N-CSR

As filed with the Securities and Exchange Commission on March 9, 2010

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-09303 & 811-09923

Kinetics Mutual Funds, Inc. & Kinetics Portfolios Trust

(Exact name of registrant as specified in charter)

555 Taxter Road, Suite 175
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)

(800) 930-3828

Registrant’s telephone number, including area code

Date of fiscal year end: December 31, 2009

Date of reporting period: December 31, 2009

Item 1. Reports to Stockholders.

 

 December 31, 2009 www.kineticsfunds.com

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

 Each a series of Kinetics Mutual Funds, Inc.

(Kinetics Mutual Funds, Inc. Logo)

KINETICS MUTUAL FUNDS, INC.

Table of Contents

December 31, 2009

	Page
Shareholders’ Letter		2
Year 2009 Annual Investment Commentary		5
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Growth of 10,000 Investment		12
Expense Example		22
Statement of Assets & Liabilities		31
Statement of Operations		36
Statements of Changes in Net Assets		41
Notes to Financial Statements		51
Financial Highlights		66
Report of Independent Registered Public Accounting Firm		86
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Allocation of Portfolio Assets		88
Portfolio of Investments The Internet Portfolio		92
Portfolio of Investments The Global Portfolio		99
Portfolio of Investments The Paradigm Portfolio		106
Portfolio of Investments The Medical Portfolio		116
Portfolio of Investments The Small Cap Opportunities Portfolio		119
Portfolio of Investments The Kinetics Government Money Market Portfolio		126
Portfolio of Investments The Market Opportunities Portfolio		127
Portfolio of Investments The Water Infrastructure Portfolio		132
Portfolio of Investments The Multi-Disciplinary Portfolio		135
Portfolio of Options Written The Internet Portfolio		137
Portfolio of Options Written The Market Opportunities Portfolio		138
Portfolio of Options Written The Multi-Disciplinary Portfolio		139
Statement of Assets & Liabilities		148
Statement of Operations		153
Statements of Changes in Net Assets		158
Notes to Financial Statements		163
Report of Independent Registered Public Accounting Firm		186
Management of the Funds and the Portfolios		187
Privacy Policy		192

1

KINETICS MUTUAL FUNDS, INC.

Shareholders’ Letter

Dear Fellow Shareholders:

We are pleased to present the Kinetics Mutual Funds’ Annual Report for the period ending December 31, 2009. On balance, the Kinetics Family of Mutual Funds had solid investment results for 2009, with gains of 41.02% for The Paradigm Fund, 58.16% for the Small-Cap Opportunities Fund, 50.21% for the Market Opportunities Funds, 48.61% for the Internet Fund, 24.47% for the Medical Fund, 16.46% for the Water Infrastructure Fund, 66.86% for The Global Fund, and 22.90% for the Multi-Disciplinary Fund. This compares with the 2009 returns of 26.46% and 43.89% for the S&P 500 Index⁽¹⁾ and for the NASDAQ Composite Index⁽²⁾, respectively. The comparison of our funds to these two indices is merely for illustrative purposes and is not an indication that we are trying to replicate or exceed the performance of a certain index during a discrete short timeframe. Our investment goal is to provide you with very satisfactory investment results, without particular concern as to how an index is positioned in relationship to our funds. We encourage you to use whatever index you feel appropriate for your own comparison purposes.

We have always maintained that our long-term investment results will be driven by the underlying business operations of the companies we own. In this regard, nothing has changed. As global investors continue to re-assess risk, those companies that have rebounded the most in price have been those which performed well operationally throughout the crisis. We still believe our Funds offer noteworthy value for long-term investors, as we believe the price recovery for our holdings is still in the earlier stages. Markets will have down periods, sometimes extreme, such as seen during 2008, but if your focus is upon the business fundamentals, you should, and hopefully will, in the longer term, be rewarded for your steadfastness.

We continue to inform our shareholders through our website, www.kineticsfunds.com. This website provides a broad array of information, including recent portfolio holdings, quarterly investment commentaries, newsflashes, recent performance data, and online access to account information.

Kinetics offers the following funds to investors:

The Paradigm Fund focuses on companies that currently have, or which should soon have, sustainable high returns on equity. The

2

Fund has produced attractive returns over the last 10 years in an environment that should be described as difficult for equity investors. The Paradigm Fund is Kinetics’ flagship fund. We have recently registered a new fund, The Tactical Paradigm Fund, which, like the Paradigm Fund, will invest in the Paradigm Portfolio, but will attempt to use options and futures to mitigate risk. This new fund has not yet commenced operations. For those interested in potentially controlling volatility, we encourage you to examine this new fund, as well as our Multi-Disciplinary Fund listed below.

The Tactical Paradigm Fund, when it commences operations will seek to provide long-term growth of capital by generally investing all of its assets in the Paradigm Portfolio, while also dynamically hedging market risk with futures, options and short sales of ETFs. The Tactical Paradigm Fund may also purchase or write options in combination with each other to adjust market risk and return of its overall investment positions. Broadmark Asset Management, LLC, serves as the sub-adviser for the hedged portion of the Fund.

The Small Cap Opportunities Fund focuses on undervalued and special situation small capitalization equities that have the potential for rewarding long-term investment results.

The Medical Fund is a sector fund, offering an investment in scientific discovery within the promising field of medical research, particularly in the development of cancer treatments and therapies. As a sector fund, The Medical Fund is likely to have heightened volatility.

The Internet Fund is a sector fund that focuses on companies engaged in the evolution of Internet-related developments. As such, this Fund has been, and is likely to continue to be, quite volatile. The Internet Fund is not designed to be a major component of one’s equity exposure. In some cases, we view this Fund’s holdings as publicly traded venture capital and are quite aware that many of these investments will not fulfill their promise. However, we hope and expect that, over time, some small percentage will develop into excellent investments, allowing the Fund to produce overall attractive, albeit, lumpy returns.

3

The Global Fund’s mandate was changed in early April 2008 to an emphasis on international investments, with particular attention to China and other Asian markets. We believe that emerging markets may offer better growth rates, and potentially better returns, for the coming decade in comparison to more established markets, such as those of the United States and Europe.

The Market Opportunities Fund focuses on those companies that benefit from increasing transactional volume or throughput, such as publicly-traded exchanges, or that act as facilitators, such as gaming companies, airports and publicly-traded toll roads.

The Water Infrastructure Fund is a sector fund that invests in global companies engaged in water infrastructure and water-specific natural resources, as well as related activities. This Fund is sub-advised by Brennan Investment Partners, LLC.

The Multi-Disciplinary Fund is a fund that seeks to utilize stock options and fixed-income investments in order to provide investors with equity-like returns, but with more muted volatility. At times, the options strategies of the Fund may cause the manager to purchase equity securities.

The Kinetics Government Money Market Fund is a short-term investment vehicle that provides a useful service for those participating in our equity product offerings.

Peter B. Doyle

President

Kinetics Mutual Funds, Inc.

(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.

4

KINETICS MUTUAL FUNDS, INC.

Investment Commentary

Dear Fellow Shareholders,

For the first several months of 2009, the global equity markets were essentially in free fall. It was commonly believed that the demise of the global banking system was imminent, that the U.S. Government was going to nationalize its largest banks, and that the residential sub-prime mortgage crisis was but a small prelude to a larger commercial real estate crisis, as well as a credit card crisis. Furthermore, the financial system was going to de-lever in a way that was likely to place downward pressure on security prices ad infinitum. Then something happened. The stock market started to rebound, and the rebound strengthened until year-end. The real economy then followed. At the height of the crisis, it was our belief that the world’s central banks’ liquidity responses would lessen the selling pressure in equities and that business fundamentals would ultimately start to drive stock performance, as occurs under most circumstances. We felt confident that our holdings would bounce back quite strongly. This is what happened, to a large extent, across all of our funds. While we have not recouped the entire decline of 2008, we hope and believe that with time we will.

While much of the equity selling was related to institutional liquidity needs, there were also a fair amount of individuals who sold out of fear. If you are an equity investor and you cannot tolerate or afford to have your account fluctuate by more than $1,000 in value, then it is probably best to have only a maximum exposure of $1,500 to $2,000 in a diversified basket of stocks. You can scale this up or down based on your financial condition. The surest way to limit account value fluctuation is based on the dollar amount invested. The recent crisis taught that many individuals were over-exposed to stocks. Unfortunately, this led to forced selling and a permanent erosion of capital for investors. It is our goal to help you accumulate wealth. In order for us to do that effectively, all parties concerned must have similar time horizons. A minimum time horizon of three years should be the benchmark. We would much rather have less of your assets than see you forced out of equities at the exact moment when you should be investing.

While there is no question that the financial crisis and the subsequent economic fallout have done lasting damage to certain

5

businesses, particularly those that required significant leverage to achieve adequate returns, many businesses have not experienced any meaningful diminution in the demand for their goods and services. In their recently published book, “This Time It’s Different,” Professors Carmen Reinhart and Kenneth Rogoff investigate 800 hundred years of financial crises. “If there is one common theme to the vast range of crises, it is that excessive debt accumulation whether it be by governments, banks, corporations, or consumers, often poses greater systemic risks than it seems during a boom.” This was certainly true of the recent crisis. The potential good news: based on their historical studies, recessions caused by financial crises typically last an average of 1.7 years, and stocks take between two and three years to reach their previous levels. These parameters are quite consistent with the current economic recovery and the stocks’ performance over the last 10 months. Of course there can be no guarantees; however, we would not be surprised if current events evolved in accordance with historical averages.

Interest rates are to financial assets what gravity is to the physical world, with low interest rates being a boon for financial assets. Typically, price-earnings multiples expand in a low interest rate environment, as investors switch out of risk-free assets, which offer a very low return. The debt burden of this country, including Federal Government debt, municipal debt, consumer installment debt, mortgages, corporate debt, excluding financial companies, and Governmental Agency debt, is over $40 trillion dollars. This staggering debt figure has significant implications for investors in financial assets.

A one percent rise in the cost of the servicing of this debt would shift $400 billion annually from the borrowers to the lenders. Since our Federal Government, along with state governments and municipalities, is a big borrower, a rise in interest rates is not something desirable. Historically, governments have inflated their way out of excessive debt, but given that longer term rates are set in the market, not by the Federal Reserve, which controls short-term rates, market participants would react very quickly to such a plan, choking off economic activity. Thus, we believe that it is quite likely that low interest rates will remain with us longer than is commonly expected. Stocks with good earnings growth rates should do extremely well in this type of environment.

6

Anyone who has ever read our commentaries or has listened to us over the years knows that our model of investing has a strong resemblance to that of Warren Buffett. We focus upon the underlying business returns; we try not to let emotions cloud our judgment; we own companies, in most circumstances, with very long product lifecycles; we usually avoid companies with substantial leverage; and we try to exercise patience. This strategy is to us the most straightforward and reasonable if your goal is the accumulation of wealth. The financial crisis has not invalidated this style of investing, which, in the fullness of time, we expect will demonstrate its true merits.

When recently reading Andrew Carnegie’s autobiography, I came across this passage: “Nothing tells in the long run like good judgment, and no sound judgment can remain with the man whose mind is disturbed by the mercurial changes of the Stock Exchange. It places him under an influence akin to intoxication. What is not, he sees, and what he sees, is not. He cannot judge of relative values or get the true perspective of things. The molehill seems to him a mountain and the mountain a molehill, and he jumps at conclusions which he should arrive at by reason. His mind is upon the stock quotations and not upon the points that require calm thought. Speculation is a parasite feeding upon values, creating none.”

Our minds are focused upon tranquil thoughts. Moreover, we ardently aspire to assist you in your accumulation of wealth. We ask nothing of you other than the use of an appropriate fraction of your assets and sufficient time so we can effectively do our work on your behalf.

The following discussion includes the factors that materially affected each Fund’s performance:

Small Cap

The performance of the Small Cap Opportunities Fund was largely a result of holdings in financial companies, industrial companies and consumer-related companies, most of which saw their share prices rise as the financial crisis abated and as investors began to anticipate an economic recovery.

7

Market Opportunities

The Market Opportunities Fund benefitted from wide exposure to the financial sector, which saw share prices increase as the financial crisis abated, producing more normal market environments. Investments in companies such as securities exchanges, banks, insurance companies and asset managers were also significant contributors to performance.

Internet

The Internet Fund’s performance resulted from holdings of media related companies, whose products and services are relatively recession resistant, and technology and information related businesses and other areas that were not affected by the financial crisis. We continue to believe that these companies are exposed to secular trends that will continue for some time.

Global

The Global Fund benefitted from a recovery in equity markets, particularly in the Hong Kong-traded shares of mainland Chinese companies, and in India, as both countries saw strong economic recoveries. Holdings of financial companies, consumer related companies and infrastructure related businesses also contributed to the performance.

Paradigm

The largest contributors to the Paradigm Fund’s performance were diversified financial companies and energy companies. Companies with operations in mainland China were also significant contributors to the Fund’s performance during 2009.

Multi-Disciplinary

The largest contributors to the Multi-Disciplinary Fund’s performance were from both accrued interest on debt positions, and expired options in financial companies and energy companies.

Medical

The performance of the Medical Fund resulted from investments in discounted pharmaceutical and bio-tech companies. In addition to appreciation, many of these companies paid handsome dividends throughout the credit crisis, and several bio-tech positions were revalued dramatically to the upside due to acquisition.

8

Water

The Water Fund’s performance benefitted from a recovery in the water industrials and a core concentration in global water utilities. The Fund did hold considerable cash throughout the first three quarters of 2009 due to inconsistent spending patterns brought on by the housing market, a slowdown in the municipal bond market and the U.S. stimulus package.

We thank you for your confidence.

Peter B. Doyle

Chief Investment Strategist

9

Disclosure

This material is intended to be reviewed in conjunction with a current prospectus, which includes all fees and expenses that apply to a continued investment program, as well as information regarding the risk factors, policies and objectives of the Funds. Read it carefully before investing.

Mutual Fund investing involves risk. Principal loss is possible. Because the Funds [other than The Global Fund, The Paradigm Fund, The Small Cap Opportunities Fund, The Market Opportunities Fund, The Kinetics Government Money Market Fund and The Multi-Disciplinary Fund] invest in a single industry or geographic region, their shares are subject to a higher degree of risk than funds with a higher level of diversification. Internet and biotechnology stocks are subject to a rate of change in technology, obsolescence and competition that is generally higher than that of other industries and have experienced extreme price and volume fluctuations. International investing [for The Global Fund, The Water Infrastructure Fund, The Paradigm Fund, The Market Opportunities Fund, The Small Cap Opportunities Fund and The Internet Fund] presents special risks including currency exchange fluctuation, government regulations, and the potential for political and economic instability. Accordingly, the share price for these Funds is expected to be more volatile than that of a U.S.-only fund. Past performance is no guarantee of future performance.

Because smaller companies [for The Global Fund, The Small Cap Opportunities Fund and the Water Infrastructure Fund] often have narrower markets and limited financial resources, they present more risk than larger, more well established, companies.

Non-investment grade debt securities [for all Funds], i.e., junk bonds, are subject to greater credit risk, price volatility and risk of loss than investment grade securities. Further, options contain special risks including the imperfect correlation between the value of the option and the value of the underlying asset. Investments [for the Multi-Disciplinary Fund] in futures, swaps and other derivative instruments may result in loss as derivative instruments may be illiquid, difficult to price and leveraged so that small changes may produce disproportionate losses to the Fund. To the extent the Funds segregate assets to cover derivative positions, they may impair their ability to meet current obligations, to honor requests for redemption and to manage the Funds in a manner consistent with their respective

10

investment objectives. Purchasing and writing put and call options and, in particular, writing “uncovered” options are highly specialized activities that entail greater than ordinary investment risk.

As non-diversified [other than The Kinetics Government Money Market Fund] Funds, the value of Fund shares may fluctuate more than shares invested in a broader range of industries and companies.

An investment in the Kinetics Government Money Market Fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.

Unlike other investment companies that directly acquire and manage their own portfolios of securities, The Kinetics Mutual Funds pursue their investment objectives by investing all of their investable assets in a corresponding portfolio series of Kinetics Portfolios Trust.

The information concerning the Funds included in the shareholder report contains certain forward-looking statements about the factors that may affect the performance of the Funds in the future. These statements are based on Fund management’s predictions and expectations concerning certain future events and their expected impact on the Funds, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors that may influence the future performance of the Funds. Management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed.

The Nasdaq Composite (NASDAQ) and the Standard & Poor’s 500 Index (S&P 500) each represent an unmanaged, broad-basket of stocks. They are typically used as a proxy for overall market performance.

Distributor:  Kinetics Funds Distributor, Inc. is not an affiliate of Kinetics Mutual Funds, Inc. Kinetics Funds Distributor, Inc. is an affiliate of Kinetics Asset Management, Inc., Investment Adviser to Kinetics Mutual Funds, Inc.

For more information, log onto www.kineticsfunds.com.

January 1, 2010 — Kinetics Asset Management, Inc.

11

How a $10,000 Investment Has Grown:

The charts show the growth of a $10,000 investment in the Feeder Funds as compared to the performance of two representative market indices. The tables below the charts show the average annual total returns on an investment over various periods. Returns for periods greater than one year are average annual total returns. The annual returns assume the reinvestment of all dividends and distributions, however, the graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is not predictive of future performance. Current performance may be lower or higher than the returns quoted below. The performance data reflects voluntary fee waivers and expense reimbursements made by the Adviser and the returns would have been lower if these waivers and expense reimbursements were not in effect. Investment return and principal value will fluctuate, so that your shares, when redeemed, may be worth more or less than their original costs.

S&P 500 Index — The S&P 500 Index is a capital-weighted index, representing the aggregate market value of the common equity of 500 stocks primarily traded on the New York Stock Exchange. The S&P 500 is unmanaged and includes the reinvestment of dividends and does not reflect the payments of transaction costs and advisory fees associated with an investment in the Funds. The securities that comprise the S&P 500 may differ substantially from the securities in the Funds’ portfolios. It is not possible to directly invest in an index.

NASDAQ Composite Index — The NASDAQ Composite Index is a broad-based capitalization-weighted index of all NASDAQ stocks. The NASDAQ Composite is unmanaged and does not include the reinvestment of dividends and does not reflect the payment of transaction costs or advisory fees associated with an investment in the Funds. The securities that comprise the NASDAQ Composite may differ substantially from the securities in the Funds’ portfolios. It is not possible to directly invest in an index.

MSCI EAFE Index — The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US and Canada. The MSCI EAFE is unmanaged and includes the reinvestment of dividends and does not reflect the payment of transaction costs or advisory fees associated with an investment in the Funds. The securities that comprise the MSCI EAFE may differ substantially from the securities in the Funds’ portfolios. It is not possible to directly invest in an index.

CBOE S&P 500 BuyWrite Index (BXM) — The CBOE S&P 500 BuyWrite Index (BXM) is a benchmark index designed to track the performance of a hypothetical buy-write strategy on the S&P 500 Index. The securities that

12

comprise the CBOE S&P 500 BuyWrite Index may differ substantially from the securities in the Multi-Disciplinary Fund’s portfolio. It is not possible to directly invest in an index.

S&P Global Water Index — The S&P Global Water Index is comprised of fifty of the largest publicly traded companies in water-related businesses that meet specific investability requirements. The index is designed to provide liquid exposure to the leading publicly listed companies in the global water industry, from both developed markets and emerging markets. The securities that comprise the S&P Global Water Index may differ substantially from the securities in the Water Infrastructure Fund’s portfolio. It is not possible to directly invest in an index.

13

The Internet Fund

December 31, 1999 — December 31, 2009

	Ended 12/31/2009
				Advisor			Advisor
	No Load			Class A			Class A			Advisor						NASDAQ
	Class			(No Load)			(Load Adjusted)(1)			Class C			S&P 500			Composite
One Year		48.61	%		48.23	%		39.71	%		47.51	%		26.46	%		43.89	%
Five Years		4.51	%		4.46	%		3.24	%		N/A			0.42	%		0.85	%
Ten Years		−4.28	%		N/A			N/A			N/A			−0.95	%		−5.67	%
Since Inception No Load Class (10/21/96)		15.14	%		N/A			N/A			N/A			5.30	%		4.71	%
Since Inception Advisor Class A (4/26/01)		N/A			3.36	%		2.65	%		N/A			0.73	%		1.26	%
Since Inception Advisor Class C (2/16/07)		N/A			N/A			N/A			1.73	%		−6.80	%		−3.27	%

⁽¹⁾ Reflects front-end sales charge of 5.75%.

Returns for periods greater than one year are average annual total returns.

14

The Global Fund

December 31, 1999 — December 31, 2009

	Ended 12/31/2009
				Advisor			Advisor
	No Load			Class A			Class A			Advisor						NASDAQ
	Class			(No Load)			(Load Adjusted)(1)			Class C			S&P 500			Composite			MSCI EAFE
One Year		66.86	%		67.11	%		57.75	%		65.08	%		26.46	%		43.89	%		31.78	%
Five Years		0.57	%		N/A			N/A			N/A			0.42	%		0.85	%		3.54	%
Ten Years		−7.09	%		N/A			N/A			N/A			−0.95	%		−5.67	%		1.17	%
Since Inception No Load Class (12/31/99)		−7.09	%		N/A			N/A			N/A			−0.95	%		−5.67	%		1.17	%
Since Inception Advisor Class A (5/19/08)		N/A			−7.35	%		−10.70	%		N/A			11.97	%		−6.18	%		−16.28	%
Since Inception Advisor Class C (5/19/08)		N/A			N/A			N/A			−8.07	%		−11.97	%		−6.18	%		−16.28	%

⁽¹⁾ Reflects front-end sales charge of 5.75%.

Returns for periods greater than one year are average annual total returns.

15

The Paradigm Fund

December 31, 1999 — December 31, 2009

	Ended 12/31/2009
				Advisor			Advisor
	No Load			Class A			Class A			Advisor			Institutional						NASDAQ
	Class			(No Load)			(Load Adjusted)(1)			Class C			Class			S&P 500			Composite			MSCI EAFE
One Year		41.02	%		40.64	%		32.59	%		39.97	%		41.31	%		26.46	%		43.89	%		31.78	%
Five Years		3.49	%		3.17	%		1.95	%		2.65	%		N/A			0.42	%		0.85	%		3.54	%
Ten years		7.94	%		N/A			N/A			N/A			N/A			−0.95	%		−5.67	%		1.17	%
Since Inception No Load Class (12/31/99)		7.94	%		N/A			N/A			N/A			N/A			−0.95	%		−5.67	%		1.17	%
Since Inception Advisor Class A (4/26/01)		N/A			8.37	%		7.63	%		N/A			N/A			0.73	%		1.26	%		4.19	%
Since Inception Advisor Class C (6/28/02)		N/A			N/A			N/A			8.89	%		N/A			3.63	%		6.02	%		7.27	%
Since Inception Institutional Class (5/27/05)		N/A			N/A			N/A			N/A			3.21	%		0.53	%		1.96	%		4.28	%

⁽¹⁾ Reflects front-end sales charge of 5.75%.

Returns for periods greater than one year are average annual total returns.

16

The Medical Fund

September 30, 1999 — December 31, 2009

	Ended 12/31/2009
				Advisor			Advisor
	No Load			Class A			Class A			Advisor						NASDAQ
	Class			(No Load)			(Load Adjusted)(1)			Class C			S&P 500			Composite
One Year		24.47	%		24.17	%		17.02	%		23.50	%		26.46	%		43	.89%
Five Years		5.45	%		5.22	%		3.98	%		N/A			0.42	%		0	.85%
Ten Years		5.12	%		N/A			N/A			N/A			−0.95	%		−5	.67%
Since Inception No Load Class (9/30/99)		8.00	%		N/A			N/A			N/A			0.42	%		−1	.84%
Since Inception Advisor Class A (4/26/01)		N/A			1.88	%		1.19	%		N/A			0.73	%		1	.26%
Since Inception Advisor Class C (2/16/07)		N/A			N/A			N/A			2.36	%		−6.80	%		−3	.27%

⁽¹⁾ Reflects front-end sales charge of 5.75%.

Returns for periods greater than one year are average annual total returns.

17

The Small Cap Opportunities Fund

March 20, 2000 — December 31, 2009

	Ended 12/31/2009
				Advisor			Advisor
	No Load			Class A			Class A			Advisor			Institutional						NASDAQ
	Class			(No Load)			(Load Adjusted)(1)			Class C			Class			S&P 500			Composite			MSCI EAFE
One Year		58.16	%		57.80	%		48.77	%		56.97	%		58.45	%		26.46	%		43.89	%		31.78	%
Five Years		2.98	%		2.71	%		1.49	%		N/A			N/A			0.42	%		0.85	%		3.54	%
Since Inception No Load Class (3/20/00)		8.73	%		N/A			N/A			N/A			N/A			−0.91	%		−6.99	%		1.34	%
Since Inception Advisor Class A (12/31/01)		N/A			5.50	%		4.73	%		N/A			N/A			1.60	%		1.91	%		6.59	%
Since Inception Advisor Class C (2/16/07)		N/A			N/A			N/A			−10.48	%		N/A			−6.80	%		−3.27	%		−7.66	%
Since Inception Institutional Class (8/12/05)		N/A			N/A			N/A			N/A			1.41	%		−0.12	%		1.16	%		2.65	%

⁽¹⁾ Reflects front-end sales charge of 5.75%.

Returns for periods greater than one year are average annual total returns.

18

The Market Opportunities Fund

January 31, 2006 — December 31, 2009

	Ended 12/31/2009
				Advisor			Advisor
	No Load			Class A			Class A			Advisor			Institutional						NASDAQ
	Class			(No Load)			(Load Adjusted)(1)			Class C			Class			S&P 500			Composite			MSCI EAFE
One Year		50.21	%		49.66	%		41.06	%		49.17	%		50.70	%		26.46	%		43.89	%		31.78	%
Since Inception No Load Class (1/31/06)		2.44	%		N/A			N/A			N/A			N/A			−1.35	%		−0.41	%		−0.32	%
Since Inception Advisor Class A (1/31/06)		N/A			2.16	%		0.63	%		N/A			N/A			−1.35	%		−0.41	%		−0.32	%
Since Inception Advisor Class C (2/16/07)		N/A			N/A			N/A			−6.48	%		N/A			−6.80	%		−3.27	%		−7.66	%
Since Inception Institutional Class (5/19/08)		N/A			N/A			N/A			N/A			−12.73	%		−11.97	%		−6.18	%		−16.28	%

⁽¹⁾ Reflects front-end sales charge of 5.75%.

Returns for periods greater than one year are average annual total returns.

19

The Water Infrastructure Fund

June 29, 2007 — December 31, 2009

Ended 12/31/2009

Advisor

Advisor

No Load

Class A

Class A

Advisor

Institutional

NASDAQ

S&P Global

Class

(No Load)

(Load Adjusted)(1)

Class C

Class

S&P 500

Composite

Water Index

One Year

16.46

%

16.21

%

9.57

%

15.52

%

16.94

%

26.46

%

43.89

%

32

.67%

Since Inception No Load Class (6/29/07)

−4.35

%

N/A

N/A

N/A

N/A

−9.17

%

−5.33

%

−7

.20%

Since Inception Advisor Class A (6/29/07)

N/A

−4.57

%

−6.80

%

N/A

N/A

−9.17

%

−5.33

%

−7

.20%

Since Inception Advisor Class C (6/29/07)

N/A

N/A

N/A

−5.09

%

N/A

−9.17

%

−5.33

%

−7

.20%

Since Inception Institutional Class (6/29/07)

N/A

N/A

N/A

N/A

−4.09

%

−9.17

%

−5.33

%

−7

.20%

⁽¹⁾ Reflects front-end sales charge of 5.75%.

Returns for periods greater than one year are average annual total returns.

20

The Multi-Disciplinary Fund

February 11, 2008 — December 31, 2009

	Ended 12/31/2009
				Advisor			Advisor
	No Load			Class A			Class A			Advisor			Institutional						NASDAQ
	Class			(No Load)			(Load Adjusted)(1)			Class C			Class			S&P 500			Composite			CBOE
One Year		22.90	%		22.73	%		15.67	%		22.03	%		23.25	%		26.46	%		43.89	%		32	.67%
Since Inception No Load Class (2/11/08)		0.57	%		N/A			N/A			N/A			N/A			−7.01	%		−1.17	%		−2	.33%
Since Inception Advisor Class A (2/11/08)		N/A			0.35	%		−2.75	%		N/A			N/A			−7.01	%		−1.17	%		−2	.33%
Since Inception Advisor Class C (2/11/08)		N/A			N/A			N/A			−0.16	%		N/A			−7.01	%		−1.17	%		−2	.33%
Since Inception Institutional Class (2/11/08)		N/A			N/A			N/A			N/A			0.79	%		−7.01	%		−1.17	%		−2	.33%

⁽¹⁾ Reflects front-end sales charge of 5.75%.

Returns for periods greater than one year are average annual total returns.

21

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Expense Example

December 31, 2009

Shareholders incur two type of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvestments of dividends or other distributions made by the Fund, redemption fees, and exchange fees, and (2), ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help investors understand the ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested on July 1, 2009 and held for the entire period from July 1, 2009 to December 31, 2009.

Actual Expenses

The first line of the table below provides information about actual account values and actual expenses. Unlike other mutual funds that directly acquire and manage their own portfolio securities, each Feeder Fund invests all of its investable assets in a corresponding Master Portfolio, a separately registered investment company. The Master Portfolio, in turn, invests in securities. With this type of organization, expenses can accrue specifically to the Master Portfolio or the Feeder Fund or both. The Adviser for the Master Portfolios has directed a certain amount of the Master Portfolio’s trades to brokers believed to provide the best execution and, as a result, the Master Portfolios have generated direct brokerage credits to reduce certain service provider fees. Each Feeder Fund records its proportionate share of the Master Portfolio’s expenses, including directed brokerage credits, on a daily basis. Any expense reductions include Feeder Fund-specific expenses as well as the expenses allocated from the Master Portfolio.

The Feeder Funds will charge shareholder fees for outgoing wire transfers, returned checks, and exchanges executed by telephone between the Feeder Fund and any other series of Kinetics Mutual Funds, Inc. The Feeder Fund’s transfer agent charges a $5.00 transaction fee to shareholder accounts for telephone exchanges between any two series of Kinetics Mutual Funds, Inc. The Feeder Fund’s transfer agent does not charge a transaction fee for written exchange requests. IRA accounts are assessed a $15.00 annual fee. Finally, as a disincentive to market-timing transactions, the Feeder Funds will assess a 2.00% fee on the redemption or exchange of Fund shares held for less than 30 days. These fees will be paid to the Feeder Funds to help offset transaction costs. The Feeder Funds reserve the right to waive the redemption fee, subject to their sole discretion, in instances deemed not to be disadvantageous to the Feeder Funds or shareholders.

22

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Expense Example — (Continued)

December 31, 2009

You may use the information provided in the first line, together with the amounts you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Feeder Funds’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which are not the Feeder Funds’ actual returns. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses one paid for the period. You may use this information to compare the ongoing costs of investing in the Feeder Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight one’s ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help one determine the relative total costs of owning different funds. In if these transactional costs were included, one’s costs would have been higher.

23

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Expense Example — (Continued)

December 31, 2009

	Beginning		Ending
	Account		Account					Expenses Paid
	Value		Value		Annualized			During Period*
	(7/1/09)		(12/31/09)		Expense Ratio			(7/1/09 to 12/31/09)
The Internet Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,254.16		1.95	%	$	11.08
No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,254.16		1.89	%	$	10.74
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,015.38		1.95	%	$	9.91
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,015.68		1.89	%	$	9.60
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	1,253.07		2.20	%	$	12.49
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	1,253.07		2.14	%	$	12.15
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,014.12		2.20	%	$	11.17
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,014.42		2.14	%	$	10.87
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	1,249.83		2.70	%	$	15.31
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	1,249.83		2.64	%	$	14.97
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,011.59		2.70	%	$	13.69
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,011.90		2.64	%	$	13.39
The Global Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,196.93		4.90	%	$	27.13
No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,196.93		1.39	%	$	7.70
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,000.51		4.90	%	$	24.70
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,018.20		1.39	%	$	7.07
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	1,195.08		5.15	%	$	28.49
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	1,195.08		1.64	%	$	9.07

24

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Expense Example — (Continued)

December 31, 2009

	Beginning		Ending
	Account		Account					Expenses Paid
	Value		Value		Annualized			During Period*
	(7/1/09)		(12/31/09)		Expense Ratio			(7/1/09 to 12/31/09)
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	999.25		5.15	%	$	25.95
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.94		1.64	%	$	8.34
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	1,192.82		5.65	%	$	31.22
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	1,192.82		2.14	%	$	11.83
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	996.73		5.65	%	$	28.43
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,014.42		2.14	%	$	10.87
The Paradigm Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,192.10		1.73	%	$	9.56
No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,192.10		1.64	%	$	9.06
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,016.48		1.73	%	$	8.79
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.94		1.64	%	$	8.34
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	1,189.77		1.98	%	$	10.93
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	1,189.77		1.89	%	$	10.43
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,015.22		1.98	%	$	10.06
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,015.68		1.89	%	$	9.60
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	1,187.35		2.48	%	$	13.67
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	1,187.35		2.39	%	$	13.18
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,012.70		2.48	%	$	12.58
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,013.16		2.39	%	$	12.13

25

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Expense Example — (Continued)

December 31, 2009

	Beginning		Ending
	Account		Account					Expenses Paid
	Value		Value		Annualized			During Period*
	(7/1/09)		(12/31/09)		Expense Ratio			(7/1/09 to 12/31/09)
Institutional Class Actual — before expense reimbursement	$	1,000.00	$	1,192.61		1.68	%	$	9.28
Institutional Class Actual — after expense reimbursement	$	1,000.00	$	1,192.61		1.44	%	$	7.96
Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,016.74		1.68	%	$	8.54
Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,017.95		1.44	%	$	7.32
The Medical Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,123.69		2.08	%	$	11.13
No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,123.69		1.39	%	$	7.44
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,014.72		2.08	%	$	10.56
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,018.20		1.39	%	$	7.07
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	1,121.26		2.33	%	$	12.46
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	1,121.26		1.64	%	$	8.77
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,013.46		2.33	%	$	11.82
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.94		1.64	%	$	8.34
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	1,118.82		2.83	%	$	15.11
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	1,118.82		2.14	%	$	11.43
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,010.94		2.83	%	$	14.34
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,014.42		2.14	%	$	10.87
The Small Cap Opportunities Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,188.25		1.88	%	$	10.37
No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,188.25		1.64	%	$	9.05

26

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Expense Example — (Continued)

December 31, 2009

	Beginning		Ending
	Account		Account					Expenses Paid
	Value		Value		Annualized			During Period*
	(7/1/09)		(12/31/09)		Expense Ratio			(7/1/09 to 12/31/09)
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,015.73		1.88	%	$	9.55
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.94		1.64	%	$	8.34
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	1,186.71		2.13	%	$	11.74
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	1,186.71		1.89	%	$	10.42
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,014.47		2.13	%	$	10.82
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,015.68		1.89	%	$	9.60
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	1,183.89		2.63	%	$	14.48
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	1,183.89		2.39	%	$	13.16
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,011.95		2.63	%	$	13.34
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,013.16		2.39	%	$	12.13
Institutional Class Actual — before expense reimbursement	$	1,000.00	$	1,189.53		1.83	%	$	10.10
Institutional Class Actual — after expense reimbursement	$	1,000.00	$	1,189.53		1.44	%	$	7.95
Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,015.98		1.83	%	$	9.30
Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,017.95		1.44	%	$	7.32
The Kinetics Government Money Market Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,000.00		3.17	%	$	15.98
No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,000.00		0.04	%	$	0.20
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,009.23		3.17	%	$	16.05
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,025.00		0.04	%	$	0.20

27

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Expense Example — (Continued)

December 31, 2009

	Beginning		Ending
	Account		Account					Expenses Paid
	Value		Value		Annualized			During Period*
	(7/1/09)		(12/31/09)		Expense Ratio			(7/1/09 to 12/31/09)
The Market Opportunities Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,157.47		1.89	%	$	10.28
No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,157.47		1.64	%	$	8.92
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,015.68		1.89	%	$	9.60
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.94		1.64	%	$	8.34
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	1,154.41		2.14	%	$	11.62
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	1,154.41		1.89	%	$	10.26
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,014.42		2.14	%	$	10.87
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,015.68		1.89	%	$	9.60
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	1,151.25		2.64	%	$	14.31
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	1,151.25		2.39	%	$	12.96
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,011.90		2.64	%	$	13.39
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,013.16		2.39	%	$	12.13
Institutional Class Actual — before expense reimbursement	$	1,000.00	$	1,140.24		1.84	%	$	9.93
Institutional Class Actual — after expense reimbursement	$	1,000.00	$	1,140.24		1.44	%	$	7.77
Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,015.93		1.84	%	$	9.35
Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,017.95		1.44	%	$	7.32
The Water Infrastructure Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,094.10		2.29	%	$	12.09
No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,094.10		1.64	%	$	8.66

28

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Expense Example — (Continued)

December 31, 2009

	Beginning		Ending
	Account		Account					Expenses Paid
	Value		Value		Annualized			During Period*
	(7/1/09)		(12/31/09)		Expense Ratio			(7/1/09 to 12/31/09)
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,013.66		2.29	%	$	11.62
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.94		1.64	%	$	8.34
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	1,092.94		2.54	%	$	13.40
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	1,092.94		1.89	%	$	9.97
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,012.40		2.54	%	$	12.88
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,015.66		1.89	%	$	9.60
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	1,090.11		3.04	%	$	16.02
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	1,090.11		2.39	%	$	12.59
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,009.88		3.04	%	$	16.02
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,013.16		2.39	%	$	12.13
Institutional Class Actual — before expense reimbursement	$	1,000.00	$	1,096.10		2.24	%	$	11.83
Institutional Class Actual — after expense reimbursement	$	1,000.00	$	1,096.10		1.44	%	$	7.61
Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,013.91		2.24	%	$	11.37
Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,017.95		1.44	%	$	7.32
The Multi-Disciplinary Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,121.38		11.00	%	$	58.82
No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,121.38		1.49	%	$	7.97
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	969.75		11.00	%	$	54.61
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,017.69		1.49	%	$	7.58

29

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Expense Example — (Continued)

December 31, 2009

	Beginning		Ending
	Account		Account					Expenses Paid
	Value		Value		Annualized			During Period*
	(7/1/09)		(12/31/09)		Expense Ratio			(7/1/09 to 12/31/09)
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	1,121.90		11.25	%	$	60.17
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	1,121.90		1.74	%	$	9.31
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	968.49		11.25	%	$	55.82
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.43		1.74	%	$	8.84
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	1,118.92		11.75	%	$	62.75
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	1,118.92		2.24	%	$	11.96
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	965.97		11.75	%	$	58.23
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,013.91		2.24	%	$	11.37
Institutional Class Actual — before expense reimbursement	$	1,000.00	$	1,123.29		10.95	%	$	58.60
Institutional Class Actual — after expense reimbursement	$	1,000.00	$	1,123.29		1.29	%	$	6.90
Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	970.01		10.95	%	$	54.37
Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,018.70		1.29	%	$	6.56

Note:  Each Feeder Fund records its proportionate share of the respective Master Portfolio’s expenses, including directed brokerage credits, on a daily basis. Any expense reductions includes Feeder Fund-specific expenses as well as the expenses allocated for the Master Portfolio.

*  Expenses are equal to the Fund’s annualized expense ratio before expense reimbursement and after expense reimbursement multiplied by the average account value over the period, multiplied by 184/365.

30

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statement of Assets & Liabilities

December 31, 2009

	The Internet			The Global
	Fund			Fund
ASSETS:
Investments in the Master Portfolios, at value*	$	105,609,810		$	4,763,296
Receivable from Adviser		—			8,941
Receivable for Master Portfolio interest sold		121,193			—
Receivable for Fund shares sold		16,402			8,586
Prepaid expenses and other assets		14,316			16,336
Total assets		105,761,721			4,797,159
LIABILITIES:
Payable for Master Portfolio interest purchased		—			8,570
Payable to Adviser		1,406			—
Payable to Directors and Officers		1,466			41
Payable for Fund shares repurchased		137,596			17
Payable for service fees		22,124			1,023
Payable for distribution fees		281			93
Accrued expenses and other liabilities		74,956			13,866
Total liabilities		237,829			23,610
Net assets	$	105,523,892		$	4,773,549
NET ASSETS CONSIST OF:
Paid in capital	$	241,926,630		$	8,397,880
Accumulated net investment loss		(912,146	)		(8,321	)
Accumulated net realized loss on investments, foreign currency and written option contracts		(163,959,606	)		(3,936,918	)
Net unrealized appreciation on:
Investments and foreign currency		28,463,611			320,908
Written option contracts		5,403			—
Net Assets	$	105,523,892		$	4,773,549
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS:
Net assets	$	104,666,332		$	4,370,098
Shares outstanding		3,404,920			1,114,306
Net asset value per share (offering and redemption price)	$	30.74		$	3.92
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A:
Net assets	$	738,121		$	367,608
Shares outstanding		24,318			93,529
Net asset value per share (redemption price)	$	30.35		$	3.93
Offering price per share ($30.35 divided by .9425 and $3.93 divided by .9425)	$	32.20		$	4.17
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C:
Net assets	$	119,439		$	35,843
Shares outstanding		4,014			9,179
Net asset value per share (offering and redemption price)	$	29.76		$	3.90

*  Each Feeder Fund invests its assets directly in the corresponding Master Portfolio. The financial statements for the Master Portfolios, along with the portfolio of investments in securities, are contained elsewhere in this report and should be read in conjunction with the Feeder Fund’s financial statements.

See Notes to the Financial Statements.

31

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statement of Assets & Liabilities

December 31, 2009

	The Paradigm			The Medical
	Fund			Fund
ASSETS:
Investments in the Master Portfolios, at value*	$	1,373,149,379		$	25,927,985
Receivable from Adviser		—			14,609
Receivable for Fund shares sold		3,179,526			177,225
Prepaid expenses and other assets		38,383			12,979
Total assets		1,376,367,288			26,132,798
LIABILITIES:
Payable for Master Portfolio interest purchased		399,758			121,670
Payable to Adviser		10,912			—
Payable to Directors and Officers		21,087			358
Payable for Fund shares repurchased		2,779,768			55,555
Payable for service fees		270,453			5,456
Payable for distribution fees		189,932			1,163
Accrued expenses and other liabilities		361,493			21,614
Total liabilities		4,033,403			205,816
Net assets	$	1,372,333,885		$	25,926,982
NET ASSETS CONSIST OF:
Paid in capital	$	2,280,509,827		$	27,049,983
Accumulated net investment income		2,487,370			29,613
Accumulated net realized loss on investments, foreign currency and written option contracts		(914,239,078	)		(458,870	)
Net unrealized appreciation (depreciation) on:
Investments and foreign currency		3,575,766			(693,744	)
Net Assets	$	1,372,333,885		$	25,926,982
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS:
Net assets	$	825,278,442		$	21,126,348
Shares outstanding		40,898,960			1,125,353
Net asset value per share (offering and redemption price)	$	20.18		$	18.77
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A:
Net assets	$	252,105,530		$	4,346,905
Shares outstanding		12,684,526			236,765
Net asset value per share (redemption price)	$	19.88		$	18.36
Offering price per share ($19.88 divided by .9425 and 18.36 divided by .9425)	$	21.09		$	19.48
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C:
Net assets	$	169,578,363		$	453,729
Shares outstanding		8,773,463			24,840
Net asset value per share (offering and redemption price)	$	19.33		$	18.27
CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS:
Net assets	$	125,371,550
Shares outstanding		6,227,453
Net asset value per share (offering and redemption price)	$	20.13

*  Each Feeder Fund invests its assets directly in the corresponding Master Portfolio. The financial statements for the Master Portfolios, along with the portfolio of investments in securities, are contained elsewhere in this report and should be read in conjunction with the Feeder Fund’s financial statements.

See Notes to the Financial Statements.

32

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statement of Assets & Liabilities

December 31, 2009

				The Kinetics
	The Small Cap			Government
	Opportunities			Money Market
	Fund			Fund
ASSETS:
Investments in the Master Portfolios, at value*	$	199,761,644		$	1,644,431
Receivable from Adviser		13,798			4,357
Receivable for Master Portfolio interest sold		644,802			—
Receivable for Fund shares sold		126,806			—
Prepaid expenses and other assets		22,435			10,881
Total assets		200,569,485			1,659,669
LIABILITIES:
Payable to Directors and Officers		3,314			18
Payable for Fund shares repurchased		771,608			—
Payable for service fees		38,839			343
Payable for distribution fees		6,209			—
Accrued expenses and other liabilities		106,263			7,931
Total liabilities		926,233			8,292
Net assets	$	199,643,252		$	1,651,377
NET ASSETS CONSIST OF:
Paid in capital	$	376,046,715		$	1,651,460
Accumulated net investment income		870,062			—
Accumulated net realized loss on investments, foreign currency and written option contracts		(187,377,385	)		(83	)
Net unrealized appreciation on:
Investments and foreign currency		10,103,860			—
Net Assets	$	199,643,252		$	1,651,377
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS:
Net assets	$	161,204,946		$	1,651,377
Shares outstanding		7,738,819			1,651,377
Net asset value per share (offering and redemption price)	$	20.83		$	1.00
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A:
Net assets	$	14,244,324
Shares outstanding		693,753
Net asset value per share (redemption price)	$	20.53
Offering price per share ($20.53 divided by .9425)	$	21.78
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C:
Net assets	$	4,445,392
Shares outstanding		219,195
Net asset value per share (offering and redemption price)	$	20.28
CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS:
Net assets	$	19,748,590
Shares outstanding		944,745
Net asset value per share (offering and redemption price)	$	20.90

*  Each Feeder Fund invests its assets directly in the corresponding Master Portfolio. The financial statements for the Master Portfolios, along with the portfolio of investments in securities, are contained elsewhere in this report and should be read in conjunction with the Feeder Fund’s financial statements.

See Notes to the Financial Statements.

33

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statement of Assets & Liabilities

December 31, 2009

	The Market			The Water
	Opportunities			Infrastructure
	Fund			Fund
ASSETS:
Investments in the Master Portfolios, at value*	$	66,109,900		$	23,117,750
Receivable from Adviser		15,711			14,835
Receivable for Fund shares sold		66,217			329,217
Prepaid expenses and other assets		26,431			14,071
Total assets		66,218,259			23,475,873
LIABILITIES:
Payable for Master Portfolio interest purchased		317			273,478
Payable to Directors and Officers		982			283
Payable for Fund shares repurchased		65,900			55,739
Payable for service fees		13,970			4,222
Payable for distribution fees		7,670			2,943
Accrued expenses and other liabilities		29,852			18,859
Total liabilities		118,691			355,524
Net assets	$	66,099,568		$	23,120,349
NET ASSETS CONSIST OF:
Paid in capital	$	98,957,454		$	29,737,309
Accumulated net investment income		57,267			3,244
Accumulated net realized loss on investments, foreign currency, options and written option contracts		(33,980,758	)		(6,998,191	)
Net unrealized appreciation on:
Investments and foreign currency		1,027,783			377,987
Written option contracts		37,822			—
Net Assets	$	66,099,568		$	23,120,349
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS:
Net assets	$	41,255,426		$	7,175,586
Shares outstanding		3,807,507			810,149
Net asset value per share (offering and redemption price)	$	10.84		$	8.86
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A:
Net assets	$	18,770,064		$	10,339,555
Shares outstanding		1,737,243			1,172,600
Net asset value per share (redemption price)	$	10.80		$	8.82
Offering price per share ($10.80 divided by .9425 and $8.82 divided by .9425)	$	11.46		$	9.36
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C:
Net assets	$	6,054,985		$	2,699,788
Shares outstanding		566,231			309,891
Net asset value per share (offering and redemption price)	$	10.69		$	8.71
CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS:
Net assets	$	19,093		$	2,905,420
Shares outstanding		1,758			326,547
Net asset value per share (offering and redemption price)	$	10.86		$	8.90

*  Each Feeder Fund invests its assets directly in the corresponding Master Portfolio. The financial statements for the Master Portfolios, along with the portfolio of investments in securities, are contained elsewhere in this report and should be read in conjunction with the Feeder Fund’s financial statements.

See Notes to the Financial Statements.

34

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statement of Assets & Liabilities

December 31, 2009

	The Multi-
	Disciplinary
	Fund
ASSETS:
Investments in the Master Portfolios, at value*	$	1,226,993
Receivable from Adviser		9,569
Prepaid expenses and other assets		26,239
Total assets		1,262,801
LIABILITIES:
Payable to Directors and Officers		8
Payable for service fees		230
Payable for distribution fees		85
Accrued expenses and other liabilities		14,988
Total liabilities		15,311
Net assets	$	1,247,490
NET ASSETS CONSIST OF:
Paid in capital	$	1,146,799
Accumulated net investment income		705
Accumulated net realized gain on investments and written option contracts		15,899
Net unrealized appreciation on:
Investments		33,679
Written option contracts		50,408
Net Assets	$	1,247,490
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS:
Net assets	$	938,039
Shares outstanding		95,117
Net asset value per share (offering and redemption price)	$	9.86
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A:
Net assets	$	102,970
Shares outstanding		10,456
Net asset value per share (redemption price)	$	9.85
Offering price per share ($9.85 divided by .9425)	$	10.45
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C:
Net assets	$	104,975
Shares outstanding		10,711
Net asset value per share (offering and redemption price)	$	9.80
CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS:
Net assets	$	101,506
Shares outstanding		10,262
Net asset value per share (offering and redemption price)	$	9.89

*  Each Feeder Fund invests its assets directly in the corresponding Master Portfolio. The financial statements for the Master Portfolios, along with the portfolio of investments in securities, are contained elsewhere in this report and should be read in conjunction with the Feeder Fund’s financial statements.

See Notes to the Financial Statements.

35

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statement of Operations

For the Year Ended December 31, 2009

	The Internet			The Global
	Fund			Fund
INVESTMENT INCOME ALLOCATED FROM MASTER
PORTFOLIOS:
Dividends†	$	628,830		$	66,934
Interest		417,736			299
Income from securities lending		133,745			1,072
Expenses only from Master Portfolio		(1,213,369	)		(92,765	)
Net investment loss from Master Portfolio		(33,058	)		(24,460	)
EXPENSES:
Distribution fees — Advisor Class A		1,133			390
Distribution fees — Advisor Class C		780			142
Shareholder servicing fees — Advisor Class A		1,133			390
Shareholder servicing fees — Advisor Class C		260			47
Shareholder servicing fees — No Load Class		219,580			7,893
Transfer Agent fees and expenses		140,805			18,885
Reports to shareholders		55,754			2,799
Administration fees		33,052			1,213
Professional fees		20,100			7,072
Directors’ and Officers’ fees and expenses		6,529			220
Registration fees		43,649			45,435
Fund accounting fees		3,704			176
Other expenses		8,508			336
Total expenses		534,987			84,998
Less, expense reimbursement		(75,887	)		(130,914	)
Net expenses		459,100			(45,916	)
Net investment income (loss)		(492,158	)		21,456
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS:
Net realized gain (loss) on:
Investments and foreign currency		3,597,660			(418,155	)
Net change in unrealized appreciation of:
Investments and foreign currency		31,629,895			1,899,110
Written option contracts		459,289			—
Net gain on investments		35,686,844			1,480,955
Net increase in net assets resulting from operations	$	35,194,686		$	1,502,411
† Net of Foreign Taxes Withheld of:	$	28,720		$	4,261

See Notes to the Financial Statements.

36

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statement of Operations

For the Year Ended December 31, 2009

	The Paradigm			The Medical
	Fund			Fund
INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIOS:
Dividends†	$	24,205,787		$	420,603
Interest		3,477,551			1,155
Other income		231,158			103,156
Income from securities lending		4,217,659			13,174
Expenses allocated from Master Portfolio		(17,455,729	)		(298,574	)
Net investment income from Master Portfolio		14,676,426			239,514
EXPENSES:
Distribution fees — Advisor Class A		594,084			8,481
Distribution fees — Advisor Class C		1,148,858			3,291
Shareholder servicing fees — Advisor Class A		594,084			8,481
Shareholder servicing fees — Advisor Class C		382,953			1,097
Shareholder servicing fees — No Load Class		1,912,548			42,894
Shareholder servicing fees — Institutional Class		245,726			—
Transfer Agent fees and expenses		536,519			25,607
Reports to shareholders		92,241			7,639
Administration fees		436,385			7,446
Professional fees		49,321			13,077
Directors’ and Officers’ fees and expenses		80,093			1,647
Registration fees		112,755			40,801
Fund accounting fees		64,264			1,048
Other expenses		101,109			2,428
Total expenses		6,350,940			163,937
Less, expense waiver for Institutional Class service fees		(184,295	)		—
Less, expense reimbursement		(1,154,490	)		(158,994	)
Net expenses		5,012,155			4,943
Net investment income		9,664,271			234,571
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
ALLOCATED FROM MASTER PORTFOLIOS:
Net realized gain (loss) on:
Investments and foreign currency		(281,292,053	)		(171,671	)
Written option contracts expired or closed		—			19,458
Net change in unrealized appreciation (depreciation) of:
Investments and foreign currency		685,169,758			4,244,154
Written option contracts		—			(18,418	)
Net gain on investments		403,877,705			4,073,523
Net increase in net assets resulting from operations	$	413,541,976		$	4,308,094
† Net of Foreign Taxes Withheld of:	$	1,262,415		$	19,117

See Notes to the Financial Statements.

37

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statement of Operations

For the Year Ended December 31, 2009

				The Kinetics
	The Small Cap			Government
	Opportunities			Money Market
	Fund			Fund
INVESTMENT INCOME ALLOCATED FROM MASTER
PORTFOLIOS:
Dividends†	$	2,675,328		$	—
Interest		96,978			1,268
Income from securities lending		134,281			—
Expenses only from Master Portfolio		(3,004,286	)		(21,528	)
Net investment loss from Master Portfolio		(97,699	)		(20,260	)
EXPENSES:
Distribution fees — Advisor Class A		31,360			—
Distribution fees — Advisor Class C		25,397			—
Shareholder servicing fees — Advisor Class A		31,360			—
Shareholder servicing fees — Advisor Class C		8,466			—
Shareholder servicing fees — No Load Class		355,359			5,321
Shareholder servicing fees — Institutional Class		106,584			—
Transfer Agent fees and expenses		92,191			5,393
Reports to shareholders		87,361			5,104
Administration fees		78,217			762
Professional fees		24,740			5,275
Directors’ and Officers’ fees and expenses		14,063			180
Registration fees		67,344			20,040
Fund accounting fees		10,507			109
Other expenses		14,174			966
Total expenses		947,123			43,150
Less, expense waiver for Institutional Class service fees		(79,938	)		—
Less, expense reimbursement		(454,896	)		(63,410	)
Net expenses		412,289			(20,260	)
Net investment loss		(509,988	)		—
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS:
Net realized loss on:
Investments and foreign currency		(45,656,563	)		—
Net change in unrealized appreciation of:
Investments and foreign currency		143,851,148			—
Written option contracts		1,310			—
Net gain on investments		98,195,895			—
Net increase in net assets resulting from operations	$	97,685,907		$	—
† Net of Foreign Taxes Withheld of:	$	90,034		$	—

See Notes to the Financial Statements.

38

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statement of Operations

For the Year Ended December 31, 2009

	The Market			The Water
	Opportunities			Infrastructure
	Fund			Fund
INVESTMENT INCOME ALLOCATED FROM MASTER
PORTFOLIOS:
Dividends†	$	894,420		$	346,776
Interest		4,167			3,630
Income from securities lending		98,138			10,471
Expenses only from Master Portfolio		(843,738	)		(253,722	)
Net investment income from Master Portfolio		152,987			107,155
EXPENSES:
Distribution fees — Advisor Class A		45,935			18,690
Distribution fees — Advisor Class C		39,077			15,970
Shareholder servicing fees — Advisor Class A		45,935			18,690
Shareholder servicing fees — Advisor Class C		13,026			5,323
Shareholder servicing fees — No Load Class		89,460			17,086
Shareholder servicing fees — Institutional Class		14			1,455
Transfer Agent fees and expenses		36,984			23,176
Reports to shareholders		10,715			8,312
Administration fees		21,588			5,859
Professional fees		15,849			12,699
Directors’ and Officers’ fees and expenses		4,149			1,415
Registration fees		52,714			54,310
Fund accounting fees		3,034			772
Other expenses		6,146			1,724
Total expenses		384,626			185,481
Less, expense waiver for Institutional Class service fees		(10	)		(1,091	)
Less, expense reimbursement		(169,602	)		(123,364	)
Net expenses		215,014			61,026
Net investment income (loss)		(62,027	)		46,129
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS:
Net realized loss on:
Investments and foreign currency		(7,399,154	)		(1,419,347	)
Net change in unrealized appreciation of:
Investments and foreign currency		29,812,832			3,683,013
Written option contracts		264,761			—
Net gain on investments		22,678,439			2,263,666
Net increase in net assets resulting from operations	$	22,616,412		$	2,309,795
† Net of Foreign Taxes Withheld of:	$	38,811		$	26,735

See Notes to the Financial Statements.

39

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statement of Operations

For the Year Ended December 31, 2009

	The Multi-
	Disciplinary
	Fund
INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIOS:
Interest	$	20,326
Expenses only from Master Portfolio		(29,734	)
Net investment loss from Master Portfolio		(9,408	)
EXPENSES:
Distribution fees — Advisor Class A		228
Distribution fees — Advisor Class C		698
Shareholder servicing fees — Advisor Class A		228
Shareholder servicing fees — Advisor Class C		233
Shareholder servicing fees — No Load Class		1,417
Shareholder servicing fees — Institutional Class		179
Transfer Agent fees and expenses		20,125
Reports to shareholders		768
Administration fees		1,305
Professional fees		9,654
Directors’ and Officers’ fees and expenses		50
Registration fees		46,108
Fund accounting fees		46
Other expenses		353
Total expenses		81,392
Less, expense waiver for Institutional Class service fees		(134	)
Less, expense reimbursement		(97,718	)
Net expenses		(16,460	)
Net investment gain		7,052
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS:
Net realized gain (loss) on:
Investments		(17,264	)
Written option contracts expired or closed		116,361
Net change in unrealized appreciation of:
Investments		34,497
Written option contracts		64,531
Net gain on investments		198,125
Net increase in net assets resulting from operations	$	205,177

See Notes to the Financial Statements.

40

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statements of Changes in Net Assets

	The Internet Fund						The Global Fund
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31, 2009			December 31, 2008			December 31, 2009			December 31, 2008
OPERATIONS:
Net investment income (loss)	$	(492,158	)	$	1,162,085		$	21,456		$	52,359
Net realized gain (loss) on sale of investments, foreign currency and written option contracts expired or closed		3,597,660			1,853,798			(418,155	)		188,701
Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options		32,089,184			(65,383,744	)		1,899,110			(2,272,129	)
Net increase (decrease) in net assets resulting from operations		35,194,686			(62,367,861	)		1,502,411			(2,031,069	)
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS:
Net investment income		(127,292	)		(180,775	)		(19,692	)		(42,183	)
Total distributions		(127,292	)		(180,775	)		(19,692	)		(42,183	)
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A:(1)
Net investment income		(930	)		(751	)		(1,275	)		(2,180	)
Total distributions		(930	)		(751	)		(1,275	)		(2,180	)
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C:(1)
Net investment income		(145	)		(235	)		(22	)		(88	)
Total distributions		(145	)		(235	)		(22	)		(88	)
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS:
Proceeds from shares sold		4,869,857			6,464,409			2,868,282			1,558,631
Redemption fees		1,370			4,900			6,702			772
Proceeds from shares issued to holders in reinvestment of dividends		123,697			173,127			19,427			41,443
Cost of shares redeemed		(10,313,179	)		(36,080,016	)		(1,808,229	)		(862,547	)
Net increase (decrease) in net assets resulting from capital share transactions		(5,318,255	)		(29,437,580	)		1,086,182			738,299
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A:(1)
Proceeds from shares sold		489,536			156,223			312,466			182,086
Redemption fees		201			20			—			—
Proceeds from shares issued to holders in reinvestment of dividends		825			615			417			2,065
Cost of shares redeemed		(225,140	)		(241,742	)		(101,796	)		(21,680	)
Net increase (decrease) in net assets resulting from capital share transactions		265,422			(84,884	)		211,087			162,471
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C:(1)
Proceeds from shares sold		302			44,894			21,000			10,000
Redemption fees		—			—			—			—
Proceeds from shares issued to holders in reinvestment of dividends		43			105			22			88
Cost of shares redeemed		(33,452	)		(147,129	)		—			—
Net increase (decrease) in net assets resulting from capital share transactions		(33,107	)		(102,130	)		21,022			10,088
TOTAL INCREASE (DECREASE) IN NET ASSETS:		29,980,379			(92,174,216	)		2,799,713			(1,164,662	)
NET ASSETS:
Beginning of year		75,543,513			167,717,729			1,973,836			3,138,498
End of year*	$	105,523,892		$	75,543,513		$	4,773,549		$	1,973,836
*Including undistributed net investment loss of:	$	(912,146	)	$	(494,997	)	$	(8,321	)	$	(8	)

⁽¹⁾ Advisor Class A and Advisor Class C shares of the Global Fund commenced operations on May 19, 2008.

See Notes to the Financial Statements.

41

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statements of Changes in Net Assets — (Continued)

	The Internet Fund						The Global Fund
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31, 2009			December 31, 2008			December 31, 2009			December 31, 2008
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS:
Shares sold		175,734			208,819			878,509			372,985
Shares issued in reinvestments of dividends and distributions		4,000			8,491			4,994			17,711
Shares redeemed		(401,239	)		(1,231,700	)		(557,975	)		(243,058	)
Net increase (decrease) in shares outstanding		(221,505	)		(1,014,390	)		325,528			147,638
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A:(1)
Shares sold		17,431			6,346			84,996			52,744
Shares issued in reinvestments of dividends and distributions		27			30			107			882
Shares redeemed		(8,671	)		(8,709	)		(36,346	)		(8,854	)
Net increase (decrease) in shares outstanding		8,787			(2,333	)		48,757			44,772
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C:(1)
Shares sold		12			2,063			6,943			2,193
Shares issued in reinvestments of dividends and distributions		2			5			6			37
Shares redeemed		(1,599	)		(4,784	)		—			—
Net increase (decrease) in shares outstanding		(1,585	)		(2,716	)		6,949			2,230

⁽¹⁾ Advisor Class A and Advisor Class C shares of the Global Fund commenced operations on May 19, 2008.

See Notes to the Financial Statements.

42

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statements of Changes in Net Assets

	The Paradigm Fund						The Medical Fund
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31, 2009			December 31, 2008			December 31, 2009			December 31, 2008
OPERATIONS:
Net investment income	$	9,664,271		$	14,464,539		$	234,571		$	187,354
Net realized gain (loss) on sale of investments, foreign currency and written option contracts expired or closed		(281,292,053	)		(630,047,922	)		(152,213	)		369,226
Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options		685,169,758			(1,574,418,489	)		4,225,736			(5,656,013	)
Net increase (decrease) in net assets resulting from operations		413,541,976			(2,190,001,872	)		4,308,094			(5,099,433	)
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS:
Net investment income		(6,864,283	)		—			(175,656	)		(160,902	)
Net realized gains		—			(4,119,453	)		(22,795	)		(379,210	)
Total distributions		(6,864,283	)		(4,119,453	)		(198,451	)		(540,112	)
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A:
Net investment income		(741,228	)		—			(28,347	)		(25,786	)
Net realized gains		—			(1,395,788	)		(4,778	)		(72,741	)
Total distributions		(741,228	)		(1,395,788	)		(33,125	)		(98,527	)
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C:
Net investment income		—			—			(618	)		(1,481	)
Net realized gains		—			(850,989	)		(507	)		(7,780	)
Total distributions		—			(850,989	)		(1,125	)		(9,261	)
DISTRIBUTIONS TO SHAREHOLDERS — INSTITUTIONAL CLASS:
Net investment income		(1,674,477	)		—			N/A			N/A
Net realized gains		—			(706,833	)		N/A			N/A
Total distributions		(1,674,477	)		(706,833	)		N/A			N/A
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS:
Proceeds from shares sold		228,538,793			777,766,342			8,877,756			12,391,571
Redemption fees		96,505			414,514			5,196			5,119
Proceeds from shares issued to holders in reinvestment of dividends		6,669,240			3,983,262			196,171			534,949
Cost of shares redeemed		(392,483,046	)		(1,675,903,934	)		(6,974,443	)		(6,247,291	)
Net increase (decrease) in net assets resulting from capital share transactions		(157,178,508	)		(893,739,816	)		2,104,680			6,684,348
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A:
Proceeds from shares sold		52,590,755			237,905,995			2,336,497			3,411,318
Redemption fees		—			85,557			1,395			5,045
Proceeds from shares issued to holders in reinvestment of dividends		642,068			1,172,121			18,350			67,566
Cost of shares redeemed		(123,719,278	)		(207,346,143	)		(1,638,705	)		(1,198,061	)
Net increase (decrease) in net assets resulting from capital share transactions		(70,486,455	)		31,817,530			717,537			2,285,868
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C:
Proceeds from shares sold		15,759,105			112,960,292			354,523			501,414
Redemption fees		532			14,030			4			336
Proceeds from shares issued to holders in reinvestment of dividends		—			763,533			689			5,511
Cost of shares redeemed		(44,568,229	)		(86,079,004	)		(307,788	)		(240,952	)
Net increase (decrease) in net assets resulting from capital share transactions		(28,808,592	)		27,658,851			47,428			266,309

See Notes to the Financial Statements.

43

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statements of Changes in Net Assets — (Continued)

	The Paradigm Fund						The Medical Fund
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31, 2009			December 31, 2008			December 31, 2009			December 31, 2008
CAPITAL SHARE TRANSACTIONS — INSTITUTIONAL CLASS :
Proceeds from shares sold		52,022,093			234,720,520			N/A			N/A
Redemption fees		2,858			27,867			N/A			N/A
Proceeds from shares issued to holders in reinvestment of dividends		1,564,877			624,496			N/A			N/A
Cost of shares redeemed		(95,494,884	)		(517,865,576	)		N/A			N/A
Net decrease in net assets resulting from capital share transactions		(41,905,056	)		(282,492,693	)		N/A			N/A
TOTAL INCREASE (DECREASE) IN NET ASSETS:		105,883,377			(3,313,831,063	)		6,945,038			3,489,192
NET ASSETS:
Beginning of year		1,266,450,508			4,580,281,571			18,981,944			15,492,752
End of year*	$	1,372,333,885		$	1,266,450,508		$	25,926,982		$	18,981,944
*Including undistributed net investment income of:	$	2,487,370		$	1,990,250		$	29,613		$	62
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS:
Shares sold		13,500,735			30,563,817			503,291			644,585
Shares issued in reinvestments of dividends and distributions		331,473			282,239			10,374			35,404
Shares redeemed		(24,319,939	)		(73,373,736	)		(421,096	)		(349,528	)
Net increase (decrease) in shares outstanding		(10,487,731	)		(42,527,680	)		92,569			330,461
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A:
Shares sold		3,318,616			9,802,715			140,646			199,403
Shares issued in reinvestments of dividends and distributions		32,395			84,490			993			4,568
Shares redeemed		(8,280,037	)		(10,100,248	)		(102,207	)		(80,265	)
Net increase (decrease) in shares outstanding		(4,929,026	)		(213,043	)		39,432			123,706
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C:
Shares sold		1,011,821			4,474,742			22,768			27,549
Shares issued in reinvestments of dividends and distributions		—			56,496			37			374
Shares redeemed		(2,955,060	)		(4,547,903	)		(19,133	)		(14,415	)
Net increase (decrease) in shares outstanding		(1,943,239	)		(16,665	)		3,672			13,508
CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS:
Shares sold		3,148,491			9,395,948			N/A			N/A
Shares issued in reinvestments of dividends and distributions		77,932			44,196			N/A			N/A
Shares redeemed		(5,875,213	)		(26,545,295	)		N/A			N/A
Net decrease in shares outstanding		(2,648,790	)		(17,105,151	)		N/A			N/A

See Notes to the Financial Statements.

44

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statements of Changes in Net Assets

							The Kinetics Government
	The Small Cap Opportunities Fund						Money Market Fund
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31, 2009			December 31, 2008			December 31, 2009			December 31, 2008
OPERATIONS:
Net investment income (loss)	$	(509,988	)	$	1,530,590		$	—		$	17,670
Net realized loss on sale of investments, foreign currency and written option contracts expired or closed		(45,656,563	)		(139,814,506	)		—			(83	)
Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options		143,852,458			(332,379,674	)		—			—
Net increase (decrease) in net assets resulting from operations		97,685,907			(470,663,590	)		—			17,587
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS:
Net investment income		—			—			—			(17,587	)
Net realized gains		—			(2,580,104	)		—			—
Total distributions		—			(2,580,104	)		—			(17,587	)
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A:
Net realized gains		—			(242,741	)		N/A			N/A
Total distributions		—			(242,741	)		N/A			N/A
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C:
Net realized gains		—			(57,484	)		N/A			N/A
Total distributions		—			(57,484	)		N/A			N/A
DISTRIBUTIONS TO SHAREHOLDERS — INSTITUTIONAL CLASS:
Net realized gains		—			(1,390,250	)		N/A			N/A
Total distributions		—			(1,390,250	)		N/A			N/A
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS:
Proceeds from shares sold		36,310,875			124,972,348			1,874,921			4,422,225
Redemption fees		8,109			67,878			—			—
Proceeds from shares issued to holders in reinvestment of dividends		—			2,547,716			—			15,599
Cost of shares redeemed		(64,086,132	)		(447,983,662	)		(2,911,485	)		(2,939,399	)
Net increase (decrease) in net assets resulting from capital share transactions		(27,767,148	)		(320,395,720	)		(1,036,564	)		1,498,425
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A:
Proceeds from shares sold		4,027,254			12,727,793			N/A			N/A
Redemption fees		472			4,012			N/A			N/A
Proceeds from shares issued to holders in reinvestment of dividends		—			216,516			N/A			N/A
Cost of shares redeemed		(7,399,034	)		(16,402,510	)		N/A			N/A
Net decrease in net assets resulting from capital share transactions		(3,371,308	)		(3,454,189	)		N/A			N/A

See Notes to the Financial Statements.

45

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statements of Changes in Net Assets — (Continued)

							The Kinetics Government
	The Small Cap Opportunities Fund						Money Market Fund
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31, 2009			December 31, 2008			December 31, 2009			December 31, 2008
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C:
Proceeds from shares sold		1,109,508			3,622,686			N/A			N/A
Redemption fees		101			59			N/A			N/A
Proceeds from shares issued to holders in reinvestment of dividends		—			28,520			N/A			N/A
Cost of shares redeemed		(1,004,506	)		(2,146,275	)		N/A			N/A
Net increase in net assets resulting from capital share transactions		105,103			1,504,990			N/A			N/A
CAPITAL SHARE TRANSACTIONS — INSTITUTIONAL CLASS:
Proceeds from shares sold		9,645,168			33,049,688			N/A			N/A
Redemption fees		269			1,510			N/A			N/A
Proceeds from shares issued to holders in reinvestment of dividends		—			1,357,045			N/A			N/A
Cost of shares redeemed		(86,994,949	)		(114,107,993	)		N/A			N/A
Net decrease in net assets resulting from capital share transactions		(77,349,512	)		(79,699,750	)		N/A			N/A
TOTAL INCREASE (DECREASE) IN NET ASSETS:		(10,696,958	)		(876,978,838	)		(1,036,564	)		1,498,425
NET ASSETS:
Beginning of year		210,340,210			1,087,319,048			2,687,941			1,189,516
End of year*	$	199,643,252		$	210,340,210		$	1,651,377		$	2,687,941
*Including undistributed net investment income (loss) of:	$	870,062		$	(387,918	)	$	—		$	83
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS:
Shares sold		2,125,038			4,796,386			1,874,921			4,422,225
Shares issued in reinvestments of dividends and distributions		—			196,884			—			15,599
Shares redeemed		(4,028,266	)		(18,197,054	)		(2,911,485	)		(2,939,399	)
Net increase (decrease) in shares outstanding		(1,903,228	)		(13,203,784	)		(1,036,564	)		1,498,425
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A:
Shares sold		229,236			530,590			N/A			N/A
Shares issued in reinvestments of dividends and distributions		—			16,941			N/A			N/A
Shares redeemed		(464,677	)		(768,900	)		N/A			N/A
Net decrease in shares outstanding		(235,441	)		(221,369	)		N/A			N/A
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C:
Shares sold		60,451			162,488			N/A			N/A
Shares issued in reinvestments of dividends and distributions		—			2,247			N/A			N/A
Shares redeemed		(63,523	)		(99,012	)		N/A			N/A
Net increase (decrease) in shares outstanding		(3,072	)		65,723			N/A			N/A
CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS:
Shares sold		659,244			1,421,164			N/A			N/A
Shares issued in reinvestments of dividends and distributions		—			104,710			N/A			N/A
Shares redeemed		(4,901,031	)		(6,261,434	)		N/A			N/A
Net decrease in shares outstanding		(4,241,787	)		(4,735,560	)		N/A			N/A

See Notes to the Financial Statements.

46

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statements of Changes in Net Assets

	The Market Opportunities Fund						The Water Infrastructure Fund
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31, 2009			December 31, 2008			December 31, 2009			December 31, 2008
OPERATIONS:
Net investment income (loss)	$	(62,027	)	$	726,380		$	46,129		$	187,272
Net realized loss on sale of investments, foreign currency and written option contracts expired or closed		(7,399,154	)		(26,771,823	)		(1,419,347	)		(5,802,786	)
Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options		30,077,593			(46,310,390	)		3,683,013			(3,337,404	)
Net increase (decrease) in net assets resulting from operations		22,616,412			(72,355,833	)		2,309,795			(8,952,918	)
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS:
Net investment income		(20,768	)		(285,733	)		(1,817	)		—
Total distributions		(20,768	)		(285,733	)		(1,817	)		—
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A:
Net investment income		(9,381	)		(62,736	)		—			—
Total distributions		(9,381	)		(62,736	)		—			—
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C:
Net investment income		(2,890	)		(8,853	)		—			—
Total distributions		(2,890	)		(8,853	)		—			—
DISTRIBUTIONS TO SHAREHOLDERS — INSTITUTIONAL CLASS:(1)
Net investment income		(10	)		(62	)		(7,282	)		—
Total distributions		(10	)		(62	)		(7,282	)		—
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS:
Proceeds from shares sold		7,876,163			44,566,651			3,525,885			27,335,651
Redemption fees		47,139			27,450			635			489
Proceeds from shares issued to holders in reinvestment of dividends		20,440			283,718			1,579			—
Cost of shares redeemed		(14,496,784	)		(32,158,187	)		(3,951,117	)		(16,642,255	)
Net increase (decrease) in net assets resulting from capital share transactions		(6,553,042	)		12,719,632			(423,018	)		10,693,885
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A:
Proceeds from shares sold		3,438,842			19,183,719			7,953,554			7,936,561
Redemption fees		8,744			7,471			997			2,093
Proceeds from shares issued to holders in reinvestment of dividends		7,753			51,974			—			—
Cost of shares redeemed		(10,299,115	)		(18,476,958	)		(6,109,558	)		(869,788	)
Net increase (decrease) in net assets resulting from capital share transactions		(6,843,776	)		766,206			1,844,993			7,068,866

⁽¹⁾Institutional Class shares of the Market Opportunities Fund commenced operations on May 19, 2008.

See Notes to the Financial Statements.

47

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statements of Changes in Net Assets — (Continued)

	The Market Opportunities Fund						The Water Infrastructure Fund
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31, 2009			December 31, 2008			December 31, 2009			December 31, 2008
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C:
Proceeds from shares sold		1,574,137			4,664,077			1,341,247			1,298,685
Redemption fees		7			186			101			—
Proceeds from shares issued to holders in reinvestment of dividends		2,366			7,291			—			—
Cost of shares redeemed		(2,210,676	)		(3,618,752	)		(542,169	)		(388,456	)
Net increase (decrease) in net assets resulting from capital share transactions		(634,166	)		1,052,802			799,179			910,229
CAPITAL SHARE TRANSACTIONS — INSTITUTIONAL CLASS:(1)
Proceeds from shares sold		10,807			10,000			2,665,048			329,302
Redemption fees		—			—			500			69
Proceeds from shares issued to holders in reinvestment of dividends		10			62			4,823			—
Cost of shares redeemed		—			—			(153,009	)		(116,019	)
Net increase in net assets resulting from capital share transactions		10,817			10,062			2,517,362			213,352
TOTAL INCREASE (DECREASE) IN NET ASSETS:		8,563,196			(58,164,515	)		7,039,212			9,933,414
NET ASSETS:
Beginning of year		57,536,372			115,700,887			16,081,137			6,147,723
End of year*	$	66,099,568		$	57,536,372		$	23,120,349		$	16,081,137
*Including undistributed net investment income (loss) of:	$	57,267		$	73,246		$	3,244		$	(27,093	)
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS:
Shares sold		840,758			3,752,788			439,147			2,786,011
Shares issued in reinvestments of dividends and distributions		1,569			40,416			177			—
Shares redeemed		(1,774,870	)		(2,962,139	)		(495,881	)		(2,153,711	)
Net increase (decrease) in shares outstanding		(932,543	)		831,065			(56,557	)		632,300
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A:
Shares sold		407,710			1,638,020			992,317			875,948
Shares issued in reinvestments of dividends and distributions		657			7,414			—			—
Shares redeemed		(1,235,063	)		(1,813,295	)		(828,509	)		(108,948	)
Net increase (decrease) in shares outstanding		(826,696	)		(167,861	)		163,808			767,000
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C:
Shares sold		177,257			445,382			169,781			141,741
Shares issued in reinvestments of dividends and distributions		211			1,047			—			—
Shares redeemed		(276,951	)		(329,688	)		(68,264	)		(51,559	)
Net increase (decrease) in shares outstanding		(99,483	)		116,741			101,517			90,182
CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS:(1)
Shares sold		1,019			729			311,808			36,839
Shares issued in reinvestments of dividends and distributions		1			9			540			—
Shares redeemed		—			—			(18,661	)		(14,073	)
Net increase in shares outstanding		1,020			738			293,687			22,766

⁽¹⁾Institutional Class shares of the Market Opportunities Fund commenced operations on May 19, 2008.

See Notes to the Financial Statements.

48

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statements of Changes in Net Assets

	The Multi-Disciplinary Portfolio
				From
	For the			February 11, 2008ˆ
	Year Ended			through
	December 31, 2009			December 31, 2008
OPERATIONS:
Net investment income (loss)	$	7,052		$	(358	)
Net realized gain (loss) on sale of investments and written option contracts expired or closed		99,097			(60,467	)
Net change in unrealized appreciation (depreciation) of investments and written options		99,028			(14,941	)
Net increase (decrease) in net assets resulting from operations		205,177			(75,766	)
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS:
Net investment income		(7,818	)		(48	)
Net realized gains		(14,757	)		—
Total distributions		(22,575	)		(48	)
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A:
Net investment income		(559	)		(27	)
Net realized gains		(1,623	)		—
Total distributions		(2,182	)		(27	)
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C:
Net investment income		(116	)		(5	)
Net realized gains		(1,672	)		—
Total distributions		(1,788	)		(5	)
DISTRIBUTIONS TO SHAREHOLDERS — INSTITUTIONAL CLASS:
Net investment income		(947	)		(48	)
Net realized gains		(1,587	)		—
Total distributions		(2,534	)		(48	)
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS:
Proceeds from shares sold		695,920			119,689
Redemption fees		—			—
Proceeds from shares issued to holders in reinvestment of dividends		20,528			44
Cost of shares redeemed		(3,410	)		(4	)
Net increase in net assets resulting from capital share transactions		713,038			119,729
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A:
Proceeds from shares sold		—			102,357
Redemption fees		—			—
Proceeds from shares issued to holders in reinvestment of dividends		2,182			27
Cost of shares redeemed		—			—
Net increase in net assets resulting from capital share transactions		2,182			102,384

ˆ  Commencement of operations.

See Notes to the Financial Statements.

49

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statements of Changes in Net Assets — (Continued)

	The Multi-Disciplinary Portfolio
				From
	For the			February 11, 2008ˆ
	Year Ended			through
	December 31, 2009			December 31, 2008
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C:
Proceeds from shares sold		5,000			107,839
Redemption fees		—			—
Proceeds from shares issued to holders in reinvestment of dividends		1,696			5
Cost of shares redeemed		(7,169	)		—
Net increase (decrease) in net assets resulting from capital share transactions		(473	)		107,844
CAPITAL SHARE TRANSACTIONS — INSTITUTIONAL CLASS:
Proceeds from shares sold		—			100,000
Redemption fees		—			—
Proceeds from shares issued to holders in reinvestment of dividends		2,534			48
Cost of shares redeemed		—			—
Net increase in net assets resulting from capital share transactions		2,534			100,048
TOTAL INCREASE IN NET ASSETS:		893,379			354,111
NET ASSETS:
Beginning of year		354,111			—
End of year*	$	1,247,490		$	354,111
*Including undistributed net investment income of:	$	705		$	—
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS:
Shares sold		81,319			12,091
Shares issued in reinvestments of dividends and distributions		2,082			5
Shares redeemed		(380	)		—
Net increase in shares outstanding		83,021			12,096
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A:
Shares sold		—			10,231
Shares issued in reinvestments of dividends and distributions		222			3
Shares redeemed		—			—
Net increase in shares outstanding		222			10,234
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C:
Shares sold		538			10,828
Shares issued in reinvestments of dividends and distributions		173			1
Shares redeemed		(829	)		—
Net increase (decrease) in shares outstanding		(118	)		10,829
CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS:
Shares sold		—			10,000
Shares issued in reinvestments of dividends and distributions		256			6
Shares redeemed		—			—
Net increase in shares outstanding		256			10,006

ˆ  Commencement of operations.

See Notes to the Financial Statements.

50

KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS

Notes to Financial Statements

December 31, 2009

1.  Organization

Kinetics Mutual Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), and is incorporated in the State of Maryland. The Company is an open-end management investment company issuing its shares in series. One billion shares are authorized for the Company with a par value of $0.001 per share. The series of the Company presently authorized are The Internet Fund (“Internet”), The Global Fund (“Global”), The Paradigm Fund (“Paradigm”), The Medical Fund (“Medical”), The Small Cap Opportunities Fund (“Small Cap”), The Kinetics Government Money Market Fund (“Government”), The Market Opportunities Fund (“Market Opportunities”), The Water Infrastructure Fund (“Water Infrastructure”) and The Multi-Disciplinary Fund (“Multi-Disciplinary”). Investment operations of the Company began on October 21, 1996 (Internet), September 30, 1999 (Medical), December 31, 1999 (Global and Paradigm), February 3, 2000 (Government), March 20, 2000 (Small Cap), January 31, 2006 (Market Opportunities), June 29, 2007 (Water Infrastructure) and February 11, 2008 (Multi-Disciplinary). Each series, unlike many other investment companies which directly acquire and manage their own portfolios of securities, seeks to achieve its investment objective by investing all of its investable assets in a corresponding portfolio series (each a “Master Portfolio” and collectively the “Master Portfolios”) of Kinetics Portfolios Trust (the “Trust”).

On April 28, 2000 (January 31, 2006 with respect to Market Opportunities, June 29, 2007 with respect to Water Infrastructure and February 11, 2008 with respect to Multi-Disciplinary), each series in the Company entered into a master-feeder fund structure. By entering into this structure, each series (each a “Feeder Fund” and collectively, the “Feeder Funds”) invested all of its assets in a corresponding Master Portfolio which had the same investment objective as the Feeder Fund. Each Master Portfolio has multiple feeder funds. Each Feeder Fund receives a proportionate amount of interest in the Master Portfolio equal to its relative contribution of capital. Thus, each Feeder Fund is allocated its portion of income, gains (losses) and expenses from the Master Portfolio.

51

KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS

Notes to Financial Statements — (Continued)

December 31, 2009

Each Feeder Fund’s respective interest in the corresponding Master Portfolio as of December 31, 2009 is as follows:

	Interest in
	Master Portfolio
Internet Fund		99.991%
Global Fund		99.895%
Paradigm Fund		97.716%
Medical Fund		99.944%
Small Cap Fund		99.988%
Government Fund		98.354%
Market Opportunities Fund		99.984%
Water Infrastructure Fund		99.619%
Multi-Disciplinary Fund		92.769%

Prior to the conversion to a master-feeder fund structure on April 28, 2000, each then existing series conducted its own investment operations.

As of December 31, 2009, each of the Feeder Funds, except the Government Fund, offer Advisor Class A shares. Advisor Class A shares are subject to an annual Rule 12b-1 fee of 0.25% of average daily net assets and a service fee of 0.25% of average daily net assets. The Advisor Class A shares are also subject to a front-end sales charge of 5.75%.

As of December 31, 2009, each of the Feeder Funds, except the Government Fund, offer Advisor Class C shares. Advisor Class C shares are subject to an annual Rule 12b-1 fee of 0.75% of average daily net assets and a service fee of 0.25% of average daily net assets. Advisor Class C shares do not have a sales charge.

As of December 31, 2009, each of the Feeder Funds offer No Load Class shares. No Load Class shares are subject to a service fee of 0.25% of average daily net assets but do not have 12b-1 fees or a sales charge.

As of December 31, 2009, the Paradigm, Small Cap, Market Opportunities, Water Infrastructure and Multi-Disciplinary Funds offer Institutional Class shares. Institutional Class shares are subject to a service fee of 0.20% of average daily net assets but do not have 12b-1 fees or a sales charge.

Each class of shares for each Fund has identical rights and privileges except with respect to the Rule 12b-1 fees paid by the Advisor Class A and Advisor Class C shares, the sales charge on the Advisor Class A shares, the service fees paid by the Advisor Class A, Advisor Class C, No Load Class and Institutional Class shares, voting rights on matters pertaining to a single class of shares and the exchange privileges of each class of shares. Shares of each Feeder Fund,

52

KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS

Notes to Financial Statements — (Continued)

December 31, 2009

except the Government Fund, will assess a 2.00% redemption fee (with exceptions) on shares redeemed or exchanged within 30 days of purchase. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class based on its relative net assets.

Refer to the Master Portfolio’s financial statements to obtain information about the investment objective of the corresponding Feeder Fund. The financial statements of the Master Portfolios, including the portfolios of investments are contained elsewhere in this report and should be read in conjunction with the Feeder Funds’ financial statements.

2.  Significant Accounting Policies

Security Valuation

Master Portfolio securities (other than securities held by the Kinetics Government Money Market Portfolio) that are listed on a U.S. securities exchange for which market quotations are readily available are valued at the last quoted sale price on the day the valuation is made. Price information on listed securities is taken from the exchange where the security is primarily traded. All equity securities that are traded using the National Association of Securities Dealers’ Automated Quotation System (“NASDAQ”) are valued using the NASDAQ Official Closing Price (“NOCP”). Foreign securities are valued by an independent pricing service. In the event market quotations are not readily available or if events occur that may materially affect the value of a particular security between the time trading ends on a particular security and the close of regular trading on the New York Stock Exchange (“NYSE”), “fair value” will be determined. Purchased non-exchange traded options, futures, unlisted U.S. securities and listed U.S. securities not traded on the valuation date for which market quotations are readily available are valued at the mean of the most recent bid and asked prices. Exchange traded options are valued at the last reported sale price on an exchange on which the option is traded. If no sales are reported on a particular day, the mean between the highest bid and the lowest asked quotations at the close of the exchanges will be used. Fixed-income securities (other than obligations having a maturity of 60 days or less) are normally valued on the basis of quotes obtained from pricing services, which take into account appropriate factors such as institutional-sized trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data.

53

KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS

Notes to Financial Statements — (Continued)

December 31, 2009

Investment securities in The Kinetics Government Money Market Portfolio and instruments with remaining maturities of 60 days or less are valued at amortized cost, which approximates fair value. Other assets and securities for which no quotations are readily available (including restricted securities) are valued in good faith at fair value using methods determined by the Board of Trustees of the Master Portfolios. At December 31, 2009, 0.00%, 0.19% and 0.00% of the net assets of the Internet Portfolio, Paradigm Portfolio, and Small Cap Portfolio, respectively, were fair valued securities.

Repurchase Agreements

Each Master Portfolio may enter into repurchase agreements with banks that are members of the Federal Reserve System or securities dealers who are members of a national securities exchange or are primary dealers in U.S. Government Securities. In connection with transactions in repurchase agreements, it is the Trust’s policy that the Master Portfolio receive, as collateral, securities whose market value, including accrued interest, at all times will be at least equal to 100% of the amount invested by the Master Portfolio in each repurchase agreement. If the seller defaults, and the value of the collateral declines, realization of the collateral by the Master Portfolio may be delayed or limited.

Written Option Accounting

The Master Portfolios may write (sell) call or put options for trading or hedging purposes. When a Master Portfolio writes an option, an amount equal to the premium received by the Master Portfolio is included in the Statement of Assets and Liabilities as an asset and an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current value of the option written. By writing the option, the Master Portfolio may become obligated during the term of the option to deliver or purchase the securities underlying the option at the exercise price if the option is exercised. When an option expires on its stipulated expiration date or the Master Portfolio enters into a closing purchase transaction, the Master Portfolio realizes a gain or loss if the cost of the closing transaction differs from the premium received when the option was sold, without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is eliminated. When an option is exercised, the premium originally received decreases the cost basis of the underlying security (or increases the proceeds on the security sold short) and the Master Portfolio realizes a gain or loss from the sale of the security (or closing of the short sale). As collateral for uncovered written options, the Master Portfolio is required under the 1940 Act to maintain assets

54

KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS

Notes to Financial Statements — (Continued)

December 31, 2009

consisting of cash, cash equivalents or liquid securities. This collateral is required to be adjusted daily to reflect the exercise price of the purchase obligation for put options or the market value of the instrument underlying the contract for call options.

Foreign Currency Translations

The books and records of the Master Portfolios are maintained in U.S. dollars. For the Master Portfolios, foreign currency transactions are translated into U.S. dollars on the following basis: (i) market values of investment securities and other assets and liabilities are translated at the exchange rate of such currencies against the U.S. dollar, as provided by an approved pricing service, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. The Master Portfolios do not isolate and treat as ordinary income that portion of the results of operations arising as a result of changes in the exchange rate from the fluctuations arising from changes in the market prices of securities held during the period. However, for federal income tax purposes, the Master Portfolios do isolate and treat as ordinary income the effect of changes in foreign exchange rates arising from actual foreign currency transactions and the effect of changes in foreign exchange rates arising between trade date and settlement date.

Restricted and Illiquid Securities

The Master Portfolios may invest in restricted securities. These securities are valued by the Master Portfolios after giving due consideration to pertinent factors including recent private sales, market conditions and the issuer’s financial performance. The Master Portfolios have no right to require registration of unregistered securities. At December 31, 2009 none of the Master Portfolios held restricted securities. An illiquid asset is any asset which may not be sold or disposed of in the ordinary course of business within seven days at approximately the value at which the Master Portfolio has valued the investment. At December 31, 2009, the following Master Portfolios held illiquid securities:

	Market		Percentage of
	Value		Net Assets
The Internet Portfolio	$	0		0.00	%
The Paradigm Portfolio		2,620,751		0.19
The Small Cap Opportunities Portfolio		0		0.00

55

KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS

Notes to Financial Statements — (Continued)

December 31, 2009

When-Issued Securities

The Master Portfolios may purchase securities on a when-issued or delayed delivery basis. Although the purchase amounts of these securities are established at the time the purchaser enters into the agreement, these securities may be delivered and paid for at a future date. The Master Portfolios record purchases of when-issued securities and reflect the values of such securities in determining net asset value in the same manner as other portfolio securities. The Master Portfolios maintain at all times cash or other liquid assets in an amount at least equal to the amount of outstanding commitments for when-issued securities.

Securities Lending

Each Master Portfolio may lend its portfolio securities to broker-dealers by entering directly into lending arrangements with such broker-dealers or indirectly through repurchase agreements with respect to no more than 331/3% of the total assets of each Portfolio (including any collateral posted) or 50% of the total assets of each Portfolio (excluding any collateral posted). Securities lending and repurchase transactions will be fully collateralized at all times with cash and/or short-term debt obligations. The Master Portfolios receive interest on the collateral received as well as a fee for the securities loaned.

Expense Allocation

Common expenses incurred by Feeder Funds are allocated among the Feeder Funds (i) based upon relative average net assets, (ii) as incurred on a specific identification basis, or (iii) equally among the Feeder Funds, depending on the nature of the expenditure.

Each Feeder Fund records its proportionate share of the corresponding Master Portfolio’s expenses on a daily basis. In addition, each Feeder Fund accrues its own separate expenses. Any cap on expenses includes Feeder Fund-specific expenses as well as the expenses allocated from the Master Portfolio.

Federal Income Taxes

Each Master Portfolio will be treated as a partnership for federal income tax purposes. As such, each investor in the Portfolio will be subject to taxation on its share of the Portfolio’s ordinary income and capital gains. It is intended that the Portfolio’s assets will be managed so an investor in the Portfolio can satisfy the requirements of subchapter M of the Internal Revenue Code.

It is the Feeder Funds’ policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and the Feeder Funds intend to distribute investment company net taxable income and net capital

56

KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS

Notes to Financial Statements — (Continued)

December 31, 2009

gains to shareholders. Therefore, no federal income tax provision is recorded. Dividends from net investment income and distributions of net realized capital gains, if any, will be declared and paid at least annually. The character of distributions made during the year from net investment income or net realized gains may differ from the characterization for federal income tax purposes due to differences in the recognition of income, expenses and gain items for financial statement and tax purposes. Additionally, the Feeder Funds may utilize earnings and profits distributed to shareholders on redemption of shares as part of the dividends paid deduction for income tax purposes. Where appropriate, reclassifications between capital accounts are made for such differences that are permanent in nature.

There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken in future tax returns. As of December 31, 2009, open tax years include the tax years ended December 31, 2006 through 2009. The Funds are also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ from those estimates.

Other

Realized gains and losses on the sale of investments are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date and interest income is recognized on the accrual basis. Other noncash dividends are recognized as investment income at the fair value of the property received. Withholding taxes on foreign dividends have been provided for in accordance with the Company’s understanding of the applicable country’s tax rules and rates.

3.  Investment Adviser

The Trust has entered into Investment Advisory Agreements (the “Agreements”) with Kinetics Asset Management, Inc. (the “Adviser”), with whom certain officers and trustees of the Trust are affiliated, to furnish investment advisory services to the Master Portfolios. Under the terms of the Agreements, the Master Portfolios compensate the Adviser for its management services at the

57

KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS

Notes to Financial Statements — (Continued)

December 31, 2009

annual rate of 1.25% of each Master Portfolio’s average daily net assets, except for The Kinetics Government Money Market Portfolio, which compensates the Adviser at an annual rate of 0.50% of the Master Portfolio’s average daily net assets. The Sub-Adviser to the Water Infrastructure Portfolio, Brennan Investment Partners, LLC, receives its compensation from the Adviser at the annual rate of 0.35% of the daily net assets of the Water Infrastructure Portfolio.

The Adviser has voluntarily agreed to waive a portion of its advisory fee and/or reimburse certain operating expenses as deemed appropriate. The Adviser may discontinue the voluntary waiver/reimbursement at any time; these waivers/reimbursements are not subject to recapture.

For the year ended December 31, 2009, the rate earned by the Adviser from the Master Portfolios and the waived fees/reimbursed expenses for the Feeder Funds are as follows:

	Internet		Global
Annual Advisory Rate		1.25%		1.25%
Expenses Reimbursed by Adviser through voluntary waiver	$	75,887	$	130,914
Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver	$	—	$	—
	Paradigm		Medical
Annual Advisory Rate		1.25%		1.25%
Expenses Reimbursed by Adviser through voluntary waiver	$	1,154,490	$	158,994
Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver	$	184,295	$	—
	Small Cap		Government
Annual Advisory Rate		1.25%		0.50%
Expenses Reimbursed by Adviser through voluntary waiver	$	454,896	$	63,410
Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver	$	79,938	$	—
	Market		Water
	Opportunities		Infrastructure
Annual Advisory Rate		1.25%		1.25%
Expenses Reimbursed by Adviser through voluntary waiver	$	169,602	$	123,364
Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver	$	10	$	1,091

58

KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS

Notes to Financial Statements — (Continued)

December 31, 2009

	Multi-
	Disciplinary
Annual Advisory Rate		1.25%
Expenses Reimbursed by Adviser through voluntary waiver	$	97,718
Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver	$	134

The Adviser receives a shareholder servicing fee from the No Load Class, Class A and Class C shares of a Feeder Fund pursuant to a Shareholder Servicing Agreement in the amount equal to 0.25% of the Feeder Fund’s average daily net assets attributable to No Load Class, Class A and Class C shares, respectively. For the Institutional Class, the Adviser receives a shareholder servicing fee pursuant to a shareholder servicing agreement in the amount equal to 0.20% of a Feeder Fund’s average daily net assets attributable to Institutional Class shares. At this time, the Investment Adviser has contractually agreed to waive and/or reimburse the portion of the Institutional Class shareholder servicing fee in excess of 0.05% of a Feeder Fund’s average daily net assets attributable to Institutional Class shares until at least May 1, 2010. For the year ended December 31, 2009, the Adviser waived amounts depicted in the above table in shareholder servicing fees for the Institutional Class of the Paradigm Fund, the Small Cap Fund, the Market Opportunities Fund, the Water Infrastructure Fund and the Multi-Disciplinary Fund. The Adviser is responsible for paying a portion of these shareholder servicing fees to various agents that have a written shareholder servicing agreement with the Adviser and that perform shareholder servicing functions and maintenance of shareholder accounts on behalf of their clients who own shares of the Feeder Funds.

For the year ended December 31, 2009, the Feeder Funds were allocated $24,000 for the services of the Chief Compliance Officer employed by the Adviser.

The Company, on behalf of the Feeder Funds, has adopted two Retail Distribution Plans pursuant to Rule 12b-1 under the 1940 Act (the “12b-1 Plans”). One Plan is for Advisor Class A shares, while the other Plan is for Advisor Class C shares. Under the first Plan, Advisor Class A shares may pay up to an annual rate of 0.50% of the average daily net asset value of Advisor Class A shares to the Distributor or other qualified recipients under the Plan. During the year ended December 31, 2009, payments under the 12b-1 Plan for the Advisor Class A shares of the Internet, Global, Paradigm, Medical, Small Cap, Market Opportunities, Water and Multi-Disciplinary Funds were limited to 0.25% of

59

KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS

Notes to Financial Statements — (Continued)

December 31, 2009

the average daily net asset value of such shares of such Funds. During the year ended December 31, 2009, the Advisor Class A shares of the Internet, Global, Paradigm, Medical, Small Cap, Market Opportunities, Water Infrastructure and Multi-Disciplinary Funds incurred expenses of $1,133, $390, $594,084, $8,481, $31,360, $45,935, $18,690 and $228 respectively, pursuant to the 12b-1 Plan. Under the second Plan, Advisor Class C shares pay an annual rate of 0.75% of the average daily net asset value of such shares. During the year ended December 31, 2009, Internet, Global, Paradigm, Medical, Small Cap, Market Opportunities, Water Infrastructure and Multi-Disciplinary Funds Advisor Class C Shares incurred expenses of $780, $142, $1,148,858, $3,291, $25,397, $39,077, $15,970, and $698 respectively, pursuant to the 12b-1 Plan.

Kinetics Funds Distributor, Inc. (the “Distributor”) acts as the Feeder Funds’ principal underwriter in a continuous public offering of the Feeder Funds’ shares. The Distributor is an affiliate of the Adviser. For the year ended December 31, 2009, the Distributor received $882, $1,603, $51,627, $5,642, $6,227, $6,941, $12,905, and $0 from sales loads from the Internet, Global, Paradigm, Medical, Small Cap, Market Opportunities, Water Infrastructure, and Multi-Disciplinary Funds.

4.  Reclassification of Capital Accounts

Accounting principles generally accepted in the United States of America require that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the year ended

60

KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS

Notes to Financial Statements — (Continued)

December 31, 2009

December 31, 2009, each Fund recorded the following reclassifications to the accounts listed below:

	INCREASE (DECREASE)
				Accumulated
				Net			Accumulated
				Investment			Net Realized
	Paid-in-Capital			Income(Loss)			Loss
The Internet Fund	$	(13,902,578	)	$	203,376		$	13,699,202
The Global Fund		(5,481,052	)		(8,780	)		5,489,832
The Paradigm Fund		140,643			112,837			(253,480	)
The Medical Fund		—			(399	)		399
The Small Cap Opportunities Fund		(1,576,792	)		1,767,968			(191,176	)
The Kinetics Government Money Market Fund		83			—			(83	)
The Market Opportunities Fund		(192,923	)		79,097			113,826
The Water Infrastructure Fund		1			(6,693	)		6,692
The Multi-Disciplinary Fund		(1	)		3,093			(3,092	)

5.  Income Taxes

At December 31, 2009 the Internet, Global, Paradigm, Medical, Small Cap, Government, Market Opportunities, Water Infrastructure, and Multi-Disciplinary Funds had $0, $4,817, $13,952,984, $29,613, $2,944,401, $0, $0, $3,244 and $18,872, respectively, of undistributed net investment income on a tax basis.

At December 31, 2009 none of the Funds had accumulated gains on a tax basis.

At December 31, 2009, the Feeder Funds had accumulated net realized capital loss carryforwards expiring in the following years:

Feeder Fund	2017		2016		2015		2014		2013		2011		2010
Internet	$	—	$	—	$	—	$	16,077,777	$	6,777,871	$	—	$	140,178,775
Global		408,711		—		—		—		4,885		887,154		2,635,504
Paradigm		445,866,806		417,659,386		—		—		—		—		—
Medical		116,113		—		—		—		—		—		—
Small Cap		96,486,615		78,193,634		—		—		—		—		—
Government		67		16		—		—		—		—		—
Market Opportunities		6,623,055		25,221,869		40,803		21		—		—		—
Water Infrastructure		4,868,599		2,088,692		—		—		—		—		—
Multi-Disciplinary		—		—		—		—		—		—		—

To the extent that the Feeder Funds realize future net capital gains, those gains will be offset by any unused capital loss carryforwards. For the year ended December 31, 2009, Internet and Multi-Disciplinary Funds utilized $3,592,586 and $43,829, respectively, of capital loss carryforwards.

61

KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS

Notes to Financial Statements — (Continued)

December 31, 2009

At December 31, 2009, the following Feeder Funds deferred, on a tax basis, post-October losses and straddle losses of:

			Post-October
Feeder Fund	Post-October Losses		Currency Losses		Straddle Losses
Internet	$	—	$	528	$	—
Global		664		509		—
Paradigm		1,684,598		323,210		—
Medical		187,224		—		—
Small Cap		692,392		10,340		—
Government		—		—		—
Market Opportunities		735,020		1,887		—
Water Infrastructure		—		—		—
Multi-Disciplinary		—		—		—

The tax components of dividends paid during the years ended December 31, 2009 and December 31, 2008, are:

	Internet				Global
	Ordinary		Long-Term		Ordinary		Long-Term
	Income		Capital Gains		Income		Capital Gains
	Distribution		Distribution		Distribution		Distribution
2009	$	128,367	$	—	$	20,989	$	—
2008	$	181,761	$	—	$	44,451	$	—

	Paradigm				Medical
	Ordinary		Long-Term		Ordinary		Long-Term
	Income		Capital Gains		Income		Capital Gains
	Distribution		Distribution		Distribution		Distribution
2009	$	9,279,988	$	—	$	232,701	$	—
2008	$	—	$	7,073,063	$	463,919	$	183,981

	Small Cap				Government
	Ordinary		Long-Term		Ordinary		Long-Term
	Income		Capital Gains		Income		Capital Gains
	Distribution		Distribution		Distribution		Distribution
2009	$	—	$	—	$	—	$	—
2008	$	—	$	4,270,579	$	17,587	$	—

	Market Opportunities				Water Infrastructure
	Ordinary		Long-Term		Ordinary		Long-Term
	Income		Capital Gains		Income		Capital Gains
	Distribution		Distribution		Distribution		Distribution
2009	$	33,049	$	—	$	9,099	$	—
2008	$	357,384	$	—	$	—	$	—

62

KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS

Notes to Financial Statements — (Continued)

December 31, 2009

	Multi-Disciplinary
	Ordinary		Long-Term
	Income		Capital Gains
	Distribution		Distribution
2009	$	29,079	$	—
2008	$	128	$	—

6.  Subsequent Events

In preparing these financial statements, management has evaluated Fund related events and transactions for potential recognition or disclosure through February 26, 2010, the date the financial statements were issued. There were no events or translations that occurred during the period that materially impacted the amounts or disclosures in the Funds’ financial statements.

7.  Tax Information (Unaudited)

The Internet, Global, Paradigm, Medical, Market Opportunities, and Water Infrastructure Funds designate 100%, 100%, 100%, 97%, 100%, and 100%, respectively, of dividends declared after December 31, 2009 from net investment income as qualified dividend income under the Jobs and Growth Tax Relief Reconciliation Act of 2003.

The Internet, Global, Paradigm, Medical, Market Opportunities, Water Infrastructure and Multi-Disciplinary Funds hereby designate 100%, 100%, 100%, 100%, 100%, 100%, and 100% respectively, as ordinary income distributions and 0% for all of the funds as long-term capital gain distributions for the purposes of the dividends paid deduction, which include earnings and profits distributed to shareholders on redemptions of Fund shares.

For corporate shareholders in the Funds, the percentage of ordinary dividend income distributed for the year ended December 31, 2009, which is designated as qualifying for the dividends-received deduction, is as follows: Internet 100%, Global 7%, Paradigm 65%, Medical 95%, Market Opportunities 100%, and Water Infrastructure 100%.

The Internet, Paradigm, Medical, Market Opportunities, Water Infrastructure, and Multi-Disciplinary Funds designate 9%, 13%, 1%, 10%, 1% and 17%, respectively, of their ordinary income distributions for the fiscal year as interest-related dividends under Internal Revenue Code Section 871(k)(l)(C).

63

KINETICS MUTUAL FUNDS, INC.—FEEDER FUNDS

Notes to Financial Statements — (Continued)

December 31, 2009

The Medical and Multi-Disciplinary Funds designate 12 and 68%, respectively, of their ordinary income distributions as short-term capital gain distributions under Internal Revenue Code Section 871(k)(2)(C).

8.  Information about Proxy Voting (Unaudited)

Information regarding how Kinetics Mutual Funds, Inc. votes proxies relating to portfolio securities is available without charge, upon request by calling toll-free at 1-800-930-3828 or by accessing the Funds’ website at www.kineticsfunds.com and by accessing the SEC’s website at www.sec.gov. Information regarding how the Funds voted proxies relating to portfolio securities during the most recent twelve month period ended June 30, is available without charge, upon request, by calling toll-free at 1-800-930-3828 or by accessing the SEC’s website at www.sec.gov.

9.  Information about the Portfolio Holdings (Unaudited)

The Funds file their complete schedule of portfolio holdings for their first and third fiscal quarters with the SEC on Form N-Q. The Funds’ Form N-Q is available without charge, upon request, by calling toll-free at 1-800-930-3828. Furthermore, you can obtain the Form N-Q on the SEC’s website at www.sec.gov. Finally, the Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

64

(This page intentionally left blank)

65

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Financial Highlights

	The Internet Fund
	No Load Class			Advisor Class A			Advisor Class C			No Load Class			Advisor Class A
	For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2009			2009			2009			2008			2008
PER SHARE DATA:(1)
Net Asset Value
Beginning of Year	$	20.71		$	20.50		$	20.20		$	35.94		$	35.66
Income from Investment Operations:
Net investment income (loss)(2)		(0.14	)		(0.21	)		(0.31	)		0.29			0.22
Net realized and unrealized gain (loss) on investments		10.21			10.09			9.91			(15.47	)		(15.33	)
Total from investment operations		10.07			9.88			9.60			(15.18	)		(15.11	)
Redemption Fees		0.00	(3)		0.01			—			0.00	(3)		0.00	(3)
Less Distributions:
From net investment income		(0.04	)		(0.04	)		(0.04	)		(0.05	)		(0.05	)
From net realized gains		—			—			—			—			—
Total distributions		(0.04	)		(0.04	)		(0.04	)		(0.05	)		(0.05	)
Net Asset Value, End of Year	$	30.74		$	30.35		$	29.76		$	20.71		$	20.50
Total Return(4)		48.61	%		48.23	%		47.51	%		(42.24	)%		(42.37	)%
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of Year (000’s)	$	104,666		$	738		$	120		$	75,112		$	318
Ratio of operating expenses to average net assets:
Before expense reimbursement		1.98	%		2.23	%		2.73	%		2.03	%		2.28	%
After expense reimbursement(7)		1.89	%		2.14	%		2.64	%		1.90	%		2.15	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(0.64	)%		(0.89	)%		(1.39	)%		0.90	%		0.65	%
After expense reimbursement(7)		(0.55	)%		(0.80	)%		(1.30	)%		1.03	%		0.78	%
Portfolio turnover rate		N/A			N/A			N/A			N/A			N/A

ˆ  Commencement of operations.

(1)	Information presented relates to a share of capital stock outstanding for each period.
(2)	Net investment income per share represents net investment income divided by the average shares outstanding throughout the period.
(3)	Amount calculated is less than $0.005.
(4)	The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares.
(5)	Not annualized.
(6)	Annualized.
(7)	See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion.

See Notes to the Financial Statements.

66

The Internet Fund
	Advisor Class C			No Load Class			Advisor Class A			Advisor Class C			No Load Class			Advisor Class A			No Load Class			Advisor Class A
	For the			For the			For the			February 16, 2007ˆ			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			through			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2008			2007			2007			2007			2006			2006			2005			2005
	$	35.31		$	28.62		$	28.24		$	28.66		$	24.66		$	24.40		$	25.29		$	24.93
		0.08			0.30			0.23			0.07			(0.08	)		(0.14	)		0.11			0.05
		(15.15	)		7.37			7.49			6.87			4.15			4.09			(0.54	)		(0.44	)
		(15.07	)		7.67			7.72			6.94			4.07			3.95			(0.43	)		(0.39	)
		—			0.00	(3)		—			0.00	(3)		0.00	(3)		—			0.00	(3)		0.00	(3)
		(0.04	)		(0.35	)		(0.30	)		(0.29	)		(0.11	)		(0.11	)		(0.20	)		(0.14	)
		—			—			—			—			—			—			—			—
		(0.04	)		(0.35	)		(0.30	)		(0.29	)		(0.11	)		(0.11	)		(0.20	)		(0.14	)
	$	20.20		$	35.94		$	35.66		$	35.31		$	28.62		$	28.24		$	24.66		$	24.40
		(42.67	)%		26.81	%		27.35	%		24.22	%(5)		16.50	%		16.18	%		(1.69	)%		(1.55	)%
	$	113		$	166,787		$	637		$	294		$	137,012		$	235		$	148,260		$	300
		2.78	%		1.99	%		2.24	%		2.73	%(6)		1.98	%		2.23	%		2.35	%		2.60	%
		2.65	%		1.98	%		2.23	%		2.72	%(6)		1.85	%		2.10	%		2.35	%		2.60	%
		0.15	%		0.94	%		0.70	%		0.22	%(6)		(0.42	)%		(0.67	)%		0.46	%		0.21	%
		0.28	%		0.95	%		0.71	%		0.23	%(6)		(0.29	)%		(0.54	)%		0.46	%		0.21	%
		N/A			N/A			N/A			N/A			N/A			N/A			N/A			N/A

See Notes to the Financial Statements.

67

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Financial Highlights

	The Global Fund
	No Load Class			Advisor Class A			Advisor Class C			No Load Class
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2009			2009			2009			2008
PER SHARE DATA:(1)
Net Asset Value,
Beginning of Year	$	2.36		$	2.36		$	2.37		$	4.90
Income from Investment Operations:
Net investment income (loss)		0.02	(2)		0.01	(2)		(0.00	)(2)(3)		0.07	(2)
Net realized and unrealized gain (loss) on investments		1.55			1.57			1.53			(2.56	)
Total from investment operations		1.57			1.58			1.53			(2.49	)
Redemption Fees		0.01			—			—			0.00	(3)
Less Distributions:
From net investment income		(0.02	)		(0.01	)		(0.00	)(3)		(0.05	)
From net realized gains		—			—			—			—
Total distributions		(0.02	)		(0.01	)		(0.00	)(3)		(0.05	)
Net Asset Value, End of Year	$	3.92		$	3.93		$	3.90		$	2.36
Total Return(4)		66.86	%		67.11	%		65.08	%		(50.72	)%
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of year (000’s)	$	4,370		$	368		$	36		$	1,863
Ratio of operating expenses to average net assets:
Before expense reimbursement		5.32	%		5.57	%		6.07	%		5.98	%
After expense reimbursement(7)		1.39	%		1.64	%		2.14	%		1.41	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(3.27	)%		(3.52	)%		(4.02	)%		(2.72	)%
After expense reimbursement(7)		0.66	%		0.41	%		(0.09	)%		1.85	%
Portfolio turnover rate		N/A			N/A			N/A			N/A

ˆ  Commencement of operations.

(1)	Information presented relates to a share of capital stock outstanding for each period.
(2)	Net investment income per share represents net investment income divided by the average shares outstanding throughout the period.
(3)	Amount calculated is less than $0.005.
(4)	The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares.
(5)	Not annualized.
(6)	Annualized.
(7)	See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion.

See Notes to the Financial Statements.

68

The Global Fund
Advisor Class A			Advisor Class C			No Load Class			No Load Class			No Load Class
May 19, 2008ˆ			May 19, 2008ˆ			For the			For the			For the
through			through			Year Ended			Year Ended			Year Ended
December 31,			December 31,			December 31,			December 31,			December 31,
2008			2008			2007			2006			2005
$	4.56		$	4.56		$	5.00		$	4.43		$	4.50
	0.03	(2)		0.02	(2)		0.22			0.13			0.15
	(2.18	)		(2.17	)		(0.01	)		0.62			(0.03	)
	(2.15	)		(2.15	)		0.21			0.75			0.12
	—			—			0.00	(3)		0.00	(3)		0.00	(3)
	(0.05	)		(0.04	)		(0.31	)		(0.18	)		(0.19	)
	—			—			—			—			—
	(0.05	)		(0.04	)		(0.31	)		(0.18	)		(0.19	)
$	2.36		$	2.37		$	4.90		$	5.00		$	4.43
	(47.12	)%(5)		(47.14	)%(5)		4.27	%		16.90	%		2.65	%
$	106		$	5		$	3,138		$	3,991		$	3,896
	8.28	%(6)		8.78	%(6)		3.84	%		3.09	%		3.22	%
	1.65	%(6)		2.15	%(6)		1.48	%		1.39	%		2.69	%
	(5.16	)%(6)		(5.66	)%(6)		1.87	%		3.00	%		2.80	%
	1.47	%(6)		0.97	%(6)		4.23	%		1.30	%		3.33	%
	N/A			N/A			N/A			N/A			N/A

See Notes to the Financial Statements.

69

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Financial Highlights

	The Paradigm Fund
	No Load Class			Advisor Class A			Advisor Class C			Institutional Class
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2009			2009			2009			2009
PER SHARE DATA:(1)
Net Asset Value,
Beginning of Year	$	14.42		$	14.16		$	13.80		$	14.44
Income from Investment Operations:
Net investment income (loss)(2)		0.15			0.10			0.02			0.18
Net realized and unrealized gain (loss) on investments		5.78			5.68			5.51			5.78
Total from investment operations		5.93			5.78			5.53			5.96
Redemption Fees		0.00	(3)		—			0.00	(3)		0.00	(3)
Less Distributions:
From net investment income		(0.17	)		(0.06	)		—			(0.27	)
From net realized gains		—			—			—			—
Total distributions		(0.17	)		(0.06	)		—			(0.27	)
Net Asset Value, End of Year	$	20.18		$	19.88		$	19.33		$	20.13
Total Return(4)		41.02	%		40.64	%		39.97	%		41.31	%
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of Year (000’s)	$	825,278		$	252,106		$	169,578		$	125,372
Ratio of operating expenses to average net assets:
Before expense reimbursement		1.73	%		1.98	%		2.48	%		1.68	%
After expense reimbursement(7)		1.64	%		1.89	%		2.39	%		1.44	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		0.78	%		0.53	%		0.03	%		0.83	%
After expense reimbursement(7)		0.87	%		0.62	%		0.12	%		1.07	%
Portfolio turnover rate		N/A			N/A			N/A			N/A

ˆ  Commencement of operations.

(1)	Information presented relates to a share of capital stock outstanding for each period.
(2)	Net investment income per share represents net investment income divided by the average shares outstanding throughout the period.
(3)	Amount calculated is less than $0.005.
(4)	The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares.
(5)	Not annualized.
(6)	Annualized.
(7)	See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion.
(8)	Includes adviser reimbursement from net realized losses on the disposal of investments in violation of restrictions and trading errors. This reimbursement comprises less than $0.005 of the NAVs for each class at the time of the reimbursement and 0.03% of the total return for the Institutional Class for the fiscal year ended December 31, 2008. There was no impact on the other classes.

See Notes to the Financial Statements.

70

The Paradigm Fund
	No Load Class			Advisor Class A			Advisor Class C			Institutional Class			No Load Class			Advisor Class A
	For the			For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2008			2008			2008			2008			2007			2007
	$	30.99		$	30.52		$	29.90		$	30.97		$	25.79		$	25.43
		0.12			0.06			(0.05	)		0.18			0.11			0.04
		(16.62	)(8)		(16.34	)(8)		(15.97	)(8)		(16.63	)(8)		5.35			5.27
		(16.50	)		(16.28	)		(16.02	)		(16.45	)		5.46			5.31
		0.01			0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)
		—			—			—			—			(0.13	)		(0.09	)
		(0.08	)		(0.08	)		(0.08	)		(0.08	)		(0.13	)		(0.13	)
		(0.08	)		(0.08	)		(0.08	)		(0.08	)		(0.26	)		(0.22	)
	$	14.42		$	14.16		$	13.80		$	14.44		$	30.99		$	30.52
		(53.17	)%(8)		(53.30	)%(8)		(53.54	)%(8)		(53.11	)%(8)		21.15	%		20.87	%
	$	740,983		$	249,424		$	147,915		$	128,129		$	2,910,518		$	544,046
		1.72	%		1.97	%		2.47	%		1.67	%		1.68	%		1.93	%
		1.66	%		1.91	%		2.41	%		1.46	%		1.68	%		1.93	%
		0.46	%		0.21	%		(0.29	)%		0.51	%		0.39	%		0.14	%
		0.52	%		0.27	%		(0.23	)%		0.72	%		0.39	%		0.14	%
		N/A			N/A			N/A			N/A			N/A			N/A

See Notes to the Financial Statements.

71

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Financial Highlights

	The Paradigm Fund
	Advisor Class C			Institutional Class			No Load Class			Advisor Class A			Advisor Class C
	For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2007			2006			2006			2006
PER SHARE DATA:(1)
Net Asset Value,
Beginning of Year	$	24.98		$	25.76		$	20.33		$	20.08		$	19.76
Income from Investment Operations:
Net investment income (loss)		(0.10	)		0.17			0.14			0.08			(0.03	)
Net realized and unrealized gain (loss) on investments		5.15			5.34			5.52			5.43			5.33
Total from investment operations		5.05			5.51			5.66			5.51			5.30
Redemption Fees		0.00	(3)		0.00	(3)		0.00	(3)		(0.00	)(3)		0.00	(3)
Less Distributions:
From net investment income		(0.00	)		(0.17	)		(0.16	)		(0.12	)		(0.04	)
From net realized gains		(0.13	)		(0.13	)		(0.04	)		(0.04	)		(0.04	)
Total distributions		(0.13	)		(0.30	)		(0.20	)		(0.16	)		(0.08	)
Net Asset Value, End of Year	$	29.90		$	30.97		$	25.79		$	25.43		$	24.98
Total Return(4)		20.20	%		21.37	%		27.81	%		27.42	%		26.82	%
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	320,962		$	804,755		$	1,337,761		$	183,031		$	116,226
Ratio of operating expenses to average net assets:
Before expense reimbursement		2.43	%		1.63	%		1.79	%		2.04	%		2.54	%
After expense reimbursement(7)		2.43	%		1.48	%		1.63	%		1.88	%		2.38	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(0.36	)%		0.44	%		0.44	%		0.19	%		(0.31	)%
After expense reimbursement(7)		(0.36	)%		0.59	%		0.60	%		0.35	%		(0.15	)%
Portfolio turnover rate		N/A			N/A			N/A			N/A			N/A

ˆ  Commencement of operations.

(1)	Information presented relates to a share of capital stock outstanding for each period.
(2)	Net investment income per share represents net investment income divided by the average shares outstanding throughout the period.
(3)	Amount calculated is less than $0.005.
(4)	The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares.
(5)	Not annualized.
(6)	Annualized.
(7)	See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion.
(8)	Includes adviser reimbursement from net realized losses on the disposal of investments in violation of restrictions and trading errors. This reimbursement comprises less than $0.005 of the NAVs for each class at the time of the reimbursement and 0.03% of the total return for the Institutional Class for the fiscal year ended December 31, 2008. There was no impact on the other classes.

See Notes to the Financial Statements.

72

The Paradigm Fund
Institutional Class			No Load Class			Advisor Class A			Advisor Class C			Institutional Class
For the			For the			For the			For the			May 27, 2005ˆ
Year Ended			Year Ended			Year Ended			Year Ended			through
December 31,			December 31,			December 31,			December 31,			December 31,
2006			2005			2005			2005			2005
$	20.31		$	17.54		$	17.40		$	17.21		$	18.13
	0.19			(0.03	)		(0.07	)		(0.17	)		0.01
	5.49			2.82			2.77			2.74			2.23
	5.68			2.79			2.70			2.57			2.24
	—			0.03			(0.00	)(3)		0.00	(3)		—
	(0.19	)		(0.01	)		—			—			(0.04	)
	(0.04	)		(0.02	)		(0.02	)		(0.02	)		(0.02	)
	(0.23	)		(0.03	)		(0.08	)		(0.02	)		(0.06	)
$	25.76		$	20.33		$	20.08		$	19.76		$	20.31
	27.96	%		16.11	%		15.54	%		14.96	%		12.35	%(5)
$	507,314		$	418,914		$	60,421		$	38,740		$	10,895
	1.74	%		1.93	%		2.18	%		2.68	%		1.88	%(6)
	1.43	%		1.69	%		1.94	%		2.44	%		1.49	%(6)
	0.48	%		(0.41	)%		(0.66	)%		(1.16	)%		(0.37	)%(6)
	0.79	%		(0.17	)%		(0.42	)%		(0.92	)%		0.02	%(6)
	N/A			N/A			N/A			N/A			N/A

See Notes to the Financial Statements.

73

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Financial Highlights

	The Medical Fund
	No Load Class			Advisor Class A			Advisor Class C			No Load Class			Advisor Class A			Advisor Class C
	For the			For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2009			2009			2009			2008			2008			2008
PER SHARE DATA:(1)
Net Asset Value,
Beginning of Year	$	15.23		$	14.90		$	14.83		$	19.82		$	19.39		$	19.34
Income from Investment Operations:
Net investment income (loss)(2)		0.20			0.15			0.07			0.19			0.13			0.05
Net realized and unrealized gain (loss) on investments		3.51			3.44			3.41			(4.25	)		(4.15	)		(4.13	)
Total from investment operations		3.71			3.59			3.48			(4.06	)		(4.02	)		(4.08	)
Redemption Fees		0.01			0.01			0.00	(3)		0.01			0.04			0.02
Less Distributions:
From net investment income		(0.16	)		(0.12	)		(0.02	)		(0.16	)		(0.13	)		(0.07	)
From net realized gains		(0.02	)		(0.02	)		(0.02	)		(0.38	)		(0.38	)		(0.38	)
Total distributions		(0.18	)		(0.14	)		(0.04	)		(0.54	)		(0.51	)		(0.45	)
Net Asset Value, End of Year	$	18.77		$	18.36		$	18.27		$	15.23		$	14.90		$	14.83
Total Return(4)		24.47	%		24.17	%		23.50	%		(20.42	)%		(20.49	)%		(20.97	)%
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of year (000’s)	$	21,126		$	4,347		$	454		$	15,727		$	2,941		$	314
Ratio of operating expenses to average net assets:
Before expense reimbursement		2.15	%		2.40	%		2.90	%		2.26	%		2.51	%		3.01	%
After expense reimbursement(7)		1.39	%		1.64	%		2.14	%		1.41	%		1.66	%		2.16	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		0.42	%		0.17	%		(0.33	)%		0.18	%		(0.07	)%		(0.57	)%
After expense reimbursement(7)		1.17	%		0.92	%		0.42	%		1.03	%		0.78	%		0.28	%
Portfolio turnover rate		N/A			N/A			N/A			N/A			N/A			N/A

ˆ   Commencement of operations.

(1)	Information presented relates to a share of capital stock outstanding for each period.
(2)	Net investment income per share represents net investment income divided by the average shares outstanding throughout the period.
(3)	Amount calculated is less than $0.005.
(4)	The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares.
(5)	Not annualized.
(6)	Annualized.
(7)	See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion.

See Notes to the Financial Statements.

74

The Medical Fund
	No Load Class			Advisor Class A			Advisor Class C			No Load Class			Advisor Class A			No Load Class			Advisor Class A
	For the			For the			February 16, 2007ˆ			For the			For the			For the			For the
	Year Ended			Year Ended			through			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2007			2007			2006			2006			2005			2005
	$	17.83		$	17.47		$	18.29		$	16.64		$	16.34		$	16.76		$	16.49
		0.10			0.05			(0.04	)		0.06			0.01			(0.18	)		(0.22	)
		2.67			2.62			1.79			2.40			2.35			0.06			0.07
		2.77			2.67			1.75			2.46			2.36			(0.12	)		(0.15	)
		0.01			0.00	(3)		0.00	(3)		0.00	(3)		—			0.00	(3)		—
		(0.10	)		(0.06	)		(0.01	)		(0.04	)		—			—			—
		(0.69	)		(0.69	)		(0.69	)		(1.23	)		(1.23	)		—			—
		(0.79	)		(0.75	)		(0.70	)		(1.27	)		(1.23	)		—			—
	$	19.82		$	19.39		$	19.34		$	17.83		$	17.47		$	16.64		$	16.34
		15.47	%		15.16	%		9.55	%(5)		14.81	%		14.49	%		(0.72	)%		(0.91	)%
	$	13,917		$	1,427		$	148		$	15,527		$	711		$	13,943		$	559
		2.41	%		2.66	%		3.19	%(6)		2.28	%		2.53	%		2.48	%		2.73	%
		1.40	%		1.65	%		2.15	%(6)		1.44	%		1.69	%		2.44	%		2.69	%
		(0.51	)%		(0.76	)%		(1.30	)%(6)		(0.51	)%		(0.76	)%		(1.14	)%		(1.39	)%
		0.50	%		0.25	%		(0.26	)%(6)		0.33	%		0.08	%		(1.10	)%		(1.35	)%
		N/A			N/A			N/A			N/A			N/A			N/A			N/A

See Notes to the Financial Statements.

75

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Financial Highlights

	The Small Cap Opportunities Fund
	No Load Class			Advisor Class A			Advisor Class C			Institutional Class			No Load Class
	For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2009			2009			2009			2009			2008
PER SHARE DATA:(1)
Net Asset Value, Beginning of Year	$	13.17		$	13.01		$	12.92		$	13.19		$	31.92
Income from Investment Operations:
Net investment income (loss)(2)		(0.04	)		(0.08	)		(0.16	)		(0.01	)		0.05
Net realized and unrealized gain (loss) on investments		7.70			7.60			7.52			7.72			(18.53	)(8)
Total from investment operations		7.66			7.52			7.36			7.71			(18.48	)
Redemption Fees		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)
Less Distributions:
From net investment income		—			—			—			—			—
From net realized gains		—			—			—			—			(0.27	)
Total distributions		—			—			—			—			(0.27	)
Net Asset Value, End of Year	$	20.83		$	20.53		$	20.28		$	20.90		$	13.17
Total Return(4)		58.16	%		57.80	%		56.97	%		58.45	%		(57.88	)%(8)
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of year (000’s)	$	161,205		$	14,244		$	4,445		$	19,749		$	126,971
Ratio of operating expenses to average net assets:
Before expense reimbursement		1.86	%		2.11	%		2.61	%		1.81	%		1.79	%
After expense reimbursement(7)		1.64	%		1.89	%		2.39	%		1.44	%		1.67	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(0.48	)%		(0.73	)%		(1.23	)%		(0.43	)%		0.09	%
After expense reimbursement(7)		(0.26	)%		(0.51	)%		(1.01	)%		(0.06	)%		0.21	%
Portfolio turnover rate		N/A			N/A			N/A			N/A			N/A

ˆ   Commencement of operations.

(1)	Information presented relates to a share of capital stock outstanding for each period.
(2)	Net investment income per share represents net investment income divided by the average shares outstanding throughout the period.
(3)	Amount calculated is less than $0.005.
(4)	The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares.
(5)	Not annualized.
(6)	Annualized.
(7)	See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion.
(8)	Includes adviser reimbursement from the net realized loss on the disposal of investments in violation of restrictions. This reimbursement comprises less than $0.005 of the NAVs for each class at the time of the reimbursement and 0.03% of the total return for the Adviser Class C for the fiscal year ended December 31, 2008. There was no impact on the other classes.

See Notes to the Financial Statements.

76

The Small Cap Opportunities Fund
	Advisor Class A			Advisor Class C			Institutional Class			No Load Class			Advisor Class A			Advisor Class C			Institutional Class
	For the			For the			For the			For the			For the			February 16, 2007ˆ			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			through			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2008			2008			2008			2007			2007			2007			2007
	$	31.63		$	31.57		$	31.92		$	26.92		$	26.71		$	28.70		$	26.91
		(0.01	)		(0.12	)		0.10			0.01			(0.07	)		(0.21	)		0.07
		(18.34	)(8)		(18.26	)(8)		(18.56	)(8)		5.29			5.25			3.33			5.29
		(18.35	)		(18.38	)		(18.46	)		5.30			5.18			3.12			5.36
		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.02			0.00	(3)
		—			—			—			(0.23	)		(0.19	)		(0.20	)		(0.28	)
		(0.27	)		(0.27	)		(0.27	)		(0.07	)		(0.07	)		(0.07	)		(0.07	)
		(0.27	)		(0.27	)		(0.27	)		(0.30	)		(0.26	)		(0.27	)		(0.35	)
	$	13.01		$	12.92		$	13.19		$	31.92		$	31.63		$	31.57		$	31.92
		(58.00	)%(8)		(58.20	)%(8)		(57.82	)%(8)		19.65	%		19.36	%		10.94	%(5)		19.91	%
	$	12,090		$	2,871		$	68,408		$	729,278		$	36,390		$	4,942		$	316,709
		2.04	%		2.54	%		1.74	%		1.71	%		1.96	%		2.47	%(6)		1.66	%
		1.92	%		2.42	%		1.47	%		1.69	%		1.94	%		2.45	%(6)		1.49	%
		(0.16	)%		(0.66	)%		0.14	%		0.00	%		(0.25	)%		(0.76	)%(6)		0.05	%
		(0.04	)%		(0.54	)%		0.41	%		0.02	%		(0.23	)%		(0.75	)%(6)		0.22	%
		N/A			N/A			N/A			N/A			N/A			N/A			N/A

See Notes to the Financial Statements.

77

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Financial Highlights

	The Small Cap Opportunities Fund
	No Load Class			Advisor Class A			Institutional Class			No Load Class			Advisor Class A			Institutional Class
	For the			For the			For the			For the			For the			August 12, 2005ˆ
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			through
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2006			2006			2006			2005			2005			2005
PER SHARE DATA:(1)
Net Asset Value, Beginning of Year	$	21.02		$	20.89		$	21.00		$	18.69		$	18.63		$	20.48
Income from Investment Operations:
Net investment income (loss)(2)		0.03			(0.03	)		0.08			0.12			0.02			0.00	(3)
Net realized and unrealized gain (loss) on investments		5.92			5.88			5.91			2.35			2.38			0.67
Total from investment operations		5.95			5.85			5.99			2.47			2.40			0.67
Redemption Fees		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		—
Less Distributions:
From net investment income		(0.05	)		(0.03	)		(0.08	)		(0.01	)		(0.01	)		(0.02	)
From net realized gains		—			—			—			(0.13	)		(0.13	)		(0.13	)
Total distributions		(0.05	)		(0.03	)		(0.08	)		(0.14	)		(0.14	)		(0.15	)
Net Asset Value, End of Year	$	26.92		$	26.71		$	26.91		$	21.02		$	20.89		$	21.00
Total Return(4)		28.37	%		28.03	%		28.52	%		13.17	%		12.83	%		3.23	%(5)
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of year (000’s)	$	268,875		$	12,144		$	209,592		$	55,979		$	5,205		$	67,586
Ratio of operating expenses to average net assets:
Before expense reimbursement		1.83	%		2.08	%		1.78	%		1.93	%		2.16	%		1.77	%(6)
After expense reimbursement(7)		1.58	%		1.83	%		1.38	%		1.66	%		1.94	%		1.59	%(6)
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(0.14	)%		(0.39	)%		(0.09	)%		0.18	%		(0.17	)%		(0.21	)%(6)
After expense reimbursement(7)		0.11	%		(0.14	)%		0.31	%		0.45	%		0.06	%		(0.03	)%(6)
Portfolio turnover rate		N/A			N/A			N/A			N/A			N/A			N/A

ˆ   Commencement of operations.

(1)	Information presented relates to a share of capital stock outstanding for each period.
(2)	Net investment income per share represents net investment income divided by the average shares outstanding throughout the period.
(3)	Amount calculated is less than $0.005.
(4)	The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares.
(5)	Not annualized.
(6)	Annualized.
(7)	See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion.
(8)	Includes adviser reimbursement from the net realized loss on the disposal of investments in violation of restrictions. This reimbursement comprises less than $0.005 of the NAVs for each class at the time of the reimbursement and 0.03% of the total return for the Adviser Class C for the fiscal year ended December 31, 2008. There was no impact on the other classes.

See Notes to the Financial Statements.

78

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Financial Highlights

	The Kinetics Government Money Market Fund
	For The			For The			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2009			2008			2007			2006			2005
PER SHARE DATA:(1)
Net Asset Value, Beginning of Year	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Income from Investment Operations:
Net investment income		—			0.01			0.04			0.04			0.02
Net realized and unrealized gain on investments		—			—			—			—			—
Total from investment operations		—			0.01			0.04			0.04			0.02
Less Distributions:
From net investment income		—			(0.01	)		(0.04	)		(0.04	)		(0.02	)
Total distributions		—			(0.01	)		(0.04	)		(0.04	)		(0.02	)
Net Asset Value, End of Year	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Total Return		0.00	%		0.91	%		3.77	%		4.45	%		1.88	%
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of year (000’s)	$	1,651		$	2,688		$	1,190		$	1,425		$	1,052
Ratio of operating expenses to average net assets:
Before expense reimbursement		3.04	%		3.55	%		6.42	%		3.94	%		5.08	%
After expense reimbursement(2)		0.06	%		0.76	%		0.98	%		0.22	%		1.06	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(2.98	)%		(1.98	)%		(1.74	)%		0.73	%		(2.17	)%
After expense reimbursement(2)		(0.00	)%		0.81	%		3.70	%		4.45	%		1.85	%
Portfolio turnover rate		N/A			N/A			N/A			N/A			N/A

⁽¹⁾ Information presented relates to a share of capital stock outstanding for each period.

⁽²⁾ See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion.

See Notes to the Financial Statements.

79

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Financial Highlights

	The Market Opportunities Fund
	No Load Class			Advisor Class A			Advisor Class C			Institutional Class			No Load Class
	For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2009			2009			2009			2009			2008
PER SHARE DATA:(1)
Net Asset Value, Beginning of Year	$	7.22		$	7.22		$	7.17		$	7.21		$	16.12
Income from Investment Operations:
Net investment income (loss)		0.00	(2)(3)		(0.02	)(2)		(0.06	)(2)		0.02	(2)		0.11	(2)
Net realized and unrealized gain (loss) on investments		3.62			3.61			3.59			3.64			(9.02	)
Payment by adviser(7)		—			—			—			—			0.06
Total from investment operations		3.62			3.59			3.53			3.66			(8.85	)
Redemption Fees		0.01			0.00	(3)		0.00	(3)		—			0.01
Less Distributions:
From net investment income		(0.01	)		(0.01	)		(0.01	)		(0.01	)		(0.06	)
From net realized gains		—			—			—			—			—
Total distributions		(0.01	)		(0.01	)		(0.01	)		(0.01	)		(0.06	)
Net Asset Value, End of Year	$	10.84		$	10.80		$	10.69		$	10.86		$	7.22
Total Return(4)		50.21	%		49.66	%		49.17	%		50.70	%		(54.82	)%
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of year (000’s)	$	41,254		$	18,770		$	6,055		$	19		$	34,246
Ratio of operating expenses to average net assets:
Before expense reimbursement		1.93	%		2.18	%		2.68	%		1.88	%		1.82	%
After expense reimbursement(7)		1.64	%		1.89	%		2.39	%		1.44	%		1.66	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(0.25	)%		(0.50	)%		(1.00	)%		(0.20	)%		0.78	%
After expense reimbursement(7)		0.04	%		(0.21	)%		(0.71	)%		0.24	%		0.94	%
Portfolio turnover rate		N/A			N/A			N/A			N/A			N/A

ˆ   Commencement of operations.

(1)	Information presented relates to a share of capital stock outstanding for each period.
(2)	Net investment income per share represents net investment income divided by the average shares outstanding throughout the period.
(3)	Amount calculated is less than $0.005.
(4)	The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares.
(5)	Not annualized.
(6)	Annualized.
(7)	See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion.

See Notes to the Financial Statements.

80

The Market Opportunities Fund
	Advisor Class A			Advisor Class C			Institutional Class			No Load Class			Advisor Class A			Advisor Class C			No Load Class			Advisor Class A
	For the			For the			May 19, 2008ˆ			For the			For the			February 16, 2007ˆ			January 31, 2006ˆ			January 31, 2006ˆ
	Year Ended			Year Ended			through			Year Ended			Year Ended			through			through			through
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2008			2008			2008			2007			2007			2007			2006			2006
	$	16.07		$	16.01		$	13.71		$	12.05		$	12.04		$	12.99		$	10.00		$	10.00
		0.08	(2)		0.02	(2)		0.08	(2)		0.04	(2)		0.00	(2)		(0.05	)(2)		0.04			0.02
		(8.97	)		(8.91	)		(6.55	)		4.05			4.04			3.07			2.05			2.05
		0.06			0.06			0.06			—			—			—			—			—
		(8.83	)		(8.83	)		(6.41	)		4.09			4.04			3.02			2.09			2.07
		0.00	(3)		0.00	(3)		—			0.01			0.00	(3)		0.00	(3)		0.00	(3)		—
		(0.02	)		(0.01	)		(0.09	)		(0.03	)		(0.01	)		—			(0.04	)		(0.03	)
		—			—			—			—			—			—			—
		(0.02	)		(0.01	)		(0.09	)		(0.03	)		(0.01	)		—			(0.04	)		(0.03	)
	$	7.22		$	7.17		$	7.21		$	16.12		$	16.07		$	16.01		$	12.05		$	12.04
		(54.91	)%		(55.13	)%		(46.77	)%(5)		34.03	%		33.54	%		23.25	%(5)		20.85	%(5)		20.68	%(5)
	$	18,514		$	771		$	5		$	63,004		$	43,907		$	8,790		$	7,994		$	9,591
		2.07	%		2.57	%		1.82	%(6)		1.91	%		2.16	%		2.66	%(6)		2.68	%(6)		2.93	%(6)
		1.91	%		2.41	%		1.44	%(6)		1.74	%		1.99	%		2.49	%(6)		1.46	%(6)		1.71	%(6)
		0.53	%		0.03	%		0.94	%(6)		0.12	%		(0.14	)%		(0.60	)%(6)		(0.76	)%(6)		(1.01	)%(6)
		0.69	%		0.19	%		1.32	%(6)		0.29	%		0.03	%		(0.43	)%(6)		0.46	%(6)		(0.21	)%(6)
		N/A			N/A			N/A			N/A			N/A			N/A			N/A			N/A

See Notes to the Financial Statements.

81

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Financial Highlights

	The Water Infrastructure Fund
	No Load Class			Advisor Class A			Advisor Class C			Institutional Class			No Load Class
	For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2009			2009			2009			2009			2008
PER SHARE DATA:(1)
Net Asset Value,
Beginning of Year	$	7.61		$	7.59		$	7.54		$	7.63		$	10.17
Income from Investment Operations:
Net investment income (loss)(2)		0.04			0.02			(0.02	)		0.05			0.10
Net realized and unrealized gain (loss) on investments		1.21			1.21			1.19			1.23			(2.66	)
Total from investment operations		1.25			1.23			1.17			1.28			(2.56	)
Redemption Fees		0.00	(3)		0.00	(3)		0.00	(3)		0.01			0.00	(3)
Less Distributions:
From net investment income		(0.00	)(3)		—			—			(0.02	)		—
From net realized gains		—			—			—			—			—
Total distributions		(0.00	)(3)		—			—			(0.02	)		—
Net Asset Value, End of Year	$	8.86		$	8.82		$	8.71		$	8.90		$	7.61
Total Return(4)		16.46	%		16.21	%		15.52	%		16.94	%		(25.17	)%
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of year (000’s)	$	7,176		$	10,339		$	2,700		$	2,905		$	6,598
Ratio of operating expenses to average net assets:
Before expense reimbursement		2.36	%		2.61	%		3.11	%		2.31	%		2.20	%
After expense reimbursement(7)		1.64	%		1.89	%		2.39	%		1.44	%		1.65	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(0.26	)%		(0.51	)%		(1.01	)%		(0.21	)%		0.55	%
After expense reimbursement(7)		0.46	%		0.21	%		(0.29	)%		0.66	%		1.10	%
Portfolio turnover rate		N/A			N/A			N/A			N/A			N/A

ˆ   Commencement of operations.

(1)	Information presented relates to a share of capital stock outstanding for each period.
(2)	Net investment income per share represents net investment income divided by the average shares outstanding throughout the period.
(3)	Amount calculated is less than $0.005.
(4)	The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares.
(5)	Not annualized.
(6)	Annualized.
(7)	See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion.

See Notes to the Financial Statements.

82

The Water Infrastructure Fund
	Advisor Class A			Advisor Class C			Institutional Class			No Load Class			Advisor Class A			Advisor Class C			Institutional Class
	For the			For the			For the			June 29, 2007ˆ			June 29, 2007ˆ			June 29, 2007ˆ			June 29, 2007ˆ
	Year Ended			Year Ended			Year Ended			through			through			through			through
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2008			2008			2008			2007			2007			2007			2007
	$	10.17		$	10.16		$	10.18		$	10.00		$	10.00		$	10.00		$	10.00
		0.07			0.03			0.12			0.06			0.05			0.02			0.06
		(2.65	)		(2.65	)		(2.67	)		0.20			0.20			0.21			0.21
		(2.58	)		(2.62	)		(2.55	)		0.26			0.25			0.23			0.27
		0.00	(3)		—			0.00	(3)		—			0.00	(3)		0.00	(3)		—
		—			—			—			(0.04	)		(0.03	)		(0.02	)		(0.04	)
		—			—			—			(0.05	)		(0.05	)		(0.05	)		(0.05	)
		—			—			—			(0.09	)		(0.08	)		(0.07	)		(0.09	)
	$	7.59		$	7.54		$	7.63		$	10.17		$	10.17		$	10.16		$	10.18
		(25.37	)%		(25.79	)%		(25.05	)%		2.64	%(5)		2.55	%(5)		2.33	%(5)		2.76	%(5)
	$	7,661		$	1,571		$	251		$	2,385		$	2,459		$	1,201		$	103
		2.45	%		2.95	%		2.15	%		3.62	%(6)		3.87	%(6)		4.37	%(6)		3.58	%(6)
		1.90	%		2.40	%		1.45	%		1.74	%(6)		1.99	%(6)		2.49	%(6)		1.54	%(6)
		0.30	%		(0.20	)%		0.60	%		(0.73	)%(6)		(0.98	)%(6)		(1.48	)%(6)		(0.69	)%(6)
		0.85	%		0.35	%		1.30	%		1.15	%(6)		0.90	%(6)		0.40	%(6)		1.35	%(6)
		N/A			N/A			N/A			N/A			N/A			N/A			N/A

See Notes to the Financial Statements.

83

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Financial Highlights

	The Multi-Disciplinary Fund
	No Load Class			Advisor Class A			Advisor Class C			Institutional Class
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2009			2009			2009			2009
PER SHARE DATA:(1)
Net Asset Value, Beginning of Year	$	8.22		$	8.20		$	8.17		$	8.23
Income from Investment Operations:
Net investment income (loss)(2)		0.09			0.06			0.02			0.10
Net realized and unrealized gain (loss) on investments		1.79			1.80			1.78			1.81
Total from investment operations		1.88			1.86			1.80			1.91
Redemption Fees		—			—			—			—
Less Distributions:
From net investment income		(0.08	)		(0.05	)		(0.01	)		(0.09	)
From net realized gains		(0.16	)		(0.16	)		(0.16	)		(0.16	)
Total distributions		(0.24	)		(0.21	)		(0.17	)		(0.25	)
Net Asset Value, End of Year	$	9.86		$	9.85		$	9.80		$	9.89
Total Return(4)		22.90	%		22.73	%		22.03	%		23.25	%
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of year (000’s)	$	938		$	103		$	105		$	101
Ratio of operating expenses to average net assets:
Before expense reimbursement		13.11	%		13.36	%		13.86	%		13.06	%
After expense reimbursement(7)		1.49	%		1.74	%		2.24	%		1.29	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(10.69	)%		(10.94	)%		(11.44	)%		(10.64	)%
After expense reimbursement(7)		0.93	%		0.68	%		0.18	%		1.13	%
Portfolio turnover rate		N/A			N/A			N/A			N/A

ˆ   Commencement of operations.

(1)	Information presented relates to a share of capital stock outstanding for each period.
(2)	Net investment income per share represents net investment income divided by the average shares outstanding throughout the period.
(3)	Amount calculated is less than $0.005.
(4)	The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares.
(5)	Not annualized.
(6)	Annualized.
(7)	See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion.

See Notes to the Financial Statements.

84

The Multi-Disciplinary Fund
	No Load Class			Advisor Class A			Advisor Class C			Institutional Class
	For The Period			For The Period			For The Period			For The Period
	February 11, 2008ˆ			February 11, 2008ˆ			February 11, 2008ˆ			February 11, 2008ˆ
	through			through			through			through
	December 31, 2008			December 31, 2008			December 31, 2008			December 31, 2008
	$	10.00		$	10.00		$	10.00		$	10.00
		0.01			(0.01	)		(0.05	)		0.02
		(1.79	)		(1.79	)		(1.78	)		(1.79	)
		(1.78	)		(1.80	)		(1.83	)		(1.77	)
		—			—			—			—
		(0.00	)(3)		(0.00	)(3)		(0.00	)(3)		(0.00	)(3)
		—			—			—			—
		(0.00	)		(0.00	)		(0.00	)		(0.00	)
	$	8.22		$	8.20		$	8.17		$	8.23
		(17.76	)%(5)		(17.97	)%(5)		(18.30	)%(5)		(17.65	)%(5)
	$	99		$	84		$	88		$	82
		17.58	%(6)		17.83	%(6)		18.33	%(6)		17.53	%(6)
		1.49	%(6)		1.74	%(6)		2.24	%(6)		1.29	%(6)
		(15.99	)%(6)		(16.24	)%(6)		(16.74	)%(6)		(15.94	)%(6)
		0.10	%(6)		(0.15	)%(6)		(0.65	)%(6)		0.30	%(6)
		N/A			N/A			N/A			N/A

See Notes to the Financial Statements.

85

KINETICS MUTUAL FUNDS, INC.

Report of Independent Registered
Public Accounting Firm

To the Shareholders of and Board of Directors

Kinetics Mutual Funds, Inc.

Elmsford, New York

We have audited the accompanying statements of assets and liabilities of The Internet Fund, The Global Fund, The Paradigm Fund, The Medical Fund, The Small Cap Opportunities Fund, The Kinetics Government Money Market Fund, The Market Opportunities Fund, The Water Infrastructure Fund, and The Multi-Disciplinary Fund, each a series of shares of Kinetics Mutual Funds, Inc. (the “Funds”), as of December 31, 2009, and the related statements of operations, the statements of changes in net assets and financial highlights for the periods indicated thereon. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform, nor were the Funds required to have, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly in all material respects, the financial position of the above mentioned Funds as of December 31, 2009, the results of their operations, the changes in their net assets and financial highlights for the periods indicated thereon, in conformity with accounting principles generally accepted in the United States of America.

TAIT, WELLER & BAKER LLP

Philadelphia, Pennsylvania

February 26, 2010

86

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

ALLOCATION OF PORTFOLIO ASSETS

December 31, 2009

The Internet Portfolio

The Global Portfolio

87

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

ALLOCATION OF PORTFOLIO ASSETS

December 31, 2009 — (Continued)

The Paradigm Portfolio

The Medical Portfolio

88

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

ALLOCATION OF PORTFOLIO ASSETS

December 31, 2009 — (Continued)

The Small Cap Opportunities Portfolio

The Kinetics Government Money Market Portfolio

89

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

ALLOCATION OF PORTFOLIO ASSETS

December 31, 2009 — (Continued)

The Market Opportunities Portfolio

The Water Infrastructure Portfolio

90

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

ALLOCATION OF PORTFOLIO ASSETS

December 31, 2009 — (Continued)

The Multi-Disciplinary Portfolio

91

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — December 31, 2009

Identifier	COMMON STOCKS — 96.94%	Shares		Value
	Administrative and Support Services — 4.10%
CTRP	Ctrip.com International Ltd. — ADR*		3,000	$	215,580
IILG	Interval Leisure Group, Inc.*(1)		200		2,494
ID	L-1 Identity Solutions, Inc.*(1)		20,000		149,800
MANT	ManTech International Corporation — Class A*		82,000		3,958,960
TKTM	Ticketmaster*(1)		200		2,444
					4,329,278
	Amusement, Gambling, and Recreation Industries — 0.35%
DIS	The Walt Disney Co.(1)		11,380		367,005
	Asian Exchanges — 0.65%
8697 JP	Osaka Securities Exchange Co., Ltd.		144		684,941
	Asset Management — 0.92%
URB/A CN	Urbana Corp. — Class A*		240,000		339,628
GROW	US Global Investors, Inc. — Class A(1)		48,000		590,880
WSDT	WisdomTree Investments, Inc.*(1)		24,000		44,400
					974,908
	Broadcasting (except Internet) — 4.66%
LBTYK	Liberty Global, Inc. — Series C*		100,707		2,200,448
SNI	Scripps Networks Interactive — Class A		65,000		2,697,500
SIRI	Sirius XM Radio, Inc.*		46,000		27,600
					4,925,548
	Cable TV — 0.85%
TWC	Time Warner Cable, Inc.(1)		21,754		900,398
	Computer and Electronic Product Manufacturing — 5.79%
AAPL	Apple, Inc.*		5,000		1,054,300
EMC	EMC Corporation*		140,000		2,445,800
JDSU	JDS Uniphase Corporation*		45,000		371,250
NTAP	NetApp, Inc.*(1)		45,000		1,547,550
QCOM	QUALCOMM Inc.		15,000		693,900
					6,112,800

See Notes to the Financial Statements.

92

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Credit Intermediation and Related Activities — 2.84%
AXP	American Express Company(1)		10,000	$	405,200
NTRS	Northern Trust Corp.		2,000		104,800
STT	State Street Corporation		4,000		174,160
TREE	Tree.com, Inc.*(1)		10,033		91,802
V	Visa, Inc. — Class A(1)		20,000		1,749,200
WU	The Western Union Company		25,000		471,250
					2,996,412
	Data Processing, Hosting and Related Services — 0.64%
ACXM	Acxiom Corporation*		30,150		404,613
AOL	AOL Inc.*(1)		7,878		183,400
CSGP	CoStar Group, Inc.*(1)		2,000		83,540
					671,553
	Educational Services — 0.37%
APOL	Apollo Group, Inc. — Class A*		2,000		121,160
EDU	New Oriental Education & Technology Group, Inc. — ADR*(1)		3,550		268,416
					389,576
	European Exchanges — 0.31%
DB1 GR	Deutsche Boerse AG		4,000		332,583
	Funds, Trusts, and Other Financial Vehicles — 0.19%
HHH	Internet HOLDRs Trust		3,500		203,840
	Global Exchanges — 5.82%
388 HK	Hong Kong Exchanges & Clearing Limited		110,000		1,977,713
JSE SJ	JSE Limited		60,000		490,081
SGX SP	Singapore Exchange Limited		620,000		3,676,265
					6,144,059
	Holding Company — 7.08%
GBLB BB	Groupe Bruxelles Lambert S.A.		18,000		1,704,345
GBLS BB	Groupe Bruxelles Lambert S.A. Strip VVPR*		2,000		23
LUK	Leucadia National Corporation*(1)		242,540		5,770,027
					7,474,395

See Notes to the Financial Statements.

93

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Hotels, Restaurants & Leisure — 0.65%
200 HK	Melco International Development Limited*		1,500,000	$	692,599
	Management of Companies and Enterprises — 0.19%
SATS	EchoStar Corporation — Class A*		10,000		201,400
	Motion Picture and Sound Recording Industries — 9.23%
DWA	DreamWorks Animation SKG, Inc. — Class A*		150,000		5,992,500
NFLX	Netflix, Inc.*		1,000		55,140
SINA	SINA Corporation*(1)		26,000		1,174,680
TWX	Time Warner, Inc.		86,666		2,525,447
					9,747,767
	Nonstore Retailers — 3.70%
EBAY	eBay, Inc.*(1)		40,000		941,600
HSNI	HSN, Inc.*		200		4,038
IACI	IAC/InterActiveCorp*(1)		60,740		1,243,955
OSTK	Overstock.com, Inc.*		1,000		13,560
SOHU	Sohu.com Inc.*(1)		18,000		1,031,040
BID	Sotheby’s(1)		30,000		674,400
					3,908,593
	Other Exchanges — 0.61%
ASX AU	ASX Ltd.		18,000		564,925
NZX NZ	NZX Ltd.*		48,000		82,247
					647,172
	Other Information Services — 5.78%
BIDU	Baidu.com, Inc. — ADR*(1)		9,700		3,988,931
EXPE	Expedia, Inc.*(1)		4,000		102,840
GOOG	Google Inc. — Class A*(1)		3,200		1,983,936
MVL	Marvel Entertainment, Inc.*		322		17,414
NTES	NetEase.com Inc. — ADR*		200		7,522
					6,100,643
	Performing Arts, Spectator Sports, and Related Industries — 1.66%
WMG	Warner Music Group Corp.*		310,000		1,754,600

See Notes to the Financial Statements.

94

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Prepackaged Software — 0.67%
CHKP	Check Point Software Technologies Ltd.*		21,000	$	711,480
	Professional, Scientific, and Technical Services — 14.02%
BR	Broadridge Financial Solutions, Inc.		100,000		2,256,000
CAI	CACI International, Inc. — Class A*		55,000		2,686,750
JRJC	China Finance Online Company — ADR*(1)		10,000		73,000
CTSH	Cognizant Technology Solutions Corporation — Class A*		39,000		1,766,700
FTIS LI	Financial Technologies (India) Ltd. — GDR		144,000		604,800
INFY	Infosys Technologies Limited — ADR(1)		30,000		1,658,100
ICGE	Internet Capital Group, Inc.*		15,000		99,750
MA	Mastercard, Inc. — Class A(1)		6,000		1,535,880
MWW	Monster Worldwide, Inc.*		2,000		34,800
MCO	Moody’s Corporation(1)		4,000		107,200
PCLN	Priceline.com Incorporated*(1)		500		109,250
RHD	R.H. Donnelley Corporation*(1)		484,000		1,839
RBA	Ritchie Bros. Auctioneers, Incorporated(1)		162,000		3,633,660
SAPE	Sapient Corporation*		20,000		165,400
UNTD	United Online, Inc.		10,000		71,900
					14,805,029
	Publishing Industries (except Internet) — 13.55%
SSP	The E.W. Scripps Company — Class A*(1)		898,065		6,250,532
IAR	Idearc Inc.*		364,000		1,201
MFE	McAfee, Inc.*		15,000		608,550
MSFT	Microsoft Corp.		15,000		457,350
ROVI	Rovi Corporation*(1)		152,880		4,872,286
SYMC	Symantec Corporation*		30,000		536,700
WPO	The Washington Post Company — Class B		3,600		1,582,560
					14,309,179
	Real Estate — 0.68%
IEP	Icahn Enterprises LP		18,000		719,100
	Rental and Leasing Services — 1.84%
CDCO	Comdisco Holding Company, Inc.*(1)		194,400		1,944,000

See Notes to the Financial Statements.

95

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 4.78%
CLE LN	Climate Exchange PLC*		40,000	$	410,906
CME	CME Group, Inc.		7,100		2,385,245
CLST LN	Collins Stewart plc		4,000		4,474
ICE	IntercontinentalExchange Inc.*(1)		13,000		1,459,900
LAB	LaBranche & Co. Inc.*		210,000		596,400
MKTX	MarketAxess Holdings, Inc.(1)		6,000		83,400
RMG	Riskmetrics Group Inc.*		5,700		90,687
TLPR LN	Tullett Prebon plc		4,000		18,019
					5,049,031
	Special Purpose Entity — 0.00%
ADPAO	Adelphia Contingent Value Vehicle CVV Servies ACC-4 Int*+		250,827		0
ADPAL	Adelphia Recovery Trust Ser ACC-6 E/F Int*+		4,878,645		0
					0
	Telecommunications — 3.04%
CHU	China Unicom (Hong Kong) Limited — ADR		159,793		2,094,886
215 HK	Hutchison Telecommunications Hong Kong Holdings Limited		2,300,000		391,570
HTHKY	Hutchison Telecommunications Hong Kong Holdings Limited — ADR		45,000		111,600
2332 HK	Hutchison Telecommunications International Limited*		2,300,000		477,597
HTX	Hutchison Telecommunications International Limited — ADR*		45,000		135,450
SNSHA	Sunshine PCS Corp. — Class A*		149,890		3,748
					3,214,851
	U.S. Equity Exchanges — 1.84%
NDAQ	The Nasdaq OMX Group*		54,470		1,079,596
NYX	NYSE Euronext		34,000		860,200
					1,939,796

See Notes to the Financial Statements.

96

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Warehousing and Storage — 0.13%
IRM	Iron Mountain Incorporated*(1)		6,000	$	136,560
	TOTAL COMMON STOCKS (cost $72,264,751)				102,389,096
		Principal
	ESCROW NOTES — 0.00%	Amount
	Special Purpose Entity — 0.00%
006ESCBG1	Adelphia Communications Corp.*+	$	200,000		0
006ESC958	Adelphia Communications Corp. Preferred*+		190,000		0
	TOTAL ESCROW NOTES (cost $0)				0
	CONVERTIBLE BONDS — 1.89%
	Telecommunications — 1.89%
52729NAS9	Level 3 Communications, Inc., CLB(1) 6.000%, 03/15/2010		2,000,000		2,000,000
	TOTAL CONVERTIBLE BONDS (cost $1,937,086)				2,000,000
	RIGHTS — 1.45%	Shares
	Rental and Leasing Services — 1.45%
CDCOR	Comdisco Holding Company, Inc.
	Expiration Date: 12/31/2050
	Strike Price $1.00#		12,240,699		1,530,087
	TOTAL RIGHTS (cost $3,253,775)				1,530,087
	SHORT-TERM INVESTMENTS — 0.89%
	Money Market Funds — 0.89%
FIUXX	First American Prime Obligations Fund — Class I, 0.00%ˆb		935,678		935,678
	TOTAL SHORT-TERM INVESTMENTS (cost $935,678)				935,678

See Notes to the Financial Statements.

97

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

	INVESTMENTS PURCHASED WITH
	THE CASH PROCEEDS FROM
Identifier	SECURITIES LENDING — 36.00%	Shares		Value
	Investment Companies — 36.00%
	Mount Vernon Securities Lending Trust — Prime Portfolio, 0.21%b		38,026,523	$	38,026,523
	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $38,026,523)				38,026,523
	TOTAL INVESTMENTS — 137.17% (cost $116,417,813)			$	144,881,384

Percentages are stated as a percent of net assets.

* — Non-income producing security.

ˆ — All or a portion of the shares have been committed as collateral for written option contracts.

# — Contingent value right (contingent upon profitability of company).

+ — Security is considered illiquid. The aggregate value of such securities is $0 or 0.00% of net assets.

^b — The rate quoted is the annualized seven-day yield as of December 31, 2009.

ADR — American Depository Receipt.

CLB — Callable Security.

GDR — Global Depository Receipt.

(1) —  This security or a portion of this security was out on loan at December 31, 2009. Total loaned securities had a market value of $36,061,381 at December 31, 2009.

See Notes to the Financial Statements.

98

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Global Portfolio

Portfolio of Investments — December 31, 2009

Identifier	COMMON STOCKS — 98.29%	Shares		Value
	Administrative and Support Services — 0.55%
144 HK	China Merchants Holdings International Company Limited		8,000	$	26,053
	Air Transportation — 3.67%
694 HK	Beijing Capital International Airport Company Limited — Class H*		205,000		135,902
357 HK	Hainan Meilan International Airport Company Limited — Class H		32,000		38,878
					174,780
	Amusement, Gambling, and Recreation Industries — 0.53%
555 HK	REXLot Holdings		225,000		25,247
	Asset Management — 3.90%
URB/A CN	Urbana Corp. — Class A*		59,300		83,916
GROW	US Global Investors, Inc. — Class A(1)		3,655		44,993
806 HK	Value Partners Group Limited*		111,000		56,836
					185,745
	Beverage and Tobacco Product Manufacturing — 3.94%
SMCB PM	San Miguel Corporation — Class B		21,700		32,388
168 HK	Tsingtao Brewery Co. Limited — Class H		28,000		155,287
					187,675
	Chemical Manufacturing — 5.44%
GSK	GlaxoSmithKline plc — ADR		1,000		42,250
MRK GR	Merck KGaA		330		30,825
SNY	Sanofi-Aventis — ADR		1,750		68,723
SHPGY	Shire PLC — ADR(1)		2,000		117,400
					259,198
	Commercial Banking — 3.73%
	Axis Bank Limited — PN		2,790		59,307
3988 HK	Bank of China Ltd. — Class H		20,000		10,834
939 HK	China Construction Bank Corp. — Class H		12,000		10,323
1398 HK	Industrial & Commercial Bank of China — Class H		13,000		10,798
	State Bank of India — PN		1,780		86,791
					178,053

See Notes to the Financial Statements.

99

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Global Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Computer and Electronic Product Manufacturing — 2.40%
MR	Mindray Medical International Limited — ADR(1)		1,855	$	62,922
8199 HK	Shandong Weigao Group Medical Polymer Company Limited — Class H		15,400		51,443
					114,365
	Credit Intermediation and Related Activities — 3.74%
COMPARTO MM	Banco Compartamos SA de CV		8,000		41,302
HDB	HDFC Bank Ltd. — ADR(1)		620		80,650
IBN	ICICI Bank Ltd. — ADR		1,500		56,565
					178,517
	Crop Production — 3.57%
CRESY	Cresud S.A.C.I.F.y A. — ADR		3,590		51,624
KWS GR	KWS Saat AG		200		34,262
VT CN	Viterra, Inc.*		8,915		84,134
					170,020
	Food Manufacturing — 0.87%
BARN SW	Barry Callebaut AG		40		25,250
2897 JP	Nissin Foods Holdings Co., Ltd.		500		16,267
					41,517
	Food Services and Drinking Places — 0.44%
JFC PM	Jollibee Foods Corporation		17,700		21,058
	Funds, Trusts, and Other Financial Vehicles — 3.99%
BRK-U CN	The Brick Group Income Fund — Class A		49,500		62,949
GAPFF	Groupe Aeroplan, Inc.		4,050		42,171
JAARF	Jazz Air Income Fund		11,775		49,651
MEW-U CN	Menu Foods Income Fund — UT*		8,040		22,063
WTE-U CN	Westshore Terminals Income Fund		1,000		13,673
					190,507
	Global Exchanges — 8.19%
BURSA MK	Bursa Malaysia Bhd		22,700		52,971
388 HK	Hong Kong Exchanges & Clearing Limited		6,500		116,865
JSE SJ	JSE Limited		2,225		18,174
PSE PM	Philippine Stock Exchange, Inc.		3,200		21,631
SGX SP	Singapore Exchange Limited		30,500		180,848
					390,489

See Notes to the Financial Statements.

100

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Global Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Health and Personal Care Stores — 0.39%
	Dabur India Ltd. — PN		5,415	$	18,479
	Heavy and Civil Engineering Construction — 7.07%
1186 HK	China Railway Construction Corp. — Class H		36,000		46,199
390 HK	China Railway Group Ltd. — Class H*		48,000		37,393
	Engineers India Limited — PN		1,775		59,122
	Gammon India Limited — PN		35,600		173,046
	Noida Toll Bridge Company Ltd. — PN*		26,350		21,376
					337,136
	Insurance Carriers and Related Activities — 0.18%
2318 HK	Ping An Insurance Group Company of China Limited — Class H		1,000		8,770
	Management of Companies and Enterprises — 1.64%
656 HK	Fosun International		112,000		78,293
	Merchant Wholesalers, Durable Goods — 2.49%
3323 HK	China National Building Material Company Ltd. — Class H		8,000		16,571
HEI GR	HeidelbergCement AG		502		34,708
HOLN VX	Holcim Ltd.		250		19,455
LG FP	Lafarge SA		285		23,619
OLAM SP	Olam International Limited		13,000		24,615
					118,968
	Merchant Wholesalers, Nondurable Goods — 1.70%
AWB AU	AWB Limited*		54,570		55,390
NOBL SP	Noble Group Limited		11,000		25,447
					80,837
	Mining (except Oil and Gas) — 0.32%
	Hindalco Industries Limited — PN		4,370		15,105

See Notes to the Financial Statements.

101

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Global Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Oil & Gas & Consumable Fuels — 9.85%
SNP	China Petroleum & Chemical Corp. — ADR		450	$	39,631
386 HK	China Petroleum & Chemical Corp. — Class H		64,000		57,038
1088 HK	China Shenhua Energy Company Limited — Class H		14,000		68,615
CEO	CNOOC Limited — ADR		300		46,635
EC	Ecopetrol SA — ADR(1)		3,615		87,411
	GAIL India Limited — PN		1,975		17,541
PTR	PetroChina Company Limited — ADR		350		41,636
	Petronet LNG Ltd. — PN		33,590		51,466
PTBA IJ	PT Tambang Batubara Bukit Asam Tbk		8,000		14,689
	Reliance Industries Ltd. — PN		1,920		44,995
					469,657
	Other Information Services — 1.18%
CPU AU	Computershare Limited		5,450		56,053
	Port and Harbor Operations — 1.12%
3382 HK	Tianjin Port Development Holdings Ltd.*		148,000		53,639
	Professional, Scientific, and Technical Services — 0.27%
BXB AU	Brambles Limited		2,145		13,063
	Rail Transportation — 0.82%
CNI	Canadian National Railway Company		345		18,754
CP	Canadian Pacific Railway Limited(1)		375		20,250
					39,004
	Real Estate — 5.90%
1 HK	Cheung Kong (Holdings) Limited		4,000		51,745
	DLF Ltd. — PN		2,330		18,085
12 HK	Henderson Land Development Company Limited		12,000		90,386
	Housing Development & Infrastructure Limited — PN*		3,120		24,194
823 HK	The Link REIT		31,000		79,245
XIN	Xinyuan Real Estate Co. Ltd. — ADR*		4,000		17,880
					281,535
	Retail Trade — 0.26%
	Pantaloon Retail India Limited — PN		1,500		12,272

See Notes to the Financial Statements.

102

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Global Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 4.81%
111 HK	Cinda International Holdings Ltd.*		188,000	$	47,767
	Crisil Ltd. — PN		240		22,922
	ICRA Limited — PN		650		11,554
	Infrastructure Development Finance Company Ltd. — PN		25,360		84,088
LIQ-U CN	Liquor Stores Income Fund		870		13,019
	Power Finance Corporation — PN		4,620		25,957
	Reliance Capital Limited — PN		1,310		24,144
					229,451
	Software Publishers — 1.64%
	Financial Technologies (India) Ltd. — PN		2,715		78,440
	Support Activities for Transportation — 6.68%
995 HK	Anhui Expressway Co. Ltd. — Class H		66,000		45,967
AIO AU	Asciano Group*		19,650		32,124
ICT PM	International Container Terminal Services, Inc.		60,600		29,494
177 HK	Jiangsu Expressway Company Ltd. — Class H		54,000		48,196
	Mundra Port and Special Economic Zone Ltd. — PN		2,645		31,457
177 HK	Shenzhen Expressway Company Limited — Class H		54,000		26,605
107 HK	Sichuan Expressway Co. Limited — Class H		114,000		60,430
576 HK	Zhejiang Expressway Co., Limited — Class H		48,000		44,512
					318,785
	Telecommunications — 2.39%
AXIATA MK	Axiata Group Berhad*		44,000		39,194
HTX	Hutchison Telecommunications International Limited — ADR*		20,000		60,200
TCL	Tata Communications Limited — ADR(1)		1,000		14,450
					113,844
	Transportation Equipment Manufacturing — 1.24%
TTM	Tata Motors Limited — ADR(1)		3,500		59,010

See Notes to the Financial Statements.

103

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Global Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Utilities — 3.38%
855 HK	China Water Affairs Group Limited		76,000	$	30,289
991 HK	Datang International Power Generation Company Limited — Class H		48,000		20,739
HNP	Huaneng Power International, Inc. — ADR		600		13,440
	Power Grid Corporation of India Limited — PN		12,460		29,493
	PTC India Ltd. — PN		15,800		38,333
	Reliance Power Limited — PN*		8,650		28,830
					161,124
	TOTAL COMMON STOCKS (cost $4,362,231)				4,686,689
	PREFERRED STOCKS — 0.00%
	Telecommunications — 0.00%
PTVI	PTV, Inc. — Series A, CLB*		487		39
	TOTAL PREFERRED STOCKS (cost $3,399)				39
	SHORT-TERM INVESTMENTS — 4.80%
	Money Market Funds — 4.80%
FGVXX	First American Government Obligations Fund — Class Y, 0.00%b		7,160		7,160
FIUXX	First American Prime Obligations Fund — Class I, 0.00%b		112,959		112,959
FAIXX	First American Prime Obligations Fund — Class Y, 0.00%b		30,449		30,449
FFCXX	First American Tax Free Obligations Fund — Class Y, 0.00%b		78,510		78,510
	TOTAL SHORT-TERM INVESTMENTS (cost $229,078)				229,078

See Notes to the Financial Statements.

104

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Global Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

	INVESTMENTS PURCHASED WITH
Identifier	THE CASH PROCEEDS FROM SECURITIES LENDING — 8.16%	Shares		Value
	Investment Companies — 8.16%
	Mount Vernon Securities Lending Trust —
	Prime Portfolio, 0.21%b		388,881	$	388,881
	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $388,881)				388,881
	TOTAL INVESTMENTS — 111.25% (cost $4,983,589)			$	5,304,687

Percentages are stated as a percent of net assets.

* — Non-income producing security.

^b — The rate quoted is the annualized seven-day yield as of December 31, 2009.

ADR — American Depository Receipt.

CLB — Callable Security.

PN — Participatory Note.

(1) — This security or a portion of this security was out on loan at December 31, 2009. Total loaned securities had a market value of $371,588 at December 31, 2009.

See Notes to the Financial Statements.

105

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Paradigm Portfolio

Portfolio of Investments — December 31, 2009

Identifier	COMMON STOCKS — 98.89%	Shares		Value
	Air Transportation — 2.36%
694 HK	Beijing Capital International Airport Company Limited — Class H*		33,277,000	$	22,060,487
670 HK	China Eastern Airlines Corporation Limited — Class H*		8,460,000		3,022,442
1055 HK	China Southern Airlines Company Limited — Class H*		14,158,000		4,419,011
357 HK	Hainan Meilan International Airport Company Limited — Class H		3,073,720		3,734,419
					33,236,359
	Asian Exchanges — 1.76%
8697 JP	Osaka Securities Exchange Co., Ltd.		5,212		24,791,067
	Asset Management — 5.48%
BLK	BlackRock, Inc.(1)		35,113		8,153,239
BX	The Blackstone Group LP(1)		210,314		2,759,320
BAM	Brookfield Asset Management Inc. — Class A(1)		1,689,560		37,474,441
CNS	Cohen & Steers, Inc.(1)		180,067		4,112,730
EV	Eaton Vance Corp.(1)		246,228		7,487,793
LM	Legg Mason, Inc.(1)		108,399		3,269,314
POW CN	Power Corporation of Canada		358,565		10,014,518
PZN	Pzena Investment Management, Inc. — Class A*(1)		213,518		1,738,037
URB/A CN	Urbana Corp. — Class A*		449,500		636,095
GROW	US Global Investors, Inc. — Class A(1)		82,687		1,017,877
806 HK	Value Partners Group Limited*		700,000		358,423
WSDT	WisdomTree Investments, Inc.*(1)		12,000		22,200
					77,043,987
	Beverage and Tobacco Product Manufacturing — 2.13%
168 HK	Tsingtao Brewery Co. Limited — Class H		5,388,000		29,881,600
	Broadcasting (except Internet) — 0.27%
SNI	Scripps Networks Interactive — Class A		90,209		3,743,674
	Cable TV — 0.11%
TWC	Time Warner Cable, Inc.(1)		36,920		1,528,119

See Notes to the Financial Statements.

106

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Paradigm Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Chemical Manufacturing — 0.99%
CCJ	Cameco Corporation(1)		133,464	$	4,293,537
FRX	Forest Laboratories, Inc.*		115,991		3,724,471
NVO	Novo-Nordisk A/S — ADR		62,913		4,016,995
SNY	Sanofi-Aventis — ADR		48,930		1,921,481
					13,956,484
	Coal Mining — 0.30%
1898 HK	China Coal Energy Company — Class H		2,264,000		4,158,093
	Commercial Banking — 1.17%
3988 HK	Bank of China Ltd. — Class H		7,441,000		4,030,774
939 HK	China Construction Bank Corp. — Class H		3,565,500		3,067,285
1398 HK	Industrial & Commercial Bank of China — Class H		11,261,000		9,353,424
					16,451,483
	Credit Intermediation and Related Activities — 3.54%
BK	The Bank of New York Mellon Corp.(1)		483,833		13,532,809
CLFC	Center Financial Corporation*		146,392		673,403
EWBC	East West Bancorp, Inc.(1)		76,326		1,205,951
FRE	Federal Home Loan Mortgage Corporation*(1)		6,664,522		9,796,847
FNM	Federal National Mortgage Association*(1)		5,989,431		7,067,529
HAFC	Hanmi Financial Corporation*(1)		156,563		187,876
MTB	M&T Bank Corporation(1)		11,430		764,553
NARA	Nara Bancorp, Inc.*		137,714		1,561,677
NTRS	Northern Trust Corp.		21,514		1,127,334
SBKFF	State Bank of India — GDR(1)		65,898		6,523,902
STT	State Street Corporation(1)		82,020		3,571,151
STU	The Student Loan Corporation(1)		16,167		752,897
UCBH	UCBH Holdings, Inc.		115,052		3,797
V	Visa, Inc. — Class A(1)		4,735		414,123
WU	The Western Union Company		134,757		2,540,169
					49,724,018

See Notes to the Financial Statements.

107

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Paradigm Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Data Processing, Hosting and Related Services — 0.01%
AOL	AOL Inc.*(1)		6,436	$	149,830
	European Exchanges — 0.69%
BME SM	Bolsas y Mercados Espanoles		36,828		1,187,881
DB1 GR	Deutsche Boerse AG		103,095		8,571,914
					9,759,795
	Funds, Trusts, and Other Financial Vehicles — 0.80%
ALX	Alexander’s, Inc.*(1)		6,164		1,876,445
GDX	Market Vectors Gold Miners ETF(1)		201,979		9,333,449
					11,209,894
	Gaming — 2.41%
LVS	Las Vegas Sands Corp.*(1)		325,968		4,869,962
MGM	MGM Mirage*(1)		258,420		2,356,790
WYNN	Wynn Resorts Limited(1)		456,834		26,601,444
					33,828,196
	General Merchandise Stores — 0.87%
SHLD	Sears Holdings Corporation*(1)		147,302		12,292,352
	Global Exchanges — 9.65%
388 HK	Hong Kong Exchanges & Clearing Limited		5,373,840		96,617,393
JSE SJ	JSE Limited		558,125		4,558,777
SGX SP	Singapore Exchange Limited		5,797,197		34,374,240
					135,550,410
	Heavy and Civil Engineering Construction — 0.35%
JOE	The St. Joe Company*(1)		170,051		4,912,773
	Holding Company — 6.83%
BRK/A	Berkshire Hathaway Inc. — Class A*		294		29,164,800
BRK/B	Berkshire Hathaway Inc. — Class B*(1)		4,747		15,598,642
GBLS BB	Groupe Bruxelles Lambert S.A. Strip VVPR*		24,000		275
LUK	Leucadia National Corporation*(1)		2,152,047		51,197,198
					95,960,915

See Notes to the Financial Statements.

108

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Paradigm Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Hotels, Restaurants & Leisure — 0.07%
200 HK	Melco International Development Limited*		2,213,000	$	1,021,815
	Insurance Carriers and Related Activities — 5.31%
AGO	Assured Guaranty Ltd.(1)		974,094		21,196,286
LFC	China Life Insurance Co., Limited — ADR(1)		217,977		15,988,613
2628 HK	China Life Insurance Co., Limited — Class H		492,000		2,433,539
MKL	Markel Corporation*(1)		43,935		14,937,900
MBI	MBIA Inc.*(1)		1,315,930		5,237,401
2328 HK	PICC Property & Casualty Co. Ltd. — Class H*		3,014,000		2,721,129
2318 HK	Ping An Insurance Group Company of China Limited — Class H		1,386,245		12,157,848
					74,672,716
	Management of Companies and Enterprises — 0.20%
ABK	Ambac Financial Group, Inc.*(1)		1,172,286		972,997
CATY	Cathay General Bancorp(1)		90,191		680,942
WIBC	Wilshire Bancorp, Inc.(1)		137,619		1,127,100
					2,781,039
	Merchant Wholesalers, Nondurable Goods — 1.71%
SIAL	Sigma-Aldrich Corp.(1)		475,768		24,040,557
	Mining (except Oil and Gas) — 6.08%
AAUKY	Anglo American PLC — ADR*(1)		1,942,165		42,106,137
FNV CN	Franco-Nevada Corporation		1,117,592		30,027,571
RTP	Rio Tinto Plc — ADR		53,783		11,584,321
1171 HK	Yanzhou Coal Mining Company Limited — Class H		809,000		1,790,497
					85,508,526

See Notes to the Financial Statements.

109

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Paradigm Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Motion Picture and Sound Recording Industries — 1.33%
DWA	DreamWorks Animation SKG, Inc. — Class A*		329,669	$	13,170,277
TWX	Time Warner, Inc.(1)		187,603		5,466,751
					18,637,028
	Nonstore Retailers — 0.41%
BID	Sotheby’s(1)		254,708		5,725,836
	Oil & Gas & Consumable Fuels — 0.48%
CEO	CNOOC Limited — ADR(1)		43,324		6,734,716
	Oil and Gas Extraction — 11.98%
CNQ	Canadian Natural Resources Ltd.		471,978		33,958,817
COSWF	Canadian Oil Sands Trust(1)		1,480,088		42,227,722
CVE	Cenovus Energy Inc.		270,838		6,825,117
135 HK	CNPC Hong Kong Limited		933,000		1,241,850
EP	El Paso Corporation		661,446		6,502,014
ECA	EnCana Corporation		270,835		8,772,346
IMO	Imperial Oil Ltd.(1)		235,335		9,098,051
NXY	Nexen Inc.		438,482		10,492,874
PWE	Penn West Energy Trust(1)		353,375		6,219,400
PBR	Petroleo Brasileiro S.A. — ADR(1)		36,459		1,738,365
SD	SandRidge Energy, Inc.*(1)		121,590		1,146,594
STO	StatoilHydro ASA — ADR(1)		108,309		2,697,977
SU	Suncor Energy, Inc.		1,053,699		37,206,112
WZGRF	WesternZagros Resources Ltd.*		297,410		218,966
					168,346,205
	Other Exchanges — 1.67%
ASX AU	ASX Ltd.		627,352		19,689,278
X CN	TMX Group Inc.		119,192		3,775,714
					23,464,992
	Performing Arts, Spectator Sports, and Related Industries — 0.65%
WMG	Warner Music Group Corp.*		1,622,302		9,182,229
	Plastics and Rubber Products Manufacturing — 0.81%
JAH	Jarden Corporation		366,986		11,343,537

See Notes to the Financial Statements.

110

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Paradigm Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Port and Harbor Operations — 0.04%
3382 HK	Tianjin Port Development Holdings Ltd.*		1,639,000	$	594,009
	Professional, Scientific, and Technical Services — 1.88%
BR	Broadridge Financial Solutions, Inc.		64,192		1,448,172
CACI	CACI International, Inc. — Class A*		142,727		6,972,214
FTIS LI	Financial Technologies (India) Ltd. — GDR		277,368		1,164,946
MA	Mastercard, Inc. — Class A(1)		65,752		16,831,197
RHDCQ	R.H. Donnelley Corporation*(1)		49,000		186
					26,416,715
	Publishing Industries (except Internet) — 0.48%
SSP	The E.W. Scripps Company — Class A*(1)		47,980		333,941
WPO	The Washington Post Company — Class B(1)		14,426		6,341,669
					6,675,610
	Rail Transportation — 2.68%
CSX	CSX Corp.		288,956		14,011,477
NSC	Norfolk Southern Corp.		226,839		11,890,900
UNP	Union Pacific Corp.		184,371		11,781,307
					37,683,684
	Real Estate — 6.62%
1 HK	Cheung Kong (Holdings) Limited		1,261,000		16,312,624
FCE/A	Forest City Enterprises, Inc. — Class A*(1)		985,029		11,603,642
10 HK	Hang Lung Group Limited		239,000		1,191,393
12 HK	Henderson Land Development Company Limited		3,086,000		23,244,306
IEP	Icahn Enterprises LP(1)		390,225		15,589,489
823 HK	The Link REIT		5,289,000		13,520,260
TPL	Texas Pacific Land Trust		157,445		4,746,967
VNO	Vornado Realty Trust(1)		31,058		2,172,197
4 HK	Wharf Holdings Ltd.		799,000		4,611,558
					92,992,436

See Notes to the Financial Statements.

111

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Paradigm Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Rental and Leasing Services — 0.03%
WSC	Wesco Financial Corporation		1,382	$	474,026
	Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 6.71%
CLE LN	Climate Exchange PLC*		66,602		684,179
CME	CME Group, Inc.(1)		106,266		35,700,063
ICE	IntercontinentalExchange Inc.*(1)		339,848		38,164,930
LAB	LaBranche & Co. Inc.*(1)		1,122,462		3,187,792
LSE LN	London Stock Exchange Group plc		1,431,836		16,605,153
					94,342,117
	Special Purpose Entity — 1.30%
CPN	Calpine Corporation*(1)		1,658,356		18,241,916
	Support Activities for Mining — 0.64%
OGZPY	Gazprom OAO — ADR		370,222		9,033,417
	Support Activities for Transportation — 1.75%
995 HK	Anhui Expressway Co. Ltd. — Class H		3,918,000		2,728,764
177 HK	Jiangsu Expressway Company Ltd. — Class H		4,450,500		3,972,123
548 HK	Shenzhen Expressway Company Limited — Class H		6,650,000		3,276,369
107 HK	Sichuan Expressway Co. Limited — Class H		17,960,000		9,520,417
576 HK	Zhejiang Expressway Co., Limited — Class H		5,436,000		5,040,994
					24,538,667
	Telecommunications — 1.02%
CHL	China Mobile Limited — ADR(1)		129,347		6,005,581
CHU	China Unicom (Hong Kong) Limited — ADR(1)		584,358		7,660,934
762 HK	China Unicom Limited		461,000		611,226
					14,277,741

See Notes to the Financial Statements.

112

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Paradigm Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	U.S. Equity Exchanges — 3.20%
NDAQ	The Nasdaq OMX Group*(1)		1,205,796	$	23,898,877
NYX	NYSE Euronext(1)		833,606		21,090,232
					44,989,109
	Utilities — 2.12%
BIP	Brookfield Infrastucture Partners LP(1)		79,901		1,339,940
991 HK	Datang International Power Generation Company Limited — Class H		23,717,000		10,247,369
DYN	Dynegy, Inc. — Class A*		1,714,996		3,104,143
NRG	NRG Energy, Inc.*		78,768		1,859,712
RRI	RRI Energy, Inc.*		2,320,563		13,273,620
					29,824,784
	TOTAL COMMON STOCKS (cost $1,381,082,411)				1,389,722,476
		Principal
	ESCROW NOTES — 0.00%	Amount
	Special Purpose Entity — 0.00%
	Calpine Corporation (converted from Calpine Corp., 8.750%, 07/15/2008)*+	$	200,000		0
	Calpine Corporation (converted from Calpine Corp., 8.500%, 02/15/2011)*+		1,000,000		0
	Calpine Corporation (converted from Calpine Corp., 7.875%, 04/01/2008)*+		200,000		0
	Calpine Corporation (converted from Calpine Corp., 7.625%, 04/15/2050)*+		100,000		0
	Calpine Corporation (converted from Calpine Corp., 4.750%, 11/15/2023)*+		42,200,000		0
	TOTAL ESCROW NOTES (cost $0)				0

See Notes to the Financial Statements.

113

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Paradigm Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

		Principal
Identifier	CONVERTIBLE BONDS — 0.88%	Amount		Value
	Real Estate — 0.88%
029169AA7	American Real Estate 4.000%, 08/15/2013	$	10,000,000	$	8,300,000
345550AK3	Forest City Enterprises, Inc. 3.625%, 10/15/2014,		4,000,000		3,985,000
	TOTAL CONVERTIBLE BONDS (cost $9,625,966)				12,285,000
	CORPORATE BONDS — 0.04%
	Credit Intermediation and Related Activities — 0.04%
317928AA7	FINOVA Group, Inc. 7.500%, 11/15/2009, Acquired
	10/19/2006-3/29/2007 at $7,902,157
	(Default Effective 4/29/2005)		9,503,880		582,112
	TOTAL CORPORATE BONDS (cost $7,902,157)				582,112
	SHORT-TERM INVESTMENTS — 0.33%	Shares
	Money Market Funds — 0.33%
FIUXX	First American Prime Obligations Fund — Class I, 0.00%b		4,687,061		4,687,061
	TOTAL SHORT-TERM INVESTMENTS (cost $4,687,061)				4,687,061

See Notes to the Financial Statements.

114

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Paradigm Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

	INVESTMENTS PURCHASED WITH
	THE CASH PROCEEDS FROM
Identifier	SECURITIES LENDING — 27.68%	Shares		Value
	Investment Companies — 27.68%
	DWS Money Market Series Institutional Shares, 0.16%b		17,000,000	$	17,000,000
	First American Prime Obligations Fund — Class Z, 0.05%b		84,435,000		84,435,000
	JP Morgan Prime Money Market Fund, 0.11%b		17,156,763		17,156,763
	Mount Vernon Securities Lending Trust — Prime Portfolio, 0.21%b		267,726,886		267,726,886
	Reserve Primary Fund+, 0.00%b		3,117,324		2,620,751
	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $389,435,973)				388,939,400
	TOTAL INVESTMENTS — 127.82% (cost $1,792,733,568)			$	1,796,216,049

Percentages are stated as a percent of net assets.

* — Non-income producing security.

+ — Security is considered illiquid. The aggregate value of such securities is $2,620,751 or 0.19% of net assets.

^b — The rate quoted is the annualized seven-day yield as of December 31, 2009.

ADR — American Depository Receipt.

ETF — Exchange Traded Fund.

GDR — Global Depository Receipt.

(1) — This security or a portion of this security was out on loan at December 31, 2009. Cash collateral for loaned securities totaled $389,435,973 of which $3,117,324 was illiquid. Total loaned securities had a market value of $366,244,969 at December 31, 2009.

See Notes to the Financial Statements.

115

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Medical Portfolio

Portfolio of Investments — December 31, 2009

Identifier	COMMON STOCKS — 94.18%	Shares		Value
	Ambulatory Health Care Services — 0.03%
AVXT	AVAX Technologies, Inc.*		50,000	$	8,500
	Chemical Manufacturing — 80.47%
ABT	Abbott Laboratories		23,000		1,241,770
AEZS	AEterna Zentaris Inc.*(1)		102,500		82,717
AGEN	Antigenics, Inc.*		892		571
ARNA	Arena Pharmaceuticals, Inc.*(1)		45,000		159,750
AZN	AstraZeneca PLC — ADR		11,000		516,340
ATB CN	Atrium Innovations Inc.*(1)		4,884		73,597
BIIB	Biogen Idec, Inc.*		33,250		1,778,875
BPAX	BioSante Pharmaceuticals, Inc.*(1)		13,476		19,540
BMY	Bristol-Myers Squibb Company(1)		43,000		1,085,750
CLDX	Celldex Therapeutics Inc.*(1)		26,294		123,056
1093 HK	China Pharmaceutical Group Limited		1,640,000		911,652
DCGN	deCODE genetics, Inc.*(1)		11,000		1,535
DNDN	Dendreon Corporation*(1)		29,000		762,120
LLY	Eli Lilly & Company		32,000		1,142,720
EPCT	EpiCept Corporation*(1)		2,039		1,183
GENZ	Genzyme Corporation*		24,538		1,202,607
GSK	GlaxoSmithKline plc — ADR		33,673		1,422,684
IMGN	ImmunoGen, Inc.*		14,000		110,040
ISA CN	Isotechnika Pharma Inc.*		40,000		6,311
JNJ	Johnson & Johnson		27,000		1,739,070
LIFE	Life Technologies Corporation*		32,000		1,671,360
LONN SW	Lonza Group AG*		14,000		987,965
MBRX	Metabasis Therapeutics, Inc.*		44,000		16,940
MMRF	MMR Information Systems Inc.*		43,000		3,440
COX FP	NicOx SA*		41,535		346,954
NVS	Novartis AG — ADR		31,000		1,687,330
ONTY	Oncothyreon, Inc.*(1)		20,333		109,595
PTIE	Pain Therapeutics, Inc.*		34,000		182,240
PFE	Pfizer, Inc.		49,000		891,310
PGNX	Progenics Pharmaceuticals, Inc.*		42,200		187,368
SNY	Sanofi-Aventis — ADR		32,000		1,256,640
SVNT	Savient Pharmaceuticals Inc.*(1)		25,000		340,250
SCR	Simcere Pharmaceutical Group — ADR*		53,000		489,720
TGEN	Targeted Genetics Corp.*		1,000		280

See Notes to the Financial Statements.

116

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Medical Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Chemical Manufacturing (Continued)
TELK	Telik, Inc.*(1)		111,000	$	84,848
VICL	Vical Incorporated*(1)		72,500		238,525
					20,876,653
	Computer and Electronic Product Manufacturing — 0.01%
TGX	Theragenics Corporation*		2,000		2,680
	Funds, Trusts, and Other Financial Vehicles — 0.03%
IBLTZ	IMPATH Bankruptcy Liquidating Trust — Class A*		26,000		6,500
	Pharmaceutical and Medicine Manufacturing — 1.06%
4508 JP	Mitsubishi Tanabe Pharma Corporation		22,000		274,247
	Professional, Scientific, and Technical Services — 12.58%
AFFX	Affymetrix, Inc.*		130,000		759,200
AMRI	Albany Molecular Research, Inc.*		50,000		454,000
CEPH	Cephalon, Inc.*		12,000		748,920
CBST	Cubist Pharmaceuticals, Inc.*(1)		31,000		588,070
HGSI	Human Genome Sciences, Inc.*(1)		21,000		642,600
MYRX	Myriad Pharmaceuticals Inc.*(1)		14,000		70,420
					3,263,210
	TOTAL COMMON STOCKS (cost $25,125,395)				24,431,790
	SHORT-TERM INVESTMENTS — 5.00%
	Money Market Funds — 5.00%
FIUXX	First American Prime Obligations Fund — Class I, 0.00%b		956,669		956,669
FAIXX	First American Prime Obligations Fund — Class Y, 0.00%b		340,859		340,859
	TOTAL SHORT-TERM INVESTMENTS (cost $1,297,528)				1,297,528

See Notes to the Financial Statements.

117

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Medical Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

	INVESTMENTS PURCHASED WITH THE
	CASH PROCEEDS FROM SECURITIES
Identifier	LENDING — 13.34%	Shares		Value
	Investment Companies — 13.34%
	Mount Vernon Securities Lending Trust — Prime Portfolio, 0.21%b		3,462,232	$	3,462,232
	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $3,462,232)				3,462,232
	TOTAL INVESTMENTS — 112.52% (cost $29,885,155)			$	29,191,550

Percentages are stated as a percent of net assets.

* — Non-income producing security.

^b — The rate quoted is the annualized seven-day yield as of December 31, 2009.

ADR — American Depository Receipt.

(1) —  This security or a portion of this security was out on loan at December 31, 2009. Total loaned securities had a market value of $3,180,354 at December 31, 2009.

See Notes to the Financial Statements.

118

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — December 31, 2009

Identifier	COMMON STOCKS — 99.66%	Shares		Value
	Administrative and Support Services — 0.56%
MANT	ManTech International Corporation — Class A*		23,388	$	1,129,173
	Air Transportation — 9.84%
694 HK	Beijing Capital International Airport Company Limited — Class H*		10,937,000		7,250,520
CEA	China Eastern Airlines Corporation Limited — ADR*(1)		35,814		1,257,788
670 HK	China Eastern Airlines Corporation Limited — Class H*		4,104,000		1,466,206
ZNH	China Southern Airlines Company Limited — ADR*(1)		84,326		1,300,307
1055 HK	China Southern Airlines Company Limited — Class H*		11,439,000		3,570,353
357 HK	Hainan Meilan International Airport Company Limited — Class H		3,961,000		4,812,420
					19,657,594
	Asian Exchanges — 2.58%
8697 JP	Osaka Securities Exchange Co., Ltd.		1,086		5,165,598
	Asset Management — 3.69%
CNS	Cohen & Steers, Inc.(1)		101,472		2,317,620
EV	Eaton Vance Corp.		43,076		1,309,941
PZN	Pzena Investment Management, Inc. — Class A*		125,498		1,021,554
SII CN	Sprott, Inc.		1,680		7,229
URB/A CN	Urbana Corp. — Class A*		560,871		793,698
GROW	US Global Investors, Inc. — Class A(1)		125,128		1,540,326
806 HK	Value Partners Group Limited*		700,000		358,423
WSDT	WisdomTree Investments, Inc.*(1)		14,420		26,677
					7,375,468
	Beverage and Tobacco Product Manufacturing — 10.53%
168 HK	Tsingtao Brewery Co. Limited — Class H		3,591,700		19,919,403
WEN	Wendy’s/Arby’s Group, Inc. — Class A		237,040		1,111,718
					21,031,121

See Notes to the Financial Statements.

119

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Chemical Manufacturing — 0.37%
1093 HK	China Pharmaceutical Group Limited		1,341,000	$	745,442
	Commercial Banking — 1.00%
BLBD LB	BLOM Bank s.a.l. — GDR		22,780		2,004,640
	Credit Intermediation and Related Activities — 1.33%
CLFC	Center Financial Corporation*		103,259		474,992
EWBC	East West Bancorp, Inc.(1)		38,577		609,517
FBOD	First Bank of Delaware*		97,167		121,459
HAFC	Hanmi Financial Corporation*(1)		129,747		155,696
NARA	Nara Bancorp, Inc.*		104,254		1,182,240
PFBC	Preferred Bank Los Angeles(1)		55,700		100,260
UCBH	UCBH Holdings, Inc.(1)		182,396		6,019
					2,650,183
	Food Services and Drinking Places — 0.34%
OCX CN	Onex Corporation		30,087		678,924
	Funds, Trusts, and Other Financial Vehicles — 1.18%
ALX	Alexander’s, Inc.*		7,727		2,352,253
	Global Exchanges — 6.60%
JSE SJ	JSE Limited		489,836		4,000,991
SGX SP	Singapore Exchange Limited		1,549,000		9,184,732
					13,185,723
	Hotels, Restaurants & Leisure — 0.56%
200 HK	Melco International Development Limited*		2,425,000		1,119,702
	Insurance Carriers and Related Activities — 0.78%
MBI	MBIA Inc.*(1)		391,555		1,558,389
	Management of Companies and Enterprises — 0.77%
ABK	Ambac Financial Group, Inc.*(1)		302,629		251,182
CATY	Cathay General Bancorp(1)		59,766		451,233
WIBC	Wilshire Bancorp, Inc.(1)		101,755		833,374
					1,535,789

See Notes to the Financial Statements.

120

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Mining (except Oil and Gas) — 7.73%
FMG AU	Fortescue Metals Group Ltd.*		652,741	$	2,603,271
FNV CN	Franco-Nevada Corporation		230,369		6,189,577
GLW CN	Gold Wheaton Gold Corporation*		481,160		167,924
IMN CN	Inmet Mining Corporation		90,265		5,504,711
1171 HK	Yanzhou Coal Mining Company Limited — Class H		440,000		973,818
					15,439,301
	Motion Picture and Sound Recording Industries — 2.82%
DWA	DreamWorks Animation SKG, Inc. — Class A*		141,079		5,636,106
	Nonstore Retailers — 1.23%
BID	Sotheby’s(1)		109,578		2,463,313
	Oil and Gas Extraction — 2.24%
2883 HK	China Oilfield Services Limited — Class H		257,000		308,264
135 HK	CNPC Hong Kong Limited		1,763,000		2,346,604
NEGI	National Energy Group, Inc.*		251,902		995,013
PVG	Penn Virginia GP Holdings LP		49,310		822,491
					4,472,372
	Other Exchanges — 0.48%
NZX NZ	NZX Ltd.*		560,696		960,737
	Performing Arts, Spectator Sports, and Related Industries — 3.13%
WMG	Warner Music Group Corp.*(1)		1,103,357		6,245,001
	Pipeline Transportation — 0.00%
SUG	Southern Union Company		1		11
	Plastics and Rubber Products Manufacturing — 2.89%
JAH	Jarden Corporation		186,641		5,769,073
	Port and Harbor Operations — 0.10%
3382 HK	Tianjin Port Development Holdings Ltd.*		559,000		202,594

See Notes to the Financial Statements.

121

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Professional, Scientific, and Technical Services — 1.55%
BBD/B CN	Bombardier Inc. — Class B		108,466	$	497,812
BR	Broadridge Financial Solutions, Inc.		2,468		55,678
CACI	CACI International, Inc. — Class A*		21,835		1,066,640
FTIS LI	Financial Technologies (India) Ltd. — GDR		252,835		1,061,907
RHDCQ	R.H. Donnelley Corporation*(1)		1,356,700		5,155
RBA	Ritchie Bros. Auctioneers, Incorporated(1)		18,298		410,424
					3,097,616
	Publishing Industries (except Internet) — 0.67%
IDARQ	Idearc Inc.*		1,317,000		4,346
ROVI	Rovi Corporation*		41,816		1,332,676
					1,337,022
	Rail Transportation — 0.01%
525 HK	Guangshen Railway Company Limited — Class H		64,000		26,167
	Real Estate — 11.81%
BLMC	Biloxi Marsh Lands Corporation		100		1,400
IEP	Icahn Enterprises LP		294,670		11,772,067
823 HK	The Link REIT		2,229,000		5,697,988
TPL	Texas Pacific Land Trust		202,888		6,117,073
					23,588,528
	Rental and Leasing Services — 0.20%
CDCO	Comdisco Holding Company, Inc.*		9,000		90,000
WSC	Wesco Financial Corporation		916		314,188
					404,188

See Notes to the Financial Statements.

122

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 7.49%
BNB CN	BAM Investments Ltd.*		149,395	$	1,449,882
CLE LN	Climate Exchange PLC*		60,649		623,026
ICE	IntercontinentalExchange Inc.*		21,464		2,410,407
JEF	Jefferies Group, Inc.*(1)		421,203		9,995,147
LAB	LaBranche & Co. Inc.*		80,366		228,240
RHJI BB	RHJ International*		800		6,124
SWS	SWS Group, Inc.		1,000		12,100
VALU	Value Line, Inc.(1)		9,246		232,167
					14,957,093
	Special Purpose Entity — 1.49%
CPN	Calpine Corporation*		270,302		2,973,322
	Specialty Trade Contractors — 0.24%
PWR	Quanta Services, Inc.*		22,740		473,902
	Support Activities for Mining — 1.38%
KEWL	Keweenaw Land Association Ltd.		290		50,170
SEMUF	Siem Industries Inc.*		35,617		1,691,808
UTS CN	UTS Energy Corporation*(1)		466,985		1,018,048
					2,760,026
	Support Activities for Transportation — 5.54%
548 HK	Shenzhen Expressway Company Limited — Class H		655,000		322,710
107 HK	Sichuan Expressway Co. Limited — Class H		19,311,100		10,236,622
576 HK	Zhejiang Expressway Co., Limited — Class H		547,000		507,252
					11,066,584
	Telecommunications — 0.03%
CIBY	CIBL, Inc.*		18		5,706
LICT	Lynch Interactive Corporation*		18		52,200
					57,906
	U.S. Equity Exchanges — 0.78%
NDAQ	The Nasdaq OMX Group*		79,011		1,565,998

See Notes to the Financial Statements.

123

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Utilities — 5.05%
991 HK	Datang International Power Generation Company Limited — Class H		7,130,000	$	3,080,648
DYN	Dynegy, Inc. — Class A*		87,801		158,920
1071 HK	Huadian Power International Corporation — Class H*		970,000		257,719
PICO	PICO Holdings, Inc.*		35,016		1,146,074
RRI	RRI Energy, Inc.*		951,468		5,442,397
					10,085,758
	Waste Management and Remediation Services — 2.67%
CVA	Covanta Holding Corporation*(1)		294,545		5,328,319
	TOTAL COMMON STOCKS (cost $186,627,566)				199,100,936
		Principal
	ESCROW NOTES — 0.00%	Amount		Value
	Special Purpose Entity — 0.00%
	Calpine Corporation (converted from Calpine Corp., 4.750%, 11/15/2023)*+	$	14,400,000		0
	TOTAL ESCROW NOTES (cost $0)				0
	CORPORATE BONDS — 0.08%
	Credit Intermediation and Related Activities — 0.08%
317928AA7	FINOVA Group, Inc. 7.500%, 11/15/2009, Acquired
	10/19/2006-5/17/2007 at $741,082
	(Default Effective 4/29/2005)		2,783,965		170,518
	TOTAL CORPORATE BONDS (cost $1,396,960)				170,518

See Notes to the Financial Statements.

124

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier	RIGHTS — 0.43%	Shares		Value
	Rental and Leasing Services — 0.43%
CDCOR	Comdisco Holding Company, Inc.
	Expiration Date 12/31/2050,
	Strike Price $1.00*#		6,839,908	$	854,989
	TOTAL RIGHTS (cost $1,996,634)				854,989
	SHORT-TERM INVESTMENTS — 0.21%
	Money Market Funds — 0.21%
FIUXX	First American Prime Obligations Fund — Class I, 0.00%b		412,802		412,802
	TOTAL SHORT-TERM INVESTMENTS (cost $412,802)				412,802
	INVESTMENTS PURCHASED WITH
	THE CASH PROCEEDS FROM
	SECURITIES LENDING — 13.42%
	Investment Companies — 13.42%
	Mount Vernon Securities Lending Trust —
	Prime Portfolio, 0.21%b		26,818,709		26,818,709
	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $26,818,709)				26,818,709
	TOTAL INVESTMENTS — 113.80% (cost $217,252,671)			$	227,357,954

Percentages are stated as a percent of net assets.

* —	Non-income producing security.
# —	Contingent value right (contingent upon profitability of company).

+ — Security is considered illiquid. The aggregate value of such securities is $0 or 0% of net assets.

^b — The rate quoted is the annualized seven-day yield as of December 31, 2009.

ADR —	American Depository Receipt.
GDR —	Global Depository Receipt

(1) — This security or a portion of this security was out on loan at December 31, 2009. Total loaned securities had a market value of $24,885,913 at December 31, 2009.

See Notes to the Financial Statements.

125

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Kinetics Government Money Market Portfolio

Portfolio of Investments — December 31, 2009

		Principal
Identifier	SHORT-TERM INVESTMENTS — 99.88%	Amount		Value
	US Government Agency Issues — 99.88%
313385SF3	Federal Home Loan Bank Discount Note 0.004%, 01/25/2010b	$	1,520,000	$	1,519,996
313385SP3	Federal Home Loan Bank Discount Note 0.010%, 02/02/2010b		150,000		149,998
	TOTAL SHORT-TERM INVESTMENTS (cost $1,669,994)				1,669,994
	TOTAL INVESTMENTS — 99.88% (cost $1,669,994)			$	1,669,994

Percentages are stated as a percent of net assets

^b — The rate quoted is the yield to maturity.

See Notes to the Financial Statements.

126

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Market Opportunities Portfolio

Portfolio of Investments — December 31, 2009

Identifier	COMMON STOCKS — 98.87%	Shares		Value
	Asian Exchanges — 1.19%
8697 JP	Osaka Securities Exchange Co., Ltd.		165	$	784,829
	Asset Management — 17.17%
BLK	BlackRock, Inc.(1)		6,607		1,534,145
BX	The Blackstone Group LP		71,209		934,262
BAM	Brookfield Asset Management Inc. — Class A		43,595		966,937
CNS	Cohen & Steers, Inc.(1)		49,527		1,131,197
EV	Eaton Vance Corp.(1)		32,959		1,002,283
LM	Legg Mason, Inc.		42,688		1,287,470
POW CN	Power Corporation of Canada		42,688		1,192,252
PZN	Pzena Investment Management, Inc. — Class A*(1)		174,617		1,421,382
SII CN	Sprott, Inc.		44,945		193,386
URB/A CN	Urbana Corp. — Class A*		370,714		524,604
GROW	US Global Investors, Inc. — Class A(1)		38,390		472,581
806 HK	Value Partners Group Limited*		1,311,000		671,276
WSDT	WisdomTree Investments, Inc.*(1)		11,580		21,423
					11,353,198
	Commercial Banking — 6.98%
3988 HK	Bank of China Ltd. — Class H		1,834,000		993,474
939 HK	China Construction Bank Corp. — Class H		2,012,000		1,730,859
1398 HK	Industrial & Commercial Bank of China — Class H		2,278,000		1,892,114
					4,616,447
	Credit Intermediation and Related Activities — 7.50%
BK	The Bank of New York Mellon Corp.		29,470		824,276
CLFC	Center Financial Corporation*		5,674		26,101
EWBC	East West Bancorp, Inc.(1)		3,344		52,835
FRE	Federal Home Loan Mortgage Corporation*(1)		458,805		674,443
FNM	Federal National Mortgage Association*(1)		445,190		525,324
HAFC	Hanmi Financial Corporation*(1)		6,417		7,700
NARA	Nara Bancorp, Inc.*		6,424		72,848
NTRS	Northern Trust Corp.		15,984		837,562
PFBC	Preferred Bank Los Angeles(1)		2,605		4,689
STT	State Street Corporation		14,435		628,500

See Notes to the Financial Statements.

127

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Market Opportunities Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Credit Intermediation and Related Activities (Continued)
UCBH	UCBH Holdings, Inc.		6,803	$	225
V	Visa, Inc. — Class A(1)		14,935		1,306,215
					4,960,718
	Data Processing, Hosting and Related Services — 0.62%
DST	DST Systems, Inc.*		5,220		227,331
FISV	Fiserv, Inc.*		3,746		181,606
					408,937
	European Exchanges — 1.37%
DB1 GR	Deutsche Boerse AG		10,928		908,617
	Food Services and Drinking Places — 0.96%
OCX CN	Onex Corporation		28,090		633,861
	Global Exchanges — 10.16%
388 HK	Hong Kong Exchanges & Clearing Limited		184,650		3,319,861
JSE SJ	JSE Limited		164,795		1,346,049
SGX SP	Singapore Exchange Limited		346,387		2,053,888
					6,719,798
	Holding Company — 1.80%
BRK/A	Berkshire Hathaway Inc. — Class A*		12		1,190,400
	Insurance Carriers and Related Activities — 8.50%
LFC	China Life Insurance Co., Limited — ADR		25,410		1,863,824
2628 HK	China Life Insurance Co., Limited — Class H		165,000		816,126
MKL	Markel Corporation*		693		235,620
MBI	MBIA Inc.*(1)		103,530		412,049
2318 HK	Ping An Insurance Group Company of China Limited — Class H		243,300		2,133,825
VRSK	Verisk Analytics, Inc. — Class A*		5,337		161,604
					5,623,048

See Notes to the Financial Statements.

128

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Market Opportunities Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Management of Companies and Enterprises — 0.14%
ABK	Ambac Financial Group, Inc.*(1)		18,914	$	15,699
CATY	Cathay General Bancorp(1)		3,377		25,496
WIBC	Wilshire Bancorp, Inc.(1)		6,601		54,062
					95,257
	Mining (except Oil and Gas) — 6.82%
FNV CN	Franco-Nevada Corporation		167,841		4,509,568
	Nonstore Retailers — 1.50%
BID	Sotheby’s(1)		44,008		989,300
	Other Exchanges — 2.78%
ASX AU	ASX Ltd.		48,174		1,511,928
IMAREX NO	IMAREX ASA*		1,930		19,001
NZX NZ	NZX Ltd.*		178,004		305,005
					1,835,934
	Professional, Scientific, and Technical Services — 5.67%
BR	Broadridge Financial Solutions, Inc.		64,031		1,444,539
FTIS LI	Financial Technologies (India) Ltd. — GDR		135,464		568,949
MA	Mastercard, Inc. — Class A(1)		6,788		1,737,592
					3,751,080
	Publishing Industries (except Internet) — 0.94%
MXB	MSCI Inc. — Class A*		19,460		618,828
	Real Estate — 1.30%
IEP	Icahn Enterprises LP		21,578		862,041
	Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 18.33%
AB	AllianceBernstein Holding LP(1)		7,472		209,963
BNB CN	BAM Investments Ltd.*		32,340		313,861
CLE LN	Climate Exchange PLC*		49,626		509,790
CME	CME Group, Inc.(1)		9,141		3,070,919
BEN	Franklin Resources, Inc.		1,651		173,933
GFIG	GFI Group, Inc.		1,737		7,938
IBKR	Interactive Brokers Group, Inc. — Class A*		3,405		60,337
ICE	IntercontinentalExchange Inc.*		27,847		3,127,218
JEF	Jefferies Group, Inc.*(1)		149,859		3,556,154

See Notes to the Financial Statements.

129

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Market Opportunities Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Securities, Commodity Contracts, and Other Financial Investments and Related Activities (Continued)
LAB	LaBranche & Co. Inc.*		134,848	$	382,968
LSE LN	London Stock Exchange Group plc		22,003		255,171
RMG	Riskmetrics Group Inc.*		5,777		91,912
TROW	T. Rowe Price Group, Inc.		6,219		331,162
TLPR LN	Tullett Prebon plc		5,790		26,083
					12,117,409
	Support Activities for Transportation — 0.26%
995 HK	Anhui Expressway Co. Ltd. — Class H		56,000		39,002
177 HK	Jiangsu Expressway Company Ltd. — Class H		29,000		25,883
548 HK	Shenzhen Expressway Company Limited — Class H		25,000		12,317
107 HK	Sichuan Expressway Co. Limited — Class H		118,000		62,551
576 HK	Zhejiang Expressway Co., Limited — Class H		34,000		31,529
					171,282
	Telecommunications — 0.02%
IRDM	Iridium Communications, Inc.*		1,737		13,948
	U.S. Equity Exchanges — 4.78%
NDAQ	The Nasdaq OMX Group*		44,505		882,089
NYX	NYSE Euronext		90,080		2,279,024
					3,161,113
	Utilities — 0.08%
BIP	Brookfield Infrastucture Partners LP		2,936		49,237
	TOTAL COMMON STOCKS (cost $64,346,620)				65,374,850

See Notes to the Financial Statements.

130

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Market Opportunities Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

	SHORT-TERM INVESTMENTS — 0.82%
	Money Market Funds — 0.82%
FIUXX	First American Prime Obligations Fund — Class I@, 0.00%b		540,525	$	540,525
	TOTAL SHORT-TERM INVESTMENTS (cost $540,525)				540,525
	INVESTMENTS PURCHASED WITH
	THE CASH PROCEEDS FROM
Identifier	SECURITIES LENDING — 22.62%	Shares		Value
	Investment Companies — 22.62%
	Mount Vernon Securities Lending Trust —
	Prime Portfolio, 0.21%b		14,955,121		14,955,121
	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $14,955,121)				14,955,121
	TOTAL INVESTMENTS — 122.31% (cost $79,842,266)			$	80,870,496

Percentages are stated as a percent of net assets.

* — Non-income producing security.

@ — All or a portion of the shares have been committed as collateral for written option contracts.

^b — The rate quoted is the annualized seven-day yield as of December 31, 2009.

ADR —	American Depository Receipt.
GDR —	Global Depository Receipt.

(1) —  This security or a portion of this security was out on loan at December 31, 2009. Total loaned securities had a market value of $14,034,189 at December 31, 2009.

See Notes to the Financial Statements.

131

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Water Infrastructure Portfolio

Portfolio of Investments — December 31, 2009

Identifier	COMMON STOCKS — 88.21%	Shares		Value
	Administrative and Support Services — 1.78%
ACM	Aecom Technology Corp.*		15,000	$	412,500
	Building Supplies — 10.15%
SOLK GA	Corinth Pipeworks SA*		100,000		206,431
GEBN VX	Geberit AG		6,108		1,083,492
6485 JP	Maezawa Kyuso Industries Co. Ltd.		4,500		64,068
NWPX	Northwest Pipe Company*(1)		23,000		617,780
PAP TB	Pacific Pipe Public Company Limited		2,286,500		112,473
SPIP SP	Sinopipe Holdings Limited*		2,000,000		270,492
					2,354,736
	Chemical Manufacturing — 0.47%
YARIY	Yara International ASA — ADR		2,400		109,555
	Funds, Trusts, and Other Financial Vehicles — 1.07%
SLV	iShares Silver Trust*		15,000		248,550
	Heavy and Civil Engineering Construction — 1.18%
PUR CN	Pure Technologies Ltd.*		20,000		82,804
STRL	Sterling Construction Company, Inc.*		10,000		191,800
					274,604
	Machinery Manufacturing — 16.19%
ARF-U CN	Armtec Infrastructure Income Fund		30,000		731,462
CVVT	China Valves Technology, Inc.*(1)		48,300		446,292
ERII	Energy Recovery Inc.*(1)		53,000		364,640
ESE	ESCO Technologies, Inc.		15,000		537,750
FLOW	Flow International Corporation*		40,000		123,200
LNN	Lindsay Corporation(1)		23,000		916,550
MPR	Met-Pro Corporation		39,800		422,676
840 HK	Xinjiang Tianye Water Saving Irrigation System Co. Ltd. — Class H*		1,826,000		214,314
					3,756,884
	Management of Companies and Enterprises — 0.65%
HEK	Heckmann Corporation*(1)		30,300		151,197
	Merchant Wholesalers, Nondurable Goods — 0.66%
HWKN	Hawkins, Inc.(1)		7,000		152,810
	Petroleum and Coal Products Manufacturing — 5.47%
AMN	Ameron International Corporation		20,000		1,269,200

See Notes to the Financial Statements.

132

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Water Infrastructure Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier		Shares		Value
	Professional, Scientific, and Technical Services — 10.42%
ITRI	Itron, Inc.*		8,000	$	540,560
TTEK	Tetra Tech, Inc.*		20,000		543,400
URS	URS Corp.*		30,000		1,335,600
					2,419,560
	Utilities — 40.17%
ACE IM	ACEA S.P.A.		50,000		536,147
AWR	American States Water Company		6,200		219,542
AWK	American Water Works Co., Inc.		15,000		336,150
WTR	Aqua America, Inc.(1)		16,700		292,417
ARTNA	Artesian Resources Corp. — Class A(1)		20,610		377,369
AENV SP	Asia Environment Holdings Limited*		410,000		86,095
BRC-U CN	Brookfield Renewable Power Fund		13,000		238,657
CDZI	Cadiz Inc.*(1)		18,660		223,360
HOO	Cascal N.V.		50,000		270,500
1038 HK	Cheung Kong Infrastructure Holdings Limited		75,000		285,842
CTWS	Connecticut Water Service, Inc.		21,206		525,273
CWCO	Consolidated Water Co., Ltd.(1)		13,252		189,371
EDE	The Empire District Electric Co.		20,000		374,600
GSZ FP	GDF Suez		6,205		269,370
270 HK	Guangdong Investment Limited		1,000,000		584,260
MWC PM	Manila Water Company		1,050,000		357,722
MSEX	Middlesex Water Co.		30,000		528,900
NWG LN	Northumbrian Water Group Plc		90,200		393,802
PNAL MK	Puncak Niaga Holdings Berhad*		84,320		16,007
SVT LN	Severn Trent plc		30,000		526,231
SINO SP	Sinomem Technology Limited*		850,000		338,826
SJW	SJW Corp.		20,000		451,400
SWWC	Southwest Water Company(1)		20,000		117,800
SEV FP	Suez Environnement Co.		10,000		231,160
EYAPS GA	Thessaloniki Water Supply & Sewage Co. SA		10,000		68,524
UU/ LN	United Utilities Group PLC		55,000		440,359
VE	Veolia Environnement — ADR		19,500		641,160
YORW	York Water Company(1)		27,611		400,636
					9,321,480
	TOTAL COMMON STOCKS (cost $20,102,767)				20,471,076

See Notes to the Financial Statements.

133

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Water Infrastructure Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

	PREFERRED STOCKS — 1.56%
	Utilities — 1.56%
CIG	Companhia Energetica de Minas Gerais — ADR	20,000	$	361,200
	TOTAL PREFERRED STOCKS (cost $333,293)			361,200
	SHORT-TERM INVESTMENTS — 8.15%
	Money Market Funds — 8.15%
FIUXX	First American Prime Obligations Fund — Class I, 0.00%b	912,657		912,657
FAIXX	First American Prime Obligations Fund — Class Y, 0.00%b	208,536		208,536
FFCXX	First American Tax Free Obligations Fund — Class Y, 0.00%b	771,525		771,525
	TOTAL SHORT-TERM INVESTMENTS (cost $1,892,718)			1,892,718
	INVESTMENTS PURCHASED WITH THE
	CASH PROCEEDS FROM SECURITIES
	LENDING — 12.28%
	Investment Companies — 12.28%
	Mount Vernon Securities Lending Trust —
	Prime Portfolio, 0.21%b	2,849,007		2,849,007
	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $2,849,007)			2,849,007
	TOTAL INVESTMENTS — 110.20% (cost $25,177,785)		$	25,574,001

Percentages are stated as a percent of net assets.

* — Non-income producing security.

^b — The rate quoted is the annualized seven-day yield as of December 31, 2009.

ADR — American Depository Receipt.

(1) —  This security or a portion of this security was out on loan at December 31, 2009. Total loaned securities had a market value of $2,618,453 at December 31, 2009.

See Notes to the Financial Statements.

134

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Investments — December 31, 2009

		Principal
Identifier	CONVERTIBLE BONDS — 30.01%	Amount		Value
	Computer and Electronic Product Manufacturing — 7.98%
502413AW7	L-3 Communications Holdings, Inc. 3.000%, 08/01/2035ˆ	$	100,000	$	105,500
	Funds, Trusts, and Other Financial Vehicles — 14.90%
10112RAK0	Boston Properties LP 2.875%, 02/15/2037ˆ		100,000		98,625
939653AK7	Washington Real Estate Investment Trust 3.875%, 09/15/2026ˆ		100,000		98,500
					197,125
	Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 7.13%
631103AA6	The Nasdaq OMX Group 2.500%, 08/15/2013ˆ		100,000		94,250
	TOTAL CONVERTIBLE BONDS (cost $367,569)				396,875
	CORPORATE BONDS — 38.92%
	Administrative and Support Services — 7.60%
22025YAJ9	Corrections Corp. of America 6.750%, 01/31/2014ˆ		100,000		100,500
	Mining (except Oil and Gas) — 15.82%
20854PAB5	CONSOL Energy, Inc. 7.875%, 03/01/2012ˆ		100,000		107,625
704549AC8	Peabody Energy Corp. 6.875%, 03/15/2013ˆ		100,000		101,625
					209,250
	Telecommunications — 7.83%
27876GAQ1	Echostar DBS Corp. 6.375%, 10/01/2011ˆ		100,000		103,500
	Utilities — 7.67%
629377AT9	Nrg Energy, Inc. 7.250%, 02/01/2014ˆ		100,000		101,500
	TOTAL CORPORATE BONDS (cost $506,452)				514,750

See Notes to the Financial Statements.

135

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Investments — December 31, 2009 — (Continued)

Identifier	CALL OPTIONS PURCHASED — 0.01%	Contracts		Value
	Computer and Electronis Product Manufacturing — 0.01%
ODY.MV	L-3 Communications Holdings, Inc.ˆ
	Expiration: January 2011, Exercise Price: $25.00		18	$	135
	TOTAL CALL OPTIONS PURCHASED (cost $1,224)				135
	SHORT-TERM INVESTMENTS — 10.62%	Shares
	Money Market Funds — 10.62%
FGVXX	First American Government Obligations Fund — Class Y, 0.00%ˆb		40,000		40,000
FIUXX	First American Prime Obligations Fund — Class I, 0.00%ˆb		33,019		33,019
FAIXX	First American Prime Obligations Fund — Class Y, 0.00%ˆb		39,508		39,508
FOCXX	First American Treasury Obligations Fund — Class Y, 0.00%ˆb		28,000		28,000
	TOTAL SHORT-TERM INVESTMENTS (cost $140,527)				140,527
	TOTAL INVESTMENTS — 79.56% (cost $1,015,772)			$	1,052,287

Percentages are stated as a percent of net assets.

ˆ — All or a portion of the shares have been committed as collateral for written option contracts.

^b — The rate quoted is the annualized seven-day yield as of December 31, 2009.

See Notes to the Financial Statements.

136

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Options Written — December 31, 2009

Identifier	PUT OPTIONS WRITTEN	Contracts		Value
CME.MT	CME Group, Inc. Expiration: January 2010, Exercise Price: $400.00		2	$	12,650
	TOTAL PUT OPTIONS WRITTEN (premiums received $18,054)			$	12,650

See Notes to the Financial Statements.

137

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Market Opportunities Portfolio

Portfolio of Options Written — December 31, 2009

Identifier	PUT OPTIONS WRITTEN	Contracts		Value
CME.MT	CME Group, Inc. Expiration: January 2010, Exercise Price: $400.00		14	$	88,550
	TOTAL PUT OPTIONS WRITTEN (premiums received $126,377)			$	88,550

See Notes to the Financial Statements.

138

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2009

Identifier	PUT OPTIONS WRITTEN	Contracts		Value
	Activities Related to Credit Intermediation
ZZH.MW	The Western Union Company
	Expiration: January 2011, Exercise Price: $17.50		4	$	770
	Air Transportation
ZNH.OC	China Southern Airlines Company Limited — ADR
	Expiration: March 2010, Exercise Price: $15.00		8		960
	Amusement Parks and Arcades
DIS.MX	The Walt Disney Co.
	Expiration: January 2010, Exercise Price: $22.50		3		7
	Asset Management
BX.OM	The Blackstone Group LP
	Expiration: March 2010, Exercise Price: $13.00		12		1,284
BAM.MW	Brookfield Asset Management — Class A
	Expiration: January 2010, Exercise Price: $17.50		3		7
BAM.OX	Brookfield Asset Management — Class A
	Expiration: March 2010, Exercise Price: $22.50		3		420
					1,711
	Beverages
DEO.MK	Diageo plc — ADR
	Expiration: January 2010, Exercise Price: $55.00		1		5
DEO.PL	Diageo plc — ADR
	Expiration: April 2010, Exercise Price: $60.00		2		172
					177
	Beverage and Tobacco Product Manufacturing
MO.OR	Altria Group, Inc.
	Expiration: March 2010, Exercise Price: $17.00		5		60
	Chemical and Allied Products Merchant Wholesalers
IAQ.MI	Sigma-Aldrich Corp.
	Expiration: January 2010, Exercise Price: $45.00		1		5
IAQ.PK	Sigma-Aldrich Corp.
	Expiration: April 2010, Exercise Price: $55.00		2		1,070
IAQ.SJ	Sigma-Aldrich Corp.
	Expiration: July 2010, Exercise Price: $50.00		3		1,080
					2,155

See Notes to the Financial Statements.

139

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2009 — (Continued)

Identifier		Contracts		Value
	Chemical Manufacturing
CCJ.MX	Cameco Corporation
	Expiration: January 2010, Exercise Price: $22.50		2	$	5
	Clothing and Clothing Accessories Stores
VFF.MF	Tiffany & Co.
	Expiration: January 2011, Exercise Price: $30.00		2		410
VFF.MH	Tiffany & Co.
	Expiration: January 2011, Exercise Price: $40.00		2		1,060
					1,470
	Couriers and Messengers
FDX.MI	FedEx Corp.
	Expiration: January 2010, Exercise Price: $45.00		3		7
UPS.MI	United Parcel Service — Class B
	Expiration: January 2010, Exercise Price: $45.00		1		3
UPS.PK	United Parcel Service — Class B
	Expiration: April 2010, Exercise Price: $55.00		1		175
					185
	Credit Intermediation and Related Activities
AXP.MA	American Express Company
	Expiration: January 2010, Exercise Price: $24.00		1		2
BK.MY	The Bank of New York Mellon Corp.
	Expiration: January 2010, Exercise Price: $27.50		1		35
BYX.OF	The Bank of New York Mellon Corp.
	Expiration: March 2010, Exercise Price: $30.00		2		550
DFS.MB	Discover Financial Services
	Expiration: January 2010, Exercise Price: $10.00		2		5
WFC.MX	Wells Fargo & Company
	Expiration: January 2010, Exercise Price: $22.50		6		36
					628
	Depository Credit Intermediation
HDB.PB	HDFC Bank Ltd. — ADR
	Expiration: April 2010, Exercise Price: $110.00		1		385
IBN.MC	ICIC Bank Ltd. — ADR
	Expiration: January 2010, Exercise Price: $15.00		2		5

See Notes to the Financial Statements.

140

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2009 — (Continued)

Identifier		Contracts		Value
	Depository Credit Intermediation (continued)
IBN.OP	ICIC Bank Ltd. — ADR
	Expiration: March 2010, Exercise Price: $34.00		2	$	350
MTB.MJ	M&T Bank Corporation
	Expiration: January 2010, Exercise Price: $50.00		2		5
NRQ.MK	Northern Trust Corp.
	Expiration: January 2010, Exercise Price: $55.00		2		535
NRQ.PJ	Northern Trust Corp.
	Expiration: April 2010, Exercise Price: $50.00		1		203
OLD.MI	State Street Corporation
	Expiration: January 2011, Exercise Price: $45.00		3		2,250
					3,733
	Electric Power Generation, Transmission and Distribution
CPN.OV	Calpine Corp.
	Expiration: March 2010, Exercise Price: $12.50		16		2,800
HNP.NF	Huaneng Power International, Inc. — ADR
	Expiration: February 2010, Exercise Price: $30.00		2		1,510
HNP.QE	Huaneng Power International, Inc. — ADR
	Expiration: May 2010, Exercise Price: $25.00		3		1,245
OBD.ME	Nrg Energy, Inc.
	Expiration: January 2011, Exercise Price: $25.00		6		2,670
					8,225
	Equity Fund
UTH.QR	Utilities HOLDRs Trust
	Expiration: May 2010, Exercise Price: $90.00		2		420
	Fabricated Metal Product Manufacturing
CMC.MV	Commercial Metals Company
	Expiration: January 2010, Exercise Price: $12.50		8		20
CMC.OW	Commercial Metals Company
	Expiration: March 2010, Exercise Price: $17.50		3		747
FO.OI	Fortune Brands, Inc.
	Expiration: March 2010, Exercise Price: $45.00		2		700
					1,467

See Notes to the Financial Statements.

141

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2009 — (Continued)

Identifier		Contracts		Value
	Food Manufacturing
ADM.OM	Archer-Daniels-Midland Company
	Expiration: March 2010, Exercise Price: $27.00		3	$	120
BGW.MJ	Bunge Limited
	Expiration: January 2010, Exercise Price: $50.00		1		5
BGW.ML	Bunge Limited
	Expiration: January 2010, Exercise Price: $60.00		1		40
UN.NE	Unilever NV
	Expiration: February 2010, Exercise Price: $25.00		2		10
					175
	Gaming
VEG.ML	Wynn Resorts Limited
	Expiration: January 2011, Exercise Price: $60.00		1		1,315
	Insurance Carriers and Related Activities
LFC.MK	China Life Insurance Co., Limited — ADR
	Expiration: January 2010, Exercise Price: $55.00		1		2
MMC.MW	Marsh & McLennan Companies, Inc.
	Expiration: January 2010, Exercise Price: $17.50		2		5
MBI.MA	MBIA Inc.
	Expiration: January 2010, Exercise Price: $5.00		4		400
					407
	Leather and Allied Product Manufacturing
COH.MD	Coach, Inc.
	Expiration: January 2010, Exercise Price: $20.00		1		2
VZF.ME	Coach, Inc.
	Expiration: January 2011, Exercise Price: $25.00		1		163
					165
	Lessors of Real Estate
VNO.OM	Vornado Realty Trust
	Expiration: March 2010, Exercise Price: $65.00		5		1,500
	Metal Ore Mining
RTP.MG	Rio Tinto plc — ADR
	Expiration: January 2010, Exercise Price: $135.00		1		8

See Notes to the Financial Statements.

142

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2009 — (Continued)

Identifier		Contracts		Value
	Mining (except Oil and Gas)
FHZ.QO	Freeport-McMoRan Copper & Gold Inc.
	Expiration: May 2010, Exercise Price: $75.00		1	$	575
OBQ.MP	Freeport-McMoRan Copper & Gold Inc.
	Expiration: January 2011, Exercise Price: $80.00		3		4,005
NEM.RQ	Newmont Mining Corporation
	Expiration: June 2010, Exercise Price: $43.00		1		320
VIE.MV	Newmont Mining Corporation
	Expiration: January 2011, Exercise Price: $42.50		2		1,070
					5,970
	Miscellaneous Manufacturing
BDX.ON	Becton, Dickinson and Company
	Expiration: March 2010, Exercise Price: $70.00		2		130
	Oil & Gas & Consumable Fuels
SNP.MO	China Petroleum & Chemical Corp. — ADR
	Expiration: January 2010, Exercise Price: $75.00		1		5
CEO.OG	CNOOC Limited — ADR
	Expiration: March 2010, Exercise Price: $135.00		2		470
					475
	Oil and Gas Extraction
CNQ.MJ	Canadian Natural Resources Ltd.
	Expiration: January 2010, Exercise Price: $50.00		4		10
CNQ.OM	Canadian Natural Resources Ltd.
	Expiration: March 2010, Exercise Price: $65.00		2		455
ECA.MH	EnCana Corporation
	Expiration: January 2010, Exercise Price: $40.00		2		10
IMO.NG	Imperial Oil Ltd.
	Expiration: February 2010, Exercise Price: $35.00		1		40
IMO.QG	Imperial Oil Ltd.
	Expiration: May 2010, Exercise Price: $35.00		2		285
NXY.MC	Nexen Inc.
	Expiration: January 2010, Exercise Price: $15.00		2		5
NXY.OX	Nexen Inc.
	Expiration: March 2010, Exercise Price: $22.50		3		345
PMJ.PU	Petroleo Brasileiro S.A.
	Expiration: April 2010, Exercise Price: $49.00		2		920

See Notes to the Financial Statements.

143

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2009 — (Continued)

Identifier		Contracts		Value
	Oil and Gas Extraction (continued)
STO.MW	StatoilHydro ASA — ADR
	Expiration: January 2010, Exercise Price: $17.50		2	$	10
STO.PX	StatoilHydro ASA — ADR
	Expiration: April 2010, Exercise Price: $22.50		2		155
SXH.OG	Suncor Energy, Inc.
	Expiration: March 2010, Exercise Price: $35.00		5		1,175
					3,410
	Other Financial Investment Activities
BEN.MM	Franklin Resources, Inc.
	Expiration: January 2010, Exercise Price: $65.00		1		2
BEN.PT	Franklin Resources, Inc.
	Expiration: April 2010, Exercise Price: $100.00		1		340
NQD.MC	The Nasdaq OMX Group
	Expiration: January 2010, Exercise Price: $15.00		6		15
NQD.MX	The Nasdaq OMX Group
	Expiration: January 2010, Exercise Price: $22.50		5		1,125
QGW.RV	U.S. Global Investors, Inc. — Class A
	Expiration: June 2010, Exercise Price: $12.50		6		1,425
					2,907
	Other Professional, Scientific, and Technical Services
MCO.MF	Moody’s Corporation
	Expiration: January 2010, Exercise Price: $30.00		1		310
	Other Wood Product Manufacturing
LUK.MC	Leucadia National Corporation
	Expiration: January 2010, Exercise Price: $15.00		6		30
LUK.OE	Leucadia National Corporation
	Expiration: March 2010, Exercise Price: $25.00		2		410
					440
	Pipeline Transportation of Crude Oil
SUG.OD	Southern Union Company
	Expiration: March 2010, Exercise Price: $20.00		7		210

See Notes to the Financial Statements.

144

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2009 — (Continued)

Identifier		Contracts		Value
	Primary Metal Manufacturing
NUE.MB	Nucor Corp.
	Expiration: January 2010, Exercise Price: $42.00		1	$	15
	Professional, Scientific, and Technical Services
OLJ.MA	Automatic Data Processing, Inc.
	Expiration: January 2011, Exercise Price: $37.50		1		210
OLJ.MH	Automatic Data Processing, Inc.
	Expiration: January 2011, Exercise Price: $40.00		2		600
CAI.OI	CACI International, Inc. — Class A
	Expiration: March 2010, Exercise Price: $45.00		2		245
CRL.NG	Charles River Laboratories International, Inc.
	Expiration: February 2010, Exercise Price: $35.00		1		225
					1,280
	Publishing Industries (except Internet)
MHP.MF	The McGraw-Hill Companies, Inc.
	Expiration: January 2010, Exercise Price: $30.00		2		20
VMP.ME	The McGraw-Hill Companies, Inc.
	Expiration: January 2011, Exercise Price: $25.00		2		385
					405
	Rail Transportation
BNI.PQ	Burlington Northern Santa Fe Corporation
	Expiration: April 2010, Exercise Price: $85.00		1		63
OBC.MI	CSX Corp.
	Expiration: January 2011, Exercise Price: $45.00		3		1,680
CP.OJ	Canadian Pacific Railway Limited
	Expiration: March 2010, Exercise Price: $50.00		2		325
OGO.MI	Norfolk Southern Corporation
	Expiration: January 2011, Exercise Price: $45.00		3		1,143
UNP.QL	Union Pacific Corporation
	Expiration: May 2010, Exercise Price: $60.00		2		616
					3,827

See Notes to the Financial Statements.

145

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2009 — (Continued)

Identifier		Contracts		Value
	Real Estate
CBG.OV	CB Richard Ellis Group, Inc. — Class A
	Expiration: March 2010, Exercise Price: $12.50		7	$	525
JLL.OJ	Jones Lang LaSalle Incorporated
	Expiration: March 2010, Exercise Price: $50.00		5		663
JOE.OF	The St. Joe Company
	Expiration: March 2010, Exercise Price: $30.00		6		1,440
					2,628
	Securities, Commodity Contracts, and Other Financial Investments and Related Activities
SHQ.OQ	The Charles Schwab Corporation
	Expiration: March 2010, Exercise Price: $17.00		10		450
LAZ.OG	Lazard Ltd. — Class A
	Expiration: March 2010, Exercise Price: $35.00		5		775
					1,225
	Securities and Commodity Contracts Intermediation and Brokerage
AMG.OL	Affiliated Managers Group Inc.
	Expiration: March 2010, Exercise Price: $60.00		2		375
GQG.OI	GFI Group, Inc.
	Expiration: March 2010, Exercise Price: $7.50		5		1,525
					1,900
	Telecommunications
CHU.MB	China Unicom (Hong Kong) Limited — ADR
	Expiration: January 2010, Exercise Price: $10.00		4		10
CHU.PV	China Unicom (Hong Kong) Limited — ADR
	Expiration: April 2010, Exercise Price: $12.50		2		150
					160
	Transportation Equipment Manufacturing
VBO.MI	Boeing Co.
	Expiration: January 2011, Exercise Price: $45.00		1		370
VBO.MJ	Boeing Co.
	Expiration: January 2011, Exercise Price: $50.00		1		535

See Notes to the Financial Statements.

146

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2009 — (Continued)

Identifier		Contracts		Value
	Transportation Equipment Manufacturing (continued)
VOJ.MI	Northrop Grumman Corporation
	Expiration: January 2011, Exercise Price: $45.00		1	$	220
OSK.SG	Oshkosh Corporation
	Expiration: July 2010, Exercise Price: $35.00		3		1,440
					2,565
	Securities and Commodity Exchanges
NYX.OJ	NYSE Euronext
	Expiration: March 2010, Exercise Price: $28.00		5		1,650
	Securities and Commodity Contracts Intermediation and Brokerage
RQW.MH	T. Rowe Price Group, Inc.
	Expiration: January 2010, Exercise Price: $40.00		1		3
	Utilities
AYE.ME	Allegheny Energy, Inc.
	Expiration: January 2010, Exercise Price: $25.00		2		320
AYE.MF	Allegheny Energy, Inc.
	Expiration: January 2010, Exercise Price: $30.00		1		655
AYE.PE	Allegheny Energy, Inc.
	Expiration: April 2010, Exercise Price: $25.00		2		455
ETR.OP	Entergy Corporation
	Expiration: March 2010, Exercise Price: $80.00		2		535
GXP.OW	Great Plains Energy Incorporated
	Expiration: March 2010, Exercise Price: $17.50		5		90
MIR.OC	Mirant Corporation
	Expiration: March 2010, Exercise Price: $15.00		7		630
					2,685
	Warehousing and Storage
IRM.ME	Iron Mountain Incorporated
	Expiration: January 2010, Exercise Price: $25.00		4		900
IRM.PE	Iron Mountain Incorporated
	Expiration: April 2010, Exercise Price: $25.00		2		545
					1,445
	TOTAL PUT OPTIONS WRITTEN (premiums received ($114,271))			$	59,183

ADR — American Depository Receipt.

See Notes to the Financial Statements.

147

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Assets & Liabilities

December 31, 2009

	The Internet		The Global
	Portfolio		Portfolio
ASSETS:
Investments, at value(1)(2)	$	144,881,384	$	5,304,687
Cash		—		46
Receivable for contributed capital		16,402		8,586
Receivable for investments sold		—		137
Dividends and interest receivable		53,916		2,653
Other assets		10,834		95
Total assets		144,962,536		5,316,204
LIABILITIES:
Written options, at value(3)		12,650		—
Payable to Adviser		110,717		5,130
Payable to Custodian		1,028,645		72
Payable to Trustees and Officers		1,533		76
Payable for securities purchased		—		138,507
Payable for collateral received for securities loaned		38,026,523		388,881
Payable for withdrawn capital		137,596		17
Accrued expenses and other liabilities		25,923		15,225
Total liabilities		39,343,587		547,908
Net assets	$	105,618,949	$	4,768,296
(1)Cost of investments	$	116,417,813	$	4,983,589
(2)Includes loaned securities with a market value of	$	36,061,381	$	371,588
(3)Premiums received	$	18,054	$	—

See Notes to the Financial Statements.

148

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Assets & Liabilities

December 31, 2009

	The		The
	Paradigm		Medical
	Portfolio		Portfolio
ASSETS:
Investments, at value(1)(2)	$	1,796,216,049	$	29,191,550
Cash		264,000		40,986
Receivable for contributed capital		3,259,526		177,225
Receivable for investments sold		35		60,582
Dividends and interest receivable		892,483		30,260
Other assets		408,418		1,149
Total assets		1,801,040,511		29,501,752
LIABILITIES:
Payable to Adviser		1,493,124		27,271
Payable to Securities Lending Agent		127,427		—
Payable to Trustees and Officers		22,207		363
Payable for collateral received for securities loaned		389,435,973		3,462,232
Payable for withdrawn capital		4,429,767		55,555
Accrued expenses and other liabilities		210,256		13,696
Total liabilities		395,718,754		3,559,117
Net assets	$	1,405,321,757	$	25,942,635
(1)Cost of investments	$	1,792,733,568	$	29,885,155
(2)Includes loaned securities with a market value of	$	366,244,969	$	3,180,354

See Notes to the Financial Statements.

149

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Assets & Liabilities

December 31, 2009

			The Kinetics
	The Small Cap		Government
	Opportunities		Money Market
	Portfolio		Portfolio
ASSETS:
Investments, at value(1)(2)	$	227,357,954	$	1,669,994
Cash		—		9,596
Receivable for contributed capital		126,806		—
Dividends and interest receivable		161,390		—
Other assets		10,096		—
Total assets		227,656,246		1,679,590
LIABILITIES:
Payable to Adviser		210,997		704
Payable to Custodian		14,956		—
Payable to Trustees and Officers		3,371		17
Payable for collateral received for securities loaned		26,818,709		—
Payable for withdrawn capital		771,608		—
Accrued expenses and other liabilities		51,807		6,919
Total liabilities		27,871,448		7,640
Net assets	$	199,784,798	$	1,671,950
(1)Cost of investments	$	217,252,671	$	1,669,994
(2)Includes loaned securities with a market value of	$	24,885,913	$	—

See Notes to the Financial Statements.

150

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Assets & Liabilities

December 31, 2009

	The Market		The Water
	Opportunities		Infrastructure
	Portfolio		Portfolio
ASSETS:
Investments, at value(1)(2)	$	80,870,496	$	25,574,001
Foreign currencies, at value(3)		—		393,637
Cash		347,143		39,894
Receivable for contributed capital		66,217		329,217
Dividends and interest receivable		18,999		41,698
Other assets		19,044		1,141
Total assets		81,321,899		26,379,588
LIABILITIES:
Written options, at value(4)		88,550		—
Payable to Adviser		69,949		23,370
Payable to Trustees and Officers		1,034		294
Payable for securities purchased		—		231,620
Payable for collateral received for securities loaned		14,955,121		2,849,007
Payable for withdrawn capital		65,900		55,739
Accrued expenses and other liabilities		22,325		13,369
Total liabilities		15,202,879		3,173,399
Net assets	$	66,119,020	$	23,206,189
(1)Cost of investments	$	79,842,266	$	25,177,785
(2)Includes loaned securities with a market value of	$	14,034,189	$	2,618,453
(3)Cost of foreign currencies	$	—	$	400,723
(4)Premiums received	$	126,377	$	—

See Notes to the Financial Statements.

151

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Assets & Liabilities

December 31, 2009

	The Multi-
	Disciplinary
	Portfolio
ASSETS:
Investments, at value(1)	$	1,052,287
Deposit at brokers for written options		58,043
Cash		267,122
Dividends and interest receivable		16,517
Other assets		28
Total assets		1,393,997
LIABILITIES:
Written options, at value(2)		59,183
Payable to Adviser		1,309
Payable to Trustees and Officers		13
Accrued expenses and other liabilities		10,862
Total liabilities		71,367
Net assets	$	1,322,630
(1)Cost of investments	$	1,015,772
(2)Premiums received	$	114,271

See Notes to the Financial Statements.

152

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Operations

For the Year Ended December 31, 2009

	The Internet			The Global
	Portfolio			Portfolio
INVESTMENT INCOME:
Dividends†	$	628,882		$	67,019
Interest		417,771			299
Income from securities lending		133,756			1,073
Total investment income		1,180,409			68,391
EXPENSES:
Investment advisory fees		1,105,746			41,303
Administration fees		36,203			1,516
Professional fees		19,836			7,370
Fund accounting fees		22,865			12,720
Trustee and Officers’ fees and expenses		7,254			282
Custodian fees and expenses		13,057			29,349
Other expenses		8,508			335
Total expenses		1,213,469			92,875
Net expenses		1,213,469			92,875
Net investment loss		(33,060	)		(24,484	)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on:
Investments and foreign currency		3,597,819			(420,269	)
Net change in unrealized appreciation of:
Investments and foreign currency		31,632,715			1,903,249
Written option contracts		459,326			—
Net gain on investments		35,689,860			1,482,980
Net increase in net assets resulting from operations	$	35,656,800		$	1,458,496
† Net of Foreign Taxes Withheld of:	$	28,723		$	4,266

See Notes to the Financial Statements.

153

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Operations

For the Year Ended December 31, 2009

	The			The
	Paradigm			Medical
	Portfolio			Portfolio
INVESTMENT INCOME:
Dividends†	$	24,737,096		$	420,870
Interest		3,552,514			1,156
Other income		236,242			103,226
Income from securities lending		4,309,037			13,182
Total investment income		32,834,889			538,434
EXPENSES:
Investment advisory fees		16,336,818			261,826
Administration fees		598,367			9,212
Professional fees		44,631			11,987
Fund accounting fees		248,791			6,784
Trustee and Officers’ fees and expenses		101,071			1,848
Custodian fees and expenses		364,561			4,684
Other expenses		144,142			2,418
Total expenses		17,838,381			298,759
Net expenses		17,838,381			298,759
Net investment income		14,996,508			239,675
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized (gain) loss on:
Investments and foreign currency		(282,409,570	)		(171,878	)
Written option contracts expired or closed		—			19,470
Net change in unrealized appreciation (depreciation) of:
Investments and foreign currency		696,152,858			4,247,082
Written option contracts		—			(18,430	)
Net gain on investments		413,743,288			4,076,244
Net increase in net assets resulting from operations	$	428,739,796		$	4,315,919
† Net of Foreign Taxes Withheld of:	$	1,289,944		$	19,130

See Notes to the Financial Statements.

154

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Operations

For the Year Ended December 31, 2009

				The Kinetics
	The Small Cap			Government
	Opportunities			Money Market
	Portfolio			Portfolio
INVESTMENT INCOME:
Dividends†	$	2,675,563		$	—
Interest		96,983			1,282
Income from securities lending		134,293			—
Total investment income		2,906,839			1,282
EXPENSES:
Investment advisory fees		2,642,332			10,786
Administration fees		97,873			937
Professional fees		22,548			5,574
Fund accounting fees		46,809			536
Trustee and Officers’ fees and expenses		15,958			212
Custodian fees and expenses		155,333			3,404
Other expenses		23,694			364
Total expenses		3,004,547			21,813
Net expenses		3,004,547			21,813
Net investment loss		(97,708	)		(20,531	)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on:
Investments and foreign currency		(45,656,070	)		—
Net change in unrealized appreciation of:
Investments and foreign currency		143,859,185			—
Written option contracts		1,310			—
Net gain on investments		98,204,425			—
Net increase (decrease) in net assets resulting from operations	$	98,106,717		$	(20,531	)
† Net of Foreign Taxes Withheld of:	$	90,040		$	—

See Notes to the Financial Statements.

155

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Operations

For the Year Ended December 31, 2009

	The Market			The Water
	Opportunities			Infrastructure
	Portfolio			Portfolio
INVESTMENT INCOME:
Dividends†	$	894,532		$	348,410
Interest		4,168			3,647
Income from securities lending		98,150			10,522
Total investment income		996,850			362,579
EXPENSES:
Investment advisory fees		742,814			214,062
Administration fees		24,088			7,168
Professional fees		16,324			12,235
Fund accounting fees		17,857			7,465
Trustee and Officers’ fees and expenses		4,937			1,579
Custodian fees and expenses		31,676			10,662
Other expenses		6,146			1,724
Total expenses		843,842			254,895
Net expenses		843,842			254,895
Net investment income		153,008			107,684
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on:
Investments and foreign currency		(7,399,123	)		(1,421,220	)
Net change in unrealized appreciation of:
Investments and foreign currency		29,815,969			3,696,782
Written option contracts		264,788			—
Net gain on investments		22,681,634			2,275,562
Net increase in net assets resulting from operations	$	22,834,642		$	2,383,246
† Net of Foreign Taxes Withheld of:	$	38,816		$	26,869

See Notes to the Financial Statements.

156

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Operations

For the Year Ended December 31, 2009

	The Multi-
	Disciplinary
	Portfolio
INVESTMENT INCOME:
Interest	$	22,172
Total investment income		22,172
EXPENSES:
Investment advisory fees		11,295
Administration fees		1,400
Professional fees		11,476
Fund accounting fees		5,748
Trustee and Officers’ fees and expenses		70
Custodian fees and expenses		2,720
Other expenses		330
Total expenses		33,039
Net expenses		33,039
Net investment loss		(10,867	)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on:
Investments		(22,498	)
Written option contracts expired or closed		128,037
Net change in unrealized appreciation of:
Investments		37,417
Written option contracts		72,507
Net gain on investments		215,463
Net increase in net assets resulting from operations	$	204,596

See Notes to the Financial Statements.

157

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Changes in Net Assets

	The Internet Portfolio						The Global Portfolio
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2009			2008			2009			2008
OPERATIONS:
Net investment income (loss)	$	(33,060	)	$	1,798,294		$	(24,484	)	$	23,448
Net realized gain (loss) on sale of investments, foreign currency and written options		3,597,819			1,853,794			(420,269	)		188,690
Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options		32,092,041			(65,388,288	)		1,903,249			(2,277,088	)
Net increase (decrease) in net assets resulting from operations		35,656,800			(61,736,200	)		1,458,496			(2,064,950	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS:
Contributions		2,234,532			1,732,265			3,020,852			1,685,706
Withdrawals		(7,912,207	)		(32,194,574	)		(1,672,795	)		(801,892	)
Net increase (decrease) in net assets resulting from beneficial interest transactions		(5,677,675	)		(30,462,309	)		1,348,057			883,814
Total increase (decrease) in net assets		29,979,125			(92,198,509	)		2,806,553			(1,181,136	)
NET ASSETS:
Beginning of year		75,639,824			167,838,333			1,961,743			3,142,879
End of year	$	105,618,949		$	75,639,824		$	4,768,296		$	1,961,743

See Notes to the Financial Statements.

158

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Changes in Net Assets

	The Paradigm Portfolio						The Medical Portfolio
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2009			2008			2009			2008
OPERATIONS:
Net investment income	$	14,996,508		$	27,713,345		$	239,675		$	192,545
Net realized gain (loss) on sale of investments, foreign currency and written options		(282,409,570	)		(640,738,772	)		(152,408	)		369,558
Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options		696,152,858			(1,594,810,674	)		4,228,652			(5,659,508	)
Net increase (decrease) in net assets resulting from operations		428,739,796			(2,207,836,101	)		4,315,919			(5,097,405	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS:
Contributions		78,038,515			283,118,993			7,401,998			13,013,167
Withdrawals		(393,931,544	)		(1,422,768,329	)		(4,767,975	)		(4,427,289	)
Net increase (decrease) in net assets resulting from beneficial interest transactions		(315,893,029	)		(1,139,649,336	)		2,634,023			8,585,878
Total increase (decrease) in net assets		112,846,767			(3,347,485,437	)		6,949,942			3,488,473
NET ASSETS:
Beginning of year		1,292,474,990			4,639,960,427			18,992,693			15,504,220
End of year	$	1,405,321,757		$	1,292,474,990		$	25,942,635		$	18,992,693

See Notes to the Financial Statements.

159

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Changes in Net Assets

	The Small Cap						The Kinetics Government Money
	Opportunities Portfolio						Market Portfolio
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2009			2008			2009			2008
OPERATIONS:
Net investment income (loss)	$	(97,708	)	$	2,982,907		$	(20,531	)	$	7,334
Net realized loss on sale of investments, foreign currency and written options		(45,656,070	)		(139,808,958	)		—			(84	)
Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options		143,860,495			(332,405,475	)		—			—
Net increase (decrease) in net assets resulting from operations		98,106,717			(469,231,526	)		(20,531	)		7,250
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS:
Contributions		19,485,826			9,623,613			1,675,824			3,553,538
Withdrawals		(128,333,657	)		(417,583,047	)		(2,689,591	)		(2,067,115	)
Net increase (decrease) in net assets resulting from beneficial interest transactions		(108,847,831	)		(407,959,434	)		(1,013,767	)		1,486,423
Total increase (decrease) in net assets		(10,741,114	)		(877,190,960	)		(1,034,298	)		1,493,673
NET ASSETS:
Beginning of year		210,525,912			1,087,716,872			2,706,248			1,212,575
End of year	$	199,784,798		$	210,525,912		$	1,671,950		$	2,706,248

See Notes to the Financial Statements.

160

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Changes in Net Assets

	The Market Opportunities Portfolio						The Water Infrastructure Portfolio
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2009			2008			2009			2008
OPERATIONS:
Net investment income	$	153,008		$	1,128,258		$	107,684		$	242,835
Net realized loss on sale of investments, foreign currency and written options		(7,399,123	)		(26,773,299	)		(1,421,220	)		(5,821,675	)
Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options		30,080,757			(46,316,211	)		3,696,782			(3,345,871	)
Net increase (decrease) in net assets resulting from operations		22,834,642			(71,961,252	)		2,383,246			(8,924,711	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS:
Contributions		7,456,809			41,907,272			11,818,237			33,631,279
Withdrawals		(21,721,577	)		(28,148,309	)		(7,147,014	)		(14,812,293	)
Net increase (decrease) in net assets resulting from beneficial interest transactions		(14,264,768	)		13,758,963			4,671,223			18,818,986
Total increase (decrease) in net assets		8,569,874			(58,202,289	)		7,054,469			9,894,275
NET ASSETS:
Beginning of year		57,549,146			115,751,435			16,151,720			6,257,445
End of year	$	66,119,020		$	57,549,146		$	23,206,189		$	16,151,720

See Notes to the Financial Statements.

161

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Changes in Net Assets

	The Multi-Disciplinary Portfolio
	For the			From
	Year Ended			February 11, 2008ˆ
	December 31,			through
	2009			December 31, 2008
OPERATIONS:
Net investment loss	$	(10,867	)	$	(14,825	)
Net realized gain (loss) on sale of investments and written options		105,539			(74,483	)
Net change in unrealized appreciation (depreciation) of investments and written options		109,924			(18,321	)
Net increase (decrease) in net assets resulting from operations		204,596			(107,629	)
NET INCREASE IN NET ASSETS RESULTING
FROM BENEFICIAL INTEREST TRANSACTIONS:
Contributions		788,927			605,549
Withdrawals		(89,179	)		(79,634	)
Net increase in net assets resulting from beneficial interest transactions		699,748			525,915
Total increase in net assets		904,344			418,286
NET ASSETS:
Beginning of period		418,286			—
End of period	$	1,322,630		$	418,286

ˆ  Commencement of operations.

See Notes to the Financial Statements.

162

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements

December 31, 2009

1.  Organization

The Kinetics Portfolios Trust (the “Trust”) was organized as a Delaware Statutory Trust on March 14, 2000 and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company issuing its beneficial interests in series, each series representing a distinct portfolio with its own investment objective and policies. The series currently authorized are: The Internet Portfolio, The Global Portfolio, The Paradigm Portfolio, The Medical Portfolio, The Small Cap Opportunities Portfolio, The Kinetics Government Money Market Portfolio, The Market Opportunities Portfolio, The Water Infrastructure Portfolio and The Multi-Disciplinary Portfolio (collectively, the “Master Portfolios”). Pursuant to the 1940 Act, the Master Portfolios, with the exception of The Kinetics Government Money Market Portfolio, are “non-diversified” series of the Trust. The Market Opportunities Portfolio commenced operations on January 31, 2006, The Water Infrastructure Portfolio commenced operations on June 29, 2007 and The Multi-Disciplinary Portfolio commenced operations on February 11, 2008. Each of the remaining Master Portfolios commenced operations on April 28, 2000.

Each Master Portfolio is a Master Investment Portfolio in a master-feeder fund structure. Each Master Portfolio has multiple feeder funds invested in the Master Portfolio. By contributing assets to the Master Portfolio, the feeder funds receive a beneficial interest in the Master Portfolio. The Master Portfolio then invests the contributed assets in portfolio securities and allocates income, gains (losses) and expenses to the feeder funds based on the feeder funds’ proportionate interests in the Master Portfolio.

Each of the Master Portfolios, with the exception of The Kinetics Government Money Market Portfolio, seeks to provide investors with long-term capital growth. The Internet Portfolio invests primarily in the equity securities of U.S. and foreign companies engaged in the Internet and Internet-related activities. The Global Portfolio invests primarily in the equity securities of foreign companies that have the ability to facilitate an increase in the growth of their traditional business lines and secondarily in U.S. companies benefiting from international economic growth. The Paradigm Portfolio invests primarily in the equity securities of U.S. and foreign companies that the investment adviser believes are undervalued and that have high returns on equity and are well positioned to reduce their costs, extend the reach of their distribution channels and experience significant growth in revenues. The Medical Portfolio invests primarily in the equity securities of U.S. and foreign companies engaged in

163

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

medical research, pharmaceutical treatments and related medical technology with a focus on companies engaged in cancer research and drug development. The Small Cap Opportunities Portfolio invests primarily in the equity securities of U.S. and foreign small capitalized companies that provide attractive valuation opportunities due to special situations such as lack of institutional ownership, lack of significant analyst coverage or companies with sound fundamentals that have experienced a short-term earnings shortfall. The Market Opportunities Portfolio invests primarily in the equity securities of U.S. and foreign companies engaged in capital markets or related to capital markets or in the gaming industry. The Water Infrastructure Portfolio invests primarily in securities issued by U.S. and foreign companies involved in water infrastructure and natural resources with a specific water theme and related activities. The Multi-Disciplinary Portfolio utilizes a two-part investment strategy, investing primarily in fixed income securities and in derivatives. The Kinetics Government Money Market Portfolio seeks to provide investors with current income consistent with the preservation of capital and maintenance of liquidity by investing in money market instruments issued by the U.S. Government, its agencies or instrumentalities.

2.  Significant Accounting Policies

Security Valuation

Master Portfolio securities (other than securities held by the Kinetics Government Money Market Portfolio) that are listed on a U.S. securities exchange for which market quotations are readily available are valued at the last quoted sale price on the day the valuation is made. Price information on listed securities is taken from the exchange where the security is primarily traded. All equity securities that are traded using the National Association of Securities Dealers’ Automated Quotation System (“NASDAQ”) are valued using the NASDAQ Official Closing Price (“NOCP”). In the event market quotations are not readily available or if events occur that may materially affect the value of a particular security between the time trading ends on a particular security and the close of regular trading on the NYSE, “fair value” will be determined. Purchased non-exchange traded options, futures, unlisted U.S. securities and listed U.S. securities not traded on the valuation date for which market quotations are readily available are valued at the mean of the most recent bid and asked prices. Exchange traded options are valued at the last reported sale price on an exchange on which the option is traded. If no sales are reported on a particular day, the mean between the highest bid and lowest asked quotations at the close of the exchanges will be used. Fixed-income securities

164

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

(other than obligations having a maturity of 60 days or less) are normally valued on the basis of quotes obtained from pricing services, which take into account appropriate factors such as institutional-sized trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data. Investment securities in The Kinetics Government Money Market Portfolio and instruments purchased with remaining maturities of 60 days or less are valued at amortized cost, which approximates fair value. Other assets and securities for which no quotations are readily available (including restricted securities) will be valued in good faith at fair value using methods determined by the Board of Trustees of the Master Portfolios. At December 31, 2009, 0.00%, 0.19% and 0.00% of the net assets of the Internet Portfolio, Paradigm Portfolio, and Small Cap Portfolio, respectively were fair valued securities.

Repurchase Agreements

Each Master Portfolio may enter into repurchase agreements with banks that are members of the Federal Reserve System or securities dealers who are members of a national securities exchange or are primary dealers in U.S. Government Securities. In connection with transactions in repurchase agreements, it is the Trust’s policy that the Master Portfolio receive, as collateral, securities whose market value, including accrued interest, at all times will be at least equal to 100% of the amount invested by the Master Portfolio in each repurchase agreement. If the seller defaults, and the value of the collateral declines, realization of the collateral by the Master Portfolio may be delayed or limited.

Written Options

The Master Portfolios may write (sell) call or put options for trading or hedging purposes. When a Master Portfolio writes an option, an amount equal to the premium received by the Master Portfolio is included in the Statement of Assets and Liabilities as an asset and an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current value of the option written. By writing the option, the Master Portfolio may become obligated during the term of the option to deliver or purchase the securities underlying the option at the exercise price if the option is exercised. When an option expires on its stipulated expiration date or the Master Portfolio enters into a closing purchase transaction, the Master Portfolio realizes a gain or loss if the cost of the closing transaction differs from the premium received when the option was sold, without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is eliminated. When an option is exercised, the premium originally received decreases the cost basis of the underlying security (or increases the proceeds on the security

165

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

sold short) and the Master Portfolio realizes a gain or loss from the sale of the security (or closing of the short sale). As collateral for uncovered written options, the Master Portfolio is required under the 1940 Act to maintain assets consisting of cash, cash equivalents or liquid securities. This collateral is required to be adjusted daily to reflect the exercise price of the purchase obligation for put options or the market value of the instrument underlying the contract for call options.

Foreign Currency Translations

The books and records of the Master Portfolios are maintained in U.S. dollars. For the Master Portfolios, foreign currency transactions are translated into U.S. dollars on the following basis: (i) market value of investment securities and other assets and liabilities are translated at the exchange rate of such currencies against the U.S. dollar, as provided by an approved pricing service, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. The Master Portfolios do not isolate and treat as ordinary income that portion of the results of operations arising as a result of changes in the exchange rate from the fluctuations arising from changes in the market prices of securities held during the period. However, for federal income tax purposes, the Master Portfolios do isolate and treat as ordinary income the effect of changes in foreign exchange rates arising from actual foreign currency transactions and the effect of changes in foreign exchange rates arising between trade date and settlement date.

Restricted and Illiquid Securities

The Master Portfolios may invest in restricted securities. These securities are valued by the Master Portfolios after giving due consideration to pertinent factors including recent private sales, market conditions and the issuer’s financial performance. The Master Portfolios have no right to require registration of unregistered securities. At December 31, 2009 there were no restricted Securities held by the Master Portfolios. An illiquid asset is any asset which may not be sold or disposed of in the ordinary course of business within seven days at approximately the value at which the Master Portfolio has valued the investment. At December 31, 2009, the following Master Portfolios held illiquid securities:

			Percentage
	Market Value		of Net Assets
The Internet Portfolio	$	0		0.00	%
The Paradigm Portfolio		2,620,751		0.19
The Small Cap Opportunities Portfolio		0		0.00

166

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

When-Issued Securities

The Master Portfolios may purchase securities on a when-issued or delayed delivery basis. Although the purchase amounts of these securities are established at the time the purchaser enters into the agreement, these securities may be delivered and paid for at a future date. The Master Portfolios record purchases of when-issued securities and reflect the values of such securities in determining net asset value in the same manner as other portfolio securities. The Master Portfolios maintain at all times cash or other liquid assets in an amount at least equal to the amount of outstanding commitments for when-issued securities.

Securities Lending

Each Master Portfolio may lend its portfolio securities to broker-dealers by entering directly into lending arrangements with such broker-dealers or indirectly through repurchase agreements with respect to no more than 331/3% of the total assets of each Portfolio (including any collateral posted) or 50% of the total assets of each Portfolio (excluding any collateral posted). Securities lending and repurchase transactions will be fully collateralized at all times with cash and/or short-term debt obligations. The Master Portfolios receive interest on the collateral received as well as a fee for the securities loaned.

Expense Allocation

Common expenses incurred by the Master Portfolios are allocated among the Master Portfolios (i) based upon relative average net assets, (ii) as incurred on a specific identification basis, or (iii) equally among the Master Portfolios, depending on the nature of the expenditure. All expenses incurred by the Master Portfolios are allocated to the feeder funds daily based on their proportionate interests in the respective Master Portfolios.

Federal Income Taxes

Each Master Portfolio will be treated as a partnership for federal income tax purposes. As such, each investor in a Portfolio will be subject to taxation on its share of the Portfolio’s ordinary income and capital gains. It is intended that each Master Portfolio’s assets will be managed so an investor in the Portfolio can satisfy the requirements of subchapter M of the Internal Revenue Code.

There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken in future tax returns. As of December 31, 2009, open tax years include the tax years ended December 31, 2006 through 2009. The Portfolios are also not aware of any

167

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ from those estimates.

Other

Realized gains and losses on the sale of investments are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date and interest income is recognized on the accrual basis. Other noncash dividends are recognized as investment income at the fair value of the property received. Withholding taxes on foreign dividends have been provided for in accordance with the Trust’s understanding of the applicable country’s tax rules and rates.

3.  Investment Adviser

The Trust has entered into Investment Advisory Agreements (the “Agreements”) with Kinetics Asset Management, Inc. (the “Adviser”), with whom certain officers and trustees of the Trust are affiliated, to furnish investment advisory services to the Master Portfolios. Under the terms of the Agreements, the Master Portfolios compensate the Adviser for its management services at the annual rate of 1.25% of each Master Portfolio’s average daily net assets, except for The Kinetics Government Money Market Portfolio, which compensates the Adviser at a rate of 0.50% of the Master Portfolio’s average daily net assets. The Sub-Adviser to the Water Infrastructure Portfolio, Brennan Investment Partners, LLC, receives its compensation from the Adviser at the annual rate of 0.35% of the daily net assets of the Water Infrastructure Portfolio. For the year ended December 31, 2009, The Internet Portfolio, The Global Portfolio, The Paradigm Portfolio, The Medical Portfolio, The Small Cap Opportunities Portfolio, The Kinetics Government Money Market Portfolio, The Market Opportunities Portfolio, The Water Infrastructure Portfolio and The Multi-Disciplinary Portfolio incurred expenses of $1,105,746, $41,303, $16,336,818, $261,826, $2,642,332, $10,786, $742,814, $214,062 and $11,295, respectively, pursuant to the Investment Advisory Agreements.

For the year ended December 31, 2009, the Trust was allocated $24,000 for the services of the Chief Compliance Officer employed by the Adviser.

168

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

4.  Securities Transactions

Purchases and sales of investment securities, other than short-term investments, for the year ended December 31, 2009 were as follows:

	Purchases				Sales
	U.S.				U.S.
	Government		Other		Government		Other
The Internet Portfolio	$	—	$	29,351,491	$	—	$	11,708,277
The Global Portfolio		—		2,971,428		—		1,664,798
The Paradigm Portfolio		—		194,470,798		—		468,862,887
The Medical Portfolio		—		4,633,506		—		2,533,545
The Small Cap Opportunities Portfolio		—		9,125,640		—		115,480,575
The Market Opportunities Portfolio		—		7,830,906		—		17,903,885
The Water Infrastructure Portfolio		—		10,858,754		—		6,637,437
The Multi-Disciplinary Portfolio		—		1,207,340		—		314,742

As of December 31, 2009, the cost of investments and unrealized appreciation (depreciation) on investment securities for federal income tax purposes was as follows:

	Net
	Appreciation			Appreciated		Depreciated			Cost of
	(Depreciation)			Securities		Securities			Investments
The Internet Portfolio	$	26,660,799		$	41,355,788	$	(14,694,989	)	$	118,220,585
The Global Portfolio		308,469			582,048		(273,579	)		4,996,218
The Paradigm Portfolio		(56,687,313	)		269,874,223		(326,561,536	)		1,852,903,362
The Medical Portfolio		(760,414	)		4,698,660		(5,459,074	)		29,951,964
The Small Cap Opportunities Portfolio		(3,429,925	)		51,685,143		(55,115,068	)		230,787,879
The Kinetics Government Money Market Portfolio		—			—		—			1,669,994
The Market Opportunities Portfolio		(233,582	)		11,767,825		(12,001,407	)		81,104,078
The Water Infrastructure Portfolio		275,316			2,147,607		(1,872,291	)		25,298,685
The Multi-Disciplinary		34,247			50,178		(15,931	)		1,018,040

169

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

For the year ended December 31, 2009, the Master Portfolios wrote the following options:

	Number			Premium
	of Contracts			Amount
The Internet Portfolio
Outstanding at the Beginning of Year		40		$	361,078
Options Closed		(38	)		(343,024	)
Outstanding at the End of Year		2		$	18,054
The Medical Portfolio
Outstanding at the Beginning of Year		40		$	19,470
Options Expired		(40	)		(19,470	)
Outstanding at the End of Year		—		$	—
The Small Cap Opportunities Portfolio
Outstanding at the Beginning of Year		20		$	3,940
Options Exercised		(20	)		(3,940	)
Outstanding at the End of Year		—		$	—
The Market Opportunities Portfolio
Outstanding at the Beginning of Year		20		$	180,539
Options Exercised		(6	)		(54,162	)
Outstanding at the End of Year		14		$	126,377
The Multi-Disciplinary Portfolio
Outstanding at the Beginning of Year		102		$	43,279
Options Written		704			223,391
Options Exercised		(68	)		(22,634	)
Options Expired		(365	)		(106,314	)
Options Closed		(46	)		(23,451	)
Outstanding at the End of Year		327		$	114,271

5.  Portfolio Securities Loaned

As of December 31, 2009, the Master Portfolios had loaned securities that were collateralized by cash. The cash collateral is invested by the custodian in a money market pooled account approved by the Adviser. Although risk is mitigated by the collateral, a Master Portfolio could experience a delay in recovering its securities and possible loss of income or value if the borrower fails to return them. The Master Portfolio receives interest on the collateral received as well as a fee for the securities loaned. The Master Portfolios will continue to receive dividends and interest on all securities loaned. Gain or

170

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

loss in the fair value of the securities loaned that may occur during the term of the loan will be accounted for by the Master Portfolios. The value of the securities on loan and the value of the related collateral at December 31, 2009, were as follows:

	Securities		Collateral
The Internet Portfolio	$	36,061,381	$	38,026,523
The Global Portfolio		371,588		388,881
The Paradigm Portfolio		366,244,969		389,435,973
The Medical Portfolio		3,180,354		3,462,232
The Small Cap Opportunities Portfolio		24,885,913		26,818,709
The Market Opportunities Portfolio		14,034,189		14,955,121
The Water Infrastructure Portfolio		2,618,453		2,849,007
The Multi-Disciplinary Portfolio		—		—

6.  Selected Financial Highlights

Financial highlights for the Master Portfolios were as follows:

	The Internet Portfolio
	For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2009			2008			2007			2006			2005
Ratio of expenses to average net assets:
Before expense reduction		1.37	%		1.34	%		1.34	%		1.39	%		1.45	%
After expense reduction		1.37	%		1.34	%		1.33	%		1.33	%		1.44	%
Ratio of net investment income (loss) to average net assets:
Before expense reduction		(0.04	)%		1.59	%		1.58	%		0.17	%		1.35	%
After expense reduction		(0.04	)%		1.59	%		1.59	%		0.23	%		1.36	%
Portfolio turnover rate		14	%		19	%		15	%		11	%		12	%

	The Global Portfolio
	For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2009			2008			2007			2006			2005
Ratio of expenses to average net assets:
Before expense reduction		2.81	%		2.46	%		1.99	%		1.62	%		1.73	%
After expense reduction		2.81	%		2.46	%		1.98	%		1.46	%		1.72	%
Ratio of net investment income (loss) to average net assets:
Before expense reduction		(0.74	)%		0.83	%		3.73	%		2.78	%		4.30	%
After expense reduction		(0.74	)%		0.83	%		3.74	%		2.94	%		4.31	%
Portfolio turnover rate		53	%		98	%		22	%		10	%		2	%

171

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

	The Paradigm Portfolio
	For the		For the		For the		For the		For the
	Year Ended		Year Ended		Year Ended		Year Ended		Year Ended
	December 31,		December 31,		December 31,		December 31,		December 31,
	2009		2008		2007		2006		2005
Ratio of expenses to average net assets:
Before expense reduction		1.36%		1.33%		1.33%		1.40%		1.45%
After expense reduction		1.36%		1.33%		1.33%		1.32%		1.40%
Ratio of net investment income to average net assets:
Before expense reduction		1.15%		0.86%		0.75%		0.85%		0.07%
After expense reduction		1.15%		0.86%		0.75%		0.93%		0.12%
Portfolio turnover rate		15%		34%		8%		3%		5%

	The Medical Portfolio
	For the		For the			For the			For the			For the
	Year Ended		Year Ended			Year Ended			Year Ended			Year Ended
	December 31,		December 31,			December 31,			December 31,			December 31,
	2009		2008			2007			2006			2005
Ratio of expenses to average net assets:
Before expense reduction		1.43%		1.42	%		1.49	%		1.44	%		1.50	%
After expense reduction		1.43%		1.42	%		1.40	%		1.34	%		1.49	%
Ratio of net investment income (loss) to average net assets:
Before expense reduction		1.14%		1.02	%		0.42	%		0.33	%		(0.17	%)
After expense reduction		1.14%		1.02	%		0.51	%		0.43	%		(0.16	%)
Portfolio turnover rate		13%		28	%		38	%		20	%		2	%

	The Small Cap Opportunities Portfolio
	For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2009			2008			2007			2006			2005
Ratio of expenses to average net assets:
Before expense reduction		1.42	%		1.36	%		1.34	%		1.40	%		1.48	%
After expense reduction		1.42	%		1.36	%		1.31	%		1.27	%		1.37	%
Ratio of net investment income (loss) to average net assets:
Before expense reduction		(0.05	)%		0.51	%		0.38	%		0.30	%		0.46	%
After expense reduction		(0.05	)%		0.51	%		0.41	%		0.43	%		0.57	%
Portfolio turnover rate		4	%		16	%		17	%		6	%		4	%

172

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

	The Kinetics Government
	Money Market Portfolio
	For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2009			2008			2007			2006			2005
Ratio of expenses to average net assets:
Before expense reduction		1.01	%		1.24	%		2.22	%		1.56	%		1.37	%
After expense reduction		1.01	%		1.24	%		2.22	%		1.17	%		1.37	%
Ratio of net investment income (loss) to average net assets:
Before expense reduction		(0.95	)%		0.33	%		2.47	%		3.13	%		1.58	%
After expense reduction		(0.95	)%		0.33	%		2.47	%		3.52	%		1.58	%
Portfolio turnover rate		N/A			N/A			N/A			N/A			N/A

	The Market
	Opportunities Portfolio
	For the		For the			For the			January 31,
	Year Ended		Year Ended			Year Ended			2006ˆ through
	December 31,		December 31,			December 31,			December 31,
	2009		2008			2007			2006
Ratio of expenses to average net assets:
Before expense reduction		1.42%		1.36	%		1.44	%		1.81	%(1)
After expense reduction		1.42%		1.36	%		1.44	%		1.61	%(1)
Ratio of net investment income to average net assets:
Before expense reduction		0.26%		1.25	%		0.61	%		0.16	%(1)
After expense reduction		0.26%		1.25	%		0.61	%		0.36	%(1)
Portfolio turnover rate		14%		77	%		14	%		0	%

	The Water
	Infrastructure Portfolio
	For the		For the			June 29,
	Year Ended		Year Ended			2007ˆ through
	December 31,		December 31,			December 31,
	2009		2008			2007
Ratio of expenses to average net assets:
Before expense reduction		1.49%		1.49	%		2.01	%(1)
After expense reduction		1.49%		1.49	%		2.01	%(1)
Ratio of net investment income to average net assets
Before expense reduction		0.63%		1.27	%		0.96	%(1)
After expense reduction		0.63%		1.27	%		0.96	%(1)
Portfolio turnover rate		45%		66	%		7	%

173

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

	The Multi-
	Disciplinary Portfolio
	For the
	Year Ended			February 11, 2008ˆ
	December 31,			through
	2009			December 31, 2008
Ratio of expenses to average net assets:
Before expense reduction		3.66	%		5.09	%(1)
After expense reduction		3.66	%		5.09	%(1)
Ratio of net investment income (loss) to average net assets
Before expense reduction		(1.20	)%		(3.49	)%(1)
After expense reduction		(1.20	)%		(3.49	)%(1)
Portfolio turnover rate		77	%		N/A	(2)

ˆ   Commencement of operations.

(1)	Annualized.
(2)	This Portfolio did not hold any long term securities during the period, therefore the portfolio turnover is not applicable.

7.  Summary of Fair Value Exposure

Various inputs are used in determining the value of the Portfolios’ investments. These inputs are summarized in the three broad levels listed below:

Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Level 2 — Observable inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Company’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value

174

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in level 3.

The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The Internet Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009:

	Level 1			Level 2		Level 3			Total
Common Stocks	$	102,389,096		$	—	$	—	*(1)	$	102,389,096
Escrow Notes		—			—		—	*		—	*
Convertible Bonds		—			2,000,000		—			2,000,000
Rights		1,530,087			—		—			1,530,087
Short-Term Investments		935,678			—		—			935,678
Investments Purchased with the Cash
Proceeds from Securities Lending		38,026,523			—		—			38,026,523
Total Investments in Securities	$	142,881,384		$	2,000,000	$	—	*	$	144,881,384
Put Options Written	$	(12,650	)	$	—	$	—		$	(12,650	)

*  Amount is less than $0.50.

(1)  The Common Stocks Level 3 balance consists of the market values of the associated Level 3 investment in the following industry:

Special Purpose Entity $ —*

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

	Investments in
Description	Securities
Balance as of December 31, 2008	$	634
Accrued discounts/premiums		—
Realized gain (loss)		—
Change in unrealized appreciation (depreciation)		(634	)
Net purchases (sales)		—
Transfer in and/or out of Level 3		—
		—
Balance as of December 31, 2009	$	—	*

*  Amount is less than $0.50.

175

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

The Global Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009:

	Level 1		Level 2			Level 3		Total
Common Stocks	$	3,709,692	$	976,997	(1)	$	—	$	4,686,689
Preferred Stocks		39		—			—		39
Short-Term Investments		229,078		—			—		229,078
Investments Purchased with the Cash Proceeds from Securities Lending		388,881		—			—		388,881
Total Investments in Securities	$	4,327,690	$	976,997		$	—	$	5,304,687

(1)  The Common Stocks Level 2 balance consists of the market values of the associated Level 2 investments in the following industries:

Commercial Banking	$	146,098
Health and Personal Care Stores		18,479
Heavy and Civil Engineering Construction		253,544
Mining (except Oil and Gas)		15,105
Oil & Gas & Consumable Fuels		114,002
Real Estate		42,279
Retail Trade		12,272
Securities, Commodity Contracts, and Other Financial Investments and Related Activities		168,665
Software Publishers		78,440
Support Activities for Transportation		31,457
Utilities		96,656
	$	976,997

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

	Investments in
Description	Securities
Balance as of December 31, 2008	$	54,120
Accrued discounts/premiums		—
Realized gain (loss)		—
Change in unrealized appreciation (depreciation)		—
Net purchases (sales)		—
Transfer in and/or out of Level 3		(54,120	)
Balance as of December 31, 2009	$	—

176

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

The Paradigm Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009:

	Level 1		Level 2		Level 3			Total
Common Stocks	$	1,389,722,476	$	—	$	—		$	1,389,722,476
Escrow Notes		—		—		—	*		—	*
Convertible Bonds		—		12,285,000		—			12,285,000
Corporate Bonds		—		582,112		—			582,112
Short-Term Investments		4,687,061		—		—			4,687,061
Investments Purchased with the Cash Proceeds from Securities Lending		386,318,649		—		2,620,751			388,939,400
Total Investments in Securities	$	1,780,728,186	$	12,867,112	$	2,620,751		$	1,796,216,049

*   Amount is less than $0.50.

Following is a reconciliation of Level 3 assets for which significant unoberservable inputs were used to determine fair value:

	Investments in
Description	Securities
Balance as of December 31, 2008	$	12,901,309
Accrued discounts/premiums		—
Realized gain (loss)		—
Change in unrealized appreciation (depreciation)		127,422
Net purchases (sales)		(10,407,980	)
Transfer in and/or out of Level 3		—
Balance as of December 31, 2009	$	2,620,751

The Medical Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009:

	Level 1		Level 2		Level 3		Total
Common Stocks	$	24,431,790	$	—	$	—	$	24,431,790
Short-Term Investments		1,297,528		—		—		1,297,528
Investments Purchased with the Cash Proceeds from Securities Lending		3,462,232		—		—		3,462,232
Total Investment in Securities	$	29,191,550	$	—	$	—	$	29,191,550

177

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

The Small Cap Opportunities Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009:

	Level 1		Level 2			Level 3			Total
Common Stocks	$	197,096,296	$	2,004,640	(1)	$	—		$	199,100,936
Escrow Notes		—		—			—	*		—	*
Corporate Bonds		—		170,518			—			170,518
Rights		854,989		—			—			854,989
Short-Term Investments		412,802		—			—			412,802
Investments Purchased with the Cash Proceeds from Securities Lending		26,818,709		—			—			26,818,709
Total Investments in Securities	$	225,182,796	$	2,175,158		$	—	*	$	227,357,954

*	Amount is less than $0.50.
(1)	The Common Stocks Level 2 balance consists of the market value of the associated Level 2 investment in the following industries:

Commercial Banking $ 2,004,640

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

	Investments in
Description	Securities
Balance as of December 31, 2008	$	6,301
Accrued discounts/premiums		—
Realized gain (loss)		—
Change in unrealized appreciation (depreciation)		(1	)
Net purchases (sales)		—
Transfer in and/or out of Level 3		(6,300	)
Balance as of December 31, 2009	$	—

The Government Money Market Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009:

	Level 1		Level 2		Level 3		Total
Short-Term Investments	$	—	$	1,669,994	$	—	$	1,669,994
Total Investments in Securities	$	—	$	1,669,994	$	—	$	1,669,994

178

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

The Market Opportunities Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009:

	Level 1			Level 2		Level 3		Total
Common Stocks	$	65,374,850		$	—	$	—	$	65,374,850
Short-Term Investments		540,525			—		—		540,525
Investments Purchased with the Cash Proceeds from Securities Lending		14,955,121			—		—		14,955,121
Total Investment in Securities	$	80,870,496		$	—	$	—	$	80,870,496
Put Options Written	$	(88,550	)	$	—	$	—	$	(88,550	)

The Water Infrastructure Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009:

	Level 1		Level 2		Level 3		Total
Common Stocks	$	20,471,076	$	—	$	—	$	20,471,076
Preferred Stocks		361,200		—		—		361,200
Short-Term Investments		1,892,718		—		—		1,892,718
Investments Purchased with the Cash Proceeds from Securities Lending		2,849,007		—		—		2,849,007
Total Investments in Securities	$	25,574,001	$	—	$	—	$	25,574,001

The Multi-Disciplinary Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009:

	Level 1			Level 2		Level 3		Total
Convertible Bonds	$	—		$	396,875	$	—	$	396,875
Corporate Bonds		—			514,750		—		514,750
Call Options Purchased		135			—		—		135
Short-Term Investments		140,527			—		—		140,527
Total Investments in Securities	$	140,662		$	911,625	$	—	$	1,052,287
Put Options Written	$	(59,183	)	$	—	$	—	$	(59,183	)

8.  Disclosures about Derivative Instruments and Hedging Activities

The Portfolios have adopted enhanced disclosure regarding derivatives and hedging activity intended to improve financial reporting of derivative instruments by enabling investors to understand how and why an entity uses derivatives, how derivatives are accounted for, and how derivative instruments affect an entity’s results of operations and financial position.

179

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

The Internet Portfolio

Statement of Assets and Liabilities

Fair Values of derivative instruments as of December 31, 2009:

	Assets				Liabilities
Equity Contracts	Description		Fair Value		Description		Fair Value
Purchased Options		Investments*	$	—
						Written option
Written Options						contracts, at value	$	12,650
Total			$	—			$	12,650

*  Purchased options are included in investments with other long positions.

Statement of Operations

The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2009:

Amount of Realized Gain (Loss) on Equity Contracts

Equity Contracts
Purchased Options	$	—	**
Written Options		—
Total	$	—

**  Purchased options are included with investments.

Change in Unrealized Appreciation (Depreciation) on Equity Contracts

Equity Contracts
Purchased Options	$	—	***
Written Options		459,326
Total	$	459,326

***  Purchased options are included with investments.

180

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

The Paradigm Portfolio

Statement of Assets and Liabilities

Fair Values of derivative instruments as of December 31, 2009:

	Assets				Liabilities
Equity Contracts	Description		Fair Value		Description		Fair Value
Purchased Options		Investments*	$	—
						Written option
Written Options						contracts, at value	$	—
Total			$	—			$	—

*  Purchased options are included in investments with other long positions.

Statement of Operations

The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2009:

Amount of Realized Gain (Loss) on Equity Contracts

Equity Contracts
Purchased Options	$	(128,376	)**
Written Options		—
Total	$	—

**  Purchased options are included with investments.

Change in Unrealized Appreciation (Depreciation) on Equity Contracts

Equity Contracts
Purchased Options	$	(1,364,916	)***
Written Options		—
Total	$	(1,364,916	)

***  Purchased options are included with investments.

The Medical Portfolio

Statement of Assets and Liabilities

Fair Values of derivative instruments as of December 31, 2009:

	Assets				Liabilities
Equity Contracts	Description		Fair Value		Description		Fair Value
Purchased Options		Investments*	$	—
						Written option
Written Options						contracts, at value	$	—
Total			$	—			$	—

*  Purchased options are included in investments with other long positions.

181

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

Statement of Operations

The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2009:

Amount of Realized Gain (Loss) on Equity Contracts

Equity Contracts
Purchased Options	$	—	**
Written Options		19,470
Total	$	19,470

**  Purchased options are included with investments.

Change in Unrealized Appreciation (Depreciation) on Equity Contracts

Equity Contracts
Purchased Options	$	—	***
Written Options		(18,430	)
Total	$	(18,430	)

***  Purchased options are included with investments.

The Small Cap Opportunities Portfolio

Statement of Assets and Liabilities

Fair Values of derivative instruments as of December 31, 2009:

	Assets				Liabilities
Equity Contracts	Description		Fair Value		Description		Fair Value
Purchased Options		Investments*	$	—
						Written option
Written Options						contracts, at value	$	—
Total			$	—			$	—

*  Purchased options are included in investments with other long positions.

Statement of Operations

The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2009:

Amount of Realized Gain (Loss) on Equity Contracts

Equity Contracts
Purchased Options	$	90,828	**
Written Options		—
Total	$	90,828

**  Purchased options are included with investments.

182

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

Change in Unrealized Appreciation (Depreciation) on Equity Contracts

Equity Contracts
Purchased Options	$	88,668	***
Written Options		1,310
Total	$	89,978

***  Purchased options are included with investments.

The Market Opportunities Portfolio

Statement of Assets and Liabilities

Fair Values of derivative instruments as of December 31, 2009:

	Assets				Liabilities
Equity Contracts	Description		Fair Value		Description		Fair Value
Purchased Options		Investments*	$	—
						Written option
Written Options						contracts, at value	$	88,550
Total			$	—			$	88,550

*  Purchased options are included in investments with other long positions.

Statement of Operations

The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2009:

Amount of Realized Gain (Loss) on Equity Contracts

Equity Contracts
Purchased Options	$	(56,934	)**
Written Options		—
Total	$	(56,934	)

**  Purchased options are included with investments.

Change in Unrealized Appreciation (Depreciation) on Equity Contracts

Equity Contracts
Purchased Options	$	52,074	***
Written Options		264,788
Total	$	316,862

***  Purchased options are included with investments.

183

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

The Multi-Disciplinary Portfolio

Statement of Assets and Liabilities

Fair Values of derivative instruments as of December 31, 2009:

	Assets				Liabilities
Equity Contracts	Description		Fair Value		Description		Fair Value
Purchased Options		Investments*	$	135
						Written option
Written Options						contracts, at value	$	59,183
Total			$	135			$	59,183

*  Purchased options are included in investments with other long positions.

Statement of Operations

The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2009:

Amount of Realized Gain (Loss) on Equity Contracts

Equity Contracts
Purchased Options	$	—	**
Written Options		128,037
Total	$	128,037

**  Purchased options are included with investments.

Change in Unrealized Appreciation (Depreciation) on Equity Contracts

Equity Contracts
Purchased Options	$	(1,089	)***
Written Options		72,507
Total	$	71,418

***  Purchased options are included with investments.

9.  New Accounting Pronouncement

In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update “Improving Disclosures about Fair Value Measurements” that requires additional disclosures regarding fair value measurements. Certain required disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, and other required disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Management is currently evaluating the impact the update will have on its financial statement disclosures.

184

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2009

10.  Subsequent Events

In preparing these financial statements, Management has evaluated portfolio related events and transactions for potential recognition or disclosure through February 26, 2010, the date the financial statements were issued. There were no events or translations that occurred during the period that materially impacted the amounts or disclosures in the Portfolios’ financial statements.

11.  Results of Shareholder Meeting (Unaudited)

At a meeting held on March 18, 2009, the Board of Directors of the Company and the Board of Trustees of the Trust, approved the sub-advisory agreement for the Water Infrastructure Portfolio between Kinetics Asset Management, Inc. and Brennan Investment Partners, LLC. On November 16, 2009, a special meeting of shareholders of the Water Infrastructure Fund was held and the agreement was also approved. The result of the voting of shares with respect to the Proposal to approve a new sub-advisory agreement between Kinetics Asset Management, Inc. and Brennan Investment Partners, LLC, is shown below:

Votes for the Resolution:		Votes against the Resolution:		Abstain:
	1,032,712.690		26,173.655		16,380.394

12.  Information about Proxy Voting (Unaudited)

Information regarding how Kinetics Portfolios Trust votes proxies relating to portfolio securities is available without charge upon request by calling toll-free at 1-800-930-3828 or by accessing the Funds’ website at www.kineticsfund.com and by accessing the SEC’s website at www.sec.gov. Information regarding how the Portfolios voted proxies relating to portfolio securities during the most recent twelve month period ended June 30, is available without charge, upon request, by calling toll-free at 1-800-930-3828 or by accessing the SEC’s website at www.sec.gov.

13.  Information about the Portfolio Holdings (Unaudited)

The Kinetics Portfolios Trust file its complete schedules of portfolio holdings for its first and third fiscal quarters with the SEC on Form N-Q. The Portfolios’ Form N-Q is available without charge, upon request, by calling toll-free at 1-800-930-3828. Furthermore, you can obtain the Form N-Q on the SEC’s website at www.sec.gov. The Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

185

KINETICS PORTFOLIOS TRUST

Report of Independent Registered
Public Accounting Firm

To the Shareholders of and Board of Trustees

Kinetics Portfolios Trust

Elmsford, New York

We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of The Internet Portfolio, The Global Portfolio, The Paradigm Portfolio, The Medical Portfolio, The Small Cap Opportunities Portfolio, The Kinetics Government Money Market Portfolio, The Market Opportunities Portfolio, The Water Infrastructure Portfolio, and The Multi-Disciplinary Portfolio, each a series of shares of Kinetics Portfolios Trust (the “Trust”), as of December 31, 2009, and the related statements of operations, the statements of changes in net assets and financial highlights for the periods indicated thereon. These financial statements and financial highlights are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform, nor was the Trust required to have, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly in all material respects, the financial position of the above mentioned Portfolios as of December 31, 2009, the results of their operations, the changes in their net assets and financial highlights for the periods indicated thereon, in conformity with accounting principles generally accepted in the United States of America.

TAIT, WELLER & BAKER LLP

Philadelphia, Pennsylvania

February 26, 2010

186

KINETICS PORTFOLIOS TRUST

Management of the Funds and the Portfolios

The management and affairs of the Funds and the Portfolios are supervised by the Board of Directors of the Company and the Board of Trustees of the Trust, respectively. Each Board consists of the same eight individuals, five of whom are not “interested persons” of the Company or the Trust as that term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”). The Directors are fiduciaries for the Funds’ shareholders and are governed by the laws of the State of Maryland in this regard. The Trustees are fiduciaries for the Portfolios’ shareholders and are governed by the laws of the State of Delaware in this regard.

Each Board establishes policies for the operation of the Funds and the Portfolios and appoints the officers who conduct the daily business of the Funds and the Portfolios. Directors/Trustees of the Company and the Trust are listed below with their addresses, present positions with the Company and Trust, length of time served, principal occupations over at least the last five years, number of Funds and Portfolios overseen and any other Directorships held. The SAI includes additional information about the Funds’ officers and directors and is available, without charge, upon request by calling 1-800-930-3828.

187

KINETICS PORTFOLIOS TRUST

Management of the Funds and the Portfolios — (Continued)

Board of Directors/Board of Trustees

Independent Directors/Trustees

			Number of
			Portfolios/Funds in
		Term of Office/	Fund Complex**
	Position(s) with the	Length of	Overseen by
Name, Address and Year of Birth	Company and Trust	Time Served	Trustee/Director
Steven T. Russell Year Born: 1964 c/o Kinetics Asset Management, Inc. 555 Taxter Road Suite 175 Elmsford, New York, 10523	Independent Director/Trustee	Indefinite/ Since 2000		19
Douglas Cohen, C.P.A Year Born: 1961 c/o Kinetics Asset Management, Inc. 555 Taxter Road Suite 175 Elmsford, New York, 10523	Independent Director/Trustee	Indefinite/ Since 2000		19
William J. Graham Year Born: 1962 c/o Kinetics Asset Management, Inc. 555 Taxter Road Suite 175 Elmsford, New York, 10523	Independent Director/Trustee	Indefinite/ Since 2000		19
Joseph E. Breslin Year Born: 1953 c/o Kinetics Asset Management, Inc. 555 Taxter Road Suite 175 Elmsford, New York, 10523	Independent Director/Trustee	Indefinite/ Since 2000		19
James M. Breen Year Born: 1959 c/o Kinetics Asset Management, Inc. 555 Taxter Road Suite 175 Elmsford, New York, 10523	Independent Director/Trustee	Indefinite/ Since 2008		19

188

Principal Occupation During the Past Five Years	Other Directorships Held by Trustee/Director
Attorney and Counselor at Law, Partner, Law Firm of Russell and Fig (since September 2002); Steven Russell Law Firm (1994 to 2002); Professor of Business Law, Suffolk County Community College (1997 to Present).	N/A
Sunrise Credit Services, Inc. (2005 to Present); Wagner & Zwerman, LLP Certified Public Accountant (1997 to 2005).	Director, The Kinetics Funds (a private investment company).
Attorney, William J. Graham, PC (2001 to Present); Bracken & Margolin, LLP (1997 to 2001).	N/A
Chief Operating Officer, Central Park Credit Holdings, (2007-2009) Chief Operating Officer, Aladdin Capital Management (2005-2007); Independent Consultant Whitehall Asset Management (May 2003 to 2004); Independent Consultant, Independence Community Bank (2003-2005).	Trustee, AIP Alternative Strategies Funds (2 portfolios); Trustee, Underlying Funds Trust (4 portfolios).
Assistant Attaché Immigration & Customs Enforcement, Pretoria, South Africa (2008 to Present); Immigration & Customs Enforcement Representative, Athens, Greece (2006 to 2008); Immigration & Customs Enforcement, Senior Special Agent, Miami, FL (2000 to 2008).	N/A

189

KINETICS PORTFOLIOS TRUST

Management of the Funds and the Portfolios — (Continued)

Board of Directors/Board of Trustees (Continued)

Interested Directors/Trustees and Officers

			Number of
			Portfolios/Funds in
		Term of Office/	Fund Complex**
	Position(s) with the	Length of	Overseen by
Name, Address and Year of Birth	Company and Trust	Time Served	Trustee/Director
Murray Stahl* Year Born: 1953 c/o Kinetics Asset Management, Inc. 555 Taxter Road Suite 175 Elmsford, New York, 10523	Director/Trustee and Secretary	Indefinite/ Since 2000		19
Peter B. Doyle* Year Born: 1962 c/o Kinetics Asset Management, Inc. 555 Taxter Road Suite 175 Elmsford, New York, 10523	Director/Trustee, President and Chairman of the Board	Indefinite/ Since 2002		19
Leonid Polyakov* Year Born: 1959 c/o Kinetics Asset Management, Inc. 555 Taxter Road Suite 175 Elmsford, New York, 10523	Director/Trustee and Treasurer	Indefinite/ Since 2002		19

*  Directors/Trustees who are considered “interested persons” as defined in Section 2(a)(19) of the 1940 Act because of their association with the Adviser.

190

Principal Occupation During the Past Five Years	Other Directorships Held by Trustee/Director
Chairman, The FRMO Corp. (2001 to Present) (provides consulting services to private investment funds and research services with respect to marketable securities); Chairman, Horizon Asset Management, an investment adviser (1994 to Present); Director of Research, Kinetics Asset Management and Kinetics Mutual Funds, Inc. (2002 to Present).	Chairman of Horizon Asset Management; Chairman of FRMO Corporation.
President, Kinetics Asset Management, Inc. (2002 to Present); Director, Kinetics Advisers, LLC (2000 to Present); Director and Officer, Horizon Asset Management, Inc. (1994 to Present); Chief Investment Strategist, Kinetics Asset Management and Kinetics Mutual Funds, Inc. (1998 to Present).	Director, The Kinetics Funds (a private investment company); Director and Officer of FRMO Corporation.
CFO, Kinetics Asset Management, Inc. (2000 to Present); President, Kinetics Funds Distributor, Inc. (2002 to Present); Director, Kinetics Advisers, LLC (2000 to Present); formerly CFO, KBD Securities, LLC (2000 to Present).	Director, The Kinetics Funds (a private investment company).

**  The term “fund complex” refers to the Company and the Trust, which hold themselves out as related for investment purposes.

191

KINETICS MUTUAL FUNDS, INC. & KINETICS PORTFOLIOS TRUST

Privacy Policy

We collect the following nonpublic personal information about you:

•  Information we receive from you on or in applications or other forms, correspondence, or conversations, including, but not limited to, your name, address, phone number, social security number, assets, income and date of birth; and

•  Information about your transactions with us, our affiliates, or others, including, but not limited to, your account number and balance, payments history, parties to transactions, cost basis information, and other financial information.

We do not disclose any nonpublic personal information about our current or former shareholders to nonaffiliated third parties, except as permitted by law. For example, we are permitted by law to disclose all of the information we collect, as described above, to our transfer agent to process your transactions. Furthermore, we restrict access to your nonpublic personal information to those persons who require such information to provide products or services to you. We maintain physical, electronic, and procedural safeguards that comply with federal standards to guard your nonpublic personal information.

In the event that you hold shares of the fund(s) through a financial intermediary, including, but not limited to, a broker-dealer, bank, or trust company, the privacy policy of your financial intermediary would govern how your nonpublic personal information would be shared with nonaffiliated third parties.

192

Kinetics Mutual

Funds, Inc.

615 East Michigan Street

Milwaukee, WI 53202

INVESTMENT ADVISER AND

SHAREHOLDER SERVICING AGENT

Kinetics Asset Management, Inc.

555 Taxter Road

Suite 175

Elmsford, NY 10523

INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

Tait, Weller & Baker LLP

1818 Market Street

Suite 2400

Philadelphia, PA 19103

DISTRIBUTOR

Kinetics Funds Distributor, Inc.

555 Taxter Road

Suite 175

Elmsford, NY 10523

ADMINISTRATOR

FUND ACCOUNTANT AND

TRANSFER AGENT

U.S. Bancorp Fund Services, LLC

615 East Michigan Street

Milwaukee, WI 53202

CUSTODIAN

U.S. Bank, N.A.

Custody Operations

1555 River Center Drive, Suite 302

Milwaukee, WI 53212

THIS MATERIAL MUST BE PRECEDED OR

ACCOMPANIED BY A PROSPECTUS

Item 2. Code of Ethics.

The registrant has adopted a code of ethics (“Code of Ethics”) that applies to the registrant’s principal executive officer and principal financial officer. The registrant has not made any amendments to its code of ethics during the period covered by this report. The registrant has not granted any waivers from any provisions of the code of ethics during the period covered by this report. A copy of the registrant’s Code of Ethics is incorporated herein by reference as provided in item 12(a)(1) of this report.

Item 3. Audit Committee Financial Expert.

The registrant’s board of trustees/directors has determined that there is at least one audit committee financial expert serving on its audit committee. Mr. Douglas Cohen and Mr. Joseph Breslin are the “audit committee financial experts” and are considered to be “independent” as each term is defined in Item 3 of Form N-CSR.

Item 4. Principal Accountant Fees and Services.

Items 4(a) to 4(d).

The registrant has engaged its principal accountant to perform audit services, audit-related services, tax services and other services during the past two fiscal years. “Audit services” refers to performing an audit of the registrant’s annual financial statements or services that are normally provided by the principal accountant in connection with statutory and regulatory filings or engagements for those fiscal years. “Audit-related services” refers to the assurance and related services by the principal accountant that are reasonably related to the performance of the audit. “Tax services” refers to services rendered by the principal accountant for tax compliance, tax advice, and tax planning. “Other services” refers to products and services provided by the principal accountant other than audit services, audit-related services and tax services. The following table details the aggregate fees billed for each of the last two fiscal years for audit services, audit-related services, tax fees and other services by the principal accountant.

	FYE 12/31/2009		FYE 12/31/2008		FYE 12/31/2009		FYE 12/31/2008
	Kinetics Portfolios		Kinetics Portfolios		Kinetics Mutual		Kinetics Mutual
	Trust		Trust		Funds		Funds
Audit Fees		76,000		76,000		76,000		76,000
Audit-Related Fees		0		0		0		0
Tax Fees		21,500		21,500		21,500		21,500
All Other Fees		0		0		0		0

Items 4(e) to 4(h).

     (e)(1) The audit committee does not have pre-approval policies and procedures. Instead, the audit committee or sub-audit committee approves on a case-by-case basis each audit or non-audit service before the principal accountant is engaged by the registrant to provide such service.

     (e)(2) There were no services approved by the audit committee pursuant to paragraph (c)(7)(i)(C) Rule 2-01 of Regulation S-X.

     (f) The percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was zero percent (0%).

     (g) The aggregate non-audit fees billed by the registrant’s principal accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant was $0 and $0 for Kinetics Mutual Funds, Inc. and Kinetics Portfolios Trust, respectively, for the fiscal year ended December 31, 2008 and $0 and $0 for Kinetics Mutual Funds, Inc. and Kinetics Portfolios Trust, respectively, for the fiscal year ended December 31, 2009.

     (h) Not applicable as the response to (g) of this item is none.

Item 5. Audit Committee of Listed Registrants.

Not applicable to registrants who are not listed issuers (as defined in Rule 10A-3 under the Securities Exchange Act of 1934).

Item 6. Schedule of Investments.

The Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable to open-end investment companies.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable to open-end investment companies.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable to open-end investment companies.

Item 10. Submission of Matters to a Vote of Security Holders.

Not Applicable.

Item 11. Controls and Procedures.

(a)

The Registrant’s President/Chief Executive Officer and Treasurer/Chief Financial Officer have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report, that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended.

(b)

There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item 12. Exhibits.

(a) (1) Code of Ethics is filed herewith.

(2) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.

(3) Not applicable to open-end investment companies.

(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.

SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) Kinetics Mutual Funds, Inc. & Kinetics Portfolios Trust
By (Signature and Title)*	/s/ Peter B. Doyle
	Peter B. Doyle, President

Date March 8, 2010

          Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title)*	/s/ Peter B. Doyle
	Peter B. Doyle, President

Date March 8, 2010

By (Signature and Title)*	/s/ Leonid Polyakov
	Leonid Polyakov, Treasurer

Date March 8, 2010

* Print the name and title of each signing officer under his or her signature.

EX-99.CODE

CODE OF ETHICS
FOR
CHIEF EXECUTIVE AND SENIOR FINANCIAL OFFICERS
OF
KINETICS MUTUAL FUNDS, INC. AND KINETICS PORTFOLIOS TRUST

Kinetics Mutual Funds, Inc. (the “Company”) and Kinetics Portfolios Trust (the “Trust,” and together with the Company, the “Funds”) are committed to conducting business in accordance with applicable laws, rules and regulations and the highest standards of business ethics, and to full and accurate disclosure — financial and otherwise — in compliance with applicable law. This Code of Ethics, applicable to the Funds’ Chief Executive Officer (the President and Chairman of the Board) and Chief Financial Officer (the Treasurer) (or persons performing similar functions) (together, “Senior Officers”), sets forth policies to guide you in the performance of your duties and is for the purpose of promoting:

• honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

• full, fair, accurate, timely and understandable disclosure in reports and documents that the Funds file with, or submit to, the Securities and Exchange Commission and in other public communications made by the Funds;

• compliance with applicable laws and governmental rules and regulations;

• the prompt internal reporting of violations of the Code of Ethics to an appropriate person or persons identified in this Code; and

• accountability for adherence to this Code.

          As a Senior Officer, you must comply with applicable law. You also have a responsibility to conduct yourself in an honest and ethical manner. You have leadership responsibilities that include creating a culture of high ethical standards and a commitment to compliance, maintaining a work environment that encourages the internal reporting of compliance concerns and promptly addressing compliance concerns.

          This Code of Ethics recognizes that the Senior Officers are subject to certain conflicts of interest inherent in the operation of investment companies, because, among other reasons, the Senior Officers currently or may in the future serve as officers or employees of the Funds’ investment advisor (the “Advisor”) and/or affiliates of the Funds’ investment advisor (collectively, “Kinetics”). This Code of Ethics also recognizes that certain laws and regulations applicable to, and certain policies and procedures adopted by, the Funds or Kinetics govern your conduct in connection with

many of the conflict of interest situations that arise in connection with the operations of the Funds, including:

• the Investment Company Act of 1940, as amended, and the rules and regulation promulgated thereunder by the Securities and Exchange Commission (the “1940 Act”);

• the Investment Advisers Act of 1940, as amended, and the rules and regulations promulgated thereunder by the Securities and Exchange Commission (the “Advisers Act”);

• the Code of Ethics adopted by the Funds pursuant to Rule 17j-1(c) under the 1940 Act (the “Funds’ 1940 Act Code of Ethics”);

• one or more codes of ethics adopted by Kinetics that have been reviewed and approved by those directors of the Company and trustees of the Trust that are not “interested persons” of the Company and the Trust, respectively, (the “Independent Directors/Trustees”), within the meaning of the 1940 Act (“Kinetics’ 1940 Act Code of Ethics” and, together with the Funds’ 1940 Act Code of Ethics, the “1940 Act Codes of Ethics”); and

• Kinetics ‘s general policies and procedures to address, among other things, conflict of interest situations and related matters (collectively, the “Kinetics Policies”).

The provisions of the 1940 Act, the Advisers Act, the 1940 Act Codes of Ethics, and the Kinetics Policies are referred to herein collectively as the “Additional Conflict Rules”.

          This Code of Ethics is different from, and is intended to supplement, the Additional Conflict Rules. Accordingly, a violation of the Additional Conflict Rules by a Senior Officer is hereby deemed not to be a violation of this Code of Ethics, unless and until the Independent Directors/Trustees shall determine that any such violation of the Additional Conflict Rules is also a violation of this Code of Ethics.

Senior Officers Should Act Honestly and Candidly

          Each Senior Officer has a responsibility to the Funds to act with integrity. Integrity requires, among other things, being honest and candid. Deceit and subordination of principle are inconsistent with integrity.

          Each Senior Officer must:

• act with integrity, including being honest and candid while still maintaining the confidentiality of information where required by law or the Additional Conflict Rules;

-2-

• comply with the laws, rules and regulations that govern the conduct of the Funds’ operations and report any suspected violations thereof in accordance with the section below entitled “Compliance”; and

• adhere to a high standard of business ethics.

Conflicts Of Interest

          A conflict of interest for the purpose of this Code of Ethics occurs when your private interests, or those of your family members, interfere in any way, or even appear to interfere, with the interests of the Funds.

          Senior Officers are expected to use objective and unbiased standards when making decisions that affect the Funds, keeping in mind that Senior Officers are subject to certain inherent conflicts of interest because Senior Officers of the Funds, or a member of a Senior Officer’s family, also are or may be officers of Kinetics (as a result of which it is incumbent upon you to be familiar with and to seek to comply with the Additional Conflict Rules).

          You are required to conduct the business of the Funds in an honest and ethical manner, including the ethical handling of actual or apparent conflicts of interest between personal and business relationships. When making any investment, accepting any position or benefits, participating in any transaction or business arrangement or otherwise acting in a manner that creates or appears to create a conflict of interest with respect to the Funds where you are receiving a personal benefit, you should act in accordance with the letter and spirit of this Code of Ethics.

          If you are in doubt as to the application or interpretation of this Code of Ethics to you as a Senior Officer of the Funds, you should make full disclosure of all relevant facts and circumstances to the Audit Committees of the Funds and obtain approval prior to taking action.

Each Senior Officer must:

• avoid conflicts of interest wherever possible;

• handle any actual or apparent conflict of interest ethically;

• not use his or her personal influence or personal relationships to influence investment decisions or financial reporting by the Funds whereby the Senior Officer would benefit personally to the detriment of the Funds;

• not cause the Funds to take action, or fail to take action, for the personal benefit of the Senior Officer rather than the benefit of the Funds;

-3-

• not use material non-public knowledge of portfolio transactions made or contemplated for the Funds to trade personally or cause others to trade personally in contemplation of the market effect of such transactions; and

• report at least annually affiliations or other relationships with the Funds, the Advisor or the distributor, including any related conflict of interest.

          Some conflict of interest situations that should always be approved by the Audit Committees, if material, include the following:

• the receipt of any entertainment or non-nominal gift by the Senior Officer, or a member of his or her family, from any company with which the Funds have current or prospective business dealings (other than Kinetics), unless such entertainment or gift is business related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety;

• any ownership interest in, or any consulting or employment relationship with, any of the Funds’ service providers, other than Kinetics; or

• a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Funds for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Senior Officer’s employment by Kinetics, such as compensation or equity ownership.

Disclosures

          It is the policy of the Funds to make full, fair, accurate, timely and understandable disclosure in compliance with all applicable laws and regulations in all reports and documents that the Funds file with, or submits to, the Securities and Exchange Commission and in all other public communications made by the Funds. As a Senior Officer, you are required to promote compliance with this policy and to abide by the Funds’ standards, policies and procedures designed to promote compliance with this policy.

          Each Senior Officer must:

• familiarize himself or herself with the disclosure requirements applicable to the Funds as well as the business and financial operations of the Funds; and

• not knowingly misrepresent, or cause others to misrepresent, facts about the Funds to others, including to the Trustees/Directors, the Funds’ independent auditors, the Funds’ counsel, counsel to the Independent Trustees/Directors, governmental regulators or self-regulatory organizations.

-4-

          Unless otherwise required by law, this Code shall be disclosed as required by the Securities and Exchange Commission.

Compliance

          It is the Funds’ policy to comply with all applicable governmental laws, rules and regulations. It is the personal responsibility of each Senior Officer to adhere to the standards and restrictions imposed by those laws, rules and regulations, including those relating to affiliated transactions, accounting and auditing matters.

Accountability

Each Senior Officer must:

• upon receipt of the Code of Ethics, sign and submit to the Funds’ Boards an acknowledgement stating that he has received, read and understands the Code on the certification attached hereto as Appendix A.

• annually thereafter affirm to the Funds’ Boards that he has complied with the requirements of the Code and reported any violations of the Code on the certification attached hereto as Appendix A.

• notify the Audit Committee promptly if he knows of any violation of this Code. Failure to do so is itself a violation of this Code.

• not retaliate against any other Senior Officer or any employee of the Funds or affiliated persons of the Funds or the Funds’ service providers for reports of potential violations that are made in good faith.

Reporting Violations

          The Funds’ Audit Committees are responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. The Funds’ Audit Committees may consult Fund counsel in order to effectively discharge its responsibilities.

Investigation Procedures

          The Funds will follow these procedures in investigating and enforcing this Code of Ethics:

• The Audit Committee will take all appropriate action to investigate any potential violations of the Code;

• If, after such investigation, the Audit Committee believes that no violation has occurred, the Audit Committee is not required to take any further action;

-5-

• Any matter that the Audit Committee believes is a violation of this Code will be reported to the Funds’ Board; and

• If the Board concurs that a violation has occurred, it will take action which it considers appropriate. Such action may include a review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of each service provider or its governing body; or a recommendation to dismiss the Senior Officer.

Waivers of Code of Ethics

          The Audit Committees are responsible for granting waivers, implicit or otherwise, of this Code of Ethics, as appropriate. Such Committees will be responsible for granting waivers, as appropriate; and any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules.

          A waiver is the approval of a material departure from a provision of this Code. An implicit waiver is the Funds’ failure to take action within a reasonable period of time regarding a material departure from a provision of this Code that has been made known to the Audit Committees.

Recordkeeping

          The Funds will maintain and preserve for a period of not less than six (6) years from the date an action is taken, the first two (2) years in an easily accessible place, a copy of the information or materials supplied to the Audit Committees: (i) that provided the basis for any amendment or waiver to this Code of Ethics; and (ii) relating to any violation of this Code of Ethics and sanctions imposed for such violation, together with a written record of the approval or action taken by the Audit Committees.

Confidentiality

          All reports and records prepared or maintained pursuant to this Code of Ethics shall be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code of Ethics, such matters shall not be disclosed to anyone other than the Audit Committees, the Funds and their counsel, Kinetics and its counsel and any other advisors, consultants or counsel retained by the Boards of the Company or the Trust or the Audit Committees.

Amendments

          This Code of Ethics, other than Exhibit A, may not be amended except in written form, which is specifically approved by a majority vote of the Boards of the Company and the Trust, including a majority of the Independent Directors/Trustees.

-6-

No Rights Created

          This Code of Ethics is a statement of certain fundamental principles, policies and procedures that govern each of the Senior Officers in the conduct of the Funds’ business. It is not intended to and does not create any rights in any employee, investor, supplier, competitor, shareholder or any other person or entity.

-7-

Appendix A

KINETICS MUTUAL FUNDS, INC. AND KINETICS PORTFOLIOS TRUST

Certification and Acknowledgement of Receipt of Code of Ethics

I acknowledge and certify that I have received a copy of the Code of Ethics for the Chief Executive Officer (President/Chairman of the Board) and Chief Financial Officer (the Treasurer) of Kinetics Mutual Funds, Inc. and Kinetics Portfolios Trust (the “Code”). I understand and agree that it is my responsibility to read and familiarize myself with the policies and procedures contained in the Code and to abide by those policies and procedures.

I acknowledge my commitment to comply with the Code.

Applicable next year:

I acknowledge that I complied with the Code for the one-year period ended ____________.

I acknowledge that I reported all violations of this Code of Ethics for the one-year period ended _________ of which I am aware.

(Please submit on a separate piece of paper, exceptions to these acknowledgements.)

Officer Name (Please Print)	Officer Signature
	Date

-8-

EX-99.CERT

EX.99.CERT

CERTIFICATIONS

I, Peter B. Doyle certify that:

1.	I have reviewed this report on Form N-CSR of Kinetics Mutual Funds, Inc. & Kinetics Portfolios Trust (each, the “registrant”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting 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; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 8, 2010	/s/ Peter B. Doyle
	Peter B. Doyle
	President

EX.99.CERT

CERTIFICATIONS

I, Leonid Polyakov, certify that:

1.	I have reviewed this report on Form N-CSR of Kinetics Mutual Funds, Inc. & Kinetics Portfolios Trust (each, the “registrant”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting 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; and

5. The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 8, 2010	/s/ Leonid Polyakov
	Leonid Polyakov
	Treasurer

EX-99.906CERT

EX.99.906CERT

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act

          Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of the Kinetics Mutual Funds, Inc. & Kinetics Portfolios Trust (each, the “Registrant”), does hereby certify, to such officer’s knowledge, that the report on Form N-CSR of the Kinetics Mutual Funds, Inc. & Kinetics Portfolios Trust (each, the “Registrant”) for the period ended December 31, 2009 (the “Report), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as applicable, and that the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Kinetics Mutual Funds, Inc. & Kinetics Portfolios Trust (each, the “Registrant”) for the stated period.

/s/ Peter B. Doyle	/s/ Leonid Polyakov
Peter B. Doyle	Leonid Polyakov
President, Kinetics Mutual Funds, Inc. & Kinetics	Treasurer, Kinetics Mutual Funds, Inc. & Kinetics
Portfolios Trust	Portfolios Trust
Dated: March 8, 2010	Dated: March 8, 2010

This statement accompanies this report on Form N-CSR pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed as filed by Kinetics Mutual Funds, Inc. & Kinetics Portfolios Trust (each, the “Registrant”), for purposes of Section 18 of the Securities Exchange Act of 1934.