As filed with the Securities and Exchange Commission on September 7, 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, 2010

Date of reporting period: June 30, 2010

Item 1. Report to Stockholders.

 

 June 30, 2010 www.kineticsfunds.com

Semi-Annual Report

 The Internet Fund
 The Global Fund
 The Paradigm Fund
 The Medical Fund
 The Small Cap Opportunities Fund
 The Kinetics Government Money Market Fund
 The Market Opportunities Fund
 The Water Infrastructure Fund
 The Multi-Disciplinary Fund
 The Tactical Paradigm Fund

LOGO Each a series of Kinetics Mutual Funds, Inc.

(Kinetics Mutual Funds, Inc.)

KINETICS MUTUAL FUNDS, INC.

Table of Contents

June 30, 2010

	Page
Shareholders’ Letter		2
Year 2010 Semi-Annual Investment Commentary		5
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Expense Example		10
Schedule of Investments The Tactical Paradigm Fund		25
Schedule of Options Written The Tactical Paradigm Fund		26
Schedule of Future Contracts The Tactical Paradigm Fund		27
Statement of Assets & Liabilities		28
Statement of Operations		33
Statements of Changes in Net Assets		38
Notes to Financial Statements		50
Financial Highlights		70
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Allocation of Portfolio Assets		100
Portfolio of Investments The Internet Portfolio		105
Portfolio of Investments The Global Portfolio		112
Portfolio of Investments The Paradigm Portfolio		119
Portfolio of Investments The Medical Portfolio		129
Portfolio of Investments The Small Cap Opportunities Portfolio		133
Portfolio of Investments The Kinetics Government Money Market Portfolio		140
Portfolio of Investments The Market Opportunities Portfolio		141
Portfolio of Investments The Water Infrastructure Portfolio		147
Portfolio of Investments The Multi-Disciplinary Portfolio		151
Portfolio of Options Written The Multi-Disciplinary Portfolio		154
Statement of Assets & Liabilities		168
Statement of Operations		173
Statements of Changes in Net Assets		178
Notes to Financial Statements		183

1

KINETICS MUTUAL FUNDS, INC.

Shareholders’ Letter

Dear Fellow Shareholders:

We are pleased to present the Kinetics Mutual Funds’ (“Funds”) Semi-Annual Report for the six-month period ended June 30, 2010. On balance, the Kinetics Family of Mutual Funds did not meet our expectations for the first half of 2010, with returns of (8.03)% for the Paradigm Fund,(7.80)% for the Tactical Paradigm Fund, (7.39)% for the Small Cap Opportunities Fund, (8.76)% for the Market Opportunities Fund, (4.33)% for the Internet Fund, (6.76)% for the Medical Fund, (14.45)% for the Water Infrastructure Fund, (7.14)% for the Global Fund, and 0.09% for the Multi-Disciplinary Fund. This compares with first-half 2010 returns of (6.65)% and (7.05)% for the S&P 500 Index⁽¹⁾ and the NASDAQ Composite Index⁽²⁾, respectively.

The Funds continue to be managed by focusing upon strong businesses at attractive valuations. Companies within the Funds’ portfolios have nearly universally met or exceeded our expectations, but the market has gyrated wildly in response to a seemingly endless array of proposed impending crises. A critical aspect to our investment process includes analyzing a company’s ability to function in a myriad of business environments. In this regard, we were not surprised that most holdings in the Funds have approached or exceeded earnings figures from 2007. Despite this, many of the companies in the Funds continue to trade well below the valuations seen in 2007. It is our belief that over the fullness of time, fundamentals will drive stock prices, and we remain exceptionally optimistic about our positioning.

Shareholders can continue to access additional information from our website, www.kineticsfunds.com. This website provides a broad array of information, including recent portfolio holdings, quarterly investment commentaries, conference call transcripts, newsflashes, recent performance data, and online access to account information.

Kinetics offers the following funds to investors:

The Paradigm Fund focuses on companies that are valued attractively and have had sustainable high business returns. This has been a very successful strategy for the Fund over the past 10 years. The Paradigm Fund is Kinetics’ flagship fund.

The Tactical Paradigm Fund invests generally all of its assets in the Paradigm Portfolio while also hedging market risk with futures, options and short sales of exchange traded funds. The Fund may also

2

KINETICS MUTUAL FUNDS, INC.

Shareholders’ Letter — (Continued)

purchase or write options in combination with each other to adjust market risk and return of its overall investment positions.

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 same investment fundamentals employed by the Paradigm Fund are used to identify such opportunities.

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

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

The Global Fund’s mandate was changed in early April 2008 to an emphasis on international investments, with particular attention to China and other Asian markets. The Fund employs the same investment criteria as the Paradigm Fund, but with an international focus.

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

The 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.

The Multi-Disciplinary Fund uses a unique two-part strategy of fixed income and derivative components. The Fund generally invests in U.S. corporate bonds and simultaneously sells at-the-money put options on equities. This strategy aims to achieve equity-like returns, with bond-like volatility. At times the Fund may purchase equity positions in addition to the core option/bond portfolio.

3

KINETICS MUTUAL FUNDS, INC.

Shareholders’ Letter — (Continued)

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:

If we were penning this commentary at the end of June, instead of mid-August, we could have easily been writing about what impact the Greek crisis and the potential demise of the Euro were having on global equity prices during the first six-months of 2010. If we felt expansive, the unflattering acronym PIIGS, standing for the all of the perceived financially troubled European nations (Portugal, Italy, Ireland, Greece and Spain) could have been mentioned. This would have demonstrated that we had an International/Global outlook and were aware of such pressing issues. Back in June these issues dominated the business press, and the European crisis, as explained by most pundits, was expected to have dire consequences for the world economy. Today, the European crisis appears to be but a small footnote in history. Pundits and market participants have now moved on to the next potential concern: deflation. It should be noted that the Euro, despite its previously predicted imminent collapse, has rallied substantially over the last 45 days, as have most global equity markets, notwithstanding the last few days prior to this writing.

All of the perceived financial troubles, and there have been many over the last two years, along with the anchoring effect of the financial crisis of 2008-2009, have caused a massive flight to less risky assets. As of August 12, 2010, the 10-year U.S. Treasury Note has a pre-tax yield of 2.72%. If you are in a 35% federal tax bracket, then your after-tax yield is just 1.77% with this investment. Such a low yield is reflective of its perceived safety. One had better be very certain that there will be, at a minimum, an absence of inflation when buying at such a low yield. Should the 10-year Treasury Note yield quickly move back to 4%, low by historical standards, one would experience an approximate 12% decline in the price of one’s investment. Should the 10-year Note similarly move back to a 6% yield, which is still below the 10-year Treasury’s long-term average yield, one would experience an approximate 25% decline in one’s investment. Ten years of 3% inflation per annum erodes approximately 35% of one’s original principal amount.

In our opinion, the 10-year U.S. Treasury Note’s pre-tax yield is the functional equivalent of buying a stock at a price-earnings multiple of 36 times (100/2.72). Such a valuation multiple brings to mind the

5

KINETICS MUTUAL FUNDS, INC.

Investment Commentary — (Continued)

prices that investors were paying for established technology/Internet stocks near their peak in late 1999 and early 2000. At that time, however, excessive optimism caused the high valuations, whereas today, we believe it is excessive pessimism that is driving the pricing of U.S. Treasuries. While we are aware of the major differences between stocks and U.S. Treasury Notes (one of which is that investors are guaranteed the face amount at maturity), investors’ expectations for the future must be excessively bleak, given that there are attractive alternative investment opportunities that offer a much higher initial yield. Since the U.S. Treasury market is multi-trillion in size, the low yields, as a function of supply and demand, are the result of substantial institutions buying the securities rather than individuals who are concerned about their retirement nest eggs. While we offer no prediction as to the direction of the price of U.S. Treasury Notes, we know too well what can happen when everyone gets into an investment: they all eventually flee. We believe our funds offer a better investment alternative.

For example, the Kinetics Medical Fund owns a position in Bristol-Myers Squibb. This is a world class pharmaceutical company, tracing its history back to 1887, and trades at a price-earnings multiple of 11.3 times next year’s estimated earnings of $2.33. The initial earnings yield, on its 2011 earnings estimate, is 8.9% (1/11.2 = 8.89%). It should also be noted that Bristol’s current dividend yield is 4.80%. Compare both of these yields to the yield of 10-year U.S. Treasury Notes, set forth above. We could have told you a similar story about NYSE-Euronext, which traces its domestic history back to 1792, and is held in both the Kinetics Paradigm Fund and the Kinetics Market Opportunities Fund. There are many more companies in each of our funds that have similar stories. Given everything that we know about valuations, interest rates and expected returns, equities currently look very compelling relative to other asset classes. Ironically, in our opinion, the massive investor flight to safety has caused the risky asset class, stocks, to become a far safer harbor for one’s wealth. The global equity markets trade on the release of generally non-meaningful news which investors tend to forget almost immediately. Longer term investment success will be predicated upon the valuation and quality of the underlying assets.

6

KINETICS MUTUAL FUNDS, INC.

Investment Commentary — (Continued)

Furthermore, please be aware that our Kinetics Multi-Disciplinary Fund uses a unique options strategy on names we would be comfortable holding to capture the high premiums others are willing to pay in order to have protection. This fund was started in 2008, a very inauspicious year in which to start a mutual fund, and we believe it has performed quite commendably. Because of its income return characteristics and short-term gains, this fund is particularly well-suited for tax-advantaged accounts. It will also likely perform admirably if volatility remains high while the equity market remains fairly flat, which is what has happened thus far in 2010.

We appreciate your confidence and believe you will be appropriately rewarded as we live through what could be a continued volatile ride.

The Kinetics Investment Team
August 12, 2010

7

KINETICS MUTUAL FUNDS, INC.

Investment Commentary — (Continued)

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 Internet Fund, The Medical Fund and The Water Infrastructure Fund invest in a single industry, 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, The Internet Fund and The Tactical Paradigm 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 all Funds] 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 investment objectives. Purchasing and writing put and call options and, in particular, writing

8

KINETICS MUTUAL FUNDS, INC.

Investment Commentary — (Continued)

“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 or generally all of their investable assets in a corresponding portfolio series of Kinetics Portfolios Trust.

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

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

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

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

July 1, 2010 — Kinetics Asset Management, Inc.

9

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example

June 30, 2010 (Unaudited)

Shareholders incur two type of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvestments of dividends or other distributions made by a Fund, redemption fees, and exchange fees, and (2), ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help investors understand the ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested on January 1, 2010 and held for the entire period from January 1, 2010 to June 30, 2010.

Actual Expenses

The first line and second line items of the table below provide information about actual account values and actual expenses before and after expense reimbursement. Unlike other mutual funds that directly acquire and manage their own portfolio securities, each Fund invests all or generally all of its investable assets in a corresponding series of The Kinetics Portfolios Trust (each, a “Master Portfolio”, and together the “Master Portfolios”), a separately registered investment company. The Master Portfolio, in turn, invests in securities. With this type of organization, expenses can accrue specifically to the Master Portfolio or the 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 Fund records its proportionate share of the Master Portfolio’s expenses, including directed brokerage credits, on a daily basis. Any expense reductions include Fund-specific expenses as well as the expenses allocated from the Master Portfolio.

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

10

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

June 30, 2010 (Unaudited)

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 third and fourth line items of the table below provide information about hypothetical account values and hypothetical expenses before and after expense reimbursements based on the Funds’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which are not the 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 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.

11

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

June 30, 2010 (Unaudited)

Expense Example

	Beginning		Ending		Annualized			Expenses Paid
	Account		Account		Expense			During Period*
	Value (1/1/10)		Value (6/30/10)		Ratio			(1/1/10 to 6/30/10)
The Internet Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	956.73		1.96	%	$	9.51
No Load Class Actual — after expense reimbursement	$	1,000.00	$	956.73		1.89	%	$	9.17
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,015.08		1.96	%	$	9.79
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,015.42		1.89	%	$	9.44
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	955.52		2.21	%	$	10.72
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	955.52		2.14	%	$	10.38
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,013.84		2.21	%	$	11.03
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,014.18		2.14	%	$	10.69
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	952.96		2.71	%	$	13.12
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	952.96		2.64	%	$	12.78
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,011.36		2.71	%	$	13.51
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,011.70		2.64	%	$	13.17

12

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

June 30, 2010 (Unaudited)

	Beginning		Ending		Annualized			Expenses Paid
	Account		Account		Expense			During Period*
	Value (1/1/10)		Value (6/30/10)		Ratio			(1/1/10 to 6/30/10)
The Global Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	928.57		4.43	%	$	21.18
No Load Class Actual — after expense reimbursement	$	1,000.00	$	928.57		1.39	%	$	6.65
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,002.83		4.43	%	$	22.00
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,017.90		1.39	%	$	6.95
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	928.75		4.68	%	$	22.38
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	928.75		1.64	%	$	7.84
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,001.59		4.68	%	$	23.23
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.66		1.64	%	$	8.20
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	925.83		5.18	%	$	24.73
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	925.83		2.14	%	$	10.22
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	999.11		5.18	%	$	25.68
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,014.18		2.14	%	$	10.69

13

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

June 30, 2010 (Unaudited)

	Beginning		Ending		Annualized			Expenses Paid
	Account		Account		Expense			During Period*
	Value (1/1/10)		Value (6/30/10)		Ratio			(1/1/10 to 6/30/10)
The Paradigm Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	919.72		1.76	%	$	8.38
No Load Class Actual — after expense reimbursement	$	1,000.00	$	919.72		1.64	%	$	7.81
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,016.07		1.76	%	$	8.80
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.66		1.64	%	$	8.20
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	918.97		2.01	%	$	9.56
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	918.97		1.89	%	$	8.99
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,014.83		2.01	%	$	10.04
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,015.42		1.89	%	$	9.44
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	916.19		2.51	%	$	11.93
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	916.19		2.39	%	$	11.36
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,012.35		2.51	%	$	12.52
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,012.94		2.39	%	$	11.93

14

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

June 30, 2010 (Unaudited)

	Beginning		Ending		Annualized			Expenses Paid
	Account		Account		Expense			During Period*
	Value (1/1/10)		Value (6/30/10)		Ratio			(1/1/10 to 6/30/10)
Institutional Class Actual — before expense reimbursement	$	1,000.00	$	921.01		1.71	%	$	8.14
Institutional Class Actual — after expense reimbursement	$	1,000.00	$	921.01		1.44	%	$	6.86
Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,016.31		1.71	%	$	8.55
Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,017.65		1.44	%	$	7.20
The Medical Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	932.37		2.00	%	$	9.58
No Load Class Actual — after expense reimbursement	$	1,000.00	$	932.37		1.39	%	$	6.66
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,014.88		2.00	%	$	9.99
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,017.90		1.39	%	$	6.95
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	931.92		2.25	%	$	10.78
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	931.92		1.64	%	$	7.86
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,013.64		2.25	%	$	11.23
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.66		1.64	%	$	8.20

15

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

June 30, 2010 (Unaudited)

	Beginning		Ending		Annualized			Expenses Paid
	Account		Account		Expense			During Period*
	Value (1/1/10)		Value (6/30/10)		Ratio			(1/1/10 to 6/30/10)
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	929.39		2.75	%	$	13.16
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	929.39		2.14	%	$	10.24
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,011.16		2.75	%	$	13.71
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,014.18		2.14	%	$	10.69
The Small Cap Opportunities Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	926.07		1.87	%	$	8.93
No Load Class Actual — after expense reimbursement	$	1,000.00	$	926.07		1.64	%	$	7.83
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,015.52		1.87	%	$	9.35
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.66		1.64	%	$	8.20
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	924.99		2.12	%	$	10.12
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	924.99		1.89	%	$	9.02
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,014.28		2.12	%	$	10.59
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,015.42		1.89	%	$	9.44

16

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

June 30, 2010 (Unaudited)

	Beginning		Ending		Annualized			Expenses Paid
	Account		Account		Expense			During Period*
	Value (1/1/10)		Value (6/30/10)		Ratio			(1/1/10 to 6/30/10)
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	922.58		2.62	%	$	12.49
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	922.58		2.39	%	$	11.39
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,011.80		2.62	%	$	13.07
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,012.94		2.39	%	$	11.93
Institutional Class Actual — before expense reimbursement	$	1,000.00	$	927.27		1.82	%	$	8.70
Institutional Class Actual — after expense reimbursement	$	1,000.00	$	927.27		1.44	%	$	6.88
Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,015.77		1.82	%	$	9.10
Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,017.65		1.44	%	$	7.20
The Kinetics Government Money Market Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,000.00		4.11	%	$	20.38
No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,000.00		0.05	%	$	0.25
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,004.41		4.11	%	$	20.43
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,024.55		0.05	%	$	0.25

17

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

June 30, 2010 (Unaudited)

	Beginning		Ending		Annualized			Expenses Paid
	Account		Account		Expense			During Period*
	Value (1/1/10)		Value (6/30/10)		Ratio			(1/1/10 to 6/30/10)
The Market Opportunities Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	912.36		1.92	%	$	9.10
No Load Class Actual — after expense reimbursement	$	1,000.00	$	912.36		1.64	%	$	7.78
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,015.27		1.92	%	$	9.59
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.66		1.64	%	$	8.20
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	912.96		2.17	%	$	10.29
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	912.96		1.89	%	$	8.96
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,014.03		2.17	%	$	10.84
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,015.42		1.89	%	$	9.44
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	910.20		2.67	%	$	12.65
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	910.20		2.39	%	$	11.32
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,011.55		2.67	%	$	13.32
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,012.94		2.39	%	$	11.93

18

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

June 30, 2010 (Unaudited)

	Beginning		Ending		Annualized			Expenses Paid
	Account		Account		Expense			During Period*
	Value (1/1/10)		Value (6/30/10)		Ratio			(1/1/10 to 6/30/10)
Institutional Class Actual — before expense reimbursement	$	1,000.00	$	913.44		1.87	%	$	8.87
Institutional Class Actual — after expense reimbursement	$	1,000.00	$	913.44		1.44	%	$	6.83
Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,015.52		1.87	%	$	9.35
Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,017.65		1.44	%	$	7.20
The Water Infrastructure Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	855.53		2.08	%	$	9.57
No Load Class Actual — after expense reimbursement	$	1,000.00	$	855.53		1.64	%	$	7.55
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,014.48		2.08	%	$	10.39
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.66		1.64	%	$	8.20
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	854.88		2.33	%	$	10.72
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	854.88		1.89	%	$	8.69
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,013.24		2.33	%	$	11.63
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,015.42		1.89	%	$	9.44

19

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

June 30, 2010 (Unaudited)

	Beginning		Ending		Annualized			Expenses Paid
	Account		Account		Expense			During Period*
	Value (1/1/10)		Value (6/30/10)		Ratio			(1/1/10 to 6/30/10)
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	854.19		2.83	%	$	13.01
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	854.19		2.39	%	$	10.99
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,010.76		2.83	%	$	14.11
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,012.94		2.39	%	$	11.93
Institutional Class Actual — before expense reimbursement	$	1,000.00	$	857.30		2.03	%	$	9.35
Institutional Class Actual — after expense reimbursement	$	1,000.00	$	857.30		1.44	%	$	6.63
Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,014.73		2.03	%	$	10.14
Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,017.65		1.44	%	$	7.20
The Multi-Disciplinary Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,000.91		7.94	%	$	39.39
No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,000.91		1.49	%	$	7.39
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	985.42		7.94	%	$	39.09
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,017.41		1.49	%	$	7.45

20

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

June 30, 2010 (Unaudited)

	Beginning		Ending		Annualized			Expenses Paid
	Account		Account		Expense			During Period*
	Value (1/1/10)		Value (6/30/10)		Ratio			(1/1/10 to 6/30/10)
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	999.88		8.19	%	$	40.61
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	999.88		1.74	%	$	8.63
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	984.18		8.19	%	$	40.29
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.17		1.74	%	$	8.70
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	997.07		8.69	%	$	43.03
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	997.07		2.24	%	$	11.09
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	981.70		8.69	%	$	42.70
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,013.69		2.24	%	$	11.18
Institutional Class Actual — before expense reimbursement	$	1,000.00	$	1,002.79		7.89	%	$	39.18
Institutional Class Actual — after expense reimbursement	$	1,000.00	$	1,002.79		1.29	%	$	6.41
Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	985.67		7.89	%	$	38.85
Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,018.40		1.29	%	$	6.46

21

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

June 30, 2010 (Unaudited)

	Beginning		Ending		Annualized			Expenses Paid
	Account		Account		Expense			During Period*
	Value (1/1/10)		Value (6/30/10)		Ratio			(1/1/10 to 6/30/10)
The Tactical Paradigm Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	922.00		8.54	%	$	40.70
No Load Class Actual — after expense reimbursement	$	1,000.00	$	922.00		2.29	%	$	10.91
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	982.45		8.54	%	$	41.98
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,013.44		2.29	%	$	11.43
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	920.00		8.79	%	$	41.85
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	920.00		2.54	%	$	12.09
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	981.21		8.79	%	$	43.18
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,012.20		2.54	%	$	12.67
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	918.00		9.29	%	$	44.18
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	918.00		3.04	%	$	14.46
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	978.73		9.29	%	$	45.58
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,009.72		3.04	%	$	15.15

22

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

June 30, 2010 (Unaudited)

	Beginning		Ending		Annualized			Expenses Paid
	Account		Account		Expense			During Period*
	Value (1/1/10)		Value (6/30/10)		Ratio			(1/1/10 to 6/30/10)
Institutional Class Actual — before expense reimbursement	$	1,000.00	$	922.00		8.49	%	$	40.46
Institutional Class Actual — after expense reimbursement	$	1,000.00	$	922.00		2.09	%	$	9.96
Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	982.67		8.49	%	$	41.74
Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,014.43		2.09	%	$	10.44

Note:  Each Fund records its proportionate share of the respective Master Portfolio’s expenses, including directed brokerage credits, on a daily basis. Any expense reductions includes 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 181/365.

23

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Allocation of Tactical Paradigm Fund Assets

June 30, 2010 (Unaudited)

24

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

The Tactical Paradigm Fund

Schedule of Investments — June 30, 2010 (Unaudited)

Identifier	OTHER INVESTMENTS — 76.26%	Shares		Value
	Other Investments — 76.26%
	Kinetics Paradigm Portfoliom		1	$	1,384,785
	TOTAL OTHER INVESTMENTS (cost $1,490,352)				1,384,785
	CALL OPTIONS PURCHASED — 2.67%	Contracts
	Equity Fund — 2.67%
SPY 100918P00110000	SPDR S&P 500 ETF Trust
	Expiration: September 2010, Exercise Price: $110.00		50		48,550
	TOTAL CALL OPTIONS PURCHASED (cost $35,456)				48,550
	TOTAL INVESTMENTS — 78.93% (cost $1,525,808)			$	1,433,335

Percentages are stated as a percent of net assets.

m — Please see the Paradigm Portfolio’s Portfolio of Investments for a detailed schedule of investments.

ETF — Exchange Traded Fund.

See Notes to the Financial Statements.

25

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

The Tactical Paradigm Fund

Schedule of Options Written — June 30, 2010 (Unaudited)

Identifier	CALL OPTIONS WRITTEN	Contracts		Value
	Equity Fund
SPY 100918C00110000	SPDR S&P 500 ETF Trust
	Expiration: September 2010, Exercise Price: $110.00		50	$	11,700
	TOTAL CALL OPTIONS WRITTEN (premiums received $19,484)			$	11,700

ETF — Exchange Traded Fund.

See Notes to the Financial Statements.

26

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

The Tactical Paradigm Fund

Schedule of Futures Contracts — June 30, 2010 (Unaudited)

				Unrealized
				Appreciation/
Identifier	SHORT FUTURES CONTRACTS	Contracts		(Depreciation)
ESU0	S&P 500 EMINI Futures Contract, Expiring September 2010 (Multiplier of 50, underlying Face Amount at Market Value $359,310)		7	$	3,799
RTAU0	RUSSELL 2000 Mini Futures Contract, Expiring September 2010 (Multiplier of 100, underlying Face Amount at Market Value $425,460)		7		19,564
	TOTAL SHORT FUTURES CONTRACTS			$	23,363

See Notes to the Financial Statements.

27

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statement of Assets & Liabilities

June 30, 2010 (Unaudited)

	The Internet			The Global
	Fund			Fund
ASSETS:
Investments in the Master Portfolios, at value*	$	96,311,511		$	4,555,887
Receivable from Adviser		17,122			—
Receivable for Master Portfolio interest sold		10,870			—
Receivable for Fund shares sold		20,449			9,723
Prepaid expenses and other assets		23,916			24,210
Total assets		96,383,868			4,589,820
LIABILITIES:
Payable for Master Portfolio interest purchased		—			9,723
Payable to Adviser		—			2,521
Payable to Directors and Officers		1,386			74
Payable for Fund shares repurchased		31,319			—
Payable for service fees		20,834			963
Payable for distribution fees		327			106
Accrued expenses and other liabilities		72,588			10,575
Total liabilities		126,454			23,962
Net assets	$	96,257,414		$	4,565,858
NET ASSETS CONSIST OF:
Paid in capital	$	236,869,591		$	8,538,065
Accumulated net investment income/(loss)		(1,336,381	)		7,618
Accumulated net realized loss on investments, foreign currency, and written option contracts		(163,883,105	)		(3,892,698	)
Net unrealized appreciation (depreciation) on:
Investments and foreign currency		24,607,309			(87,127	)
Net Assets	$	96,257,414		$	4,565,858
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS:
Net assets	$	95,149,946		$	4,075,942
Shares outstanding		3,235,466			1,118,614
Net asset value per share (offering and redemption price)	$	29.41		$	3.64
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A:
Net assets	$	990,032		$	447,256
Shares outstanding		34,136			122,606
Net asset value per share (redemption price)	$	29.00		$	3.65
Offering price per share ($29.00 divided by .9425 and $3.65 divided by .9425)	$	30.77		$	3.87
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C:
Net assets	$	117,436		$	42,660
Shares outstanding		4,140			11,799
Net asset value per share (offering and redemption price)	$	28.37		$	3.62

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

See Notes to the Financial Statements.

28

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statement of Assets & Liabilities

June 30, 2010 (Unaudited)

	The Paradigm			The Medical
	Fund			Fund
ASSETS:
Investments in the Master Portfolios, at value*	$	1,100,240,796		$	29,188,839
Receivable from Adviser		167,338			16,810
Receivable for Master Portfolio interest sold		6,215,448			—
Receivable for Fund shares sold		1,140,530			11,679
Prepaid expenses and other assets		79,209			21,604
Total assets		1,107,843,321			29,238,932
LIABILITIES:
Payable for Master Portfolio interest purchased		—			8,596
Payable to Directors and Officers		17,435			393
Payable for Fund shares repurchased		7,355,978			3,083
Payable for service fees		222,992			6,165
Payable for distribution fees		171,749			1,283
Accrued expenses and other liabilities		359,482			19,443
Total liabilities		8,127,636			38,963
Net assets	$	1,099,715,685		$	29,199,969
NET ASSETS CONSIST OF:
Paid in capital	$	2,107,223,170		$	32,426,824
Accumulated net investment income		4,103,228			182,425
Accumulated net realized loss on investments, foreign currency, and written option contracts		(962,708,839	)		(535,379	)
Net unrealized depreciation on:
Investments and foreign currency		(48,901,874	)		(2,873,901	)
Net Assets	$	1,099,715,685		$	29,199,969
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS:
Net assets	$	644,236,603		$	24,392,433
Shares outstanding		34,708,529			1,392,900
Net asset value per share (offering and redemption price)	$	18.56		$	17.51
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A:
Net assets	$	201,896,215		$	4,107,750
Shares outstanding		11,057,249			240,138
Net asset value per share (redemption price)	$	18.26		$	17.11
Offering price per share ($18.26 divided by .9425 and $17.11 divided by .9425)	$	19.37		$	18.15
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C:
Net assets	$	138,877,423		$	699,786
Shares outstanding		7,840,537			41,223
Net asset value per share (offering and redemption price)	$	17.71		$	16.98
CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS:
Net assets	$	114,705,444
Shares outstanding		6,188,064
Net asset value per share (offering and redemption price)	$	18.54

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

See Notes to the Financial Statements.

29

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statement of Assets & Liabilities

June 30, 2010 (Unaudited)

				The Kinetics
	The Small Cap			Government
	Opportunities			Money Market
	Fund			Fund
ASSETS:
Investments in the Master Portfolios, at value*	$	140,887,054		$	1,332,179
Receivable from Adviser		—			5,491
Receivable for Master Portfolio interest sold		933,020			7,800
Receivable for Fund shares sold		17,639			—
Prepaid expenses and other assets		37,155			10,588
Total assets		141,874,868			1,356,058
LIABILITIES:
Payable to Adviser		929			—
Payable to Directors and Officers		2,444			13
Payable for Fund shares repurchased		950,659			7,800
Payable for service fees		28,981			286
Payable for distribution fees		5,407			—
Accrued expenses and other liabilities		83,896			8,859
Total liabilities		1,072,316			16,958
Net assets	$	140,802,552		$	1,339,100
NET ASSETS CONSIST OF:
Paid in capital	$	327,983,033		$	1,339,100
Accumulated net investment income		587,410			—
Accumulated net realized loss on investments, foreign currency, and written option contracts		(190,340,409	)		—
Net unrealized appreciation on:
Investments and foreign currency		2,572,518			—
Net Assets	$	140,802,552		$	1,339,100
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS:
Net assets	$	116,720,267		$	1,339,100
Shares outstanding		6,051,130			1,339,100
Net asset value per share (offering and redemption price)	$	19.29		$	1.00
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A:
Net assets	$	11,086,790
Shares outstanding		583,833
Net asset value per share (redemption price)	$	18.99
Offering price per share ($18.99 divided by .9425)	$	20.15
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C:
Net assets	$	3,578,479
Shares outstanding		191,265
Net asset value per share (offering and redemption price)	$	18.71
CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS:
Net assets	$	9,417,016
Shares outstanding		486,019
Net asset value per share (offering and redemption price)	$	19.38

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

See Notes to the Financial Statements.

30

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statement of Assets & Liabilities

June 30, 2010 (Unaudited)

	The Market			The Water
	Opportunities			Infrastructure
	Fund			Fund
ASSETS:
Investments in the Master Portfolios, at value*	$	53,669,686		$	26,801,575
Receivable from Adviser		18,412			12,481
Receivable for Master Portfolio interest sold		17,384			13,821
Receivable for Fund shares sold		25,131			139,972
Prepaid expenses and other assets		32,714			35,512
Total assets		53,763,327			27,003,361
LIABILITIES:
Payable to Directors and Officers		819			339
Payable for Fund shares repurchased		42,515			153,793
Payable for service fees		11,647			4,835
Payable for distribution fees		6,486			3,401
Accrued expenses and other liabilities		24,530			16,172
Total liabilities		85,997			178,540
Net assets	$	53,677,330		$	26,824,821
NET ASSETS CONSIST OF:
Paid in capital	$	91,631,314		$	37,734,764
Accumulated net investment income		148,397			150,068
Accumulated net realized loss on investments, foreign currency, and written option contracts		(33,732,642	)		(6,930,290	)
Net unrealized depreciation on:
Investments and foreign currency		(4,369,739	)		(4,129,721	)
Net Assets	$	53,677,330		$	26,824,821
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS:
Net assets	$	33,964,631		$	7,079,438
Shares outstanding		3,432,984			933,453
Net asset value per share (offering and redemption price)	$	9.89		$	7.58
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A:
Net assets	$	14,477,073		$	11,990,964
Shares outstanding		1,468,866			1,589,889
Net asset value per share (redemption price)	$	9.86		$	7.54
Offering price per share ($9.86 divided by .9425 and $7.54 divided by .9425)	$	10.46		$	8.00
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C:
Net assets	$	5,190,207		$	2,844,876
Shares outstanding		533,364			382,274
Net asset value per share (offering and redemption price)	$	9.73		$	7.44
CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS:
Net assets	$	45,419		$	4,909,543
Shares outstanding		4,577			643,748
Net asset value per share (offering and redemption price)	$	9.92		$	7.63

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

See Notes to the Financial Statements.

31

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statement of Assets & Liabilities

June 30, 2010 (Unaudited)

	The Multi-			The Tactical
	Disciplinary			Paradigm
	Fund			Fund
ASSETS:
Investments in the Master Portfolios, at value*	$	1,863,414		$	1,384,785
Investments at value (cost $35,456)		—			48,550
Deposit at brokers for written options		—			262,533
Deposit at brokers for futures		—			116,538
Receivable from Adviser		7,923			18,294
Receivable for Fund shares sold		64,000			—
Due from broker-variation margin		—			6,825
Prepaid expenses and other assets		26,494			5,242
Total assets		1,961,831			1,842,767
LIABILITIES:
Written options, at value (premiums received $19,484)		—			11,700
Payable for Master Portfolio interest purchased		64,000			—
Payable to Sub-Adviser		—			994
Payable to Directors and Officers		13			5
Payable for service fees		343			379
Payable for distribution fees		106			1,204
Accrued expenses and other liabilities		10,893			12,601
Total liabilities		75,355			26,883
Net assets	$	1,886,476		$	1,815,884
NET ASSETS CONSIST OF:
Paid in capital	$	1,819,575		$	1,959,071
Accumulated net investment loss		(2,367	)		(4,156	)
Accumulated net realized gain (loss) on investments, foreign currency, and written option contracts		81,935			(77,705	)
Net unrealized appreciation (depreciation) on:
Investments and foreign currency		28,423			(92,473	)
Written options		(41,090	)		7,784
Futures contracts		—			23,363
Net Assets	$	1,886,476		$	1,815,884
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS:
Net assets	$	1,486,277		$	166,658
Shares outstanding		153,151			18,082
Net asset value per share (offering and redemption price)	$	9.70		$	9.22
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A:
Net assets	$	179,419		$	511,422
Shares outstanding		18,521			55,568
Net asset value per share (redemption price)	$	9.69		$	9.20
Offering price per share ($9.69 divided by .9425 and $9.20 divided by .9425)	$	10.28		$	9.76
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C:
Net assets	$	119,053		$	1,119,359
Shares outstanding		12,345			121,948
Net asset value per share (offering and redemption price)	$	9.64		$	9.18
CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS:
Net assets	$	101,727		$	18,445
Shares outstanding		10,449			2,000
Net asset value per share (offering and redemption price)	$	9.74		$	9.22

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

See Notes to the Financial Statements.

32

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statement of Operations

For the Six Months Ended June 30, 2010 (Unaudited)

	The Internet			The Global
	Fund			Fund
INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIOS:
Dividends†	$	445,999		$	50,171
Interest		73,653			—
Income from securities lending		53,180			897
Expenses allocated from Master Portfolio		(718,935	)		(67,223	)
Net investment loss from Master Portfolio		(146,103	)		(16,155	)
EXPENSES:
Distribution fees — Advisor Class A		1,129			481
Distribution fees — Advisor Class C		461			120
Shareholder servicing fees — Advisor Class A		1,129			481
Shareholder servicing fees — Advisor Class C		154			40
Shareholder servicing fees — No Load Class		130,391			5,689
Transfer Agent fees and expenses		86,672			10,109
Reports to shareholders		39,446			1,940
Administration fees		16,971			829
Professional fees		9,101			3,831
Directors’ and Officers’ fees and expenses		3,520			201
Registration fees		18,400			19,560
Fund accounting fees		2,594			119
Other expenses		2,628			111
Total expenses		312,596			43,511
Less, expense reimbursement		(34,464	)		(75,605	)
Net expenses		278,132			(32,094	)
Net investment income (loss)		(424,235	)		15,939
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS:
Net realized gain on:
Investments and foreign currency		76,501			44,220
Net realized gain		76,501			44,220
Net change in unrealized depreciation of:
Investments and foreign currency		(3,856,302	)		(408,035	)
Written option contracts		(5,403	)		—
Net change in unrealized depreciation		(3,861,705	)		(408,035	)
Net loss on investments		(3,785,204	)		(363,815	)
Net decrease in net assets resulting from operations	$	(4,209,439	)	$	(347,876	)
† Net of Foreign Taxes Withheld of:	$	27,604		$	6,358

See Notes to the Financial Statements.

33

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statement of Operations

For the Six Months Ended June 30, 2010 (Unaudited)

	The Paradigm			The Medical
	Fund			Fund
INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIOS:
Dividends†	$	10,717,967		$	366,075
Interest		844,200			—
Income from securities lending		1,387,669			12,576
Expenses allocated from Master Portfolio		(8,781,812	)		(219,049	)
Net investment income from Master Portfolio		4,168,024			159,602
EXPENSES:
Distribution fees — Advisor Class A		292,706			5,611
Distribution fees — Advisor Class C		599,542			2,341
Shareholder servicing fees — Advisor Class A		292,706			5,611
Shareholder servicing fees — Advisor Class C		199,847			784
Shareholder servicing fees — No Load Class		961,686			32,793
Shareholder servicing fees — Institutional Class		125,266			—
Transfer Agent fees and expenses		352,107			16,172
Reports to shareholders		188,646			5,601
Administration fees		220,491			5,279
Professional fees		44,158			5,803
Directors’ and Officers’ fees and expenses		42,877			1,025
Registration fees		59,645			19,615
Fund accounting fees		32,046			771
Other expenses		35,823			676
Total expenses		3,447,546			102,082
Less, expense waiver for Institutional Class service fees		(93,950	)		—
Less, expense reimbursement		(801,430	)		(95,292	)
Net expenses		2,552,166			6,790
Net investment income		1,615,858			152,812
REALIZED AND UNREALIZED LOSS ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS:
Net realized loss on:
Investments and foreign currency		(48,469,761	)		(76,509	)
Net realized loss		(48,469,761	)		(76,509	)
Net change in unrealized depreciation of:
Investments and foreign currency		(52,477,640	)		(2,180,157	)
Net change in unrealized depreciation		(52,477,640	)		(2,180,157	)
Net loss on investments		(100,947,401	)		(2,256,666	)
Net decrease in net assets resulting from operations	$	(99,331,543	)	$	(2,103,854	)
† Net of Foreign Taxes Withheld of:	$	734,260		$	27,851

See Notes to the Financial Statements.

34

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statement of Operations

For the Six Months Ended June 30, 2010 (Unaudited)

				The Kinetics
	The Small Cap			Government
	Opportunities			Money Market
	Fund			Fund
INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIOS:
Dividends†	$	1,150,357		$	—
Interest		2			328
Income from securities lending		39,008			—
Expenses allocated from Master Portfolio		(1,280,218	)		(8,965	)
Net investment loss from Master Portfolio		(90,851	)		(8,637	)
EXPENSES:
Distribution fees — Advisor Class A		16,638			—
Distribution fees — Advisor Class C		14,987			—
Shareholder servicing fees — Advisor Class A		16,638			—
Shareholder servicing fees — Advisor Class C		4,996			—
Shareholder servicing fees — No Load Class		179,923			1,777
Shareholder servicing fees — Institutional Class		16,373			—
Transfer Agent fees and expenses		52,085			2,615
Reports to shareholders		24,106			2,564
Administration fees		30,498			257
Professional fees		11,916			3,218
Directors’ and Officers’ fees and expenses		5,771			50
Registration fees		26,143			9,727
Fund accounting fees		4,450			32
Other expenses		5,676			30
Total expenses		410,200			20,270
Less, expense waiver for Institutional Class service fees		(12,279	)		—
Less, expense reimbursement		(206,120	)		(28,907	)
Net expenses		191,801			(8,637	)
Net investment loss		(282,652	)		—
REALIZED AND UNREALIZED LOSS ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS:
Net realized loss on:
Investments and foreign currency		(2,963,024	)		—
Net realized loss		(2,963,024	)		—
Net change in unrealized depreciation of:
Investments and foreign currency		(7,531,342	)		—
Net change in unrealized depreciation		(7,531,342	)		—
Net loss on investments		(10,494,366	)		—
Net decrease in net assets resulting from operations	$	(10,777,018	)	$	—
† Net of Foreign Taxes Withheld of:	$	44,313		$	—

See Notes to the Financial Statements.

35

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statement of Operations

For the Six Months Ended June 30, 2010 (Unaudited)

	The Market			The Water
	Opportunities			Infrastructure
	Fund			Fund
INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIOS:
Dividends†	$	590,351		$	340,616
Interest		23			2
Income from securities lending		49,434			38,411
Expenses allocated from Master Portfolio		(440,466	)		(182,960	)
Net investment income from Master Portfolio		199,342			196,069
EXPENSES:
Distribution fees — Advisor Class A		21,019			14,165
Distribution fees — Advisor Class C		21,899			11,198
Shareholder servicing fees — Advisor Class A		21,019			14,165
Shareholder servicing fees — Advisor Class C		7,299			3,733
Shareholder servicing fees — No Load Class		48,727			9,154
Shareholder servicing fees — Institutional Class		48			4,080
Transfer Agent fees and expenses		21,956			14,879
Reports to shareholders		7,775			1,455
Administration fees		10,490			4,391
Professional fees		7,139			5,421
Directors’ and Officers’ fees and expenses		2,081			846
Registration fees		22,743			23,627
Fund accounting fees		1,510			643
Other expenses		1,680			563
Total expenses		195,385			108,320
Less, expense waiver for Institutional Class service fees		(36	)		(3,060	)
Less, expense reimbursement		(87,137	)		(56,015	)
Net expenses		108,212			49,245
Net investment income		91,130			146,824
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS:
Net realized gain on:
Investments and foreign currency		248,116			67,901
Net realized gain		248,116			67,901
Net change in unrealized depreciation of:
Investments and foreign currency		(5,397,522	)		(4,507,708	)
Written option contracts		(37,822	)		—
Net change in unrealized depreciation		(5,435,344	)		(4,507,708	)
Net loss on investments		(5,187,228	)		(4,439,807	)
Net decrease in net assets resulting from operations	$	(5,096,098	)	$	(4,292,983	)
† Net of Foreign Taxes Withheld of:	$	29,005		$	25,867

See Notes to the Financial Statements.

36

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statement of Operations

For the Six Months Ended June 30, 2010 (Unaudited)

	The Multi-			The Tactical
	Disciplinary			Paradigm
	Fund			Fund
INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIOS:
Dividends†	$	85		$	9,007
Interest		37,219			607
Income from securities lending		17			734
Expenses allocated from Master Portfolio		(19,516	)		(5,960	)
Net investment income from Master Portfolio		17,805			4,388
EXPENSES:
Distribution fees — Advisor Class A		157			506
Distribution fees — Advisor Class C		421			1,970
Shareholder servicing fees — Advisor Class A		157			506
Shareholder servicing fees — Advisor Class C		140			657
Shareholder servicing fees — No Load Class		1,468			128
Shareholder servicing fees — Institutional Class		102			20
Sub-Advisory fees		—			3,420
Custody fees and expenses		—			1,780
Transfer Agent fees and expenses		10,077			10,057
Reports to shareholders		128			88
Administration fees		1,045			706
Professional fees		4,706			6,896
Directors’ and Officers’ fees and expenses		50			30
Registration fees		22,615			2,436
Fund accounting fees		41			12,205
Interest expense		—			54
Other expenses		20			6
Total expenses		41,127			41,465
Less, expense waiver for Institutional Class service fees		(77	)		(15	)
Less, expense reimbursement		(48,808	)		(32,906	)
Net expenses		(7,758	)		8,544
Net investment income (loss)		25,563			(4,156	)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS:
Net realized gain (loss) on:
Investments and foreign currency		(2,082	)		(100,240	)
Written option contracts expired or closed		68,118			22,535
Net realized gain (loss)		66,036			(77,705	)
Net change in unrealized appreciation (depreciation) of:
Investments and foreign currency		(5,256	)		(92,473	)
Written option contracts		(91,498	)		7,784
Futures contracts		—			23,363
Net change in unrealized depreciation		(96,754	)		(61,326	)
Net loss on investments		(30,718	)		(139,031	)
Net decrease in net assets resulting from operations	$	(5,155	)	$	(143,187	)
† Net of Foreign Taxes Withheld of:	$	—		$	644

See Notes to the Financial Statements.

37

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Changes in Net Assets

	The Internet Fund						The Global Fund
	For the			For the			For the			For the
	Six Months Ended			Year Ended			Six Months Ended			Year Ended
	June 30, 2010			December 31, 2009			June 30, 2010			December 31, 2009
	(Unaudited)						(Unaudited)
OPERATIONS:
Net investment income (loss)	$	(424,235	)	$	(492,158	)	$	15,939		$	21,456
Net realized gain (loss) on sale of investments, foreign currency and written option contracts expired or closed		76,501			3,597,660			44,220			(418,155	)
Net change in unrealized appreciation (depreciation) on investments, foreign currency and written options		(3,861,705	)		32,089,184			(408,035	)		1,899,110
Net increase (decrease) in net assets resulting from operations		(4,209,439	)		35,194,686			(347,876	)		1,502,411
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS:
Net investment income		—			(127,292	)		—			(19,692	)
Total distributions		—			(127,292	)		—			(19,692	)
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A:
Net investment income		—			(930	)		—			(1,275	)
Total distributions		—			(930	)		—			(1,275	)
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C:
Net investment income		—			(145	)		—			(22	)
Total distributions		—			(145	)		—			(22	)
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS:
Proceeds from shares sold		1,980,922			4,869,857			884,000			2,868,282
Redemption fees		133			1,370			102			6,702
Proceeds from shares issued to holders in reinvestment of dividends		—			123,697			—			19,427
Cost of shares redeemed		(7,356,392	)		(10,313,179	)		(864,250	)		(1,808,229	)
Net increase (decrease) in net assets resulting from capital share transactions		(5,375,343	)		(5,318,255	)		19,852			1,086,182
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A:
Proceeds from shares sold		417,413			489,536			130,258			312,466
Redemption fees		16			201			—			—
Proceeds from shares issued to holders in reinvestment of dividends		—			825			—			417
Cost of shares redeemed		(103,293	)		(225,140	)		(19,269	)		(101,796	)
Net increase in net assets resulting from capital share transactions		314,136			265,422			110,989			211,087

See Notes to the Financial Statements.

38

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Changes in Net Assets — (Continued)

	The Internet Fund						The Global Fund
	For the			For the			For the			For the
	Six Months Ended			Year Ended			Six Months Ended			Year Ended
	June 30, 2010			December 31, 2009			June 30, 2010			December 31, 2009
	(Unaudited)						(Unaudited)
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C:
Proceeds from shares sold		4,168			302			15,833			21,000
Redemption fees		—			—			—			—
Proceeds from shares issued to holders in reinvestment of dividends		—			43			—			22
Cost of shares redeemed		—			(33,452	)		(6,489	)		—
Net increase (decrease) in net assets resulting from capital share transactions		4,168			(33,107	)		9,344			21,022
TOTAL INCREASE (DECREASE) IN NET ASSETS:		(9,266,478	)		29,980,379			(207,691	)		2,799,713
NET ASSETS:
Beginning of period		105,523,892			75,543,513			4,773,549			1,973,836
End of period*	$	96,257,414		$	105,523,892		$	4,565,858		$	4,773,549
*Including undistributed net investment income (loss) of:	$	(1,336,381	)	$	(912,146	)	$	7,618		$	(8,321	)
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS:
Shares sold		62,643			175,734			225,211			878,509
Shares issued in reinvestments of dividends and distributions		—			4,000			—			4,994
Shares redeemed		(232,097	)		(401,239	)		(220,903	)		(557,975	)
Net increase (decrease) in shares outstanding		(169,454	)		(221,505	)		4,308			325,528
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A:
Shares sold		13,192			17,431			33,942			84,996
Shares issued in reinvestments of dividends and distributions		—			27			—			107
Shares redeemed		(3,374	)		(8,671	)		(4,865	)		(36,346	)
Net increase in shares outstanding		9,818			8,787			29,077			48,757
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C:
Shares sold		126			12			4,271			6,943
Shares issued in reinvestments of dividends and distributions		—			2			—			6
Shares redeemed		—			(1,599	)		(1,651	)		—
Net increase (decrease) in shares outstanding		126			(1,585	)		2,620			6,949

See Notes to the Financial Statements.

39

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Changes in Net Assets

	The Paradigm Fund						The Medical Fund
	For the			For the			For the			For the
	Six Months Ended			Year Ended			Six Months Ended			Year Ended
	June 30, 2010			December 31, 2009			June 30, 2010			December 31, 2009
	(Unaudited)						(Unaudited)
OPERATIONS:
Net investment income	$	1,615,858		$	9,664,271		$	152,812		$	234,571
Net realized loss on sale of investments, foreign currency and written option contracts expired or closed		(48,469,761	)		(281,292,053	)		(76,509	)		(152,213	)
Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options		(52,477,640	)		685,169,758			(2,180,157	)		4,225,736
Net increase (decrease) in net assets resulting from operations		(99,331,543	)		413,541,976			(2,103,854	)		4,308,094
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS:
Net investment income		—			(6,864,283	)		—			(175,656	)
Net realized gains		—			—			—			(22,795	)
Total distributions		—			(6,864,283	)		—			(198,451	)
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A:
Net investment income		—			(741,228	)		—			(28,347	)
Net realized gains		—			—			—			(4,778	)
Total distributions		—			(741,228	)		—			(33,125	)
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C:
Net investment income		—			—			—			(618	)
Net realized gains		—			—			—			(507	)
Total distributions		—			—			—			(1,125	)
DISTRIBUTIONS TO SHAREHOLDERS — INSTITUTIONAL CLASS:
Net investment income		—			(1,674,477	)		N/A			N/A
Total distributions		—			(1,674,477	)		N/A			N/A
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS:
Proceeds from shares sold		53,494,090			228,538,793			8,968,470			8,877,756
Redemption fees		7,039			96,505			56			5,196
Proceeds from shares issued to holders in reinvestment of dividends		—			6,669,240			—			196,171
Cost of shares redeemed		(176,485,088	)		(392,483,046	)		(3,968,300	)		(6,974,443	)
Net increase (decrease) in net assets resulting from capital share transactions		(122,983,959	)		(157,178,508	)		5,000,226			2,104,680
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A:
Proceeds from shares sold		15,366,701			52,590,755			717,625			2,336,497
Redemption fees		1,993			—			174			1,395
Proceeds from shares issued to holders in reinvestment of dividends		—			642,068			—			18,350
Cost of shares redeemed		(47,356,423	)		(123,719,278	)		(645,501	)		(1,638,705	)
Net increase (decrease) in net assets resulting from capital share transactions		(31,987,729	)		(70,486,455	)		72,298			717,537

See Notes to the Financial Statements.

40

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Changes in Net Assets — (Continued)

	The Paradigm Fund						The Medical Fund
	For the			For the			For the			For the
	Six Months Ended			Year Ended			Six Months Ended			Year Ended
	June 30, 2010			December 31, 2009			June 30, 2010			December 31, 2009
	(Unaudited)						(Unaudited)
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C:
Proceeds from shares sold		5,549,842			15,759,105			314,686			354,523
Redemption fees		531			532			—			4
Proceeds from shares issued to holders in reinvestment of dividends		—			—			—			689
Cost of shares redeemed		(23,430,945	)		(44,568,229	)		(10,369	)		(307,788	)
Net increase (decrease) in net assets resulting from capital share transactions		(17,880,572	)		(28,808,592	)		304,317			47,428
CAPITAL SHARE TRANSACTIONS — INSTITUTIONAL CLASS:
Proceeds from shares sold		28,560,752			52,022,093			N/A			N/A
Redemption fees		503			2,858			N/A			N/A
Proceeds from shares issued to holders in reinvestment of dividends		—			1,564,877			N/A			N/A
Cost of shares redeemed		(28,995,652	)		(95,494,884	)		N/A			N/A
Net decrease in net assets resulting from capital share transactions		(434,397	)		(41,905,056	)		N/A			N/A
TOTAL INCREASE (DECREASE) IN NET ASSETS:		(272,618,200	)		105,883,377			3,272,987			6,945,038
NET ASSETS:
Beginning of period		1,372,333,885			1,266,450,508			25,926,982			18,981,944
End of period*	$	1,099,715,685		$	1,372,333,885		$	29,199,969		$	25,926,982
*Including undistributed net investment income of:	$	4,103,228		$	2,487,370		$	182,425		$	29,613
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS:
Shares sold		2,643,149			13,500,735			477,138			503,291
Shares issued in reinvestments of dividends and distributions		—			331,473			—			10,374
Shares redeemed		(8,833,580	)		(24,319,939	)		(209,591	)		(421,096	)
Net increase (decrease) in shares outstanding		(6,190,431	)		(10,487,731	)		267,547			92,569
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A:
Shares sold		769,998			3,318,616			39,038			140,646
Shares issued in reinvestments of dividends and distributions		—			32,395			—			993
Shares redeemed		(2,397,275	)		(8,280,037	)		(35,665	)		(102,207	)
Net increase (decrease) in shares outstanding		(1,627,277	)		(4,929,026	)		3,373			39,432

See Notes to the Financial Statements.

41

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Changes in Net Assets — (Continued)

	The Paradigm Fund						The Medical Fund
	For the			For the			For the			For the
	Six Months Ended			Year Ended			Six Months Ended			Year Ended
	June 30, 2010			December 31, 2009			June 30, 2010			December 31, 2009
	(Unaudited)						(Unaudited)
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C:
Shares sold		286,151			1,011,821			16,952			22,768
Shares issued in reinvestments of dividends and distributions		—			—			—			37
Shares redeemed		(1,219,077	)		(2,955,060	)		(569	)		(19,133	)
Net increase (decrease) in shares outstanding		(932,926	)		(1,943,239	)		16,383			3,672
CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS:
Shares sold		1,410,178			3,148,491			N/A			N/A
Shares issued in reinvestments of dividends and distributions		—			77,932			N/A			N/A
Shares redeemed		(1,449,567	)		(5,875,213	)		N/A			N/A
Net decrease in shares outstanding		(39,389	)		(2,648,790	)		N/A			N/A

See Notes to the Financial Statements.

42

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Changes in Net Assets

							The Kinetics Government
	The Small Cap Opportunities Fund						Money Market Portfolio
	For the			For the			For the			For the
	Six Months Ended			Year Ended			Six Months Ended			Year Ended
	June 30, 2010			December 31, 2009			June 30, 2010			December 31, 2009
	(Unaudited)						(Unaudited)
OPERATIONS:
Net investment loss	$	(282,652	)	$	(509,988	)	$	—		$	—
Net realized loss on sale of investments, foreign currency and written option contracts expired or closed		(2,963,024	)		(45,656,563	)		—			—
Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options		(7,531,342	)		143,852,458			—			—
Net increase (decrease) in net assets resulting from operations		(10,777,018	)		97,685,907			—			—
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS:
Net investment income		—			—			—			—
Total distributions		—			—			—			—
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A:
Net investment income		—			—			N/A			N/A
Total distributions		—			—			N/A			N/A
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C:
Net investment income		—			—			N/A			N/A
Total distributions		—			—			N/A			N/A
DISTRIBUTIONS TO SHAREHOLDERS — INSTITUTIONAL CLASS:
Net investment income		—			—			N/A			N/A
Total distributions		—			—			N/A			N/A
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS:
Proceeds from shares sold		4,338,136			36,310,875			471,850			1,874,921
Redemption fees		1,202			8,109			—			—
Proceeds from shares issued to holders in reinvestment of dividends		—			—			—			—
Cost of shares redeemed		(40,110,310	)		(64,086,132	)		(784,127	)		(2,911,485	)
Net decrease in net assets resulting from capital share transactions		(35,770,972	)		(27,767,148	)		(312,277	)		(1,036,564	)
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A:
Proceeds from shares sold		1,507,342			4,027,254			N/A			N/A
Redemption fees		322			472			N/A			N/A
Proceeds from shares issued to holders in reinvestment of dividends		—			—			N/A			N/A
Cost of shares redeemed		(3,694,104	)		(7,399,034	)		N/A			N/A
Net decrease in net assets resulting from capital share transactions		(2,186,440	)		(3,371,308	)		N/A			N/A
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C:
Proceeds from shares sold		233,576			1,109,508			N/A			N/A
Redemption fees		—			101			N/A			N/A
Proceeds from shares issued to holders in reinvestment of dividends		—			—			N/A			N/A
Cost of shares redeemed		(788,536	)		(1,004,506	)		N/A			N/A
Net increase (decrease) in net assets resulting from capital share transactions		(554,960	)		105,103			N/A			N/A

See Notes to the Financial Statements.

43

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Changes in Net Assets — (Continued)

							The Kinetics Government
	The Small Cap Opportunities Fund						Money Market Portfolio
	For the			For the			For the			For the
	Six Months Ended			Year Ended			Six Months Ended			Year Ended
	June 30, 2010			December 31, 2009			June 30, 2010			December 31, 2009
	(Unaudited)						(Unaudited)
CAPITAL SHARE TRANSACTIONS — INSTITUTIONAL CLASS:
Proceeds from shares sold		504,926			9,645,168			N/A			N/A
Redemption fees		7			269			N/A			N/A
Proceeds from shares issued to holders in reinvestment of dividends		—			—			N/A			N/A
Cost of shares redeemed		(10,056,243	)		(86,994,949	)		N/A			N/A
Net decrease in net assets resulting from capital share transactions		(9,551,310	)		(77,349,512	)		N/A			N/A
TOTAL INCREASE (DECREASE) IN NET ASSETS:		(58,840,700	)		(10,696,958	)		(312,277	)		(1,036,564	)
NET ASSETS:
Beginning of period		199,643,252			210,340,210			1,651,377			2,687,941
End of period*	$	140,802,552		$	199,643,252		$	1,339,100		$	1,651,377
*Including undistributed net investment income of:	$	587,410		$	870,062		$	—		$	—
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS:
Shares sold		204,136			2,125,038			471,850			1,874,921
Shares issued in reinvestments of dividends and distributions		—			—			—			—
Shares redeemed		(1,891,825	)		(4,028,266	)		(784,127	)		(2,911,485	)
Net decrease in shares outstanding		(1,687,689	)		(1,903,228	)		(312,277	)		(1,036,564	)
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A:
Shares sold		72,692			229,236			N/A			N/A
Shares issued in reinvestments of dividends and distributions		—			—			N/A			N/A
Shares redeemed		(182,612	)		(464,677	)		N/A			N/A
Net decrease in shares outstanding		(109,920	)		(235,441	)		N/A			N/A
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C:
Shares sold		11,449			60,451			N/A			N/A
Shares issued in reinvestments of dividends and distributions		—			—			N/A			N/A
Shares redeemed		(39,379	)		(63,523	)		N/A			N/A
Net decrease in shares outstanding		(27,930	)		(3,072	)		N/A			N/A
CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS:
Shares sold		23,524			659,244			N/A			N/A
Shares issued in reinvestments of dividends and distributions		—			—			N/A			N/A
Shares redeemed		(482,250	)		(4,901,031	)		N/A			N/A
Net decrease in shares outstanding		(458,726	)		(4,241,787	)		N/A			N/A

See Notes to the Financial Statements.

44

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Changes in Net Assets

	The Market Opportunities Fund						The Water Infrastructure Fund
	For the			For the			For the			For the
	Six Months Ended			Year Ended			Six Months Ended			Year Ended
	June 30, 2010			December 31, 2009			June 30, 2010			December 31, 2009
	(Unaudited)						(Unaudited)
OPERATIONS:
Net investment income (loss)	$	91,130		$	(62,027	)	$	146,824		$	46,129
Net realized gain (loss) on sale of investments, foreign currency and written option contracts expired or closed		248,116			(7,399,154	)		67,901			(1,419,347	)
Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options		(5,435,344	)		30,077,593			(4,507,708	)		3,683,013
Net increase (decrease) in net assets resulting from operations		(5,096,098	)		22,616,412			(4,292,983	)		2,309,795
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS:
Net investment income		—			(20,768	)		—			(1,817	)
Total distributions		—			(20,768	)		—			(1,817	)
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A:
Net investment income		—			(9,381	)		—			—
Total distributions		—			(9,381	)		—			—
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C:
Net investment income		—			(2,890	)		—			—
Total distributions		—			(2,890	)		—			—
DISTRIBUTIONS TO SHAREHOLDERS — INSTITUTIONAL CLASS:
Net investment income		—			(10	)		—			(7,282	)
Total distributions		—			(10	)		—			(7,282	)
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS:
Proceeds from shares sold		2,089,660			7,876,163			2,715,039			3,525,885
Redemption fees		286			47,139			101			635
Proceeds from shares issued to holders in reinvestment of dividends		—			20,440			—			1,579
Cost of shares redeemed		(6,238,278	)		(14,496,784	)		(1,619,750	)		(3,951,117	)
Net increase (decrease) in net assets resulting from capital share transactions		(4,148,332	)		(6,553,042	)		1,095,390			(423,018	)
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A:
Proceeds from shares sold		1,140,091			3,438,842			5,140,712			7,953,554
Redemption fees		4,243			8,744			851			997
Proceeds from shares issued to holders in reinvestment of dividends		—			7,753			—			—
Cost of shares redeemed		(3,996,048	)		(10,299,115	)		(1,551,830	)		(6,109,558	)
Net increase (decrease) in net assets resulting from capital share transactions		(2,851,714	)		(6,843,776	)		3,589,733			1,844,993

See Notes to the Financial Statements.

45

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Changes in Net Assets — (Continued)

	The Market Opportunities Fund						The Water Infrastructure Fund
	For the			For the			For the			For the
	Six Months Ended			Year Ended			Six Months Ended			Year Ended
	June 30, 2010			December 31, 2009			June 30, 2010			December 31, 2009
	(Unaudited)						(Unaudited)
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C:
Proceeds from shares sold		371,492			1,574,137			848,769			1,341,247
Redemption fees		2,058			7			—			101
Proceeds from shares issued to holders in reinvestment of dividends		—			2,366			—			—
Cost of shares redeemed		(728,042	)		(2,210,676	)		(215,817	)		(542,169	)
Net increase (decrease) in net assets resulting from capital share transactions		(354,492	)		(634,166	)		632,952			799,179
CAPITAL SHARE TRANSACTIONS — INSTITUTIONAL CLASS:
Proceeds from shares sold		40,000			10,807			2,791,013			2,665,048
Redemption fees		—			—			54			500
Proceeds from shares issued to holders in reinvestment of dividends		—			10			—			4,823
Cost of shares redeemed		(11,602	)		—			(111,687	)		(153,009	)
Net increase in net assets resulting from capital share transactions		28,398			10,817			2,679,380			2,517,362
TOTAL INCREASE (DECREASE) IN NET ASSETS:		(12,422,238	)		8,563,196			3,704,472			7,039,212
NET ASSETS:
Beginning of period		66,099,568			57,536,372			23,120,349			16,081,137
End of period*	$	53,677,330		$	66,099,568		$	26,824,821		$	23,120,349
*Including undistributed net investment income of:	$	148,397		$	57,267		$	150,068		$	3,244
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS:
Shares sold		190,622			840,758			315,195			439,147
Shares issued in reinvestments of dividends and distributions		—			1,569			—			177
Shares redeemed		(565,145	)		(1,774,870	)		(191,891	)		(495,881	)
Net increase (decrease) in shares outstanding		(374,523	)		(932,543	)		123,304			(56,557	)
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A:
Shares sold		103,715			407,710			599,819			992,317
Shares issued in reinvestments of dividends and distributions		—			657			—			—
Shares redeemed		(372,092	)		(1,235,063	)		(182,530	)		(828,509	)
Net increase (decrease) in shares outstanding		(268,377	)		(826,696	)		417,289			163,808
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C:
Shares sold		34,836			177,257			98,134			169,781
Shares issued in reinvestments of dividends and distributions		—			211			—			—
Shares redeemed		(67,703	)		(276,951	)		(25,751	)		(68,264	)
Net increase (decrease) in shares outstanding		(32,867	)		(99,483	)		72,383			101,517

See Notes to the Financial Statements.

46

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Changes in Net Assets — (Continued)

	The Market Opportunities Fund					The Water Infrastructure Fund
	For the			For the		For the			For the
	Six Months Ended			Year Ended		Six Months Ended			Year Ended
	June 30, 2010			December 31, 2009		June 30, 2010			December 31, 2009
	(Unaudited)					(Unaudited)
CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS:
Shares sold		3,839			1,019		331,170			311,808
Shares issued in reinvestments of dividends and distributions		—			1		—			540
Shares redeemed		(1,020	)		—		(13,969	)		(18,661	)
Net increase in shares outstanding		2,819			1,020		317,201			293,687

See Notes to the Financial Statements.

47

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Changes in Net Assets

	The Multi-Disciplinary Fund						The Tactical Paradigm Fund
	For the			For the Year			For the			December 31, 2009ˆ
	Six Months Ended			Ended			Six Months Ended			through
	June 30, 2010			December 31, 2009			June 30, 2010			December 31, 2009
	(Unaudited)						(Unaudited)
OPERATIONS:
Net investment income (loss)	$	25,563		$	7,052		$	(4,156	)	$	—
Net realized gain (loss) on sale of investments, foreign currency and written option contracts expired or closed		66,036			99,097			(77,705	)		—
Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options		(96,754	)		99,028			(61,326	)		—
Net increase (decrease) in net assets resulting from operations		(5,155	)		205,177			(143,187	)		—
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS:
Net investment income		(22,830	)		(7,818	)		—			—
Net realized gains		—			(14,757	)		—			—
Total distributions		(22,830	)		(22,575	)		—			—
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A:
Net investment income		(2,407	)		(559	)		—			—
Net realized gains		—			(1,623	)		—			—
Total distributions		(2,407	)		(2,182	)		—			—
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C:
Net investment income		(1,536	)		(116	)		—			—
Net realized gains		—			(1,672	)		—			—
Total distributions		(1,536	)		(1,788	)		—			—
DISTRIBUTIONS TO SHAREHOLDERS — INSTITUTIONAL CLASS:
Net investment income		(1,862	)		(947	)		—			—
Net realized gains		—			(1,587	)		—			—
Total distributions		(1,862	)		(2,534	)		—			—
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS:
Proceeds from shares sold		642,763			695,920			159,751			20,000
Redemption fees		51			—			—			—
Proceeds from shares issued to holders in reinvestment of dividends		20,286			20,528			—			—
Cost of shares redeemed		(88,414	)		(3,410	)		—			—
Net increase in net assets resulting from capital share transactions		574,686			713,038			159,751			20,000
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A:
Proceeds from shares sold		77,357			—			524,174			20,000
Redemption fees		—			—			—			—
Proceeds from shares issued to holders in reinvestment of dividends		2,407			2,182			—			—
Cost of shares redeemed		—			—			—			—
Net increase in net assets resulting from capital share transactions		79,764			2,182			524,174			20,000

ˆ Commencement of operations.

See Notes to the Financial Statements.

48

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Changes in Net Assets — (Continued)

	The Multi-Disciplinary Fund						The Tactical Paradigm Fund
	For the			For the Year			For the			December 31, 2009ˆ
	Six Months Ended			Ended			Six Months Ended			through
	June 30, 2010			December 31, 2009			June 30, 2010			December 31, 2009
	(Unaudited)						(Unaudited)
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C:
Proceeds from shares sold		15,000			5,000			1,237,717			20,000
Redemption fees		—			—			—			—
Proceeds from shares issued to holders in reinvestment of dividends		1,464			1,696			—			—
Cost of shares redeemed		—			(7,169	)		(42,571	)		—
Net increase (decrease) in net assets resulting from capital share transactions		16,464			(473	)		1,195,146			20,000
CAPITAL SHARE TRANSACTIONS — INSTITUTIONAL CLASS:
Proceeds from shares sold		—			—			—			20,000
Redemption fees		—			—			—			—
Proceeds from shares issued to holders in reinvestment of dividends		1,862			2,534			—			—
Cost of shares redeemed		—			—			—			—
Net increase in net assets resulting from capital share transactions		1,862			2,534			—			20,000
TOTAL INCREASE IN NET ASSETS:		638,986			893,379			1,735,884			80,000
NET ASSETS:
Beginning of period		1,247,490			354,111			80,000			—
End of period*	$	1,886,476		$	1,247,490		$	1,815,884		$	80,000
*Including undistributed net investment income (loss) of:	$	(2,367	)	$	705		$	(4,156	)	$	—
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS:
Shares sold		64,654			81,319			16,082			2,000
Shares issued in reinvestments of dividends and distributions		2,049			2,082			—			—
Shares redeemed		(8,669	)		(380	)		—			—
Net increase in shares outstanding		58,034			83,021			16,082			2,000
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A:
Shares sold		7,821			—			53,568			2,000
Shares issued in reinvestments of dividends and distributions		244			222			—			—
Shares redeemed		—			—			—			—
Net increase in shares outstanding		8,065			222			53,568			2,000
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C:
Shares sold		1,485			538			124,175			2,000
Shares issued in reinvestments of dividends and distributions		149			173			—			—
Shares redeemed		—			(829	)		(4,227	)		—
Net increase (decrease) in shares outstanding		1,634			(118	)		119,948			2,000
CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS:
Shares sold		—			—			—			2,000
Shares issued in reinvestments of dividends and distributions		187			256			—			—
Shares redeemed		—			—			—			—
Net increase in shares outstanding		187			256			—			2,000

ˆ  Commencement of operations.

See Notes to the Financial Statements.

49

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements

June 30, 2010 (Unaudited)

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”), The Multi-Disciplinary Fund (“Multi-Disciplinary”) and The Tactical Paradigm Fund (“Tactical Paradigm”) (each, a “Fund” and together, the “Funds”). 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), February 11, 2008 (Multi-Disciplinary) and December 31, 2009 (Tactical Paradigm).

Each series (other than Tactical Paradigm), 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”). Each series in the Company (other than Tactical Paradigm) (each, a “Feeder Fund”, and together, the “Feeder Funds”) has entered into a master-feeder fund structure. By entering into this structure, each Feeder Fund invests all of its assets in a corresponding Master Portfolio with 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.

50

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

Each Feeder Fund’s respective interest in the corresponding Master Portfolio as of June 30, 2010 is as follows:

	Interest in
	Master Portfolio
Internet Fund		99.991%
Global Fund		99.898%
Paradigm Fund		97.239%
Medical Fund		99.952%
Small Cap Fund		99.985%
Government Fund		97.988%
Market Opportunities Fund		99.984%
Water Infrastructure Fund		99.704%
Multi-Disciplinary Fund		95.056%

Tactical Paradigm seeks its investment objective by investing generally all of its investable assets in the Paradigm Portfolio while also hedging market risk with futures, options and short sales of ETFs. Tactical Paradigm 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 Tactical Paradigm. As of June 30, 2010, Tactical Paradigm held 0.122% of the Paradigm Portfolio.

As of June 30, 2010, each of the Funds, except Government, offers Advisor Class A shares. Advisor Class A shares are subject to an annual Rule 12b-1 fee of 0.25% of average daily net assets and a service fee of 0.25% of average daily net assets. The Advisor Class A shares are also subject to a front-end sales charge of 5.75%.

As of June 30, 2010, each of the Funds, except Government, offers Advisor Class C shares. Advisor Class C shares are subject to an annual Rule 12b-1 fee of 0.75% of average daily net assets and a service fee of 0.25% of average daily net assets. Advisor Class C shares do not have a sales charge.

As of June 30, 2010, each of the Funds offers No Load Class shares. No Load Class shares are subject to a service fee of 0.25% of average daily net assets but do not have 12b-1 fees or a sales charge.

As of June 30, 2010, Paradigm, Small Cap, Market Opportunities, Water Infrastructure, Multi-Disciplinary and Tactical Paradigm 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.

51

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

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 Fund, except Government, 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.

Tactical Paradigm seeks to provide long-term growth of capital. 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) and securities held directly by Tactical Paradigm 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 and futures are valued at the last reported sale price on an exchange on which the option or future 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

52

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

normally valued on the basis of quotes obtained from pricing services, which take into account appropriate factors such as institutional-sized trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data.

Investment securities in The Kinetics Government Money Market Portfolio and instruments with remaining maturities of 60 days or less are valued at amortized cost, which approximates fair value. Other assets and securities for which no quotations are readily available (including restricted securities) are valued in good faith at fair value using methods determined by the Board of Trustees of the Master Portfolios. At June 30, 2010, 0.01%, 0.00%, 0.01%, 0.00% and 0.00% of the net assets of the Internet Portfolio, Paradigm Portfolio, Medical Portfolio, Small Cap Portfolio and Market Opportunities Portfolio, respectively, were fair valued securities.

Repurchase Agreements

Each Master Portfolio and Tactical Paradigm may enter into repurchase agreements with banks that are members of the Federal Reserve System or securities dealers who are members of a national securities exchange or are primary dealers in U.S. Government Securities. In connection with transactions in repurchase agreements, it is the Trust and the Company’s policy that the Master Portfolio and Tactical Paradigm 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/Tactical Paradigm in each repurchase agreement. If the seller defaults and the value of the collateral declines, realization of the collateral by the Master Portfolio/Tactical Paradigm Fund may be delayed or limited.

Written Option Accounting

The Master Portfolios and Tactical Paradigm may write (sell) call or put options for trading or hedging purposes. When a Master Portfolio or Tactical Paradigm writes an option, an amount equal to the premium received by the Master Portfolio or Tactical Paradigm 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 or Tactical Paradigm 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 or Tactical Paradigm enters into a closing purchase transaction, the Master Portfolio or Tactical Paradigm 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

53

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

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 or Tactical Paradigm 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 and Tactical Paradigm are 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.

Futures Contracts

Each Portfolio and the Tactical Paradigm Fund, except the Kinetics Government Money Market Portfolio, may buy and sell stock index futures contracts traded on domestic stock exchanges to hedge the value of its portfolio against changes in market conditions. A stock index futures contract is an agreement between two parties to take or make delivery of an amount of cash equal to a specified dollar amount, times the difference between the stock index value at the close of the last trading day of the contract and the price at which the futures contract is originally struck. At the time a Portfolio purchases or sells a stock index futures contract, it must make a good faith deposit known as the “initial margin”. Thereafter, a Portfolio may need to make subsequent deposits, known as “variation margin”, to reflect changes in the level of the stock index which are recorded for financial statement purposes as unrealized gains or losses.

Foreign Currency Translations

The books and records of the Master Portfolios and Tactical Paradigm are maintained in U.S. dollars. For the Master Portfolios and Tactical Paradigm, 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 and Tactical Paradigm 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 and Tactical Paradigm do isolate and treat as ordinary income the effect of changes in foreign exchange rates arising from actual foreign currency

54

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

transactions and the effect of changes in foreign exchange rates arising between trade date and settlement date.

Restricted and Illiquid Securities

The Master Portfolios and Tactical Paradigm may invest in restricted securities. These securities are valued by the Master Portfolios and Tactical Paradigm Fund after giving due consideration to pertinent factors including recent private sales, market conditions and the issuer’s financial performance. The Master Portfolios and Tactical Paradigm have no right to require registration of unregistered securities. At June 30, 2010 none of the Master Portfolios or Tactical Paradigm 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 June 30, 2010, Tactical Paradigm held no illiquid securities. At June 30, 2010, the following Master Portfolios held illiquid securities:

	Market		Percentage of
	Value		Net Assets
The Internet Portfolio	$	4,903		0.01	%
The Paradigm Portfolio		0		0.00
The Medical Portfolio		2,627		0.01
The Small Cap Opportunities Portfolio		0		0.00
The Market Opportunities Portfolio		0		0.00

When-Issued Securities

The Master Portfolios and Tactical Paradigm 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 and Tactical Paradigm 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 and Tactical Paradigm 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-

55

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

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 Funds are allocated among the Funds (i) based upon relative average net assets, (ii) as incurred on a specific identification basis, or (iii) equally among the 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. Tactical Paradigm also records its proportionate share of the Paradigm Portfolio’s expenses on a daily basis. In addition, each Fund accrues its own separate expenses. Any cap on expenses includes Fund-specific expenses as well as the expenses allocated from a 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 Funds’ policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and the Funds intend to distribute investment company net taxable income and net capital gains to shareholders. Therefore, no federal income tax provision is recorded. Dividends from net investment income and distributions of net realized capital gains, if any, will be declared and paid at least annually. The character of distributions made during the year from net investment income or net realized gains may differ from the characterization for federal income tax purposes due to differences in the recognition of income, expenses and gain items for financial statement and tax purposes. Additionally, the 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.

56

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

Use of Estimates

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

Other

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

3.  Investment Adviser

The Company has entered into an investment advisory agreement (the “Advisory Agreement”) with Kinetics Asset Management, Inc. (the “Adviser”), with whom certain officers and directors of the Company are affiliated, to furnish investment advisory services to Tactical Paradigm. The Trust has entered into investment advisory agreements (the “Agreements”) with the Adviser, with whom certain officers and trustees of the Trust are affiliated, to furnish investment advisory services to the Master Portfolios. For its advisory services, the Adviser is entitled to receive 0.65% of Tactical Paradigm’s average daily net assets, 0.50% of the Kinetics Government Money Market Portfolio’s average daily net assets and 1.25% of each other Master Portfolio’s average daily net assets.

The former sub-adviser to the Water Infrastructure Portfolio, Brennan Investment Partners, LLC, received its compensation from the Adviser at the annual rate of 0.35% of the average daily net assets of the Water Infrastructure Portfolio. On July 16, 2010, Brennan Investment Partners, LLC ceased serving as sub-adviser for Water Infrastructure. The sub-adviser to Tactical Paradigm is Broadmark Asset Management, LLC (the “Sub-Adviser”), which receives compensation from the Adviser at the annual rate of 0.65% of the average daily net assets of Tactical Paradigm pursuant to a sub-advisory agreement (the “Sub-Advisory Agreement”) with the Adviser.

For the six months ended June 30, 2010, Tactical Paradigm incurred expenses of $3,420 pursuant to the Advisory Agreement.

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

57

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

discontinue the voluntary waiver/reimbursement at any time; these waivers/reimbursements are not subject to recapture.

For the six months ended June 30, 2010, the rate earned by the Adviser from the Master Portfolios and from Tactical Paradigm and the waived fees/reimbursed expenses for the Funds are as follows:

	Internet		Global
Annual Advisory Rate		1.25%		1.25%
Expenses Reimbursed by Adviser through voluntary waiver	$	34,464	$	75,605
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	$	801,430	$	95,292
Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver	$	93,950	$	—
	Small Cap		Government
Annual Advisory Rate		1.25%		0.50%
Expenses Reimbursed by Adviser through voluntary waiver	$	206,120	$	28,907
Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver	$	12,279	$	—
	Market		Water
	Opportunities		Infrastructure
Annual Advisory Rate		1.25%		1.25%
Expenses Reimbursed by Adviser through voluntary waiver	$	87,137	$	56,015
Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver	$	36	$	3,060
	Multi		Tactical
	Disciplinary		Paradigm
Annual Advisory Rate		1.25%		1.25%
Annual Sub-Advisory Rate		0.00%		0.65%
Expenses Reimbursed by Adviser through voluntary waiver	$	48,808	$	32,906
Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver	$	77	$	15

The Adviser receives a shareholder servicing fee from the No Load Class, Class A and Class C shares of each Fund pursuant to a Shareholder Servicing Agreement in the amount equal to 0.25% of the Fund’s average daily net assets attributable to No Load Class, Class A and Class C shares, respectively. For the Institutional

58

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

Class, the Adviser receives a shareholder servicing fee pursuant to a shareholder servicing agreement in the amount equal to 0.20% of each Fund’s average daily net assets attributable to Institutional Class shares. At this time, the Adviser has contractually agreed to waive and/or reimburse the portion of the Institutional Class shareholder servicing fee in excess of 0.05% of a Feeder Fund’s average daily net assets attributable to Institutional Class shares until at least May 1, 2011. For the six months ended June 30, 2010, the Adviser waived amounts depicted in the above table in shareholder servicing fees for the Institutional Class of Paradigm, Small Cap, Market Opportunities, Water Infrastructure, Multi-Disciplinary and Tactical Paradigm. 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 Funds.

For the six months ended June 30, 2010, the Funds were allocated $12,000 for the services of the Chief Compliance Officer employed by the Adviser.

The Company, on behalf of the 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 six months ended June 30, 2010, payments under the 12b-1 Plan for the Advisor Class A shares of Internet, Global, Paradigm, Medical, Small Cap, Market Opportunities, Water, Multi-Disciplinary and Tactical Paradigm were limited to 0.25% of the average daily net asset value of such shares of such Funds. During the six months ended June 30, 2010, the Advisor Class A shares of Internet, Global, Paradigm, Medical, Small Cap, Market Opportunities, Water Infrastructure, Multi-Disciplinary and Tactical Paradigm incurred expenses of $1,129, $481, $292,706, $5,611, $16,638, $21,019, $14,165, $157 and $506 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 six months ended June 30, 2010, Internet, Global, Paradigm, Medical, Small Cap, Market Opportunities, Water Infrastructure, Multi-Disciplinary and Tactical Paradigm Advisor Class C Shares incurred expenses of $461, $120, $599,542, $2,341, $14,987, $21,899, $11,198, $421 and $1,970 respectively, pursuant to the 12b-1 Plan.

Kinetics Funds Distributor, Inc. (the “Distributor”) acts as the Funds’ principal underwriter in a continuous public offering of the Funds’ shares. The Distributor

59

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

is an affiliate of the Adviser. For the six months ended June 30, 2010, the Distributor received $1,636, $745, $21,964, $1,085, $1,226, $2,168, $10,692, $0 and $0 from sales loads from Internet, Global, Paradigm, Medical, Small Cap, Market Opportunities, Water Infrastructure, Multi-Disciplinary and Tactical Paradigm, respectively.

4.   Approval of Investment Advisory Contracts by Directors of Tactical Paradigm Fund

At a meeting of the Board of Directors of the Company held on December 18, 2009, the Board, including all of the Directors who are not interested persons under the 1940 Act (the “Independent Directors”), approved the Advisory Agreement and Sub-Advisory Agreement with respect to Tactical Paradigm. In reaching a decision to approve the Advisory Agreement and Sub-Advisory Agreement, the Board of Directors, including all of the Independent Directors, considered, among others

(1) the nature, extent and quality of the services to be provided by the Adviser and Sub-Adviser; (2) the contractual and actual compensation to be paid under the Agreements as compared to the compensation paid to the Lipper, Inc. (“Lipper”) peer group; (3) the advisory fees and services to be provided to ensure that the fees are based on services provided that are in addition to, rather than duplicative of, services provided pursuant to the Adviser’s advisory agreement with the Paradigm Portfolio; (4) the expected expense ratio of Tactical Paradigm, with expense waivers, as compared to expense ratios for relevant Lipper peer group; (5) the experience and qualifications of the Adviser’s and Sub-Adviser’s personnel and the Adviser’s and Sub-Adviser’s portfolio management capabilities and investment methodologies; (6) the extent to which economies of scale are relevant given Tactical Paradigm’s asset growth potential; (7) the financial condition of the Adviser and Sub-Adviser; (8) the cost of services to be provided by the Adviser and Sub-Adviser and the Adviser’s and Sub-Adviser’s expected profitability; (9) the “fall-out” benefits to the Adviser, Sub-Adviser and their affiliates from the relationship with Tactical Paradigm; (10) the Adviser’s and Sub-Adviser’s operations, compliance programs and policies with respect to the Code of Ethics; and (11) that Tactical Paradigm is designed for long-term investors. The Lipper peer group information was provided by U.S. Bancorp Fund Services, LLC, the Company’s administrator.

The Board of Directors, including all of the Independent Directors, concluded that: they were satisfied with the quality of services to be provided by the Adviser and Sub-Adviser in advising Tactical Paradigm; the compensation to be paid to the Adviser and Sub-Adviser was fair and reasonable; the compensation to be paid to the Adviser pursuant to the Advisory Agreement were for services in

60

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

addition to, rather than duplicative of, services provided pursuant to the Advisor’s advisory agreement with the Paradigm Portfolio; the profits expected to be earned by the Adviser and Sub-Adviser were reasonable in light of the nature, extent and quality of the services provided to Tactical Paradigm; and that Tactical Paradigm is not expected to become large enough to attain significant economies of scale.

Based on the factors considered, the Board of Directors, including all of the Independent Directors, concluded that it was appropriate to approve the Advisory and Sub-Advisory Agreement.

5.  Reclassification of Capital Accounts

Accounting principles generally accepted in the United States of America require that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the year ended December 31, 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	)
The Tactical Paradigm Fund		—			—			—

6.  Income Taxes

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

61

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

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

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

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 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 utilized $3,592,586 and $43,829, respectively, of capital loss carryforwards.

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

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

62

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

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

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

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

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

7.  Securities Transactions for Tactical Paradigm

Purchases and sales of investment securities, other than short-term investments, for the six months ended June 30, 2010 were as follows:

	Purchases				Sales
	U.S.				U.S.
	Government		Other		Government		Other
Tactical Paradigm	$	—	$	—	$	—	$	—

For the six months ended June 30, 2010, Tactical Paradigm wrote the following options:

	Number			Premium
	of Contracts			Amount
Tactical Paradigm
Outstanding at the Beginning of Year		—		$	—
Options Written		464			96,399
Options Closed		(414	)		(76,915	)
Outstanding at June 30, 2010		50		$	19,484

63

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

8.  Summary of Fair Value Exposure

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

Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that 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 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 Tactical Paradigm Fund

The following is a summary of the inputs used to value Tactical Paradigm’s net assets as of June 30, 2010:

	Level 1		Level 2		Level 3		Total
Other Investments	$	1,384,785	$	—	$	—	$	1,384,785
Put Options Purchased		48,550		—		—		48,550
Total Investments in Securities	$	1,433,335	$	—	$	—	$	1,433,335
Call Options Written	$	11,700	$	—	$	—	$	11,700
Short Futures Contracts*	$	23,363	$	—	$	—	$	23,363

*   Short Futures Contracts are valued at the unrealized appreciation (depreciation) on the instrument.

64

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

9.   Disclosures about Derivative Instruments and Hedging Activities

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

The Sub-Adviser will attempt to reduce market risk through its use of hedging activities, including use of derivatives. When equity market risk is perceived to be high, and opportunity low, net exposure will be reduced by selling futures, option combos or short-selling ETFs against the value of Tactical Paradigm’s investment in the Paradigm Portfolio. Conversely, when perceived risks are low and opportunities high, Tactical Paradigm will have a low to zero exposure to hedging vehicles.

The Tactical Paradigm Fund

Statement of Assets and Liabilities

Fair Values of derivative instruments as of June 30, 2010:

	Assets				Liabilities
Equity Contracts	Description		Fair Value		Description	Fair Value
Purchased Options		Investments*	$	48,550
Written Options					Written option contracts, at value	$	11,700
Short Futures Contractsˆ				23,363	Short futures contracts		—
Total			$	71,913		$	11,700

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

ˆ   Short futures contracts are valued at the unrealized appreciation (depreciation) on the instrument.

65

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

Statement of Operations

The effect of derivative instruments on the Statement of Operations for the six months ended June 30, 2010:

Amount of Realized Gain (Loss) on Derivatives

Equity Contracts
Purchased Options	$	(39,023)	**
Written Options		22,535
Total	$	(16,488		)

**    Purchased options are included with investments.

Change in Unrealized Appreciation (Depreciation) on Derivatives

Equity Contracts
Purchased Options	$	13,094	***
Written Options		7,784
Futures Contracts		23,363
Total	$	44,241

**    Purchased options are included with investments.

Tactical Paradigm has adopted authoritative standards regarding disclosure about derivatives and hedging activities and how they affect its Statement of Assets and Liabilities and Statement of Operations. For the six months ended June 30, 2010: long option contracts (464 contracts) were purchased and $289,273 premiums were paid, written option contracts (464 contracts) were opened and $96,399 premiums were received, and an average of 2 short futures contracts were open with an average notional value of $115,448 during the period.

10.  Subsequent Events

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

66

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

11.  Tax Information (Unaudited)

Internet, Global, Paradigm, Medical, Market Opportunities, and Water Infrastructure 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.

Internet, Global, Paradigm, Medical, Market Opportunities, Water Infrastructure and Multi-Disciplinary 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%.

Internet, Paradigm, Medical, Market Opportunities, Water Infrastructure, and Multi-Disciplinary 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).

Medical and Multi-Disciplinary 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).

12.  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.

67

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

13.  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.

68

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69

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Financial Highlights

	The Internet Fund
	No Load Class			Advisor Class A			Advisor Class C			No Load Class
	For the Six			For the Six			For the Six			For the
	Months Ended			Months Ended			Months Ended			Year Ended
	June 30, 2010			June 30, 2010			June 30, 2010			December 31,
	(Unaudited)			(Unaudited)			(Unaudited)			2009
PER SHARE DATA:(1)
Net Asset Value, Beginning of Period	$	30.74		$	30.35		$	29.76		$	20.71
Income from Investment Operations:
Net investment income (loss)(2)		(0.13	)		(0.16	)		(0.24	)		(0.14	)
Net realized and unrealized gain (loss) on investments		(1.20	)		(1.19	)		(1.15	)		10.21
Total from investment operations		(1.33	)		(1.35	)		(1.39	)		10.07
Redemption Fees		0.00	(3)		0.00	(3)		—			0.00	(3)
Less Distributions:
From net investment income		—			—			—			(0.04	)
From net realized gains		—			—			—			—
Total distributions		—			—			—			(0.04	)
Net Asset Value, End of Period	$	29.41		$	29.00		$	28.37		$	30.74
Total Return(4)		(4.33	)%(5)		(4.45	)%(5)		(4.70	)%(5)		48.61	%
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	95,150		$	990		$	117		$	104,666
Ratio of operating expenses to average net assets:
Before expense reimbursement		1.96	%(6)		2.21	%(6)		2.71	%(6)		1.98	%
After expense reimbursement(7)		1.89	%(6)		2.14	%(6)		2.64	%(6)		1.89	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(0.87	)%(6)		(1.12	)%(6)		(1.62	)%(6)		(0.64	)%
After expense reimbursement(7)		(0.80	)%(6)		(1.05	)%(6)		(1.55	)%(6)		(0.55	)%
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.

70

The Internet Fund
	Advisor Class A			Advisor Class C			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			For the			February 16, 2007ˆ
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			through
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2009			2009			2008			2008			2008			2007			2007			2007
	$	20.50		$	20.20		$	35.94		$	35.66		$	35.31		$	28.62		$	28.24		$	28.66
		(0.21	)		(0.31	)		0.29			0.22			0.08			0.30			0.23			0.07
		10.09			9.91			(15.47	)		(15.33	)		(15.15	)		7.37			7.49			6.87
		9.88			9.60			(15.18	)		(15.11	)		(15.07	)		7.67			7.72			6.94
		0.01			—			0.00	(3)		0.00	(3)		—			0.00	(3)		—			0.00	(3)
		(0.04	)		(0.04	)		(0.05	)		(0.05	)		(0.04	)		(0.35	)		(0.30	)		(0.29	)
		—			—			—			—			—			—			—			—
		(0.04	)		(0.04	)		(0.05	)		(0.05	)		(0.04	)		(0.35	)		(0.30	)		(0.29	)
	$	30.35		$	29.76		$	20.71		$	20.50		$	20.20		$	35.94		$	35.66		$	35.31
		48.23	%		47.51	%		(42.24	)%		(42.37	)%		(42.67	)%		26.81	%		27.35	%		24.22	%(5)
	$	738		$	120		$	75,112		$	318		$	113		$	166,787		$	637		$	294
		2.23	%		2.73	%		2.03	%		2.28	%		2.78	%		1.99	%		2.24	%		2.73	%(6)
		2.14	%		2.64	%		1.90	%		2.15	%		2.65	%		1.98	%		2.23	%		2.72	%(6)
		(0.89	)%		(1.39	)%		0.90	%		0.65	%		0.15	%		0.94	%		0.70	%		0.22	%(6)
		(0.80	)%		(1.30	)%		1.03	%		0.78	%		0.28	%		0.95	%		0.71	%		0.23	%(6)
		N/A			N/A			N/A			N/A			N/A			N/A			N/A			N/A

See Notes to the Financial Statements.

71

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Financial Highlights — (Continued)

	The Internet Fund
	No Load Class			Advisor Class A			No Load Class			Advisor Class A
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2006			2005			2005
PER SHARE DATA:(1)
Net Asset Value, Beginning of Period	$	24.66		$	24.40		$	25.29		$	24.93
Income from Investment Operations:
Net investment income (loss)(2)		(0.08	)		(0.14	)		0.11			0.05
Net realized and unrealized gain (loss) on investments		4.15			4.09			(0.54	)		(0.44	)
Total from investment operations		4.07			3.95			(0.43	)		(0.39	)
Redemption Fees		0.00	(3)		—			0.00	(3)		0.00	(3)
Less Distributions:
From net investment income		(0.11	)		(0.11	)		(0.20	)		(0.14	)
From net realized gains		—			—			—			—
Total distributions		(0.11	)		(0.11	)		(0.20	)		(0.14	)
Net Asset Value, End of Period	$	28.62		$	28.24		$	24.66		$	24.40
Total Return(4)		16.50	%		16.18	%		(1.69	)%		(1.55	)%
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	137,012		$	235		$	148,260		$	300
Ratio of operating expenses to average net assets:
Before expense reimbursement		1.98	%		2.23	%		2.35	%		2.60	%
After expense reimbursement(7)		1.85	%		2.10	%		2.35	%		2.60	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(0.42	)%		(0.67	)%		0.46	%		0.21	%
After expense reimbursement(7)		(0.29	)%		(0.54	)%		0.46	%		0.21	%
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.

72

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73

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Financial Highlights

	The Global Fund
	No Load Class			Advisor Class A			Advisor Class C
	For the Six			For the Six			For the Six
	Months Ended			Months Ended			Months Ended
	June 30, 2010			June 30, 2010			June 30, 2010
	(Unaudited)			(Unaudited)			(Unaudited)
PER SHARE DATA:(1)
Net Asset Value, Beginning of Period	$	3.92		$	3.93		$	3.90
Income from Investment Operations:
Net investment income (loss)		0.01	(2)		0.01	(2)		(0.00	)(3)
Net realized and unrealized gain (loss) on investments		(0.29	)		(0.29	)		(0.28	)
Total from investment operations		(0.28	)		(0.28	)		(0.28	)
Redemption Fees		0.00	(3)		—			—
Less Distributions:
From net investment income		—			—			—
From net realized gains		—			—			—
Total distributions		—			—			—
Net Asset Value, End of Period	$	3.64		$	3.65		$	3.62
Total Return(4)		(7.14	)%(5)		(7.12	)%(5)		(7.42	)%(5)
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of year (000’s)	$	4,076		$	447		$	43
Ratio of operating expenses to average net assets:
Before expense reimbursement		4.43	%(6)		4.68	%(6)		5.18	%(6)
After expense reimbursement(7)		1.39	%(6)		1.64	%(6)		2.14	%(6)
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(2.37	)%(6)		(2.62	)%(6)		(3.12	)%(6)
After expense reimbursement(7)		0.67	%(6)		0.42	%(6)		(0.08	)%(6)
Portfolio turnover rate		N/A			N/A			N/A

ˆ   Commencement of operations.

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

See Notes to the Financial Statements.

74

The Global Fund
	No Load Class			Advisor Class A			Advisor Class C			No Load Class			Advisor Class A			Advisor Class C			No Load Class			No Load Class			No Load Class
	For the			For the			For the			For the			May 19, 2008ˆ			May 19, 2008ˆ			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			through			through			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2009			2009			2009			2008			2008			2008			2007			2006			2005
	$	2.36		$	2.36		$	2.37		$	4.90		$	4.56		$	4.56		$	5.00		$	4.43		$	4.50
		0.02	(2)		0.01	(2)		(0.00	)(2)(3)		0.07	(2)		0.03	(2)		0.02	(2)		0.22			0.13			0.15
		1.55			1.57			1.53			(2.56	)		(2.18	)		(2.17	)		(0.01	)		0.62			(0.03	)
		1.57			1.58			1.53			(2.49	)		(2.15	)		(2.15	)		0.21			0.75			0.12
		0.01			—			—			0.00	(3)		—			—			0.00	(3)		0.00	(3)		0.00	(3)
		(0.02	)		(0.01	)		(0.00	)(3)		(0.05	)		(0.05	)		(0.04	)		(0.31	)		(0.18	)		(0.19	)
		—			—			—			—			—			—			—			—			—
		(0.02	)		(0.01	)		(0.00	)(3)		(0.05	)		(0.05	)		(0.04	)		(0.31	)		(0.18	)		(0.19	)
	$	3.92		$	3.93		$	3.90		$	2.36		$	2.36		$	2.37		$	4.90		$	5.00		$	4.43
		66.86	%		67.11	%		65.08	%		(50.72	)%		(47.12	)%(5)		(47.14	)%(5)		4.27	%		16.90	%		2.65	%
	$	4,370		$	368		$	36		$	1,863		$	106		$	5		$	3,138		$	3,991		$	3,896
		5.32	%		5.57	%		6.07	%		5.98	%		8.28	%(6)		8.78	%(6)		3.84	%		3.09	%		3.22	%
		1.39	%		1.64	%		2.14	%		1.41	%		1.65	%(6)		2.15	%(6)		1.48	%		1.39	%		2.69	%
		(3.27	)%		(3.52	)%		(4.02	)%		(2.72	)%		(5.16	)%(6)		(5.66	)%(6)		1.87	%		1.30	%		2.80	%
		0.66	%		0.41	%		(0.09	)%		1.85	%		1.47	%(6)		0.97	%(6)		4.23	%		3.00	%		3.33	%
		N/A			N/A			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. — THE FUNDS

Financial Highlights

	The Paradigm Fund
				Advisor			Advisor			Institutional
	No Load Class			Class A			Class C			Class
	For the			For the			For the			For the
	Six Months			Six Months			Six Months			Six Months
	Ended			Ended			Ended			Ended
	June 30, 2010			June 30, 2010			June 30, 2010			June 30, 2010
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
PER SHARE DATA:(1)
Net Asset Value, Beginning of Period	$	20.18		$	19.88		$	19.33		$	20.13
Income from Investment Operations:
Net investment income (loss)(2)		0.04			0.01			(0.04	)		0.06
Net realized and unrealized gain (loss) on investments		(1.66	)		(1.63	)		(1.58	)		(1.65	)
Total from investment operations		(1.62	)		(1.62	)		(1.62	)		(1.59	)
Redemption Fees		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)
Less Distributions:
From net investment income		—			—			—			—
From net realized gains		—			—			—			—
Total distributions		—			—			—			—
Net Asset Value, End of Period	$	18.56		$	18.26		$	17.71		$	18.54
Total Return(4)		(8.03	)%(5)		(8.10	)%(5)		(8.38	)%(5)		(7.90	)%(5)
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	644,237		$	201,896		$	138,877		$	114,705
Ratio of operating expenses to average net assets:
Before expense reimbursement		1.76	%(6)		2.01	%(6)		2.51	%(6)		1.71	%(6)
After expense reimbursement(7)		1.64	%(6)		1.89	%(6)		2.39	%(6)		1.44	%(6)
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		0.25	%(6)		0.00	%(6)		(0.50	)%(6)		0.30	%(6)
After expense reimbursement(7)		0.37	%(6)		0.12	%(6)		(0.38	)%(6)		0.57	%(6)
Portfolio turnover rate		N/A			N/A			N/A			N/A

ˆ   Commencement of operations.

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

76

The Paradigm Fund
No Load			Advisor			Advisor			Institutional			No Load			Advisor			Advisor
Class			Class A			Class C			Class			Class			Class A			Class C
For the			For the			For the			For the			For the			For the			For the
Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
2009			2009			2009			2009			2008			2008			2008
$	14.42		$	14.16		$	13.80		$	14.44		$	30.99		$	30.52		$	29.90
	0.15			0.10			0.02			0.18			0.12			0.06			(0.05	)
	5.78			5.68			5.51			5.78			(16.62	)(8)		(16.34	)(8)		(15.97	)(8)
	5.93			5.78			5.53			5.96			(16.50	)		(16.28	)		(16.02	)
	0.00	(3)		—			0.00	(3)		0.00	(3)		0.01			0.00	(3)		0.00	(3)
	(0.17	)		(0.06	)		—			(0.27	)		—			—			—
	—			—			—			—			(0.08	)		(0.08	)		(0.08	)
	(0.17	)		(0.06	)		—			(0.27	)		(0.08	)		(0.08	)		(0.08	)
$	20.18		$	19.88		$	19.33		$	20.13		$	14.42		$	14.16		$	13.80
	41.02	%		40.64	%		39.97	%		41.31	%		(53.17	)%(8)		(53.30	)%(8)		(53.54	)%(8)
$	825,278		$	252,106		$	169,578		$	125,372		$	740,983		$	249,424		$	147,915
	1.73	%		1.98	%		2.48	%		1.68	%		1.72	%		1.97	%		2.47	%
	1.64	%		1.89	%		2.39	%		1.44	%		1.66	%		1.91	%		2.41	%
	0.78	%		0.53	%		0.03	%		0.83	%		0.46	%		0.21	%		(0.29	)%
	0.87	%		0.62	%		0.12	%		1.07	%		0.52	%		0.27	%		(0.23	)%
	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. — THE FUNDS

Financial Highlights

	The Paradigm Fund
	Institutional			No Load			Advisor			Advisor
	Class			Class			Class A			Class C
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2008			2007			2007			2007
PER SHARE DATA:(1)
Net Asset Value, Beginning of Period	$	30.97		$	25.79		$	25.43		$	24.98
Income from Investment Operations:
Net investment income (loss)(2)		0.18			0.11			0.04			(0.10	)
Net realized and unrealized gain (loss) on investments		(16.63	)(8)		5.35			5.27			5.15
Total from investment operations		(16.45	)		5.46			5.31			5.05
Redemption Fees		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)
Less Distributions:
From net investment income		—			(0.13	)		(0.09	)		(0.00	)
From net realized gains		(0.08	)		(0.13	)		(0.13	)		(0.13	)
Total distributions		(0.08	)		(0.26	)		(0.22	)		(0.13	)
Net Asset Value, End of Period	$	14.44		$	30.99		$	30.52		$	29.90
Total Return(4)		(53.11	)%(8)		21.15	%		20.87	%		20.20	%
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	128,129		$	2,910,518		$	544,046		$	320,962
Ratio of operating expenses to average net assets:
Before expense reimbursement		1.67	%		1.68	%		1.93	%		2.43	%
After expense reimbursement(7)		1.46	%		1.68	%		1.93	%		2.43	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		0.51	%		0.39	%		0.14	%		(0.36	)%
After expense reimbursement(7)		0.72	%		0.39	%		0.14	%		(0.36	)%
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.

78

The Paradigm Fund
Institutional			No Load			Advisor			Advisor			Institutional			No Load			Advisor			Advisor			Institutional
Class			Class			Class A			Class C			Class			Class			Class A			Class C			Class
For the			For the			For the			For the			For the			For the			For the			For the			May 27, 2005ˆ
Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			through
December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
2007			2006			2006			2006			2006			2005			2005			2005			2005
$	25.76		$	20.33		$	20.08		$	19.76		$	20.31		$	17.54		$	17.40		$	17.21		$	18.13
	0.17			0.14			0.08			(0.03	)		0.19			(0.03	)		(0.07	)		(0.17	)		0.01
	5.34			5.52			5.43			5.33			5.49			2.82			2.77			2.74			2.23
	5.51			5.66			5.51			5.30			5.68			2.79			2.70			2.57			2.24
	0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		—			0.03			0.00	(3)		0.00	(3)		—
	(0.17	)		(0.16	)		(0.12	)		(0.04	)		(0.19	)		(0.01	)		—			—			(0.04	)
	(0.13	)		(0.04	)		(0.04	)		(0.04	)		(0.04	)		(0.02	)		(0.02	)		(0.02	)		(0.02	)
	(0.30	)		(0.20	)		(0.16	)		(0.08	)		(0.23	)		(0.03	)		(0.02	)		(0.02	)		(0.06	)
$	30.97		$	25.79		$	25.43		$	24.98		$	25.76		$	20.33		$	20.08		$	19.76		$	20.31
	21.37	%		27.81	%		27.42	%		26.82	%		27.96	%		16.11	%		15.54	%		14.96	%		12.35	%(5)
$	804,755		$	1,337,761		$	183,031		$	116,226		$	507,314		$	418,914		$	60,421		$	38,740		$	10,895
	1.63	%		1.79	%		2.04	%		2.54	%		1.74	%		1.93	%		2.18	%		2.68	%		1.88	%(6)
	1.48	%		1.63	%		1.88	%		2.38	%		1.43	%		1.69	%		1.94	%		2.44	%		1.49	%(6)
	0.44	%		0.44	%		0.19	%		(0.31	)%		0.48	%		(0.41	)%		(0.66	)%		(1.16	)%		(0.37	)%(6)
	0.59	%		0.60	%		0.35	%		(0.15	)%		0.79	%		(0.17	)%		(0.42	)%		(0.92	)%		0.02	%(6)
	N/A			N/A			N/A			N/A			N/A			N/A			N/A			N/A			N/A

See Notes to the Financial Statements.

79

KINETICS MUTUAL FUNDS, INC. — THE 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 Six			For the Six			For the Six			For the			For the			For the
	Months Ended			Months Ended			Months Ended			Year Ended			Year Ended			Year Ended
	June 30, 2010			June 30, 2010			June 30, 2010			December 31,			December 31,			December 31,
	(Unaudited)			(Unaudited)			(Unaudited)			2009			2009			2009
PER SHARE DATA:(1)
Net Asset Value, Beginning of Period	$	18.77		$	18.36		$	18.27		$	15.23		$	14.90		$	14.83
Income from Investment Operations:
Net investment income (loss)(2)		0.10			0.07			0.02			0.20			0.15			0.07
Net realized and unrealized gain (loss) on investments		(1.36	)		(1.32	)		(1.31	)		3.51			3.44			3.41
Total from investment operations		(1.26	)		(1.25	)		(1.29	)		3.71			3.59			3.48
Redemption Fees		0.00	(3)		0.00	(3)		—			0.01			0.01			0.00	(3)
Less Distributions:
From net investment income		—			—			—			(0.16	)		(0.12	)		(0.02	)
From net realized gains		—			—			—			(0.02	)		(0.02	)		(0.02	)
Total distributions		—			—			—			(0.18	)		(0.14	)		(0.04	)
Net Asset Value, End of Period	$	17.51		$	17.11		$	16.98		$	18.77		$	18.36		$	18.27
Total Return(4)		(6.76	)%(5)		(6.81	)%(5)		(7.06	)(5)		24.47	%		24.17	%		23.50	%
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	24,392		$	4,108		$	700		$	21,126		$	4,347		$	454
Ratio of operating expenses to average net assets:
Before expense reimbursement		2.00	%(6)		2.25	%(6)		2.75	%(6)		2.15	%		2.40	%		2.90	%
After expense reimbursement(7)		1.39	%(6)		1.64	%(6)		2.14	%(6)		1.39	%		1.64	%		2.14	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		0.42	%(6)		0.17	%(6)		(0.33	)%(6)		0.42	%		0.17	%		(0.33	)%
After expense reimbursement(7)		1.03	%(6)		0.78	%(6)		0.28	%(6)		1.17	%		0.92	%		0.42	%
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.

80

The Medical Fund
No Load Class			Advisor Class A			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			For the			For the			February 16, 2007ˆ			For the			For the			For the			For the
Year Ended			Year Ended			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,			December 31,			December 31,
2008			2008			2008			2007			2007			2007			2006			2006			2005			2005
$	19.82		$	19.39		$	19.34		$	17.83		$	17.47		$	18.29		$	16.64		$	16.34		$	16.76		$	16.49
	0.19			0.13			0.05			0.10			0.05			(0.04	)		0.06			0.01			(0.18	)		(0.22	)
	(4.25	)		(4.15	)		(4.13	)		2.67			2.62			1.79			2.40			2.35			0.06			0.07
	(4.06	)		(4.02	)		(4.08	)		2.77			2.67			1.75			2.46			2.36			(0.12	)		(0.15	)
	0.01			0.04			0.02			0.01			0.00	(3)		0.00	(3)		0.00	(3)		—			0.00	(3)		—
	(0.16	)		(0.13	)		(0.07	)		(0.10	)		(0.06	)		(0.01	)		(0.04	)		—			—			—
	(0.38	)		(0.38	)		(0.38	)		(0.69	)		(0.69	)		(0.69	)		(1.23	)		(1.23	)		—			—
	(0.54	)		(0.51	)		(0.45	)		(0.79	)		(0.75	)		(0.70	)		(1.27	)		(1.23	)		—			—
$	15.23		$	14.90		$	14.83		$	19.82		$	19.39		$	19.34		$	17.83		$	17.47		$	16.64		$	16.34
	(20.42	)%		(20.49	)%		(20.97	)%		15.47	%		15.16	%		9.55	%(5)		14.81	%		14.49	%		(0.72	)%		(0.91	)%
$	15,727		$	2,941		$	314		$	13,917		$	1,427		$	148		$	15,527		$	711		$	13,943		$	559
	2.26	%		2.51	%		3.01	%		2.41	%		2.66	%		3.19	%(6)		2.28	%		2.53	%		2.48	%		2.73	%
	1.41	%		1.66	%		2.16	%		1.40	%		1.65	%		2.15	%(6)		1.44	%		1.69	%		2.44	%		2.69	%
	0.18	%		(0.07	)%		(0.57	)%		(0.51	)%		(0.76	)%		(1.30	)%(6)		(0.51	)%		(0.76	)%		(1.14	)%		(1.39	)%
	1.03	%		0.78	%		0.28	%		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			N/A			N/A			N/A

See Notes to the Financial Statements.

81

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Financial Highlights

	The Small Cap Opportunities Fund
	No Load Class			Advisor Class A			Advisor Class C			Institutional Class
	For the Six			For the Six			For the Six			For the Six
	Months Ended			Months Ended			Months Ended			Months Ended
	June 30, 2010			June 30, 2010			June 30, 2010			June 30, 2010
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
PER SHARE DATA:(1)
Net Asset Value, Beginning of Period	$	20.83		$	20.53		$	20.28		$	20.90
Income from Investment Operations:
Net investment income (loss)(2)		(0.03	)		(0.06	)		(0.11	)		(0.01	)
Net realized and unrealized gain (loss) on investments		(1.51	)		(1.48	)		(1.46	)		(1.51	)
Total from investment operations		(1.54	)		(1.54	)		(1.57	)		(1.52	)
Redemption Fees		0.00	(3)		0.00	(3)		—			0.00	(3)
Less Distributions:
From net investment income		—			—			—			—
From net realized gains		—			—			—			—
Total distributions		—			—			—			—
Net Asset Value, End of Period	$	19.29		$	18.99		$	18.71		$	19.38
Total Return(4)		(7.39	)%(5)		(7.50	)%(5)		(7.74	)%(5)		(7.27	)%(5)
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	116,720		$	11,087		$	3,579		$	9,417
Ratio of operating expenses to average net assets:
Before expense reimbursement		1.87	%(6)		2.12	%(6)		2.62	%(6)		1.82	%(6)
After expense reimbursement(7)		1.64	%(6)		1.89	%(6)		2.39	%(6)		1.44	%(6)
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(0.53	)%(6)		(0.78	)%(6)		(1.28	)%(6)		(0.48	)%(6)
After expense reimbursement(7)		(0.30	)%(6)		(0.55	)%(6)		(1.05	)%(6)		(0.10	)%(6)
Portfolio turnover rate		N/A			N/A			N/A			N/A

ˆ   Commencement of operations.

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

82

The Small Cap Opportunities Fund
	No Load Class			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			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2009			2009			2009			2009			2008			2008			2008			2008
	$	13.17		$	13.01		$	12.92		$	13.19		$	31.92		$	31.63		$	31.57		$	31.92
		(0.04	)		(0.08	)		(0.16	)		(0.01	)		0.05			(0.01	)		(0.12	)		0.10
		7.70			7.60			7.52			7.72			(18.53	)(8)		(18.34	)(8)		(18.26	)(8)		(18.56	)(8)
		7.66			7.52			7.36			7.71			(18.48	)		(18.35	)		(18.38	)		(18.46	)
		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)
		—			—			—			—			—			—			—			—
		—			—			—			—			(0.27	)		(0.27	)		(0.27	)		(0.27	)
		—			—			—			—			(0.27	)		(0.27	)		(0.27	)		(0.27	)
	$	20.83		$	20.53		$	20.28		$	20.90		$	13.17		$	13.01		$	12.92		$	13.19
		58.16	%		57.80	%		56.97	%		58.45	%		(57.88	)%(8)		(58.00	)%(8)		(58.20	)%(8)		(57.82	)%(8)
	$	161,205		$	14,244		$	4,445		$	19,749		$	126,971		$	12,090		$	2,871		$	68,408
		1.86	%		2.11	%		2.61	%		1.81	%		1.79	%		2.04	%		2.54	%		1.74	%
		1.64	%		1.89	%		2.39	%		1.44	%		1.67	%		1.92	%		2.42	%		1.47	%
		(0.48	)%		(0.73	)%		(1.23	)%		(0.43	)%		0.09	%		(0.16	)%		(0.66	)%		0.14	%
		(0.26	)%		(0.51	)%		(1.01	)%		(0.06	)%		0.21	%		(0.04	)%		(0.54	)%		0.41	%
		N/A			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. — THE FUNDS

Financial Highlights

	The Small Cap Opportunities Fund
	No Load Class			Advisor Class A			Advisor Class C			Institutional Class
	For the			For the			February 16, 2007ˆ			For the
	Year Ended			Year Ended			through			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2007			2007			2007			2007
PER SHARE DATA:(1)
Net Asset Value, Beginning of Period	$	26.92		$	26.71		$	28.70		$	26.91
Income from Investment Operations:
Net investment income (loss)(2)		0.01			(0.07	)		(0.21	)		0.07
Net realized and unrealized gain (loss) on investments		5.29			5.25			3.33			5.29
Total from investment operations		5.30			5.18			3.12			5.36
Redemption Fees		0.00	(3)		0.00	(3)		0.02			0.00	(3)
Less Distributions:
From net investment income		(0.23	)		(0.19	)		(0.20	)		(0.28	)
From net realized gains		(0.07	)		(0.07	)		(0.07	)		(0.07	)
Total distributions		(0.30	)		(0.26	)		(0.27	)		(0.35	)
Net Asset Value, End of Period	$	31.92		$	31.63		$	31.57		$	31.92
Total Return(4)		19.65	%		19.36	%		10.94	%(5)		19.91	%
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	729,278		$	36,390		$	4,942		$	316,709
Ratio of operating expenses to average net assets:
Before expense reimbursement		1.71	%		1.96	%		2.47	%(6)		1.66	%
After expense reimbursement(7)		1.69	%		1.94	%		2.45	%(6)		1.49	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		0.00	%		(0.25	)%		(0.76	)%(6)		0.05	%
After expense reimbursement(7)		0.02	%		(0.23	)%		(0.75	)%(6)		0.22	%
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 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.

84

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
	$	21.02		$	20.89		$	21.00		$	18.69		$	18.63		$	20.48
		0.03			(0.03	)		0.08			0.12			0.02			0.00	(3)
		5.92			5.88			5.91			2.35			2.38			0.67
		5.95			5.85			5.99			2.47			2.40			0.67
		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		0.00	(3)		—
		(0.05	)		(0.03	)		(0.08	)		(0.01	)		(0.01	)		(0.02	)
		—			—			—			(0.13	)		(0.13	)		(0.13	)
		(0.05	)		(0.03	)		(0.08	)		(0.14	)		(0.14	)		(0.15	)
	$	26.92		$	26.71		$	26.91		$	21.02		$	20.89		$	21.00
		28.37	%		28.03	%		28.52	%		13.17	%		12.83	%		3.23	%(5)
	$	268,875		$	12,144		$	209,592		$	55,979		$	5,205		$	67,586
		1.83	%		2.08	%		1.78	%		1.93	%		2.16	%		1.77	%(6)
		1.58	%		1.83	%		1.38	%		1.66	%		1.94	%		1.59	%(6)
		(0.14	)%		(0.39	)%		(0.09	)%		0.18	%		(0.17	)%		(0.21	)%(6)
		0.11	%		(0.14	)%		0.31	%		0.45	%		0.06	%		(0.03	)%(6)
		N/A			N/A			N/A			N/A			N/A			N/A

See Notes to the Financial Statements.

85

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Financial Highlights

	The Kinetics Government Money Market Fund
	For the
	Six Months
	Ended			For the			For the			For the			For the			For the
	June 30,			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	2010			December 31,			December 31,			December 31,			December 31,			December 31,
	(Unaudited)			2009			2008			2007			2006			2005
PER SHARE DATA:(1)
Net Asset Value, Beginning of Period	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Income from Investment Operations:
Net investment income		—			—			0.01			0.04			0.04			0.02
Net realized and unrealized gain on investments		—			—			—			—			—			—
Total from investment operations		—			—			0.01			0.04			0.04			0.02
Less Distributions:
From net investment income		—			—			(0.01	)		(0.04	)		(0.04	)		(0.02	)
Total distributions		—			—			(0.01	)		(0.04	)		(0.04	)		(0.02	)
Net Asset Value, End of Period	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Total Return		0.00	%(3)		0.00	%		0.91	%		3.77	%		4.45	%		1.88	%
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	1,339		$	1,651		$	2,688		$	1,190		$	1,425		$	1,052
Ratio of operating expenses to average net assets:
Before expense reimbursement		4.11	%(4)		3.04	%		3.55	%		6.42	%		3.94	%		5.08	%
After expense reimbursement(2)		0.05	%(4)		0.06	%		0.76	%		0.98	%		0.22	%		1.06	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(4.06	)%(4)		(2.98	)%		(1.98	)%		(1.74	)%		0.73	%		(2.17	)%
After expense reimbursement(2)		(0.00	)%(4)		(0.00	)%		0.81	%		3.70	%		4.45	%		1.85	%
Portfolio turnover rate		N/A			N/A			N/A			N/A			N/A			N/A

(1)	Information presented relates to a share of capital stock outstanding for each period.
(2)	See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion.
(3)	Not annualized.
(4)	Annualized.

See Notes to the Financial Statements.

86

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87

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Financial Highlights

	The Market Opportunities Fund
	No Load Class			Advisor Class A			Advisor Class C			Institutional Class			No Load Class
	For the Six			For the Six			For the Six			For the Six			For the
	Months Ended			Months Ended			Months Ended			Months Ended			Year Ended
	June 30, 2010			June 30, 2010			June 30, 2010			June 30, 2010			December 31,
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			2009
PER SHARE DATA:(1)
Net Asset Value, Beginning of Period	$	10.84		$	10.80		$	10.69		$	10.86		$	7.22
Income from Investment Operations:
Net investment income (loss)		0.02	(2)		0.01	(2)		(0.02	)(2)		0.03	(2)		—	(2)(3)
Net realized and unrealized gain (loss) on investments		(0.97	)		(0.95	)		(0.94	)		(0.97	)		3.62
Payment by adviser(7)		—			—			—			—			—
Total from investment operations		(0.95	)		(0.94	)		(0.96	)		(0.94	)		3.62
Redemption Fees		0.00	(3)		0.00	(3)		0.00	(3)		—			0.01
Less Distributions:
From net investment income		—			—			—			—			(0.01	)
From net realized gains		—			—			—			—			—
Total distributions		—			—			—			—			(0.01	)
Net Asset Value, End of Period	$	9.89		$	9.86		$	9.73		$	9.92		$	10.84
Total Return(4)		(8.76	)%(5)		(8.70	)%(5)		(8.98	)%(5)		(8.66	)%(5)		50.21	%
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	33,965		$	14,477		$	5,190		$	45		$	41,254
Ratio of operating expenses to average net assets:
Before expense reimbursement		1.92	%(6)		2.17	%(6)		2.67	%(6)		1.87	%(6)		1.93	%
After expense reimbursement(7)		1.64	%(6)		1.89	%(6)		2.39	%(6)		1.44	%(6)		1.64	%
Ratio of net investment income (loss)to average net assets:
Before expense reimbursement		0.15	%(6)		(0.10	)%(6)		(0.60	)%(6)		0.20	%(6)		(0.25	)%
After expense reimbursement(7)		0.43	%(6)		0.18	%(6)		(0.32	)%(6)		0.63	%(6)		0.04	%
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.

88

The Market Opportunities Fund
Advisor Class A			Advisor Class C			Institutional Class			No Load Class			Advisor Class A			Advisor Class C			Institutional Class			No Load Class
For the			For the			For the			For the			For the			For the			May 19, 2008ˆ			For the
Year Ended			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,			December 31,
2009			2009			2009			2008			2008			2008			2008			2007
$	7.22		$	7.17		$	7.21		$	16.12		$	16.07		$	16.01		$	13.71		$	12.05
	(0.02	)(2)		(0.06	)(2)		0.02	(2)		0.11	(2)		0.08	(2)		0.02	(2)		0.08	(2)		0.04	(2)
	3.61			3.59			3.64			(9.02	)		(8.97	)		(8.91	)		(6.55	)		4.05
	—			—			—			0.06			0.06			0.06			0.06			—
	3.59			3.53			3.66			(8.85	)		(8.83	)		(8.83	)		(6.41	)		4.09
	0.00	(3)		0.00	(3)		—			0.01			0.00	(3)		0.00	(3)		—			0.01
	(0.01	)		(0.01	)		(0.01	)		(0.06	)		(0.02	)		(0.01	)		(0.09	)		(0.03	)
	—			—			—			—			—			—			—			—
	(0.01	)		(0.01	)		(0.01	)		(0.06	)		(0.02	)		(0.01	)		(0.09	)		(0.03	)
$	10.80		$	10.69		$	10.86		$	7.22		$	7.22		$	7.17		$	7.21		$	16.12
	49.66	%		49.17	%		50.70	%		(54.82	)%		(54.91	)%		(55.13	)%		(46.77	)%(5)		34.03	%
$	18,770		$	6,055		$	19		$	34,246		$	18,514		$	771		$	5		$	63,004
	2.18	%		2.68	%		1.88	%		1.82	%		2.07	%		2.57	%		1.82	%(6)		1.91	%
	1.89	%		2.39	%		1.44	%		1.66	%		1.91	%		2.41	%		1.44	%(6)		1.74	%
	(0.50	)%		(1.00	)%		(0.20	)%		0.78	%		0.53	%		0.03	%		0.94	%(6)		0.12	%
	(0.21	)%		(0.71	)%		0.24	%		0.94	%		0.69	%		0.19	%		1.32	%(6)		0.29	%
	N/A			N/A			N/A			N/A			N/A			N/A			N/A			N/A

See Notes to the Financial Statements.

89

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Financial Highlights

	The Market Opportunities Fund
	Advisor Class A			Advisor Class C			No Load Class			Advisor Class A
	For the			February 16, 2007ˆ			January 31, 2006ˆ			January 31, 2006ˆ
	Year Ended			through			through			through
	December 31,			December 31,			December 31,			December 31,
	2007			2007			2006			2006
PER SHARE DATA:(1)
Net Asset Value, Beginning of Period	$	12.04		$	12.99		$	10.00		$	10.00
Income from Investment Operations:
Net investment income (loss)		0.00	(2)		(0.05	)(2)		0.04			0.02
Net realized and unrealized gain (loss) on investments		4.04			3.07			2.05			2.05
Payment by adviser(7)		—			—			—			—
Total from investment operations		4.04			3.02			2.09			2.07
Redemption Fees		0.00	(3)		0.00	(3)		0.00	(3)		—
Less Distributions:
From net investment income		(0.01	)		—			(0.04	)		(0.03	)
From net realized gains		—			—			—			—
Total distributions		(0.01	)		—			(0.04	)		(0.03	)
Net Asset Value, End of Period	$	16.07		$	16.01		$	12.05		$	12.04
Total Return(4)		33.54	%		23.25	%(5)		20.85	%(5)		20.68	%(5)
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	43,907		$	8,790		$	7,994		$	9,591
Ratio of operating expenses to average net assets:
Before expense reimbursement		2.16	%		2.66	%(6)		2.68	%(6)		2.93	%(6)
After expense reimbursement(7)		1.99	%		2.49	%(6)		1.46	%(6)		1.71	%(6)
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(0.14	)%		(0.60	)%(6)		(0.76	)%(6)		(1.01	)%(6)
After expense reimbursement(7)		0.03	%		(0.43	)%(6)		0.46	%(6)		(0.21	)%(6)
Portfolio turnover rate		N/A			N/A			N/A			N/A

ˆ   Commencement of operations.

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

See Notes to the Financial Statements.

90

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91

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Financial Highlights

	The Water Infrastructure Fund
	No Load Class			Advisor Class A			Advisor Class C			Institutional Class
	For the Six			For the Six			For the Six			For the Six
	Months Ended			Months Ended			Months Ended			Months Ended
	June 30, 2010			June 30, 2010			June 30, 2010			June 30, 2010
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
PER SHARE DATA:(1)
Net Asset Value, Beginning of Period	$	8.86		$	8.82		$	8.71		$	8.90
Income from Investment Operations:
Net investment income (loss)(2)		0.06			0.04			0.02			0.06
Net realized and unrealized gain (loss) on investments		(1.34	)		(1.32	)		(1.29	)		(1.33	)
Total from investment operations		(1.28	)		(1.28	)		(1.27	)		(1.27	)
Redemption Fees		0.00	(3)		0.00	(3)		—			0.00	(3)
Less Distributions:
From net investment income(2)		—			—			—			—
From net realized gains		—			—			—			—
Total distributions		—			—			—			—
Net Asset Value, End of Period	$	7.58		$	7.54		$	7.44		$	7.63
Total Return(4)		(14.45	)%(5)		(14.51	)%(5)		(14.58	)%(5)		(14.27	)%(5)
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	7,079		$	11,991		$	2,845		$	4,910
Ratio of operating expenses to average net assets:
Before expense reimbursement		2.08	%(6)		2.33	%(6)		2.83	%(6)		2.03	%(6)
After expense reimbursement(7)		1.64	%(6)		1.89	%(6)		2.39	%(6)		1.44	%(6)
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		0.87	%(6)		0.62	%(6)		0.12	%(6)		0.92	%(6)
After expense reimbursement(7)		1.31	%(6)		1.06	%(6)		0.56	%(6)		1.51	%(6)
Portfolio turnover rate		N/A			N/A			N/A			N/A

ˆ   Commencement of operations.

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

See Notes to the Financial Statements.

92

The Water Infrastructure Fund
No Load Class			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			For the			For the			For the
Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
2009			2009			2009			2009			2008			2008			2008			2008
$	7.61		$	7.59		$	7.54		$	7.63		$	10.17		$	10.17		$	10.16		$	10.18
	0.04			0.02			(0.02	)		0.05			0.10			0.07			0.03			0.12
	1.21			1.21			1.19			1.23			(2.66	)		(2.65	)		(2.65	)		(2.67	)
	1.25			1.23			1.17			1.28			(2.56	)		(2.58	)		(2.62	)		(2.55	)
	0.00	(3)		0.00	(3)		0.00	(3)		0.01			0.00	(3)		0.00	(3)		—			0.00	(3)
	(0.00	)(3)		—			—			(0.02	)		—			—			—			—
	—			—			—			—			—			—			—			—
	(0.00	)(3)		—			—			(0.02	)		—			—			—			—
$	8.86		$	8.82		$	8.71		$	8.90		$	7.61		$	7.59		$	7.54		$	7.63
	16.46	%		16.21	%		15.52	%		16.94	%		(25.17	)%		(25.37	)%		(25.79	)%		(25.05	)%
$	7,176		$	10,339		$	2,700		$	2,905		$	6,598		$	7,661		$	1,571		$	251
	2.36	%		2.61	%		3.11	%		2.31	%		2.20	%		2.45	%		2.95	%		2.15	%
	1.64	%		1.89	%		2.39	%		1.44	%		1.65	%		1.90	%		2.40	%		1.45	%
	(0.26	)%		(0.51	)%		(1.01	)%		(0.21	)%		0.55	%		0.30	%		(0.20	)%		0.60	%
	0.46	%		0.21	%		(0.29	)%		0.66	%		1.10	%		0.85	%		0.35	%		1.30	%
	N/A			N/A			N/A			N/A			N/A			N/A			N/A			N/A

See Notes to the Financial Statements.

93

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Financial Highlights

	The Water Infrastructure Fund
	No Load Class			Advisor Class A			Advisor Class C			Institutional Class
	June 29, 2007ˆ			June 29, 2007ˆ			June 29, 2007ˆ			June 29, 2007ˆ
	through			through			through			through
	December 31,			December 31,			December 31,			December 31,
	2007			2007			2007			2007
PER SHARE DATA:(1)
Net Asset Value, Beginning of Period	$	10.00		$	10.00		$	10.00		$	10.00
Income from Investment Operations:
Net investment income (loss)(2)		0.06			0.05			0.02			0.06
Net realized and unrealized gain (loss) on investments		0.20			0.20			0.21			0.21
Total from investment operations		0.26			0.25			0.23			0.27
Redemption Fees		—			0.00	(3)		0.00	(3)		—
Less Distributions:
From net investment income(2)		(0.04	)		(0.03	)		(0.02	)		(0.04	)
From net realized gains		(0.05	)		(0.05	)		(0.05	)		(0.05	)
Total distributions		(0.09	)		(0.08	)		(0.07	)		(0.09	)
Net Asset Value, End of Period	$	10.17		$	10.17		$	10.16		$	10.18
Total Return(4)		2.64	%(5)		2.55	%(5)		2.33	%(5)		2.76	%(5)
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	2,385		$	2,459		$	1,201		$	103
Ratio of operating expenses to average net assets:
Before expense reimbursement		3.62	%(6)		3.87	%(6)		4.37	%(6)		3.58	%(6)
After expense reimbursement(7)		1.74	%(6)		1.99	%(6)		2.49	%(6)		1.54	%(6)
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(0.73	)%(6)		(0.98	)%(6)		(1.48	)%(6)		(0.69	)%(6)
After expense reimbursement(7)		1.15	%(6)		0.90	%(6)		0.40	%(6)		1.35	%(6)
Portfolio turnover rate		N/A			N/A			N/A			N/A

ˆ   Commencement of operations.

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

See Notes to the Financial Statements.

94

(This page intentionally left blank)

95

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Financial Highlights

	The Multi-Disciplinary Fund
	No Load Class			Advisor Class A			Advisor Class C
	For the			For the			For the			Institutional Class
	Six Months			Six Months			Six Months			For the Six
	Ended			Ended			Ended			Months Ended
	June 30, 2010			June 30, 2010			June 30, 2010			June 30, 2010
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
PER SHARE DATA:(1)
Net Asset Value, Beginning of Period	$	9.86		$	9.85		$	9.80		$	9.89
Income from Investment Operations:
Net investment income (loss)(2)		0.17			0.16			0.13			0.18
Net realized and unrealized gain (loss) on investments		(0.16	)		(0.16	)		(0.16	)		(0.15	)
Total from investment operations		0.01			(0.00	)		(0.03	)		0.03
Redemption Fees		0.00	(3)		—			—			—
Less Distributions:
From net investment income		(0.17	)		(0.16	)		(0.13	)		(0.18	)
From net realized gains		—			—			—			—
Total distributions		(0.17	)		(0.16	)		(0.13	)		(0.18	)
Net Asset Value, End of Period	$	9.70		$	9.69		$	9.64		$	9.74
Total Return(4)		0.09	%(5)		(0.01	)%(5)		(0.29	)%(5)		0.28	%(5)
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	1,486		$	179		$	119		$	102
Ratio of operating expenses to average net assets:
Before expense reimbursement		7.94	%(6)		8.19	%(6)		8.69	%(6)		7.89	%(6)
After expense reimbursement(7)		1.49	%(6)		1.74	%(6)		2.24	%(6)		1.29	%(6)
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(3.01	)%(6)		(3.26	)%(6)		(3.76	)%(6)		(2.96	)%(6)
After expense reimbursement(7)		3.44	%(6)		3.19	%(6)		2.69	%(6)		3.64	%(6)
Portfolio turnover rate		N/A			N/A			N/A			N/A

ˆ   Commencement of operations.

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

See Notes to the Financial Statements.

96

The Multi-Disciplinary Fund
												No Load Class			Advisor Class A			Advisor Class C			Institutional Class
No Load Class			Advisor Class A			Advisor Class C			Institutional Class			For The Period			For The Period			For The Period			For The Period
For the			For the			For the			For the			February 11, 2008ˆ			February 11, 2008ˆ			February 11, 2008ˆ			February 11, 2008ˆ
Year Ended			Year Ended			Year Ended			Year Ended			through			through			through			through
December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
2009			2009			2009			2009			2008			2008			2008			2008
$	8.22		$	8.20		$	8.17		$	8.23		$	10.00		$	10.00		$	10.00		$	10.00
	0.09			0.06			0.02			0.10			0.01			(0.01	)		(0.05	)		0.02
	1.79			1.80			1.78			1.81			(1.79	)		(1.79	)		(1.78	)		(1.79	)
	1.88			1.86			1.80			1.91			(1.78	)		(1.80	)		(1.83	)		(1.77	)
	—			—			—			—			—			—			—			—
	(0.08	)		(0.05	)		(0.01	)		(0.09	)		(0.00	)(3)		(0.00	)(3)		(0.00	)(3)		(0.00	)(3)
	(0.16	)		(0.16	)		(0.16	)		(0.16	)		—			—			—			—
	(0.24	)		(0.21	)		(0.17	)		(0.25	)		(0.00	)(3)		(0.00	)(3)		(0.00	)(3)		(0.00	)(3)
$	9.86		$	9.85		$	9.80		$	9.89		$	8.22		$	8.20		$	8.17		$	8.23
	22.90	%		22.73	%		22.03	%		23.25	%		(17.76	)%(5)		(17.97	)%(5)		(18.30	)%(5)		(17.65	)%(5)
$	938		$	103		$	105		$	101		$	99		$	84		$	88		$	82
	13.11	%		13.36	%		13.86	%		13.06	%		17.58	%(6)		17.83	%(6)		18.33	%(6)		17.53	%(6)
	1.49	%		1.74	%		2.24	%		1.29	%		1.49	%(6)		1.74	%(6)		2.24	%(6)		1.29	%(6)
	(10.69	)%		(10.94	)%		(11.44	)%		(10.64	)%		(15.99	)%(6)		(16.24	)%(6)		(16.74	)%(6)		(15.94	)%(6)
	0.93	%		0.68	%		0.18	%		1.13	%		0.10	%(6)		(0.15	)%(6)		(0.65	)%(6)		0.30	%(6)
	N/A			N/A			N/A			N/A			N/A			N/A			N/A			N/A

See Notes to the Financial Statements.

97

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Financial Highlights

	The Tactical Paradigm Fund
	No Load Class			Advisor Class A			Advisor Class C			Institutional Class
	For the Six			For the Six			For the Six			For the Six
	Months Ended			Months Ended			Months Ended			Months Ended
	June 30, 2010			June 30, 2010			June 30, 2010			June 30, 2010
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
PER SHARE DATA:(1)
Net Asset Value, Beginning of Period	$	10.00		$	10.00		$	10.00		$	10.00
Income from Investment Operations:
Net investment income (loss)(2)		(0.02	)		(0.03	)		(0.05	)		(0.01	)
Net realized and unrealized gain (loss) on investments		(0.76	)		(0.77	)		(0.77	)		(0.77	)
Total from investment operations		(0.78	)		(0.80	)		(0.82	)		(0.78	)
Redemption Fees		—			—			—			—
Less Distributions:
From net investment income		—			—			—			—
From net realized gains		—			—			—			—
Total distributions		—			—			—			—
Net Asset Value, End of Period	$	9.22		$	9.20		$	9.18		$	9.22
Total Return(3)		(7.80	)%(4)		(8.00	)%(4)		(8.20	)%(4)		(7.80	)%(4)
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	167		$	511		$	1,119
Ratio of operating expenses to average net assets:										$	19
Before expense reimbursement		8.54	%(5)		8.79	%(5)		9.29	%(5)		8.49	%(5)
After expense reimbursement(6)		2.29	%(5)		2.54	%(5)		3.04	%(5)		2.09	%(5)
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(6.57	)%(5)		(6.82	)%(5)		(7.32	)%(5)		(6.52	)%(5)
After expense reimbursement(6)		(0.32	)%(5)		(0.57	)%(5)		(1.07	)%(5)		(0.12	)%(5)
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)	The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares.
(4)	Not annualized.
(5)	Annualized.
(6)	See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion.

See Notes to the Financial Statements.

98

The Tactical Paradigm Fund
No Load Class			Advisor Class A			Advisor Class C			Institutional Class
December 31, 2009ˆ			December 31, 2009ˆ			December 31, 2009ˆ			December 31, 2009ˆ
through			through			through			through
December 31,			December 31,			December 31,			December 31,
2009			2009			2009			2009
$	10.00		$	10.00		$	10.00		$	10.00
	—			—			—			—
	—			—			—			—
	—			—			—			—
	—			—			—			—
	—			—			—			—
	—			—			—			—
	—			—			—			—
$	10.00		$	10.00		$	10.00		$	10.00
	0.00	%(4)		0.00	%(4)		0.00	%(4)		0.00	%(4)
$	20		$	20		$	20		$	20
	0.00	%(5)		0.00	%(5)		0.00	%(5)		0.00	%(5)
	0.00	%(5)		0.00	%(5)		0.00	%(5)		0.00	%(5)
	0.00	%(5)		0.00	%(5)		0.00	%(5)		0.00	%(5)
	0.00	%(5)		0.00	%(5)		0.00	%(5)		0.00	%(5)
	N/A			N/A			N/A			N/A

See Notes to the Financial Statements.

99

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

ALLOCATION OF PORTFOLIO ASSETS

June 30, 2010 (Unaudited)

The Internet Portfolio

The Global Portfolio

100

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

ALLOCATION OF PORTFOLIO ASSETS

June 30, 2010 (Unaudited) — (Continued)

The Paradigm Portfolio

The Medical Portfolio

101

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

ALLOCATION OF PORTFOLIO ASSETS

June 30, 2010 (Unaudited) — (Continued)

The Small Cap Opportunities Portfolio

The Kinetics Government Money Market Portfolio

102

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

ALLOCATION OF PORTFOLIO ASSETS

June 30, 2010 (Unaudited) — (Continued)

The Market Opportunities Portfolio

The Water Infrastructure Portfolio

103

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

ALLOCATION OF PORTFOLIO ASSETS

June 30, 2010 (Unaudited) — (Continued)

The Multi-Disciplinary Portfolio

104

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited)

Identifier	COMMON STOCKS — 99.02%	Shares		Value
	Administrative and Support Services — 0.41%
CTRP	Ctrip.com International Ltd. — ADR*ˆ		6,000	$	225,360
IILG	Interval Leisure Group, Inc.*		200		2,490
ID	L-1 Identity Solutions, Inc.*ˆ		20,000		163,800
					391,650
	Amusement, Gambling, and Recreation Industries — 0.38%
DIS	The Walt Disney Co.ˆ		11,619		365,999
	Asset Management — 0.66%
URB/A CN	Urbana Corp. — Class A*		240,000		315,626
GROW	US Global Investors, Inc. — Class A		48,000		266,400
WSDT	WisdomTree Investments, Inc.*ˆ		24,000		51,600
					633,626
	Broadcasting (except Internet) — 5.48%
LBTYK	Liberty Global, Inc. — Series C*ˆ		100,707		2,617,375
SNI	Scripps Networks Interactive — Class A		65,000		2,622,100
SIRI	Sirius XM Radio, Inc.*ˆ		46,000		43,677
					5,283,152
	Cable TV — 1.18%
TWC	Time Warner Cable, Inc.ˆ		21,754		1,132,948
	Computer and Electronic Product Manufacturing — 6.68%
AAPL	Apple, Inc.*		5,000		1,257,650
EMC	EMC Corporation*		140,000		2,562,000
JDSU	JDS Uniphase Corporation*ˆ		45,000		442,800
NTAP	NetApp, Inc.*ˆ		45,000		1,678,950
QCOM	QUALCOMM Inc.		15,000		492,600
					6,434,000

See Notes to the Financial Statements.

105

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	Credit Intermediation and Related Activities — 3.08%
AXP	American Express Companyˆ		10,000	$	397,000
BR	Broadridge Financial Solutions, Inc.		100,000		1,905,000
NTRS	Northern Trust Corp.ˆ		2,000		93,400
STT	State Street Corporation		4,000		135,280
TREE	Tree.com, Inc.*		10,033		63,409
WU	The Western Union Company		25,000		372,750
					2,966,839
	Data Processor — 3.02%
MA	Mastercard, Inc. — Class Aˆ		6,000		1,197,180
VRSK	Verisk Analytics, Inc. — Class A*		10,000		299,000
V	Visa, Inc. — Class Aˆ		20,000		1,415,000
					2,911,180
	Data Processing, Hosting and Related Services — 0.54%
ACXM	Acxiom Corporation*		30,150		442,904
CSGP	CoStar Group, Inc.*ˆ		2,000		77,600
					520,504
	Defense — 6.05%
CACI	CACI International, Inc. — Class A*		55,000		2,336,400
MANT	ManTech International Corporation — Class A*		82,000		3,490,740
					5,827,140
	Diversified Financials — 1.31%
NAT BB	Compagnie Nationale a Portefeuille		29,485		1,261,953
	Educational Services — 0.43%
APOL	Apollo Group, Inc. — Class A*ˆ		2,000		84,940
EDU	New Oriental Education & Technology Group, Inc. — ADR*ˆ		3,550		330,824
					415,764
	European Exchanges — 0.25%
DB1 GR	Deutsche Boerse AG		4,000		244,962
	Funds, Trusts, and Other Financial Vehicles — 0.18%
HHH	Internet HOLDRs Trustˆ		3,500		171,395

See Notes to the Financial Statements.

106

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	Gaming — 0.62%
200 HK	Melco International Development Limited*		1,500,000	$	597,157
	Global Exchanges — 6.37%
388 HK	Hong Kong Exchanges & Clearing Limited		110,000		1,731,883
JSE SJ	JSE Limited		60,000		513,616
8697 JP	Osaka Securities Exchange Co., Ltd.		144		614,828
SGX SP	Singapore Exchange Limited		620,000		3,274,351
					6,134,678
	Holding Company — 3.36%
GBLS BB	Groupe Bruxelles Lambert S.A. Strip VVPR*		2,000		22
IEP	Icahn Enterprises LP		18,000		665,100
LUK	Leucadia National Corporation*		132,000		2,575,320
					3,240,442
	Management of Companies and Enterprises — 0.20%
SATS	EchoStar Corporation — Class A*		10,000		190,800
	Motion Picture and Sound Recording Industries — 9.68%
DWA	DreamWorks Animation SKG, Inc. — Class A*ˆ		150,000		4,282,500
NFLX	Netflix, Inc.*ˆ		1,000		108,650
SINA	SINA Corporation*ˆ		26,000		916,760
TWX	Time Warner, Inc.		86,666		2,505,514
WMG	Warner Music Group Corp.*		310,000		1,506,600
					9,320,024
	Nonstore Retailers — 6.77%
EBAY	eBay, Inc.*		40,000		784,400
HSNI	HSN, Inc.*		200		4,800
IACI	IAC/InterActiveCorp*		60,740		1,334,458
OSTK	Overstock.com, Inc.*		1,000		18,070
RBA	Ritchie Bros. Auctioneers, Incorporatedˆ		162,000		2,951,640
SOHU	Sohu.com Inc.*ˆ		18,000		739,620
BID	Sotheby’sˆ		30,000		686,100
					6,519,088

See Notes to the Financial Statements.

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The Internet Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	Other Exchanges — 1.12%
ASX AU	ASX Ltd.		18,000	$	441,818
FTIS LI	Financial Technologies (India) Ltd. — GDR		144,000		587,520
NZX NZ	NZX Ltd.*		48,000		49,056
					1,078,394
	Other Information Services — 8.42%
BIDU	Baidu.com, Inc. — ADR*ˆ		97,000		6,603,760
EXPE	Expedia, Inc.ˆ		4,000		75,120
GOOG	Google Inc. — Class A*		3,200		1,423,840
NTES	NetEase.com Inc. — ADR*		200		6,342
					8,109,062
	Performing Arts, Spectator Sports, and Related Industries — 0.00%
LYV	Live Nation Entertainment, Inc.*ˆ		294		3,072
	Prepackaged Software — 0.64%
CHKP	Check Point Software Technologies Ltd.*ˆ		21,000		619,080
	Professional, Scientific, and Technical Services — 4.55%
JRJC	China Finance Online Company — ADR*ˆ		10,000		71,000
CTSH	Cognizant Technology Solutions Corporation — Class A*		39,000		1,952,340
INFY	Infosys Technologies Limited — ADRˆ		30,000		1,797,300
ICGE	Internet Capital Group, Inc.*		15,000		114,000
MWW	Monster Worldwide, Inc.*ˆ		2,000		23,300
MCO	Moody’s Corporationˆ		4,000		79,680
PCLN	Priceline.com Incorporated*ˆ		500		88,270
SAPE	Sapient Corporationˆ		20,000		202,800
UNTD	United Online, Inc.		10,000		57,600
					4,386,290

See Notes to the Financial Statements.

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The Internet Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	Publishing Industries (except Internet) — 15.75%
SSP	The E.W. Scripps Company — Class A*ˆ		898,065	$	6,672,623
MFE	McAfee, Inc.*		15,000		460,800
MSFT	Microsoft Corp.		15,000		345,150
ROVI	Rovi Corporation*ˆ		152,880		5,795,681
SYMC	Symantec Corporation*		30,000		416,400
WPO	The Washington Post Company — Class B		3,600		1,477,728
					15,168,382
	Rental and Leasing Services — 1.74%
CDCO	Comdisco Holding Company, Inc.*		194,400		1,671,840
	Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 5.16%
CLE LN	Climate Exchange PLC*		40,000		446,437
CME	CME Group, Inc.		7,300		2,055,315
CLST LN	Collins Stewart plc		4,000		4,527
ICE	IntercontinentalExchange Inc.*		13,000		1,469,390
LAB	LaBranche & Co. Inc.*		210,000		898,800
MKTX	MarketAxess Holdings, Inc.		6,000		82,740
TLPR LN	Tullett Prebon plc		4,000		18,879
					4,976,088
	Special Purpose Entity — 0.01%
ADPAO	Adelphia Contingent Value Vehicle CVV Servies ACC-4 Int*+		250,827		25
ADPAL	Adelphia Recovery Trust Ser ACC-6 E/F Int*+		4,878,645		4,878
					4,903
	Telecommunications — 2.86%
CHU	China Unicom (Hong Kong) Limited — ADRˆ		159,793		2,125,247
215 HK	Hutchison Telecommunications Hong Kong Holdings Limited		2,345,000		626,407
SNSH	Sunshine PCS Corporation — Class A*		149		4,060
					2,755,714

See Notes to the Financial Statements.

109

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The Internet Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	U.S. Equity Exchanges — 1.98%
NDAQ	The Nasdaq OMX Group*		54,470	$	968,476
NYX	NYSE Euronext		34,000		939,420
					1,907,896
	Warehousing and Storage — 0.14%
IRM	Iron Mountain Incorporatedˆ		6,000		134,760
	TOTAL COMMON STOCKS (cost $68,987,164)				95,378,782
		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
	RIGHTS — 1.53%	Shares
	Rental and Leasing Services — 1.53%
CDCOR	Comdisco Holding Company, Inc.
	Expiration Date: 12/31/2050 Strike Price: $1.00#*ˆ		12,240,699		1,468,884
	TOTAL RIGHTS (cost $3,253,775)				1,468,884
	SHORT-TERM INVESTMENTS — 0.48%
	Money Market Funds — 0.48%
FIUXX	First American Prime Obligations Fund — Class I, 0.00%b		463,604		463,604
	TOTAL SHORT-TERM INVESTMENTS (cost $463,604)				463,604

See Notes to the Financial Statements.

110

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The Internet Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier	INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING — 38.61%	Shares		Value
	Investment Companies — 38.61%
	Mount Vernon Securities Lending Trust — Prime Portfolio, 0.28%b		37,191,023	$	37,191,023
	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $37,191,023)				37,191,023
	TOTAL INVESTMENTS — 139.64% (cost $109,895,566)			$	134,502,293

Percentages are stated as a percent of net assets.

* — Non-income producing security.

ˆ — This security or a portion of this security was out on loan at June 30, 2010. Total loaned securities had a market value of $35,652,076 at June 30, 2010.

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

+ — Security is considered illiquid. The aggregate value of such securities is $4,903 or 0.01% of net assets.

b — The rate quoted is the annualized seven-day yield as of June 30, 2010.

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

See Notes to the Financial Statements.

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The Global Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited)

Identifier	COMMON STOCKS — 98.23%	Shares		Value
	Asset Management — 1.60%
8739 JP	SPARX Group Co., Ltd.*		800	$	72,929
	Banks — 4.71%
COMPARTO MM	Banco Compartamos SA de CV		8,000		41,580
BCH	Banco De Chile — ADRˆ		1,000		59,700
8309 JP	Chuo Mitsui Trust Holdings, Inc.		15,000		53,611
8053 JP	Sumitomo Corp.		5,900		59,857
					214,748
	Beverage and Tobacco Product Manufacturing — 0.72%
SMCB PM	San Miguel Corporation — Class B		21,700		32,769
	Capital Goods — 5.64%
8001 JP	ITOCHU Corporation		7,100		56,614
8002 JP	Marubeni Corporation		10,500		54,748
8058 JP	Mitsubishi Corporation		3,050		64,301
8031 JP	Mitsui & Co., Ltd.		4,700		56,029
2768 JP	Sojitz Corporation		16,000		25,335
					257,027
	Chemical Manufacturing — 10.04%
GSK	GlaxoSmithKline plc — ADRˆ		3,055		103,901
MRK GR	Merck KGaA		500		36,679
SNY	Sanofi-Aventis — ADR		2,940		88,376
SHPGY	Shire PLC — ADRˆ		1,920		117,850
SQM	Sociedad Quimica y Minera de Chile SA — ADR		2,000		65,220
SYT	Syngenta AG — ADRˆ		1,000		45,850
					457,876
	Commercial Banking — 0.53%
MFG	Mizuho Financial Group, Inc. — ADR		7,500		24,375

See Notes to the Financial Statements.

112

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The Global Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	Computer and Electronic Product Manufacturing — 4.98%
6954 JP	Fanuc Ltd.		200	$	22,937
MR	Mindray Medical International Limited — ADRˆ		2,300		72,266
8199 HK	Shandong Weigao Group Medical Polymer Company Limited — Class H		30,000		131,760
					226,963
	Construction — 0.07%
KWG GR	KHD Humboldt Wedag International Ltd.		572		3,050
	Consumer Retailing — 2.11%
BRK-U CN	The Brick Group Income Fund — Class A*		49,500		96,252
	Credit Intermediation and Related Activities — 5.10%
8511 JP	Japan Securities Finance Co., Ltd.		12,000		68,676
MTU	Mitsubishi UFJ Financial Group, Inc. — ADR		6,000		27,360
NBG	National Bank of Greece S.A. — ADR		4,500		9,765
8512 JP	Osaka Securities Finance Co. Ltd.		11,800		23,623
8403 JP	The Sumitomo Trust and Banking Co., Ltd.		20,000		103,376
					232,800
	Crop Production — 3.39%
CRESY	Cresud S.A.C.I.F.y A. — ADR		3,590		43,583
KWS GR	KWS Saat AG		300		44,224
VT CN	Viterra, Inc.*		10,000		66,601
					154,408
	Diversified Financials — 1.33%
2337 JP	Asset Managers Holdings Co., Ltd.*		200		18,119
8601 JP	Daiwa Securities Group Inc.		10,000		42,753
					60,872
	Energy — 0.25%
MAU FP	Establissements Maurel et Prom		1,000		11,236

See Notes to the Financial Statements.

113

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The Global Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	Food & Staples Retailing — 0.53%
CA FP	Carrefour SA		600	$	24,022
	Food and Beverage Stores — 0.37%
TSCO LN	Tesco plc		3,000		17,035
	Food Manufacturing — 4.50%
BARN SW	Barry Callebaut AG		100		62,300
CPF TB	Charoen Pokphand Foods Public Company Limited		100,000		62,673
1334 JP	Maruha Nichiro Holdings, Inc.		10,000		15,382
MEW-U CN	Menu Foods Income Fund — UT*		8,040		27,793
2897 JP	Nissin Foods Holdings Co., Ltd.		1,000		36,928
					205,076
	Food Services and Drinking Places — 0.86%
JFC PM	Jollibee Foods Corporation		17,700		26,919
LIQ-U CN	Liquor Stores Income Fund		870		12,390
					39,309
	Funds, Trusts, and Other Financial Vehicles — 4.71%
AER CN	Groupe Aeroplan, Inc.		7,100		59,092
JAZ-U CN	Jazz Air Income Fund		11,775		45,350
AFK	Market Vectors Africa Index ETF		1,000		27,520
VNM	Market Vectors Vietnam Index ETF		1,000		24,940
1615 JP	TOPIX Banks ETF		40,000		57,909
					214,811
	Global Exchanges — 2.42%
BURSA MK	Bursa Malaysia Bhd		22,700		49,362
8697 JP	Osaka Securities Exchange Co., Ltd.		10		42,696
PSE PM	Philippine Stock Exchange, Inc.		3,200		18,121
					110,179
	Household & Personal Products — 0.75%
8113 JP	Unicharm Corporation		300		34,033
	Machinery Manufacturing — 0.13%
KWG GR	KHD Humboldt Wedag International AG*		1,125		5,917

See Notes to the Financial Statements.

114

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The Global Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	Materials — 0.42%
3402 JP	Toray Industries, Inc.		4,000	$	19,363
	Merchant Wholesalers, Durable Goods — 1.24%
HEI GR	HeidelbergCement AG		502		24,046
HOLN VX	Holcim Ltd.		250		16,897
LG FP	Lafarge SA		285		15,709
					56,652
	Merchant Wholesalers, Nondurable Goods — 3.51%
AWB AU	AWB Limited*		75,000		57,765
NOBL SP	Noble Group Limited		23,182		28,329
OLAM SP	Olam International Limited		40,000		74,037
					160,131
	Mining (except Oil and Gas) — 5.98%
AAUKY	Anglo American PLC — ADR*		2,000		34,460
BVN	Cia de Minas Buenaventura S.A. — ADR		1,500		57,660
ELT AU	Elementos Limited*		7,424		812
HMY	Harmony Gold Mining Company Limited — ADR		1,000		10,570
ORE AU	Orocobre Ltd.*		30,000		42,929
RTP	Rio Tinto Plc — ADRˆ		1,200		52,320
TTT	Terra Nova Realty Corp.*		4,500		37,485
VALE	Vale SA — ADRˆ		1,500		36,525
					272,761
	Oil & Gas & Consumable Fuels — 5.33%
EC	Ecopetrol SA — ADRˆ		4,455		127,725
NPLNG IN	Petronet LNG Ltd. — PN*		60,000		100,312
PTBA IJ	PT Tambang Batubara Bukit Asam Tbk		8,000		15,223
					243,260
	Oil and Gas Extraction — 1.98%
ECA	EnCana Corporation		1,500		45,510
PRE CN	Pacific Rubiales Energy Corporation*		2,000		44,826
					90,336
	Other Information Services — 1.96%
CPU AU	Computershare Limited		10,000		89,310

See Notes to the Financial Statements.

115

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The Global Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	Pharmaceuticals & Biotechnology — 2.09%
CSL AU	CSL Limited		3,485	$	95,574
	Primary Metal Manufacturing — 2.68%
MT	ArcelorMittal Sa Luxembourg — ADRˆ		2,000		53,520
SIM	Grupo Simec, S.A. de C.V. — ADR*ˆ		3,000		21,570
PKX	POSCO — ADRˆ		500		47,160
					122,250
	Rail Transportation — 2.14%
CNI	Canadian National Railway Company		1,000		57,380
CP	Canadian Pacific Railway Limited		750		40,215
					97,595
	Real Estate — 2.85%
4321 JP	Kenedix, Inc.*		100		16,841
8802 JP	Mitsubishi Estate Company Ltd.		4,000		56,416
8801 JP	Mitsui Fudosan Co., Ltd.		4,000		56,597
					129,854
	Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 2.33%
111 HK	Cinda International Holdings Ltd.*		300,000		60,101
NMR	Nomura Holdings, Inc. — ADRˆ		8,500		46,325
					106,426
	Support Activities for Transportation — 3.11%
AIO AU	Asciano Group*		45,000		61,364
BXB AU	Brambles Limited		5,000		22,980
ICT PM	International Container Terminal Services, Inc.		60,600		41,180
WTE-U CN	Westshore Terminals Income Fund		1,000		16,260
					141,784

See Notes to the Financial Statements.

116

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Global Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	Telecommunications — 3.67%
AXIATA MK	Axiata Group Berhad*		44,000	$	53,276
OTE	Hellenic Telecommunications Organization SA — ADR		2,000		7,480
NTT	Nippon Telegraph & Telephone Corporation — ADR		2,500		50,850
PT	Portugal Telecom, SGPS, S.A. — ADRˆ		2,400		23,808
TI/A	Telecom Italia S.p.A. — ADR		3,500		31,850
					167,264
	Transportation — 1.47%
9706 JP	Japan Airport Terminal Co., Ltd.		4,500		67,030
	Transportation Equipment Manufacturing — 1.32%
TTM	Tata Motors Limited — ADRˆ		3,500		60,165
	Utilities — 1.41%
EOC	Empresa Nacional de Electricidad S.A. (Endesa-Chile) — ADR		750		34,635
ENI	Enersis S.A. — ADRˆ		1,500		29,865
					64,500
	TOTAL COMMON STOCKS (cost $4,570,501)				4,479,942
	PREFERRED STOCKS — 1.10%
	Banks — 1.10%
CIB	Bancolombia S.A. — ADRˆ		1,000		50,130
	Telecommunications — 0.00%
PTVIP.PK	PTV, Inc. — Series A, CLB		487		41
	TOTAL PREFERRED STOCKS (cost $47,055)				50,171

See Notes to the Financial Statements.

117

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The Global Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier	WARRANTS — 0.00%	Shares		Value
	Oil & Gas & Consumable Fuels — 0.00%
B4PM666	Maurel Et Prom Cw14 Warrant
	Expiration Date: 6/30/2014 Strike Price: $14.20		1,000	$	202
	TOTAL WARRANTS (cost $0)				202
	SHORT-TERM INVESTMENTS — 0.50%
	Money Market Funds — 0.50%
FIUXX	First American Prime Obligations Fund — Class I, 0.00%b		22,634		22,634
	TOTAL SHORT-TERM INVESTMENTS (cost $22,634)				22,634
	INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING — 18.12%
	Investment Companies — 18.12%
	Mount Vernon Securities Lending Trust —
	Prime Portfolio, 0.28%b		826,554		826,554
	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $826,554)				826,554
	TOTAL INVESTMENTS — 117.95% (cost $5,466,744)			$	5,379,503

Percentages are stated as a percent of net assets.

* — Non-income producing security.

ˆ — This security or a portion of this security was out on loan at June 30, 2010. Total loaned securities had a market value of $777,468 at June 30, 2010.

b — The rate quoted is the annualized seven-day yield as of June 30, 2010.

ADR — American Depository Receipt.

ETF — Exchange Traded Fund.

PN — Participatory Note.

See Notes to the Financial Statements.

118

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Paradigm Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited)

Identifier	COMMON STOCKS — 98.00%	Shares		Value
	Air Transportation — 0.74%
670 HK	China Eastern Airlines Corporation Limited — Class H*		7,345,000	$	3,216,485
1055 HK	China Southern Airlines Company Limited — Class H*		12,292,000		5,146,069
					8,362,554
	Asset Management — 4.75%
BLK	BlackRock, Inc.		31,042		4,451,423
BX	The Blackstone Group LPˆ		182,598		1,745,637
BAM	Brookfield Asset Management Inc. — Class Aˆ		1,466,894		33,181,142
CNS	Cohen & Steers, Inc.ˆ		156,331		3,242,305
EV	Eaton Vance Corp.ˆ		213,785		5,902,604
LM	Legg Mason, Inc.		96,038		2,691,945
PZN	Pzena Investment Management, Inc. — Class Aˆ		189,166		1,204,987
URB/A CN	Urbana Corp. — Class A*		410,478		539,824
GROW	US Global Investors, Inc. — Class Aˆ		73,246		406,515
806 HK	Value Partners Group Limited		639,000		397,995
WSDT	WisdomTree Investments, Inc.*ˆ		12,000		25,800
					53,790,177
	Beverage and Tobacco Product Manufacturing — 1.99%
168 HK	Tsingtao Brewery Co. Limited — Class H		4,774,000		22,530,725
	Broadcasting (except Internet) — 0.29%
SNI	Scripps Networks Interactive — Class A		79,923		3,224,094
	Cable TV — 0.15%
TWC	Time Warner Cable, Inc.ˆ		32,705		1,703,276
	Chemical Manufacturing — 2.83%
CCJ	Cameco Corporation		115,874		2,465,799
FRX	Forest Laboratories, Inc.*		100,691		2,761,954
NVO	Novo-Nordisk A/S — ADRˆ		55,734		4,515,569
SNY	Sanofi-Aventis — ADR		43,340		1,302,800
SIAL	Sigma-Aldrich Corp.ˆ		421,493		21,002,996
					32,049,118

See Notes to the Financial Statements.

119

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Paradigm Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	Coal Mining — 0.22%
1898 HK	China Coal Energy Company — Class H		1,965,000	$	2,495,711
	Credit Intermediation and Related Activities — 2.87%
BK	The Bank of New York Mellon Corp.		420,075		10,371,652
BR	Broadridge Financial Solutions, Inc.		55,740		1,061,847
CATY	Cathay General Bancorpˆ		78,305		808,891
CLFC	Center Financial Corporation*ˆ		127,093		654,529
EWBC	East West Bancorp, Inc.ˆ		66,264		1,010,526
FMCC	Federal Home Loan Mortgage Corporation*		5,786,010		2,389,622
FNMA	Federal National Mortgage Association*		5,199,380		1,780,788
HAFC	Hanmi Financial Corporation*ˆ		150,364		189,459
MTB	M&T Bank Corporationˆ		10,124		860,034
NARA	Nara Bancorp, Inc.*		121,998		1,028,443
NTRS	Northern Trust Corp.ˆ		19,058		890,008
SBKFF	State Bank of India — GDRˆ		58,360		5,785,110
STT	State Street Corporation		72,662		2,457,429
STU	The Student Loan Corporationˆ		14,322		344,874
UCBH	UCBH Holdings, Inc.ˆ		112,751		1,161
WU	The Western Union Company		119,374		1,779,867
WIBC	Wilshire Bancorp, Inc.ˆ		121,917		1,066,774
					32,481,014
	Data Processor — 1.06%
MA	Mastercard, Inc. — Class Aˆ		58,255		11,623,620
V	Visa, Inc. — Class Aˆ		4,503		318,587
					11,942,207
	Defense — 0.47%
CACI	CACI International, Inc. — Class A*ˆ		123,916		5,263,952
	European Exchanges — 0.55%
BME SM	Bolsas y Mercados Espanoles		32,900		720,553
DB1 GR	Deutsche Boerse AG		89,462		5,478,694
					6,199,247

See Notes to the Financial Statements.

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Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	Funds, Trusts, and Other Financial Vehicles — 0.82%
GDX	Market Vectors Gold Miners ETF		178,938	$	9,297,618
	Gaming — 4.61%
LVS	Las Vegas Sands Corp.*ˆ		551,188		12,203,302
200 HK	Melco International Development Limited*		1,960,000		780,285
MGM	MGM Mirage*ˆ		799,134		7,703,652
WYNN	Wynn Resorts Limitedˆ		412,980		31,497,985
					52,185,224
	General Merchandise Stores — 0.75%
SHLD	Sears Holdings Corporation*ˆ		130,499		8,436,760
	Global Exchanges — 11.14%
388 HK	Hong Kong Exchanges & Clearing Limited		4,761,740		74,970,697
JSE SJ	JSE Limited		494,943		4,236,841
8697 JP	Osaka Securities Exchange Co., Ltd.		4,614		19,700,107
SGX SP	Singapore Exchange Limited		5,136,003		27,124,321
					126,031,966
	Holding Company — 8.69%
BRK/A	Berkshire Hathaway Inc. — Class A*		255		30,600,000
BRK/B	Berkshire Hathaway Inc. — Class B*ˆ		206,066		16,421,399
GBLS BB	Groupe Bruxelles Lambert S.A. Strip VVPR*		23,520		259
IEP	Icahn Enterprises LPˆ		370,735		13,698,658
LUK	Leucadia National Corporation*ˆ		1,906,572		37,197,220
WSC	Wesco Financial Corporation		1,255		405,616
					98,323,152
	Insurance — 0.66%
PWF CN	Power Financial Corporation		291,835		7,478,520

See Notes to the Financial Statements.

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The Paradigm Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	Insurance Carriers and Related Activities — 4.91%
ABK	Ambac Financial Group, Inc.*ˆ		1,017,862	$	681,967
AGO	Assured Guaranty Ltd.ˆ		846,036		11,226,898
LFC	China Life Insurance Co., Limited — ADRˆ		192,708		12,564,562
2628 HK	China Life Insurance Co., Limited — Class H		427,000		1,900,057
MKL	Markel Corporation*ˆ		38,918		13,232,120
MBI	MBIA Inc.*ˆ		583,100		3,271,191
2328 HK	PICC Property & Casualty Co. Ltd. — Class H*		2,670,000		2,571,627
2318 HK	Ping An Insurance Group Company of China Limited — Class H		1,227,245		10,141,804
					55,590,226
	Mining (except Oil and Gas) — 5.56%
AAUKY	Anglo American PLC — ADR*ˆ		1,375,219		23,695,023
FNV CN	Franco-Nevada Corporation		970,262		29,530,307
RTP	Rio Tinto Plc — ADRˆ		190,608		8,310,509
1171 HK	Yanzhou Coal Mining Company Limited — Class H		716,000		1,403,146
					62,938,985
	Motion Picture and Sound Recording Industries — 1.76%
DWA	DreamWorks Animation SKG, Inc. — Class A*ˆ		286,229		8,171,838
TWX	Time Warner, Inc.		166,210		4,805,131
WMG	Warner Music Group Corp.*ˆ		1,437,256		6,985,064
					19,962,033
	Nonstore Retailers — 0.46%
BID	Sotheby’sˆ		225,653		5,160,684

See Notes to the Financial Statements.

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The Paradigm Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	Oil and Gas Extraction — 12.60%
CNQ	Canadian Natural Resources Ltd.ˆ		819,546	$	27,233,514
COS-U CN	Canadian Oil Sands Trustˆ		1,285,101		32,581,724
CVE	Cenovus Energy Inc.		235,138		6,064,209
CEO	CNOOC Limited — ADRˆ		37,617		6,401,285
EP	El Paso Corporation		574,273		6,380,173
ECA	EnCana Corporation		235,135		7,133,996
OGZPY	Gazprom OAO — ADRˆ		328,027		6,170,188
IMO	Imperial Oil Ltd.ˆ		208,492		7,593,279
NXY	Nexen Inc.		388,470		7,641,205
PWE	Penn West Energy Trustˆ		318,810		6,063,766
PBR	Petroleo Brasileiro S.A. — ADRˆ		32,307		1,108,776
SD	SandRidge Energy, Inc.*ˆ		107,717		627,990
SU	Suncor Energy, Inc.ˆ		933,512		27,482,593
WZGRF	WesternZagros Resources Ltd.*		291,462		128,681
					142,611,379
	Other Exchanges — 1.51%
ASX AU	ASX Ltd.		544,705		13,370,032
FTIS LI	Financial Technologies (India) Ltd. — GDR		240,908		982,905
X CN	TMX Group Inc.		105,555		2,755,506
					17,108,443
	Plastics and Rubber Products Manufacturing — 0.77%
JAH	Jarden Corporation		325,121		8,736,001
	Pipeline Transportation — 0.09%
135 HK	Kunlun Energy Co. Ltd.		841,200		1,073,794
	Port and Harbor Operations — 0.03%
3382 HK	Tianjin Port Development Holdings Ltd.*		1,559,000		344,358
	Publishing Industries (except Internet) — 0.49%
SSP	The E.W. Scripps Company — Class A*ˆ		43,809		325,501
WPO	The Washington Post Company — Class Bˆ		12,774		5,243,471
					5,568,972

See Notes to the Financial Statements.

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The Paradigm Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	Rail Transportation — 3.05%
CSX	CSX Corp.ˆ		250,875	$	12,450,926
NSC	Norfolk Southern Corp.ˆ		200,959		10,660,875
UNP	Union Pacific Corp.		163,346		11,354,181
					34,465,982
	Real Estate — 5.82%
ALX	Alexander’s, Inc.ˆ		5,355		1,622,137
1 HK	Cheung Kong (Holdings) Limited		1,096,240		12,726,514
FCE/A	Forest City Enterprises, Inc. — Class A*ˆ		855,221		9,681,102
10 HK	Hang Lung Group Limited		212,500		1,154,342
12 HK	Henderson Land Development Company Limited		2,734,000		16,150,715
823 HK	The Link REIT		4,685,000		11,672,039
JOE	The St. Joe Company*ˆ		150,653		3,489,124
TPL	Texas Pacific Land Trust		148,325		3,902,431
VNO	Vornado Realty Trustˆ		27,518		2,007,438
4 HK	Wharf Holdings Ltd.		708,000		3,468,672
					65,874,514
	Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 6.70%
CLE LN	Climate Exchange PLC*		58,968		658,137
CME	CME Group, Inc.ˆ		92,269		25,978,337
ICE	IntercontinentalExchange Inc.*ˆ		301,082		34,031,299
LAB	LaBranche & Co. Inc.*ˆ		1,036,477		4,436,121
LSE LN	London Stock Exchange Group plc		1,268,553		10,680,257
					75,784,151
	Support Activities for Transportation — 3.67%
995 HK	Anhui Expressway Co. Ltd. — Class H		3,403,000		1,887,909
694 HK	Beijing Capital International Airport Company Limited — Class H		28,891,000		17,141,150
357 HK	Hainan Meilan International Airport Company Limited — Class H		2,722,720		3,007,023
177 HK	Jiangsu Expressway Company Ltd. — Class H		3,943,500		3,590,571
548 HK	Shenzhen Expressway Company Limited — Class H		5,893,000		2,610,904

See Notes to the Financial Statements.

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The Paradigm Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
107 HK	Sichuan Expressway Co. Limited — Class H		15,912,000	$	8,766,323
576 HK	Zhejiang Expressway Co., Limited — Class H		4,817,000		4,466,314
					41,470,194
	Telecommunications — 1.14%
CHL	China Mobile Limited — ADRˆ		112,287		5,548,101
CHU	China Unicom (Hong Kong) Limited — ADRˆ		507,343		6,747,662
762 HK	China Unicom Limited		408,000		552,251
					12,848,014
	U.S. Equity Exchanges — 3.48%
NDAQ	The Nasdaq OMX Group*ˆ		1,068,253		18,993,538
NYX	NYSE Euronextˆ		738,532		20,405,639
					39,399,177
	Utilities — 3.37%
BIP	Brookfield Infrastructure Partners LPˆ		69,356		1,100,680
CPN	Calpine Corporation*ˆ		1,439,807		18,314,345
991 HK	Datang International Power Generation Company Limited — Class H		20,592,000		8,409,323
DYN	Dynegy Inc.*ˆ		272,006		1,047,223
NRG	NRG Energy, Inc.*ˆ		69,798		1,480,416
RRI	RRI Energy, Inc.*ˆ		2,055,864		7,791,724
					38,143,711
	TOTAL COMMON STOCKS (cost $1,153,457,500)				1,108,875,933

See Notes to the Financial Statements.

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The Paradigm Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

		Principal
Identifier	ESCROW NOTES — 0.00%	Amount		Value
	Special Purpose Entity — 0.00%
13199ACT6	Calpine Corporation (converted from Capline Corp., 8.750%, 07/15/2008)*+	$	200,000	$	0
13199ACY5	Calpine Corporation (converted from Capline Corp., 8.500%, 02/15/2011)*+		1,000,000		0
13199ACU3	Calpine Corporation (converted from Capline Corp., 7.875%, 04/01/2008)*+		200,000		0
13199ACV1	Calpine Corporation (converted from Capline Corp., 7.625%, 04/15/2050)*+		100,000		0
13199ADC2	Calpine Corporation (converted from Capline Corp., 4.750%, 11/15/2023)*+		42,200,000		0
	TOTAL ESCROW NOTES (cost $0)				0
	CONVERTIBLE BONDS — 1.11%
	Real Estate — 1.11%
029169AA7	American Real Estate 4.000%, 08/15/2013		10,000,000		8,750,000
345550AK3	Forest City Enterprises, Inc. 3.625%, 10/15/2014		4,000,000		3,797,500
	TOTAL CONVERTIBLE BONDS (cost $10,188,389)				12,547,500

See Notes to the Financial Statements.

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The Paradigm Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

		Principal
Identifier	CORPORATE BONDS — 0.00%	Amount		Value
	Credit Intermediation and Related Activities — 0.00%
317928AA7	FINOVA Group, Inc. 7.500%, 11/15/2010 Acquired 10/19/2006-3/29/2007 at $7,902,157 (Default Effective 4/29/2005)	$	9,503,880	$	39,916
	TOTAL CORPORATE BONDS (cost $7,355,131)				39,916
	RIGHTS — 0.00%	Shares
	Credit Intermediation and Related Activities — 0.00%
4104951RT	Hanmi Financial Corporation Rights Expiration Date: 7/12/2010 Strike Price: $1.20*+#		150,364		0
	TOTAL RIGHTS (cost $612,130)				0
	WARRANTS — 0.01%
	Real Estate — 0.01%
B563405	Henderson Land Development Company Limited Expiration Date: 6/01/2011 Strike Price: $58.00		569,400		96,522
	TOTAL WARRANTS (cost $0)				96,522
SHORT-TERM INVESTMENTS — 1.25%
	Money Market Funds — 1.25%
FIUXX	First American Prime Obligations Fund — Class I, 0.00%b		14,173,360		14,173,360
	TOTAL SHORT-TERM INVESTMENTS (cost $14,173,360)				14,173,360

See Notes to the Financial Statements.

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The Paradigm Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

	INVESTMENTS PURCHASED
	WITH THE CASH PROCEEDS	Shares or
	FROM SECURITIES	Principal
Identifier	LENDING — 29.73%	Amount		Value
	Investment Companies — 24.25%
	Mount Vernon Securities Lending Trust — Prime Portfolio, 0.28%b		274,354,484	$	274,354,484
	Repurchase Agreements — 5.48%
	Credit Suisse Repurchase Agreement 0.00%, dated 6/30/2010, due 07/01/2010 Repurchase price $62,000,000c	$	62,000,000		62,000,000
	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $336,354,484)				336,354,484
	TOTAL INVESTMENTS — 130.10% (cost $1,522,140,994)			$	1,472,087,715

Percentages are stated as a percent of net assets.

* — Non-income producing security.

ˆ — This security or a portion of this security was out on loan at June 30, 2010. Total loaned securities had a market value of $317,589,547 at June 30, 2010.

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

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

b — The rate quoted is the annualized seven-day yield as of June 30, 2010.

c   See Repurchase Agreements disclosure in the Notes to Financial Statements for the Kinetics Portfolios Trust.

ADR — American Depository Receipt.

ETF — Exchange Traded Fund.

GDR — Global Depository Receipt.

See Notes to the Financial Statements.

128

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The Medical Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited)

Identifier	COMMON STOCKS — 93.00%	Shares		Value
	Ambulatory Health Care Services — 0.01%
AVXT	AVAX Technologies, Inc.*		50,000	$	3,250
	Chemical Manufacturing — 3.44%
LONN VX	Lonza Group AG		15,000		1,005,474
	Computer and Electronic Product Manufacturing — 0.01%
TGX	Theragenics Corporation*		2,000		2,300
	Funds, Trusts, and Other Financial Vehicles — 0.02%
IBLTZ	IMPATH Bankruptcy Liquidating Trust — Class A*		26,000		6,768
	Pharmaceutical and Medicine Manufacturing — 1.68%
4508 JP	Mitsubishi Tanabe Pharma Corporation		32,000		490,052
	Pharmaceuticals & Biotechnology — 84.19%
ABT	Abbott Laboratories		28,000		1,309,840
ATLN VX	Actelion Ltd.*		10,000		375,748
AEZS	AEterna Zentaris Inc.*ˆ		102,500		117,875
ALKS	Alkermes, Inc.*		31,000		385,950
AGEN	Antigenics, Inc.*		892		723
ARNA	Arena Pharmaceuticals, Inc.*ˆ		45,000		138,150
AZN	AstraZeneca PLC — ADRˆ		17,000		801,210
ATB CN	Atrium Innovations Inc.*ˆ		4,884		70,194
BIIB	Biogen Idec, Inc.*		37,250		1,767,512
BPAX	BioSante Pharmaceuticals, Inc.*ˆ		13,476		23,718
BMY	Bristol-Myers Squibb Company		48,000		1,197,120
CLDX	Celldex Therapeutics Inc.*ˆ		26,294		119,901
CEPH	Cephalon, Inc.*ˆ		21,000		1,191,750
1093 HK	China Pharmaceutical Group Limited		1,640,000		991,974
CBST	Cubist Pharmaceuticals, Inc.*ˆ		38,000		782,800
DCGNQ	deCODE genetics, Inc.*+		11,000		77
DNDN	Dendreon Corporation*ˆ		29,000		937,570
LLY	Eli Lilly & Company		36,000		1,206,000
EPCT	EpiCept Corporation*ˆ		680		694
GENZ	Genzyme Corporation*ˆ		28,538		1,448,874
GSK	GlaxoSmithKline plc — ADRˆ		37,673		1,281,259
HGSI	Human Genome Sciences, Inc.*ˆ		21,000		475,860
IMGN	ImmunoGen, Inc.*ˆ		14,000		129,780

See Notes to the Financial Statements.

129

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The Medical Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
ISIS	Isis Pharmaceuticals, Inc.*ˆ		27,000	$	258,390
ISA CN	Isotechnika Pharma Inc.*		40,000		8,642
JNJ	Johnson & Johnson		30,000		1,771,800
LIFE	Life Technologies Corporation*		36,000		1,701,000
MAXY	Myrexis, Inc.*		30,000		165,900
MMRF	MMR Information Systems Inc.*ˆ		43,000		6,880
MYRX	Myriad Pharmaceuticals Inc.*ˆ		63,000		236,880
COX FP	NicOx SA*		41,535		134,190
NVS	Novartis AG — ADRˆ		35,000		1,691,200
ONTY	Oncothyreon, Inc.*ˆ		28,333		94,066
PTIE	Pain Therapeutics, Inc.*		38,000		211,280
PFE	Pfizer, Inc.		56,000		798,560
PGNX	Progenics Pharmaceuticals, Inc.*ˆ		65,200		357,296
SNY	Sanofi-Aventis — ADR		38,000		1,142,280
SVNT	Savient Pharmaceuticals Inc.*ˆ		25,000		315,000
SCR	Simcere Pharmaceutical Group — ADR*ˆ		58,000		480,240
TGEN	Targeted Genetics Corp.*		1,000		380
TELK	Telik, Inc.*ˆ		116,000		90,480
VICL	Vical Incorporated*ˆ		82,500		255,750
VPHM	ViroPharma Incorporated*		10,000		112,100
					24,586,893
	Professional, Scientific, and Technical Services — 3.65%
AFFX	Affymetrix, Inc.*		134,000		790,600
AMRI	Albany Molecular Research, Inc.*		53,000		274,010
					1,064,610
	TOTAL COMMON STOCKS (cost $30,050,297)				27,159,347
		Principal
	ESCROW NOTES — 0.01%	Amount
	Special Purpose Entity — 0.01%
053ESC992	Avigen Inc. Escrow*+	$	51,000		2,550
	TOTAL ESCROW NOTES (cost $0)				2,550

See Notes to the Financial Statements.

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The Medical Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier	RIGHTS — 0.05%	Shares		Value
	Funds, Trusts, and Other Financial Vehicles — 0.05%
LGNYZ	Ligand Pharmaceuticals Incorporated General Contingent Value Right*		44,000	$	3,080
LGNXZ	Ligand Pharmaceuticals Incorporated Glucagon Contingent Value Right*		44,000		2,200
LGNDZ	Ligand Pharmaceuticals Incorporated Roche Contingent Value Right*		44,000		5,720
LGNZZ	Ligand Pharmaceuticals Incorporated TR Beta Contingent Value Right*		44,000		2,420
	TOTAL RIGHTS (cost $0)				13,420
SHORT-TERM INVESTMENTS — 5.02%
	Money Market Funds — 5.02%
FIUXX	First American Prime Obligations Fund — Class I, 0.00%b		740,438		740,438
FFCXX	First American Tax Free Obligations Fund — Class Y, 0.00%b		726,631		726,631
	TOTAL SHORT-TERM INVESTMENTS (cost $1,467,069)				1,467,069
	INVESTMENTS PURCHASED WITH
	THE CASH PROCEEDS FROM
	SECURITIES LENDING — 39.28%
	Investment Companies — 39.28%
	Mount Vernon Securities Lending Trust — Prime Portfolio, 0.28%b		11,469,644		11,469,644
	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $11,469,644)				11,469,644
	TOTAL INVESTMENTS — 137.36% (cost $42,987,010)			$	40,112,030

See Notes to the Financial Statements.

131

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The Medical Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Percentages are stated as a percent of net assets.

* — Non-income producing security.

ˆ — This security or a portion of this security was out on loan at June 30, 2010. Total loaned securities had a market value of $10,620,566 at June 30, 2010.

+ — Security is considered illiquid. The aggregate value of such securities is $2,627 or 0.01% of net assets.

b — The rate quoted is the annualized seven-day yield as of June 30, 2010.

ADR — American Depository Receipt.

See Notes to the Financial Statements.

132

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited)

Identifier	COMMON STOCKS — 99.96%	Shares		Value
	Air Transportation — 5.77%
CEA	China Eastern Airlines Corporation Limited — ADR*ˆ		29,514	$	1,266,150
670 HK	China Eastern Airlines Corporation Limited — Class H*		3,383,000		1,481,467
ZNH	China Southern Airlines Company Limited — ADR*ˆ		69,494		1,438,526
1055 HK	China Southern Airlines Company Limited — Class H*		9,426,000		3,946,212
					8,132,355
	Asset Management — 5.28%
BNBMF	BAM Investments Ltd.*		125,540		1,355,580
CNS	Cohen & Steers, Inc.ˆ		83,623		1,734,341
EV	Eaton Vance Corp.		35,485		979,741
PZN	Pzena Investment Management, Inc. — Class A		103,410		658,722
SII CN	Sprott, Inc.		1,680		5,650
URB/A CN	Urbana Corp. — Class A*		481,071		632,661
GROW	US Global Investors, Inc. — Class A		103,110		572,261
806 HK	Value Partners Group Limited		608,000		378,687
WSDT	WisdomTree Investments, Inc.*ˆ		524,420		1,127,503
					7,445,146
	Beverage and Tobacco Product Manufacturing — 6.74%
168 HK	Tsingtao Brewery Co. Limited — Class H		2,011,700		9,494,147
	Chemical Manufacturing — 0.47%
1093 HK	China Pharmaceutical Group Limited		1,105,000		668,373
	Commercial Banking — 1.26%
BLBD LI	BLOM Bank s.a.l. — GDR		19,924		1,773,236
	Credit Intermediation and Related Activities — 3.31%
BR	Broadridge Financial Solutions, Inc.		73,300		1,396,365
CATY	Cathay General Bancorpˆ		49,252		508,773
CLFC	Center Financial Corporation*ˆ		85,100		438,265
EWBC	East West Bancorp, Inc.		31,794		484,859
FBOD	First Bank of Delaware*		80,025		136,042
HAFC	Hanmi Financial Corporation*ˆ		106,923		134,723
NARA	Nara Bancorp, Inc.*		85,910		724,221

See Notes to the Financial Statements.

133

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The Small Cap Opportunities Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
PFBC	Preferred Bank Los Angeles*ˆ		46,803	$	97,818
UCBH	UCBH Holdings, Inc.*		182,396		1,879
WIBC	Wilshire Bancorp, Inc.ˆ		83,859		733,767
					4,656,712
	Defense — 1.12%
CACI	CACI International, Inc. — Class A*		17,988		764,130
MANT	ManTech International Corporation — Class A*		19,275		820,537
					1,584,667
	Food Services and Drinking Places — 0.42%
OCX CN	Onex Corporation		24,860		597,593
	Gaming — 0.57%
200 HK	Melco International Development Limited*		1,999,000		795,811
	Global Exchanges — 9.87%
JSE SJ	JSE Limited		403,739		3,456,111
8697 JP	Osaka Securities Exchange Co., Ltd.		896		3,825,595
SGX SP	Singapore Exchange Limited		1,254,080		6,623,062
					13,904,768
	Holding Companies — 7.00%
IEP	Icahn Enterprises LP		260,424		9,622,667
WSC	Wesco Financial Corporation		746		241,107
					9,863,774
	Insurance Carriers and Related Activities — 1.82%
GLRE	Greenlight Capital Re, Ltd. — Class A*ˆ		51,000		1,284,690
MBI	MBIA Inc.*ˆ		226,900		1,272,909
					2,557,599
	Mining (except Oil and Gas) — 6.09%
FNV CN	Franco-Nevada Corporation		186,541		5,677,449
GLW CN	Gold Wheaton Gold Corporation*		40,450		93,853
IMN CN	Inmet Mining Corporation		71,140		2,816,731
					8,588,033

See Notes to the Financial Statements.

134

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	Motion Picture and Sound Recording Industries — 5.42%
DWA	DreamWorks Animation SKG, Inc. — Class A*ˆ		114,144	$	3,258,811
WMG	Warner Music Group Corp.*		901,501		4,381,295
					7,640,106
	Nonstore Retailers — 1.66%
RBA	Ritchie Bros. Auctioneers, Incorporatedˆ		15,077		274,703
BID	Sotheby’sˆ		90,299		2,065,138
					2,339,841
	Oil and Gas Extraction — 1.46%
SEMUF	Siem Industries Inc.*		29,342		1,291,048
UEYCF	UTS Energy Corporation*ˆ		392,632		759,778
					2,050,826
	Other Exchanges — 0.94%
FTIS LI	Financial Technologies (India) Ltd. — GDR		208,390		850,231
NZX NZ	NZX Ltd.*		462,420		472,589
					1,322,820
	Pipeline Transportation — 2.40%
135 HK	Kunlun Energy Co., Ltd.		1,303,000		1,663,283
NEGI	National Energy Group, Inc.*		207,595		981,924
PVG	Penn Virginia GP Holdings LPˆ		40,634		740,352
SUG	Southern Union Company		1		11
					3,385,570
	Plastics and Rubber Products Manufacturing — 2.81%
JAH	Jarden Corporation		147,160		3,954,189
	Port and Harbor Operations — 0.07%
3382 HK	Tianjin Port Development Holdings Ltd.*		460,000		101,607
	Publishing Industries (except Internet) — 1.03%
ROVI	Rovi Corporation*ˆ		34,454		1,306,151
VALU	Value Line, Inc.ˆ		7,615		138,136
					1,444,287

See Notes to the Financial Statements.

135

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	Rail Transportation — 0.01%
525 HK	Guangshen Railway Company Limited — Class H		58,000	$	20,260
	Real Estate — 6.49%
ALX	Alexander’s, Inc.ˆ		6,369		1,929,297
BLMC	Biloxi Marsh Lands Corporation		100		1,225
KEWL	Keweenaw Land Association Ltd.		190		34,010
823 HK	The Link REIT		841,000		2,095,237
TPL	Texas Pacific Land Trust		193,503		5,091,064
					9,150,833
	Rental and Leasing Services — 0.05%
CDCO	Comdisco Holding Company, Inc.*		7,560		65,016
	Restaurants — 0.50%
WEN	Wendy’s/Arby’s Group, Inc. — Class A		177,496		709,984
	Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 6.20%
CLE LN	Climate Exchange PLC*		49,960		557,599
ICE	IntercontinentalExchange Inc.*		16,873		1,907,155
JEF	Jefferies Group, Inc.ˆ		282,771		5,960,813
LAB	LaBranche & Co. Inc.*		67,582		289,251
RHJI BB	RHJ International*		800		5,978
SWS	SWS Group, Inc.		1,000		9,500
					8,730,296
	Specialty Trade Contractors — 0.27%
PWR	Quanta Services, Inc.*ˆ		18,742		387,022
	Support Activities for Transportation — 12.93%
694 HK	Beijing Capital International Airport Company Limited — Class H		9,014,000		5,348,043
357 HK	Hainan Meilan International Airport Company Limited — Class H		3,265,000		3,605,928
548 HK	Shenzhen Expressway Company Limited — Class H		539,000		238,805
107 HK	Sichuan Expressway Co. Limited — Class H		15,630,100		8,611,017

See Notes to the Financial Statements.

136

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
576 HK	Zhejiang Expressway Co., Limited — Class H		451,000	$	418,166
					18,221,959
	Telecommunications — 0.04%
CIBY	CIBL, Inc.		18		7,200
LICT	Lynch Interactive Corporation*		16		39,360
SNSH	Sunshine PCS Corporation — Class A*		208		5,668
					52,228
	U.S. Equity Exchanges — 0.82%
NDAQ	The Nasdaq OMX Group*		65,113		1,157,709
	Utilities — 4.34%
CPN	Calpine Corporation*		162,860		2,071,579
DYN	Dynegy Inc.*ˆ		14,473		55,721
1071 HK	Huadian Power International Corporation — Class H*		800,000		195,200
PICO	PICO Holdings, Inc.*		28,851		864,664
RRI	RRI Energy, Inc.*		773,929		2,933,191
					6,120,355
	Waste Management and Remediation Services — 2.80%
CVA	Covanta Holding Corporation*ˆ		237,589		3,941,601
	TOTAL COMMON STOCKS (cost $135,747,595)				140,858,723
		Principal
	ESCROW NOTES — 0.00%	Amount
	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

See Notes to the Financial Statements.

137

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

		Principal
Identifier	CORPORATE BONDS — 0.01%	Amount		Value
	Credit Intermediation and Related Activities — 0.01%
317928AA7	FINOVA Group, Inc. 7.500%, 11/15/2010, Acquired 10/19/2006-5/17/2007 at $741,082 (Default Effective 4/29/2005)	$	2,783,965	$	11,693
	TOTAL CORPORATE BONDS (cost $1,236,720)				11,693
	RIGHTS — 0.48%	Shares
	Credit Intermediation and Related Activities — 0.00%
4104951RT	Hanmi Financial Corporation Rights Expiration Date: 7/12/2010 Strike Price: $1.20*+#		106,923		0
	Rental and Leasing Services — 0.48%
CDCOR	Comdisco Holding Company, Inc. Expiration Date: 12/31/2050 Strike Price: $1.00*#		5,634,807		676,177
	TOTAL RIGHTS (cost $1,991,511)				676,177
	INVESTMENTS PURCHASED WITH
	THE CASH PROCEEDS FROM
	SECURITIES LENDING — 14.18%
	Investment Companies — 14.18%
	Mount Vernon Securities Lending Trust — Prime Portfolio, 0.28%b		19,983,320		19,983,320
	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $19,983,320)				19,983,320
	TOTAL INVESTMENTS — 114.63% (cost $158,959,146)			$	161,529,913

See Notes to the Financial Statements.

138

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Percentages are stated as a percent of net assets.

* — Non-income producing security.

ˆ — This security or a portion of this security was out on loan at June 30, 2010. Total loaned securities had a market value of $18,375,220 at June 30, 2010.

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

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

b — The rate quoted is the annualized seven-day yield as of June 30, 2010.

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

See Notes to the Financial Statements.

139

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Kinetics Government Money Market Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited)

		Principal
Identifier	SHORT-TERM INVESTMENTS — 98.56%	Amount		Value
	US Government Agency Issues — 98.56%
313385YZ1	Federal Home Loan Bank Discount Note 0.061%, 07/06/2010b	$	1,340,000	$	1,339,989
	TOTAL SHORT-TERM INVESTMENTS (cost $1,339,989)				1,339,989
	TOTAL INVESTMENTS — 98.56% (cost $1,339,989)			$	1,339,989

Percentages are stated as a percent of net assets.

b — The rate quoted is the yield to maturity.

See Notes to the Financial Statements.

140

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Market Opportunities Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited)

Identifier	COMMON STOCKS — 99.72%	Shares		Value
	Asset Management — 17.05%
AB	AllianceBernstein Holding LPˆ		7,172	$	185,325
BNBMF	BAM Investments Ltd.*		31,090		335,710
BLK	BlackRock, Inc.		4,471		641,141
BAM	Brookfield Asset Management Inc. — Class Aˆ		41,875		947,212
CNS	Cohen & Steers, Inc.ˆ		47,577		986,747
EV	Eaton Vance Corp.ˆ		31,659		874,105
BEN	Franklin Resources, Inc.		1,591		137,128
LM	Legg Mason, Inc.		40,998		1,149,174
PZN	Pzena Investment Management, Inc. — Class A*		167,737		1,068,485
SII CN	Sprott, Inc.		43,155		145,127
TROW	T. Rowe Price Group, Inc.		5,979		265,408
BX	The Blackstone Group LP		68,399		653,894
URB/A CN	Urbana Corp. — Class A*		356,004		468,184
GROW	US Global Investors, Inc. — Class A		36,880		204,684
806 HK	Value Partners Group Limited		1,712,000		1,066,304
WSDT	WisdomTree Investments, Inc.*ˆ		11,350		24,403
					9,153,031
	Commercial Banking — 4.36%
3988 HK	Bank of China Ltd. — Class H		964,000		491,477
939 HK	China Construction Bank Corp. — Class H		1,307,000		1,064,143
1398 HK	Industrial & Commercial Bank of China — Class H		1,067,000		783,783
					2,339,403

See Notes to the Financial Statements.

141

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Market Opportunities Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	Credit Intermediation and Related Activities — 6.68%
BK	The Bank of New York Mellon Corp.		28,310	$	698,974
BR	Broadridge Financial Solutions, Inc.		61,501		1,171,594
CATY	Cathay General Bancorpˆ		3,237		33,438
CLFC	Center Financial Corporation*ˆ		5,454		28,088
EWBC	East West Bancorp, Inc.		3,204		48,861
FMCC	Federal Home Loan Mortgage Corporation*		399,985		165,194
FNMA	Federal National Mortgage Association*		379,150		129,859
HAFC	Hanmi Financial Corporation*ˆ		6,157		7,758
NARA	Nara Bancorp, Inc.*		6,164		51,963
NTRS	Northern Trust Corp.		15,354		717,032
PFBC	Preferred Bank Los Angeles*ˆ		2,605		5,444
STT	State Street Corporation		13,865		468,914
UCBH	UCBH Holdings, Inc.		6,803		70
WIBC	Wilshire Bancorp, Inc.ˆ		6,341		55,484
					3,582,673
	Data Processing, Hosting and Related Services — 0.65%
DST	DST Systems, Inc.		5,020		181,422
FISV	Fiserv, Inc.*		3,606		164,650
					346,072
	Data Processor — 5.32%
MA	Mastercard, Inc. — Class Aˆ		6,326		1,262,227
MSCI	MSCI Inc. — Class A*		19,731		540,629
VRSK	Verisk Analytics, Inc. — Class A*		5,117		152,998
V	Visa, Inc. — Class Aˆ		12,750		902,062
					2,857,916
	European Exchanges — 1.20%
DB1 GR	Deutsche Boerse AG		10,508		643,515
	Food Services and Drinking Places — 1.21%
OCX CN	Onex Corporation		26,930		647,352

See Notes to the Financial Statements.

142

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Market Opportunities Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	Global Exchanges — 12.26%
388 HK	Hong Kong Exchanges & Clearing Limited		177,150	$	2,789,119
JSE SJ	JSE Limited		158,335		1,355,389
8697 JP	Osaka Securities Exchange Co., Ltd.		159		678,872
SGX SP	Singapore Exchange Limited		332,727		1,757,202
					6,580,582
	Holding Company — 4.11%
BRK/A	Berkshire Hathaway Inc. — Class A*		12		1,440,000
IEP	Icahn Enterprises LP		20,728		765,900
					2,205,900
	Insurance — 1.68%
PWF CN	Power Financial Corporation		35,240		903,055
	Insurance Carriers and Related Activities — 8.23%
ABK	Ambac Financial Group, Inc.*ˆ		18,534		12,418
LFC	China Life Insurance Co., Limited — ADRˆ		22,155		1,444,506
2628 HK	China Life Insurance Co., Limited — Class H		114,000		507,275
MKL	Markel Corporation*		523		177,820
MBI	MBIA Inc.*ˆ		62,115		348,465
2318 HK	Ping An Insurance Group Company of China Limited — Class H		233,300		1,927,963
					4,418,447
	Mining (except Oil and Gas) — 7.50%
FNV CN	Franco-Nevada Corporation		132,259		4,025,355
	Nonstore Retailers — 1.80%
BID	Sotheby’sˆ		42,278		966,898

See Notes to the Financial Statements.

143

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Market Opportunities Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	Other Exchanges — 3.46%
ASX AU	ASX Ltd.		46,324	$	1,137,044
FTIS LI	Financial Technologies (India) Ltd. — GDR		130,084		530,743
IMAREX NO	IMAREX ASA*		1,850		14,015
NZX NZ	NZX Ltd.*		170,954		174,713
					1,856,515
	Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 17.94%
CBOE	CBOE Holdings Inc.*ˆ		18,830		612,916
CLE LN	Climate Exchange PLC*		47,646		531,773
CME	CME Group, Inc.		10,121		2,849,568
GFIG	GFI Group, Inc.		1,737		9,693
IBKR	Interactive Brokers Group, Inc. — Class A*ˆ		3,265		54,199
ICE	IntercontinentalExchange Inc.*		26,747		3,023,213
JEF	Jefferies Group, Inc.ˆ		84,854		1,788,722
LAB	LaBranche & Co. Inc.*		129,508		554,294
LSE LN	London Stock Exchange Group plc		21,163		178,176
TLPR LN	Tullett Prebon plc		5,570		26,290
					9,628,844
	Support Activities for Transportation — 0.29%
995 HK	Anhui Expressway Co. Ltd. — Class H		54,000		29,958
177 HK	Jiangsu Expressway Company Ltd. — Class H		27,000		24,584
548 HK	Shenzhen Expressway Company Limited — Class H		24,000		10,633
107 HK	Sichuan Expressway Co. Limited — Class H		114,000		62,806
576 HK	Zhejiang Expressway Co., Limited — Class H		32,000		29,670
					157,651
	Telecommunications — 0.03%
IRDM	Iridium Communications, Inc.*ˆ		1,672		16,787

See Notes to the Financial Statements.

144

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Market Opportunities Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	U.S. Equity Exchanges — 5.87%
NDAQ	The Nasdaq OMX Group*		42,755	$	760,184
NYX	NYSE Euronext		86,530		2,390,824
					3,151,008
	Utilities — 0.08%
BIP	Brookfield Infrastructure Partners LP		2,816		44,690
	TOTAL COMMON STOCKS (cost $57,869,721)				53,525,694
	RIGHTS — 0.00%
	Credit Intermediation and Related Activities — 0.00%
4104951RT	Hanmi Financial Corporation Rights
	Expiration Date: 7/12/2010 Strike Price: $1.20*+#		6,157		0
	TOTAL RIGHTS (cost $26,190)				0
SHORT-TERM INVESTMENTS — 0.45%
	Money Market Funds — 0.45%
FIUXX	First American Prime Obligations Fund — Class I, 0.00%b		244,785		244,785
	TOTAL SHORT-TERM INVESTMENTS (cost $244,785)				244,785

See Notes to the Financial Statements.

145

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Market Opportunities Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier	INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING — 15.01%	Shares		Value
	Investment Companies — 15.01%
	Mount Vernon Securities Lending Trust — Prime Portfolio, 0.28%b		8,056,223	$	8,056,223
	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $8,056,223)				8,056,223
	TOTAL INVESTMENTS — 115.18% (cost $66,196,919)			$	61,826,702

Percentages are stated as a percent of net assets.

* — Non-income producing security.

ˆ — This security or a portion of this security was out on loan at June 30, 2010. Total loaned securities had a market value of $7,663,963 at June 30, 2010.

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

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

b — The rate quoted is the annualized seven-day yield as of June 30, 2010.

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

See Notes to the Financial Statements.

146

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Water Infrastructure Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited)

Identifier	COMMON STOCKS — 92.73%	Shares		Value
	Administrative and Support Services — 3.36%
ACM	Aecom Technology Corp.*		25,000	$	576,500
TRIT	Tri-Tech Holding Inc.*		40,000		326,400
					902,900
	Building Supplies — 8.51%
SOLK GA	Corinth Pipeworks SA*		150,000		150,411
GEBN VX	Geberit AG		6,108		954,862
6485 JP	Maezawa Kyuso Industries Co. Ltd.		4,500		54,510
NWPX	Northwest Pipe Company*ˆ		39,501		750,519
PAP TB	Pacific Pipe Public Company Limited		2,286,500		127,067
SPIP SP	Sinopipe Holdings Limited		2,000,000		250,125
					2,287,494
	Chemical Manufacturing — 2.53%
NLC	Nalco Holding Co.		30,000		613,800
YARIY	Yara International ASA — ADR		2,400		67,224
					681,024
	Heavy and Civil Engineering Construction — 1.46%
PUR CN	Pure Technologies Ltd.*		35,000		132,498
STRL	Sterling Construction Company, Inc.*		20,000		258,800
					391,298
	Machinery Manufacturing — 16.01%
ARF-U CN	Armtec Infrastructure Income Fund		30,000		525,574
CVVT	China Valves Technology, Inc.*ˆ		48,300		450,639
DGW	Duoyuan Global Water Inc. — ADR*ˆ		35,000		616,000
ERII	Energy Recovery Inc.*ˆ		85,200		340,800
ESE	ESCO Technologies, Inc.ˆ		33,000		849,750
FLOW	Flow International Corporation		40,000		94,400
LNN	Lindsay Corporationˆ		23,000		728,870
HEAT	SmartHeat, Inc.*ˆ		80,000		456,800
840 HK	Xinjiang Tianye Water Saving Irrigation System Co. Ltd. — Class H*		1,826,000		241,531
					4,304,364

See Notes to the Financial Statements.

147

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Water Infrastructure Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
	Management of Companies and Enterprises — 0.87%
HEK	Heckmann Corporation*ˆ		50,300	$	233,392
	Merchant Wholesalers, Nondurable Goods — 2.24%
HWKN	Hawkins, Inc.ˆ		25,000		602,000
	Petroleum and Coal Products Manufacturing — 6.55%
AMN	Ameron International Corporation		29,200		1,761,636
	Professional, Scientific, and Technical Services — 12.69%
ARCAD NA	Arcadis N.V.		25,000		450,927
ITRI	Itron, Inc.*		10,000		618,200
RINO	RINO International Corporation*ˆ		30,000		375,300
TTEK	Tetra Tech, Inc.*		30,000		588,300
URS	URS Corp.*		35,000		1,377,250
					3,409,977
	Utilities — 38.51%
ACE IM	ACEA S.P.A.		50,000		498,618
AWR	American States Water Company		6,200		205,468
AWK	American Water Works Co., Inc.		25,000		515,000
WTR	Aqua America, Inc.ˆ		16,700		295,256
ARTNA	Artesian Resources Corp. — Class A		20,688		381,901
AENV SP	Asia Environment Holdings Limited*		610,000		69,749
BRC-U CN	Brookfield Renewable Power Fund		20,000		376,685
CDZI	Cadiz Inc.*ˆ		33,384		402,945
HOO	Cascal N.V.		64,500		432,150
1038 HK	Cheung Kong Infrastructure Holdings Limited		75,000		278,834
CHC	China Hydroelectric Corporation — ADS*ˆ		50,000		375,500
CTWS	Connecticut Water Service, Inc.ˆ		21,206		445,750
CWCO	Consolidated Water Co., Ltd.ˆ		34,853		396,627
EDE	The Empire District Electric Co.ˆ		20,000		375,400
GSZ FP	GDF Suez		6,205		178,300
270 HK	Guangdong Investment Limited		1,000,000		473,873
MWC PM	Manila Water Company		1,050,000		373,746
MSEX	Middlesex Water Co.		32,964		522,479
NWG LN	Northumbrian Water Group Plc		90,200		410,502

See Notes to the Financial Statements.

148

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The Water Infrastructure Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier		Shares		Value
PNHL MK	Puncak Niaga Holdings Berhad*		73,780	$	14,699
SVT LN	Severn Trent Plc		30,000		551,770
SINO SP	Sinomem Technology Limited		850,000		309,798
SJW	SJW Corp.		20,000		468,800
SEV FP	Suez Environnement Co.		20,000		332,249
EYAPS GA	Thessaloniki Water Supply & Sewage Co. SA		10,000		48,303
UU/ LN	United Utilities Group PLC		55,000		431,832
VE	Veolia Environnement — ADR		34,000		794,580
YORW	York Water Companyˆ		27,611		392,076
					10,352,890
	TOTAL COMMON STOCKS (cost $29,032,448)				24,926,975
	PREFERRED STOCKS — 2.05%
	Utilities — 2.05%
CIG	Companhia Energetica de Minas Gerais — ADRˆ		37,500		550,125
	TOTAL PREFERRED STOCKS (cost $561,575)				550,125
	WARRANTS — 0.10%
	Utilities — 0.10%
G2112E14	China Hydroelectric Corporation*
	Expiration Date: 1/25/2014 Strike Price: $15.00		40,000		27,200
	TOTAL WARRANTS (cost $48,000)				27,200

See Notes to the Financial Statements.

149

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The Water Infrastructure Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier	SHORT-TERM INVESTMENTS — 5.53%	Shares		Value
	Money Market Funds — 5.53%
FIUXX	First American Prime Obligations Fund — Class I, 0.00%b		850,906	$	850,906
FAIXX	First American Prime Obligations Fund — Class Y, 0.00%b		211,002		211,001
FFCXX	First American Tax Free Obligations Fund — Class Y, 0.00%b		423,393		423,393
	TOTAL SHORT-TERM INVESTMENTS (cost $1,485,300)				1,485,300
	INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING — 22.53%
	Investment Companies — 22.53%
	Mount Vernon Securities Lending Trust — Prime Portfolio, 0.28%b		6,056,623		6,056,623
	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $6,056,623)				6,056,623
	TOTAL INVESTMENTS — 122.94% (cost $37,183,946)			$	33,046,223

Percentages are stated as a percent of net assets.

* — Non-income producing security.

ˆ — This security or a portion of this security was out on loan at June 30, 2010. Total loaned securities had a market value of $5,663,837 at June 30, 2010.

b — The rate quoted is the annualized seven-day yield as of June 30, 2010.

ADR — American Depository Receipt.

ADS — American Depository Share.

See Notes to the Financial Statements.

150

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The Multi-Disciplinary Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited)

		Principal
Identifier	CONVERTIBLE BONDS — 29.10%	Amount		Value
	Computer and Electronic Product Manufacturing — 5.13%
502413AW7	L-3 Communications Holdings, Inc.
	3.000%, 08/01/2035ˆ	$	100,000	$	100,500
	Funds, Trusts, and Other Financial Vehicles — 10.18%
10112RAK0	Boston Properties LP
	2.875%, 02/15/2037ˆ		100,000		99,125
939653AK7	Washington Real Estate Investment Trust
	3.875%, 09/15/2026ˆ		100,000		100,500
					199,625
	Repair and Maintenance — 8.93%
451102AB3	Icahn Enterprises LP
	4.000%, 08/15/2013ˆ		200,000		175,000
	Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 4.86%
631103AA6	The Nasdaq OMX Group
	2.500%, 08/15/2013ˆ		100,000		95,375
	TOTAL CONVERTIBLE BONDS (cost $550,663)				570,500
	CORPORATE BONDS — 51.95%
	Administrative and Support Services — 5.20%
22025YAJ9	Corrections Corp. of America
	6.750%, 01/31/2014ˆ		100,000		102,000
	Ambulatory Health Care Services — 4.42%
23918KAE8	Davita, Inc.
	6.625%, 03/15/2013ˆ		86,000		86,537
	Mining (except Oil and Gas) — 10.67%
20854PAB5	CONSOL Energy, Inc.
	7.875%, 03/01/2012ˆ		100,000		107,813
704549AC8	Peabody Energy Corp.
	6.875%, 03/15/2013ˆ		100,000		101,250
					209,063

See Notes to the Financial Statements.

151

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The Multi-Disciplinary Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

		Principal
Identifier		Amount		Value
	Nonmetallic Mineral Product Manufacturing — 7.30%
69073TAL7	Owens-Brockway Glass Container
	6.750%, 12/01/2014ˆ	$	140,000	$	143,150
	Performing Arts, Spectator Sports, and Related Industries — 5.11%
707569AL3	Penn National Gaming, Inc.
	6.750%, 03/01/2015ˆ		100,000		100,250
	Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 3.60%
52107QAC9	Lazard Group LLC
	7.125%, 05/15/2015ˆ		67,000		70,637
	Telecommunications — 5.28%
27876GAQ1	Echostar DBS Corp.
	6.375%, 10/01/2011ˆ		100,000		103,500
	Utilities — 10.37%
629377AT9	NRG Energy, Inc.
	7.250%, 02/01/2014ˆ		200,000		203,250
	TOTAL CORPORATE BONDS (cost $1,005,220)				1,018,387
CALL OPTIONS PURCHASED — 0.01%Contracts
	Computer and Electronic Manufacturing — 0.01%
OOY 110122P00025000	L-3 Communications Holdings, Inc.ˆ
	Expiration Date: 1/22/2011, Exercise Price: $25.00		18		180
	TOTAL PURCHASED OPTIONS (cost $1,224)				180

See Notes to the Financial Statements.

152

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The Multi-Disciplinary Portfolio

Portfolio of Investments — June 30, 2010 (Unaudited) — (Continued)

Identifier	SHORT-TERM INVESTMENTS — 1.36%	Shares		Value
	Money Market Funds — 1.36%
FIUXX	First American Prime Obligations Fund — Class I, 0.00%ˆb		26,617	$	26,617
	TOTAL SHORT-TERM INVESTMENTS (cost $26,617)				26,617
	TOTAL INVESTMENTS — 82.42% (cost $1,583,724)			$	1,615,684

Percentages are stated as a percent of net assets.

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

b — The rate quoted is the annualized seven-day yield as of June 30, 2010.

See Notes to the Financial Statements.

153

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The Multi-Disciplinary Portfolio

Portfolio of Options Written — June 30, 2010 (Unaudited)

Identifier	PUT OPTIONS WRITTEN	Contracts		Value
	Aerospace Product and Parts Manufacturing
COL 101016P00060000	Rockwell Collins, Inc.
	Expiration: October 2010, Exercise Price: $60.00		3	$	2,490
	Amusement, Gambling, and Recreation Industries
VDS 110122P00030000	The Walt Disney Co.
	Expiration: January 2011, Exercise Price: $30.00		3		840
	Asset Management
BAM 100918P00022500	Brookfield Asset Management — Class A
	Expiration: September 2010, Exercise Price: $22.50		3		398
BAM 101218P00022500	Brookfield Asset Management — Class A
	Expiration: December 2010, Exercise Price: $22.50		5		1,075
					1,473
	Beverage and Tobacco Product Manufacturing
VPM 110122P00020000	Altria Group, Inc.
	Expiration: January 2011, Exercise Price: $20.00		4		676
PFY 100918P00048000	Philip Morris International, Inc.
	Expiration: September 2010, Exercise Price: $48.00		2		620
					1,296
	Beverages
DEO 110122P00065000	Diageo plc — ADR
	Expiration: January 2011, Exercise Price: $65.00		5		3,250
	Building Material and Supplies Dealers
ZCR 110122P00075000	The Sherwin-Williams Company
	Expiration: January 2011, Exercise Price: $75.00		2		1,970

See Notes to the Financial Statements.

154

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The Multi-Disciplinary Portfolio

Portfolio of Options Written — June 30, 2010 (Unaudited) — (Continued)

Identifier		Contracts		Value
	Chemical Manufacturing
ZBK 110122P00030000	Cameco Corporation
	Expiration: January 2011, Exercise Price: $30.00		2	$	1,726
IAQ 100717P00050000	Sigma-Aldrich Corp.
	Expiration: July 2010, Exercise Price: $50.00		3		330
IAQ 101016P00055000	Sigma-Aldrich Corp.
	Expiration: October 2010, Exercise Price: $55.00		3		1,950
					4,006
	Clothing and Clothing Accessories Stores
VFF 110122P00030000	Tiffany & Co.
	Expiration: January 2011, Exercise Price: $30.00		2		435
VFF 110122P00040000	Tiffany & Co.
	Expiration: January 2011, Exercise Price: $40.00		2		1,260
					1,695
	Couriers and Messengers
FDX 110122P00070000	FedEx Corp.
	Expiration: January 2011, Exercise Price: $70.00		4		3,176
OPS 110122P00055000	United Parcel Service — Class B
	Expiration: January 2011, Exercise Price: $55.00		2		910
OPS 110122P00065000	United Parcel Service — Class B
	Expiration: January 2011, Exercise Price: $65.00		2		2,165
					6,251

See Notes to the Financial Statements.

155

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The Multi-Disciplinary Portfolio

Portfolio of Options Written — June 30, 2010 (Unaudited) — (Continued)

Identifier		Contracts		Value
	Credit Intermediation and Related Activities
VAX 110122P00040000	American Express Company
	Expiration: January 2011, Exercise Price: $40.00		2	$	1,130
OUY 110122P00025000	The Bank Of New York Mellon Corp.
	Expiration: January 2011, Exercise Price: $25.00		4		1,220
XRF 110122P00012500	Discover Financial Services
	Expiration: January 2011, Exercise Price: $12.50		2		260
EWBC 110122P00015000	East West Bancorp, Inc.
	Expiration: January 2011, Exercise Price: $15.00		10		2,275
QAN 101218P00007500	Nara Bancorp Inc.
	Expiration: December 2010, Exercise Price: $7.50		8		740
XGP 110122P00050000	Northern Trust Corp.
	Expiration: January 2011, Exercise Price: $50.00		2		1,390
XGP 110122P00055000	Northern Trust Corp.
	Expiration: January 2011, Exercise Price: $55.00		4		4,160
STT 110122P00035000	State Street Corporation
	Expiration: January 2011, Exercise Price: $35.00		2		892
OLD 110122P00045000	State Street Corporation
	Expiration: January 2011, Exercise Price: $45.00		3		3,563
VWF 110122P00025000	Wells Fargo & Company
	Expiration: January 2011, Exercise Price: $25.00		3		960
ZZH 110122P00017500	The Western Union Company
	Expiration: January 2011, Exercise Price: $17.50		4		1,320
					17,910

See Notes to the Financial Statements.

156

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The Multi-Disciplinary Portfolio

Portfolio of Options Written — June 30, 2010 (Unaudited) — (Continued)

Identifier		Contracts		Value
	Data Processor
ZXV 110122P00240000	Mastercard Inc. — Class A
	Expiration: January 2011, Exercise Price: $240.00		1	$	4,594
VSK 110122P00090000	Visa Inc. — Class A
	Expiration: January 2011, Exercise Price: $90.00		2		4,185
					8,779
	Defense
CAI 100918P00047500	CACI International, Inc. — Class A
	Expiration: September 2010, Exercise Price: $47.50		3		1,680
	Depository Credit Intermediation
HDB 101016P00140000	HDFC Bank Ltd. — ADR
	Expiration: October 2010, Exercise Price: $140.00		1		1,115
VCD 110122P00030000	ICIC Bank Ltd. — ADR
	Expiration: January 2011, Exercise Price: $30.00		2		510
VCD 110122P00035000	ICIC Bank Ltd. — ADR
	Expiration: January 2011, Exercise Price: $35.00		2		880
					2,505
	Equity Fund
UTH 100821P00090000	Utilities HOLDRs Trust
	Expiration: August 2010, Exercise Price: $90.00		5		1,700
UTH 101120P00090000	Utilities HOLDRs Trust
	Expiration: November 2010, Exercise Price: $90.00		4		2,340
					4,040

See Notes to the Financial Statements.

157

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The Multi-Disciplinary Portfolio

Portfolio of Options Written — June 30, 2010 (Unaudited) — (Continued)

Identifier		Contracts		Value
	Fabricated Metal Product Manufacturing
CMC 110122P00015000	Commercial Metals Company
	Expiration: January 2011, Exercise Price: $15.00		12	$	3,552
FO 100918P00040000	Fortune Brands, Inc.
	Expiration: September 2010, Exercise Price: $40.00		2		640
FO 100918P00045000	Fortune Brands, Inc.
	Expiration: September 2010, Exercise Price: $45.00		3		1,770
					5,962
	Food Manufacturing
ADM 110122P00025000	Archer-Daniels-Midland Company
	Expiration: January 2011, Exercise Price: $25.00		10		2,250
BG 110122P00050000	Bunge Limited
	Expiration: January 2011, Exercise Price: $50.00		3		2,010
UN 100821P00030000	Unilever NV
	Expiration: August 2010, Exercise Price: $30.00		4		1,280
UN 110219P00025000	Unilever NV
	Expiration: February 2011, Exercise Price: $25.00		4		680
					6,220
	Gaming
VEG 110122P00060000	Wynn Resorts Limited
	Expiration: January 2011, Exercise Price: $60.00		1		584
	Holding Company
OYD 110122P00020000	Leucadia National Corporation
	Expiration: January 2011, Exercise Price: $20.00		2		460

See Notes to the Financial Statements.

158

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The Multi-Disciplinary Portfolio

Portfolio of Options Written — June 30, 2010 (Unaudited) — (Continued)

Identifier		Contracts		Value
	Insurance Carriers
OOE 110122P00070000	China Life Insurance Co., Limited — ADR
	Expiration: January 2011, Exercise Price: $70.00		1	$	880
PGR 101120P00020000	The Progressive Corporation
	Expiration: November 2010, Exercise Price: $20.00		8		1,592
					2,472
	Leather and Allied Product Manufacturing
VZF 110122P00025000	Coach, Inc.
	Expiration: January 2011, Exercise Price: $25.00		1		110
	Machinery, Equipment, and Supplies Merchant Wholesalers
TTT 101016P00012500	Terra Nova Royalty Corp.
	Expiration: October 2010, Exercise Price: $11.21		4		1,220
TTT 110122P00010000	Terra Nova Royalty Corp.
	Expiration: January 2011, Exercise Price: $8.71		11		1,650
					2,870
	Management of Companies and Enterprises
GS 110122P00140000	The Goldman Sachs Group, Inc.
	Expiration: January 2011, Exercise Price: $140.00		1		2,095
	Mining (except Oil and Gas)
FCX 110122P00055000	Freeport-McMoRan Copper & Gold Inc.
	Expiration: January 2011, Exercise Price: $55.00		1		715
OBQ 110122P00080000	Freeport-McMoRan Copper & Gold Inc.
	Expiration: January 2011, Exercise Price: $80.00		3		7,133

See Notes to the Financial Statements.

159

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The Multi-Disciplinary Portfolio

Portfolio of Options Written — June 30, 2010 (Unaudited) — (Continued)

Identifier		Contracts		Value
VIE 110122P00042500	Newmont Mining Corporation
	Expiration: January 2011, Exercise Price: $42.50		2	$	242
VIE 110122P00045000	Newmont Mining Corporation
	Expiration: January 2011, Exercise Price: $45.00		2		296
NEM 110122P00047500	Newmont Mining Corporation
	Expiration: January 2011, Exercise Price: $47.50		2		386
VIE 110122P00050000	Newmont Mining Corporation
	Expiration: January 2011, Exercise Price: $50.00		2		508
					9,280
	Miscellaneous Manufacturing
BDX 100918P00075000	Becton, Dickinson and Company
	Expiration: September 2010, Exercise Price: $75.00		2		1,660
VGG 110122P00015000	International Game Technology
	Expiration: January 2011, Exercise Price: $15.00		3		525
					2,185
	Nonstore Retailers
BID 110122P00017500	Sotheby’s
	Expiration: January 2011, Exercise Price: $17.50		9		1,800
BID 110122P00025000	Sotheby’s
	Expiration: January 2011, Exercise Price: $25.00		5		2,700
					4,500
	Oil & Gas & Consumable Fuels
ZPJ 110122P00075000	China Petroleum & Chemical Corp. — ADR
	Expiration: January 2011, Exercise Price: $75.00		3		1,680

See Notes to the Financial Statements.

160

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The Multi-Disciplinary Portfolio

Portfolio of Options Written — June 30, 2010 (Unaudited) — (Continued)

Identifier		Contracts		Value
ZPJ 110122P00080000	China Petroleum & Chemical Corp. — ADR
	Expiration: January 2011, Exercise Price: $80.00		1	$	764
PTR 110122P00100000	PetroChina Company Limited — ADR
	Expiration: January 2011, Exercise Price: $100.00		2		1,640
					4,084
	Oil and Gas Extraction
CNQ 110122P00032500	Canadian Natural Resources Ltd.
	Expiration: January 2011, Exercise Price: $32.50		14		5,180
CEO 100918P00160000	CNOOC Limited — ADR
	Expiration: September 2010, Exercise Price: $160.00		3		2,490
ZBM 110122P00030000	EnCana Corporation
	Expiration: January 2011, Exercise Price: $30.00		2		680
ECA 110122P00031000	EnCana Corporation
	Expiration: January 2011, Exercise Price: $31.00		4		1,600
IMO 100821P00035000	Imperial Oil Ltd.
	Expiration: August 2010, Exercise Price: $35.00		2		230
IMO 101120P00035000	Imperial Oil Ltd.
	Expiration: November 2010, Exercise Price: $35.00		3		660
NXY 100918P00020000	Nexen Inc.
	Expiration: September 2010, Exercise Price: $20.00		4		660
NXY 100918P00022500	Nexen Inc.
	Expiration: September 2010, Exercise Price: $22.50		4		1,320
VDW 110122P00040000	Petroleo Brasileiro S.A.
	Expiration: January 2011, Exercise Price: $40.00		3		2,397

See Notes to the Financial Statements.

161

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The Multi-Disciplinary Portfolio

Portfolio of Options Written — June 30, 2010 (Unaudited) — (Continued)

Identifier		Contracts		Value
OUO 110122P00045000	Scores Holding Company, Inc.
	Expiration: January 2011, Exercise Price: $45.00		4	$	2,630
STO 101016P00022500	StatoilHydro ASA — ADR
	Expiration: October 2010, Exercise Price: $22.50		9		3,330
ZDT 110122P00055000	StatoilHydro ASA — ADR
	Expiration: January 2011, Exercise Price: $55.00		2		2,440
OYX 110122P00035000	Suncor Energy, Inc.
	Expiration: January 2011, Exercise Price: $35.00		6		4,335
					27,952
	Other Financial Investment Activities
BEN 110122P00107000	Franklin Resources, Inc.
	Expiration: January 2011, Exercise Price: $107.00		2		4,810
GROW 101218P00007500	U.S. Global Investors, Inc. — Class A
	Expiration: December 2010, Exercise Price: $7.50		10		2,475
					7,285
	Other Investment Pools and Funds
ABX 110122P00041000	Barrick Gold Corporation
	Expiration: January 2011, Exercise Price: $41.00		5		1,600
SKF 110122P00020000	UltraShort Financials ProShares ETF
	Expiration: January 2011, Exercise Price: $20.00		11		2,937
SRS 110122P00025000	UltraShort Real Estate ProShares ETF
	Expiration: January 2011, Exercise Price: $25.00		2		830
SDS 110122P00029000	UltraShort S&P 500 ProShares ETF
	Expiration: January 2011, Exercise Price: $29.00		7		1,382
					6,749

See Notes to the Financial Statements.

162

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The Multi-Disciplinary Portfolio

Portfolio of Options Written — June 30, 2010 (Unaudited) — (Continued)

Identifier		Contracts		Value
	Pharmaceutical and Medicine Manufacturing
GENZ 110122P00047500	Genzyme Corporation
	Expiration: January 2011, Exercise Price: $47.50		3	$	1,080
GENZ 110122P00052500	Genzyme Corporation
	Expiration: January 2011, Exercise Price: $52.50		2		1,180
MJN 110122P00045000	Mead Johnson Nutrition Company
	Expiration: January 2011, Exercise Price: $45.00		4		1,280
					3,540
	Professional, Scientific & Technical Services
OLJ 110122P00037500	Automatic Data Processing, Inc.
	Expiration: January 2011, Exercise Price: $37.50		1		218
OLJ 110122P00040000	Automatic Data Processing, Inc.
	Expiration: January 2011, Exercise Price: $40.00		2		640
CRL 100821P00035000	Charles River Laboratories International, Inc.
	Expiration: August 2010, Exercise Price: $35.00		4		910
OWC 110122P00025000	Moody’s Corporation
	Expiration: January 2011, Exercise Price: $25.00		1		620
					2,388
	Publishing Industries (except Internet)
MHP 110122P00025000	The McGraw-Hill Companies, Inc.
	Expiration: January 2011, Exercise Price: $25.00		4		880
	Rail Transportation
CP 100918P00045000	Canadian Pacific Railway Limited
	Expiration: September 2010, Exercise Price: $45.00		2		225

See Notes to the Financial Statements.

163

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The Multi-Disciplinary Portfolio

Portfolio of Options Written — June 30, 2010 (Unaudited) — (Continued)

Identifier		Contracts		Value
CP 100918P00050000	Canadian Pacific Railway Limited
	Expiration: September 2010, Exercise Price: $50.00		3	$	697
OBC 110122P00045000	CSX Corp.
	Expiration: January 2011, Exercise Price: $45.00		3		1,237
CSX 110219P00045000	CSX Corp.
	Expiration: February 2011, Exercise Price: $45.00		2		900
OGO 110122P00045000	Norfolk Southern Corporation
	Expiration: January 2011, Exercise Price: $45.00		3		930
NSC 110122P00049000	Norfolk Southern Corporation
	Expiration: January 2011, Exercise Price: $49.00		2		900
UNP 110122P00065000	Union Pacific Corporation
	Expiration: January 2011, Exercise Price: $65.00		3		1,665
					6,554
	Real Estate
PSA 100918P00080000	Public Storage
	Expiration: September 2010, Exercise Price: $80.00		1		265
FVJ 110122P00025000	The St. Joe Company
	Expiration: January 2011, Exercise Price: $25.00		2		850
					1,115
	Securities, Commodity Contracts, and Other Financial Instruments and Related Activities
VNB 110122P00070000	Affiliated Managers Group
	Expiration: January 2011, Exercise Price: $70.00		2		2,600
GQG 100918P00005000	GFI Group, Inc.
	Expiration: September 2010, Exercise Price: $5.00		6		240
					2,840

See Notes to the Financial Statements.

164

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — June 30, 2010 (Unaudited) — (Continued)

Identifier		Contracts		Value
	Ship and Boat Building
GD 110122P00070000	General Dynamics Corporation
	Expiration: January 2011, Exercise Price: $70.00		3	$	4,065
	Telecommunications
CHU 100717P00012500	China Unicom (Hong Kong) Limited — ADR
	Expiration: July 2010, Exercise Price: $12.50		4		64
CHU 101016P00012500	China Unicom (Hong Kong) Limited — ADR
	Expiration: October 2010, Exercise Price: $12.50		3		225
CHU 110122P00012500	China Unicom (Hong Kong) Limited — ADR
	Expiration: January 2011, Exercise Price: $12.50		4		450
					739
	Transportation Equipment Manufacturing
VBO 110122P00045000	Boeing Co.
	Expiration: January 2011, Exercise Price: $45.00		1		222
VBO 110122P00050000	Boeing Co.
	Expiration: January 2011, Exercise Price: $50.00		1		330
VOJ 110122P00045000	Northrop Grumman Corporation
	Expiration: January 2011, Exercise Price: $45.00		1		205
OSK 100717P00035000	Oshkosh Corporation
	Expiration: July 2010, Exercise Price: $35.00		3		1,050
					1,807
	U.S. Equity Exchanges
XGV 110122P00020000	The Nasdaq OMX Group
	Expiration: January 2011, Exercise Price: $20.00		5		1,625

See Notes to the Financial Statements.

165

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — June 30, 2010 (Unaudited) — (Continued)

Identifier		Contracts		Value
	Utilities
AYE 100717P00022500	Allegheny Energy, Inc.
	Expiration: July 2010, Exercise Price: $22.50		6	$	1,065
AYE 101016P00025000	Allegheny Energy, Inc.
	Expiration: October 2010, Exercise Price: $25.00		4		1,760
CPN 110122P00012500	Calpine Corp.
	Expiration: January 2011, Exercise Price: $12.50		20		2,850
CIG1 100918P00013640	Companhia Energetica de Minas Gerais — ADR
	Expiration: September 2010, Exercise Price: $13.64		9		643
GXP 100918P00017500	Great Plains Energy Incorporated
	Expiration: September 2010, Exercise Price: $17.50		5		563
GXP 101218P00017500	Great Plains Energy Incorporated
	Expiration: December 2010, Exercise Price: $17.50		8		1,320
HNP 100821P00022500	Huaneng Power International, Inc. — ADR
	Expiration: August 2010, Exercise Price: $22.50		3		180
HNP 101120P00022500	Huaneng Power International, Inc. — ADR
	Expiration: November 2010, Exercise Price: $22.50		8		1,080
KEP 101218P00015000	Korea Electric Power Corporation — ADR
	Expiration: December 2010, Exercise Price: $15.00		10		2,650
ZOD 110122P00012500	Mirant Corporation
	Expiration: January 2011, Exercise Price: $12.50		8		2,380

See Notes to the Financial Statements.

166

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — June 30, 2010 (Unaudited) — (Continued)

Identifier		Contracts		Value
OBD 110122P00025000	NRG Energy, Inc.
	Expiration: January 2011, Exercise Price: $25.00		6	$	2,970
					17,461
	Warehousing and Storage
IRM 100717P00022500	Iron Mountain Incorporated
	Expiration: July 2010, Exercise Price: $22.50		4		200
IRM 101016P00025000	Iron Mountain Incorporated
	Expiration: October 2010, Exercise Price: $25.00		3		945
					1,145
	Wireless Telecommunications Carriers (except Satellite)
VUX 110122P00020000	Vodafone Group PLC — ADR
	Expiration: January 2011, Exercise Price: $20.00		11		1,980
	TOTAL PUT OPTIONS WRITTEN (premiums received ($143,827))			$	187,132

ADR — American Depository Receipt.

See Notes to the Financial Statements.

167

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Assets & Liabilities

June 30, 2010 (Unaudited)

	The Internet		The Global
	Portfolio		Portfolio
ASSETS:
Investments, at value(1)(2)	$	134,502,293	$	5,379,503
Foreign currencies, at value(3)		8,338		13,949
Cash		566		255
Receivable for contributed capital		20,450		9,723
Dividends and interest receivable		16,775		4,259
Other assets		11,751		299
Total assets		134,560,173		5,407,988
LIABILITIES:
Payable to Adviser		104,223		4,786
Payable to Custodian		890,209		—
Payable to Trustees and Officers		1,443		66
Payable for collateral received for securities loaned		37,191,023		826,554
Payable for withdrawn capital		31,320		—
Accrued expenses and other liabilities		21,687		16,040
Total liabilities		38,239,905		847,446
Net assets	$	96,320,268	$	4,560,542
(1) Cost of investments	$	109,895,566	$	5,466,744
(2) Includes loaned securities with a market value of	$	35,652,076	$	777,468
(3) Cost of foreign currencies	$	8,160	$	13,853

See Notes to the Financial Statements.

168

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Assets & Liabilities

June 30, 2010 (Unaudited)

	The Paradigm		The Medical
	Portfolio		Portfolio
ASSETS:
Investments, at value(1)(2)	$	1,472,087,715	$	40,112,030
Foreign currencies, at value(3)		1,506,399		55,259
Deposit at brokers for written options		79,730		40,985
Cash		—		460,000
Receivable for contributed capital		1,140,530		11,679
Dividends and interest receivable		1,731,692		32,702
Other assets		121,078		6,255
Total assets		1,476,667,144		40,718,910
LIABILITIES:
Payable to Adviser		1,247,897		30,819
Payable to Custodian		38,024		—
Payable to Trustees and Officers		18,483		420
Payable for collateral received for securities loaned		336,354,484		11,469,644
Payable for withdrawn capital		7,355,978		3,083
Accrued expenses and other liabilities		176,458		12,023
Total liabilities		345,191,324		11,515,989
Net assets	$	1,131,475,820	$	29,202,921
(1) Cost of investments	$	1,522,140,994	$	42,987,010
(2) Includes loaned securities with a market value of	$	317,589,547	$	10,620,566
(3) Cost of foreign currencies	$	1,502,451	$	55,101

See Notes to the Financial Statements.

169

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Assets & Liabilities

June 30, 2010 (Unaudited)

			The Kinetics
	The Small Cap		Government
	Opportunities		Money Market
	Portfolio		Portfolio
ASSETS:
Investments, at value(1)(2)	$	161,529,913	$	1,339,989
Foreign currencies, at value(3)		211,088		—
Cash		—		33,933
Receivable for contributed capital		17,639		—
Receivable for investments sold		99,920		—
Dividends and interest receivable		273,926		—
Other assets		16,389		51
Total assets		162,148,875		1,373,973
LIABILITIES:
Payable to Adviser		153,506		582
Payable to Custodian		110,072		—
Payable to Trustees and Officers		2,495		18
Payable for collateral received for securities loaned		19,983,320		—
Payable for withdrawn capital		950,659		7,800
Accrued expenses and other liabilities		40,489		6,043
Total liabilities		21,240,541		14,443
Net assets	$	140,908,334	$	1,359,530
(1) Cost of investments	$	158,959,146	$	1,339,989
(2) Includes loaned securities with a market value of	$	18,375,220	$	—
(3) Cost of foreign currencies	$	210,159	$	—

See Notes to the Financial Statements.

170

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Assets & Liabilities

June 30, 2010 (Unaudited)

	The Market		The Water
	Opportunities		Infrastructure
	Portfolio		Portfolio
ASSETS:
Investments, at value(1)(2)	$	61,826,702	$	33,046,223
Foreign currencies, at value(3)		85,127		134,792
Cash		—		39,894
Receivable for contributed capital		25,131		139,971
Dividends and interest receivable		116,632		73,607
Other assets		4,359		9,344
Total assets		62,057,951		33,443,831
LIABILITIES:
Payable to Adviser		58,298		28,112
Payable to Custodian		203,715		—
Payable to Trustees and Officers		853		355
Payable for securities purchased		—		311,765
Payable for collateral received for securities loaned		8,056,223		6,056,623
Payable for withdrawn capital		42,515		153,793
Accrued expenses and other liabilities		18,009		12,043
Total liabilities		8,379,613		6,562,691
Net assets	$	53,678,338	$	26,881,140
(1) Cost of investments	$	66,196,919	$	37,183,946
(2) Includes loaned securities with a market value of	$	7,663,963	$	5,663,837
(3) Cost of foreign currencies	$	85,131	$	134,777

See Notes to the Financial Statements.

171

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Assets & Liabilities

June 30, 2010 (Unaudited)

	The Multi-
	Disciplinary
	Portfolio
ASSETS:
Investments, at value(1)(2)	$	1,615,684
Deposit at brokers for written options		419,644
Cash		32,227
Receivable for contributed capital		64,000
Dividends and interest receivable		26,551
Other assets		50
Total assets		2,158,156
LIABILITIES:
Written options, at value(2)		187,132
Payable to Adviser		1,865
Payable to Trustees and Officers		9
Accrued expenses and other liabilities		8,814
Total liabilities		197,820
Net assets	$	1,960,336
(1)Cost of investments	$	1,583,724
(2)Premiums received	$	143,827

See Notes to the Financial Statements.

172

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Operations

For the Six Months Ended June 30, 2010 (Unaudited)

	The Internet			The Global
	Portfolio			Portfolio
INVESTMENT INCOME:
Dividends†	$	446,039		$	50,221
Interest income		73,660			—
Income from securities lending		53,185			898
Total investment income		572,884			51,119
EXPENSES:
Investment advisory fees		658,861			30,872
Administration fees		22,601			1,015
Professional fees		8,598			3,821
Fund accounting fees		11,616			5,166
Trustee and Officers’ fees and expenses		4,033			181
Custody fees and expenses		10,725			26,125
Other expenses		2,564			111
Total expenses		718,998			67,291
Net expenses		718,998			67,291
Net investment loss		(146,114	)		(16,172	)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on:
Investments and foreign currency		76,492			44,320
Net realized gain		76,492			44,320
Net change in unrealized depreciation of:
Investments and foreign currency		(3,856,665	)		(408,464	)
Written option contracts		(5,404	)		—
Net change in unrealized depreciation		(3,862,069	)		(408,464	)
Net loss on investments		(3,785,577	)		(364,144	)
Net decrease in net assets resulting from operations	$	(3,931,691	)	$	(380,316	)
† Net of Foreign Taxes Withheld of:	$	27,606		$	6,365

See Notes to the Financial Statements.

173

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Operations

For the Six Months Ended June 30, 2010 (Unaudited)

	The Paradigm			The Medical
	Portfolio			Portfolio
INVESTMENT INCOME:
Dividends†	$	10,997,531		$	366,246
Interest income		865,934			—
Income from securities lending		1,422,313			12,582
Total investment income		13,285,778			378,828
EXPENSES:
Investment advisory fees		8,264,497			195,569
Administration fees		285,872			6,667
Professional fees		38,927			5,642
Fund accounting fees		111,742			4,123
Trustee and Officers’ fees and expenses		50,710			1,196
Custody fees and expenses		218,797			5,292
Other expenses		35,983			664
Total expenses		9,006,528			219,153
Net expenses		9,006,528			219,153
Net investment income		4,279,250			159,675
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on:
Investments and foreign currency		(49,471,545	)		(76,090	)
Net realized loss		(49,471,545	)		(76,090	)
Net change in unrealized depreciation of:
Investments and foreign currency		(54,023,897	)		(2,181,217	)
Net change in unrealized depreciation		(54,023,897	)		(2,181,217	)
Net loss on investments		(103,495,442	)		(2,257,307	)
Net decrease in net assets resulting from operations	$	(99,216,192	)	$	(2,097,632	)
† Net of Foreign Taxes Withheld of:	$	753,491		$	27,864

See Notes to the Financial Statements.

174

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Operations

For the Six Months Ended June 30, 2010 (Unaudited)

				The Kinetics
	The Small Cap			Government
	Opportunities			Money Market
	Portfolio			Portfolio
INVESTMENT INCOME:
Dividends†	$	1,150,514		$	—
Interest income		2			276
Income from securities lending		39,013			—
Total investment income		1,189,529			276
EXPENSES:
Investment advisory fees		1,110,952			3,620
Administration fees		38,500			324
Professional fees		11,163			3,208
Fund accounting fees		18,328			125
Trustee and Officers’ fees and expenses		6,728			60
Custody fees and expenses		89,405			1,771
Other expenses		5,616			30
Total expenses		1,280,692			9,138
Net expenses		1,280,692			9,138
Net investment loss		(91,163	)		(8,862	)
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on:
Investments and foreign currency		(2,963,541	)		—
Net realized loss		(2,963,541	)		—
Net change in unrealized depreciation of:
Investments and foreign currency		(7,532,700	)		—
Net change in unrealized depreciation		(7,532,700	)		—
Net loss on investments		(10,496,241	)		—
Net decrease in net assets resulting from operations	$	(10,587,404	)	$	(8,862	)
† Net of Foreign Taxes Withheld of:	$	44,319		$	—

See Notes to the Financial Statements.

175

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Operations

For the Six Months Ended June 30, 2010 (Unaudited)

	The Market			The Water
	Opportunities			Infrastructure
	Portfolio			Portfolio
INVESTMENT INCOME:
Dividends†	$	590,441		$	341,726
Interest income		23			2
Income from securities lending		49,441			38,535
Total investment income		639,905			380,263
EXPENSES:
Investment advisory fees		385,675			160,326
Administration fees		13,237			5,541
Professional fees		6,829			5,329
Fund accounting fees		8,192			4,803
Trustee and Officers’ fees and expenses		2,383			965
Custody fees and expenses		22,525			6,066
Other expenses		1,689			553
Total expenses		440,530			183,583
Net expenses		440,530			183,583
Net investment income		199,375			196,680
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on:
Investments and foreign currency		248,487			72,384
Net realized gain		248,487			72,384
Net change in unrealized depreciation of:
Investments and foreign currency		(5,398,389	)		(4,521,677	)
Written option contracts		(37,827	)		—
Net change in unrealized depreciation		(5,436,216	)		(4,521,677	)
Net loss on investments		(5,187,729	)		(4,449,293	)
Net decrease in net assets resulting from operations	$	(4,988,354	)	$	(4,252,613	)
† Net of Foreign Taxes Withheld of:	$	29,009		$	25,951

See Notes to the Financial Statements.

176

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Operations

For the Six Months Ended June 30, 2010 (Unaudited)

	The Multi-
	Disciplinary
	Portfolio
INVESTMENT INCOME:
Dividends†	$	90
Interest income		39,613
Income from securities lending		18
Total investment income		39,721
EXPENSES:
Investment advisory fees		9,862
Administration fees		1,624
Professional fees		4,706
Fund accounting fees		2,635
Trustee and Officers’ fees and expenses		50
Custody fees and expenses		1,861
Other expenses		50
Total expenses		20,788
Net expenses		20,788
Net investment income		18,933
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on:
Investments and foreign currency		788
Written option contracts expired or closed		71,661
Net realized gain		72,449
Net change in unrealized depreciation of:
Investments and foreign currency		(4,555	)
Written option contracts		(98,392	)
Net change in unrealized depreciation		(102,947	)
Net loss on investments		(30,498	)
Net decrease in net assets resulting from operations	$	(11,565	)
† Net of Foreign Taxes Withheld of:	$	—

See Notes to the Financial Statements.

177

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
	Six Months Ended			Year Ended			Six Months Ended			Year Ended
	June 30, 2010			December 31,			June 30, 2010			December 31,
	(Unaudited)			2009			(Unaudited)			2009
OPERATIONS:
Net investment loss	$	(146,114	)	$	(33,060	)	$	(16,172	)	$	(24,484	)
Net realized gain (loss) on sale of investments, foreign currency and written options		76,492			3,597,819			44,320			(420,269	)
Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options		(3,862,069	)		32,092,041			(408,464	)		1,903,249
Net increase (decrease) in net assets resulting from operations		(3,931,691	)		35,656,800			(380,316	)		1,458,496
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS:
Contributions		633,128			2,234,532			950,816			3,020,852
Withdrawals		(6,000,118	)		(7,912,207	)		(778,254	)		(1,672,795	)
Net increase (decrease) in net assets resulting from beneficial interest transactions		(5,366,990	)		(5,677,675	)		172,562			1,348,057
Total increase (decrease) in net assets		(9,298,681	)		29,979,125			(207,754	)		2,806,553
NET ASSETS:
Beginning of period		105,618,949			75,639,824			4,768,296			1,961,743
End of period	$	96,320,268		$	105,618,949		$	4,560,542		$	4,768,296

See Notes to the Financial Statements.

178

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
	Six Months Ended			Year Ended			Six Months Ended			Year Ended
	June 30, 2010			December 31,			June 30, 2010			December 31,
	(Unaudited)			2009			(Unaudited)			2009
OPERATIONS:
Net investment income	$	4,279,250		$	14,996,508		$	159,675		$	239,675
Net realized loss on sale of investments, foreign currency and written options		(49,471,545	)		(282,409,570	)		(76,090	)		(152,408	)
Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options		(54,023,897	)		696,152,858			(2,181,217	)		4,228,652
Net increase (decrease) in net assets resulting from operations		(99,216,192	)		428,739,796			(2,097,632	)		4,315,919
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS:
Contributions		2,093,404			78,038,515			7,885,282			7,401,998
Withdrawals		(176,723,149	)		(393,931,544	)		(2,527,364	)		(4,767,975	)
Net increase (decrease) in net assets resulting from beneficial interest transactions		(174,629,745	)		(315,893,029	)		5,357,918			2,634,023
Total increase (decrease) in net assets		(273,845,937	)		112,846,767			3,260,286			6,949,942
NET ASSETS:
Beginning of period		1,405,321,757			1,292,474,990			25,942,635			18,992,693
End of period	$	1,131,475,820		$	1,405,321,757		$	29,202,921		$	25,942,635

See Notes to the Financial Statements.

179

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Changes in Net Assets

							The Kinetics Government
	The Small Cap Opportunities Portfolio						Money Market Portfolio
	For the			For the			For the			For the
	Six Months Ended			Year Ended			Six Months Ended			Year Ended
	June 30, 2010			December 31,			June 30, 2010			December 31,
	(Unaudited)			2009			(Unaudited)			2009
OPERATIONS:
Net investment loss	$	(91,163	)	$	(97,708	)	$	(8,862	)	$	(20,531	)
Net realized loss on sale of investments, foreign currency and written options		(2,963,541	)		(45,656,070	)		—			—
Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options		(7,532,700	)		143,860,495			—			—
Net increase (decrease) in net assets resulting from operations		(10,587,404	)		98,106,717			(8,862	)		(20,531	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS:
Contributions		—			19,485,826			395,993			1,675,824
Withdrawals		(48,289,060	)		(128,333,657	)		(699,551	)		(2,689,591	)
Net decrease in net assets resulting from beneficial interest transactions		(48,289,060	)		(108,847,831	)		(303,558	)		(1,013,767	)
Total decrease in net assets		(58,876,464	)		(10,741,114	)		(312,420	)		(1,034,298	)
NET ASSETS:
Beginning of period		199,784,798			210,525,912			1,671,950			2,706,248
End of period	$	140,908,334		$	199,784,798		$	1,359,530		$	1,671,950

See Notes to the Financial Statements.

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Statements of Changes in Net Assets

	The Market Opportunities Portfolio						The Water Infrastructure Portfolio
	For the			For the			For the			For the
	Six Months Ended			Year Ended			Six Months Ended			Year Ended
	June 30, 2010			December 31,			June 30, 2010			December 31,
	(Unaudited)			2009			(Unaudited)			2009
OPERATIONS:
Net investment income	$	199,375		$	153,008		$	196,680		$	107,684
Net realized gain (loss) on sale of investments, foreign currency and written options		248,487			(7,399,123	)		72,384			(1,421,220	)
Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options		(5,436,216	)		30,080,757			(4,521,677	)		3,696,782
Net increase (decrease) in net assets resulting from operations		(4,988,354	)		22,834,642			(4,252,613	)		2,383,246
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS:
Contributions		1,011,282			7,456,809			8,992,213			11,818,237
Withdrawals		(8,463,610	)		(21,721,577	)		(1,064,649	)		(7,147,014	)
Net increase (decrease) in net assets resulting from beneficial interest transactions		(7,452,328	)		(14,264,768	)		7,927,564			4,671,223
Total increase (decrease) in net assets		(12,440,682	)		8,569,874			3,674,951			7,054,469
NET ASSETS:
Beginning of period		66,119,020			57,549,146			23,206,189			16,151,720
End of period	$	53,678,338		$	66,119,020		$	26,881,140		$	23,206,189

See Notes to the Financial Statements.

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Statements of Changes in Net Assets

	The Multi-Disciplinary Portfolio
	For the			For the
	Six Months Ended			Year Ended
	June 30, 2010			December 31,
	(Unaudited)			2009
OPERATIONS:
Net investment income (loss)	$	18,933		$	(10,867	)
Net realized gain on sale of investments, foreign currency and written options		72,449			105,539
Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options		(102,947	)		109,924
Net increase (decrease) in net assets resulting from operations		(11,565	)		204,596
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
BENEFICIAL INTEREST TRANSACTIONS:
Contributions		718,344			788,927
Withdrawals		(69,073	)		(89,179	)
Net increase in net assets resulting from beneficial interest transactions		649,271			699,748
Total increase in net assets		637,706			904,344
NET ASSETS:
Beginning of period		1,322,630			418,286
End of period	$	1,960,336		$	1,322,630

See Notes to the Financial Statements.

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Notes to Financial Statements

June 30, 2010 (Unaudited)

1.  Organization

The Kinetics Portfolios Trust (the “Trust”) was organized as a Delaware Statutory Trust on March 14, 2000 and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company issuing its beneficial interests in series, each series representing a distinct portfolio with its own investment objective and policies. The series currently authorized are: The Internet Portfolio, The Global Portfolio, 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 generally invests in the equity securities of foreign companies that have the ability to facilitate an increase in the growth of their traditional business lines and in U.S. companies benefiting from international economic growth. The Paradigm Portfolio invests primarily in the equity securities of U.S. and foreign companies that the investment adviser believes are undervalued and that have high returns on equity and are well positioned to reduce their costs, extend the reach of their distribution channels and experience significant growth in their assets or revenues. The Medical Portfolio invests primarily in the equity securities of U.S. and foreign companies engaged in medical research, pharmaceutical treatments and related medical technology industries and related technology

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Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

industries, generally, with a focus on companies engaged in cancer research and drug development. The Small Cap Opportunities Portfolio invests primarily in the equity securities of U.S. and foreign small capitalized companies that provide attractive valuation opportunities due to special situations such as lack of institutional ownership, lack of significant analyst coverage or companies with sound fundamentals that have experienced a short-term earnings shortfall. The Market Opportunities Portfolio invests primarily in the equity securities of U.S. and foreign companies engaged in capital markets or related to capital markets, as well as companies involved in the gaming industry. The 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, which includes fixed income and derivatives components. 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 and repurchase agreements that are fully collaterized by such obligations.

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 (other than obligations having a maturity of 60 days or less) are

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Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

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 June 30, 2010, 0.01%, 0.00%, 0.01%, 0.00%, and 0.00% of the net assets of The Internet Portfolio, The Paradigm Portfolio, The Medical Portfolio, The Small Cap Portfolio, and The Market Opportunities 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.

At June 30, 2010, The Paradigm Portfolio received as collateral securities with a total market value of $63,241,680. The detailed list of the securities received as collateral is listed below.

Credit Suisse Repurchase Agreement, 0.00%, due 07/01/2010, principal amount $62,000,000 Collaterlized by:

Description	Fair Value
FGPC, Pool E98225, 3.5000%, 08/01/2013	$	130,125
FGPC, Pool E80722, 6.0000%, 11/01/2014		67,386
FGPC, Pool E97047, 4.0000%, 05/01/2018		9,336,430
FGPC, Pool E98752, 4.5000%, 08/01/2018		6,769,359
FGPC, Pool E01639, 6.0000%, 02/01/2019		893,649
FGPC, Pool G01732, 6.0000%, 8/01/2034		10,976,624
FGPC, Pool G02200, 5.5000%, 06/01/2036		6,981,439
FGPC, Pool G02201, 5.5000%, 06/01/2036		28,086,669
Total	$	63,241,681

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Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

Written Options

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

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Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

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 June 30, 2010 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 June 30, 2010, the following Master Portfolios held illiquid securities:

			Percentage
	Market Value		of Net Assets
The Internet Portfolio	$	4,903		0.01	%
The Paradigm Portfolio		0		0.00
The Medical Portfolio		2,627		0.01
The Small Cap Opportunities Portfolio		0		0.00
The Market Opportunities Portfolio		0		0.00

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,

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Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

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 June 30, 2010, open tax years include the tax years ended December 31, 2006 through 2009. The Portfolios are also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next 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

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Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

Water Infrastructure Portfolio, Brennan Investment Partners, LLC, receives its compensation from the Adviser at the annual rate of 0.35% of the average daily net assets of The Water Infrastructure Portfolio. On July 16, 2010, Brennan Investment Partners, LLC ceased serving as sub-adviser for The Water Infrastructure Portfolio.

For the six months ended June 30, 2010, 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 $658,861, $30,872, $8,264,497, $195,569, $1,110,952, $3,620, $385,675, $160,326 and $9,862, respectively, pursuant to the Agreements.

For the six months ended June 30, 2010, the Trust was allocated $12,000 for the services of the Chief Compliance Officer employed by the Adviser.

4.   Approval of Investment Advisory Contracts by Trustees of Kinetics Portfolios Trust

At a meeting of the Board of Trustees of the Trust held on March 12, 2010, the Board, including all of the Trustees who are not interested persons under the 1940 Act (the “Independent Trustees”), approved the Agreements with respect to each Master Portfolio. In reaching a decision to renew the Advisory Agreements, the Board of Trustees, including all of the Independent Trustees, considered, among others (1) the nature, extent and quality of the services provided by the Adviser; (2) the performance of the Master Portfolios over the previous three months as well as the one, three and five-year periods ended December 31, 2009, as compared to the median of their relevant Lipper, Inc. (“Lipper”) peer group(s); (3) the contractual and actual compensation to be paid under the Agreements as compared to the compensation paid to relevant Lipper peer groups; (4) the expense ratios of the Master Portfolios, with expense waivers, as compared to expense ratios for relevant peer groups of Lipper portfolios; (5) the experience and qualifications of the Adviser’s personnel and the Adviser’s portfolio management capabilities and investment methodologies; (6) the Adviser’s operations, compliance program and policies with respect to the Code of Ethics; (7) the financial condition of the Adviser; (8) the cost of services to be provided by the Adviser and the Adviser’s profitability from each Master Portfolio for the year ended December 31, 2009; (9) the “fall-out” benefits to the Adviser and its affiliates from the relationship with the Master Portfolios; (10) the extent to which economies of

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Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

scale are relevant given the Master Portfolios’ current asset size and current asset growth potential; and (11) that each Master Portfolio other than the Government Money Market Portfolio, is designed for long-term investors. The Lipper peer group information was provided by U.S. Bancorp Fund Services, LLC, the Company’s administrator.

In addition, the Board of Trustees, including all of the Independent Trustees, approved, the investment sub-advisory agreement (the “Sub-Advisory Agreement”) for The Water Infrastructure Portfolio with Brennan Investment Partners, LLC (the “Sub-Adviser”). The Board noted that William S. Brennan, the Water Infrastructure Portfolio’s current lead portfolio manager, would continue to be responsible for the day-to-day management of the Portfolio under the Sub-Advisory Agreement. In reaching a decision to approve the Sub-Advisory Agreement, the Board of Trustees, including all of the Independent Trustees, considered their legal responsibilities with regard to all factors deemed to be relevant to The Water Infrastructure Portfolio, including, but not limited to the following: (1) the nature, extent and quality of the services provided by the Sub-Adviser; (2) the experience and qualifications of the Sub-Adviser’s personnel providing such services; (3) the performance of The Water Infrastructure Portfolio and the Sub-Adviser, as compared to industry competitors for the periods ended December 31, 2009; (4) an evaluation of the fee structure, any fee waivers, and The Water Infrastructure Portfolio’s expense ratios, and a comparison of them in relation to those of other investment companies having comparable investment policies and limitations; (5) possible alternative fee structures for determining fees; (6) the extent to which economies of scale would be realized as The Water Infrastructure Portfolio grows and whether fee levels reflect these economies of scale for the benefit of The Water Infrastructure Portfolio’s investors; (7) the direct and indirect costs of the services to be provided (and the basis of determining and allocating these costs) and profits by the Sub-Adviser and its affiliates from their relationship with the Trust; (8) other compensation or possible benefits to the Sub-Adviser and its affiliates from their advisory and other relationships with the Trust, including, if applicable, any benefits derived or to be derived by the Sub-Adviser from its relationship with the Trust such as soft dollar arrangements by which brokers provide research to the trust or the Sub-Adviser in return for allocating the Trust’s brokerage; (9) entrepreneurial risks borne by the Sub-Adviser, if any; and (10) a comparison of the fees charged by the Sub-Adviser with fees charged by the Sub-Adviser to similar clients.

The Board of Trustees, including a majority of the Independent Trustees, concluded that: they were satisfied with the quality of services provided by the

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Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

Adviser in advising the Master Portfolios and the quality of services to be provided by the Sub-Adviser in sub-advising The Water Infrastructure Portfolio, the profits earned by the Adviser (and Sub-Adviser with respect to The Water Infrastructure Portfolio) were reasonable in light of the nature, extent and quality of the services provided to each Master Portfolio; and that each Master Portfolio was not large enough to attain significant economies of scale.

Based on the factors considered, the Board of Trustees, including a majority of the Independent Trustees, concluded that it was appropriate to renew the Agreements and the Sub-Advisory Agreement.

5.  Securities Transactions

Purchases and sales of investment securities, other than short-term investments, for the six months ended June 30, 2010 were as follows:

	Purchases				Sales
	U.S.				U.S.
	Government		Other		Government		Other
The Internet Portfolio	$	—	$	1,919,570	$	—	$	7,221,917
The Global Portfolio		—		3,639,404		—		3,437,949
The Paradigm Portfolio		—		36,135,145		—		212,804,396
The Medical Portfolio		—		5,461,875		—		462,013
The Small Cap Opportunities Portfolio		—		4,521,859		—		51,900,583
The Market Opportunities Portfolio		—		2,619,682		—		9,256,095
The Water Infrastructure Portfolio		—		10,020,227		—		915,663
The Multi-Disciplinary Portfolio		—		901,886		—		225,213

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Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

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 Portfolio		34,247			50,178		(15,931	)		1,018,040

For the six months ended June 30, 2010, the Master Portfolios wrote the following options:

	Number			Premium
	of Contracts			Amount
The Internet Portfolio
Outstanding at the Beginning of Year		2		$	18,054
Options Exercised		(2	)		(18,054	)
Outstanding at June 30, 2010		—		$	—
The Market Opportunities Portfolio
Outstanding at the Beginning of Year		14		$	126,377
Options Exercised		(14	)		(126,377	)
Outstanding at June 30, 2010		—		$	—
The Multi-Disciplinary Portfolio
Outstanding at the Beginning of Year		327		$	114,271
Options Written		452			119,423
Options Exercised		(71	)		(17,876	)
Options Expired		(214	)		(70,941	)
Options Closed		(2	)		(1,050	)
Outstanding at June 30, 2010		492		$	143,827

6.  Portfolio Securities Loaned

As of June 30, 2010, 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

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Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

mitigated by the collateral, a Master Portfolio could experience a delay in recovering its securities and possible loss of income or value if the borrower fails to return them. The Master Portfolio receives interest on the collateral received as well as a fee for the securities loaned. The Master Portfolios will continue to receive dividends and interest on all securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan will be accounted for by the Master Portfolios. The value of the securities on loan and the value of the related collateral at June 30, 2010, were as follows:

	Securities		Collateral
The Internet Portfolio	$	35,652,076	$	37,191,023
The Global Portfolio		777,468		826,554
The Paradigm Portfolio		317,589,547		336,354,484
The Medical Portfolio		10,620,566		11,469,644
The Small Cap Opportunities Portfolio		18,375,220		19,983,320
The Market Opportunities Portfolio		7,663,963		8,056,223
The Water Infrastructure Portfolio		5,663,837		6,056,623
The Multi-Disciplinary Portfolio		—		—

7.  Selected Financial Highlights

Financial highlights for the Master Portfolios were as follows:

	The Internet Portfolio
	For the
	Six Months
	Ended			For the			For the		For the		For the		For the
	June 30,			Year Ended			Year Ended		Year Ended		Year Ended		Year Ended
	2010			December 31,			December 31,		December 31,		December 31,		December 31,
	(Unaudited)			2009			2008		2007		2006		2005
Ratio of expenses to average net assets:
Before expense reduction		1.36	%(1)		1.37	%		1.34%		1.34%		1.39%		1.45%
After expense reduction		1.36	%(1)		1.37	%		1.34%		1.33%		1.33%		1.44%
Ratio of net investment income (loss) to average net assets:
Before expense reduction		(0.28	)%(1)		(0.04	)%		1.59%		1.58%		0.17%		1.35%
After expense reduction		(0.28	)%(1)		(0.04	)%		1.59%		1.59%		0.23%		1.36%
Portfolio turnover rate		3	%		14	%		19%		15%		11%		12%

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Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

	The Global Portfolio
	For the
	Six Months
	Ended			For the			For the		For the		For the		For the
	June 30,			Year Ended			Year Ended		Year Ended		Year Ended		Year Ended
	2010			December 31,			December 31,		December 31,		December 31,		December 31,
	(Unaudited)			2009			2008		2007		2006		2005
Ratio of expenses to average net assets:
Before expense reduction		2.72	%(1)		2.81	%		2.46%		1.99%		1.62%		1.73%
After expense reduction		2.72	%(1)		2.81	%		2.46%		1.98%		1.46%		1.72%
Ratio of net investment income (loss) to average net assets:
Before expense reduction		(0.65	)%(1)		(0.74	)%		0.83%		3.73%		2.78%		4.30%
After expense reduction		(0.65	)%(1)		(0.74	)%		0.83%		3.74%		2.94%		4.31%
Portfolio turnover rate		130	%		53	%		98%		22%		10%		2%

	The Paradigm Portfolio
	For the
	Six Months
	Ended			For the		For the		For the		For the		For the
	June 30,			Year Ended		Year Ended		Year Ended		Year Ended		Year Ended
	2010			December 31,		December 31,		December 31,		December 31,		December 31,
	(Unaudited)			2009		2008		2007		2006		2005
Ratio of expenses to average net assets:
Before expense reduction		1.36	%(1)		1.36%		1.33%		1.33%		1.40%		1.45%
After expense reduction		1.36	%(1)		1.36%		1.33%		1.33%		1.32%		1.40%
Ratio of net investment income to average net assets:
Before expense reduction		0.65	%(1)		1.15%		0.86%		0.75%		0.85%		0.07%
After expense reduction		0.65	%(1)		1.15%		0.86%		0.75%		0.93%		0.12%
Portfolio turnover rate		5	%		15%		34%		8%		3%		5%

	The Medical Portfolio
	For the
	Six Months
	Ended			For the		For the		For the		For the		For the
	June 30,			Year Ended		Year Ended		Year Ended		Year Ended		Year Ended
	2010			December 31,		December 31,		December 31,		December 31,		December 31,
	(Unaudited)			2009		2008		2007		2006		2005
Ratio of expenses to average net assets:
Before expense reduction		1.40	%(1)		1.43%		1.42%		1.49%		1.44%		1.50%
After expense reduction		1.40	%(1)		1.43%		1.42%		1.40%		1.34%		1.49%
Ratio of net investment income (loss) to average net assets:
Before expense reduction		1.02	%(1)		1.14%		1.02%		0.42%		0.33%		(0.17%	)
After expense reduction		1.02	%(1)		1.14%		1.02%		0.51%		0.43%		(0.16%	)
Portfolio turnover rate		3	%		13%		28%		38%		20%		2%

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Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

	The Small Cap Opportunities Portfolio
	For the
	Six Months
	Ended			For the			For the		For the		For the		For the
	June 30,			Year Ended			Year Ended		Year Ended		Year Ended		Year Ended
	2010			December 31,			December 31,		December 31,		December 31,		December 31,
	(Unaudited)			2009			2008		2007		2006		2005
Ratio of expenses to average net assets:
Before expense reduction		1.44	%(1)		1.42	%		1.36%		1.34%		1.40%		1.48%
After expense reduction		1.44	%(1)		1.42	%		1.36%		1.31%		1.27%		1.37%
Ratio of net investment income (loss) to average net assets:
Before expense reduction		(0.10	)%(1)		(0.05	)%		0.51%		0.38%		0.30%		0.46%
After expense reduction		(0.10	)%(1)		(0.05	)%		0.51%		0.41%		0.43%		0.57%
Portfolio turnover rate		3	%		4	%		16%		17%		6%		4%

	The Kinetics Government Money Market Portfolio
	For the
	Six Months
	Ended			For the			For the			For the			For the			For the
	June 30,			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	2010			December 31,			December 31,			December 31,			December 31,			December 31,
	(Unaudited)			2009			2008			2007			2006			2005
Ratio of expenses to average net assets:
Before expense reduction		1.26	%(1)		1.01	%		1.24	%		2.22	%		1.56	%		1.37	%
After expense reduction		1.26	%(1)		1.01	%		1.24	%		2.22	%		1.17	%		1.37	%
Ratio of net investment income (loss) to average net assets:
Before expense reduction		(1.22	)%(1)		(0.95	)%		0.33	%		2.47	%		3.13	%		1.58	%
After expense reduction		(1.22	)%(1)		(0.95	)%		0.33	%		2.47	%		3.52	%		1.58	%
Portfolio turnover rate		N/A(2	)		N/A(2	)		N/A(2)			N/A(2)			N/A(2)			N/A(2)

	The Market Opportunities Portfolio
	For the
	Six Months
	Ended			For the		For the		For the		January 31,
	June 30,			Year Ended		Year Ended		Year Ended		2006ˆ through
	2010			December 31,		December 31,		December 31,		December 31,
	(Unaudited)			2009		2008		2007		2006
Ratio of expenses to average net assets:
Before expense reduction		1.43	%(1)		1.42%		1.36%		1.44%		1.81	%(1)
After expense reduction		1.43	%(1)		1.42%		1.36%		1.44%		1.61	%(1)
Ratio of net investment income to average net assets:
Before expense reduction		0.65	%(1)		0.26%		1.25%		0.61%		0.16	%(1)
After expense reduction		0.65	%(1)		0.26%		1.25%		0.61%		0.36	%(1)
Portfolio turnover rate		4	%		14%		77%		14%		0	%

195

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Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

	The Water Infrastructure Portfolio
	For the
	Six Months
	Ended			For the		For the		June 29,
	June 30,			Year Ended		Year Ended		2007ˆ through
	2010			December 31,		December 31,		December 31,
	(Unaudited)			2009		2008		2007
Ratio of expenses to average net assets:
Before expense reduction		1.43	%(1)		1.49%		1.49%		2.01	%(1)
After expense reduction		1.43	%(1)		1.49%		1.49%		2.01	%(1)
Ratio of net investment income to average net assets:
Before expense reduction		1.53	%(1)		0.63%		1.27%		0.96	%(1)
After expense reduction		1.53	%(1)		0.63%		1.27%		0.96	%(1)
Portfolio turnover rate		4	%		45%		66%		7	%

	The Multi-Disciplinary Portfolio
	For the
	Six Months
	Ended			For the			February 11, 2008ˆ
	June 30,			Year Ended			through
	2010			December 31,			December 31,
	(Unaudited)			2009			2008
Ratio of expenses to average net assets:
Before expense reduction		2.63	%(1)		3.66	%		5.09	%(1)
After expense reduction		2.63	%(1)		3.66	%		5.09	%(1)
Ratio of net investment income (loss) to average net assets:
Before expense reduction		2.40	%(1)		(1.20	)%		(3.49	)%(1)
After expense reduction		2.40	%(1)		(1.20	)%		(3.49	)%(1)
Portfolio turnover rate		34	%		77	%		N/A	(2)

ˆ	Commencement of operations.
(1)	Annualized.
(2)	The Portfolio did not hold any long-term securities during the period, therefore the portfolio turnover is not applicable.

8.  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

196

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

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 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 June 30, 2010:

	Level 1		Level 2		Level 3			Total
Common Stocks	$	95,373,878	$	4,879	$	25	(1)	$	95,378,782
Escrow Notes		—		—		—			—
Rights		1,468,884		—		—			1,468,884
Short-Term Investments		463,604		—		—			463,604
Investments Purchased with the Cash
Proceeds from Securities Lending		37,191,023		—		—			37,191,023
Total Investments in Securities	$	134,497,389	$	4,879	$	25		$	134,502,293

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

Special Purpose Entity $ 25

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Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

The Global Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of June 30, 2010:

	Level 1		Level 2			Level 3		Total
Common Stocks	$	4,379,630	$	100,312	(1)	$	—	$	4,479,942
Preferred Stocks		50,171		—			—		50,171
Warrants		202		—			—		202
Short-Term Investments		22,634		—			—		22,634
Investments Purchased with the Cash
Proceeds from Securities Lending		826,554		—			—		826,554
Total Investments in Securities	$	5,279,191	$	100,312		$	—	$	5,379,503

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

Oil & Gas & Consumable Fuels $ 100,312

The Paradigm Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of June 30, 2010:

	Level 1		Level 2			Level 3			Total
Common Stocks	$	1,108,875,933	$	—		$	—		$	1,108,875,933
Escrow Notes		—		—			—	*		—	*
Convertible Bonds		—		12,547,500			—			12,547,500
Corporate Bonds		—		39,916			—			39,916
Rights		—		—	*		—			—	*
Warrants		—		96,522			—			96,522
Short-Term Investments		14,173,360		—			—			14,173,360
Investments Purchased with the Cash
Proceeds from Securities Lending		336,354,484		—			—			336,354,484
Total Investments in Securities	$	1,459,403,777	$	12,683,938		$	—		$	1,472,087,715

*  Amount is less than $0.50.

Transfers into Level 2	$	96,522
Transfers out of Level 2		—
Net transfers in and/or out of Level 2	$	96,522

Transfers between Levels are recognized at the end of the reporting period.

198

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Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

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

	Investments in			Written Option
Description	Securities			Contracts
Balance as of December 31, 2009	$	2,620,751		$	—
Accrued discounts/premiums		—			—
Realized gain (loss)		—			—
Change in unrealized appreciation (depreciation)		—			—
Net purchases (sales)		(2,620,751	)		—
Transfer in and/or out of Level 3		—			—
Balance as of June 30, 2010	$	—		$	—

The Medical Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of June 30, 2010:

	Level 1		Level 2		Level 3		Total
Common Stocks	$	27,159,347	$	—	$	—	$	27,159,347
Escrow Notes		—		2,550		—		2,550
Rights		—		13,420		—		13,420
Short-Term Investments		1,467,069		—		—		1,467,069
Investments Purchased with the Cash
Proceeds from Securities Lending		11,469,644		—		—		11,469,644
Total Investment in Securities	$	40,096,060	$	15,970	$	—	$	40,112,030

The Small Cap Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of June 30, 2010:

	Level 1		Level 2			Level 3			Total
Common Stocks	$	140,858,723	$	—		$	—		$	140,858,723
Escrow Notes		—		—			—	*		—	*
Corporate Bonds		—		11,693			—			11,693
Rights		676,177		—	*		—			676,177
Investments Purchased with the Cash
Proceeds from Securities Lending		19,983,320		—			—			19,983,320
Total Investments in Securities	$	161,518,220	$	11,693		$	—		$	161,529,913

*  Amount is less than $0.50.

199

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Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

The Government Money Market Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of June 30, 2010:

	Level 1		Level 2		Level 3		Total
Short-Term Investments	$	—	$	1,339,989	$	—	$	1,339,989
Total Investments in Securities	$	—	$	1,339,989	$	—	$	1,339,989

The Market Opportunities Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of June 30, 2010:

	Level 1		Level 2			Level 3		Total
Common Stocks	$	53,525,694	$	—		$	—	$	53,525,694
Rights		—		—	*		—		—	*
Short-Term Investments		244,785		—			—		244,785
Investments Purchased with the Cash
Proceeds from Securities Lending		8,056,223		—			—		8,056,223
Total Investment in Securities	$	61,826,702	$	—		$	—	$	61,826,702

*  Amount is less than $0.50.

The Water Infrastructure Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of June 30, 2010:

	Level 1		Level 2		Level 3		Total
Common Stocks	$	24,926,975	$	—	$	—	$	24,926,975
Preferred Stocks		550,125		—		—		550,125
Warrants		—		27,200		—		27,200
Short-Term Investments		1,485,300		—		—		1,485,300
Investments Purchased with the Cash
Proceeds from Securities Lending		6,056,623		—		—		6,056,623
Total Investments in Securities	$	33,019,023	$	27,200	$	—	$	33,046,223

The Multi-Disciplinary Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of June 30, 2010:

	Level 1			Level 2		Level 3		Total
Convertible Bonds	$	—		$	570,500	$	—	$	570,500
Corporate Bonds		—			1,018,387		—		1,018,387
Purchased Call Option Contracts		180			—		—		180
Short-Term Investments		26,617			—		—		26,617
Total Investments in Securities	$	26,797		$	1,588,887	$	—	$	1,615,684
Put Options Written	$	(187,132	)	$	—	$	—	$	(187,132	)

200

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Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

9.   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 a Portfolio uses derivatives, how derivatives are accounted for by the Portfolios, and how derivative instruments affect a Portfolio results of operations and financial position. The Portfolios utilized options to implement or to gain further exposure to their respective investment strategies.

The Internet Portfolio

Statement of Assets and Liabilities

Fair Values of derivative instruments as of June 30, 2010:

	Assets				Liabilities
Equity Contracts	Description		Fair Value		Description		Fair Value
Purchased Options		Investments*	$	—
Written Options						Written option 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 six months ended June 30, 2010:

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		(5,404	)+
Total	$	(5,404	)

***	Purchased options are included with investments.
+	This change is a result of options being opened in a pervious period and then held through the current period.

201

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Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

The Internet Portfolio has adopted authoritative standards regarding disclosure about derivatives and hedging activities and how they affect the Portfolio’s Statement of Assets and Liabilities and Statement of Operations. For the six months ended June 30, 2010: no long option contracts were purchased and $0 premiums were paid, no written option contracts were opened and $0 premiums were received during the period.

The Market Opportunities Portfolio

Statement of Assets and Liabilities

Fair Values of derivative instruments as of June 30, 2010:

	Assets				Liabilities
Equity Contracts	Description		Fair Value		Description		Fair Value
Purchased Options		Investments*	$	—
Written Options						Written option 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 six months ended June 30, 2010:

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		(37,827	)+
Total	$	(37,827	)

***	Purchased options are included with investments.
+	This change is a result of options being opened in a previous period and then held through the current period.

202

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Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

The Market Opportunities Portfolio has adopted authoritative standards regarding disclosure about derivatives and hedging activities and how they affect the Portfolio’s Statement of Assets and Liabilities and Statement of Operations. For the six months ended June 30, 2010: no long option contracts were purchased and $0 premiums were paid, no written option contracts were opened and $0 premiums were received during the period.

The Multi-Disciplinary Portfolio

Statement of Assets and Liabilities

Fair Values of derivative instruments as of June 30, 2010:

	Assets				Liabilities
Equity Contracts	Description		Fair Value		Description		Fair Value
Purchased Options		Investments*	$	180
Written Options						Written option contracts, at value	$	187,132
Total			$	180			$	187,132

*    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 six months ended June 30, 2010:

Amount of Realized Gain (Loss) on Equity Contracts

Equity Contracts
Purchased Options	$	—	**
Written Options		71,661
Total	$	71,661

**   Purchased options are included with investments.

Change in Unrealized Appreciation (Depreciation) on Equity Contracts

Equity Contracts
Purchased Options	$	(45	)***
Written Options		(98,392	)
Total	$	(98,437	)

***  Purchased options are included with investments.

The Multi-Disciplinary Portfolio has adopted authoritative standards regarding disclosure about derivatives and hedging activities and how they affect the Portfolio’s Statement of Assets and Liabilities and Statement of Operations. For

203

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Notes to Financial Statements — (Continued)

June 30, 2010 (Unaudited)

the six months ended June 30, 2010: no long option contracts were purchased and $0 premiums were paid, written option contracts (452 contracts) were opened and $119,423 premiums were received during the period.

10.  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.

11.  Subsequent Events

On July 16, 2010, Brennan Investment Partners, LLC ceased serving as sub-adviser for Water Infrastructure. Kinetics Asset Management, Inc. continues to serve as investment adviser to Water Infrastructure.

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.kineticsfunds.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.

204

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

TABLE OF CONTENTS

	Item 2. Code of Ethics
	Item 3. Audit Committee Financial Expert
	Item 4. Principal Accountant Fees and Services
	Item 5. Audit Committee of Listed Registrants
	Item 6. Schedule of Investments
	Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
	Item 8. Portfolio Managers of Closed-End Management Investment Companies
	Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
	Item 10. Submission of Matters to a Vote of Security Holders
	Item 11. Controls and Procedures
	Item 12. Exhibits
SIGNATURES

Item 2. Code of Ethics.

Not applicable for semi-annual reports.

Item 3. Audit Committee Financial Expert.

Not applicable for semi-annual reports.

Item 4. Principal Accountant Fees and Services.

Not applicable for semi-annual reports.

Item 5. Audit Committee of Listed Registrants.

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

Item 6. Schedule of Investments.

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

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

Not applicable to open-end investment companies.

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

Not applicable to open-end investment companies.

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

Not applicable to open-end investment companies.

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

Not Applicable.

Item 11. Controls and Procedures.

(a) The Registrant’s President/Chief Executive Officer and Treasurer/Chief Financial Officer have 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) Not applicable.

(2)	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
(3)	Not applicable to open-end investment companies.

(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 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 September 7, 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 September 7, 2010

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

Date September 7, 2010

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