nvcsr

As filed with the Securities and Exchange Commission on March 10, 2011

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: December 31, 2010

KINETICS MUTUAL FUNDS, INC.

Table of Contents

December 31, 2010


	Page

Shareholders’ Letter		2
Year 2010 Annual Investment Commentary		5
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
Growth of 10,000 Investment		13
Expense Example		24
Allocation of The Tactical Paradigm Fund Assets		34
Schedule of Investments — The Tactical Paradigm Fund		35
Schedule of Future Contracts — The Tactical Paradigm Fund		36
Statements of Assets & Liabilities		37
Statements of Operations		42
Statements of Changes in Net Assets		47
Notes to Financial Statements		60
Financial Highlights		78
Report of Independent Registered Public Accounting Firm		104
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
Allocation of Portfolio Assets		105
Portfolio of Investments — The Internet Portfolio		109
Portfolio of Investments — The Global Portfolio		116
Portfolio of Investments — The Paradigm Portfolio		122
Portfolio of Investments — The Medical Portfolio		129
Portfolio of Investments — The Small Cap Opportunities Portfolio		133
Portfolio of Investments — The Market Opportunities Portfolio		139
Portfolio of Investments — The Water Infrastructure Portfolio		143
Portfolio of Investments — The Multi-Disciplinary Portfolio		146
Portfolio of Options Written — The Water Infrastructure Portfolio		150
Portfolio of Options Written — The Multi-Disciplinary Portfolio		156
Statements of Assets & Liabilities		175
Statements of Operations		179
Statements of Changes in Net Assets		183
Notes to Financial Statements		187
Report of Independent Registered Public Accounting Firm		209
Management of the Funds and the Portfolios		211
Privacy Policy		216

KINETICS MUTUAL FUNDS, INC.

Shareholders’ Letter

Dear Fellow Shareholders:

We are pleased to present the Kinetics Mutual Funds’ Annual Report for the fiscal year ended December 31, 2010. On balance, the Kinetics Family of Mutual Funds had solid investment results for 2010, with gains of 17.37% for The Paradigm Fund, 13.86% for the Small-Cap Opportunities Fund, 11.31% for The Market Opportunities Funds, 21.18% for The Internet Fund, 4.30% for The Medical Fund, 20.30% for The Global Fund, 3.47% for The Tactical Paradigm Fund, and 13.04% for The Multi-Disciplinary Fund. The Water Infrastructure Fund declined by 4.60% for the same period. This compares with the 2010 returns of 15.06% and 16.91% for the S&P 500 Index⁽¹⁾ and for the NASDAQ Composite Index⁽²⁾, respectively. The comparison of our funds to these two indices is merely for illustrative purposes and is not an indication that we are trying to replicate or exceed the performance of a certain index during a discrete short timeframe. Our investment goal is to provide you with commendable investment results, without regard as to how an index is positioned in relationship to our funds. We encourage you to use whatever index you feel appropriate for your own comparison purposes.

We have always maintained that our long-term investment results will be driven by the underlying business operations of the companies we own. In this regard, nothing has changed. As global investors continue to re-assess risk, those companies that have, typically, rebounded the most in price have been those which performed well operationally throughout the crisis. We still believe our Funds offer noteworthy value for long-term investors, as we believe the price recovery for our holdings is still in the earlier stages. Markets will have down periods, sometimes extreme, such as seen during 2008 - early 2009, but if your focus is upon the business fundamentals, you should, and hopefully will, in the longer term, be rewarded for your steadfastness.

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

Kinetics offers the following funds to investors:

The Paradigm Fund focuses on companies that currently have, or which should soon have, sustainable high returns on equity. The Fund has produced attractive returns since its inception in an environment that should be described as difficult for equity investors. The Paradigm Fund is Kinetics’ flagship fund. For those interested in potentially less volatility, we encourage you to examine our Multi-Disciplinary Fund, listed below.

The Tactical Paradigm Fund seeks to provide long-term growth of capital by generally investing all of its assets in the Paradigm Portfolio, while also dynamically hedging market risk with futures, options and short sales of ETFs. The Tactical Paradigm Fund may also purchase or write options, either separately or in combination with each other, to adjust the market risk and return of its overall investment positions. Broadmark Asset Management, LLC, serves as the sub-adviser for the hedged portion of the Fund. We expect to close this fund in early 2011.

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

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

The Internet Fund is a sector fund that focuses on companies engaged in the evolution of Internet-related developments. As such, this Fund has been, and is likely to continue to be, quite volatile. The Internet Fund is not designed to be a major component of one’s equity exposure. More recently, this fund has been focusing on content companies, which we believe will be the winners in the next generation of Internet development.

The Global Fund’s mandate was changed in early April 2008 to an emphasis on global investments. This fund is truly a go-anywhere-fund and is presently finding exciting opportunities in the more developed markets.

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

The Water Infrastructure Fund is a sector fund that invests in global companies engaged in water infrastructure and water-specific natural resources, as well as related activities. This fund is now being managed in-house and is using an investment strategy similar to that of the Multi-Disciplinary Fund. As such, we hope to achieve very attractive long-term results with muted volatility.

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

KINETICS MUTUAL FUNDS, INC.

Investment Commentary

Dear Shareholders:

Perhaps in defiance of the vocal cottage industry of financial doomsayers, 2010 was a satisfactory year for the majority of the Kinetics Mutual Funds. The Funds (No-Load Class) experienced gains of 17.37% in the Paradigm Fund, 13.86% in the Small Cap Opportunities Fund, 11.31% in the Market Opportunities Fund, 4.30% in the Medical Fund, 21.18% in the Internet Fund, 13.04% in the Multi-Disciplinary Fund, 20.30% in the Global Fund, and 3.47% in the Tactical Paradigm Fund. The Water Infrastructure Fund, which was managed by an outside sub-adviser for the majority of 2010, posted a loss of 4.60%. The Water Infrastructure Fund is now being managed in-house by the Kinetics investment staff. The S&P 500 Index and the NASDAQ Composite Index had respective returns of 15.06% and 16.91% during the same period.

During 2010, in general terms, stock prices rose until April, then declined until August, and then rose again until year end. For the greater part of the year, the daily gains or losses in stock prices had much to do with the news released on a particular day. For institutional investors, a crowd that needs no encouragement, the financial crisis apparently reinforced the idea that one has to trade the market, lest one be seen as sleeping at the wheel. It appears the new religion in financial management is that fundamental buy-and-hold investing has been invalidated.

The performance of The Paradigm Fund and The Tactical Paradigm Fund can be attributed to investments in financial exchanges, holding companies (owner operated), Chinese infrastructure companies, Canadian oil sands companies, real estate investment trusts and gaming/casino companies with exposure to Macao. Global economic growth, low interest rates, stable inflation and stability of financial system were underlying factors for the investments’ financial performance.

The Global Fund’s performance benefitted from rising expectations for economic growth in developed and developing markets. The Fund’s investments also benefitted in change in investor sentiment from the previous two years, as investors looked to value companies on the basis of earnings, rather than perceptions of the financial system’s stability.

Decreasing option price volatility and narrowing corporate credit spreads generated a substantial portion of 2010 returns for The Multi-Disciplinary Fund. The Fund maintained a diverse option exposure across a variety of high quality corporations which was supplemented by income received from bonds of equally high quality companies in the energy, real estate and power generation industries. The Fund benefitted not only from the income of the options and bonds, but also price appreciation in the bonds as company fundamentals and the economy improved.

Performance for The Small Cap Opportunities Fund was largely driven by allocations to financial exchanges, holding companies, real estate developers, media companies and Chinese infrastructure businesses. Overall economic and stock market performance was heavily influenced by the fiscal and monetary policies implemented by the United States government. As a result of such low interest rates and high capital spending policies, domestic businesses experienced recovering earnings and increased margins.

The Market Opportunities Fund embraced a systemic financial recovery in 2010 as allocations to financial exchanges, asset management companies and various critical financial intermediary businesses dictated Fund performance for the year. Increases in investor confidence, financial activity and economic output are factors that underpinned the Fund’s returns.

The Water Infrastructure Fund’s performance was the result of premiums received on option positions, income and price appreciation in fixed income positions and price appreciation in equity positions. The exposure was diversified across water related industries including water utilities, water purification, water transportation (pipes and pumps) and water rights companies. The option and fixed income positions provided stability and income to the Fund during volatile periods of the year, while the equity positions provided additional upside when markets stabilized.

The performance of The Medical Fund for 2010 was driven by allocations into discounted pharmaceuticals and biotechnology companies. Gains came from both equity appreciation and strong dividend yields. In addition, due to discounts to intrinsic

valuations, merger and acquisition activity within companies held by the Fund continued at a brisk pace, dramatically unlocking value.

For The Internet Fund, while the number of holdings that advanced for the year vastly exceeded those that fell, the performance of media companies and other content providers had a notable contribution to the Fund’s overall return during 2010. This was likely due to the market recognizing that such companies possess high earnings leverage, in which the marginal increase in revenue after development costs translates into pure profit. Additionally, a number of the Fund’s holdings in international Internet-related companies appreciated considerably, reflective of the vast growth potential that these companies possess.

Yogi Berra once quipped: “It’s tough to make predictions, especially about the future,” and this is a view to which we fully subscribe. Leaving aside the high frictional costs of trading, the idea that one can “out trade” other market participants defies all common sense and basic mathematics; yet, it is embraced by a majority of investors. For perspective, consider a 3x3 Rubik’s Cube, a seemingly simple puzzle. A 3x3 cube has six sides, with nine mini-cubes to a side. Thus, it has 54 mini-cubes in total. Without some basic instructions as to how to solve the puzzle, one can spend a fair amount of time coming up with a solution for a scrambled cube. Even with some instruction, the cube is not so simple. Just ask Erno Rubik, the cube’s inventor, who spent over a month trying to solve it the first time he scrambled his original cube in 1974. There are over 43 quintillion scrambled starting positions on a 3x3 Rubik’s Cube (a quintillion, which is a real number, is a billion times a billion). Serious mathematicians have spent the better part of 30 years trying to determine the minimum number of moves it would take to complete the cube from every starting position. With the help of Google’s computers, and over 35 years of computing power, they have come up with an answer, 20. Keep in mind that the faces of the mini-cubes on a Rubik’s Cube are fixed. The notion that an investor can out-guess all the other market participants, or that economists have great insight into the direction of the overall economy, defies all mathematical logic

once you consider all the variables that need to be calculated, variables that are constantly shifting.

Domestic equity fund flows suggest that headlines and volatility (all of the daily guessing) continue to make investors hesitant to commit funds to developed market (U.S., Europe, Japan) equities. In accordance with current investor trends ( a good contrarian indicator), the reasons to own equities in 2011 are at least as compelling as they were at the start of 2010: generally attractive valuations, low interest rates, rising corporate profits and dividends, sizable stock buybacks, and, finally, accretive merger activity.

A recent cover of Barron’s Magazine (January 24, 2011) had a caricature of Warren Buffett under the headline, “Mr. Moneybags.” Mr. Buffett is seen smiling broadly as he clutches dollar bills, as more dollars seemingly fall from the sky all around him. The article on Berkshire Hathaway, the company headed by Mr. Buffet since 1965, is, for the most part, very positive. It goes into detail about the company’s attractive valuation (“shares trade at just 1.15 times projected year-end 2011 book”), its prodigious earnings (2011 after-tax profits may exceed $12 billion), and its masterstroke November 2009 acquisition of Burlington Northern, which may have added over $10 billion worth of value to Berkshire in little more than a year’s time. The article also notes that Berkshire’s stock price is little changed in the last year, despite its impressive and improving operating results. We have owned Berkshire for well over 10 years in various accounts, and it was an original position in our Paradigm Fund. While it is somewhat gratifying to read positive things about companies we own, we also found the article amusing, because Barron’s had another cover story on Berkshire Hathaway, in December of 1999. That article, which was not as flattering, was titled, “What’s Wrong, Warren?” The article goes on to say, “But there’s more to Berkshire’s weak showing than just operating and investment performance. To be blunt, Buffett, who turns 70 in 2000, is viewed by an increasing number of investors as too conservative, even passé. Buffett, Berkshire’s chairman and chief executive, may be the world’s greatest investor, but he hasn’t anticipated or capitalized on the boom in technology stocks in the past few years.” The article did quote a number of investors who

liked the stock, then trading at 1.5 times book value and expected to earn $2 billion after tax. From the end of 1999, Berkshire’s stock price, which had higher valuation metrics than today, appreciated 118.8% through the end of 2010. Over the same time period, the S&P 500 Index rose just 4.59% and the tech-heavy NASDAQ Composite declined by 29.9%. Over the same time period our flagship fund, the Paradigm Fund, rose by 151.9%. Our success or failure is ultimately predicated on the underlying business operations of the companies we own. A perusal of our long-term results should encourage our investors.

We believe a very important dynamic is taking place in the financial industry, one that should ultimately benefit fundamental buy-and-hold investors such as Kinetics. Exchange traded funds (ETFs) are growing rapidly in popularity. It is estimated that ETFs now have close to $1 trillion invested in them, with close to a 1,000 different funds. ETFs were designed to be a passive investment strategy, but with so many choices they have become an active strategy, with high turnover among the owners, who are jumping from one ETF to another. Companies that are typically deemed desirable for inclusion in an ETF are those with great liquidity. For example, Berkshire would probably not be included in an ETF because Warren Buffett owns a significant stake, as do other long-term holders of the stock. Thus, it is not that “liquid”, even though it is massive in size. In effect, the designers of ETFs are bypassing companies that are largely owned by their original founders in favor of managements that are more transitory in nature. Basic psychology would suggest that owners make better decisions and take better care of their property than do agents brought in from the outside to run the business for a short time before moving on to their next career endeavor. We believe that it is not just a coincidence that ETFs have grown in popularity while companies comparable to Berkshire have become better values. Similarly to the response to the temporary underperformance in 1999, we believe this is likely to end poorly for those making that bet. We recently read that 67% of the world’s billionaires started from scratch, building up great enterprises over time through hard work and diligence. Most of the world’s billionaires still have

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 “uncovered” options are highly specialized activities that entail greater than ordinary investment risk.

As non-diversified Funds, the value of Fund shares may fluctuate more than shares invested in a broader range of industries and companies.

Unlike other investment companies that directly acquire and manage their own portfolios of securities, The Kinetics Mutual Funds pursue their investment objectives by investing all 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.

January 1, 2011 — Kinetics Asset Management, Inc.

How a $10,000 Investment Has Grown:

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

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

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

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

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

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

CBOE S&P 500 PutWrite Index (PUT) — The CBOE S&P 500 Put-Write Index (PUT) is a benchmark index designed to track the performance of a passive program that sells near-term, at-the-money S&P 500 Index puts. The securities that comprise the CBOE S&P 500 Put-Write Index may differ substantially from the securities in The Multi-Disciplinary Fund’s portfolio. It is not possible to directly invest in an index.

The Internet Fund

December 31, 2000 — December 31, 2010


	Ended 12/31/2010
				Advisor			Advisor
	No Load			Class A			Class A			Advisor						NASDAQ
	Class			(No Load)			(Load Adjusted)⁽¹⁾			Class C			S&P 500			Composite


One Year		21.18	%		20.89	%		13.94	%		20.26	%		15.06	%		16.91	%


Five Years		8.97	%		8.84	%		7.56	%		N/A			2.29	%		3.76	%


Ten Years		4.89	%		N/A			N/A			N/A			1.41	%		0.71	%


Since Inception No Load Class (10/21/96)		15.55	%		N/A			N/A			N/A			5.96	%		5.53	%


Since Inception Advisor Class A (4/26/01)		N/A			5.04	%		4.40	%		N/A			2.13	%		2.78	%


Since Inception Advisor Class C (2/16/07)		N/A			N/A			N/A			6.23	%		−1.58	%		1.58	%


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

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

The Global Fund

December 31, 2000 — December 31, 2010


	Ended 12/31/2010
				Advisor			Advisor
	No Load			Class A			Class A			Advisor						NASDAQ
	Class			(No Load)			(Load Adjusted)⁽¹⁾			Class C			S&P 500			Composite


One Year		20.30	%		20.04	%		19.24	%		20.26	%		15.06	%		16.91	%


Five Years		3.81	%		N/A			N/A			N/A			2.29	%		3.76	%


Ten Years		4.57	%		N/A			N/A			N/A			1.41	%		0.71	%


Since Inception No Load Class (12/31/99)		−4.88	%		N/A			N/A			N/A			0.41	%		−3.81	%


Since Inception Advisor Class A (5/19/08)		N/A			2.28	%		−0.02	%		N/A			−2.49	%		2.04	%


Since Inception Advisor Class C (5/19/08)		N/A			N/A			N/A			1.52	%		−2.49	%		2.04	%


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

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

The Paradigm Fund

December 31, 2000 — December 31, 2010


	Ended 12/31/2010
				Advisor			Advisor
	No Load			Class A			Class A			Advisor			Institutional						NASDAQ
	Class			(No Load)			(Load Adjusted)⁽¹⁾			Class C			Class			S&P 500			Composite


One Year		17.37	%		17.11	%		10.39	%		16.45	%		17.62	%		15.06	%		16.91	%


Five Years		3.71	%		3.44	%		2.22	%		2.91	%		3.89	%		2.29	%		3.76	%


Ten years		9.25	%		N/A			N/A			N/A			N/A			1.41	%		0.71	%


Since Inception No Load Class (12/31/99)		8.76	%		N/A			N/A			N/A			N/A			0.41	%		−3.81	%


Since Inception Advisor Class A (4/26/01)		N/A			9.24	%		8.57	%		N/A			N/A			2.13	%		2.78	%


Since Inception Advisor Class C (6/28/02)		N/A			N/A			N/A			9.75	%		N/A			4.91	%		7.24	%


Since Inception Institutional Class (5/27/05)		N/A			N/A			N/A			N/A			5.65	%		2.99	%		4.48	%


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

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

The Medical Fund

December 31, 2000 — December 31, 2010


	Ended 12/31/2010
				Advisor			Advisor
	No Load			Class A			Class A			Advisor						NASDAQ
	Class			(No Load)			(Load Adjusted)⁽¹⁾			Class C			S&P 500			Composite


One Year		4.30	%		4.13	%		−1.86	%		3.55	%		15.06	%		16.91	%


Five Years		6.49	%		6.27	%		5.01	%		N/A			2.29	%		3.76	%


Ten Years		0.91	%		N/A			N/A			N/A			1.41	%		0.71	%


Since Inception No Load Class (9/30/99)		7.67	%		N/A			N/A			N/A			1.65	%		−0.31	%


Since Inception Advisor Class A (4/26/01)		N/A			2.11	%		1.49	%		N/A			2.13	%		2.78	%


Since Inception Advisor Class C (2/16/07)		N/A			N/A			N/A			2.66	%		−1.58	%		1.58	%


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

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

The Small Cap Opportunities Fund

December 31, 2000 — December 31, 2010


	Ended 12/31/2010
				Advisor			Advisor
	No Load			Class A			Class A			Advisor			Institutional						NASDAQ
	Class			(No Load)			(Load Adjusted)⁽¹⁾			Class C			Class			S&P 500			Composite


One Year		13.86	%		13.56	%		7.04	%		13.00	%		14.10	%		15.06	%		16.91	%


Five Years		3.10	%		2.84	%		1.63	%		N/A			3.28	%		2.29	%		3.76	%


Ten Years		8.81	%		N/A			N/A			N/A			N/A			1.41	%		0.71	%


Since Inception No Load Class (3/20/00)		9.20	%		N/A			N/A			N/A			N/A			0.47	%		−5.00	%


Since Inception Advisor Class A (12/31/01)		N/A			6.37	%		5.67	%		N/A			N/A			3.01	%		3.48	%


Since Inception Advisor Class C (2/16/07)		N/A			N/A			N/A			−4.93	%		N/A			−1.58	%		1.58	%


Since Inception Institutional Class (8/12/05)		N/A			N/A			N/A			N/A			3.65	%		2.54	%		3.92	%


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

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

The Market Opportunities Fund

January 31, 2006 — December 31, 2010


	Ended 12/31/2010
				Advisor			Advisor
	No Load			Class A			Class A			Advisor			Institutional						NASDAQ
	Class			(No Load)			(Load Adjusted)⁽¹⁾			Class C			Class			S&P 500			Composite


One Year		11.31	%		11.11	%		4.71	%		10.54	%		11.54	%		15.06	%		16.91	%


Since Inception No Load Class (1/31/06)		4.19	%		N/A			N/A			N/A			N/A			1.79	%		2.89	%


Since Inception Advisor Class A (1/31/06)		N/A			3.92	%		2.68	%		N/A			N/A			1.79	%		2.89	%


Since Inception Advisor Class C (2/16/07)		N/A			N/A			N/A			−2.36	%		N/A			−1.58	%		1.58	%


Since Inception Institutional Class (5/19/08)		N/A			N/A			N/A			N/A			−4.16	%		−2.49	%		2.04	%


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

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

The Water Infrastructure Fund

June 29, 2007 — December 31, 2010

Ended 12/31/2010

Advisor

No Load

Class A

Advisor

Institutional

S&P Global

Class

(No Load)

(Load Adjusted)⁽¹⁾

Class C

Class

S&P 500

Water Index

One Year

−4.60

−4.80

−10.29

−5.15

−4.38

15.05

15.95

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

−4.42

N/A

−2.83

−1.12

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

N/A

−4.64

−6.23

N/A

−2.83

−1.12

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

N/A

−5.11

N/A

−2.83

−1.12

Since Inception Institutional Class (6/29/07)

N/A

−4.17

−2.83

−1.12


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

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

The Multi-Disciplinary Fund

February 11, 2008 — December 31, 2010


	Ended 12/31/2010
				Advisor			Advisor
	No Load			Class A			Class A			Advisor			Institutional						NASDAQ			CBOE			CBOE
	Class			(No Load)			(Load Adjusted)⁽¹⁾			Class C			Class			S&P 500			Composite			Buy			PUT


One Year		13.04	%		12.64	%		6.17	%		12.13	%		13.19	%		15.06	%		16.91	%		5.86	%		9.02	%


Since Inception No Load Class (2/11/08)		4.72	%		N/A			N/A			N/A			N/A			0.11	%		4.75	%		0.43	%		3.60	%


Since Inception Advisor Class A (2/11/08)		N/A			4.45	%		2.33	%		N/A			N/A			0.11	%		4.75	%		0.43	%		3.60	%


Since Inception Advisor Class C (2/11/08)		N/A			N/A			N/A			3.94	%		N/A			0.11	%		4.75	%		0.43	%		3.60	%


Since Inception Institutional Class (2/11/08)		N/A			N/A			N/A			N/A			4.92	%		0.11	%		4.75	%		0.43	%		3.60	%


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

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


*		Effective 12/31/2010, The Multi-Disciplinary Fund has replaced the CBOE S&P 500 Buy Write Index (BXM) with the CBOE S&P 500 PutWrite Index (PUT). The portfolio management team believes that CBOE S&P 500 PutWrite Index (PUT) is more representative of the Fund than the CBOE S&P 500 Buy Write Index (BXM).

The Tactical Paradigm Fund

December 31, 2009 — December 31, 2010


	Ended 12/31/2010
				Advisor			Advisor
	No Load			Class A			Class A			Advisor			Institutional						NASDAQ
	Class			(No Load)			(Load Adjusted)⁽¹⁾			Class C			Class			S&P 500			Composite


One Year		3.47	%		3.08	%		−2.85	%		2.53	%		3.51	%		15.06	%		16.91	%


Since Inception No Load Class (12/31/09)		3.47	%		N/A			N/A			N/A			N/A			15.06	%		16.91	%


Since Inception Advisor Class A (12/31/09)		N/A			3.08	%		−2.85	%		N/A			N/A			15.06	%		16.91	%


Since Inception Advisor Class C (12/31/09)		N/A			N/A			N/A			2.53	%		N/A			15.06	%		16.91	%


Since Inception Institutional Class (12/31/09)		N/A			N/A			N/A			N/A			3.51	%		15.06	%		16.91	%


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

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example

December 31, 2010

Shareholders incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvestments of dividends or other distributions made by a Fund, redemption fees, and exchange fees, and (2), ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help investors understand the ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested on July 1, 2010 and held for the entire period from July 1, 2010 to December 31, 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

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

December 31, 2010

deemed not to be disadvantageous to the Funds or shareholders as described in the Funds’ prospectus.

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.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

December 31, 2010


	Beginning		Ending
	Account		Account					Expenses Paid
	Value		Value		Annualized			During Period*
	(7/1/10)		(12/31/10)		Expense Ratio			(7/1/10 to 12/31/10)
The Internet Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,266.57		1.94	%	$	11.08
No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,266.57		1.89	%	$	10.80
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,015.43		1.94	%	$	9.86
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,015.68		1.89	%	$	9.60
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	1,265.17		2.19	%	$	12.50
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	1,265.17		2.14	%	$	12.22
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,014.17		2.19	%	$	11.12
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,014.42		2.14	%	$	10.87
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	1,261.99		2.69	%	$	15.34
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	1,261.99		2.64	%	$	15.05
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,011.64		2.69	%	$	13.64
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,011.90		2.64	%	$	13.39
The Global Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,295.51		3.90	%	$	22.57
No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,295.51		1.39	%	$	8.04
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,005.55		3.90	%	$	19.71
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,018.20		1.39	%	$	7.07
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	1,292.50		4.15	%	$	23.98
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	1,292.50		1.64	%	$	9.48

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

December 31, 2010


	Beginning		Ending
	Account		Account					Expenses Paid
	Value		Value		Annualized			During Period*
	(7/1/10)		(12/31/10)		Expense Ratio			(7/1/10 to 12/31/10)
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,004.28		4.15	%	$	20.97
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.94		1.64	%	$	8.34
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	1,287.88		4.65	%	$	26.82
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	1,287.88		2.14	%	$	12.34
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,001.76		4.65	%	$	23.46
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,014.42		2.14	%	$	10.87
The Paradigm Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,276.11		1.76	%	$	10.10
No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,276.11		1.64	%	$	9.41
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,016.33		1.76	%	$	8.94
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.94		1.64	%	$	8.34
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	1,274.38		2.01	%	$	11.52
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	1,274.38		1.89	%	$	10.83
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,015.07		2.01	%	$	10.21
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,015.68		1.89	%	$	9.60
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	1,271.00		2.51	%	$	14.37
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	1,271.00		2.39	%	$	13.68
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,012.55		2.51	%	$	12.73
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,013.16		2.39	%	$	12.13

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

December 31, 2010


	Beginning		Ending
	Account		Account					Expenses Paid
	Value		Value		Annualized			During Period*
	(7/1/10)		(12/31/10)		Expense Ratio			(7/1/10 to 12/31/10)
Institutional Class Actual — before expense reimbursement	$	1,000.00	$	1,277.03		1.71	%	$	9.81
Institutional Class Actual — after expense reimbursement	$	1,000.00	$	1,277.03		1.44	%	$	8.26
Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,016.59		1.71	%	$	8.69
Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,017.95		1.44	%	$	7.32
The Medical Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,118.64		1.99	%	$	10.63
No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,118.64		1.39	%	$	7.42
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,015.17		1.99	%	$	10.11
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,018.20		1.39	%	$	7.07
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	1,117.34		2.24	%	$	11.95
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	1,117.34		1.64	%	$	8.75
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,013.91		2.24	%	$	11.37
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.94		1.64	%	$	8.34
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	1,114.18		2.74	%	$	14.60
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	1,114.18		2.14	%	$	11.40
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,011.39		2.74	%	$	13.89
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,014.42		2.14	%	$	10.87
The Small Cap Opportunities Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,229.44		1.84	%	$	10.34
No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,229.44		1.64	%	$	9.22

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

December 31, 2010


	Beginning		Ending
	Account		Account					Expenses Paid
	Value		Value		Annualized			During Period*
	(7/1/10)		(12/31/10)		Expense Ratio			(7/1/10 to 12/31/10)
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,015.93		1.84	%	$	9.35
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.94		1.64	%	$	8.34
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	1,227.68		2.09	%	$	11.74
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	1,227.68		1.89	%	$	10.61
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,014.67		2.09	%	$	10.61
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,015.68		1.89	%	$	9.60
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	1,224.81		2.59	%	$	14.52
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	1,224.81		2.39	%	$	13.40
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,012.15		2.59	%	$	13.14
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,013.16		2.39	%	$	12.13
Institutional Class Actual — before expense reimbursement	$	1,000.00	$	1,230.44		1.79	%	$	10.06
Institutional Class Actual — after expense reimbursement	$	1,000.00	$	1,230.44		1.44	%	$	8.10
Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,016.18		1.79	%	$	9.10
Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,017.95		1.44	%	$	7.32
The Market Opportunities Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,219.99		1.93	%	$	10.80
No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,219.99		1.64	%	$	9.18
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,015.48		1.93	%	$	9.80
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.94		1.64	%	$	8.34

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

December 31, 2010


	Beginning		Ending
	Account		Account					Expenses Paid
	Value		Value		Annualized			During Period*
	(7/1/10)		(12/31/10)		Expense Ratio			(7/1/10 to 12/31/10)
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	1,216.98		2.18	%	$	12.18
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	1,216.98		1.89	%	$	10.56
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,014.22		2.18	%	$	11.07
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,015.68		1.89	%	$	9.60
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	1,214.46		2.68	%	$	14.96
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	1,214.46		2.39	%	$	13.34
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,011.70		2.68	%	$	13.59
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,013.16		2.39	%	$	12.13
Institutional Class Actual — before expense reimbursement	$	1,000.00	$	1,221.06		1.88	%	$	10.52
Institutional Class Actual — after expense reimbursement	$	1,000.00	$	1,221.06		1.44	%	$	8.06
Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,015.73		1.88	%	$	9.55
Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,017.95		1.44	%	$	7.32
The Water Infrastructure Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,115.10		2.26	%	$	12.05
No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,115.10		1.64	%	$	8.74
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,013.81		2.26	%	$	11.47
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.94		1.64	%	$	8.34
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	1,113.63		2.51	%	$	13.37
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	1,113.63		1.89	%	$	10.07

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

December 31, 2010


	Beginning		Ending
	Account		Account					Expenses Paid
	Value		Value		Annualized			During Period*
	(7/1/10)		(12/31/10)		Expense Ratio			(7/1/10 to 12/31/10)
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,012.55		2.51	%	$	12.73
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,015.68		1.89	%	$	9.60
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	1,110.41		3.01	%	$	16.01
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	1,110.41		2.39	%	$	12.71
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,010.03		3.01	%	$	15.25
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,013.16		2.39	%	$	12.13
Institutional Class Actual — before expense reimbursement	$	1,000.00	$	1,115.34		2.21	%	$	11.78
Institutional Class Actual — after expense reimbursement	$	1,000.00	$	1,115.34		1.44	%	$	7.68
Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,014.06		2.21	%	$	11.22
Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,017.95		1.44	%	$	7.32
The Multi-Disciplinary Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,129.40		5.19	%	$	27.86
No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,129.40		1.49	%	$	8.00
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	999.04		5.19	%	$	26.15
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,017.69		1.49	%	$	7.58
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	1,126.51		5.44	%	$	29.16
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	1,126.51		1.74	%	$	9.33
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	997.78		5.44	%	$	27.39
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.43		1.74	%	$	8.84

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

December 31, 2010


	Beginning		Ending
	Account		Account					Expenses Paid
	Value		Value		Annualized			During Period*
	(7/1/10)		(12/31/10)		Expense Ratio			(7/1/10 to 12/31/10)
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	1,124.64		5.94	%	$	31.81
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	1,124.64		2.24	%	$	12.00
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	995.26		5.94	%	$	29.87
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,013.91		2.24	%	$	11.37
Institutional Class Actual — before expense reimbursement	$	1,000.00	$	1,128.75		5.14	%	$	27.58
Institutional Class Actual — after expense reimbursement	$	1,000.00	$	1,128.75		1.29	%	$	6.92
Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	999.29		5.14	%	$	25.90
Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,018.70		1.29	%	$	6.56
The Tactical Paradigm Fund
No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,122.24		6.20	%	$	33.17
No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,122.24		2.29	%	$	12.25
No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	993.95		6.20	%	$	31.16
No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,013.66		2.29	%	$	11.62
Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	1,120.43		6.45	%	$	34.47
Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	1,120.43		2.54	%	$	13.58
Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	992.69		6.45	%	$	32.40
Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,012.40		2.54	%	$	12.88
Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	1,116.93		6.95	%	$	37.08
Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	1,116.93		3.04	%	$	16.22

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Expense Example — (Continued)

December 31, 2010


	Beginning		Ending
	Account		Account					Expenses Paid
	Value		Value		Annualized			During Period*
	(7/1/10)		(12/31/10)		Expense Ratio			(7/1/10 to 12/31/10)
Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	990.17		6.95	%	$	34.86
Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,009.88		3.04	%	$	15.40
Institutional Class Actual — before expense reimbursement	$	1,000.00	$	1,122.63		6.15	%	$	32.90
Institutional Class Actual — after expense reimbursement	$	1,000.00	$	1,122.63		2.09	%	$	11.18
Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	994.20		6.15	%	$	30.91
Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,014.67		2.09	%	$	10.61


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 Feeder Fund-specific expenses as well as the expenses allocated for the Master Portfolio.


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

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

The Tactical Paradigm Fund

Schedule of Investments — December 31, 2010


Identifier	OTHER INVESTMENTS — 95.91%	Value

	*Other Investments — 95.91%*
	Kinetics Paradigm Portfolio^m		1,531,791

	TOTAL OTHER INVESTMENTS		1,531,791

	TOTAL INVESTMENTS — 95.91%	$	1,531,791

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.

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Assets & Liabilities

December 31, 2010


	The Internet			The Global
	Fund			Fund


ASSETS:
Investments in the Master Portfolios, at value*	$	115,255,930		$	5,296,841
Receivable from Adviser		4,846			15,419
Receivable for Master Portfolio interest sold		223,059			—
Receivable for Fund shares sold		10,918			3,850
Prepaid expenses and other assets		17,220			14,434

Total assets		115,511,973			5,330,544

LIABILITIES:
Payable for Master Portfolio interest purchased		—			3,850
Payable to Directors and Officers		1,659			86
Payable for Fund shares repurchased		233,977			—
Payable for service fees		24,549			1,105
Payable for distribution fees		702			179
Accrued expenses and other liabilities		77,296			12,814

Total liabilities		338,183			18,034

Net assets	$	115,173,790		$	5,312,510

NET ASSETS CONSIST OF:
Paid in capital	$	92,326,294		$	6,069,102
Accumulated net investment income (loss)		54,100			(23,401	)
Accumulated net realized loss on investments and foreign currency		(23,778,966	)		(1,300,750	)
Net unrealized appreciation on:
Investments and foreign currency		46,572,362			567,559

Net Assets	$	115,173,790		$	5,312,510

CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS:
Net assets	$	113,085,292		$	4,541,173
Shares outstanding		3,035,874			971,739
Net asset value per share (offering and redemption price)	$	37.25		$	4.67

CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A:
Net assets	$	1,892,151		$	707,176
Shares outstanding		51,571			151,095
Net asset value per share (redemption price)	$	36.69		$	4.68

Offering price per share ($36.69 divided by .9425 and $4.68 divided by .9425)	$	38.93		$	4.97

CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C:
Net assets	$	196,347		$	64,161
Shares outstanding		5,486			13,818
Net asset value per share (offering and redemption price)	$	35.79		$	4.64


*	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.

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Assets & Liabilities

December 31, 2010


	The Paradigm			The Medical
	Fund			Fund


ASSETS:
Investments in the Master Portfolios, at value*	$	1,208,791,332		$	30,676,424
Receivable from Adviser		115,672			15,182
Receivable for Master Portfolio interest sold		282,871			21,655
Receivable for Fund shares sold		2,143,090			5,589
Prepaid expenses and other assets		34,981			15,568

Total assets		1,211,367,946			30,734,418

LIABILITIES:
Payable to Directors and Officers		18,867			483
Payable for Fund shares repurchased		2,425,961			27,244
Payable for service fees		230,235			6,520
Payable for distribution fees		189,310			1,384
Accrued expenses and other liabilities		351,918			22,809

Total liabilities		3,216,291			58,440

Net assets	$	1,208,151,655		$	30,675,978

NET ASSETS CONSIST OF:
Paid in capital	$	1,957,688,385		$	30,643,234
Accumulated net investment income (loss)		(9,775,040	)		28,164
Accumulated net realized loss on investments and foreign currency		(1,021,368,388	)		(677,876	)
Net unrealized appreciation on:
Investments and foreign currency		281,606,698			682,456

Net Assets	$	1,208,151,655		$	30,675,978

CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS:
Net assets	$	687,056,274		$	25,776,928
Shares outstanding		29,478,131			1,322,932
Net asset value per share (offering and redemption price)	$	23.31		$	19.48

CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A:
Net assets	$	226,263,752		$	4,207,003
Shares outstanding		9,860,177			220,773
Net asset value per share (redemption price)	$	22.95		$	19.06

Offering price per share ($22.95 divided by .9425 and $19.06 divided by .9425)	$	24.35		$	20.22

CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C:
Net assets	$	152,570,975		$	692,047
Shares outstanding		6,855,733			36,613
Net asset value per share (offering and redemption price)	$	22.25		$	18.90

CALCULATION OF NET ASSET VALUE PER SHARE —
INSTITUTIONAL CLASS:
Net assets	$	142,260,654
Shares outstanding		6,119,270
Net asset value per share (offering and redemption price)	$	23.25


*	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.

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Assets & Liabilities

December 31, 2010


	The Small Cap			The Market
	Opportunities			Opportunities
	Fund			Fund


ASSETS:
Investments in the Master Portfolios, at value*	$	155,118,505		$	58,518,497
Receivable from Adviser		16,799			14,631
Receivable for Master Portfolio interest sold		340,854			78,889
Receivable for Fund shares sold		44,761			13,110
Prepaid expenses and other assets		22,233			24,724

Total assets		155,543,152			58,649,851

LIABILITIES:
Payable to Directors and Officers		2,562			903
Payable for Fund shares repurchased		385,615			92,000
Payable for service fees		31,518			12,429
Payable for distribution fees		5,518			6,655
Accrued expenses and other liabilities		71,877			27,134

Total liabilities		497,090			139,121

Net assets	$	155,046,062		$	58,510,730

NET ASSETS CONSIST OF:
Paid in capital	$	314,478,990		$	88,209,920
Accumulated net investment loss		(1,089,215	)		(2,114,296	)
Accumulated net realized loss on investments and foreign currency		(188,919,026	)		(34,818,280	)
Net unrealized appreciation on:
Investments and foreign currency		30,575,313			7,233,386

Net Assets	$	155,046,062		$	58,510,730

CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS:
Net assets	$	130,278,539		$	38,562,142
Shares outstanding		5,587,064			3,366,208
Net asset value per share (offering and redemption price)	$	23.32		$	11.46

CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A:
Net assets	$	11,509,161		$	14,167,453
Shares outstanding		500,776			1,239,468
Net asset value per share (redemption price)	$	22.98		$	11.43

Offering price per share ($22.98 divided by .9425 and $11.43 divided by .9425)	$	24.38		$	12.13

CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C:
Net assets	$	3,450,477		$	5,569,269
Shares outstanding		152,152			492,787
Net asset value per share (offering and redemption price)	$	22.68		$	11.30

CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS:
Net assets	$	9,807,885		$	211,866
Shares outstanding		418,279			18,459
Net asset value per share (offering and redemption price)	$	23.45		$	11.48


*	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.

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Assets & Liabilities

December 31, 2010


	The Water			The Multi-
	Infrastructure			Disciplinary
	Fund			Fund


ASSETS:
Investments in the Master Portfolios, at value*	$	24,122,101		$	4,097,779
Receivable from Adviser		13,293			6,662
Receivable for Master Portfolio interest sold		146,515			—
Receivable for Fund shares sold		80,528			8,000
Prepaid expenses and other assets		15,425			26,299

Total assets		24,377,862			4,138,740

LIABILITIES:
Payable for Master Portfolio interest purchased		—			8,000
Payable to Directors and Officers		399			28
Payable for Fund shares repurchased		227,043			—
Payable for service fees		4,471			791
Payable for distribution fees		3,938			145
Accrued expenses and other liabilities		18,049			14,136

Total liabilities		253,900			23,100

Net assets	$	24,123,962		$	4,115,640

NET ASSETS CONSIST OF:
Paid in capital	$	32,389,675		$	3,890,144
Accumulated net investment loss		(33,240	)		(12,853	)
Accumulated net realized gain (loss) on investments, foreign currency and written option contracts		(9,416,641	)		2,997
Net unrealized appreciation on:
Investments and foreign currency		20,727			69,225
Written option contracts		1,163,441			166,127

Net Assets	$	24,123,962		$	4,115,640

CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS:
Net assets	$	7,001,497		$	3,489,290
Shares outstanding		835,279			333,411
Net asset value per share (offering and redemption price)	$	8.38		$	10.47

CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A:
Net assets	$	10,100,308		$	355,903
Shares outstanding		1,209,401			34,093
Net asset value per share (redemption price)	$	8.35		$	10.44

Offering price per share ($8.35 divided by .9425 and $10.44 divided by .9425)	$	8.86		$	11.08

CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C:
Net assets	$	2,839,723		$	128,001
Shares outstanding		344,069			12,309
Net asset value per share (offering and redemption price)	$	8.25		$	10.40

CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS:
Net assets	$	4,182,434		$	142,446
Shares outstanding		496,582			13,564
Net asset value per share (offering and redemption price)	$	8.42		$	10.50


*	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.

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Assets & Liabilities

December 31, 2010


	The Tactical
	Paradigm
	Fund


ASSETS:
Investments in the Master Portfolios, at value*	$	1,531,791
Deposit at brokers for futures		56,046
Receivable from Adviser		3,910
Due from broker-variation margin		825
Prepaid expenses and other assets		24,152

Total assets		1,616,724

LIABILITIES:
Payable to Sub-Adviser		885
Payable to Directors and Officers		19
Payable for service fees		337
Payable for distribution fees		2,636
Accrued expenses and other liabilities		15,670

Total liabilities		19,547

Net assets	$	1,597,177

NET ASSETS CONSIST OF:
Paid in capital	$	1,542,457
Accumulated net investment loss		(10,975	)
Accumulated net realized loss on investments, foreign currency, written option contracts and future contracts		(326,571	)
Net unrealized appreciation (depreciation) on:
Investments and foreign currency		404,653
Futures contracts		(12,387	)

Net Assets	$	1,597,177

CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS:
Net assets	$	49,847
Shares outstanding		4,850
Net asset value per share (offering and redemption price)	$	10.28

CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS A:
Net assets	$	502,267
Shares outstanding		49,043
Net asset value per share (redemption price)	$	10.24

Offering price per share ($10.24 divided by .9425)	$	10.86

CALCULATION OF NET ASSET VALUE PER SHARE — ADVISOR CLASS C:
Net assets	$	1,024,355
Shares outstanding		100,210
Net asset value per share (offering and redemption price)	$	10.22

CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS:
Net assets	$	20,708
Shares outstanding		2,022
Net asset value per share (offering and redemption price)	$	10.24


*	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.

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Operations

For the Year Ended December 31, 2010


	The Internet			The Global
	Fund			Fund


INVESTMENT LOSS ALLOCATED FROM MASTER
PORTFOLIOS:
Dividends†	$	850,831		$	92,408
Interest		54,676			1
Income from securities lending		106,235			2,043
Other income		99,868			—
Expenses allocated from Master Portfolio		(1,461,843	)		(119,398	)

Net investment loss from Master Portfolio		(350,233	)		(24,946	)

EXPENSES:
Distribution fees — Advisor Class A		2,841			1,204
Distribution fees — Advisor Class C		1,093			322
Shareholder servicing fees — Advisor Class A		2,841			1,204
Shareholder servicing fees — Advisor Class C		365			107
Shareholder servicing fees — No Load Class		264,081			11,061
Transfer Agent fees and expenses		172,690			20,215
Reports to shareholders		72,171			3,501
Administration fees		36,254			1,669
Professional fees		17,217			7,625
Directors’ and Officers’ fees and expenses		7,293			355
Registration fees		39,557			40,711
Fund accounting fees		5,256			242
Other expenses		5,327			236

Total expenses		626,986			88,452
Less, expense reimbursement		(64,197	)		(137,533	)

Net expenses		562,789			(49,081	)

Net investment income (loss)		(913,022	)		24,135

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS:
Net realized gain on:
Investments and foreign currency		3,608,256			621,170
Net change in unrealized appreciation (depreciation) of:
Investments and foreign currency		18,108,751			246,651
Written option contracts		(5,403	)		—

Net gain on investments		21,711,604			867,821

Net increase in net assets resulting from operations	$	20,798,582		$	891,956

† Net of Foreign Taxes Withheld of:	$	33,821		$	10,402

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Operations

For the Year Ended December 31, 2010


	The Paradigm			The Medical
	Fund			Fund


INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIOS:
Dividends†	$	23,133,845		$	581,765
Interest		1,681,570			58
Income from securities lending		2,082,596			24,147
Expenses allocated from Master Portfolio		(16,706,025	)		(434,646	)

Net investment income from Master Portfolio		10,191,986			171,324

EXPENSES:
Distribution fees — Advisor Class A		563,355			10,946
Distribution fees — Advisor Class C		1,153,688			5,099
Shareholder servicing fees — Advisor Class A		563,355			10,946
Shareholder servicing fees — Advisor Class C		384,562			1,703
Shareholder servicing fees — No Load Class		1,794,385			65,568
Shareholder servicing fees — Institutional Class		257,319			—
Transfer Agent fees and expenses		696,038			32,486
Reports to shareholders		347,584			11,576
Administration fees		426,920			11,005
Professional fees		74,582			11,363
Directors’ and Officers’ fees and expenses		83,835			2,163
Registration fees		93,940			39,882
Fund accounting fees		59,730			1,552
Other expenses		71,038			1,370

Total expenses		6,570,331			205,659
Less, expense waiver for Institutional Class service fees		(192,989	)		—
Less, expense reimbursement		(1,524,125	)		(189,372	)

Net expenses		4,853,217			16,287

Net investment income		5,338,769			155,037

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS:
Net realized loss on:
Investments and foreign currency		(106,442,949	)		(220,195	)
Net change in unrealized appreciation of:
Investments and foreign currency		278,030,932			1,376,200

Net gain on investments		171,587,983			1,156,005

Net increase in net assets resulting from operations	$	176,926,752		$	1,311,042

† Net of Foreign Taxes Withheld of:	$	1,193,928		$	28,223

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Operations

For the Year Ended December 31, 2010


	The Small Cap			The Market
	Opportunities			Opportunities
	Fund			Fund


INVESTMENT INCOME ALLOCATED FROM MASTER
PORTFOLIOS:
Dividends†	$	2,249,570		$	1,090,688
Interest		20,973			36
Income from securities lending		100,654			81,141
Expenses allocated from Master Portfolio		(2,336,881	)		(841,186	)

Net investment income from Master Portfolio		34,316			330,679

EXPENSES:
Distribution fees — Advisor Class A		31,127			39,161
Distribution fees — Advisor Class C		28,274			41,919
Shareholder servicing fees — Advisor Class A		31,127			39,161
Shareholder servicing fees — Advisor Class C		9,425			13,973
Shareholder servicing fees — No Load Class		337,810			94,441
Shareholder servicing fees — Institutional Class		26,349			171
Transfer Agent fees and expenses		104,089			41,861
Reports to shareholders		41,150			13,810
Administration fees		56,967			20,534
Professional fees		21,999			13,639
Directors’ and Officers’ fees and expenses		11,001			4,065
Registration fees		52,988			48,179
Fund accounting fees		8,024			2,884
Other expenses		10,510			3,375

Total expenses		770,840			377,173
Less, expense waiver for Institutional Class service fees		(19,761	)		(129	)
Less, expense reimbursement		(356,797	)		(167,828	)

Net expenses		394,282			209,216

Net investment income (loss)		(359,966	)		121,463

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS:
Net realized loss on:
Investments and foreign currency		(588,589	)		(336,643	)
Net change in unrealized appreciation (depreciation) of:
Investments and foreign currency		20,471,453			6,205,603
Written option contracts		—			(37,822	)

Net gain on investments		19,882,864			5,831,138

Net increase in net assets resulting from operations	$	19,522,898		$	5,952,601

† Net of Foreign Taxes Withheld of:	$	66,129		$	39,957

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Operations

For the Year Ended December 31, 2010


	The Water			The Multi-
	Infrastructure			Disciplinary
	Fund			Fund


INVESTMENT INCOME ALLOCATED FROM MASTER
PORTFOLIOS:
Dividends†	$	423,323		$	85
Interest		173,690			111,245
Income from securities lending		52,546			54
Expenses allocated from Master Portfolio		(380,207	)		(53,600	)

Net investment income from Master Portfolio		269,352			57,784

EXPENSES:
Distribution fees — Advisor Class A		28,794			418
Distribution fees — Advisor Class C		21,516			892
Shareholder servicing fees — Advisor Class A		28,794			418
Shareholder servicing fees — Advisor Class C		7,172			297
Shareholder servicing fees — No Load Class		18,216			4,663
Shareholder servicing fees — Institutional Class		8,643			227
Transfer Agent fees and expenses		31,734			20,392
Reports to shareholders		14,338			158
Administration fees		9,190			2,192
Professional fees		10,794			9,460
Directors’ and Officers’ fees and expenses		1,816			100
Registration fees		47,795			46,603
Fund accounting fees		1,299			119
Other expenses		1,175			40

Total expenses		231,276			85,979

Less, expense waiver for Institutional Class service fees		(6,482	)		(170	)
Less, expense reimbursement		(137,029	)		(104,577	)

Net expenses		87,765			(18,768	)

Net investment income		181,587			76,552

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS:
Net realized gain (loss) on:
Investments and foreign currency		(2,178,542	)		3,717
Written option contracts expired or closed		(296,275	)		98,444
Net change in unrealized appreciation (depreciation) of:
Investments and foreign currency		(357,260	)		35,546
Written option contracts		1,163,441			115,719

Net gain (loss) on investments		(1,668,636	)		253,426

Net increase (decrease) in net assets resulting from operations	$	(1,487,049	)	$	329,978

† Net of Foreign Taxes Withheld of:	$	31,416		$	—

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Operations

For the Year Ended December 31, 2010


	The Tactical
	Paradigm
	Fund


INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIO:
Dividends†	$	26,366
Interest		1,784
Income from securities lending		1,717
Expenses allocated from Master Portfolio		(17,220	)

Net investment income from Master Portfolio		12,647

EXPENSES:
Distribution fees — Advisor Class A		1,165
Distribution fees — Advisor Class C		6,176
Shareholder servicing fees — Advisor Class A		1,165
Shareholder servicing fees — Advisor Class C		2,058
Shareholder servicing fees — No Load Class		235
Shareholder servicing fees — Institutional Class		42
Sub-Advisory fees		9,119
Custodian fees and expenses		3,276
Transfer Agent fees and expenses		20,301
Reports to shareholders		148
Administration fees		2,412
Professional fees		10,011
Directors’ and Officers’ fees and expenses		90
Registration fees		7,473
Fund accounting fees		25,671
Interest expense		54

Total expenses		89,396
Less, expense waiver for Institutional Class service fees		(32	)
Less, expense reimbursement		(67,156	)

Net expenses		22,208

Net investment loss		(9,561	)

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on:
Investments and foreign currency allocated from Master Portfolio		(260,660	)
Written option contracts expired or closed		30,716
Futures contracts		(97,336	)
Net change in unrealized appreciation (depreciation) of:
Investments and foreign currency allocated from Master Portfolio		404,653
Futures contracts		(12,387	)

Net gain on investments		64,986

Net increase in net assets resulting from operations	$	55,425

† Net of Foreign Taxes Withheld of:	$	1,299

The accompanying notes are an integral part of these financial statements.

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
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2010			2009			2010			2009


OPERATIONS:
Net investment income (loss)	$	(913,022	)	$	(492,158	)	$	24,135		$	21,456
Net realized gain (loss) on sale of investments and foreign currency		3,608,256			3,597,660			621,170			(418,155	)
Net change in unrealized appreciation of investments, foreign currency and written options		18,103,348			32,089,184			246,651			1,899,110

Net increase in net assets resulting from operations		20,798,582			35,194,686			891,956			1,502,411

DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS:
Net investment income		—			(127,292	)		(43,877	)		(19,692	)

Total distributions		—			(127,292	)		(43,877	)		(19,692	)

DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A:
Net investment income		—			(930	)		(5,645	)		(1,275	)

Total distributions		—			(930	)		(5,645	)		(1,275	)

DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C:
Net investment income		—			(145	)		(303	)		(22	)

Total distributions		—			(145	)		(303	)		(22	)

CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS:
Proceeds from shares sold		3,021,151			4,869,857			1,128,676			2,868,282
Redemption fees		170			1,370			102			6,702
Proceeds from shares issued to holders in reinvestment of dividends		—			123,697			43,193			19,427
Cost of shares redeemed		(15,163,154	)		(10,313,179	)		(1,733,680	)		(1,808,229	)

Net increase (decrease) in net assets resulting from capital share transactions		(12,141,833	)		(5,318,255	)		(561,709	)		1,086,182

CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A:
Proceeds from shares sold		1,362,470			489,536			289,022			312,466
Redemption fees		16			201			14			—
Proceeds from shares issued to holders in reinvestment of dividends		—			825			1,741			417
Cost of shares redeemed		(412,504	)		(225,140	)		(50,310	)		(101,796	)

Net increase in net assets resulting from capital share transactions		949,982			265,422			240,467			211,087

The accompanying notes are an integral part of these financial statements.

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
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2010			2009			2010			2009


CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C:
Proceeds from shares sold		43,167			302			24,258			21,000
Redemption fees		—			—			—			—
Proceeds from shares issued to holders in reinvestment of dividends		—			43			303			22
Cost of shares redeemed		—			(33,452	)		(6,489	)		—

Net increase (decrease) in net assets resulting from capital share transactions		43,167			(33,107	)		18,072			21,022

TOTAL INCREASE IN NET ASSETS:		9,649,898			29,980,379			538,961			2,799,713
NET ASSETS:
Beginning of year		105,523,892			75,543,513			4,773,549			1,973,836

End of year*	$	115,173,790		$	105,523,892		$	5,312,510		$	4,773,549

*Including undistributed net investment
income (loss) of:	$	54,100		$	(912,146	)	$	(23,401	)	$	(8,321	)

CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS:
Shares sold		92,334			175,734			281,577			878,509
Shares issued in reinvestments of dividends and distributions		—			4,000			9,289			4,994
Shares redeemed		(461,380	)		(401,239	)		(433,433	)		(557,975	)

Net increase (decrease) in shares outstanding		(369,046	)		(221,505	)		(142,567	)		325,528

CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A:
Shares sold		39,616			17,431			69,249			84,996
Shares issued in reinvestments of dividends and distributions		—			27			373			107
Shares redeemed		(12,363	)		(8,671	)		(12,056	)		(36,346	)

Net increase in shares outstanding		27,253			8,787			57,566			48,757

CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C:
Shares sold		1,472			12			6,225			6,943
Shares issued in reinvestments of dividends and distributions		—			2			65			6
Shares redeemed		—			(1,599	)		(1,651	)		—

Net increase (decrease) in shares outstanding		1,472			(1,585	)		4,639			6,949

The accompanying notes are an integral part of these financial statements.

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
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2010			2009			2010			2009


OPERATIONS:
Net investment income	$	5,338,769		$	9,664,271		$	155,037		$	234,571
Net realized loss on sale of investments, foreign currency		(106,442,949	)		(281,292,053	)		(220,195	)		(152,213	)
Net change in unrealized appreciation of investments and foreign currency		278,030,932			685,169,758			1,376,200			4,225,736

Net increase in net assets resulting from operations		176,926,752			413,541,976			1,311,042			4,308,094

DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS:
Net investment income		(10,863,592	)		(6,864,283	)		(141,862	)		(175,656	)
Net realized gains		—			—			—			(22,795	)

Total distributions		(10,863,592	)		(6,864,283	)		(141,862	)		(198,451	)

DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A:
Net investment income		(3,108,298	)		(741,228	)		(12,747	)		(28,347	)
Net realized gains		—			—			—			(4,778	)

Total distributions		(3,108,298	)		(741,228	)		(12,747	)		(33,125	)

DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C:
Net investment income		(1,760,303	)		—			(688	)		(618	)
Net realized gains		—			—			—			(507	)

Total distributions		(1,760,303	)		—			(688	)		(1,125	)

DISTRIBUTIONS TO SHAREHOLDERS — INSTITUTIONAL CLASS:
Net investment income		(2,558,528	)		(1,674,477	)		N/A			N/A
Net realized gains		—			—			N/A			N/A

Total distributions		(2,558,528	)		(1,674,477	)		N/A			N/A

CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS:
Proceeds from shares sold		102,887,659			228,538,793			10,282,693			8,877,756
Redemption Fees		13,160			96,505			132			5,196
Proceeds from shares issued to holders in reinvestment of dividends		10,197,239			6,669,240			140,271			196,171
Cost of shares redeemed		(340,164,186	)		(392,483,046	)		(6,758,118	)		(6,974,443	)

Net increase (decrease) in net assets resulting from capital share transactions		(227,066,128	)		(157,178,508	)		3,664,978			2,104,680

CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A:
Proceeds from shares sold		26,261,163			52,590,755			1,196,355			2,336,497
Redemption Fees		4,893			—			177			1,395
Proceeds from shares issued to holders in reinvestment of dividends		2,635,918			642,068			7,167			18,350
Cost of shares redeemed		(85,179,916	)		(123,719,278	)		(1,492,863	)		(1,638,705	)

Net increase (decrease) in net assets resulting from capital share transactions		(56,277,942	)		(70,486,455	)		(289,164	)		717,537

The accompanying notes are an integral part of these financial statements.

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
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2010			2009			2010			2009


CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C:
Proceeds from shares sold		8,298,564			15,759,105			356,622			354,523
Redemption Fees		712			532			—			4
Proceeds from shares issued to holders in reinvestment of dividends		1,536,819			—			441			689
Cost of shares redeemed		(47,196,534	)		(44,568,229	)		(139,626	)		(307,788	)

Net increase (decrease) in net assets resulting from capital share transactions		(37,360,439	)		(28,808,592	)		217,437			47,428

CAPITAL SHARE TRANSACTIONS — INSTITUTIONAL CLASS :
Proceeds from shares sold		49,106,216			52,022,093			N/A			N/A
Redemption Fees		541			2,858			N/A			N/A
Proceeds from shares issued to holders in reinvestment of dividends		2,167,870			1,564,877			N/A			N/A
Cost of shares redeemed		(53,388,379	)		(95,494,884	)		N/A			N/A

Net decrease in net assets resulting from capital share transactions		(2,113,752	)		(41,905,056	)		N/A			N/A

TOTAL INCREASE (DECREASE) IN NET ASSETS:		(164,182,230	)		105,883,377			4,748,996			6,945,038
NET ASSETS:
Beginning of year		1,372,333,885			1,266,450,508			25,926,982			18,981,944

End of year*	$	1,208,151,655		$	1,372,333,885		$	30,675,978		$	25,926,982

*Including undistributed net investment
income (loss) of:	$	(9,775,040	)	$	2,487,370		$	28,164		$	29,613

CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS:
Shares sold		4,985,324			13,500,735			545,733			503,291
Shares issued in reinvestments of dividends and distributions		439,158			331,473			7,182			10,374
Shares redeemed		(16,845,311	)		(24,319,939	)		(355,336	)		(421,096	)

Net increase (decrease) in shares outstanding		(11,420,829	)		(10,487,731	)		197,579			92,569

CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A:
Shares sold		1,278,667			3,318,616			64,338			140,646
Shares issued in reinvestments of dividends and distributions		115,297			32,395			375			993
Shares redeemed		(4,218,313	)		(8,280,037	)		(80,705	)		(102,207	)

Net increase (decrease) in shares outstanding		(2,824,349	)		(4,929,026	)		(15,992	)		39,432

The accompanying notes are an integral part of these financial statements.

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
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2010			2009			2010			2009


CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C:
Shares sold		417,554			1,011,821			19,193			22,768
Shares issued in reinvestments of dividends and distributions		69,320			—			23			37
Shares redeemed		(2,404,604	)		(2,955,060	)		(7,443	)		(19,133	)

Net increase (decrease) in shares outstanding		(1,917,730	)		(1,943,239	)		11,773			3,672

CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS:
Shares sold		2,381,963			3,148,491			N/A			N/A
Shares issued in reinvestments of dividends and distributions		93,604			77,932			N/A			N/A
Shares redeemed		(2,583,750	)		(5,875,213	)		N/A			N/A

Net decrease in shares outstanding		(108,183	)		(2,648,790	)		N/A			N/A

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Changes in Net Assets


	The Small Cap Opportunities Fund						The Market Opportunities Fund
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2010			2009			2010			2009


OPERATIONS:
Net investment income (loss)	$	(359,966	)	$	(509,988	)	$	121,463		$	(62,027	)
Net realized loss on sale of investments and foreign currency		(588,589	)		(45,656,563	)		(336,643	)		(7,399,154	)
Net change in unrealized appreciation of investments, foreign currency and written options		20,471,453			143,852,458			6,167,781			30,077,593

Net increase in net assets resulting from operations		19,522,898			97,685,907			5,952,601			22,616,412

DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS:
Net investment income		(2,187,430	)		—			(1,939,475	)		(20,768	)

Total distributions		(2,187,430	)		—			(1,939,457	)		(20,768	)

DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A:
Net investment income		(165,531	)		—			(677,980	)		(9,381	)

Total distributions		(165,531	)		—			(677,980	)		(9,381	)

DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C:
Net investment income		(35,675	)		—			(243,526	)		(2,890	)

Total distributions		(35,675	)		—			(243,526	)		(2,890	)

DISTRIBUTIONS TO SHAREHOLDERS — INSTITUTIONAL CLASS:
Net investment income		(163,727	)		—			(11,629	)		(10	)

Total distributions		(163,727	)		—			(11,629	)		(10	)

CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS:
Proceeds from shares sold		14,985,968			36,310,875			2,555,924			7,876,163
Redemption fees		3,294			8,109			309			47,139
Proceeds from shares issued to holders in reinvestment of dividends		2,097,736			—			1,892,329			20,440
Cost of shares redeemed		(62,304,199	)		(64,086,132	)		(9,242,637	)		(14,496,784	)

Net decrease in net assets resulting from capital share transactions		(45,217,201	)		(27,767,148	)		(4,794,075	)		(6,553,042	)

CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A:
Proceeds from shares sold		2,116,520			4,027,254			2,148,005			3,438,842
Redemption fees		717			472			4,256			8,744
Proceeds from shares issued to holders in reinvestment of dividends		132,990			—			533,060			7,753
Cost of shares redeemed		(6,197,572	)		(7,399,034	)		(7,979,700	)		(10,299,115	)

Net decrease in net assets resulting from capital share transactions		(3,947,345	)		(3,371,308	)		(5,294,379	)		(6,843,776	)

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Changes in Net Assets — (Continued)


	The Small Cap Opportunities Fund						The Market Opportunities Fund
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2010			2009			2010			2009


CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C:
Proceeds from shares sold		411,674			1,109,508			594,179			1,574,137
Redemption fees		—			101			2,058			7
Proceeds from shares issued to holders in reinvestment of dividends		21,022			—			208,569			2,366
Cost of shares redeemed		(1,792,550	)		(1,004,506	)		(1,567,544	)		(2,210,676	)

Net increase (decrease) in net assets resulting from capital share transactions		(1,359,854	)		105,103			(762,738	)		(634,166	)

CAPITAL SHARE TRANSACTIONS — INSTITUTIONAL CLASS:
Proceeds from shares sold		1,069,997			9,645,168			193,362			10,807
Redemption fees		14			269			—			—
Proceeds from shares issued to holders in reinvestment of dividends		111,423			—			603			10
Cost of shares redeemed		(12,224,759	)		(86,994,949	)		(11,602	)		—

Net increase (decrease) in net assets resulting from capital share transactions		(11,043,325	)		(77,349,512	)		182,363			10,817

TOTAL INCREASE (DECREASE) IN NET ASSETS:		(44,597,190	)		(10,696,958	)		(7,588,838	)		8,563,196
NET ASSETS:
Beginning of year		199,643,252			210,340,210			66,099,568			57,536,372

End of year*	$	155,046,062		$	199,643,252		$	58,510,730		$	66,099,568

*Including undistributed net investment
income (loss) of:	$	(1,089,215	)	$	870,062		$	(2,114,296	)	$	57,267

CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS:
Shares sold		663,539			2,125,038			234,324			840,758
Shares issued in reinvestments of dividends and distributions		90,071			—			165,414			1,569
Shares redeemed		(2,905,365	)		(4,028,266	)		(841,037	)		(1,774,870	)

Net decrease in shares outstanding		(2,151,755	)		(1,903,228	)		(441,299	)		(932,543	)

CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A:
Shares sold		103,386			229,236			192,473			407,710
Shares issued in reinvestments of dividends and distributions		5,792			—			46,719			657
Shares redeemed		(302,155	)		(464,677	)		(736,967	)		(1,235,063	)

Net decrease in shares outstanding		(192,977	)		(235,441	)		(497,775	)		(826,696	)

CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C:
Shares sold		19,435			60,451			54,608			177,257
Shares issued in reinvestments of dividends and distributions		928			—			18,490			211
Shares redeemed		(87,406	)		(63,523	)		(146,542	)		(276,951	)

Net decrease in shares outstanding		(67,043	)		(3,072	)		(73,444	)		(99,483	)

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Changes in Net Assets — (Continued)


	The Small Cap Opportunities Fund						The Market Opportunities Fund
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2010			2009			2010			2009


CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS:
Shares sold		49,716			659,244			17,668			1,019
Shares issued in reinvestments of dividends and distributions		4,757			—			53			1
Shares redeemed		(580,939	)		(4,901,031	)		(1,020	)		—

Net increase (decrease) in shares outstanding		(526,466	)		(4,241,787	)		16,701			1,020

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Changes in Net Assets


	The Water Infrastructure Fund						The Multi-Disciplinary Fund
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2010			2009			2010			2009


OPERATIONS:
Net investment income	$	181,587		$	46,129		$	76,552		$	7,052
Net realized gain (loss) on sale of investments, foreign currency and written option contracts expired or closed		(2,474,817	)		(1,419,347	)		102,161			99,097
Net change in unrealized appreciation of investments, foreign currency and written options		806,181			3,683,013			151,265			99,028

Net increase (decrease) in net assets resulting from operations		(1,487,049	)		2,309,795			329,978			205,177

DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS:
Net investment income		(60,253	)		(1,817	)		(75,832	)		(7,818	)
Net realized gains		—			—			(97,584	)		(14,757	)

Total distributions		(60,253	)		(1,817	)		(173,416	)		(22,575	)

DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A:
Net investment income		(56,524	)		—			(7,026	)		(559	)
Net realized gains		—			—			(9,873	)		(1,623	)

Total distributions		(56,524	)		—			(16,899	)		(2,182	)

DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C:
Net investment income		(3,967	)		—			(3,169	)		(116	)
Net realized gains		—			—			(3,569	)		(1,672	)

Total distributions		(3,967	)		—			(6,738	)		(1,788	)

DISTRIBUTIONS TO SHAREHOLDERS — INSTITUTIONAL CLASS:
Net investment income		(44,989	)		(7,282	)		(4,248	)		(947	)
Net realized gains		—			—			(3,925	)		(1,587	)

Total distributions		(44,989	)		(7,282	)		(8,173	)		(2,534	)

CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS:
Proceeds from shares sold		3,810,415			3,525,885			2,878,206			695,920
Redemption fees		101			635			51			—
Proceeds from shares issued to holders in reinvestment of dividends		54,002			1,579			122,312			20,528
Cost of shares redeemed		(3,555,293	)		(3,951,117	)		(554,675	)		(3,410	)

Net increase (decrease) in net assets resulting from capital share transactions		309,225			(423,018	)		2,445,894			713,038

CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A:
Proceeds from shares sold		6,375,421			7,953,554			309,589			—
Redemption fees		1,662			997			—			—
Proceeds from shares issued to holders in reinvestment of dividends		50,605			—			16,899			2,182
Cost of shares redeemed		(5,936,700	)		(6,109,558	)		(79,254	)		—

Net increase in net assets resulting from capital share transactions		490,988			1,844,993			247,234			2,182

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Changes in Net Assets — (Continued)


	The Water Infrastructure Fund						The Multi-Disciplinary Fund
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2010			2009			2010			2009


CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C:
Proceeds from shares sold		1,279,796			1,341,247			15,000			5,000
Redemption fees		—			101			—			—
Proceeds from shares issued to holders in reinvestment of dividends		2,625			—			6,667			1,696
Cost of shares redeemed		(943,226	)		(542,169	)		(5,570	)		(7,169	)

Net increase (decrease) in net assets resulting from capital share transactions		339,195			799,179			16,097			(473	)

CAPITAL SHARE TRANSACTIONS — INSTITUTIONAL CLASS:
Proceeds from shares sold		3,936,264			2,665,048			26,000			—
Redemption fees		278			500			—			—
Proceeds from shares issued to holders in reinvestment of dividends		1,972			4,823			8,173			2,534
Cost of shares redeemed		(2,421,527	)		(153,009	)		—			—

Net increase in net assets resulting from capital share transactions		1,516,987			2,517,362			34,173			2,534

TOTAL INCREASE IN NET ASSETS:		1,003,613			7,039,212			2,868,150			893,379
NET ASSETS:
Beginning of year		23,120,349			16,081,137			1,247,490			354,111

End of year*	$	24,123,962		$	23,120,349		$	4,115,640		$	1,247,490

*Including undistributed net investment
income (loss) of:	$	(33,240	)	$	3,244		$	(12,853	)	$	705

CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS:
Shares sold		448,551			439,147			278,898			81,319
Shares issued in reinvestments of dividends and distributions		6,441			177			11,816			2,082
Shares redeemed		(429,862	)		(495,881	)		(52,420	)		(380	)

Net increase (decrease) in shares outstanding		25,130			(56,557	)		238,294			83,021

CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A:
Shares sold		752,587			992,317			29,903			—
Shares issued in reinvestments of dividends and distributions		6,068			—			1,635			222
Shares redeemed		(721,854	)		(828,509	)		(7,901	)		—

Net increase in shares outstanding		36,801			163,808			23,637			222

CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C:
Shares sold		151,009			169,781			1,486			538
Shares issued in reinvestments of dividends and distributions		318			—			650			173
Shares redeemed		(117,149	)		(68,264	)		(538	)		(829	)

Net increase (decrease) in shares outstanding		34,178			101,517			1,598			(118	)

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Changes in Net Assets — (Continued)


	The Water Infrastructure Fund						The Multi-Disciplinary Fund
	For the			For the			For the		For the
	Year Ended			Year Ended			Year Ended		Year Ended
	December 31,			December 31,			December 31,		December 31,
	2010			2009			2010		2009


CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS:
Shares sold		470,451			311,808			2,512		—
Shares issued in reinvestments of dividends and distributions		234			540			790		256
Shares redeemed		(300,650	)		(18,661	)		—		—

Net increase in shares outstanding		170,035			293,687			3,302		256

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Changes in Net Assets


	The Tactical Paradigm Fund
	For the			December 31, 2009ˆ
	Year Ended			through
	December 31,			December 31,
	2010			2009


OPERATIONS:
Net investment income (loss)	$	(9,561	)	$	—
Net realized gain (loss) on sale of investments, futures contracts and written option contracts expired or closed		(327,280	)		—
Net change in unrealized appreciation (depreciation) of investments and futures contracts		392,266			—

Net increase in net assets resulting from operations		55,425			—

DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS:
Net investment income		(322	)		—

Total distributions		(322	)		—

DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A:
Net investment income		(3,297	)		—

Total distributions		(3,297	)		—

DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C:
Net investment income		(3,330	)		—

Total distributions		(3,330	)		—

DISTRIBUTIONS TO SHAREHOLDERS — INSTITUTIONAL CLASS:
Net investment income		(220	)		—

Total distributions		(220	)		—

CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS:
Proceeds from shares sold		175,120			20,000
Redemption fees		—			—
Proceeds from shares issued to holders in reinvestment of dividends		322			—
Cost of shares redeemed		(140,689	)		—

Net increase in net assets resulting from capital share transactions		34,753			20,000

CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A:
Proceeds from shares sold		524,174			20,000
Redemption fees		—			—
Proceeds from shares issued to holders in reinvestment of dividends		3,297			—
Cost of shares redeemed		(69,714	)		—

Net increase in net assets resulting from capital share transactions		457,757			20,000

CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C:
Proceeds from shares sold		1,237,717			20,000
Redemption fees		—			—
Proceeds from shares issued to holders in reinvestment of dividends		783			—
Cost of shares redeemed		(262,309	)		—

Net increase in net assets resulting from capital share transactions		976,191			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		220			—
Cost of shares redeemed		—			—

Net increase in net assets resulting from capital share transactions		220			20,000

TOTAL INCREASE IN NET ASSETS:		1,517,177			80,000
NET ASSETS:
Beginning of period		80,000			—

End of period*	$	1,597,177		$	80,000

*Including undistributed net investment
loss of:	$	(10,975	)	$	—

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Statements of Changes in Net Assets — (Continued)


	The Tactical Paradigm Fund
	For the			December 31, 2009ˆ
	Year Ended			through
	December 31,			December 31,
	2010			2009


CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS:
Shares sold		17,694			2,000
Shares issued in reinvestments of dividends and distributions		31			—
Shares redeemed		(14,875	)		—

Net increase in shares outstanding		2,850			2,000

CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A:
Shares sold		53,568			2,000
Shares issued in reinvestments of dividends and distributions		323			—
Shares redeemed		(6,848	)		—

Net increase in shares outstanding		47,043			2,000

CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C:
Shares sold		124,174			2,000
Shares issued in reinvestments of dividends and distributions		77			—
Shares redeemed		(26,041	)		—

Net increase in shares outstanding		98,210			2,000

CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS:
Shares sold		—			2,000
Shares issued in reinvestments of dividends and distributions		22			—
Shares redeemed		—			—

Net increase in shares outstanding		22			2,000


ˆ	Commencement of operations.

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements

December 31, 2010

1. Organization

Kinetics Mutual Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), and is incorporated in the State of Maryland. The Company is an open-end management investment company issuing its shares in series. One billion shares are authorized for the Company with a par value of $0.001 per share. The series of the Company presently authorized are The Internet Fund (“Internet”), The Global Fund (“Global”), The Paradigm Fund (“Paradigm”), The Medical Fund (“Medical”), The Small Cap Opportunities Fund (“Small Cap”), The Market Opportunities Fund (“Market Opportunities”), The Water Infrastructure Fund (“Water Infrastructure”), The Multi-Disciplinary Fund (“Multi-Disciplinary”) and The Tactical Paradigm Fund (“Tactical Paradigm”). Investment operations of the Company began on October 21, 1996 (Internet), September 30, 1999 (Medical), December 31, 1999 (Global and Paradigm), March 20, 2000 (Small Cap), January 31, 2006 (Market Opportunities), June 29, 2007 (Water Infrastructure), February 11, 2008 (Multi-Disciplinary) and December 31, 2009 (Tactical Paradigm) (each, a “Fund” and together, the “Funds”). Each series (excluding 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”). Tactical Paradigm seeks its investment objective by investing generally all of its investable assets in the Paradigm Portfolio while also being permitted to hedge 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.

On April 28, 2000 (January 31, 2006 with respect to Market Opportunities, June 29, 2007 with respect to Water Infrastructure and February 11, 2008 with respect to Multi-Disciplinary), each series (excluding Tactical Paradigm) in the Company entered into a master-feeder fund structure. By entering into this structure, each series (each a “Feeder Fund” and collectively, the “Feeder Funds”) invested all of its assets in a corresponding Master Portfolio (excluding Tactical Paradigm) which had the same investment objective as the Feeder Fund. Tactical Paradigm seeks its investment objective by investing generally all of its investable assets in the Paradigm Portfolio while also being permitted to hedge market risk with futures, options and short sales of ETFs. Each Master Portfolio has multiple feeder funds. Each Feeder Fund receives a proportionate

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

December 31, 2010

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.

Each Feeder Fund’s respective interest in the corresponding Master Portfolio, and Tactical Paradigm’s interest in the Paradigm Portfolio, as of December 31, 2010 is as follows:


	Interest in
	Master Portfolio

Internet Fund		99.990%
Global Fund		99.887%
Paradigm Fund		96.901%
Medical Fund		99.949%
Small Cap Fund		99.983%
Market Opportunities Fund		99.982%
Water Infrastructure Fund		99.583%
Multi-Disciplinary Fund		97.380%
Tactical Paradigm Fund		00.123%

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

As of December 31, 2010, each of the Funds offers Advisor Class A shares. Advisor Class A shares are subject to an annual Rule 12b-1 fee of 0.25% of average daily net assets and a service fee of 0.25% of average daily net assets. The Advisor Class A shares are also subject to a front-end sales charge of 5.75%.

As of December 31, 2010, each of the Funds offers Advisor Class C shares. Advisor Class C shares are subject to an annual Rule 12b-1 fee of 0.75% of average daily net assets and a service fee of 0.25% of average daily net assets. Advisor Class C shares do not have a sales charge.

As of December 31, 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 December 31, 2010, the Paradigm, Small Cap, Market Opportunities, Water Infrastructure, Multi-Disciplinary and Tactical Paradigm Funds offer Institutional Class shares. Institutional Class shares are subject to a service fee of 0.20% of average daily net assets but do not have 12b-1 fees or a sales charge.

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

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

December 31, 2010

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

Refer to the Master Portfolio’s financial statements to obtain information about the investment objective of the corresponding Feeder Funds. Tactical Paradigm seeks to provide long-term growth of capital. 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 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 are valued at the last reported sale price on an exchange on which the option is traded. If no sales are reported on a particular day, the mean between the highest bid and the lowest asked quotations at the close of the exchanges will be used. Fixed-income securities (other than obligations having a maturity of 60 days or less) are normally valued at the mean between the closing bid and asked prices provided by an independent pricing service. If the closing bid and ask are not readily available, the independent pricing service may provide a price determined by a matrix pricing method, which will 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.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

December 31, 2010

Instruments with remaining maturities of 60 days or less are valued at amortized cost, which approximates fair value. Other assets and securities for which no quotations are readily available (including restricted securities) are valued in good faith at fair value using methods determined by the Board of Trustees of the Master Portfolios. At December 31, 2010, 0.00%, 0.00% and 0.00% of the net assets of the Internet Portfolio, Paradigm Portfolio and Medical Portfolio, respectively, were fair valued securities. The other Master Portfolios and Tactical Paradigm did not hold any fair valued securities at December 31, 2010.

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 or 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 or Tactical Paradigm 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 the 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 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

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

December 31, 2010

(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 Master Portfolio and Tactical Paradigm 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 Master Portfolio or Tactical Paradigm purchases or sells a stock index futures contract, it must make a good faith deposit known as the “initial margin”. Thereafter, a the Master Portfolio or Tactical Paradigm 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 transactions and the effect of changes in foreign exchange rates arising between trade date and settlement date.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

December 31, 2010

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 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 December 31, 2010 the following Master Portfolio held securities restricted to institutional investors (144A Securities):


			Percentage of
Restricted Securities	Market Value		Net Assets

The Multi-Disciplinary Portfolio	$	106,750		2.54	%

None of the other Master Portfolios or Tactical Paradigm held restricted Securities at December 31, 2010.

An illiquid asset is any asset which may not be sold or disposed of in the ordinary course of business within seven days at approximately the value at which the Master Portfolio has valued the investment. At December 31, 2010, the following Master Portfolios held illiquid securities:


	Market		Percentage of
	Value		Net Assets

The Internet Portfolio	$	502		0.00	%
The Paradigm Portfolio		0		0.00
The Medical 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

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

December 31, 2010

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 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, 2010, open tax years include the tax years ended December 31, 2007 through 2010. 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.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

December 31, 2010

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 Fund’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 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 and 1.25% of each 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, Broadmark Asset Management, LLC (the “Sub-Adviser”), 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 year ended December 31, 2010, the Tactical Paradigm Fund incurred expenses of $9,119 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 discontinue the voluntary waiver/reimbursement at any time; these waivers/reimbursements are not subject to recapture.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

December 31, 2010

For the year ended December 31, 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	$	64,197	$	137,533
Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver	$	—	$	—


	Paradigm		Medical

Annual Advisory Rate		1.25%		1.25%
Expenses Reimbursed by Adviser through voluntary waiver	$	1,524,125	$	189,372
Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver	$	192,989	$	—


			Market
	Small Cap		Opportunities

Annual Advisory Rate		1.25%		1.25%
Expenses Reimbursed by Adviser through voluntary waiver	$	356,797	$	167,828
Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver	$	19,761	$	129


			Multi-
	Water Infrastructure		Disciplinary

Annual Advisory Rate		1.25%		1.25%
Expenses Reimbursed by Adviser through voluntary waiver	$	137,029	$	104,577
Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver	$	6,482	$	170


	Tactical
	Paradigm

Annual Advisory Rate		1.25%
Annual Sub-Advisory Rate		0.65%
Expenses Reimbursed by Adviser through voluntary waiver	$	67,156
Expenses Reimbursed by Adviser through institutional class shareholder servicing fee waiver	$	32

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.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

December 31, 2010

For the Institutional Class, the Adviser receives a shareholder servicing fee pursuant to a shareholder servicing agreement in the amount equal to 0.20% of 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 Fund’s average daily net assets attributable to Institutional Class shares until at least May 1, 2011. For the year ended December 31, 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 year ended December 31, 2010, the Funds were allocated $24,000 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 year ended December 31, 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 year ended December 31, 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 $2,841, $1,204, $563,355, $10,946, $31,127, $39,161, $28,794, $418 and $1,165, respectively, pursuant to the 12b-1 Plan. Under the second Plan, Advisor Class C shares pay an annual rate of 0.75% of the average daily net asset value of such shares. During the year ended December 31, 2010, Internet, Global, Paradigm, Medical, Small Cap, Market Opportunities, Water Infrastructure, Multi-Disciplinary and Tactical Paradigm Advisor Class C Shares incurred expenses of $1,093, $322, $1,153,688, $5,099, $28,274, $41,919, $21,516, $892 and $6,176, respectively, pursuant to the 12b-1 Plan.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

December 31, 2010

Kinetics Funds Distributor, Inc. (the “Distributor”) acts as the Funds’ principal underwriter in a continuous public offering of the Funds’ shares. The Distributor is an affiliate of the Adviser. For the year ended December 31, 2010, the Distributor received $1,646, $800, $40,499, $2,003, $2,074, $3,329, $12,605, $215 and $0 from sales loads from Internet, Global, Paradigm, Medical, Small Cap, Market Opportunities, Water Infrastructure, Multi-Disciplinary and Tactical Paradigm, respectively.

4. Reclassification of Capital Accounts

Accounting principles generally accepted in the United States of America require that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the year ended December 31, 2010, each Fund recorded the following reclassifications to the accounts listed below:


	INCREASE (DECREASE)
				Accumulated
				Net			Accumulated
				Investment			Net Realized
	Paid-in-Capital			Income (Loss)			Gain (Loss)

The Internet Fund	$	(138,451,652	)	$	1,879,268		$	136,572,384
The Global Fund		(2,025,608	)		10,610			2,014,998
The Paradigm Fund		(3,181	)		689,542			(686,361	)
The Medical Fund		—			(1,189	)		1,189
The Small Cap Opportunities Fund		—			953,052			(953,052	)
The Market Opportunities Fund		(78,705	)		579,584			(500,879	)
The Water Infrastructure Fund		(4,029	)		(52,338	)		56,367
The Multi-Disciplinary Fund		(53	)		165			(112	)
The Tactical Paradigm Fund		(6,464	)		5,755			709

5. Income Taxes

At December 31, 2010 Internet, Global, Paradigm, Medical, Small Cap, Market Opportunities, Water Infrastructure, Multi-Disciplinary, and Tactical Paradigm had $0, $30,374, $8,405,276, $28,164, $1,730,963, $0, $0, $4,312 and $0, respectively, of undistributed net investment income on a tax basis.

At December 31, 2010 none of the Funds had accumulated gains on a tax basis.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

December 31, 2010

At December 31, 2010, the Funds had accumulated net realized capital loss carryforwards expiring in the following years:


Fund	2018		2017		2016		2015		2014		2013		2011

Internet	$	—	$	—	$	—	$	—	$	16,077,777	$	6,777,871	$	—
Global		—		408,711		—		—		—		4,885		887,154
Paradigm		115,811,157		445,505,345		417,659,386		—		—		—		—
Medical		406,228		116,113		—		—		—		—		—
Small Cap		8,371,154		96,486,615		78,193,634		—		—		—		—
Market Opportunities		2,108,533		6,623,055		25,221,869		40,803		21		—		—
Water Infrastructure		2,203,647		4,868,599		2,008,692		—		—		—		—
Multi-Disciplinary		—		—		—		—		—		—		—
Tactical Paradigm		317,091		—		—		—		—		—		—

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, 2010, Internet and Global utilized $2,812,299 and $609,896, respectively, of capital loss carryforwards.

At December 31, 2010, the following Funds deferred, on a tax basis, post-October losses and straddle losses of:


			Post-October
Fund	Post-October Losses		Currency Losses

Internet	$	—	$	5,825
Global		—		2,005
Paradigm		—		40,806
Medical		—		—
Small Cap		—		810
Market Opportunities		100,268		—
Water Infrastructure		262,091		11,042
Multi-Disciplinary		1,228		169
Tactical Paradigm		20,870		60

The tax components of dividends paid during the years ended December 31, 2010 and December 31, 2009, are:


	Internet				Global
	Ordinary		Long-Term		Ordinary		Long-Term
	Income		Capital Gains		Income		Capital Gains
	Distribution		Distribution		Distribution		Distribution

2010	$	—	$	—	$	49,825	$	—
2009	$	128,367	$	—	$	20,989	$	—

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

December 31, 2010


	Paradigm				Medical
	Ordinary		Long-Term		Ordinary		Long-Term
	Income		Capital Gains		Income		Capital Gains
	Distribution		Distribution		Distribution		Distribution

2010	$	18,290,721	$	—	$	155,297	$	—
2009	$	9,279,988	$	—	$	232,701	$	—


	Small Cap				Market Opportunities
	Ordinary		Long-Term		Ordinary		Long-Term
	Income		Capital Gains		Income		Capital Gains
	Distribution		Distribution		Distribution		Distribution

2010	$	2,552,363	$	—	$	2,872,610	$	—
2009	$	—	$	—	$	33,049	$	—


	Water Infrastructure				Multi-Disciplinary
	Ordinary		Long-Term		Ordinary		Long-Term
	Income		Capital Gains		Income		Capital Gains
	Distribution		Distribution		Distribution		Distribution

2010	$	165,733	$	—	$	196,148	$	9,078
2009	$	9,099	$	—	$	29,079	$	—


	Tactical Paradigm
	Ordinary		Long-Term
	Income		Capital Gains
	Distribution		Distribution

2010	$	7,169	$	—
2009	$	—	$	—

6. Securities Transactions for Tactical Paradigm

Purchases and sales of investment securities, other than short-term investments, for the year ended December 31, 2010 were as follows:

Purchases

Sales

U.S.

Government

Other

Government

Other

Tactical Paradigm

—

For the year ended December 31, 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		(464	)		(96,399	)

Outstanding at December 31, 2010		—		$	—

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

December 31, 2010

7. Summary of Fair Value Exposure of Tactical Paradigm

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.

Tactical Paradigm

The following is a summary of the inputs used to value the Tactical Paradigm net assets as of December 31, 2010:


	Level 1			Level 2		Level 3		Total

Other Investments	$	1,531,791		$	—	$	—	$	1,531,791
Total Investments in Securities		1,531,791			—		—		1,531,791
Short Futures Contracts*	$	(12,387	)	$	—	$	—	$	(12,387	)


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

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

December 31, 2010

8. Disclosures about Derivative Instruments and Hedging Activities of Tactical Paradigm

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, 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.

Tactical Paradigm

Statement of Assets and Liabilities

Fair Values of derivative instruments as of December 31, 2010:


	Assets					Liabilities
Equity Contracts	Description			Fair Value		Description		Fair Value

Futures Contractsˆ		Due from broker- variation margin^(a	⁾	$	825		—	$	—

				$	825			$	—

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


(a)	Represents variation margin on the last day of the reporting period.

Statement of Operations

The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2010:

Amount of Realized Gain (Loss) on Derivatives


Equity Contracts

Futures Contracts	$	(97,336	)
Purchased Options		(37,789	)
Written Options		30,716

Total	$	(104,409	)

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

December 31, 2010

Change in Unrealized Appreciation (Depreciation) on Derivatives


Equity Contracts

Futures Contracts	$	(12,387	)

Total	$	(12,387	)

Unrealized appreciation (depreciation) on open futures contracts is required to be treated as realized gain (loss) for tax purposes.

Tactical Paradigm has adopted authoritative standards regarding disclosure about derivatives and hedging activities and how they affect the Fund’s Statement of Assets and Liabilities and Statement of Operations. For the year ended December 31, 2010: written option contracts (464 contracts) were opened and $96,399 premiums were received and 124 short future contracts were opened during the period.

9. New Accounting Pronouncement

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

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.

On December 6, 2010, the Board of Directors/Trustees approved the liquidation of the Tactical Paradigm Fund, subject to shareholder approval.

11. Tax Information (Unaudited)

The Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted on December 22, 2010. The Act makes changes to several tax rules impacting the Funds. In general, the provisions of the Act will be effective for the Funds’ fiscal year ending December 31, 2011. Although the Act provides several benefits, including the unlimited carryover of future

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

December 31, 2010

capital losses, there may be a greater likelihood that all or a portion of each Fund’s pre-enactment capital loss carryovers may expire without being utilized due to the fact that post-enactment capital losses get utilized before pre-enactment capital loss carryovers. Relevant information regarding the impact of the Act on the Funds, if any, will be contained within the “Income Taxes” section of the financial statement notes for the fiscal year ending December 31, 2011.

Global, Paradigm, Medical, Market Opportunities, Water Infrastructure and Tactical Paradigm designate 100%, 100%, 100%, 33%, 100%, and 100%, respectively, of dividends declared after December 31, 2010 from net investment income as qualified dividend income under the Jobs and Growth Tax Relief Reconciliation Act of 2003.

Global, Paradigm, Medical, Small Cap, Market Opportunities, Water Infrastructure, Multi-Disciplinary and Tactical Paradigm hereby designate 100%, 100%, 100%, 100%, 100%, 100%, 96% and 100%, respectively, as ordinary income distributions and 4% for Multi-Disciplinary Fund 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, 2010, which is designated as qualifying for the dividends-received deduction, is as follows: Global 1%, Paradigm 43%, Medical 100%, Market Opportunities 17%, Water Infrastructure 82% and Tactical Paradigm 100%.

Paradigm, Water Infrastructure, Multi-Disciplinary and Tactical Paradigm designate 8%, 30%, 47% and 5%, respectively, of their ordinary income distributions for the fiscal year ended December 31, 2010 as interest-related dividends under Internal Revenue Code Section 871(k)(l)(C).

Multi-Disciplinary designates 56% of its ordinary income distribution as a short-term capital gain distribution 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.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Notes to Financial Statements — (Continued)

December 31, 2010

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.

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.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Financial Highlights


	The Internet Fund
	No Load Class			Advisor Class A			Advisor Class C			No Load Class			Advisor Class A
	For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2010			2010			2010			2009			2009


PER SHARE DATA:⁽¹⁾
Net Asset Value,
Beginning of Period	$	30.74		$	30.35		$	29.76		$	20.71		$	20.50

Income from Investment Operations:
Net investment income (loss)⁽²⁾		(0.28	)		(0.36	)		(0.51	)		(0.14	)		(0.21	)
Net realized and unrealized gain (loss) on investments		6.79			6.70			6.54			10.21			10.09

Total from investment operations		6.51			6.34			6.03			10.07			9.88

Redemption Fees		0.00	⁽³⁾		0.00	⁽³⁾		—			0.00	⁽³⁾		0.01
Less Distributions:
From net investment income		—			—			—			(0.04	)		(0.04	)
From net realized gains		—			—			—			—			—

Total distributions		—			—			—			(0.04	)		(0.04	)

Net Asset Value, End of Period	$	37.25		$	36.69		$	35.79		$	30.74		$	30.35

Total Return⁽⁴⁾		21.18	%		20.89	%		20.26	%		48.61	%		48.23	%

SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	113,085		$	1,892		$	196		$	104,666		$	738
Ratio of operating expenses to average net assets:
Before expense reimbursement		1.95	%		2.20	%		2.70	%		1.98	%		2.23	%
After expense reimbursement⁽⁷⁾		1.89	%		2.14	%		2.64	%		1.89	%		2.14	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(0.91	)%		(1.16	)%		(1.66	)%		(0.64	)%		(0.89	)%
After expense reimbursement⁽⁷⁾		(0.85	)%		(1.10	)%		(1.60	)%		(0.55	)%		(0.80	)%
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.

The accompanying notes are an integral part of these financial statements.


The Internet Fund
	Advisor Class C			No Load Class			Advisor Class A			Advisor Class C			No Load Class			Advisor Class A			Advisor Class C			No Load Class			Advisor Class A
	For the			For the			For the			For the			For the			For the			February 16, 2007ˆ			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			through			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2009			2008			2008			2008			2007			2007			2007			2006			2006




	$	20.20		$	35.94		$	35.66		$	35.31		$	28.62		$	28.24		$	28.66		$	24.66		$	24.40


		(0.31	)		0.29			0.22			0.08			0.30			0.23			0.07			(0.08	)		(0.14	)

		9.91			(15.47	)		(15.33	)		(15.15	)		7.37			7.49			6.87			4.15			4.09

		9.60			(15.18	)		(15.11	)		(15.07	)		7.67			7.72			6.94			4.07			3.95

		—			0.00	⁽³⁾		0.00	⁽³⁾		—			0.00	⁽³⁾		—			0.00	⁽³⁾		0.00	⁽³⁾		—

		(0.04	)		(0.05	)		(0.05	)		(0.04	)		(0.35	)		(0.30	)		(0.29	)		(0.11	)		(0.11	)
		—			—			—			—			—			—			-			—			—

		(0.04	)		(0.05	)		(0.05	)		(0.04	)		(0.35	)		(0.30	)		(0.29	)		(0.11	)		(0.11	)

	$	29.76		$	20.71		$	20.50		$	20.20		$	35.94		$	35.66		$	35.31		$	28.62		$	28.24

		47.51	%		(42.24	)%		(42.37	)%		(42.67	)%		26.81	%		27.35	%		24.22	%⁽⁵⁾		16.50	%		16.18	%


	$	120		$	75,112		$	318		$	113		$	166,787		$	637		$	294		$	137,012		$	235

		2.73	%		2.03	%		2.28	%		2.78	%		1.99	%		2.24	%		2.73	%⁽⁶⁾		1.98	%		2.23	%
		2.64	%		1.90	%		2.15	%		2.65	%		1.98	%		2.23	%		2.72	%⁽⁶⁾		1.85	%		2.10	%


		(1.39	)%		0.90	%		0.65	%		0.15	%		0.94	%		0.70	%		0.22	%⁽⁶⁾		(0.42	)%		(0.67	)%
		(1.30	)%		1.03	%		0.78	%		0.28	%		0.95	%		0.71	%		0.23	%⁽⁶⁾		(0.29	)%		(0.54	)%
		N/A			N/A			N/A			N/A			N/A			N/A			N/A			N/A			N/A

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Financial Highlights


	The Global Fund
	No Load Class			Advisor Class A			Advisor Class C			No Load Class
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2010			2010			2010			2009


PER SHARE DATA:⁽¹⁾
Net Asset Value,
Beginning of Period	$	3.92		$	3.93		$	3.90		$	2.36

Income from Investment Operations:
Net investment income (loss)		0.02	⁽²⁾		0.01	⁽²⁾		(0.01	)⁽²⁾		0.02⁽²	⁾
Net realized and unrealized gain (loss) on investments		0.78			0.78			0.77			1.55

Total from investment operations		0.80			0.79			0.76			1.57

Redemption Fees		0.00	⁽³⁾		0.00	⁽³⁾		—			0.01
Less Distributions:
From net investment income		(0.05	)		(0.04	)		(0.02	)		(0.02	)
From net realized gains		—			—			—			—

Total distributions		(0.05	)		(0.04	)		(0.02	)		(0.02	)

Net Asset Value, End of Period	$	4.67		$	4.68		$	4.64		$	3.92

Total Return⁽⁴⁾		20.30	%		20.04	%		19.24	%		66.86	%

SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	4,541		$	707		$	64		$	4,370
Ratio of operating expenses to average net assets:
Before expense reimbursement		4.17	%		4.42	%		4.92	%		5.32	%
After expense reimbursement⁽⁷⁾		1.39	%		1.64	%		2.14	%		1.39	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(2.26	)%		(2.51	)%		(3.01	)%		(3.27	)%
After expense reimbursement⁽⁷⁾		0.52	%		0.27	%		(0.23	)%		0.66	%
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.

The accompanying notes are an integral part of these financial statements.


The Global Fund
Advisor Class A			Advisor Class C			No Load Class			Advisor Class A			Advisor Class C			No Load Class			No Load Class
For the			For the			For the			May 19, 2008ˆ			May 19, 2008ˆ			For the			For the
Year Ended			Year Ended			Year Ended			through			through			Year Ended			Year Ended
December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
2009			2009			2008			2008			2008			2007			2006




$	2.36		$	2.37		$	4.90		$	4.56		$	4.56		$	5.00		$	4.43


	0.01	⁽²⁾		(0.00	)⁽²⁾⁽³⁾		0.07	⁽²⁾		0.03	⁽²⁾		0.02	⁽²⁾		0.22			0.13

	1.57			1.53			(2.56	)		(2.18	)		(2.17	)		(0.01	)		0.62

	1.58			1.53			(2.49	)		(2.15	)		(2.15	)		0.21			0.75

	—			—			0.00	⁽³⁾		—			—			0.00	⁽³⁾		0.00	⁽³⁾

	(0.01	)		(0.00	)⁽³⁾		(0.05	)		(0.05	)		(0.04	)		(0.31	)		(0.18	)
	—			—			—			—			—			—			—

	(0.01	)		(0.00	)⁽³⁾		(0.05	)		(0.05	)		(0.04	)		(0.31	)		(0.18	)

$	3.93		$	3.90		$	2.36		$	2.36		$	2.37		$	4.90		$	5.00

	67.11	%		65.08	%		(50.72	)%		(47.12	)%⁽⁵⁾		(47.14	)%⁽⁵⁾		4.27	%		16.90	%


$	368		$	36		$	1,863		$	106		$	5		$	3,138		$	3,991


	5.57	%		6.07	%		5.98	%		8.28	%⁽⁶⁾		8.78	%⁽⁶⁾		3.84	%		3.09	%
	1.64	%		2.14	%		1.41	%		1.65	%⁽⁶⁾		2.15	%⁽⁶⁾		1.48	%		1.39	%


	(3.52	)%		(4.02	)%		(2.72	)%		(5.16	)%⁽⁶⁾		(5.66	)%⁽⁶⁾		1.87	%		1.30	%
	0.41	%		(0.09	)%		1.85	%		1.47	%⁽⁶⁾		0.97	%⁽⁶⁾		4.23	%		3.00	%
	N/A			N/A			N/A			N/A			N/A			N/A			N/A

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Financial Highlights


	The Paradigm Fund
	No Load Class			Advisor Class A			Advisor Class C			Institutional Class
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2010			2010			2010			2010


PER SHARE DATA:⁽¹⁾
Net Asset Value,
Beginning of Year	$	20.18		$	19.88		$	19.33		$	20.13

Income from Investment Operations:
Net investment income (loss)⁽²⁾		0.11			0.06			(0.04	)		0.16
Net realized and unrealized gain (loss) on investments		3.39			3.33			3.22			3.38

Total from investment operations		3.50			3.39			3.18			3.54

Redemption Fees		0.00	⁽³⁾		0.00	⁽³⁾		0.00	⁽³⁾		0.00	⁽³⁾
Less Distributions:
From net investment income		(0.37	)		(0.32	)		(0.26	)		(0.42	)
From net realized gains		—			—			—			—

Total distributions		(0.37	)		(0.32	)		(0.26	)		(0.42	)

Net Asset Value, End of Year	$	23.31		$	22.95		$	22.25		$	23.25

Total Return⁽⁴⁾		17.37	%		17.11	%		16.45	%		17.62	%

SUPPLEMENTAL DATA AND RATIOS
Net assets, end of year (000’s)	$	687,056		$	226,264		$	152,571		$	142,261
Ratio of operating expenses to average net assets:
Before expense reimbursement		1.76	%		2.01	%		2.51	%		1.71	%
After expense reimbursement⁽⁵⁾		1.64	%		1.89	%		2.39	%		1.44	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		0.43	%		0.18	%		(0.32	)%		0.48	%
After expense reimbursement⁽⁵⁾		0.55	%		0.30	%		(0.20	)%		0.75	%
Portfolio turnover rate		N/A			N/A			N/A			N/A


(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)	See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion.
(6)	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.

The accompanying notes are an integral part of these financial statements.


The Paradigm Fund
	No Load Class			Advisor Class A			Advisor Class C			Institutional Class			No Load Class			Advisor Class A
	For the			For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2009			2009			2009			2009			2008			2008




	$	14.42		$	14.16		$	13.80		$	14.44		$	30.99		$	30.52


		0.15			0.10			0.02			0.18			0.12			0.06

		5.78			5.68			5.51			5.78			(16.62	)⁽⁶⁾		(16.34	)⁽⁶⁾

		5.93			5.78			5.53			5.96			(16.50	)		(16.28	)

		0.00	⁽³⁾		—			0.00	⁽³⁾		0.00	⁽³⁾		0.01			0.00	⁽³⁾

		(0.17	)		(0.06	)		—			(0.27	)		—			—
		—			—			—			—			(0.08	)		(0.08	)

		(0.17	)		(0.06	)		—			(0.27	)		(0.08	)		(0.08	)

	$	20.18		$	19.88		$	19.33		$	20.13		$	14.42		$	14.16

		41.02	%		40.64	%		39.97	%		41.31	%		(53.17	)%⁽⁶⁾		(53.30	)%⁽⁶⁾


	$	825,278		$	252,106		$	169,578		$	125,372		$	740,983		$	249,424


		1.73	%		1.98	%		2.48	%		1.68	%		1.72	%		1.97	%
		1.64	%		1.89	%		2.39	%		1.44	%		1.66	%		1.91	%


		0.78	%		0.53	%		0.03	%		0.83	%		0.46	%		0.21	%
		0.87	%		0.62	%		0.12	%		1.07	%		0.52	%		0.27	%
		N/A			N/A			N/A			N/A			N/A			N/A

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Financial Highlights


	The Paradigm Fund
	Advisor Class C			Institutional Class			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,
	2008			2008			2007			2007


PER SHARE DATA:⁽¹⁾
Net Asset Value,
Beginning of Year	$	29.90		$	30.97		$	25.79		$	25.43

Income from Investment Operations:
Net investment income (loss)⁽²⁾		(0.05	)		0.18			0.11			0.04
Net realized and unrealized gain (loss) on investments		(15.97	)⁽⁶⁾		(16.63	)⁽⁶⁾		5.35			5.27

Total from investment operations		(16.02	)		(16.45	)		5.46			5.31

Redemption Fees		0.00	⁽³⁾		0.00	⁽³⁾		0.00	⁽³⁾		0.00	⁽³⁾
Less Distributions:
From net investment income		—			—			(0.13	)		(0.09	)
From net realized gains		(0.08	)		(0.08	)		(0.13	)		(0.13	)

Total distributions		(0.08	)		(0.08	)		(0.26	)		(0.22	)

Net Asset Value, End of Year	$	13.80		$	14.44		$	30.99		$	30.52

Total Return⁽⁴⁾		(53.54	)%⁽⁶⁾		(53.11	)%⁽⁶⁾		21.15	%		20.87	%

SUPPLEMENTAL DATA AND RATIOS
Net assets, end of year (000’s)	$	147,915		$	128,129		$	2,910,518		$	544,046
Ratio of operating expenses to average net assets:
Before expense reimbursement		2.47	%		1.67	%		1.68	%		1.93	%
After expense reimbursement⁽⁵⁾		2.41	%		1.46	%		1.68	%		1.93	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(0.29	)%		0.51	%		0.39	%		0.14	%
After expense reimbursement⁽⁵⁾		(0.23	)%		0.72	%		0.39	%		0.14	%
Portfolio turnover rate		N/A			N/A			N/A			N/A


(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)	See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion.
(6)	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.

The accompanying notes are an integral part of these financial statements.


The Paradigm Fund
	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
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2007			2006			2006			2006			2006




	$	24.98		$	25.76		$	20.33		$	20.08		$	19.76		$	20.31


		(0.10	)		0.17			0.14			0.08			(0.03	)		0.19

		5.15			5.34			5.52			5.43			5.33			5.49

		5.05			5.51			5.66			5.51			5.30			5.68

		0.00	⁽³⁾		0.00	⁽³⁾		0.00	⁽³⁾		0.00	⁽³⁾		0.00	⁽³⁾		—

		(0.00	)		(0.17	)		(0.16	)		(0.12	)		(0.04	)		(0.19	)
		(0.13	)		(0.13	)		(0.04	)		(0.04	)		(0.04	)		(0.04	)

		(0.13	)		(0.30	)		(0.20	)		(0.16	)		(0.08	)		(0.23	)

	$	29.90		$	30.97		$	25.79		$	25.43		$	24.98		$	25.76

		20.20	%		21.37	%		27.81	%		27.42	%		26.82	%		27.96	%


	$	320,962		$	804,755		$	1,337,761		$	183,031		$	116,226		$	507,314


		2.43	%		1.63	%		1.79	%		2.04	%		2.54	%		1.74	%
		2.43	%		1.48	%		1.63	%		1.88	%		2.38	%		1.43	%


		(0.36	)%		0.44	%		0.44	%		0.19	%		(0.31	)%		0.48	%
		(0.36	)%		0.59	%		0.60	%		0.35	%		(0.15	)%		0.79	%
		N/A			N/A			N/A			N/A			N/A			N/A

The accompanying notes are an integral part of these financial statements.

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
	For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2010			2010			2010			2009			2009


PER SHARE DATA:⁽¹⁾
Net Asset Value,
Beginning of Period	$	18.77		$	18.36		$	18.27		$	15.23		$	14.90

Income from Investment Operations:
Net investment income (loss)⁽²⁾		0.10			0.05			(0.04	)		0.20			0.15
Net realized and unrealized gain (loss) on investments		0.72			0.71			0.69			3.51			3.44

Total from investment operations		0.82			0.76			0.65			3.71			3.59

Redemption Fees		0.00	⁽³⁾		0.00	⁽³⁾		—			0.01			0.01
Less Distributions:
From net investment income		(0.11	)		(0.06	)		(0.02	)		(0.16	)		(0.12	)
From net realized gains		—			—			—			(0.02	)		(0.02	)

Total distributions		(0.11	)		(0.06	)		(0.02	)		(0.18	)		(0.14	)

Net Asset Value, End of Period	$	19.48		$	19.06		$	18.90		$	18.77		$	18.36

Total Return⁽⁴⁾		4.30	%		4.13	%		3.55	%		24.47	%		24.17	%

SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	25,777		$	4,207		$	692		$	21,126		$	4,347
Ratio of operating expenses to average net assets:
Before expense reimbursement		2.00	%		2.25	%		2.75	%		2.15	%		2.40	%
After expense reimbursement⁽⁷⁾		1.39	%		1.64	%		2.14	%		1.39	%		1.64	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(0.06	)%		(0.31	)%		(0.81	)%		0.42	%		0.17	%
After expense reimbursement⁽⁷⁾		0.55	%		0.30	%		(0.20	)%		1.17	%		0.92	%
Portfolio turnover rate		N/A			N/A			N/A			N/A			N/A


	ˆ	Commencement of operations.


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

The accompanying notes are an integral part of these financial statements.


The Medical Fund
	Advisor Class C			No Load Class			Advisor Class A			Advisor Class C			No Load Class			Advisor Class A			Advisor Class C			No Load Class			Advisor Class A
	For the			For the			For the			For the			For the			For the			February 16, 2007ˆ			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			through			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2009			2008			2008			2008			2007			2007			2007			2006			2006




	$	14.83		$	19.82		$	19.39		$	19.34		$	17.83		$	17.47		$	18.29		$	16.64		$	16.34


		0.07			0.19			0.13			0.05			0.10			0.05			(0.04	)		0.06			0.01

		3.41			(4.25	)		(4.15	)		(4.13	)		2.67			2.62			1.79			2.40			2.35

		3.48			(4.06	)		(4.02	)		(4.08	)		2.77			2.67			1.75			2.46			2.36

		0.00	⁽³⁾		0.01			0.04			0.02			0.01			0.00	⁽³⁾		0.00	⁽³⁾		0.00	⁽³⁾		—

		(0.02	)		(0.16	)		(0.13	)		(0.07	)		(0.10	)		(0.06	)		(0.01	)		(0.04	)		—
		(0.02	)		(0.38	)		(0.38	)		(0.38	)		(0.69	)		(0.69	)		(0.69	)		(1.23	)		(1.23	)

		(0.04	)		(0.54	)		(0.51	)		(0.45	)		(0.79	)		(0.75	)		(0.70	)		(1.27	)		(1.23	)

	$	18.27		$	15.23		$	14.90		$	14.83		$	19.82		$	19.39		$	19.34		$	17.83		$	17.47

		23.50	%		(20.42	)%		(20.49	)%		(20.97	)%		15.47	%		15.16	%		9.55	%⁽⁵⁾		14.81	%		14.49	%



	$	454		$	15,727		$	2,941		$	314		$	13,917		$	1,427		$	148		$	15,527		$	711

		2.90	%		2.26	%		2.51	%		3.01	%		2.41	%		2.66	%		3.19	%⁽⁶⁾		2.28	%		2.53	%
		2.14	%		1.41	%		1.66	%		2.16	%		1.40	%		1.65	%		2.15	%⁽⁶⁾		1.44	%		1.69	%


		(0.33	)%		0.18	%		(0.07	)%		(0.57	)%		(0.51	)%		(0.76	)%		(1.30	)%⁽⁶⁾		(0.51	)%		(0.76	)%
		0.42	%		1.03	%		0.78	%		0.28	%		0.50	%		0.25	%		(0.26	)%⁽⁶⁾		0.33	%		0.08	%
		N/A			N/A			N/A			N/A			N/A			N/A			N/A			N/A			N/A

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Financial Highlights


	The Small Cap Opportunities Fund
	No Load Class			Advisor Class A			Advisor Class C			Institutional Class			No Load Class			Advisor Class A
	For the			For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2010			2010			2010			2010			2009			2009


PER SHARE DATA:⁽¹⁾
Net Asset Value,
Beginning of Year	$	20.83		$	20.53		$	20.28		$	20.90		$	13.17		$	13.01

Income from Investment Operations:
Net investment income (loss)⁽²⁾		(0.04	)		(0.09	)		(0.20	)		0.00	⁽³⁾		(0.04	)		(0.08	)
Net realized and unrealized gain (loss) on investments		2.93			2.87			2.84			2.95			7.70			7.60

Total from investment operations		2.89			2.78			2.64			2.95			7.66			7.52

Redemption Fees		0.00	⁽³⁾		0.00	⁽³⁾		—			0.00	⁽³⁾		0.00	⁽³⁾		0.00	⁽³⁾
Less Distributions:
From net investment income		(0.40	)		(0.33	)		(0.24	)		(0.40	)		—			—
From net realized gains		—			—			—			—			—			—

Total distributions		(0.40	)		(0.33	)		(0.24	)		(0.40	)		—			—

Net Asset Value, End of Year	$	23.32		$	22.98		$	22.68		$	23.45		$	20.83		$	20.53

Total Return⁽⁴⁾		13.86	%		13.56	%		13.00	%		14.10	%		58.16	%		57.80	%

SUPPLEMENTAL DATA AND RATIOS
Net assets, end of year (000’s)	$	130,279		$	11,509		$	3,450		$	9,808		$	161,205		$	14,244
Ratio of operating expenses to average net assets:
Before expense reimbursement		1.86	%		2.11	%		2.61	%		1.81	%		1.86	%		2.11	%
After expense reimbursement⁽⁵⁾		1.64	%		1.89	%		2.39	%		1.44	%		1.64	%		1.89	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(0.42	)%		(0.67	)%		(1.17	)%		(0.37	)%		(0.48	)%		(0.73	)%
After expense reimbursement⁽⁵⁾		(0.20	)%		(0.45	)%		(0.95	)%		0.00	%		(0.26	)%		(0.51	)%
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)	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)	See Note #3, Investment Adviser, for the waiver and expense reimbursement discussion.
(6)	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.

The accompanying notes are an integral part of these financial statements.


The Small Cap Opportunities Fund
Advisor Class C			Institutional Class			No Load Class			Advisor Class A			Advisor Class C			Institutional Class			No Load Class			Advisor Class A
For the			For the			For the			For the			For the			For the			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			2008			2008			2008			2008			2007			2007




$	12.92		$	13.19		$	31.92		$	31.63		$	31.57		$	31.92		$	26.92		$	26.71


	(0.16	)		(0.01	)		0.05			(0.01	)		(0.12	)		0.10			0.01			(0.07	)

	7.52			7.72			(18.53	)⁽⁶⁾		(18.34	)⁽⁶⁾		(18.26	)⁽⁶⁾		(18.56	)⁽⁶⁾		5.29			5.25


	7.36			7.71			(18.48	)		(18.35	)		(18.38	)		(18.46	)		5.30			5.18

	0.00	⁽³⁾		0.00	⁽³⁾		0.00	⁽³⁾		0.00	⁽³⁾		0.00	⁽³⁾		0.00	⁽³⁾		0.00	⁽³⁾		0.00	⁽³⁾

	—			—			—			—			—			—			(0.23	)		(0.19	)
	—			—			(0.27	)		(0.27	)		(0.27	)		(0.27	)		(0.07	)		(0.07	)

	—			—			(0.27	)		(0.27	)		(0.27	)		(0.27	)		(0.30	)		(0.26	)

$	20.28		$	20.90		$	13.17		$	13.01		$	12.92		$	13.19		$	31.92		$	31.63

	56.97	%		58.45	%		(57.88	)%⁽⁶⁾		(58.00	)%⁽⁶⁾		(58.20	)%⁽⁶⁾		(57.82	)%⁽⁶⁾		19.65	%		19.36	%


$	4,445		$	19,749		$	126,971		$	12,090		$	2,871		$	68,408		$	729,278		$	36,390


	2.61	%		1.81	%		1.79	%		2.04	%		2.54	%		1.74	%		1.71	%		1.96	%
	2.39	%		1.44	%		1.67	%		1.92	%		2.42	%		1.47	%		1.69	%		1.94	%


	(1.23	)%		(0.43	)%		0.09	%		(0.16	)%		(0.66	)%		0.14	%		0.00	%		(0.25	)%
	(1.01	)%		(0.06	)%		0.21	%		(0.04	)%		(0.54	)%		0.41	%		0.02	%		(0.23	)%
	N/A			N/A			N/A			N/A			N/A			N/A			N/A			N/A

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Financial Highlights


	The Small Cap Opportunities Fund
	Advisor Class C			Institutional Class			No Load Class			Advisor Class A			Institutional Class
	February 16, 2007ˆ			For the			For the			For the			For the
	through			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2007			2007			2006			2006			2006


PER SHARE DATA:⁽¹⁾
Net Asset Value, Beginning of Period	$	28.70		$	26.91		$	21.02		$	20.89		$	21.00

Income from Investment Operations:
Net investment income (loss)⁽²⁾		(0.21	)		0.07			0.03			(0.03	)		0.08
Net realized and unrealized gain on investments		3.33			5.29			5.92			5.88			5.91

Total from investment operations		3.12			5.36			5.95			5.85			5.99

Redemption Fees		0.02			0.00	⁽³⁾		0.00	⁽³⁾		0.00	⁽³⁾		0.00	⁽³⁾
Less Distributions:
From net investment income		(0.20	)		(0.28	)		(0.05	)		(0.03	)		(0.08	)
From net realized gains		(0.07	)		(0.07	)		—			—			—

Total distributions		(0.27	)		(0.35	)		(0.05	)		(0.03	)		(0.08	)

Net Asset Value, End of Period	$	31.57		$	31.92		$	26.92		$	26.71		$	26.91

Total Return⁽⁴⁾		10.94	%⁽⁵⁾		19.91	%		28.37	%		28.03	%		28.52	%

SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	4,942		$	316,709		$	268,875		$	12,144		$	209,592
Ratio of operating expenses to average net assets:
Before expense reimbursement		2.47	%⁽⁶⁾		1.66	%		1.83	%		2.08	%		1.78	%
After expense reimbursement⁽⁷⁾		2.45	%⁽⁶⁾		1.49	%		1.58	%		1.83	%		1.38	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(0.76	)%⁽⁶⁾		0.05	%		(0.14	)%		(0.39	)%		(0.09	)%
After expense reimbursement⁽⁷⁾		(0.75	)%⁽⁶⁾		0.22	%		0.11	%		(0.14	)%		0.31	%
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.

The accompanying notes are an integral part of these financial statements.

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			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2010			2010			2010			2010			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)⁽²⁾		0.04			0.01			(0.04	)		0.06			0.00	⁽³⁾
Net realized and unrealized gain (loss) on investments		1.18			1.19			1.17			1.19			3.62
Payment by adviser⁽⁸⁾		—			—			—			—			—

Total from investment operations		1.22			1.20			1.13			1.25			3.62

Redemption Fees		0.00	⁽³⁾		0.00	⁽³⁾		0.00	⁽³⁾		—			0.01
Less Distributions:
From net investment income		(0.60	)		(0.57	)		(0.52	)		(0.63	)		(0.01	)
From net realized gains		—			—			—			—			—

Total distributions		(0.60	)		(0.57	)		(0.52	)		(0.63	)		(0.01	)

Net Asset Value, End of Period	$	11.46		$	11.43		$	11.30		$	11.48		$	10.84

Total Return⁽⁴⁾		11.31	%		11.11	%		10.54	%		11.54	%		50.21	%

SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	38,562		$	14,167		$	5,569		$	212		$	41,254
Ratio of operating expenses to average net assets:
Before expense reimbursement		1.92	%		2.17	%		2.67	%		1.87	%		1.93	%
After expense reimbursement⁽⁷⁾		1.64	%		1.89	%		2.39	%		1.44	%		1.64	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		0.06	%		(0.19	)%		(0.69	)%		0.11	%		(0.25	)%
After expense reimbursement⁽⁷⁾		0.34	%		0.09	%		(0.41	)%		0.54	%		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.
(8)	Includes adviser reimbursement from the net realized loss on the disposal of investments in violation of restrictions. This reimbursement contributed 0.38%, 0.37%, 0.38% and 0.44% to the returns of the No Load Class, the Advisor Class A, the Advisor Class C, and the Institutional Class, respectively, for the year ended December 31, 2008.

The accompanying notes are an integral part of these financial statements.


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	)		(0.06	)		0.02			0.11			0.08			0.02			0.08			0.04

		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	)%⁽⁸⁾		(54.91	)%⁽⁸⁾		(55.13	)%⁽⁸⁾		(46.77	)%⁽⁵⁾⁽⁸⁾		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

The accompanying notes are an integral part of these financial statements.

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 on investments		4.04			3.07			2.05			2.05

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.

The accompanying notes are an integral part of these financial statements.

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			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2010			2010			2010			2010


PER SHARE DATA:⁽¹⁾
Net Asset Value,
Beginning of Year	$	8.86		$	8.82		$	8.71		$	8.90

Income from Investment Operations:
Net investment income (loss)⁽²⁾		0.07			0.05			0.01			0.09
Net realized and unrealized gain (loss) on investments		(0.48	)		(0.47	)		(0.46	)		(0.48	)

Total from investment operations		(0.41	)		(0.42	)		(0.45	)		(0.39	)

Redemption Fees		0.00	⁽³⁾		0.00	⁽³⁾		—			0.00	⁽³⁾
Less Distributions:
From net investment income		(0.07	)		(0.05	)		(0.01	)		(0.09	)
From net realized gains		—			—			—			—

Total distributions		(0.07	)		(0.05	)		(0.01	)		(0.09	)

Net Asset Value, End of Year	$	8.38		$	8.35		$	8.25		$	8.42

Total Return⁽⁴⁾		(4.60	)%		(4.80	)%		(5.15	)%		(4.38	)%

SUPPLEMENTAL DATA AND RATIOS
Net assets, end of year (000’s)	$	7,001		$	10,100		$	2,840		$	4,182
Ratio of operating expenses to average net assets:
Before expense reimbursement		2.17	%		2.42	%		2.92	%		2.12	%
After expense reimbursement⁽⁵⁾		1.64	%		1.89	%		2.39	%		1.44	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		0.33	%		0.08	%		(0.42	)%		0.38	%
After expense reimbursement⁽⁵⁾		0.86	%		0.61	%		0.11	%		1.06	%
Portfolio turnover rate		N/A			N/A			N/A			N/A


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

The accompanying notes are an integral part of these financial statements.


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

The accompanying notes are an integral part of these financial statements.

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⁽²⁾		0.06			0.05			0.02			0.06
Net realized and unrealized gain 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		(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.

The accompanying notes are an integral part of these financial statements.

KINETICS MUTUAL FUNDS, INC. — THE FUNDS

Financial Highlights


	The Multi-Disciplinary Fund
	No Load Class			Advisor Class A			Advisor Class C			Institutional Class			No Load Class
	For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2010			2010			2010			2010			2009


PER SHARE DATA:⁽¹⁾
Net Asset Value,
Beginning of Period	$	9.86		$	9.85		$	9.80		$	9.89		$	8.22

Income from Investment Operations:
Net investment income (loss)⁽²⁾		0.35			0.33			0.27			0.37			0.09
Net realized and unrealized gain (loss) on investments		0.91			0.89			0.90			0.91			1.79

Total from investment operations		1.26			1.22			1.17			1.28			1.88

Redemption Fees		0.00	⁽³⁾		—			—			—			—
Less Distributions:
From net investment income		(0.35	)		(0.33	)		(0.27	)		(0.37	)		(0.08	)
From net realized gains		(0.30	)		(0.30	)		(0.30	)		(0.30	)		(0.16	)

Total distributions		(0.65	)		(0.63	)		(0.57	)		(0.67	)		(0.24	)

Net Asset Value, End of Period	$	10.47		$	10.44		$	10.40		$	10.50		$	9.86

Total Return⁽⁴⁾		13.04	%		12.64	%		12.13	%		13.19	%		22.90	%

SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	3,489		$	356		$	128		$	142		$	938
Ratio of operating expenses to average net assets:
Before expense reimbursement		6.11	%		6.36	%		6.86	%		6.06	%		13.11	%
After expense reimbursement⁽⁷⁾		1.49	%		1.74	%		2.24	%		1.29	%		1.49	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(1.19	)%		(1.44	)%		(1.94	)%		(1.14	)%		(10.69	)%
After expense reimbursement⁽⁷⁾		3.43	%		3.18	%		2.68	%		3.63	%		0.93	%
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.

The accompanying notes are an integral part of these financial statements.

100


The Multi-Disciplinary Fund
										No Load Class			Advisor Class A			Advisor Class C			Institutional 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			February 11, 2008ˆ			February 11, 2008ˆ			February 11, 2008ˆ			February 11, 2008ˆ
	Year Ended			Year Ended			Year Ended			through			through			through			through
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2009			2009			2009			2008			2008			2008			2008




	$	8.20		$	8.17		$	8.23		$	10.00		$	10.00		$	10.00		$	10.00


		0.06			0.02			0.10			0.01			(0.01	)		(0.05	)		0.02

		1.80			1.78			1.81			(1.79	)		(1.79	)		(1.78	)		(1.79	)


		1.86			1.80			1.91			(1.78	)		(1.80	)		(1.83	)		(1.77	)

		—			—			—			—			—			—			—

		(0.05	)		(0.01	)		(0.09	)		(0.00	)⁽³⁾		(0.00	)⁽³⁾		(0.00	)⁽³⁾		(0.00	)⁽³⁾
		(0.16	)		(0.16	)		(0.16	)		—			—			—			—

		(0.21	)		(0.17	)		(0.25	)		(0.00	)⁽³⁾		(0.00	)⁽³⁾		(0.00	)⁽³⁾		(0.00	)⁽³⁾

	$	9.85		$	9.80		$	9.89		$	8.22		$	8.20		$	8.17		$	8.23

		22.73	%		22.03	%		23.25	%		(17.76	)%⁽⁵⁾		(17.97	)%⁽⁵⁾		(18.30	)%⁽⁵⁾		(17.65	)%⁽⁵⁾


	$	103		$	105		$	101		$	99		$	84		$	88		$	82


		13.36	%		13.86	%		13.06	%		17.58	%⁽⁶⁾		17.83	%⁽⁶⁾		18.33	%⁽⁶⁾		17.53	%⁽⁶⁾
		1.74	%		2.24	%		1.29	%		1.49	%⁽⁶⁾		1.74	%⁽⁶⁾		2.24	%⁽⁶⁾		1.29	%⁽⁶⁾


		(10.94	)%		(11.44	)%		(10.64	)%		(15.99	)%⁽⁶⁾		(16.24	)%⁽⁶⁾		(16.74	)%⁽⁶⁾		(15.94	)%⁽⁶⁾
		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

The accompanying notes are an integral part of these financial statements.

101

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			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2010			2010			2010			2010



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	)		(0.04	)		(0.09	)		0.00	⁽³⁾
Net realized and unrealized gain on investments		0.37			0.35			0.34			0.35

Total from investment operations		0.35			0.31			0.25			0.35

Redemption Fees		—			—			—			—
Less Distributions:
From net investment income		(0.07	)		(0.07	)		(0.03	)		(0.11	)
From net realized gains		—			—			—			—

Total distributions		(0.07	)		(0.07	)		(0.03	)	$	(0.11	)

Net Asset Value, End of Period	$	10.28		$	10.24		$	10.22		$	10.24

Total Return⁽⁴⁾		3.47	%		3.08	%		2.53	%		3.51	%

SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000’s)	$	50		$	502		$	1,024		$	21
Ratio of operating expenses to average net assets:
Before expense reimbursement		7.08	%		7.33	%		7.83	%		7.03	%
After expense reimbursement⁽⁷⁾		2.29	%		2.54	%		3.04	%		2.09	%
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement		(4.95	)%		(5.20	)%		(5.70	)%		(4.90	)%
After expense reimbursement⁽⁷⁾		(0.16	)%		(0.41	)%		(0.91	)%		0.04	%
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.

The accompanying notes are an integral part of these financial statements.

102


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, 2009			December 31, 2009			December 31, 2009			December 31, 2009




	$	10.00		$	10.00		$	10.00		$	10.00


		—			—			—			—

		—			—			—			—


		—			—			—			—

		—			—			—			—


		—			—			—			—
		—			—			—			—

		—			—			—			—

	$	10.00		$	10.00		$	10.00		$	10.00

		0.00	%⁽⁵⁾		0.00	%⁽⁵⁾		0.00	%⁽⁵⁾		0.00	%⁽⁵⁾

	$	20		$	20		$	20		$	20


		0.00	%⁽⁶⁾		0.00	%⁽⁶⁾		0.00	%⁽⁶⁾		0.00	%⁽⁶⁾
		0.00	%⁽⁶⁾		0.00	%⁽⁶⁾		0.00	%⁽⁶⁾		0.00	%⁽⁶⁾


		0.00	%⁽⁶⁾		0.00	%⁽⁶⁾		0.00	%⁽⁶⁾		0.00	%⁽⁶⁾
		0.00	%⁽⁶⁾		0.00	%⁽⁶⁾		0.00	%⁽⁶⁾		0.00	%⁽⁶⁾
		N/A			N/A			N/A			N/A

The accompanying notes are an integral part of these financial statements.

103

KINETICS MUTUAL FUNDS, INC.

Report of Independent Registered
Public Accounting Firm

To the Shareholders of and Board of Directors

Kinetics Mutual Funds, Inc.

Elmsford, New York

We have audited the accompanying statements of assets and liabilities of The Internet Fund, The Global Fund, The Paradigm Fund, The Medical Fund, The Small Cap Opportunities Fund, The Market Opportunities Fund, The Water Infrastructure Fund, The Multi-Disciplinary Fund, and The Tactical Paradigm Fund, each a series of shares of Kinetics Mutual Funds, Inc. (the “Funds”), as of December 31, 2010, and the related statements of operations, the statements of changes in net assets and financial highlights for the periods indicated thereon. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

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

In our opinion, the financial statements and financial highlights referred to above present fairly in all material respects, the financial position of the above mentioned Funds as of December 31, 2010, the results of their operations, the changes in their net assets and financial highlights for the periods indicated thereon, in conformity with accounting principles generally accepted in the United States of America.

TAIT, WELLER & BAKER LLP

Philadelphia, Pennsylvania

March 1, 2011

104

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — December 31, 2010


Identifier	COMMON STOCKS — 99.09%	Shares		Value


	*Administrative and Support Services — 0.42%*
CTRP	Ctrip.com International Ltd. — ADR*		6,000	$	242,700
IILG	Interval Leisure Group, Inc.*		200		3,228
ID	L-1 Identity Solutions, Inc.*		20,000		238,200

					484,128

	*Amusement, Gambling, and Recreation Industries — 0.97%*
DIS	The Walt Disney Co.ˆ		29,691		1,113,709

	*Asset Management — 0.26%*
URB/A CN	Urbana Corp. — Class A*		240,000		296,892

	*Broadcasting (except Internet) — 11.09%*
LBTYK	Liberty Global, Inc. — Series C*ˆ		100,707		3,412,960
LCAPA	Liberty Media Corp. — Capital Series A*		23,580		1,475,165
LINTA	Liberty Media Corp. — Interactive — Class A*		174,500		2,751,865
2008 HK	Phoenix Satellite Television Holdings Limited		5,006,000		1,700,267
SNI	Scripps Networks Interactive — Class A		65,000		3,363,750
SIRI	Sirius XM Radio, Inc.*ˆ		46,000		75,440

					12,779,447

	*Computer and Electronic Product Manufacturing — 6.59%*
AAPL	Apple, Inc.*		5,000		1,612,800
EMC	EMC Corporation*ˆ		95,530		2,187,637
JDSU	JDS Uniphase Corporation*		40,260		582,965
NTAP	NetApp, Inc.*ˆ		45,000		2,473,200
QCOM	QUALCOMM Inc.		15,000		742,350

					7,598,952

	*Credit Intermediation and Related Activities — 2.48%*
BR	Broadridge Financial Solutions, Inc.		100,000		2,193,000
NTRS	Northern Trust Corp.		2,000		110,820
TREE	Tree.com, Inc.*		10,033		94,712
WU	The Western Union Company		25,000		464,250

					2,862,782

The accompanying notes are an integral part of these financial statements.

109

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier		Shares		Value


	*Data Processing, Hosting and Related Services — 0.55%*
ACXM	Acxiom Corporation*		30,150	$	517,073
CSGP	CoStar Group, Inc.*ˆ		2,000		115,120

					632,193

	*Data Processor — 2.68%*
MA	Mastercard, Inc. — Class A		6,000		1,344,660
VRSK	Verisk Analytics, Inc. — Class A*ˆ		10,000		340,800
V	Visa, Inc. — Class Aˆ		20,000		1,407,600

					3,093,060

	*Defense — 5.42%*
CACI	CACI International, Inc. — Class A*		55,000		2,937,000
MANT	ManTech International Corporation — Class A*		80,000		3,306,400

					6,243,400

	*Educational Services — 0.32%*
EDU	New Oriental Education & Technology Group, Inc. — ADR*ˆ		3,550		373,566

	*European Exchanges — 1.37%*
NAT BB	Compagnie Nationale a Portefeuille		26,685		1,305,134
DB1 GR	Deutsche Boerse AG		4,000		276,883

					1,582,017

	*Gaming — 0.74%*
200 HK	Melco International Development Limited		1,500,000		856,834

	*Global Exchanges — 4.96%*
388 HK	Hong Kong Exchanges & Clearing Limited		68,800		1,560,498
JSE SJ	JSE Limited		51,000		611,613
8697 JP	Osaka Securities Exchange Co., Ltd.		94		474,110
SGX SP	Singapore Exchange Limited		468,200		3,071,839

					5,718,060

The accompanying notes are an integral part of these financial statements.

110

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier		Shares		Value


	*Holding Company — 0.54%*
GBLS BB	Groupe Bruxelles Lambert S.A. Strip VVPR*		2,000	$	21
IEP	Icahn Enterprises LP		17,900		627,574

					627,595

	*Management of Companies and Enterprises — 0.22%*
SATS	EchoStar Corporation — Class A*		10,000		249,700

	*Motion Picture and Sound Recording Industries — 9.05%*
DWA	DreamWorks Animation SKG, Inc. — Class A*		130,000		3,831,100
SINA	SINA Corporation*ˆ		30,000		2,064,600
TWX	Time Warner, Inc.		86,666		2,788,045
WMG	Warner Music Group Corp.*ˆ		310,000		1,745,300

					10,429,045

	*Non-Store Retailers — 8.90%*
EBAY	eBay, Inc.*		81,290		2,262,301
HSNI	HSN, Inc.*ˆ		200		6,128
IACI	IAC/InterActiveCorp*		60,740		1,743,238
OSTK	Overstock.com, Inc.*ˆ		1,000		16,480
RBA	Ritchie Bros. Auctioneers, Incorporatedˆ		162,000		3,734,100
SOHU	Sohu.com Inc.*ˆ		18,000		1,142,820
BID	Sotheby’sˆ		30,000		1,350,000

					10,255,067

	*Other Exchanges — 0.79%*
ASX AU	ASX Ltd.		12,600		485,592
FTIS LI	Financial Technologies (India) Ltd. — GDR		144,000		421,920

					907,512

	*Other Information Services — 10.64%*
BIDU	Baidu.com, Inc. — ADR*		90,930		8,777,473
EXPE	Expedia, Inc.ˆ		4,000		100,360
GOOG	Google Inc. — Class A*		3,200		1,900,704
NTES	NetEase.com Inc. — ADR*		11,320		409,218

The accompanying notes are an integral part of these financial statements.

111

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier		Shares		Value


	*Other Information Services (Continued)*
YHOO	Yahoo! Inc.*ˆ		60,000	$	997,800
YOKU	Youku.com, Inc. — ADR*ˆ		2,160		75,621

					12,261,176

	*Performing Arts, Spectator Sports, and Related Industries — 0.10%*
LYV	Live Nation Entertainment, Inc.*ˆ		10,294		117,558

	*Prepackaged Software — 0.84%*
CHKP	Check Point Software Technologies Ltd.*		21,000		971,460

	*Professional, Scientific, and Technical Services — 5.23%*
JRJC	China Finance Online Company — ADR*ˆ		10,000		65,300
CTSH	Cognizant Technology Solutions Corporation — Class A*		39,000		2,858,310
INFY	Infosys Technologies Limited — ADRˆ		30,000		2,282,400
ICGE	Internet Capital Group, Inc.*		15,000		213,300
MWW	Monster Worldwide, Inc.*ˆ		2,000		47,260
PCLN	Priceline.com Incorporated*		500		199,775
SAPE	Sapient Corporation		20,000		242,000
UNTD	United Online, Inc.ˆ		10,000		66,000
WYY	WidePoint Corp.*		39,062		51,562

					6,025,907

	*Publishing Industries (except Internet) — 14.30%*
MFE	McAfee, Inc.*		15,000		694,650
ROVI	Rovi Corporation*ˆ		109,350		6,780,794
SYMC	Symantec Corporation*		30,000		502,200
SSP	The E.W. Scripps Company — Class A*		752,000		7,632,800
WPO	The Washington Post Company — Class Bˆ		2,000		879,000

					16,489,444

	*Rental and Leasing Services — 1.48%*
CDCO	Comdisco Holding Company, Inc.*		194,400		1,701,000

The accompanying notes are an integral part of these financial statements.

112

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier		Shares		Value


	*Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 3.66%*
CME	CME Group, Inc.ˆ		6,230	$	2,004,503
ICE	IntercontinentalExchange Inc.*ˆ		11,670		1,390,481
LAB	LaBranche & Co. Inc.*		193,490		696,564
MKTX	MarketAxess Holdings, Inc.		6,000		124,860

					4,216,408

	*Special Purpose Entity — 0.00%*
ADPAO	Adelphia Contingent Value Vehicle CVV Services ACC-4 Int*+		250,827		502
ADPAL	Adelphia Recovery Trust Ser ACC-6 E/F Int*+		4,878,645		0

					502

	*Telecommunications — 3.56%*
CHU	China Unicom (Hong Kong) Limited — ADRˆ		156,460		2,229,555
215 HK	Hutchison Telecommunications Hong Kong Holdings Limited		2,300,000		704,251
HTHKY	Hutchison Telecommunications Hong Kong Holdings Limited — ADRˆ		45,000		200,250
SNSH	Sunshine PCS Corporation — Class A*		149		4,798
VOD	Vodafone Group Plc — ADRˆ		36,570		966,545

					4,105,399

	*U.S. Equity Exchanges — 1.12%*
NDAQ	The NASDAQ OMX Group, Inc.*ˆ		29,440		698,022
NYX	NYSE Euronext		19,830		594,503

					1,292,525

	*Warehousing and Storage — 0.81%*
IRM	Iron Mountain Incorporated		37,147		929,046

	TOTAL COMMON STOCKS (cost $65,916,697)				114,214,384

The accompanying notes are an integral part of these financial statements.

113

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


		Principal
Identifier	ESCROW NOTES — 0.00%	Amount		Value


	*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 — 1.33%	Shares


	*Rental and Leasing Services — 1.33%*
CDCOR	Comdisco Holding Company, Inc.
	Expiration Date: 12/31/2050
	Strike Price: $1.00#*ˆ		12,240,699		1,530,087

	TOTAL RIGHTS (cost $3,253,775)				1,530,087



	SHORT-TERM INVESTMENTS — 0.52%


	*Money Market Funds — 0.52%*
FIUXX	First American Prime Obligations Fund — Class I, 0.00%^b		600,620		600,620

	TOTAL SHORT-TERM INVESTMENTS (cost $600,620)				600,620



	INVESTMENTS PURCHASED WITH
	THE CASH PROCEEDS FROM SECURITIES LENDING — 32.46%


	*Investment Companies — 32.46%*
	Mount Vernon Securities Lending Trust — Prime Portfolio, 0.29%^b		37,416,974		37,416,974

	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $37,416,974)				37,416,974

	TOTAL INVESTMENTS — 133.40% (cost $107,188,066)			$	153,762,065

The accompanying notes are an integral part of these financial statements.

114

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — December 31, 2010 — (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 December 31, 2010. Total loaned securities had a market value of $35,839,537 at December 31, 2010.


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


+ —	Security is considered illiquid and was fair valued. The aggregate value of such securities is $502 or 0.00% of net assets.

^b — The rate quoted is the annualized seven-day yield as of December 31, 2010.


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

The accompanying notes are an integral part of these financial statements.

115

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Global Portfolio

Portfolio of Investments — December 31, 2010


Identifier	COMMON STOCKS — 99.75%	Shares		Value


	*Asset Management — 1.70%*
8739 JP	SPARX Group Co., Ltd.*		800	$	90,159

	*Banks — 1.57%*
8053 JP	Sumitomo Corp.		5,900		83,497

	*Beverage and Tobacco Product Manufacturing — 1.19%*
ZWC PW	Grupa Zywiec S.A.		200		38,238
ZWACK HB	Zwack Unicum Nyrt.		400		24,609

					62,847

	*Chemical Manufacturing — 11.28%*
GSK	GlaxoSmithKline plc — ADRˆ		3,000		117,660
LYB	LyondellBasell Industries NV — Class A*		2,500		86,000
MRK GR	Merck KGaA		500		39,989
SNY	Sanofi-Aventis — ADRˆ		4,000		128,920
SHPGY	Shire PLC — ADRˆ		1,500		108,570
SQM	Sociedad Quimica y Minera de Chile SA — ADRˆ		2,000		116,840

					597,979

	*Commercial Banking — 0.53%*
MFG	Mizuho Financial Group, Inc. — ADRˆ		7,500		28,125

	*Computer and Electronic Product Manufacturing — 3.67%*
6954 JP	Fanuc Ltd.		400		61,436
6592 JP	Mabuchi Motor Co., Ltd.		500		25,773
6594 JP	Nidec Corporation		500		50,561
6506 JP	YASKAWA Electric Corporation		6,000		56,756

					194,526

	*Consumer Retailing — 2.34%*
BRK-U CN	The Brick Group Income Fund — Class A*		45,000		124,007

	*Credit Intermediation and Related Activities — 7.41%*
8309 JP	Chuo Mitsui Trust Holdings, Inc.		15,000		62,261
8511 JP	Japan Securities Finance Co., Ltd.		12,000		88,090
MTU	Mitsubishi UFJ Financial Group, Inc. — ADRˆ		6,000		32,460
8512 JP	Osaka Securities Finance Co. Ltd.		11,800		24,562
OTP HB	OTP Bank Nyrt.*		1,000		24,128

The accompanying notes are an integral part of these financial statements.

116

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Global Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier		Shares		Value


	*Credit Intermediation and Related Activities (Continued)*
SMFG	Sumitomo Mitsui Financial Group, Inc. — ADRˆ		5,000	$	35,550
8403 JP	The Sumitomo Trust and Banking Co., Ltd.		20,000		126,124

					393,175

	*Crop Production — 1.10%*
KWS GR	KWS Saat AG		300		58,270

	*Data Processing, Hosting and Related Services — 0.72%*
SUM CN	Solium Capital Inc.*		25,000		38,343

	*Food and Beverage Stores — 1.25%*
TSCO LN	Tesco plc		10,000		66,261

	*Food Manufacturing — 2.55%*
BARN SW	Barry Callebaut AG		100		82,834
1334 JP	Maruha Nichiro Holdings, Inc.		10,000		16,628
2897 JP	Nissin Foods Holdings Co., Ltd.		1,000		35,842

					135,304

	*Food Services and Drinking Places — 0.43%*
LIQ-U CN	Liquor Stores Income Fund*		1,500		22,900

	*Funds, Trusts, and Other Financial Vehicles — 4.97%*
AER CN	Groupe Aeroplan, Inc.		8,000		109,987
2337 JP	Ichigo Group Holdings Co., Ltd.*		200		28,009
JAZ-U CN	Jazz Air Income Fund*		11,775		61,581
1615 JP	TOPIX Banks ETF		40,000		64,047

					263,624

	*Global Exchanges — 0.95%*
8697 JP	Osaka Securities Exchange Co., Ltd.		10		50,437

	*Insurance Carriers and Related Activities — 2.00%*
MUV2 GR	Muenchener Rueckversicherungs-Gesellschaft AG		700		106,123

	*Machinery Manufacturing — 0.70%*
KWG GR	KHD Humboldt Wedag International AG		3,978		36,929

The accompanying notes are an integral part of these financial statements.

117

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Global Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier		Shares		Value


	*Medical Equipment and Supplies Manufacturing — 1.68%*
NOBN VX	Nobel Biocare Holding AG		3,500	$	65,995
STMN SW	Straumann Holding AG		100		22,888

					88,883

	*Merchant Wholesalers, Durable Goods — 2.32%*
CFAO FP	CFAO		1,000		43,524
1911 JP	Sumitomo Forestry Co., Ltd.		5,000		43,909
8113 JP	Unicharm Corporation		900		35,805

					123,238

	*Merchant Wholesalers, Nondurable Goods — 3.82%*
EDEN FP	Edenred*		5,000		118,364
5002 JP	Showa Shell Sekiyu K.K.		4,000		36,655
3402 JP	Toray Industries, Inc.		8,000		47,789

					202,808

	*Mining (except Oil and Gas) — 2.99%*
ELT AU	Elementos Limited*		7,424		2,696
ORE AU	Orocobre Ltd.*		30,000		100,950
TTT	Terra Nova Realty Corp.*		7,000		54,670

					158,316

	*Oil and Gas Extraction — 0.27%*
MAU FP	Establissements Maurel et Prom		1,000		14,098

	*Other Information Services — 2.08%*
CPU AU	Computershare Limited		10,000		110,257

	*Pharmaceutical and Biotechnology — 5.53%*
AZN	AstraZeneca PLC — ADRˆ		1,000		46,190
CSL AU	CSL Limited		3,100		115,064
NVS	Novartis AG — ADRˆ		1,000		58,950
ROG VX	Roche Holding AG		500		73,262

					293,466

	*Professional, Scientific, and Technical Services — 4.13%*
ALKB DC	Alk-Abello A/S		800		46,109
BSLN SW	Basilea Pharmaceutica AG*		750		52,139
8601 JP	Daiwa Securities Group Inc.		10,000		51,484

The accompanying notes are an integral part of these financial statements.

118

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Global Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier		Shares		Value


	*Professional, Scientific, and Technical Services (Continued)*
ICLL AV	Intercell AG*		2,000	$	31,002
PTS CN	Points International Ltd.*		55,000		38,168

					218,902

	*Rail Transportation — 2.17%*
CNI	Canadian National Railway Company		1,000		66,470
CP	Canadian Pacific Railway Limited		750		48,607

					115,077

	*Real Estate — 3.48%*
4321 JP	Kenedix, Inc.*		100		30,447
8802 JP	Mitsubishi Estate Company Ltd.		4,000		74,196
8801 JP	Mitsui Fudosan Co., Ltd.		4,000		79,764

					184,407

	*Retail Trade — 3.81%*
CA FP	Carrefour SA		1,200		49,470
CO FP	Casino Guichard-Perrachon SA		500		48,742
MEO GR	Metro AG		700		50,400
3382 JP	Seven & I Holdings Co., Ltd.		2,000		53,455

					202,067

	*Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 1.02%*
NMR	Nomura Holdings, Inc. — ADRˆ		8,500		54,230

	*Space Research and Technology — 0.97%*
BA/ LN	BAE Systems plc		10,000		51,450

	*Support Activities for Transportation — 5.00%*
AIO AU	Asciano Group*		45,000		73,411
BXB AU	Brambles Limited		12,000		87,388
9706 JP	Japan Airport Terminal Co., Ltd.		4,500		69,448
WTE-U CN	Westshore Terminals Income Fund		1,500		34,668

					264,915

The accompanying notes are an integral part of these financial statements.

119

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Global Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier		Shares		Value


	*Telecommunications — 3.57%*
NTT	Nippon Telegraph & Telephone Corporation — ADRˆ		2,500	$	57,350
VOD	Vodafone Group Plc — ADR		5,000		132,150

					189,500

	*Transportation Equipment — 0.78%*
BRE IM	Brembo S.p.A.		4,000		41,292

	*Transportation Equipment Manufacturing — 1.19%*
1211 HK	BYD Company Limited — Class H		12,000		63,066

	*Utilities — 4.15%*
EGPW IM	Enel Green Power SpA*		50,000		105,635
SSE LN	Scottish and Southern Energy plc		6,000		114,593

					220,228

	*Wholesale Trade — 6.43%*
8001 JP	ITOCHU Corporation		7,100		71,883
8002 JP	Marubeni Corporation		10,500		73,845
8058 JP	Mitsubishi Corporation		3,050		82,571
8031 JP	Mitsui & Co., Ltd.		4,700		77,629
2768 JP	Sojitz Corporation		16,000		35,078

					341,006

	TOTAL COMMON STOCKS (cost $4,721,765)				5,289,712



	WARRANTS — 0.00%


	*Oil and Gas and Consumable Fuels — 0.00%*
B4PM666	Maurel Et Prom Cw14
	Expiration Date: 6/30/2014 Strike Price: $14.20*		1,000		231

	TOTAL WARRANTS (cost $0)				231

The accompanying notes are an integral part of these financial statements.

120

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Global Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


	INVESTMENTS PURCHASED WITH
Identifier	THE CASH PROCEEDS FROM SECURITIES LENDING — 10.40%	Shares		Value


	*Investment Companies — 10.40%*
	Mount Vernon Securities Lending Trust —
	Prime Portfolio, 0.29%^b		551,370	$	551,370

	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $551,370)				551,370

	TOTAL INVESTMENTS — 110.15% (cost $5,273,135)			$	5,841,313

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 December 31, 2010. Total loaned securities had a market value of $533,095 at December 31, 2010.

^b — The rate quoted is the annualized seven-day yield as of December 31, 2010.


ADR —	American Depository Receipt.


ETF —	Exchange Traded Fund.

The accompanying notes are an integral part of these financial statements.

121

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Paradigm Portfolio

Portfolio of Investments — December 31, 2010


Identifier	COMMON STOCKS — 96.40%	Shares		Value


	*Air Transportation — 0.86%*
670 HK	China Eastern Airlines Corporation Limited — Class H*		6,982,000	$	3,539,147
1055 HK	China Southern Airlines Company Limited — Class H*		11,685,000		7,155,800

					10,694,947

	*Asset Management — 5.14%*
BX	The Blackstone Group LP		173,576		2,456,100
BAM	Brookfield Asset Management Inc. — Class Aˆ		1,487,009		49,502,530
CNS	Cohen & Steers, Inc.ˆ		148,608		3,878,669
EV	Eaton Vance Corp.ˆ		176,518		5,336,139
PZN	Pzena Investment Management, Inc. — Class A		166,825		1,226,164
URB/A CN	Urbana Corp. — Class A*		398,178		492,567
806 HK	Value Partners Group Limited		1,194,000		1,198,178

					64,090,347

	*Beverage and Tobacco Product Manufacturing — 1.89%*
168 HK	Tsingtao Brewery Co. Limited — Class H		4,498,000		23,552,465

	*Broadcasting (except Internet) — 0.32%*
SNI	Scripps Networks Interactive — Class A		75,973		3,931,602

	*Chemical Manufacturing — 2.45%*
NVO	Novo-Nordisk A/S — ADRˆ		52,983		5,964,296
SIAL	Sigma-Aldrich Corp.ˆ		369,705		24,607,565

					30,571,861

	*Credit Intermediation and Related Activities — 2.10%*
BK	The Bank of New York Mellon Corp.		399,325		12,059,615
FMCC	Federal Home Loan Mortgage Corporation*ˆ		5,499,770		1,676,330
FNMA	Federal National Mortgage Association*ˆ		4,942,512		1,482,754
NTRS	Northern Trust Corp.		18,118		1,003,918
SBKFF	State Bank of India — GDRˆ		54,125		6,807,296
STT	State Street Corporation		69,072		3,200,796
UCBH	UCBH Holdings, Inc.*ˆ		112,751		474

					26,231,183

The accompanying notes are an integral part of these financial statements.

122

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Paradigm Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier		Shares		Value


	*Data Processor — 0.90%*
MA	Mastercard, Inc. — Class A		49,000	$	10,981,390
V	Visa, Inc. — Class Aˆ		4,363		307,068

					11,288,458

	*Defense — 0.48%*
CACI	CACI International, Inc. — Class A*ˆ		111,136		5,934,662

	*European Exchanges — 0.53%*
BME SM	Bolsas y Mercados Espanoles		31,300		745,766
DB1 GR	Deutsche Boerse AG		85,062		5,888,059

					6,633,825

	*Funds, Trusts, and Other Financial Vehicles — 0.54%*
GDX	Market Vectors Gold Miners ETFˆ		109,201		6,712,585

	*Gaming — 7.93%*
LVS	Las Vegas Sands Corp.*ˆ		1,015,241		46,650,324
200 HK	Melco International Development Limited		1,863,000		1,064,188
MGM	MGM Mirage*ˆ		759,661		11,280,966
WYNN	Wynn Resorts Limited		384,385		39,914,539

					98,910,017

	*General Merchandise Stores — 0.73%*
SHLD	Sears Holdings Corporation*ˆ		124,047		9,148,466

	*Global Exchanges — 11.34%*
388 HK	Hong Kong Exchanges & Clearing Limited		3,748,190		85,015,168
JSE SJ	JSE Limited		470,543		5,642,944
8697 JP	Osaka Securities Exchange Co., Ltd.		3,889		19,615,045
SGX SP	Singapore Exchange Limited		4,758,003		31,217,038

					141,490,195

	*Holding Company — 8.77%*
BRK/A	Berkshire Hathaway Inc. — Class A*		228		27,462,600
BRK/B	Berkshire Hathaway Inc. — Class B*ˆ		191,111		15,309,902
GBLS BB	Groupe Bruxelles Lambert S.A. Strip VVPR*		23,520		251
IEP	Icahn Enterprises LPˆ		368,735		12,927,849
LUK	Leucadia National Corporation		1,827,372		53,322,715
WSC	Wesco Financial Corporation		1,191		438,776

					109,462,093

The accompanying notes are an integral part of these financial statements.

123

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Paradigm Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier		Shares		Value


	*Insurance Carriers and Related Activities — 3.97%*
LFC	China Life Insurance Co., Limited — ADRˆ		136,494	$	8,349,338
MKL	Markel Corporation*		32,732		12,376,951
MBI	MBIA Inc.*ˆ		475,800		5,704,842
2328 HK	PICC Property & Casualty Co. Ltd. — Class H*		2,538,000		3,676,652
2318 HK	Ping An Insurance Group Company of China Limited — Class H		1,084,745		12,127,463
PWF CN	Power Financial Corporation		234,000		7,232,043

					49,467,289

	*Mining (except Oil and Gas) — 6.73%*
AAUKY	Anglo American PLC — ADRˆ		1,298,013		33,891,119
CCJ	Cameco Corporationˆ		110,146		4,447,696
FNV CN	Franco-Nevada Corporation		922,362		30,853,626
RIO	Rio Tinto Plc — ADRˆ		181,190		12,984,075
1171 HK	Yanzhou Coal Mining Company Limited — Class H		570,000		1,741,650

					83,918,166

	*Motion Picture and Sound Recording Industries — 1.59%*
DWA	DreamWorks Animation SKG, Inc. — Class A*ˆ		272,086		8,018,375
TWX	Time Warner, Inc.		151,702		4,880,253
WMG	Warner Music Group Corp.*ˆ		1,232,967		6,941,604

					19,840,232

	*Non-Store Retailers — 0.77%*
BID	Sotheby’s		214,505		9,652,725

	*Oil and Gas Extraction — 10.30%*
CNQ	Canadian Natural Resources Ltd.ˆ		756,560		33,606,395
COS-U CN	Canadian Oil Sands Trust*ˆ		1,186,924		31,536,571
CVE	Cenovus Energy Inc.		209,469		6,962,750
ECA	EnCana Corporationˆ		223,523		6,508,990
IMO	Imperial Oil Ltd.ˆ		192,905		7,816,511
NXY	Nexen Inc.		349,272		7,998,329
SD	SandRidge Energy, Inc.*ˆ		102,397		749,546
SU	Suncor Energy, Inc.		870,926		33,347,756

					128,526,848

The accompanying notes are an integral part of these financial statements.

124

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Paradigm Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier		Shares		Value


	*Other Exchanges — 1.81%*
ASX AU	ASX Ltd.		488,800	$	18,837,880
X CN	TMX Group Inc.		100,355		3,730,384

					22,568,264

	*Pharmaceutical and Biotechnology — 0.11%*
SNY	Sanofi-Aventis — ADRˆ		41,199		1,327,844

	*Pipeline Transportation — 0.10%*
135 HK	Kunlun Energy Co., Ltd.		800,200		1,241,562

	*Plastics and Rubber Products Manufacturing — 0.67%*
JAH	Jarden Corporation		271,913		8,393,954

	*Port and Harbor Operations — 0.03%*
3382 HK	Tianjin Port Development Holdings Ltd.		1,512,000		357,925

	*Rail Transportation — 3.33%*
CSX	CSX Corp.		235,029		15,185,224
NSC	Norfolk Southern Corp.		191,030		12,000,504
UNP	Union Pacific Corp.		155,277		14,387,967

					41,573,695

	*Real Estate — 10.98%*
ALX	Alexander’s, Inc. — REITˆ		5,091		2,098,918
1 HK	Cheung Kong (Holdings) Limited		1,063,240		16,401,101
FCE/A	Forest City Enterprises, Inc. — Class A*ˆ		829,561		13,845,373
GGP	General Growth Properties, Inc. — REITˆ		2,676,870		41,437,947
10 HK	Hang Lung Group Limited		202,500		1,331,277
12 HK	Henderson Land Development Company Limited		2,700,000		18,410,354
HHC	The Howard Hughes Corporation*ˆ		309,272		16,830,582
823 HK	The Link — REIT		4,453,000		13,835,420
TPL	Texas Pacific Land Trustˆ		147,325		5,374,416
VNO	Vornado Realty Trust — REIT		26,154		2,179,413
4 HK	Wharf Holdings Ltd.		673,000		5,177,722

					136,922,523

The accompanying notes are an integral part of these financial statements.

125

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Paradigm Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier		Shares		Value


	*Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 5.70%*
CBOE	CBOE Holdings Inc.ˆ		363,965	$	8,320,240
CME	CME Group, Inc.		87,709		28,220,371
ICE	IntercontinentalExchange Inc.*ˆ		286,211		34,102,041
LAB	LaBranche & Co. Inc.*		140,000		504,000

					71,146,652

	*Support Activities for Transportation — 3.42%*
995 HK	Anhui Expressway Co. Ltd. — Class H		3,235,000		2,838,450
694 HK	Beijing Capital International Airport Company Limited — Class H		27,464,000		14,663,390
357 HK	Hainan Meilan International Airport Company Limited — Class H		2,587,720		3,295,907
177 HK	Jiangsu Expressway Company Ltd. — Class H		3,748,500		4,292,102
548 HK	Shenzhen Expressway Company Limited — Class H		5,602,000		3,322,512
107 HK	Sichuan Expressway Co. Limited — Class H		15,126,000		9,730,084
576 HK	Zhejiang Expressway Co., Limited — Class H		4,579,000		4,512,549

					42,654,994

	*Telecommunications — 0.53%*
CHU	China Unicom (Hong Kong) Limited — ADRˆ		461,835		6,581,149

	*U.S. Equity Exchanges — 1.61%*
NYX	NYSE Euronextˆ		668,732		20,048,585

	*Utilities — 0.77%*
BIP	Brookfield Infrastructure Partners LPˆ		65,930		1,387,826
CPN	Calpine Corporation*ˆ		349,889		4,667,519
GEN	GenOn Energy, Inc.*ˆ		937,997		3,573,769

					9,629,114

	TOTAL COMMON STOCKS (cost $906,900,057)				1,202,504,227

The accompanying notes are an integral part of these financial statements.

126

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Paradigm Portfolio

Portfolio of Investments — December 31, 2010 — (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
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

	TOTAL ESCROW NOTES (cost $0)				0



	CONVERTIBLE BONDS — 0.41%


	*Real Estate — 0.41%*
345550AK3	Forest City Enterprises, Inc. 3.625%, 10/15/2014		4,000,000		5,065,000

	TOTAL CONVERTIBLE BONDS (cost $3,110,104)				5,065,000



	CORPORATE BONDS — 0.00%


	*Credit Intermediation and Related Activities — 0.00%*
317928AA7	FINOVA Group, Inc.
	7.500%, 11/15/2009, Acquired 10/19/2006-3/29/2007 at $7,902,157 (Default Effective 4/29/2005)*		9,503,880		428

	TOTAL CORPORATE BONDS (cost $7,356,219)				428



	WARRANTS — 0.01%	Shares


	*Real Estate — 0.01%*
879 HK	Henderson Land Development Company Limited
	Expiration Date: 6/01/2011 Strike Price: $58.00*		569,400		131,860

	TOTAL WARRANTS (cost $0)				131,860

The accompanying notes are an integral part of these financial statements.

127

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Paradigm Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier	SHORT-TERM INVESTMENTS — 3.08%	Shares		Value


	*Money Market Funds — 3.08%*
FIUXX	First American Prime Obligations Fund — Class I, 0.00%^b		38,460,062	$	38,460,062

	TOTAL SHORT-TERM INVESTMENTS
	(cost $38,460,062)				38,460,062



	INVESTMENTS PURCHASED WITH
	THE CASH PROCEEDS FROM SECURITIES LENDING — 19.55%


	*Investment Companies — 19.55%*
	Mount Vernon Securities Lending Trust — Prime Portfolio, 0.29%^b		243,932,317		243,932,317

	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $243,932,317)				243,932,317

	TOTAL INVESTMENTS — 119.45% (cost $1,199,758,759)			$	1,490,093,894

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 December 31, 2010. Total loaned securities had a market value of $230,416,063 at December 31, 2010.


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

^b — The rate quoted is the annualized seven-day yield as of December 31, 2010.


ADR —	American Depository Receipt.


ETF —	Exchange Traded Fund.


GDR —	Global Depository Receipt.


REIT —	Real Estate Investment Trust.

The accompanying notes are an integral part of these financial statements.

128

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Medical Portfolio

Portfolio of Investments — December 31, 2010


Identifier	COMMON STOCKS — 98.43%	Shares		Value


	*Ambulatory Health Care Services — 0.01%*
AVXT	AVAX Technologies, Inc.*		50,000	$	2,200

	*Chemical Manufacturing — 3.93%*
LONN VX	Lonza Group AG		15,000		1,202,406
MMRF	MMRGlobal Inc.*		43,000		3,913

					1,206,319

	*Computer and Electronic Product Manufacturing — 0.01%*
TGX	Theragenics Corporation*		2,000		3,020

	*Funds, Trusts, and Other Financial Vehicles — 0.00%*
IBLTZ	IMPATH Bankruptcy Liquidating Trust — Class A		26,000		1,445

	*Pharmaceutical and Biotechnology — 89.36%*
ABT	Abbott Laboratories		28,000		1,341,480
ATLN VX	Actelion Ltd.*		10,000		547,594
AEZS	AEterna Zentaris Inc.*ˆ		102,500		176,300
ALKS	Alkermes, Inc.*ˆ		31,000		380,680
AGEN	Antigenics, Inc.*		892		892
ARNA	Arena Pharmaceuticals, Inc.*ˆ		45,000		77,400
AZN	AstraZeneca PLC — ADRˆ		17,000		785,230
ATB CN	Atrium Innovations Inc.*ˆ		4,884		74,761
BIIB	Biogen Idec, Inc.*		37,250		2,497,613
BPAX	BioSante Pharmaceuticals, Inc.*ˆ		13,476		22,101
BMY	Bristol-Myers Squibb Company		48,000		1,271,040
CLDX	Celldex Therapeutics Inc.*ˆ		26,294		108,331
CEPH	Cephalon, Inc.*ˆ		21,000		1,296,120
1093 HK	China Pharmaceutical Group Limited		1,640,000		915,706
CBST	Cubist Pharmaceuticals, Inc.*ˆ		38,000		813,200
DNDN	Dendreon Corporation*ˆ		29,000		1,012,680
LLY	Eli Lilly & Company		36,000		1,261,440
EPCT	EpiCept Corporation*ˆ		680		564
GENZ	Genzyme Corporation*		28,538		2,031,906
GSK	GlaxoSmithKline plc — ADRˆ		37,673		1,477,535
HGSI	Human Genome Sciences, Inc.*ˆ		21,000		501,690
IMGN	ImmunoGen, Inc.*ˆ		14,000		129,640
ISIS	Isis Pharmaceuticals, Inc.*ˆ		27,000		273,240

The accompanying notes are an integral part of these financial statements.

129

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Medical Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier		Shares		Value


	*Pharmaceutical and Biotechnology (Continued)*
ISA CN	Isotechnika Pharma Inc.*		40,000	$	10,057
JNJ	Johnson & Johnson		30,000		1,855,500
LIFE	Life Technologies Corporation*		36,000		1,998,000
MAXY	Maxygen, Inc.		30,000		117,900
MYRX	Myrexis Inc.*		63,000		262,080
COX FP	NicOx SA*		41,535		122,108
NVS	Novartis AG — ADRˆ		35,000		2,063,250
ONTY	Oncothyreon, Inc.*ˆ		28,333		92,082
PTIE	Pain Therapeutics, Inc.ˆ		38,000		256,500
PFE	Pfizer, Inc.		56,000		980,560
PGNX	Progenics Pharmaceuticals, Inc.*ˆ		65,200		355,992
SNY	Sanofi-Aventis — ADRˆ		38,000		1,224,740
SCR	Simcere Pharmaceutical Group — ADR*ˆ		58,000		661,780
TGEN	Targeted Genetics Corp.*		1,000		360
TELK	Telik, Inc.*ˆ		116,000		88,160
VICL	Vical Incorporated*		82,500		166,650
VPHM	ViroPharma Incorporated*		10,000		173,200

					27,426,062

	*Pharmaceutical and Medicine Manufacturing — 1.76%*
4508 JP	Mitsubishi Tanabe Pharma Corporation		32,000		540,362

	*Professional, Scientific, and Technical Services — 3.36%*
AFFX	Affymetrix, Inc.*ˆ		134,000		674,020
AMRI	Albany Molecular Research, Inc.*		53,000		297,860
CDXS	Codexis, Inc.*		5,611		59,477

					1,031,357

	TOTAL COMMON STOCKS (cost $29,531,253)				30,210,765

The accompanying notes are an integral part of these financial statements.

130

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Medical Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


		Principal
Identifier	ESCROW NOTES — 0.00%	Amount		Value


	*Special Purpose Entity — 0.00%*
053ESC992	Avigen Inc. Escrow*+	$	51,000	$	0

	TOTAL ESCROW NOTES (cost $0)				0



Identifier	RIGHTS — 0.01%	Shares		Value


	*Funds, Trusts, and Other Financial Vehicles — 0.01%*
LGNYZ	Ligand Pharmaceuticals Incorporated General Contingent Value Right*		44,000		924
LGNXZ	Ligand Pharmaceuticals Incorporated Glucagon Contingent Value Right*		44,000		836
LGNDZ	Ligand Pharmaceuticals Incorporated Roche Contingent Value Right		44,000		1,056
LGNZZ	Ligand Pharmaceuticals Incorporated TR Beta Contingent Value Right*		44,000		946

	TOTAL RIGHTS (cost $0)				3,762



	SHORT-TERM INVESTMENTS — 1.58%


	*Money Market Funds — 1.58%*
FIUXX	First American Prime Obligations Fund — Class I, 0.00%^b		483,789		483,789

	TOTAL SHORT-TERM INVESTMENTS (cost $483,789)				483,789

The accompanying notes are an integral part of these financial statements.

131

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Medical Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


	INVESTMENTS PURCHASED WITH THE
	CASH PROCEEDS FROM SECURITIES
Identifier	LENDING — 35.17%	Shares		Value


	*Investment Companies — 35.17%*
	Mount Vernon Securities Lending Trust —
	Prime Portfolio, 0.29%^b		10,793,305	$	10,793,305

	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $10,793,305)				10,793,305

	TOTAL INVESTMENTS — 135.19% (cost $40,808,347)			$	41,491,621

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 December 31, 2010. Total loaned securities had a market value of $10,283,709 at December 31, 2010.


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

^b — The rate quoted is the annualized seven-day yield as of December 31, 2010.


ADR —	American Depository Receipt.

The accompanying notes are an integral part of these financial statements.

132

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — December 31, 2010


Identifier	COMMON STOCKS — 98.68%	Shares		Value


	*Air Transportation — 6.76%*
CEA	China Eastern Airlines Corporation Limited — ADR*ˆ		59,028	$	1,500,492
670 HK	China Eastern Airlines Corporation Limited — Class H*		3,051,000		1,546,539
ZNH	China Southern Airlines Company Limited — ADR*ˆ		68,060		2,076,510
1055 HK	China Southern Airlines Company Limited — Class H*		8,750,000		5,358,430

					10,481,971

	*Asset Management — 6.77%*
BNBMF	BAM Investments Ltd.*		125,540		2,051,720
CNS	Cohen & Steers, Inc.ˆ		83,623		2,182,560
EV	Eaton Vance Corp.ˆ		16,000		483,680
PZN	Pzena Investment Management, Inc. — Class A		103,410		760,064
SII CN	Sprott, Inc.		1,680		13,619
URB/A CN	Urbana Corp. — Class A*		481,071		595,109
GROW	US Global Investors, Inc. — Class Aˆ		73,940		601,132
806 HK	Value Partners Group Limited		608,000		610,127
WSDT	WisdomTree Investments, Inc.*ˆ		771,080		3,199,982

					10,497,993

	*Beverage and Tobacco Product Manufacturing — 4.62%*
168 HK	Tsingtao Brewery Co. Limited — Class H		1,370,000		7,173,605

	*Commercial Banking — 1.34%*
BLBD LI	BLOM Bank s.a.l. — GDR		199,240		2,072,096

	*Credit Intermediation and Related Activities — 3.39%*
BR	Broadridge Financial Solutions, Inc.		73,300		1,607,469
CATY	Cathay General Bancorpˆ		45,037		752,118
CLFC	Center Financial Corporation*ˆ		85,100		645,058
EWBC	East West Bancorp, Inc.ˆ		31,794		621,573
FBOD	First Bank of Delaware		80,025		134,442
NARA	Nara Bancorp, Inc.*		85,910		843,636
PFBC	Preferred Bank Los Angeles*		46,803		82,373

The accompanying notes are an integral part of these financial statements.

133

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier		Shares		Value


	*Credit Intermediation and Related Activities (Continued)*
UCBH	UCBH Holdings, Inc.*		182,396	$	766
WIBC	Wilshire Bancorp, Inc.ˆ		75,810		577,672

					5,265,107

	*Defense — 1.13%*
CACI	CACI International, Inc. — Class A*ˆ		17,988		960,559
MANT	ManTech International Corporation — Class A*		19,275		796,636

					1,757,195

	*Food Services and Drinking Places — 0.49%*
OCX CN	Onex Corporation		24,860		755,826

	*Gaming — 0.74%*
200 HK	Melco International Development Limited		1,999,000		1,141,874

	*Global Exchanges — 10.31%*
JSE SJ	JSE Limited		385,739		4,625,940
8697 JP	Osaka Securities Exchange Co., Ltd.		810		4,085,417
SGX SP	Singapore Exchange Limited		1,111,180		7,290,401

					16,001,758

	*Holding Company — 5.82%*
IEP	Icahn Enterprises LP		249,700		8,754,482
WSC	Wesco Financial Corporation		746		274,834

					9,029,316

	*Insurance Carriers and Related Activities — 2.56%*
GLRE	Greenlight Capital Re, Ltd. — Class A*		51,000		1,367,310
MBI	MBIA Inc.*ˆ		217,800		2,611,422

					3,978,732

	*Mining (except Oil and Gas) — 7.65%*
FNV CN	Franco-Nevada Corporation		183,416		6,135,388
GLW CN	Gold Wheaton Gold Corporation*		40,450		209,105
IMN CN	Inmet Mining Corporation		71,140		5,527,785

					11,872,278

The accompanying notes are an integral part of these financial statements.

134

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier		Shares		Value


	*Motion Picture and Sound Recording Industries — 5.25%*
DWA	DreamWorks Animation SKG, Inc. — Class A*		114,144	$	3,363,824
WMG	Warner Music Group Corp.*ˆ		847,890		4,773,621

					8,137,445

	*Non-Store Retailers — 2.84%*
RBA	Ritchie Bros. Auctioneers, Incorporatedˆ		15,077		347,525
BID	Sotheby’sˆ		90,299		4,063,455

					4,410,980

	*Oil and Gas Extraction — 1.13%*
SEMUF	Siem Industries Inc.*		29,342		1,760,520

	*Other Exchanges — 0.75%*
FTIS LI	Financial Technologies (India) Ltd. — GDR		208,390		610,583
NZX NZ	NZX Ltd.		462,420		551,285

					1,161,868

	*Pharmaceutical and Biotechnology — 0.40%*
1093 HK	China Pharmaceutical Group Limited		1,105,000		616,985

	*Pipeline Transportation — 2.16%*
135 HK	Kunlun Energy Co., Ltd.		911,000		1,413,475
NEGI	National Energy Group, Inc.*		207,595		871,899
PVG	Penn Virginia GP Holdings LP		40,634		1,069,487
SUG	Southern Union Company		1		12

					3,354,873

	*Plastics and Rubber Products Manufacturing — 2.83%*
JAH	Jarden Corporation		142,210		4,390,023

	*Port and Harbor Operations — 0.07%*
3382 HK	Tianjin Port Development Holdings Ltd.		460,000		108,892

	*Publishing Industries (except Internet) — 1.26%*
ROVI	Rovi Corporation*ˆ		29,770		1,846,038
VALU	Value Line, Inc.ˆ		7,615		110,037

					1,956,075

The accompanying notes are an integral part of these financial statements.

135

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier		Shares		Value


	*Rail Transportation — 0.01%*
525 HK	Guangshen Railway Company Limited — Class H		58,000	$	22,834

	*Real Estate — 7.46%*
ALX	Alexander’s, Inc.ˆ		6,369		2,625,811
BLMC	Biloxi Marsh Lands Corporation		100		1,310
KEWL	Keweenaw Land Association Ltd.*		190		35,245
823 HK	The Link REIT		626,000		1,944,975
TPL	Texas Pacific Land Trustˆ		190,800		6,960,384

					11,567,725

	*Rental and Leasing Services — 0.04%*
CDCO	Comdisco Holding Company, Inc.*		7,560		66,150

	*Restaurants — 0.53%*
WEN	Wendy’s/Arby’s Group, Inc. — Class A		177,496		820,031

	*Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 5.22%*
CBOE	CBOE Holdings Inc.ˆ		38,770		886,282
ICE	IntercontinentalExchange Inc.*ˆ		13,010		1,550,142
JEF	Jefferies Group, Inc.ˆ		202,940		5,404,292
LAB	LaBranche & Co. Inc.*		67,582		243,295
RHJI BB	RHJ International*		800		6,628
SWS	SWS Group, Inc.		1,000		5,050

					8,095,689

	*Support Activities for Transportation — 11.98%*
694 HK	Beijing Capital International Airport Company Limited — Class H		9,014,000		4,812,693
357 HK	Hainan Meilan International Airport Company Limited — Class H		3,265,000		4,158,540
548 HK	Shenzhen Expressway Company Limited — Class H		539,000		319,678
107 HK	Sichuan Expressway Co. Limited — Class H		13,766,100		8,855,303
576 HK	Zhejiang Expressway Co., Limited — Class H		451,000		444,455

					18,590,669

The accompanying notes are an integral part of these financial statements.

136

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier		Shares		Value


	*Telecommunications — 0.04%*
CIBY	CIBL, Inc.		18	$	9,180
LICT	Lynch Interactive Corporation*		16		42,400
SNSH	Sunshine PCS Corporation — Class A*		208		6,697

					58,277

	*Utilities — 2.57%*
CPN	Calpine Corporation*		70,320		938,069
GEN	GenOn Energy, Inc.*ˆ		516,630		1,968,360
1071 HK	Huadian Power International Corporation — Class H		800,000		156,443
PICO	PICO Holdings, Inc.*		28,851		917,462

					3,980,334

	*Waste Management and Remediation Services — 2.56%*
CVA	Covanta Holding Corporationˆ		230,839		3,968,122

	TOTAL COMMON STOCKS (cost $120,406,175)				153,095,243



		Principal
	CORPORATE BONDS — 0.00%	Amount


	*Credit Intermediation and Related Activities — 0.00%*
317928AA7	FINOVA Group, Inc.
	7.500%, 11/15/2009, Acquired 10/19/2006-5/17/2007 at $741,082 (Default Effective 4/29/2005)*	$	2,783,965		125

	TOTAL CORPORATE BONDS
	(cost $1,236,720)				125



	RIGHTS — 0.46%	Shares


	*Rental and Leasing Services — 0.46%*
CDCOR	Comdisco Holding Company, Inc.
	Expiration Date: 12/31/2050
	Strike Price: $1.00*#		5,634,807		704,351

	TOTAL RIGHTS (cost $1,577,064)				704,351

The accompanying notes are an integral part of these financial statements.

137

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier	SHORT-TERM INVESTMENTS — 1.15%	Shares		Value


	*Money Market Funds — 1.15%*
FIUXX	First American Prime Obligations Fund — Class I, 0.00%^b		1,786,829	$	1,786,829

	TOTAL SHORT-TERM INVESTMENTS (cost $1,786,829)				1,786,829



	INVESTMENTS PURCHASED WITH
	THE CASH PROCEEDS FROM
	SECURITIES LENDING — 25.82%


	*Investment Companies — 25.82%*
	Mount Vernon Securities Lending Trust — Prime Portfolio, 0.29%^b		40,060,947		40,060,947

	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $40,060,947)				40,060,947

	TOTAL INVESTMENTS — 126.11% (cost $165,067,735)			$	195,647,495

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 December 31, 2010. Total loaned securities had a market value of $38,006,161 at December 31, 2010.


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

^b — The rate quoted is the annualized seven-day yield as of December 31, 2010.


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

The accompanying notes are an integral part of these financial statements.

138

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Market Opportunities Portfolio

Portfolio of Investments — December 31, 2010


Identifier	COMMON STOCKS — 100.52%	Shares		Value


	*Asset Management — 20.84%*
AB	AllianceBernstein Holding LPˆ		7,172	$	167,323
BNBMF	BAM Investments Ltd.*		31,090		508,109
BX	The Blackstone Group LPˆ		68,399		967,846
BAM	Brookfield Asset Management Inc. — Class A		41,875		1,394,019
CNS	Cohen & Steers, Inc.ˆ		47,577		1,241,759
EV	Eaton Vance Corp.		19,120		577,998
BEN	Franklin Resources, Inc.		1,591		176,935
LM	Legg Mason, Inc.		27,870		1,010,845
PZN	Pzena Investment Management, Inc. — Class A		59,820		439,677
SII CN	Sprott, Inc.		43,155		349,823
TROW	T. Rowe Price Group, Inc.		5,979		385,885
URB/A CN	Urbana Corp. — Class A*		356,004		440,395
806 HK	Value Partners Group Limited		1,712,000		1,717,991
WSDT	WisdomTree Investments, Inc.*ˆ		679,007		2,817,879

					12,196,484

	*Commercial Banking — 1.12%*
3988 HK	Bank of China Ltd. — Class H		394,000		207,827
939 HK	China Construction Bank Corp. — Class H		232,000		208,038
1398 HK	Industrial & Commercial Bank of China — Class H		322,000		239,860

					655,725

	*Credit Intermediation and Related Activities — 7.20%*
BK	The Bank of New York Mellon Corp.		28,310		854,962
BR	Broadridge Financial Solutions, Inc.		61,501		1,348,717
CATY	Cathay General Bancorpˆ		3,237		54,058
CLFC	Center Financial Corporation*ˆ		5,454		41,341
EWBC	East West Bancorp, Inc.		3,204		62,638
FMCC	Federal Home Loan Mortgage Corporation*ˆ		399,985		121,915
FNMA	Federal National Mortgage Association*ˆ		379,150		113,745
HAFC	Hanmi Financial Corporation*		6,157		7,081
NARA	Nara Bancorp, Inc.*		6,164		60,530
NTRS	Northern Trust Corp.		15,354		850,765
PFBC	Preferred Bank Los Angeles*		2,605		4,585
STT	State Street Corporation		13,865		642,504

The accompanying notes are an integral part of these financial statements.

139

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Market Opportunities Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier		Shares		Value


	*Credit Intermediation and Related Activities (Continued)*
UCBH	UCBH Holdings, Inc.*		6,803	$	29
WIBC	Wilshire Bancorp, Inc.ˆ		6,341		48,318

					4,211,188

	*Data Processor — 6.05%*
DST	DST Systems, Inc.		5,020		222,637
FISV	Fiserv, Inc.*		3,606		211,167
MA	Mastercard, Inc. — Class A		5,870		1,315,526
MSCI	MSCI Inc. — Class A*		19,731		768,720
VRSK	Verisk Analytics, Inc. — Class A*ˆ		5,117		174,387
V	Visa, Inc. — Class Aˆ		12,020		845,968

					3,538,405

	*European Exchanges — 1.24%*
DB1 GR	Deutsche Boerse AG		10,508		727,372

	*Food Services and Drinking Places — 1.40%*
OCX CN	Onex Corporation		26,930		818,761

	*Global Exchanges — 14.23%*
388 HK	Hong Kong Exchanges & Clearing Limited		160,850		3,648,345
JSE SJ	JSE Limited		145,400		1,743,696
8697 JP	Osaka Securities Exchange Co., Ltd.		150		756,559
SGX SP	Singapore Exchange Limited		332,727		2,183,007

					8,331,607

	*Holding Company — 3.30%*
BRK/A	Berkshire Hathaway Inc. — Class A*		10		1,204,500
IEP	Icahn Enterprises LP		20,728		726,724

					1,931,224

	*Insurance Carriers and Related Activities — 7.80%*
LFC	China Life Insurance Co., Limited — ADRˆ		7,460		456,328
2628 HK	China Life Insurance Co., Limited — Class H		114,000		465,662
MKL	Markel Corporation*		523		197,762
MBI	MBIA Inc.*ˆ		54,600		654,654
2318 HK	Ping An Insurance Group Company of China Limited — Class H		152,000		1,699,362
PWF CN	Power Financial Corporation		35,240		1,089,133

					4,562,901

The accompanying notes are an integral part of these financial statements.

140

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Market Opportunities Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier		Shares		Value


	*Mining (except Oil and Gas) — 6.89%*
FNV CN	Franco-Nevada Corporation		120,630	$	4,035,154

	*Non-Store Retailers — 3.25%*
BID	Sotheby’sˆ		42,278		1,902,510

	*Other Exchanges — 3.40%*
ASX AU	ASX Ltd.		38,080		1,467,566
FTIS LI	Financial Technologies (India) Ltd. — GDR		102,980		301,731
IMAREX NO	IMAREX ASA*		1,850		18,072
NZX NZ	NZX Ltd.		170,954		203,807

					1,991,176

	*Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 18.69%*
CBOE	CBOE Holdings Inc.ˆ		106,208		2,427,915
CME	CME Group, Inc.ˆ		10,121		3,256,432
GFIG	GFI Group, Inc.		1,737		8,146
ICE	IntercontinentalExchange Inc.*		26,747		3,186,905
JEF	Jefferies Group, Inc.ˆ		68,020		1,811,373
LSE LN	London Stock Exchange Group plc		16,538		216,072
TLPR LN	Tullett Prebon plc		5,570		33,243

					10,940,086

	*Support Activities for Transportation — 0.34%*
995 HK	Anhui Expressway Co. Ltd. — Class H		54,000		47,381
177 HK	Jiangsu Expressway Company Ltd. — Class H		27,000		30,915
548 HK	Shenzhen Expressway Company Limited — Class H		24,000		14,234
107 HK	Sichuan Expressway Co. Limited — Class H		114,000		73,333
576 HK	Zhejiang Expressway Co., Limited — Class H		32,000		31,536

					197,399

	*Telecommunications — 0.02%*
IRDM	Iridium Communications, Inc.*ˆ		1,672		13,794

	*U.S. Equity Exchanges — 4.65%*
NDAQ	The NASDAQ OMX Group, Inc.*		20,300		481,313
NYX	NYSE Euronext		74,740		2,240,705

					2,722,018

The accompanying notes are an integral part of these financial statements.

141

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Market Opportunities Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


Identifier		Shares		Value


	*Utilities — 0.10%*
BIP	Brookfield Infrastructure Partners LPˆ		2,816	$	59,277

	TOTAL COMMON STOCKS (cost $51,600,258)				58,835,081



	SHORT-TERM INVESTMENTS — 0.04%


	*Money Market Funds — 0.04%*
FIUXX	First American Prime Obligations Fund — Class I, 0.00%^b		20,282		20,282

	TOTAL SHORT-TERM INVESTMENTS (cost $20,282)				20,282



	INVESTMENTS PURCHASED WITH
	THE CASH PROCEEDS FROM
	SECURITIES LENDING — 25.31%


	*Investment Companies — 25.31%*
	Mount Vernon Securities Lending Trust —
	Prime Portfolio, 0.29%^b		14,816,293		14,816,293

	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $14,816,293)				14,816,293

	TOTAL INVESTMENTS — 125.87% (cost $66,436,833)			$	73,671,656

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 December 31, 2010. Total loaned securities had a market value of $13,653,346 at December 31, 2010.

^b — The rate quoted is the annualized seven-day yield as of December 31, 2010.


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

The accompanying notes are an integral part of these financial statements.

142

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Water Infrastructure Portfolio

Portfolio of Investments — December 31, 2010


Identifier	COMMON STOCKS — 10.36%	Shares		Value


	*Administrative and Support Services — 0.27%*
TRIT	Tri-Tech Holding Inc.*ˆ		6,000	$	64,560

	*Machinery Manufacturing — 3.26%*
AMN	Ameron International Corporation		5,246		400,637
ARF-U CN	Armtec Infrastructure Income Fund*		12,650		202,288
ERII	Energy Recovery Inc.*ˆ		51,108		187,055

					789,980

	*Professional, Scientific, and Technical Services — 1.98%*
TTEK	Tetra Tech, Inc.*		19,194		481,002

	*Utilities — 4.85%*
BRC-U CN	Brookfield Renewable Power Fund		11,250		233,418
CDZI	Cadiz Inc.*ˆ		40,000		497,599
CWCO	Consolidated Water Co., Ltd.ˆ		27,875		255,614
PNH MK	Puncak Niaga Holdings Berhad — EIS		18,972		3,255
UU/ LN	United Utilities Group PLC		20,000		184,596

					1,174,482

	TOTAL COMMON STOCKS (cost $2,466,384)				2,510,024



		Principal
	CONVERTIBLE BONDS — 11.82%	Amount


	*Holding Company — 5.35%*
451102AB3	Icahn Enterprises LP 4.000%, 08/15/2013	$	1,370,000		1,296,363

	*Oil and Gas Extraction — 6.47%*
165167CB1	Chesapeake Energy Corp. 2.250%, 12/15/2038#		2,000,000		1,567,500

	TOTAL CONVERTIBLE BONDS (cost $2,846,704)				2,863,863



	CORPORATE BONDS — 20.76%


	*Fabricated Metal Product Manufacturing — 9.01%*
624758AB4	Mueller Water Products, Inc. 7.375%, 06/01/2017#		2,250,000		2,182,500

The accompanying notes are an integral part of these financial statements.

143

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Water Infrastructure Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


		Principal
Identifier		Amount		Value


	*Utilities — 11.75%*
7595554	Veolia Environnement SA 4.875%, 05/28/2013#	$	2,000,000	$	2,845,547

	TOTAL CORPORATE BONDS (cost $5,028,486)				5,028,047



	WARRANTS — 0.05%	Shares


	*Utilities — 0.05%*
CHC/WS	China Hydroelectric Corporation
	Expiration Date: 1/25/2014
	Strike Price: $15.00*		40,000		12,000

	TOTAL WARRANTS (cost $48,000)				12,000



	SHORT-TERM INVESTMENTS — 34.72%


	*Money Market Funds — 12.43%*
FGVXX	First American Government Obligations Fund — Class Y, 0.00%#^b		726,356		726,356
FIUXX	First American Prime Obligations Fund — Class I, 0.00%#^b		726,395		726,395
FAIXX	First American Prime Obligations Fund — Class Y, 0.00%#^b		728,383		728,383
FFCXX	First American Tax Free Obligations Fund — Class Y, 0.00%#^b		102,625		102,625
FOCXX	First American Treasury Obligations Fund — Class Y, 0.00%#^b		726,317		726,317

					3,010,076

	*U.S. Treasury Obligations — 22.29%*
912795X89	United States Treasury Bills 0.095%, 01/20/2011#^c		5,400,000		5,399,997

	TOTAL SHORT-TERM INVESTMENTS (cost $8,410,073)				8,410,073

The accompanying notes are an integral part of these financial statements.

144

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Water Infrastructure Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


	INVESTMENTS PURCHASED WITH
	THE CASH PROCEEDS FROM
Identifier	SECURITIES LENDING — 2.41%	Shares		Value


	*Investment Companies — 2.41%*
	Mount Vernon Securities Lending Trust — Prime Portfolio, 0.29%^b		582,692	$	582,692

	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $582,692)				582,692

	TOTAL INVESTMENTS — 80.12% (cost $19,382,339)			$	19,406,699

Percentages are stated as a percent of net assets.

* — Non-income producing security.


EIS —	Enhanced Income Security. This exchange-traded security is composed of both an issuer’s common shares and its subordinated notes.


ˆ —	This security or a portion of this security was out on loan at December 31, 2010. Total loaned securities had a market value of $544,028 at December 31, 2010.


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

^b — The rate quoted is the annualized seven-day yield as of December 31, 2010.

^c — The rate quoted is the effective yield.

The accompanying notes are an integral part of these financial statements.

145

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Investments — December 31, 2010


Identifier	COMMON STOCKS — 0.33%	Shares		Value


	*Data Processor — 0.33%*
V	Visa, Inc. — Class A		200	$	14,076

	TOTAL COMMON STOCKS (cost $16,915 )				14,076



		Principal
	CONVERTIBLE BONDS — 33.08%	Amount


	*Computer and Electronic Product Manufacturing — 2.39%*
502413AW7	L-3 Communications Holdings, Inc.
	3.000%, 08/01/2035	$	100,000	$	100,750

	*Holding Company — 9.22%*
451102AB3	Icahn Enterprises LP
	4.000%, 08/15/2013#		410,000		387,962

	*Oil and Gas Extraction — 10.19%*
165167BW6	Chesapeake Energy Corp.
	2.750%, 11/15/2035		100,000		99,750
165167CB1	Chesapeake Energy Corp.
	2.250%, 12/15/2038		420,000		329,175

					428,925

	*Professional, Scientific, and Technical Services — 2.39%*
159864AB3	Charles River Laboratories International, Inc.
	2.250%, 06/15/2013		100,000		100,500

	*Real Estate — 6.52%*
10112RAK0	Boston Properties LP
	2.875%, 02/15/2037		100,000		102,000
345550AH0	Forest City Enterprises, Inc.
	3.625%, 10/15/2011ˆ		175,000		172,550

					274,550

	*U.S. Equity Exchanges — 2.37%*
631103AA6	The NASDAQ OMX Group, Inc.
	2.500%, 08/15/2013		100,000		99,500

	TOTAL CONVERTIBLE BONDS (cost $1,350,079 )				1,392,187

The accompanying notes are an integral part of these financial statements.

146

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


		Principal
Identifier	CORPORATE BONDS — 54.62%	Amount		Value


	*Administrative and Support Services — 2.43%*
22025YAJ9	Corrections Corp. of America
	6.750%, 01/31/2014#	$	100,000	$	102,125

	*Amusement, Gambling, and Recreation Industries — 4.85%*
707569AL3	Penn National Gaming, Inc.
	6.750%, 03/01/2015#		200,000		204,000

	*Chemical Manufacturing — 2.32%*
785583AC9	Sabine Pass LNG LP
	7.250%, 11/30/2013#		100,000		97,750

	*Funds, Trusts, and Other Financial Vehicles — 9.59%*
779273AG6	The Rouse Company LP
	5.375%, 11/26/2013#		400,000		403,500

	*Mining (except Oil and Gas) — 6.14%*
20854PAB5	CONSOL Energy, Inc.
	7.875%, 03/01/2012#		100,000		106,875
704549AD6	Peabody Energy Corp.
	5.875%, 04/15/2016#		150,000		151,500

					258,375

	*Non-Metallic Mineral Product Manufacturing — 3.40%*
69073TAL7	Owens-Brockway Glass Container
	6.750%, 12/01/2014#		140,000		143,150

	*Oil and Gas Extraction — 10.68%*
41754WAE1	Harvest Operations Corp.
	7.250%, 09/30/2013#		200,000		206,376
41754WAJ0	Harvest Operations Corp.
	7.500%, 05/31/2015#		230,000		242,885

					449,261

	*Securities, Commodity Contracts, and Other Financial Investments and Related Activities — 1.72%*
52107QAC9	Lazard Group LLC
	7.125%, 05/15/2015#		67,000		72,213

The accompanying notes are an integral part of these financial statements.

147

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


		Principal
Identifier		Amount		Value


	*Telecommunications — 2.45%*
27876GAQ1	Echostar DBS Corp.
	6.375%, 10/01/2011#	$	100,000	$	103,250

	*Utilities — 11.04%*
13134YAD9	Calpine Construction Finance Company LP
	8.000%, 06/01/2016, Acquired
	10/25/2010 at $108,220#*		100,000		106,750
629377AT9	NRG Energy, Inc.
	7.250%, 02/01/2014#		350,000		357,875

					464,625

	TOTAL CORPORATE BONDS (cost $2,260,793 )				2,298,249



	PUT OPTIONS PURCHASED — 0.00%	Contracts


	*Computer and Electronic Product Manufacturing — 0.00%*
OOY 110122P00025000	L-3 Communications Holdings, Inc.
	Expiration Date: 1/22/2011,
	Exercise Price: $25.00		18		45

	TOTAL PURCHASED OPTIONS (cost $1,224 )				45



	SHORT-TERM INVESTMENTS — 1.42%	Shares


	*Money Market Funds — 1.42%*
FIUXX	First American Prime Obligations Fund — Class I, 0.00%#^b		59,799		59,799

	TOTAL SHORT-TERM INVESTMENTS (cost $59,799 )				59,799

The accompanying notes are an integral part of these financial statements.

148

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Investments — December 31, 2010 — (Continued)


	INVESTMENTS PURCHASED
	WITH THE CASH PROCEEDS
	FROM SECURITIES
Identifier	LENDING — 1.82%	Shares		Value


	*Investment Companies — 1.82%*
	Mount Vernon Securities Lending Trust — Prime Portfolio, 0.29%^b		76,500	$	76,500

	TOTAL INVESTMENTS PURCHASED WITH THE CASH PROCEEDS FROM SECURITIES LENDING (cost $76,500)				76,500

	TOTAL INVESTMENTS — 91.27% (cost $3,765,310)			$	3,840,856

Percentages are stated as a percent of net assets.


ˆ —	This security or a portion of this security was out on loan at December 31, 2010. Total loaned securities had a market value of $74,539 at December 31, 2010.


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

^b — The rate quoted is the annualized seven-day yield as of December 31, 2010.

* — Restricted Security restricted to institutional investors (144A Securities).

The accompanying notes are an integral part of these financial statements.

149

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Water Infrastructure Portfolio

Portfolio of Options Written — December 31, 2010


Identifier	PUT OPTIONS WRITTEN	Contracts		Value


	*Administrative and Support Services*
ACM 110319P00022500	Aecom Technology Corp.
	Expiration: March 2011, Exercise Price: $22.50		115	$	1,725
ACM 110319P00025000	Aecom Technology Corp.
	Expiration: March 2011, Exercise Price: $25.00		170		6,800

					8,525

	*Beverage and Tobacco Products*
HEK 110319P00005000	Heckmann Corporation
	Expiration: March 2011, Exercise Price: $5.00		300		9,000
HHO 110319P00070000	Puro Water Group, Inc.
	Expiration: March 2011, Exercise Price: $70.00		1		38

					9,038

	*Chemical Manufacturing*
CCC 110122P00012500	Calgon Carbon Corporation
	Expiration: January 2011, Exercise Price: $12.50		500		2,500
CCC 110416P00012500	Calgon Carbon Corporation
	Expiration: April 2011, Exercise Price: $12.50		100		3,000
NLC 110319P00022500	Nalco Holding Co.
	Expiration: March 2011, Exercise Price: $22.50		200		2,500

					8,000

	*Computer and Electronic Product Manufacturing*
DHR 110319P00037000	Danaher Corporation
	Expiration: March 2011, Exercise Price: $37.00		145		2,538
DHR 120121P00035000	Danaher Corporation
	Expiration: January 2012, Exercise Price: $35.00		40		4,600

					7,138

The accompanying notes are an integral part of these financial statements.

150

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Water Infrastructure Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Electrical Equipment, Appliance, and Component Manufacturing*
FELE 110319P00030000	Franklin Electric Co., Inc.
	Expiration: March 2011, Exercise Price: $30.00		190	$	5,225

	*Fabricated Metal Product Manufacturing*
CVVT 110319P00010000	China Valves Technology, Inc.
	Expiration: March 2011, Exercise Price: $10.00		200		21,000
INSU 110319P00020000	Insituform Technologies, Inc. — Class A
	Expiration: March 2011, Exercise Price: $20.00		100		1,000
NWPX 110319P00015000	Northwest Pipe Company
	Expiration: March 2011, Exercise Price: $15.00		60		450
NWPX 110319P00017500	Northwest Pipe Company
	Expiration: March 2011, Exercise Price: $17.50		250		5,625
PNR 110219P00030000	Pentair, Inc.
	Expiration: February 2011, Exercise Price: $30.00		244		3,050

					31,125

	*Funds, Trusts, and Other Financial Vehicles*
PHO 110319P00015000	PowerShares Water Resources ETF
	Expiration: March 2011, Exercise Price: $15.00		580		4,350

	*Heavy and Civil Engineering Construction*
STRL 110319P00010000	Sterling Construction Company, Inc.
	Expiration: March 2011, Exercise Price: $10.00		165		5,775
STRL 110319P00012500	Sterling Construction Company, Inc.
	Expiration: March 2011, Exercise Price: $12.50		235		16,450

					22,225

The accompanying notes are an integral part of these financial statements.

151

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Water Infrastructure Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Machinery Manufacturing*
AMN 110319P00052000	Ameron International Corporation
	Expiration: March 2011, Exercise Price: $52.00		60	$	1,650
AMN 110319P00057000	Ameron International Corporation
	Expiration: March 2011, Exercise Price: $57.00		70		3,150
DCI 110219P00030000	Donaldson Company, Inc.
	Expiration: February 2011, Exercise Price: $30.00		30		150
DCI 110219P00040000	Donaldson Company, Inc.
	Expiration: February 2011, Exercise Price: $40.00		65		325
DCI 110219P00045000	Donaldson Company, Inc.
	Expiration: February 2011, Exercise Price: $45.00		65		488
DGW 110319P00020000	Duoyuan Global Water Inc. — ADR
	Expiration: March 2011, Exercise Price: $20.00		240		175,199
ERII 110219P00005000	Energy Recovery Inc.
	Expiration: February 2011, Exercise Price: $5.00		110		15,125
ESE 110319P00030000	ESCO Technologies, Inc.
	Expiration: March 2011, Exercise Price: $30.00		290		11,600
ITT 110122P00045000	ITT Corporation
	Expiration: January 2011, Exercise Price: $45.00		135		945
LNN 110319P00030000	Lindsay Corporation
	Expiration: March 2011, Exercise Price: $30.00		200		1,500
PLL 110319P00035000	Pall Corporation
	Expiration: March 2011, Exercise Price: $35.00		220		2,200
ROP 110219P00060000	Roper Industries, Inc.
	Expiration: February 2011, Exercise Price: $60.00		100		1,250

The accompanying notes are an integral part of these financial statements.

152

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Water Infrastructure Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Machinery Manufacturing (Continued)*
HEAT 110319P00006000	SmartHeat, Inc.
	Expiration: March 2011, Exercise Price: $6.00		500	$	56,249
VMI 110319P00065000	Valmont Industries, Inc.
	Expiration: March 2011, Exercise Price: $65.00		20		800
VMI 110319P00070000	Valmont Industries, Inc.
	Expiration: March 2011, Exercise Price: $70.00		80		5,000

					275,631

	*Professional, Scientific, and Technical Services*
TTEK 110319P00017500	Tetra Tech, Inc.
	Expiration: March 2011, Exercise Price: $17.50		100		750
TTEK 110319P00020000	Tetra Tech, Inc.
	Expiration: March 2011, Exercise Price: $20.00		100		2,000
URS 110122P00040000	URS Corporation
	Expiration: January 2011, Exercise Price: $40.00		100		4,250
URS 110416P00035000	URS Corporation
	Expiration: April 2011, Exercise Price: $35.00		90		4,950

					11,950

	*Utilities*
AWK 110319P00020000	American Water Works Co., Inc.
	Expiration: March 2011, Exercise Price: $20.00		355		3,550
WTR 110319P00017500	Aqua America, Inc.
	Expiration: March 2011, Exercise Price: $17.50		170		1,275
WTR 110319P00020000	Aqua America, Inc.
	Expiration: March 2011, Exercise Price: $20.00		150		2,625

The accompanying notes are an integral part of these financial statements.

153

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Water Infrastructure Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Utilities (Continued)*
SBS 110122P00035000	Cia de Saneamento Basico do Estado de Sao Paulo — ADR
	Expiration: January 2011, Exercise Price: $35.00		145	$	725
CIG 110319P00015000	Companhia Energetica de Minas Gerais — ADR
	Expiration: March 2011, Exercise Price: $15.00		375		93,749
EDE 110319P00020000	The Empire District Electric Company
	Expiration: March 2011, Exercise Price: $20.00		250		5,250
PICO 110122P00025000	PICO Holdings, Inc.
	Expiration: January 2011, Exercise Price: $25.00		75		375
PICO 110122P00030000	PICO Holdings, Inc.
	Expiration: January 2011, Exercise Price: $30.00		150		3,000
PICO 110416P00025000	PICO Holdings, Inc.
	Expiration: April 2011, Exercise Price: $25.00		30		1,350
VE 110122P00025000	Veolia Environnement — ADR
	Expiration: January 2011, Exercise Price: $25.00		200		500
VE 110122P00030000	Veolia Environnement — ADR
	Expiration: January 2011, Exercise Price: $30.00		100		10,500
VE 110416P00022500	Veolia Environnement — ADR
	Expiration: April 2011, Exercise Price: $22.50		25		563

					123,462

	*Waste Management and Remediation Services*
CLH 110122P00055000	Clean Harbors, Inc.
	Expiration: January 2011, Exercise Price: $55.00		85		213
CLH 110416P00055000	Clean Harbors, Inc.
	Expiration: April 2011, Exercise Price: $55.00		25		438

The accompanying notes are an integral part of these financial statements.

154

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Water Infrastructure Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Waste Management and Remediation Services (Continued)*
WCN 110319P00023330	Waste Connections, Inc.
	Expiration: March 2011, Exercise Price: $23.33		175	$	3,938
WM 110122P00032500	Waste Management, Inc.
	Expiration: January 2011, Exercise Price: $32.50		160		480
WM 120121P00032500	Waste Management, Inc.
	Expiration: January 2012, Exercise Price: $32.50		40		7,600

					12,669

	TOTAL PUT OPTIONS WRITTEN (premiums received ($1,687,618))			$	519,338


ADR —	American Depository Receipt.


ETF —	Exchange Traded Fund.

The accompanying notes are an integral part of these financial statements.

155

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2010


Identifier	PUT OPTIONS WRITTEN	Contracts		Value


	*Amusement, Gambling, and Recreation Industries*
DIS 110122P00030000	The Walt Disney Company
	Expiration: January 2011, Exercise Price: $30.00		7	$	35

	*Asset Management*
BLK 110416P00155000	BlackRock, Inc.
	Expiration: April 2011, Exercise Price: $155.00		2		425
BEN 110122P00107000	Franklin Resources, Inc.
	Expiration: January 2011, Exercise Price: $107.00		2		250
IVZ 110122P00020000	Invesco Limited
	Expiration: January 2011, Exercise Price: $20.00		14		70
GROW 110618P00007500	US Global Investors, Inc. — Class A
	Expiration: June 2011, Exercise Price: $7.50		10		1,025

					1,770

	*Beverage and Tobacco Product Manufacturing*
VPM 110122P00020000	Altria Group, Inc.
	Expiration: January 2011, Exercise Price: $20.00		4		8
DEO 110122P00065000	Diageo plc — ADR
	Expiration: January 2011, Exercise Price: $65.00		5		25
DEO 110716P00065000	Diageo plc — ADR
	Expiration: July 2011, Exercise Price: $65.00		4		720

					753

The accompanying notes are an integral part of these financial statements.

156

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Building Material and Garden Equipment and Supplies Dealers*
ZCR 110122P00075000	The Sherwin-Williams Company
	Expiration: January 2011, Exercise Price: $75.00		2	$	15
SHW 120121P00070000	The Sherwin-Williams Company
	Expiration: January 2012, Exercise Price: $70.00		2		720

					735

	*Chemical Manufacturing*
ZBK 110122P00030000	Cameco Corporation
	Expiration: January 2011, Exercise Price: $30.00		2		5
CCJ 120121P00025000	Cameco Corporation
	Expiration: January 2012, Exercise Price: $25.00		15		1,612
NVS 120121P00050000	Novartis AG — ADR
	Expiration: January 2012, Exercise Price: $50.00		15		4,050
SIAL 110122P00050000	Sigma-Aldrich Corp.
	Expiration: January 2011, Exercise Price: $50.00		3		8
SIAL 110416P00055000	Sigma-Aldrich Corp.
	Expiration: April 2011, Exercise Price: $55.00		3		188

					5,863

	*Clothing and Clothing Accessories Stores*
VFF 110122P00030000	Tiffany & Co.
	Expiration: January 2011, Exercise Price: $30.00		2		3
VFF 110122P00040000	Tiffany & Co.
	Expiration: January 2011, Exercise Price: $40.00		2		4

					7

The accompanying notes are an integral part of these financial statements.

157

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Computer and Electronic Product Manufacturing*
COL 110416P00055000	Rockwell Collins, Inc.
	Expiration: April 2011, Exercise Price: $55.00		3	$	540

	*Couriers and Messengers*
FDX 110122P00070000	FedEx Corp.
	Expiration: January 2011, Exercise Price: $70.00		4		20
FDX 120121P00075000	FedEx Corp.
	Expiration: January 2012, Exercise Price: $75.00		2		945
FDX 12012P00080000	FedEx Corp.
	Expiration: January 2012, Exercise Price: $80.00		4		2,420
OPS 110122P00055000	United Parcel Service — Class B
	Expiration: January 2011, Exercise Price: $55.00		2		10
OPS 110122P00065000	United Parcel Service — Class B
	Expiration: January 2011, Exercise Price: $65.00		2		18

					3,413

	*Credit Intermediation and Related Activities*
VAX 110122P00040000	American Express Company
	Expiration: January 2011, Exercise Price: $40.00		2		50
AXP 120121P00030000	American Express Company
	Expiration: January 2012, Exercise Price: $30.00		10		1,430
BAC 110219P00013000	Bank of America Corporation
	Expiration: February 2011, Exercise Price: $13.00		12		660
BAC 120121P00012500	Bank of America Corporation
	Expiration: January 2012, Exercise Price: $12.50		15		2,535

The accompanying notes are an integral part of these financial statements.

158

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Credit Intermediation and Related Activities (Continued)*
BK 110122P00024000	The Bank of New York Mellon Corp.
	Expiration: January 2011, Exercise Price: $24.00		4	$	12
OUY 110122P00025000	The Bank of New York Mellon Corp.
	Expiration: January 2011, Exercise Price: $25.00		4		16
BK 120121P00025000	The Bank of New York Mellon Corp.
	Expiration: January 2012, Exercise Price: $25.00		6		1,086
BOKF 110319P00045000	BOK Financial Corporation
	Expiration: March 2011, Exercise Price: $45.00		6		1,470
XRF 110122P00012500	Discover Financial Services
	Expiration: January 2011, Exercise Price: $12.50		2		5
EWBC 110122P00015000	East West Bancorp, Inc.
	Expiration: January 2011, Exercise Price: $15.00		10		50
EWBC 110416P00015000	East West Bancorp, Inc.
	Expiration: April 2011, Exercise Price: $15.00		7		175
FIS 110122P00025000	Fidelity National Information Services, Inc.
	Expiration: January 2011, Exercise Price: $25.00		6		33
FIS 120121P00025000	Fidelity National Information Services, Inc.
	Expiration: January 2012, Exercise Price: $25.00		6		984
MTB 120121P00065000	M&T Bank Corporation
	Expiration: January 2012, Exercise Price: $65.00		6		2,550
MTB 120121P00075000	M&T Bank Corporation
	Expiration: January 2012, Exercise Price: $75.00		3		2,175
NARA 110618P00007500	Nara Bancorp, Inc.
	Expiration: June 2011, Exercise Price: $7.50		8		360

The accompanying notes are an integral part of these financial statements.

159

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Credit Intermediation and Related Activities (Continued)*
XGP 110122P00050000	Northern Trust Corp.
	Expiration: January 2011, Exercise Price: $50.00		2	$	50
XGP 110122P00055000	Northern Trust Corp.
	Expiration: January 2011, Exercise Price: $55.00		4		520
STT 110122P00035000	State Street Corporation
	Expiration: January 2011, Exercise Price: $35.00		2		12
OLD 110122P00045000	State Street Corporation
	Expiration: January 2011, Exercise Price: $45.00		3		264
USB 120121P00022500	U.S. Bancorp
	Expiration: January 2012, Exercise Price: $22.50		20		3,480
WFC 110122P00025000	Wells Fargo & Company
	Expiration: January 2011, Exercise Price: $25.00		3		15
ZZH 110122P00017500	The Western Union Company
	Expiration: January 2011, Exercise Price: $17.50		4		40

					17,972

	*Data Processor*
ZXV 110122P00240000	Mastercard Inc. — Class A
	Expiration: January 2011, Exercise Price: $240.00		1		1,690

	*Defense*
CACI 110319P00040000	CACI International Inc. — Class A
	Expiration: March 2011, Exercise Price: $40.00		8		80

The accompanying notes are an integral part of these financial statements.

160

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Depository Credit Intermediation*
HDB 110416P00175000	HDFC Bank Ltd. — ADR
	Expiration: April 2011, Exercise Price: $175.00		1	$	1,650
VCD 110122P00030000	ICIC Bank Ltd. — ADR
	Expiration: January 2011, Exercise Price: $30.00		2		3
VCD 110122P00035000	ICIC Bank Ltd. — ADR
	Expiration: January 2011, Exercise Price: $35.00		2		3

					1,656

	*Equity Fund*
UTH 110219P00090000	Utilities HOLDRs Trust
	Expiration: February 2011, Exercise Price: $90.00		10		300
UTH 110521P00095000	Utilities HOLDRs Trust
	Expiration: May 2011, Exercise Price: $95.00		5		1,375

					1,675

	*Fabricated Metal Product Manufacturing*
CMC 110122P00015000	Commercial Metals Company
	Expiration: January 2011, Exercise Price: $15.00		12		150
FO 110319P00040000	Fortune Brands, Inc.
	Expiration: March 2011, Exercise Price: $40.00		4		40
FO 110319P00045000	Fortune Brands, Inc.
	Expiration: March 2011, Exercise Price: $45.00		6		75

					265

	*Food Manufacturing*
ADM 110122P00025000	Archer-Daniels-Midland Company
	Expiration: January 2011, Exercise Price: $25.00		10		25
ADM 120121P00025000	Archer-Daniels-Midland Company
	Expiration: January 2012, Exercise Price: $25.00		4		724

The accompanying notes are an integral part of these financial statements.

161

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Food Manufacturing (Continued)*
BG 110122P00050000	Bunge Limited
	Expiration: January 2011, Exercise Price: $50.00		3	$	15
BG 120121P00050000	Bunge Limited
	Expiration: January 2012, Exercise Price: $50.00		3		1,020
UN 110219P00025000	Unilever NV
	Expiration: February 2011, Exercise Price: $25.00		14		182

					1,966

	*Gaming*
VEG 110122P00060000	Wynn Resorts Limited
	Expiration: January 2011, Exercise Price: $52.00		1		1

	*Holding Company*
BRKB 120121P00070000	Berkshire Hathaway, Inc. — Class B
	Expiration: January 2012, Exercise Price: $70.00		5		2,075
OYD 110122P00020000	Leucadia National Corporation
	Expiration: January 2011, Exercise Price: $20.00		2		10

					2,085

	*Insurance Carriers and Related Activities*
OOE 110122P00070000	China Life Insurance Co., Limited — ADR
	Expiration: January 2011, Exercise Price: $70.00		1		900
LFC 120121P00062500	China Life Insurance Co., Limited — ADR
	Expiration: January 2012, Exercise Price: $62.50		6		5,070

The accompanying notes are an integral part of these financial statements.

162

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Insurance Carriers and Related Activities (Continued)*
FNF 110618P00012500	Fidelity National Financial, Inc. — Class A
	Expiration: June 2011, Exercise Price: $12.50		12	$	780
PGR 110219P00019000	The Progressive Corporation
	Expiration: February 2011, Exercise Price: $19.00		5		100
PGR 110521P00020000	The Progressive Corporation
	Expiration: May 2011, Exercise Price: $20.00		9		787

					7,637

	*Leather and Allied Product Manufacturing*
VZF 110122P00025000	Coach, Inc.
	Expiration: January 2011, Exercise Price: $25.00		1		2

	*Management of Companies and Enterprises*
GS 110122P00140000	The Goldman Sachs Group, Inc.
	Expiration: January 2011, Exercise Price: $140.00		1		21
GS 120121P00140000	The Goldman Sachs Group, Inc.
	Expiration: January 2012, Exercise Price: $140.00		1		913
GS 120121P00150000	The Goldman Sachs Group, Inc.
	Expiration: January 2012, Exercise Price: $150.00		1		1,230

					2,164

	*Medical Laboratories*
LH 110219P00075000	Laboratory Corporation of America Holdings
	Expiration: February 2011, Exercise Price: $75.00		4		90

	*Merchant Wholesalers, Durable Goods*
TTT 110122P000058600	Terra Nova Royalty Corp.
	Expiration: January 2011, Exercise Price: $5.86		11		55

The accompanying notes are an integral part of these financial statements.

163

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Mining (except Oil and Gas)*
FCX 110122P00055000	Freeport-McMoRan Copper & Gold Inc.
	Expiration: January 2011, Exercise Price: $55.00		1	$	1
OBQ 110122P00080000	Freeport-McMoRan Copper & Gold Inc.
	Expiration: January 2011, Exercise Price: $80.00		3		15
GGP1 120121P00015000	Greatland Gold Plc
	Expiration: January 2012, Exercise Price: $15.00		24		2,892
HWD 110521P00012500	Harry Winston Diamond Corporation
	Expiration: May 2011, Exercise Price: $12.50		25		4,375
VIE 110122P00042500	Newmont Mining Corporation
	Expiration: January 2011, Exercise Price: $42.50		2		2
VIE 110122P00045000	Newmont Mining Corporation
	Expiration: January 2011, Exercise Price: $45.00		2		4
NEM 110122P00047500	Newmont Mining Corporation
	Expiration: January 2011, Exercise Price: $47.50		2		7
VIE 110122P00050000	Newmont Mining Corporation
	Expiration: January 2011, Exercise Price: $50.00		2		12

					7,308

	*Miscellaneous Manufacturing*
BDX 110319P00070000	Becton, Dickinson and Company
	Expiration: March 2011, Exercise Price: $70.00		5		150
IGT 110122P00014000	International Game Technology
	Expiration: January 2011, Exercise Price: $14.00		13		65

The accompanying notes are an integral part of these financial statements.

164

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Miscellaneous Manufacturing (Continued)*
VGG 110122P00015000	International Game Technology
	Expiration: January 2011, Exercise Price: $15.00		3	$	15
IGT 130119P00012500	International Game Technology
	Expiration: January 2013, Exercise Price: $12.50		12		1,890

					2,120

	*Motion Picture and Sound Recording Industries*
DWA 110618P00030000	DreamWorks Animation SKG, Inc. — Class A
	Expiration: June 2011, Exercise Price: $30.00		14		4,025

	*Non-Store Retailers*
AMZN 110122P00095000	Amazon.com, Inc.
	Expiration: January 2011, Exercise Price: $95.00		2		6
EBAY 110122P00017500	eBay, Inc.
	Expiration: January 2011, Exercise Price: $17.50		12		6
EBAY 120121P00020000	eBay, Inc.
	Expiration: January 2012, Exercise Price: $20.00		5		555
BID 110122P00017500	Sotheby’s
	Expiration: January 2011, Exercise Price: $17.50		9		45
BID 110122P00025000	Sotheby’s
	Expiration: January 2011, Exercise Price: $25.00		5		13

					625

The accompanying notes are an integral part of these financial statements.

165

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Oil and Gas and Consumable Fuels*
ZPJ 110122P00075000	China Petroleum & Chemical Corp. — ADR
	Expiration: January 2011, Exercise Price: $75.00		3	$	15
ZPJ 110122P00080000	China Petroleum & Chemical Corp. — ADR
	Expiration: January 2011, Exercise Price: $80.00		1		5
PTR 110122P00100000	PetroChina Company Limited — ADR
	Expiration: January 2011, Exercise Price: $100.00		2		10
PTR 120121P00105000	PetroChina Company Limited — ADR
	Expiration: January 2012, Exercise Price: $105.00		2		1,000

					1,030

	*Oil and Gas Extraction*
CNQ 110122P00032500	Canadian Natural Resources Ltd.
	Expiration: January 2011, Exercise Price: $32.50		14		105
CEO 110319P00160000	CNOOC Limited — ADR
	Expiration: March 2011, Exercise Price: $160.00		2		40
ZBM 110122P00030000	EnCana Corporation
	Expiration: January 2011, Exercise Price: $30.00		2		240
ECA 110122P00031000	EnCana Corporation
	Expiration: January 2011, Exercise Price: $31.00		4		820
ECA 120121P00030000	EnCana Corporation
	Expiration: January 2012, Exercise Price: $30.00		10		4,300
NXY 110319P00017500	Nexen Inc.
	Expiration: March 2011, Exercise Price: $17.50		7		105

The accompanying notes are an integral part of these financial statements.

166

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Oil and Gas Extraction (Continued)*
NXY 110319P00020000	Nexen Inc.
	Expiration: March 2011, Exercise Price: $20.00		10	$	500
VDW 110122P00040000	Petroleo Brasileiro S.A.
	Expiration: January 2011, Exercise Price: $40.00		3		744
PBR 110416P00034000	Petroleo Brasileiro S.A.
	Expiration: April 2011, Exercise Price: $34.00		6		654
PBR 120121P00030000	Petroleo Brasileiro S.A.
	Expiration: January 2012, Exercise Price: $30.00		6		1,224
STO 110416P00020000	StatoilHydro ASA — ADR
	Expiration: April 2011, Exercise Price: $20.00		15		337
OYX 110122P00035000	Suncor Energy, Inc.
	Expiration: January 2011, Exercise Price: $35.00		6		96
ZDT 110122P00055000	Total SA — ADR
	Expiration: January 2011, Exercise Price: $55.00		2		400
TOT 120121P00045000	Total SA — ADR
	Expiration: January 2012, Exercise Price: $45.00		5		1,550
TOT 120121P00050000	Total SA — ADR
	Expiration: January 2012, Exercise Price: $50.00		3		1,470
XOM1 110122P00045000	XTO Energy, Inc.
	Expiration: January 2011, Exercise Price: $45.00		4		12

					12,597

	*Other Investment Pools and Funds*
ABX 110122P00041000	Barrick Gold Corporation
	Expiration: January 2011, Exercise Price: $41.00		5		13
ABX 120121P00045000	Barrick Gold Corporation
	Expiration: January 2012, Exercise Price: $45.00		3		1,068

The accompanying notes are an integral part of these financial statements.

167

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Other Investment Pools and Funds (Continued)*
SKF 110122P00020000	UltraShort Financials ProShares ETF
	Expiration: January 2011, Exercise Price: $20.00		11	$	4,758
SRS 110122P00025000	UltraShort Real Estate ProShares ETF
	Expiration: January 2011, Exercise Price: $25.00		2		1,375
SDS 110122P00029000	UltraShort S&P 500 ProShares ETF
	Expiration: January 2011, Exercise Price: $29.00		7		3,675
SDS 110319P00026000	UltraShort S&P 500 ProShares ETF
	Expiration: March 2011, Exercise Price: $26.00		7		2,205

					13,094

	*Pharmaceutical & Biotechnology*
BIIB 120121P00055000	Biogen Idec Inc.
	Expiration: January 2012, Exercise Price: $55.00		5		1,538

	*Pharmaceutical and Medicine Manufacturing*
GENZ 110122P00047500	Genzyme Corporation
	Expiration: January 2011, Exercise Price: $47.50		3		29
GENZ 110122P00052500	Genzyme Corporation
	Expiration: January 2011, Exercise Price: $52.50		2		31
MJN 110122P00045000	Mead Johnson Nutrition Company
	Expiration: January 2011, Exercise Price: $45.00		4		10

					70

The accompanying notes are an integral part of these financial statements.

168

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Professional, Scientific, and Technical Services*
OLJ 110122P00037500	Automatic Data Processing, Inc.
	Expiration: January 2011, Exercise Price: $37.50		1	$	3
OLJ 110122P00040000	Automatic Data Processing, Inc.
	Expiration: January 2011, Exercise Price: $40.00		2		5
CRL 110219P00030000	Charles River Laboratories International, Inc.
	Expiration: February 2011, Exercise Price: $30.00		5		150
FCN 120121P00030000	FTI Consulting, Inc.
	Expiration: January 2012, Exercise Price: $30.00		12		2,070
OWC 110122P00025000	Moody’s Corporation
	Expiration: January 2011, Exercise Price: $25.00		1		25

					2,253

	*Publishing Industries (except Internet)*
MHP 110122P00025000	The McGraw-Hill Companies, Inc.
	Expiration: January 2011, Exercise Price: $25.00		4		20

	*Rail Transportation*
CP 110319P00055000	Canadian Pacific Railway Limited
	Expiration: March 2011, Exercise Price: $55.00		7		297
OBC 110122P00045000	CSX Corp.
	Expiration: January 2011, Exercise Price: $45.00		3		6
CSX 110219P00045000	CSX Corp.
	Expiration: February 2011, Exercise Price: $45.00		2		19
OGO 110122P00045000	Norfolk Southern Corporation
	Expiration: January 2011, Exercise Price: $45.00		3		8
NSC 110122P00049000	Norfolk Southern Corporation
	Expiration: January 2011, Exercise Price: $49.00		2		5

The accompanying notes are an integral part of these financial statements.

169

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Rail Transportation (Continued)*
NSC 120121P00050000	Norfolk Southern Corporation
	Expiration: January 2012, Exercise Price: $50.00		3	$	885
NSC 120121P00055000	Norfolk Southern Corporation
	Expiration: January 2012, Exercise Price: $55.00		4		1,760
UNP 110122P00065000	Union Pacific Corporation
	Expiration: January 2011, Exercise Price: $65.00		3		18
UNP 120121P00072500	Union Pacific Corporation
	Expiration: January 2012, Exercise Price: $72.50		2		855

					3,853

	*Real Estate*
PSA 110319P00085000	Public Storage
	Expiration: March 2011, Exercise Price: $85.00		2		170
PSA 110319P00090000	Public Storage
	Expiration: March 2011, Exercise Price: $90.00		2		285
FVJ 110122P00025000	The St. Joe Company
	Expiration: January 2011, Exercise Price: $25.00		2		690
JOE 120121P00022500	The St. Joe Company
	Expiration: January 2012, Exercise Price: $22.50		10		4,200

					5,345

The accompanying notes are an integral part of these financial statements.

170

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Securities, Commodity Contracts, and Other Financial Investments and Related Activities*
VNB 110122P00070000	Affiliated Managers Group
	Expiration: January 2011, Exercise Price: $70.00		2	$	10
CBOE 110319P00020000	CBOE Holdings Inc.
	Expiration: March 2011, Exercise Price: $20.00		16		1,000
FII 110416P00022500	Federated Investors, Inc. — Class B
	Expiration: April 2011, Exercise Price: $22.50		8		360
FII 110716P00025000	Federated Investors, Inc. — Class B
	Expiration: July 2011, Exercise Price: $25.00		8		1,320
GHL 110319P00060000	Greenhill & Co., Inc.
	Expiration: March 2011, Exercise Price: $60.00		4		120
GHL 110319P00070000	Greenhill & Co., Inc.
	Expiration: March 2011, Exercise Price: $70.00		5		488

					3,298

	*Telecommunications*
CHU 110122P00012500	China Unicom (Hong Kong) Limited — ADR
	Expiration: January 2011, Exercise Price: $12.50		7		35
CHU 110416P00013000	China Unicom (Hong Kong) Limited — ADR
	Expiration: April 2011, Exercise Price: $13.00		3		127

					162

The accompanying notes are an integral part of these financial statements.

171

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Transportation Equipment Manufacturing*
VBO 110122P00045000	Boeing Co.
	Expiration: January 2011, Exercise Price: $45.00		1	$	1
VBO 110122P00050000	Boeing Co.
	Expiration: January 2011, Exercise Price: $50.00		1		3
GD 110122P00070000	General Dynamics Corporation
	Expiration: January 2011, Exercise Price: $70.00		3		300
VOJ 110122P00045000	Northrop Grumman Corporation
	Expiration: January 2011, Exercise Price: $45.00		1		2
TM 120121P00070000	Toyota Motor Corporation — ADR
	Expiration: January 2012, Exercise Price: $70.00		5		2,025

					2,331

	*U.S. Equity Exchanges*
NYX 120121P00025000	NYSE Euronext
	Expiration: January 2012, Exercise Price: $25.00		12		2,388
XGV 110122P00020000	The NASDAQ OMX Group
	Expiration: January 2011, Exercise Price: $20.00		5		25
NDAQ 120121P00017500	The NASDAQ OMX Group
	Expiration: January 2012, Exercise Price: $17.50		10		875

					3,288

The accompanying notes are an integral part of these financial statements.

172

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Utilities*
AYE 110416P00022500	Allegheny Energy, Inc.
	Expiration: April 2011, Exercise Price: $22.50		15	$	563
AWK 110319P00020000	American Water Works Co., Inc.
	Expiration: March 2011, Exercise Price: $20.00		6		60
CPN 110122P00012500	Calpine Corp.
	Expiration: January 2011, Exercise Price: $12.50		20		200
GXP 110319P00017500	Great Plains Energy Incorporated
	Expiration: March 2011, Exercise Price: $17.50		10		200
HNP 110219P00022500	Huaneng Power International, Inc. — ADR
	Expiration: February 2011, Exercise Price: $22.50		8		1,220
HNP 110521P00020000	Huaneng Power International, Inc. — ADR
	Expiration: May 2011, Exercise Price: $20.00		9		990
HNP 110521P00022500	Huaneng Power International, Inc. — ADR
	Expiration: May 2011, Exercise Price: $22.50		7		1,890
KEP 110319P00012500	Korea Electric Power Corporation — ADR
	Expiration: March 2011, Exercise Price: $12.50		12		480
KEP 110319P00015000	Korea Electric Power Corporation — ADR
	Expiration: March 2011, Exercise Price: $15.00		10		1,800
KEP 110618P00012500	Korea Electric Power Corporation — ADR
	Expiration: June 2011, Exercise Price: $12.50		9		652
GEN1 110122P00012500	Mirant Corporation
	Expiration: January 2011, Exercise Price: $12.50		8		1,380

The accompanying notes are an integral part of these financial statements.

173

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Multi-Disciplinary Portfolio

Portfolio of Options Written — December 31, 2010 — (Continued)


Identifier		Contracts		Value


	*Utilities (Continued)*
OBD 110122P00025000	NRG Energy, Inc.
	Expiration: January 2011, Exercise Price: $25.00		6	$	3,300
PICO 110122P00030000	PICO Holdings, Inc.
	Expiration: January 2011, Exercise Price: $30.00		10		200
PICO 110716P00030000	PICO Holdings, Inc.
	Expiration: July 2011, Exercise Price: $30.00		3		585
UNS 110319P00030000	Unisource Energy Corporation
	Expiration: March 2011, Exercise Price: $30.00		10		2,500
VE 110416P00022500	Veolia Environnement — ADR
	Expiration: April 2011, Exercise Price: $22.50		10		225
VE 110416P00025000	Veolia Environnement — ADR
	Expiration: April 2011, Exercise Price: $25.00		4		180

					16,425

	*Wireless Telecommunications Carriers (except Satellite)*
VUX 110122P00020000	Vodafone Group PLC — ADR
	Expiration: January 2011, Exercise Price: $20.00		11		27

	TOTAL PUT OPTIONS WRITTEN (premiums received ($300,469))			$	129,863


ADR —	American Depository Receipt.


ETF —	Exchange Traded Fund.

The accompanying notes are an integral part of these financial statements.

174

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Assets & Liabilities

December 31, 2010


	The Internet		The Global
	Portfolio		Portfolio


ASSETS:
Investments, at value⁽¹⁾⁽²⁾	$	153,762,065	$	5,841,313
Foreign currencies, at value⁽³⁾		—		1,332
Receivable for contributed capital		10,918		3,850
Receivable for investments sold		—		80,500
Dividends and interest receivable		57,814		5,757
Other accounts receivable		99,877		—
Other assets		9,290		107

Total assets		153,939,964		5,932,859

LIABILITIES:
Payable to Adviser		122,827		5,523
Payable to Broker		870,731		—
Payable to Custodian		—		16,678
Payable to Trustees and Officers		1,273		52
Payable for securities purchased		—		43,561
Payable for collateral received for securities loaned		37,416,974		551,370
Payable for withdrawn capital		233,977		—
Accrued expenses and other liabilities		27,229		12,841

Total liabilities		38,673,011		630,025

Net assets	$	115,266,953	$	5,302,834

⁽¹⁾Cost of investments	$	107,188,066	$	5,273,135

⁽²⁾Includes loaned securities with a market value of	$	35,839,537	$	533,095

⁽³⁾Cost of foreign currencies	$	—	$	1,321

The accompanying notes are an integral part of these financial statements.

175

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Assets & Liabilities

December 31, 2010


	The		The
	Paradigm		Medical
	Portfolio		Portfolio


ASSETS:
Investments, at value⁽¹⁾⁽²⁾	$	1,490,093,894	$	41,491,621
Foreign currencies, at value⁽³⁾		36,545		—
Deposit at brokers for written options		79,730		40,986
Cash		42,640		—
Receivable for contributed capital		2,143,090		5,589
Receivable for investments sold		1,165,367		—
Dividends and interest receivable		1,618,743		19,114
Other assets		129,303		2,587

Total assets		1,495,309,312		41,559,897

LIABILITIES:
Payable to Adviser		1,311,050		32,617
Payable to Trustees and Officers		14,579		355
Payable for collateral received for securities loaned		243,932,317		10,793,305
Payable for withdrawn capital		2,425,961		27,244
Accrued expenses and other liabilities		174,623		14,196

Total liabilities		247,858,530		10,867,717

Net assets	$	1,247,450,782	$	30,692,180

⁽¹⁾Cost of investments	$	1,199,758,759	$	40,808,347

⁽²⁾Includes loaned securities with a market value of	$	230,416,063	$	10,283,709

⁽³⁾Cost of foreign currencies	$	36,339	$	—

The accompanying notes are an integral part of these financial statements.

176

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Assets & Liabilities

December 31, 2010


	The Small Cap		The Market
	Opportunities		Opportunities
	Portfolio		Portfolio


ASSETS:
Investments, at value⁽¹⁾⁽²⁾	$	195,647,495	$	73,671,656
Receivable for contributed capital		44,761		13,110
Receivable for investments sold		12,705		—
Dividends and interest receivable		69,167		28,626
Other assets		35,745		11,359

Total assets		195,809,873		73,724,751

LIABILITIES:
Payable to Adviser		166,205		62,497
Payable to Broker		12,258		—
Payable to Custodian		—		203,534
Payable to Trustees and Officers		1,894		685
Payable for collateral received for securities loaned		40,060,947		14,816,293
Payable for withdrawn capital		385,616		92,000
Accrued expenses and other liabilities		38,801		20,490

Total liabilities		40,665,721		15,195,499

Net assets	$	155,144,152	$	58,529,252

⁽¹⁾Cost of investments	$	165,067,735	$	66,436,833

⁽²⁾Includes loaned securities with a market value of	$	38,006,161	$	13,653,346

The accompanying notes are an integral part of these financial statements.

177

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Assets & Liabilities

December 31, 2010


	The Water		The Multi-
	Infrastructure		Disciplinary
	Portfolio		Portfolio


ASSETS:
Investments, at value⁽¹⁾⁽²⁾	$	19,406,699	$	3,840,856
Foreign currencies, at value⁽³⁾		16		—
Deposit at brokers for written options		5,980,900		549,032
Receivable for contributed capital		80,528		8,000
Receivable for investments sold		1,169		9,398
Dividends and interest receivable		124,121		42,952
Other assets		1,004		33

Total assets		25,594,437		4,450,271

LIABILITIES:
Written options, at value⁽⁴⁾		519,338		129,863
Payable to Adviser		26,057		4,142
Payable to Trustees and Officers		292		18
Payable for securities purchased		—		18,025
Payable for collateral received for securities loaned		582,692		76,500
Payable for withdrawn capital		227,043		—
Accrued expenses and other liabilities		15,928		13,674

Total liabilities		1,371,350		242,222

Net assets	$	24,223,087	$	4,208,049

⁽¹⁾Cost of investments	$	19,382,339	$	3,765,310

⁽²⁾Includes loaned securities with a market value of	$	544,028	$	74,539


⁽³⁾Cost of foreign currencies	$	15	$	—

⁽⁴⁾Premiums received	$	1,687,618	$	300,469

The accompanying notes are an integral part of these financial statements.

178

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Operations

For the Year Ended December 31, 2010


	The Internet			The Global
	Portfolio			Portfolio


INVESTMENT INCOME:
Dividends†	$	850,909		$	92,506
Interest		54,680			1
Income from securities lending		106,245			2,045
Other income		99,877			—

Total investment income		1,111,711			94,552

EXPENSES:
Investment advisory fees		1,337,259			61,608
Administration fees		46,329			2,083
Professional fees		16,393			7,588
Fund accounting fees		24,701			11,495
Trustee and Officers’ fees and expenses		7,957			355
Custodian fees and expenses		24,115			36,159
Other expenses		5,220			235

Total expenses		1,461,974			119,523

Net investment loss		(350,263	)		(24,971	)

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on:
Investments and foreign currency		3,608,489			621,908
Net change in unrealized appreciation (depreciation) of:
Investments and foreign currency		18,110,430			246,931
Written option contracts		(5,404	)		—

Net gain on investments		21,713,515			868,839

Net increase in net assets resulting from operations	$	21,363,252		$	843,868

† Net of Foreign Taxes Withheld of:	$	33,824		$	10,413

The accompanying notes are an integral part of these financial statements.

179

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Operations

For the Year Ended December 31, 2010


	The			The
	Paradigm			Medical
	Portfolio			Portfolio


INVESTMENT INCOME:
Dividends†	$	23,793,585		$	582,043
Interest		1,728,632			58
Income from securities lending		2,138,549			24,159

Total investment income		27,660,766			606,260

EXPENSES:
Investment advisory fees		15,754,346			390,729
Administration fees		545,236			13,644
Professional fees		65,981			11,098
Fund accounting fees		223,168			8,922
Trustee and Officers’ fees and expenses		94,234			2,357
Custodian fees and expenses		413,729			6,766
Other expenses		73,834			1,340

Total expenses		17,170,528			434,856

Net investment income		10,490,238			171,404

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on:
Investments and foreign currency		(109,064,403	)		(219,849	)
Net change in unrealized appreciation of:
Investments and foreign currency		286,372,800			1,376,880

Net gain on investments		177,308,397			1,157,031

Net increase in net assets resulting from operations	$	187,798,635		$	1,328,435

† Net of Foreign Taxes Withheld of:	$	1,227,003		$	28,236

The accompanying notes are an integral part of these financial statements.

180

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Operations

For the Year Ended December 31, 2010


	The Small Cap			The Market
	Opportunities			Opportunities
	Portfolio			Portfolio


INVESTMENT INCOME:
Dividends†	$	2,249,899		$	1,090,864
Interest		—			36
Income from securities lending		100,669			81,154
Other income		20,977			—

Total investment income		2,371,545			1,172,054

EXPENSES:
Investment advisory fees		2,057,923			739,565
Administration fees		71,053			25,496
Professional fees		20,704			13,155
Fund accounting fees		35,098			16,763
Trustee and Officers’ fees and expenses		12,092			4,434
Custodian fees and expenses		129,972			38,551
Other expenses		10,370			3,355

Total expenses		2,337,212			841,319

Net investment income		34,333			330,735

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on:
Investments and foreign currency		(589,161	)		(336,199	)
Net change in unrealized appreciation (depreciation) of:
Investments and foreign currency		20,474,498			6,206,744
Written option contracts		—			(37,827	)

Net gain on investments		19,885,337			5,832,718

Net increase in net assets resulting from operations	$	19,919,670		$	6,163,453

† Net of Foreign Taxes Withheld of:	$	66,139		$	39,963

The accompanying notes are an integral part of these financial statements.

181

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Operations

For the Year Ended December 31, 2010


	The Water			The Multi-
	Infrastructure			Disciplinary
	Portfolio			Portfolio


INVESTMENT INCOME:
Dividends†	$	424,723		$	90
Interest		174,364			116,202
Income from securities lending		52,714			56

Total investment income		651,801			116,348

EXPENSES:
Investment advisory fees		325,221			29,141
Administration fees		11,403			3,963
Professional fees		10,535			9,460
Fund accounting fees		9,788			9,087
Trustee and Officers’ fees and expenses		1,972			150
Custodian fees and expenses		21,477			4,207
Other expenses		1,155			80

Total expenses		381,551			56,088

Net investment income		270,250			60,260

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on:
Investments and foreign currency		(2,165,582	)		9,909
Written option contracts expired or closed		(297,569	)		101,093
Net change in unrealized appreciation (depreciation) of:
Investments and foreign currency		(362,117	)		39,125
Written option contracts		1,168,280			115,518

Net gain (loss) on investments		(1,656,988	)		265,645

Net increase (decrease) in net assets resulting from operations	$	(1,386,738	)	$	325,905

† Net of Foreign Taxes Withheld of:	$	31,520		$	—

The accompanying notes are an integral part of these financial statements.

182

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Changes in Net Assets


	The Internet Portfolio						The Global Portfolio
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2010			2009			2010			2009


OPERATIONS:
Net investment loss	$	(350,263	)	$	(33,060	)	$	(24,971	)	$	(24,484	)
Net realized gain (loss) on sale of investments, foreign currency and written options		3,608,489			3,597,819			621,908			(420,269	)
Net change in unrealized appreciation of investments, foreign currency and written options		18,105,026			32,092,041			246,931			1,903,249

Net increase in net assets resulting from operations		21,363,252			35,656,800			843,868			1,458,496

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS:
Contributions		1,346,460			2,234,532			1,327,460			3,020,852
Withdrawals		(13,061,708	)		(7,912,207	)		(1,636,790	)		(1,672,795	)

Net increase (decrease) in net assets resulting from beneficial interest transactions		(11,715,248	)		(5,677,675	)		(309,330	)		1,348,057

Total increase in net assets		9,648,004			29,979,125			534,538			2,806,553
NET ASSETS:
Beginning of year		105,618,949			75,639,824			4,768,296			1,961,743

End of year	$	115,266,953		$	105,618,949		$	5,302,834		$	4,768,296

The accompanying notes are an integral part of these financial statements.

183

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Changes in Net Assets


	The Paradigm Portfolio						The Medical Portfolio
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2010			2009			2010			2009


OPERATIONS:
Net investment income	$	10,490,238		$	14,996,508		$	171,404		$	239,675
Net realized loss on sale of investments, foreign currency and written options		(109,064,403	)		(282,409,570	)		(219,849	)		(152,408	)
Net change in unrealized appreciation of investments, foreign currency and written options		286,372,800			696,152,858			1,376,880			4,228,652

Net increase in net assets resulting from operations		187,798,635			428,739,796			1,328,435			4,315,919

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS:
Contributions		12,611,540			78,038,515			8,554,289			7,401,998
Withdrawals		(358,281,150	)		(393,931,544	)		(5,133,179	)		(4,767,975	)

Net increase (decrease) in net assets resulting from beneficial interest transactions		(345,669,610	)		(315,893,029	)		3,421,110			2,634,023

Total increase (decrease) in net assets		(157,870,975	)		112,846,767			4,749,545			6,949,942
NET ASSETS:
Beginning of year		1,405,321,757			1,292,474,990			25,942,635			18,992,693

End of year	$	1,247,450,782		$	1,405,321,757		$	30,692,180		$	25,942,635

The accompanying notes are an integral part of these financial statements.

184

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Changes in Net Assets


	The Small Cap Opportunities Portfolio						The Market Opportunities Portfolio
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2010			2009			2010			2009


OPERATIONS:
Net investment income (loss)	$	34,333		$	(97,708	)	$	330,735		$	153,008
Net realized loss on sale of investments, foreign currency and written options		(589,161	)		(45,656,070	)		(336,199	)		(7,399,123	)
Net change in unrealized appreciation of investments, foreign currency and written options		20,474,498			143,860,495			6,168,917			30,080,757

Net increase in net assets resulting from operations		19,919,670			98,106,717			6,163,453			22,834,642

NET DECREASE IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS:
Contributions		8,900,395			19,485,826			1,707,965			7,456,809
Withdrawals		(73,460,711	)		(128,333,657	)		(15,461,186	)		(21,721,577	)

Net decrease in net assets resulting from beneficial interest transactions		(64,560,316	)		(108,847,831	)		(13,753,221	)		(14,264,768	)

Total increase (decrease) in net assets		(44,640,646	)		(10,741,114	)		(7,589,768	)		8,569,874
NET ASSETS:
Beginning of year		199,784,798			210,525,912			66,119,020			57,549,146

End of year	$	155,144,152		$	199,784,798		$	58,529,252		$	66,119,020

The accompanying notes are an integral part of these financial statements.

185

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Changes in Net Assets


							The Multi-Disciplinary
	The Water Infrastructure Portfolio						Portfolio
	For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2010			2009			2010			2009


OPERATIONS:
Net investment income (loss)	$	270,250		$	107,684		$	60,260		$	(10,867	)
Net realized gain (loss) on sale of investments, foreign currency and written options		(2,463,151	)		(1,421,220	)		111,002			105,539
Net change in unrealized appreciation of investments, foreign currency and written options		806,163			3,696,782			154,643			109,924

Net increase (decrease) in net assets resulting from operations		(1,386,738	)		2,383,246			325,905			204,596

NET INCREASE IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS:
Contributions		10,339,696			11,818,237			3,080,316			788,927
Withdrawals		(7,936,060	)		(7,147,014	)		(520,802	)		(89,179	)

Net increase in net assets resulting from beneficial interest transactions		2,403,636			4,671,223			2,559,514			699,748

Total increase in net assets		1,016,898			7,054,469			2,885,419			904,344
NET ASSETS:
Beginning of year		23,206,189			16,151,720			1,322,630			418,286

End of year	$	24,223,087		$	23,206,189		$	4,208,049		$	1,322,630

The accompanying notes are an integral part of these financial statements.

186

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements

December 31, 2010

1. Organization

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

187

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2010

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 and derivatives issued by U.S. and foreign companies engaged 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.

2. Significant Accounting Policies

Security Valuation

Master Portfolio securities that are listed on a U.S. securities exchange for which market quotations are readily available are valued at the last quoted sale price on the day the valuation is made. Price information on listed securities is taken from the exchange where the security is primarily traded. All equity securities 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 normally valued on the basis of quotes obtained from pricing services, which take into account appropriate factors such as institutional-sized trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data. Other assets and securities for which no quotations are readily available (including restricted securities) will be valued in good faith at fair value using methods determined by the Board of Trustees of the Master Portfolios. At December 31, 2010, 0.00%, 0.00%, and 0.00% of

188

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2010

the net assets of The Internet Portfolio, The Paradigm Portfolio, and The Medical Portfolio, respectively, were fair valued securities.

Repurchase Agreements

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

Written Options

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

189

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2010

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

Restricted and Illiquid Securities

The Master Portfolios may invest in restricted securities. These securities are valued by the Master Portfolios after giving due consideration to pertinent factors including recent private sales, market conditions and the issuer’s financial performance. The Master Portfolios have no right to require registration of unregistered securities. At December 31, 2010 the following Master Portfolio held securities restricted to institutional investors (144A Securities):


			Percentage
Restricted Securities	Market Value		of Net Assets

The Multi-Disciplinary Portfolio	$	106,750		2.54	%


			Percentage
Illiquid Securities	Market Value		of Net Assets

The Internet Portfolio	$	502		0.00	%
The Paradigm Portfolio		0		0.00
The Medical 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.

190

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2010

Securities Lending

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

Expense Allocation

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

Federal Income Taxes

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

There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken in future tax returns. As of December 31, 2010, open tax years include the tax years ended December 31, 2007 through 2010. The Master Portfolios are also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

Use of Estimates

Other

191

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2010

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. The 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 The Water Infrastructure Portfolio.

For the year ended December 31, 2010, The Internet Portfolio, The Global Portfolio, The Paradigm Portfolio, The Medical Portfolio, The Small Cap Opportunities Portfolio, The Market Opportunities Portfolio, The Water Infrastructure Portfolio and The Multi-Disciplinary Portfolio incurred expenses of $1,337,259, $61,608, $15,754,346, $390,729, $2,057,923, $739,565, $325,221 and $29,141, respectively, pursuant to the Agreements.

For the year ended December 31, 2010, the Trust was allocated $24,000 for the services of the Chief Compliance Officer employed by the Adviser.

4. Securities Transactions

Purchases and sales of investment securities, other than short-term investments, for the year ended December 31, 2010 were as follows:


	Purchases				Sales
	U.S.				U.S.
	Government		Other		Government		Other

The Internet Portfolio	$	—	$	12,467,411	$	—	$	23,317,997
The Global Portfolio		—		5,870,035		—		6,126,927
The Paradigm Portfolio		—		90,826,091		—		463,111,095
The Medical Portfolio		—		5,461,875		—		753,454
The Small Cap Opportunities Portfolio		—		5,743,539		—		71,270,403
The Market Opportunities Portfolio		—		7,178,580		—		19,299,186
The Water Infrastructure Portfolio		—		20,157,995		—		28,093,151
The Multi-Disciplinary Portfolio		—		3,503,330		—		739,999

192

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2010

As of December 31, 2010, the cost of investments and unrealized appreciation (depreciation) on investment securities for federal income tax purposes was as follows:


	Net
	Unrealized
	Appreciation		Unrealized		Unrealized			Tax Cost of
	(Depreciation)		Appreciation		Depreciation			Investments

The Internet Portfolio	$	45,780,455	$	55,045,628	$	(9,265,173	)	$	107,981,610
The Global Portfolio		514,949		626,963		(112,014	)		5,326,364
The Paradigm Portfolio		228,453,024		360,791,025		(132,338,001	)		1,261,640,870
The Medical Portfolio		527,740		5,989,204		(5,461,464	)		40,963,881
The Small Cap Opportunities Portfolio		22,538,214		48,513,109		(25,974,895	)		173,109,281
The Market Opportunities Portfolio		4,483,119		12,417,832		(7,934,713	)		69,188,537
The Water Infrastructure Portfolio		2,163		551,721		(549,558	)		19,404,536
The Multi-Disciplinary Portfolio		62,862		104,758		(41,896	)		3,777,994

For the year ended December 31, 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 December 31, 2010		—		$	—

*The Market Opportunities Portfolio*
Outstanding at the Beginning of Year		14		$	126,377
Options Exercised		(14	)		(126,377	)

Outstanding at December 31, 2010		—		$	—

*The Water Infrastructure Portfolio*
Outstanding at the Beginning of Year		—		$	—
Options Written		9,230			1,837,464
Options Expired		(150	)		(29,603	)
Options Closed		(400	)		(120,243	)

Outstanding at December 31, 2010		8,680		$	1,687,618

193

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2010


	Number			Premium
	of Contracts			Amount

*The Multi-Disciplinary Portfolio*
Outstanding at the Beginning of Year		327		$	114,271
Options Written		1,211			320,281
Options Split		7			—
Options Exercised		(147	)		(32,055	)
Options Expired		(368	)		(97,859	)
Options Closed		(3	)		(4,169	)

Outstanding at December 31, 2010		1,027		$	300,469

5. Portfolio Securities Loaned

As of December 31, 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 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 December 31, 2010, were as follows:


	Securities		Collateral

The Internet Portfolio	$	35,839,537	$	37,416,974
The Global Portfolio		533,095		551,370
The Paradigm Portfolio		230,416,063		243,932,317
The Medical Portfolio		10,283,709		10,793,305
The Small Cap Opportunities Portfolio		38,006,161		40,060,947
The Market Opportunities Portfolio		13,653,346		14,816,293
The Water Infrastructure Portfolio		544,028		582,692
The Multi-Disciplinary Portfolio		74,539		76,500

6. Selected Financial Highlights

Financial highlights for the Master Portfolios were as follows:


	The Internet Portfolio
	For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2010			2009			2008			2007			2006

Ratio of expenses to average net assets:
Before expense reduction		1.37	%		1.37	%		1.34	%		1.34	%		1.39	%
After expense reduction		1.37	%		1.37	%		1.34	%		1.33	%		1.33	%

194

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2010


	The Internet Portfolio
	For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2010			2009			2008			2007			2006

Ratio of net investment income (loss) to average net assets:
Before expense reduction		(0.33	)%		(0.04	)%		1.59	%		1.58	%		0.17	%
After expense reduction		(0.33	)%		(0.04	)%		1.59	%		1.59	%		0.23	%
Portfolio turnover rate		12	%		14	%		19	%		15	%		11	%


	The Global Portfolio
	For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2010			2009			2008			2007			2006

Ratio of expenses to average net assets:
Before expense reduction		2.43	%		2.81	%		2.46	%		1.99	%		1.62	%
After expense reduction		2.43	%		2.81	%		2.46	%		1.98	%		1.46	%
Ratio of net investment income (loss) to average net assets:
Before expense reduction		(0.51	)%		(0.74	)%		0.83	%		3.73	%		2.78	%
After expense reduction		(0.51	)%		(0.74	)%		0.83	%		3.74	%		2.94	%
Portfolio turnover rate		122	%		53	%		98	%		22	%		10	%


	The Paradigm Portfolio
	For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2010			2009			2008			2007			2006

Ratio of expenses to average net assets:
Before expense reduction		1.36	%		1.36	%		1.33	%		1.33	%		1.40	%
After expense reduction		1.36	%		1.36	%		1.33	%		1.33	%		1.32	%
Ratio of net investment income (loss) to average net assets:
Before expense reduction		0.83	%		1.15	%		0.86	%		0.75	%		0.85	%
After expense reduction		0.83	%		1.15	%		0.86	%		0.75	%		0.93	%
Portfolio turnover rate		7	%		15	%		34	%		8	%		3	%


	The Medical Portfolio
	For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2010			2009			2008			2007			2006

Ratio of expenses to average net assets:
Before expense reduction		1.39	%		1.43	%		1.42	%		1.49	%		1.44	%
After expense reduction		1.39	%		1.43	%		1.42	%		1.40	%		1.34	%
Ratio of net investment income (loss) to average net assets:
Before expense reduction		0.55	%		1.14	%		1.02	%		0.42	%		0.33	%
After expense reduction		0.55	%		1.14	%		1.02	%		0.51	%		0.43	%
Portfolio turnover rate		3	%		13	%		28	%		38	%		20	%

195

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2010


	The Small Cap Opportunities Portfolio
	For the			For the			For the			For the			For the
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2010			2009			2008			2007			2006

Ratio of expenses to average net assets:
Before expense reduction		1.42	%		1.42	%		1.36	%		1.34	%		1.40	%
After expense reduction		1.42	%		1.42	%		1.36	%		1.31	%		1.27	%
Ratio of net investment income (loss) to average net assets:
Before expense reduction		0.02	%		(0.05	)%		0.51	%		0.38	%		0.30	%
After expense reduction		0.02	%		(0.05	)%		0.51	%		0.41	%		0.43	%
Portfolio turnover rate		4	%		4	%		16	%		17	%		6	%


	The Market Opportunities Portfolio
	For the			For the			For the			For the			January 31,
	Year Ended			Year Ended			Year Ended			Year Ended			2006ˆ through
	December 31,			December 31,			December 31,			December 31,			December 31,
	2010			2009			2008			2007			2006

Ratio of expenses to average net assets:
Before expense reduction		1.42	%		1.42	%		1.36	%		1.44	%		1.81	%⁽¹⁾
After expense reduction		1.42	%		1.42	%		1.36	%		1.44	%		1.61	%⁽¹⁾
Ratio of net investment income to average net assets:
Before expense reduction		0.56	%		0.26	%		1.25	%		0.61	%		0.16	%⁽¹⁾
After expense reduction		0.56	%		0.26	%		1.25	%		0.61	%		0.36	%⁽¹⁾
Portfolio turnover rate		12	%		14	%		77	%		14	%		0	%


	ˆ	Commencement of operations.


(1)	Annualized.


	The Water Infrastructure Portfolio
	For the			For the			For the			June 29,
	Year Ended			Year Ended			Year Ended			2007ˆ through
	December 31,			December 31,			December 31,			December 31,
	2010			2009			2008			2007

Ratio of expenses to average net assets:
Before expense reduction		1.47	%		1.49	%		1.49	%		2.01	%⁽¹⁾
After expense reduction		1.47	%		1.49	%		1.49	%		2.01	%⁽¹⁾
Ratio of net investment income to average net assets:
Before expense reduction		1.04	%		0.63	%		1.27	%		0.96	%⁽¹⁾
After expense reduction		1.04	%		0.63	%		1.27	%		0.96	%⁽¹⁾
Portfolio turnover rate		111	%		45	%		66	%		7	%


	ˆ	Commencement of operations.


(1)	Annualized.

196

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2010


	The Multi-Disciplinary Portfolio
						February 11,
	For the		For the			2008ˆ
	Year Ended		Year Ended			through
	December 31,		December 31,			December 31,
	2010		2009			2008

Ratio of expenses to average net assets:
Before expense reduction		2.41%		3.66	%		5.09	%⁽¹⁾
After expense reduction		2.41%		3.66	%		5.09	%⁽¹⁾
Ratio of net investment income (loss) to average net assets:
Before expense reduction		2.58%		(1.20	)%		(3.49	)%⁽¹⁾
After expense reduction		2.58%		(1.20	)%		(3.49	)%⁽¹⁾
Portfolio turnover rate		38%		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.

7. Summary of Fair Value Exposure

Various inputs are used in determining the value of the Master 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 Trust has the ability to access.

Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Trust’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 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

197

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2010

value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The Internet Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2010:


	Level 1		Level 2			Level 3			Total

Common Stocks	$	112,508,084	$	1,705,798	⁽¹⁾	$	502	⁽²⁾	$	114,214,384
Escrow Notes		—		—			—	*		—	*
Rights		1,530,087		—			—			1,530,087
Short-Term Investments		600,620		—			—			600,620
Investments Purchased with the Cash
Proceeds from Securities Lending		37,416,974		—			—			37,416,974

Total Investments in Securities	$	152,055,765	$	1,705,798		$	502		$	153,762,065


*	The amount is less than $0.50


	See portfolio of Investments for breakout of common stocks by industry classification.


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


Rental and Leasing Services	$	1,701,000
Telecommunications		4,798

	$	1,705,798


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


Special Purpose Entity	$	502

Transfers into Level 2		1,705,798
Transfers out of Level 2		—

Net transfers in and/or out of Level 2	$	1,705,798

Transfers were made into Level 2 due to a lack of market activity.

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

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


	Investments in
Description	Securities

Balance as of December 31, 2009	$	—	*
Accrued discounts/premiums		—
Realized gain (loss)		—
Change in unrealized appreciation (depreciation)		502
Net purchases (sales)		—
Transfer in and/or out of Level 3		—

Balance as of December 31, 2010	$	502


*	The amount is less than $0.50.

198

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2010

The Global Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2010:


	Level 1		Level 2			Level 3		Total

Common Stocks	$	5,251,369	$	38,343	⁽¹⁾	$	—	$	5,289,712
Warrants		231		—			—		231
Investments Purchased with the Cash Proceeds from Securities Lending		551,370		—			—		551,370

Total Investments in Securities	$	5,802,970	$	38,343		$	—	$	5,841,313


	See Portfolio of Investments for breakout of common stocks by industry classification.


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


Data Processing, Hosting and Related Services		$	38,343

The Paradigm Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2010:


	Level 1		Level 2			Level 3			Total

Common Stocks	$	1,195,696,931	$	6,807,296	⁽¹⁾	$	—		$	1,202,504,227
Escrow Notes		—		—			—	*		—	*
Convertible Bonds		—		5,065,000			—			5,065,000
Corporate Bonds		—		428			—			428
Warrants		131,860		—			—			131,860
Short-Term Investments		38,460,062		—			—			38,460,062
Proceeds from Securities Lending		243,932,317		—			—			243,932,317

Total Investments in Securities	$	1,478,221,170	$	11,872,724			—	*	$	1,490,093,894


*	Amount is less than $0.50.


	See Portfolio of Investments for breakout of common stocks by industry classification.


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


Credit Intermediation and Related Activities	$	6,807,296
Transfers into Level 2	$	6,807,296
Transfers out of Level 2		—

Net transfers in and/or out of Level 2		6,807,296

Transfers were made into and out of Level 2 due to a lack of market activity.

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

199

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2010

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


	Investments in
Description	Securities

Balance as of December 31, 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 December 31, 2010	$	—	*


*	Amount is less than $0.50.

The Medical Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2010:


	Level 1		Level 2		Level 3			Total

Common Stocks	$	30,210,765	$	—	$	—		$	30,210,765
Escrow Notes		—		—		—	*		—	*
Rights		3,762		—		—			3,762
Short-Term Investments		483,789		—		—			483,789
Investments Purchased with the Cash
Proceeds from Securities Lending		10,793,305		—		—			10,793,305

Total Investment in Securities	$	41,491,621	$	—	$	—	*	$	41,491,621


*	Amount is less than $0.50.


	See Portfolio of Investments for breakout of common stocks by industry classification.

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


	Investments in
Description	Securities

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

Balance as of December 31, 2010	$	—	*


*	Amount is less than $0.50.

200

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2010

The Small Cap Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2010:


	Level 1		Level 2			Level 3		Total

Common Stocks	$	150,960,186ˆ	$	2,135,057	⁽¹⁾	$	—	$	153,095,243
Corporate Bonds		—		—			125		125
Rights		704,351		—			—		704,351
Short-Term Investments		1,786,829		—			—		1,786,829
Investments Purchased with the Cash
Proceeds from Securities Lending		40,060,947		—			—		40,060,947

Total Investments in Securities	$	193,512,313	$	2,135,057		$	125	$	195,647,495


ˆ	See Portfolio of Investments for breakout of common stocks by industry classification.


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


Asset Management	$	2,051,720
Real Estate		1,310
Rental and Leasing Services		66,150
Telecommunications		15,877

	$	2,135,057

Transfers into Level 2	$	2,135,057
Transfers out of Level 2		(170,518	)

Net transfers in and/or out of Level 2	$	1,964,539

Transfers were made into Level 2 due to a lack of market activity. Transfers were made out of Level 2 and into Level 3 due to security becoming fair valued in accordance with procedures adopted by the Trust’s Board of Trustees.

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

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


	Investments in
Description	Securities

Balance as of December 31, 2009	$	—	*
Accrued discounts/premiums		—
Realized gain (loss)		1,213,355
Change in unrealized appreciation (depreciation)		—
Net purchases (sales)		(1,213,355	)
Transfer in and/or out of Level 3		—

Balance as of December 31, 2010	$	—


*	Amount is less than $0.50.

201

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2010

The Market Opportunities Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2010:


	Level 1			Level 2			Level 3		Total

Common Stocks	$	58,326,972	ˆ	$	508,109	⁽¹⁾	$	—	$	58,835,081
Short-Term Investments		20,282			—			—		20,282
Investments Purchased with the Cash
Proceeds from Securities Lending		14,816,293			—			—		14,816,293

Total Investment in Securities	$	73,163,547		$	508,109		$	—	$	73,671,656


ˆ	See Portfolio of Investments for breakout of common stocks by industry classification.


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


Asset Management	$	508,109

Transfers into Level 2	$	508,109
Transfers out of Level 2		—

Net transfers in and/or out of Level 2	$	508,109

Transfers were made into Level 2 due to a lack of market activity.

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

The Water Infrastructure Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2010:


	Level 1			Level 2			Level 3		Total

Common Stocks	$	2,510,024	ˆ	$	—		$	—	$	2,510,024
Convertible Bonds		—			2,863,863			—		2,863,863
Corporate Bonds		—			5,028,047			—		5,028,047
Warrants		—			12,000			—		12,000
Short-Term Investments		3,010,076			5,399,997			—		8,410,073
Investments Purchased with the Cash
Proceeds from Securities Lending		582,692			—			—		582,692

Total Investments in Securities	$	6,102,792		$	13,303,907		$	—	$	19,406,699

Put Options Written	$	—		$	(519,338	)	$	—	$	(519,338	)


ˆ	See Portfolio of Investments for breakout of common stocks by industry classification.

202

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2010

The Multi-Disciplinary Portfolio

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2010:


	Level 1			Level 2			Level 3		Total

Common Stocks	$	14,076	ˆ	$	—		$	—	$	14,076
Convertible Bonds		—			1,392,187			—		1,392,187
Corporate Bonds		—			2,298,249			—		2,298,249
Put Options Purchased		—			45			—		45
Short-Term Investments		59,799			—			—		59,799
Investments Purchased with the Cash
Proceeds from Securities Lending		76,500			—			—		76,500

Total Investments in Securities	$	150,375		$	3,690,481		$	—	$	3,840,856

Put Options Written	$	—		$	(129,863	)	$	—	$	(129,863	)


ˆ	See Portfolio of Investments for breakout of common stocks by industry classification.

8. Disclosures about Derivative Instruments and Hedging Activities

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

The Internet Portfolio

Statement of Assets and Liabilities

Fair Values of derivative instruments as of December 31, 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.

203

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2010

Statement of Operations

The effect of derivative instruments on the Statement of Operations for the year ended December 31, 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 previous period and then held during the current period.

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 year ended December 31, 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 December 31, 2010:

Assets

Liabilities

Equity Contracts

Description

Fair Value

Description

Fair Value

Purchased Options

Investments*

—

Written option

Written Options

contracts, at value

—

Total

—


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

204

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2010

Statement of Operations

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

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 year ended December 31, 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 Water Infrastructure Portfolio

Statement of Assets and Liabilities

Fair Values of derivative instruments as of December 31, 2010:

Assets

Liabilities

Equity Contracts

Description

Fair Value

Description

Fair Value

Written option

Written Options

contracts, at value

519,338

Total

—

519,338


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

205

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2010

Statement of Operations

The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2010:

Amount of Realized Gain (Loss) on Equity Contracts


Equity Contracts

Written Options	$	(297,569	)

Total	$	(297,569	)

Change in Unrealized Appreciation (Depreciation) on Equity Contracts


Equity Contracts

Written Options	$	1,168,280

Total	$	1,168,280

The Water Infrastructure 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 year ended December 31, 2010: no long option contracts were purchased and $0 premiums were paid, written option contracts (9,230 contracts) were opened and $1,837,464 premiums were received during the period.

The Multi-Disciplinary Portfolio

Statement of Assets and Liabilities

Fair Values of derivative instruments as of December 31, 2010:

Assets

Liabilities

Equity Contracts

Description

Fair Value

Description

Fair Value

Purchased Options

Investments*

Written option

Written Options

contracts, at value

129,863

Total

129,863


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

Statement of Operations

The effect of derivative instruments on the Statement of Operations for the year ended December 31, 2010:

Amount of Realized Gain (Loss) on Equity Contracts


Equity Contracts

Purchased Options	$	—	**
Written Options		101,093

Total	$	101,093


**	Purchased options are included with investments.

206

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2010

Change in Unrealized Appreciation (Depreciation) on Equity Contracts


Equity Contracts

Purchased Options	$	(90	)***
Written Options		115,518

Total	$	115,428


***	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 the year ended December 31, 2010: no long option contracts were purchased and $0 premiums were paid, written option contracts (1,211 contracts) were opened and $320,281 premiums were received during the period.

9. New Accounting Pronouncement

10. Subsequent Events

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

11. Tax Information (Unaudited)

The Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted on December 22, 2010. The Act makes changes to several tax rules impacting the Portfolios. In general, the provisions of the Act will be effective for the Master Portfolios’ fiscal year ending December 31, 2011. Although the Act provides several benefits, including the unlimited carryover of future capital losses, there may be a greater likelihood that all or a portion of each Master Portfolio’s pre-enactment capital loss carryovers may expire without being utilized due to the fact that post-enactment capital losses get utilized before pre-enactment capital loss carryovers. Relevant information regarding the impact of the Act on the Master Portfolios, if any, will be

207

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

December 31, 2010

contained within the “Federal Taxes” section of the financial statement notes for the fiscal year ending December 31, 2011.

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.

208

KINETICS PORTFOLIOS TRUST

Report of Independent Registered
Public Accounting Firm

To the Shareholders of and Board of Trustees

Kinetics Portfolios Trust

Elmsford, New York

We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of The Internet Portfolio, The Global Portfolio, The Paradigm Portfolio, The Medical Portfolio, The Small Cap Opportunities Portfolio, The Market Opportunities Portfolio, The Water Infrastructure Portfolio, and The Multi-Disciplinary Portfolio, each a series of shares of Kinetics Portfolios Trust (the “Trust”), as of December 31, 2010, and the related statements of operations, the statements of changes in net assets and financial highlights for the periods indicated thereon. These financial statements and financial highlights are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform, nor was the Trust required to have, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2010, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly in all material respects, the financial position of the above mentioned Portfolios as of December 31, 2010, the results of their operations, the changes in their net assets and financial highlights for the periods indicated thereon, in conformity with accounting principles generally accepted in the United States of America.

TAIT, WELLER & BAKER LLP

Philadelphia, Pennsylvania

March 1, 2011

209

KINETICS PORTFOLIOS TRUST

Management of the Funds and the Master Portfolios

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

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

211

KINETICS PORTFOLIOS TRUST

Management of the Funds and the Master Portfolios — (Continued)

Board of Directors/Board of Trustees

Independent Directors/Trustees


			Number of
			Portfolios/Funds in
		Term of Office/	Fund Complex**
	Position(s) with the	Length of	Overseen by
Name, Address and Year of Birth	Company and Trust	Time Served	Trustee/Director


Steven T. Russell Year Born: 1963 c/o Kinetics Asset Management, Inc. 555 Taxter Road Suite 175 Elmsford, New York, 10523	Independent Director/Trustee	Indefinite/ Since 2000		17
Douglas Cohen, C.P.A Year Born: 1961 c/o Kinetics Asset Management, Inc. 555 Taxter Road Suite 175 Elmsford, New York, 10523	Independent Director/Trustee	Indefinite/ Since 2000		17
William J. Graham Year Born: 1962 c/o Kinetics Asset Management, Inc. 555 Taxter Road Suite 175 Elmsford, New York, 10523	Independent Director/Trustee	Indefinite/ Since 2000		17
Joseph E. Breslin Year Born: 1953 c/o Kinetics Asset Management, Inc. 555 Taxter Road Suite 175 Elmsford, New York, 10523	Independent Director/Trustee	Indefinite/ Since 2000		17
James M. Breen Year Born: 1959 c/o Kinetics Asset Management, Inc. 555 Taxter Road Suite 175 Elmsford, New York, 10523	Independent Director/Trustee	Indefinite/ Since 2008		17

212


Principal Occupation During the Past Five Years		Other Directorships Held by Trustee/Director


Attorney and Counselor at Law, Partner, Law Firm of Russell and Fig (2002-2010); Steven Russell Law Firm (1994 to 2002); Professor of Business Law, Suffolk County Community College (1997 to Present).		N/A
Sunrise Credit Services, Inc. (2005 to Present); Wagner & Zwerman, LLP Certified Public Accountant (1997 to 2005).		Director, The Kinetics Fund (a private investment company).
Attorney, William J. Graham, PC (2001 to Present); Bracken & Margolin, LLP (1997 to 2001).		N/A
Chief Operating Officer, Central Park Credit Holdings, (2007-2009) Chief Operating Officer, Aladdin Capital Management (2005-2007); Independent Consultant, Independence Community Bank (2003-2004); Senior Managing Director of Whitehall Asset Management (1999-2003).		Trustee, Hatteras Alternative Mutual Funds Trust (2 portfolios); Trustee, Underlying Funds Trust (4 portfolios).
Assistant Attaché Immigration & Customs Enforcement, Pretoria, South Africa (2008 to Present); Immigration & Customs Enforcement Representative, Athens, Greece (2006 to 2008); U.S. Homeland Security Office of Investigations, Senior Special Agent, Miami, FL (2000 to 2008).		N/A

213

KINETICS PORTFOLIOS TRUST

Management of the Funds and the Master Portfolios — (Continued)

Board of Directors/Board of Trustees (Continued)

Interested Directors/Trustees and Officers


			Number of
			Portfolios/Funds in
		Term of Office/	Fund Complex**
	Position(s) with the	Length of	Overseen by
Name, Address and Year of Birth	Company and Trust	Time Served	Trustee/Director


Murray Stahl* Year Born: 1953 c/o Kinetics Asset Management, Inc. 555 Taxter Road Suite 175 Elmsford, New York, 10523	Director/Trustee and Secretary	Indefinite/ Since 2000		17
Peter B. Doyle* Year Born: 1962 c/o Kinetics Asset Management, Inc. 555 Taxter Road Suite 175 Elmsford, New York, 10523	Director/Trustee, President and Chairman of the Board	Indefinite/ Since 2002		17
Leonid Polyakov* Year Born: 1959 c/o Kinetics Asset Management, Inc. 555 Taxter Road Suite 175 Elmsford, New York, 10523	Director/Trustee and Treasurer	Indefinite/ Since 2002		17


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

214


		Principal Occupation During the Past Five Years		Other Directorships Held by Trustee/Director


		Chairman, The FRMO Corp. (2001 to Present) (provides consulting services to private investment funds and research services with respect to marketable securities); Chairman, Horizon Asset Management, an investment adviser (1994 to Present); Director of Research, Kinetics Asset Management and Kinetics Mutual Funds, Inc. (2002 to Present).		Chairman of Horizon Asset Management; Chairman of FRMO Corporation.
		President, Kinetics Asset Management, Inc. (2002 to Present); Director, Kinetics Advisers, LLC (2000 to Present); Director and Officer, Horizon Asset Management, Inc. (1994 to Present); Chief Investment Strategist, Kinetics Asset Management and Kinetics Mutual Funds, Inc. (1998 to Present).		Director, The Kinetics Fund (a private investment company); Director and Officer of FRMO Corporation.
		CFO, Kinetics Asset Management, Inc. (2000 to Present); President, Kinetics Funds Distributor, Inc. (2002 to Present); Director, Kinetics Advisers, LLC (2000 to Present); formerly CFO, KBD Securities, LLC (2000 to 2010).		Director, The Kinetics Fund (a private investment company).


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

215

KINETICS MUTUAL FUNDS, INC. & KINETICS PORTFOLIOS TRUST

Privacy Policy

We collect the following nonpublic personal information about you:


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

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

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

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

216

Kinetics Mutual

Funds, Inc.

615 East Michigan Street

Milwaukee, WI 53202

INVESTMENT ADVISER AND

SHAREHOLDER SERVICING AGENT

Kinetics Asset Management, Inc.

555 Taxter Road

Suite 175

Elmsford, NY 10523

INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

Tait, Weller & Baker LLP

1818 Market Street

Suite 2400

Philadelphia, PA 19103

DISTRIBUTOR

Kinetics Funds Distributor, Inc.

555 Taxter Road

Suite 175

Elmsford, NY 10523

ADMINISTRATOR

FUND ACCOUNTANT AND

TRANSFER AGENT

U.S. Bancorp Fund Services, LLC

615 East Michigan Street

Milwaukee, WI 53202

CUSTODIAN

U.S. Bank, N.A.

Custody Operations

1555 River Center Drive, Suite 302

Milwaukee, WI 53212

THIS MATERIAL MUST BE PRECEDED OR

ACCOMPANIED BY A PROSPECTUS

Item 2. Code of Ethics.

The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer and principal financial officer. The registrant has not made any amendments to its code of ethics during the period covered by this report. The registrant has not granted any waivers from any provisions of the code of ethics during the period covered by this report. A copy of the registrant’s Code of Ethics is filed herewith.

Item 3. Audit Committee Financial Expert.

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

Item 4. Principal Accountant Fees and Services.

The registrant has engaged its principal accountant to perform audit services, audit-related services, tax services and other services during the past two fiscal years. “Audit services” refer to performing an audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. “Audit-related services” refer to the assurance and related services by the principal accountant that are reasonably related to the performance of the audit. “Tax services” refer to professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. There were no “Other services” provided by the principal accountant. The following table details the aggregate fees billed or expected to be billed for each of the last two fiscal years for audit fees, audit-related fees, tax fees and other fees by the principal accountant.


	FYE 12/31/2010		FYE 12/31/2010		FYE 12/31/2009		FYE 12/31/2009
	Kinetics Portfolios		Kinetics Mutual		Kinetics Portfolios		Kinetics Mutual
	Trust		Funds		Trust		Funds

Audit Fees		78,250		78,250		76,000		76,000
Audit-Related Fees		0		0		0		0
Tax Fees		20,941		23,559		21,500		21,500
All Other Fees		0		0		0		0

The audit committee has adopted pre-approval policies and procedures that require the audit committee to pre-approve all audit and non-audit services of the registrant, including services provided to any entity affiliated with the registrant.

The percentage of fees billed by Tait, Weller & Baker LLP applicable to non-audit services pursuant to waiver of pre-approval requirement were as follows:


	FYE 12/31/2010			FYE 12/31/2009

Audit-Related Fees		0	%		0	%
Tax Fees		0	%		0	%
All Other Fees		0	%		0	%

All of the principal accountant’s hours spent on auditing the registrant’s financial statements were attributed to work performed by full-time permanent employees of the principal accountant.

The following table indicates the non-audit fees billed or expected to be billed by the registrant’s accountant for services to the registrant and to the registrant’s investment adviser (and any other controlling entity, etc.—not sub-adviser) for the last two years. The audit committee of the board of trustees/directors has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser is compatible with maintaining the principal accountant’s independence and has concluded that the provision of such non-audit services by the accountant has not compromised the accountant’s independence.


Non-Audit Related Fees	FYE 12/31/2010		FYE 12/31/2009

Registrant		0		0
Registrant’s Investment Adviser		0		0

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. 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.

To approve the liquidation and termination of the Kinetics Government Money Market Fund as set forth in a Plan of Liquidation and Termination adopted by the Board of Directors of the Company.


	No. of Shares		% of Outstanding Shares			% of Shares voted
Affirmative		1,391,666.290		55.477	%		99.918	%
Against		1,142.770		0.045	%		0.082	%
Abstain		.000		0.000	%		0.000	%
TOTAL		1,392,809.060		55.522	%		100.000	%

Item 11. Controls and Procedures.

(a)		The Registrant’s President and Treasurer have reviewed the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and by the Registrant’s service provider.

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

Item 12. Exhibits.

(a)

(1) Code of Ethics is filed herewith.

	(2)		A separate certification for each principal executive and principal financial officer 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 March 10, 2011

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


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

Date March 10, 2011

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

Date March 9, 2011


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



		December 31, 2010 www.kineticsfunds.com

		Annual Report

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

		Each a series of 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.


				Unrealized
				Appreciation/
Identifier	SHORT FUTURES CONTRACTS	Contracts		(Depreciation)


ESH1	S&P 500 EMINI Futures Contract, Expiring March 2011 (Multiplier of 50, underlying Face Amount at Market Value $689,150)		11	$	(12,387	)

	TOTAL SHORT FUTURES CONTRACTS			$	(12,387	)