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As filed with the Securities and Exchange Commission on September 4, 2008
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
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 175
Elmsford, NY 10523
(Address of principal executive offices) (Zip code)
Elmsford, NY 10523
(Address of principal executive offices) (Zip code)
U.S. Bancorp Fund Services, LLC
615 E. Michigan Street
Milwaukee, WI 53202
(Name and address of agent for service)
615 E. Michigan Street
Milwaukee, WI 53202
(Name and address of agent for service)
(800) 930-3828
Registrant’s telephone number, including area code
Registrant’s telephone number, including area code
Date of fiscal year end: December 31, 2008
Date of reporting period: June 30, 2008
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Item 1. Report to Stockholders.
| June 30, 2008 www.kineticsfunds.com | ||
| Semi-Annual Report | ||
| 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 | ||
| LOGO Each a series of Kinetics Mutual Funds, Inc. | ||
(Kinetics Mutual Funds, Inc.)
KINETICS MUTUAL FUNDS, INC.
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June 30, 2008
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Dear Fellow Shareholders:
We are pleased to present the Kinetics Mutual Funds’ Semi-Annual Report for the six-month period ended June 30, 2008. On balance, the Kinetics Family of Mutual Funds had disappointing results for the first half of 2008, with declines of 18.85% for The Paradigm Fund, 24.37% for the Small-Cap Opportunities Fund, 28.10% for the Market Opportunities Fund, 19.98% for the Internet Fund, and 23.47% for The Global Fund. Our Medical Fund had a modest decline of 2.88%, the Water Infrastructure Fund declined by only 2.26%, and the Multi-Disciplinary Fund, since its inception on February 11, 2008, declined by 2.90%. This compares with first-half 2008 declines of 11.91% and 13.55% for the S&P 500 Index(l) and the NASDAQ Composite Index(2), respectively.
Over time, we have informed you that our long-term investment results will be driven by the underlying business operations of the companies we own. This is an outgrowth of our low-turnover investment strategy. Based on the first six months of this year, one would think that the operations of our companies suffered greatly. This, to a very large measure, is not the case at all. The upward shift in the equity risk premium cut across virtually all holdings, but it was most dramatic in our financial services and Chinese holdings. We believe our positions in these companies have very little credit risk and are being lumped into a class of investments, unfairly in our opinion, that are having real operational and financial problems. A great many of our companies are reporting earnings in line with our expectations; yet, the stocks are down, in some instances substantially. With the passage of time, we expect our companies to be separated from the troubled ones. At present, we believe our Funds offer significant value for long-term investors.
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.
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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 Fund has produced attractive returns over the last 81/2 years.
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. We view a segment of this Fund’s holdings as publicly traded venture capital and are quite aware that many of these investments will not fulfill their early promise. However, we expect that, over time, some small percentage will develop into excellent investments, allowing the Fund to produce overall attractive, albeit lumpy, returns.
The Global Fund’s mandate was changed in March 2008 to focus on international investments, currently with particular emphasis on China and other Asian markets.
The Market Opportunities Fund focuses on those companies that benefit from increasing transactional volume, 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 Aqua Terra Asset Management, LLC.
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The Multi-Disciplinary Fund is a unique fund that utilizes a two part investment strategy, which includes fixed income securities and a derivative component. The derivative component generally involves selling written equity put options.
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.
| (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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Prior to writing this commentary, we re-read our investment commentary from the 2007 semi-annual report. The paragraph below is worth restating, especially given the turmoil surrounding the capital markets:
“Equities investing, which constitutes deferred consumption, requires patience because stock price movements in the short term, 1 to 2 years, are often random. To allow the business operations of the companies one owns to start generating decent returns requires a 3 to 5 year time horizon, if not longer. Thus, as always, we would counsel any investor with cash needs expected to develop in less than 3 years to invest in more conservative alternatives, such as U.S. Treasuries. The preceding comment is merely the recognition of the nature of stock investing and not a prediction of what is going to unfold in the shorter term. Too frequently, investors experience a poor investment result even when they are with capable managers, primarily because the time horizon of the investor is out of sync with the parameters of stock investing and/or because the individual investor is chasing recent past performance.”
The question that investors in the Kinetics’ Funds (with the exclusion of the Medical and Water Infrastructure Funds) must be asking themselves is this: “Has Kinetics become so wedded to its positions that it cannot admit its mistakes, or has it been rejecting, or, at least heavily discounting, data that would invalidate its views?” In other words, has Kinetics fallen into a malaise such that it is standing by passively, watching as dire events unfold? This particular assessment, perhaps, might seem self-evident given our exposure to financial services stocks and Chinese stocks, which every other holder seems to be reducing. In addition, it is human nature to seek out data that supports one’s views and to disregard that which does not. This mental tendency is well known to us and something we go to great lengths to avoid.
Any success that we have had historically or plan to have in the future is rooted in the facts as we understand them. Investment success is directly correlated to a correct analysis of data, one’s reasoning and temperament. We have no emotional ties to our companies and would sell them if we believed that their business returns were somehow permanently impaired. Further, we never
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would have purchased them if we had not believed that we were receiving value for the prices originally paid.
As a long-term stock investor, one can hope to approach (receive) the actual returns of the businesses themselves, in much the same way one achieves a return from a bond coupon. A stock’s performance inevitability must be linked to the underlying business itself. One does not own a piece of paper, but rather, a fractional interest in a real company. If you purchase at par (100% of face value) 10-year Treasury notes with a 5% coupon and hold them to maturity, your annualized rate of return, over the life of the notes, will be 5%. This is true even if at the end of year three the notes trade at a price of $50. Of course, for that particular year you would have a large negative return. However, your annualized return from year three onward would be vastly higher than your original expected return, but your ultimate annualized return on original investment would be 5%. An investor who purchased the notes at a price of $50 would have a very different return profile in relation to her cost basis, but from that point forward the return to both investors (original and new) would be identical.
Prior to the recent stock market downturn, we believed we owned a collection of companies that would collectively generate a very high rate of return for our investors, with the passage of time. Nothing that has occurred over the last six months has dissuaded us from that view. In fact, based on the logic set forth above, we believe the return profile of our Funds has improved dramatically as a result of the downturn, in much the same way as that of the investor who purchased the notes at a price of $50. This statement, however, does not mean that our Funds cannot go lower from here, but it does mean that we believe our Funds are performing well below their perceived channel rates of return. In order for them to achieve such channel rates of return, their future returns, at some point, must be far higher.
From our perspective, at the exact time when our investors are most concerned they should actually be the most optimistic. If we, in fact, did originally identify excellent businesses, which are now suffering from a temporary collective price decline, investors should be hopeful. This is the reason for our own optimism. With
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few exceptions, we believe our companies have a higher intrinsic worth today than they did at the start of the year.
Even a casual observer of the stock market believes that stock prices, in the short-term, are driven by fear and greed. The current decline in the market stems from the conviction that the economy is going into, or already is in, a severe downturn, principally as a consequence of the “de-leveraging” of the financial services sector, initially stemming from the sub-prime mortgage market and later blossoming into a full blown liquidity crisis. While the Federal Reserve has been accommodating, some believe an earnings collapse will occur sometime in the future, making stocks a bad bet despite the absolute and relative low interest rate environment.
We are of the belief that the system is not de-leveraging. If you visit the website of the Federal Reserve at www.federalreserve.gov, you can verify this conclusion for yourself. Under the section All Statistical Releases, you can find the weekly collective balance sheet of U.S. commercial banks. The numbers do not reveal a de-leveraging, or a meaningful diminution of credit. The net worth of the banks is fairly robust, despite the massive write-downs taken. This information can explain why Ben Bernanke, on June 10th, stated “The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.” We cannot confirm, based on Federal Reserve statistics, a massive de-leveraging. Thus, we do not believe that the primary fear driving the market has any basis in fact. Our financial system cannot function in its current form without leverage, and it appears the Federal Reserve will take the necessary steps to maintain the availability of such leverage. The prospective return profile for the financial intermediaries (which assume real capital risk) would not support a system that hopes to operate in today’s environment without leverage. Furthermore, we believe the de-leveraging of a Lehman Brothers does not mean a de-leveraging of the entire system.
A second website that should be visited is that of MBIA.com. Recently, MBIA’s Chief Executive Officer, Jay Brown, authored several shareholder letters. MBIA resides at the eye of the credit crisis storm and has been targeted by prominent short-sellers as being effectively bankrupt. Mr. Brown displays little fear for the
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financial health of his company and expresses a good deal of derision for the rating agencies. One cannot read these commentaries and remain neutral regarding the prospects for MBIA. Mr. Brown’s view is in accord with that of the famed value investor, Marty Whitman. We have never seen a company where two more extreme views exist among well-regarded investors (short-sellers vs. famed value investors). This situation cannot go on indefinitely, as certain MBIA-related events are expected to occur, which will reveal which side has done the proper analysis. While both sides can ultimately make money, only one side is going to have an accurate perception of the company’s financial health.
Another illuminating website to visit is bankstocks.com. This website is the creation of Tom Brown and Vernon W. Hill. Mr. Brown is a highly regarded financial analyst who is known for his independent views. He has written a number of articles regarding the financial crisis that seem to be rooted in factual data, as opposed to mere opinion. Several recently published articles advance the view (a distinctly minority view) that the sub-prime loss estimates are too pessimistic. According to data analyzed by Mr. Brown, the problems in sub-prime mortgages peaked in November of 2007. This view is consistent with that of my colleague Murray Stahl, as purported in the early part of this year, to the effect that others were making unrealistically draconian assumptions.
The default rate, by definition, must decline as the shutdown of the sub-prime market guarantees such a result. The problem vintages are becoming seasoned, and we believe the losses have almost certainly been overstated, leaving aside the confusion over mark-to-market accounting, which would require, as shown in our Treasury Notes example above, a write-down of 50% of our equity investment, despite the fact that we know that we will receive our entire principal back.
We have listened to the views of a great number of “financial experts,” and based on available data, we cannot confirm the validity of their extremely negative views. That is not to say that the housing crisis, the liquidity crisis and inflationary pressures have not had their effect on the health of the economy. However, an objective analysis of these conditions does not support the type
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of sell-off that has occurred for many of our companies. The more interesting question investors should be asking is: “Why has economic activity held up so well nine months into this crisis?” The answer, in our opinion, is that there are an abundance of positive factors (most notably the large capital expenditures going on in the utility sector and exports) that are having a very salutary effect, but which never get written about in the financial press. A cursory reading of headlines would cause one to expect to see massive bread lines in Manhattan, one of the world’s financial capitals.
Should investor sentiment change, which we expect to occur, our Funds are poised for an impressive rebound. The last time we saw such massive dislocation was in the utility sector at the time of the collapse of Enron in 2001. Most analysts and investors had extremely negative views, unsupported by the underlying facts, which created tremendous opportunity. Companies like Williams Companies rebounded from a price of under a $1 a share to over $35 today. For us, the price of admission for excellent long term results is heightened volatility risk. This risk, while perhaps psychologically and emotionally unpleasant for most, is not synonymous with the permanent erosion of capital. Today’s conditions are, in our opinion, an investor’s ideal scenario.
We thank you for your confidence and look forward to more prosperous times.
Peter B. Doyle
Chief Investment Strategist
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Disclosure
This material is intended to be reviewed in conjunction with a current prospectus, which includes all fees and expenses that apply to a continued investment 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 Paradigm Fund, The Small Cap Opportunities Fund, The Market Opportunities Fund and The Kinetics Government Money Market 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.
As of March 14, 2008, The Global Portfolio, formerly known as the Internet Emerging Growth Portfolio, changed its name and investment mandate.
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
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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 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.
July 1, 2008 — Kinetics Asset Management, Inc.
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Expense Example
June 30, 2008 (Unaudited)
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 January 1, 2008 and held for the entire period from January 1, 2008 to June 30, 2008.
Actual Expenses
The first two lines of each of the accompanying tables provide 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. Each Feeder Fund records its proportionate share of the Master Portfolio’s expenses 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 certain redemption or exchange of Fund shares held for less than thirty days after purchase. 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.
You may use the information provided in the second 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
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value divided by $1,000 = 8.6), then multiply the result by the number in the second 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 third and fourth lines of each of the accompanying tables below provide 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 you 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 your 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 you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
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Expense Example
| Beginning | Ending | Annualized | Expenses Paid | |||||||||||||
| Account | Account | Expense | During Period* | |||||||||||||
| Value (1/1/08) | Value (6/30/08) | Ratio | (1/1/08 to 6/30/08) | |||||||||||||
The Internet Fund | ||||||||||||||||
| No Load Class Actual — before expense reimbursement | $ | 1,000.00 | $ | 800.20 | 1.97 | % | $ | 8.82 | ||||||||
| No Load Class Actual — after expense reimbursement | $ | 1,000.00 | $ | 800.20 | 1.90 | % | $ | 8.50 | ||||||||
| No Load Class Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,015.07 | 1.97 | % | $ | 9.87 | ||||||||
| No Load Class Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,015.42 | 1.90 | % | $ | 9.52 | ||||||||
| Advisor Class A Actual — before expense reimbursement | $ | 1,000.00 | $ | 798.90 | 2.22 | % | $ | 9.93 | ||||||||
| Advisor Class A Actual — after expense reimbursement | $ | 1,000.00 | $ | 798.90 | 2.15 | % | $ | 9.62 | ||||||||
| Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,013.82 | 2.22 | % | $ | 11.12 | ||||||||
| Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,014.17 | 2.15 | % | $ | 10.77 | ||||||||
| Advisor Class C Actual — before expense reimbursement | $ | 1,000.00 | $ | 797.20 | 2.72 | % | $ | 12.15 | ||||||||
| Advisor Class C Actual — after expense reimbursement | $ | 1,000.00 | $ | 797.20 | 2.65 | % | $ | 11.84 | ||||||||
| Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,021.74 | 2.72 | % | $ | 13.67 | ||||||||
| Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,011.69 | 2.65 | % | $ | 13.25 | ||||||||
The Global Fund | ||||||||||||||||
| No Load Class Actual — before expense reimbursement | $ | 1,000.00 | $ | 765.30 | 5.47 | % | $ | 24.01 | ||||||||
| No Load Class Actual — after expense reimbursement | $ | 1,000.00 | $ | 765.30 | 1.42 | % | $ | 6.23 | ||||||||
| No Load Class Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 997.61 | 5.47 | % | $ | 27.17 | ||||||||
| No Load Class Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,017.80 | 1.42 | % | $ | 7.12 | ||||||||
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| Beginning | Ending | Annualized | Expenses Paid | |||||||||||||
| Account | Account | Expense | During Period* | |||||||||||||
| Value (1/1/08) | Value (6/30/08) | Ratio | (1/1/08 to 6/30/08) | |||||||||||||
| Advisor Class A Actual — before expense reimbursement ** | $ | 1,000.00 | $ | 822.40 | 12.59 | % | $ | 13.16 | ||||||||
| Advisor Class A Actual — after expense reimbursement** | $ | 1,000.00 | $ | 822.40 | 1.64 | % | $ | 1.71 | ||||||||
| Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 943.13 | 12.59 | % | $ | 60.83 | ||||||||
| Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 997.58 | 1.64 | % | $ | 8.15 | ||||||||
| Advisor Class C Actual — before expense reimbursement** | $ | 1,000.00 | $ | 822.40 | 13.09 | % | $ | 13.69 | ||||||||
| Advisor Class C Actual — after expense reimbursement** | $ | 1,000.00 | $ | 822.40 | 2.14 | % | $ | 2.24 | ||||||||
| Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 940.65 | 13.09 | % | $ | 63.16 | ||||||||
| Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 995.10 | 2.14 | % | $ | 10.62 | ||||||||
The Paradigm Fund | ||||||||||||||||
| No Load Class Actual — before expense reimbursement | $ | 1,000.00 | $ | 811.50 | 1.69 | % | $ | 7.61 | ||||||||
| No Load Class Actual — after expense reimbursement | $ | 1,000.00 | $ | 811.50 | 1.67 | % | $ | 7.52 | ||||||||
| No Load Class Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,016.46 | 1.69 | % | $ | 8.47 | ||||||||
| No Load Class Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,016.56 | 1.67 | % | $ | 8.37 | ||||||||
| Advisor Class A Actual — before expense reimbursement | $ | 1,000.00 | $ | 810.60 | 1.94 | % | $ | 8.73 | ||||||||
| Advisor Class A Actual — after expense reimbursement | $ | 1,000.00 | $ | 810.60 | 1.92 | % | $ | 8.64 | ||||||||
| Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,015.22 | 1.94 | % | $ | 9.72 | ||||||||
| Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,015.32 | 1.92 | % | $ | 9.62 | ||||||||
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| Beginning | Ending | Annualized | Expenses Paid | |||||||||||||
| Account | Account | Expense | During Period* | |||||||||||||
| Value (1/1/08) | Value (6/30/08) | Ratio | (1/1/08 to 6/30/08) | |||||||||||||
| Advisor Class C Actual — before expense reimbursement | $ | 1,000.00 | $ | 808.70 | 2.44 | % | $ | 10.97 | ||||||||
| Advisor Class C Actual — after expense reimbursement | $ | 1,000.00 | $ | 808.70 | 2.42 | % | $ | 10.88 | ||||||||
| Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,012.73 | 2.44 | % | $ | 12.21 | ||||||||
| Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,012.83 | 2.42 | % | $ | 12.11 | ||||||||
| Institutional Class Actual — before expense reimbursement | $ | 1,000.00 | $ | 812.40 | 1.64 | % | $ | 7.39 | ||||||||
| Institutional Class Actual — after expense reimbursement | $ | 1,000.00 | $ | 812.40 | 1.47 | % | $ | 6.62 | ||||||||
| Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,016.71 | 1.64 | % | $ | 8.22 | ||||||||
| Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,017.55 | 1.47 | % | $ | 7.37 | ||||||||
The Medical Fund | ||||||||||||||||
| No Load Class Actual — before expense reimbursement | $ | 1,000.00 | $ | 971.20 | 2.31 | % | $ | 11.32 | ||||||||
| No Load Class Actual — after expense reimbursement | $ | 1,000.00 | $ | 971.20 | 1.42 | % | $ | 6.96 | ||||||||
| No Load Class Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,013.38 | 2.31 | % | $ | 11.56 | ||||||||
| No Load Class Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,017.80 | 1.42 | % | $ | 7.12 | ||||||||
| Advisor Class A Actual — before expense reimbursement | $ | 1,000.00 | $ | 970.10 | 2.56 | % | $ | 12.54 | ||||||||
| Advisor Class A Actual — after expense reimbursement | $ | 1,000.00 | $ | 970.10 | 1.67 | % | $ | 8.18 | ||||||||
| Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,012.13 | 2.56 | % | $ | 12.81 | ||||||||
| Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,016.56 | 1.67 | % | $ | 8.37 | ||||||||
16
Table of Contents
| Beginning | Ending | Annualized | Expenses Paid | |||||||||||||
| Account | Account | Expense | During Period* | |||||||||||||
| Value (1/1/08) | Value (6/30/08) | Ratio | (1/1/08 to 6/30/08) | |||||||||||||
| Advisor Class C Actual — before expense reimbursement | $ | 1,000.00 | $ | 967.90 | 3.06 | % | $ | 14.97 | ||||||||
| Advisor Class C Actual — after expense reimbursement | $ | 1,000.00 | $ | 967.90 | 2.17 | % | $ | 10.62 | ||||||||
| Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,021.35 | 3.06 | % | $ | 15.38 | ||||||||
| Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,022.37 | 2.17 | % | $ | 10.91 | ||||||||
The Small Cap Opportunities Fund | ||||||||||||||||
| No Load Class Actual — before expense reimbursement | $ | 1,000.00 | $ | 756.30 | 1.77 | % | $ | 7.73 | ||||||||
| No Load Class Actual — after expense reimbursement | $ | 1,000.00 | $ | 756.30 | 1.67 | % | $ | 7.29 | ||||||||
| No Load Class Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,016.06 | 1.77 | % | $ | 8.87 | ||||||||
| No Load Class Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,016.56 | 1.67 | % | $ | 8.37 | ||||||||
| Advisor Class A Actual — before expense reimbursement | $ | 1,000.00 | $ | 755.30 | 2.02 | % | $ | 8.82 | ||||||||
| Advisor Class A Actual — after expense reimbursement | $ | 1,000.00 | $ | 755.30 | 1.92 | % | $ | 8.38 | ||||||||
| Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,014.82 | 2.02 | % | $ | 10.12 | ||||||||
| Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,015.32 | 1.92 | % | $ | 9.62 | ||||||||
| Advisor Class C Actual — before expense reimbursement | $ | 1,000.00 | $ | 753.30 | 2.52 | % | $ | 10.99 | ||||||||
| Advisor Class C Actual — after expense reimbursement | $ | 1,000.00 | $ | 753.30 | 2.42 | % | $ | 10.55 | ||||||||
| Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,021.97 | 2.52 | % | $ | 12.67 | ||||||||
| Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,022.09 | 2.42 | % | $ | 12.17 | ||||||||
17
Table of Contents
| Beginning | Ending | Annualized | Expenses Paid | |||||||||||||
| Account | Account | Expense | During Period* | |||||||||||||
| Value (1/1/08) | Value (6/30/08) | Ratio | (1/1/08 to 6/30/08) | |||||||||||||
| Institutional Class Actual — before expense reimbursement | $ | 1,000.00 | $ | 756.90 | 1.72 | % | $ | 7.51 | ||||||||
| Institutional Class Actual — after expense reimbursement | $ | 1,000.00 | $ | 756.90 | 1.47 | % | $ | 6.42 | ||||||||
| Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,016.31 | 1.72 | % | $ | 8.62 | ||||||||
| Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,023.18 | 1.47 | % | $ | 7.39 | ||||||||
The Kinetics Government Money Market Fund | ||||||||||||||||
| No Load Class Actual — before expense reimbursement | $ | 1,000.00 | $ | 1,006.60 | 3.73 | % | $ | 18.61 | ||||||||
| No Load Class Actual — after expense reimbursement | $ | 1,000.00 | $ | 1,006.60 | 0.91 | % | $ | 4.54 | ||||||||
| No Load Class Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,006.32 | 3.73 | % | $ | 18.61 | ||||||||
| No Load Class Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,020.34 | 0.91 | % | $ | 4.57 | ||||||||
The Market Opportunities Fund | ||||||||||||||||
| No Load Class Actual — before expense reimbursement | $ | 1,000.00 | $ | 719.00 | 1.78 | % | $ | 7.61 | ||||||||
| No Load Class Actual — after expense reimbursement | $ | 1,000.00 | $ | 719.00 | 1.67 | % | $ | 7.14 | ||||||||
| No Load Class Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,016.01 | 1.78 | % | $ | 8.92 | ||||||||
| No Load Class Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,016.56 | 1.67 | % | $ | 8.37 | ||||||||
| Advisor Class A Actual — before expense reimbursement | $ | 1,000.00 | $ | 718.10 | 2.03 | % | $ | 8.67 | ||||||||
| Advisor Class A Actual — after expense reimbursement | $ | 1,000.00 | $ | 718.10 | 1.92 | % | $ | 8.20 | ||||||||
| Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,014.77 | 2.03 | % | $ | 10.17 | ||||||||
| Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,015.32 | 1.92 | % | $ | 9.62 | ||||||||
18
Table of Contents
| Beginning | Ending | Annualized | Expenses Paid | |||||||||||||
| Account | Account | Expense | During Period* | |||||||||||||
| Value (1/1/08) | Value (6/30/08) | Ratio | (1/1/08 to 6/30/08) | |||||||||||||
| Advisor Class C Actual — before expense reimbursement | $ | 1,000.00 | $ | 716.40 | 2.53 | % | $ | 10.80 | ||||||||
| Advisor Class C Actual — after expense reimbursement | $ | 1,000.00 | $ | 716.40 | 2.42 | % | $ | 10.33 | ||||||||
| Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,021.96 | 2.53 | % | $ | 12.72 | ||||||||
| Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,022.07 | 2.42 | % | $ | 12.17 | ||||||||
| Institutional Class Actual — before expense reimbursement** | $ | 1,000.00 | $ | 846.10 | 1.77 | % | $ | 1.87 | ||||||||
| Institutional Class Actual — after expense reimbursement** | $ | 1,000.00 | $ | 846.10 | 1.43 | % | $ | 1.51 | ||||||||
| Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 996.94 | 1.77 | % | $ | 8.79 | ||||||||
| Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 998.63 | 1.43 | % | $ | 7.11 | ||||||||
The Water Infrastructure Fund | ||||||||||||||||
| No Load Class Actual — before expense reimbursement | $ | 1,000.00 | $ | 977.40 | 2.22 | % | $ | 10.91 | ||||||||
| No Load Class Actual — after expense reimbursement | $ | 1,000.00 | $ | 977.40 | 1.65 | % | $ | 8.11 | ||||||||
| No Load Class Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,013.82 | 2.22 | % | $ | 11.12 | ||||||||
| No Load Class Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,016.66 | 1.65 | % | $ | 8.27 | ||||||||
| Advisor Class A Actual — before expense reimbursement | $ | 1,000.00 | $ | 975.40 | 2.47 | % | $ | 12.13 | ||||||||
| Advisor Class A Actual — after expense reimbursement | $ | 1,000.00 | $ | 975.40 | 1.90 | % | $ | 9.33 | ||||||||
| Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,012.58 | 2.47 | % | $ | 12.36 | ||||||||
| Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,015.42 | 1.90 | % | $ | 9.52 | ||||||||
19
Table of Contents
| Beginning | Ending | Annualized | Expenses Paid | |||||||||||||
| Account | Account | Expense | During Period* | |||||||||||||
| Value (1/1/08) | Value (6/30/08) | Ratio | (1/1/08 to 6/30/08) | |||||||||||||
| Advisor Class C Actual — before expense reimbursement | $ | 1,000.00 | $ | 973.40 | 2.97 | % | $ | 14.57 | ||||||||
| Advisor Class C Actual — after expense reimbursement | $ | 1,000.00 | $ | 973.40 | 2.40 | % | $ | 11.78 | ||||||||
| Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,010.09 | 2.97 | % | $ | 14.84 | ||||||||
| Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,012.93 | 2.40 | % | $ | 12.01 | ||||||||
| Institutional Class Actual — before expense reimbursement | $ | 1,000.00 | $ | 978.40 | 2.17 | % | $ | 10.67 | ||||||||
| Institutional Class Actual — after expense reimbursement | $ | 1,000.00 | $ | 978.40 | 1.45 | % | $ | 7.13 | ||||||||
| Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 1,014.07 | 2.17 | % | $ | 10.87 | ||||||||
| Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,017.65 | 1.45 | % | $ | 7.27 | ||||||||
The Multi-Disciplinary Fund | ||||||||||||||||
| No Load Class Actual — before expense reimbursement*** | $ | 1,000.00 | $ | 971.00 | 17.67 | % | $ | 66.61 | ||||||||
| No Load Class Actual — after expense reimbursement*** | $ | 1,000.00 | $ | 971.00 | 1.49 | % | $ | 5.62 | ||||||||
| No Load Class Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 931.26 | 17.67 | % | $ | 84.85 | ||||||||
| No Load Class Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,011.72 | 1.49 | % | $ | 7.45 | ||||||||
| Advisor Class A Actual — before expense reimbursement*** | $ | 1,000.00 | $ | 970.00 | 17.92 | % | $ | 67.52 | ||||||||
| Advisor Class A Actual — after expense reimbursement*** | $ | 1,000.00 | $ | 970.00 | 1.74 | % | $ | 6.56 | ||||||||
| Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 930.02 | 17.92 | % | $ | 85.99 | ||||||||
| Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,010.47 | 1.74 | % | $ | 8.70 | ||||||||
20
Table of Contents
| Beginning | Ending | Annualized | Expenses Paid | |||||||||||||
| Account | Account | Expense | During Period* | |||||||||||||
| Value (1/1/08) | Value (6/30/08) | Ratio | (1/1/08 to 6/30/08) | |||||||||||||
| Advisor Class C Actual — before expense reimbursement*** | $ | 1,000.00 | $ | 968.00 | 18.42 | % | $ | 69.33 | ||||||||
| Advisor Class C Actual — after expense reimbursement*** | $ | 1,000.00 | $ | 968.00 | 2.24 | % | $ | 8.43 | ||||||||
| Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 927.53 | 18.42 | % | $ | 88.28 | ||||||||
| Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,007.99 | 2.24 | % | $ | 11.18 | ||||||||
| Institutional Class Actual — before expense reimbursement*** | $ | 1,000.00 | $ | 972.00 | 17.62 | % | $ | 66.46 | ||||||||
| Institutional Class Actual — after expense reimbursement*** | $ | 1,000.00 | $ | 972.00 | 1.29 | % | $ | 4.87 | ||||||||
| Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement | $ | 1,000.00 | $ | 931.51 | 17.62 | % | $ | 84.62 | ||||||||
| Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement | $ | 1,000.00 | $ | 1,012.71 | 1.29 | % | $ | 6.46 | ||||||||
| 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 182/366. |
| ** | Expenses paid 5/19/08-6/30/08 are equal to the Fund’s annualized expense ratio before expense reimbursement, and after expense reimbursement, multiplied by 42/366 (to reflect the inception date to the end of the semi-annual period). |
| *** | Expenses paid 2/11/08-6/30/08 are equal to the Fund’s annualized expense ratio before expense reimbursement and after expense reimbursement, multiplied by 140/366 (to reflect the inception date to the end of the semi-annual period). |
21
Table of Contents
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Assets & Liabilities
June 30, 2008 (Unaudited)
| The Internet | The Global | |||||||
| Fund | Fund | |||||||
ASSETS: | ||||||||
| Investments in the Master Portfolios, at value* | $ | 114,369,069 | $ | 3,016,807 | ||||
| Receivable from Adviser | 11,421 | 39,521 | ||||||
| Receivable for Master Portfolio interest sold | 123,598 | — | ||||||
| Receivable for Fund shares sold | 26,237 | 1,911 | ||||||
| Prepaid expenses and other assets | 22,423 | 34,041 | ||||||
| Total assets | 114,552,748 | 3,092,280 | ||||||
LIABILITIES: | ||||||||
| Payable for Master Portfolio interest purchased | — | 1,911 | ||||||
| Payable to Directors and Officers | 670 | 7 | ||||||
| Payable for Fund shares repurchased | 149,835 | — | ||||||
| Payable for service fees | 24,958 | 672 | ||||||
| Payable for distribution fees | 213 | 6 | ||||||
| Accrued expenses and other liabilities | 74,447 | 9,328 | ||||||
| Total liabilities | 250,123 | 11,924 | ||||||
| Net assets | $ | 114,302,625 | $ | 3,080,356 | ||||
NET ASSETS CONSIST OF: | ||||||||
| Paid in capital | 268,579,570 | 14,458,619 | ||||||
| Accumulated net investment loss | (1,008,320 | ) | (97,941 | ) | ||||
| Accumulated net realized loss on investments, | ||||||||
| options and written option contracts | (178,732,835 | ) | (10,834,001 | ) | ||||
| Net unrealized appreciation (depreciation) on: | ||||||||
| Investments | 25,464,210 | (446,321 | ) | |||||
| Net Assets | $ | 114,302,625 | $ | 3,080,356 | ||||
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS: | ||||||||
| Net assets | $ | 113,719,926 | $ | 3,026,294 | ||||
| Shares outstanding | 3,954,651 | 807,088 | ||||||
| Net asset value per share (offering and redemption price) | $ | 28.76 | $ | 3.75 | ||||
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A: | ||||||||
| Net assets | $ | 463,515 | $ | 45,843 | ||||
| Shares outstanding | 16,267 | 12,219 | ||||||
| Net asset value per share (offering and redemption price) | $ | 28.49 | $ | 3.75 | ||||
| Offering price per share ($28.49 divided by .9425 and $3.75 divided by .9425) | $ | 30.23 | $ | 3.98 | ||||
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C: | ||||||||
| Net assets | $ | 119,184 | $ | 8,219 | ||||
| Shares outstanding | 4,234 | 2,193 | ||||||
| Net asset value per share (offering and redemption price) | $ | 28.15 | $ | 3.75 | ||||
| * | 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.
22
Table of Contents
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Assets & Liabilities
June 30, 2008 (Unaudited)
| The Paradigm | The Medical | |||||||
| Fund | Fund | |||||||
ASSETS: | ||||||||
| Investments in the Master Portfolios, at value* | $ | 3,611,610,941 | $ | 18,045,371 | ||||
| Receivable from Adviser | 357,459 | 13,208 | ||||||
| Receivable for Master Portfolio interest sold | 6,426,797 | — | ||||||
| Receivable for Fund shares sold | 12,223,872 | 90,025 | ||||||
| Prepaid expenses and other assets | 200,841 | 18,036 | ||||||
| Total assets | 3,630,819,910 | 18,166,640 | ||||||
LIABILITIES: | ||||||||
| Payable for Master Portfolio interest purchased | — | 82,456 | ||||||
| Payable to Directors and Officers | 20,215 | 83 | ||||||
| Payable for Fund shares repurchased | 18,650,670 | 7,569 | ||||||
| Payable for service fees | 682,908 | 3,732 | ||||||
| Payable for distribution fees | 330,459 | 437 | ||||||
| Accrued expenses and other liabilities | 619,196 | 14,934 | ||||||
| Total liabilities | 20,303,448 | 109,211 | ||||||
| Net assets | $ | 3,610,516,462 | $ | 18,057,429 | ||||
NET ASSETS CONSIST OF: | ||||||||
| Paid in capital | $ | 3,599,893,313 | $ | 18,056,764 | ||||
| Accumulated net investment gain (loss) | (2,988,597 | ) | 146,615 | |||||
| Accumulated net realized gain (loss) on investments, foreign currency and written option contracts expired or closed | (80,296,674 | ) | 41,562 | |||||
| Net unrealized appreciation (depreciation) on: | ||||||||
| Investments and foreign currency | 93,908,420 | (187,512 | ) | |||||
| Net Assets | $ | 3,610,516,462 | $ | 18,057,429 | ||||
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS: | ||||||||
| Net assets | $ | 2,068,229,293 | $ | 16,203,822 | ||||
| Shares outstanding | 82,219,893 | 841,587 | ||||||
| Net asset value per share (offering and redemption price) | $ | 25.15 | $ | 19.25 | ||||
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A: | ||||||||
| Net assets | $ | 528,582,211 | $ | 1,726,071 | ||||
| Shares outstanding | 21,364,076 | 91,749 | ||||||
| Net asset value per share (offering and redemption price) | $ | 24.74 | $ | 18.81 | ||||
| Offering price per share ($24.74 divided by .9425 and $18.81 divided by .9425) | $ | 26.25 | $ | 19.96 | ||||
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C: | ||||||||
| Net assets | $ | 324,538,529 | $ | 127,536 | ||||
| Shares outstanding | 13,421,761 | 6,813 | ||||||
| Net asset value per share (offering and redemption price) | $ | 24.18 | $ | 18.72 | ||||
CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS: | ||||||||
| Net assets | $ | 689,166,429 | ||||||
| Shares outstanding | 27,385,706 | |||||||
| Net asset value per share (offering and redemption price) | $ | 25.17 | ||||||
| * | 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.
23
Table of Contents
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Assets & Liabilities
June 30, 2008 (Unaudited)
| The Kinetics | ||||||||
| The Small Cap | Government | |||||||
| Opportunities | Money Market | |||||||
| Fund | Fund | |||||||
ASSETS: | ||||||||
| Investments in the Master Portfolios, at value* | $ | 606,372,727 | $ | 2,044,295 | ||||
| Receivable from Adviser | 74,628 | 5,263 | ||||||
| Receivable for Master Portfolio interest sold | 1,865,242 | — | ||||||
| Receivable for Fund shares sold | 601,324 | 192,344 | ||||||
| Prepaid expenses and other assets | 62,223 | 18,634 | ||||||
| Total assets | 608,976,144 | 2,260,536 | ||||||
LIABILITIES: | ||||||||
| Payable for Master Portfolio interest purchased | — | 192,506 | ||||||
| Payable to Directors and Officers | 3,517 | 4 | ||||||
| Payable for Fund shares repurchased | 2,466,566 | — | ||||||
| Payable for service fees | 95,622 | 396 | ||||||
| Payable for distribution fees | 8,830 | — | ||||||
| Accrued expenses and other liabilities | 152,891 | 7,385 | ||||||
| Total liabilities | 2,727,426 | 200,291 | ||||||
| Net assets | $ | 606,248,718 | $ | 2,060,245 | ||||
NET ASSETS CONSIST OF: | ||||||||
| Paid in capital | $ | 646,518,050 | $ | 2,060,245 | ||||
| Accumulated net investment loss | (560,318 | ) | — | |||||
| Accumulated net realized loss on investments and foreign currency | (25,817,178 | ) | — | |||||
| Net unrealized depreciation on: | ||||||||
| Investments and foreign currency | (13,891,836 | ) | — | |||||
| Net Assets | $ | 606,248,718 | $ | 2,060,245 | ||||
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS: | ||||||||
| Net assets | $ | 341,887,048 | $ | 2,060,245 | ||||
| Shares outstanding | 14,164,271 | 2,060,245 | ||||||
| Net asset value per share (offering and redemption price) | $ | 24.14 | $ | 1.00 | ||||
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A: | ||||||||
| Net assets | $ | 26,537,095 | ||||||
| Shares outstanding | 1,110,981 | |||||||
| Net asset value per share | $ | 23.89 | ||||||
| Offering price per share ($23.89 divided by .9425) | $ | 25.35 | ||||||
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C: | ||||||||
| Net assets | $ | 4,917,519 | ||||||
| Shares outstanding | 206,804 | |||||||
| Net asset value per share (offering and redemption price) | $ | 23.78 | ||||||
CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS: | ||||||||
| Net assets | $ | 232,907,056 | ||||||
| Shares outstanding | 9,640,868 | |||||||
| Net asset value per share (offering and redemption price) | $ | 24.16 | ||||||
| * | 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.
24
Table of Contents
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Assets & Liabilities
June 30, 2008 (Unaudited)
| The Market | The Water | |||||||
| Opportunities | Infrastructure | |||||||
| Fund | Fund | |||||||
ASSETS: | ||||||||
| Investments in the Master Portfolios, at value* | $ | 95,475,989 | $ | 25,848,238 | ||||
| Receivable from Adviser | 19,336 | 10,561 | ||||||
| Receivable for Fund shares sold | 881,377 | 580,778 | ||||||
| Prepaid expenses and other assets | 37,045 | 35,413 | ||||||
| Total assets | 96,413,747 | 26,474,990 | ||||||
LIABILITIES: | ||||||||
| Payable for Master Portfolio interest purchased | 352,427 | 580,473 | ||||||
| Payable to Directors and Officers | 521 | 37 | ||||||
| Payable for Fund shares repurchased | 528,949 | 305 | ||||||
| Payable for service fees | 20,754 | 5,086 | ||||||
| Payable for distribution fees | 11,062 | 1,342 | ||||||
| Accrued expenses and other liabilities | 22,439 | 11,240 | ||||||
| Total liabilities | 936,152 | 598,483 | ||||||
| Net assets | $ | 95,477,595 | $ | 25,876,507 | ||||
NET ASSETS CONSIST OF: | ||||||||
| Paid in capital | $ | 114,592,423 | $ | 26,382,715 | ||||
| Accumulated net investment gain | 315,605 | 111,145 | ||||||
| Accumulated net realized gain (loss) on investments and foreign currency | (572,856 | ) | 163,658 | |||||
| Net unrealized depreciation on: | ||||||||
| Investments and foreign currency | (18,857,577 | ) | (781,011 | ) | ||||
| Net Assets | $ | 95,477,595 | $ | 25,876,507 | ||||
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS: | ||||||||
| Net assets | $ | 54,976,653 | $ | 20,229,195 | ||||
| Shares outstanding | 4,742,523 | 2,035,070 | ||||||
| Net asset value per share (offering and redemption price) | $ | 11.59 | $ | 9.94 | ||||
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A: | ||||||||
| Net assets | $ | 34,129,583 | $ | 3,532,297 | ||||
| Shares outstanding | 2,956,576 | 356,060 | ||||||
| Net asset value per share (offering and redemption price) | $ | 11.54 | $ | 9.92 | ||||
| Offering price per share ($11.54 divided by .9425 and $9.92 divided by .9425) | $ | 12.24 | $ | 10.53 | ||||
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C: | ||||||||
| Net assets | $ | 6,362,900 | $ | 1,829,304 | ||||
| Shares outstanding | 554,752 | 185,025 | ||||||
| Net asset value per share (offering and redemption price) | $ | 11.47 | $ | 9.89 | ||||
CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS: | ||||||||
| Net assets | $ | 8,459 | $ | 285,711 | ||||
| Shares outstanding | 729 | 28,704 | ||||||
| Net asset value per share (offering and redemption price) | $ | 11.60 | $ | 9.95 | ||||
| * | 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.
25
Table of Contents
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Assets & Liabilities
June 30, 2008 (Unaudited)
| The Multi- | ||||
| Disciplinary | ||||
| Fund | ||||
ASSETS: | ||||
| Investments in the Master Portfolios, at value* | $ | 386,268 | ||
| Receivable from Adviser | 13,243 | |||
| Prepaid expenses and other assets | 5,861 | |||
| Total assets | 405,372 | |||
LIABILITIES: | ||||
| Payable for service fees | 67 | |||
| Payable for distribution fees | 80 | |||
| Accrued expenses and other liabilities | 7,966 | |||
| Total liabilities | 8,113 | |||
| Net assets | $ | 397,259 | ||
NET ASSETS CONSIST OF: | ||||
| Paid in capital | $ | 409,363 | ||
| Accumulated net investment gain | 158 | |||
| Accumulated net realized gain on investments and written option contracts expired or closed | 3,281 | |||
| Net unrealized depreciation on: | ||||
| Investments | (15,543 | ) | ||
| Net Assets | $ | 397,259 | ||
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS: | ||||
| Net assets | $ | 103,962 | ||
| Shares outstanding | 10,705 | |||
| Net asset value per share (offering and redemption price) | $ | 9.71 | ||
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A: | ||||
| Net assets | $ | 99,263 | ||
| Shares outstanding | 10,230 | |||
| Net asset value per share | $ | 9.70 | ||
| Offering price per share ($9.70 divided by .9425) | $ | 10.29 | ||
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C: | ||||
| Net assets | $ | 96,841 | ||
| Shares outstanding | 10,000 | |||
| Net asset value per share (offering and redemption price) | $ | 9.68 | ||
CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS: | ||||
| Net assets | $ | 97,193 | ||
| Shares outstanding | 10,000 | |||
| Net asset value per share (offering and redemption price) | $ | 9.72 | ||
| * | 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.
26
Table of Contents
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Operations
For the Six Months Ended June 30, 2008 (Unaudited)
| The Internet | The Global | |||||||
| Fund | Fund | |||||||
INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIOS: | ||||||||
| Dividends† | $ | 567,122 | $ | 45,828 | ||||
| Interest | 242,456 | 3,511 | ||||||
| Income from securities lending | 1,006,009 | 1,813 | ||||||
| Expenses only from Master Portfolio | (883,651 | ) | (38,125 | ) | ||||
| Net investment income from Master Portfolio | 931,936 | 13,027 | ||||||
EXPENSES: | ||||||||
| Distribution fees — Advisor Class A | 652 | 4 | ||||||
| Distribution fees — Advisor Class C | 619 | 8 | ||||||
| Shareholder servicing fees and expenses | 330,006 | 10,936 | ||||||
| Reports to shareholders | 31,870 | 22,142 | ||||||
| Administration fees | 16,407 | 381 | ||||||
| Professional fees | 6,988 | 4,162 | ||||||
| Directors’ and Officers’ fees and expenses | 1,462 | 30 | ||||||
| Registration fees | 23,582 | 11,182 | ||||||
| Fund accounting fees | 3,243 | 79 | ||||||
| Other expenses | 1,578 | 114 | ||||||
| Total expenses | 416,407 | 49,038 | ||||||
| Less, expense reimbursement | (43,295 | ) | (64,552 | ) | ||||
| Net expenses | 373,112 | (15,514 | ) | |||||
| Net investment income | 558,824 | 28,541 | ||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS: | ||||||||
| Net realized gain on: | ||||||||
| Investments and foreign currency | 4,285,608 | 220,914 | ||||||
| Net change in unrealized depreciation of: | ||||||||
| Investments and foreign currency | (36,299,364 | ) | (1,140,248 | ) | ||||
| Net loss on investments | (32,013,756 | ) | (919,334 | ) | ||||
| Net decrease in net assets resulting from operations | $ | (31,454,932 | ) | $ | (890,793 | ) | ||
| † Net of Foreign Taxes Withheld of: | $ | 30,606 | $ | 2,262 | ||||
| Advisor Class A and Advisor Class C shares of the Global Fund commenced operations on May 19, 2008. |
See Notes to the Financial Statements.
27
Table of Contents
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Operations
For the Six Months Ended June 30, 2008 (Unaudited)
| The Paradigm | The Medical | |||||||
| Fund | Fund | |||||||
INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIOS: | ||||||||
| Dividends† | $ | 30,072,410 | $ | 227,972 | ||||
| Interest | 8,872,192 | 14,386 | ||||||
| Income from securities lending | 3,289,316 | 24,258 | ||||||
| Expenses allocated from Master Portfolio | (26,837,378 | ) | (122,974 | ) | ||||
| Net investment income from Master Portfolio | 15,396,540 | 143,642 | ||||||
EXPENSES: | ||||||||
| Distribution fees — Advisor Class A | 668,050 | 1,903 | ||||||
| Distribution fees — Advisor Class C | 1,218,759 | 594 | ||||||
| Shareholder servicing fees and expenses | 5,288,599 | 43,485 | ||||||
| Shareholder servicing fees — Institutional Class | 732,549 | — | ||||||
| Reports to shareholders | 348,422 | 3,296 | ||||||
| Administration fees | 502,441 | 2,491 | ||||||
| Professional fees | 101,504 | 4,342 | ||||||
| Directors’ and Officers’ fees and expenses | 47,744 | 182 | ||||||
| Registration fees | 134,470 | 24,996 | ||||||
| Fund accounting fees | 102,297 | 523 | ||||||
| Other expenses | 37,930 | 130 | ||||||
| Total expenses | 9,182,765 | 81,942 | ||||||
| Less, expense waiver for Institutional Class service fees | (549,412 | ) | — | |||||
| Less, expense reimbursement | (357,459 | ) | (77,617 | ) | ||||
| Net expenses | 8,275,894 | 4,325 | ||||||
| Net investment income | 7,120,646 | 139,317 | ||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS: | ||||||||
| Net realized gain (loss) on: | ||||||||
| Investments and foreign currency | (82,308,817 | ) | 236,454 | |||||
| Written option contracts expired or closed | (53,393 | ) | — | |||||
| Net change in unrealized depreciation of: | ||||||||
| Investments and foreign currency | (798,813,170 | ) | (924,045 | ) | ||||
| Written option contracts | (102,907 | ) | — | |||||
| Net loss on investments | (881,278,287 | ) | (687,591 | ) | ||||
| Net decrease in net assets resulting from operations | $ | (874,157,641 | ) | $ | (548,274 | ) | ||
| † Net of Foreign Taxes Withheld of: | $ | 1,798,986 | $ | 12,265 | ||||
See Notes to the Financial Statements.
28
Table of Contents
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Operations
For the Six Months Ended June 30, 2008 (Unaudited)
| The Kinetics | ||||||||
| The Small Cap | Government | |||||||
| Opportunities | Money Market | |||||||
| Fund | Fund | |||||||
INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIOS: | ||||||||
| Dividends† | $ | 4,605,836 | $ | — | ||||
| Interest | 721,745 | 20,482 | ||||||
| Income from securities lending | 2,992,833 | — | ||||||
| Expenses only from Master Portfolio | (5,252,455 | ) | (11,996 | ) | ||||
| Net investment income from Master Portfolio | 3,067,959 | 8,486 | ||||||
EXPENSES: | ||||||||
| Distribution fees — Advisor Class A | 38,031 | — | ||||||
| Distribution fees — Advisor Class C | 17,760 | — | ||||||
| Shareholder servicing fees and expenses | 895,065 | 4,911 | ||||||
| Shareholder servicing fees — Institutional Class | 262,759 | — | ||||||
| Reports to shareholders | 127,146 | 2,310 | ||||||
| Administration fees | 95,733 | 235 | ||||||
| Professional fees | 24,448 | 4,132 | ||||||
| Directors’ and Officers’ fees and expenses | 9,704 | 20 | ||||||
| Registration fees | 57,272 | 11,710 | ||||||
| Fund accounting fees | 18,382 | 48 | ||||||
| Other expenses | 8,914 | 70 | ||||||
| Total expenses | 1,555,214 | 23,436 | ||||||
| Less, expense waiver for Institutional Class service fees | (197,069 | ) | — | |||||
| Less, expense reimbursement | (378,966 | ) | (26,798 | ) | ||||
| Net expenses | 979,179 | (3,362 | ) | |||||
| Net investment income | 2,088,780 | 11,848 | ||||||
REALIZED AND UNREALIZED LOSS ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS: | ||||||||
| Net loss on: | ||||||||
| Investments and foreign currency | (27,406,232 | ) | — | |||||
| Net change in unrealized depreciation of: | ||||||||
| Investments and foreign currency | (212,522,912 | ) | — | |||||
| Net loss on investments | (239,929,144 | ) | — | |||||
| Net increase (decrease) in net assets resulting from operations | $ | (237,840,364 | ) | $ | 11,848 | |||
| † Net of Foreign Taxes Withheld of: | $ | 149,610 | $ | — | ||||
See Notes to the Financial Statements.
29
Table of Contents
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Operations
For the Six Months Ended June 30, 2008 (Unaudited)
| The Market | The Water | |||||||
| Opportunities | Infrastructure | |||||||
| Fund | Fund | |||||||
INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIOS: | ||||||||
| Dividends† | $ | 1,143,232 | $ | 183,081 | ||||
| Interest | 101,493 | 47,178 | ||||||
| Income from securities lending | 111,825 | 6,716 | ||||||
| Expenses only from Master Portfolio | (714,543 | ) | (106,900 | ) | ||||
| Net investment income from Master Portfolio | 642,007 | 130,075 | ||||||
EXPENSES: | ||||||||
| Distribution fees — Advisor Class A | 47,366 | 3,502 | ||||||
| Distribution fees — Advisor Class C | 29,278 | 5,321 | ||||||
| Shareholder servicing fees and expenses | 170,911 | 29,598 | ||||||
| Shareholder servicing fees — Institutional Class | 2 | 162 | ||||||
| Reports to shareholders | 8,096 | 1,632 | ||||||
| Administration fees | 13,181 | 1,588 | ||||||
| Professional fees | 6,524 | 6,088 | ||||||
| Directors’ and Officers’ fees and expenses | 1,326 | 90 | ||||||
| Registration fees | 25,564 | 10,966 | ||||||
| Fund accounting fees | 2,697 | 325 | ||||||
| Other expenses | 828 | 104 | ||||||
| Total expenses | 305,773 | 59,376 | ||||||
| Less, expense waiver for Institutional Class service fees | (1 | ) | (120 | ) | ||||
| Less, expense reimbursement | (57,256 | ) | (40,326 | ) | ||||
| Net expenses | 248,516 | 18,930 | ||||||
| Net investment income | 393,491 | 111,145 | ||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS: | ||||||||
| Net realized gain (loss) on: | ||||||||
| Investments and foreign currency | (430,613 | ) | 163,021 | |||||
| Written option contracts expired or closed | — | 637 | ||||||
| Net change in unrealized depreciation of: | ||||||||
| Investments and foreign currency | (36,155,979 | ) | (813,389 | ) | ||||
| Net loss on investments | (36,586,592 | ) | (649,731 | ) | ||||
| Net decrease in net assets resulting from operations | $ | (36,193,101 | ) | $ | (538,586 | ) | ||
| † Net of Foreign Taxes Withheld of: | $ | 68,625 | $ | 18,348 | ||||
| Institutional Class shares of the Market Opportunities Fund commenced operations on May 19, 2008. |
See Notes to the Financial Statements.
30
Table of Contents
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Operations
For the Period from February 11, 2008ˆ through June 30, 2008 (Unaudited)
| The Multi- | ||||
| Disciplinary | ||||
| Fund | ||||
INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIOS: | ||||
| Interest | $ | 2,784 | ||
| Expenses only from Master Portfolio | (6,949 | ) | ||
| Net investment loss from Master Portfolio | (4,165 | ) | ||
EXPENSES: | ||||
| Distribution fees — Advisor Class A | 97 | |||
| Distribution fees — Advisor Class C | 288 | |||
| Shareholder servicing fees and expenses | 13,699 | |||
| Shareholder servicing fees — Institutional Class | 77 | |||
| Reports to shareholders | 1,372 | |||
| Administration fees | 51 | |||
| Professional fees | 3,502 | |||
| Directors’ and Officers’ fees and expenses | — | |||
| Registration fees | 1,816 | |||
| Fund accounting fees | 8 | |||
| Total expenses | 20,910 | |||
| Less, expense waiver for Institutional Class service fees | (58 | ) | ||
| Less, expense reimbursement | (25,175 | ) | ||
| Net expenses | (4,323 | ) | ||
| Net investment income | 158 | |||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS: | ||||
| Net realized gain on: | ||||
| Investments | 117 | |||
| Written option contracts expired or closed | 3,164 | |||
| Net change in unrealized depreciation of: | ||||
| Written option contracts | (15,543 | ) | ||
| Net loss on investments | (12,262 | ) | ||
| Net decrease in net assets resulting from operations | $ | (12,104 | ) | |
Commencement of operations.
See Notes to the Financial Statements.
31
Table of Contents
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 | |||||||||||||
| Six Months Ended | Year Ended | Six Months Ended | Year Ended | |||||||||||||
| June 30, 2008 | December 31, 2007 | June 30, 2008 | December 31, 2007 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
OPERATIONS: | ||||||||||||||||
| Net investment income | $ | 558,824 | $ | 1,352,765 | $ | 28,541 | $ | 159,497 | ||||||||
| Net realized gain on sale of investments, foreign currency and written option contracts expired or closed | 4,285,608 | 15,698,724 | 220,914 | 294,670 | ||||||||||||
| Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options | (36,299,364 | ) | 16,150,780 | (1,140,248 | ) | (303,988 | ) | |||||||||
| Net increase (decrease) in net assets resulting from operations | (31,454,932 | ) | 33,202,269 | (890,793 | ) | 150,179 | ||||||||||
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS: | ||||||||||||||||
| Net investment income | — | (1,629,950 | ) | — | (188,230 | ) | ||||||||||
| Total distributions | — | (1,629,950 | ) | — | (188,230 | ) | ||||||||||
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A:(1) | ||||||||||||||||
| Net investment income | — | (5,354 | ) | — | N/A | |||||||||||
| Total distributions | — | (5,354 | ) | — | N/A | |||||||||||
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C:(1) | ||||||||||||||||
| Net investment income | — | (2,405 | ) | — | N/A | |||||||||||
| Total distributions | — | (2,405 | ) | — | N/A | |||||||||||
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS: | ||||||||||||||||
| Proceeds from shares sold | 5,576,820 | 30,688,190 | 1,293,589 | 904,772 | ||||||||||||
| Redemption fees | 4,628 | 4,080 | 1 | 879 | ||||||||||||
| Proceeds from shares issued to holders in reinvestment of dividends | — | 1,493,327 | — | 186,476 | ||||||||||||
| Cost of shares redeemed | (27,363,595 | ) | (33,892,666 | ) | (520,133 | ) | (1,906,635 | ) | ||||||||
| Net increase (decrease) in net assets resulting from capital share transactions | (21,782,147 | ) | (1,707,069 | ) | 773,457 | (814,508 | ) | |||||||||
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A:(1) | ||||||||||||||||
| Proceeds from shares sold | 73,123 | 342,660 | 49,194 | N/A | ||||||||||||
| Redemption fees | 20 | — | — | N/A | ||||||||||||
| Proceeds from shares issued to holders in reinvestment of dividends | — | 4,405 | — | N/A | ||||||||||||
| Cost of shares redeemed | (122,882 | ) | (24,946 | ) | — | N/A | ||||||||||
| Net increase (decrease) in net assets resulting from capital share transactions | (49,739 | ) | 322,119 | 49,194 | N/A | |||||||||||
| (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.
32
Table of Contents
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 | |||||||||||||
| Six Months Ended | Year Ended | Six Months Ended | Year Ended | |||||||||||||
| June 30, 2008 | December 31, 2007 | June 30, 2008 | December 31, 2007 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C:(1) | ||||||||||||||||
| Proceeds from shares sold | $ | — | $ | 299,960 | $ | 10,000 | N/A | |||||||||
| Redemption fees | — | 204 | — | N/A | ||||||||||||
| Proceeds from shares issued to holders in reinvestment of dividends | — | 1,392 | — | N/A | ||||||||||||
| Cost of shares redeemed | (128,286 | ) | (10,217 | ) | — | N/A | ||||||||||
| Net increase (decrease) in net assets resulting from capital share transactions | (128,286 | ) | 291,339 | 10,000 | N/A | |||||||||||
TOTAL INCREASE (DECREASE) IN NET ASSETS: | (53,415,104 | ) | 30,470,949 | (58,142 | ) | (852,559 | ) | |||||||||
NET ASSETS: | ||||||||||||||||
| Beginning of period | 167,717,729 | 137,246,780 | 3,138,498 | 3,991,057 | ||||||||||||
| End of period* | $ | 114,302,625 | $ | 167,717,729 | $ | 3,080,356 | $ | 3,138,498 | ||||||||
| *Including undistributed net investment loss of: | $ | (1,008,320 | ) | $ | (1,567,144 | ) | $ | (97,941 | ) | $ | (126,482 | ) | ||||
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS: | ||||||||||||||||
| Shares sold | 171,971 | 877,610 | 284,015 | 178,439 | ||||||||||||
| Shares issued in reinvestments of dividends and distributions | — | 41,574 | — | 38,212 | ||||||||||||
| Shares redeemed | (858,135 | ) | (1,065,901 | ) | (118,067 | ) | (373,212 | ) | ||||||||
| Net increase (decrease) in shares outstanding | (686,164 | ) | (146,717 | ) | 165,948 | (156,561 | ) | |||||||||
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A:(1) | ||||||||||||||||
| Shares sold | 2,329 | 10,246 | 12,219 | N/A | ||||||||||||
| Shares issued in reinvestments of dividends and distributions | — | 124 | — | N/A | ||||||||||||
| Shares redeemed | (3,926 | ) | (819 | ) | — | N/A | ||||||||||
| Net increase (decrease) in shares outstanding | (1,597 | ) | 9,551 | 12,219 | N/A | |||||||||||
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C:(1) | ||||||||||||||||
| Shares sold | — | 8,559 | 2,193 | N/A | ||||||||||||
| Shares issued in reinvestments of dividends and distributions | — | 39 | — | N/A | ||||||||||||
| Shares redeemed | (4,081 | ) | (283 | ) | — | N/A | ||||||||||
| Net increase (decrease) in shares outstanding | (4,081 | ) | 8,315 | 2,193 | N/A | |||||||||||
| (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.
33
Table of Contents
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 | |||||||||||||
| Six Months Ended | Year Ended | Six Months Ended | Year Ended | |||||||||||||
| June 30, 2008 | December 31, 2007 | June 30, 2008 | December 31, 2007 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
OPERATIONS: | ||||||||||||||||
| Net investment income | $ | 7,120,646 | $ | 11,645,301 | $ | 139,317 | $ | 87,456 | ||||||||
| Net realized gain (loss) on sale of investments, foreign currency and written option contracts expired or closed | (82,362,210 | ) | 24,069,411 | 236,454 | 1,257,766 | |||||||||||
| Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options | (798,916,077 | ) | 529,799,808 | (924,045 | ) | 936,268 | ||||||||||
| Net increase (decrease) in net assets resulting from operations | (874,157,641 | ) | 565,514,520 | (548,274 | ) | 2,281,490 | ||||||||||
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS: | ||||||||||||||||
| Net investment income | — | (11,699,941 | ) | — | (83,580 | ) | ||||||||||
| Net realized gains | — | (11,505,288 | ) | — | (582,488 | ) | ||||||||||
| Total distributions | — | (23,205,229 | ) | — | (666,068 | ) | ||||||||||
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A: | ||||||||||||||||
| Net investment income | — | (1,577,182 | ) | — | (4,104 | ) | ||||||||||
| Net realized gains | — | (2,187,982 | ) | — | (48,899 | ) | ||||||||||
| Total distributions | — | (3,765,164 | ) | — | (53,003 | ) | ||||||||||
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C: | ||||||||||||||||
| Net investment income | — | (177 | ) | — | (110 | ) | ||||||||||
| Net realized gains | — | (1,318,999 | ) | — | (5,043 | ) | ||||||||||
| Total distributions | — | (1,319,176 | ) | — | (5,153 | ) | ||||||||||
DISTRIBUTIONS TO SHAREHOLDERS — INSTITUTIONAL CLASS: | ||||||||||||||||
| Net investment income | — | (4,342,775 | ) | N/A | N/A | |||||||||||
| Net realized gains | — | (3,204,711 | ) | N/A | N/A | |||||||||||
| Total distributions | — | (7,547,486 | ) | N/A | N/A | |||||||||||
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS: | ||||||||||||||||
| Proceeds from shares sold | 629,452,637 | 1,849,873,606 | 4,961,061 | 9,939,816 | ||||||||||||
| Redemption Fees | 201,354 | 208,321 | 320 | 8,816 | ||||||||||||
| Proceeds from shares issued to holders in reinvestment of dividends | — | 22,401,473 | — | 655,064 | ||||||||||||
| Cost of shares redeemed | (934,031,334 | ) | (629,292,842 | ) | (2,175,523 | ) | (13,683,124 | ) | ||||||||
| Net increase (decrease) in net assets resulting from capital share transactions | (304,377,343 | ) | 1,243,190,558 | 2,785,858 | (3,079,428 | ) | ||||||||||
See Notes to the Financial Statements.
34
Table of Contents
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 | |||||||||||||
| Six Months Ended | Year Ended | Six Months Ended | Year Ended | |||||||||||||
| June 30, 2008 | December 31, 2007 | June 30, 2008 | December 31, 2007 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A: | ||||||||||||||||
| Proceeds from shares sold | $ | 178,920,040 | $ | 350,897,357 | $ | 428,253 | $ | 838,301 | ||||||||
| Redemption Fees | 52,587 | 47,579 | — | 9 | ||||||||||||
| Proceeds from shares issued to holders in reinvestment of dividends | — | 3,255,755 | — | 44,818 | ||||||||||||
| Cost of shares redeemed | (81,803,889 | ) | (44,065,954 | ) | (82,455 | ) | (255,909 | ) | ||||||||
| Net increase in net assets resulting from capital share transactions | 97,168,738 | 310,134,737 | 345,798 | 627,219 | ||||||||||||
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C: | ||||||||||||||||
| Proceeds from shares sold | 97,645,056 | 194,027,867 | 46,326 | 144,802 | ||||||||||||
| Redemption Fees | 12,273 | 16,484 | — | 1 | ||||||||||||
| Proceeds from shares issued to holders in reinvestment of dividends | — | 1,154,254 | — | 5,153 | ||||||||||||
| Cost of shares redeemed | (25,451,178 | ) | (21,852,493 | ) | (65,031 | ) | (41 | ) | ||||||||
| Net increase (decrease) in net assets resulting from capital share transactions | 72,206,151 | 173,346,112 | (18,705 | ) | 149,915 | |||||||||||
CAPITAL SHARE TRANSACTIONS — INSTITUTIONAL CLASS : | ||||||||||||||||
| Proceeds from shares sold | 173,158,502 | 300,690,200 | N/A | N/A | ||||||||||||
| Redemption Fees | 2,775 | 8,309 | N/A | N/A | ||||||||||||
| Proceeds from shares issued to holders in reinvestment of dividends | — | 7,311,557 | N/A | N/A | ||||||||||||
| Cost of shares redeemed | (133,766,291 | ) | (128,408,385 | ) | N/A | N/A | ||||||||||
| Net increase in net assets resulting from capital share transactions | 39,394,986 | 179,601,681 | N/A | N/A | ||||||||||||
TOTAL INCREASE (DECREASE) IN NET ASSETS: | (969,765,109 | ) | 2,435,950,553 | 2,564,677 | (745,028 | ) | ||||||||||
NET ASSETS: | ||||||||||||||||
| Beginning of period | 4,580,281,571 | 2,144,331,018 | 15,492,752 | 16,237,780 | ||||||||||||
| End of period* | $ | 3,610,516,462 | $ | 4,580,281,571 | $ | 18,057,429 | $ | 15,492,752 | ||||||||
| *Including undistributed net investment income (loss) of: | $ | (2,988,597 | ) | $ | (10,109,243 | ) | $ | 146,615 | $ | 7,298 | ||||||
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS: | ||||||||||||||||
| Shares sold | 22,717,301 | 63,730,279 | 253,853 | 490,051 | ||||||||||||
| Shares issued in reinvestments of dividends and distributions | — | 724,732 | — | 32,884 | ||||||||||||
| Shares redeemed | (34,411,779 | ) | (22,412,502 | ) | (114,589 | ) | (691,314 | ) | ||||||||
| Net increase (decrease) in shares outstanding | (11,694,478 | ) | 42,042,509 | 139,264 | (168,379 | ) | ||||||||||
See Notes to the Financial Statements.
35
Table of Contents
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 | |||||||||||||
| Six Months Ended | Year Ended | Six Months Ended | Year Ended | |||||||||||||
| June 30, 2008 | December 31, 2007 | June 30, 2008 | December 31, 2007 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A: | ||||||||||||||||
| Shares sold | 6,610,209 | 12,078,256 | 22,625 | 43,860 | ||||||||||||
| Shares issued in reinvestments of dividends and distributions | — | 106,956 | — | 2,300 | ||||||||||||
| Shares redeemed | (3,072,728 | ) | (1,555,850 | ) | (4,503 | ) | (13,237 | ) | ||||||||
| Net increase in shares outstanding | 3,537,481 | 10,629,362 | 18,122 | 32,923 | ||||||||||||
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C: | ||||||||||||||||
| Shares sold | 3,667,093 | 6,821,284 | 2,499 | 7,397 | ||||||||||||
| Shares issued in reinvestments of dividends and distributions | — | 38,695 | — | 265 | ||||||||||||
| Shares redeemed | (978,699 | ) | (780,249 | ) | (3,346 | ) | (2 | ) | ||||||||
| Net increase (decrease) in shares outstanding | 2,688,394 | 6,079,730 | (847 | ) | 7,660 | |||||||||||
CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS: | ||||||||||||||||
| Shares sold | 6,304,771 | 10,562,832 | N/A | N/A | ||||||||||||
| Shares issued in reinvestments of dividends and distributions | — | 236,696 | N/A | N/A | ||||||||||||
| Shares redeemed | (4,900,459 | ) | (4,510,587 | ) | N/A | N/A | ||||||||||
| Net increase in shares outstanding | 1,404,312 | 6,288,941 | N/A | N/A | ||||||||||||
See Notes to the Financial Statements.
36
Table of Contents
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 | |||||||||||||
| Six Months Ended | Year Ended | Six Months Ended | Year Ended | |||||||||||||
| June 30, 2008 | December 31, 2007 | June 30, 2008 | December 31, 2007 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
OPERATIONS: | ||||||||||||||||
| Net investment income | $ | 2,088,780 | $ | 652,285 | $ | 11,848 | $ | 43,527 | ||||||||
| Net realized gain (loss) on sale of investments, foreign currency and written option contracts expired or closed | (27,406,232 | ) | 10,940,512 | — | — | |||||||||||
| Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options | (212,522,912 | ) | 110,489,283 | — | — | |||||||||||
| Net increase (decrease) in net assets resulting from operations | (237,840,364 | ) | 122,082,080 | 11,848 | 43,527 | |||||||||||
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS: | ||||||||||||||||
| Net investment income | — | (5,211,975 | ) | (11,848 | ) | (43,527 | ) | |||||||||
| Net realized gains | — | (1,576,555 | ) | — | — | |||||||||||
| Total distributions | — | (6,788,530 | ) | (11,848 | ) | (43,527 | ) | |||||||||
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A: | ||||||||||||||||
| Net investment income | — | (216,845 | ) | N/A | N/A | |||||||||||
| Net realized gains | — | (79,429 | ) | N/A | N/A | |||||||||||
| Total distributions | — | (296,274 | ) | N/A | N/A | |||||||||||
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C: | ||||||||||||||||
| Net investment income | — | (29,881 | ) | N/A | N/A | |||||||||||
| Net realized gains | — | (10,599 | ) | N/A | N/A | |||||||||||
| Total distributions | — | (40,480 | ) | N/A | N/A | |||||||||||
DISTRIBUTIONS TO SHAREHOLDERS — INSTITUTIONAL CLASS: | ||||||||||||||||
| Net investment income | — | (2,707,668 | ) | N/A | N/A | |||||||||||
| Net realized gains | — | (682,422 | ) | N/A | N/A | |||||||||||
| Total distributions | — | (3,390,090 | ) | N/A | N/A | |||||||||||
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS: | ||||||||||||||||
| Proceeds from shares sold | 105,843,828 | 609,987,689 | 2,529,814 | 1,478,721 | ||||||||||||
| Redemption fees | 28,606 | 81,392 | — | — | ||||||||||||
| Proceeds from shares issued to holders in reinvestment of dividends | — | 6,566,511 | 10,557 | 39,561 | ||||||||||||
| Cost of shares redeemed | (342,159,920 | ) | (222,811,396 | ) | (1,669,642 | ) | (1,754,222 | ) | ||||||||
| Net increase (decrease) in net assets resulting from capital share transactions | (236,287,486 | ) | 393,824,196 | 870,729 | (235,940 | ) | ||||||||||
See Notes to the Financial Statements.
37
Table of Contents
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 | |||||||||||||
| Six Months Ended | Year Ended | Six Months Ended | Year Ended | |||||||||||||
| June 30, 2008 | December 31, 2007 | June 30, 2008 | December 31, 2007 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A: | ||||||||||||||||
| Proceeds from shares sold | $ | 8,426,064 | $ | 25,460,990 | N/A | N/A | ||||||||||
| Redemption fees | 3,159 | 2,571 | N/A | N/A | ||||||||||||
| Proceeds from shares issued to holders in reinvestment of dividends | — | 241,765 | N/A | N/A | ||||||||||||
| Cost of shares redeemed | (9,287,962 | ) | (4,433,515 | ) | N/A | N/A | ||||||||||
| Net increase (decrease) in net assets resulting from capital share transactions | (858,739 | ) | 21,271,811 | N/A | N/A | |||||||||||
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C: | ||||||||||||||||
| Proceeds from shares sold | 2,251,798 | 5,051,725 | N/A | N/A | ||||||||||||
| Redemption fees | — | 1,076 | N/A | N/A | ||||||||||||
| Proceeds from shares issued to holders in reinvestment of dividends | — | 25,478 | N/A | N/A | ||||||||||||
| Cost of shares redeemed | (904,867 | ) | (114,627 | ) | N/A | N/A | ||||||||||
| Net increase in net assets resulting from capital share transactions | 1,346,931 | 4,963,652 | N/A | N/A | ||||||||||||
CAPITAL SHARE TRANSACTIONS — INSTITUTIONAL CLASS: | ||||||||||||||||
| Proceeds from shares sold | 22,222,092 | 103,687,085 | N/A | N/A | ||||||||||||
| Redemption fees | — | 3,028 | N/A | N/A | ||||||||||||
| Proceeds from shares issued to holders in reinvestment of dividends | — | 3,374,500 | N/A | N/A | ||||||||||||
| Cost of shares redeemed | (29,652,764 | ) | (42,283,259 | ) | N/A | N/A | ||||||||||
| Net increase (decrease) in net assets resulting from capital share transactions | (7,430,672 | ) | 64,781,354 | N/A | N/A | |||||||||||
TOTAL INCREASE (DECREASE) IN NET ASSETS: | (481,070,330 | ) | 596,407,719 | 870,729 | (235,940 | ) | ||||||||||
NET ASSETS: | ||||||||||||||||
| Beginning of period | 1,087,319,048 | 490,911,329 | 1,189,516 | 1,425,456 | ||||||||||||
| End of period* | $ | 606,248,718 | $ | 1,087,319,048 | $ | 2,060,245 | $ | 1,189,516 | ||||||||
| *Including undistributed net investment loss of: | $ | (560,318 | ) | $ | (2,649,098 | ) | $ | — | $ | — | ||||||
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS: | ||||||||||||||||
| Shares sold | 3,801,887 | 19,955,450 | 2,529,814 | 1,478,721 | ||||||||||||
| Shares issued in reinvestments of dividends and distributions | — | 206,429 | 10,557 | 39,561 | ||||||||||||
| Shares redeemed | (12,483,447 | ) | (7,302,163 | ) | (1,669,642 | ) | (1,754,222 | ) | ||||||||
| Net increase (decrease) in shares outstanding | (8,681,560 | ) | 12,859,716 | 870,729 | (235,940 | ) | ||||||||||
See Notes to the Financial Statements.
38
Table of Contents
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 | |||||||||||||
| Six Months Ended | Year Ended | Six Months Ended | Year Ended | |||||||||||||
| June 30, 2008 | December 31, 2007 | June 30, 2008 | December 31, 2007 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A: | ||||||||||||||||
| Shares sold | 309,924 | 821,149 | N/A | N/A | ||||||||||||
| Shares issued in reinvestments of dividends and distributions | — | 7,673 | N/A | N/A | ||||||||||||
| Shares redeemed | (349,506 | ) | (144,091 | ) | N/A | N/A | ||||||||||
| Net increase (decrease) in shares outstanding | (39,582 | ) | 684,731 | N/A | N/A | |||||||||||
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C: | ||||||||||||||||
| Shares sold | 84,399 | 159,451 | N/A | N/A | ||||||||||||
| Shares issued in reinvestments of dividends and distributions | — | 810 | N/A | N/A | ||||||||||||
| Shares redeemed | (34,139 | ) | (3,717 | ) | N/A | N/A | ||||||||||
| Net increase in shares outstanding | 50,260 | 156,544 | N/A | N/A | ||||||||||||
CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS: | ||||||||||||||||
| Shares sold | 821,738 | 3,434,722 | N/A | N/A | ||||||||||||
| Shares issued in reinvestments of dividends and distributions | — | 106,116 | N/A | N/A | ||||||||||||
| Shares redeemed | (1,102,962 | ) | (1,406,770 | ) | N/A | N/A | ||||||||||
| Net increase (decrease) in shares outstanding | (281,224 | ) | 2,134,068 | N/A | N/A | |||||||||||
See Notes to the Financial Statements.
39
Table of Contents
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 | From June 29, | |||||||||||||
| Six Months Ended | Year Ended | Six Months Ended | 2007ˆ through | |||||||||||||
| June 30, 2008 | December 31, 2007 | June 30, 2008 | December 31,2007 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
OPERATIONS: | ||||||||||||||||
| Net investment income | $ | 393,491 | $ | 84,658 | $ | 111,145 | $ | 16,318 | ||||||||
| Net realized gain (loss) on sale of investments, foreign currency and written option contracts expired or closed | (430,613 | ) | (139,847 | ) | 163,658 | 31,249 | ||||||||||
| Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options | (36,155,979 | ) | 15,573,705 | (813,389 | ) | 32,378 | ||||||||||
| Net increase (decrease) in net assets resulting from operations | (36,193,101 | ) | 15,518,516 | (538,586 | ) | 79,945 | ||||||||||
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS: | ||||||||||||||||
| Net investment income | — | (118,628 | ) | — | (9,413 | ) | ||||||||||
| Net realized gains | — | — | — | (11,976 | ) | |||||||||||
| Total distributions | — | (118,628 | ) | — | (21,389 | ) | ||||||||||
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A: | ||||||||||||||||
| Net investment income | — | (22,695 | ) | — | (7,700 | ) | ||||||||||
| Net realized gains | — | — | — | (12,600 | ) | |||||||||||
| Total distributions | — | (22,695 | ) | — | (20,300 | ) | ||||||||||
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C: | ||||||||||||||||
| Net investment income | — | — | — | (2,363 | ) | |||||||||||
| Net realized gains | — | — | — | (6,144 | ) | |||||||||||
| Total distributions | — | — | — | (8,507 | ) | |||||||||||
DISTRIBUTIONS TO SHAREHOLDERS — INSTITUTIONAL CLASS:(1) | ||||||||||||||||
| Net investment income | — | N/A | — | (435 | ) | |||||||||||
| Net realized gains | — | N/A | — | (525 | ) | |||||||||||
| Total distributions | — | N/A | — | (960 | ) | |||||||||||
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS: | ||||||||||||||||
| Proceeds from shares sold | 31,851,579 | 55,769,867 | 18,816,298 | 2,828,533 | ||||||||||||
| Redemption fees | 18,176 | 14,947 | 143 | — | ||||||||||||
| Proceeds from shares issued to holders in reinvestment of dividends | — | 117,154 | — | 19,762 | ||||||||||||
| Cost of shares redeemed | (19,322,339 | ) | (9,030,247 | ) | (576,943 | ) | (465,719 | ) | ||||||||
| Net increase in net assets resulting from capital share transactions | 12,547,416 | 46,871,721 | 18,239,498 | 2,382,576 | ||||||||||||
| (+) | Commencement of operations. |
| (1) | Institutional Class shares of the Market Opportunities Fund commenced operations on May 19, 2008. |
See Notes to the Financial Statements.
40
Table of Contents
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 | From June 29, | |||||||||||||
| Six Months Ended | Year Ended | Six Months Ended | 2007ˆ through | |||||||||||||
| June 30, 2008 | December 31, 2007 | June 30, 2008 | December 31,2007 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A: | ||||||||||||||||
| Proceeds from shares sold | $ | 11,830,352 | $ | 33,158,535 | $ | 1,326,719 | $ | 2,521,529 | ||||||||
| Redemption fees | 4,591 | 949 | — | 126 | ||||||||||||
| Proceeds from shares issued to holders in reinvestment of dividends | — | 19,057 | — | 19,597 | ||||||||||||
| Cost of shares redeemed | (8,688,080 | ) | (5,377,672 | ) | (163,483 | ) | (102,213 | ) | ||||||||
| Net increase in net assets resulting from capital share transactions | 3,146,863 | 27,800,869 | 1,163,236 | 2,439,039 | ||||||||||||
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C: | ||||||||||||||||
| Proceeds from shares sold | 2,408,161 | 8,211,008 | 714,940 | 1,194,129 | ||||||||||||
| Redemption fees | 187 | 612 | — | 109 | ||||||||||||
| Proceeds from shares issued to holders in reinvestment of dividends | — | — | — | 7,586 | ||||||||||||
| Cost of shares redeemed | (2,142,818 | ) | (145,356 | ) | (39,650 | ) | (5,465 | ) | ||||||||
| Net increase in net assets resulting from capital share transactions | 265,530 | 8,066,264 | 675,290 | 1,196,359 | ||||||||||||
CAPITAL SHARE TRANSACTIONS — INSTITUTIONAL CLASS:(1) | ||||||||||||||||
| Proceeds from shares sold | 10,000 | N/A | 195,675 | 100,000 | ||||||||||||
| Redemption fees | — | N/A | — | — | ||||||||||||
| Proceeds from shares issued to holders in reinvestment of dividends | — | N/A | — | 960 | ||||||||||||
| Cost of shares redeemed | — | N/A | (6,329 | ) | — | |||||||||||
| Net increase in net assets resulting from capital share transactions | 10,000 | N/A | 189,346 | 100,960 | ||||||||||||
TOTAL INCREASE (DECREASE) IN NET ASSETS: | (20,223,292 | ) | 98,116,047 | 19,728,784 | 6,147,723 | |||||||||||
NET ASSETS: | ||||||||||||||||
| Beginning of period | 115,700,887 | 17,584,840 | 6,147,723 | — | ||||||||||||
| End of period* | $ | 95,477,595 | $ | 115,700,887 | $ | 25,876,507 | $ | 6,147,723 | ||||||||
| *Including undistributed net investment income (loss) of: | $ | 315,605 | $ | (77,886 | ) | $ | 111,145 | $ | — | |||||||
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS: | ||||||||||||||||
| Shares sold | 2,273,386 | 3,879,691 | 1,858,016 | 277,724 | ||||||||||||
| Shares issued in reinvestments of dividends and distributions | — | 7,325 | — | 1,945 | ||||||||||||
| Shares redeemed | (1,439,848 | ) | (641,269 | ) | (57,352 | ) | (45,263 | ) | ||||||||
| Net increase in shares outstanding | 833,538 | 3,245,747 | 1,800,664 | 234,406 | ||||||||||||
| (+) | Commencement of operations. |
| (1) | Institutional Class shares of the Market Opportunities Fund commenced operations on May 19, 2008. |
See Notes to the Financial Statements.
41
Table of Contents
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 | From June 29, | |||||||||||||
| Six Months Ended | Year Ended | Six Months Ended | 2007ˆ through | |||||||||||||
| June 30, 2008 | December 31, 2007 | June 30, 2008 | December 31,2007 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A: | ||||||||||||||||
| Shares sold | 884,098 | 2,313,386 | 130,874 | 249,966 | ||||||||||||
| Shares issued in reinvestments of dividends and distributions | — | 1,195 | — | 1,929 | ||||||||||||
| Shares redeemed | (659,322 | ) | (379,689 | ) | (16,606 | ) | (10,103 | ) | ||||||||
| Net increase in shares outstanding | 224,776 | 1,934,892 | 114,268 | 241,792 | ||||||||||||
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C: | ||||||||||||||||
| Shares sold | 170,145 | 559,532 | 70,938 | 117,981 | ||||||||||||
| Shares issued in reinvestments of dividends and distributions | — | — | — | 747 | ||||||||||||
| Shares redeemed | (164,366 | ) | (10,559 | ) | (4,105 | ) | (536 | ) | ||||||||
| Net increase in shares outstanding | 5,779 | 548,973 | 66,833 | 118,192 | ||||||||||||
CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS:(1) | ||||||||||||||||
| Shares sold | 729 | N/A | 19,223 | 10,000 | ||||||||||||
| Shares issued in reinvestments of dividends and distributions | — | N/A | — | 94 | ||||||||||||
| Shares redeemed | — | N/A | (613 | ) | — | |||||||||||
| Net increase in shares outstanding | 729 | N/A | 18,610 | 10,094 | ||||||||||||
| (+) | Commencement of operations. |
| (1) | Institutional Class shares of the Market Opportunities Fund commenced operations on May 19, 2008. |
See Notes to the Financial Statements.
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Changes in Net Assets
| The Multi-Disciplinary Fund | ||||
| For the Period | ||||
| From February 11, 2008ˆ | ||||
| through June 30, 2008 | ||||
| (Unaudited) | ||||
OPERATIONS: | ||||
| Net investment income | $ | 158 | ||
| Net realized gain on sale of investments and written option contracts expired or closed | 3,281 | |||
| Net change in unrealized depreciation of investments and written options | (15,543 | ) | ||
| Net decrease in net assets resulting from operations | (12,104 | ) | ||
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS: | ||||
| Net investment income | — | |||
| Net realized gains | — | |||
| Total distributions | — | |||
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A: | ||||
| Net investment income | — | |||
| Net realized gains | — | |||
| Total distributions | — | |||
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C: | ||||
| Net investment income | — | |||
| Net realized gains | — | |||
| Total distributions | — | |||
DISTRIBUTIONS TO SHAREHOLDERS��— INSTITUTIONAL CLASS: | ||||
| Net investment income | — | |||
| Net realized gains | — | |||
| Total distributions | — | |||
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS: | ||||
| Proceeds from shares sold | 107,006 | |||
| Redemption fees | — | |||
| Proceeds from shares issued to holders in reinvestment of dividends | — | |||
| Cost of shares redeemed | — | |||
| Net increase in net assets resulting from capital share transactions | 107,006 | |||
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A: | ||||
| Proceeds from shares sold | 102,357 | |||
| Redemption fees | — | |||
| Proceeds from shares issued to holders in reinvestment of dividends | — | |||
| Cost of shares redeemed | — | |||
| Net increase in net assets resulting from capital share transactions | 102,357 | |||
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C: | ||||
| Proceeds from shares sold | 100,000 | |||
| Redemption fees | — | |||
| Proceeds from shares issued to holders in reinvestment of dividends | — | |||
| Cost of shares redeemed | — | |||
| Net increase in net assets resulting from capital share transactions | 100,000 | |||
| (+) | Commencement of operations. |
See Notes to the Financial Statements.
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Statement of Changes in Net Assets — (Continued)
| The Multi-Disciplinary Fund | ||||
| For the Period | ||||
| From February 11, 2008ˆ | ||||
| through June 30, 2008 | ||||
| (Unaudited) | ||||
CAPITAL SHARE TRANSACTIONS — INSTITUTIONAL CLASS: | ||||
| Proceeds from shares sold | $ | 100,000 | ||
| Redemption fees | — | |||
| Proceeds from shares issued to holders in reinvestment of dividends | — | |||
| Cost of shares redeemed | — | |||
| Net increase in net assets resulting from capital share transactions | 100,000 | |||
TOTAL INCREASE IN NET ASSETS: | 397,259 | |||
NET ASSETS: | ||||
| Beginning of period | — | |||
| End of period* | $ | 397,259 | ||
| *Including undistributed net investment income of: | $ | 158 | ||
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS: | ||||
| Shares sold | 10,705 | |||
| Shares issued in reinvestments of dividends and distributions | — | |||
| Shares redeemed | — | |||
| Net increase in shares outstanding | 10,705 | |||
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A: | ||||
| Shares sold | 10,230 | |||
| Shares issued in reinvestments of dividends and distributions | — | |||
| Shares redeemed | — | |||
| Net increase in shares outstanding | 10,230 | |||
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C: | ||||
| Shares sold | 10,000 | |||
| Shares issued in reinvestments of dividends and distributions | — | |||
| Shares redeemed | — | |||
| Net increase in shares outstanding | 10,000 | |||
CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS: | ||||
| Shares sold | 10,000 | |||
| Shares issued in reinvestments of dividends and distributions | — | |||
| Shares redeemed | — | |||
| Net increase in shares outstanding | 10,000 | |||
| (+) | Commencement of operations. |
See Notes to the Financial Statements.
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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,” formerly The Internet Emerging Growth Fund), 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.
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
Each Feeder Fund’s respective interest in the corresponding Master Portfolio as of June 30, 2008 is as follows:
| Interest in | ||||
| Master Portfolio | ||||
| Internet Fund | 99.993% | |||
| Global Fund | 99.801% | |||
| Paradigm Fund | 98.712% | |||
| Medical Fund | 99.920% | |||
| Small Cap Fund | 99.996% | |||
| Government Fund | 98.658% | |||
| Market Opportunities Fund | 99.990% | |||
| Water Infrastructure Fund | 99.615% | |||
| Multi-Disciplinary Fund | 80.104% | |||
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 June 30, 2008, 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 June 30, 2008 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 June 30, 2008 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 June 30, 2008 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 and Advisor Class C shares, the service fees paid by the Advisor Class A, Advisor Class C, No Load Class and Institutional Class, 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, except the Government Fund, will assess a 2.00%
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
redemption fee (with exceptions) on shares redeemed or exchanged within 30 days of purchase.
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 portfolio of investments in securities, 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”). 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 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. 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.
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 June 30, 2008, none of the Master Portfolios held securities which were fair valued.
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
In September 2006, the Financial Accounting Standards Board Issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements.” The Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. The Statement establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The Master Portfolios adopted the Statement effective January 1, 2008. See the Notes to Financial Statements for the Master Portfolios for a discussion of this statement.
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. Option contracts are valued at the average of the current bid and asked price reported on the day of the valuation. 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,
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is eliminated. When an option is exercised, the premium originally received decreases the cost basis of the underlying security (or increases the proceeds on the security sold short) and the Master Portfolio realizes a gain or loss from the sale of the security (or closing of the short sale). As collateral for uncovered written options, the Master Portfolio is required under the 1940 Act to maintain assets consisting of cash, cash equivalents or liquid securities. This collateral is required to be adjusted daily to reflect the market value 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 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 June 30, 2008, the Master Portfolios did not hold any investment securities which were determined to be illiquid pursuant to the guidelines adopted by the Board of Trustees.
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
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
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 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
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
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.
Effective June 29, 2007, the Feeder Funds adopted Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes”. FIN 48 requires the evaluation of tax positions taken on previously filed tax returns or expected to be taken on future returns. These positions must meet a “more likely than not” standard that, based on the technical merits, have a more than fifty percent likelihood of being sustained upon examination. In evaluating whether a tax position has met the recognition threshold, the Funds must presume that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as a tax expense in the current year.
FIN 48 requires the Feeder Funds to analyze all open tax years, as defined by the relevant statute of limitations, for all major jurisdictions. Open tax years are those that are open for examination by taxing authorities. Major jurisdictions for the Funds include the Federal Government and the state of New York. As of June 30, 2008, open Federal and New York tax years include the tax years ended December 31, 2003 through 2007. The Funds have no examination in progress.
The Feeder Funds have reviewed all open tax years and major jurisdictions and concluded that the adoption of FIN 48 resulted in no effect to the Funds’ financial position or results of operations. 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. 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 six months.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
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 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, Aqua-Terra Asset Management 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 continue to pay certain operating expenses as deemed appropriate. The Adviser may discontinue the voluntary reimbursement at any time; these reimbursements are not subject to recapture. For the six months ended June 30, 2008, the amounts earned by the Adviser and the 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 | $ | 43,295 | $ | 64,552 | ||||
| Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver | $ | — | $ | — | ||||
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
Paradigm | Medical | |||||||
| Annual Advisory Rate | 1.25% | 1.25% | ||||||
| Expenses Reimbursed by Adviser through voluntary waiver | $ | 357,459 | $ | 77,617 | ||||
| Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver | $ | 549,412 | $ | — | ||||
Small Cap | Government | |||||||
| Annual Advisory Rate | 1.25% | 0.50% | ||||||
| Expenses Reimbursed by Adviser through voluntary waiver | $ | 378,966 | $ | 26,798 | ||||
| Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver | $ | 197,069 | $ | — | ||||
| Market | Water | |||||||
Opportunities | Infrastructure | |||||||
| Annual Advisory Rate | 1.25% | 1.25% | ||||||
| Expenses Reimbursed by Adviser through voluntary waiver | $ | 57,256 | $ | 40,326 | ||||
| Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver | $ | 1 | $ | 120 | ||||
Multi-Disciplinary | ||||||||
| Annual Advisory Rate | 1.25% | |||||||
| Expenses Reimbursed by Adviser through voluntary waiver | $ | 25,175 | ||||||
| Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver | $ | 58 | ||||||
The Adviser receives a shareholder servicing fee from the No Load, 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, 2009. For the six months ended June 30, 2008, 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
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Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
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 six months ended June 30, 2008, the Feeder Funds were allocated $12,000 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 Classes B and 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 six months ended June 30, 2008, 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 the average daily net asset value of such shares of such Funds. During the six months ended June 30, 2008, the Advisor Class A shares of the Internet, Global, Paradigm, Medical, Small Cap, Market Opportunities, Water Infrastructure and Multi-Disciplinary Funds incurred expenses of $652, $4, $668,050, $1,903, $38,031, $47,366, $3,502 and $97 respectively, pursuant to the 12b-1 Plan. Under the second Plan, Advisor Classes B and C shares pay an annual rate of 0.75% of the average daily net asset value of such shares. During the six months ended June 30, 2008, Internet, Global, Paradigm, Medical, Small Cap, Market Opportunities, Water Infrastructure and Multi-Disciplinary Funds Advisor Class C Shares incurred expenses of $619, $8, $1,218,759, $594, $17,760, $29,278, $5,321, and $288 respectively, pursuant to the 12b-1 Plan. Through June 30, 2008, the Funds had not issued any Advisor Class B shares.
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 six months ended June 30, 2008, the Distributor received $222, $222, $244,212, $789, $14,236, $29,931, $5,693, and $12 from sales loads from the Internet, Global, Paradigm, Medical, Small Cap, Market Opportunities, Water Infrastructure, and Multi-Disciplinary Funds.
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Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
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 December 31, 2007, 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 | $ | — | $ | (1,972 | ) | $ | 1,972 | |||||
| The Global Fund | (402 | ) | 148 | 254 | ||||||||
| The Paradigm Fund | 744,082 | 2,834,881 | (3,578,963 | ) | ||||||||
| The Medical Fund | 218,475 | (10,271 | ) | (208,204 | ) | |||||||
| The Small Cap Opportunities Fund | — | 5,328,084 | (5,328,084 | ) | ||||||||
| The Kinetics Government Money Market Fund | — | — | — | |||||||||
| The Market Opportunities Fund | — | 2,340 | (2,340 | ) | ||||||||
| The Water Infrastructure Fund | (3,589 | ) | 3,593 | (4 | ) | |||||||
5. Income Taxes
At December 31, 2007 the Internet, Global, Paradigm, Medical, Small Cap, Government, Market Opportunities, and Water Infrastructure Funds had $171,807, $0, $1,578, $7,298, $39,101, $0, $106,543 and $3,593, respectively, of undistributed net investment income on a tax basis.
At December 31, 2007 the Paradigm, Medical, and Small Cap Funds had $6,263,516, $28,115, and $4,096,529 respectively, of accumulated gains on a tax basis.
At December 31, 2007, the Feeder Funds had accumulated net realized capital loss carryforwards expiring in the following years.
Feeder Fund | 2015 | 2014 | 2013 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||||||||
| Internet | $ | — | $ | 16,077,777 | $ | 6,777,871 | $ | — | $ | 140,178,775 | $ | 19,078,127 | $ | — | ||||||||||||||
| Global | — | — | 4,885 | 887,154 | 2,635,504 | 5,481,052 | 2,046,239 | |||||||||||||||||||||
| Paradigm | — | — | — | — | — | — | — | |||||||||||||||||||||
| Medical | — | — | — | — | — | — | — | |||||||||||||||||||||
| Small Cap | — | — | — | — | — | — | — | |||||||||||||||||||||
| Government | — | — | — | — | — | — | — | |||||||||||||||||||||
| Market Opportunities | 40,803 | 21 | — | — | — | — | — | |||||||||||||||||||||
| Water Infrastructure | — | — | — | — | — | — | — | |||||||||||||||||||||
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
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, 2007, Internet, Global, and Small Cap Funds utilized $15,041,179, $303,648, and $1,496,664, respectively, of capital loss carryforwards.
At December 31, 2007, 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 | $ | — | $ | 269 | — | |||||||
| Global | — | — | — | |||||||||
| Paradigm | — | — | — | |||||||||
| Medical | 70,829 | — | 88,724 | |||||||||
| Small Cap | — | 2,907 | — | |||||||||
| Government | — | — | — | |||||||||
| Market Opportunities | 101,419 | 911 | — | |||||||||
| Water Infrastructure | — | — | — | |||||||||
The tax components of dividends paid during the years ended December 31, 2007 and December 31, 2006, are:
| Internet | Global | |||||||||||||||
| Ordinary Income | Long-Term Capital | Ordinary Income | Long-Term Capital | |||||||||||||
| Distribution | Gains Distribution | Distribution | Gains Distribution | |||||||||||||
| 2007 | $ | 1,637,709 | $ | — | $ | 188,230 | $ | — | ||||||||
| 2006 | $ | 517,918 | $ | — | $ | 136,199 | $ | — | ||||||||
| Paradigm | Medical | |||||||||||||||
| Ordinary Income | Long-Term Capital | Ordinary Income | Long-Term Capital | |||||||||||||
| Distribution | Gains Distribution | Distribution | Gains Distribution | |||||||||||||
| 2007 | $ | 21,067,887 | $ | 14,769,168 | $ | 185,181 | $ | 539,043 | ||||||||
| 2006 | $ | 12,435,794 | $ | 3,162,407 | $ | 29,493 | $ | 1,054,815 | ||||||||
| Small Cap | Government | |||||||||||||||
| Ordinary Income | Long-Term Capital | Ordinary Income | Long-Term Capital | |||||||||||||
| Distribution | Gains Distribution | Distribution | Gains Distribution | |||||||||||||
| 2007 | $ | 5,200,341 | $ | 5,315,033 | $ | 43,527 | $ | — | ||||||||
| 2006 | $ | 1,131,237 | $ | — | $ | 44,708 | $ | — | ||||||||
| Market Opportunities | Water Infrastructure | |||||||||||||||
| Ordinary Income | Long-Term Capital | Ordinary Income | Long-Term Capital | |||||||||||||
| Distribution | Gains Distribution | Distribution | Gains Distribution | |||||||||||||
| 2007 | $ | 141,323 | $ | — | $ | 51,156 | $ | — | ||||||||
| 2006 | $ | 44,530 | $ | — | N/A | N/A | ||||||||||
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
6. Tax Information
The Internet, Global, Paradigm, Medical, Small Cap, Market Opportunities, and Water Infrastructure Funds designate 46%, 46%, 99%, 96%, 68%, 23%, and 52%, respectively, of dividends declared after December 31, 2007 from net investment income as qualified dividend income under the Jobs and Growth Tax Relief Reconciliation Act of 2003.
The Paradigm, Medical, and Small Cap Funds hereby designate 26%, 59%, and 50%, respectively, as ordinary income distributions and 74%, 41%, and 50% respectively, 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, 2007, which is designated as qualifying for the dividends-received deduction, is as follows: Internet 40%, Global 31%, Paradigm 89%, Medical 96%, Small Cap 36%, Market Opportunities 12%, and Water Infrastructure 30%.
The Internet, Global, Paradigm, Medical, Small Cap, Government, Market Opportunities, and Water Infrastructure Funds designate 16%, 14%, 29%, 15%, 29%, 100%, 18% and 100%, respectively, of their ordinary income distributions for the fiscal year as interest-related dividends under Internal Revenue Code Section 871(k)(l)(C).
The Internet, Global, Paradigm, Medical, Small Cap, Government, Market Opportunities, and Water Infrastructure Funds designate 0%, 0%, 25%, 53%, 0%, 0%, 0% and 61%, respectively, of their ordinary income distributions as short-term capital gain distributions under Internal Revenue Code Section 871(k)(2)(C).
7. New Accounting Pronouncements
In March 2008, Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”) was issued. SFAS 161 is effective for fiscal years beginning after November 15, 2008. SFAS 161 is intended to improve financial reporting for derivative instruments by requiring enhanced disclosure that enables investors to understand how and why an entity uses derivatives, how derivative instruments and hedging activities are accounted for, and how derivative instruments and related hedging activities affect an entity’s financial performance and financial
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
position. Management is currently evaluating the implications of SFAS 161. The impact on the Funds’ financial statement disclosures, if any, is currently being assessed.
8. Results of Shareholder Meeting
At a meeting held on December 6, 2007, the Board of Directors of the Company and the Board of Trustees of the Trust, approved: (1) changing the Internet Emerging Growth Fund/Internet Emerging Growth Portfolio (the “Fund/Portfolio”) investment strategy such that it will invest at least 65% of its net assets in the equity securities of foreign companies and U.S. companies with business operations and/or equity or business interests in international markets (the Fund’s/Portfolio’s investment strategy currently requires it to invest at least 80% of its net assets plus any borrowings for investment purposes in the securities of small and medium capitalization U.S. and foreign emerging growth companies engaged in the Internet and Internet-related activities); (2) changing the Fund’s/Portfolio’s fundamental investment restriction relating to industry concentration by eliminating the Fund’s/Portfolio’s ability to concentrate its investments in the Internet and Internet-related industries; and (3) changing the name of the Fund to the Global Fund and the name of the Portfolio to the Global Portfolio. On February 27, 2008, a special meeting of shareholders of the Fund was held and the change in the Fund’s/Portfolio’s fundamental restriction relating to industry concentration was approved. The voting results of the special meeting of shareholders are shown below:
Votes for the Resolution: | Votes against the Resolution: | Abstain: | ||||||
| 387,034.564 | 37,097.753 | 8,806.765 | ||||||
9. Information about Proxy Voting
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.
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
10. Information about the Portfolio Holdings
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.
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
| The Internet Fund | ||||||||||||||||||||
| No Load Class | Advisor Class A | Advisor Class C | No Load Class | Advisor Class A | ||||||||||||||||
| For the Six | For the Six | For the Six | For the | For the | ||||||||||||||||
| Months Ended | Months Ended | Months Ended | Year Ended | Year Ended | ||||||||||||||||
| June 30, 2008 | June 30, 2008 | June 30, 2008 | December 31, | December 31, | ||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | 2007 | 2007 | ||||||||||||||||
PER SHARE DATA:(1) | ||||||||||||||||||||
| Net Asset Value, | ||||||||||||||||||||
| Beginning of Period | $ | 35.94 | $ | 35.66 | $ | 35.31 | $ | 28.62 | $ | 28.24 | ||||||||||
| Income from Investment Operations: | ||||||||||||||||||||
| Net investment income (loss) | 0.13 | (2) | 0.09 | (2) | 0.02 | (2) | 0.30 | (2) | 0.23 | (2) | ||||||||||
| Net realized and unrealized gain (loss) on investments | (7.31 | ) | (7.26 | ) | (7.18 | ) | 7.37 | 7.49 | ||||||||||||
| Total from investment operations | (7.18 | ) | (7.17 | ) | (7.16 | ) | 7.67 | 7.72 | ||||||||||||
| Redemption fees | 0.00 | (3) | 0.00 | (3) | — | 0.00 | (3) | — | ||||||||||||
| Less Distributions: | ||||||||||||||||||||
| From net investment income | — | — | — | (0.35 | ) | (0.30 | ) | |||||||||||||
| From net realized gains | — | — | — | — | — | |||||||||||||||
| Total distributions | — | — | — | (0.35 | ) | (0.30 | ) | |||||||||||||
| Net Asset Value, End of Period | $ | 28.76 | $ | 28.49 | $ | 28.15 | $ | 35.94 | $ | 35.66 | ||||||||||
Total Return(4) | (19.98 | )%(5) | (20.11 | )%(5) | (20.28 | )%(5) | 26.81 | % | 27.35 | % | ||||||||||
SUPPLEMENTAL DATA AND RATIOS | ||||||||||||||||||||
| Net assets, end of period (000’s) | $ | 113,720 | $ | 464 | $ | 119 | $ | 166,787 | $ | 637 | ||||||||||
| Ratio of operating expenses to average net assets: | ||||||||||||||||||||
| Before expense reimbursement | 1.97 | %(6) | 2.22 | %(6) | 2.72 | %(6) | 1.99 | % | 2.24 | % | ||||||||||
After expense reimbursement(7) | 1.90 | %(6) | 2.15 | %(6) | 2.65 | %(6) | 1.98 | % | 2.23 | % | ||||||||||
| Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
| Before expense reimbursement | 0.78 | %(6) | 0.53 | %(6) | 0.03 | %(6) | 0.94 | % | 0.70 | % | ||||||||||
After expense reimbursement(7) | 0.85 | %(6) | 0.60 | %(6) | 0.10 | %(6) | 0.95 | % | 0.71 | % | ||||||||||
| 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.
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| The Internet Fund | ||||||||||||||||||||||||||||||||||||
| Advisor Class C | No Load Class | Advisor Class A | No Load Class | Advisor Class A | No Load Class | Advisor Class A | No Load Class | Advisor Class A | ||||||||||||||||||||||||||||
| February 16, 2007ˆ | For the | For the | For the | For the | For the | For the | For the | For the | ||||||||||||||||||||||||||||
| through | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||||||||||||||
| December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | ||||||||||||||||||||||||||||
| 2007 | 2006 | 2006 | 2005 | 2005 | 2004 | 2004 | 2003 | 2003 | ||||||||||||||||||||||||||||
| $ | 28.66 | $ | 24.66 | $ | 24.40 | $ | 25.29 | $ | 24.93 | $ | 23.31 | $ | 22.88 | $ | 16.69 | $ | 16.47 | |||||||||||||||||||
| 0.07 | (2) | (0.08 | )(2) | (0.14 | )(2) | 0.11 | (2) | 0.05 | (2) | 0.10 | (2) | 0.05 | (2) | 0.03 | (0.82 | ) | ||||||||||||||||||||
| 6.87 | 4.15 | 4.09 | (0.54 | ) | (0.44 | ) | 2.25 | 2.23 | 6.66 | 7.23 | ||||||||||||||||||||||||||
| 6.94 | 4.07 | 3.95 | (0.43 | ) | (0.39 | ) | 2.35 | 2.28 | 6.69 | 6.41 | ||||||||||||||||||||||||||
| 0.00 | (3) | 0.00 | (3) | — | 0.00 | (3) | 0.00 | (3) | — | — | — | — | ||||||||||||||||||||||||
| (0.29 | ) | (0.11 | ) | (0.11 | ) | (0.20 | ) | (0.14 | ) | (0.37 | ) | (0.23 | ) | (0.07 | ) | — | ||||||||||||||||||||
| — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
| (0.29 | ) | (0.11 | ) | (0.11 | ) | (0.20 | ) | (0.14 | ) | 0.37 | (0.23 | ) | (0.07 | ) | — | |||||||||||||||||||||
| $ | 35.31 | $ | 28.62 | $ | 28.24 | $ | 24.66 | $ | 24.40 | $ | 25.29 | $ | 24.93 | $ | 23.31 | $ | 22.88 | |||||||||||||||||||
| 24.22 | %(5) | 16.50 | % | 16.18 | % | (1.69 | )% | (1.55 | )% | 10.06 | % | 9.95 | % | 40.11 | % | 38.92 | % | |||||||||||||||||||
| $ | 294 | $ | 137,012 | $ | 235 | $ | 148,260 | $ | 300 | $ | 201,929 | $ | 354 | $ | 230,971 | $ | 428 | |||||||||||||||||||
| 2.73 | %(6) | 1.98 | % | 2.23 | % | 2.35 | % | 2.60 | % | 2.37 | % | 2.62 | % | 2.39 | % | 2.64 | % | |||||||||||||||||||
| 2.72 | %(6) | 1.85 | % | 2.10 | % | 2.35 | % | 2.60 | % | 2.37 | % | 2.62 | % | 2.39 | % | 2.64 | % | |||||||||||||||||||
| 0.22 | %(6) | (0.42 | )% | (0.67 | )% | 0.46 | % | 0.21 | % | 0.44 | % | 0.19 | % | 0.11 | % | (0.14 | )% | |||||||||||||||||||
| 0.23 | %(6) | (0.29 | )% | (0.54 | )% | 0.46 | % | 0.21 | % | 0.44 | % | 0.19 | % | 0.11 | % | (0.14 | )% | |||||||||||||||||||
| N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||
See Notes to the Financial Statements.
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
| The Global Fund | ||||||||||||||||
| No Load Class | Advisor Class A | Advisor Class C | ||||||||||||||
| For the Six | May 19, 2008 | May 19, 2008 | ||||||||||||||
| Months Ended | through | through | ||||||||||||||
| June 30, 2008 | June 30, 2008 | June 30, 2008 | ||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
PER SHARE DATA:(1) | ||||||||||||||||
| Net Asset Value, | ||||||||||||||||
| Beginning of Period | $ | 4.90 | $ | 4.56 | $ | 4.56 | ||||||||||
| Income from Investment Operations: | ||||||||||||||||
| Net investment income | 0.04 | (2) | 0.00 | (2)(3) | 0.00 | (2)(3) | ||||||||||
| Net realized and unrealized gain (loss) on investments | (1.19 | ) | (0.81 | ) | (0.81 | ) | ||||||||||
| Total from investment operations | (1.15 | ) | (0.81 | ) | (0.81 | ) | ||||||||||
| Redemption fees | 0.00 | (3) | — | — | ||||||||||||
| Less Distributions: | ||||||||||||||||
| From net investment income | — | — | — | |||||||||||||
| From net realized gains | — | — | ||||||||||||||
| Total distributions | — | — | — | |||||||||||||
| Net Asset Value, End of Period | $ | 3.75 | $ | 3.75 | $ | 3.75 | ||||||||||
Total Return(4) | (23.47 | )%(5) | (17.76 | )%(5) | (17.76 | )%(5) | ||||||||||
SUPPLEMENTAL DATA AND RATIOS | ||||||||||||||||
| Net assets, end of period (000’s) | $ | 3,026 | $ | 46 | $ | 8 | ||||||||||
| Ratio of expenses to average net assets: | ||||||||||||||||
| Before expense reimbursement | 5.47 | %(6) | 12.59 | %(6) | 13.09 | %(6) | ||||||||||
After expense reimbursement(7) | 1.42 | %(6) | 1.64 | %(6) | 2.14 | %(6) | ||||||||||
| Ratio of net investment income (loss) to average net assets: | ||||||||||||||||
| Before expense reimbursement | (2.25 | )%(6) | (10.12 | )%(6) | (10.62 | )%(6) | ||||||||||
After expense reimbursement(7) | 1.80 | %(6) | 0.83 | %(6) | 0.33 | %(6) | ||||||||||
| Portfolio turnover rate | 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.
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| The Global 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, | ||||||||||||||||
| 2007 | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||
| $ | 5.00 | $ | 4.43 | $ | 4.50 | $ | 4.28 | $ | 3.24 | |||||||||||
| 0.22 | 0.13 | 0.15 | 0.08 | 0.04 | ||||||||||||||||
| (0.01 | ) | 0.62 | (0.03 | ) | 0.25 | 1.05 | ||||||||||||||
| 0.21 | 0.75 | 0.12 | 0.33 | 1.09 | ||||||||||||||||
| 0.00 | (3) | 0.00 | (3) | 0.00 | (3) | — | — | |||||||||||||
| (0.31 | ) | (0.18 | ) | (0.19 | ) | (0.11 | ) | (0.05 | ) | |||||||||||
| — | — | — | — | — | ||||||||||||||||
| (0.31 | ) | (0.18 | ) | (0.19 | ) | (0.11 | ) | (0.05 | ) | |||||||||||
| $ | 4.90 | $ | 5.00 | $ | 4.43 | $ | 4.50 | $ | 4.28 | |||||||||||
| 4.27 | % | 16.90 | % | 2.65 | % | 7.67 | % | 33.56 | % | |||||||||||
| $ | 3,138 | $ | 3,991 | $ | 3,896 | $ | 4,584 | $ | 4,677 | |||||||||||
| 3.84 | % | 3.09 | % | 3.22 | % | 3.45 | % | 3.64 | % | |||||||||||
| 1.48 | % | 1.39 | % | 2.69 | % | 2.67 | % | 2.74 | % | |||||||||||
| 1.87 | % | 3.00 | % | 2.80 | % | 1.08 | % | 0.11 | % | |||||||||||
| 4.23 | % | 1.30 | % | 3.33 | % | 1.84 | % | 1.01 | % | |||||||||||
| N/A | N/A | N/A | N/A | N/A | ||||||||||||||||
See Notes to the Financial Statements.
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Financial Highlights
| The Paradigm Fund | ||||||||||||||||
| Advisor | Advisor | Institutional | ||||||||||||||
| No Load Class | Class A | Class C | Class | |||||||||||||
| For the | For the | For the | For the | |||||||||||||
| Six Months | Six Months | Six Months | Six Months | |||||||||||||
| Ended | Ended | Ended | Ended | |||||||||||||
| June 30, 2008 | June 30, 2008 | June 30, 2008 | June 30, 2008 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
PER SHARE DATA:(1) | ||||||||||||||||
| Net Asset Value, Beginning of Period | $ | 30.99 | $ | 30.52 | $ | 29.90 | $ | 30.97 | ||||||||
| Income from Investment Operations: | ||||||||||||||||
| Net investment income (loss) | 0.06 | (2) | 0.03 | (2) | (0.04 | )(2) | 0.07 | (2) | ||||||||
| Net realized and unrealized gain (loss) on investments | (5.90 | ) | (5.81 | ) | (5.68 | ) | (5.87 | ) | ||||||||
| Total from investment operations | (5.84 | ) | (5.78 | ) | (5.72 | ) | (5.80 | ) | ||||||||
| Redemption fees | 0.00 | (3) | 0.00 | (3) | 0.00 | (3) | 0.00 | (3) | ||||||||
| Less Distributions: | ||||||||||||||||
| From net investment income | — | — | — | — | ||||||||||||
| From net realized gains | — | — | — | — | ||||||||||||
| Total distributions | — | — | — | — | ||||||||||||
| Net Asset Value, End of Period | $ | 25.15 | $ | 24.74 | $ | 24.18 | $ | 25.17 | ||||||||
Total Return(4) | (18.85 | )%(5) | (18.94 | )%(5) | (19.13 | )%(5) | (18.76 | )%(5) | ||||||||
| SUPPLEMENTAL DATA AND RATIOS | ||||||||||||||||
| Net assets, end of period (000’s) | $ | 2,068,229 | $ | 528,582 | $ | 324,539 | $ | 689,166 | ||||||||
| Ratio of expenses to average net assets: | ||||||||||||||||
| Before expense reimbursement | 1.69 | %(6) | 1.94 | %(6) | 2.44 | %(6) | 1.64 | %(6) | ||||||||
After expense reimbursement(7) | 1.67 | %(6) | 1.92 | %(6) | 2.42 | %(6) | 1.47 | %(6) | ||||||||
| Ratio of net investment income (loss) to average net assets: | ||||||||||||||||
| Before expense reimbursement | 0.39 | %(6) | 0.14 | %(6) | (0.36 | )%(6) | 0.44 | %(6) | ||||||||
After expense reimbursement(7) | 0.41 | %(6) | 0.16 | %(6) | (0.34 | )%(6) | 0.61 | %(6) | ||||||||
| 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.
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| The Paradigm Fund | ||||||||||||||||||||||||
| Advisor | Advisor | Institutional | Advisor | |||||||||||||||||||||
| No Load Class | Class A | Class C | Class | No Load Class | 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, | |||||||||||||||||||
| 2007 | 2007 | 2007 | 2007 | 2006 | 2006 | |||||||||||||||||||
| $ | 25.79 | $ | 25.43 | $ | 24.98 | $ | 25.76 | $ | 20.33 | $ | 20.08 | |||||||||||||
| 0.11 | (2) | 0.04 | (2) | (0.10 | )(2) | 0.17 | (2) | 0.14 | (2) | 0.08 | (2) | |||||||||||||
| 5.35 | 5.27 | 5.15 | 5.34 | 5.52 | 5.43 | |||||||||||||||||||
| 5.46 | 5.31 | 5.05 | 5.51 | 5.66 | 5.51 | |||||||||||||||||||
| 0.00 | (3) | 0.00 | (3) | 0.00 | (3) | 0.00 | (3) | 0.00 | (3) | 0.00 | (3) | |||||||||||||
| (0.13 | ) | (0.09 | ) | (0.00 | )(3) | (0.17 | ) | (0.16 | ) | (0.12 | ) | |||||||||||||
| (0.13 | ) | (0.13 | ) | (0.13 | ) | (0.13 | ) | (0.04 | ) | (0.04 | ) | |||||||||||||
| (0.26 | ) | (0.22 | ) | (0.13 | ) | (0.30 | ) | (0.20 | ) | (0.16 | ) | |||||||||||||
| $ | 30.99 | $ | 30.52 | $ | 29.90 | $ | 30.97 | $ | 25.79 | $ | 25.43 | |||||||||||||
| 21.15 | % | 20.87 | % | 20.20 | % | 21.37 | % | 27.81 | % | 27.42 | % | |||||||||||||
| $ | 2,910,518 | $ | 544,046 | $ | 320,962 | $ | 804,755 | $ | 1,337,761 | $ | 183,031 | |||||||||||||
| 1.68 | % | 1.93 | % | 2.43 | % | 1.63 | % | 1.79 | % | 2.04 | % | |||||||||||||
| 1.68 | % | 1.93 | % | 2.43 | % | 1.48 | % | 1.63 | % | 1.88 | % | |||||||||||||
| 0.39 | % | 0.14 | % | (0.36 | )% | 0.44 | % | 0.44 | % | 0.19 | % | |||||||||||||
| 0.39 | % | 0.14 | % | (0.36 | )% | 0.59 | % | 0.60 | % | 0.35 | % | |||||||||||||
| N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||
See Notes to the Financial Statements.
65
Table of Contents
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Financial Highlights
| The Paradigm Fund | ||||||||||||||||||||||||
| Advisor | Advisor | Advisor | ||||||||||||||||||||||
| Class C | Institutional Class | No Load Class | Class A | 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, | ||||||||||||||||||||
| 2006 | 2006 | 2005 | 2005 | 2005 | ||||||||||||||||||||
PER SHARE DATA:(1) | ||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | $ | 19.76 | $ | 20.31 | $ | 17.54 | $ | 17.40 | $ | 17.21 | ||||||||||||||
| Income from Investment Operations: | ||||||||||||||||||||||||
| Net investment income (loss) | (0.03 | )(2) | 0.19 | (2) | (0.03 | )(2) | (0.07 | )(2) | (0.17 | )(2) | ||||||||||||||
| Net realized and unrealized gain (loss) on investments | 5.33 | 5.49 | 2.82 | 2.77 | 2.74 | |||||||||||||||||||
| Total from investment operations | 5.30 | 5.68 | 2.79 | 2.70 | 2.57 | |||||||||||||||||||
| Redemption fees | 0.00 | (3) | — | 0.03 | 0.00 | (3) | 0.00 | (3) | ||||||||||||||||
| Less Distributions: | ||||||||||||||||||||||||
| From net investment income | (0.04 | ) | (0.19 | ) | (0.01 | ) | — | — | ||||||||||||||||
| From net realized gains | (0.04 | ) | (0.04 | ) | (0.02 | ) | (0.02 | ) | (0.02 | ) | ||||||||||||||
| Total distributions | (0.08 | ) | (0.23 | ) | (0.03 | ) | (0.02 | ) | (0.02 | ) | ||||||||||||||
| Net Asset Value, End of Period | $ | 24.98 | $ | 25.76 | $ | 20.33 | $ | 20.08 | $ | 19.76 | ||||||||||||||
Total Return(4) | 26.82 | % | 27.96 | % | 16.11 | % | 15.54 | % | 14.96 | % | ||||||||||||||
| SUPPLEMENTAL DATA AND RATIOS | ||||||||||||||||||||||||
| Net assets, end of period (000’s) | $ | 116,226 | $ | 507,314 | $ | 418,914 | $ | 60,421 | $ | 38,740 | ||||||||||||||
| Ratio of expenses to average net assets: | ||||||||||||||||||||||||
| Before expense reimbursement | 2.54 | % | 1.74 | % | 1.93 | % | 2.18 | % | 2.68 | % | ||||||||||||||
After expense reimbursement(7) | 2.38 | % | 1.43 | % | 1.69 | % | 1.94 | % | 2.44 | % | ||||||||||||||
| Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||||||
| Before expense reimbursement | (0.31 | )% | 0.48 | % | (0.41 | )% | (0.66 | )% | (1.16 | )% | ||||||||||||||
After expense reimbursement(7) | (0.15 | )% | 0.79 | % | (0.17 | )% | (0.42 | )% | (0.92 | )% | ||||||||||||||
| 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
Table of Contents
| The Paradigm Fund | ||||||||||||||||||||||||||||
| Institutional Class | No Load | Advisor | Advisor | No Load | Advisor | Advisor | ||||||||||||||||||||||
| For the Period | Class | Class A | Class C | Class | Class A | Class C | ||||||||||||||||||||||
| May 27, 2005ˆ | For the | For the | For the | For the | For the | For the | ||||||||||||||||||||||
| through | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||||||||
| December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | ||||||||||||||||||||||
| 2005 | 2004 | 2004 | 2004 | 2003 | 2003 | 2003 | ||||||||||||||||||||||
| $ | 18.13 | $ | 14.91 | $ | 14.82 | $ | 14.73 | $ | 10.12 | $ | 10.07 | $ | 10.05 | |||||||||||||||
| 0.01 | (2) | (0.06 | )(2) | (0.10 | ) | (0.18 | ) | 0.05 | 0.08 | 0.02 | ||||||||||||||||||
| 2.23 | 3.17 | 3.16 | 3.14 | 4.79 | 4.70 | 4.67 | ||||||||||||||||||||||
| 2.24 | 3.11 | 3.06 | 2.96 | 4.84 | 4.78 | 4.69 | ||||||||||||||||||||||
| — | — | — | — | — | — | — | ||||||||||||||||||||||
| (0.04 | ) | (0.02 | ) | (0.02 | ) | (0.02 | ) | (0.05 | ) | (0.03 | ) | (0.01 | ) | |||||||||||||||
| (0.02 | ) | (0.46 | ) | (0.46 | ) | (0.46 | ) | — | — | — | ||||||||||||||||||
| (0.06 | ) | (0.48 | ) | (0.48 | ) | (0.48 | ) | (0.05 | ) | (0.03 | ) | (0.01 | ) | |||||||||||||||
| $ | 20.31 | $ | 17.54 | $ | 17.40 | $ | 17.21 | $ | 14.91 | $ | 14.82 | $ | 14.73 | |||||||||||||||
| 12.35 | %(5) | 20.84 | % | 20.63 | % | 20.08 | % | 47.87 | % | 47.47 | % | 46.68 | % | |||||||||||||||
| $ | 10,895 | $ | 89,313 | $ | 26,525 | $ | 9,426 | $ | 57,646 | $ | 13,157 | $ | 2,125 | |||||||||||||||
| 1.88 | %(6) | 2.10 | % | 2.35 | % | 2.85 | % | 2.24 | % | 2.49 | % | 2.99 | % | |||||||||||||||
| 1.49 | %(6) | 1.74 | % | 1.99 | % | 2.49 | % | 1.74 | % | 1.99 | % | 2.49 | % | |||||||||||||||
| (0.37 | )%(6) | (0.77 | )% | (1.02 | )% | (1.52 | )% | 0.57 | % | 0.32 | % | (0.18 | )% | |||||||||||||||
| 0.02 | %(6) | (0.41 | )% | (0.66 | )% | (1.16 | )% | 1.07 | % | 0.82 | % | 0.32 | % | |||||||||||||||
| N/A | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||
See Notes to the Financial Statements.
67
Table of Contents
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 | ||||||||||||||||
| For the Six | For the Six | For the Six | For the | For the | ||||||||||||||||
| Months Ended | Months Ended | Months Ended | Year Ended | Year Ended | ||||||||||||||||
| June 30, 2008 | June 30, 2008 | June 30, 2008 | December 31, | December 31, | ||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | 2007 | 2007 | ||||||||||||||||
PER SHARE DATA:(1) | ||||||||||||||||||||
| Net Asset Value, Beginning of Period | $ | 19.82 | $ | 19.39 | $ | 19.34 | $ | 17.83 | $ | 17.47 | ||||||||||
| Income from Investment Operations: | ||||||||||||||||||||
| Net investment income (loss) | 0.15 | (2) | 0.13 | (2) | 0.08 | (2) | 0.10 | (2) | 0.05 | (2) | ||||||||||
| Net realized and unrealized gain (loss) on investments | (0.72 | ) | (0.71 | ) | (0.70 | ) | 2.67 | 2.62 | ||||||||||||
| Total from investment operations | (0.57 | ) | (0.58 | ) | (0.62 | ) | 2.77 | 2.67 | ||||||||||||
| Redemption Fees | 0.00 | (3) | — | — | 0.01 | 0.00 | (3) | |||||||||||||
| Less Distributions: | ||||||||||||||||||||
| From net investment income | — | — | — | (0.10 | ) | (0.06 | ) | |||||||||||||
| From net realized gains | — | — | — | (0.69 | ) | (0.69 | ) | |||||||||||||
| Total distributions | — | — | — | (0.79 | ) | (0.75 | ) | |||||||||||||
| Net Asset Value, End of Period | $ | 19.25 | $ | 18.81 | $ | 18.72 | $ | 19.82 | $ | 19.39 | ||||||||||
Total Return(4) | (2.88 | )%(5) | (2.99 | )%(5) | (3.21 | )%(5) | 15.47 | % | 15.16 | % | ||||||||||
SUPPLEMENTAL DATA AND RATIOS | ||||||||||||||||||||
| Net assets, end of period (000’s) | $ | 16,204 | $ | 1,726 | $ | 128 | $ | 13,917 | $ | 1,427 | ||||||||||
| Ratio of operating expenses to average net assets: | ||||||||||||||||||||
| Before expense reimbursement | 2.31 | %(6) | 2.56 | %(6) | 3.06 | %(6) | 2.41 | % | 2.66 | % | ||||||||||
After expense reimbursement(7) | 1.42 | %(6) | 1.67 | %(6) | 2.17 | %(6) | 1.40 | % | 1.65 | % | ||||||||||
| Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
| Before expense reimbursement | 0.73 | %(6) | 0.48 | %(6) | (0.02 | )%(6) | (0.51 | )% | (0.76 | )% | ||||||||||
After expense reimbursement(7) | 1.62 | %(6) | 1.37 | %(6) | 0.87 | %(6) | 0.50 | % | 0.25 | % | ||||||||||
| 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.
68
Table of Contents
| The Medical Fund | ||||||||||||||||||||||||||||||||||||||||||||||
| Advisor Class C | No Load Class | Advisor Class A | No Load Class | Advisor Class A | No Load Class | Advisor Class A | No Load Class | Advisor Class A | ||||||||||||||||||||||||||||||||||||||
| February 16, | For the | For the | For the | For the | For the | For the | For the | For the | ||||||||||||||||||||||||||||||||||||||
| 2007ˆ through | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||||||||||||||||||||||||
| December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | ||||||||||||||||||||||||||||||||||||||
| 2007 | 2006 | 2006 | 2005 | 2005 | 2004 | 2004 | 2003 | 2003 | ||||||||||||||||||||||||||||||||||||||
| $ | 18.29 | $ | 16.64 | $ | 16.34 | $ | 16.76 | $ | 16.49 | $ | 15.67 | $ | 15.47 | $ | 12.72 | $ | 12.61 | |||||||||||||||||||||||||||||
| (0.04 | )(2) | 0.06 | (2) | 0.01 | (2) | (0.18 | )(2) | (0.22 | )(2) | (0.10 | )(2) | (0.11 | )(2) | (0.25 | ) | (0.63 | ) | |||||||||||||||||||||||||||||
| 1.79 | 2.40 | 2.35 | 0.06 | 0.07 | 1.19 | 1.13 | 3.20 | 3.49 | ||||||||||||||||||||||||||||||||||||||
| 1.75 | 2.46 | 2.36 | (0.12 | ) | (0.15 | ) | 1.09 | 1.02 | 2.95 | 2.86 | ||||||||||||||||||||||||||||||||||||
| 0.00 | (3) | 0.00 | (3) | — | 0.00 | (3) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| (0.01 | ) | (0.04 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| (0.69 | ) | (1.23 | ) | (1.23 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| (0.70 | ) | (1.27 | ) | (1.23 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| $ | 19.34 | $ | 17.83 | $ | 17.47 | $ | 16.64 | $ | 16.34 | $ | 16.76 | $ | 16.49 | $ | 15.67 | $ | 15.47 | |||||||||||||||||||||||||||||
| 9.55 | %(5) | 14.81 | % | 14.49 | % | (0.72 | )% | (0.91 | )% | 6.96 | % | 6.59 | % | 23.19 | % | 22.68 | % | |||||||||||||||||||||||||||||
| $ | 148 | $ | 15,527 | $ | 711 | $ | 13,943 | $ | 559 | $ | 19,583 | $ | 696 | $ | 23,695 | $ | 758 | |||||||||||||||||||||||||||||
| 3.19 | %(6) | 2.28 | % | 2.53 | % | 2.48 | % | 2.73 | % | 2.54 | % | 2.79 | % | 2.52 | % | 2.77 | % | |||||||||||||||||||||||||||||
| 2.15 | %(6) | 1.44 | % | 1.69 | % | 2.44 | % | 2.69 | % | 2.39 | % | 2.64 | % | 2.52 | % | 2.77 | % | |||||||||||||||||||||||||||||
| (1.30 | )%(6) | (0.51 | )% | (0.76 | )% | (1.14 | )% | (1.39 | )% | (1.31 | )% | (1.56 | )% | (1.55 | )% | (1.80 | )% | |||||||||||||||||||||||||||||
| (0.26 | )%(6) | 0.33 | % | 0.08 | % | (1.10 | )% | (1.35 | )% | (1.16 | )% | (1.41 | )% | (1.55 | )% | (1.80 | )% | |||||||||||||||||||||||||||||
| N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||
See Notes to the Financial Statements.
69
Table of Contents
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Financial Highlights
| The Small Cap Opportunities Fund | ||||||||||||||||||||
| No Load Class | Advisor Class A | Advisor Class C | Institutional Class | |||||||||||||||||
| For the Six | For the Six | For the Six | For the Six | No Load Class | ||||||||||||||||
| Months Ended | Months Ended | Months Ended | Months Ended | For The | ||||||||||||||||
| June 30, | June 30, | June 30, | June 30, | Year Ended | ||||||||||||||||
| 2008 | 2008 | 2008 | 2008 | December 31, | ||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | 2007 | ||||||||||||||||
PER SHARE DATA:(1) | ||||||||||||||||||||
| Net Asset Value, Beginning of Period | $ | 31.92 | $ | 31.63 | $ | 31.57 | $ | 31.92 | $ | 26.92 | ||||||||||
| Income from Investment Operations: | ||||||||||||||||||||
| Net investment income (loss) | 0.07 | (2) | 0.03 | (2) | (0.03 | )(2) | 0.09 | (2) | 0.01 | (2) | ||||||||||
| Net realized and unrealized gain (loss) on investments | (7.85 | ) | (7.77 | ) | (7.76 | ) | (7.85 | ) | 5.29 | |||||||||||
| Total from investment operations | (7.78 | ) | (7.74 | ) | (7.79 | ) | (7.76 | ) | 5.30 | |||||||||||
| Redemption Fees | 0.00 | (3) | 0.00 | (3) | — | — | 0.00 | (3) | ||||||||||||
| Less Distributions: | ||||||||||||||||||||
| From net investment income | — | — | — | — | (0.23 | ) | ||||||||||||||
| From net realized gains | — | — | — | — | (0.07 | ) | ||||||||||||||
| Total distributions | — | — | — | — | (0.30 | ) | ||||||||||||||
| Net Asset Value, End of Period | $ | 24.14 | $ | 23.89 | $ | 23.78 | $ | 24.16 | $ | 31.92 | ||||||||||
Total Return(4) | (24.37 | )%(5) | (24.47 | )%(5) | (24.67 | )%(5) | (24.31 | )%(5) | 19.65 | % | ||||||||||
SUPPLEMENTAL DATA AND RATIOS | ||||||||||||||||||||
| Net assets, end of period (000’s) | $ | 341,887 | $ | 26,537 | $ | 4,918 | $ | 232,907 | $ | 729,278 | ||||||||||
| Ratio of operating expenses to average net assets: | ||||||||||||||||||||
| Before expense reimbursement | 1.77 | %(6) | 2.02 | %(6) | 2.52 | %(6) | 1.72 | %(6) | 1.71 | % | ||||||||||
After expense reimbursement(7) | 1.67 | %(6) | 1.92 | %(6) | 2.42 | %(6) | 1.47 | %(6) | 1.69 | % | ||||||||||
| Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
| Before expense reimbursement | 0.39 | %(6) | 0.14 | %(6) | (0.36 | )%(6) | 0.44 | %(6) | 0.00 | % | ||||||||||
After expense reimbursement(7) | 0.49 | %(6) | 0.24 | %(6) | (0.26 | )%(6) | 0.69 | %(6) | 0.02 | % | ||||||||||
| 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.
70
Table of Contents
| The Small Cap Opportunities Fund | ||||||||||||||||||||||||||||||
| Advisor Class C | Institutional | Institutional | ||||||||||||||||||||||||||||
| Advisor Class A | February 16, | Class | No Load Class | Advisor Class A | Class | No Load Class | Advisor Class A | |||||||||||||||||||||||
| For the | 2007^ | For the | For the | For the | For the | For the | For the | |||||||||||||||||||||||
| Year Ended | through | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||||||
| December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||||||||||||||||||
| 2007 | 2007 | 2007 | 2006 | 2006 | 2006 | 2005 | 2005 | |||||||||||||||||||||||
| $ | 26.71 | $ | 28.70 | $ | 26.91 | $ | 21.02 | $ | 20.89 | $ | 21.00 | $ | 18.69 | $ | 18.63 | |||||||||||||||
| (0.07 | )(2) | (0.21 | )(2) | 0.07 | (2) | 0.03 | (2) | (0.03 | )(2) | 0.08 | (2) | 0.12 | (2) | 0.02 | (2) | |||||||||||||||
| 5.25 | 3.33 | 5.29 | 5.92 | 5.88 | 5.91 | 2.35 | 2.38 | |||||||||||||||||||||||
| 5.18 | 3.12 | 5.36 | 5.95 | 5.85 | 5.99 | 2.47 | 2.40 | |||||||||||||||||||||||
| 0.00 | (3) | 0.02 | 0.00 | (3) | 0.00 | (3) | 0.00 | (3) | 0.00 | (3) | 0.00 | (3) | 0.00 | (3) | ||||||||||||||||
| (0.19 | ) | (0.20 | ) | (0.28 | ) | (0.05 | ) | (0.03 | ) | (0.08 | ) | (0.01 | ) | (0.01 | ) | |||||||||||||||
| (0.07 | ) | (0.07 | ) | (0.07 | ) | — | — | — | (0.13 | ) | (0.13 | ) | ||||||||||||||||||
| (0.26 | ) | (0.27 | ) | (0.35 | ) | (0.05 | ) | (0.03 | ) | (0.08 | ) | (0.14 | ) | (0.14 | ) | |||||||||||||||
| $ | 31.63 | $ | 31.57 | $ | 31.92 | $ | 26.92 | $ | 26.71 | $ | 26.91 | $ | 21.02 | $ | 20.89 | |||||||||||||||
| 19.36 | % | 10.94 | %(5) | 19.91 | % | 28.37 | % | 28.03 | % | 28.52 | % | 13.17 | % | 12.83 | % | |||||||||||||||
| $ | 36,390 | $ | 4,942 | $ | 316,709 | $ | 268,875 | $ | 12,444 | $ | 209,592 | $ | 55,979 | $ | 5,205 | |||||||||||||||
| 1.96 | % | 2.47 | %(6) | 1.66 | % | 1.83 | % | 2.08 | % | 1.78 | % | 1.93 | % | 2.16 | % | |||||||||||||||
| 1.94 | % | 2.45 | %(6) | 1.49 | % | 1.58 | % | 1.83 | % | 1.38 | % | 1.66 | % | 1.94 | % | |||||||||||||||
| (0.25 | )% | (0.76 | )%(6) | 0.05 | % | (0.14 | )% | (0.39 | )% | (0.09 | )% | 0.18 | % | (0.17 | )% | |||||||||||||||
| (0.23 | )% | (0.75 | )%(6) | 0.22 | % | 0.11 | % | (0.14 | )% | 0.31 | % | 0.45 | % | 0.06 | % | |||||||||||||||
| N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||
See Notes to the Financial Statements.
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Financial Highlights
| The Small Cap Opportunities Fund | ||||||||||||||||||||
| Institutional Class | ||||||||||||||||||||
| For the Period | No Load Class | Advisor Class A | No Load Class | Advisor Class A | ||||||||||||||||
| August 12, 2005ˆ | For the | For the | For the | For the | ||||||||||||||||
| through | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
| December 31, | December 31, | December 31, | December 31, | December 31, | ||||||||||||||||
| 2005 | 2004 | 2004 | 2003 | 2003 | ||||||||||||||||
PER SHARE DATA:(1) | ||||||||||||||||||||
| Net Asset Value, Beginning of Period | $ | 20.48 | $ | 16.55 | $ | 16.50 | $ | 10.04 | $ | 10.03 | ||||||||||
| Income from Investment Operations: | ||||||||||||||||||||
| Net investment income (loss) | 0.00 | (2)(3) | 0.22 | (2) | 0.18 | (2) | 0.25 | 0.15 | ||||||||||||
| Net realized and unrealized gain (loss) on investments | 0.67 | 2.49 | 2.49 | 6.43 | 6.47 | |||||||||||||||
| Total from investment operations | 0.67 | 2.71 | 2.67 | 6.68 | 6.62 | |||||||||||||||
| Redemption Fees | — | — | — | — | — | |||||||||||||||
| Less Distributions: | ||||||||||||||||||||
| From net investment income | (0.02 | ) | (0.16 | ) | (0.13 | ) | (0.17 | ) | (0.15 | ) | ||||||||||
| From net realized gains | (0.13 | ) | (0.41 | ) | (0.41 | ) | — | — | ||||||||||||
| Total distributions | (0.15 | ) | (0.57 | ) | (0.54 | ) | (0.17 | ) | (0.15 | ) | ||||||||||
| Net Asset Value, End of Period | $ | 21.00 | $ | 18.69 | $ | 18.63 | $ | 16.55 | $ | 16.50 | ||||||||||
Total Return(4) | 3.23 | %(5) | 16.40 | % | 16.17 | % | 66.51 | % | 65.98 | % | ||||||||||
SUPPLEMENTAL DATA AND RATIOS | ||||||||||||||||||||
| Net assets, end of period (000’s) | $ | 67,586 | $ | 35,702 | $ | 2,929 | $ | 23,665 | $ | 2,075 | ||||||||||
| Ratio of operating expenses to average net assets: | ||||||||||||||||||||
| Before expense reimbursement | 1.77 | %(6) | 2.03 | % | 2.28 | % | 2.34 | % | 2.59 | % | ||||||||||
After expense reimbursement(7) | 1.59 | %(6) | 1.74 | % | 1.99 | % | 2.34 | % | 2.59 | % | ||||||||||
| Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
| Before expense reimbursement | (0.21 | )%(6) | 1.01 | % | 0.76 | % | 2.14 | % | 1.89 | % | ||||||||||
After expense reimbursement(7) | (0.03 | )%(6) | 1.30 | % | 1.05 | % | 2.14 | % | 1.89 | % | ||||||||||
| 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.
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Financial Highlights
| The Kinetics Government Money Market Fund | ||||||||||||||||||||||||
| For the | ||||||||||||||||||||||||
| Six Months | ||||||||||||||||||||||||
| Ended | For the | For the | For the | For the | For the | |||||||||||||||||||
| June 30, | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
| 2008 | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||||||||||||||
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||
PER SHARE DATA(1) | ||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | $ | 1.00 | $ | 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 Period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||||
| Total Return | 0.66 | %(2) | 3.77 | % | 4.45 | % | 1.88 | % | 0.00 | % | 0.00 | % | ||||||||||||
SUPPLEMENTAL DATA AND RATIOS | ||||||||||||||||||||||||
| Net assets, end of period (000’s) | $ | 2,060 | $ | 1,190 | $ | 1,425 | $ | 1,052 | $ | 1,166 | $ | 3,048 | ||||||||||||
| Ratio of operating expenses to average net assets: | ||||||||||||||||||||||||
| Before expense reimbursement | 3.73 | %(3) | 6.42 | % | 3.94 | % | 5.08 | % | 2.11 | % | 1.32 | % | ||||||||||||
After expense reimbursement(4) | 0.91 | %(3) | 0.98 | % | 0.22 | % | 1.06 | % | 0.98 | % | 0.94 | % | ||||||||||||
| Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||||||
| Before expense reimbursement | (1.57 | )%(3) | (1.74 | )% | 0.73 | % | (2.17 | )% | (1.13 | )% | (0.38 | )% | ||||||||||||
After expense reimbursement(4) | 1.25 | %(3) | 3.70 | % | 4.45 | % | 1.85 | % | 0.00 | % | 0.00 | % | ||||||||||||
| Portfolio turnover rate | N/A | 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) | Not annualized. |
| (3) | Annualized. |
| (4) | See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion. |
See Notes to the Financial Statements.
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Financial Highlights
| The Market Opportunities Fund | ||||||||||||||||
| No Load Class | Advisor Class A | Advisor Class C | Institutional Class | |||||||||||||
| For the Six | For the Six | For the Six | May 19, 2008 | |||||||||||||
| Months Ended | Months Ended | Months Ended | through | |||||||||||||
| June 30, 2008 | June 30, 2008 | June 30, 2008 | June 30, 2008 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
PER SHARE DATA:(1) | ||||||||||||||||
| Net Asset Value, Beginning of Period | $ | 16.12 | $ | 16.07 | $ | 16.01 | $ | 13.71 | ||||||||
| Income from Investment Operations: | ||||||||||||||||
| Net investment income (loss) | 0.06 | (2) | 0.04 | (2) | 0.01 | (2) | 0.02 | (2) | ||||||||
| Net realized and unrealized gain (loss) on investments | (4.59 | ) | (4.57 | ) | (4.55 | ) | (2.13 | ) | ||||||||
| Total from investment operations | (4.53 | ) | (4.53 | ) | (4.54 | ) | (2.11 | ) | ||||||||
| Redemption Fees | 0.00 | (3) | 0.00 | (3) | 0.00 | (3) | — | |||||||||
| Less Distributions: | ||||||||||||||||
| From net investment income | — | — | — | — | ||||||||||||
| From net realized gains | — | — | — | — | ||||||||||||
| Total distributions | — | — | — | — | ||||||||||||
| Net Asset Value, End of Period | $ | 11.59 | $ | 11.54 | $ | 11.47 | $ | 11.60 | ||||||||
Total Return(4) | (28.10 | )%(5) | (28.19 | )%(5) | (28.36 | )%(5) | (15.39 | )%(5) | ||||||||
SUPPLEMENTAL DATA AND RATIOS | ||||||||||||||||
| Net assets, end of period (000’s) | $ | 54,977 | $ | 34,130 | $ | 6,363 | $ | 8 | ||||||||
| Ratio of operating expenses to average net assets: | ||||||||||||||||
| Before expense reimbursement | 1.78 | %(6) | 2.03 | %(6) | 2.53 | %(6) | 1.77 | %(6) | ||||||||
After expense reimbursement(7) | 1.67 | %(6) | 1.92 | %(6) | 2.42 | %(6) | 1.43 | %(6) | ||||||||
| Ratio of net investment income (loss) to average net assets: | ||||||||||||||||
| Before expense reimbursement | 0.81 | %(6) | 0.55 | %(6) | 0.03 | %(6) | 1.31 | %(6) | ||||||||
After expense reimbursement(7) | 0.92 | %(6) | 0.66 | %(6) | 0.14 | %(6) | 1.65 | %(6) | ||||||||
| 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.
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| The Market Opportunities Fund | ||||||||||||||||||||
| No Load Class | Advisor Class A | Advisor Class C | No Load Class | Advisor Class A | ||||||||||||||||
| For the | For the | February 16, 2007^ | January 31, 2006ˆ | January 31, 2006ˆ | ||||||||||||||||
| Year Ended | Year Ended | through | through | through | ||||||||||||||||
| December 31, | December 31, | December 31, | December 31, | December 31, | ||||||||||||||||
| 2007 | 2007 | 2007 | 2006 | 2006 | ||||||||||||||||
| $ | 12.05 | $ | 12.04 | $ | 12.99 | $ | 10.00 | $ | 10.00 | |||||||||||
| 0.04 | (2) | 0.00 | (2) | (0.05 | )(2) | 0.04 | 0.02 | |||||||||||||
| 4.05 | 4.04 | 3.07 | 2.05 | 2.05 | ||||||||||||||||
| 4.09 | 4.04 | 3.02 | 2.09 | 2.07 | ||||||||||||||||
| 0.01 | 0.00 | (3) | 0.00 | (3) | 0.00 | (3) | — | |||||||||||||
| (0.03 | ) | (0.01 | ) | — | (0.04 | ) | (0.03 | ) | ||||||||||||
| — | — | — | — | — | ||||||||||||||||
| (0.03 | ) | (0.01 | ) | — | (0.04 | ) | (0.03 | ) | ||||||||||||
| $ | 16.12 | $ | 16.07 | $ | 16.01 | $ | 12.05 | $ | 12.04 | |||||||||||
| 34.03 | % | 33.54 | % | 23.25 | %(5) | 20.85 | %(5) | 20.68 | %(5) | |||||||||||
| $ | 63,004 | $ | 43,907 | $ | 8,790 | $ | 7,994 | $ | 9,591 | |||||||||||
| 1.91 | % | 2.16 | % | 2.66 | %(6) | 2.68 | %(6) | 2.93 | %(6) | |||||||||||
| 1.74 | % | 1.99 | % | 2.49 | %(6) | 1.46 | %(6) | 1.71 | %(6) | |||||||||||
| 0.12 | % | (0.14 | )% | (0.60 | )%(6) | (0.76 | )%(6) | (1.01 | )%(6) | |||||||||||
| 0.29 | % | 0.03 | % | (0.43 | )%(6) | 0.46 | %(6) | 0.21 | %(6) | |||||||||||
| N/A | N/A | N/A | N/A | N/A | ||||||||||||||||
See Notes to the Financial Statements.
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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Financial Highlights
| The Water Infrastructure Fund | ||||||||||||||||
| No Load Class | Advisor Class A | Advisor Class C | Institutional Class | |||||||||||||
| For the Six | For the Six | For the Six | For the Six | |||||||||||||
| Months Ended | Months Ended | Months Ended | Months Ended | |||||||||||||
| June 30, 2008 | June 30, 2008 | June 30, 2008 | June 30, 2008 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
PER SHARE DATA:(1) | ||||||||||||||||
| Net Asset Value, Beginning of Period | $ | 10.17 | $ | 10.17 | $ | 10.16 | $ | 10.18 | ||||||||
| Income from Investment Operations: | ||||||||||||||||
| Net investment income | 0.08 | (2) | 0.07 | (2) | 0.05 | (2) | 0.09 | (2) | ||||||||
| Net realized and unrealized gain (loss) on investments | (0.31 | ) | (0.32 | ) | (0.32 | ) | (0.32 | ) | ||||||||
| Total from investment operations | (0.23 | ) | (0.25 | ) | (0.27 | ) | (0.23 | ) | ||||||||
| Redemption Fees | 0.00 | (3) | — | — | — | |||||||||||
| Less Distributions: | ||||||||||||||||
| From net investment income | — | — | — | — | ||||||||||||
| From net realized gains | — | — | — | — | ||||||||||||
| Total distributions | — | — | — | — | ||||||||||||
| Net Asset Value, End of Period | $ | 9.94 | $ | 9.92 | $ | 9.89 | $ | 9.95 | ||||||||
Total Return(4) | (2.26 | )%(5) | (2.46 | )%(5) | (2.66 | )%(5) | (2.16 | )%(5) | ||||||||
SUPPLEMENTAL DATA AND RATIOS | ||||||||||||||||
| Net assets, end of period (000’s) | $ | 20,229 | $ | 3,532 | $ | 1,829 | $ | 286 | ||||||||
| Ratio of operating expenses to average net assets: | ||||||||||||||||
| Before expense reimbursement | 2.22 | %(6) | 2.47 | %(6) | 2.97 | %(6) | 2.17 | %(6) | ||||||||
After expense reimbursement(7) | 1.65 | %(6) | 1.90 | %(6) | 2.40 | %(6) | 1.45 | %(6) | ||||||||
| Ratio of net investment income (loss) to average net assets: | ||||||||||||||||
| Before expense reimbursement | 1.12 | %(6) | 0.87 | %(6) | 0.37 | %(6) | 1.17 | %(6) | ||||||||
After expense reimbursement(7) | 1.69 | %(6) | 1.44 | %(6) | 0.94 | %(6) | 1.89 | %(6) | ||||||||
| 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.
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| The Water Infrastructure Fund | ||||||||||||||||||
| No Load Class | Advisor Class A | Advisor Class C | Institutional Class | |||||||||||||||
| June 29, 2007^ | June 29, 2007^ | June 29, 2007^ | June 29, 2007^ | |||||||||||||||
| through | through | through | through | |||||||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||||||||
| 2007 | 2007 | 2007 | 2007 | |||||||||||||||
| $ | 10.00 | $ | 10.00 | $ | 10.00 | $ | 10.00 | |||||||||||
| 0.06 | (2) | 0.05 | (2) | 0.02 | (2) | 0.06 | (2) | |||||||||||
| 0.20 | 0.20 | 0.21 | 0.21 | |||||||||||||||
| 0.26 | 0.25 | 0.23 | 0.27 | |||||||||||||||
| — | 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 | ) | |||||||||||
| $ | 10.17 | $ | 10.17 | $ | 10.16 | $ | 10.18 | |||||||||||
| 2.64 | %(5) | 2.55 | %(5) | 2.33 | %(5) | 2.76 | %(5) | |||||||||||
| $ | 2,385 | $ | 2,459 | $ | 1,201 | $ | 103 | |||||||||||
| 3.62 | %(6) | 3.87 | %(6) | 4.37 | %(6) | 3.58 | %(6) | |||||||||||
| 1.74 | %(6) | 1.99 | %(6) | 2.49 | %(6) | 1.54 | %(6) | |||||||||||
| (0.73 | )%(6) | (0.98 | )%(6) | (1.48 | )%(6) | (0.69 | )%(6) | |||||||||||
| 1.15 | %(6) | 0.90 | %(6) | 0.40 | %(6) | 1.35 | %(6) | |||||||||||
| N/A | N/A | N/A | N/A | |||||||||||||||
See Notes to the Financial Statements.
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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 Period | For the Period | For the Period | For the Period | |||||||||||||
| February 11, 2008 | February 11, 2008 | February 11, 2008 | February 11, 2008 | |||||||||||||
| through | through | through | through | |||||||||||||
| June 30, 2008 | June 30, 2008 | June 30, 2008 | June 30, 2008 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
PER SHARE DATA:(1) | ||||||||||||||||
| Net Asset Value, Beginning of Period | $ | 10.00 | $ | 10.00 | $ | 10.00 | $ | 10.00 | ||||||||
| Income from Investment Operations: | ||||||||||||||||
| Net investment income (loss) | 0.01 | (2) | 0.00 | (2)(3) | (0.02 | )(2) | 0.02 | (2) | ||||||||
| Net realized and unrealized gain (loss) on investments | (0.30 | ) | (0.30 | ) | (0.30 | ) | (0.30 | ) | ||||||||
| Total from investment operations | (0.29 | ) | (0.30 | ) | (0.32 | ) | (0.28 | ) | ||||||||
| Redemption Fees | — | — | — | — | ||||||||||||
| Less Distributions: | ||||||||||||||||
| From net investment income | — | — | — | — | ||||||||||||
| From net realized gains | — | — | — | — | ||||||||||||
| Total distributions | — | — | — | — | ||||||||||||
| Net Asset Value, End of Period | $ | 9.71 | $ | 9.70 | $ | 9.68 | $ | 9.72 | ||||||||
Total Return(4) | (2.90 | )%(5) | (3.00 | )%(5) | (3.20 | )%(5) | (2.80 | )%(5) | ||||||||
SUPPLEMENTAL DATA AND RATIOS | ||||||||||||||||
| Net assets, end of period (000’s) | $ | 104 | $ | 99 | $ | 97 | $ | 97 | ||||||||
| Ratio of operating expenses to average net assets: | ||||||||||||||||
| Before expense reimbursement | 17.67 | %(6) | 17.92 | %(6) | 18.42 | %(6) | 17.62 | %(6) | ||||||||
After expense reimbursement(7) | 1.49 | %(6) | 1.74 | %(6) | 2.24 | %(6) | 1.29 | %(6) | ||||||||
| Ratio of net investment income (loss) to average net assets | ||||||||||||||||
| Before expense reimbursement | (15.88 | )%(6) | (16.13 | )%(6) | (16.63 | )%(6) | (15.83 | )%(6) | ||||||||
After expense reimbursement(7) | 0.30 | %(6) | 0.05 | %(6) | (0.45 | )%(6) | 0.50 | %(6) | ||||||||
| 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.
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KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
June 30, 2008 (Unaudited)
The Internet Portfolio
![[GRAPH]](https://capedge.com/proxy/N-CSRS/0000950137-08-011437/c34603bc3460307.gif)
The Global Portfolio
![[GRAPH]](https://capedge.com/proxy/N-CSRS/0000950137-08-011437/c34603bc3460308.gif)
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KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
ALLOCATION OF PORTFOLIO ASSETS
June 30, 2008 (Unaudited) — (Continued)
The Paradigm Portfolio
![[GRAPH]](https://capedge.com/proxy/N-CSRS/0000950137-08-011437/c34603bc3460309.gif)
The Medical Portfolio
![[GRAPH]](https://capedge.com/proxy/N-CSRS/0000950137-08-011437/c34603bc3460310.gif)
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KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
ALLOCATION OF PORTFOLIO ASSETS
June 30, 2008 (Unaudited) — (Continued)
The Small Cap Opportunities Portfolio
![[GRAPH]](https://capedge.com/proxy/N-CSRS/0000950137-08-011437/c34603bc3460311.gif)
The Kinetics Government Money Market Portfolio
![[GRAPH]](https://capedge.com/proxy/N-CSRS/0000950137-08-011437/c34603bc3460312.gif)
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KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
ALLOCATION OF PORTFOLIO ASSETS
June 30, 2008 (Unaudited) — (Continued)
The Market Opportunities Portfolio
![[GRAPH IN %]](https://capedge.com/proxy/N-CSRS/0000950137-08-011437/c34603bc3460331.gif)
The Water Infrastructure Portfolio
![[GRAPH IN %]](https://capedge.com/proxy/N-CSRS/0000950137-08-011437/c34603bc3460332.gif)
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KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
ALLOCATION OF PORTFOLIO ASSETS
June 30, 2008 (Unaudited) — (Continued)
The Multi-Disciplinary Portfolio
![[GRAPH IN %]](https://capedge.com/proxy/N-CSRS/0000950137-08-011437/c34603bc3460333.gif)
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The Internet Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited)
| Identifier | COMMON STOCKS — 89.40% | Shares | Value | |||||||
Aerospace & Defense — 5.60% | ||||||||||
| CAI | CACI International, Inc. — Class A*(1) | 140,000 | $ | 6,407,800 | ||||||
Asian Exchanges — 7.10% | ||||||||||
| 388 HK | Hong Kong Exchanges & Clearing Limited | 240,000 | 3,508,930 | |||||||
| 8697 JP | Osaka Securities Exchange Co., Ltd. | 144 | 606,187 | |||||||
| SGX SP | Singapore Exchange Limited | 788,000 | 4,002,117 | |||||||
| 8,117,234 | ||||||||||
Asset Management — 1.31% | ||||||||||
| URB/A CN | Urbana Corp. — Class A* | 240,000 | 689,615 | |||||||
| GROW | US Global Investors, Inc. — Class A(1) | 48,000 | 804,000 | |||||||
| 1,493,615 | ||||||||||
Brokerage & Investment Banking — 0.06% | ||||||||||
| IAP LN | ICAP plc | 6,000 | 64,774 | |||||||
Capital Markets — 1.21% | ||||||||||
| BK | The Bank of New York Mellon Corp.(1) | 4,000 | 151,320 | |||||||
| CLST LN | Collins Stewart plc | 4,000 | 5,876 | |||||||
| GFIG | GFI Group, Inc.(1) | 8,000 | 72,080 | |||||||
| LAB | LaBranche & Co. Inc.* | 48,000 | 339,840 | |||||||
| NTRS | Northern Trust Corp. | 4,000 | 274,280 | |||||||
| STT | State Street Corporation | 8,000 | 511,920 | |||||||
| TLPR LN | Tullett Prebon plc | 4,000 | 34,259 | |||||||
| 1,389,575 | ||||||||||
Commercial Services & Supplies — 5.47% | ||||||||||
| CDCO | Comdisco Holding Company, Inc.* | 194,400 | 1,856,520 | |||||||
| RBA | Ritchie Bros. Auctioneers, Incorporated(1) | 162,000 | 4,395,060 | |||||||
| 6,251,580 | ||||||||||
Computers & Peripherals — 0.73% | ||||||||||
| AAPL | Apple, Inc.* | 5,000 | 837,200 | |||||||
Diversified Consumer Services — 0.41% | ||||||||||
| APOL | Apollo Group, Inc. — Class A*(1) | 2,000 | 88,520 | |||||||
| BID | Sotheby’s(1) | 14,400 | 379,728 | |||||||
| 468,248 | ||||||||||
See Notes to the Financial Statements.
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Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Diversified Financial Services — 8.88% | ||||||||||
| CLE LN | Climate Exchange plc* | 40,000 | $ | 1,520,964 | ||||||
| CME | CME Group, Inc.(1) | 8,000 | 3,065,520 | |||||||
| ICE | IntercontinentalExchange Inc.* | 30,000 | 3,420,000 | |||||||
| LSE LN | London Stock Exchange Group plc | 72,352 | 1,124,082 | |||||||
| NMX | Nymex Holdings, Inc.(1) | 12,200 | 1,030,656 | |||||||
| 10,161,222 | ||||||||||
European Exchanges — 1.93% | ||||||||||
| BME SM | Bolsas Y Mercados Espanoles | 14,000 | 521,302 | |||||||
| DB1 GR | Deutsche Boerse AG | 6,600 | 744,960 | |||||||
| EXAE GA | Hellenic Exchanges S.A. Holding | 12,000 | 151,148 | |||||||
| OMX SS | OMX AB* | 18,000 | 792,037 | |||||||
| 2,209,447 | ||||||||||
Holding Company — 16.90% | ||||||||||
| GBLB BB | Groupe Bruxelles Lambert S.A. | 22,000 | 2,618,982 | |||||||
| GBLS BB | Groupe Bruxelles Lambert S.A. Strip VVPR* | 2,000 | 31 | |||||||
| LUK | Leucadia National Corporation(1) | 356,000 | 16,710,640 | |||||||
| 19,329,653 | ||||||||||
Household Durables — 1.11% | ||||||||||
| IEP | Icahn Enterprises LP | 18,000 | 1,266,120 | |||||||
Internet & Catalog Retail — 0.59% | ||||||||||
| EBAY | eBay, Inc.*(1) | 24,000 | 655,920 | |||||||
| IACI | IAC/InterActiveCorp*(1) | 1,000 | 19,280 | |||||||
| 675,200 | ||||||||||
Internet Software & Services — 1.10% | ||||||||||
| BIDU | Baidu.com, Inc. — ADR*(1) | 1,000 | 312,960 | |||||||
| GOOG | Google Inc. — Class A* | 1,800 | 947,556 | |||||||
| 1,260,516 | ||||||||||
IT Services — 8.24% | ||||||||||
| BR | Broadridge Financial Solutions, Inc. | 120,000 | 2,526,000 | |||||||
| IRM | Iron Mountain Incorporated*(1) | 6,000 | 159,300 | |||||||
| MANT | ManTech International Corporation — Class A*(1) | 140,000 | 6,736,800 | |||||||
| 9,422,100 | ||||||||||
See Notes to the Financial Statements.
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Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Leisure Equipment & Products — 0.01% | ||||||||||
| MVL | Marvel Entertainment, Inc.*(1) | 322 | $ | 10,349 | ||||||
Media — 14.09% | ||||||||||
| DWA | DreamWorks Animation SKG, Inc. — Class A* | 92,000 | 2,742,520 | |||||||
| SSP | E.W. Scripps Company — Class A(1) | 4,000 | 166,160 | |||||||
| HPOL | Harris Interactive, Inc.*(1) | 80,000 | 160,800 | |||||||
| LBTYA | Liberty Global, Inc. — Class A* | 120,257 | 3,779,677 | |||||||
| LBTYK | Liberty Global, Inc. — Series C*(1) | 182,707 | 5,546,985 | |||||||
| DIS | The Walt Disney Co.(1) | 1,380 | 43,056 | |||||||
| WMG | Warner Music Group Corp.(1) | 208,000 | 1,485,120 | |||||||
| WPO | The Washington Post Company — Class B(1) | 3,600 | 2,112,840 | |||||||
| XMSR | XM Satellite Radio Holdings, Inc. — Class A* | 10,000 | 78,400 | |||||||
| 16,115,558 | ||||||||||
Other Exchanges — 2.14% | ||||||||||
| ASX AU | ASX Ltd. | 36,000 | 1,083,662 | |||||||
| JSE SJ | JSE Limited | 60,000 | 417,625 | |||||||
| NZX NZ | NZX Ltd. | 12,000 | 68,959 | |||||||
| X CN | TMX Group Inc. | 21,340 | 881,057 | |||||||
| 2,451,303 | ||||||||||
Publishing — 0.36% | ||||||||||
| MCO | Moody’s Corporation(1) | 12,000 | 413,280 | |||||||
Software — 2.86% | ||||||||||
| FTIS LI | Financial Technologies (India) Ltd. — GDR | 144,000 | 842,400 | |||||||
| MVSN | Macrovision Solutions Corp.*(1) | 152,880 | 2,287,085 | |||||||
| MSFT | Microsoft Corp. | 5,000 | 137,550 | |||||||
| 3,267,035 | ||||||||||
Special Purpose Entity — 0.04% | ||||||||||
| ADPAO | Adelphia Contingent Value Vehicle CVV Series ACC-4 Int* | 250,827 | — | |||||||
| ADPAL | Adelphia Recovery Trust Ser ACC-6 E/F Int* | 4,878,645 | 48,786 | |||||||
| 48,786 | ||||||||||
See Notes to the Financial Statements.
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The Internet Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
U.S. Equity Exchanges — 9.26% | ||||||||||
| NDAQ | The Nasdaq OMX Group*(1) | 170,000 | $ | 4,513,500 | ||||||
| NYX | NYSE Euronext(1) | 120,000 | 6,079,200 | |||||||
| 10,592,700 | ||||||||||
Wireless Telecommunication Services — 0.00% | ||||||||||
| SNSHA | Sunshine PCS Corp. — Class A* | 149,890 | 450 | |||||||
TOTAL COMMON STOCKS (cost $75,002,290) | 102,253,745 | |||||||||
| ESCROW NOTES — 0.00% | ||||||||||
Adelphia Communications Corp.(1) | 200,000 | — | ||||||||
Adelphia Communications Corp. Preferred | 190,000 | — | ||||||||
TOTAL ESCROW NOTES (cost $0) | — | |||||||||
| Principal | ||||||||||
| CONVERTIBLE BONDS — 1.63% | Amount | |||||||||
Diversified Telecommunication Services — 1.63% | ||||||||||
| 52729NAS9 | Level 3 Communications, Inc., CLB 6.000%, 03/15/2010 | $ | 2,000,000 | 1,860,000 | ||||||
TOTAL CONVERTIBLE BONDS (cost $1,533,163) | 1,860,000 | |||||||||
| RIGHTS — 0.96% | Shares | |||||||||
Commercial Services & Supplies — 0.96% | ||||||||||
| CDCOR | Comdisco Holding Company, Inc. Rights Expiration Date: 12/31/2050 Strike Price $1.00# | 12,240,699 | 1,101,663 | |||||||
| TOTAL RIGHTS (cost $3,253,775) | 1,101,663 | |||||||||
See Notes to the Financial Statements.
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Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Principal | ||||||||||
| Identifier | SHORT-TERM INVESTMENTS — 7.43% | Amount | Value | |||||||
US Government Agency Issues — 7.31% | ||||||||||
| 313384YV | Federal Home Loan Bank Discount Note 1.850%, 07/01/2008 | $ | 8,357,000 | $ | 8,357,000 | |||||
| Shares | ||||||||||
Money Market Funds — 0.12% | ||||||||||
| FIUXX | First American Prime Obligations Fund — Class I | 138,074 | 138,074 | |||||||
TOTAL SHORT-TERM INVESTMENTS (cost $8,495,074) | 8,495,074 | |||||||||
| INVESTMENTS PURCHASED | ||||||||||
| WITH THE CASH PROCEEDS | ||||||||||
| FROM SECURITIES | ||||||||||
| LENDING — 51.22% | ||||||||||
Investment Companies — 51.22% | ||||||||||
Mount Vernon Securities Lending Trust — Prime Portfolio | 58,584,774 | 58,584,774 | ||||||||
TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $58,584,774) | 58,584,774 | |||||||||
TOTAL INVESTMENTS — 150.64% (cost $146,869,076) | $ | 172,295,256 | ||||||||
Percentages are stated as a percent of net assets.
| * — | Non-income producing security. |
| # — | Contingent value right (contingent upon profitability of company). |
| ADR — | American Depository Receipt. |
| GDR — | Global Depository Receipt. |
| CLB — | Callable Security. |
| (1) — | This security or a portion of this security was out on loan at June 30, 2008. Total loaned securities had a market value of $56,458,394 at June 30, 2008. |
See Notes to the Financial Statements.
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The Global Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited)
| Identifier | COMMON STOCKS — 96.35% | Shares | Value | |||||||
Airlines — 2.70% | ||||||||||
| 753 HK | Air China Limited — Class H | 50,000 | $ | 24,624 | ||||||
| 670 HK | China Eastern Airlines Corporation Limited — Class H* | 100,000 | 31,421 | |||||||
| 1055 HK | China Southern Airlines Company Limited — Class H* | 64,000 | 25,445 | |||||||
| 81,490 | ||||||||||
Asian Exchanges — 11.70% | ||||||||||
| CML SJ | Coronation Fund Managers Ltd. | 30,000 | 17,433 | |||||||
| DC/A CN | Dundee Corporation — Class A* | 1,600 | 19,362 | |||||||
| 388 HK | Hong Kong Exchanges & Clearing Limited | 9,500 | 138,895 | |||||||
| PSE PM | Philippine Stock Exchange, Inc. | 1,600 | 23,165 | |||||||
| SGX SP | Singapore Exchange Limited | 30,500 | 154,904 | |||||||
| 353,759 | ||||||||||
Asset Management — 10.06% | ||||||||||
| URB/A CN | Urbana Corp. — Class A* | 31,800 | 91,374 | |||||||
| GROW | US Global Investors, Inc. — Class A | 7,000 | 117,250 | |||||||
| 806 HK | Value Partners Group Limited | 111,000 | 95,380 | |||||||
| 304,004 | ||||||||||
Beverages — 1.89% | ||||||||||
| 168 HK | Tsingtao Brewery Co. Limited — Class H | 28,000 | 57,025 | |||||||
Commercial Banks — 10.17% | ||||||||||
| 3988 HK | Bank of China Ltd. — Class H | 136,000 | 60,524 | |||||||
| 939 HK | China Construction Bank Corp. — Class H | 70,000 | 56,379 | |||||||
| HDB | HDFC Bank Ltd. — ADR | 620 | 44,429 | |||||||
| IBN | ICICI Bank Ltd. — ADR | 1,500 | 43,140 | |||||||
| 1398 HK | Industrial & Commercial Bank of China — Class H | 80,000 | 54,686 | |||||||
| SBKFF | State Bank of India Ltd. — GDR | 900 | 48,420 | |||||||
| 307,578 | ||||||||||
Construction & Engineering — 2.68% | ||||||||||
| 1186 HK | China Railway Construction Corp. — Class H* | 26,000 | 36,680 | |||||||
| 390 HK | China Railway Group Ltd. — Class H* | 24,000 | 17,883 | |||||||
| NTBC LN | Noida Toll Bridge Company Ltd. — GDR* | 4,000 | 26,500 | |||||||
| 81,063 | ||||||||||
See Notes to the Financial Statements.
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The Global Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Diversified Telecommunication Services — 0.59% | ||||||||||
| 2267781Z | CIBL Inc.* | 51 | $ | 17,850 | ||||||
Electric Utilities — 3.79% | ||||||||||
| 991 HK | Datang International Power Generation Company Limited — Class H | 96,000 | 57,005 | |||||||
| HNP | Huaneng Power International, Inc. — ADR | 1,200 | 33,180 | |||||||
| RIFS LI | Reliance Infrastructure Ltd. — GDR | 450 | 24,525 | |||||||
| 114,710 | ||||||||||
Gaming — 1.91% | ||||||||||
| 200 HK | Melco International Development Limited | 60,000 | 57,713 | |||||||
Holding Company — 0.00% | ||||||||||
| GBLS BB | Groupe Bruxelles Lambert S.A. Strip VVPR* | 160 | 3 | |||||||
Hotels Restaurants & Leisure — 1.23% | ||||||||||
| MPEL | Melco Crown Entertainment Ltd. — ADR* | 4,000 | 37,280 | |||||||
Insurance — 4.56% | ||||||||||
| LFC | China Life Insurance Co., Limited — ADR(1) | 500 | 26,090 | |||||||
| 2628 HK | China Life Insurance Co., Limited — Class H | 16,000 | 56,020 | |||||||
| 2318 HK | Ping An Insurance Group Company of China Limited — Class H | 7,500 | 55,789 | |||||||
| 137,899 | ||||||||||
Metals & Mining — 3.81% | ||||||||||
| 358 HK | Jiangxi Copper Company Ltd. — Class H | 14,000 | 27,471 | |||||||
| SLT | Sterlite Industries India Ltd. — ADR* | 4,000 | 63,600 | |||||||
| VED LN | Vedanta Resources Plc | 550 | 23,959 | |||||||
| 115,030 | ||||||||||
Oil, Gas & Consumable Fuels — 9.41% | ||||||||||
| SNP | China Petroleum & Chemical Corp. — ADR | 250 | 23,222 | |||||||
| 386 HK | China Petroleum & Chemical Corp. — Class H | 64,000 | 59,919 | |||||||
| 1088 HK | China Shenhua Energy Company Limited — Class H | 14,000 | 54,942 | |||||||
| CEO | CNOOC Limited — ADR(1) | 300 | 52,062 | |||||||
| PTR | PetroChina Company Limited — ADR | 350 | 45,101 | |||||||
| RIGD LI | Reliance Industries Limited — GDR (Acquired 04/03/08-05/06/08 at $63,073)† | 500 | 49,200 | |||||||
| 284,446 | ||||||||||
See Notes to the Financial Statements.
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The Global Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Other Exchanges — 0.51% | ||||||||||
| JSE SJ | JSE Limited | 2,225 | $ | 15,487 | ||||||
Real Estate — 2.47% | ||||||||||
| 12 HK | Henderson Land Development Company Limited | 12,000 | 74,796 | |||||||
Real Estate Investment Trusts (REITs) — 2.34% | ||||||||||
| 823 HK | The Link REIT | 31,000 | 70,610 | |||||||
Real Estate Management & Development — 2.29% | ||||||||||
| 1 HK | Cheung Kong Holdings Ltd. | 4,000 | 53,916 | |||||||
| XIN | Xinyuan Real Estate Co. Ltd. — ADR* | 2,500 | 15,175 | |||||||
| 69,091 | ||||||||||
Software — 4.03% | ||||||||||
| FTIS LI | Financial Technologies (India) Ltd. — GDR | 20,800 | 121,680 | |||||||
Tobacco — 0.65% | ||||||||||
| PM | Philip Morris International, Inc.(1) | 400 | 19,756 | |||||||
Transportation Infrastructure — 19.56% | ||||||||||
| 995 HK | Anhui Expressway Co., Ltd. — Class H | 66,000 | 47,825 | |||||||
| 694 HK | Beijing Capital International Airport Company Limited — Class H | 235,000 | 195,601 | |||||||
| 357 HK | Hainan Meilan International Airport Company Limited — Class H | 65,000 | 59,938 | |||||||
| 737 HK | Hopewell Highway Infrastructure Limited | 34,000 | 25,771 | |||||||
| 54 HK | Hopewell Holdings Limited | 16,000 | 56,840 | |||||||
| 177 HK | Jiangsu Expressway Company Ltd. — Class H | 54,000 | 44,254 | |||||||
| 548 HK | Shenzhen Expressway Company Limited — Class H | 54,000 | 31,580 | |||||||
| 107 HK | Sichuan Expressway Co. Limited — Class H | 114,000 | 32,750 | |||||||
| 3382 HK | Tianjin Port Development Holdings Ltd. | 148,000 | 59,600 | |||||||
| 576 HK | Zhejiang Expressway Co., Limited — Class H | 48,000 | 36,998 | |||||||
| 591,157 | ||||||||||
Wireless Telecommunication Services — 0.00% | ||||||||||
| SNSHA | Sunshine PCS Corp. — Class A* | 6,000 | 18 | |||||||
| TOTAL COMMON STOCKS (cost $3,356,281) | 2,912,445 | |||||||||
See Notes to the Financial Statements.
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The Global Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | PREFERRED STOCKS — 0.01% | Shares | Value | |||||||
Diversified Telecommunication Services — 0.01% | ||||||||||
| PTVIP.PK | PTV, Inc. — Series A, CLB* | 487 | $ | 304 | ||||||
| TOTAL PREFERRED STOCKS (cost $3,774) | 304 | |||||||||
| SHORT-TERM INVESTMENTS — 3.32% | ||||||||||
Money Market Funds — 3.32% | ||||||||||
| FIUXX | First American Prime Obligations Fund — Class I | 100,238 | 100,238 | |||||||
TOTAL SHORT-TERM INVESTMENTS (cost $100,238) | 100,238 | |||||||||
| INVESTMENTS PURCHASED | ||||||||||
| WITH THE CASH PROCEEDS | ||||||||||
| FROM SECURITIES LENDING — 3.22% | ||||||||||
Investment Companies — 3.22% | ||||||||||
Mount Vernon Securities Lending Trust — Prime Portfolio | 97,416 | 97,416 | ||||||||
TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $97,416) | 97,416 | |||||||||
TOTAL INVESTMENTS — 102.90% (cost $3,557,709) | $ | 3,110,403 | ||||||||
Percentages are stated as a percent of net assets.
| * — | Non-income producing security. |
| † — | Restricted security. |
ADR — American Depository Receipt.
GDR — Global Depository Receipt.
CLB — Callable Security.
| (1) — | This security or a portion of this security was out on loan at June 30, 2008. Total loaned securities had a market value of $96,929 at June 30, 2008. |
See Notes to the Financial Statements.
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The Paradigm Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited)
| Identifier | COMMON STOCKS — 86.57% | Shares | Value | |||||||
Aerospace & Defense — 0.72% | ||||||||||
| CAI | CACI International, Inc. — Class A*(1) | 574,000 | $ | 26,271,980 | ||||||
Agricultural Operations — 0.12% | ||||||||||
| ADM | Archer-Daniels-Midland Company(1) | 88,000 | 2,970,000 | |||||||
| BG | Bunge Limited(1) | 15,000 | 1,615,350 | |||||||
| 4,585,350 | ||||||||||
Aircraft Maintenance — 0.04% | ||||||||||
| 44 HK | Hong Kong Aircraft Engineering Company Limited | 84,000 | 1,293,841 | |||||||
Airlines — 0.33% | ||||||||||
| 753 HK | Air China Limited — Class H | 2,400,000 | 1,181,955 | |||||||
| CEA | China Eastern Airlines Corporation Limited — ADR*(1) | 40,000 | 1,256,820 | |||||||
| 670 HK | China Eastern Airlines Corporation Limited — Class H* | 11,364,000 | 3,570,721 | |||||||
| ZNH | China Southern Airlines Company Limited — ADR* | 18,000 | 356,040 | |||||||
| 1055 HK | China Southern Airlines Company Limited — Class H* | 14,000,000 | 5,566,065 | |||||||
| 11,931,601 | ||||||||||
Asian Exchanges — 4.60% | ||||||||||
| 388 HK | Hong Kong Exchanges & Clearing Limited | 7,368,000 | 107,724,133 | |||||||
| 8697 JP | Osaka Securities Exchange Co., Ltd. | 4,800 | 20,206,244 | |||||||
| SGX SP | Singapore Exchange Limited | 7,952,000 | 40,386,844 | |||||||
| 168,317,221 | ||||||||||
See Notes to the Financial Statements.
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The Paradigm Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Asset Management — 7.75% | ||||||||||
| AB | AllianceBernstein Holding LP | 58,000 | $ | 3,171,440 | ||||||
| BLK | BlackRock, Inc.(1) | 258,400 | 45,736,800 | |||||||
| BX | The Blackstone Group LP | 600,000 | 10,926,000 | |||||||
| BAM | Brookfield Asset Management Inc. — Class A(1) | 2,734,000 | 88,964,360 | |||||||
| CNS | Cohen & Steers, Inc.(1) | 488,000 | 12,673,360 | |||||||
| EV | Eaton Vance Corp.(1) | 800,000 | 31,808,000 | |||||||
| FIG | Fortress Investment Group LLC — Class A(1) | 72,000 | 887,040 | |||||||
| BEN | Franklin Resources, Inc.(1) | 180,000 | 16,497,000 | |||||||
| IGM CN | IGM Financial, Inc.(1) | 30,000 | 1,243,307 | |||||||
| IVZ | Invesco Limited | 12,000 | 287,760 | |||||||
| LM | Legg Mason, Inc.(1) | 538,000 | 23,440,660 | |||||||
| POW CN | Power Corporation of Canada | 1,044,000 | 31,963,989 | |||||||
| PZN | Pzena Investment Management, Inc. — Class A(1) | 454,000 | 5,793,040 | |||||||
| TROW | T. Rowe Price Group, Inc.(1) | 80,000 | 4,517,600 | |||||||
| URB/A CN | Urbana Corp. — Class A* | 424,000 | 1,218,319 | |||||||
| GROW | US Global Investors, Inc. — Class A(1) | 240,000 | 4,020,000 | |||||||
| 806 HK | Value Partners Group Limited | 684,000 | 587,746 | |||||||
| 283,736,421 | ||||||||||
Auto Components — 0.37% | ||||||||||
| 6201 JP | Toyota Industries Corporation | 420,000 | 13,448,227 | |||||||
Automobiles — 0.00% | ||||||||||
| 2333 HK | Great Wall Motor Company Limited — Class H | 20,000 | 13,261 | |||||||
Beverages — 0.48% | ||||||||||
| STZ | Constellation Brands, Inc. — Class A*(1) | 1,800 | 35,748 | |||||||
| DPS | Dr. Pepper Snapple Group, Inc.*(1) | 1,920 | 40,282 | |||||||
| RI FP | Pernod-Ricard SA | 41,680 | 4,281,922 | |||||||
| RCO FP | Remy Cointreau SA | 3,600 | 196,851 | |||||||
| 168 HK | Tsingtao Brewery Co. Limited — Class H | 6,316,000 | 12,863,263 | |||||||
| 17,418,066 | ||||||||||
See Notes to the Financial Statements.
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| Identifier | Shares | Value | ||||||||
Biotechnology — 0.16% | ||||||||||
| CRL | Charles River Laboratories International, Inc.*(1) | 92,000 | $ | 5,880,640 | ||||||
Brokerage & Investment Banking — 0.44% | ||||||||||
| GHL | Greenhill & Co., Inc.(1) | 36,000 | 1,938,960 | |||||||
| IAP LN | ICAP plc | 370,000 | 3,994,423 | |||||||
| LAZ | Lazard Ltd. — Class A(1) | 300,100 | 10,248,415 | |||||||
| 16,181,798 | ||||||||||
Capital Markets — 5.42% | ||||||||||
| ACAS | American Capital Ltd.(1) | 72,000 | 1,711,440 | |||||||
| BK | The Bank of New York Mellon Corp.(1) | 1,600,060 | 60,530,270 | |||||||
| CLST LN | Collins Stewart plc | 40,000 | 58,759 | |||||||
| GFIG | GFI Group, Inc.(1) | 198,000 | 1,783,980 | |||||||
| GS | The Goldman Sachs Group, Inc.(1) | 320,000 | 55,968,000 | |||||||
| LAB | LaBranche & Co. Inc.*(1) | 1,898,000 | 13,437,840 | |||||||
| LEH | Lehman Brothers Holdings, Inc.(1) | 272,000 | 5,388,320 | |||||||
| NTRS | Northern Trust Corp.(1) | 252,000 | 17,279,640 | |||||||
| STT | State Street Corporation(1) | 648,248 | 41,481,389 | |||||||
| TLPR LN | Tullett Prebon plc | 72,000 | 616,672 | |||||||
| 198,256,310 | ||||||||||
Chemicals — 1.05% | ||||||||||
| NZYMB DC | Novozymes A/S — Class B | 200 | 18,072 | |||||||
| POT | Potash Corporation of Saskatchewan Inc.(1) | 1,200 | 274,284 | |||||||
| SIAL | Sigma-Aldrich Corp.(1) | 708,000 | 38,132,880 | |||||||
| 38,425,236 | ||||||||||
See Notes to the Financial Statements.
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| Identifier | Shares | Value | ||||||||
Commercial Banks — 1.45% | ||||||||||
| 3988 HK | Bank of China Ltd. — Class H | 12,000,000 | $ | 5,340,345 | ||||||
| CATY | Cathay General Bancorp(1) | 144,000 | 1,565,280 | |||||||
| CLFC | Center Financial Corporation | 224,000 | 1,897,280 | |||||||
| 939 HK | China Construction Bank Corp. — Class H | 9,084,000 | 7,316,364 | |||||||
| EWBC | East West Bancorp, Inc.(1) | 144,000 | 1,016,640 | |||||||
| HAFC | Hanmi Financial Corporation(1) | 224,000 | 1,167,040 | |||||||
| HDB | HDFC Bank Ltd. — ADR(1) | 80,000 | 5,732,800 | |||||||
| IBN | ICICI Bank Ltd. — ADR(1) | 270,000 | 7,765,200 | |||||||
| 1398 HK | Industrial & Commercial Bank of China — Class H | 8,748,000 | 5,979,908 | |||||||
| MTB | M&T Bank Corporation(1) | 88,000 | 6,207,520 | |||||||
| NARA | Nara Bancorp, Inc.(1) | 208,000 | 2,231,840 | |||||||
| SBID LI | State Bank of India — GDR(1) | 72,000 | 3,873,600 | |||||||
| UCBH | UCBH Holdings, Inc.(1) | 200,000 | 450,000 | |||||||
| WFC | Wells Fargo & Company(1) | 40,000 | 950,000 | |||||||
| WIBC | Wilshire Bancorp, Inc.(1) | 200,000 | 1,714,000 | |||||||
| 53,207,817 | ||||||||||
Commercial Services & Supplies — 0.01% | ||||||||||
| BCO | The Brink’s Co. | 6,000 | 392,520 | |||||||
| EFX | Equifax Inc.(1) | 100 | 3,362 | |||||||
| 395,882 | ||||||||||
Consumer Finance — 0.06% | ||||||||||
| STU | The Student Loan Corporation | 21,900 | 2,147,952 | |||||||
Diversified Consumer Services — 0.57% | ||||||||||
| HRB | H&R Block, Inc.(1) | 106,000 | 2,268,400 | |||||||
| BID | Sotheby’s(1) | 700,000 | 18,459,000 | |||||||
| 20,727,400 | ||||||||||
See Notes to the Financial Statements.
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| Identifier | Shares | Value | ||||||||
Diversified Financial Services — 4.79% | ||||||||||
| CLE LN | Climate Exchange Plc* | 80,000 | $ | 3,041,928 | ||||||
| CME | CME Group, Inc.(1) | 204,000 | 78,170,760 | |||||||
| ICE | IntercontinentalExchange Inc.*(1) | 272,000 | 31,008,000 | |||||||
| LSE LN | London Stock Exchange Group Plc | 2,172,291 | 33,749,367 | |||||||
| NMX | Nymex Holdings, Inc.(1) | 144,000 | 12,165,120 | |||||||
| PARG SW | Pargesa Holding SA | 80,000 | 8,919,779 | |||||||
| TPL | Texas Pacific Land Trust(1) | 158,000 | 8,374,000 | |||||||
| 175,428,954 | ||||||||||
Diversified Food — 0.00% | ||||||||||
| CBY | Cadbury PLC — ADR | 2,560 | 128,819 | |||||||
Diversified Telecommunication Services — 0.03% | ||||||||||
| CN | China Netcom Group Corp. Hong Kong Ltd. — ADR(1) | 18,000 | 982,620 | |||||||
| 728 HK | China Telecom Corp. Ltd. — Class H | 200,000 | 108,756 | |||||||
| 1,091,376 | ||||||||||
Electric Utilities — 3.11% | ||||||||||
| AYE | Allegheny Energy, Inc.(1) | 882,000 | 44,197,020 | |||||||
| BIP | Brookfield Infrastucture Partners LP(1) | 103,920 | 2,036,832 | |||||||
| 991 HK | Datang International Power Generation Company Limited — Class H | 19,620,000 | 11,650,338 | |||||||
| 1071 HK | Huadian Power International Corporation — Class H | 1,040,000 | 274,764 | |||||||
| HNP | Huaneng Power International, Inc. — ADR(1) | 610,000 | 16,866,500 | |||||||
| KEP | Korea Electric Power Corporation — ADR(1) | 640,000 | 9,299,200 | |||||||
| SRP | Sierra Pacific Resources | 1,904,000 | 24,199,840 | |||||||
| USERY | RAO Unified Energy System of Russia — ADR | 52,000 | 5,304,000 | |||||||
| 113,828,494 | ||||||||||
See Notes to the Financial Statements.
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| Identifier | Shares | Value | ||||||||
European Exchanges — 1.25% | ||||||||||
| BME SM | Bolsas y Mercados Espanoles | 160,000 | $ | 5,957,742 | ||||||
| DB1 GR | Deutsche Boerse AG | 314,000 | 35,442,044 | |||||||
| EXAE GA | Hellenic Exchanges S.A. Holding | 36,000 | 453,443 | |||||||
| OMX SS | OMX AB* | 88,000 | 3,872,178 | |||||||
| 45,725,407 | ||||||||||
Gaming — 3.18% | ||||||||||
| IGT | International Game Technology(1) | 50,000 | 1,249,000 | |||||||
| LVS | Las Vegas Sands Corp.*(1) | 588,000 | 27,894,720 | |||||||
| 200 HK | Melco International Development | 3,000,000 | 2,885,633 | |||||||
| MGM | MGM Mirage*(1) | 686,400 | 23,262,096 | |||||||
| WYNN | Wynn Resorts Limited(1) | 750,000 | 61,012,500 | |||||||
| 116,303,949 | ||||||||||
Health Care Equipment & Supplies — 0.09% | ||||||||||
| BDX | Becton, Dickinson & Co.(1) | 34,000 | 2,764,200 | |||||||
| SYK | Stryker Corp.(1) | 6,000 | 377,280 | |||||||
| 3,141,480 | ||||||||||
Holding Company — 6.35% | ||||||||||
| BRK/A | Berkshire Hathaway Inc. — Class A* | 430 | 51,922,500 | |||||||
| BRK/B | Berkshire Hathaway Inc. — Class B*(1) | 9,616 | 38,579,392 | |||||||
| GBLB BB | Groupe Bruxelles Lambert S.A. | 272,000 | 32,380,136 | |||||||
| GBLS BB | Groupe Bruxelles Lambert S.A. Strip VVPR* | 24,000 | 378 | |||||||
| LUK | Leucadia National Corporation(1) | 2,258,000 | 105,990,520 | |||||||
| PAOR FP | Paris Orleans et Cie SA | 200 | 8,234 | |||||||
| PWF CN | Power Financial Corp.(1) | 108,000 | 3,512,092 | |||||||
| 232,393,252 | ||||||||||
See Notes to the Financial Statements.
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| Identifier | Shares | Value | ||||||||
Hotels Restaurants & Leisure — 0.09% | ||||||||||
| LTO IM | Lottomatica S.p.A | 2,000 | $ | 59,798 | ||||||
| MPEL | Melco Crown Entertainment Ltd. — ADR* | 120,045 | 1,118,819 | |||||||
| BAIN FP | Societe des Bains de Mer et du Cercle des Etrangers a Monaco | 2 | 1,770 | |||||||
| TRY | Triarc Companies, Inc. — Class A(1) | 340,000 | 2,176,000 | |||||||
| 3,356,387 | ||||||||||
Household Durables — 1.26% | ||||||||||
| FO | Fortune Brands, Inc.(1) | 4,000 | 249,640 | |||||||
| IEP | Icahn Enterprises LP | 494,600 | 34,790,164 | |||||||
| JAH | Jarden Corporation*(1) | 610,000 | 11,126,400 | |||||||
| 46,166,204 | ||||||||||
Independent Power Producers & Energy Traders — 3.01% | ||||||||||
| CPN | Calpine Corp.*(1) | 2,550,049 | 57,529,110 | |||||||
| 836 HK | China Resources Power Holdings Company Limited | 144,000 | 350,893 | |||||||
| DYN | Dynegy, Inc. — Class A *(1) | 3,552,165 | 30,371,011 | |||||||
| MIR | Mirant Corp. *(1) | 560,000 | 21,924,000 | |||||||
| 110,175,014 | ||||||||||
See Notes to the Financial Statements.
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Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Insurance — 2.72% | ||||||||||
| LFC | China Life Insurance Co., Limited — ADR(1) | 144,666 | $ | 7,548,672 | ||||||
| 2628 HK | China Life Insurance Co., Limited — Class H | 1,000,000 | 3,501,234 | |||||||
| GWO CN | Great-West Lifeco, Inc.(1) | 128,000 | 3,660,371 | |||||||
| L | Loews Corporation(1) | 102,000 | 4,783,800 | |||||||
| MKL | Markel Corporation*(1) | 80,000 | 29,360,000 | |||||||
| 2328 HK | PICC Property & Casualty Co. Ltd. — Class H | 4,800,000 | 3,188,817 | |||||||
| 2318 HK | Ping An Insurance Group Company of China Limited — Class H | 2,000,000 | 14,877,040 | |||||||
| PGR | The Progressive Corporation(1) | 924,000 | 17,297,280 | |||||||
| WSC | Wesco Financial Corporation | 1,700 | 649,400 | |||||||
| WTM | White Mountains Insurance Group Ltd. | 34,000 | 14,586,000 | |||||||
| 99,452,614 | ||||||||||
Internet & Catalog Retail — 0.09% | ||||||||||
| EBAY | eBay, Inc.*(1) | 114,000 | 3,115,620 | |||||||
Internet Software & Services — 0.10% | ||||||||||
| GOOG | Google Inc. — Class A*(1) | 7,200 | 3,790,224 | |||||||
IT Services — 0.61% | ||||||||||
| BR | Broadridge Financial Solutions, Inc.(1) | 180,000 | 3,789,000 | |||||||
| IRM | Iron Mountain Incorporated*(1) | 86,000 | 2,283,300 | |||||||
| MA | Mastercard, Inc. — Class A(1) | 42,000 | 11,151,840 | |||||||
| V | Visa, Inc. — Class A*(1) | 2,000 | 162,620 | |||||||
| WU | The Western Union Company (1) | 200,000 | 4,944,000 | |||||||
| 22,330,760 | ||||||||||
See Notes to the Financial Statements.
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Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Media — 1.23% | ||||||||||
| DWA | DreamWorks Animation SKG, Inc. — Class A*(1) | 464,000 | $ | 13,831,840 | ||||||
| SSP | E.W. Scripps Company — Class A(1) | 158,000 | 6,563,320 | |||||||
| DIS | The Walt Disney Co.(1) | 18,400 | 574,080 | |||||||
| WMG | Warner Music Group Corp.(1) | 1,600,000 | 11,424,000 | |||||||
| WPO | The Washington Post Company — Class B(1) | 21,600 | 12,677,040 | |||||||
| 9399 JP | Xinhua Finance Ltd.* | 100 | 4,944 | |||||||
| 45,075,224 | ||||||||||
Metals & Mining — 4.04% | ||||||||||
| AAUK | Anglo American PLC — ADR(1) | 2,400,080 | 85,082,836 | |||||||
| CMC | Commercial Metals Company(1) | 360,000 | 13,572,000 | |||||||
| FNNVF | Franco-Nevada Corporation | 600,000 | 14,533,687 | |||||||
| FCX | Freeport-McMoRan Copper & Gold Inc.(1) | 2,680 | 314,069 | |||||||
| RTP | Rio Tinto Plc — ADR(1) | 60,000 | 29,700,000 | |||||||
| YZC | Yanzhou Coal Mining Company Limited — ADR | 12,000 | 1,116,120 | |||||||
| 1171 HK | Yanzhou Coal Mining Company Limited — Class H | 1,800,000 | 3,347,334 | |||||||
| 147,666,046 | ||||||||||
Multiline Retail — 0.67% | ||||||||||
| SHLD | Sears Holdings Corporation*(1) | 332,000 | 24,455,120 | |||||||
Multi-Utilities — 2.99% | ||||||||||
| CNP | Centerpoint Energy, Inc.(1) | 992,000 | 15,921,600 | |||||||
| CMS | CMS Energy Corporation(1) | 870,000 | 12,963,000 | |||||||
| NRG | NRG Energy, Inc.*(1) | 540,000 | 23,166,000 | |||||||
| RRI | Reliant Energy Inc.* | 2,696,000 | 57,343,920 | |||||||
| 109,394,520 | ||||||||||
See Notes to the Financial Statements.
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Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Oil, Gas & Consumable Fuels — 15.61% | ||||||||||
| CCJ | Cameco Corporation(1) | 360,000 | $ | 15,433,200 | ||||||
| CNQ | Canadian Natural Resources Ltd. | 758,000 | 75,989,500 | |||||||
| COSWF | Canadian Oil Sands Trust | 1,748,000 | 94,761,223 | |||||||
| 1898 HK | China Coal Energy Company — Class H | 4,000,000 | 6,997,339 | |||||||
| SNP | China Petroleum & Chemical Corp. — ADR (1) | 30,000 | 2,786,700 | |||||||
| 386 HK | China Petroleum & Chemical Corp. — Class H | 720,000 | 674,084 | |||||||
| 1088 HK | China Shenhua Energy Company Limited — Class H | 876,000 | 3,437,827 | |||||||
| 883 HK | CNOOC Limited | 2,400,000 | 4,130,687 | |||||||
| CEO | CNOOC Limited — ADR(1) | 200,000 | 34,708,000 | |||||||
| EP | El Paso Corporation(1) | 1,868,000 | 40,610,320 | |||||||
| ECA | EnCana Corporation(1) | 458,000 | 41,645,940 | |||||||
| OGZPY | Gazprom OAO — ADR(1) | 1,208,000 | 70,064,000 | |||||||
| IMO | Imperial Oil Ltd.(1) | 606,000 | 33,372,420 | |||||||
| MRO | Marathon Oil Corp. | 204,060 | 10,584,592 | |||||||
| NEGI | National Energy Group, Inc.* | 50,000 | 180,000 | |||||||
| NXY | Nexen Inc. | 660,000 | 26,235,000 | |||||||
| NHYDY | Norsk Hydro ASA — ADR(1) | 152,000 | 2,220,264 | |||||||
| PWE | Penn West Energy Trust(1) | 542,000 | 18,341,280 | |||||||
| PCZ | Petro-Canada(1) | 200,000 | 11,150,000 | |||||||
| PBR | Petroleo Brasileiro S.A. — ADR(1) | 48,000 | 3,399,840 | |||||||
| STO | StatoilHydro ASA — ADR(1) | 144,054 | 5,384,738 | |||||||
| SU | Suncor Energy, Inc. | 1,184,000 | 68,814,080 | |||||||
| WZR CN | WesternZagros Resources Ltd.* | 34,400 | 100,532 | |||||||
| 571,021,566 | ||||||||||
Other Exchanges — 1.24% | ||||||||||
| ASX AU | ASX Ltd. | 900,000 | 27,091,542 | |||||||
| JSE SJ | JSE Limited | 720,000 | 5,011,494 | |||||||
| NZX NZ | NZX Ltd. | 24,329 | 139,809 | |||||||
| X CN | TMX Group Inc. | 320,044 | 13,213,546 | |||||||
| 45,456,391 | ||||||||||
See Notes to the Financial Statements.
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Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Paper & Forest Products — 0.00% | ||||||||||
| POPE | Pope Resources Inc. LP | 1,800 | $ | 58,140 | ||||||
Pharmaceuticals — 0.17% | ||||||||||
| 1093 HK | China Pharmaceutical Group Limited | 1,200,000 | 600,212 | |||||||
| NVO | Novo-Nordisk A/S — ADR(1) | 84,000 | 5,544,000 | |||||||
| 6,144,212 | ||||||||||
Publishing — 0.66% | ||||||||||
| JW/A | John Wiley & Sons, Inc. — Class A | 8,000 | 360,240 | |||||||
| JW/B | John Wiley & Sons, Inc. — Class B(1) | 2,000 | 90,540 | |||||||
| MHP | The McGraw-Hill Companies, Inc.(1) | 152,000 | 6,098,240 | |||||||
| MCO | Moody’s Corporation(1) | 502,000 | 17,288,880 | |||||||
| RHD | R.H. Donnelley Corporation*(1) | 50,000 | 150,000 | |||||||
| 23,987,900 | ||||||||||
Real Estate — 0.19% | ||||||||||
| 12 HK | Henderson Land Development Co. Ltd. | 1,098,000 | 6,843,798 | |||||||
| 242 HK | Shun Tak Holdings Limited | 72,000 | 67,408 | |||||||
| 6,911,206 | ||||||||||
Real Estate Investment Trusts (REITs) — 1.44% | ||||||||||
| ALX | Alexander’s, Inc.*(1) | 20,000 | 6,212,000 | |||||||
| DFR | Deerfield Capital Corp.(1) | 36,049 | 28,479 | |||||||
| 823 HK | The Link REIT | 7,068,000 | 16,098,968 | |||||||
| VNO | Vornado Realty Trust(1) | 346,000 | 30,448,000 | |||||||
| 52,787,447 | ||||||||||
Real Estate Management & Development — 1.49% | ||||||||||
| FCE/A | Forest City Enterprises, Inc. — Class A(1) | 1,328,400 | 42,801,048 | |||||||
| 917 HK | New World China Land Limited | 1,000,000 | 518,131 | |||||||
| JOE | The St. Joe Company(1) | 200,000 | 6,864,000 | |||||||
| 4 HK | Wharf Holdings Ltd. | 1,000,000 | 4,187,374 | |||||||
| 54,370,553 | ||||||||||
See Notes to the Financial Statements.
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Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Road & Rail — 1.18% | ||||||||||
| BNI | Burlington Northern Santa Fe Corp. | 100,000 | $ | 9,989,000 | ||||||
| CSX | CSX Corp.(1) | 164,000 | 10,300,840 | |||||||
| GSH | Guangshen Railway Company Limited — ADR(1) | 12,000 | 268,920 | |||||||
| 525 HK | Guangshen Railway Company Limited — Class H | 360,000 | 163,904 | |||||||
| NSC | Norfolk Southern Corp.(1) | 162,200 | 10,165,074 | |||||||
| UNP | Union Pacific Corp. | 163,000 | 12,306,500 | |||||||
| 43,194,238 | ||||||||||
Software — 0.05% | ||||||||||
| FTIS LI | Financial Technologies (India) Ltd. — GDR | 288,400 | 1,687,140 | |||||||
State Commercial Banks — 0.00% | ||||||||||
| PFBC | Preferred Bank Los Angeles(1) | 18,000 | 93,240 | |||||||
Thrifts & Mortgage Finance — 0.22% | ||||||||||
| FRE | Federal Home Loan Mortgage Corporation(1) | 8,000 | 131,200 | |||||||
| FNM | Federal National Mortgage Association(1) | 400,000 | 7,804,000 | |||||||
| 7,935,200 | ||||||||||
Tobacco — 0.03% | ||||||||||
| PM | Philip Morris International, Inc.(1) | 22,000 | 1,086,580 | |||||||
Trading Companies & Distributors — 0.02% | ||||||||||
| NOBL SP | Noble Group Limited | 424,800 | 739,977 | |||||||
Transportation By Air — 0.03% | ||||||||||
| PAC | Grupo Aeroportuario del Pacifico SA de CV — ADR(1) | 40,200 | 1,180,674 | |||||||
See Notes to the Financial Statements.
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Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Transportation Infrastructure — 1.72% | ||||||||||
| 995 HK | Anhui Expressway Co., Ltd. — Class H | 5,180,000 | $ | 3,753,503 | ||||||
| 694 HK | Beijing Capital International Airport Co. Ltd. — Class H | 34,800,000 | 28,965,597 | |||||||
| OMAB | Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. — ADR(1) | 78,000 | 1,293,240 | |||||||
| ASR | Grupo Aeroportuario del Sureste S.A.B. de C.V. — ADR(1) | 35,000 | 1,802,500 | |||||||
| 357 HK | Hainan Meilan International Airport Company Limited — Class H | 4,096,000 | 3,777,003 | |||||||
| 54 HK | Hopewell Holdings Limited | 500,000 | 1,776,267 | |||||||
| 177 HK | Jiangsu Expressway Company Ltd. — Class H | 6,000,000 | 4,917,118 | |||||||
| 548 HK | Shenzhen Expressway Company Limited — Class H | 9,000,000 | 5,263,394 | |||||||
| 107 HK | Sichuan Expressway Co. Limited — Class H | 18,000,000 | 5,171,054 | |||||||
| 3382 HK | Tianjin Port Development Holdings Ltd. | 2,000,000 | 805,412 | |||||||
| 576 HK | Zhejiang Expressway Co., Limited — Class H | 7,200,000 | 5,549,649 | |||||||
| 63,074,737 | ||||||||||
U.S. Equity Exchanges — 3.31% | ||||||||||
| NDAQ | The Nasdaq OMX Group*(1) | 2,172,000 | 57,666,600 | |||||||
| NYX | NYSE Euronext(1) | 1,252,552 | 63,454,284 | |||||||
| 121,120,884 | ||||||||||
Wireless Telecommunication Services — 0.03% | ||||||||||
| 762 HK | China Unicom Limited | 640,000 | 1,188,522 | |||||||
| TOTAL COMMON STOCKS (cost $3,068,084,245) | 3,167,297,074 | |||||||||
See Notes to the Financial Statements.
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The Paradigm Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Principal | ||||||||||
| Identifier | ESCROW NOTES — 0.00%* | A mount | Value | |||||||
| Calpine Corporation (converted from Calpine Corp., 8.500%, 02/15/2011)* | $ | 1,000,000 | $ | — | ||||||
| Calpine Corporation (converted from Calpine Corp., 10.500%, 05/15/2015)* | 300,000 | — | ||||||||
| Calpine Corporation (converted from Calpine Corp., 8.750%, 07/15/2008)* | 200,000 | — | ||||||||
| Calpine Corporation (converted from Calpine Corp., 7.875%, 04/01/2008)* | 200,000 | — | ||||||||
| Calpine Corporation (converted from Calpine Corp., 7.625%, 04/15/2050)* | 100,000 | — | ||||||||
| Calpine Corporation (converted from Calpine Corp., 4.750%, 11/15/2023)* | 42,200,000 | 5 | ||||||||
| TOTAL ESCROW NOTES (cost $0) | 5 | |||||||||
| CORPORATE BONDS — 0.03% | ||||||||||
Diversified Financial Services — 0.03% | ||||||||||
| 317928AA7 | FINOVA Group, Inc. 7.500%, 11/15/2009, Acquired 10/19/2006-3/29/2007 at $2,775,288 (Default Effective 4/29/2005)* | 9,503,880 | 1,116,706 | |||||||
| TOTAL CORPORATE BONDS (cost $6,167,637) | 1,116,706 | |||||||||
See Notes to the Financial Statements.
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Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| CALL OPTIONS | ||||||||||
| Identifier | PURCHASED — 0.04% | Contracts | Value | |||||||
| LUK.AD | Leucadia National Corporation Expiration: January 2009, Exercise Price: $20.00 | 72 | $ | 196,200 | ||||||
| L.AE | Loews Corporation Expiration: January 2009, Exercise Price: $25.00 | 500 | 1,145,000 | |||||||
| TOTAL CALL OPTIONS PURCHASED (cost $1,557,476) | 1,341,200 | |||||||||
| SHORT-TERM | Principal | |||||||||
| INVESTMENTS — 12.18% | Amount | |||||||||
US Government Agency Issues — 11.97% | ||||||||||
| 313384YV | Federal Home Loan Bank Discount Note 1.850%, 07/01/2008 | $ | 438,076,000 | 438,076,000 | ||||||
| Shares | ||||||||||
Money Market Funds — 0.21% | ||||||||||
| FIUXX | First American Prime Obligations Fund — Class I | 7,832,407 | 7,832,407 | |||||||
| TOTAL SHORT-TERM INVESTMENTS (cost $445,908,407) | 445,908,407 | |||||||||
See Notes to the Financial Statements.
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Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING — 38.82% | Shares | Value | |||||||
Investment Companies — 36.85% | ||||||||||
| AIM Short Term Investment Prime Portfolio | 56,000,000 | $ | 56,000,000 | |||||||
| AIM Short Term Liquid Asset Fund | 69,000,000 | 69,000,000 | ||||||||
| DWS Money Market Series Institutional Shares | 67,000,000 | 67,000,000 | ||||||||
| Federated Prime Obligations Fund | 67,000,000 | 67,000,000 | ||||||||
| Goldman Sachs Financial SQ Money Market | 67,000,000 | 67,000,000 | ||||||||
| Goldman Sachs Financial SQ Prime Obligation Investment | 67,000,000 | 67,000,000 | ||||||||
| Janus Institutional Money Market Fund | 65,000,000 | 65,000,000 | ||||||||
| Janus Institutional Cash Management Fund | 65,000,000 | 65,000,000 | ||||||||
| Merrill Lynch Premier Institutional Fund | 70,000,000 | 70,000,000 | ||||||||
| Mount Vernon Securities Lending Trust — Prime Portfolio | 685,215,880 | 685,215,880 | ||||||||
| Reserve Primary Fund | 70,000,000 | 70,000,000 | ||||||||
| 1,348,215,880 | ||||||||||
Repurchase Agreements — 1.97% | ||||||||||
Morgan Stanley Repurchase Agreement, 2.750%, dated 6/30/2008, due 7/1/2008(2) | ||||||||||
| Repurchase price $72,005,500 | 72,000,000 | 72,000,000 | ||||||||
| TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (Cost $1,420,215,880) | 1,420,215,880 | |||||||||
TOTAL INVESTMENTS — 137.64% (cost $4,941,933,645) | $ | 5,035,879,272 | ||||||||
See Notes to the Financial Statements.
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Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
Percentages are stated as a percent of net assets.
| * — | Non-income producing security. |
| ADR — | American Depository Receipt. |
| GDR — | Global Depository Receipt. |
| (1) — | This security or a portion of this security was out on loan at June 30, 2008. Cash collateral for loaned securities totaled $1,421,598,819 of which $1,420,215,880 was invested. Total loaned securities had a market value of $1,368,187,723 at June 30, 2008. |
| (2) — | See Repurchase Agreements disclosure in the Notes to Financial Statements for the Kinetics Portfolios Trust. |
See Notes to the Financial Statements.
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The Medical Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited)
| Identifier | COMMON STOCKS — 91.46% | Shares | Value | |||||||
Biotechnology — 24.33% | ||||||||||
| AEZS | AEterna Zentaris Inc.*(1) | 100,500 | $ | 105,525 | ||||||
| AMRI | Albany Molecular Research, Inc.* | 30,000 | 398,100 | |||||||
| ARNA | Arena Pharmaceuticals, Inc.*(1) | 14,000 | 72,660 | |||||||
| AVXT | AVAX Technologies, Inc.* | 50,000 | 4,500 | |||||||
| AVGN | Avigen, Inc.* | 27,000 | 78,030 | |||||||
| BIIB | Biogen Idec, Inc.*(1) | 18,250 | 1,019,993 | |||||||
| CEGE | Cell Genesys, Inc.*(1) | 61,725 | 160,485 | |||||||
| CBST | Cubist Pharmaceuticals, Inc.*(1) | 2,000 | 35,720 | |||||||
| CRGN | CuraGen Corporation* | 16,000 | 15,360 | |||||||
| DCGN | deCODE genetics, Inc.*(1) | 11,000 | 10,120 | |||||||
| DNDN | Dendreon Corporation*(1) | 29,000 | 129,050 | |||||||
| FVRL | Favrille Inc.*(1) | 43,000 | 2,713 | |||||||
| HGSI | Human Genome Sciences, Inc.*(1) | 21,000 | 109,410 | |||||||
| IMCL | ImClone Systems, Inc.*(1) | 3,000 | 121,380 | |||||||
| IMGN | ImmunoGen, Inc.* | 14,000 | 42,840 | |||||||
| IVGN | Invitrogen Corp.*(1) | 22,000 | 863,720 | |||||||
| ISA CN | Isotechnika, Inc.* | 40,000 | 28,636 | |||||||
| MEDX | Medarex, Inc.*(1) | 20,000 | 132,200 | |||||||
| MBRX | Metabasis Therapeutics, Inc.* | 27,000 | 41,850 | |||||||
| ONTY | Oncothyreon, Inc.* | 15,333 | 37,259 | |||||||
| PGNX | Progenics Pharmaceuticals, Inc.*(1) | 12,200 | 193,614 | |||||||
| SVNT | Savient Pharmaceuticals Inc.*(1) | 25,000 | 632,500 | |||||||
| TGEN | Targeted Genetics Corp.* | 1,000 | 590 | |||||||
| TELK | Telik, Inc.*(1) | 38,000 | 45,980 | |||||||
| VICL | Vical Incorporated* | 33,500 | 112,895 | |||||||
| 4,395,130 | ||||||||||
Chemicals — 2.94% | ||||||||||
| ATB CN | Atrium Innovations Inc. | 4,884 | 76,826 | |||||||
| DOW | The Dow Chemical Co.(1) | 13,000 | 453,830 | |||||||
| 530,656 | ||||||||||
Health Care Equipment & Supplies — 3.42% | ||||||||||
| COV | Covidien Ltd. | 12,750 | 610,597 | |||||||
| TGX | Theragenics Corporation* | 2,000 | 7,260 | |||||||
| 617,857 | ||||||||||
See Notes to the Financial Statements.
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The Medical Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Health Care Providers & Services — 0.04% | ||||||||||
| IBLTZ | IMPATH Bankruptcy Liquidating Trust — Class A | 26,000 | $ | 6,890 | ||||||
Life Sciences Tools & Services — 8.45% | ||||||||||
| LONN VX | Lonza Group AG | 11,000 | 1,525,819 | |||||||
Pharmaceuticals — 52.28% | ||||||||||
| ABT | Abbott Laboratories | 16,000 | 847,520 | |||||||
| AGEN | Antigenics, Inc.* | 892 | 1,722 | |||||||
| BMY | Bristol-Myers Squibb Company | 24,000 | 492,720 | |||||||
| 1093 HK | China Pharmaceutical Group Limited | 1,440,000 | 720,254 | |||||||
| LLY | Eli Lilly & Company | 14,000 | 646,240 | |||||||
| EPCT | EpiCept Corporation*(1) | 2,039 | 494 | |||||||
| GENZ | Genzyme Corporation* | 15,538 | 1,119,047 | |||||||
| GSK | GlaxoSmithKline plc — ADR(1) | 19,673 | 869,940 | |||||||
| JNJ | Johnson & Johnson | 15,000 | 965,100 | |||||||
| NVS | Novartis AG — ADR(1) | 23,000 | 1,265,920 | |||||||
| PTIE | Pain Therapeutics, Inc.*(1) | 20,000 | 158,000 | |||||||
| PFE | Pfizer, Inc.(1) | 31,000 | 541,570 | |||||||
| SNY | Sanofi-Aventis SA — ADR | 15,000 | 498,450 | |||||||
| SGP | Schering-Plough Corporation(1) | 15,000 | 295,350 | |||||||
| SCR | Simcere Pharmaceutical Group — ADR*(1) | 28,000 | 352,800 | |||||||
| WYE | Wyeth | 13,900 | 666,644 | |||||||
| 9,441,771 | ||||||||||
TOTAL COMMON STOCKS (cost $16,707,569) | 16,518,123 | |||||||||
| Principal | ||||||||||
| SHORT-TERM INVESTMENTS — 8.04% | Amount | |||||||||
US Government Agency Issues — 4.19% | ||||||||||
| 313384YV | Federal Home Loan Bank Discount Note 1.850%, 07/01/2008 | $ | 756,000 | 756,000 | ||||||
See Notes to the Financial Statements.
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Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Money Market Funds — 3.85% | ||||||||||
| FIUXX | First American Prime Obligations Fund — Class I | 695,876 | $ | 695,876 | ||||||
TOTAL SHORT-TERM INVESTMENTS (cost $1,451,876) | 1,451,876 | |||||||||
| INVESTMENTS PURCHASED | ||||||||||
| WITH THE CASH PROCEEDS | ||||||||||
| FROM SECURITIES | ||||||||||
| LENDING — 39.27% | ||||||||||
Investment Companies — 39.27% | ||||||||||
Mount Vernon Securities Lending Trust — Prime Portfolio | 7,091,189 | 7,091,189 | ||||||||
TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $7,091,189) | 7,091,189 | |||||||||
TOTAL INVESTMENTS — 138.77% (cost $25,250,634) | $ | 25,061,188 | ||||||||
Percentages are stated as a percent of net assets.
| * — | Non-income producing security. |
| ADR — | American Depository Receipt. |
| (1) — | This security or a portion of this security was out on loan at June 30, 2008. Total loaned securities had a market value of $6,779,228 at June 30, 2008. |
See Notes to the Financial Statements.
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The Small Cap Opportunities Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited)
| Identifier | COMMON STOCKS — 92.89% | Shares | Value | |||||||
Aerospace & Defense — 1.32% | ||||||||||
| BBD/B CN | Bombardier Inc.(1) | 360,000 | $ | 2,616,064 | ||||||
| CAI | CACI International, Inc. — Class A*(1) | 114,000 | 5,217,780 | |||||||
| GY | GenCorp Inc.*(1) | 24,000 | 171,840 | |||||||
| 8,005,684 | ||||||||||
Airlines — 2.24% | ||||||||||
| 753 HK | Air China Limited — Class H | 640,000 | 315,188 | |||||||
| CEA | China Eastern Airlines Corporation Limited — ADR*(1) | 104,000 | 3,267,732 | |||||||
| 670 HK | China Eastern Airlines Corporation Limited — Class H* | 6,800,000 | 2,136,651 | |||||||
| ZNH | China Southern Airlines Company Limited — ADR*(1) | 122,000 | 2,413,160 | |||||||
| 1055 HK | China Southern Airlines Company Limited — Class H* | 13,680,000 | 5,438,840 | |||||||
| 13,571,571 | ||||||||||
Asian Exchanges — 4.79% | ||||||||||
| 388 HK | Hong Kong Exchanges & Clearing Limited | 316,000 | 4,620,090 | |||||||
| 8697 JP | Osaka Securities Exchange Co., Ltd. | 1,776 | 7,476,310 | |||||||
| SGX SP | Singapore Exchange Limited | 3,336,000 | 16,942,972 | |||||||
| 29,039,372 | ||||||||||
Asset Management — 7.77% | ||||||||||
| CNS | Cohen & Steers, Inc.(1) | 360,000 | 9,349,200 | |||||||
| EV | Eaton Vance Corp.(1) | 588,000 | 23,378,880 | |||||||
| FIG | Fortress Investment Group LLC — Class A(1) | 24,000 | 295,680 | |||||||
| IVZ | Invesco Ltd. | 40,000 | 959,200 | |||||||
| PZN | Pzena Investment Management, Inc. — Class A(1) | 330,000 | 4,210,800 | |||||||
| URB/A CN | Urbana Corp. — Class A* | 666,000 | 1,913,680 | |||||||
| GROW | US Global Investors, Inc. — Class A(1) | 400,000 | 6,700,000 | |||||||
| 806 HK | Value Partners Group Limited | 396,000 | 340,274 | |||||||
| 47,147,714 | ||||||||||
See Notes to the Financial Statements.
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Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Beverages — 2.12% | ||||||||||
| 168 HK | Tsingtao Brewery Co. Limited — Class H | 6,300,000 | $ | 12,830,677 | ||||||
Capital Markets — 2.14% | ||||||||||
| ACAS | American Capital Ltd.(1) | 16,000 | 380,320 | |||||||
| CSWC | Capital Southwest Corp.(1) | 15,400 | 1,605,142 | |||||||
| GFIG | GFI Group, Inc.(1) | 76,000 | 684,760 | |||||||
| IAAC | International Assets Holding Corporation*(1) | 224,000 | 6,733,440 | |||||||
| LAB | LaBranche & Co. Inc.* | 502,000 | 3,554,160 | |||||||
| 12,957,822 | ||||||||||
Commercial Banks — 2.33% | ||||||||||
| BMBZF | BLOM Bank SAL — GDR | 30,000 | 3,112,500 | |||||||
| CATY | Cathay General Bancorp(1) | 172,000 | 1,869,640 | |||||||
| CLFC | Center Financial Corporation | 200,000 | 1,694,000 | |||||||
| EWBC | East West Bancorp, Inc.(1) | 56,000 | 395,360 | |||||||
| FMBL | Farmers & Merchants Bank of Long Beach CA | 31 | 148,800 | |||||||
| FBOD | First Bank of Delaware* | 324,000 | 612,360 | |||||||
| HAFC | Hanmi Financial Corporation | 226,062 | 1,177,783 | |||||||
| NARA | Nara Bancorp, Inc.(1) | 242,000 | 2,596,660 | |||||||
| UCBH | UCBH Holdings, Inc.(1) | 200,000 | 450,000 | |||||||
| WIBC | Wilshire Bancorp, Inc. | 244,000 | 2,091,080 | |||||||
| 14,148,183 | ||||||||||
Commercial Services & Supplies — 1.10% | ||||||||||
| CDCO | Comdisco Holding Company, Inc.* | 9,000 | 85,950 | |||||||
| CRRC | Courier Corporation | 50,000 | 1,004,000 | |||||||
| LW CN | Loring Ward International Ltd. | 1,000 | 16,105 | |||||||
| PICO | PICO Holdings, Inc.*(1) | 72,000 | 3,128,400 | |||||||
| RBA | Ritchie Bros. Auctioneers, Incorporated(1) | 90,000 | 2,441,700 | |||||||
| 6,676,155 | ||||||||||
Construction & Engineering — 0.79% | ||||||||||
| PWR | Quanta Services, Inc.*(1) | 144,000 | 4,790,880 | |||||||
Consumer Finance — 0.02% | ||||||||||
| STU | The Student Loan Corporation | 1,200 | 117,696 | |||||||
See Notes to the Financial Statements.
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Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Diversified Consumer Services — 1.82% | ||||||||||
| BID | Sotheby’s(1) | 418,000 | $ | 11,022,660 | ||||||
Diversified Financial Services — 5.36% | ||||||||||
| CLE LN | Climate Exchange plc* | 82,000 | 3,117,976 | |||||||
| ICE | IntercontinentalExchange Inc.* | 104,000 | 11,856,000 | |||||||
| LSE LN | London Stock Exchange Group plc | 310,000 | 4,816,254 | |||||||
| RHJI BB | RHJ International* | 800 | 10,077 | |||||||
| TPL | Texas Pacific Land Trust | 240,000 | 12,720,000 | |||||||
| 32,520,307 | ||||||||||
Diversified Telecommunication Services — 0.01% | ||||||||||
| 2267781Z | CIBL Inc.* | 18 | 6,300 | |||||||
| LICT | Lynch Interactive Corporation* | 18 | 75,330 | |||||||
| 81,630 | ||||||||||
Electric Utilities — 3.46% | ||||||||||
| AYE | Allegheny Energy, Inc.(1) | 24,000 | 1,202,640 | |||||||
| 991 HK | Datang International Power Generation Company Limited — Class H | 16,180,000 | 9,607,669 | |||||||
| 1071 HK | Huadian Power International Corporation — Class H | 1,600,000 | 422,713 | |||||||
| SRP | Sierra Pacific Resources | 768,000 | 9,761,280 | |||||||
| 20,994,302 | ||||||||||
Energy — 0.72% | ||||||||||
| SEMUF | Siem Industries Inc. | 50,000 | 4,393,750 | |||||||
European Exchanges — 1.44% | ||||||||||
| EXAE GA | Hellenic Exchanges S.A. Holding | 36,000 | 453,443 | |||||||
| OMX SS | OMX AB* | 188,000 | 8,272,381 | |||||||
| 8,725,824 | ||||||||||
Gaming — 0.68% | ||||||||||
| 200 HK | Melco International Development Limited | 4,276,000 | 4,112,989 | |||||||
Gas Utilities — 0.58% | ||||||||||
| SUG | Southern Union Company(1) | 130,263 | 3,519,693 | |||||||
See Notes to the Financial Statements.
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The Small Cap Opportunities Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Holding Company — 0.58% | ||||||||||
| BNB CN | BAM Investments Ltd.*(1) | 194,400 | $ | 3,496,417 | ||||||
Hotels Restaurants & Leisure — 0.61% | ||||||||||
| BAIN FP | Societe des Bains de Mer et du Cercle des Etrangers a Monaco | 20 | 17,697 | |||||||
| TRY | Triarc Companies, Inc. — Class A | 574,000 | 3,673,600 | |||||||
| 3,691,297 | ||||||||||
Household Durables — 7.90% | ||||||||||
| IEP | Icahn Enterprises LP | 509,800 | 35,859,332 | |||||||
| JAH | Jarden Corporation*(1) | 660,000 | 12,038,400 | |||||||
| 47,897,732 | ||||||||||
Independent Power Producers & Energy Traders — 4.31% | ||||||||||
| CPN | Calpine Corp.* | 720,128 | 16,246,088 | |||||||
| DYN | Dynegy, Inc. — Class A*(1) | 1,154,000 | 9,866,700 | |||||||
| 26,112,788 | ||||||||||
Industrial Conglomerates — 0.20% | ||||||||||
| Y | Alleghany Corporation*(1) | 3,600 | 1,195,380 | |||||||
Insurance — 1.91% | ||||||||||
| CVA | Covanta Holding Corporation*(1) | 400,000 | 10,676,000 | |||||||
| NWLIA | National Western Life Insurance Company — Class A(1) | 1,600 | 349,600 | |||||||
| WSC | Wesco Financial Corporation | 1,400 | 534,800 | |||||||
| 11,560,400 | ||||||||||
IT Services — 1.07% | ||||||||||
| BR | Broadridge Financial Solutions, Inc. | 180,000 | 3,789,000 | |||||||
| MANT | ManTech International Corporation — Class A*(1) | 56,000 | 2,694,720 | |||||||
| 6,483,720 | ||||||||||
See Notes to the Financial Statements.
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The Small Cap Opportunities Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Media — 3.99% | ||||||||||
| DWA | DreamWorks Animation SKG, Inc. — Class A*(1) | 350,000 | $ | 10,433,500 | ||||||
| WMG | Warner Music Group Corp.(1) | 1,930,000 | 13,780,200 | |||||||
| 24,213,700 | ||||||||||
Metals & Mining — 8.25% | ||||||||||
| CMC | Commercial Metals Company | 280,000 | 10,556,000 | |||||||
| FMG AU | Fortescue Metals Group Ltd.* | 1,400,000 | 15,971,164 | |||||||
| FNNVF | Franco-Nevada Corporation | 306,000 | 7,412,180 | |||||||
| IMN CN | Inmet Mining Corporation(1) | 192,000 | 12,743,513 | |||||||
| 1171 HK | Yanzhou Coal Mining Company Limited — Class H | 1,800,000 | 3,347,334 | |||||||
| 50,030,191 | ||||||||||
Multi-Utilities — 10.37% | ||||||||||
| ILA | Aquila, Inc.*(1) | 1,850,000 | 6,974,500 | |||||||
| CMS | CMS Energy Corporation(1) | 1,042,000 | 15,525,800 | |||||||
| RRI | Reliant Energy Inc.* | 1,900,000 | 40,413,000 | |||||||
| 62,913,300 | ||||||||||
Oil, Gas & Consumable Fuels — 2.33% | ||||||||||
| AHD | Atlas Pipeline Holdings LP(1) | 8,000 | 268,000 | |||||||
| BLMC | Biloxi Marsh Lands Corporation | 100 | 2,035 | |||||||
| BGH | Buckeye GP Holdings LP | 56,000 | 1,266,160 | |||||||
| 1898 HK | China Coal Energy Company — Class H | 1,800,000 | 3,148,802 | |||||||
| KEWL | Keweenaw Land Association Ltd. | 300 | 69,300 | |||||||
| NEGI | National Energy Group, Inc.* | 382,000 | 1,375,200 | |||||||
| PVG | Penn Virginia GP Holdings LP | 108,000 | 3,542,400 | |||||||
| UTS CN | UTS Energy Corporation*(1) | 760,000 | 4,442,091 | |||||||
| 14,113,988 | ||||||||||
Other Exchanges — 1.98% | ||||||||||
| ASX AU | ASX Ltd. | 128,000 | 3,853,019 | |||||||
| JSE SJ | JSE Limited | 720,000 | 5,011,494 | |||||||
| NZX NZ | NZX Ltd. | 206,988 | 1,189,478 | |||||||
| X CN | TMX Group Inc. | 48,000 | 1,981,759 | |||||||
| 12,035,750 | ||||||||||
See Notes to the Financial Statements.
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The Small Cap Opportunities Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Pharmaceuticals — 0.17% | ||||||||||
| 1093 HK | China Pharmaceutical Group Limited | 2,056,000 | $ | 1,028,363 | ||||||
Publishing — 0.17% | ||||||||||
| RHD | R.H. Donnelley Corporation*(1) | 180,246 | 540,738 | |||||||
| VALU | Value Line, Inc. | 14,000 | 465,500 | |||||||
| 1,006,238 | ||||||||||
Real Estate — 0.00% | ||||||||||
| SLED LI | Solidere — GDR | 800 | 29,240 | |||||||
Real Estate Investment Trusts (REITS) — 2.59% | ||||||||||
| ALX | Alexander’s, Inc.*(1) | 20,000 | 6,212,000 | |||||||
| NLY | Annaly Capital Management, Inc.(1) | 18,000 | 279,180 | |||||||
| DFR | Deerfield Capital Corporation(1) | 96,648 | 76,352 | |||||||
| 823 HK | The Link REIT | 4,000,000 | 9,110,904 | |||||||
| 15,678,436 | ||||||||||
Real Estate Management & Development — 0.03% | ||||||||||
| TRC | Tejon Ranch Co.*(1) | 6,000 | 216,360 | |||||||
Software — 0.61% | ||||||||||
| FTIS LI | Financial Technologies (India) Ltd. — GDR | 316,000 | 1,848,600 | |||||||
| MVSN | Macrovision Solutions Corporation*(1) | 122,304 | 1,829,668 | |||||||
| 3,678,268 | ||||||||||
State Commercial Banks — 0.08% | ||||||||||
| PFBC | Preferred Bank Los Angeles(1) | 94,000 | 486,920 | |||||||
See Notes to the Financial Statements.
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The Small Cap Opportunities Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Transportation Infrastructure — 5.06% | ||||||||||
| 694 HK | Beijing Capital International Airport Company Limited — Class H | 17,724,000 | $ | 14,752,478 | ||||||
| 357 HK | Hainan Meilan International Airport Company Limited — Class H | 6,040,000 | 5,569,605 | |||||||
| 548 HK | Shenzhen Expressway Company Limited — Class H | 1,000,000 | 584,821 | |||||||
| 107 HK | Sichuan Expressway Co. Limited — Class H | 30,740,000 | 8,831,011 | |||||||
| 3382 HK | Tianjin Port Development Holdings Ltd. | 800,000 | 322,165 | |||||||
| 576 HK | Zhejiang Expressway Co., Limited — Class H | 840,000 | 647,459 | |||||||
| 30,707,539 | ||||||||||
U.S. Equity Exchanges — 1.99% | ||||||||||
| NDAQ | The Nasdaq OMX Group*(1) | 454,000 | 12,053,700 | |||||||
| TOTAL COMMON STOCKS (cost $574,233,774) | 563,286,636 | |||||||||
| Principal | ||||||||||
| ESCROW NOTES — 0.00% | Amount | |||||||||
| Calpine Corporation (converted from Calpine Corp., 4.750%, 11/15/2023)* | $ | 14,400,000 | 1 | |||||||
| TOTAL ESCROW NOTES (cost $0) | 1 | |||||||||
| CORPORATE BONDS — 0.05% | ||||||||||
Diversified Financial Services — 0.05% | ||||||||||
| 317928AA7 | FINOVA Group, Inc. 7.500%, 11/15/2009, Acquired on 10/19/2006-5/17/2007 at $741,082 (Default Effective 4/29/2005)* | 2,783,965 | 327,116 | |||||||
| TOTAL CORPORATE BONDS (cost $1,225,304) | 327,116 | |||||||||
See Notes to the Financial Statements.
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The Small Cap Opportunities Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | RIGHTS — 0.14% | Shares | Value | |||||||
Commercial Services & Supplies — 0.14% | ||||||||||
| CDCOR | Comdisco Holding Company, Inc. — Rights Expiration Date 12/31/2050, Strike Price $1.00# | 9,050,400 | $ | 814,536 | ||||||
| TOTAL RIGHTS (cost $2,836,438) | 814,536 | |||||||||
| CALL OPTIONS PURCHASED — 0.01% | Contracts | |||||||||
| L.AF | Loews Corp. Expiration: January 2009, Exercise Price: $30.00 | 36 | 63,720 | |||||||
| TOTAL CALL OPTIONS PURCHASED (cost $90,828) | 63,720 | |||||||||
| Principal | ||||||||||
| SHORT-TERM INVESTMENTS — 4.14% | Amount | |||||||||
U.S. Government Agency Issues — 4.14% | ||||||||||
| 313384YV | Federal Home Loan Bank Discount Note 1.850%, 07/01/2008 | $ | 25,108,000 | 25,108,000 | ||||||
| Shares | ||||||||||
Money Market Funds — 0.00% | ||||||||||
| FIUXX | First American Prime Obligations Fund — Class I | 1,474 | 1,474 | |||||||
| TOTAL SHORT-TERM INVESTMENTS (cost $25,109,474) | 25,109,474 | |||||||||
See Notes to the Financial Statements.
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The Small Cap Opportunities Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING | ||||||||||
| Identifier | — 29.80% | Shares | Value | |||||||
Investment Companies — 29.80% | ||||||||||
| Mount Vernon Securities Lending Trust — Prime Portfolio | 180,731,085 | $ | 180,731,085 | |||||||
| TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $180,731,085) | 180,731,085 | |||||||||
TOTAL INVESTMENTS — 127.03% (cost $784,226,903) | $ | 770,332,568 | ||||||||
Percentages are stated as a percent of net assets.
* — Non-income producing security.
| # — | Contingent value right (contingent upon profitability of company). |
| ADR — | American Depository Receipt. |
| GDR — | Global Depository Receipt. |
| (1) — | This security or a portion of this security was out on loan at June 30, 2008. Total loaned securities had a market value of $170,723,617 at June 30, 2008. |
See Notes to the Financial Statements.
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The Kinetics Government Money Market Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited)
| Principal | ||||||||||
| Identifier | SHORT-TERM INVESTMENTS — 91.12% | Amount | Value | |||||||
US Government Agency Issues — 91.12% | ||||||||||
| 313384YV | Federal Home Loan Bank Discount Note 1.850%, 07/01/2008 | $ | 1,888,000 | $ | 1,888,000 | |||||
| TOTAL SHORT-TERM INVESTMENTS (cost $1,888,000) | 1,888,000 | |||||||||
TOTAL INVESTMENTS — 91.12% (cost $1,888,000) | $ | 1,888,000 | ||||||||
Percentages are stated as a percent of net assets.
See Notes to the Financial Statements.
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KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Market Opportunities Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited)
| Identifier | COMMON STOCKS — 95.59% | Shares | Value | |||||||
Asian Exchanges — 7.40% | ||||||||||
| 388 HK | Hong Kong Exchanges & Clearing Limited | 244,000 | $ | 3,567,412 | ||||||
| 8697 JP | Osaka Securities Exchange Co., Ltd. | 180 | 757,734 | |||||||
| SGX SP | Singapore Exchange Limited | 540,000 | 2,742,567 | |||||||
| 7,067,713 | ||||||||||
Asset Management — 23.82% | ||||||||||
| AB | AllianceBernstein Holding LP | 8,000 | 437,440 | |||||||
| BLK | BlackRock, Inc.(1) | 9,800 | 1,734,600 | |||||||
| BX | The Blackstone Group LP | 86,000 | 1,566,060 | |||||||
| BAM | Brookfield Asset Management Inc. — Class A | 98,000 | 3,188,920 | |||||||
| CNS | Cohen & Steers, Inc.(1) | 28,000 | 727,160 | |||||||
| EV | Eaton Vance Corp.(1) | 96,000 | 3,816,960 | |||||||
| FII | Federated Investors, Inc. — Class B(1) | 4,800 | 165,216 | |||||||
| FIG | Fortress Investment Group LLC — Class A(1) | 18,000 | 221,760 | |||||||
| BEN | Franklin Resources, Inc. | 18,200 | 1,668,030 | |||||||
| IGM CN | IGM Financial, Inc. | 3,000 | 124,331 | |||||||
| IVZ | Invesco Limited | 4,000 | 95,920 | |||||||
| JNS | Janus Capital Group, Inc.(1) | 200 | 5,294 | |||||||
| LM | Legg Mason, Inc. | 36,000 | 1,568,520 | |||||||
| POW CN | Power Corporation of Canada | 96,000 | 2,939,217 | |||||||
| PZN | Pzena Investment Management, Inc. — Class A(1) | 148,000 | 1,888,480 | |||||||
| TROW | T. Rowe Price Group, Inc.(1) | 11,600 | 655,052 | |||||||
| URB/A CN | Urbana Corp. — Class A* | 400,000 | 1,149,358 | |||||||
| GROW | US Global Investors, Inc. — Class A(1) | 36,000 | 603,000 | |||||||
| 806 HK | Value Partners Group Limited | 216,000 | 185,604 | |||||||
| 22,740,922 | ||||||||||
Brokerage & Investment Banking — 0.36% | ||||||||||
| IAP LN | ICAP plc | 32,000 | 345,464 | |||||||
See Notes to the Financial Statements.
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The Market Opportunities Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Capital Markets — 13.88% | ||||||||||
| ACAS | American Capital Ltd.(1) | 28,000 | $ | 665,560 | ||||||
| BK | The Bank of New York Mellon Corp.(1) | 98,856 | 3,739,722 | |||||||
| CLST LN | Collins Stewart plc | 6,000 | 8,814 | |||||||
| GFIG | GFI Group, Inc.(1) | 36,000 | 324,360 | |||||||
| GS | The Goldman Sachs Group, Inc.(1) | 7,200 | 1,259,280 | |||||||
| IAAC | International Assets Holding Corporation* | 8,200 | 246,492 | |||||||
| JEF | Jefferies Group, Inc.(1) | 36,000 | 605,520 | |||||||
| LAB | LaBranche & Co. Inc.* | 60,000 | 424,800 | |||||||
| LEH | Lehman Brothers Holdings, Inc.(1) | 8,400 | 166,404 | |||||||
| NTRS | Northern Trust Corp. | 28,000 | 1,919,960 | |||||||
| STT | State Street Corporation | 60,018 | 3,840,552 | |||||||
| TLPR LN | Tullett Prebon plc | 6,000 | 51,389 | |||||||
| 13,252,853 | ||||||||||
Commercial Banks — 0.58% | ||||||||||
| 3988 HK | Bank of China Ltd. — Class H | 128,000 | 56,964 | |||||||
| CATY | Cathay General Bancorp(1) | 3,600 | 39,132 | |||||||
| CLFC | Center Financial Corporation | 6,000 | 50,820 | |||||||
| 939 HK | China Construction Bank Corp. — Class H | 128,000 | 103,093 | |||||||
| EWBC | East West Bancorp, Inc. | 3,600 | 25,416 | |||||||
| HAFC | Hanmi Financial Corporation | 6,800 | 35,428 | |||||||
| 1398 HK | Industrial & Commercial Bank of China — Class H | 128,000 | 87,497 | |||||||
| NARA | Nara Bancorp, Inc.(1) | 7,000 | 75,110 | |||||||
| UCBH | UCBH Holdings, Inc.(1) | 7,600 | 17,100 | |||||||
| WIBC | Wilshire Bancorp, Inc. | 7,200 | 61,704 | |||||||
| 552,264 | ||||||||||
Diversified Consumer Services — 1.38% | ||||||||||
| BID | Sotheby’s(1) | 50,000 | 1,318,500 | |||||||
See Notes to the Financial Statements.
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The Market Opportunities Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Diversified Financial Services — 11.36% | ||||||||||
| CLE LN | Climate Exchange plc* | 36,000 | $ | 1,368,868 | ||||||
| CME | CME Group, Inc.(1) | 9,285 | 3,557,919 | |||||||
| IBKR | Interactive Brokers Group, Inc. — Class A* | 18,000 | 578,340 | |||||||
| ICE | IntercontinentalExchange Inc.* | 12,000 | 1,368,000 | |||||||
| JPM | JPMorgan Chase & Co. | 1,305 | 44,775 | |||||||
| LSE LN | London Stock Exchange Group plc | 144,043 | 2,237,895 | |||||||
| NMX | Nymex Holdings, Inc.(1) | 20,000 | 1,689,600 | |||||||
| 10,845,397 | ||||||||||
Electric Utilities — 0.07% | ||||||||||
| BIP | Brookfield Infrastucture Partners L.P.(1) | 3,200 | 62,720 | |||||||
European Exchanges — 6.64% | ||||||||||
| BME SM | Bolsas y Mercados Espanoles | 44,200 | 1,645,826 | |||||||
| DB1 GR | Deutsche Boerse AG | 20,200 | 2,280,030 | |||||||
| EXAE GA | Hellenic Exchanges S.A. Holding | 24,000 | 302,296 | |||||||
| OMX SS | OMX AB* | 48,000 | 2,112,097 | |||||||
| 6,340,249 | ||||||||||
Holding Company — 1.54% | ||||||||||
| BNB CN | BAM Investments Ltd.* | 33,000 | 593,528 | |||||||
| BRK/A | Berkshire Hathaway Inc. — Class A* | 4 | 483,000 | |||||||
| PWF CN | Power Financial Corp.(1) | 12,000 | 390,232 | |||||||
| 1,466,760 | ||||||||||
Household Durables — 1.06% | ||||||||||
| IEP | Icahn Enterprises LP | 14,400 | 1,012,896 | |||||||
Insurance — 5.22% | ||||||||||
| 2628 HK | China Life Insurance Co., Limited — Class H | 643,600 | 2,253,395 | |||||||
| GWO CN | Great West Lifeco, Inc. | 12,200 | 348,879 | |||||||
| 2318 HK | Ping An Insurance Group Company of China Limited — Class H | 320,000 | 2,380,326 | |||||||
| 4,982,600 | ||||||||||
See Notes to the Financial Statements.
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The Market Opportunities Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
IT Services — 1.29% | ||||||||||
| BR | Broadridge Financial Solutions, Inc. | 36,000 | $ | 757,800 | ||||||
| MA | Mastercard, Inc. — Class A(1) | 1,800 | 477,936 | |||||||
| 1,235,736 | ||||||||||
Media — 0.00% | ||||||||||
| 9399 JP | Xinhua Finance Ltd.* | 100 | 4,944 | |||||||
Metals & Mining — 4.26% | ||||||||||
| FNNVF | Franco-Nevada Corporation | 168,000 | 4,069,432 | |||||||
Other Exchanges — 6.68% | ||||||||||
| ASX AU | ASX Ltd. | 100,000 | 3,010,171 | |||||||
| IMAREX NO | IMAREX ASA* | 2,000 | 51,048 | |||||||
| JSE SJ | JSE Limited | 180,000 | 1,252,874 | |||||||
| NZX NZ | NZX Ltd. | 48,526 | 278,860 | |||||||
| X CN | TMX Group Inc. | 43,352 | 1,789,859 | |||||||
| 6,382,812 | ||||||||||
Publishing — 1.55% | ||||||||||
| MHP | The McGraw-Hill Companies, Inc.(1) | 6,000 | 240,720 | |||||||
| MCO | Moody’s Corporation(1) | 36,000 | 1,239,840 | |||||||
| 1,480,560 | ||||||||||
Software — 0.89% | ||||||||||
| FTIS LI | Financial Technologies (India) Ltd. — GDR | 144,675 | 846,349 | |||||||
State Commercial Banks — 0.01% | ||||||||||
| PFBC | Preferred Bank Los Angeles(1) | 2,700 | 13,986 | |||||||
Thrifts & Mortgage Finance — 0.74% | ||||||||||
| FNM | Federal National Mortgage Association(1) | 36,000 | 702,360 | |||||||
U.S. Equity Exchanges — 6.86% | ||||||||||
| NDAQ | The Nasdaq OMX Group*(1) | 120,000 | 3,186,000 | |||||||
| NYX | NYSE Euronext(1) | 66,431 | 3,365,394 | |||||||
| 6,551,394 | ||||||||||
| TOTAL COMMON STOCKS (cost $110,131,953) | 91,275,911 | |||||||||
See Notes to the Financial Statements.
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The Market Opportunities Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | CALL OPTIONS PURCHASED — 0.05% | Contracts | Value | |||||||
| STT.AH | State Street Corporation Expiration: January 2009, Exercise Price: $40.00 | 18 | $ | 46,530 | ||||||
| TOTAL CALL OPTIONS PURCHASED (cost $56,394) | 46,530 | |||||||||
| Principal | ||||||||||
| SHORT-TERM INVESTMENTS — 3.87% | Amount | |||||||||
US Government Agency Issues — 3.12% | ||||||||||
| 313384YV | Federal Home Loan Bank Discount Note 1.850%, 07/01/2008 | $ | 2,986,000 | 2,986,000 | ||||||
| Shares | ||||||||||
Money Market Funds — 0.75% | ||||||||||
| FIUXX | First American Prime Obligations Fund — Class I | 713,652 | 713,652 | |||||||
| TOTAL SHORT-TERM INVESTMENTS (cost $3,699,652) | 3,699,652 | |||||||||
See Notes to the Financial Statements.
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The Market Opportunities Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| INVESTMENTS PURCHASED | ||||||||||
| WITH THE CASH PROCEEDS | ||||||||||
| FROM SECURITIES LENDING | ||||||||||
| Identifier | — 30.69% | Shares | Value | |||||||
Investment Companies — 30.69% | ||||||||||
| Mount Vernon Securities Lending Trust — Prime Portfolio | 29,301,981 | $ | 29,301,981 | |||||||
| TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $29,301,981) | 29,301,981 | |||||||||
TOTAL INVESTMENTS — 130.20% (cost $143,189,980) | $ | 124,324,074 | ||||||||
Percentages are stated as a percent of net assets.
| * — | Non-income producing security. |
| GDR — | Global Depository Receipt. |
| (1) — | This security or a portion of this security was out on loan at June 30, 2008. Total loaned securities had a market value of $27,497,397 at June 30, 2008. |
See Notes to the Financial Statements.
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The Water Infrastructure Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited)
| Identifier | COMMON STOCKS — 68.91% | Shares | Value | |||||||
Building Products — 5.71% | ||||||||||
| AMN | Ameron International Corp.(1) | 3,400 | $ | 407,932 | ||||||
| GEBN VX | Geberit AG | 2,935 | 432,399 | |||||||
| UNR1V FH | Uponor Oyj | 21,000 | 308,814 | |||||||
| WAVIN NA | Wavin NV | 40,000 | 331,266 | |||||||
| 1,480,411 | ||||||||||
Chemicals — 0.90% | ||||||||||
| HWKN | Hawkins, Inc. | 1,500 | 22,440 | |||||||
| YARIY | Yara International ASA — ADR | 2,400 | 212,508 | |||||||
| 234,948 | ||||||||||
Commercial Services & Supplies — 3.32% | ||||||||||
| AENV SP | Asia Environment Holdings Limited | 163,000 | 57,506 | |||||||
| BIOT SP | Bio-Treat Technology Ltd. | 250,000 | 51,450 | |||||||
| CLHB | Clean Harbors, Inc.*(1) | 3,000 | 213,180 | |||||||
| LAYN | Layne Christensen Company* | 8,000 | 350,320 | |||||||
| SINO SP | Sinomem Technology Limited* | 400,000 | 188,159 | |||||||
| 860,615 | ||||||||||
Construction & Engineering — 4.52% | ||||||||||
| URS | URS Corp.* | 17,000 | 713,490 | |||||||
| YTY1V FH | YIT Oyj | 18,300 | 460,424 | |||||||
| 1,173,914 | ||||||||||
Electric Utilities — 1.07% | ||||||||||
| EDE | The Empire District Electric Co. | 15,000 | 278,100 | |||||||
Electrical Equipment — 2.32% | ||||||||||
| FELE | Franklin Electric Co., Inc. | 7,000 | 271,460 | |||||||
| ROP | Roper Industries, Inc.(1) | 5,000 | 329,400 | |||||||
| 600,860 | ||||||||||
Funds, Trusts, and Other Financial Vehicles — 0.52% | ||||||||||
| MGU | Macquarie Global Infrastructure Total Return Fund Inc. | 6,000 | 134,700 | |||||||
Household Durables — 0.31% | ||||||||||
| 6485 JP | Maezawa Kyuso Industries Co. Ltd. | 4,500 | 80,011 | |||||||
See Notes to the Financial Statements.
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The Water Infrastructure Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Independent Power Producers & Energy Traders — 1.59% | ||||||||||
| APF-U CN | Algonquin Power Income Fund | 25,000 | $ | 187,065 | ||||||
| GLH-U CN | Great Lakes Hydro Income Fund | 12,000 | 224,772 | |||||||
| 411,837 | ||||||||||
Industrial Conglomerates — 1.54% | ||||||||||
| TYC | Tyco International Ltd.(1) | 10,000 | 400,400 | |||||||
Machinery — 13.05% | ||||||||||
| ANDR AV | Andritz AG | 5,000 | 315,285 | |||||||
| ARF-U CN | Armtec Infrastructure Income Fund | 12,200 | 303,893 | |||||||
| DHR | Danaher Corp.(1) | 8,000 | 618,400 | |||||||
| ESE | ESCO Technologies, Inc.*(1) | 3,000 | 140,760 | |||||||
| GRC | The Gorman-Rupp Company(1) | 3,000 | 119,520 | |||||||
| IEX | IDEX Corp.(1) | 10,000 | 368,400 | |||||||
| IR | Ingersoll-Rand Company Ltd. — Class A | 690 | 25,827 | |||||||
| ITT | ITT Corporation(1) | 7,000 | 443,310 | |||||||
| MPR | Met-Pro Corporation | 34,800 | 464,580 | |||||||
| MLI | Mueller Industries, Inc.(1) | 11,900 | 383,180 | |||||||
| 840 HK | Xinjiang Tianye Water Saving Irrigation System Co. Ltd. — Class H | 800,000 | 204,174 | |||||||
| 3,387,329 | ||||||||||
Metals & Mining — 1.90% | ||||||||||
| SOLK GA | Corinth Pipeworks SA* | 23,100 | 145,480 | |||||||
| NWPX | Northwest Pipe Company*(1) | 4,000 | 223,200 | |||||||
| PAP TB | Pacific Pipe Public Company Limited | 417,500 | 123,620 | |||||||
| 492,300 | ||||||||||
Multi-Utilities — 7.41% | ||||||||||
| ACE IM | ACEA S.P.A. | 15,500 | 295,045 | |||||||
| SZE FP | Suez SA | 6,500 | 442,517 | |||||||
| VE | Veolia Environnement — ADR | 21,200 | 1,184,020 | |||||||
| 1,921,582 | ||||||||||
Multi-Utilities & Unregulated Power — 2.90% | ||||||||||
| UU/ LN | United Utilities Group PLC | 55,000 | 752,067 | |||||||
See Notes to the Financial Statements.
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KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
The Water Infrastructure Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Shares | Value | ||||||||
Water Utilities — 21.85% | ||||||||||
| AWR | American States Water Company(1) | 16,200 | $ | 566,028 | ||||||
| WTR | Aqua America, Inc.(1) | 30,800 | 491,876 | |||||||
| ARTNA | Artesian Resources Corp. — Class A | 11,910 | 219,025 | |||||||
| CWT | California Water Service Group | 24,000 | 786,480 | |||||||
| SBS | Cia de Saneamento Basico do Estado de Sao Paulo — ADR(1) | 16,000 | 818,560 | |||||||
| CTWS | Connecticut Water Service, Inc. | 18,494 | 414,266 | |||||||
| 270 HK | Guangdong Investment Limited | 300,000 | 121,581 | |||||||
| MWC PM | Manila Water Company | 488,100 | 198,415 | |||||||
| MSEX | Middlesex Water Co. | 12,000 | 199,080 | |||||||
| NWG LN | Northumbrian Water Group Plc | 60,200 | 377,112 | |||||||
| SVT LN | Severn Trent plc | 13,000 | 332,477 | |||||||
| SJW | SJW Corp.(1) | 17,000 | 448,800 | |||||||
| AGS SM | Sociedad General de Aguas de Barcelona SA | 15,000 | 460,056 | |||||||
| EYAPS GA | Thessaloniki Water Supply & Sewage Co. SA | 500 | 4,849 | |||||||
| YORW | York Water Company | 15,953 | 232,435 | |||||||
| 5,671,040 | ||||||||||
| TOTAL COMMON STOCKS (cost $18,662,258) | 17,880,114 | |||||||||
| Principal | ||||||||||
| SHORT-TERM INVESTMENTS — 36.75% | Amount | |||||||||
US Government Agency Issues — 35.08% | ||||||||||
| 313384YV | Federal Home Loan Bank Discount Note 1.850%, 07/01/2008 | $ | 9,103,000 | 9,103,000 | ||||||
| Shares | ||||||||||
Money Market Funds — 1.67% | ||||||||||
| FIUXX | First American Prime Obligations Fund — Class I | 434,302 | 434,302 | |||||||
| TOTAL SHORT-TERM INVESTMENTS (cost $9,537,302) | 9,537,302 | |||||||||
See Notes to the Financial Statements.
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The Water Infrastructure Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited) — (Continued)
| INVESTMENTS PURCHASED | ||||||||||
| WITH THE CASH PROCEEDS FROM SECURITIES | ||||||||||
| Identifier | LENDING — 16.54% | Shares | Value | |||||||
Investment Companies — 16.54% | ||||||||||
| Mount Vernon Securities Lending Trust — Prime Portfolio | 4,290,507 | $ | 4,290,507 | |||||||
| TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $4,290,507) | 4,290,507 | |||||||||
TOTAL INVESTMENTS — 122.20% (cost $32,490,067) | $ | 31,707,923 | ||||||||
Percentages are stated as a percent of net assets.
* — Non-income producing security.
| ADR — | American Depository Receipt. |
| (1) — | This security or a portion of this security was out on loan at June 30, 2008. Total loaned securities had a market value of $4,181,821 at June 30, 2008. |
See Notes to the Financial Statements.
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The Multi-Disciplinary Portfolio
Portfolio of Investments — June 30, 2008 (Unaudited)
| Principal | ||||||||||
| Identifier | SHORT-TERM INVESTMENTS — 88.58% | Amount | Value | |||||||
| US Government Agency Issues — 88.58% | ||||||||||
| 313384YV | Federal Home Loan Bank Discount Note 1.851%, 07/01/2008 | $ | 427,000 | $ | 427,000 | |||||
| Shares | ||||||||||
| Money Market Funds — 0.03% | ||||||||||
| FIUXX | First American Prime Obligations Fund — Class I | 143 | 143 | |||||||
TOTAL SHORT-TERM INVESTMENTS (cost $427,143) | 427,143 | |||||||||
| TOTAL INVESTMENTS — 88.58% (cost $427,143) | $ | 427,143 | ||||||||
Percentages are stated as a percent of net assets.
See Notes to the Financial Statements.
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The Multi-Disciplinary Portfolio
Portfolio of Options Written — June 30, 2008 (Unaudited)
| Identifier | PUT OPTIONS WRITTEN | Contracts | Value | |||||||
| Aerospace & Defense | ||||||||||
| BA.TO | Boeing Co. | |||||||||
Expiration: August 2008, Exercise Price: $75.00 | 1 | $ | 980 | |||||||
| NOC.WM | Northrop Grumman Corp. | |||||||||
Expiration: November 2008, Exercise Price: $65.00 | 1 | 360 | ||||||||
| 1,340 | ||||||||||
| Airlines | ||||||||||
| ZNH.UG | China Southern Airlines Company Limited — ADR | |||||||||
Expiration: September 2008, Exercise Price: $35.00 | 2 | 3,040 | ||||||||
| Auto Components | ||||||||||
| TEN.VE | Tenneco Inc. | |||||||||
Expiration: October 2008, Exercise Price: $25.00 | 2 | 2,280 | ||||||||
| Beverages | ||||||||||
| BUD.UI | Anheuser-Busch Cos. Inc. | |||||||||
Expiration: September 2008, Exercise Price: $45.00 | 1 | 32 | ||||||||
| STZ.VW | Constellation Brands, Inc. — Class A | |||||||||
Expiration: October 2008, Exercise Price: $17.50 | 2 | 150 | ||||||||
| 182 | ||||||||||
See Notes to the Financial Statements.
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The Multi-Disciplinary Portfolio
Portfolio of Options Written — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Contracts | Value | ||||||||
| Capital Markets | ||||||||||
| AMG.US | Affiliated Managers Group Inc. | |||||||||
Expiration: September 2008, Exercise Price: $95.00 | 1 | $ | 1,060 | |||||||
| BK.XH | The Bank of New York Mellon Corp. | |||||||||
Expiration: December 2008, Exercise Price: $40.00 | 1 | 565 | ||||||||
| BX.UC | The Blackstone Group LP | |||||||||
Expiration: September 2008, Exercise Price: $15.00 | 3 | 180 | ||||||||
| CNS.UE | Cohen & Steers, Inc. | |||||||||
Expiration: September 2008, Exercise Price: $25.00 | 2 | 395 | ||||||||
| FIG.UV | Fortress Investment Group LLC — Class A | |||||||||
Expiration: September 2008, Exercise Price: $12.50 | 3 | 495 | ||||||||
| GQG.UC | GFI Group, Inc. | |||||||||
Expiration: September 2008, Exercise Price: $15.00 | 4 | 2,420 | ||||||||
| GPY.VM | The Goldman Sachs Group, Inc. | |||||||||
Expiration: October 2008, Exercise Price: $165.00 | 1 | 1,000 | ||||||||
| LM.TV | Legg Mason, Inc. | |||||||||
Expiration: August 2008, Exercise Price: $55.00 | 1 | 1,165 | ||||||||
| RQW.VJ | T. Rowe Price Group, Inc. | |||||||||
Expiration: October 2008, Exercise Price: $50.00 | 1 | 315 | ||||||||
| QGW.UV | U.S. Global Investors, Inc. — Class A | |||||||||
Expiration: September 2008, Exercise Price: $12.50 | 3 | 150 | ||||||||
| 7,745 | ||||||||||
| Chemicals | ||||||||||
| IAQ.VK | Sigma-Aldrich Corp. | |||||||||
Expiration: October 2008, Exercise Price: $55.00 | 1 | 370 | ||||||||
See Notes to the Financial Statements.
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The Multi-Disciplinary Portfolio
Portfolio of Options Written — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Contracts | Value | ||||||||
| Commercial Banks | ||||||||||
| HDB.VS | HDFC Bank Ltd. — ADR | |||||||||
Expiration: October 2008, Exercise Price: $95.00 | 1 | $ | 2,620 | |||||||
| IBN.UH | ICICI Bank Ltd. — ADR | |||||||||
Expiration: September 2008, Exercise Price: $40.00 | 1 | 1,210 | ||||||||
| MTB.VR | M&T Bank Corporation | |||||||||
Expiration: October 2008, Exercise Price: $90.00 | 2 | 4,140 | ||||||||
| 7,970 | ||||||||||
| Consumer Finance | ||||||||||
| DFS.VW | Discover Financial Services | |||||||||
Expiration: October 2008, Exercise Price: $17.50 | 2 | 960 | ||||||||
| Diversified Consumer Services | ||||||||||
| BID.SE | Sotheby’s | |||||||||
Expiration: July 2008, Exercise Price: $25.00 | 2 | 180 | ||||||||
| Diversified Financial Services | ||||||||||
| LUK.UJ | Leucadia National Corporation | |||||||||
Expiration: September 2008, Exercise Price: $50.00 | 1 | 500 | ||||||||
| MCO.WG | Moody’s Corporation | |||||||||
Expiration: November 2008, Exercise Price: $35.00 | 1 | 530 | ||||||||
| 1,030 | ||||||||||
| Diversified Telecommunication | ||||||||||
| CN.UK | China Netcom Group — ADR | |||||||||
Expiration: September 2008, Exercise Price: $55.00 | 1 | 490 | ||||||||
See Notes to the Financial Statements.
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The Multi-Disciplinary Portfolio
Portfolio of Options Written — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Contracts | Value | ||||||||
| Electric Utilities | ||||||||||
| AYE.VJ | Allegheny Energy, Inc. | |||||||||
Expiration: October 2008, Exercise Price: $50.00 | 1 | $ | 315 | |||||||
| KEP.XC | Korea Electric Power Corporation — ADR | |||||||||
Expiration: December 2008, Exercise Price: $15.00 | 6 | 915 | ||||||||
| 1,230 | ||||||||||
| Hotels Restaurants & Leisure | ||||||||||
| IGX.VF | International Game Technology | |||||||||
Expiration: October 2008, Exercise Price: $30.00 | 1 | 580 | ||||||||
| LVS.UP | Las Vegas Sands Corp. | |||||||||
Expiration: September 2008, Exercise Price: $80.00 | 1 | 3,240 | ||||||||
| MGM.UL | MGM Mirage | |||||||||
Expiration: September 2008, Exercise Price: $60.00 | 1 | 2,580 | ||||||||
| UWY.UT | Wynn Resorts Limited | |||||||||
Expiration: September 2008, Exercise Price: $100.00 | 1 | 2,045 | ||||||||
| 8,445 | ||||||||||
| Independent Power Producers & Energy Traders | ||||||||||
| CPN.UW | Calpine Corp. | |||||||||
Expiration: September 2008, Exercise Price: $17.50 | 3 | 67 | ||||||||
| HNP.TF | Huaneng Power International, Inc. — ADR | |||||||||
Expiration: August 2008, Exercise Price: $30.00 | 2 | 730 | ||||||||
| RRI.WE | Reliant Energy Inc. | |||||||||
Expiration: November 2008, Exercise Price: $25.00 | 2 | 890 | ||||||||
| 1,687 | ||||||||||
See Notes to the Financial Statements.
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The Multi-Disciplinary Portfolio
Portfolio of Options Written — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Contracts | Value | ||||||||
| Insurance | ||||||||||
| AIG.WI | American International Group, Inc. | |||||||||
Expiration: November 2008, Exercise Price: $45.00 | 1 | $ | 1,880 | |||||||
| LFC.SX | China Life Insurance Co., Limited — ADR | |||||||||
Expiration: July 2008, Exercise Price: $57.50 | 1 | 560 | ||||||||
| L.UH | Loews Corporation | |||||||||
Expiration: September 2008, Exercise Price: $40.00 | 1 | 83 | ||||||||
| MBI.WN | MBIA Inc. | |||||||||
Expiration: November 2008, Exercise Price: $12.00 | 4 | 3,060 | ||||||||
| 5,583 | ||||||||||
| Internet Software & Services | ||||||||||
| XBA.SF | eBay, Inc. | |||||||||
Expiration: July 2008, Exercise Price: $30.00 | 2 | 574 | ||||||||
| IT Services | ||||||||||
| CAI.UI | CACI International, Inc. — Class A | |||||||||
Expiration: September 2008, Exercise Price: $45.00 | 1 | 275 | ||||||||
| IRM.VE | Iron Mountain Incorporated | |||||||||
Expiration: October 2008, Exercise Price: $25.00 | 2 | 270 | ||||||||
| WU.WD | The Western Union Company | |||||||||
Expiration: November 2008, Exercise Price: $20.00 | 4 | 240 | ||||||||
| 785 | ||||||||||
| Machinery | ||||||||||
| UKU.UD | American Railcar Industries, Inc. | |||||||||
Expiration: September 2008, Exercise Price: $20.00 | 2 | 740 | ||||||||
See Notes to the Financial Statements.
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The Multi-Disciplinary Portfolio
Portfolio of Options Written — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Contracts | Value | ||||||||
| Media | ||||||||||
| MHP.WG | The McGraw-Hill Companies, Inc. | |||||||||
Expiration: November 2008, Exercise Price: $35.00 | 1 | $ | 205 | |||||||
| DIS.VF | The Walt Disney Co. | |||||||||
Expiration: October 2008, Exercise Price: $30.00 | 1 | 138 | ||||||||
| 343 | ||||||||||
| Metals & Mining | ||||||||||
| CMC.UF | Commercial Metals Company | |||||||||
Expiration: September 2008, Exercise Price: $30.00 | 2 | 140 | ||||||||
| NRQ.VN | Northern Trust Corp. | |||||||||
Expiration: October 2008, Exercise Price: $70.00 | 2 | 1,260 | ||||||||
| 1,400 | ||||||||||
| Multiline Retail | ||||||||||
| KTQ.US | Sears Holdings Corporation | |||||||||
Expiration: September 2008, Exercise Price: $95.00 | 1 | 2,360 | ||||||||
See Notes to the Financial Statements.
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The Multi-Disciplinary Portfolio
Portfolio of Options Written — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Contracts | Value | ||||||||
| Oil, Gas & Consumable Fuels | ||||||||||
| GIY.TA | AMBAC Financial Group Inc. | |||||||||
Expiration: August 2008, Exercise Price: $5.00 | 10 | $ | 3,650 | |||||||
| CCJ.UG | Cameco Corporation | |||||||||
Expiration: September 2008, Exercise Price: $35.00 | 2 | 160 | ||||||||
| CNQ.UN | Canadian Natural Resources Ltd. | |||||||||
Expiration: September 2008, Exercise Price: $70.00 | 1 | 50 | ||||||||
| SNP.VR | China Petroleum & Chemical Corp. — ADR | |||||||||
Expiration: October 2008, Exercise Price: $90.00 | 1 | 900 | ||||||||
| CEO.XL | CNOOC Limited — ADR | |||||||||
Expiration: December 2008, Exercise Price: $160.00 | 1 | 1,460 | ||||||||
| ECA.VO | EnCana Corporation | |||||||||
Expiration: October 2008, Exercise Price: $75.00 | 1 | 183 | ||||||||
| IMO.TK | Imperial Oil Ltd. | |||||||||
Expiration: August 2008, Exercise Price: $55.00 | 1 | 280 | ||||||||
| NXY.UF | Nexen Inc. | |||||||||
Expiration: September 2008, Exercise Price: $30.00 | 2 | 75 | ||||||||
| PWE.UE | Penn West Energy Trust | |||||||||
Expiration: September 2008, Exercise Price: $25.00 | 2 | 15 | ||||||||
| STO.VG | StatoilHydro ASA — ADR | |||||||||
Expiration: October 2008, Exercise Price: $35.00 | 2 | 430 | ||||||||
| 7,203 | ||||||||||
See Notes to the Financial Statements.
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The Multi-Disciplinary Portfolio
Portfolio of Options Written — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Contracts | Value | ||||||||
| Real Estate Investment Trusts (REITs) | ||||||||||
| BAM.UF | Brookfield Asset Management, Inc. — Class A | |||||||||
Expiration: September 2008, Exercise Price: $30.00 | 1 | $ | 110 | |||||||
| VNO.UQ | Vornado Realty Trust | |||||||||
Expiration: September 2008, Exercise Price: $85.00 | 1 | 490 | ||||||||
| 600 | ||||||||||
| Road & Rail | ||||||||||
| BNI.VQ | Burlington Northern Santa Fe Corp. | |||||||||
Expiration: October 2008, Exercise Price: $85.00 | 1 | 222 | ||||||||
| CSX.TK | CSX Corp. | |||||||||
Expiration: August 2008, Exercise Price: $55.00 | 1 | 105 | ||||||||
| NSC.UK | Norfolk Southern Corp. | |||||||||
Expiration: September 2008, Exercise Price: $55.00 | 1 | 150 | ||||||||
| 477 | ||||||||||
| Specialty Retail | ||||||||||
| TIF.WH | Tiffany & Co. | |||||||||
Expiration: November 2008, Exercise Price: $40.00 | 1 | 360 | ||||||||
| Textiles, Apparel & Luxury Goods | ||||||||||
| COH.WY | Coach Inc. | |||||||||
Expiration: November 2008, Exercise Price: $27.50 | 1 | 240 | ||||||||
| Thrifts & Mortgage Finance | ||||||||||
| NJW.UE | Federal National Mortgage Association | |||||||||
Expiration: September 2008, Exercise Price: $25.00 | 2 | 1,340 | ||||||||
| Transportation Infrastructure | ||||||||||
| PAC.VH | Grupo Aeroportuario del Pacifico S.A.B. de C.V. — ADR | |||||||||
Expiration: October 2008, Exercise Price: $40.00 | 1 | 1,065 | ||||||||
See Notes to the Financial Statements.
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The Multi-Disciplinary Portfolio
Portfolio of Options Written — June 30, 2008 (Unaudited) — (Continued)
| Identifier | Contracts | Value | ||||||||
| Wireless Telecommunication Services | ||||||||||
| CHU.VW | China Unicom Limited — ADR | |||||||||
Expiration: October 2008, Exercise Price: $17.50 | 4 | $ | 600 | |||||||
TOTAL PUT OPTIONS WRITTEN (Premiums received $41,239) | $ | 60,619 | ||||||||
| ADR — | American Depository Receipt. |
See Notes to the Financial Statements.
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Statement of Assets & Liabilities
June 30, 2008 (Unaudited)
| The Internet | The Global | |||||||
| Portfolio | Portfolio | |||||||
ASSETS: | ||||||||
Investments, at value(1)(2) | $ | 172,295,256 | $ | 3,110,403 | ||||
Foreign currencies, at value(3) | 14,471 | — | ||||||
| Receivable for contributed capital | 26,237 | 1,911 | ||||||
| Receivable for investments sold | 186,167 | — | ||||||
| Dividends and interest receivable | 246,437 | 18,570 | ||||||
| Other assets | 536,185 | 235 | ||||||
| Total assets | 173,304,753 | 3,131,119 | ||||||
LIABILITIES: | ||||||||
| Payable to Adviser | 124,868 | 3,303 | ||||||
| Payable to Custodian | 47,165 | — | ||||||
| Payable to Trustees and Officers | 714 | 9 | ||||||
| Payable for collateral received for securities loaned | 58,584,774 | 97,416 | ||||||
| Payable for withdrawn capital | 149,835 | — | ||||||
| Accrued expenses and other liabilities | 19,871 | 7,568 | ||||||
| Total liabilities | 58,927,227 | 108,296 | ||||||
| Net assets | $ | 114,377,526 | $ | 3,022,823 | ||||
(1) Cost of investments | $ | 146,869,076 | $ | 3,557,709 | ||||
(2) Includes loaned securities with a market value of | $ | 56,458,394 | $ | 96,929 | ||||
(3) Cost of foreign currencies | $ | 13,936 | $ | — | ||||
See Notes to the Financial Statements.
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Statement of Assets & Liabilities
June 30, 2008 (Unaudited)
| The | The | |||||||
| Paradigm | Medical | |||||||
| Portfolio | Portfolio | |||||||
ASSETS: | ||||||||
Investments, at value(1)(2) | $ | 5,035,879,272 | $ | 25,061,188 | ||||
Foreign currencies, at value(3) | 383,923 | — | ||||||
| Cash | 1,109,228 | — | ||||||
| Cash collateral for securities on loan | 1,382,939 | — | ||||||
| Receivable for contributed capital | 12,223,872 | 90,025 | ||||||
| Receivable for investments sold | 46,256,707 | — | ||||||
| Dividends and interest receivable | 5,684,127 | 31,458 | ||||||
| Other assets | 685,128 | 3,895 | ||||||
| Total assets | 5,103,605,196 | 25,186,566 | ||||||
LIABILITIES: | ||||||||
Foreign currencies, at value(4) | 155,278 | — | ||||||
| Payable to Adviser | 4,060,628 | 18,645 | ||||||
| Payable to Trustees and Officers | 21,233 | 87 | ||||||
| Payable for collateral received for securities loaned | 1,421,598,819 | 7,091,189 | ||||||
| Payable for withdrawn capital | 18,650,670 | 7,569 | ||||||
| Accrued expenses and other liabilities | 389,887 | 9,336 | ||||||
| Total liabilities | 1,444,876,515 | 7,126,826 | ||||||
| Net assets | $ | 3,658,728,681 | $ | 18,059,740 | ||||
(1) Cost of investments | $ | 4,941,933,645 | $ | 25,250,634 | ||||
(2) Includes loaned securities with a market value of | $ | 1,368,187,723 | $ | 6,779,228 | ||||
(3) Cost of foreign currencies | $ | 366,043 | $ | — | ||||
(4) Cost of foreign currencies short | $ | 155,144 | $ | — | ||||
See Notes to the Financial Statements.
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Statement of Assets & Liabilities
June 30, 2008 (Unaudited)
| The Kinetics | ||||||||
| The Small Cap | Government | |||||||
| Opportunities | Money Market | |||||||
| Portfolio | Portfolio | |||||||
ASSETS: | ||||||||
Investments, at value(1) (2) | $ | 770,332,568 | $ | 1,888,000 | ||||
Foreign currencies, at value(3) | 171,023 | — | ||||||
| Cash | 2,472,387 | — | ||||||
| Receivable for contributed capital | 601,324 | 192,344 | ||||||
| Receivable for investments sold | 13,828,212 | — | ||||||
| Dividends and interest receivable | 1,101,396 | — | ||||||
| Other assets | 1,874,433 | 149 | ||||||
| Total assets | 790,381,343 | 2,080,493 | ||||||
LIABILITIES: | ||||||||
| Payable to Adviser | 683,243 | 772 | ||||||
| Payable to Custodian | — | 1,129 | ||||||
| Payable to Trustees and Officers | 4,155 | 5 | ||||||
| Payable for collateral received for securities loaned | 180,731,085 | — | ||||||
| Payable for withdrawn capital | 2,466,566 | — | ||||||
| Accrued expenses and other liabilities | 97,273 | 6,495 | ||||||
| Total liabilities | 183,982,322 | 8,401 | ||||||
| Net assets | $ | 606,399,021 | $ | 2,072,092 | ||||
(1) Cost of investments | $ | 784,226,903 | $ | 1,888,000 | ||||
(2) Includes loaned securities with a market value of | $ | 170,723,617 | $ | — | ||||
(3) Cost of foreign currencies | $ | 170,595 | $ | — | ||||
See Notes to the Financial Statements.
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Statement of Assets & Liabilities
June 30, 2008 (Unaudited)
| The Market | The Water | |||||||
| Opportunities | Infrastructure | |||||||
| Portfolio | Portfolio | |||||||
ASSETS: | ||||||||
Investments, at value(1) (2) | $ | 124,324,074 | $ | 31,707,923 | ||||
Foreign currencies, at value(3) | 35,062 | 336,134 | ||||||
| Cash | — | 40,294 | ||||||
| Receivable for contributed capital | 881,377 | 580,778 | ||||||
| Dividends and interest receivable | 220,245 | 50,448 | ||||||
| Other assets | 24,275 | 2,155 | ||||||
| Total assets | 125,485,033 | 32,717,732 | ||||||
LIABILITIES: | ||||||||
| Payable to Adviser | 103,605 | 25,546 | ||||||
| Payable to Custodian | 44,983 | — | ||||||
| Payable to Trustees and Officers | 537 | 49 | ||||||
| Payable for securities purchased | — | 2,443,123 | ||||||
| Payable for collateral received for securities loaned | 29,301,981 | 4,290,507 | ||||||
| Payable for withdrawn capital | 528,950 | 305 | ||||||
| Accrued expenses and other liabilities | 19,601 | 10,046 | ||||||
| Total liabilities | 29,999,657 | 6,769,576 | ||||||
| Net assets | $ | 95,485,376 | $ | 25,948,156 | ||||
(1) Cost of investments | $ | 143,189,980 | $ | 32,490,067 | ||||
(2) Includes loaned securities with a market value of | $ | 27,497,397 | $ | 4,181,821 | ||||
(3) Cost of foreign currencies | $ | 32,086 | $ | 338,086 | ||||
See Notes to the Financial Statements.
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Statement of Assets & Liabilities
June 30, 2008 (Unaudited)
| The Multi- | ||||
| Disciplinary | ||||
| Portfolio | ||||
ASSETS: | ||||
Investments, at value(1) | $ | 427,143 | ||
| Deposit at brokers for written options | 60,004 | |||
| Cash | 60,074 | |||
| Dividends and interest receivable | 5 | |||
| Other assets | 12 | |||
| Total assets | 547,238 | |||
LIABILITIES: | ||||
Written options, at value(2) | 60,619 | |||
| Payable to Adviser | 511 | |||
| Accrued expenses and other liabilities | 3,903 | |||
| Total liabilities | 65,033 | |||
| Net assets | $ | 482,205 | ||
(1) Cost of investments | $ | 427,143 | ||
(2) Premiums received | $ | 41,239 | ||
See Notes to the Financial Statements.
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Statement of Operations
For the Six Months Ended June 30, 2008 (Unaudited)
| The Internet | The Global | |||||||
| Portfolio | Portfolio | |||||||
INVESTMENT INCOME: | ||||||||
| Dividends† | $ | 567,162 | $ | 45,930 | ||||
| Interest | 242,471 | 3,518 | ||||||
| Income from securities lending | 1,006,082 | 1,817 | ||||||
| Total investment income | 1,815,715 | 51,265 | ||||||
EXPENSES: | ||||||||
| Investment advisory fees | 825,996 | 19,725 | ||||||
| Administration fees | 25,025 | 588 | ||||||
| Professional fees | 5,714 | 3,670 | ||||||
| Fund accounting fees | 8,204 | 1,955 | ||||||
| Trustee and Officers’ fees and expenses | 1,482 | 30 | ||||||
| Custodian fees and expenses | 15,560 | 12,126 | ||||||
| Other expenses | 1,730 | 114 | ||||||
| Total expenses | 883,711 | 38,208 | ||||||
| Net expenses | 883,711 | 38,208 | ||||||
| Net investment income | 932,004 | 13,057 | ||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | ||||||||
| Net realized gain on: | ||||||||
| Investments and foreign currency | 4,285,874 | 221,004 | ||||||
| Net change in unrealized depreciation of: | ||||||||
| Investments and foreign currency | (36,301,781 | ) | (1,142,280 | ) | ||||
| Net loss on investments | (32,015,907 | ) | (921,276 | ) | ||||
| Net decrease in net assets resulting from operations | $ | (31,083,903 | ) | $ | (908,219 | ) | ||
| † Net of Foreign Taxes Withheld of: | $ | 30,609 | $ | 2,267 | ||||
See Notes to the Financial Statements.
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Statement of Operations
For the Six Months Ended June 30, 2008 (Unaudited)
| The | The | |||||||
| Paradigm | Medical | |||||||
| Portfolio | Portfolio | |||||||
INVESTMENT INCOME: | ||||||||
| Dividends† | $ | 30,449,622 | $ | 228,158 | ||||
| Interest | 8,983,441 | 14,397 | ||||||
| Income from securities lending | 3,327,694 | 24,278 | ||||||
| Total investment income | 42,760,757 | 266,833 | ||||||
EXPENSES: | ||||||||
| Investment advisory fees | 25,698,959 | 109,567 | ||||||
| Administration fees | 775,128 | 2,258 | ||||||
| Professional fees | 80,890 | 3,782 | ||||||
| Fund accounting fees | 186,186 | 1,532 | ||||||
| Trustee and Officers’ fees and expenses | 50,098 | 192 | ||||||
| Custodian fees and expenses | 345,190 | 5,614 | ||||||
| Other expenses | 37,940 | 130 | ||||||
| Net expenses | 27,174,391 | 123,075 | ||||||
| Net investment income | 15,586,366 | 143,758 | ||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | ||||||||
| Net realized gain (loss) on: | ||||||||
| Investments and foreign currency | (83,662,960 | ) | 236,700 | |||||
| Written option contracts expired or closed | (54,066 | ) | — | |||||
| Net change in unrealized depreciation of: | ||||||||
| Investments and foreign currency | (808,518,420 | ) | (924,817 | ) | ||||
| Written option contracts | (103,358 | ) | — | |||||
| Net loss on investments | (892,338,804 | ) | (688,117 | ) | ||||
| Net decrease in net assets resulting from operations | $ | (876,752,438 | ) | $ | (544,359 | ) | ||
| † Net of Foreign Taxes Withheld of: | $ | 1,821,563 | $ | 12,275 | ||||
See Notes to the Financial Statements.
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Statement of Operations
For the Six Months Ended June 30, 2008 (Unaudited)
| The Kinetics | ||||||||
| The Small Cap | Government | |||||||
| Opportunities | Money Market | |||||||
| Portfolio | Portfolio | |||||||
INVESTMENT INCOME: | ||||||||
| Dividends† | $ | 4,606,016 | $ | — | ||||
| Interest | 721,771 | 20,791 | ||||||
| Income from securities lending | 2,992,955 | — | ||||||
| Total investment income | 8,320,742 | 20,791 | ||||||
EXPENSES: | ||||||||
| Investment advisory fees | 4,809,224 | 4,806 | ||||||
| Administration fees | 237,261 | 344 | ||||||
| Professional fees | 18,996 | 3,680 | ||||||
| Fund accounting fees | 51,735 | 87 | ||||||
| Trustee and Officers’ fees and expenses | 9,684 | 20 | ||||||
| Custodian fees and expenses | 116,850 | 3,166 | ||||||
| Other Expenses | 8,903 | 70 | ||||||
| Total expenses | 5,252,653 | 12,173 | ||||||
| Net expenses | 5,252,653 | 12,173 | ||||||
| Net investment income | 3,068,089 | 8,618 | ||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | ||||||||
| Net realized loss on: | ||||||||
| Investments and foreign currency | (27,395,575 | ) | — | |||||
| Net change in unrealized depreciation of: | ||||||||
| Investments and foreign currency | (212,542,148 | ) | — | |||||
| Net loss on investments | (239,937,723 | ) | — | |||||
| Net increase (decrease) in net assets resulting from operations | $ | (236,869,634 | ) | $ | 8,618 | |||
| † Net of Foreign Taxes Withheld of: | $ | 149,616 | $ | — | ||||
See Notes to the Financial Statements.
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Statement of Operations
For the Six Months Ended June 30, 2008 (Unaudited)
| The Market | The Water | |||||||
| Opportunities | Infrastructure | |||||||
| Portfolio | Portfolio | |||||||
INVESTMENT INCOME: | ||||||||
| Dividends† | $ | 1,143,348 | $ | 184,319 | ||||
| Interest | 101,504 | 47,479 | ||||||
| Income from securities lending | 111,837 | 6,774 | ||||||
| Total investment income | 1,356,689 | 238,572 | ||||||
EXPENSES: | ||||||||
| Investment advisory fees | 659,329 | 88,194 | ||||||
| Administration fees | 19,692 | 2,481 | ||||||
| Professional fees | 5,632 | 5,534 | ||||||
| Fund accounting fees | 7,566 | 4,868 | ||||||
| Trustee and Officers’ fees and expenses | 1,450 | 116 | ||||||
| Custodian fees and expenses | 20,128 | 6,386 | ||||||
| Other Expenses | 818 | 104 | ||||||
| Total expenses | 714,615 | 107,683 | ||||||
| Net expenses | 714,615 | 107,683 | ||||||
| Net investment income | 642,074 | 130,889 | ||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | ||||||||
| Net realized gain (loss) on: | ||||||||
| Investments and foreign currency | (429,991 | ) | 163,472 | |||||
| Written option contracts expired or closed | — | 640 | ||||||
| Net change in unrealized depreciation of: | ||||||||
| Investments and foreign currency | (36,160,366 | ) | (816,918 | ) | ||||
| Net loss on investments | (36,590,357 | ) | (652,806 | ) | ||||
| Net decrease in net assets resulting from operations | $ | (35,948,283 | ) | $ | (521,917 | ) | ||
| † Net of Foreign Taxes Withheld of: | $ | 68,632 | $ | 18,475 | ||||
See Notes to the Financial Statements.
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Statement of Operations
For the Period from February 11,2008ˆ through June 30, 2008 (Unaudited)
| The Multi- | ||||
| Disciplinary | ||||
| Portfolio | ||||
INVESTMENT INCOME: | ||||
| Interest | $ | 3,481 | ||
| Total investment income | 3,481 | |||
EXPENSES: | ||||
| Investment advisory fees | 2,394 | |||
| Administration fees | 98 | |||
| Professional fees | 3,212 | |||
| Fund accounting fees | 628 | |||
| Custodian fees and expenses | 2,355 | |||
| Total expenses | 8,687 | |||
| Net expenses | 8,687 | |||
| Net investment loss | (5,206 | ) | ||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | ||||
| Net realized gain on: | ||||
| Investments | 146 | |||
| Written option contracts expired or closed | 3,950 | |||
| Net change in unrealized depreciation of: | ||||
| Written option contracts | (19,380 | ) | ||
| Net loss on investments | (15,284 | ) | ||
| Net decrease in net assets resulting from operations | $ | (20,490 | ) | |
| ˆ | Commencement of operations |
See Notes to the Financial Statements.
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| KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS |
Statements of Changes in Net Assets
| The Internet Portfolio | The Global Portfolio | |||||||||||||||
| For the | For the | |||||||||||||||
| Six Months | For the | Six Months | For the | |||||||||||||
| Ended | Year Ended | Ended | Year Ended | |||||||||||||
| June 30, 2008 | December 31, | June 30, 2008 | December 31, | |||||||||||||
| (Unaudited) | 2007 | (Unaudited) | 2007 | |||||||||||||
OPERATIONS: | ||||||||||||||||
| Net investment income | $ | 932,004 | $ | 2,283,029 | $ | 13,057 | $ | 140,984 | ||||||||
| Net realized gain on sale of investments, foreign currency and written options | 4,285,874 | 15,699,622 | 221,004 | 295,159 | ||||||||||||
| Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options | (36,301,781 | ) | 16,152,318 | (1,142,280 | ) | (304,486 | ) | |||||||||
| Net increase (decrease) in net assets resulting from operations | (31,083,903 | ) | 34,134,969 | (908,219 | ) | 131,657 | ||||||||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS: | ||||||||||||||||
| Contributions | 1,607,453 | 21,788,282 | (511,416 | ) | 641,520 | |||||||||||
| Withdrawals | (23,984,357 | ) | (25,387,972 | ) | 1,299,579 | (1,617,402 | ) | |||||||||
| Net increase (decrease) in net assets resulting from beneficial interest transactions | (22,376,904 | ) | (3,599,690 | ) | 788,163 | (975,882 | ) | |||||||||
| Total increase (decrease) in net assets | (53,460,807 | ) | 30,535,279 | (120,056 | ) | (844,225 | ) | |||||||||
NET ASSETS: | ||||||||||||||||
| Beginning of period | 167,838,333 | 137,303,054 | 3,142,879 | 3,987,104 | ||||||||||||
| End of period | $ | 114,377,526 | $ | 167,838,333 | $ | 3,022,823 | $ | 3,142,879 | ||||||||
See Notes to the Financial Statements.
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Statements of Changes in Net Assets
| The Paradigm Portfolio | The Medical Portfolio | |||||||||||||||
| For the | For the | |||||||||||||||
| Six Months | For the | Six Months | For the | |||||||||||||
| Ended | Year Ended | Ended | Year Ended | |||||||||||||
| June 30, 2008 | December 31, | June 30, 2008 | December 31, | |||||||||||||
| (Unaudited) | 2007 | (Unaudited) | 2007 | |||||||||||||
OPERATIONS: | ||||||||||||||||
| Net investment income | $ | 15,586,366 | $ | 24,576,262 | $ | 143,758 | $ | 91,619 | ||||||||
| Net realized gain (loss) on sale of investments, foreign currency and written options | (83,717,026 | ) | 24,227,223 | 236,700 | 1,258,860 | |||||||||||
| Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options | (808,621,778 | ) | 537,525,297 | (924,817 | ) | 937,125 | ||||||||||
| Net increase (decrease) in net assets resulting from operations | (876,752,438 | ) | 586,328,782 | (544,359 | ) | 2,287,604 | ||||||||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS: | ||||||||||||||||
| Contributions | 285,744,507 | 2,022,528,529 | 4,422,133 | 8,466,891 | ||||||||||||
| Withdrawals | (390,223,815 | ) | (130,658,050 | ) | (1,322,254 | ) | (11,493,025 | ) | ||||||||
| Net increase (decrease) in net assets resulting from beneficial interest transactions | (104,479,308 | ) | 1,891,870,479 | 3,099,879 | (3,026,134 | ) | ||||||||||
| Total increase (decrease) in net assets | (981,231,746 | ) | 2,478,199,261 | 2,555,520 | (738,530 | ) | ||||||||||
NET ASSETS: | ||||||||||||||||
| Beginning of period | 4,639,960,427 | 2,161,761,166 | 15,504,220 | 16,242,750 | ||||||||||||
| End of period | $ | 3,658,728,681 | $ | 4,639,960,427 | $ | 18,059,740 | $ | 15,504,220 | ||||||||
See Notes to the Financial Statements.
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Statements of Changes in Net Assets
| The Small Cap Opportunities Portfolio | The Kinetics Government Money Market Portfolio | |||||||||||||||
| For the | For the | |||||||||||||||
| Six Months | For the | Six Months | For the | |||||||||||||
| Ended | Year Ended | Ended | Year Ended | |||||||||||||
| June 30, 2008 | December 31, | June 30, 2008 | December 31, | |||||||||||||
| (Unaudited) | 2007 | (Unaudited) | 2007 | |||||||||||||
OPERATIONS: | ||||||||||||||||
| Net investment income | $ | 3,068,089 | $ | 3,464,783 | $ | 8,618 | $ | 29,647 | ||||||||
| Net realized gain (loss) on sale of investments, foreign currency and written options | (27,395,575 | ) | 10,942,305 | — | — | |||||||||||
| Net change in unrealized appreciation (depreciation) of investments,foreign currency and written options | (212,542,148 | ) | 110,493,933 | — | — | |||||||||||
| Net increase (decrease) in net assets resulting from operations | (236,869,634 | ) | 124,901,021 | 8,618 | 29,647 | |||||||||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS: | ||||||||||||||||
| Contributions | 6,578,745 | 545,055,337 | 2,053,592 | 1,384,198 | ||||||||||||
| Withdrawals | (251,026,962 | ) | (73,301,302 | ) | (1,202,693 | ) | (1,639,629 | ) | ||||||||
| Net increase (decrease) in net assets resulting from beneficial interest transactions | (244,448,217 | ) | 471,754,035 | 850,899 | (255,431 | ) | ||||||||||
| Total increase (decrease) in net assets | (481,317,851 | ) | 596,655,056 | 859,517 | (225,784 | ) | ||||||||||
NET ASSETS: | ||||||||||||||||
| Beginning of period | 1,087,716,872 | 491,061,816 | 1,212,575 | 1,438,359 | ||||||||||||
| End of period | $ | 606,399,021 | $ | 1,087,716,872 | $ | 2,072,092 | $ | 1,212,575 | ||||||||
See Notes to the Financial Statements.
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Statements of Changes in Net Assets
| The Water | ||||||||||||||||
| The Market Opportunities Portfolio | Infrastructure Portfolio | |||||||||||||||
| For the | For the | |||||||||||||||
| Six Months | For the | Six Months | From June 29, | |||||||||||||
| Ended | Year Ended | Ended | 2007ˆ through | |||||||||||||
| June 30, 2008 | December 31, | June 30, 2008 | December 31, | |||||||||||||
| (Unaudited) | 2007 | (Unaudited) | 2007 | |||||||||||||
OPERATIONS: | ||||||||||||||||
| Net investment income | $ | 642,074 | $ | 351,788 | $ | 130,889 | $ | 17,366 | ||||||||
| Net realized gain (loss) on sale of investments, foreign currency and written options | (429,991 | ) | (139,936 | ) | 164,112 | 32,043 | ||||||||||
| Net change in unrealized appreciation (depreciation) of investments,foreign currency and written options | (36,160,366 | ) | 15,574,685 | (816,918 | ) | 33,213 | ||||||||||
| Net increase (decrease) in net assets resulting from operations | (35,948,283 | ) | 15,786,537 | (521,917 | ) | 82,622 | ||||||||||
NET INCREASE IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS: | ||||||||||||||||
| Contributions | 31,336,396 | 87,609,598 | 20,388,026 | 6,511,597 | ||||||||||||
| Withdrawals | (15,654,172 | ) | (5,225,769 | ) | (175,398 | ) | (336,774 | ) | ||||||||
| Net increase in net assets resulting from beneficial interest transactions | 15,682,224 | 82,383,829 | 20,212,628 | 6,174,823 | ||||||||||||
| Total increase (decrease) in net assets | (20,266,059 | ) | 98,170,366 | 19,690,711 | 6,257,445 | |||||||||||
NET ASSETS: | ||||||||||||||||
| Beginning of period | 115,751,435 | 17,581,069 | 6,257,445 | — | ||||||||||||
| End of period | $ | 95,485,376 | $ | 115,751,435 | $ | 25,948,156 | $ | 6,257,445 | ||||||||
(+)Commencement of operations.
See Notes to the Financial Statements.
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Statement of Changes in Net Assets
| The Multi-Disciplinary | ||||
| Portfolio | ||||
| From February 11, | ||||
| 2008ˆ through | ||||
| June 30, 2008 | ||||
| (Unaudited) | ||||
OPERATIONS: | ||||
| Net investment loss | $ | (5,206 | ) | |
| Net realized gain on sale of investments and written options | 4,096 | |||
| Net change in unrealized depreciation of investments and written options | (19,380 | ) | ||
| Net decrease in net assets resulting from operations | (20,490 | ) | ||
NET INCREASE IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS: | ||||
| Contributions | 521,192 | |||
| Withdrawals | (18,497 | ) | ||
| Net increase in net assets resulting from beneficial interest transactions | 502,695 | |||
| Total increase in net assets | 482,205 | |||
NET ASSETS: | ||||
| Beginning of period | — | |||
| End of period | $ | 482,205 | ||
(+)Commencement of operations.
See Notes to the Financial Statements.
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Notes to Financial Statements
June 30, 2008 (Unaudited)
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 (formerly The Internet Emerging Growth 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 (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 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)
June 30, 2008 (Unaudited)
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 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. 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
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Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
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 June 30, 2008 there were no fair valued securities held by the Master Portfolios.
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.
At June 30, 2008 the Paradigm Portfolio received as collateral securities with a total market value of $73,440,000. The detailed list of the securities received as collateral is listed below.
Morgan Stanley Repurchase Agreement, 2.750%, due 7/1/2008, par value $72,000,000 Collateralized by:
Description | Fair Value | |||
| FHLMC, Series 3311, Class FK, 2.7769%, 5/15/2037 | $ | 4,429,117 | ||
FNMA, Series 2003-108, Class BE, 4%, 11/25/2018 | 12,587,692 | |||
FNMA, Series 2003-100, Class PA, 5%, 10/25/2018 | 23,538,949 | |||
| FHLMC, Series 3315 Class F, 2.8069%, 5/15/2037 | 32,884,242 | |||
| Total | $ | 73,440,000 | ||
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
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Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
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. Option contracts are valued at the average of the current bid and asked price reported on the day of the valuation. When an option expires on its stipulated expiration date or the Master Portfolio enters into a closing purchase transaction, the Master Portfolio realizes a gain or loss if the cost of the closing transaction differs from the premium received when the option was sold, without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is eliminated. When an option is exercised, the premium originally received decreases the cost basis of the underlying security (or increases the proceeds on the security sold short) and the Master Portfolio realizes a gain or loss from the sale of the security (or closing of the short sale). As collateral for uncovered written options, the Master Portfolio is required under the 1940 Act to maintain assets consisting of cash, cash equivalents or liquid securities. This collateral is required to be adjusted daily to reflect the market value 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 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
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June 30, 2008 (Unaudited)
registration of unregistered securities. At June 30, 2008 the Global Portfolio had restricted securities with an aggregate value of $49,200 representing 1.6% of its net assets.
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.
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Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
Effective June 29, 2007, the Master Portfolios adopted Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes”. FIN 48 requires the evaluation of tax positions taken on previously filed tax returns or expected to be taken on future returns. These positions must meet a “more likely than not” standard that, based on the technical merits, have a more than fifty percent likelihood of being sustained upon examination. In evaluating whether a tax position has met the recognition threshold, the Portfolios must presume that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as a tax expense in the current year.
FIN 48 requires the Master Portfolios to analyze all open tax years, as defined by the relevant statute of limitations, for all major jurisdictions. Open tax years are those that are open for exam by taxing authorities. Major jurisdictions for the Portfolios include the Federal Government and the state of New York. As of June 30, 2008, open Federal and New York tax years include the tax years ended December 31, 2003 through 2007. The Portfolios have no examination in progress.
The Master Portfolios have reviewed all open tax years and major jurisdictions and concluded that the adoption of FIN 48 resulted in no effect to the Portfolios’ financial position or results of operations. 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. The Portfolios are also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next six 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
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June 30, 2008 (Unaudited)
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, Aqua Terra Asset Management LLC, receives its compensation from the Adviser at the annual rate of 0.35% of daily net assets of the Water Infrastructure Portfolio. For the six months ended June 30, 2008, 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 $825,996, $19,725, $25,698,959, $109,567, $4,809,224, $4,806, $659,329, $88,194 and $2,394, respectively, pursuant to the Investment Advisory Agreements.
For the six months ended June 30, 2008, the Trust was allocated $12,000 for the services of the Chief Compliance Officer employed by the Adviser.
| 4. | Approval of Investment Advisory Contracts by Trustees of Kinetics Portfolios Trust |
At a meeting of the Board of Trustees of the Trust held on March 6, 2008, the Board, including all of the Trustees who are not interested persons under the 1940 Act (the “Independent Trustees”), approved the investment advisory agreements with respect to the Internet, Global, Paradigm, Medical, Small Cap Opportunities, Government Money Market, Market Opportunities and Water Infrastructure Portfolios (collectively, the “Advisory Agreements”). In reaching a decision to renew the Advisory Agreements, the Board of Trustees, including all of the Independent Trustees, considered, among others (1) the nature, extent and quality of the services provided by the Adviser; (2) the performance of the Master Portfolios over the previous six and nine months as
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well as the three and five-year periods ended December 31, 2007, as compared to the median of their relevant Lipper, Inc. (“Lipper”) peer group(s); (3) the contractual and actual compensation to be paid under the Advisory Agreements as compared to the compensation paid to relevant Lipper peer groups; (4) the expense ratios of the Master Portfolios, with expense waivers, as compared to expense ratios for relevant peer groups of Lipper portfolios; (5) the experience and qualifications of the Adviser’s personnel and the Adviser’s portfolio management capabilities and investment methodologies; (6) the Adviser’s operations, compliance program and policies with respect to the Code of Ethics; (7) the financial condition of the Adviser; (8) the cost of services to be provided by the Adviser and the Adviser’s profitability from each Master Portfolio for the year ended December 31, 2007; (9) the “fall-out” benefits to the Adviser and its affiliates from the relationship with the Master Portfolios; (10) the extent to which economies of scale are relevant given the Master Portfolios’ current asset size and current asset growth potential; and (11) that each Master Portfolio other than the Government Money Market Portfolio, is designed for long-term investors. The Lipper peer group information was provided by U.S. Bancorp Fund Services, LLC, the Company’s administrator. In addition, the Board of Trustees, including all of the Independent Trustees, approved the investment sub-advisory agreement for the Water Infrastructure Portfolio (the “Sub-Advisory Agreement”). The Board considered many of the same factors listed above with regards to the Water Infrastructure Portfolio’s sub-adviser, Aqua Terra Asset Management, LLC (the “Sub-Adviser”), which made a presentation to the Board.
The Board of Trustees, including a majority of the Independent Trustees, concluded that: they were satisfied with the quality of services provided by the Adviser in advising the Master Portfolios and the Sub-Adviser in advising the Water Infrastructure Portfolio, the profits earned by the Adviser and Sub-Adviser were reasonable in light of the nature, extent and quality of the services provided to each Master Portfolio; and that each Master Portfolio was not large enough to attain significant economies of scale.
Based on the factors considered, the Board of Trustees, including a majority of the Independent Trustees, concluded that it was appropriate to renew the Advisory and Sub-Advisory Agreements.
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5. Securities Transactions
Purchases and sales of investment securities, other than short-term investments, for the six months ended June 30, 2008 were as follows:
| Purchases | Sales | |||||||||||||||
| U.S. | U.S. | |||||||||||||||
| Government | Other | Government | Other | |||||||||||||
| The Internet Portfolio | $ | — | $ | 4,976,118 | $ | — | $ | 13,064,831 | ||||||||
| The Global Portfolio | — | 3,227,923 | — | 2,467,608 | ||||||||||||
| The Paradigm Portfolio | — | 383,241,917 | — | 180,562,547 | ||||||||||||
| The Medical Portfolio | — | 4,084,004 | — | 3,991,038 | ||||||||||||
| The Small Cap Opportunities Portfolio | — | 21,703,612 | — | 168,284,738 | ||||||||||||
| The Market Opportunities Portfolio | — | 24,055,471 | — | 3,958,392 | ||||||||||||
| The Water Infrastructure Portfolio | — | 14,223,555 | — | 950,247 | ||||||||||||
| The Multi-Disciplinary Portfolioˆ | — | 3,865 | — | 4,011 | ||||||||||||
ˆCommenced operations on February 11, 2008.
As of December 31, 2007, 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 | $ | 59,080,642 | $ | 64,994,450 | $ | (5,913,808 | ) | $ | 154,094,749 | |||||||
| The Global Portfolio | 568,385 | 1,157,597 | (589,212 | ) | 3,152,934 | |||||||||||
| The Paradigm Portfolio | 888,184,667 | 1,092,780,824 | (204,596,157 | ) | 4,267,839,561 | |||||||||||
| The Medical Portfolio | 672,857 | 4,257,769 | (3,584,912 | ) | 20,565,559 | |||||||||||
| The Small Cap Opportunities Portfolio | 193,459,774 | 280,848,603 | (87,388,829 | ) | 1,122,964,516 | |||||||||||
| The Kinetics Government Money Market Portfolio | — | — | — | 1,247,899 | ||||||||||||
| The Market Opportunities Portfolio | 17,116,198 | 20,920,938 | (3,804,740 | ) | 106,146,139 | |||||||||||
| The Water Infrastructure Portfolio | 33,303 | 308,752 | (275,449 | ) | 7,454,464 | |||||||||||
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June 30, 2008 (Unaudited)
For the six months ended June 30, 2008, the Master Portfolios wrote the following options:
| Number | Premium | |||||||
| of Contracts | Amount | |||||||
The Paradigm Portfolio | ||||||||
| Outstanding at the Beginning of Year | 80 | $ | 109,758 | |||||
| Options Closed | 80 | 109,758 | ||||||
| Outstanding at June 30, 2008 | — | $ | — | |||||
The Multi-Disciplinary Portfolioˆ | ||||||||
| Outstanding at February 11, 2008ˆ | — | $ | — | |||||
| Options Written | 12,400 | 45,949 | ||||||
| Options Exercised | 100 | 410 | ||||||
| Options Expired | 100 | 1,280 | ||||||
| Options Closed | 100 | 3,020 | ||||||
| Outstanding at June 30, 2008 | 12,100 | $ | 41,239 | |||||
ˆCommencement of operations.
6. Portfolio Securities Loaned
As of June 30, 2008, the Master Portfolios had loaned securities that were collateralized by cash. The cash collateral is invested by the custodian in a money market pooled account approved by the Adviser. Although risk is mitigated by the collateral, a Master Portfolio could experience a delay in recovering its securities and possible loss of income or value if the borrower fails to return them. The Master Portfolio receives interest on the collateral received as well as a fee for the securities loaned. The Master Portfolios will continue to receive dividends and interest on all securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan will be accounted for by the Master Portfolios. The value of the securities on loan and the value of the related collateral at June 30, 2008, were as follows:
| Securities | Collateral | |||||||
| The Internet Portfolio | $ | 56,458,394 | $ | 58,584,774 | ||||
| The Global Portfolio | 96,929 | 97,416 | ||||||
| The Paradigm Portfolio | 1,368,187,723 | 1,421,598,819 | ||||||
| The Medical Portfolio | 6,779,228 | 7,091,189 | ||||||
| The Small Cap Opportunities Portfolio | 170,723,617 | 180,731,085 | ||||||
| The Market Opportunities Portfolio | 27,497,397 | 29,301,981 | ||||||
| The Water Infrastructure Portfolio | 4,181,821 | 4,290,507 | ||||||
| The Multi-Disciplinary Portfolio | — | — | ||||||
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7. Selected Financial Highlights
Financial highlights for the Master Portfolios were as follows:
| The Internet Portfolio | ||||||||||||||||||||||||
| For the | ||||||||||||||||||||||||
| Six Months | For the | For the | For the | For the | For the | |||||||||||||||||||
| Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
| June 30, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||||||||||||||
| 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| Ratio of expenses to average net assets: | ||||||||||||||||||||||||
| Before expense reduction | 1.34%(1 | ) | 1.34% | 1.39% | 1.45% | 1.50% | 1.51% | |||||||||||||||||
| After expense reduction | 1.34%(1 | ) | 1.33% | 1.33% | 1.44% | 1.44% | 1.51% | |||||||||||||||||
| Ratio of net investment income to average net assets: | ||||||||||||||||||||||||
| Before expense reduction | 1.41%(1 | ) | 1.58% | 0.17% | 1.35% | 1.30% | 0.99% | |||||||||||||||||
| After expense reduction | 1.41%(1 | ) | 1.59% | 0.23% | 1.36% | 1.36% | 0.99% | |||||||||||||||||
| Portfolio turnover rate | 4% | 15% | 11% | 12% | 42% | 69% | ||||||||||||||||||
| The Global Portfolio | ||||||||||||||||||||||||
| For the | ||||||||||||||||||||||||
| Six Months | For the | For the | For the | For the | For the | |||||||||||||||||||
| Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
| June 30, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||||||||||||||
| 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| Ratio of expenses to average net assets: | ||||||||||||||||||||||||
| Before expense reduction | 2.42%(1 | ) | 1.99% | 1.62% | 1.73% | 1.78% | 1.84% | |||||||||||||||||
| After expense reduction | 2.42%(1 | ) | 1.98% | 1.46% | 1.72% | 1.73% | 1.84% | |||||||||||||||||
| Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||||||
| Before expense reduction | 0.83%(1 | ) | 3.73% | 2.78% | 4.30% | 2.77% | 1.94% | |||||||||||||||||
| After expense reduction | 0.83%(1 | ) | 3.74% | 2.94% | 4.31% | 2.82% | 1.94% | |||||||||||||||||
| Portfolio turnover rate | 84% | 22% | 10% | 2% | 18% | 20% | ||||||||||||||||||
| The Paradigm Portfolio | ||||||||||||||||||||||||
| For the | ||||||||||||||||||||||||
| Six Months | For the | For the | For the | For the | For the | |||||||||||||||||||
| Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
| June 30, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||||||||||||||
| 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| Ratio of expenses to average net assets: | ||||||||||||||||||||||||
| Before expense reduction | 1.32%(1 | ) | 1.33% | 1.40% | 1.45% | 1.52% | 1.56% | |||||||||||||||||
| After expense reduction | 1.32%(1 | ) | 1.33% | 1.32% | 1.40% | 1.42% | 1.46% | |||||||||||||||||
| Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||||||
| Before expense reduction | 0.76%(1 | ) | 0.75% | 0.85% | 0.07% | (0.18% | ) | 1.28% | ||||||||||||||||
| After expense reduction | 0.76%(1 | ) | 0.75% | 0.93% | 0.12% | (0.08% | ) | 1.38% | ||||||||||||||||
| Portfolio turnover rate | 5% | 8% | 3% | 5% | 52% | 20% | ||||||||||||||||||
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June 30, 2008 (Unaudited)
| The Medical Portfolio | ||||||||||||||||||||||||
| For the | ||||||||||||||||||||||||
| Six Months | For the | For the | For the | For the | For the | |||||||||||||||||||
| Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
| June 30, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||||||||||||||
| 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| Ratio of expenses to average net assets: | ||||||||||||||||||||||||
| Before expense reduction | 1.40% | (1) | 1.49% | 1.44% | 1.50% | 1.58% | 1.53% | |||||||||||||||||
| After expense reduction | 1.40% | (1) | 1.40% | 1.34% | 1.49% | 1.57% | 1.53% | |||||||||||||||||
| Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||||||
| Before expense reduction | 1.64% | (1) | 0.42% | 0.33% | (0.17% | ) | (0.33% | ) | (0.56% | ) | ||||||||||||||
| After expense reduction | 1.64% | (1) | 0.51% | 0.43% | (0.16% | ) | (0.32% | ) | (0.56% | ) | ||||||||||||||
| Portfolio turnover rate | 24% | 38% | 20% | 2% | 13% | 16% | ||||||||||||||||||
| The Small Cap Opportunities Portfolio | ||||||||||||||||||||||||
| For the | ||||||||||||||||||||||||
| Six Months | For the | For the | For the | For the | For the | |||||||||||||||||||
| Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
| June 30, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||||||||||||||
| 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| Ratio of expenses to average net assets: | ||||||||||||||||||||||||
| Before expense reduction | 1.37% | (1) | 1.34% | 1.40% | 1.48% | 1.55% | 1.67% | |||||||||||||||||
| After expense reduction | 1.37% | (1) | 1.31% | 1.27% | 1.37% | 1.21% | 1.49% | |||||||||||||||||
| Ratio of net investment income to average net assets: | ||||||||||||||||||||||||
| Before expense reduction | 0.80% | (1) | 0.38% | 0.30% | 0.46% | 1.51% | 2.88% | |||||||||||||||||
| After expense reduction | 0.80% | (1) | 0.41% | 0.43% | 0.57% | 1.85% | 3.06% | |||||||||||||||||
| Portfolio turnover rate | 3% | 17% | 6% | 4% | 96% | 180% | ||||||||||||||||||
| The Kinetics Government | ||||||||||||||||||||||||
| Money Market Portfolio | ||||||||||||||||||||||||
| For the | ||||||||||||||||||||||||
| Six Months | For the | For the | For the | For the | For the | |||||||||||||||||||
| Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
| June 30, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||||||||||||||
| 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| Ratio of expenses to average net assets: | ||||||||||||||||||||||||
| Before expense reduction | 1.26% | (1) | 2.22% | 1.56% | 1.37% | 0.83% | 0.79% | |||||||||||||||||
| After expense reduction | 1.26% | (1) | 2.22% | 1.17% | 1.37% | 0.83% | 0.79% | |||||||||||||||||
| Ratio of net investment income to average net assets: | ||||||||||||||||||||||||
| Before expense reduction | 0.89% | (1) | 2.47% | 3.13% | 1.58% | 0.18% | 0.15% | |||||||||||||||||
| After expense reduction | 0.89% | (1) | 2.47% | 3.52% | 1.58% | 0.18% | 0.15% | |||||||||||||||||
| Portfolio turnover rate | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||
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| The Market | ||||||||||||
| Opportunities Portfolio | ||||||||||||
| For the | ||||||||||||
| Six Months | For the | January 31, | ||||||||||
| Ended | Year Ended | 2006ˆ through | ||||||||||
| June 30, | December 31, | December 31, | ||||||||||
| �� | 2008 | 2007 | 2006 | |||||||||
| (Unaudited) | ||||||||||||
| Ratio of expenses to average net assets: | ||||||||||||
| Before expense reduction | 1.35% | (1) | 1.44% | 1.81% | (1) | |||||||
| After expense reduction | 1.35% | (1) | 1.44% | 1.61% | (1) | |||||||
| Ratio of net investment income to average net assets: | ||||||||||||
| Before expense reduction | 1.21% | (1) | 0.61% | 0.16% | (1) | |||||||
| After expense reduction | 1.21% | (1) | 0.61% | 0.36% | (1) | |||||||
| Portfolio turnover rate | 4% | 14% | 0% | |||||||||
| The Water | ||||||||
| Infrastructure Portfolio | ||||||||
| June 29, | ||||||||
| For the Six | 2007ˆ through | |||||||
| Months Ended | December 31, | |||||||
| June 30, 2008 | 2007 | |||||||
| (Unaudited) | ||||||||
| Ratio of expenses to average net assets: | ||||||||
| Before expense reduction | 1.53% | (1) | 2.01% | (1) | ||||
| After expense reduction | 1.53% | (1) | 2.01% | (1) | ||||
| Ratio of net investment income to average net assets | ||||||||
| Before expense reduction | 1.86% | (1) | 0.96% | (1) | ||||
| After expense reduction | 1.86% | (1) | 0.96% | (1) | ||||
| Portfolio turnover rate | 10% | 7% | ||||||
| The Multi- | |||||
| Disciplinary Portfolio | |||||
| February 11, 2008ˆ | |||||
| through | |||||
| June 30, 2008 | |||||
| (Unaudited) | |||||
| Ratio of expenses to average net assets: | |||||
| Before expense reduction | 4 | .54 | %(1) | ||
| After expense reduction | 4 | .54 | %(1) | ||
| Ratio of net investment income (loss) to average net assets | |||||
| Before expense reduction | (2 | .72) | %(1) | ||
| After expense reduction | (2 | .72) | %(1) | ||
| Portfolio turnover rate | N/A | ||||
| ˆ | Commencement of operations. |
| (1) | Annualized. |
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KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
8. FAS 157 — Summary of Fair Value Exposure
In September 2006, the Financial Accounting Standards Board issued Standard No. 157, “Fair Value Measurements” (“FAS 157”) effective for fiscal years beginning after November 15, 2007. FAS 157 clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosure about the use of fair value measurements in an effort to make the measurement of fair value more consistent and comparable. The Portfolios have adopted FAS 157 effective January 1, 2008. A summary of the fair value hierarchy under FAS 157 is described below:
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 — Quoted prices in active markets for identical securities.
Level 2 — Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 — Significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)
The Internet Portfolio
The following is a summary of the inputs used to value the Portfolio’s net assets as of June 30, 2008:
| Other | ||||||||
| Investments in | Financial | |||||||
Description | Securities | Instruments* | ||||||
| Level 1 — Quoted prices | $ | 161,235,856 | $ | — | ||||
| Level 2 — Other significant observable inputs | 11,059,400 | — | ||||||
| Level 3 — Significant unobservable inputs | — | — | ||||||
| Total | $ | 172,295,256 | $ | — | ||||
The Global Portfolio
The following is a summary of the inputs used to value the Portfolio’s net assets as of June 30, 2008:
| Other | ||||||||
| Investments in | Financial | |||||||
Description | Securities | Instruments* | ||||||
| Level 1 — Quoted prices | $ | 2,944,373 | $ | — | ||||
| Level 2 — Other significant observable inputs | 166,030 | — | ||||||
| Level 3 — Significant unobservable inputs | — | — | ||||||
| Total | $ | 3,110,403 | $ | — | ||||
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KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
The Paradigm Portfolio
The following is a summary of the inputs used to value the Portfolio’s net assets as of June 30, 2008:
| Other | ||||||||
| Investments in | Financial | |||||||
Description | Securities | Instruments* | ||||||
| Level 1 — Quoted prices | $ | 4,594,999,422 | $ | — | ||||
| Level 2 — Other significant observable inputs | 440,879,850 | — | ||||||
| Level 3 — Significant unobservable inputs | — | — | ||||||
| Total | $ | 5,035,879,272 | $ | — | ||||
The Medical Portfolio
The following is a summary of the inputs used to value the Portfolio’s net assets as of June 30, 2008:
| Other | ||||||||
| Investments in | Financial | |||||||
Description | Securities | Instruments* | ||||||
| Level 1 — Quoted prices | $ | 24,305,188 | $ | — | ||||
| Level 2 — Other significant observable inputs | 756,000 | — | ||||||
| Level 3 — Significant unobservable inputs | — | — | ||||||
| Total | $ | 25,061,188 | $ | — | ||||
The Small Cap Opportunities Portfolio
The following is a summary of the inputs used to value the Portfolio’s net assets as of June 30, 2008:
| Other | ||||||||
| Investments in | Financial | |||||||
Description | Securities | Instruments* | ||||||
| Level 1 — Quoted prices | $ | 742,973,251 | $ | — | ||||
| Level 2 — Other significant observable inputs | 27,359,317 | — | ||||||
| Level 3 — Significant unobservable inputs | — | — | ||||||
| Total | $ | 770,332,568 | $ | — | ||||
The Government Money Market Portfolio
The following is a summary of the inputs used to value the Portfolio’s net assets as of June 30, 2008:
| Other | ||||||||
| Investments in | Financial | |||||||
Description | Securities | Instruments* | ||||||
| Level 1 — Quoted prices | $ | — | $ | — | ||||
| Level 2 — Other significant observable inputs | 1,888,000 | — | ||||||
| Level 3 — Significant unobservable inputs | — | — | ||||||
| Total | $ | 1,888,000 | $ | — | ||||
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KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
The Market Opportunities Portfolio
The following is a summary of the inputs used to value the Portfolio’s net assets as of June 30, 2008:
| Other | ||||||||
| Investments in | Financial | |||||||
Description | Securities | Instruments* | ||||||
| Level 1 — Quoted prices | $ | 120,440,677 | $ | — | ||||
| Level 2 — Other significant observable inputs | 3,883,397 | — | ||||||
| Level 3 — Significant unobservable inputs | — | — | ||||||
| Total | $ | 124,324,074 | $ | — | ||||
The Water Infrastructure Portfolio
The following is a summary of the inputs used to value the Portfolio’s net assets as of June 30, 2008:
| Other | ||||||||
| Investments in | Financial | |||||||
Description | Securities | Instruments* | ||||||
| Level 1 — Quoted prices | $ | 22,604,923 | $ | — | ||||
| Level 2 — Other significant observable inputs | 9,103,000 | — | ||||||
| Level 3 — Significant unobservable inputs | — | — | ||||||
| Total | $ | 31,707,923 | $ | — | ||||
The Multi-Disciplinary Portfolio
The following is a summary of the inputs used to value the Portfolio’s net assets as of June 30, 2008:
| Other | ||||||||
| Investments in | Financial | |||||||
Description | Securities | Instruments* | ||||||
| Level 1 — Quoted prices | $ | 143 | $ | 60,619 | ||||
| Level 2 — Other significant observable inputs | 427,000 | — | ||||||
| Level 3 — Significant unobservable inputs | — | — | ||||||
| Total | $ | 427,143 | $ | 60,619 | ||||
| * | Other financial instruments are derivative instruments not reflected in the Portfolio of Investments, such as futures, written options, forwards and swap contracts, which are valued at the unrealized appreciation (depreciation) on the instrument. |
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KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
9. New Accounting Pronouncements
In March 2008, Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”) was issued. SFAS 161 is effective for fiscal years beginning after November 15, 2008. SFAS 161 is intended to improve financial reporting for derivative instruments by requiring enhanced disclosure that enables investors to understand how and why an entity uses derivatives, how derivative instruments and hedging activities are accounted for, and how derivative instruments affect an entity’s financial performance and financial position. Management is currently evaluating the implications of SFAS 161. The impact and related hedging activities on the Portfolios’ financial statement disclosures, if any, is currently being assessed.
10. Results of Shareholder Meeting
At a meeting held on December 6, 2007, the Board of Directors of the Company and the Board of Trustees of the Trust, approved: (1) changing the Internet Emerging Growth Fund/Internet Emerging Growth Portfolio (the “Fund/Portfolio”) investment strategy such that it will invest at least 65% of its net assets in the equity securities of foreign companies and U.S. companies with business operations and/or equity or business interests in international markets (the Fund’s/Portfolio’s investment strategy currently requires it to invest at least 80% of its net assets plus any borrowings for investment purposes in the securities of small and medium capitalization U.S. and foreign emerging growth companies engaged in the Internet and Internet-related activities); (2) changing the Fund’s/Portfolio’s fundamental investment restriction relating to industry concentration by eliminating the Fund’s/Portfolio’s ability to concentrate its investments in the Internet and Internet-related industries; and (3) changing the name of the Fund to the Global Fund and the name of the Portfolio to the Global Portfolio. On February 27, 2008, a special meeting of shareholders of the Fund was held and the change in the Fund’s/Portfolio’s fundamental restriction relating to industry concentration was approved. The voting results of the special meeting of shareholders are shown below:
Votes for the Resolution: | Votes against the Resolution: | Abstain: | ||||||||
| 663,074.109 | 65,198.924 | 15,122.001 | ||||||||
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KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Notes to Financial Statements — (Continued)
June 30, 2008 (Unaudited)
11. Information about Proxy Voting
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.
12. Information about the Portfolio Holdings
The Kinetics Portfolios Trust file their complete schedule of portfolio holdings for their 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.
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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
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Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
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 reviewed the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as of a date within 90 days of |
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| the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and by the Registrant’s service provider. | ||
| (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) Not applicable. |
(2) Certifications pursuant to Section 302 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. Furnished herewith. |
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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.
(Registrant) Kinetics Mutual Funds, Inc. & Kinetics Portfolios Trust
By (Signature and Title)* /s/ Peter B. Doyle
Peter B. Doyle, President
Date September 4, 2008
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 September 4, 2008
By (Signature and Title)* /s/ Leonid Polyakov
Leonid Polyakov, Treasurer
Date September 4, 2008
* Print the name and title of each signing officer under his or her signature.
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