N-CSRS

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)

16 New Broadway
Sleepy Hollow, NY 10591
(Address of principal executive offices) (Zip code)

U.S. Bancorp Fund Services, LLC
615 East 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, 2006

Date of reporting period: June 30, 2006

TABLE OF CONTENTS

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

Item 1. Report to Stockholders.

June 30, 2006 www.kineticsfunds.com

Semi-Annual Report

The Internet Fund

The Internet Emerging Growth Fund

The Paradigm Fund

The Medical Fund

The Small Cap Opportunities Fund

The Kinetics Government Money Market Fund

The Market Opportunities Fund

Each a series of Kinetics Mutual Funds, Inc.

[KINETICS MUTUAL FUNDS, INC. LOGO]

KINETICS MUTUAL FUNDS, INC.

Table of Contents

June 30, 2006

		Page
Shareholders’ Letter			2
Investment Commentary			4
KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS
	Expense Example		8
	Statement of Assets & Liabilities		14
	Statement of Operations		18
	Statements of Changes in Net Assets		22
	Notes to Financial Statements		29
	Financial Highlights		40
KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS
	Allocation of Portfolio Assets		54
	Portfolio of Investments The Internet Portfolio		58
	Portfolio of Investments The Internet Emerging Growth Portfolio		64
	Portfolio of Investments The Paradigm Portfolio		69
	Portfolio of Investments The Medical Portfolio		81
	Portfolio of Investments The Small Cap Opportunities Portfolio		86
	Portfolio of Investments The Kinetics Government Money Market Portfolio		95
	Portfolio of Investments The Market Opportunities Portfolio		96
	Portfolio of Options Written The Internet Portfolio		99
	Portfolio of Options Written The Internet Emerging Growth Portfolio		100
	Statement of Assets & Liabilities		101
	Statement of Operations		105
	Statements of Changes in Net Assets		109
	Notes to Financial Statements		113

1

KINETICS MUTUAL FUNDS, INC.

Shareholders’ Letter

Dear Fellow Shareholders:

We are pleased to present the Kinetics Mutual Funds’ Semi-Annual Report for the six-month period ended June 30, 2006. The No Load Classes for the Kinetics Family of Mutual Funds had commendable results for the first half of 2006, with gains of 11.80% for The Paradigm Fund, 10.37% for the Small-Cap Opportunities Fund, 10.71% for the Internet Fund, 5.35% for the Medical Fund, and 2.48% for the Internet Emerging Growth Fund. The Market Opportunities Fund, which commenced operations on January 31, 2006, was down 1.80% through June 30th. This compares with the first-half 2006 total returns of 2.71% for the S&P 500 Index⁽¹⁾ and a negative 1.51% for the NASDAQ Composite Index.⁽²⁾

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 over the last 5 1/2 years in what may be described as a difficult environment for equity investors. The Paradigm Fund is Kinetics’ most conservative Fund.

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

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

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

2

excellent investments, allowing the Fund to produce overall satisfactory, albeit lumpy, investment results.

The Internet Emerging Growth Fund focuses upon early life cycle companies that are positioned on the edge of the curve in the evolution of the Internet and Internet-related activities. The statements made about the Internet Fund are equally applicable to this fund.

The Market Opportunities Fund focuses on those companies engaged in capital markets or related to capital markets or in the gaming industry.

The Kinetics Government Money Market Fund is a short-term investment vehicle that helps to round out our equity product offerings.

-s- Peter B. Doyle

Peter B. Doyle

President

Kinetics Mutual Funds, Inc.

__________________

(1)	The S & P 500 Index is a broad based unmanaged index of 500 stocks, which is widely recognized as representative of the equity market in general. You cannot invest directly in an index.
(2)	The NASDAQ Composite Index is a market capitalization-weighted index that is designed to represent the performance of the National Market System which includes over 5,000 stocks traded only over-the-counter and not on an exchange. You cannot invest directly in an index.

3

Investment Commentary

Dear Fellow Shareholders,

In our year-end 2005 annual report, we expressed two potential concerns regarding the investment climate. The first was the concept of peak oil and the likelihood of continuing rising gasoline prices. While there has been routine fluctuation of oil prices during the first six months of 2006, the typical American is paying approximately 10% more for gasoline today than at the start of the year. This circumstance has had repercussions across the economy in both higher than hoped-for inflation numbers and a slowdown of consumer spending. The possibility of higher oil prices remains a concern based on the long-term supply/demand information available to us. We have achieved solid returns, particularly in the Paradigm Fund, from our exposure to the Canadian Oil Sands companies over the last several years and we currently have no immediate intention of selling them as they remain very attractively priced based on their reserves and their potential for increased production.⁽¹⁾

The second concern we expressed was the potential for global political instability due to, in particular, Iran’s decision to continue its nuclear research program. The recent conflict in the Middle East is being directly linked to Iran’s sponsorship of Hezbollah. It is believed, by many, that Iran initiated the actions of Hezbollah in order to deflect attention away from itself, and to assert its influence as the world’s leading countries contemplate sanctions against it. While no one can predict the strange twists that occur in military conflicts, the clash with Hezbollah may be a precursor to a larger war with Iran.

The world’s allocators of capital have become fixated upon the achievement of superior investment results without significant volatility. This is a distinct departure from the historical norm, when investors were told that good investment results would occur provided one had a long-term time horizon and was willing to accept occasional turmoil. The new marketing refrain, particularly from the hedge fund community, is that superior returns can be achieved with very modest volatility. This new focus has created an unusual situation in which virtually all companies that have displayed a high dispersion of historical earnings, irrespective of their long- term business prospects, trade at very reasonable valuations. Thus, we believe the new focus has shifted the clearing price, or discount rate, for certain companies in a very

4

material way. For example, Goldman Sachs and Chevron trade at approximately nine times next year’s estimated earnings.

The market is making no distinction between the future business prospects of Goldman and Chevron. At its current valuation level, Goldman could suffer an earnings decline of 40% from consensus 2007 estimates and would still trade at its long term price/earnings multiple. However, there is no reason to believe that Goldman Sachs will experience such an earnings decline, nor does the analytical community expect such an eventuality. The business prospects for Goldman Sachs and Chevron are quite different, in our opinion. Chevron is confronted with an inability to replace its current year’s production. Thus, its asset base is depleting. Chevron might report higher earnings, but that is largely dependent upon a higher oil price, not upon its production capabilities.

It is our belief that the current desire to achieve high returns without volatility will prove to be elusive. Accordingly, allocators will be forced to accept higher volatility stocks into their mix. A future scenario could unfold where certain of our holdings could grow their earnings substantially and also be accorded higher valuations on those earnings. In sum, our Funds are betting against a substantial segment of the financial community.

-s- Peter B. Doyle

Peter B. Doyle

Chief Investment Strategist

__________________

(1)  Portfolio composition is subject to change.

5

Disclosure

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

Mutual Fund investing involves risk. Principal loss is possible. Because the Funds [other than The Paradigm Fund, The Small Cap Opportunities Fund, The Market Opportunities Fund and The Kinetics Government Money Market Fund] invest in a single industry or geographic region, their shares are subject to a higher degree of risk than funds with a higher level of diversification. Internet and biotechnology stocks are subject to a rate of change in technology, obsolescence and competition that is generally higher than that of other industries and have experienced extreme price and volume fluctuations. Past performance is no guarantee of future performance.

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

As non-diversified [other than The Kinetics Government Money Market Fund] and single industry funds [other than The Paradigm Fund and The Small Cap Opportunities Fund], the value of their shares may fluctuate more than shares invested in a broader range of industries and companies.

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

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

The information concerning the Funds included in the shareholder report contains certain forward-looking statements about

6

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.

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.

(C)January 1, 2006 — Kinetics Asset Management, Inc.

7

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Expense Example

June 30, 2006 (Unaudited)

Shareholders incur two type of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvestments of dividends or other distributions made by the Fund, redemption fees, and exchange fees, and (2), ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help investors understand the ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2006 to June 30, 2006.

Actual Expenses

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

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

8

redemption fee, subject to their sole discretion, in instances deemed not to be disadvantageous to the Feeder Funds or shareholders.

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

Hypothetical Example for Comparison Purposes

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

9

Expense Example

				Ending Account		Expenses Paid
		Beginning Account		Value		During Period*
		Value (1/1/06)		(6/30/06)		(1/1/06 to 6/30/06)
The Internet Fund
	No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,107.10	$	10.04
	No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,107.10	$	10.04
	No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,015.26	$	9.60
	No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,015.26	$	9.60
	Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	1,105.70	$	11.34
	Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	1,105.70	$	11.34
	Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,014.02	$	10.85
	Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,014.02	$	10.85
The Internet Emerging Growth Fund
	No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,024.80	$	16.29
	No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,024.80	$	9.20
	No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,008.70	$	16.16
	No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,015.70	$	9.16
The Paradigm Fund
	No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,118.00	$	9.56
	No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,118.00	$	8.86
	No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,015.76	$	9.10
	No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.43	$	8.43
	Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	1,116.00	$	10.87
	Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	1,116.00	$	10.16
	Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,014.52	$	10.34
	Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,015.19	$	9.68

10

				Ending Account		Expenses Paid
		Beginning Account		Value		During Period*
		Value (1/1/06)		(6/30/06)		(1/1/06 to 6/30/06)
	Advisor Class C Actual — before expense reimbursement	$	1,000.00	$	1,113.90	$	13.48
	Advisor Class C Actual — after expense reimbursement	$	1,000.00	$	1,113.90	$	12.77
	Advisor Class C Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,012.04	$	12.83
	Advisor Class C Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,012.71	$	12.16
	Institutional Class Actual — before expense reimbursement	$	1,000.00	$	1,118.70	$	8.76
	Institutional Class Actual — after expense reimbursement	$	1,000.00	$	1,118.70	$	7.81
	Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,016.52	$	8.34
	Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,017.42	$	7.44
The Medical Fund
	No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,053.50	$	12.49
	No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,053.50	$	8.97
	No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,012.63	$	12.24
	No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.06	$	8.80
	Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	1,052.00	$	13.75
	Advisor Class A Actual — after expense reimbursement	$	1,000.00	$	1,052.00	$	10.23
	Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,011.39	$	13.48
	Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,014.82	$	10.05
The Small Cap Opportunities Fund
	No Load Class Actual — before expense reimbursement	$	1,000.00	$	1,103.70	$	9.64
	No Load Class Actual — after expense reimbursement	$	1,000.00	$	1,103.70	$	8.61
	No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1,000.00	$	1,015.63	$	9.23
	No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1,000.00	$	1,016.61	$	8.26
	Advisor Class A Actual — before expense reimbursement	$	1,000.00	$	1,102.00	$	10.93

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				Ending Account		Expenses Paid
		Beginning Account		Value		During Period*
		Value (1/1/06)		(6/30/06)		(1/1/06 to 6/30/06)
	Advisor Class A Actual — after expense reimbursement	$	1000.00	$	1102.00	$	9.91
	Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement	$	1000.00	$	1014.39	$	10.48
	Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement	$	1000.00	$	1015.37	$	9.50
	Institutional Class Actual — before expense reimbursement	$	1000.00	$	1104.30	$	9.38
	Institutional Class Actual — after expense reimbursement	$	1000.00	$	1104.30	$	7.57
	Institutional Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1000.00	$	1015.88	$	8.99
	Institutional Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1000.00	$	1017.60	$	7.26
The Kinetics Government Money Market Fund
	No Load Class Actual — before expense reimbursement	$	1000.00	$	1016.90	$	20.86
	No Load Class Actual — after expense reimbursement	$	1000.00	$	1016.90	$	4.90
	No Load Class Hypothetical (5% return before expenses) — before expense reimbursement	$	1000.00	$	1004.11	$	20.73
	No Load Class Hypothetical (5% return before expenses) — after expense reimbursement	$	1000.00	$	1019.93	$	4.91
The Market Opportunities Fund
	No Load Class Actual — before expense reimbursement**	$	1000.00	$	982.00	$	11.05
	No Load Class Actual — after expense reimbursement**	$	1000.00	$	982.00	$	7.07
	No Load Class Hypothetical (5% return before expenses) — before expense reimbursement**	$	1000.00	$	1011.31	$	11.21
	No Load Class Hypothetical (5% return before expenses) — after expense reimbursement**	$	1000.00	$	1015.33	$	7.18
	Advisor Class A Actual — before expense reimbursement**	$	1000.00	$	981.00	$	12.05
	Advisor Class A Actual — after expense reimbursement**	$	1000.00	$	981.00	$	8.07
	Advisor Class A Hypothetical (5% return before expenses) — before expense reimbursement**	$	1000.00	$	1010.29	$	12.23
	Advisor Class A Hypothetical (5% return before expenses) — after expense reimbursement**	$	1000.00	$	1014.30	$	8.21

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

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*

Expenses are equal to the Fund’s annualized expense ratio before expense reimbursement and after expense reimbursement respectively of 1.92% and 1.92% for The Internet Fund No Load Class, 2.17% and 2.17% for The Internet Fund Advisor Class A, 3.25% and 1.83% for The Internet Emerging Growth Fund No Load Class, 1.82% and 1.69% for The Paradigm Fund No Load Class, 2.07% and 1.94% for The Paradigm Fund Advisor Class A, 2.57% and 2.44% for The Paradigm Fund Advisor Class C, 1.67% and 1.49% for The Paradigm Fund Institutional Class, 2.45% and 1.76% for The Medical Fund No Load Class, 2.70% and 2.01% for The Medical Fund Advisor Class A, 1.85% and 1.65% for The Small Cap Opportunities Fund No Load Class, 2.10% and 1.90% for The Small Cap Opportunities Fund Advisor Class A, and 1.80% and 1.45% for The Small Cap Opportunities Institutional Class, 4.17% and .98% for The Kinetics Government Money Market Fund, multiplied by the average account value over the period, multiplied by 181/365.

**

Expenses paid during period 1/31/06 — 6/30/06 and are equal to the Fund’s annualized expense ratio before expense reimbursement and after expense reimbursement of 2.71% and 1.73% respectively for The Market Opportunities Fund No Load Class, 2.96% and 1.98% for The Market Opportunities Fund Advisor Class A, multiplied by the average account value over the period, multiplied by 150/365 (to reflect the inception date to the end of the semi-annual period).

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KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statement of Assets & Liabilities

June 30, 2006 (Unaudited)

						The Internet
			The Internet			Emerging Growth
			Fund			Fund
ASSETS:
	Investments in the Master Portfolios, at value*		$	145,546,598		$	3,245,515
	Receivable from Adviser			—			11,356
	Receivable for Master Portfolio interest sold			38,433			3,726
	Receivable for Fund shares sold			17,084			328
	Prepaid expenses and other assets			9,059			6,977
		Total assets		145,611,174			3,267,902
LIABILITIES:
	Payable to Directors and Officers			1,495			37
	Payable for Fund shares repurchased			55,517			4,054
	Payable for service fees			29,398			663
	Payable for distribution fees			59			—
	Accrued expenses and other liabilities			156,838			6,161
		Total liabilities		243,307			10,915
		Net assets	$	145,367,867		$	3,256,987
NET ASSETS CONSIST OF:
	Paid in capital		$	305,959,347		$	14,036,075
	Accumulated net investment loss			(2,637,213	)		(27,635	)
	Accumulated net realized loss on investments, options and written option contracts			(198,554,594	)		(11,402,070	)
	Net unrealized appreciation:
		Investments		40,593,517			637,885
		Written option contracts		6,810			12,732
		Net Assets	$	145,367,867		$	3,256,987
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS:
	Net assets		$	145,083,823		$	3,256,987
	Shares outstanding			5,315,246			716,975
	Net asset value per share (offering and redemption price)		$	27.30		$	4.54
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISER CLASS A:
	Net assets		$	284,044
	Shares outstanding			10,530
	Net asset value per share (offering and redemption price)		$	26.98
	Offering price per share ($26.98 divided by .9425)		$	28.63

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

See Notes to the Financial Statements.

14

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statement of Assets & Liabilities

June 30, 2006 (Unaudited)

			The Paradigm			The Medical
			Fund			Fund
ASSETS:
	Investments in the Master Portfolios, at value*		$	1,397,866,553		$	14,713,767
	Receivable from Adviser			275,348			26,359
	Receivable for Fund shares sold			8,865,598			1,533,119
	Prepaid expenses and other assets			35,868			5,706
		Total assets		1,407,043,367			16,278,951
LIABILITIES:
	Payable for Master Portfolio interest purchased			8,193,767			1,520,579
	Payable to Directors and Officers			7,892			126
	Payable for Fund shares repurchased			671,831			12,540
	Payable for service fees			199,573			2,704
	Payable for distribution fees			59,536			129
	Accrued expenses and other liabilities			358,538			15,581
		Total liabilities		9,491,137			1,551,659
		Net assets	$	1,397,552,230		$	14,727,292
NET ASSETS CONSIST OF:
	Paid in capital		$	1,260,522,223		$	15,807,265
	Accumulated net investment income (loss)			(999,804	)		13,040
	Accumulated net realized gain (loss) on investments, options and written option contracts			(1,307,850	)		876,317
	Net unrealized appreciation (depreciation) on:
		Investments		139,337,661			(1,969,330	)
		Net assets	$	1,397,552,230		$	14,727,292
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS:
	Net assets		$	819,940,149		$	14,073,484
	Shares outstanding			36,063,289			802,680
	Net asset value per share (offering and redemption price)		$	22.74		$	17.53
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISER CLASS A:
	Net assets		$	110,168,072		$	653,808
	Shares outstanding			4,914,903			38,033
	Net asset value per share			22.42		$	17.19
	Offering price per share ($22.42 divided by .9425 and $17.19 divided by .9425, respectively)		$	23.79		$	18.24
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISER CLASS C:
	Net assets		$	69,353,810
	Shares outstanding			3,151,520
	Net asset value per share (offering and redemption price)		$	22.01
CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS:
	Net assets		$	398,090,199
	Shares outstanding			17,521,734
	Net asset value per share (offering and redemption price)		$	22.72

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

See Notes to the Financial Statements.

15

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statement of Assets & Liabilities

June 30, 2006 (Unaudited)

						The Kinetics
			The Small Cap			Government
			Opportunities			Money Market
			Fund			Fund
ASSETS:
	Investments in the Master Portfolios, at value*		$	219,513,910		$	985,615
	Receivable from Adviser			105,660			6,795
	Receivable for Fund shares sold			1,145,547			12,215
	Prepaid expenses and other assets			25,043			6,488
		Total assets		220,790,160			1,011,113
LIABILITIES:
	Payable for Master Portfolio interest purchased			1,055,212			9,435
	Payable to Directors and Officers			1,789			2
	Payable for Fund shares repurchased			90,334			2,780
	Payable for service fees			28,898			197
	Payable for distribution fees			1,688			—
	Accrued expenses and other liabilities			88,579			4,086
		Total liabilities		1,266,500			16,500
		Net assets	$	219,523,660		$	994,613
NET ASSETS CONSIST OF:
	Paid in capital		$	189,931,057		$	994,613
	Accumulated net investment loss			(3,838	)		—
	Accumulated net realized loss on investments, options and written option contracts			(1,668,476	)		—
	Net unrealized appreciation on:
		Investments		31,264,917			—
		Net assets	$	219,523,660		$	994,613
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS:
	Net assets		$	118,458,542		$	994,613
	Shares outstanding			5,107,017			994,613
	Net asset value per share (offering and redemption price)		$	23.20		$	1.00
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISER CLASS A:
	Net assets		$	9,083,774
	Shares outstanding			394,596
	Net asset value per share		$	23.02
	Offering price per share ($23.02 divided by .9425)		$	24.42
CALCULATION OF NET ASSET VALUE PER SHARE — INSTITUTIONAL CLASS:
	Net assets		$	91,981,344
	Shares outstanding			3,966,930
	Net asset value per share (offering and redemption price)		$	23.19

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

See Notes to the Financial Statements.

16

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statement of Assets & Liabilities

June 30, 2006 (Unaudited)

			The Market
			Opportunities
			Fund
ASSETS:
	Investments in the Master Portfolios, at value*		$	5,484,660
	Receivable from Adviser			14,670
	Receivable for Fund shares sold			82,845
		Total assets		5,582,175
LIABILITIES:
	Payable for Master Portfolio interest purchased			82,846
	Payable to Directors and Officers			15
	Payable for service fees			1,048
	Payable for distribution fees			381
	Accrued expenses and other liabilities			3,447
		Total liabilities		87,737
		Net assets	$	5,494,438
NET ASSETS CONSIST OF:
	Paid in capital		$	5,653,755
	Accumulated net investment income			11,100
	Accumulated net realized gain on investments, options and written option contracts			18
	Net unrealized depreciation on:
		Investments		(170,435	)
		Net assets	$	5,494,438
CALCULATION OF NET ASSET VALUE PER SHARE — NO LOAD CLASS:
	Net assets		$	3,264,256
	Shares outstanding			332,599
	Net asset value per share (offering and redemption price)		$	9.81
CALCULATION OF NET ASSET VALUE PER SHARE — ADVISER CLASS A:
	Net assets		$	2,230,182
	Shares outstanding			227,393
	Net asset value per share		$	9.81
	Offering price per share ($9.81 divided by .9425)		$	10.41

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

See Notes to the Financial Statements.

17

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statement of Operations

For the Six Months Ended June 30, 2006 (Unaudited)

						The Internet
			The Internet			Emerging
			Fund			Growth Fund
INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIOS:
	Dividends†		$	498,763		$	38,945
	Interest			524,592			31,302
	Income from securities lending			19,835			990
	Expenses only from Master Portfolio‡			(1,033,493	)		(26,706	)
		Net investment income from Master Portfolio		9,697			44,531
EXPENSES:
	Distribution fees — Advisor Class A			308			—
	Shareholder servicing fees and expenses			252,602			13,198
	Reports to shareholders			78,575			2,718
	Administration fees			34,234			793
	Professional fees			9,387			248
	Directors’ and Officers’ fees and expenses			3,680			82
	Registration fees			17,301			12,731
	Fund accounting fees			3,710			27
	Other expenses			4,607			100
		Total expenses		404,404			29,897
	Less, expense reimbursement			—			(24,632	)
		Net expenses		404,404			5,265
		Net investment income (loss)		(394,707	)		39,266
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS:
	Net realized gain (loss) on:
		Investments and foreign currency		(13,300,011	)		109,541
	Net change in unrealized appreciation (depreciation) of:
		Investments and foreign currency		29,137,123			(49,492	)
		Written option contracts		2,825			8,859
	Net gain on investments			15,839,937			68,908
	Net increase in net assets resulting from operations			15,445,230		$	108,174
† Net of Foreign Taxes Withheld of:			$	(18,312	)	$	563
‡ Net of expense reduction of:			$	12,002			1,145

See Notes to the Financial Statements.

18

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statement of Operations

For the Six Months Ended June 30, 2006 (Unaudited)

			The Paradigm			The Medical
			Fund			Fund
INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIOS:
	Dividends†		$	4,774,386		$	126,313
	Interest			2,900,389			8,434
	Income from securities lending			39,786			964
	Expenses allocated from Master Portfolio‡			(5,527,525	)		(99,906	)
		Net investment income from Master Portfolio		2,187,036			35,805
EXPENSES:
	Distribution fees — Advisor Class A			106,964			746
	Distribution fees — Advisor Class C			206,717			—
	Shareholder servicing fees and expenses			1,288,305			36,149
	Shareholder servicing fees — Institutional Class			14,184			—
	Reports to shareholders			120,096			7,215
	Administration fees			186,467			3,150
	Professional fees			70,818			820
	Directors’ and Officers’ fees and expenses			20,067			295
	Registration fees			105,879			21,506
	Fund accounting fees			45,645			341
	Other expenses			10,742			443
		Total expenses		2,175,884			70,665
	Less, expense waiver for Institutional Class service fees			(6,863	)		—
	Less, expense reimbursement			(545,209	)		(47,900	)
		Net expenses		1,623,812			22,765
		Net investment income		563,224			13,040
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS:
	Net realized gain (loss) on:
		Investments and foreign currency		(921,891	)		1,004,279
	Net change in unrealized appreciation (depreciation) of:
		Investments and foreign currency		75,764,624			(249,925	)
	Net gain on investments			74,842,733			754,354
	Net increase in net assets resulting from operations		$	75,405,957		$	767,394
† Net of Foreign Taxes Withheld of:			$	322,532		$	14,579
‡ Net of expense reduction of:			$	109,037		$	42

See Notes to the Financial Statements.

19

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statement of Operations

For the Six Months Ended June 30, 2006 (Unaudited)

						The Kinetics
			The Small Cap			Government
			Opportunities			Money Market
			Fund			Fund
INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIOS:
	Dividends†		$	688,002		$	—
	Interest			562,294			21,411
	Income from securities lending			11,503			—
	Expenses only from Master Portfolio‡			(1,215,479	)		(6,658	)
		Net investment income from Master Portfolio		46,320			14,753
EXPENSES:
	Distribution fees — Advisor Class A			9,075			—
	Shareholder servicing fees and expenses			192,553			3,766
	Shareholder servicing fees — Institutional Class			77,593			—
	Reports to shareholders			59,689			2,860
	Administration fees			41,617			225
	Professional fees			15,342			162
	Directors’ and Officers’ fees and expenses			4,751			34
	Registration fees			38,013			6,672
	Fund accounting fees			7,374			8
	Other expenses			2,600			19
		Total expenses		448,607			13,746
	Less, expense waiver for Institutional Class service fees			(58,194	)		—
	Less, expense reimbursement			(178,100	)		(15,611	)
		Net expenses		212,313			(1,865	)
		Net investment income (loss)		(165,993	)		16,618
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS:
	Net realized loss on:
		Investments and foreign currency		(402,888	)		—
	Net change in unrealized appreciation of:
		Investments and foreign currency		12,237,901			—
		Net gain on investments		11,835,013			—
		Net increase in net assets resulting from operations	$	11,669,020		$	16,618
† Net of Foreign Taxes Withheld of:			$	12,015		$	—
‡ Net of expense reduction of:			$	20,855		$	—

See Notes to the Financial Statements.

20

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statement of Operations

For the period January 31, 2006 (+) through June 30, 2006 (Unaudited)

				The Market
				Opportunities
				Fund
INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIOS:
	Dividends†			$	7,333
	Interest				32,278
	Expenses only from Master Portfolio‡				(26,046	)
		Net investment income from Master Portfolio			13,565
EXPENSES:
	Distribution fees — Advisor Class A				1,411
	Shareholder servicing fees and expenses				9,624
	Reports to shareholders				569
	Administration fees				673
	Professional fees				328
	Directors’ and Officers’ fees and expenses				67
	Registration fees				4,990
	Fund accounting fees				81
			Total expenses		17,743
	Less, expense reimbursement				(15,278	)
			Net expenses		2,465
			Net investment income		11,100
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM MASTER PORTFOLIOS:
	Net realized gain on:
			Investments and foreign currency		18
	Net change in unrealized depreciation of:
			Investments and foreign currency		(170,435	)
			Net loss on investments		(170,417	)
			Net decrease in net assets resulting from operations	$	(159,317	)
† Net of Foreign Taxes Withheld of:				$	657
‡ Net of expense reduction of:				$	1,147

__________________

(+)Commencement of operations.

See Notes to the Financial Statements.

21

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statements of Changes in Net Assets

									The Internet Emerging
			The Internet Fund						Growth Fund
			For the						For the
			Six Months			For the			Six Months			For the
			Ended			Year Ended			Ended			Year Ended
			June 30, 2006			December 31,			June 30, 2006			December 31,
			(Unaudited)			2005			(Unaudited)			2005
OPERATIONS:
	Net investment income (loss)		$	(394,707	)	$	763,308		$	39,266		$	134,885
	Net realized gain (loss) on sale of investments, foreign currency and written option contracts expired or closed			(13,300,011	)		(7,302,374	)		109,541			(20,833	)
	Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options			29,139,948			1,383,172			(40,633	)		(47,074	)
		Net increase (decrease) in net assets resulting from operations		15,445,230			(5,155,894	)		108,174			66,978
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS:
	Net investment income			—			(1,218,235	)		—			(160,455	)
	Net realized gains			—			—			—			—
		Total distributions		—			(1,218,235	)		—			(160,455	)
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A:
	Net investment income			—			(1,745	)		N/A			N/A
	Net realized gains			—			—			N/A			N/A
		Total distributions		—			(1,745	)		N/A			N/A
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS:
	Proceeds from shares sold			4,248,942			1,976,990			141,409			895,722
	Redemption fees			599			3,071			117			663
	Proceeds from shares issued to holders in reinvestment of dividends			—			1,155,106			—			153,337
	Cost of shares redeemed			(22,845,625	)		(50,437,185	)		(888,345	)		(1,644,963	)
		Net decrease in net assets resulting from capital share transactions		(18,596,084	)		(47,302,018	)		(746,819	)		(595,241	)

See Notes to the Financial Statements.

22

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statements of Changes in Net Assets

									The Internet Emerging
			The Internet Fund						Growth Fund
			For the						For the
			Six Months			For the			Six Months			For the
			Ended			Year Ended			Ended			Year Ended
			June 30, 2006			December 31,			June 30, 2006			December 31,
			(Unaudited)			2005			(Unaudited)			2005
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A:
	Proceeds from shares sold		$	67,060		$	131,159		$	N/A		$	N/A
	Redemption fees			—			995
	Proceeds from shares issued to holders in reinvestment of dividends			—			1,700			N/A			N/A
	Cost of shares redeemed			(108,936	)		(177,757	)		N/A			N/A
		Net decrease in net assets resulting from capital share transactions		(41,876	)		(43,903	)		N/A			N/A
TOTAL DECREASE IN NET ASSETS				(3,192,730	)		(53,721,795	)		(638,645	)		(688,718	)
NET ASSETS:
	Beginning of period			148,560,597			202,282,392			3,895,632			4,584,350
	End of period*		$	145,367,867		$	148,560,597		$	3,256,987		$	3,895,632
*Including undistributed net investment loss of			$	(2,637,213	)	$	(2,242,506	)	$	(27,635	)	$	(66,901	)
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS:
	Shares sold			157,824			82,811			31,090			200,890
	Shares issued in reinvestments of dividends and distributions			—			46,841			—			34,613
	Shares redeemed			(854,274	)		(2,104,010	)		(194,195	)		(373,836	)
		Net decrease in shares outstanding		(696,450	)		(1,974,358	)		(163,105	)		(138,333	)
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A:
	Shares sold			2,499			5,549			N/A			N/A
	Shares issued in reinvestments of dividends and distributions			—			70			N/A			N/A
	Shares redeemed			(4,270	)		(7,508	)		N/A			N/A
		Net decrease in shares outstanding		(1,771	)		(1,889	)		N/A			N/A

See Notes to the Financial Statements.

23

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statements of Changes in Net Assets — (Continued)

			The Paradigm Fund						The Medical Fund
			For the						For the
			Six Months			For the			Six Months			For the
			Ended			Year Ended			Ended			Year Ended
			June 30, 2006			December 31,			June 30, 2006			December 31,
			(Unaudited)			2005			(Unaudited)			2005
OPERATIONS:
	Net investment income (loss)		$	563,224		$	(774,491	)	$	13,040		$	(183,618	)
	Net realized gain (loss) on sale of investments, foreign currency and written option contracts expired or closed			(921,891	)		273,094			1,004,279			1,894,682
	Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options			75,764,624			37,040,705			(249,925	)		(2,051,506	)
		Net increase in net assets resulting from operations		75,405,957			36,539,308			767,394			(340,442	)
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS:
	Net investment income			—			(229,540	)		—			—
	Net realized gains			—			(505,860	)		—			—
		Total distributions		—			(735,400	)		—			—
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A:
	Net investment income			—			—			—			—
	Net realized gains			—			(73,876	)		—			—
		Total distributions		—			(73,876	)		—			—
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS C:
	Net investment income			—			—			N/A			N/A
	Net realized gains			—			(47,582	)		N/A			N/A
		Total distributions		—			(47,582	)		N/A			N/A
DISTRIBUTIONS TO SHAREHOLDERS — INSTITUTIONAL CLASS:
	Net investment income			—			(18,827	)		N/A			N/A
	Net realized gains			—			(13,174	)		N/A			N/A
		Total distributions		—			(32,001	)		N/A			N/A
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS:
	Proceeds from shares sold			475,033,479			416,026,097			1,874,486			487,835
	Redemption Fees			67,640			391,025			687			658
	Proceeds from shares issued to holders in reinvestment of dividends			—			684,456			—			—
	Cost of shares redeemed			(123,835,485	)		(114,335,059	)		(2,481,968	)		(5,800,569	)
		Net increase (decrease) in net assets resulting from capital share transactions		351,265,634			302,766,519			(606,795	)		(5,312,076	)
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A:
	Proceeds from shares sold			50,766,659			38,036,699			130,688			127,135
	Redemption Fees			3,086			2,465			—			—
	Proceeds from shares issued to holders in reinvestment of dividends			—			66,629			—			—
	Cost of shares redeemed			(8,342,110	)		(9,676,794	)		(65,478	)		(252,314	)
		Net increase (decrease) in net assets resulting from capital share transactions		42,427,635			28,428,999			65,210			(125,179	)
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS C:
	Proceeds from shares sold			28,230,001			28,425,604			N/A			N/A
	Redemption Fees			492			344			N/A			N/A
	Proceeds from shares issued to holders in reinvestment of dividends			—			45,141			N/A			N/A
	Cost of shares redeemed			(2,186,147	)		(1,886,081	)		N/A			N/A
		Net increase in net assets resulting from capital share transactions		26,044,346			26,585,008			N/A			N/A

See Notes to the Financial Statements.

24

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statements of Changes in Net Assets

			The Paradigm Fund						The Medical Fund
			For the						For the
			Six Months			For the			Six Months			For the
			Ended			Year Ended			Ended			Year Ended
			June 30, 2006			December 31,			June 30, 2006			December 31,
			(Unaudited)			2005			(Unaudited)			2005
CAPITAL SHARE TRANSACTIONS — INSTITUTIONAL CLASS:
	Proceeds from shares sold			376,166,068			10,716,396			N/A			N/A
	Proceeds from shares issued to holders in reinvestment of dividends			—			32,002			N/A			N/A
	Redemption fees
	Cost of shares redeemed			(2,726,800	)		(474,197	)		N/A			N/A
		Net increase in net assets resulting from capital share transactions	$	373,439,268		$	10,274,201			N/A			N/A
TOTAL INCREASE (DECREASE) IN NET ASSETS				868,582,840			403,705,176			225,809			(5,777,697	)
NET ASSETS
	Beginning of period			528,969,390			125,264,214			14,501,483			20,279,180
	End of period*		$	1,397,552,230		$	528,969,390		$	14,727,292		$	14,501,483
*Including undistributed net investment income (loss) of			$	(999,804	)	$	(1,563,028	)	$	13,040		$	—
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS:
	Shares sold			21,028,460			21,458,479			106,618			30,290
	Shares issued in reinvestments of dividends and distributions			—			33,667			—			—
	Shares redeemed			(5,565,812	)		(5,982,715	)		(141,655	)		(361,333	)
		Net increase (decrease) in shares outstanding		15,462,648			15,509,431			(35,037	)		(331,043	)
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A:
	Shares sold			2,283,227			1,998,353			7,570			7,926
	Shares issued in reinvestments of dividends and distributions			—			3,318			—			—
	Shares redeemed			(378,028	)		(516,504	)		(3,742	)		(15,948	)
		Net increase (decrease) in shares outstanding		1,905,199			1,485,167			3,828			(8,022	)
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS C:
	Shares sold			1,290,795			1,510,217			N/A			N/A
	Shares issued in reinvestments of dividends and distributions			—			2,285			N/A			N/A
	Shares redeemed			(99,431	)		(100,110	)		N/A			N/A
		Net increase in shares outstanding		1,191,364			1,412,392			N/A			N/A
CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS:
	Shares sold			17,108,925			558,748			N/A			N/A
	Shares issued in reinvestments of dividends and distributions			—			1,576			N/A			N/A
	Shares redeemed			(123,668	)		(23,847	)		N/A			N/A
		Net increase in shares outstanding		16,985,257			536,477			N/A			N/A

See Notes to the Financial Statements.

25

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statements of Changes in Net Assets — (Continued)

			The Small Cap						The Kinetics Government
			Opportunities Fund						Money Market Fund
			For the						For the
			Six Months			For the			Six Months			For the
			Ended			Year Ended			Ended			Year Ended
			June 30, 2006			December 31,			June 30, 2006			December 31,
			(Unaudited)			2005			(Unaudited)			2005
OPERATIONS:
	Net investment income (loss)		$	(165,993	)	$	212,370		$	16,618		$	21,059
	Net realized loss on sale of investments, foreign currency and written option contracts expired or closed			(402,888	)		(1,152,409	)		—			—
	Net change in unrealized appreciation of investments, foreign currency and written options			12,237,901			10,830,822			—			—
		Net increase in net assets resulting from operations		11,669,020			9,890,783			16,618			21,059
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS:
	Net investment income			—			(14,682	)		(16,618	)		(21,059	)
	Net realized gains			—			(329,578	)		—			—
		Total distributions		—			(344,260	)		(16,618	)		(21,059	)
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A:
	Net investment income			—			(1,343	)		—			—
	Net realized gains			—			(31,044	)		—			—
		Total distributions		—			(32,387	)		—			—
DISTRIBUTIONS TO SHAREHOLDERS — INSTITUTIONAL CLASS:
	Net investment income			—			(50,832	)		N/A			N/A
	Net realized gains			—			(400,218	)		N/A			N/A
		Total distributions		—			(451,050	)		N/A			N/A
CAPITAL SHARE TRANSACTIONS — NO LOAD CLASS:
	Proceeds from shares sold			89,049,630			89,063,226			537,872			384,652
	Redemption fees			34,611			19,178			—			—
	Proceeds from shares issued to holders in reinvestment of dividends			—			338,406			16,095			20,405
	Cost of shares redeemed			(30,901,476	)		(76,175,619	)		(611,411	)		(519,245	)
		Net increase (decrease) in net assets resulting from capital share transactions		58,182,765			13,245,191			(57,444	)		(114,188	)
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A:
	Proceeds from shares sold			4,960,378			3,263,742			N/A			N/A
	Redemption fees			58			2,745			N/A			N/A
	Proceeds from shares issued to holders in reinvestment of dividends			—			29,430			N/A			N/A
	Cost of shares redeemed			(1,554,540	)		(1,390,407	)		N/A			N/A
		Net increase in net assets resulting from capital share transactions		3,405,896			1,905,510			N/A			N/A

See Notes to the Financial Statements.

26

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statements of Changes in Net Assets

			The Small Cap						The Kinetics Government
			Opportunities Fund						Money Market Fund
			For the						For the
			Six Months			For the			Six Months			For the
			Ended			Year Ended			Ended			Year Ended
			June 30, 2006			December 31,			June 30, 2006			December 31,
			(Unaudited)			2005			(Unaudited)			2005
CAPITAL SHARE TRANSACTIONS — INSTITUTIONAL CLASS:
	Proceeds from shares sold		$	21,803,249		$	67,454,811			N/A			N/A
	Redemption fees			—			—			N/A			N/A
	Proceeds from shares issued to holders in reinvestment of dividends			—			450,906			N/A			N/A
	Cost of shares redeemed			(4,307,252	)		(1,981,158	)		N/A			N/A
		Net increase in net assets resulting from capital share transactions		17,495,997			65,924,559			N/A			N/A
TOTAL INCREASE (DECREASE) IN NET ASSETS				90,753,678			90,138,346			(57,444	)		(114,188	)
NET ASSETS:
	Beginning of period			128,769,982			38,631,636			1,052,057			1,166,245
	End of period*		$	219,523,660		$	128,769,982		$	994,613		$	1,052,057
*Including undistributed net investment income (loss) of			$	(3,838	)	$	162,155		$	—		$	—
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS:
	Shares sold			3,793,937			4,480,908			537,872			384,652
	Shares issued in reinvestments of dividends and distributions			—			16,099			16,095			20,405.00
	Shares redeemed			(1,349,963	)		(3,744,356	)		(611,411	)		(519,245	)
		Net increase (decrease) in shares outstanding		2,443,974			752,651			(57,444	)		(114,188	)
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A:
	Shares sold			213,231			163,666			N/A			N/A
	Shares issued in reinvestments of dividends and distributions			—			1,409			N/A			N/A
	Shares redeemed			(67,731	)		(73,232	)		N/A			N/A
		Net increase in shares outstanding		145,500			91,843			N/A			N/A
CHANGES IN SHARES OUTSTANDING — INSTITUTIONAL CLASS:
	Shares sold			934,349			3,291,874			N/A			N/A
	Shares issued in reinvestments of dividends and distributions			—			21,472			N/A			N/A
	Shares redeemed			(186,060	)		(94,705	)		N/A			N/A
		Net increase in shares outstanding		748,289			3,218,641			N/A			N/A

See Notes to the Financial Statements.

27

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Statements of Changes in Net Assets

			The Market
			Opportunities Fund
			From January 31,
			2006^ through
			June 30, 2006
			(Unaudited)
OPERATIONS:
	Net investment income		$	11,100
	Net realized gain on sale of investments, foreign currency and written option contracts expired or closed			18
	Net change in unrealized depreciation of investments, foreign currency and written options			(170,435	)
		Net decrease in net assets resulting from operations		(159,317	)
DISTRIBUTIONS TO SHAREHOLDERS — NO LOAD CLASS:
	Net investment income			—
	Net realized gains			—
		Total distributions		—
DISTRIBUTIONS TO SHAREHOLDERS — ADVISOR CLASS A:
	Net investment income			—
	Net realized gains			—
		Total distributions		—
CAPITAL SHARE TRANSACTIONS — INVESTOR CLASS:
	Proceeds from shares sold			3,362,440
	Redemption fees			—
	Proceeds from shares issued to holders in reinvestment of dividends			—
	Cost of shares redeemed			(18,305	)
		Net increase in net assets resulting from capital share transactions		3,344,135
CAPITAL SHARE TRANSACTIONS — ADVISOR CLASS A:
	Proceeds from shares sold			2,424,425
	Redemption fees			—
	Proceeds from shares issued to holders in reinvestment of dividends			—
	Cost of shares redeemed			(114,805	)
		Net increase in net assets resulting from capital share transactions		2,309,620
TOTAL INCREASE IN NET ASSETS				5,494,438
NET ASSETS:
	Beginning of period			—
	End of period*		$	5,494,438
*Including undistributed net investment income of			$	11,100
CHANGES IN SHARES OUTSTANDING — NO LOAD CLASS:
	Shares sold			334,448
	Shares issued in reinvestments of dividends and distributions			—
	Shares redeemed			(1,849	)
		Net increase in shares outstanding		332,599
CHANGES IN SHARES OUTSTANDING — ADVISOR CLASS A:
	Shares sold			239,316
	Shares issued in reinvestments of dividends and distributions			—
	Shares redeemed			(11,923	)
		Net increase in shares outstanding		227,393

^  Commencement of operations.

See Notes to the Financial Statements.

28

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Notes to Financial Statements

June 30, 2006 (Unaudited)

1.      Organization

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

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

Each Feeder Fund’s respective interest in the corresponding Master Portfolio as of June 30, 2006 is as follows:

	Interest in
	Master Portfolio
Internet Fund		99.995%
Emerging Fund		99.794%
Paradigm Fund		99.998%
Medical Fund		99.920%
Small Cap Fund		99.989%
Government Fund		97.386%
Market Opportunities Fund		99.822%

29

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

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

Effective April 26, 2001, the Internet, Paradigm and Medical Funds issued an additional class of shares — Advisor Class A. Effective December 31, 2001, the Small Cap Fund issued an additional class of shares — Advisor Class A. Effective January 31, 2006, the Market Opportunities Fund began issuing Advisor Class A shares. Advisor Class A shares are subject to an annual Rule 12b-1 fee of 0.50%⁽¹⁾ of average daily net assets. The Advisor Class A shares are also subject to a front-end sales charge of 5.75%. Effective June 28, 2002 the Paradigm Fund issued an additional class of shares — Advisor Class C. Advisor Class C shares are subject to an annual Rule 12b-1 fee of 0.75% of average daily net assets. Effective May 27, 2005, the Paradigm Fund issued an additional class of shares — the Institutional Class. Effective August 12, 2005, the Small Cap Fund issued an additional class of shares — the Institutional Class. The Institutional Class shares are subject to a service fee of 0.20% of average daily net assets, not including any waivers or reimbursements by the Adviser. All other classes are subject to a service fee of 0.25% of average daily net assets. The No Load Class and the Institutional Class shares do not pay a 12b-1 fee and, along with Advisor Class C shares, do not have 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 Class C shares, the sales charge on the Advisor Class A shares, the service fees paid by the No Load Class, Advisor Class A and Advisor Class C versus those paid by the Institutional Class, voting rights on matters pertaining to a single class of shares and the exchange privileges of each class of shares. Shares of each Feeder Fund, with the exception of the Government Fund, will assess a 2.00% redemption fee (with exceptions) on shares redeemed or exchanged within 30 days of purchase.

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

⁽¹⁾ As of June 30, 2006, the 12b-1 fees were limited to 0.25% for all of the Advisor Class A shares.

30

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

2.   Significant Accounting Policies

Security Valuation

Master Portfolio securities (other than Government) that are listed on a U.S. securities exchange for which market quotations are readily available are valued at the last quoted sale price on the day the valuation is made. Price information on listed securities is taken from the exchange where the security is primarily traded. All equity securities that are traded using the National Association of Securities Dealers’ Automated Quotation System (“NASDAQ”) are valued using the NASDAQ Official Closing Price (“NOCP”). In the event market quotations are not readily available or if events occur that may materially affect the value of a particular security between the time trading ends on a particular security and the close of regular trading on the New York Stock Exchange (“NYSE”), “fair value” will be determined. Purchased options, futures, unlisted U.S. securities and listed U.S. securities not traded on the valuation date for which market quotations are readily available are valued at the mean of the most recent bid and asked prices. Fixed-income securities (other than obligations having a maturity of 60 days or less) are normally valued on the basis of quotes obtained from pricing services, which take into account appropriate factors such as institutional sized trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data.

Investments in The Kinetics Government Money Market Portfolio and instruments with remaining maturities of 60 days or less are valued at amortized cost, which approximates fair value. Other assets and securities for which no quotations are readily available (including restricted securities) are valued in good faith at fair value using methods determined by the Board of Trustees of the Master Portfolios. At June 30, 2006, none of the Master Portfolios held securities which were fair valued.

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.

31

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

Written Option Accounting

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

Foreign Currency Translations

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

32

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

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

Restricted Securities

The Master Portfolios may invest in restricted securities. These securities are valued by the Master Portfolios after giving due consideration to pertinent factors including recent private sales, market conditions and the issuer’s financial performance. The Master Portfolios have no right to require registration of unregistered securities. At June 30, 2006, the Master Portfolios did not hold any investment securities which were determined to be illiquid pursuant to the guidelines adopted by the Board of Trustees.

When-Issued Securities

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

Securities Lending

Each Master Portfolio may lend its portfolio securities to broker-dealers by entering directly into lending arrangements with such broker-dealers or indirectly through repurchase agreements with respect to no more than 33 1/3% of the total assets of each Portfolio (including any collateral posted) or 50% of the total assets of each Portfolio (excluding any collateral posted). Securities lending and repurchase transactions will be fully collateralized at all times with cash and/or short-term debt obligations. The Master Portfolios receive interest on the collateral received as well as a fee for the securities loaned.

Expense Allocation

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

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

33

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

Federal Income Taxes

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

It is the Feeder Funds’ policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and the Feeder Funds intend to distribute investment company net taxable income and net capital gains to shareholders. Therefore, no federal income tax provision is recorded. Dividends from net investment income and distributions of net realized capital gains, if any, will be declared and paid at least annually. The character of distributions made during the year from net investment income or net realized 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.

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. Income, expenses (other than expenses attributable to a specific class) and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.

34

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

3.   Investment Adviser

The Trust has entered into Investment Advisory Agreements (the “Agreements”) with Kinetics Asset Management, Inc. (the “Adviser”), with whom certain officers and trustees of the Trust are affiliated, to furnish investment advisory services to the Master Portfolios. Under the terms of the Agreements, the Master Portfolios compensate the Adviser for its management services at the annual rate of 1.25% of each Master Portfolio’s average daily net assets, except for The Kinetics Government Money Market Portfolio, which compensates the Adviser at an annual rate of 0.50% of the Master Portfolio’s average daily net assets.

The Adviser has voluntarily agreed to continue to pay certain operating expenses as deemed appropriate. The Adviser may discontinue the voluntary reimbursement at any time, however, these reimbursements are not subject to recapture. For the six months ended June 30, 2006, the amounts earned by the Adviser and the reimbursed expenses for the Feeder Funds are as follows:

	Internet		Emerging
Annual Advisory Rate		1.25%		1.25%
Expenses Reimbursed by Adviser	$	—	$	24,632

	Paradigm		Medical
Annual Advisory Rate		1.25%		1.25%
Expenses Reimbursed by Adviser	$	545,209	$	47,900

	Small Cap		Government
Annual Advisory Rate		1.25%		0.50%
Expenses Reimbursed by Adviser	$	178,100	$	15,611

	Market
	Opportunities
Annual Advisory Rate		1.25%
Expenses Reimbursed by Adviser	$	15,278

The Adviser receives a shareholder servicing fee from the No Load, Class A and Class C shares of the Feeder Funds pursuant to a Shareholder Servicing Agreement in the amount equal to 0.25% of the Feeder Fund’s average daily net assets. For the Institutional Class the Adviser receives a shareholder servicing fee in the amount equal to 0.20% of the Institutional Class average daily net assets. At this time the Investment Adviser has contractually agreed to waive and/or reimburse the portion of the Institutional Class shareholder servicing fee in excess of 0.05% of its average daily net assets until at least May 1, 2007. For the six months ended June 30, 2006 the Adviser waived

35

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

$6,863 and $58,194 in shareholder servicing fees for the Institutional Class of the Paradigm Fund and the Small Cap Opportunities Fund, respectively. The Adviser is responsible for paying a portion of these shareholder servicing fees to various agents that have a written shareholder servicing agreement with the Adviser and that perform shareholder servicing functions and maintenance of shareholder accounts on behalf of their clients who own shares of the Feeder Funds.

For the six months ended June 30, 2006, the Feeder Funds were allocated $12,000 for the services of the Chief Compliance Officer employed by the Adviser.

The Company, on behalf of the Funds, has adopted two Retail Distribution Plans pursuant to Rule 12b-1 under the 1940 Act (the “12b-1 Plans”). One Plan is for Advisor Class A shares, while the other Plan is for Advisor Classes B and C shares. Under the first Plan, Advisor Class A shares may pay up to an annual rate of 0.50% of the average daily net asset value of shares to the Distributor or other qualified recipients under the Plan. During the six months ended June 30, 2006, payments under the 12b-1 Plan for the Advisor Class A shares of the Internet, Paradigm, Medical, Small Cap and Market Opportunities Funds were limited to 0.25% of the average daily net asset value of such shares of such Funds. During the six months ended June 30, 2006, the Advisor Class A shares of the Internet, Paradigm, Medical, Small Cap and Market Opportunities Funds incurred expenses of $308, $106,964, $746, $9,075 and $1,411, respectively, pursuant to the 12b-1 Plan. Under the second Plan, Advisor Classes B and C shares pay an annual rate of 0.75% of the average daily net asset value of such shares. During the six months ended June 30, 2006, Paradigm Advisor Class C shares incurred expenses of $206,717, pursuant to the 12b-1 Plan. Through June 30, 2006, the Funds had not issued any Advisor Class B shares.

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

For the six months ended June 30, 2006, the Distributor received $4, $161,582, $530, $15,194 and $9,655 from sales loads from the Internet, Paradigm, Medical, Small Cap and Market Opportunities Funds.

36

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

4.      Reclassification of Capital Accounts

Accounting principles generally accepted in the United States of America require that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the year ended December 31, 2005, each Fund recorded the following reclassifications to the accounts listed below:

	INCREASE (DECREASE)
				Accumulated
				Net			Accumulated
				Investment			Net Realized
	Paid-in-Capital			Income(Loss)			Loss
The Internet Fund	$			$	59,688		$	(59,688	)
The Internet Emerging Growth Fund					(4	)		4
The Paradigm Fund		263,110			(125,851	)		(137,259	)
The Medical Fund		(183,606	)		183,618			(12	)
The Small Cap Opportunities Fund		8			16,642			(16,650	)

5.      Income Taxes

At December 31, 2005 the Internet, Emerging, Paradigm and Small Cap Funds had $517,916, $9,349, $1,234,776 and $448,253, respectively, of undistributed net investment income on a tax basis.

At December 31, 2005 the Paradigm Fund had $72 of accumulated gains on a tax basis.

At December 31, 2005, the Feeder Funds had accumulated net realized capital loss carryovers expiring in the following years.

Feeder Fund	2013		2011		2010		2009		2008
Internet	$	6,777,871	$	—	$	140,178,775	$	34,119,306	$	—
Emerging		4,885		887,154		2,635,504		5,481,052		2,488,196
Paradigm		—		—		—		—		—
Medical		—		22,109		—		—		—
Small Cap		499,629		—		—		—		—

To the extent that the Feeder Funds realize future net capital gains, those gains will be offset by any unused capital loss carryovers. For the year ended December 31, 2005, Medical Fund utilized $1,863,391 of capital loss carryforward.

37

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

At December 31, 2005, the following Feeder Funds deferred, on a tax basis, post-October losses and straddle losses of:

Feeder Fund	Post-October Losses		Straddle Losses
Internet	$	2,499,021	$	710,957
Emerging		23,208		—
Paradigm		289,117		19,348
Medical		—		105,854
Small Cap		657,878		64,069

The tax components of dividends paid during the years ended December 31, 2005 and December 31, 2004, are:

	Internet				Emerging
	Ordinary		Long-Term		Ordinary		Long-Term
	Income		Capital Gains		Income		Capital Gains
	Distribution		Distribution		Distribution		Distribution
2005	$	1,219,980	$	—	$	160,455	$	—
2004	$	2,903,007	$	—	$	107,877	$	—

	Paradigm				Medical
	Ordinary		Long-Term		Ordinary		Long-Term
	Income		Capital Gains		Income		Capital Gains
	Distribution		Distribution		Distribution		Distribution
2005	$	475,907	$	412,952	$	—	$	—
2004	$	2,388,158	$	928,680	$	—	$	—

	Small Cap
	Ordinary		Long-Term
	Income		Capital Gains
	Distribution		Distribution
2005	$	436,587	$	391,110
2004	$	1,134,677	$	—

The following information is presented on an income tax basis as of December 31, 2005.

	Internet		Emerging		Paradigm		Medical		Small Cap
Distributable ordinary income	$	517,916	$	9,349	$	1,234,776	$	—	$	448,253
Distributable long-term gains	$	—	$	—	$	72	$	—	$	—

6.      Tax Information (Unaudited)

The Internet, Emerging, Paradigm and Small Cap Funds designate 24%, 37%, 66% and 9%, respectively, of dividends declared after December 31, 2005 from net investment income as qualified dividend income under the Jobs and Growth Tax Relief Reconciliation Act of 2003.

38

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

The Paradigm Fund hereby designates $115,597 as ordinary income distributions and $147,545 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, 2005, which is designated as qualifying for the dividends-received deduction, is as follows: Internet 22.4%, Emerging 36.0%, Paradigm 53.8% and Small Cap 6.5%.

7.      Information about Proxy Voting (Unaudited)

Information regarding how Kinetics Mutual Funds, Inc. votes proxies relating to portfolio securities is available without charge upon request by calling toll-free at 1-800-930-3828 or by accessing the Funds’ website at www.kineticsfunds.com and by accessing the SEC’s website at www.sec.gov. Information regarding how the Funds voted proxies relating to portfolio securities during the twelve months ended June 30, 2006 will be available after August 31, 2006 without charge, upon request, by calling toll-free at 1-800-930-3828 or by accessing the SEC’s website at www.sec.gov.

8.      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.

39

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Financial Highlights

					The Internet Fund
					No Load			Advisor			No Load
					Class			Class A			Class
					Six Months			Six Months			For the
					Ended			Ended			Year Ended
					June 30, 2006			June 30, 2006			December 31,
					(Unaudited)			(Unaudited)			2005
PER SHARE DATA(3)
	Net Asset Value,
		Beginning of Period			$	24.66		$	24.40		$	25.29
Income from Investment Operations:
		Net investment income (loss)				(0.07	)(5)		(0.10	)(5)		0.11	(5)
		Net realized and unrealized gain (loss) on investments				2.71			2.68			(0.54	)
				Total gain (loss) from investment operations		2.64			2.58			(0.43	)
	Redemption fees					0.00	(6)		—			0.00	(6)
	Less Distributions:
		From net investment income				—			—			(0.20	)
		From net realized gains				—			—			—
				Total distributions		—			—			(0.20	)
	Net Asset Value, End of Period				$	27.30		$	26.98		$	24.66
	Total Return(4)					10.71	% (1)		10.57	% (1)		(1.69	)%
SUPPLEMENTAL DATA AND RATIOS
	Net assets, end of period (000’s)				$	145,084		$	284		$	148,260
	Ratio of expenses to average net assets:
			Before expense reimbursement			1.92	% (2)		2.17	% (2)		2.35	%
			After expense reimbursement			1.92	% (2)		2.17	% (2)		2.35	%
	Ratio of net investment income (loss) to average net assets:
			Before expense reimbursement			(0.53	)%(2)		(0.78	)%(2)		0.46	%
			After expense reimbursement			(0.53	)%(2)		(0.78	)%(2)		0.46	%
	Portfolio turnover rate					N/A			N/A			N/A

[Additional columns below]

[Continued from above table, first column(s) repeated]

					The Internet Fund
					Advisor			No Load
					Class A			Class
					For the			For the
					Year Ended			Year Ended
					December 31,			December 31,
					2005			2004
PER SHARE DATA(3)
	Net Asset Value,
		Beginning of Period			$	24.93		$	23.31
Income from Investment Operati
		Net investment income (loss)				0.05	(5)		0.10	(5)
		Net realized and unrealized gain (loss) on investments				(0.44	)		2.25
				Total gain (loss) from investment operations		(0.39	)		2.35
	Redemption fees					0.00	(6)		—
	Less Distributions:
		From net investment income				(0.14	)		(0.37	)
		From net realized gains				—			—
				Total distributions		(0.14	)		(0.37	)
	Net Asset Value, End of Period				$	24.40		$	25.29
	Total Return(4)					(1.55	)%		10.06	%
SUPPLEMENTAL DATA AND RATIOS
	Net assets, end of period (000’s)				$	300		$	201,929
	Ratio of expenses to average net assets:
			Before expense reimbursement			2.60	%		2.37	%
			After expense reimbursement			2.60	%		2.37	%
	Ratio of net investment income (loss) to average net assets:
			Before expense reimbursement			0.21	%		0.44	%
			After expense reimbursement			0.21	%		0.44	%
	Portfolio turnover rate					N/A			N/A

(1)	Not annualized.
(2)	Annualized.
(3)	Information presented relates to a share of capital stock outstanding for each period.
(4)	The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares.
(5)	Net investment income per share represents net investment income (loss) divided by the average shares outstanding throughout the period.
(6)	The amount is less than $0.005 per share.

See Notes to the Financial Statements.

40

The Internet Fund
	Advisor			No Load			Advisor			No Load			Advisor			No Load
	Class A			Class			Class A			Class			Class A			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,
	2004			2003			2003			2002			2002			2001
	$	22.88		$	16.69		$	16.47		$	21.80		$	21.75		$	24.12
		0.05	(5)		0.03			(0.82	)		(0.08	)(5)		(0.12	)(5)		(0.17	)
		2.23			6.66			7.23			(5.03	)		(5.16	)		(2.15	)
		2.28			6.69			6.41			(5.11	)		(5.28	)		(2.32	)
		—			—			—			—			—			—
		(0.23	)		(0.07	)		—			—			—			—
		—			—			—			—			—			—
		(0.23	)		(0.07	)		—			—			—			—
	$	24.93		$	23.31		$	22.88		$	16.69		$	16.47		$	21.80
		9.95	%		40.11	%		38.92	%		(23.44	)%		(24.28	)%		(9.62	)%
	$	354		$	230,971		$	428		$	189,618		$	507		$	297,793
		2.62	%		2.39	%		2.64	%		2.42	%		2.67	%		2.37	%
		2.62	%		2.39	%		2.64	%		2.42	%		2.67	%		2.37	%
		0.19	%		0.11	%		(0.14	)%		(0.41	)%		(0.66	)%		(0.61	)%
		0.19	%		0.11	%		(0.14	)%		(0.41	)%		(0.66	)%		(0.61	)%
		N/A			N/A			N/A			N/A			N/A			N/A

[Additional columns below]

[Continued from above table, first column(s) repeated]

The Internet Fund
Advisor
Class A
April 26, 2001^
through
December 31,
2001
$	23.50
	(0.12	)(5)
	(1.63	)
	(1.75	)
	—
	—
	—
	—
$	21.75
	(7.45	)%(1)
$	975
	2.62	%(2)
	2.62	%(2)
	(0.86	)%(2)
	(0.86	)%(2)
	N/A

See Notes to the Financial Statements.

41

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Financial Highlights

					The Internet
					Emerging Growth Fund
					No Load
					Class Six
					Months			No Load			No Load			No Load			No Load			No Load
					Ended			Class For the			Class For the			Class For the			Class For the			Class For the
					June 30,			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
					2006			December 31,			December 31,			December 31,			December 31,			December 31,
					(Unaudited)			2005			2004			2003			2002			2001
PER SHARE DATA(1)
	Net Asset Value,
		Beginning of Period			$	4.43		$	4.50		$	4.28		$	3.24		$	4.30		$	3.69
	Income from Investment Operations:
		Net investment income (loss)				0.04			0.15			0.08			0.04			(0.08	)		(0.03	)
		Net realized and unrealized gain (loss) on investments				0.07			(0.03	)		0.25			1.05			(0.98	)		0.64
				Total gain (loss) from investment operations		0.11			0.12			0.33			1.09			(1.06	)		0.61
	Redemption fees					0.00	(2)		0.00	(2)		—			—			—			—
	Less Distributions:
		From net investment income				—			(0.19	)		(0.11	)		(0.05	)		—			—
		From net realized gains				—			—			—			—			—			—
				Total distributions		—			(0.19	)		(0.11	)		(0.05	)		—			—
	Net Asset Value, End of Period				$	4.54		$	4.43		$	4.50		$	4.28		$	3.24		$	4.30
	Total Return					2.48	%(4)		2.65	%		7.67	%		33.56	%		(24.65	)%		16.53	%
SUPPLEMENTAL DATA AND RATIOS
	Net assets, end of period (000’s)				$	3,257		$	3,896		$	4,584		$	4,677		$	3,338		$	5,277
	Ratio of expenses to average net assets:
			Before expense reimbursement			3.25	%(3)		3.22	%		3.45	%		3.64	%		3.78	%		4.17	%
			After expense reimbursement			1.83	%(3)		2.69	%		2.67	%		2.74	%		2.74	%		2.74	%
	Ratio of net investment income (loss) to average net assets:
			Before expense reimbursement			0.83	%(3)		2.80	%		1.08	%		0.11	%		(3.03	)%		(2.09	)%
			After expense reimbursement			2.25	%(3)		3.33	%		1.84	%		1.01	%		(1.99	)%		(0.66	)%
	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)	The amount is less than $0.005 per share.
(3)	Annualized.
(4)	Not annualized.

See Notes to the Financial Statements.

42

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43

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Financial Highlights

					The Paradigm Fund
					No Load Class			Advisor Class A			Advisor Class C
					For the Six			For the Six			For the Six
					Months Ended			Months Ended			Months Ended
					June 30, 2006			June 30, 2006			June 30, 2006
					(Unaudited)			(Unaudited)			(Unaudited)
PER SHARE DATA(1)
	Net Asset Value,
		Beginning of Period			$	20.33		$	20.08		$	19.76
	Income from Investment Operations:
		Net investment income (loss)				0.02(6	)		(0.00	)(2)(6)		(0.06	)(6)
		Net realized and unrealized gain (loss) on investments				2.39			2.34			2.31
				Total gain (loss) from investment operations		2.41			2.34			2.25
	Redemption fees					(0.00	)(2)		(0.00	)(2)		(0.00	)(2)
	Less Distributions:
		From net investment income				—			—			—
		From net realized gains				—			—			—
				Total distributions		—			—			—
	Net Asset Value, End of Period				$	22.74		$	22.42		$	22.01
	Total Return(5)					11.80	%(3)		11.60	%(3)		11.39	%(3)
SUPPLEMENTAL DATA AND RATIOS
	Net assets, end of period (000’s)				$	819,940		$	110,168		$	69,354
	Ratio of expenses to average net assets:
			Before expense reimbursement and waivers(7)			1.82	%(4)		2.07	%(4)		2.57	%(4)
			After expense reimbursement			1.69	%(4)		1.94	%(4)		2.44	%(4)
	Ratio of net investment income (loss) to average net assets:
			Before expense reimbursement			0.08	%(4)		(0.17	)%(4)		(0.67	)%(4)
			After expense reimbursement			0.21	%(4)		(0.04	)%(4)		(0.54	)%(4)
	Portfolio turnover rate					N/A			N/A			N/A

[Additional columns below]

[Continued from above table, first column(s) repeated]

					The Paradigm Fund
					Institutional Class			No Load Class			Advisor Class A
					For the Six			For the			For the
					Months Ended			Year Ended			Year Ended
					June 30, 2006			December 31,			December 31,
					(Unaudited)			2005			2005
PER SHARE DATA(1)
	Net Asset Value,
		Beginning of Period			$	20.31		$	17.54		$	17.40
	Income from Investment Operations:
		Net investment income (loss)				0.05(6	)		(0.03	)(6)		(0.07	)(6)
		Net realized and unrealized gain (loss) on investments				2.36			2.82			2.77
				Total gain (loss) from investment operations		2.41			2.79			2.70
	Redemption fees					—			0.03			0.00(2	)
	Less Distributions:
		From net investment income				—			(0.01	)		—
		From net realized gains				—			(0.02	)		(0.02	)
				Total distributions		—			(0.03	)		(0.02	)
	Net Asset Value, End of Period				$	22.72		$	20.33		$	20.08
	Total Return(5)					11.87	%(3)		16.11	%		15.54	%
SUPPLEMENTAL DATA AND RATIOS
	Net assets, end of period (000’s)				$	398,090		$	418,914		$	60,421
	Ratio of expenses to average net assets:
			Before expense reimbursement and waivers(7)			1.67	%(4)		1.93	%		2.18	%
			After expense reimbursement			1.49	%(4)		1.69	%		1.94	%
	Ratio of net investment income (loss) to average net assets:
			Before expense reimbursement			0.23	%(4)		(0.41	)%		(0.66	)%
			After expense reimbursement			0.41	%(4)		(0.17	)%		(0.42	)%
	Portfolio turnover rate					N/A			N/A			N/A

[Additional columns below]

[Continued from above table, first column(s) repeated]

					The Paradigm Fund
								Institutional Class
					Advisor Class C			For the Period			No Load Class
					For the			May 27, 2007^			For the
					Year Ended			through			Year Ended
					December 31,			December 31,			December 31,
					2005			2005			2004
PER SHARE DATA(1)
	Net Asset Value,
		Beginning of Period			$	17.21		$	18.13		$	14.91
	Income from Investment Operations:
		Net investment income (loss)				(0.17	)(6)		0.01(2	)(6)		(0.06	)(6)
		Net realized and unrealized gain (loss) on investments				2.74			2.23			3.17
				Total gain (loss) from investment operations		2.57			2.24			3.11
	Redemption fees					0.00(2	)		—			—
	Less Distributions:
		From net investment income				—			(0.04	)		(0.02	)
		From net realized gains				(0.02	)		(0.02	)		(0.46	)
				Total distributions		(0.02	)		(0.06	)		(0.48	)
	Net Asset Value, End of Period				$	19.76		$	20.31		$	17.54
	Total Return(5)					14.96	%		12.35	%(3)		20.84	%
SUPPLEMENTAL DATA AND RATIOS
	Net assets, end of period (000’s)				$	38,740		$	10,895		$	89,313
	Ratio of expenses to average net assets:
			Before expense reimbursement and waivers(7)			2.68	%		1.88	%(4)		2.10	%
			After expense reimbursement			2.44	%		1.49	%		1.74	%
	Ratio of net investment income (loss) to average net assets:
			Before expense reimbursement			(1.16	)%		(0.37	)%(4)		(0.77	)%
			After expense reimbursement			(.92	)%		0.02	%(4)		(0.41	)%
	Portfolio turnover rate					N/A			N/A			N/A

^ Commencement of operations.

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

See Notes to the Financial Statements.

44

The Paradigm Fund
Advisor Class A			Advisor Class C			No Load Class			Advisor Class A			Advisor Class C			No Load 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,
2004			2004			2003			2003			2003			2002
$	14.82		$	14.73		$	10.12		$	10.07		$	10.05		$	10.61
	(0.10	)		(0.18	)		0.05			0.08			0.02			(0.14	)
	3.16			3.14			4.79			4.70			4.67			(0.35	)
	3.06			2.96			4.84			4.78			4.69			(0.49	)
	—			—			—			—			—			—
	(0.02	)		(0.02	)		(0.05	)		(0.03	)		(0.01	)		—
	(0.46	)		(0.46	)		—			—			—			—
	(0.48	)		(0.48	)		(0.05	)		(0.03	)		(0.01	)		—
$	17.40		$	17.21		$	14.91		$	14.82		$	14.73		$	10.12
	20.63	%		20.08	%		47.87	%		47.47	%		46.68	%		(4.62	)%
$	26,525		$	9,426		$	57,646		$	13,157		$	2,125		$	5,044
	2.35	%		2.85	%		2.24	%		2.49	%		2.99	%		2.97	%
	1.99	%		2.49	%		1.74	%		1.99	%		2.49	%		2.74	%
	(1.02	)%		(1.52	)%		0.57	%		0.32	%		(0.18	)%		(1.61	)%
	(0.66	)%		(1.16	)%		1.07	%		0.82	%		0.32	%		(1.38	)%
	N/A			N/A			N/A			N/A			N/A			N/A

[Additional columns below]

[Continued from above table, first column(s) repeated]

The Paradigm Fund
Advisor Class A			Advisor Class C
For the			June 28, 2002^
Year Ended			through
December 31,			December 31,
2002			2002
$	10.58		$	10.64
	(0.17	)		(0.11	)
	(0.34	)		(0.48	)
	(0.51	)		(0.59	)
	—			—
	—			—
	—			—
	—			—
$	10.07		$	10.05
	(4.82	)%		(5.55	)(3)
$	4,943		$	519
	3.22	%		3.72	%(4)
	2.99	%		3.49	%(4)
	(1.86	)%		(2.36	)%(4)
	(1.63	)%		(2.13	)%(4)
	N/A			N/A

See Notes to the Financial Statements.

45

					The Paradigm Fund
					No Load Class			Advisor Class A
					For the			April 26, 2001^
					Year Ended			through
					December 31,			December 31,
					2001			2001
PER SHARE DATA(1)
	Net Asset Value,
		Beginning of Period			$	10.40		$	10.42
	Income from Investment Operations:
		Net investment income (loss)				(0.13	)		(0.10	)(6)
		Net realized and unrealized gain (loss) on investments				0.34			0.26
				Total gain (loss) from investment operations		0.21			0.16
	Redemption fees					—			—
	Less Distributions:
		From net investment income				—			—
		From net realized gains				—			—
				Total distributions		—			—
	Net Asset Value, End of Period				$	10.61		$	10.58
	Total Return(6)					2.02	%		1.54	%(3)
SUPPLEMENTAL DATA AND RATIOS
	Net assets, end of period (000’s)				$	4,817		$	4,091
	Ratio of expenses to average net assets:
			Before expense reimbursement			3.47	%		3.72	%(4)
			After expense reimbursement			2.74	%		2.99	%(4)
	Ratio of net investment income (loss) to average net assets:
			Before expense reimbursement			(1.91	)%		(2.16	)%(4)
			After expense reimbursement			(1.18	)%		(1.43	)%(4)
	Portfolio turnover rate					N/A			N/A

^ Commencement of operations.

(1)	Information presented relates to a share of capital stock outstanding for each period.
(2)	The amount is less than $0.005 per share.
(3)	Not annualized.
(4)	Annualized.
(5)	The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares.
(6)	Net investment income per share represents net investment income divided by the average shares outstanding throughout the period.

See Notes to the Financial Statements.

46

(This page intentionally left blank)

47

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Financial Highlights

					The Medical Fund
					No Load Class			Advisor Class A
					For the Six			For the Six			No Load Class
					Months Ended			Months Ended			For the
					June 30,			June 30,			Year Ended
					2006			2006			December 31,
					(Unaudited)			(unaudited)			2005
PER SHARE DATA(3)
	Net Asset Value, Beginning of Period				$	16.64		$	16.34		$	16.76
	Income from Investment Operations:
		Net investment income (loss)				0.02(5)			(0.00)(5)(6)			(0.18	)(5)
		Net realized and unrealized gain (loss) on investments				0.87			0.85			0.06
				Total gain (loss) from investment operations		0.89			0.85			(0.12	)
	Redemption fees					0.00(6)			—			0.00(6	)
	Less Distributions:
		From net investment income				—			—			—
		From net realized gains				—			—			—
				Total distributions		—			—			—
	Net Asset Value, End of Period				$	17.53		$	17.19		$	16.64
	Total Return(4)					5.35	%(1)		5.20	%(1)		(0.72	)%
SUPPLEMENTAL DATA AND RATIOS
	Net assets, end of period (000’s)				$	14,073		$	654		$	13,943
	Ratio of expenses to average net assets:
			Before expense reimbursement			2.45	%(2)		2.70	%(2)		2.48	%
			After expense reimbursement			1.76	%(2)		2.01	%(2)		2.44	%
	Ratio of net investment income (loss) to average net assets:
			Before expense reimbursement			(0.49	)%(2)		(0.74	)%(2)		(1.14	)%
			After expense reimbursement			0.20	%(2)		(0.05	)%(2)		(1.10	)%
	Portfolio turnover rate					N/A			N/A			N/A

[Additional columns below]

[Continued from above table, first column(s) repeated]

					The Medical Fund
					Advisor Class A			No Load Class
					For the			For the
					Year Ended			Year Ended
					December 31,			December 31,
					2005			2004
PER SHARE DATA(3)
	Net Asset Value, Beginning of Period				$	16.49		$	15.67
	Income from Investment Operations:
		Net investment income (loss)				(0.22	)(5)		(0.10	)(5)
		Net realized and unrealized gain (loss) on investments				0.07			1.19
				Total gain (loss) from investment operations		(0.15	)		1.09
	Redemption fees					—			—
	Less Distributions:
		From net investment income				—			—
		From net realized gains				—			—
				Total distributions		—			—
	Net Asset Value, End of Period				$	16.34		$	16.76
	Total Return(4)					(0.91	)%		6.96	%
SUPPLEMENTAL DATA AND RATIOS
	Net assets, end of period (000’s)				$	559		$	19,583
	Ratio of expenses to average net assets:
			Before expense reimbursement			2.73	%		2.54	%
			After expense reimbursement			2.69	%		2.39	%
	Ratio of net investment income (loss) to average net assets:
			Before expense reimbursement			(1.39	)%		(1.31	)%
			After expense reimbursement			(1.35	)%		(1.16	)%
	Portfolio turnover rate					N/A			N/A

[Additional columns below]

[Continued from above table, first column(s) repeated]

					The Medical Fund
					Advisor Class A			No Load Class
					For the			For the
					Year Ended			Year Ended
					December 31,			December 31,
					2004			2003
PER SHARE DATA(3)
	Net Asset Value, Beginning of Period				$	15.47		$	12.72
	Income from Investment Operations:
		Net investment income (loss)				(0.11	)(5)		(0.25	)
		Net realized and unrealized gain (loss) on investments				1.13			3.20
				Total gain (loss) from investment operations		1.02			2.95
	Redemption fees					—			—
	Less Distributions:
		From net investment income				—			—
		From net realized gains				—			—
				Total distributions		—			—
	Net Asset Value, End of Period				$	16.49		$	15.67
	Total Return(4)					6.59	%		23.19	%
SUPPLEMENTAL DATA AND RATIOS
	Net assets, end of period (000’s)				$	696		$	23,695
	Ratio of expenses to average net assets:
			Before expense reimbursement			2.79	%		2.52	%
			After expense reimbursement			2.64	%		2.52	%
	Ratio of net investment income (loss) to average net assets:
			Before expense reimbursement			(1.56	)%		(1.55	)%
			After expense reimbursement			(1.41	)%		(1.55	)%
	Portfolio turnover rate					N/A			N/A

^  Commencement of operations.

(1) Not annualized.

(2) Annualized.

(3)	Information presented relates to a share of capital stock outstanding for each period.
(4)	The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares.
(5)	Net investment income per share represents net investment income divided by the average shares outstanding throughout the period.
(6)	The amount is less than $0.005 per share.

See Notes to the Financial Statements.

48

The Medical Fund
Advisor Class A			No Load Class			Advisor Class A			No Load Class			Advisor Class A
For the			For the			For the			For the			April 26, 2001^
Year Ended			Year Ended			Year Ended			Year Ended			through
December 31,			December 31,			December 31,			December 31,			December 31,
2003			2002			2002			2001			2001
$	12.61		$	18.06		$	18.01		$	20.98		$	18.24
	(0.63	)		(0.21	)		(0.24	)		(0.25	)		(0.17	)(5)
	3.49			(5.05	)		(5.08	)		(2.64	)		(0.03	)
	2.86			(5.26	)		(5.32	)		(2.89	)		(0.20	)
	—			—			—			—			—
	—			—			—			—			—
	—			(0.08	)		(0.08	)		(0.03	)		(0.03	)
	—			(0.08	)		(0.08	)		(0.03	)		(0.03	)
$	15.47		$	12.72		$	12.61		$	18.06		$	18.01
	22.68	%		(29.14	)%		(29.56	)%		(13.77	)%		(1.09	)%(1)
$	758		$	22,604		$	794		$	40,416		$	1,203
	2.77	%		2.55	%		2.80	%		2.28	%		2.53	%(2)
	2.77	%		2.55	%		2.80	%		2.28	%		2.53	%(2)
	(1.80	)%		(1.49	)%		(1.74	)%		(1.17	)%		(1.42	)%(2)
	(1.80	)%		(1.49	)%		(1.74	)%		(1.17	)%		(1.42	)%(2)
	N/A			N/A			N/A			N/A			N/A

See Notes to the Financial Statements.

49

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Financial Highlights

					The Small Cap Opportunities Fund
					No Load Class			Advisor Class A
					For the Six			For the Six
					Months Ended			Months Ended
					June 30,			June 30,
					2006			2006
					(Unaudited)			(Unaudited)
PER SHARE DATA(3)
	Net Asset Value, Beginning of Period				$	21.02		$	20.89
	Income from Investment Operations:
		Net investment income (loss)				0.01	(5)		(0.05)	(5)
		Net realized and unrealized gain (loss) on investments				2.16			2.18
				Total gain (loss) from investment operations		2.17			2.13
	Redemption fees					0.01			0.00	(6)
	Less Distributions:
		From net investment income				—			—
		From net realized gains				—			—
				Total distributions		—			—
	Net Asset Value, End of Period				$	23.20		$	23.02
	Total Return(4)					10.37	% (1)		10.20	%(1)
SUPPLEMENTAL DATA AND RATIOS
	Net assets, end of period (000’s)				$	118,459		$	9,084
	Ratio of expenses to average net assets:
			Before expense reimbursement			1.85	% (2)		2.10	%(2)
			After expense reimbursement			1.65	% (2)		1.90	%(2)
	Ratio of net investment income (loss) to average net assets:
			Before expense reimbursement			(0.46)	% (2)		(0.71)	%(2)
			After expense reimbursement			(0.26)	% (2)		(0.51)	%(2)
	Portfolio turnover rate					N/A			N/A

[Additional columns below]

[Continued from above table, first column(s) repeated]

					The Small Cap Opportunities Fund
					Institutional Class
					For the Six			No Load Class
					Months Ended			For the
					June 30,			Year Ended
					2006			December 31,
					(Unaudited)			2005
PER SHARE DATA(3)
	Net Asset Value, Beginning of Period				$	21.00		$	18.69
	Income from Investment Operations:
		Net investment income (loss)				(0.02)	(5)		0.12	(5)
		Net realized and unrealized gain (loss) on investments				2.21			2.35
				Total gain (loss) from investment operations		2.19			2.47
	Redemption fees					0.00	(6)		0.00	(6)
	Less Distributions:
		From net investment income				—			(0.01	)
		From net realized gains				—			(0.13	)
				Total distributions		—			(0.14	)
	Net Asset Value, End of Period				$	23.19		$	21.02
	Total Return(4)					10.43	%(1)		13.17	%
SUPPLEMENTAL DATA AND RATIOS
	Net assets, end of period (000’s)				$	91,981		$	55,979
	Ratio of expenses to average net assets:
			Before expense reimbursement			1.80	%(2)		1.93	%
			After expense reimbursement			1.45	%(2)		1.66	%
	Ratio of net investment income (loss) to average net assets:
			Before expense reimbursement			(0.41)	%(2)		0.18	%
			After expense reimbursement			(0.06)	%(2)		0.45	%
	Portfolio turnover rate					N/A			N/A

[Additional columns below]

[Continued from above table, first column(s) repeated]

					The Small Cap Opportunities Fund
					Advisor Class A			Institutional Class
					For the			For the Period
					Year Ended			August 12, 2005
					December 31,			through
					2005			December 31, 2005
PER SHARE DATA(3)
	Net Asset Value, Beginning of Period				$	18.63		$	20.48
	Income from Investment Operations:
		Net investment income (loss)				0.02	(5)		0.00	(5)(6)
		Net realized and unrealized gain (loss) on investments				2.38			0.67
				Total gain (loss) from investment operations		2.40			0.67
	Redemption fees					0.00	(6)		—
	Less Distributions:
		From net investment income				(0.01	)		(0.02	)
		From net realized gains				(0.13	)		(0.13	)
				Total distributions		(0.14	)		(0.15	)
	Net Asset Value, End of Period				$	20.89		$	21.00
	Total Return(4)					12.83	%		3.23	%(1)
SUPPLEMENTAL DATA AND RATIOS
	Net assets, end of period (000’s)				$	5,205		$	67,586
	Ratio of expenses to average net assets:
			Before expense reimbursement			2.16	%		1.77	%(2)
			After expense reimbursement			1.94	%		1.59	%(2)
	Ratio of net investment income (loss) to average net assets:
			Before expense reimbursement			(0.17	)%		(0.21)	%(2)
			After expense reimbursement			0.06	%		(0.03)	%(2)
	Portfolio turnover rate					N/A			N/A

[Additional columns below]

[Continued from above table, first column(s) repeated]

					The Small Cap Opportunities Fund
					No Load Class			Advisor Class A
					For the			For the
					Year Ended			Year Ended
					December 31,			December 31,
					2004			2004
PER SHARE DATA(3)
	Net Asset Value, Beginning of Period				$	16.55		$	16.50
	Income from Investment Operations:
		Net investment income (loss)				0.22	(5)		0.18	(5)
		Net realized and unrealized gain (loss) on investments				2.49			2.49
				Total gain (loss) from investment operations		2.71			2.67
	Redemption fees					—			—
	Less Distributions:
		From net investment income				(0.16	)		(0.13	)
		From net realized gains				(0.41	)		(0.41	)
				Total distributions		(0.57	)		(0.54	)
	Net Asset Value, End of Period				$	18.69		$	18.63
	Total Return(4)					16.40	%		16.17	%
SUPPLEMENTAL DATA AND RATIOS
	Net assets, end of period (000’s)				$	35,702		$	2,929
	Ratio of expenses to average net assets:
			Before expense reimbursement			2.03	%		2.28	%
			After expense reimbursement			1.74	%		1.99	%
	Ratio of net investment income (loss) to average net assets:
			Before expense reimbursement			1.01	%		0.76	%
			After expense reimbursement			1.30	%		1.05	%
	Portfolio turnover rate					N/A			N/A

^  Commencement of operations.

(1) Not annualized.

(2) Annualized.

(3)	Information presented relates to a share of capital stock outstanding for each period.
(4)	The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares.
(5)	Net investment income per share represents net investment income divided by the average shares outstanding throughout the period.
(6)	The amount listed is less than $0.005 per share.

See Notes to the Financial Statements.

50

The Small Cap Opportunities Fund
No Load Class			Advisor Class A			No Load Class			Advisor Class A
For the			For the			For the			For the
Year Ended			Year Ended			Year Ended			Year Ended
December 31,			December 31,			December 31,			December 31,
2003			2003			2002			2002
$	10.04		$	10.03		$	14.50		$	14.50
	0.25			0.15			(0.18	)(5)		(0.20	)(5)
	6.43			6.47			(4.21	)		(4.20	)
	6.68			6.62			(4.39	)		(4.40	)
	—			—			—			—
	(0.17	)		(0.15	)		—			—
	—			—			(0.07	)		(0.07	)
	(0.17	)		(0.15	)		(0.07	)		(0.07	)
$	16.55		$	16.50		$	10.04		$	10.03
	66.51	%		65.98	%		(30.28	)%		(30.35	)%
$	23,665		$	2,075		$	3,313		$	172
	2.34	%		2.59	%		2.95	%		3.20	%
	2.34	%		2.59	%		2.74	%		2.99	%
	2.14	%		1.89	%		(1.59	)%		(1.84	)%
	2.14	%		1.89	%		(1.38	)%		(1.63	)%
	N/A			N/A			N/A			N/A

[Additional columns below]

[Continued from above table, first column(s) repeated]

The Small Cap Opportunities Fund
No Load Class
For the
Year Ended			Advisor Class A
December 31,			December 31,
2001			2001^
$	11.10		$	14.50
	(0.19	)(5)		—
	3.59			—
	3.40			—
	—			—
	—			—
	—			—
	—			—
$	14.50		$	14.50
	30.63	%		0.00	%(1)
$	9,266		$	1
	3.73	%		N/A
	2.74	%		N/A
	(2.37	)%		N/A
	(1.38	)%		N/A
	N/A			N/A

See Notes to the Financial Statements.

51

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Financial Highlights

					The Kinetics Government Money Market Fund
					Six Months			For the			For the			For the			For the			For the
					Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
					June 30, 2006			December 31,			December 31,			December 31,			December 31,			December 31,
					(Unaudited)			2005			2004			2003			2002			2001
PER SHARE DATA(3)
	Net Asset Value, Beginning of Period				$	1.00		$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
	Income from Investment Operations:
		Net investment income				0.02			0.02			—			—			0.00	(4)		0.02
		Net realized and unrealized gain on investments				—			—			—			—			—			—
				Total gain from investment operations		0.02			0.02			—			—			0.00	(4)		0.02
	Less Distributions:
		From net investment income				(0.02	)		(0.02	)		—			—			(0.00	)(4)		(0.02	)
		From net realized gains				—			—			—			—			—			—
				Total distributions		(0.02	)		(0.02	)		—			—			(0.00	)(4)		(0.02	)
	Net Asset Value, End of Period				$	1.00		$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
	Total Return					1.69	%(1)		1.88	%		0.00	%		0.00	%		0.22	%		2.36	%
SUPPLEMENTAL DATA AND RATIOS
	Net assets, end of period (000’s)				$	995		$	1,052		$	1,166		$	3,048		$	128,657		$	94,886
	Ratio of expenses to average net assets:
			Before expense reimbursement			4.17	%(2)		5.08	%		2.11	%		1.32	%		1.29	%		1.35	%
			After expense reimbursement			0.98	%(2)		1.06	%		0.98	%		0.94	%		1.23	%		1.24	%
	Ratio of net investment income to average net assets:
			Before expense reimbursement			0.21	%(2)		(2.17	)%		(1.13	)%		(0.38	)%		0.13	%		2.12	%
			After expense reimbursement			3.40	%(2)		1.85	%		0.00	%		0.00	%		0.19	%		2.23	%
	Portfolio turnover rate					N/A			N/A			N/A			N/A			N/A			N/A

(1)	Not annualized.
(2)	Annualized.
(3)	Information presented relates to a share of capital stock outstanding for each period.
(4)	The amount listed is less than $0.005 per share.

See Notes to the Financial Statements.

52

KINETICS MUTUAL FUNDS, INC. — FEEDER FUNDS

Financial Highlights

				The Market Opportunities
				Fund
				No Load Class			Advisor Class A
				January 31, 2006^			January 31, 2006^
				through			through
				June 30, 2006			June 30, 2006
				(Unaudited)			(Unaudited)
PER SHARE DATA(3)
	Net Asset Value, Beginning of Period			$	10.00		$	10.00
	Income from Investment Operations:
		Net investment income			0.02			0.02
		Net realized and unrealized loss on investments			(0.21	)		(0.21	)
			Total loss from investment operations		(0.19	)		(0.19	)
	Redemption fees				—			—
	Less Distributions:
		From net investment income			—			—
		From net realized gains			—			—
			Total distributions		—			—
	Net Asset Value, End of Period			$	9.81		$	9.81
	Total Return(4)				(1.80)	%(1)		(1.90)	%(1)
SUPPLEMENTAL DATA AND RATIOS
	Net assets, end of period (000’s)			$	3,264		$	2,230
	Ratio of expenses to average net assets:
		Before expense reimbursement			2.71	%(2)		2.96	%(2)
		After expense reimbursement			1.73	%(2)		1.98	%(2)
	Ratio of net investment income to average net assets:
		Before expense reimbursement			(0.19	)%(2)		(0.44	)%(2)
		After expense reimbursement			0.80	%(2)		0.55	%(2)
	Portfolio turnover rate				N/A			N/A

^  Commencement of operations.

(1) Not annualized.

(2) Annualized.

(3)	Information presented relates to a share of capital stock outstanding for each period.
(4)	The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares.

See Notes to the Financial Statements.

53

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

ALLOCATION OF PORTFOLIO ASSETS

June 30, 2006 (Unaudited)

The Internet Portfolio

The Internet Emerging Growth Portfolio

54

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

ALLOCATION OF PORTFOLIO ASSETS

June 30, 2006 (Unaudited) — (Continued)

The Paradigm Portfolio*

The Medical Portfolio

*  The 35.5% position in Short-Term Investments is a result of cash received for the purchase of additional interests in the Portfolio at the end of the reporting period.

55

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

ALLOCATION OF PORTFOLIO ASSETS

June 30, 2006 (Unaudited) — (Continued)

The Small Cap Opportunities Portfolio

The Kinetics Government Money Market Portfolio

56

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

ALLOCATION OF PORTFOLIO ASSETS

June 30, 2006 (Unaudited) — (Continued)

The Market Opportunities Portfolio

57

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited)

COMMON STOCKS — 89.94%†	Shares		Value
Aerospace & Defense — 6.97%†
CACI International, Inc. — Class A*		174,000	$	10,149,420
Air Freight & Logistics — 8.93%†
Expeditors International of Washington, Inc.		232,000		12,994,320
Asian Exchanges — 0.84%†
Hong Kong Exchanges & Clearing Limited		120,000		771,796
Singapore Exchange Limited		200,000		444,767
				1,216,563
Brokerage & Investment Banking — 0.06%†
ICAP plc		10,000		92,091
Capital Markets — 0.16%†
Collins Stewart Tullett plc		4,000		56,142
Internet HOLDRs Trust(3)		500		26,650
Thomas Weisel Partners Group, Inc.*		4,000		76,040
Van der Moolen Holding N.V. ADR		10,172		73,747
				232,579
Commercial Services & Supplies — 4.91%†
Comdisco Holding Company, Inc.(1)		194,400		2,976,264
Copart, Inc.*		6,000		147,360
FTI Consulting, Inc.*		43,000		1,151,110
Ritchie Bros. Auctioneers Incorporated		54,000		2,871,720
				7,146,454
Communications Equipment — 0.03%†
QUALCOMM, Inc.		1,000		40,070
Computers & Peripherals — 0.08%†
Apple Computer, Inc.*		2,000		114,240
Derivative Exchanges — 4.49%†
CBOT Holdings, Inc. — Class A*(1)		9,600		1,148,064
Chicago Mercantile Exchange Holdings Inc.		5,400		2,652,210
International Securities Exchange, Inc.		72,000		2,741,040
				6,541,314
Diversified Consumer Services — 0.07%†
Apollo Group, Inc. — Class A*		2,000		103,340

See Notes to the Financial Statements.

58

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Shares		Value
Diversified Financial Services — 0.46%†
eSPEED, Inc. — Class A*		80,000	$	666,400
Diversified Telecommunication Services — 11.12%†
Leucadia National Corporation		550,000		16,054,500
XO Holdings Inc.*		30,000		132,000
				16,186,500
European Exchanges — 0.44%†
London Stock Exchange Group plc		30,352		638,729
Health Care Providers & Services — 0.93%†
Emdeon Corporation*		109,000		1,352,690
Internet & Catalog Retail — 0.15%†
eBay, Inc.*		6,000		175,740
IAC/ InterActiveCorp*		1,000		26,490
Overstock.com, Inc.*(1)		1,000		21,260
				223,490
Internet Software & Services — 1.49%†
Baidu.com, Inc. ADR*		200		16,506
Google Inc. — Class A*		1,800		754,794
Netease.com, Inc. ADR*		4,000		89,320
NetRatings, Inc.*		90,000		1,250,100
SINA Corp*		1,000		24,980
Sohu.com, Inc.*		1,000		25,790
				2,161,490
IT Services — 14.75%†
CheckFree Corporation*		346,000		17,147,760
ManTech International Corporation — Class A*		140,000		4,320,400
				21,468,160
Leisure Equipment & Products — 0.00%†
Marvel Entertainment, Inc.*		322		6,440

See Notes to the Financial Statements.

59

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Shares		Value
Media — 23.06%†
DreamWorks Animation SKG, Inc.*		3,000	$	68,700
Gemstar-TV Guide International, Inc.*		600,000		2,112,000
Getty Images, Inc.*		34,600		2,197,446
Groupe Bruxelles Lambert S.A.		48,000		5,028,203
Harris Interactive, Inc.*		500,000		2,850,000
Liberty Global, Inc. — Class A*(1)		240,707		5,175,201
Liberty Global, Inc. — Series C*		240,707		4,951,343
PrimaCom AG ADR*		610,000		1,567,761
ProQuest Company*		5,000		61,450
The Walt Disney Company		1,380		41,400
The Washington Post Company — Class B		12,000		9,360,120
XM Satellite Radio Holdings, Inc. — Class A*		10,000		146,500
				33,560,124
Security Brokers, Dealers, And Flotation Companies — 0.04%†
GFI Group, Inc.*		1,000		53,950
Specialists — 1.50%†
LaBranche & Co Inc.*(1)		180,000		2,179,800
U.S. Equity Exchanges — 9.46%†
Nasdaq Stock Market Inc.*		140,000		4,186,000
NYSE Group Inc.*(1)		140,000		9,587,200
				13,773,200
Wireless Telecommunication Services — 0.00%†
Sunshine PCS Corporation — Class A*		149,890		5,996
TOTAL COMMON STOCKS (Cost $90,323,733)				130,907,360

CONVERTIBLE PREFERRED
STOCKS — 0.00%†
Media — 0.00%†
Adelphia Communications Corporation*, 7.500%	190,000	1,900
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $583,300)		1,900

See Notes to the Financial Statements.

60

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Principal
CONVERTIBLE BONDS — 1.14%†	Amount		Value
Diversified Telecommunication Services — 1.14%†
Level 3 Communications, Inc., CLB, 6.000%, due 03/15/2010 (1)	$	2,000,000	$	1,657,500
Media — 0.00%†
Adelphia Communications Corporation, 6.000%, due 2/15/2006, Acquired on 2/10/2004 at $123,000 (Default Effective 8/12/2002)*		200,000		1,500
TOTAL CONVERTIBLE BONDS (Cost $1,367,751)				1,659,000

CORPORATE BONDS — 2.50%†
Diversified Telecommunication Services — 2.50%†
Level 3 Communications, Inc., CLB, 12.875%, due 03/15/2010(+)(1)	3,600,000	3,636,000
TOTAL CORPORATE BONDS (Cost $3,662,025)		3,636,000

RIGHTS — 2.44%†	Shares
Commercial Services & Supplies — 2.44%†
Comdisco Holding Company, Inc. Expiration Date: 12/31/2050, Strike Price $1.00#		12,240,699	3,549,803
TOTAL RIGHTS (Cost $3,253,774)			3,549,803

PURCHASED PUT OPTIONS — 0.01%†		Contracts
Internet HOLDRs Trust
	Expiration: January, 2007, Exercise Price: $70.000		7	11,060
TOTAL PURCHASED PUT OPTIONS (Cost $7,161)				11,060

See Notes to the Financial Statements.

61

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Principal
	Amount
SHORT-TERM INVESTMENTS — 3.43%†	or Shares		Value
Investment Companies — 0.06%†
First American Prime Obligations Fund — Class I	$	90,904	$	90,904
US Government Agency Issues — 3.37%†
Federal National Mortgage Association Discount Note 4.802%, due 7/3/2006		4,900,000		4,898,693
TOTAL SHORT-TERM INVESTMENTS (Cost $4,989,597)				4,989,597

INVESTMENTS PURCHASED
WITH CASH PROCEEDS FROM
SECURITIES LENDING — 16.26%†
Investment Companies — 0.76%†
AIM Short-Term Liquid Asset Fund		575,392	575,392
Merrill Lynch Premier Institutional Fund		529,248	529,248
			1,104,640
Repurchase Agreements — 11.75%†
Citigroup Global Repurchase Agreement, 5.3625%, dated 06/30/2006, due 07/03/2006
	Repurchase price $8,824,744(2)	8,820,802	8,820,802
CS First Boston Repurchase Agreement, 5.250%, dated 06/30/2006, due 07/03/2006
	Repurchase price $2,117,919(2)	2,116,993	2,116,993
CS First Boston Repurchase Agreement, 5.250%, dated 06/30/2006, due 07/03/2006
	Repurchase price $1,941,425(2)	1,940,576	1,940,576
CS First Boston Repurchase Agreement, 5.250%, dated 06/30/2006, due 07/03/2006
	Repurchase price $2,117,919(2)	2,116,993	2,116,993

See Notes to the Financial Statements.

62

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

		Principal
		Amount
		or Shares		Value
CS First Boston Repurchase Agreement, 5.250%, dated 06/30/2006, due 07/03/2006
	Repurchase price $2,117,919(2)		2,116,993		2,116,993
					17,112,357
Short-Term Notes — 3.75%†
Chesham Financial, 5.332%, due 7/3/2006			882,080		881,689
Fenway Funding, 5.354%, due 7/5/2006			352,832		352,570
Fenway Funding, LLC, 5.356%, due 7/5/2006			529,248		528,619
Thornburg Mortgage Capital, 5.115%, due 7/6/2006			882,080		877,844
Antalis Funding, 5.323%, due 7/7/2006			882,080		881,168
Mortgage Int Net Trust Plus, 5.305%, due 7/7/2006			529,248		528,703
Rams Funding, LLC, 5.331%, due 7/17/2006			882,080		878,574
Duke Funding HGH GRD, 5.263%, due 7/20/2006			529,248		526,936
					5,456,103
TOTAL INVESTMENTS PURCHASED WITH CASH PROCEEDS FROM SECURITIES LENDING (Cost $23,673,100)					23,673,100
TOTAL INVESTMENTS (Cost $127,860,441) — 115.72%†				$	168,427,820

* — Non-income producing security.

^ — Security has a stepped rate. The rate listed is as of June 30, 2006.

† — Calculated as a percentage of net assets.

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

ADR — American Depository Receipts.

CLB — Callable Security.

(1) —	This security or a portion of this security was out on loan at June 30, 2006. Total loaned securities had a market value of $23,464,389 at June 30, 2006.
(2) —	See Repurchase Agreements disclosure in the Notes to Financial Statements for the Kinetics Portfolios Trust.
(3) —	All or a portion of the shares have been committed as collateral for written option contracts.

See Notes to the Financial Statements.

63

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Emerging Growth Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited)

COMMON STOCKS — 78.96%†	Shares		Value
Aerospace & Defense — 5.66%†
SI International, Inc.*		6,000	$	183,960
Asian Exchanges — 3.26%†
Osaka Securities Exchange Co., Ltd.		9		106,169
Capital Markets — 5.64%†
Nasdaq-100 Index Tracking Stock(3)		4,000		155,040
Thomas Weisel Partners Group, Inc.*		1,500		28,515
				183,555
Commercial Services & Supplies — 6.31%†
Comdisco Holding Company, Inc.		9,300		142,383
Deluxe Corporation		1,100		19,228
John H. Harland Company		1,000		43,500
				205,111
Computers & Peripherals — 5.92%†
M-Systems Flash Disk Pioneers Ltd.*		6,500		192,595
Derivative Exchanges — 5.36%†
Chicago Mercantile Exchange Holdings Inc.		200		98,230
International Securities Exchange, Inc.		2,000		76,140
				174,370
Diversified Financial Services — 2.30%†
eSPEED, Inc. — Class A*		5,000		41,650
MarketAxess Holdings, Inc.*		3,000		33,030
				74,680
Diversified Telecommunication Services — 8.87%†
IDT Corporation*		3,000		39,600
IDT Corporation — Class B*		3,000		41,370
Lynch Interactive Corporation*		51		118,065
Warwick Valley Telephone Company		1,200		23,400
XO Holdings Inc.*		15,000		66,000
				288,435
Insurance — 5.44%†
Fidelity National Financial, Inc.		4,173		162,539
Fidelity National Title Group, Inc. — Class A(1)		730		14,359
				176,898

See Notes to the Financial Statements.

64

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Emerging Growth Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Shares		Value
Internet Software & Services — 4.42%†
Digital River, Inc.*		1,000	$	40,390
NetRatings, Inc.*		3,000		41,670
Websense, Inc.*		3,000		61,620
				143,680
IT Services — 0.51%†
Lionbridge Technologies, Inc.*		3,000		16,590
Media — 22.28%†
Discovery Holding Company — Class A*		50		731
The E.W. Scripps Company — Class A		1,000		43,140
Gemstar-TV Guide International, Inc.*		5,000		17,600
Groupe Bruxelles Lambert S.A.		1,600		167,607
Interactive Data Corporation*		8,500		170,765
Liberty Global, Inc. — Class A*		30		645
Liberty Global, Inc. — Series C*		30		617
Liberty Media Holding Corporation — Capital Series A*		25		2,094
Liberty Media Holding Corporation — Interactive A*		126		2,175
Naspers Limited ADR		7,470		126,467
PrimaCom AG ADR*		4,750		12,208
RCN Corporation*		5,545		138,237
Valassis Communications, Inc.*		1,800		42,462
				724,748
Software — 0.87%†
FactSet Research Systems, Inc.		600		28,380
U.S. Equity Exchanges — 2.11%†
NYSE Group Inc.*(1)		1,000		68,480
Wireless Telecommunication Services — 0.01%†
Sunshine PCS Corporation — Class A*		6,000		240
TOTAL COMMON STOCKS (Cost $1,869,834)				2,567,891

See Notes to the Financial Statements.

65

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Emerging Growth Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

PREFERRED STOCKS — 0.04%†	Shares		Value
Diversified Telecommunication Services — 0.04%†
PTV, Inc. — Series A, CLB, 10.000%		487	$	1,461
TOTAL PREFERRED STOCKS (Cost $3,774)				1,461

	Principal
CONVERTIBLE BONDS — 4.54%†	Amount
Semiconductor Equipment & Products — 4.54%†
Conexant Systems, Inc., CLB, 4.000%, due 02/01/2007	$	150,000	147,563
TOTAL CONVERTIBLE BONDS (Cost $140,021)			147,563

CORPORATE BONDS — 6.99%†
Diversified Telecommunication Services — 6.99%†
Level 3 Communications, Inc., CLB, 12.875%, due 03/15/2010(+)(1)	225,000	227,250
TOTAL CORPORATE BONDS (Cost $207,358)		227,250

RIGHTS — 5.18%†	Shares
Commercial Services & Supplies — 5.18%†
Comdisco Holding Company, Inc. Expiration Date: 12/31/2050, Strike Price $1.00#		581,000	168,490
TOTAL RIGHTS (Cost $245,273)			168,490

PURCHASED PUT OPTIONS — 0.32%†		Contracts
Nasdaq-100 Index Tracking Stock
	Expiration: January, 2007, Exercise Price: $38.625		28	4,620
	Expiration: January, 2007, Exercise Price: $39.625		28	5,740
TOTAL PURCHASED PUT OPTIONS (Cost $22,568)				10,360

See Notes to the Financial Statements.

66

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Emerging Growth Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Principal
SHORT-TERM INVESTMENTS — 3.91%†	Amount		Value
US Government Agency Issues — 3.69%†
Federal Home Loan Bank Discount Note, 4.950%, due 7/3/2006	$	120,000	$	119,968
Variable Rate Demand Notes** — 0.22%†
U.S. Bank, N.A., 5.100%		7,149		7,149
TOTAL SHORT-TERM INVESTMENTS (Cost $127,117)				127,117

INVESTMENTS PURCHASED WITH CASH		Principal
PROCEEDS FROM SECURITIES		Amount,
LENDING — 10.00%†		Shares or Par
Investment Companies — 0.47%†
AIM Short-Term Liquid Asset Fund			7,907	7,907
Merrill Lynch Premier Institutional Fund			7,273	7,273
				15,180
Repurchase Agreements — 7.23%†
Citigroup Global Repurchase Agreement,
	5.3625%, dated 6/30/2006, due 07/03/2006 Repurchase price $121,275(2)		121,221	121,221
CS First Boston Repurchase Agreement,
	5.250%, dated 6/30/2006, due 07/03/2006 Repurchase price $29,106(2)		29,093	29,093
	5.250%, dated 6/30/2006, due 07/03/2006 Repurchase price $26,679(2)		26,668	26,668
	5.250%, dated 6/30/2006, due 07/03/2006 Repurchase price $29,106(2)		29,093	29,093
	5.250%, dated 6/30/2006, due 07/03/2006 Repurchase price $29,106(2)		29,093	29,093
				235,168
Short-Term Notes — 2.30%†
Chesham Financial,
	5.332%, due 7/3/2006		12,122	12,117
Fenway Funding,
	5.354%, due 7/5/2006		4,849	4,845
Fenway Funding, LLC,
	5.356%, due 7/5/2006		7,273	7,265

See Notes to the Financial Statements.

67

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Emerging Growth Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

		Principal
		Amount,
		Shares or Par		Value
Thornburg Mortgage Capital,
	5.115%, due 7/6/2006	$	12,122	$	12,064
Antalis Funding,
	5.326%, due 7/7/2006		12,122		12,110
Mortgage Int Net Trust Plus,
	5.305%, due 7/7/2006		7,273		7,266
Rams Funding, LLC,
	5.331%, due 7/17/2006		12,122		12,074
Duke Funding HGH GRD,
	5.263%, due 7/20/2006		7,273		7,241
					74,982
TOTAL INVESTMENTS PURCHASED WITH CASH PROCEEDS FROM SECURITIES LENDING (Cost $325,330)					325,330
TOTAL INVESTMENTS — 109.94%† (Cost $2,941,275)				$	3,575,462

* — Non-income producing security.

** —  Variable rate demand notes are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of June 30, 2006.

^ —  Security has a stepped rate. The rate listed is as of June 30, 2006.

† —  Calculated as a percentage of net assets.

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

ADR — American Depository Receipts.

CLB — Callable Security.

(1) —	This security or a portion of this security was out on loan at June 30, 2006. Total loaned securities had a market value of $318,780 at June 30, 2006.
(2) —	See Repurchase Agreements disclosure in the Notes to Financial Statements for the Kinetics Portfolios Trust.
(3) —	All or a portion of the shares have been committed as collateral for written option contracts.

See Notes to the Financial Statements.

68

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Paradigm Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited)

COMMON STOCKS — 65.25%†	Shares		Value
Aerospace & Defense — 1.04%†
CACI International, Inc. — Class A*		248,000	$	14,465,840
General Dynamics Corporation		400		26,184
				14,492,024
Air Freight & Logistics — 0.85%†
C.H. Robinson Worldwide, Inc.		62,000		3,304,600
Expeditors International of Washington, Inc.		138,000		7,729,380
UTI Worldwide, Inc.		32,000		807,360
				11,841,340
Airlines — 0.02%†
China Eastern Airlines Corporation Limited ADR		25,000		341,000
Asian Exchanges — 2.91%†
Hong Kong Exchanges & Clearing Limited		3,660,000		23,539,781
Osaka Securities Exchange Co., Ltd.		944		11,135,967
Singapore Exchange Limited		2,700,000		6,004,359
				40,680,107
Asset Management — 3.68%†
Ameriprise Financial, Inc.		80		3,574
Brookfield Asset Management Inc — Class A		826,000		33,552,120
Eaton Vance Corp.		8,000		199,680
Legg Mason, Inc.		144,000		14,330,880
Power Corporation of Canada		126,000		3,319,591
				51,405,845
Auto Components — 0.68%†
Toyota Industries Corporation		240,000		9,479,203
Automobiles — 0.00%†
Great Wall Automobile Holdings Company, Limited — Class H		20,000		10,880

See Notes to the Financial Statements.

69

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Paradigm Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Shares		Value
Beverages — 0.11%†
Anheuser-Busch Companies, Inc.		2,400	$	109,416
Brown-Forman Corporation — Class B		3,000		214,350
Constellation Brands, Inc. — Class A*		1,800		45,000
Diageo plc ADR		12,000		810,600
Pernod Ricard SA		1,200		237,903
Remy Cointreau SA		2,400		123,004
				1,540,273
Brokerage & Investment Banking — 0.54%†
The Bear Stearns Companies Inc.		24,000		3,361,920
Greenhill & Co., Inc.		6,600		401,016
ICAP plc		100,000		920,909
Lazard Ltd — Class A		60,000		2,424,000
Nomura Holdings, Inc. ADR		24,000		451,200
Refco Inc.*		24,000		20,400
				7,579,445
Capital Markets — 0.31%†
Collins Stewart Tullett		30,000		421,066
The Goldman Sachs Group, Inc.		24,000		3,610,320
Penson Worldwide, Inc.*		4,000		68,840
SEI Investments Co.		4,000		195,520
				4,295,746
Chemicals — 0.00%†
Novozymes A/ S — Class B		200		13,512
Potash Corporation of Saskatchewan Inc.		400		34,388
				47,900
Commercial Banks — 2.80%†
The Bank of New York Company, Inc.		404,000		13,008,800
Cathay General Bancorp		10,000		363,800
Center Financial Corporation		20,000		472,800
East West Bancorp, Inc.		10,000		379,100
Fifth Third Bancorp		4,000		147,800
Hanmi Financial Corporation		20,000		388,800
HDFC Bank Ltd. ADR		6,000		327,300
ICICI Bank Limited ADR		12,000		283,800
M&T Bank Corporation		149,000		17,570,080
Macquarie Bank Limited		10,000		512,741
Nara Bancorp, Inc.		20,000		375,000

See Notes to the Financial Statements.

70

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Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Shares		Value
State Bank of India GDR		27,000	$	1,080,000
UCBH Holdings, Inc.		20,000		330,800
Wells Fargo and Company		53,000		3,555,240
Wilshire Bancorp, Inc.		22,000		396,440
				39,192,501
Commercial Services & Supplies — 0.24%†
Acco Brands Corporation*		658		14,410
Dun & Bradstreet Corporation*		44,000		3,065,920
Equifax Inc.		100		3,434
FTI Consulting, Inc.*		10,000		267,700
				3,351,464
Consumer Finance — 0.27%†
American Express Company		400		21,288
The Student Loan Corporation		18,400		3,716,800
				3,738,088
Derivative Exchanges — 4.71%†
CBOT Holdings, Inc. — Class A*(1)		192,000		22,961,280
Chicago Mercantile Exchange Holdings Inc.		58,400		28,683,160
International Securities Exchange, Inc.		372,000		14,162,040
				65,806,480
Diversified Consumer Services — 0.17%†
H&R Block, Inc.(1)		100,000		2,386,000
Diversified Financial Services — 2.53%†
Leucadia National Corporation		998,000		29,131,620
Pargesa Holding AG — Class B		66,000		6,256,922
				35,388,542
Diversified Gas — 0.33%†
The Williams Companies, Inc.		200,000		4,672,000
Electric Utilities — 5.08%†
Allegheny Energy, Inc.*		774,000		28,692,180
Huaneng Power International, Inc. ADR(1)		324,000		8,576,280
Korea Electric Power Corporation ADR		820,000		15,547,200
Sierra Pacific Resources*		1,296,000		18,144,000
				70,959,660

See Notes to the Financial Statements.

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Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Shares		Value
European Exchanges — 2.16%†
Deutsche Boerse AG		64,000	$	8,732,742
Euronext NV		128,000		12,000,563
Hellenic Exchanges Holding S.A.		30,000		482,714
London Stock Exchange Group plc		422,291		8,886,720
OMX AB		8,000		143,398
				30,246,137
Food Products — 0.51%†
Archer-Daniels-Midland Company		105,600		4,359,168
Bunge Limited		27,400		1,376,850
Cadbury Schweppes PLC ADR		4,000		155,280
Dean Foods Company*		30,000		1,115,700
The J.M. Smucker Company		1,000		44,700
McCormick & Company, Incorporated		1,000		33,550
TreeHouse Foods, Inc.*		3,600		86,004
				7,171,252
Gaming — 1.76%†
Harrah’s Entertainment, Inc.		84,000		5,979,120
Ladbrokes Plc ADR		8,470		63,838
Las Vegas Sands Corp.*		58,000		4,515,880
MGM MIRAGE *		210,000		8,568,000
Wynn Resorts, Limited*(1)		74,000		5,424,200
				24,551,038
Hotels Restaurants & Leisure — 0.01%†
Carnival Corporation		2,000		83,480
Household Durables — 0.01%†
Fortune Brands, Inc.		2,800		198,828
Household Products — 0.06%†
Church & Dwight Co., Inc.		24,000		874,080
Independent Power Producers & Energy Traders — 0.78%†
Dynegy Inc. — Class A*		92,000		503,240
TXU Corporation		174,000		10,403,460
				10,906,700
Industrial Conglomerates — 0.00%†
Alleghany Corporation*		24		6,633

See Notes to the Financial Statements.

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Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Shares		Value
Insurance — 4.23%†
Arthur J. Gallagher & Co.		1,000	$	25,340
Berkshire Hathaway Inc. — Class B*		5,880		17,892,840
Brown & Brown, Inc.		4,800		140,256
China Life Insurance Co., Limited ADR*(1)		36,000		2,278,800
Fidelity National Financial, Inc.		8,200		319,390
Fidelity National Title Group, Inc. — Class A(1)		1,435		28,227
Markel Corporation*		12,000		4,164,000
Millea Holdings, Inc. ADR		14,400		1,339,632
Montpelier Re Holdings Ltd.(1)		160,000		2,766,400
The Progressive Corporation		580,000		14,911,800
Wesco Financial Corporation		1,700		647,700
White Mountains Insurance Group Ltd.		30,000		14,610,000
				59,124,385
IT Services — 0.08%†
Automatic Data Processing, Inc.		1,000		45,350
First Data Corporation		6,000		270,240
Iron Mountain Incorporated*		18,000		672,840
Mastercard, Inc. — Class A*(1)		2,000		96,000
				1,084,430
Media — 3.83%†
DreamWorks Animation SKG, Inc.*		32,000		732,800
The E.W. Scripps Company — Class A		64,000		2,760,960
EMI Group plc		600,000		3,370,194
Getty Images, Inc.*		36,000		2,286,360
Groupe Bruxelles Lambert S.A.		200,000		20,950,846
The McGraw-Hill Companies, Inc.		140,000		7,032,200
Meredith Corporation		2,000		99,080
The New York Times Company — Class A		600		14,724
The Walt Disney Company		14,400		432,000
The Washington Post Company — Class B		20,400		15,912,204
				53,591,368
Metals & Mining — 2.06%†
Anglo American PLC ADR(1)		1,184,000		24,200,960
BHP Billiton Limited ADR		15,600		671,892
Cameco Corporation		4,800		191,856
Rio Tinto plc ADR		17,800		3,732,838
				28,797,546

See Notes to the Financial Statements.

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Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Shares		Value
Multiline Retail — 1.31%†
Sears Holdings Corporation*		118,000	$	18,271,120
Multi-Utilities — 1.98%†
CenterPoint Energy, Inc.		940,000		11,750,000
Reliant Energy Inc.*		1,236,000		14,807,280
Sempra Energy		24,000		1,091,520
				27,648,800
Oil & Gas — 0.03%†
China Petroleum & Chemical Corp. ADR		6,000		343,762
Oil, Gas & Consumable Fuels — 10.02%†
Canadian Natural Resources Ltd.		30,000		1,661,400
Canadian Oil Sands Trust		852,000		27,477,000
CNOOC Limited ADR		101,000		8,118,380
El Paso Corporation		1,200,000		18,000,000
EnCana Corporation		124,000		6,527,360
Imperial Oil Ltd.		204,000		7,448,040
Nexen Inc.		106,000		5,993,240
Norsk Hydro ASA ADR		108,000		2,884,680
OAO Gazprom ADR*		262,000		11,017,100
Petro-Canada		120,000		5,689,200
PetroChina Company Limited ADR		57,000		6,154,290
Petroleo Brasileiro S.A. ADR		10,000		893,100
Shell Canada Limited		128,000		4,758,578
Statoil ASA ADR		10,000		285,200
Suncor Energy, Inc.		366,000		29,649,660
Western Oil Sands Inc. — Class A*		128,000		3,547,720
				140,104,948
Other Exchanges — 0.52%†
Australian Stock Exchange Limited		100,000		2,421,027
IntercontinentalExchange Inc.*		10,000		579,400
TSX Group Inc.		106,000		4,254,053
				7,254,480
Paper & Forest Products — 0.00%†
Pope Resources, L.P.		1,800		56,070
Pharmaceuticals — 0.02%†
Novo-Nordisk A/ S ADR		5,000		317,950

See Notes to the Financial Statements.

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Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Shares		Value
Publishing — 0.57%†
Dow Jones & Company, Inc.		12,000	$	420,120
John Wiley & Sons, Inc. — Class B		2,000		65,880
Moody’s Corporation		86,000		4,683,560
R.H. Donnelley Corporation*		52,000		2,811,640
				7,981,200
Real Estate — 2.65%†
American Real Estate Partners, L.P.		244,000		9,955,200
Forest City Enterprises, Inc. — Class A		482,000		24,056,620
The St. Joe Company		4,000		186,160
Texas Pacific Land Trust		19,200		2,856,000
				37,053,980
Real Estate Investment Trusts — 0.11%†
Vornado Realty Trust		15,400		1,502,270
Security Brokers, Dealers, And Flotation Companies — 0.01%†
GFI Group, Inc.*		2,000		107,900
Specialists — 0.70%†
LaBranche & Co Inc.*(1)		802,000		9,712,220
Specialty Retail — 0.00%†
Tiffany & Co.		1,000		33,020
State Commercial Banks — 0.01%†
Preferred Bank Los Angeles		3,000		160,830
Tobacco — 0.10%†
Altria Group, Inc.		18,000		1,321,740
British American Tobacco p.l.c. ADR		2,000		101,420
				1,423,160
Transportation Infrastructure — 0.16%†
Anhui Expressway Co., Ltd. — Class H		720,000		537,708
BAA Plc		4,000		69,013
Beijing Capital International Airport Company Limited — Class H		400,000		254,948
Jiangsu Expressway Company Ltd. — Class H		300,000		168,999
Macquarie Airports		97,610		222,680

See Notes to the Financial Statements.

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Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Shares		Value
Shenzhen Expressway Company Limited — Class H		1,200,000	$	575,564
Zhejiang Expressway Co., Ltd. — Class H		660,000		401,542
				2,230,454
U.S. Equity Exchanges — 5.20%†
Nasdaq Stock Market Inc.*		932,000		27,866,800
NYSE Group Inc.*(1)		654,000		44,785,920
				72,652,720
Wireless Telecommunication Services — 0.10%†
China Mobile (Hong Kong) Limited ADR		4,000		114,440
KDDI CORPORATION		200		1,228,591
NTT DoCoMo, Inc. ADR		6,000		87,960
				1,430,991
TOTAL COMMON STOCKS (cost $773,562,633)				912,130,250

	Principal
CONVERTIBLE BONDS — 0.29%†	Amount
Independent Power Producers & Energy Traders — 0.29%†
Calpine Corporation, CLB, 4.750%, due 11/15/2023, Acquired 11/30/2005-6/29/2006 at $3,744,275 (Default Effective 12/20/2005)*	$	9,100,000	4,049,500
TOTAL CONVERTIBLE BONDS (cost $3,745,364)			4,049,500

See Notes to the Financial Statements.

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Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

		Principal
CORPORATE BONDS — 0.05%†		Amount		Value
Independent Power Producers & Energy Traders — 0.04%†
Calpine Corporation,
	8.750%, due 07/15/2007, CLB, Acquired 4/18/2006 and 5/03/2006 at $118,563 (Default Effective 12/20/2005)*	$	200,000	$	141,000
	7.875%, due 04/01/2008, Acquired 4/18/2006-5/10/2006 at $118,538 (Default Effective 12/20/2005)*		200,000		140,000
	7.625%, due 04/15/2006, Acquired 4/18/2006-4/20/2006 at $61,031 (Default Effective 12/20/2005)*		100,000		70,500
	10.500%, due 05/15/2006, CLB, Acquired 4/07/2006-5/10/2006 at $181,375 (Default Effective 12/20/2005)*		300,000		210,000
					561,500
Unit Investment Trusts, Face-amount Certificate Offices, And — 0.01%†
Calpine Canada Energy Finance Ulc, 8.500%, due 05/01/2008, Acquired 4/20/2006 and 7/13/2006 at $780,125 (Default Effective 12/20/2005)*			200,000		125,000
TOTAL CORPORATE BONDS (cost $603,381)					686,500

See Notes to the Financial Statements.

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Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

PURCHASED CALL
OPTIONS — 0.04%†	Contracts		Value
TXU Corporation, Expiration: January, 2007, Exercise Price: $22.500		142		533,210
TOTAL PURCHASED CALL OPTIONS (cost $143,073)				533,210

SHORT-TERM	Principal
INVESTMENTS — 35.54%†(3)	Amount
US Government Agency Issues — 35.44%†
Federal National Mortgage Association Discount Note, 4.802%, due 7/3/2006		495,566,000	495,433,849
Variable Rate Demand Notes ** — 0.10%† U.S. Bank, N.A., 5.100%		1,329,536	1,329,536
TOTAL SHORT-TERM INVESTMENTS (cost $496,763,385)			496,763,385

INVESTMENTS PURCHASED WITH		Principal
CASH PROCEEDS		Amount
FROM SECURITIES LENDING —		Shares or
6.32%†		Par Value
Investment Companies — 0.29%†
AIM Short-Term Liquid Asset Fund		$	2,148,002	$	2,148,002
Merrill Lynch Premier Institutional Fund			1,975,743		1,975,743
					4,123,745
Repurchase Agreements — 4.57%†
Citigroup Global Repurchase Agreement, 5.363%, dated 6/30/2006, due 07/03/2006 Repurchase price $32,943,758(2)			32,929,043		32,929,043
CS First Boston Repurchase Agreement, 5.250%, dated 6/30/2006, due 07/03/2006 Repurchase price $7,906,428(2)			7,902,970		7,902,970
	5.250%, dated 6/30/2006, due 07/03/2006 Repurchase price $7,247,560(2)		7,244,390		7,244,390

See Notes to the Financial Statements.

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Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

		Principal
		Amount
		Shares or
		Par Value		Value
	5.250%, dated 6/30/2006, due 07/03/2006 Repurchase price $7,906,428(2)	$	7,902,970	$	7,902,970
	5.250%, dated 6/30/2006, due 07/03/2006 Repurchase price $7,906,428(2)		7,902,970		7,902,970
					63,882,343
Short-Term Notes — 1.46%†
Chesham Financial, 5.332%, due 7/3/2006			3,292,905		3,291,444
Fenway Funding, 5.354%, due 7/5/2006			1,317,161		1,316,184
Fenway Funding, LLC, 5.356%, due 7/5/2006			1,975,743		1,973,394
Thornburg Mortgage Capital, 5.115%, due 7/6/2006			3,292,905		3,277,090
Antalis Funding, 5.326%, due 7/7/2006			3,292,905		3,289,498
Mortgage Int Net Trust Plus, 5.305%, due 7/7/2006			1,975,743		1,973,706
Rams Funding, LLC, 5.331%, due 7/17/2006			3,292,905		3,279,815
Duke Funding HGH GRD, 5.263%, due 7/20/2006			1,975,743		1,967,116
				$	20,368,246
TOTAL INVESTMENTS PURCHASED WITH CASH PROCEEDS FROM SECURITIES LENDING (cost $88,374,335)				$	88,374,335
TOTAL INVESTMENTS  — 107.49%† (cost $1,363,192,171)				$	1,502,537,180

* — Non-income producing security.

** —  Variable rate demand notes are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of June 30, 2006.

See Notes to the Financial Statements.

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Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

† —  Calculated as a percentage of net assets.

GDR —  Global Depository Receipts.

ADR —  American Depository Receipts.

CLB —  Callable Security.

(1) — This security or a portion of this security was out on loan at June 30, 2006. Total loaned securities had a market value of $88,097,756 at June 30, 2006.

(2) — See Repurchase Agreements disclosure in the Notes to Financial Statements for the Kinetics Portfolios Trust.

(3) — The 35.54% position in Short-Term Investments is a result of cash received for the purchase of additional interests in the Portfolio at the end of the reporting period.

See Notes to the Financial Statements.

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Portfolio of Investments — June 30, 2006 (Unaudited)

COMMON STOCKS — 83.99%†	Shares		Value
Biotechnology — 28.94%†
AEterna Zentaris Inc.*(1)		20,500	$	123,000
Albany Molecular Research, Inc.*		9,000		96,120
Arena Pharmaceuticals, Inc.*		14,000		162,120
AVAX Technologies, Inc.*		50,000		7,000
Avigen, Inc.*		21,000		108,780
Biogen Idec, Inc.*		8,250		382,222
Biomira, Inc.*		37,000		39,590
Cambridge Antibody Technology Group PLC ADR*		15,000		366,600
Cell Genesys, Inc.*		14,725		73,919
Cubist Pharmaceuticals, Inc.*		2,000		50,360
CuraGen Corporation*		13,000		45,500
deCODE genetics, Inc.*(1)		11,000		68,090
Dendreon Corporation*		7,000		33,880
EntreMed, Inc.*(1)		11,000		18,150
Favrille Inc.*(1)		10,000		49,000
Genzyme Corporation*		7,038		429,670
Human Genome Sciences, Inc.*		17,000		181,900
ImmunoGen, Inc.*		6,000		18,780
Isis Pharmaceuticals, Inc.*		5,000		30,250
Isotechnika, Inc.*		15,000		19,484
Medarex, Inc.*		20,000		192,200
MedImmune, Inc.*		28,500		772,350
Millennium Pharmaceuticals, Inc.*		36,296		361,871
Poniard Pharmaceuticals, Inc.*		27,000		25,888
Progenics Pharmaceuticals, Inc.*		2,200		52,932
QLT Inc.*		10,000		70,800
Savient Pharmaceuticals Inc.*		34,000		178,500
Serono SA ADR		12,000		205,800
Sirna Therapeutics, Inc.*		3,491		19,899
Targeted Genetics Corp.*		1,000		2,300
Vical Incorporated*		13,500		74,925
				4,261,880

See Notes to the Financial Statements.

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Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Shares		Value
Chemicals — 8.77%†
Akzo Nobel N.V. ADR		10,000	$	537,700
Lonza Group AG		11,000		754,448
				1,292,148
Health Care Equipment & Supplies — 0.05%†
Theragenics Corporation*		2,000		6,820
Health Care Providers & Services — 0.32%†
IMPATH Bankruptcy Liquidating Trust — Class A*		26,000		46,800
Industrial Conglomerates — 1.87%†
Tyco International Ltd.		10,000		275,000
Pharmaceuticals — 44.04%†
Abbott Laboratories		17,000		741,370
Altana AG ADR(1)		12,000		670,560
Antigenics, Inc.*(1)		892		1,891
Bristol-Meyers Squibb Company		15,000		387,900
China Pharmaceutical Group Limited*		1,440,000		165,021
Eli Lilly and Company		11,000		607,970
Epicept Corporation*		2,039		4,894
GlaxoSmithKline PLC ADR		20,673		1,153,553
Johnson & Johnson		7,000		419,440
MGI Pharma, Inc.*		2,000		43,000
Novartis AG ADR		21,000		1,132,320
SuperGen, Inc.*		14,000		50,820
Wyeth		24,900		1,105,809
				6,484,548
TOTAL COMMON STOCKS (cost $14,339,534)				12,367,196

See Notes to the Financial Statements.

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Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

RIGHTS — 0.01%†	Shares		Value
Biotechnology — 0.01%†
OSI Pharmaceuticals, Inc.* Expiration Date 6/12/2008, Strike Price $1.00#		13,932	$	1,254
TOTAL RIGHTS (cost $0)				1,254

	Principal
SHORT-TERM INVESTMENTS — 5.49%†	Amount
US Government Agency Issues — 5.21%†
Federal National Mortgage Association Discount Note, 4.802%, due 7/3/2006	$	767,000	766,795
Variable Rate Demand Notes** — 0.28%†
U.S. Bank, N.A., 5.100%		41,416	41,416
TOTAL SHORT-TERM INVESTMENTS (cost $808,211)			808,211

	Principal
INVESTMENTS PURCHASED WITH	Amount
CASH PROCEEDS FROM	Shares or
SECURITIES LENDING — 5.40%†	Par Value
Investment Companies — 0.25%†
AIM Short-Term Liquid Asset Fund		19,342	19,342
Merrill Lynch Premier Institutional Fund		17,791	17,791
			37,133
Repurchase Agreements — 3.91%†
Citigroup Global Repurchase Agreement, 5.363%, dated 6/30/2006, due 07/03/2006
Repurchase price $296,646(2)		296,513	296,513
CS First Boston Repurchase Agreement, 5.250%, dated 6/30/2006, due 07/03/2006
Repurchase price $71,194 5.250%, dated 6/30/2006, due 07/03/2006(2)		71,163	71,163

See Notes to the Financial Statements.

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Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Principal
	Amount
	Shares or
	Par Value		Value
Repurchase price $65,262 5.250%, dated 6/30/2006, due 07/03/2006(2)	$	65,233	$	65,233
Repurchase price $71,194 5.250%, dated 6/30/2006, due 07/03/2006(2)		71,163		71,163
Repurchase price $71,194(2)		71,163		71,163
				575,235
Short-Term Notes — 1.24%†
Chesham Financial, 5.332%, due 7/3/2006		29,651		29,638
Fenway Funding, 5.354%, due 7/5/2006		11,861		11,852
Fenway Funding, LLC, 5.356%, due 7/5/2006		17,791		17,770
Thornburg Mortgage Capital, 5.115%, due 7/6/2006		29,651		29,509
Antalis Funding, 5.326%, due 7/7/2006		29,651		29,621
Mortgage Int Net Trust Plus, 5.305%, due 7/7/2006		17,791		17,772
Rams Funding, LLC, 5.331%, due 7/17/2006		29,651		29,533

See Notes to the Financial Statements.

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The Medical Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

		Principal
		Amount
		Shares or
		Par Value		Value
Duke Funding HGH GRD, 5.263%, due 7/20/2006		$	17,791	$	17,713
					183,408
TOTAL INVESTMENTS PURCHASED WITH CASH PROCEEDS FROM SECURITIES LENDING
	(cost $795,776)				795,776
TOTAL INVESTMENTS — 94.89%† (cost $15,943,521)				$	13,972,437

* — Non-income producing security.

** —  Variable rate demand notes are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of June 30, 2006.

† —  Calculated as a percentage of net assets.

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

ADR — American Depository Receipts.

(1) —	This security or a portion of this security was out on loan at June 30, 2006. Total loaned securities had a market value of $770,591 at June 30, 2006.
(2) —	See Repurchase Agreements disclosure in the Notes to Financial Statements for the Kinetics Portfolios Trust.

See Notes to the Financial Statements.

85

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited)

COMMON STOCKS — 89.90%†	Shares		Value
Aerospace & Defense — 3.02%†
Armor Holdings, Inc.*		2,000	$	109,660
Bombardier Inc.*		360,000		1,002,956
CACI International, Inc. — Class A*		92,000		5,366,360
GenCorp Inc.		10,000		160,300
				6,639,276
Air Freight & Logistics — 3.28%†
EGL, Inc.*		72,000		3,614,400
Hub Group, Inc. — Class A*		144,000		3,532,320
UTI Worldwide, Inc.		2,000		50,460
				7,197,180
Airlines — 0.69%†
China Eastern Airlines Corporation Limited ADR		60,000		818,400
China Southern Airlines Company Limited ADR(1)		60,000		687,000
				1,505,400
Asian Exchanges — 4.69%†
Hong Kong Exchanges & Clearing Limited		720,000		4,630,777
Osaka Securities Exchange Co., Ltd.		270		3,185,075
Singapore Exchange Limited		1,120,000		2,490,697
				10,306,549
Beverages — 0.18%†
Tsingtao Brewery Company Limited — Class H		360,000		403,281
Brokerage & Investment Banking — 0.28%†
Greenhill & Co., Inc.		10,000		607,600
Capital Markets — 5.98%†
Amvescap Plc ADR		10,000		184,900
Calamos Asset Management, Inc. — Class A		20,000		579,800
GAMCO Investors, Inc. — Class A		1,000		36,760
Guardian Capital Group Ltd.		2,000		22,395
International Assets Holding Corporation*		52,000		855,400

See Notes to the Financial Statements.

86

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Shares		Value
Jefferies Group, Inc.		100,000	$	2,963,000
Nuveen Investments — Class A		72,000		3,099,600
SWS Group, Inc.		12,000		289,440
Thomas Weisel Partners Group, Inc.*		96,000		1,824,960
Van der Moolen Holding N.V. ADR		450,427		3,265,596
				13,121,851
Commercial Banks — 7.99%†
Banque du Liban et d’Outre-Mer S.A.L. (BLOM) — Class B GDR*		20,000		1,462,000
Cathay General Bancorp		58,000		2,110,040
Center Financial Corporation		94,000		2,222,160
East West Bancorp, Inc.		56,000		2,122,960
Farmers & Merchants Bank of Long Beach		12		69,750
First Bank of Delaware*		428,403		1,071,008
Hanmi Financial Corporation		112,062		2,178,485
Nara Bancorp, Inc.		112,400		2,107,500
UCBH Holdings, Inc.		125,000		2,067,500
Wilshire Bancorp, Inc.		118,000		2,126,360
				17,537,763
Commercial Services & Supplies — 1.87%†
Comdisco Holding Company, Inc.		4,000		61,240
First Advantage Corporation — Class A*		12,000		279,120
FTI Consulting, Inc.*		54,000		1,445,580
Guideline, Inc.*		10,000		14,000
Loring Ward International Ltd.*		1,000		538
PICO Holdings, Inc.*		25,000		806,250
Ritchie Bros. Auctioneers Incorporated		28,000		1,489,040
				4,095,768
Communications Equipment — 0.01%†
3Com Corp.*		6,000		30,720
Construction & Engineering — 3.16%†
Quanta Services, Inc.*(1)		400,000		6,932,000
Defense Products — 0.07%†
Smith & Wesson Holding Corp.*		20,000		164,400

See Notes to the Financial Statements.

87

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Shares		Value
Derivative Exchanges — 6.03%†
International Securities Exchange, Inc.		348,000	$	13,248,360
Diversified Consumer Services — 0.57%†
Sotheby’s Holdings, Inc. — Class A*		48,000		1,260,000
Diversified Telecommunication Services — 0.40%†
Lynch Interactive Corporation*		18		41,670
NeuStar, Inc. — Class A*		1,000		33,750
XO Holdings Inc.*(1)		180,000		792,000
				867,420
Electric Utilities — 7.17%†
Allegheny Energy, Inc.*		200,000		7,414,000
China Resources Power Holdings Company Limited		100,000		83,695
Datang International Power Generation Company Limited — Class H		100,000		69,531
Huadian Power International Corporation Limited — Class H		180,000		50,990
Sierra Pacific Resources*		580,000		8,120,000
				15,738,216
Energy — 0.86%†
Siem Industries Inc.*		36,000		1,881,000
Gaming — 0.18%†
Boyd Gaming Corporation		10,000		403,600
Gas Utilities — 1.46%†
Southern Union Company		118,263		3,200,183
Holding Company — 0.53%†
BNN Investments Ltd.*		8,600		1,155,603
Hotels Restaurants & Leisure — 0.61%†
Triarc Companies, Inc. — Class A		82,000		1,339,060
Household Durables — 0.20%†
Jarden Corporation*		14,400		438,480

See Notes to the Financial Statements.

88

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Shares		Value
Independent Power Producers & Energy Traders — 0.75%†
Dynegy Inc. — Class A*		300,000	$	1,641,000
Industrial Conglomerates — 0.52%†
Alleghany Corporation*		4,165		1,151,039
Insurance — 1.37%†
Covanta Holding Corporation*		6,000		105,900
Montpelier Re Holdings Ltd.(1)		60,000		1,037,400
National Western Life Insurance Company — Class A		1,200		287,580
RLI Corp.		8,000		385,440
Safety Insurance Group, Inc.		15,800		751,290
Wesco Financial Corporation		1,000		381,000
Zenith National Insurance Corp.		1,500		59,505
				3,008,115
Internet Software & Services — 0.01%†
Jupitermedia Corporation*		2,000		26,000
IT Services — 0.67%†
ManTech International Corporation — Class A*		48,000		1,481,280
Leisure Equipment & Products — 0.00%†
Steinway Musical Instruments, Inc.*		200		4,904
Machinery — 0.04%†
Oshkosh Truck Corporation		2,000		95,040
Media — 2.77%†
Courier Corporation		48,000		1,920,960
Gemstar-TV Guide International, Inc.*		36,000		126,720
Interactive Data Corporation*		10,000		200,900
Live Nation Inc.*		100,000		2,036,000
PrimaCom AG ADR*		54,000		138,785
Warner Music Group Corp.		56,000		1,650,880
				6,074,245
Metals & Mining — 2.71%†
Aber Diamond Corporation		10,000		310,500

See Notes to the Financial Statements.

89

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Shares		Value
Commercial Metals Company		56,000	$	1,439,200
Inmet Mining Corporation		100,000		3,735,555
Stillwater Mining Company*		36,000		456,480
				5,941,735
Multiline Retail — 0.78%†
Dillard’s, Inc. — Class A		54,000		1,719,900
Multi-Utilities — 7.41%†
Aquila, Inc.*		920,000		3,873,200
CMS Energy Corporation*		172,000		2,225,680
NRG Energy, Inc.*		12,000		578,160
Reliant Energy Inc.*		800,000		9,584,000
				16,261,040
Oil, Gas & Consumable Fuels — 1.09%†
National Energy Group, Inc.*		2,000		10,800
Shell Canada Limited		3,000		111,529
UTS Energy Corporation*		430,000		2,261,131
				2,383,460
Other Exchanges — 0.69%†
IntercontinentalExchange Inc.*		24,000		1,390,560
New Zealand Exchange Limited		20,014		115,848
				1,506,408
Paper & Forest Products — 0.00%†
Pope Resources, L.P.		200		6,230
Publishing — 3.00%†
John Wiley & Sons, Inc. — Class A		24,000		796,800
R.H. Donnelley Corporation *		100,246		5,420,301
Value Line, Inc.		8,400		358,680
				6,575,781
Real Estate — 5.31%†
Alexander’s, Inc.*		8,000		2,174,080
American Real Estate Partners, L.P.		172,000		7,017,600
Forest City Enterprises, Inc. — Class A		10,000		499,100
HomeFed Corporation		400		27,300

See Notes to the Financial Statements.

90

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Shares		Value
SOLIDERE GDR*		800	$	17,400
Tejon Ranch Co.*		400		16,464
Texas Pacific Land Trust		12,800		1,904,000
United Capital Corporation *		400		10,600
				11,666,544
Road & Rail — 0.57%†
Laidlaw International, Inc.		50,000		1,260,000
Security Brokers, Dealers, And Flotation Companies — 0.69%†
GFI Group, Inc.*		28,000		1,510,600
Specialists — 3.97%†
LaBranche & Co Inc.*(1)		720,000		8,719,200
State Commercial Banks — 0.83%†
Preferred Bank Los Angeles		34,000		1,822,740
Tobacco — 0.12%†
Vector Group Ltd.(1)		16,164		262,665
Transportation Infrastructure — 0.16%†
Macquarie Airports		113,610		259,181
Sichuan Expressway Co. Limited — Class H		600,000		95,026
				354,207
U.S. Equity Exchanges — 7.21%†
Nasdaq Stock Market Inc.*		300,000		8,970,000
NYSE Group Inc.*(1)		100,000		6,848,000
				15,818,000
TOTAL COMMON STOCKS (Cost $166,236,004)				197,363,843

See Notes to the Financial Statements.

91

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

CORPORATE BONDS
CONVERTIBLE — 0.99%†	Shares		Value
Independent Power Producers & Energy Traders — 0.99%†
Calpine Corporation, CLB, 4.750%, due 11/15/2023, Acquired on 11/30/2006-6/19/2006 at $1,802,318 (Default Effective 12/20/2005)*		4,890,000	$	2,176,050
TOTAL CONVERTIBLE BONDS (Cost $1,802,792)				2,176,050

RIGHTS — 1.08%†	Shares
Commercial Services & Supplies — 1.08%†
Comdisco Holding Company, Inc., Expiration Date: 12/31/2050, Strike Price $1.00#		8,200,400	2,378,116
TOTAL RIGHTS (Cost $2,603,762)			2,378,116

	Principal
SHORT-TERM INVESTMENTS — 8.77%†	Amount
US Government Agency Issues — 8.54%†
Federal National Mortgage Association Discount Note, 4.802%, due 7/3/2006	$	18,751,000	18,746,000
Variable Rate Demand Notes — 0.23%†
U.S. Bank, N.A., 5.100%		515,813	515,813
TOTAL SHORT-TERM INVESTMENTS (Cost $19,261,813)			19,261,813

	Principal
INVESTMENTS PURCHASED WITH	Amount
CASH PROCEEDS FROM SECURITIES	Shares or
LENDING — 9.58%†	Par Value
Investment Companies — 0.45%†
AIM Short-Term Liquid Asset Fund		510,918	510,918
Merrill Lynch Premier Institutional Fund		469,945	469,945
			980,863

See Notes to the Financial Statements.

92

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Principal
	Amount
	Shares or
	Par Value		Value
Repurchase Agreements — 6.92%†
Citigroup Global Repurchase Agreement, 5.3625%, dated 6/30/2006, due 07/03/2006
Repurchase price $7,835,921(2)	$	7,832,421	$	7,832,421
CS First Boston Repurchase Agreement, 5.250%, dated 6/30/2006, due 07/03/2006
Repurchase price $1,880,603 5.250%, dated 6/30/2006, due 07/03/2006(2)		1,879,781		1,879,781
Repurchase price $1,723,887 5.250%, dated 6/30/2006, due 07/03/2006(2)		1,723,133		1,723,133
Repurchase price $1,880,603 5.250%, dated 6/30/2006, due 07/03/2006(2)		1,879,781		1,879,781
Repurchase price $1,880,603(2)		1,879,781		1,879,781
				15,194,897
Short-Term Notes — 2.21%†
Chesham Financial, 5.332%, due 7/3/2006		783,242		782,895
Fenway Funding, 5.354%, due 7/5/2006		313,297		313,064
Fenway Funding, LLC, 5.356%, due 7/5/2006		469,945		469,385
Thornburg Mortgage Capital, 5.115%, due 7/6/2006		783,242		779,481
Antalis Funding, 5.326%, due 7/7/2006		783,242		782,431
Mortgage Int Net Trust Plus, 5.305%, due 7/7/2006		469,945		469,461
Rams Funding, LLC, 5.331%, due 7/17/2006		783,242		780,129

See Notes to the Financial Statements.

93

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Small Cap Opportunities Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

		Principal
		Amount
		Shares or
		Par Value		Value
Duke Funding HGH GRD, 5.263%, due 7/20/2006		$	469,945	$	467,894
					4,844,740
TOTAL INVESTMENTS PURCHASED WITH CASH PROCEEDS FROM SECURITIES LENDING
	(cost $21,020,500)				21,020,500
TOTAL INVESTMENTS — 110.32%† (cost $210,924,871)				$	242,200,322

* — Non-income producing security.

** —  Variable rate demand notes are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of June 30, 2006.

† —  Calculated as a percentage of net assets.

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

GDR — Global Depository Receipts.

ADR — American Depository Receipts.

CLB — Callable Security.

(1) —	This security or a portion of this security was out on loan at June 30, 2006. Total loaned securities had a market value of $20,517,327 at June 30, 2006.
(2) —	See Repurchase Agreements disclosure in the Notes to Financial Statements for the Kinetics Portfolios Trust.

See Notes to the Financial Statements.

94

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Kinetics Government Money Market Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited)

	Principal
SHORT TERM INVESTMENTS — 99.18%†	Amount		Value
US Government Agency Issues — 99.18%†
Federal National Mortgage Association Discount Note 4.802%, due 7/3/2006	$	1,004,000	$	1,003,732
TOTAL INVESTMENTS — 99.18%† (cost $1,003,732)			$	1,003,732

† — Calculated as a percentage of net assets.

See Notes to the Financial Statements.

95

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Market Opportunities Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited)

COMMON STOCKS — 82.55%†	Shares		Value
Asian Exchanges — 13.37%†
Hong Kong Exchanges & Clearing Limited		8,000	$	51,453
Osaka Securities Exchange Co., Ltd.		24		283,118
Singapore Exchange Limited		180,000		400,291
				734,862
Asset Management — 5.20%†
Brookfield Asset Management Inc — Class A*		3,600		146,232
Legg Mason, Inc.		1,400		139,328
				285,560
Brokerage & Investment Banking — 2.05%†
The Bear Stearns Companies Inc.		200		28,016
Greenhill & Co., Inc.		200		12,152
Lazard Ltd — Class A		1,800		72,720
				112,888
Capital Markets — 5.18%†
The Goldman Sachs Group, Inc.		400		60,172
Jefferies Group, Inc.		2,400		71,112
Nuveen Investments — Class A		1,600		68,880
Penson Worldwide, Inc.*		200		3,442
Thomas Weisel Partners Group, Inc.*		1,200		22,812
Van der Moolen Holding N.V. ADR		8,000		58,000
				284,418
Commercial Banks — 15.39%†
The Bank of New York Company, Inc.		3,600		115,920
Cathay General Bancorp		2,800		101,864
Center Financial Corporation		4,400		104,016
East West Bancorp, Inc.		2,800		106,148
Hanmi Financial Corporation		5,400		104,976
Nara Bancorp, Inc.		6,000		112,500
UCBH Holdings, Inc.		6,000		99,240
Wilshire Bancorp, Inc.		5,600		100,912
				845,576

See Notes to the Financial Statements.

96

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Market Opportunities Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Shares		Value
Derivative Exchanges — 14.74%†
CBOT Holdings, Inc. — Class A*		2,400	$	287,016
Chicago Mercantile Exchange Holdings Inc.		600		294,690
International Securities Exchange, Inc.		6,000		228,420
				810,126
Diversified Consumer Services — 0.19%†
Sotheby’s Holdings, Inc. — Class A*		400		10,500
European Exchanges — 4.83%†
Deutsche Boerse AG		500		68,225
Euronext NV		1,000		93,754
Hellenic Exchanges Holding S.A.		1,000		16,090
London Stock Exchange Group plc		2,443		51,411
OMX AB		2,000		35,850
				265,330
Holding Company — 1.22%†
BAM Investments Ltd.*		500		67,186
IT Services — 0.18%†
Mastercard, Inc. -Class A*		200		9,600
Media — 1.28%†
Interactive Data Corporation*		1,000		20,090
The McGraw-Hill Companies, Inc.		1,000		50,230
				70,320
Other Exchanges — 2.18%†
Australian Stock Exchange Limited		2,000		48,420
Intercontinental Exchange Inc.*		200		11,588
New Zealand Exchange Limited		2,000		11,577
TSX Group Inc.		1,200		48,159
				119,744
Publishing — 0.99%†
Moody’s Corporation		1,000		54,460
Security Brokers, Dealers, And Flotation Companies — 0.39%†
GFI Group, Inc.*		400		21,580

See Notes to the Financial Statements.

97

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Market Opportunities Portfolio

Portfolio of Investments — June 30, 2006 (Unaudited) — (Continued)

	Shares		Value
Specialists — 3.26%†
LaBranche & Co Inc.*		14,800	$	179,228
State Commercial Banks — 1.76%†
Preferred Bank Los Angeles		1,800		96,498
U.S. Equity Exchanges — 10.34%†
Nasdaq Stock Market Inc.*		8,000		239,200
NYSE Group Inc.*		4,800		328,704
				567,904
TOTAL COMMON STOCKS (cost $4,706,384)				4,535,780

	Principal
SHORT-TERM INVESTMENTS — 20.08%†	Amount
US Government Agency Issues — 19.05%†
Federal National Mortgage Association Discount Note, 4.802%, due 7/3/2006	$	1,047,000		1,046,721
Variable Rate Demand Notes** — 1.03%†
U.S. Bank, N.A., 5.100%		56,446		56,446
TOTAL SHORT-TERM INVESTMENTS (cost $1,103,167)				1,103,167
TOTAL INVESTMENTS (cost $5,809,551) — 102.63%†			$	5,638,947

* —  Non-income producing security.

** —  Variable rate demand notes are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of June 30, 2006.

† — Calculated as a percentage of net assets.

ADR — American Depository Receipts.

See Notes to the Financial Statements.

98

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Portfolio

Portfolio of Written Options — June 30, 2006 (Unaudited)

WRITTEN CALL OPTIONS		Contracts		Value
Internet HOLDRs Trust
	Expiration: January, 2007, Exercise Price: $70.00		5	$	175
TOTAL WRITTEN OPTIONS (premiums received $6,985)				$	175

See Notes to the Financial Statements.

99

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

The Internet Emerging Growth Portfolio

Portfolio of Written Options — June 30, 2006 (Unaudited)

WRITTEN CALL OPTIONS		Contracts		Value
Nasdaq — 100 Index Tracking Stock
	Expiration: January, 2007, Exercise Price: $38.625		20	$	5,400
	Expiration: January, 2007, Exercise Price: $39.625		20		4,300
TOTAL WRITTEN OPTIONS (premiums received $22,479)				$	9,700

See Notes to the Financial Statements.

100

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Assets & Liabilities

June 30, 2006 (Unaudited)

						The Internet
				The Internet		Emerging Growth
				Portfolio		Portfolio
ASSETS:
	Investments, at value(1) (3)			$	168,427,820	$	3,575,462
	Cash				739,017		8,141
	Receivable for contributed capital				17,084		327
	Dividends and interest receivable				278,075		12,350
	Other assets				10,934		828
			Total assets		169,472,930		3,597,108
LIABILITIES:
	Written options, at value(2)				175		9,700
	Payable to Adviser				147,197		3,310
	Payable to Trustees and Officers				2,424		53
	Payable for collateral received for securities loaned				23,673,100		325,330
	Payable for withdrawn capital				55,517		4,053
	Accrued expenses and other liabilities				40,378		2,432
			Total liabilities		23,918,791		344,878
		Net assets		$	145,554,139	$	3,252,230
(1) Cost of investments				$	127,860,441	$	2,941,275
(2) Premiums received				$	6,985	$	22,479
(3) Includes loaned securities with a market value of				$	23,464,389	$	318,780

See Notes to the Financial Statements.

101

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Assets & Liabilities

June 30, 2006 (Unaudited)

				The Paradigm		The Medical
				Portfolio		Portfolio
ASSETS:
	Investments, at value(1) (2)			$	1,502,537,180	$	13,972,437
	Foreign currencies, at value(3)				29,561		—
	Cash				4,985,479		32,922
	Receivable for contributed capital				8,865,598		1,533,119
	Dividends and interest receivable				920,385		15,550
	Other assets				31,979		331
			Total assets		1,517,370,182		15,554,359
LIABILITIES:
	Payable to Adviser				1,040,051		13,526
	Payable to Trustees and Officers				12,310		219
	Payable for securities purchased				29,122,883		—
	Payable for collateral received for securities loaned				88,374,335		795,776
	Payable for withdrawn capital				671,831		12,540
	Accrued expenses and other liabilities				255,779		6,807
			Total liabilities		119,477,189		828,868
		Net assets		$	1,397,892,993	$	14,725,491
(1) Cost of investments				$	1,363,192,171	$	15,943,521
(2) Includes loaned securities with a market value of				$	88,097,756	$	770,591
(3) Cost of foreign currencies				$	27,766	$	—

See Notes to the Financial Statements.

102

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Assets & Liabilities

June 30, 2006 (Unaudited)

						The Kinetics
				The Small Cap		Government
				Opportunities		Money Market
				Portfolio		Portfolio
ASSETS:
	Investments, at value(1)(2)			$	242,200,322	$	1,003,732
	Cash				264,609		318
	Receivable for contributed capital				1,145,547		12,215
	Dividends and interest receivable				81,899		—
	Other assets				2,279		64
			Total assets		243,694,656		1,016,329
LIABILITIES:
	Payable to Adviser				213,411		403
	Payable to Trustees and Officers				2,834		7
	Payable for securities purchased				2,774,146		—
	Payable for collateral received for securities loaned				21,020,500		—
	Payable for withdrawn capital				90,334		2,780
	Accrued expenses and other liabilities				55,408		1,066
			Total liabilities		24,156,633		4,256
		Net assets		$	219,538,023	$	1,012,073
(1) Cost of investments				$	210,924,871	$	1,003,732
(2) Includes loaned securities with a market value of				$	20,517,327	$	—

See Notes to the Financial Statements.

103

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Assets & Liabilities

June 30, 2006 (Unaudited)

				The Market
				Opportunities
				Portfolio
ASSETS:
	Investments, at value(1)			$	5,638,947
	Cash				6,268
	Receivable for contributed capital				82,846
	Dividends and interest receivable				3,490
	Other assets				41
			Total assets		5,731,592
LIABILITIES:
	Payable to Adviser				5,217
	Payable to Trustees and Officers				40
	Payable for securities purchased				228,413
	Accrued expenses and other liabilities				3,468
			Total liabilities		237,138
		Net assets		$	5,494,454
(1) Cost of investments				$	5,809,551

See Notes to the Financial Statements.

104

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Operations

For the Six Months Ended June 30, 2006 (Unaudited)

							The Internet
				The Internet			Emerging Growth
				Portfolio			Portfolio
INVESTMENT INCOME:
	Dividends†			$	511,554		$	39,011
	Interest				524,999			31,356
	Income from securities lending				19,836			992
			Total investment income		1,056,389			71,359
EXPENSES:
	Investment advisory fees				936,550			21,809
	Administration fees				62,305			1,445
	Professional fees				6,406			293
	Fund accounting fees				21,143			1,571
	Trustees’ and Officers’ fees and expenses				1,720			27
	Custodian fees and expenses				12,787			2,660
	Other expenses				4,634			100
			Total expenses		1,045,545			27,905
			Expense reduction*		(12,003	)		(1,147	)
			Net expenses		1,033,542			26,758
Net investment income					22,847			44,601
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
	Net realized gain (loss) on:
		Investments and foreign currency			(13,300,682	)		114,249
	Net change in unrealized appreciation (depreciation) of:
		Investments and foreign currency			29,125,372			(54,125	)
		Written option contracts			2,825			8,900
Net gain on investments					15,827,515			69,024
Net increase in net assets resulting from operations				$	15,850,362		$	113,625
† Net of Foreign Taxes Withheld of:				$	18,312		$	564

* See “Expenses Reduction” in the Notes to the Financial Statements.

See Notes to the Financial Statements.

105

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Operations

For the Six Months Ended June 30, 2006 (Unaudited)

				The Paradigm			The Medical
				Portfolio			Portfolio
INVESTMENT INCOME:
	Dividends†			$	4,774,532		$	126,658
	Interest				2,900,477			8,441
	Income from securities lending				39,787			992
			Total investment income		7,714,796			136,091
EXPENSES:
	Investment advisory fees				5,017,093			86,615
	Administration fees				325,496			5,734
	Professional fees				55,156			470
	Fund accounting fees				87,880			3,162
	Trustees’ and Officers’ fees and expenses				30,579			103
	Custodian fees and expenses				108,576			5,268
	Other expenses				11,959			472
			Total expenses		5,636,739			101,824
			Expense reduction*		(109,039	)		(1,834	)
			Net expenses		5,527,700			99,990
	Net investment income				2,187,096			36,101
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
	Net realized gain (loss) on:
		Investments and foreign currency			(921,905	)		1,005,122
	Net change in unrealized appreciation (depreciation) of:
		Investments and foreign currency			75,767,436			(250,451	)
Net gain on investments					74,845,531			754,671
Net increase in net assets resulting from operations				$	77,032,627		$	790,772
† Net of Foreign Taxes Withheld of:				$	322,541		$	14,592

* See “Expenses Reduction” in the Notes to the Financial Statements.

See Notes to the Financial Statements.

106

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Operations

For the Six Months Ended June 30, 2006 (Unaudited)

							The Kinetics
				The Small Cap			Government
				Opportunities			Money Market
				Portfolio			Portfolio
INVESTMENT INCOME:
	Dividends†			$	688,094		$	—
	Interest				562,366			21,986
	Income from securities lending				11,504			—
			Total investment income		1,261,964			21,986
EXPENSES:
	Investment advisory fees				1,127,058			2,493
	Administration fees				73,621			417
	Professional fees				12,359			28
	Fund accounting fees				26,730			174
	Trustees’ and Officers’ fees and expenses				6,635			11
	Custodian fees and expenses				26,271			3,712
	Other expenses				2,888			1
			Total expenses		1,275,562			6,836
			Expense reduction*		(59,924	)		—
			Net expenses		1,215,638			6,836
Net investment income					46,326			15,150
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
	Net realized loss on:
		Investments and foreign currency			(402,914	)		—
	Net change in unrealized appreciation of:
		Investments and foreign currency			12,240,221			—
Net gain on investments					11,837,307			—
Net increase in net assets resulting from operations				$	11,883,633		$	15,150
† Net of Foreign Taxes Withheld of:				$	12,017		$	—

* See “Expenses Reduction” in the Notes to the Financial Statements.

See Notes to the Financial Statements.

107

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statement of Operations

For the period January 31, 2006^ through June 30, 2006 (Unaudited)

				The Market
				Opportunities
				Portfolio
INVESTMENT INCOME:
	Dividends†			$	7,348
	Interest				32,378
			Total investment income		39,726
EXPENSES:
	Investment advisory fees				18,888
	Administration fees				1,095
	Professional fees				220
	Fund accounting fees				958
	Trustees’ and Officers’ fees and expenses				92
	Custodian fees and expenses				6,009
			Total expenses		27,262
			Expense reduction*		(1,149	)
			Net expenses		26,113
Net investment income					13,613
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
	Net realized loss on:
		Investments and foreign currency			(86	)
	Net change in unrealized depreciation of:
		Investments and foreign currency			(170,585	)
Net loss on investments					(170,671	)
Net decrease in net assets resulting from operations				$	(157,058	)
†Net of Foreign Taxes Withheld of:				$	658

^ Commencement of operations

*  See “Expense Reduction” in the Notes to the Financial Statements.

See Notes to the Financial Statements.

108

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Changes in Net Assets

									The Internet
			The Internet Portfolio						Emerging Growth Portfolio
			For the						For the
			Six Months			For the			Six Months			For the
			Ended			Year Ended			Ended			Year Ended
			June 30, 2006			December 31,			June 30, 2006			December 31,
			(Unaudited)			2005			(Unaudited)			2005
OPERATIONS:
	Net investment income		$	22,847		$	2,268,661		$	44,601		$	174,358
	Net realized gain (loss) on sale of investments, foreign currency and written options			(13,300,682	)		(7,302,620	)		114,249			(20,871	)
	Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options			29,128,197			1,383,278			(45,225	)		(47,071	)
		Net increase (decrease) in net assets resulting from operations		15,850,362			(3,650,681	)		113,625			106,416
NET INCREASE IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS:
	Contributions			2,251,133			195,954			105,075			646,599
	Withdrawals			(21,344,472	)		(50,457,661	)		(863,358	)		(1,449,775	)
		Net decrease in net assets resulting from beneficial interest transactions		(19,093,339	)		(50,261,707	)		(758,283	)		(803,176	)
	Total decrease in net assets			(3,242,977	)		(53,912,388	)		(644,658	)		(696,760	)
NET ASSETS:
	Beginning of period			148,797,116			202,709,504			3,896,888			4,593,648
	End of period		$	145,554,139		$	148,797,116		$	3,252,230		$	3,896,888

See Notes to the Financial Statements.

109

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Changes in Net Assets

			The Paradigm Portfolio						The Medical Portfolio
			For the						For the
			Six Months			For the			Six Months			For the
			Ended			Year Ended			Ended			Year Ended
			June 30, 2006			December 31,			June 30, 2006			December 31,
			(Unaudited)			2005			(Unaudited)			2005
OPERATIONS:
	Net investment income (loss)		$	2,187,096		$	362,091		$	36,101		$	(24,812	)
	Net realized gain (loss) on sale of investments, foreign currency and written options			(921,905	)		273,557			1,005,122			1,895,925
	Net change in unrealized appreciation (depreciation) of investments, foreign currency and written options			75,767,436			37,043,510			(250,451	)		(2,052,698	)
		Net increase in net assets resulting from operations		77,032,627			37,679,158			790,772			(181,585	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS:
	Contributions			824,750,417			408,538,810			1,679,612			165,335
	Withdrawals			(33,108,444	)		(42,407,006	)		(2,281,847	)		(5,778,914	)
		Net increase (decrease) in net assets resulting from beneficial interest transactions		791,641,973			366,131,804			(602,235	)		(5,613,579	)
	Total increase (decrease) in net assets			868,674,600			403,810,962			188,537			(5,795,164	)
NET ASSETS:
	Beginning of period			529,218,393			125,407,431			14,536,954			20,332,118
	End of period		$	1,397,892,993		$	529,218,393		$	14,725,491		$	14,536,954

See Notes to the Financial Statements.

110

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Changes in Net Assets

			The Small Cap						The Kinetics Government
			Opportunities Portfolio						Money Market Portfolio
			For the						For the
			Six Months			For the			Six Months			For the
			Ended			Year Ended			Ended			Year Ended
			June 30, 2006			December 31,			June 30, 2006			December 31,
			(Unaudited)			2005			(Unaudited)			2005
OPERATIONS:
	Net investment income		$	46,326		$	436,012		$	15,150		$	18,134
	Net realized loss on sale of investments, foreign currency and written options			(402,914	)		(1,152,617	)		—			—
	Net change in unrealized appreciation of investments, foreign currency and written options			12,240,221			10,833,455			—			—
		Net increase in net assets resulting from operations		11,883,633			10,116,850			15,150			18,134
NET DECREASE IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS:
	Contributions			89,889,665			91,619,332			520,544			383,201
	Withdrawals			(11,071,167	)		(11,574,985	)		(594,982	)		(511,184	)
		Net increase (decrease) in net assets resulting from beneficial interest transactions		78,818,498			80,044,347			(74,438	)		(127,983	)
	Total increase (decrease) in net assets			90,702,131			90,161,197			(59,288	)		(109,849	)
NET ASSETS:
	Beginning of period			128,835,892			38,674,695			1,071,361			1,181,210
	End of period		$	219,538,023		$	128,835,892		$	1,012,073		$	1,071,361

See Notes to the Financial Statements.

111

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Statements of Changes in Net Assets

			The Market
			Opportunities
			Portfolio
			From
			January 31, 2006^
			through
			June 30, 2006
			(Unaudited)
OPERATIONS:
	Net investment income		$	13,613
	Net realized loss on sale of investments, foreign currency and written options			(86	)
	Net change in unrealized depreciation of investments, foreign currency and written options			(170,585	)
		Net decrease in net assets resulting from operations		(157,058	)
NET INCREASE IN NET ASSETS RESULTING FROM BENEFICIAL INTEREST TRANSACTIONS:
	Contributions			5,748,207
	Withdrawals			(96,695	)
		Net increase in net assets resulting from beneficial interest transactions		5,651,512
	Total increase in net assets			5,494,454
NET ASSETS:
	Beginning of period			—
	End of period		$	5,494,454

^ Commencement of operations.

See Notes to the Financial Statements.

112

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements

June 30, 2006 (Unaudited)

1.   Organization

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

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

Each of the Master Portfolios, with the exception of The Kinetics Government Money Market Portfolio, seeks to provide investors with long-term capital growth. The Internet Portfolio invests primarily in the equity securities of U.S. and foreign companies engaged in the Internet and Internet-related activities. The Internet Emerging Growth Portfolio invests primarily in the equity securities of small and medium capitalization U.S. and foreign growth emerging companies engaged in the Internet and Internet-related activities. The Paradigm Portfolio invests primarily in the equity securities of U.S. and foreign companies that the investment adviser believes are undervalued and that have high returns on equity and are well positioned to reduce their costs, extend the reach of their distribution channels and experience significant growth in revenues. The Medical Portfolio invests primarily in the equity securities of U.S. and foreign companies engaged in medical research, pharmaceutical treatments and related medical technology with a focus on companies engaged in cancer research and drug development. The Small Cap Opportunities Portfolio invests primarily in the equity securities of U.S.

113

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Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

and foreign small capitalization companies that provide attractive valuation opportunities due to special situations such as lack of institutional ownership, lack of significant analyst coverage or companies with sound fundamentals that have experienced a short-term earnings shortfall. The Market Opportunities Portfolio invests primarily in the equity securities of U.S. and foreign companies engaged in capital markets or related to capital markets or in the gaming industry. The Kinetics Government Money Market Portfolio seeks to provide investors with current income consistent with the preservation of capital and maintenance of liquidity by investing in money market instruments issued by the U.S. Government, its agencies or instrumentalities.

2.   Significant Accounting Policies

Security Valuation

Master Portfolio securities (other than Government) that are listed on a U.S. securities exchange for which market quotations are readily available are valued at the last quoted sale price on the day the valuation is made. Price information on listed securities is taken from the exchange where the security is primarily traded. All equity securities that are traded using the National Association of Securities Dealers’ Automated Quotation System (“NASDAQ”) are valued using the NASDAQ Official Closing Price (“NOCP”). In the event market quotations are not readily available or if events occur that may materially affect the value of a particular security between the time trading ends on a particular security and the close of regular trading on the NYSE, “fair value” will be determined. Purchased options, futures, unlisted U.S. securities and listed U.S. securities not traded on the valuation date for which market quotations are readily available are valued at the mean of the most recent bid and asked prices. Fixed-income securities (other than obligations having a maturity of 60 days or less) are normally valued on the basis of quotes obtained from pricing services, which take into account appropriate factors such as institutional sized trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data. Investments in The Kinetics Government Money Market Portfolio and instruments purchased with remaining maturities of 60 days or less are valued at amortized cost, which approximates fair value. Other assets and securities for which no quotations are readily available (including restricted securities) will be valued in good faith at fair value using methods determined by the Board of Trustees of the Master Portfolios. At June 30, 2006, there were no fair valued securities held by the Master Portfolios.

114

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

Repurchase Agreements

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

At June 30, 2006 the Master Portfolios, with the exception of the Kinetics Government Money Market Portfolio and The Market Opportunities Portfolio, received, as collateral, securities with a total market value of $97,949,189. The detailed list of the securities received as collateral is listed below.

Citigroup Global, 5.3625% due 7/3/2006, par value $50,000,000
Collateralized by:

Description	Fair Value
Inter-American Development Bank, 4.375%, 9/20/2012	$	21,205,121
US Treasury Note, 5.125%, 6/30/2008		28,795,615
Total	$	50,000,736

CS First Boston Repurchase Agreement, 5.250%, due 7/3/2006,
par value $12,000,000
Collateralized by:

Description	Fair Value
GNMA, Series 2003-114, Class SH, 4.8606%, 11/17/2032	$	2,776,265
GNMA, Series 2005-6, Class SJ, 5.4381%, 11/20/2034		2,493,623
FHLMC, Series 2600, Class SA, 0.4813%, 4/15/2033		47,282
FHLMC, Series 2827, Class SH, 2.7713%, 2/15/2033		1,929,811
FHLMC, Series 3136, Class SA, 2.1875%, 4/15/2036		1,428,112
FNMA, Series 2006-23, Class VS, 10.675%, 4/25/2036		1,775,431
FNMA, Series 1996-46, Class SD, 8.5969%, 12/25/2023		1,715,533
FNMA, Series 2005-53, Class SK, 1.3775%, 6/25/2035		78,001
Total	$	12,244,059

115

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

CS First Boston Repurchase Agreement, 5.250%, due 7/3/2006,
par value $11,000,000
Collateralized by:

Description	Fair Value
FHLMC, Series 2638, Class SG, 0.7031%, 10/15/2031		937,691
FHLMC, Series 2828, Class NS, 1.7813%, 12/15/2018		306,943
FHLMC, Series 2994, Class SC, 0.2313%, 2/15/2033		66,234
FHLMC, Series 3022, Class CI, 1.3813%, 8/15/2025		406,773
FHLMC, Series 3156, Class MS, 6.5475%, 5/15/2036		8,829,737
FNMA, Series 2005-120, Class WS, 3.7619%, 1/25/2036		367,214
FNMA, Series 2006-23, Class SK, 1.4275%, 4/25/2036		305,682
Total	$	11,220,275

CS First Boston Repurchase Agreement, 5.250%, due 7/3/2006,
par value $12,000,000
Collateralized by:

Description	Fair Value
FHLMC, Series 3007, Class SB, 0.0%, 7/15/2035		1,523,501
FHLMC, Series 3013, Class WS, 2.605%, 8/15/2035		1,566,891
FHLMC, Series 3061, Class VS, 7.1403%, 11/15/2035		1,293,324
FHLMC, Series 3107, Class ST, 8.2151%, 2/15/2031		1,753,026
FHLMC, Series 3136, Class SA, 2.1875%, 4/15/2036		826,797
FHLMC, Series 3171, Class AS, 7.0875%, 6/15/2036		973
FNMA, Series 2005-21, Class SD, 2.0917%, 3/25/2035		1,245,453
FNMA, Series 2006-49, Class SH, 3.55%, 6/25/2036		1,620,664
FNMA, Series 2006-12, Class SC, 3.2175%, 3/25/2036		2,350,996
FNMA, Series 2005-50, Class LS, 1.3275%, 6/25/2035		58,733
Total	$	12,240,358

CS First Boston Repurchase Agreement, 5.250%, due 7/3/2006,
par value $12,000,000
Collateralized by:

Description	Fair Value
GNMA, Series 2005-45, Class SB, 0.6135%, 2/16/2035	$	1,231,001
GNMA, Series 2004-94, Class TS, 3.9411%, 10/20/2034		142,832
FHLMC, Series 3013, Class SX, 3.5956%, 8/15/2035		1,114,366
FHLMC, Series 3061, Class VS, 7.1403%, 11/15/2035		748,427
FHLMC, Series 3087, Class SN, 6.5177%, 10/15/2035		1,713,376
FHLMC, Series 2006-49, Class VS, 17.907%, 6/25/2036		2,060,692
FNMA, Series 2006-49, Class TG, 9%, 6/25/2036		2,077,284
FNMA, Series 2006-46, Class SP, 4.6842%, 6/25/2036		1,389,276
FNMA, Series 2006-49, Class TH, 12%, 6/25/2036		1,766,507
Total	$	12,243,761

116

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

Written Option Accounting

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

Foreign Currency Translations

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

117

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

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

Restricted Securities

The Master Portfolios may invest in restricted securities. These securities are valued by the Master Portfolios after giving due consideration to pertinent factors including recent private sales, market conditions and the issuer’s financial performance. The Master Portfolios have no right to require registration of unregistered securities. At June 30, 2006, the Master Portfolios did not hold any investment securities which were determined to be illiquid pursuant to the guidelines adopted by the Board of Trustees.

When-Issued Securities

The Master Portfolios may purchase securities on a when-issued or delayed delivery basis. Although the purchase amounts of these securities are established at the time the purchaser enters into the agreement, these securities 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.

Expense Reduction

The Adviser has directed a certain amount of the Master Portfolios’ trades to brokers believed to provide the best execution and, as a result, it has generated directed brokerage credits to reduce certain service provider fees. For the six months ended June 30, 2006, the total expenses of The Internet Portfolio, The Internet Emerging Growth Portfolio, The Paradigm Portfolio, The Medical Portfolio, The Small Cap Opportunities Portfolio and The Market Opportunities Portfolio were reduced by $12,003, $1,147, $109,039, $1,834, $59,924 and $1,149, respectively, by using directed brokerage credits. In accordance with the requirements of the Securities and Exchange Commission, such amounts are required to be shown as an expense and have been included in each of the service provider fees in the Statement of Operations.

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 33 1/3% of the total assets of each Portfolio (including any collateral posted) or

118

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

50% of the total assets of each Portfolio (excluding any collateral posted). Securities lending and repurchase transactions will be fully collateralized at all times with cash and/or short-term debt obligations. The Master Portfolios receive interest on the collateral received as well as a fee for the securities loaned.

Expense Allocation

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

Federal Income Taxes

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

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.

3.   Investment Adviser

The Trust has Investment Advisory Agreements (the “Agreements”) with Kinetics Asset Management, Inc. (the “Adviser”), with whom certain officers and trustees of the Trust are affiliated, to furnish investment advisory services to the Master Portfolios. Under the terms of the Agreements, the Master Portfolios compensate the Adviser for its management services at the annual rate of 1.25% of each Master Portfolio’s average daily net assets, except for

119

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

The Kinetics Government Money Market Portfolio, which compensates the Adviser at a rate of 0.50% of the Master Portfolio’s average daily net assets. For the six months ended June 30, 2006, The Internet Portfolio, The Internet Emerging Growth Portfolio, The Paradigm Portfolio, The Medical Portfolio, The Small Cap Opportunities Portfolio, The Kinetics Government Money Market Portfolio, and The Market Opportunities Portfolio incurred expenses of $936,550, $21,809, $5,017,093, $86,615, $1,127,058, $2,493 and $18,888, respectively, pursuant to the Investment Advisory Agreements.

KBD Securities, LLC, an affiliate of the Adviser, received $91,524 in brokerage fee commissions with respect to the Portfolios’ portfolio transactions, which constituted 12% of the Portfolios’ brokerage commissions during the period, not including any reimbursements by the Adviser.

Portfolio	Commissions
The Internet Portfolio	$	5,312
The Internet Emerging Growth Portfolio	$	1,569
The Paradigm Portfolio	$	62,827
The Medical Portfolio	$	1,850
The Small Cap Opportunities Portfolio	$	18,265
The Market Opportunities Portfolio	$	1,701

For the six months ended June 30, 2006, the Trust was allocated $12,000 for the services of the Chief Compliance Officer employed by the Adviser.

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

At a meeting of the Board of Trustees held on March 9, 2006, the Board, including all of the Independent Trustees, approved the Agreements with respect to the Internet, Internet Emerging Growth, Paradigm, Medical, Small Cap Opportunities and Kinetics Government Money Market Portfolios. In reaching a decision to renew the Agreements, the Board of Trustees, including all of the Trustees who are not interested persons under the 1940 Act (the “Independent Trustees”), considered, among others (1) the nature, extent and quality of the services provided by the Adviser; (2) the performance of the Portfolios over 6 and 9 months and three and five year periods ended December 31, 2005 compared to the median of its relevant Lipper, Inc. (“Lipper”) peer group; (3) the contractual and actual compensation to be paid under the Agreements as compared to the compensation paid to relevant

120

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

Lipper peer groups; (4) the expense ratios of the Master Portfolios, with expense waivers, as compared to expense ratios for relevant peer groups of Lipper portfolios; (5) the qualifications of the Adviser’s personnel, portfolio management capabilities and investment methodologies; (6) the Adviser’s operations, compliance program and policies with respect to Code of Ethics; (7) the financial condition of the Adviser; (8) the cost of services to be provided by the Adviser and the Adviser’s profitability from each Master Portfolio for the years ended December 31, 2005; (9) “fall-out” benefits to the Adviser and its affiliates from the relationship with the Master Portfolios; (10) the extent to which economies of scale are relevant given the Master Portfolios’ current asset size and current asset growth potential; and (11) that each Master Portfolio other than the Government Money Market Portfolio is designed for long-term investors. The Lipper peer group information was provided by U.S. Bancorp Fund Services, LLC, the Company’s administrator.

The Board of Trustees, including a majority of the Independent Trustees, concluded that: they were satisfied with the quality of services provided by the Adviser in advising the Master Portfolios; the performance, advisory fee and total expenses of each Master Portfolio were generally acceptable given the applicable fee waivers, expense reimbursements and/or expense caps; the profits earned by the Adviser were reasonable in light of the nature, extent and quality of the services provided to each Master Portfolio; and that each Master Portfolio was not large enough to attain significant economies of scale.

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

121

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

5.   Securities Transactions

Purchases and sales of investment securities, other than short-term investments, for the six months ended June 30, 2006 were as follows:

	Purchases				Sales
	U.S.				U.S.
	Government		Other		Government		Other
The Internet Portfolio	$	—	$	2,191,126	$	—	$	23,006,667
The Internet Emerging Growth Portfolio		—		142,649		—		791,012
The Paradigm Portfolio		—		379,872,643		—		3,781,123
The Medical Portfolio		—		431,959		—		2,958,543
The Small Cap Opportunities Portfolio		—		82,503,020		—		2,257,446
The Market Opportunities Portfolio		—		4,711,757		—		4

As of June 30, 2006, unrealized appreciation (depreciation) on investment securities was as follows:

	Net
	Appreciation			Appreciated		Depreciated
	(Depreciation)			Securities		Securities
The Internet Portfolio	$	40,567,379		$	57,808,359	$	(17,240,980	)
The Internet Emerging Growth Portfolio		634,187			1,162,381		(528,194	)
The Paradigm Portfolio		139,345,009			171,494,898		(32,149,889	)
The Medical Portfolio		(1,971,084	)		2,699,427		(4,670,511	)
The Small Cap Opportunities Portfolio		31,275,451			39,240,676		(7,965,225	)
The Market Opportunities Portfolio		(170,604	)		134,242		(304,846	)

At June 30, 2006, the cost of investments was $127,860,441, $2,941,275, $1,363,192,171, $15,943,521, $210,924,871 and $5,809,551 for The Internet Portfolio, The Internet Emerging Growth Portfolio, The Paradigm Portfolio, The Medical Portfolio, The Small Cap Opportunities Portfolio, and The Market Opportunities Portfolio, respectively.

For the six months ended June 30, 2006, the Master Portfolios wrote the following options:

	Number		Premium
	of Contracts		Amount
The Internet Portfolio
Outstanding at the Beginning of Year		5	$	6,985
Options Expired		—		—
Outstanding as of June 30, 2006		5	$	6,985

122

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

	Number		Premium
	of Contracts		Amount
The Internet Emerging Growth Portfolio
Outstanding at the Beginning of Year		40	$	22,479
Options Written		—		—
Outstanding as of June 30, 2006		40	$	22,479

6.   Portfolio Securities Loaned

As of June 30, 2006, 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, the Master Portfolio could experience a delay in recovering its securities and possible loss of income or value if the borrower fails to return them. The Master Portfolio receives interest on the collateral received as well as a fee for the securities loaned. The Master Portfolios will continue to receive dividends and interest on all securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan will be accounted for by the Master Portfolios. The value of the securities on loan and the value of the related collateral at June 30, 2006, were as follows:

	Securities		Collateral
The Internet Portfolio	$	23,464,389	$	23,673,100
The Internet Emerging Growth Portfolio		318,780		325,330
The Paradigm Portfolio		88,097,756		88,374,335
The Medical Portfolio		770,591		795,776
The Small Cap Opportunities Portfolio		20,517,327		21,020,500

123

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

7.   Selected Financial Highlights

Financial highlights for the Master Portfolios were as follows:

		The Internet Portfolio
		For the
		Six Months
		Ended		For the		For the		For the		For the		For the
		June 30,		Year Ended		Year Ended		Year Ended		Year Ended		Year Ended
		2006		December 31,		December 31,		December 31,		December 31,		December 31,
		(Unaudited)		2005		2004		2003		2002		2001
Ratio of expenses to average net assets:
	Before expense reduction		1.39%*		1.45%		1.50%		1.51%		1.51%		1.44%
	After expense reduction		1.38%*		1.44%		1.44%		1.51%		1.51%		1.44%
Ratio of net investment income to average net assets:
	Before expense reduction		0.02%*		1.35%		1.30%		0.99%		0.50%		0.32%
	After expense reduction		0.03%*		1.36%		1.36%		0.99%		0.50%		0.32%
Portfolio turnover rate			2%		12%		42%		69%		41%		44%

*  Annualized.

		The Internet Emerging Growth Portfolio
		For the
		Six Months
		Ended		For the		For the		For the		For the			For the
		June 30,		Year Ended		Year Ended		Year Ended		Year Ended			Year Ended
		2006		December 31,		December 31,		December 31,		December 31,			December 31,
		(Unaudited)		2005		2004		2003		2002			2001
Ratio of expenses to average net assets:
	Before expense reduction		1.60%*		1.73%		1.78%		1.84%		1.83%			2.30%
	After expense reduction		1.53%*		1.72%		1.73%		1.84%		1.83%			2.30%
Ratio of net investment income (loss) to average net assets:
	Before expense reduction		2.49%*		4.30%		2.77%		1.94%		(1.07%	)		(0.22%	)
	After expense reduction		2.56%*		4.31%		2.82%		1.94%		(1.07%	)		(0.22%	)
Portfolio turnover rate			4%		2%		18%		20%		27%			24%

*  Annualized.

124

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

		The Paradigm Portfolio
		For the
		Six Months
		Ended		For the		For the			For the		For the			For the
		June 30,		Year Ended		Year Ended			Year Ended		Year Ended			Year Ended
		2006		December 31,		December 31,			December 31,		December 31,			December 31,
		(Unaudited)		2005		2004			2003		2002			2001
Ratio of expenses to average net assets:
	Before expense reduction		1.40%*		1.45%		1.52%			1.56%		1.64%			2.27%
	After expense reduction		1.38%*		1.40%		1.42%			1.46%		1.64%			2.27%
Ratio of net investment income (loss) to average net assets:
	Before expense reduction		0.52%*		0.07%		(0.18%	)		1.28%		(0.27%	)		(0.69%	)
	After expense reduction		0.54%*		0.12%		(0.08%	)		1.38%		(0.27%	)		(0.69%	)
Portfolio turnover rate			1%		5%		52%			20%		40%			41%

*  Annualized.

		The Medical Portfolio
		For the
		Six Months
		Ended		For the			For the			For the			For the			For the
		June 30,		Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
		2006		December 31,			December 31,			December 31,			December 31,			December 31,
		(Unaudited)		2005			2004			2003			2002			2001
Ratio of expenses to average net assets:
	Before expense reduction		1.47%*		1.50%			1.58%			1.53%			1.53%			1.51%
	After expense reduction		1.44%*		1.49%			1.57%			1.53%			1.53%			1.51%
Ratio of net investment income (loss) to average net assets:
	Before expense reduction		0.49%*		(0.17%	)		(0.33%	)		(0.56%	)		(0.47%	)		(0.39%	)
	After expense reduction		0.52%*		(0.16%	)		(0.32%	)		(0.56%	)		(0.47%	)		(0.39%	)
Portfolio turnover rate			3%		2%			13%			16%			9%			6%

*  Annualized.

		The Small Cap Opportunities Portfolio
		For the
		Six Months
		Ended			For the			For the		For the		For the			For the
		June 30,			Year Ended			Year Ended		Year Ended		Year Ended			Year Ended
		2006			December 31,			December 31,		December 31,		December 31,			December 31,
		(Unaudited)			2005			2004		2003		2002			2001
Ratio of expenses to average net assets:
	Before expense reduction		1.41	%*		1.48	%		1.55%		1.67%		1.66%			2.35%
	After expense reduction		1.35	%*		1.37	%		1.21%		1.49%		1.66%			2.35%
Ratio of net investment income (loss) to average net assets:
	Before expense reduction		(0.01	%)*		0.46	%		1.51%		2.88%		(0.29%	)		(0.99%	)
	After expense reduction		0.05	%*		0.57	%		1.85%		3.06%		(0.29%	)		(0.99%	)
Portfolio turnover rate			1	%		4	%		96%		180%		200%			181%

*  Annualized.

125

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

The Kinetics Government

Money Market Portfolio

For the

Six Months

Ended

For the

For the

For the

For the

For the

June 30,

Year Ended

Year Ended

Year Ended

Year Ended

Year Ended

2006

December 31,

December 31,

December 31,

December 31,

December 31,

(Unaudited)

2005

2004

2003

2002

2001

Ratio of expenses to average net assets:

1.37%*

1.37%

0.83%

0.79%

0.75%

0.79%

Ratio of net investment income to average net assets:

3.04%*

1.58%

0.18%

0.15%

0.67%

2.70%

Portfolio turnover rate

N/A

N/A

N/A

N/A

N/A

N/A

*  Annualized.

		The Market
		Opportunities Portfolio
		January 31,
		2006^
		through
		June 30,
		2006
		(Unaudited)
Ratio of expenses to average net assets:
	Before expense reduction		1.79%*
	After expense reduction		1.72%*
Ratio of net investment income to average net assets:
	Before expense reduction		0.82%*
	After expense reduction		0.89%*
Portfolio turnover rate			0%

*  Annualized.

^  Commencement of operations.

8.   Information about Proxy Voting (Unaudited)

Information regarding how the 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 the SEC’s website at www.sec.gov. Information regarding how the Portfolios voted proxies relating to portfolio securities during the twelve months ending June 30, 2006 will be available after

126

KINETICS PORTFOLIOS TRUST — MASTER INVESTMENT PORTFOLIOS

Notes to Financial Statements — (Continued)

June 30, 2006 (Unaudited)

August 31, 2006 without charge, upon request, by calling toll-free at 1-800-930-3828 or by accessing the SEC’s website at www.sec.gov.

9.   Information about the Portfolio Holdings (Unaudited)

The Kinetics Portfolios Trust file their complete schedule of portfolio holdings for their first and third fiscal quarters with the SEC on Form N-Q. The Portfolios’ Form N-Q is available without charge, upon request, by calling toll-free at 1-800-930-3828. Furthermore, you can obtain the Form N-Q on the SEC’s website at www.sec.gov. 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.

127

Kinetics Mutual

Funds, Inc.

16 New Broadway

Sleepy Hollow, NY 10591

INVESTMENT ADVISER AND

SHAREHOLDER SERVICING AGENT

Kinetics Asset Management, Inc.

16 New Broadway

Sleepy Hollow, NY 10591

INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

TAIT, WELLER & BAKER

1818 Market Street, Suite 2400

Philadelphia, PA 19103

DISTRIBUTOR

Kinetics Funds Distributor, Inc.

16 New Broadway

Sleepy Hollow, NY 10591

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.

615 East Michigan Street

Milwaukee, WI 53202

THIS MATERIAL MUST BE PRECEDED OR

ACCOMPANIED BY A PROSPECTUS

Item 2. Code of Ethics.

Not applicable for semi-annual reports.

Item 3. Audit Committee Financial Expert.

Not applicable for semi-annual reports.

Item 4. Principal Accountant Fees and Services.

Not applicable for semi-annual reports.

Item 5. Audit Committee of Listed Registrants.

Not applicable to open-end investment companies.

Item 6. Schedule of Investments.

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

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

Not applicable to open-end investment companies.

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

Not applicable to open-end investment companies.

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

Not applicable to open-end investment companies.

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

Not applicable.

Item 11. Controls and Procedures.

(a) The Registrant’s President/Chief Executive Officer and Treasurer/Chief Financial Officer have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”))

are effective as of a date within 90 days of the filing date of this report, that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended.

(b) There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item 12. Exhibits.

(a) (1) Not applicable.

(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

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

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished 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 09/07/06

     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 09/07/06

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

     Date 09/07/06

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

EX-99.CERT

EX.99.CERT

I, Peter B. Doyle, certify that:

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

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

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

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

Date: 09/07/06	/s/ Peter B. Doyle
	Peter B. Doyle
	President

EX.99.CERT

I, Leonid Polyakov, certify that:

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

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

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

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

Date: 09/07/06	/s/ Leonid Polyakov
	Leonid Polyakov
	Treasurer

EX-99.906CERT

EX.99. (906) CERT

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act

     Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of the Kinetics Mutual Funds, Inc. & Kinetics Portfolios Trust (each, the “Registrant”), does hereby certify, to such officer’s knowledge, that the Registrant’s report on Form N-CSR for the period ended June 30, 2006 fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ Peter B. Doyle	/s/ Leonid Polyakov
Peter B. Doyle	Leonid Polyakov
President, Kinetics Mutual Funds, Inc. & Kinetics	Treasurer, Kinetics Mutual Funds, Inc. & Kinetics
Portfolios Trust	Portfolios Trust

Dated: 09/07/06

This certification is being furnished to the Securities and Exchange Commission pursuant to Rule 30a-2(b) under the Investment Company Act of 1940, as amended, and 18 U.S.C. Section 1350 and is not being filed as part of the Form N-CSR with the Securities and Exchange Commission.