | | | | |
Investments, at value(1)(2) | | $ | 227,357,954 | | | $ | 1,669,994 | |
| Cash | | | — | | | | 9,596 | |
| Receivable for contributed capital | | | 126,806 | | | | — | |
| Dividends and interest receivable | | | 161,390 | | | | — | |
| Other assets | | | 10,096 | | | | — | |
| | | | | | | | | |
| Total assets | | | 227,656,246 | | | | 1,679,590 | |
| | | | | | | | | |
LIABILITIES: | | | | | | | | |
| Payable to Adviser | | | 210,997 | | | | 704 | |
| Payable to Custodian | | | 14,956 | | | | — | |
| Payable to Trustees and Officers | | | 3,371 | | | | 17 | |
| Payable for collateral received for securities loaned | | | 26,818,709 | | | | — | |
| Payable for withdrawn capital | | | 771,608 | | | | — | |
| Accrued expenses and other liabilities | | | 51,807 | | | | 6,919 | |
| | | | | | | | | |
| Total liabilities | | | 27,871,448 | | | | 7,640 | |
| | | | | | | | | |
| Net assets | | $ | 199,784,798 | | | $ | 1,671,950 | |
| | | | | | | | | |
(1)Cost of investments | | $ | 217,252,671 | | | $ | 1,669,994 | |
| | | | | | | | | |
(2)Includes loaned securities with a market value of | | $ | 24,885,913 | | | $ | — | |
| | | | | | | | | |
See Notes to the Financial Statements.
150
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Statement of Assets & Liabilities
December 31, 2009
| | | | | | | | | |
| | | The Market
| | | The Water
| |
| | | Opportunities
| | | Infrastructure
| |
| | | Portfolio | | | Portfolio | |
| | |
| |
ASSETS: | | | | | | | | |
Investments, at value(1)(2) | | $ | 80,870,496 | | | $ | 25,574,001 | |
Foreign currencies, at value(3) | | | — | | | | 393,637 | |
| Cash | | | 347,143 | | | | 39,894 | |
| Receivable for contributed capital | | | 66,217 | | | | 329,217 | |
| Dividends and interest receivable | | | 18,999 | | | | 41,698 | |
| Other assets | | | 19,044 | | | | 1,141 | |
| | | | | | | | | |
| Total assets | | | 81,321,899 | | | | 26,379,588 | |
| | | | | | | | | |
LIABILITIES: | | | | | | | | |
Written options, at value(4) | | | 88,550 | | | | — | |
| Payable to Adviser | | | 69,949 | | | | 23,370 | |
| Payable to Trustees and Officers | | | 1,034 | | | | 294 | |
| Payable for securities purchased | | | — | | | | 231,620 | |
| Payable for collateral received for securities loaned | | | 14,955,121 | | | | 2,849,007 | |
| Payable for withdrawn capital | | | 65,900 | | | | 55,739 | |
| Accrued expenses and other liabilities | | | 22,325 | | | | 13,369 | |
| | | | | | | | | |
| Total liabilities | | | 15,202,879 | | | | 3,173,399 | |
| | | | | | | | | |
| Net assets | | $ | 66,119,020 | | | $ | 23,206,189 | |
| | | | | | | | | |
(1)Cost of investments | | $ | 79,842,266 | | | $ | 25,177,785 | |
| | | | | | | | | |
(2)Includes loaned securities with a market value of | | $ | 14,034,189 | | | $ | 2,618,453 | |
| | | | | | | | | |
(3)Cost of foreign currencies | | $ | — | | | $ | 400,723 | |
| | | | | | | | | |
(4)Premiums received | | $ | 126,377 | | | $ | — | |
| | | | | | | | | |
See Notes to the Financial Statements.
151
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Statement of Assets & Liabilities
December 31, 2009
| | | | | |
| | | The Multi-
| |
| | | Disciplinary
| |
| | | Portfolio | |
| | |
| |
ASSETS: | | | | |
Investments, at value(1) | | $ | 1,052,287 | |
| Deposit at brokers for written options | | | 58,043 | |
| Cash | | | 267,122 | |
| Dividends and interest receivable | | | 16,517 | |
| Other assets | | | 28 | |
| | | | | |
| Total assets | | | 1,393,997 | |
| | | | | |
LIABILITIES: | | | | |
Written options, at value(2) | | | 59,183 | |
| Payable to Adviser | | | 1,309 | |
| Payable to Trustees and Officers | | | 13 | |
| Accrued expenses and other liabilities | | | 10,862 | |
| | | | | |
| Total liabilities | | | 71,367 | |
| | | | | |
| Net assets | | $ | 1,322,630 | |
| | | | | |
(1)Cost of investments | | $ | 1,015,772 | |
| | | | | |
(2)Premiums received | | $ | 114,271 | |
| | | | | |
See Notes to the Financial Statements.
152
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Statement of Operations
For the Year Ended December 31, 2009
| | | | | | | | | |
| | | The Internet
| | | The Global
| |
| | | Portfolio | | | Portfolio | |
| | |
| |
INVESTMENT INCOME: | | | | | | | | |
| Dividends† | | $ | 628,882 | | | $ | 67,019 | |
| Interest | | | 417,771 | | | | 299 | |
| Income from securities lending | | | 133,756 | | | | 1,073 | |
| | | | | | | | | |
| Total investment income | | | 1,180,409 | | | | 68,391 | |
| | | | | | | | | |
EXPENSES: | | | | | | | | |
| Investment advisory fees | | | 1,105,746 | | | | 41,303 | |
| Administration fees | | | 36,203 | | | | 1,516 | |
| Professional fees | | | 19,836 | | | | 7,370 | |
| Fund accounting fees | | | 22,865 | | | | 12,720 | |
| Trustee and Officers’ fees and expenses | | | 7,254 | | | | 282 | |
| Custodian fees and expenses | | | 13,057 | | | | 29,349 | |
| Other expenses | | | 8,508 | | | | 335 | |
| | | | | | | | | |
| Total expenses | | | 1,213,469 | | | | 92,875 | |
| | | | | | | | | |
| Net expenses | | | 1,213,469 | | | | 92,875 | |
| | | | | | | | | |
| Net investment loss | | | (33,060 | ) | | | (24,484 | ) |
| | | | | | | | | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | |
| Net realized gain (loss) on: | | | | | | | | |
| Investments and foreign currency | | | 3,597,819 | | | | (420,269 | ) |
| Net change in unrealized appreciation of: | | | | | | | | |
| Investments and foreign currency | | | 31,632,715 | | | | 1,903,249 | |
| Written option contracts | | | 459,326 | | | | — | |
| | | | | | | | | |
| Net gain on investments | | | 35,689,860 | | | | 1,482,980 | |
| | | | | | | | | |
| Net increase in net assets resulting from operations | | $ | 35,656,800 | | | $ | 1,458,496 | |
| | | | | | | | | |
| † Net of Foreign Taxes Withheld of: | | $ | 28,723 | | | $ | 4,266 | |
| | | | | | | | | |
See Notes to the Financial Statements.
153
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Statement of Operations
For the Year Ended December 31, 2009
| | | | | | | | | |
| | | The
| | | The
| |
| | | Paradigm
| | | Medical
| |
| | | Portfolio | | | Portfolio | |
| | |
| |
INVESTMENT INCOME: | | | | | | | | |
| Dividends† | | $ | 24,737,096 | | | $ | 420,870 | |
| Interest | | | 3,552,514 | | | | 1,156 | |
| Other income | | | 236,242 | | | | 103,226 | |
| Income from securities lending | | | 4,309,037 | | | | 13,182 | |
| | | | | | | | | |
| Total investment income | | | 32,834,889 | | | | 538,434 | |
| | | | | | | | | |
EXPENSES: | | | | | | | | |
| Investment advisory fees | | | 16,336,818 | | | | 261,826 | |
| Administration fees | | | 598,367 | | | | 9,212 | |
| Professional fees | | | 44,631 | | | | 11,987 | |
| Fund accounting fees | | | 248,791 | | | | 6,784 | |
| Trustee and Officers’ fees and expenses | | | 101,071 | | | | 1,848 | |
| Custodian fees and expenses | | | 364,561 | | | | 4,684 | |
| Other expenses | | | 144,142 | | | | 2,418 | |
| | | | | | | | | |
| Total expenses | | | 17,838,381 | | | | 298,759 | |
| | | | | | | | | |
| Net expenses | | | 17,838,381 | | | | 298,759 | |
| | | | | | | | | |
| Net investment income | | | 14,996,508 | | | | 239,675 | |
| | | | | | | | | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | |
| Net realized (gain) loss on: | | | | | | | | |
| Investments and foreign currency | | | (282,409,570 | ) | | | (171,878 | ) |
| Written option contracts expired or closed | | | — | | | | 19,470 | |
| Net change in unrealized appreciation (depreciation) of: | | | | | | | | |
| Investments and foreign currency | | | 696,152,858 | | | | 4,247,082 | |
| Written option contracts | | | — | | | | (18,430 | ) |
| | | | | | | | | |
| Net gain on investments | | | 413,743,288 | | | | 4,076,244 | |
| | | | | | | | | |
| Net increase in net assets resulting from operations | | $ | 428,739,796 | | | $ | 4,315,919 | |
| | | | | | | | | |
| † Net of Foreign Taxes Withheld of: | | $ | 1,289,944 | | | $ | 19,130 | |
| | | | | | | | | |
See Notes to the Financial Statements.
154
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Statement of Operations
For the Year Ended December 31, 2009
| | | | | | | | | |
| | | | | | The Kinetics
| |
| | | The Small Cap
| | | Government
| |
| | | Opportunities
| | | Money Market
| |
| | | Portfolio | | | Portfolio | |
| | |
| |
INVESTMENT INCOME: | | | | | | | | |
| Dividends† | | $ | 2,675,563 | | | $ | — | |
| Interest | | | 96,983 | | | | 1,282 | |
| Income from securities lending | | | 134,293 | | | | — | |
| | | | | | | | | |
| Total investment income | | | 2,906,839 | | | | 1,282 | |
| | | | | | | | | |
EXPENSES: | | | | | | | | |
| Investment advisory fees | | | 2,642,332 | | | | 10,786 | |
| Administration fees | | | 97,873 | | | | 937 | |
| Professional fees | | | 22,548 | | | | 5,574 | |
| Fund accounting fees | | | 46,809 | | | | 536 | |
| Trustee and Officers’ fees and expenses | | | 15,958 | | | | 212 | |
| Custodian fees and expenses | | | 155,333 | | | | 3,404 | |
| Other expenses | | | 23,694 | | | | 364 | |
| | | | | | | | | |
| Total expenses | | | 3,004,547 | | | | 21,813 | |
| | | | | | | | | |
| Net expenses | | | 3,004,547 | | | | 21,813 | |
| | | | | | | | | |
| Net investment loss | | | (97,708 | ) | | | (20,531 | ) |
| | | | | | | | | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | |
| Net realized loss on: | | | | | | | | |
| Investments and foreign currency | | | (45,656,070 | ) | | | — | |
| Net change in unrealized appreciation of: | | | | | | | | |
| Investments and foreign currency | | | 143,859,185 | | | | — | |
| Written option contracts | | | 1,310 | | | | — | |
| | | | | | | | | |
| Net gain on investments | | | 98,204,425 | | | | — | |
| | | | | | | | | |
| Net increase (decrease) in net assets resulting from operations | | $ | 98,106,717 | | | $ | (20,531 | ) |
| | | | | | | | | |
| † Net of Foreign Taxes Withheld of: | | $ | 90,040 | | | $ | — | |
| | | | | | | | | |
See Notes to the Financial Statements.
155
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Statement of Operations
For the Year Ended December 31, 2009
| | | | | | | | | |
| | | The Market
| | | The Water
| |
| | | Opportunities
| | | Infrastructure
| |
| | | Portfolio | | | Portfolio | |
| | |
| |
INVESTMENT INCOME: | | | | | | | | |
| Dividends† | | $ | 894,532 | | | $ | 348,410 | |
| Interest | | | 4,168 | | | | 3,647 | |
| Income from securities lending | | | 98,150 | | | | 10,522 | |
| | | | | | | | | |
| Total investment income | | | 996,850 | | | | 362,579 | |
| | | | | | | | | |
EXPENSES: | | | | | | | | |
| Investment advisory fees | | | 742,814 | | | | 214,062 | |
| Administration fees | | | 24,088 | | | | 7,168 | |
| Professional fees | | | 16,324 | | | | 12,235 | |
| Fund accounting fees | | | 17,857 | | | | 7,465 | |
| Trustee and Officers’ fees and expenses | | | 4,937 | | | | 1,579 | |
| Custodian fees and expenses | | | 31,676 | | | | 10,662 | |
| Other expenses | | | 6,146 | | | | 1,724 | |
| | | | | | | | | |
| Total expenses | | | 843,842 | | | | 254,895 | |
| | | | | | | | | |
| Net expenses | | | 843,842 | | | | 254,895 | |
| | | | | | | | | |
| Net investment income | | | 153,008 | | | | 107,684 | |
| | | | | | | | | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | |
| Net realized loss on: | | | | | | | | |
| Investments and foreign currency | | | (7,399,123 | ) | | | (1,421,220 | ) |
| Net change in unrealized appreciation of: | | | | | | | | |
| Investments and foreign currency | | | 29,815,969 | | | | 3,696,782 | |
| Written option contracts | | | 264,788 | | | | — | |
| | | | | | | | | |
| Net gain on investments | | | 22,681,634 | | | | 2,275,562 | |
| | | | | | | | | |
| Net increase in net assets resulting from operations | | $ | 22,834,642 | | | $ | 2,383,246 | |
| | | | | | | | | |
| † Net of Foreign Taxes Withheld of: | | $ | 38,816 | | | $ | 26,869 | |
| | | | | | | | | |
See Notes to the Financial Statements.
156
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Statement of Operations
For the Year Ended December 31, 2009
| | | | | |
| | | The Multi-
| |
| | | Disciplinary
| |
| | | Portfolio | |
| | |
| |
INVESTMENT INCOME: | | | | |
| Interest | | $ | 22,172 | |
| | | | | |
| Total investment income | | | 22,172 | |
| | | | | |
EXPENSES: | | | | |
| Investment advisory fees | | | 11,295 | |
| Administration fees | | | 1,400 | |
| Professional fees | | | 11,476 | |
| Fund accounting fees | | | 5,748 | |
| Trustee and Officers’ fees and expenses | | | 70 | |
| Custodian fees and expenses | | | 2,720 | |
| Other expenses | | | 330 | |
| | | | | |
| Total expenses | | | 33,039 | |
| | | | | |
| Net expenses | | | 33,039 | |
| | | | | |
| Net investment loss | | | (10,867 | ) |
| | | | | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | |
| Net realized gain (loss) on: | | | | |
| Investments | | | (22,498 | ) |
| Written option contracts expired or closed | | | 128,037 | |
| Net change in unrealized appreciation of: | | | | |
| Investments | | | 37,417 | |
| Written option contracts | | | 72,507 | |
| | | | | |
| Net gain on investments | | | 215,463 | |
| | | | | |
| Net increase in net assets resulting from operations | | $ | 204,596 | |
| | | | | |
See Notes to the Financial Statements.
157
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Statements of Changes in Net Assets
| | | | | | | | | | | | | | | | | |
| | | The Internet Portfolio | | | The Global Portfolio | |
| | | For the
| | | For the
| | | For the
| | | For the
| |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | |
| |
OPERATIONS: | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | $ | (33,060 | ) | | $ | 1,798,294 | | | $ | (24,484 | ) | | $ | 23,448 | |
| Net realized gain (loss) on sale of investments, foreign currency and written options | | | 3,597,819 | | | | 1,853,794 | | | | (420,269 | ) | | | 188,690 | |
| Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options | | | 32,092,041 | | | | (65,388,288 | ) | | | 1,903,249 | | | | (2,277,088 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from operations | | | 35,656,800 | | | | (61,736,200 | ) | | | 1,458,496 | | | | (2,064,950 | ) |
| | | | | | | | | | | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS: | | | | | | | | | | | | | | | | |
| Contributions | | | 2,234,532 | | | | 1,732,265 | | | | 3,020,852 | | | | 1,685,706 | |
| Withdrawals | | | (7,912,207 | ) | | | (32,194,574 | ) | | | (1,672,795 | ) | | | (801,892 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from beneficial interest transactions | | | (5,677,675 | ) | | | (30,462,309 | ) | | | 1,348,057 | | | | 883,814 | |
| | | | | | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | | 29,979,125 | | | | (92,198,509 | ) | | | 2,806,553 | | | | (1,181,136 | ) |
NET ASSETS: | | | | | | | | | | | | | | | | |
| Beginning of year | | | 75,639,824 | | | | 167,838,333 | | | | 1,961,743 | | | | 3,142,879 | |
| | | | | | | | | | | | | | | | | |
| End of year | | $ | 105,618,949 | | | $ | 75,639,824 | | | $ | 4,768,296 | | | $ | 1,961,743 | |
| | | | | | | | | | | | | | | | | |
See Notes to the Financial Statements.
158
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Statements of Changes in Net Assets
| | | | | | | | | | | | | | | | | |
| | | The Paradigm Portfolio | | | The Medical Portfolio | |
| | | For the
| | | For the
| | | For the
| | | For the
| |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | |
| |
OPERATIONS: | | | | | | | | | | | | | | | | |
| Net investment income | | $ | 14,996,508 | | | $ | 27,713,345 | | | $ | 239,675 | | | $ | 192,545 | |
| Net realized gain (loss) on sale of investments, foreign currency and written options | | | (282,409,570 | ) | | | (640,738,772 | ) | | | (152,408 | ) | | | 369,558 | |
| Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options | | | 696,152,858 | | | | (1,594,810,674 | ) | | | 4,228,652 | | | | (5,659,508 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from operations | | | 428,739,796 | | | | (2,207,836,101 | ) | | | 4,315,919 | | | | (5,097,405 | ) |
| | | | | | | | | | | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS: | | | | | | | | | | | | | | | | |
| Contributions | | | 78,038,515 | | | | 283,118,993 | | | | 7,401,998 | | | | 13,013,167 | |
| Withdrawals | | | (393,931,544 | ) | | | (1,422,768,329 | ) | | | (4,767,975 | ) | | | (4,427,289 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from beneficial interest transactions | | | (315,893,029 | ) | | | (1,139,649,336 | ) | | | 2,634,023 | | | | 8,585,878 | |
| | | | | | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | | 112,846,767 | | | | (3,347,485,437 | ) | | | 6,949,942 | | | | 3,488,473 | |
NET ASSETS: | | | | | | | | | | | | | | | | |
| Beginning of year | | | 1,292,474,990 | | | | 4,639,960,427 | | | | 18,992,693 | | | | 15,504,220 | |
| | | | | | | | | | | | | | | | | |
| End of year | | $ | 1,405,321,757 | | | $ | 1,292,474,990 | | | $ | 25,942,635 | | | $ | 18,992,693 | |
| | | | | | | | | | | | | | | | | |
See Notes to the Financial Statements.
159
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Statements of Changes in Net Assets
| | | | | | | | | | | | | | | | | |
| | | The Small Cap
| | | The Kinetics Government Money
| |
| | | Opportunities Portfolio | | | Market Portfolio | |
| | | For the
| | | For the
| | | For the
| | | For the
| |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | |
| |
OPERATIONS: | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | $ | (97,708 | ) | | $ | 2,982,907 | | | $ | (20,531 | ) | | $ | 7,334 | |
| Net realized loss on sale of investments, foreign currency and written options | | | (45,656,070 | ) | | | (139,808,958 | ) | | | — | | | | (84 | ) |
| Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options | | | 143,860,495 | | | | (332,405,475 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from operations | | | 98,106,717 | | | | (469,231,526 | ) | | | (20,531 | ) | | | 7,250 | |
| | | | | | | | | | | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS: | | | | | | | | | | | | | | | | |
| Contributions | | | 19,485,826 | | | | 9,623,613 | | | | 1,675,824 | | | | 3,553,538 | |
| Withdrawals | | | (128,333,657 | ) | | | (417,583,047 | ) | | | (2,689,591 | ) | | | (2,067,115 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from beneficial interest transactions | | | (108,847,831 | ) | | | (407,959,434 | ) | | | (1,013,767 | ) | | | 1,486,423 | |
| | | | | | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | | (10,741,114 | ) | | | (877,190,960 | ) | | | (1,034,298 | ) | | | 1,493,673 | |
NET ASSETS: | | | | | | | | | | | | | | | | |
| Beginning of year | | | 210,525,912 | | | | 1,087,716,872 | | | | 2,706,248 | | | | 1,212,575 | |
| | | | | | | | | | | | | | | | | |
| End of year | | $ | 199,784,798 | | | $ | 210,525,912 | | | $ | 1,671,950 | | | $ | 2,706,248 | |
| | | | | | | | | | | | | | | | | |
See Notes to the Financial Statements.
160
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Statements of Changes in Net Assets
| | | | | | | | | | | | | | | | | |
| | | The Market Opportunities Portfolio | | | The Water Infrastructure Portfolio | |
| | | For the
| | | For the
| | | For the
| | | For the
| |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
| | | December 31,
| | | December 31,
| | | December 31,
| | | December 31,
| |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | |
| |
OPERATIONS: | | | | | | | | | | | | | | | | |
| Net investment income | | $ | 153,008 | | | $ | 1,128,258 | | | $ | 107,684 | | | $ | 242,835 | |
| Net realized loss on sale of investments, foreign currency and written options | | | (7,399,123 | ) | | | (26,773,299 | ) | | | (1,421,220 | ) | | | (5,821,675 | ) |
| Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options | | | 30,080,757 | | | | (46,316,211 | ) | | | 3,696,782 | | | | (3,345,871 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from operations | | | 22,834,642 | | | | (71,961,252 | ) | | | 2,383,246 | | | | (8,924,711 | ) |
| | | | | | | | | | | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS: | | | | | | | | | | | | | | | | |
| Contributions | | | 7,456,809 | | | | 41,907,272 | | | | 11,818,237 | | | | 33,631,279 | |
| Withdrawals | | | (21,721,577 | ) | | | (28,148,309 | ) | | | (7,147,014 | ) | | | (14,812,293 | ) |
| | | | | | | | | | | | | | | | | |
| Net increase (decrease) in net assets resulting from beneficial interest transactions | | | (14,264,768 | ) | | | 13,758,963 | | | | 4,671,223 | | | | 18,818,986 | |
| | | | | | | | | | | | | | | | | |
| Total increase (decrease) in net assets | | | 8,569,874 | | | | (58,202,289 | ) | | | 7,054,469 | | | | 9,894,275 | |
NET ASSETS: | | | | | | | | | | | | | | | | |
| Beginning of year | | | 57,549,146 | | | | 115,751,435 | | | | 16,151,720 | | | | 6,257,445 | |
| | | | | | | | | | | | | | | | | |
| End of year | | $ | 66,119,020 | | | $ | 57,549,146 | | | $ | 23,206,189 | | | $ | 16,151,720 | |
| | | | | | | | | | | | | | | | | |
See Notes to the Financial Statements.
161
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Statements of Changes in Net Assets
| | | | | | | | | |
| | | The Multi-Disciplinary Portfolio | |
| | | For the
| | | From
| |
| | | Year Ended
| | | February 11, 2008ˆ
| |
| | | December 31,
| | | through
| |
| | | 2009 | | | December 31, 2008 | |
| | |
| |
OPERATIONS: | | | | | | | | |
| Net investment loss | | $ | (10,867 | ) | | $ | (14,825 | ) |
| Net realized gain (loss) on sale of investments and written options | | | 105,539 | | | | (74,483 | ) |
| Net change in unrealized appreciation (depreciation) of investments and written options | | | 109,924 | | | | (18,321 | ) |
| | | | | | | | | |
| Net increase (decrease) in net assets resulting from operations | | | 204,596 | | | | (107,629 | ) |
| | | | | | | | | |
NET INCREASE IN NET ASSETS RESULTING | | | | | | | | |
FROM BENEFICIAL INTEREST TRANSACTIONS: | | | | | | | | |
| Contributions | | | 788,927 | | | | 605,549 | |
| Withdrawals | | | (89,179 | ) | | | (79,634 | ) |
| | | | | | | | | |
| Net increase in net assets resulting from beneficial interest transactions | | | 699,748 | | | | 525,915 | |
| | | | | | | | | |
| Total increase in net assets | | | 904,344 | | | | 418,286 | |
NET ASSETS: | | | | | | | | |
| Beginning of period | | | 418,286 | | | | — | |
| | | | | | | | | |
| End of period | | $ | 1,322,630 | | | $ | 418,286 | |
| | | | | | | | | |
| |
| ˆ | Commencement of operations. |
See Notes to the Financial Statements.
162
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Notes to Financial Statements
December 31, 2009
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 Kinetics Government Money Market Portfolio, The Market Opportunities Portfolio, The Water Infrastructure Portfolio and The Multi-Disciplinary Portfolio (collectively, the “Master Portfolios”). Pursuant to the 1940 Act, the Master Portfolios, with the exception of The Kinetics Government Money Market Portfolio, are “non-diversified” series of the Trust. The Market Opportunities Portfolio commenced operations on January 31, 2006, The Water Infrastructure Portfolio commenced operations on June 29, 2007 and The Multi-Disciplinary 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, with the exception of The Kinetics Government Money Market Portfolio, seeks to provide investors with long-term capital growth. 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 invests primarily in the equity securities of foreign companies that have the ability to facilitate an increase in the growth of their traditional business lines and secondarily 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 positioned to reduce their costs, extend the reach of their distribution channels and experience significant growth in revenues. The Medical Portfolio invests primarily in the equity securities of U.S. and foreign companies engaged in
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Notes to Financial Statements — (Continued)
December 31, 2009
medical research, pharmaceutical treatments and related medical technology 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 or in the gaming industry. The Water Infrastructure Portfolio invests primarily in securities issued by U.S. and foreign companies involved in water infrastructure and natural resources with a specific water theme and related activities. The Multi-Disciplinary Portfolio utilizes a two-part investment strategy, investing primarily in fixed income securities and in derivatives. The Kinetics Government Money Market Portfolio seeks to provide investors with current income consistent with the preservation of capital and maintenance of liquidity by investing in money market instruments issued by the U.S. Government, its agencies or instrumentalities.
2. Significant Accounting Policies
Security Valuation
Master Portfolio securities (other than securities held by the Kinetics Government Money Market Portfolio) 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 that are traded using the National Association of Securities Dealers’ Automated Quotation System (“NASDAQ”) are valued using the NASDAQ Official Closing Price (“NOCP”). 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 NYSE, “fair value” will be determined. Purchased non-exchange traded options, futures, 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 mean of the most recent bid and asked prices. Exchange traded options are valued at the last reported sale price on an exchange on which the option is traded. If no sales are reported on a particular day, the mean between the highest bid and lowest asked quotations at the close of the exchanges will be used. Fixed-income securities
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December 31, 2009
(other than obligations having a maturity of 60 days or less) are normally valued on the basis of quotes obtained from pricing services, which take into account appropriate factors such as institutional-sized trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data. Investment securities in The Kinetics Government Money Market Portfolio and instruments purchased with remaining maturities of 60 days or less are valued at amortized cost, which approximates fair value. 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. At December 31, 2009, 0.00%, 0.19% and 0.00% of the net assets of the Internet Portfolio, Paradigm Portfolio, and Small Cap Portfolio, respectively were fair valued securities.
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 100% 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
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Notes to Financial Statements — (Continued)
December 31, 2009
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 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 value of investment securities and 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 period. 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, 2009 there were no restricted Securities held by the Master Portfolios. 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, 2009, the following Master Portfolios held illiquid securities:
| | | | | | | | | |
| | | | | Percentage
|
| | | Market Value | | of Net Assets |
| |
| The Internet Portfolio | | $ | 0 | | | | 0.00 | % |
| The Paradigm Portfolio | | | 2,620,751 | | | | 0.19 | |
| The Small Cap Opportunities Portfolio | | | 0 | | | | 0.00 | |
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December 31, 2009
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 Portfolio (including any collateral posted) or 50% of the total assets of each 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 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 Portfolio will be subject to taxation on its share of the Portfolio’s ordinary income and capital gains. It is intended that each Master Portfolio’s assets will be managed so an investor in the 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, 2009, open tax years include the tax years ended December 31, 2006 through 2009. The Portfolios are also not aware of any
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Notes to Financial Statements — (Continued)
December 31, 2009
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 accounting principles generally accepted in the United States of America 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 and interest income is recognized on the accrual basis. Other 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, Inc. (the “Adviser”), with whom certain officers and trustees of the Trust are affiliated, to furnish investment advisory services to the Master Portfolios. Under the terms of the Agreements, the Master Portfolios compensate the Adviser for its management services at the annual rate of 1.25% of each Master Portfolio’s average daily net assets, except for The Kinetics Government Money Market Portfolio, which compensates the Adviser at a rate of 0.50% of the Master Portfolio’s average daily net assets. The Sub-Adviser to the Water Infrastructure Portfolio, Brennan Investment Partners, LLC, receives its compensation from the Adviser at the annual rate of 0.35% of the daily net assets of the Water Infrastructure Portfolio. For the year ended December 31, 2009, The Internet Portfolio, The Global Portfolio, The Paradigm Portfolio, The Medical Portfolio, The Small Cap Opportunities Portfolio, The Kinetics Government Money Market Portfolio, The Market Opportunities Portfolio, The Water Infrastructure Portfolio and The Multi-Disciplinary Portfolio incurred expenses of $1,105,746, $41,303, $16,336,818, $261,826, $2,642,332, $10,786, $742,814, $214,062 and $11,295, respectively, pursuant to the Investment Advisory Agreements.
For the year ended December 31, 2009, the Trust was allocated $24,000 for the services of the Chief Compliance Officer employed by the Adviser.
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December 31, 2009
4. Securities Transactions
Purchases and sales of investment securities, other than short-term investments, for the year ended December 31, 2009 were as follows:
| | | | | | | | | | | | | | | | | |
| | | Purchases | | Sales |
| | | U.S.
| | | | U.S.
| | |
| | | Government | | Other | | Government | | Other |
| |
| The Internet Portfolio | | $ | — | | | $ | 29,351,491 | | | $ | — | | | $ | 11,708,277 | |
| The Global Portfolio | | | — | | | | 2,971,428 | | | | — | | | | 1,664,798 | |
| The Paradigm Portfolio | | | — | | | | 194,470,798 | | | | — | | | | 468,862,887 | |
| The Medical Portfolio | | | — | | | | 4,633,506 | | | | — | | | | 2,533,545 | |
| The Small Cap Opportunities Portfolio | | | — | | | | 9,125,640 | | | | — | | | | 115,480,575 | |
| The Market Opportunities Portfolio | | | — | | | | 7,830,906 | | | | — | | | | 17,903,885 | |
| The Water Infrastructure Portfolio | | | — | | | | 10,858,754 | | | | — | | | | 6,637,437 | |
| The Multi-Disciplinary Portfolio | | | — | | | | 1,207,340 | | | | — | | | | 314,742 | |
As of December 31, 2009, the cost of investments and unrealized appreciation (depreciation) on investment securities for federal income tax purposes was as follows:
| | | | | | | | | | | | | | | | | |
| | | Net
| | | | | | |
| | | Appreciation
| | Appreciated
| | Depreciated
| | Cost of
|
| | | (Depreciation) | | Securities | | Securities | | Investments |
| |
| The Internet Portfolio | | $ | 26,660,799 | | | $ | 41,355,788 | | | $ | (14,694,989 | ) | | $ | 118,220,585 | |
| The Global Portfolio | | | 308,469 | | | | 582,048 | | | | (273,579 | ) | | | 4,996,218 | |
| The Paradigm Portfolio | | | (56,687,313 | ) | | | 269,874,223 | | | | (326,561,536 | ) | | | 1,852,903,362 | |
| The Medical Portfolio | | | (760,414 | ) | | | 4,698,660 | | | | (5,459,074 | ) | | | 29,951,964 | |
| The Small Cap Opportunities Portfolio | | | (3,429,925 | ) | | | 51,685,143 | | | | (55,115,068 | ) | | | 230,787,879 | |
| The Kinetics Government Money Market Portfolio | | | — | | | | — | | | | — | | | | 1,669,994 | |
| The Market Opportunities Portfolio | | | (233,582 | ) | | | 11,767,825 | | | | (12,001,407 | ) | | | 81,104,078 | |
| The Water Infrastructure Portfolio | | | 275,316 | | | | 2,147,607 | | | | (1,872,291 | ) | | | 25,298,685 | |
| The Multi-Disciplinary | | | 34,247 | | | | 50,178 | | | | (15,931 | ) | | | 1,018,040 | |
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Notes to Financial Statements — (Continued)
December 31, 2009
For the year ended December 31, 2009, the Master Portfolios wrote the following options:
| | | | | | | | | |
| | | Number
| | Premium
|
| | | of Contracts | | Amount |
| |
The Internet Portfolio
| | | | | | | | |
| Outstanding at the Beginning of Year | | | 40 | | | $ | 361,078 | |
| Options Closed | | | (38 | ) | | | (343,024 | ) |
| | | | | | | | | |
| Outstanding at the End of Year | | | 2 | | | $ | 18,054 | |
| | | | | | | | | |
The Medical Portfolio
| | | | | | | | |
| Outstanding at the Beginning of Year | | | 40 | | | $ | 19,470 | |
| Options Expired | | | (40 | ) | | | (19,470 | ) |
| | | | | | | | | |
| Outstanding at the End of Year | | | — | | | $ | — | |
| | | | | | | | | |
The Small Cap Opportunities Portfolio
| | | | | | | | |
| Outstanding at the Beginning of Year | | | 20 | | | $ | 3,940 | |
| Options Exercised | | | (20 | ) | | | (3,940 | ) |
| | | | | | | | | |
| Outstanding at the End of Year | | | — | | | $ | — | |
| | | | | | | | | |
The Market Opportunities Portfolio
| | | | | | | | |
| Outstanding at the Beginning of Year | | | 20 | | | $ | 180,539 | |
| Options Exercised | | | (6 | ) | | | (54,162 | ) |
| | | | | | | | | |
| Outstanding at the End of Year | | | 14 | | | $ | 126,377 | |
| | | | | | | | | |
The Multi-Disciplinary Portfolio
| | | | | | | | |
| Outstanding at the Beginning of Year | | | 102 | | | $ | 43,279 | |
| Options Written | | | 704 | | | | 223,391 | |
| Options Exercised | | | (68 | ) | | | (22,634 | ) |
| Options Expired | | | (365 | ) | | | (106,314 | ) |
| Options Closed | | | (46 | ) | | | (23,451 | ) |
| | | | | | | | | |
| Outstanding at the End of Year | | | 327 | | | $ | 114,271 | |
| | | | | | | | | |
5. Portfolio Securities Loaned
As of December 31, 2009, 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
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December 31, 2009
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. The value of the securities on loan and the value of the related collateral at December 31, 2009, were as follows:
| | | | | | | | | |
| | | Securities | | Collateral |
| |
| The Internet Portfolio | | $ | 36,061,381 | | | $ | 38,026,523 | |
| The Global Portfolio | | | 371,588 | | | | 388,881 | |
| The Paradigm Portfolio | | | 366,244,969 | | | | 389,435,973 | |
| The Medical Portfolio | | | 3,180,354 | | | | 3,462,232 | |
| The Small Cap Opportunities Portfolio | | | 24,885,913 | | | | 26,818,709 | |
| The Market Opportunities Portfolio | | | 14,034,189 | | | | 14,955,121 | |
| The Water Infrastructure Portfolio | | | 2,618,453 | | | | 2,849,007 | |
| The Multi-Disciplinary Portfolio | | | — | | | | — | |
6. Selected Financial Highlights
Financial highlights for the Master Portfolios were as follows:
| | | | | | | | | | | | | | | | | | | | | |
| | | The Internet Portfolio |
| | | 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,
|
| | | 2009 | | 2008 | | 2007 | | 2006 | | 2005 |
| |
| Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reduction | | | 1.37 | % | | | 1.34 | % | | | 1.34 | % | | | 1.39 | % | | | 1.45 | % |
| After expense reduction | | | 1.37 | % | | | 1.34 | % | | | 1.33 | % | | | 1.33 | % | | | 1.44 | % |
| Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reduction | | | (0.04 | )% | | | 1.59 | % | | | 1.58 | % | | | 0.17 | % | | | 1.35 | % |
| After expense reduction | | | (0.04 | )% | | | 1.59 | % | | | 1.59 | % | | | 0.23 | % | | | 1.36 | % |
| Portfolio turnover rate | | | 14 | % | | | 19 | % | | | 15 | % | | | 11 | % | | | 12 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | The Global Portfolio |
| | | 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,
|
| | | 2009 | | 2008 | | 2007 | | 2006 | | 2005 |
| |
| Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reduction | | | 2.81 | % | | | 2.46 | % | | | 1.99 | % | | | 1.62 | % | | | 1.73 | % |
| After expense reduction | | | 2.81 | % | | | 2.46 | % | | | 1.98 | % | | | 1.46 | % | | | 1.72 | % |
| Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reduction | | | (0.74 | )% | | | 0.83 | % | | | 3.73 | % | | | 2.78 | % | | | 4.30 | % |
| After expense reduction | | | (0.74 | )% | | | 0.83 | % | | | 3.74 | % | | | 2.94 | % | | | 4.31 | % |
| Portfolio turnover rate | | | 53 | % | | | 98 | % | | | 22 | % | | | 10 | % | | | 2 | % |
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Notes to Financial Statements — (Continued)
December 31, 2009
| | | | | | | | | | | | | | | | | | | | | |
| | | The Paradigm Portfolio |
| | | 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,
|
| | | 2009 | | 2008 | | 2007 | | 2006 | | 2005 |
| |
| Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reduction | | | 1.36% | | | | 1.33% | | | | 1.33% | | | | 1.40% | | | | 1.45% | |
| After expense reduction | | | 1.36% | | | | 1.33% | | | | 1.33% | | | | 1.32% | | | | 1.40% | |
| Ratio of net investment income to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reduction | | | 1.15% | | | | 0.86% | | | | 0.75% | | | | 0.85% | | | | 0.07% | |
| After expense reduction | | | 1.15% | | | | 0.86% | | | | 0.75% | | | | 0.93% | | | | 0.12% | |
| Portfolio turnover rate | | | 15% | | | | 34% | | | | 8% | | | | 3% | | | | 5% | |
| | | | | | | | | | | | | | | | | | | | | |
| | | The Medical Portfolio |
| | | 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,
|
| | | 2009 | | 2008 | | 2007 | | 2006 | | 2005 |
| |
| Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reduction | | | 1.43% | | | | 1.42 | % | | | 1.49 | % | | | 1.44 | % | | | 1.50 | % |
| After expense reduction | | | 1.43% | | | | 1.42 | % | | | 1.40 | % | | | 1.34 | % | | | 1.49 | % |
| Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reduction | | | 1.14% | | | | 1.02 | % | | | 0.42 | % | | | 0.33 | % | | | (0.17 | %) |
| After expense reduction | | | 1.14% | | | | 1.02 | % | | | 0.51 | % | | | 0.43 | % | | | (0.16 | %) |
| Portfolio turnover rate | | | 13% | | | | 28 | % | | | 38 | % | | | 20 | % | | | 2 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | The Small Cap Opportunities Portfolio |
| | | 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,
|
| | | 2009 | | 2008 | | 2007 | | 2006 | | 2005 |
| |
| Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reduction | | | 1.42 | % | | | 1.36 | % | | | 1.34 | % | | | 1.40 | % | | | 1.48 | % |
| After expense reduction | | | 1.42 | % | | | 1.36 | % | | | 1.31 | % | | | 1.27 | % | | | 1.37 | % |
| Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reduction | | | (0.05 | )% | | | 0.51 | % | | | 0.38 | % | | | 0.30 | % | | | 0.46 | % |
| After expense reduction | | | (0.05 | )% | | | 0.51 | % | | | 0.41 | % | | | 0.43 | % | | | 0.57 | % |
| Portfolio turnover rate | | | 4 | % | | | 16 | % | | | 17 | % | | | 6 | % | | | 4 | % |
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Notes to Financial Statements — (Continued)
December 31, 2009
| | | | | | | | | | | | | | | | | | | | | |
| | | The Kinetics Government
|
| | | Money Market Portfolio |
| | | 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,
|
| | | 2009 | | 2008 | | 2007 | | 2006 | | 2005 |
| |
| Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reduction | | | 1.01 | % | | | 1.24 | % | | | 2.22 | % | | | 1.56 | % | | | 1.37 | % |
| After expense reduction | | | 1.01 | % | | | 1.24 | % | | | 2.22 | % | | | 1.17 | % | | | 1.37 | % |
| Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | |
| Before expense reduction | | | (0.95 | )% | | | 0.33 | % | | | 2.47 | % | | | 3.13 | % | | | 1.58 | % |
| After expense reduction | | | (0.95 | )% | | | 0.33 | % | | | 2.47 | % | | | 3.52 | % | | | 1.58 | % |
| Portfolio turnover rate | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | |
| | | The Market
|
| | | Opportunities Portfolio |
| | | For the
| | For the
| | For the
| | January 31,
|
| | | Year Ended
| | Year Ended
| | Year Ended
| | 2006ˆ through
|
| | | December 31,
| | December 31,
| | December 31,
| | December 31,
|
| | | 2009 | | 2008 | | 2007 | | 2006 |
| |
| Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reduction | | | 1.42% | | | | 1.36 | % | | | 1.44 | % | | | 1.81 | %(1) |
| After expense reduction | | | 1.42% | | | | 1.36 | % | | | 1.44 | % | | | 1.61 | %(1) |
| Ratio of net investment income to average net assets: | | | | | | | | | | | | | | | | |
| Before expense reduction | | | 0.26% | | | | 1.25 | % | | | 0.61 | % | | | 0.16 | %(1) |
| After expense reduction | | | 0.26% | | | | 1.25 | % | | | 0.61 | % | | | 0.36 | %(1) |
| Portfolio turnover rate | | | 14% | | | | 77 | % | | | 14 | % | | | 0 | % |
| | | | | | | | | | | | | |
| | | The Water
|
| | | Infrastructure Portfolio |
| | | For the
| | For the
| | June 29,
|
| | | Year Ended
| | Year Ended
| | 2007ˆ through
|
| | | December 31,
| | December 31,
| | December 31,
|
| | | 2009 | | 2008 | | 2007 |
| |
| Ratio of expenses to average net assets: | | | | | | | | | | | | |
| Before expense reduction | | | 1.49% | | | | 1.49 | % | | | 2.01 | %(1) |
| After expense reduction | | | 1.49% | | | | 1.49 | % | | | 2.01 | %(1) |
| Ratio of net investment income to average net assets | | | | | | | | | | | | |
| Before expense reduction | | | 0.63% | | | | 1.27 | % | | | 0.96 | %(1) |
| After expense reduction | | | 0.63% | | | | 1.27 | % | | | 0.96 | %(1) |
| Portfolio turnover rate | | | 45% | | | | 66 | % | | | 7 | % |
173
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Notes to Financial Statements — (Continued)
December 31, 2009
| | | | | | | | | |
| | | The Multi-
|
| | | Disciplinary Portfolio |
| | | For the
| | |
| | | Year Ended
| �� | February 11, 2008ˆ
|
| | | December 31,
| | through
|
| | | 2009 | | December 31, 2008 |
| |
| Ratio of expenses to average net assets: | | | | | | | | |
| Before expense reduction | | | 3.66 | % | | | 5.09 | %(1) |
| After expense reduction | | | 3.66 | % | | | 5.09 | %(1) |
| Ratio of net investment income (loss) to average net assets | | | | | | | | |
| Before expense reduction | | | (1.20 | )% | | | (3.49 | )%(1) |
| After expense reduction | | | (1.20 | )% | | | (3.49 | )%(1) |
| Portfolio turnover rate | | | 77 | % | | | N/A | (2) |
| | |
| | ˆ | Commencement of operations. |
| |
| (1) | Annualized. |
| (2) | This Portfolio did not hold any long term securities during the period, therefore the portfolio turnover is not applicable. |
7. Summary of Fair Value Exposure
Various inputs are used in determining the value of the Portfolios’ 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 the Company 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 the Company’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.
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
174
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Notes to Financial Statements — (Continued)
December 31, 2009
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 Portfolio’s net assets as of December 31, 2009:
| | | | | | | | | | | | | | | | | |
| | | Level 1 | | Level 2 | | Level 3 | | Total |
| |
| Common Stocks | | $ | 102,389,096 | | | $ | — | | | $ | — | *(1) | | $ | 102,389,096 | |
| Escrow Notes | | | — | | | | — | | | | — | * | | | — | * |
| Convertible Bonds | | | — | | | | 2,000,000 | | | | — | | | | 2,000,000 | |
| Rights | | | 1,530,087 | | | | — | | | | — | | | | 1,530,087 | |
| Short-Term Investments | | | 935,678 | | | | — | | | | — | | | | 935,678 | |
| Investments Purchased with the Cash | | | | | | | | | | | | | | | | |
| Proceeds from Securities Lending | | | 38,026,523 | | | | — | | | | — | | | | 38,026,523 | |
| | | | | | | | | | | | | | | | | |
| Total Investments in Securities | | $ | 142,881,384 | | | $ | 2,000,000 | | | $ | — | * | | $ | 144,881,384 | |
| | | | | | | | | | | | | | | | | |
| Put Options Written | | $ | (12,650 | ) | | $ | — | | | $ | — | | | $ | (12,650 | ) |
| | | | | | | | | | | | | | | | | |
| |
| * | Amount is less than $0.50. |
| |
| (1) | The Common Stocks Level 3 balance consists of the market values of the associated Level 3 investment in the following industry: |
| | | | | |
| Special Purpose Entity | | $ | —* | |
Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
| | | | | |
| | | Investments in
|
Description | | Securities |
| |
| Balance as of December 31, 2008 | | $ | 634 | |
| Accrued discounts/premiums | | | — | |
| Realized gain (loss) | | | — | |
| Change in unrealized appreciation (depreciation) | | | (634 | ) |
| Net purchases (sales) | | | — | |
Transfer in and/or out of Level 3 | | | — | |
| | | | — | |
| | | | | |
| Balance as of December 31, 2009 | | $ | — | * |
| | | | | |
| |
| * | Amount is less than $0.50. |
175
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Notes to Financial Statements — (Continued)
December 31, 2009
The Global Portfolio
The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009:
| | | | | | | | | | | | | | | | | |
| | | Level 1 | | Level 2 | | Level 3 | | Total |
| |
| Common Stocks | | $ | 3,709,692 | | | $ | 976,997 | (1) | | $ | — | | | $ | 4,686,689 | |
| Preferred Stocks | | | 39 | | | | — | | | | — | | | | 39 | |
| Short-Term Investments | | | 229,078 | | | | — | | | | — | | | | 229,078 | |
Investments Purchased with the Cash
Proceeds from Securities Lending | | | 388,881 | | | | — | | | | — | | | | 388,881 | |
| | | | | | | | | | | | | | | | | |
| Total Investments in Securities | | $ | 4,327,690 | | | $ | 976,997 | | | $ | — | | | $ | 5,304,687 | |
| | | | | | | | | | | | | | | | | |
| |
| (1) | The Common Stocks Level 2 balance consists of the market values of the associated Level 2 investments in the following industries: |
| | | | | |
| Commercial Banking | | $ | 146,098 | |
| Health and Personal Care Stores | | | 18,479 | |
| Heavy and Civil Engineering Construction | | | 253,544 | |
| Mining (except Oil and Gas) | | | 15,105 | |
| Oil & Gas & Consumable Fuels | | | 114,002 | |
| Real Estate | | | 42,279 | |
| Retail Trade | | | 12,272 | |
| Securities, Commodity Contracts, and Other Financial Investments and Related Activities | | | 168,665 | |
| Software Publishers | | | 78,440 | |
| Support Activities for Transportation | | | 31,457 | |
| Utilities | | | 96,656 | |
| | | | | |
| | | $ | 976,997 | |
| | | | | |
Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
| | | | | |
| | | Investments in
|
Description | | Securities |
| |
| Balance as of December 31, 2008 | | $ | 54,120 | |
| Accrued discounts/premiums | | | — | |
| Realized gain (loss) | | | — | |
| Change in unrealized appreciation (depreciation) | | | — | |
| Net purchases (sales) | | | — | |
Transfer in and/or out of Level 3 | | | (54,120 | ) |
| | | | | |
| Balance as of December 31, 2009 | | $ | — | |
| | | | | |
176
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Notes to Financial Statements — (Continued)
December 31, 2009
The Paradigm Portfolio
The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009:
| | | | | | | | | | | | | | | | | |
| | | Level 1 | | Level 2 | | Level 3 | | Total |
| |
| Common Stocks | | $ | 1,389,722,476 | | | $ | — | | | $ | — | | | $ | 1,389,722,476 | |
| Escrow Notes | | | — | | | | — | | | | — | * | | | — | * |
| Convertible Bonds | | | — | | | | 12,285,000 | | | | — | | | | 12,285,000 | |
| Corporate Bonds | | | — | | | | 582,112 | | | | — | | | | 582,112 | |
| Short-Term Investments | | | 4,687,061 | | | | — | | | | — | | | | 4,687,061 | |
| Investments Purchased with the Cash Proceeds from Securities Lending | | | 386,318,649 | | | | — | | | | 2,620,751 | | | | 388,939,400 | |
| | | | | | | | | | | | | | | | | |
| Total Investments in Securities | | $ | 1,780,728,186 | | | $ | 12,867,112 | | | $ | 2,620,751 | | | $ | 1,796,216,049 | |
| | | | | | | | | | | | | | | | | |
| |
| * | Amount is less than $0.50. |
Following is a reconciliation of Level 3 assets for which significant unoberservable inputs were used to determine fair value:
| | | | | |
| | | Investments in
|
Description | | Securities |
| |
| Balance as of December 31, 2008 | | $ | 12,901,309 | |
| Accrued discounts/premiums | | | — | |
| Realized gain (loss) | | | — | |
| Change in unrealized appreciation (depreciation) | | | 127,422 | |
| Net purchases (sales) | | | (10,407,980 | ) |
Transfer in and/or out of Level 3 | | | — | |
| | | | | |
| Balance as of December 31, 2009 | | $ | 2,620,751 | |
| | | | | |
The Medical Portfolio
The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009:
| | | | | | | | | | | | | | | | | |
| | | Level 1 | | Level 2 | | Level 3 | | Total |
| |
| Common Stocks | | $ | 24,431,790 | | | $ | — | | | $ | — | | | $ | 24,431,790 | |
| Short-Term Investments | | | 1,297,528 | | | | — | | | | — | | | | 1,297,528 | |
Investments Purchased with the Cash
Proceeds from Securities Lending | | | 3,462,232 | | | | — | | | | — | | | | 3,462,232 | |
| | | | | | | | | | | | | | | | | |
| Total Investment in Securities | | $ | 29,191,550 | | | $ | — | | | $ | — | | | $ | 29,191,550 | |
| | | | | | | | | | | | | | | | | |
177
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Notes to Financial Statements — (Continued)
December 31, 2009
The Small Cap Opportunities Portfolio
The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009:
| | | | | | | | | | | | | | | | | |
| | | Level 1 | | Level 2 | | Level 3 | | Total |
| |
| Common Stocks | | $ | 197,096,296 | | | $ | 2,004,640 | (1) | | $ | — | | | $ | 199,100,936 | |
| Escrow Notes | | | — | | | | — | | | | — | * | | | — | * |
| Corporate Bonds | | | — | | | | 170,518 | | | | — | | | | 170,518 | |
| Rights | | | 854,989 | | | | — | | | | — | | | | 854,989 | |
| Short-Term Investments | | | 412,802 | | | | — | | | | — | | | | 412,802 | |
| Investments Purchased with the Cash Proceeds from Securities Lending | | | 26,818,709 | | | | — | | | | — | | | | 26,818,709 | |
| | | | | | | | | | | | | | | | | |
| Total Investments in Securities | | $ | 225,182,796 | | | $ | 2,175,158 | | | $ | — | * | | $ | 227,357,954 | |
| | | | | | | | | | | | | | | | | |
| |
| * | Amount is less than $0.50. |
| |
| (1) | The Common Stocks Level 2 balance consists of the market value of the associated Level 2 investment in the following industries: |
| | | | | |
| Commercial Banking | | $ | 2,004,640 | |
Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:
| | | | | |
| | | Investments in
|
Description | | Securities |
| |
| Balance as of December 31, 2008 | | $ | 6,301 | |
| Accrued discounts/premiums | | | — | |
| Realized gain (loss) | | | — | |
| Change in unrealized appreciation (depreciation) | | | (1 | ) |
| Net purchases (sales) | | | — | |
Transfer in and/or out of Level 3 | | | (6,300 | ) |
| | | | | |
| Balance as of December 31, 2009 | | $ | — | |
| | | | | |
The Government Money Market Portfolio
The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009:
| | | | | | | | | | | | | | | | | |
| | | Level 1 | | Level 2 | | Level 3 | | Total |
| |
| Short-Term Investments | | $ | — | | | $ | 1,669,994 | | | $ | — | | | $ | 1,669,994 | |
| | | | | | | | | | | | | | | | | |
| Total Investments in Securities | | $ | — | | | $ | 1,669,994 | | | $ | — | | | $ | 1,669,994 | |
| | | | | | | | | | | | | | | | | |
178
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Notes to Financial Statements — (Continued)
December 31, 2009
The Market Opportunities Portfolio
The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009:
| | | | | | | | | | | | | | | | | |
| | | Level 1 | | Level 2 | | Level 3 | | Total |
| |
| Common Stocks | | $ | 65,374,850 | | | $ | — | | | $ | — | | | $ | 65,374,850 | |
| Short-Term Investments | | | 540,525 | | | | — | | | | — | | | | 540,525 | |
Investments Purchased with the Cash
Proceeds from Securities Lending | | | 14,955,121 | | | | — | | | | — | | | | 14,955,121 | |
| | | | | | | | | | | | �� | | | | | |
| Total Investment in Securities | | $ | 80,870,496 | | | $ | — | | | $ | — | | | $ | 80,870,496 | |
| | | | | | | | | | | | | | | | | |
| Put Options Written | | $ | (88,550 | ) | | $ | — | | | $ | — | | | $ | (88,550 | ) |
| | | | | | | | | | | | | | | | | |
The Water Infrastructure Portfolio
The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009:
| | | | | | | | | | | | | | | | | |
| | | Level 1 | | Level 2 | | Level 3 | | Total |
| |
| Common Stocks | | $ | 20,471,076 | | | $ | — | | | $ | — | | | $ | 20,471,076 | |
| Preferred Stocks | | | 361,200 | | | | — | | | | — | | | | 361,200 | |
| Short-Term Investments | | | 1,892,718 | | | | — | | | | — | | | | 1,892,718 | |
Investments Purchased with the Cash
Proceeds from Securities Lending | | | 2,849,007 | | | | — | | | | — | | | | 2,849,007 | |
| | | | | | | | | | | | | | | | | |
| Total Investments in Securities | | $ | 25,574,001 | | | $ | — | | | $ | — | | | $ | 25,574,001 | |
| | | | | | | | | | | | | | | | | |
The Multi-Disciplinary Portfolio
The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009:
| | | | | | | | | | | | | | | | | |
| | | Level 1 | | Level 2 | | Level 3 | | Total |
| |
| Convertible Bonds | | $ | — | | | $ | 396,875 | | | $ | — | | | $ | 396,875 | |
| Corporate Bonds | | | — | | | | 514,750 | | | | — | | | | 514,750 | |
| Call Options Purchased | | | 135 | | | | — | | | | — | | | | 135 | |
| Short-Term Investments | | | 140,527 | | | | — | | | | — | | | | 140,527 | |
| | | | | | | | | | | | | | | | | |
| Total Investments in Securities | | $ | 140,662 | | | $ | 911,625 | | | $ | — | | | $ | 1,052,287 | |
| | | | | | | | | | | | | | | | | |
| Put Options Written | | $ | (59,183 | ) | | $ | — | | | $ | — | | | $ | (59,183 | ) |
| | | | | | | | | | | | | | | | | |
8. Disclosures about Derivative Instruments and Hedging Activities
The Portfolios have adopted enhanced disclosure regarding derivatives and hedging activity intended to improve financial reporting of derivative instruments by enabling investors to understand how and why an entity uses derivatives, how derivatives are accounted for, and how derivative instruments affect an entity’s results of operations and financial position.
179
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Notes to Financial Statements — (Continued)
December 31, 2009
The Internet Portfolio
Statement of Assets and Liabilities
Fair Values of derivative instruments as of December 31, 2009:
| | | | | | | | | | | | | | | | | |
| | | Assets | | Liabilities |
Equity Contracts | | Description | | Fair Value | | Description | | Fair Value |
| |
| Purchased Options | | | Investments* | | | $ | — | | | | | | | | | |
| | | | | | | | | | | | Written option | | | | | |
| Written Options | | | | | | | | | | | contracts, at value | | | $ | 12,650 | |
| | | | | | | | | | | | | | | | | |
| Total | | | | | | $ | — | | | | | | | $ | 12,650 | |
| | | | | | | | | | | | | | | | | |
| |
| * | Purchased options are included in investments with other long positions. |
Statement of Operations
The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2009:
Amount of Realized Gain (Loss) on Equity Contracts
| | | | | |
Equity Contracts | | |
| |
| Purchased Options | | $ | — | ** |
| Written Options | | | — | |
| | | | | |
| Total | | $ | — | |
| | | | | |
| |
| ** | Purchased options are included with investments. |
Change in Unrealized Appreciation (Depreciation) on Equity Contracts
| | | | | |
Equity Contracts | | |
| |
| Purchased Options | | $ | — | *** |
| Written Options | | | 459,326 | |
| | | | | |
| Total | | $ | 459,326 | |
| | | | | |
| |
| *** | Purchased options are included with investments. |
180
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Notes to Financial Statements — (Continued)
December 31, 2009
The Paradigm Portfolio
Statement of Assets and Liabilities
Fair Values of derivative instruments as of December 31, 2009:
| | | | | | | | | | | | | | | | | |
| | | Assets | | Liabilities |
Equity Contracts | | Description | | Fair Value | | Description | | Fair Value |
| |
| Purchased Options | | | Investments* | | | $ | — | | | | | | | | | |
| | | | | | | | | | | | Written option | | | | | |
| Written Options | | | | | | | | | | | contracts, at value | | | $ | — | |
| | | | | | | | | | | | | | | | | |
| Total | | | | | | $ | — | | | | | | | $ | — | |
| | | | | | | | | | | | | | | | | |
| |
| * | Purchased options are included in investments with other long positions. |
Statement of Operations
The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2009:
Amount of Realized Gain (Loss) on Equity Contracts
| | | | | |
Equity Contracts | | |
| |
| Purchased Options | | $ | (128,376 | )** |
| Written Options | | | — | |
| | | | | |
| Total | | $ | — | |
| | | | | |
| |
| ** | Purchased options are included with investments. |
Change in Unrealized Appreciation (Depreciation) on Equity Contracts
| | | | | |
Equity Contracts | | |
| |
| Purchased Options | | $ | (1,364,916 | )*** |
| Written Options | | | — | |
| | | | | |
| Total | | $ | (1,364,916 | ) |
| | | | | |
| |
| *** | Purchased options are included with investments. |
The Medical Portfolio
Statement of Assets and Liabilities
Fair Values of derivative instruments as of December 31, 2009:
| | | | | | | | | | | | | | | | | |
| | | Assets | | Liabilities |
Equity Contracts | | Description | | Fair Value | | Description | | Fair Value |
| |
| Purchased Options | | | Investments* | | | $ | — | | | | | | | | | |
| | | | | | | | | | | | Written option | | | | | |
| Written Options | | | | | | | | | | | contracts, at value | | | $ | — | |
| | | | | | | | | | | | | | | | | |
| Total | | | | | | $ | — | | | | | | | $ | — | |
| | | | | | | | | | | | | | | | | |
| |
| * | Purchased options are included in investments with other long positions. |
181
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Notes to Financial Statements — (Continued)
December 31, 2009
Statement of Operations
The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2009:
Amount of Realized Gain (Loss) on Equity Contracts
| | | | | |
Equity Contracts | | |
| |
| Purchased Options | | $ | — | ** |
| Written Options | | | 19,470 | |
| | | | | |
| Total | | $ | 19,470 | |
| | | | | |
| |
| ** | Purchased options are included with investments. |
Change in Unrealized Appreciation (Depreciation) on Equity Contracts
| | | | | |
Equity Contracts | | |
| |
| Purchased Options | | $ | — | *** |
| Written Options | | | (18,430 | ) |
| | | | | |
| Total | | $ | (18,430 | ) |
| | | | | |
| |
| *** | Purchased options are included with investments. |
The Small Cap Opportunities Portfolio
Statement of Assets and Liabilities
Fair Values of derivative instruments as of December 31, 2009:
| | | | | | | | | | | | | | | | | |
| | | Assets | | Liabilities |
Equity Contracts | | Description | | Fair Value | | Description | | Fair Value |
| |
| Purchased Options | | | Investments* | | | $ | — | | | | | | | | | |
| | | | | | | | | | | | Written option | | | | | |
| Written Options | | | | | | | | | | | contracts, at value | | | $ | — | |
| | | | | | | | | | | | | | | | | |
| Total | | | | | | $ | — | | | | | | | $ | — | |
| | | | | | | | | | | | | | | | | |
| |
| * | Purchased options are included in investments with other long positions. |
Statement of Operations
The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2009:
Amount of Realized Gain (Loss) on Equity Contracts
| | | | | |
Equity Contracts | | |
| |
| Purchased Options | | $ | 90,828 | ** |
| Written Options | | | — | |
| | | | | |
| Total | | $ | 90,828 | |
| | | | | |
| |
| ** | Purchased options are included with investments. |
182
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Notes to Financial Statements — (Continued)
December 31, 2009
Change in Unrealized Appreciation (Depreciation) on Equity Contracts
| | | | | |
Equity Contracts | | |
| |
| Purchased Options | | $ | 88,668 | *** |
| Written Options | | | 1,310 | |
| | | | | |
| Total | | $ | 89,978 | |
| | | | | |
| |
| *** | Purchased options are included with investments. |
The Market Opportunities Portfolio
Statement of Assets and Liabilities
Fair Values of derivative instruments as of December 31, 2009:
| | | | | | | | | | | | | | | | | |
| | | Assets | | Liabilities |
Equity Contracts | | Description | | Fair Value | | Description | | Fair Value |
| |
| Purchased Options | | | Investments* | | | $ | — | | | | | | | | | |
| | | | | | | | | | | | Written option | | | | | |
| Written Options | | | | | | | | | | | contracts, at value | | | $ | 88,550 | |
| | | | | | | | | | | | | | | | | |
| Total | | | | | | $ | — | | | | | | | $ | 88,550 | |
| | | | | | | | | | | | | | | | | |
| |
| * | Purchased options are included in investments with other long positions. |
Statement of Operations
The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2009:
Amount of Realized Gain (Loss) on Equity Contracts
| | | | | |
Equity Contracts | | |
| |
| Purchased Options | | $ | (56,934 | )** |
| Written Options | | | — | |
| | | | | |
| Total | | $ | (56,934 | ) |
| | | | | |
| |
| ** | Purchased options are included with investments. |
Change in Unrealized Appreciation (Depreciation) on Equity Contracts
| | | | | |
Equity Contracts | | |
| |
| Purchased Options | | $ | 52,074 | *** |
| Written Options | | | 264,788 | |
| | | | | |
| Total | | $ | 316,862 | |
| | | | | |
| |
| *** | Purchased options are included with investments. |
183
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Notes to Financial Statements — (Continued)
December 31, 2009
The Multi-Disciplinary Portfolio
Statement of Assets and Liabilities
Fair Values of derivative instruments as of December 31, 2009:
| | | | | | | | | | | | | | | | | |
| | | Assets | | Liabilities |
Equity Contracts | | Description | | Fair Value | | Description | | Fair Value |
| |
| Purchased Options | | | Investments* | | | $ | 135 | | | | | | | | | |
| | | | | | | | | | | | Written option | | | | | |
| Written Options | | | | | | | | | | | contracts, at value | | | $ | 59,183 | |
| | | | | | | | | | | | | | | | | |
| Total | | | | | | $ | 135 | | | | | | | $ | 59,183 | |
| | | | | | | | | | | | | | | | | |
| |
| * | Purchased options are included in investments with other long positions. |
Statement of Operations
The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2009:
Amount of Realized Gain (Loss) on Equity Contracts
| | | | | |
Equity Contracts | | |
| |
| Purchased Options | | $ | — | ** |
| Written Options | | | 128,037 | |
| | | | | |
| Total | | $ | 128,037 | |
| | | | | |
| |
| ** | Purchased options are included with investments. |
Change in Unrealized Appreciation (Depreciation) on Equity Contracts
| | | | | |
Equity Contracts | | |
| |
| Purchased Options | | $ | (1,089 | )*** |
| Written Options | | | 72,507 | |
| | | | | |
| Total | | $ | 71,418 | |
| | | | | |
| |
| *** | Purchased options are included with investments. |
9. New Accounting Pronouncement
In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update “Improving Disclosures about Fair Value Measurements” that requires additional disclosures regarding fair value measurements. Certain required disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, and other required disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Management is currently evaluating the impact the update will have on its financial statement disclosures.
184
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Notes to Financial Statements — (Continued)
December 31, 2009
10. Subsequent Events
In preparing these financial statements, Management has evaluated portfolio related events and transactions for potential recognition or disclosure through February 26, 2010, the date the financial statements were issued. There were no events or translations that occurred during the period that materially impacted the amounts or disclosures in the Portfolios’ financial statements.
11. Results of Shareholder Meeting (Unaudited)
At a meeting held on March 18, 2009, the Board of Directors of the Company and the Board of Trustees of the Trust, approved the sub-advisory agreement for the Water Infrastructure Portfolio between Kinetics Asset Management, Inc. and Brennan Investment Partners, LLC. On November 16, 2009, a special meeting of shareholders of the Water Infrastructure Fund was held and the agreement was also approved. The result of the voting of shares with respect to the Proposal to approve a new sub-advisory agreement between Kinetics Asset Management, Inc. and Brennan Investment Partners, LLC, is shown below:
| | | | | | | | | | | |
Votes for the Resolution: | | Votes against the Resolution: | | Abstain: |
| |
| | 1,032,712.690 | | | | 26,173.655 | | | | 16,380.394 | |
12. Information about Proxy Voting (Unaudited)
Information regarding how Kinetics Portfolios Trust votes 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.kineticsfund.com and by accessing the SEC’s website at www.sec.gov. Information regarding how the 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.
13. Information about the Portfolio Holdings (Unaudited)
The Kinetics Portfolios Trust file its complete schedules of portfolio holdings for its first and third fiscal quarters with the SEC on Form N-Q. The 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. 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.
185
KINETICS PORTFOLIOS TRUST
Report of Independent Registered
Public Accounting Firm
To the Shareholders of and Board of Trustees
Kinetics Portfolios Trust
Elmsford, New York
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 Kinetics Government Money Market Portfolio, The Market Opportunities Portfolio, The Water Infrastructure Portfolio, and The Multi-Disciplinary Portfolio, each a series of shares of Kinetics Portfolios Trust (the “Trust”), as of December 31, 2009, and the related statements of operations, the statements of changes in net assets and financial highlights for the periods indicated thereon. These financial statements and financial highlights are the responsibility of the Trust’s 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, 2009, 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 the above mentioned Portfolios as of December 31, 2009, the results of their operations, the changes in their net assets and financial highlights for the periods indicated thereon, in conformity with accounting principles generally accepted in the United States of America.
TAIT, WELLER & BAKER LLP
Philadelphia, Pennsylvania
February 26, 2010
186
KINETICS PORTFOLIOS TRUST
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.
187
KINETICS PORTFOLIOS TRUST
Management of the Funds and the Portfolios — (Continued)
Board of Directors/Board of Trustees
Independent Directors/Trustees
| | | | | | | | | |
| | | | | | | Number of
| |
| | | | | | | Portfolios/Funds in
| |
| | | | | Term of Office/
| | Fund Complex**
| |
| | | Position(s) with the
| | Length of
| | Overseen by
| |
| Name, Address and Year of Birth | | Company and Trust | | Time Served | | Trustee/Director | |
| |
Steven T. Russell
Year Born: 1964
c/o Kinetics Asset Management, Inc.
555 Taxter Road
Suite 175
Elmsford, New York, 10523 | | Independent
Director/Trustee | | Indefinite/
Since 2000 | | | 19 | |
Douglas Cohen, C.P.A
Year Born: 1961
c/o Kinetics Asset Management, Inc.
555 Taxter Road
Suite 175
Elmsford, New York, 10523 | | Independent
Director/Trustee | | Indefinite/
Since 2000 | | | 19 | |
William J. Graham
Year Born: 1962
c/o Kinetics Asset Management, Inc.
555 Taxter Road
Suite 175
Elmsford, New York, 10523 | | Independent
Director/Trustee | | Indefinite/
Since 2000 | | | 19 | |
Joseph E. Breslin
Year Born: 1953
c/o Kinetics Asset Management, Inc.
555 Taxter Road
Suite 175
Elmsford, New York, 10523 | | Independent
Director/Trustee | | Indefinite/
Since 2000 | | | 19 | |
James M. Breen
Year Born: 1959
c/o Kinetics Asset Management, Inc.
555 Taxter Road
Suite 175
Elmsford, New York, 10523 | | Independent
Director/Trustee | | Indefinite/
Since 2008 | | | 19 | |
188
| | | |
| Principal Occupation During the Past Five Years | | Other Directorships Held by Trustee/Director |
|
| Attorney and Counselor at Law, Partner, Law Firm of Russell and Fig (since September 2002); Steven Russell Law Firm (1994 to 2002); Professor of Business Law, Suffolk County Community College (1997 to Present). | | N/A |
Sunrise Credit Services, Inc. (2005 to Present); Wagner & Zwerman, LLP Certified Public Accountant (1997 to 2005).
| | Director, The Kinetics Funds
(a private investment company). |
Attorney, William J. Graham, PC (2001 to Present); Bracken & Margolin, LLP (1997 to 2001).
| | N/A |
| Chief Operating Officer, Central Park Credit Holdings, (2007-2009) Chief Operating Officer, Aladdin Capital Management (2005-2007); Independent Consultant Whitehall Asset Management (May 2003 to 2004); Independent Consultant, Independence Community Bank (2003-2005). | | Trustee, AIP Alternative Strategies Funds
(2 portfolios); Trustee, Underlying Funds Trust (4 portfolios). |
| Assistant Attaché Immigration & Customs Enforcement, Pretoria, South Africa (2008 to Present); Immigration & Customs Enforcement Representative, Athens, Greece (2006 to 2008); Immigration & Customs Enforcement, Senior Special Agent, Miami, FL (2000 to 2008). | | N/A |
189
KINETICS PORTFOLIOS TRUST
Management of the Funds and the Portfolios — (Continued)
Board of Directors/Board of Trustees (Continued)
Interested Directors/Trustees and Officers
| | | | | | | | | |
| | | | | | | Number of
| |
| | | | | | | Portfolios/Funds in
| |
| | | | | Term of Office/
| | Fund Complex**
| |
| | | Position(s) with the
| | Length of
| | Overseen by
| |
| Name, Address and Year of Birth | | Company and Trust | | Time Served | | Trustee/Director | |
| |
Murray Stahl*
Year Born: 1953
c/o Kinetics Asset Management, Inc.
555 Taxter Road
Suite 175
Elmsford, New York, 10523
| | Director/Trustee
and Secretary | | Indefinite/
Since 2000 | | | 19 | |
Peter B. Doyle*
Year Born: 1962
c/o Kinetics Asset Management, Inc.
555 Taxter Road
Suite 175
Elmsford, New York, 10523
| | Director/Trustee,
President and
Chairman of the
Board | | Indefinite/
Since 2002 | | | 19 | |
Leonid Polyakov*
Year Born: 1959
c/o Kinetics Asset Management, Inc.
555 Taxter Road
Suite 175
Elmsford, New York, 10523 | | Director/Trustee
and Treasurer | | Indefinite/
Since 2002 | | | 19 | |
| |
| * | 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. |
190
| | | | | |
| | | Principal Occupation During the Past Five Years | | Other Directorships Held by Trustee/Director |
|
| | | Chairman, The FRMO Corp. (2001 to Present) (provides consulting services to private investment funds and research services with respect to marketable securities); Chairman, Horizon Asset Management, an investment adviser (1994 to Present); Director of Research, Kinetics Asset Management and Kinetics Mutual Funds, Inc. (2002 to Present). | | Chairman of Horizon Asset Management; Chairman of FRMO Corporation. |
| | | President, Kinetics Asset Management, Inc. (2002 to Present); Director, Kinetics Advisers, LLC (2000 to Present); Director and Officer, Horizon Asset Management, Inc. (1994 to Present); Chief Investment Strategist, Kinetics Asset Management and Kinetics Mutual Funds, Inc. (1998 to Present). | | Director, The Kinetics Funds (a private investment company); Director and Officer of FRMO Corporation. |
| | | CFO, Kinetics Asset Management, Inc. (2000 to Present); President, Kinetics Funds Distributor, Inc. (2002 to Present); Director, Kinetics Advisers, LLC (2000 to Present); formerly CFO, KBD Securities, LLC (2000 to Present). | | Director, The Kinetics Funds (a private investment company). |
| |
| ** | The term “fund complex” refers to the Company and the Trust, which hold themselves out as related for investment purposes. |
191
KINETICS MUTUAL FUNDS, INC. & KINETICS PORTFOLIOS TRUST
Privacy Policy
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.
192
Kinetics Mutual
Funds, Inc.
615 East Michigan Street
Milwaukee, WI 53202
INVESTMENT ADVISER AND
SHAREHOLDER SERVICING AGENT
Kinetics Asset Management, Inc.
555 Taxter Road
Suite 175
Elmsford, NY 10523
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Tait, Weller & Baker LLP
1818 Market Street
Suite 2400
Philadelphia, PA 19103
DISTRIBUTOR
Kinetics Funds Distributor, Inc.
555 Taxter Road
Suite 175
Elmsford, NY 10523
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
December 31, 2009 www.kineticsfunds.com
Annual Report
THE TACTICAL PARADIGM FUND
A Series of Kinetics Mutual Funds, Inc.
KINETICS MUTUAL FUNDS, INC.
Table of Contents
December 31, 2009
2
Dear Fellow Shareholders:
We are pleased to present the Annual Report for the Kinetics Tactical Paradigm Fund for the period ending December 31, 2009. The Fund has not yet commenced operations.
Peter B. Doyle
President
Kinetics Mutual Funds, Inc.
3
Disclosure
This material is intended to be reviewed in conjunction with the current prospectus, which includes all fees and expenses that apply to a continued investment program, as well as information regarding the risk factors, policies and objectives of the Fund. Read it carefully before investing.
Mutual Fund investing involves risk. Principal loss is possible. Internet and biotechnology stocks are subject to a rate of change in technology, obsolescence and competition that is generally higher than that of other industries and have experienced extreme price and volume fluctuations. International investing presents special risks including currency exchange fluctuation, government regulations, and the potential for political and economic instability. Accordingly, the share price for the Fund is expected to be more volatile than that of a U.S.-only fund. Past performance is no guarantee of future performance.
Non-investment grade debt securities, 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 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 Fund. To the extent the Fund segregates assets to cover derivative positions, it may impair its ability to meet current obligations, to honor requests for redemption and to manage the Fund in a manner consistent with its investment objective. Purchasing and writing put and call options and, in particular, writing “uncovered” options are highly specialized activities that entail greater than ordinary investment risk.
As a non-diversified 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 Fund pursues its investment objective by investing generally all of its investable assets in The Paradigm Portfolio, a series of Kinetics Portfolios Trust.
The information concerning the Fund included in the shareholder report contains certain forward-looking statements about the factors that may affect the performance of the Fund in the future. These statements are based on Fund management’s predictions and expectations concerning certain future events and their expected impact on the Fund, 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 Fund. 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.
Distributor: Kinetics Funds Distributor, Inc. is not an affiliate of Kinetics Mutual Funds, Inc. Kinetics Funds Distributor, Inc. is an affiliate of Kinetics Asset Management, Inc., Investment Adviser to Kinetics Mutual Funds, Inc.
For more information, log onto www.kineticsfunds.com.
February 26, 2010 — Kinetics Asset Management, Inc.
4
KINETICS MUTUAL FUNDS, INC. — THE TACTICAL PARADIGM FUND
Statement of Assets & Liabilities
December 31, 2009
| | | | | |
| | | The Tactical | |
| | | Paradigm Fund | |
ASSETS: | | | | |
| Investment in Paradigm Portfolio, at value* | | $ | 80,000 | |
| Receivable for Fund shares sold | | $ | 80,000 | |
| | | | |
| Total assets | | | 160,000 | |
| | | | |
| | | | | |
LIABILITIES: | | | | |
| Payable for Paradigm Portfolio interest purchased | | | 80,000 | |
| | | | |
| Total liabilities | | | 80,000 | |
| | | | |
| Net assets | | $ | 80,000 | |
| | | | |
| | | | | |
NET ASSETS CONSIST OF: | | | | |
| Paid in capital | | $ | 80,000 | |
| | | | |
| Net Assets | | $ | 80,000 | |
| | | | |
| | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS: | | | | |
| Net assets | | $ | 20,000 | |
| Shares outstanding | | | 2,000 | |
| Net asset value per share (offering and redemption price) | | $ | 10.00 | |
| | | | |
| | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A: | | | | |
| Net assets | | $ | 20,000 | |
| Shares outstanding | | | 2,000 | |
| Net asset value per share | | $ | 10.00 | |
| | | | |
| | | | | |
| Offering price per share ($10.00 divided by .9425) | | $ | 10.61 | |
| | | | |
| | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C: | | | | |
| Net assets | | $ | 20,000 | |
| Shares outstanding | | | 2,000 | |
| Net asset value per share (offering and redemption price) | | $ | 10.00 | |
| | | | |
| | | | | |
CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS: | | | | |
| Net assets | | $ | 20,000 | |
| Shares outstanding | | | 2,000 | |
| Net asset value per share (offering and redemption price) | | $ | 10.00 | |
| | | | |
| | |
| * | | The Fund generally invests its assets directly in the Paradigm Portfolio. The financial statements for the Portfolio, along with the portfolio of investments in securities are available for review and should be read in conjunction with the Fund’s financial statements. Please refer to Note 6. |
See Notes to the Financial Statements.
5
Notes to Financial Statements
December 31, 2009
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 Tactical Paradigm Fund (the “Fund”) is one series in the Company. The other series of the Company presently authorized are The Internet Fund, The Global Fund, The Paradigm Fund, The Medical Fund, The Small Cap Opportunities Fund, The Kinetics Government Money Market Fund, The Market Opportunities Fund, The Water Infrastructure Fund and The Multi-Disciplinary Fund. The Fund was seeded on December 31, 2009. Unlike many other investment companies which directly acquire and manage all of their own portfolios of securities, the Fund seeks its investment objective by investing generally all of its investable assets in the Paradigm Portfolio (the “Portfolio”) while also being permitted to hedge market risk with futures, options and short sales of ETFs. The Fund may also purchase or write options in combination with each other to adjust market risk and return of its overall investment positions. Broadmark Asset Management, LLC, serves as the sub-adviser for the hedged portion of the Fund. The Portfolio is a series of Kinetics Portfolios Trust (the “Trust”), a Delaware statutory trust.
The Fund receives a proportionate amount of interest in the Portfolio equal to its relative investment in the Portfolio. Thus, the Fund is allocated its portion of income, gains (losses) and expenses from the Portfolio.
As of December 31, 2009, the Fund had Advisor Class A shares, Advisor Class C, No Load Class and Institutional Class shares. Advisor Class A shares are subject to an annual Rule 12b-1 fee of 0.25% of average daily net assets and a service 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%. Advisor Class C shares are subject to an annual Rule 12b-1 fee of 0.75% of average daily net assets and a service fee of 0.25% of average daily net assets. Advisor Class C shares do not have a sales charge. No Load Class shares are subject to a service fee of 0.25% of average daily net assets but do not have 12b-1 fees or a sales charge. Institutional Class shares are subject to a service fee of 0.20% of average daily net assets but do not have 12b-1 fees or a sales charge.
Each class of shares for the 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 sales charge on the Advisor Class A, the service 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 the 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 investment are allocated to each class based on its relative net assets.
2. Significant Accounting Policies
Security Valuation
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 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. Purchased non-exchange traded options, futures, 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 mean of the most recent bid and asked prices. Exchange traded options are valued at the last reported sale price on an exchange on which the option is traded. If no sales are reported on a particular day, the mean between the highest bid and lowest asked quotations at the close of the exchanges will be used. Fixed-income securities (other than obligations having a maturity of 60 days or less) are normally valued on the basis of quotes obtained from pricing services, which take into account appropriate factors such as institutional-sized trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data.
Other assets and securities for which no quotations are readily available (including restricted securities) are valued in good faith at fair value using methods determined by the Board of Trustees of the Portfolio or the Board of Directors of the Fund, as applicable.
6
Repurchase Agreements
The Portfolio and the Fund 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 and the Company’s policy that the Portfolio/Fund receive, as collateral, securities whose market value, including accrued interest, at all times will be at least equal to 100% of the amount invested by the Portfolio/Fund in each repurchase agreement. If the seller defaults, and the value of the collateral declines, realization of the collateral by the Portfolio/Fund may be delayed or limited.
Written Option Accounting
The Portfolio/Fund may write (sell) call or put options for trading or hedging purposes. When the Portfolio/Fund writes an option, an amount equal to the premium received by the Portfolio/Fund 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 Portfolio/Fund 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 Portfolio/Fund enters into a closing purchase transaction, the Portfolio/Fund 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 Portfolio/Fund realizes a gain or loss from the sale of the security (or closing of the short sale). As collateral for uncovered written options, the Portfolio/Fund is required under the 1940 Act to maintain assets consisting of cash, cash equivalents or 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 Portfolio/Fund are maintained in U.S. dollars. For the Portfolio/Fund, foreign currency transactions are translated into U.S. dollars on the following basis: (i) market values of investment securities and 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 Portfolio/Fund 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 period. However, for federal income tax purposes, the Portfolio/Fund 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 Portfolio/Fund may invest in restricted securities. These securities are valued by the Portfolio/Fund after giving due consideration to pertinent factors including recent private sales, market conditions and the issuer’s financial performance. The Portfolio/Fund has no right to require registration of unregistered securities. 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 Portfolio/Fund has valued the investment.
When-Issued Securities
The Portfolio/Fund 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 Portfolio/Fund records purchases of when-issued securities and reflects the values of such securities in determining net asset value in the same manner as other securities. The Portfolio/Fund maintains 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
The 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 33 1/3% of the total assets of the Portfolio (including any collateral posted) or 50% of the total assets of the Portfolio (excluding any collateral posted). Securities lending and
7
repurchase transactions will be fully collateralized at all times with cash and/or short-term debt obligations. The Portfolio receives interest on the collateral received as well as a fee for the securities loaned.
Expense Allocation
Common expenses incurred by the Company are allocated among the series (i) based upon relative average net assets, (ii) as incurred on a specific identification basis, or (iii) equally among the series, depending on the nature of the expenditure.
The Fund records its proportionate share of the Portfolio’s expenses on a daily basis. In addition, the Fund accrues its own separate expenses. Any cap on expenses includes Fund-specific expenses as well as the expenses allocated from the Portfolio.
Federal Income Taxes
The Portfolio will be treated as a partnership for federal income tax purposes. As such, each investor in the Portfolio will be subject to taxation on its share of the Portfolio’s ordinary income and capital gains. It is intended that the Portfolio’s assets will be managed so an investor in the Portfolio can satisfy the requirements of subchapter M of the Internal Revenue Code.
It is the Fund’s policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and the Fund 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 Fund 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.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 and interest income is recognized on the accrual basis. Other 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 Company has entered into an Investment Advisory Agreement (the “Agreement”) with Kinetics Asset Management, Inc. (the “Adviser”), with whom certain officers and directors of the Company are affiliated, to furnish investment advisory services to the Fund. Under the terms of the Agreement, the Fund compensates the Adviser for its management services at the annual rate of 0.65% of each the Fund’s average daily net assets. The Adviser has voluntarily agreed to waive a portion of its advisory fee and/or reimburse certain operating expenses as deemed appropriate. The Adviser may discontinue the voluntary waiver/reimbursement at any time; these wavers/reimbursements are not subject to recapture.
Pursuant to a sub-advisory agreement, the sub-adviser to the Portfolio, Broadmark Asset Management LLC, will received compensation from the Adviser at the annual rate of 0.65% of the daily net assets of the Fund.
The Adviser receives a shareholder servicing fee from the No Load Class, Class A and Class C shares of the Fund pursuant to a Shareholder Servicing Agreement in the amount equal to 0.25% of the Fund’s average daily net assets attributable to No Load Class, Class A and 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 the Fund’s average daily net assets attributable to Institutional Class shares. At this time, the Investment Adviser has contractually agreed to waive and/or reimburse the portion of the Institutional Class
8
shareholder servicing fee in excess of 0.05% of the Fund’s average daily net assets attributable to Institutional Class shares until at least May 1, 2011. 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 Fund.
The Company, on behalf of the Fund, has adopted two Retail Distribution Plans pursuant to Rule 12b-1 under the 1940 Act (the “12b-1 Plans”). One Plan is for Advisor Class A shares, while the other Plan is for Advisor Class C shares. Under the first Plan, 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 Plan. During the year ended December 31, 2009, payments under the 12b-1 Plan for the Advisor Class A shares of the Fund were limited to 0.25% of the average daily net asset value of such shares of the Fund. Under the second Plan, Advisor Class C shares pay an annual rate of 0.75% of the average daily net asset value of such shares.
Kinetics Funds Distributor, Inc. (the “Distributor”) acts as the Fund’s principal underwriter in a continuous public offering of the Fund’s shares. The Distributor is an affiliate of the Adviser.
4. Subsequent Event
In preparing these financial statements, management has evaluated Fund related events and transactions for potential recognition or disclosure through February 26, 2010, the date the financial statements were issued. There were no events or translations that occurred during the period that materially impacted the amounts or disclosures in the Fund’s financial statements.
5. Information about Proxy Voting (Unaudited)
Information regarding how Kinetics Mutual Funds, Inc. votes proxies relating to portfolio securities is available without charge, upon request by calling toll-free at 1-800-930-3828 or by accessing the Fund’s website at www.kineticsfunds.com and by accessing the SEC’s website at www.sec.gov. Information regarding how the Fund 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.
6. Information about the Paradigm Portfolio (Unaudited)
The Portfolio’s financial statements and schedule of portfolio holdings can be found by accessing the Portfolio’s website at www.kineticsfunds.com and by accessing the SEC’s website at www.sec.gov.
7. Information about the Portfolio Holdings (Unaudited)
The Fund files its complete schedule of portfolio holdings for its first and third fiscal quarters with the SEC on Form N-Q. The Fund’s’ Form N-Q will be available without charge, upon request, by calling toll-free at 1-800-930-3828. Furthermore, you will be able to 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.
8. Approval of the Investment Advisory and Sub-Advisory Agreements for the Tactical Paradigm Fund by Directors of Kinetics Mutual Funds, Inc. (Unaudited)
At a meeting of the Board of Directors of the Company held on December 18, 2009, the Board, including all of the Directors who are not interested persons under the 1940 Act (the “Independent Directors”), approved the investment advisory agreement with the Adviser and the sub-advisory agreement with Broadmark Asset Management, LLC (the “Sub-Adviser”) for the Tactical Paradigm Fund (the “Agreements”). In connection with the Directors’ consideration of the Agreements, the Directors received and reviewed written materials and oral presentations at the meeting of the Board of Directors held on December 18, 2009.
In reaching a decision to approve the Agreements, the Board of Directors, including all of the Independent Directors, considered, among other things, (1) the nature, extent and quality of the services to be provided by the Adviser and Sub-Adviser; (2) the contractual and actual compensation to be paid under the Agreements as compared to the compensation paid to the Fund’s Lipper Inc. (“Lipper”) peer group; (3) the advisory fees and services to be provided to ensure that the fees are based on services provided that are in addition to, rather than duplicative of, services provided pursuant to the Adviser’s advisory agreement with the Paradigm Portfolio; (4) the expected expense ratio of the Fund, with expense waivers, as compared to expense ratios for relevant Lipper peer group; (5) the
9
experience and qualifications of the Adviser’s and Sub-Adviser’s personnel and the Adviser’s and Sub-Adviser’s portfolio management capabilities and investment methodologies; (6) the extent to which economies of scale are relevant given the Fund’s asset growth potential; (7) the financial condition of the Adviser and Sub-Adviser; (8) the cost of services to be provided by the Adviser and Sub-Adviser and the Adviser’s and Sub-Adviser’s expected profitability; (9) the “fall-out” benefits to the Adviser, Sub-Adviser and their affiliates from the relationship with the Fund; (10) the Adviser’s and Sub-Adviser’s operations, compliance programs and policies with respect to the Code of Ethics; and (11) that the Fund is designed for long-term investors. The Lipper peer group information was provided by U.S. Bancorp Fund Services, LLC, the Company’s administrator.
The Board of Directors, including all of the Independent Directors, concluded that: they were satisfied with the quality of services to be provided by the Adviser and Sub-Adviser in advising the Fund; the compensation to be paid to the Adviser and Sub-Adviser was fair and reasonable; the profits expected to be earned by the Adviser and Sub-Adviser were reasonable in light of the nature, extent and quality of the services provided to the Fund; and that the Tactical Paradigm Fund is not expected to become large enough to attain significant economies of scale.
Based on the factors considered, the Board of Directors, including a majority of the Independent Directors, concluded that it was appropriate to approve each of the Agreements.
10
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders of and Board of Directors
The Tactical Paradigm Fund
We have audited the accompanying statement of assets and liabilities of The Tactical Paradigm Fund, a series of shares of the Kinetics Mutual Funds, Inc., as of December 31, 2009. This financial statement is the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit 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 are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit 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 Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in all material respects, the financial position of The Tactical Paradigm Fund as of December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.
TAIT, WELLER & BAKER LLP
Philadelphia, Pennsylvania
February 26, 2010
11
Management of the Fund and the Portfolio
The management and affairs of the Fund and the Portfolio 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 Fund’s shareholders and are governed by the laws of the State of Maryland in this regard. The Trustees are fiduciaries for the Portfolio’s shareholders and are governed by the laws of the State of Delaware in this regard.
Each Board establishes policies for the operation of the Fund and the Portfolio and appoints the officers who conduct the daily business of the Fund and the Portfolio. 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 Fund’s 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
| | | | | | | | | | | | | |
| | | | | | | Number of | | | | |
| | | | | | | Portfolios/Funds in | | | | |
| | | | | Term of Office/ | | Fund Complex** | | Principal Occupation | | Principal Occupation |
| | | Position(s) with the | | Length of | | Overseen by | | During the Past Five | | During the Past Five |
| Name, Address and Year of Birth | | Company and Trust | | Time Served | | Trustee/Director | | Years | | Years |
Steven T. Russell
Year Born: 1964
c/o Kinetics Asset Management, Inc.
555 Taxter Road
Suite 175
Elmsford, New York, 10523 | | Independent
Director/Trustee | | Indefinite/
Since 2000 | | | 19 | | | Attorney and Counselor at Law, Partner, Law Firm of Russell and Fig (since September 2002); Steven Russell Law Firm (1994 to 2002); Professor of Business Law, Suffolk County Community College (1997 to Present) | | N/A |
| | | | | | | | | | | | | |
Douglas Cohen, C.P.A
Year Born: 1961
c/o Kinetics Asset Management, Inc.
555 Taxter Road
Suite 175
Elmsford, New York, 10523 | | Independent
Director/Trustee | | Indefinite/
Since 2000 | | | 19 | | | Sunrise Credit Services, Inc. (2005 to Present); Wagner & Zwerman, LLP Certified Public Accountant (1997 to 2005). | | Director, The Kinetics Funds (a private investment company). |
| | | | | | | | | | | | | |
William J. Graham
Year Born: 1962
c/o Kinetics Asset Management, Inc.
555 Taxter Road
Suite 175
Elmsford, New York, 10523 | | Independent
Director/Trustee | | Indefinite/
Since 2000 | | | 19 | | | Attorney, William J. Graham, PC (2001 to Present); Bracken & Margolin, LLP (1997 to 2001). | | N/A |
12
Independent Directors/Trustees (continued)
| | | | | | | | | | | | | |
| | | | | | | Number of | | | | |
| | | | | | | Portfolios/Funds in | | | | |
| | | | | Term of Office/ | | Fund Complex** | | Principal Occupation | | Principal Occupation |
| | | Position(s) with the | | Length of | | Overseen by | | During the Past Five | | During the Past Five |
| Name, Address and Year of Birth | | Company and Trust | | Time Served | | Trustee/Director | | Years | | Years |
Joseph E. Breslin
Year Born: 1953
c/o Kinetics Asset Management, Inc.
555 Taxter Road
Suite 175
Elmsford, New York, 10523 | | Independent
Director/Trustee | | Indefinite/
Since 2000 | | | 19 | | | Chief Operating Officer, Central Park Credit Holdings, (2007- 2009) Chief Operating Officer, Aladdin Capital Management (2005-2007); Independent Consultant Whitehall Asset Management (May 2003 to 2004); Independent Consultant, Independence Community Bank (2003-2005). | | Trustee, AIP Alternative Strategies Funds (2 portfolios); Trustee, Underlying Funds Trust (4 portfolios). |
| | | | | | | | | | | | | |
James M. Breen
Year Born: 1959
c/o Kinetics Asset Management, Inc.
555 Taxter Road
Suite 175
Elmsford, New York, 10523 | | Independent
Director/Trustee | | Indefinite/
Since 2008 | | | 19 | | | Assistant Attaché, Immigration & Customs Enforcement, Pretoria, South Africa (2008 to Present); Immigration & Customs Enforcement Representative, Athens, Greece (2006 to 2008); Immigration & Customs Enforcement, Senior Special Agent, Miami, FL (2000 to 2008). | | N/A |
13
Interested Directors/Trustees and Officers
| | | | | | | | | | | | | |
| | | | | | | Number of | | | | |
| | | | | | | Portfolios/Funds in | | | | |
| | | | | Term of Office/ | | Fund Complex** | | Principal Occupation | | Other Directorships |
| | | Position(s) with the | | Length of | | Overseen by | | During the Past Five | | Held by |
| Name, Address and Year of Birth | | Company and Trust | | Time Served | | Trustee/Director | | Years | | Trustee/Director |
Murray Stahl*
Year Born: 1953
c/o Kinetics Asset Management, Inc.
555 Taxter Road
Suite 175
Elmsford, New York, 10523 | | Director/Trustee and Secretary | | Indefinite/
Since 2000 | | | 19 | | | Chairman, The FRMO Corp. (2001 to Present) (provides consulting services to private investment funds and research services with respect to marketable securities); Chairman, Horizon Asset Management, an investment adviser (1994 to Present); Director of Research, Kinetics Asset Management and Kinetics Mutual Funds, Inc. (2002 to Present). | | Chairman of Horizon Asset Management; Chairman of FRMO Corporation. |
| | | | | | | | | | | | | |
Peter B. Doyle*
Year Born: 1962
c/o Kinetics Asset Management, Inc.
555 Taxter Road
Suite 175
Elmsford, New York, 10523 | | Director/Trustee, President and Chairman of the Board | | Indefinite/
Since 2002 | | | 19 | | | President, Kinetics Asset Management, Inc. (2002 to Present); Director, Kinetics Advisers, LLC (2000 to Present); Director and Officer, Horizon Asset Management, Inc. (1994 to Present); Chief Investment Strategist, Kinetics Asset Management and Kinetics Mutual Funds, Inc. (1998 to Present) | | Director, The Kinetics Funds (a private investment company); Director and Officer of FRMO Corporation. |
14
Interested Directors/Trustees and Officers (continued)
| | | | | | | | | | | | | |
| | | | | | | Number of | | | | |
| | | | | | | Portfolios/Funds in | | | | |
| | | | | Term of Office/ | | Fund Complex** | | Principal Occupation | | Other Directorships |
| | | Position(s) with the | | Length of | | Overseen by | | During the Past Five | | Held by |
| Name, Address and Year of Birth | | Company and Trust | | Time Served | | Trustee/Director | | Years | | Trustee/Director |
Leonid Polyakov*
Year Born: 1959
c/o Kinetics Asset Management, Inc.
555 Taxter Road
Suite 175
Elmsford, New York, 10523 | | Director/Trustee and Treasurer | | Indefinite/
Since 2002 | | | 19 | | | CFO, Kinetics Asset Management, Inc. (2000 to Present); President, Kinetics Funds Distributor, Inc. (2002 to Present); Director, Kinetics Advisers, LLC (2000 to Present); CFO, KBD Securities, LLC (2000 to Present). | | Director, The Kinetics Funds (a private investment company). |
| | |
| * | | 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. |
| |
| ** | | The term “fund complex” refers to the Company and the Trust, which hold themselves out as related for investment purposes. |
15
Privacy Policy
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. |
16
Kinetics Mutual
Funds, Inc.
615 East Michigan Street
Milwaukee, WI 53202
INVESTMENT ADVISER AND
SHAREHOLDER SERVICING AGENT
Kinetics Asset Management, Inc.
555 Taxter Road
Suite 175
Elmsford, NY 10523
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Tait, Weller & Baker LLP
1818 Market Street
Suite 2400
Philadelphia, PA 19103
DISTRIBUTOR
Kinetics Funds Distributor, Inc.
555 Taxter Road
Suite 175
Elmsford, NY 10523
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
17
Item 2. Code of Ethics.
The registrant has adopted a code of ethics (“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 incorporated herein by reference as provided in item 12(a)(1) of this report.
Item 3. Audit Committee Financial Expert.
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.
Item 4. Principal Accountant Fees and Services.
Items 4(a) to 4(d).
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” refers to performing an audit of the registrant’s annual financial statements or services that are normally provided by the principal accountant in connection with statutory and regulatory filings or engagements for those fiscal years. “Audit-related services” refers to the assurance and related services by the principal accountant that are reasonably related to the performance of the audit. “Tax services” refers to services rendered by the principal accountant for tax compliance, tax advice, and tax planning. “Other services” refers to products and services provided by the principal accountant other than audit services, audit-related services and tax services. The following table details the aggregate fees billed for each of the last two fiscal years for audit services, audit-related services, tax fees and other services by the principal accountant.
| | | | | | | | | | | | | | | | | |
| | | FYE 12/31/2009 | | FYE 12/31/2008 | | FYE 12/31/2009 | | FYE 12/31/2008 |
| | | Kinetics Portfolios | | Kinetics Portfolios | | Kinetics Mutual | | Kinetics Mutual |
| | | Trust | | Trust | | Funds | | Funds |
| Audit Fees | | | 76,000 | | | | 76,000 | | | | 76,000 | | | | 76,000 | |
| Audit-Related Fees | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
| Tax Fees | | | 21,500 | | | | 21,500 | | | | 21,500 | | | | 21,500 | |
| All Other Fees | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
Items 4(e) to 4(h).
(e)(1) The audit committee does not have pre-approval policies and procedures. Instead, the audit committee or sub-audit committee approves on a case-by-case basis each audit or non-audit service before the principal accountant is engaged by the registrant to provide such service.
(e)(2) There were no services approved by the audit committee pursuant to paragraph (c)(7)(i)(C) Rule 2-01 of Regulation S-X.
(f) The percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was zero percent (0%).
(g) The aggregate non-audit fees billed by the registrant’s principal accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant was $0 and $0 for Kinetics Mutual Funds, Inc. and Kinetics Portfolios Trust, respectively, for the fiscal year ended December 31, 2008 and $0 and $0 for Kinetics Mutual Funds, Inc. and Kinetics Portfolios Trust, respectively, for the fiscal year ended December 31, 2009.
(h) Not applicable as the response to (g) of this item is none.
Item 5. Audit Committee of Listed Registrants.
Not applicable to registrants who are not listed issuers (as defined in Rule 10A-3 under the Securities Exchange Act of 1934).
Item 6. Schedule of Investments.
The Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable to open-end investment companies.
Item 10. Submission of Matters to a Vote of Security Holders.
Not Applicable.
Item 11. Controls and Procedures.
| (a) | | The Registrant’s President/Chief Executive Officer and Treasurer/Chief Financial Officer have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report, that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended. |
| |
| (b) | | There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
Item 12. Exhibits.
(a) (1) Code of Ethics is filed herewith.
(2) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.
(3) Not applicable to open-end investment companies.
(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.
SIGNATURES
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.
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(Registrant) Kinetics Mutual Funds, Inc. & Kinetics Portfolios Trust
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| By (Signature and Title)* | /s/ Peter B. Doyle | | |
| | Peter B. Doyle, President | | |
| | | | |
Date March 8, 2010
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.
| | | | | |
| | | |
| By (Signature and Title)* | /s/ Peter B. Doyle | | |
| | Peter B. Doyle, President | | |
| | | | |
Date March 8, 2010
| | | | | |
| | | |
| By (Signature and Title)* | /s/ Leonid Polyakov | | |
| | Leonid Polyakov, Treasurer | | |
| | | | |
Date March 8, 2010
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| * | | Print the name and title of each signing officer under his or her signature. |
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