<PAGE> 1
June 30, 2000 www.kineticsfunds.com
SEMI-ANNUAL REPORT
The Internet Fund
The Internet Emerging Growth Fund
The Internet Infrastructure Fund
The Internet Global Growth Fund
The Internet New Paradigm Fund
The Medical Fund
The Middle East Growth Fund
The Small Cap Opportunities Fund
The Kinetics Government Money Market Fund
[KINETICS MUTUAL FUNDS, INC. LOGO]
<PAGE> 2
KINETICS MUTUAL FUNDS, INC.
TABLE OF CONTENTS
June 30, 2000
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Shareholder's Letter........................................ 2
Market Commentary......................................... 4
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
Statement of Assets and Liabilities....................... 6
Statement of Operations................................... 9
Statement of Changes in Net Assets........................ 12
Notes to the Financial Statements......................... 16
Financial Highlights...................................... 24
Changes in Independent Accountant......................... 31
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
Portfolio of Investments The Internet Portfolio........... 32
Portfolio of Investments The Internet Emerging Growth
Portfolio.............................................. 36
Portfolio of Investments The Internet Infrastructure
Portfolio.............................................. 39
Portfolio of Investments The Internet Global Growth
Portfolio.............................................. 41
Portfolio of Investments The New Paradigm Portfolio....... 48
Portfolio of Investments The Medical Portfolio............ 51
Portfolio of Investments The Middle East Growth
Portfolio.............................................. 54
Portfolio of Investments The Small Cap Opportunities
Portfolio.............................................. 57
Portfolio of Investments The Kinetics Government Money
Market Portfolio....................................... 60
Portfolio of Options Written The Internet Portfolio....... 61
Portfolio of Options Written The Internet Infrastructure
Portfolio.............................................. 62
Statement of Assets and Liabilities....................... 63
Statement of Operations................................... 66
Statement of Changes in Net Assets........................ 69
Notes to the Financial Statements......................... 72
</TABLE>
1
<PAGE> 3
KINETICS MUTUAL FUNDS, INC.
SHAREHOLDERS' LETTER
June 30, 2000
Dear Fellow Shareholders:
We are pleased to present the Kinetics Mutual Funds semi-annual report
for the period ended June 30, 2000. Much has happened in the last six
months. Our fund family has grown steadily from its beginnings with
our flagship, The Internet Fund, launched in 1996, to our encore
offering in 1999, The Medical Fund, to our current total of nine
Kinetics fund portfolios. As always, we thank our investors for their
interest and response and will strive to continue to provide our
shareholders, who now number over 150,000, with innovative investment
products and rewarding investment returns. We are gratified that
Strategic Insight, an independent mutual fund research organization,
cited Kinetics as the fastest growing investment management
organization in the country in 1999.
THE INTERNET FUND has provided investors with one of the first
opportunities to participate in the early stages of the Internet's
dramatic growth, and THE MEDICAL FUND offers a unique exposure to
investing in scientific discovery within the exciting field of medical
research and the development of cancer treatments and therapies.
During the first half of 2000, we successfully launched four new
Internet-related funds that provide Kinetics shareholders with a
greater variety of choice in this emerging investment arena. THE
INTERNET INFRASTRUCTURE FUND is dedicated to those companies that
stand to prosper from the ongoing build-out of the Net's foundation.
THE INTERNET EMERGING GROWTH FUND zeroes in on the early life cycle
companies that are positioned on the edge of the curve in this dynamic
and growing sector. THE INTERNET GLOBAL GROWTH FUND targets early
stage opportunities available in the Internet arena overseas. THE
INTERNET NEW PARADIGM FUND is in a more traditional fund category,
large cap growth, but with a non-traditional approach of investing in
blue chip companies poised to turn the growth of the Internet to their
advantage
Kinetics has recently added three additional funds to provide an even
greater array of choices for our shareholders. THE SMALL CAP
OPPORTUNITIES FUND provides a unique focus on under-followed
2
<PAGE> 4
and special situation stocks, THE MIDDLE EAST GROWTH FUND offers a way
to participate in the potential growth in the economies of that region
as progress is made toward peace, and THE KINETICS GOVERNMENT MONEY
MARKET FUND provides our shareholders with a convenient short-term
investment option.
We continue to reach out to our shareholders on a regular basis to
provide timely and insightful information regarding Kinetics Funds,
via our website www.kineticsfunds.com. It provides a broad array of
information, including portfolio holdings, investment commentary,
newsflashes, performance data and on-line access to account
information.
We thank you for your confidence and look forward to continuing to
provide you with products and services that will assist you in
achieving your investment goals.
/s/ Steven R. Samson
Steven R. Samson
President
Kinetics Mutual Funds, Inc.
3
<PAGE> 5
KINETICS MUTUAL FUNDS, INC.
MARKET COMMENTARY
June 30, 2000
The first six months of 2000 have been extremely turbulent for global
markets in general, and for the technology markets in particular. The
substantial rise of Internet and biotechnology stocks in January and
February, in the face of rising interest rates and with uncertainty
surrounding the Fed's decisions to raise interest rates, was quite
exceptional, as was the decline in many of these securities in the
months that followed. While we believe that some technology and
biotechnology shares had overextended their values, we were dismayed
by the general decline in the shares of securities with liquid balance
sheets, strong financial backing and sound business models.
Although share prices have declined, we believe the prospects of the
securities held by the Funds, as well as their financial results, are
still improving. In particular, we have witnessed incredible growth in
certain sectors, namely wireless technology, international development
of the Internet and in medical science and cancer research with the
mapping of the human genome. We believe the markets will recognize the
financial strength and market leadership of many companies in these
sectors in the future.
Kinetics Asset Management's objective has always been to pursue growth
while attempting to mitigate financial risk, which we believe is the
best protection against erosion of shareholder value over time. With
respect to the vast business opportunities that are available to the
companies whose shares are held by the Funds, possession of adequate
capital is the essential tool by which these companies can exploit
such opportunities. We will continue to emphasize companies with
capital strength, and will add to these investments when periodic
investor pessimism presents the Funds with an opportunity to do so.
In addition, we seek to invest in companies with proprietary products
that have defensible barriers to entry against external competition.
Whether a company's business is focused on building the Internet's
infrastructure, creating content and interactive media or researching
new cancer treatments, all investments in the Funds must demonstrate
the ability to differentiate their
4
<PAGE> 6
businesses and to exploit large and growing markets while protecting
against competition.
While the markets may continue to exhibit volatility in the short-
term, we believe the Funds are well positioned to benefit from the
long-term growth made possible by recent technological developments.
Finally, we continue to invest in companies that we believe will
endure and grow substantially in the future, and look forward to
assisting our shareholders in meeting their investment goals.
/s/ Peter B. Doyle
Peter B. Doyle
Chief Investment Strategist
Kinetics Asset Management, Inc.
5
<PAGE> 7
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
STATEMENT OF ASSETS & LIABILITIES
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
THE INTERNET THE INTERNET
THE INTERNET EMERGING INFRASTRUCTURE
FUND GROWTH FUND FUND
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments in the Master Portfolios,
at value*................................ $936,131,345 $10,499,093 $19,093,647
Receivable for Fund shares sold............ 2,418,128 1,430 2,000
Receivable from Advisor.................... 61,853 16,618 24,870
Prepaid expenses and other assets.......... 54,767 5,922 29,307
------------ ----------- -----------
Total assets........................... 938,666,093 10,523,063 19,149,824
------------ ----------- -----------
LIABILITIES:
Payable for service fee.................... 194,841 2,263 4,078
Payable for Fund shares repurchased........ 1,479,676 4,397 28,655
Accrued expenses and other liabilities..... 1,652,373 2,934 48,126
------------ ----------- -----------
Total liabilities...................... 3,326,890 9,594 80,859
------------ ----------- -----------
Net assets............................... $935,339,203 $10,513,469 $19,068,965
============ =========== ===========
NET ASSETS CONSIST OF:
Paid in capital............................ 884,860,807 17,550,905 25,755,650
Undistributed net investment loss.......... (9,494,132) (22,145) (47,553)
Undistributed net realized gain (loss) on
investments, options and foreign
currency................................. 43,350,006 (1,094,588) (836,125)
Net unrealized appreciation
(depreciation)........................... 16,622,522 (5,920,703) (5,803,007)
------------ ----------- -----------
Net assets............................... $935,339,203 $10,513,469 $19,068,965
============ =========== ===========
Shares outstanding (1,000,000,000 shares
authorized, $0.001 par value)............ 26,133,761 1,490,480 2,271,461
Net Asset Value, Redemption Price and
Offering Price per share................. $ 35.79 $ 7.05 $ 8.40
============ =========== ===========
</TABLE>
------------------
* Each Feeder Fund invests its assets directly in the corresponding Master
Portfolio. The financial statements for the Master Portfolios, along with the
schedule of investments in securities, are contained elsewhere in this report
and should be read in conjunction with the Fund's financial statements.
See Notes to the Financial Statements.
6
<PAGE> 8
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
STATEMENT OF ASSETS & LIABILITIES
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
THE INTERNET THE INTERNET
GLOBAL GROWTH NEW PARADIGM THE MEDICAL
FUND FUND FUND
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments in the Master Portfolios,
at value*.............................. $21,909,866 $3,100,915 $48,617,040
Receivable for Fund shares sold.......... 3,150 -- 38,183
Receivable from Advisor.................. 23,043 3,039 40,700
Prepaid expenses and other assets........ 126,330 2,944 6,435
----------- ---------- -----------
Total assets......................... 22,062,389 3,106,898 48,702,358
----------- ---------- -----------
LIABILITIES:
Payable for service fee.................. 4,654 655 8,824
Payable for Fund shares repurchased...... 125,978 939 14,488
Accrued expenses and other liabilities... 16,933 2,962 45,895
----------- ---------- -----------
Total liabilities.................... 147,565 4,556 69,207
----------- ---------- -----------
Net assets............................. $21,914,824 $3,102,342 $48,633,151
=========== ========== ===========
NET ASSETS CONSIST OF:
Paid in capital.......................... 29,269,944 3,480,193 39,860,513
Undistributed net investment income
(loss)................................. 929,209 (6,121) (162,384)
Undistributed net realized gain (loss) on
investments, options and foreign
currency............................... (723,998) (360,623) 334,029
Net unrealized appreciation
(depreciation)......................... (7,560,331) (11,107) 8,600,993
----------- ---------- -----------
Net assets............................. $21,914,824 $3,102,342 $48,633,151
=========== ========== ===========
Shares outstanding (1,000,000,000 shares
authorized, $0.001 par value).......... 2,388,063 347,915 2,512,056
Net Asset Value, Redemption Price and
Offering Price per share............... $ 9.18 $ 8.92 $ 19.36
=========== ========== ===========
</TABLE>
See Notes to the Financial Statements.
7
<PAGE> 9
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
STATEMENT OF ASSETS & LIABILITIES
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
THE SMALL CAP THE KINETICS
THE MIDDLE EAST OPPORTUNITIES GOVERNMENT MONEY
GROWTH FUND FUND MARKET FUND
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments in the Master Portfolios,
at value*............................. $269,353 $206,951 $11,259,918
Receivable from Advisor................. 2,599 912 4,204
Prepaid expenses and other assets....... 651 1,366 889
-------- -------- -----------
Total assets........................ 272,603 209,229 11,265,011
-------- -------- -----------
LIABILITIES:
Payable for service fee................. 54 39 8,424
Dividends payable....................... -- -- 147,501
Accrued expenses and other
liabilities........................... 5,119 5,103 34,129
-------- -------- -----------
Total liabilities................... 5,173 5,142 190,054
-------- -------- -----------
Net assets............................ $267,430 $204,087 $11,074,957
======== ======== ===========
NET ASSETS CONSIST OF:
Paid in capital......................... 304,930 199,699 11,074,957
Undistributed net investment income
(loss)................................ (548) 688 --
Undistributed net realized loss on
investments, options and foreign
currency.............................. (22,400) (3,163) --
Net unrealized appreciation
(depreciation)........................ (14,552) 6,863 --
-------- -------- -----------
Net assets............................ $267,430 $204,087 $11,074,957
======== ======== ===========
Shares outstanding (1,000,000,000 shares
authorized, $0.001 par value)......... 31,755 19,949 11,074,957
Net Asset Value, Redemption Price and
Offering Price per share.............. $ 8.42 $ 10.23 $ 1.00
======== ======== ===========
</TABLE>
------------------
* Each Feeder Fund invests its assets directly in the corresponding Master
Portfolio. The financial statements for the Master Portfolios, along with the
schedule of investments in securities, are contained elsewhere in this report
and should be read in conjunction with the Fund's financial statements.
See Notes to the Financial Statements.
8
<PAGE> 10
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THE INTERNET THE INTERNET
THE INTERNET EMERGING INFRASTRUCTURE
FUND GROWTH FUND FUND
------------- ------------- --------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED
JUNE 30, 2000 JUNE 30, 2000 JUNE 30, 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED)
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME ALLOCATED FROM MASTER
PORTFOLIOS*:
Dividends+.............................. $ 499,828 $ 5,847 $ 13,638
Interest................................ 1,987,456 66,704 86,756
------------- ----------- -----------
Total investment income............. 2,487,284 72,551 100,394
------------- ----------- -----------
EXPENSES:
Expenses allocated from Master
Portfolios............................ 2,238,466 34,688 54,264
Investment advisory fees................ 5,512,992 36,474 51,642
Service fees............................ 1,497,676 11,837 18,493
Transfer agent fees and expenses........ 1,303,092 31,860 44,217
Administration fee...................... 740,574 5,285 7,830
Reports to shareholders................. 592,017 1,624 2,490
Registration fees....................... 39,170 5,975 6,380
Audit fees.............................. 9,567 3,032 3,054
Custodian fees and expenses............. 55,491 6,298 5,924
Directors' fees and expenses............ 1,976 568 886
Fund accounting fees.................... 16,156 7,644 7,774
Other expenses.......................... 103,447 1,749 2,725
------------- ----------- -----------
Total expenses...................... 12,110,624 147,034 205,679
Less, expense reimbursement............. (129,216) (52,338) (57,732)
------------- ----------- -----------
Net expenses........................ 11,981,408 94,696 147,947
------------- ----------- -----------
NET INVESTMENT LOSS....................... (9,494,124) (22,145) (47,553)
------------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS ALLOCATED FROM MASTER
PORTFOLIOS:
Net realized gain (loss) on sale of
investments........................... 88,698,334 (1,094,588) (836,125)
Net change in unrealized depreciation of
investments and foreign currency...... (459,920,932) (5,920,703) (5,803,259)
Net change in unrealized appreciation of
written options....................... 15,359 -- 252
------------- ----------- -----------
Net loss on investments................... (371,207,239) (7,015,291) (6,639,132)
------------- ----------- -----------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS.............................. $(380,701,363) $(7,037,436) $(6,686,685)
============= =========== ===========
+Net of foreign taxes withheld of:........ $ 18,964 $ 306 $ --
============= =========== ===========
*Income allocated from Master Portfolios
includes
Dividend income before conversion
of:............................... $ 365,342 $ 4,122 $ 8,145
============= =========== ===========
Interest income before conversion
of:............................... $ 1,254,054 $ 41,030 $ 47,739
============= =========== ===========
</TABLE>
See Notes to the Financial Statements.
9
<PAGE> 11
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THE INTERNET THE INTERNET
GLOBAL GROWTH NEW PARADIGM THE MEDICAL
FUND FUND FUND
------------- ------------- -------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED
JUNE 30, 2000 JUNE 30, 2000 JUNE 30, 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED)
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME ALLOCATED FROM MASTER
PORTFOLIOS*:
Dividends+............................... $ 1,077,260 $ 4,476 $ 99,890
Interest................................. 56,403 13,985 59,635
----------- --------- ----------
Total investment income.............. 1,133,663 18,461 159,525
----------- --------- ----------
EXPENSES:
Expenses allocated from Master
Portfolios............................. 63,052 14,940 104,357
Investment advisory fees................. 67,245 8,831 116,491
Service fees............................. 22,717 3,073 40,239
Transfer agent fees and expenses......... 51,865 11,766 57,678
Administration fee....................... 9,923 1,321 17,367
Reports to shareholders.................. 3,127 427 32,617
Registration fees........................ 8,365 2,705 10,108
Audit fees............................... 3,069 3,002 3,626
Custodian fees and expenses.............. 7,934 2,320 9,172
Directors' fees and expenses............. 1,088 147 1,976
Fund accounting fees..................... 10,874 7,749 7,324
Other expenses........................... 3,333 459 5,981
----------- --------- ----------
Total expenses....................... 252,592 56,740 406,936
Less, expense reimbursement.............. (48,138) (32,158) (85,027)
----------- --------- ----------
Net expenses......................... 204,454 24,582 321,909
----------- --------- ----------
NET INVESTMENT INCOME (LOSS)............... 929,209 (6,121) (162,384)
----------- --------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS ALLOCATED FROM MASTER
PORTFOLIOS:
Net realized gain (loss) on sale of
investments............................ (723,998) (360,623) 334,029
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency....................... (7,560,331) (11,107) 7,523,799
----------- --------- ----------
Net gain (loss) on investments............. (8,284,329) (371,730) 7,857,828
----------- --------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................ $(7,355,120) $(377,851) $7,695,444
=========== ========= ==========
+Net of foreign taxes withheld of:......... $ 4,093 $ 94 $ 5,956
=========== ========= ==========
*Income allocated from Master Portfolios
includes
Dividend income before conversion
of:................................ $ 22,062 $ 2,688 $ 61,520
=========== ========= ==========
Interest income before conversion
of:................................ $ 39,243 $ 5,418 $ 47,742
=========== ========= ==========
</TABLE>
See Notes to the Financial Statements.
10
<PAGE> 12
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THE KINETICS
THE SMALL CAP GOVERNMENT
THE MIDDLE EAST OPPORTUNITIES MONEY MARKET
GROWTH FUND FUND FUND
----------------- ----------------- -------------------
MARCH 10, 2000(1) MARCH 20, 2000(1) FEBRUARY 3, 2000(1)
THROUGH THROUGH THROUGH
JUNE 30, 2000 JUNE 30, 2000 JUNE 30, 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED)
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME ALLOCATED FROM MASTER
PORTFOLIOS*:
Dividends+............................. $ 440 $ 547 $ --
Interest............................... 692 1,238 457,789
-------- -------- --------
Total investment income............ 1,132 1,785 457,789
-------- -------- --------
EXPENSES:
Expenses allocated from Master
Portfolios........................... 8,167 7,353 48,281
Investment advisory fees............... 404 290 9,255
Service fees........................... 186 137 19,820
Transfer agent fees and expenses....... 6,753 5,169 12,128
Administration fee..................... 70 51 5,815
Reports to shareholders................ 867 948 11,584
Registration fees...................... 1,144 1,094 8,869
Audit fees............................. 2,993 2,992 2,572
Custodian fees and expenses............ 2,663 936 2,109
Directors' fees and expenses........... 14 11 1,129
Fund accounting fees................... 7,751 3,898 14,712
Other expenses......................... 43 35 2,623
-------- -------- --------
Total expenses..................... 31,055 22,914 138,897
Less, expense reimbursement............ (29,375) (21,817) (39,796)
-------- -------- --------
Net expenses....................... 1,680 1,097 99,101
-------- -------- --------
NET INVESTMENT INCOME (LOSS)............ (548) 688 358,688
-------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS ALLOCATED FROM MASTER
PORTFOLIOS:
Net realized loss on sale of
investments.......................... (22,400) (3,163) --
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency..................... (14,552) 6,863 --
-------- -------- --------
Net gain (loss) on investments.......... (36,952) 3,700 --
-------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.............. $(37,500) $ 4,388 $358,688
======== ======== ========
+Net of foreign taxes withheld of:...... $ 150 $ -- $ --
======== ======== ========
*Income allocated from Master Portfolios
includes
Dividend income before conversion
of:.............................. $ 2 $ 28 $ --
======== ======== ========
Interest income before
conversion of:................... $ 319 $ 114 $ 91,125
======== ======== ========
</TABLE>
------------------
(1) Commencement of operations.
See Notes to the Financial Statements.
11
<PAGE> 13
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
THE INTERNET EMERGING
THE INTERNET FUND GROWTH FUND
------------------------------------ ---------------------
SIX MONTHS ENDED FOR THE YEAR SIX MONTHS ENDED
JUNE 30, 2000 ENDED JUNE 30, 2000
(UNAUDITED) DECEMBER 31, 1999 (UNAUDITED)
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment loss............ $ (9,494,124) $ (6,993,709) $ (22,145)
Net realized gain (loss) on
sale
of investments............... 88,698,334 (45,349,047) (1,094,588)
Net change in unrealized
appreciation (depreciation)
of
investments, options and
foreign currency............. (459,905,573) 471,769,870 (5,920,703)
--------------- -------------- -----------
Net increase (decrease) in
net assets resulting from
operations............... (380,701,363) 419,427,114 (7,037,436)
--------------- -------------- -----------
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS:
Net realized gain on securities
transactions................. -- (543,455) --
--------------- -------------- -----------
Total dividends and
distributions............ -- (543,455) --
--------------- -------------- -----------
FUND SHARE TRANSACTIONS:
Net proceeds from shares
sold......................... 1,382,720,391 1,458,349,629 21,979,477
Reinvestment of
distributions................ -- 506,413 --
Cost of shares redeemed........ (1,229,776,581) (736,801,628) (4,429,572)
--------------- -------------- -----------
Net increase in net assets
from capital share
contributions............ 152,943,810 722,054,414 17,549,905
--------------- -------------- -----------
Total increase (decrease) in
net assets................... (227,757,553) 1,140,938,073 10,512,469
NET ASSETS:
Beginning of period............ 1,163,096,756 22,158,683 1,000
--------------- -------------- -----------
End of period*................. $ 935,339,203 $1,163,096,756 $10,513,468
=============== ============== ===========
*Including undistributed net
investment loss of:............ $ (9,494,124) $ (6,993,709) $ (22,145)
=============== ============== ===========
CHANGES IN SHARES
OUTSTANDING:
Shares sold.................... 32,677,404 45,293,582 1,634,614
Shares issued in connection
with
payment of dividends and
distributions................ -- 9,786 --
Shares redeemed................ (29,932,456) (23,324,386) (144,234)
--------------- -------------- -----------
Net increase in shares
outstanding.............. 2,744,948 21,978,982 1,490,380
=============== ============== ===========
</TABLE>
See Notes to the Financial Statements.
12
<PAGE> 14
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
THE INTERNET THE INTERNET GLOBAL THE INTERNET NEW
INFRASTRUCTURE FUND GROWTH FUND PARADIGM FUND
------------------- ------------------- ----------------
SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2000 JUNE 30, 2000 JUNE 30, 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED)
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss)...... $ (47,553) $ 929,209 $ (6,121)
Net realized loss on sale
of investments.................. (836,125) (723,998) (360,623)
Net change in unrealized
depreciation of investments,
options and foreign currency.... (5,803,007) (7,560,331) (11,107)
----------- ----------- -----------
Net decrease in net assets
resulting from operations... (6,686,685) (7,355,120) (377,851)
----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS:
Total dividends and
distributions............... -- -- --
----------- ----------- -----------
FUND SHARE TRANSACTIONS:
Net proceeds from shares sold..... 29,899,384 37,071,650 4,622,976
Cost of shares redeemed........... (4,144,734) (7,802,706) (1,143,783)
----------- ----------- -----------
Net increase in net assets
from capital share
contributions............... 25,754,650 29,268,944 3,479,193
----------- ----------- -----------
Total increase in net assets...... 19,067,965 21,913,824 3,101,342
NET ASSETS:
Beginning of period............... 1,000 1,000 1,000
----------- ----------- -----------
End of period*.................... $19,068,965 $21,914,824 $ 3,102,342
=========== =========== ===========
*Including undistributed net
investment income (loss) of:...... $ (47,553) $ 929,209 $ (6,121)
=========== =========== ===========
CHANGES IN SHARES
OUTSTANDING:
Shares sold....................... 2,410,717 2,608,757 371,906
Shares redeemed................... (139,356) (220,794) (24,091)
----------- ----------- -----------
Net increase in shares
outstanding................. 2,271,361 2,387,963 347,815
=========== =========== ===========
</TABLE>
See Notes to the Financial Statements.
13
<PAGE> 15
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
THE MIDDLE EAST
THE MEDICAL FUND GROWTH FUND
---------------------------------------- ---------------------
SIX MONTHS ENDED SEPTEMBER 30, 1999(1) MARCH 10, 2000(1)
JUNE 30, 2000 THROUGH THROUGH JUNE 30, 2000
(UNAUDITED) DECEMBER 31, 1999 (UNAUDITED)
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment loss.......... $ (162,384) $ (8,305) $ (548)
Net realized gain (loss) on
sale of investments........ 334,029 6,812 (22,400)
Net change in unrealized
appreciation (depreciation)
of investments, options and
foreign currency........... 7,523,799 1,077,194 (14,552)
------------ ---------- --------
Net increase (decrease)
in net assets resulting
from operations........ 7,695,444 1,075,701 (37,500)
------------ ---------- --------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
Total dividends and
distributions.......... -- -- --
------------ ---------- --------
FUND SHARE TRANSACTIONS:
Net proceeds from shares
sold....................... 50,094,595 6,388,440 370,052
Cost of shares redeemed...... (16,100,446) (620,583) (65,122)
------------ ---------- --------
Net increase in net
assets from capital
share contributions.... 33,994,149 5,767,857 304,930
------------ ---------- --------
Total increase in
net assets................. 41,689,593 6,843,558 267,430
NET ASSETS:
Beginning of period.......... 6,943,558 100,000 --
------------ ---------- --------
End of period*............... $ 48,633,151 $6,943,558 $267,430
============ ========== ========
*Including undistributed net
investment loss of:.......... $ (162,384) $ (8,305) $ (548)
============ ========== ========
CHANGES IN SHARES OUTSTANDING:
Shares sold.................. 2,309,694 562,970 37,635
Shares redeemed.............. (317,618) (52,990) (5,880)
------------ ---------- --------
Net increase in shares
outstanding............ 1,992,076 509,980 31,755
============ ========== ========
</TABLE>
------------------
(1) Commencement of operations.
See Notes to the Financial Statements.
14
<PAGE> 16
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
THE SMALL CAP THE KINETICS GOVERNMENT
OPPORTUNITIES FUND MONEY MARKET FUND
------------------ -----------------------
MARCH 20, 2000(1) FEBRUARY 3, 2000(1)
THROUGH THROUGH
JUNE 30, 2000 JUNE 30, 2000
(UNAUDITED) (UNAUDITED)
-------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income...................... $ 688 $ 358,688
Net realized loss on sale of investments... (3,163) --
Net change in unrealized appreciation of
investments, options and foreign
currency................................. 6,863 --
--------- -------------
Net increase in net assets resulting
from operations...................... 4,388 358,688
--------- -------------
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS:
Net investment income...................... -- (358,688)
--------- -------------
Total dividends and
distributions........................ -- (358,688)
--------- -------------
FUND SHARE TRANSACTIONS:
Net proceeds from shares sold.............. 352,777 689,664,748
Reinvestment of distributions.............. -- 213,995
Cost of shares redeemed.................... (153,078) (678,803,786)
--------- -------------
Net increase in net assets
from capital share
contributions........................ 199,699 11,074,957
--------- -------------
Total increase in net assets................. 204,087 11,074,957
NET ASSETS:
Beginning of period........................ -- --
--------- -------------
End of period*............................. $ 204,087 $ 11,074,957
========= =============
*Including undistributed net
investment income of:...................... $ 688 $ --
========= =============
CHANGES IN SHARES
OUTSTANDING:
Shares sold................................ 26,914 689,664,748
Shares issued in connection with
payment of dividends and
distributions............................ -- 213,995
Shares redeemed............................ (6,965) (678,803,786)
--------- -------------
Net increase in shares outstanding..... 19,949 11,074,957
========= =============
</TABLE>
------------------
(1) Commencement of operations.
See Notes to the Financial Statements.
15
<PAGE> 17
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 (Unaudited)
The accompanying notes are an integral part of this financial statement.
1. ORGANIZATION
Kinetics Mutual Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act") and was incorporated in the
state of Maryland on March 26, 1999. The Company is an open-end management
investment company issuing its shares in series. The series of the Company
presently authorized are The Internet Fund ("Internet"), The Internet Emerging
Growth Fund ("Emerging"), The Internet Infrastructure Fund ("Infrastructure"),
The Internet Global Growth Fund ("Global"), The Internet New Paradigm Fund ("New
Paradigm"), The Medical Fund ("Medical"), The Middle East Growth Fund ("Middle
East"), The Small Cap Opportunities Fund ("Small Cap") and The Kinetics
Government Money Market Fund ("Government") (each a "Fund" and collectively, the
"Funds"). Investment operations of the Funds began on October 21, 1996
(Internet), September 30, 1999 (Medical), December 31, 1999 (Emerging,
Infrastructure, New Paradigm and Global), February 3, 2000 (Government), March
10, 2000 (Middle East) and March 20, 2000 (Small Cap). 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, each Fund in the series entered into a master-feeder fund
structure. By entering into this structure, each Fund invested all of its assets
in a corresponding Master Portfolio which had the same investment objective as
the Fund. Each Master Portfolio has multiple feeder funds. Each feeder fund
receives a proportionate amount of interest in the Master Portfolio equal to its
contribution of capital. Thus, each feeder fund is allocated its portion of
income, gains (losses) and expenses from the Master Portfolio. Each Fund's
16
<PAGE> 18
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
June 30, 2000 (Unaudited)
respective interest in the corresponding Master Portfolio as of June 30, 2000 is
as follows:
<TABLE>
<CAPTION>
INTEREST IN
MASTER PORTFOLIO
----------------
<S> <C>
Internet Fund......................................... 99.99%
Emerging Fund......................................... 99.91%
Infrastructure Fund................................... 99.95%
Global Fund........................................... 99.96%
New Paradigm Fund..................................... 99.65%
Medical Fund.......................................... 99.98%
Middle East Fund...................................... 96.19%
Small Cap Fund........................................ 94.99%
Government Fund....................................... 99.82%
</TABLE>
Prior to the conversion to a master-feeder fund structure, on April 28, 2000,
each Fund conducted its own investment operations. The Statement of Operations
and the Statement of Changes in Net Assets reflect the activities of the Fund
prior to the conversion as well as the activities following the conversion.
Please see the Master Portfolio's financial statements to obtain information
about the investment objective of the corresponding Fund. The financial
statements of the Master Portfolios, including the schedule of investments in
securities, are contained elsewhere in this report and should be read in
conjunction with the Funds' financial statements.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of the financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Master Portfolio securities that are listed on a U.S. securities exchange
(whether domestic or foreign) or The Nasdaq Stock Market ("NSM") for which
market quotations are readily available are valued at the last quoted sale price
as of 4:00 p.m., Eastern time on the day the valuation is made. 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 most recent bid price. 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
17
<PAGE> 19
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
June 30, 2000 (Unaudited)
characteristics and other market data. Fixed-income securities 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.
REPURCHASE AGREEMENTS
Each Master Portfolio may enter into repurchase agreements with banks that are
members of the Federal Reserve System or securities dealers who are members of a
national securities exchange or are primary dealers in U.S. Government
Securities. In connection with transactions in repurchase agreements, it is the
Trust's policy that the Master Portfolio receive, as collateral, securities
whose market value, including accrued interest, at all times will be at least
equal to 100% of the amount invested by the Master Portfolio in each repurchase
agreement. If the seller defaults, and the value of the collateral declines,
realization of the collateral by the Master Portfolio may be delayed or limited.
WRITTEN OPTION ACCOUNTING
The Master Portfolios may write (sell) call or put options for trading 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 form 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
18
<PAGE> 20
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
June 30, 2000 (Unaudited)
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, but not less than
the strike price, 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 daily rates of exchange,
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, the
Master Portfolios do isolate and treat as ordinary income the effect of changes
in foreign exchange rates arising from actual foreign currency transactions and
the effect or changes in foreign exchange rates arising from trade date and
settlement date differences.
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 the end of the period, The Internet
Emerging Growth Portfolio, The Internet Global Growth Portfolio and The Middle
East Growth Portfolio owned investment securities with an aggregate market value
of $270,000, $270,000 and $3,234, respectively, which are unregistered and thus
restricted as to resale. The restricted securities of The Internet Emerging
Growth Portfolio, The Internet Global Growth Portfolio and The Middle East
Growth Portfolio represent 2.6%, 1.2% and 1.1%, respectively, of the net assets
of each Master Portfolio.
WHEN-ISSUED SECURITIES
The Master Portfolios may purchase securities on a when-issued or delayed
delivery basis. Although the payments 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
19
<PAGE> 21
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
June 30, 2000 (Unaudited)
purchases of when-issued securities and reflects 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 to no more than 25% of its assets.
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 Funds are allocated among the Funds based upon (i)
relative average net assets, (ii) as incurred on a specific identification
basis, or (iii) evenly among the Funds, depending on the nature of the
expenditure.
Each Fund records its proportionate share of the Master Portfolio's expenses on
a daily basis. In addition, each Fund accrues its own separate expenses. Any cap
on expenses includes Fund specific expenses as well as the expenses allocated
from the Master Portfolio.
FEDERAL INCOME TAXES
Each Master Portfolio intends to qualify as a partnership for federal income tax
purposes. Therefore, the Master Portfolios believe they will not be subject to
any federal income tax on their income and net realized capital gains (if any).
However, each investor in the Master Portfolios will be taxed on its allocable
share of the Master Portfolio's income and capital gains for purposes of
determining its federal income tax liability.
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and the Funds intend to distribute
investment company net taxable income and net capital gains to shareholders.
Therefore, no federal income tax provision is required. Dividends from net
investment income and distributions of net realized capital gains, if any, will
be declared and paid at least annually.
20
<PAGE> 22
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
June 30, 2000 (Unaudited)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities 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. Generally accepted
accounting principles require that permanent financial reporting and tax
differences relating to shareholder distributions be reclassified to paid in
capital.
3. INVESTMENT ADVISOR
Effective April 28, 2000, the Trust has an Investment Advisory Agreement (the
"Agreement") with Kinetics Asset Management, Inc. (the "Advisor"), 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 Agreement,
the Master Portfolios compensate the Advisor 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
Advisor at a rate of 0.50% of the Master Portfolio's average daily net assets.
Prior to April 28, 2000, the Funds incurred the same Investment Advisory rates
before converting into the Master Feeder structure. The Advisor has voluntarily
agreed to pay all operating expenses in excess of the annual rates presented
below as applied to each Fund's daily net assets. The expense cap includes
Fund-specific expenses as well as the Master Portfolio's expenses allocated to
the Fund. Firstar Mutual Fund Services, LLC ("Firstar") performs transfer agent
and fund accounting services for the Funds. Firstar has agreed to waive a
portion of the Funds' expenses. Also, soft dollar credits have been earned by
the Funds to pay for certain expenses of the Funds. For the period ended June
30, 2000, the amounts
21
<PAGE> 23
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
June 30, 2000 (Unaudited)
earned by the Advisor and the reimbursed and waived expenses for the Funds are
as follows:
<TABLE>
<CAPTION>
INTERNET EMERGING INFRASTRUCTURE
-------- -------- --------------
<S> <C> <C> <C>
Annual Advisory Rate...................... 1.25% 1.25% 1.25%
Annual Cap on Expenses.................... 2.00% 2.00% 2.00%
Expenses Reimbursed by Advisor............ $ 61,853 $34,239 $30,646
Expenses Reimbursed by Firstar............ $ 21,878 $ 5,878 $ 8,797
Expenses Paid by Soft Dollar Credits...... $ 45,485 $12,221 $18,289
-------- ------- -------
Total Reimbursements.................. $129,216 $52,338 $57,732
</TABLE>
<TABLE>
<CAPTION>
GLOBAL NEW PARADIGM MEDICAL
------- ------------ -------
<S> <C> <C> <C>
Annual Advisory Rate...................... 1.25% 1.25% 1.25%
Annual Cap on Expenses.................... 2.25% 2.00% 2.00%
Expenses Reimbursed by Advisor............ $23,042 $28,870 $40,701
Expenses Reimbursed by Firstar............ $ 8,151 $ 1,068 $14,396
Expenses Paid by Soft Dollar Credits...... $16,945 $ 2,220 $29,930
------- ------- -------
Total Reimbursements.................. $48,138 $32,158 $85,027
</TABLE>
<TABLE>
<CAPTION>
MIDDLE EAST SMALL CAP GOVERNMENT
----------- --------- ----------
<S> <C> <C> <C>
Annual Advisory Rate...................... 1.25% 1.25% 0.50%
Annual Cap on Expenses.................... 2.25% 2.00% 1.25%
Expenses Reimbursed by Advisor............ $26,545 $20,823 $35,217
Expenses Reimbursed by Firstar............ $ 919 $ 323 $ 1,487
Expenses Paid by Soft Dollar Credits...... $ 1,911 $ 671 $ 3,092
------- ------- -------
Total Reimbursements.................. $29,375 $21,817 $39,796
</TABLE>
The Advisor also serves as administrator to the Funds. Effective April 28, 2000,
under an Administrative Services Agreement with the Company on behalf of the
Funds, the Advisor receives an annual administration fee equal to 0.05% of each
Fund's average daily net assets from which the Advisor will be responsible for
the payment of a portion of such fees to Firstar Mutual Fund Services, LLC
("Firstar") for certain sub-administrative services rendered to the Funds by
Firstar. In addition, the Master Portfolios allocate the applicable portion of
master-level administrative expense to the Funds. Through an Administrative
Service Agreement with the Trust on behalf of the Master Portfolios, the Advisor
receives an annual administration fee equal to 0.10% of each Master Portfolio's
average daily net assets from which the Advisor will be responsible for the
payment of a portion of such fees to Firstar.
Prior to April 28, 2000 the Funds had an Administrative Services Agreement with
the Advisor in which the Advisor received an annual administration fee
22
<PAGE> 24
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
June 30, 2000 (Unaudited)
equal to 0.15% of each Fund's average daily net assets. During the period ended
June 30, 2000 Internet, Emerging, Infrastructure, Global, New Paradigm, Medical,
Middle East, Small Cap and Government incurred expenses of $740,574, $5,285,
$7,830, $9,923, $1,321, $17,367, $70, $51, and $5,815, respectively, pursuant to
the Administration Services Agreements.
The Advisor receives a shareholder servicing fee from the Funds pursuant to a
Shareholder Servicing Agreement in the amount equal to 0.25% of the Fund's
average daily net assets. The Advisor is responsible for paying a portion of
these shareholder servicing fees to various shareholder servicing agents which
have a written shareholder servicing agreement with the Advisor and who perform
shareholder servicing functions and maintenance of shareholder accounts on
behalf of their clients who own shares of the Funds.
23
<PAGE> 25
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
FINANCIAL HIGHLIGHTS
THE INTERNET FUND
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 2000
(UNAUDITED)
-------------
<S> <C>
PER SHARE DATA:(5)
Net Asset Value
Beginning of period.............................. $ 49.73
--------
Income from Investment Operations
Net investment income (loss)..................... (0.04)(2)
Net realized and unrealized gain
(loss) on investments.......................... (13.90)
--------
Total gain (loss) from
investment operations..................... (13.94)
--------
Less Distributions
From realized gains.............................. --
--------
Total distributions......................... --
--------
Net Asset Value, end of period...................... $ 35.79
========
Total Return........................................ (28.03)%(3)
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000's)................... $935,399
Ratio of expenses to average net
assets:
Before expense reimbursement................... 2.02%(4)
After expense reimbursement.................... 2.00%(4)
Ratio of investment income to
average net assets:
Before expense reimbursement................... (1.61)%(4)
After expense reimbursement.................... (1.59)%(4)
Portfolio turnover rate............................. N/A
</TABLE>
------------------
(1) Commencement of operations.
(2) Net investment loss per share is calculated using ending balances prior to
consideration of adjustments for permanent financial reporting and tax
differences.
(3) Not annualized.
(4) Annualized.
(5) Information presented relates to a share of capital stock outstanding for
the entire period.
See Notes to the Financial Statements.
24
<PAGE> 26
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, OCTOBER 21, 1996(1)
-------------------------------- THROUGH
1999 1998 1997 DECEMBER 31, 1996
----------- -------- ------- --------------------
<S> <C> <C> <C> <C>
$ 15.72 $ 5.31 $ 4.71 $ 5.00
---------- ------- ------ -------
(0.30)(2) (0.08) 0.01 0.02
34.33 10.50 0.59 (0.31)
---------- ------- ------ -------
34.03 10.42 0.60 (0.29)
---------- ------- ------ -------
(0.02) (0.01) -- --
---------- ------- ------ -------
(0.02) (0.01) -- --
---------- ------- ------ -------
$ 49.73 $ 15.72 $ 5.31 $ 4.71
========== ======= ====== =======
216.50% 196.14% 12.74% (5.80)%(3)
$1,163,097 $22,159 $ 150 $ 113
2.00% 3.08% 3.60% 6.73%(4)
2.00% 3.08% 0.08% 0.21%(4)
(1.29)% (2.92)% (3.33)% (4.15)%(4)
(1.29)% (2.92)% 0.19% 2.01%(4)
89% 80% 50% 0%
</TABLE>
See Notes to the Financial Statements.
25
<PAGE> 27
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
THE INTERNET THE INTERNET
EMERGING GROWTH INFRASTRUCTURE
FUND FUND
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 2000 JUNE 30, 2000
(UNAUDITED) (UNAUDITED)
-------------------- -------------------
<S> <C> <C>
PER SHARE DATA:(4)
Net Asset Value
Beginning of period............ $ 10.00 $ 10.00
------- -------
Income from Investment Operations
Net investment loss(1)......... (0.01) (0.02)
Net realized and unrealized
loss on investments.......... (2.94) (1.58)
------- -------
Total loss from investment
operations.............. (2.95) (1.60)
------- -------
Less Distributions
Total distributions....... -- --
------- -------
Net Asset Value, end of period.... $ 7.05 $ 8.40
======= =======
Total Return(2)................... (29.50)% (16.00)%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period
(000's)........................ $10,513 $19,069
Ratio of expenses to average net
assets:
Before expense
reimbursement(3).......... 3.11% 2.78%
After expense
reimbursement(3).......... 2.00% 2.00%
Ratio of investment income to
average net assets:
Before expense
reimbursement(3).......... (1.26)% (1.42)%
After expense
reimbursement(3).......... (0.15)% (0.64)%
</TABLE>
------------------
(1) Net investment loss per share is calculated using ending balances prior to
consideration of adjustments for permanent financial reporting and tax
differences.
(2) Not annualized.
(3) Annualized.
(4) Information presented relates to a share of capital stock outstanding for
the entire period.
See Notes to the Financial Statements.
26
<PAGE> 28
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
THE INTERNET THE INTERNET
GLOBAL GROWTH NEW PARADIGM
FUND FUND
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 2000 JUNE 30, 2000
(UNAUDITED) (UNAUDITED)
------------------ -----------------
<S> <C> <C>
PER SHARE DATA:(4)
Net Asset Value
Beginning of period............ $ 10.00 $ 10.00
------- -------
Income from Investment Operations
Net investment loss(1)......... 0.39 (0.02)
Net realized and unrealized
loss on investments.......... (1.21) (1.06)
------- -------
Total loss from investment
operations.............. (0.82) (1.08)
------- -------
Less Distributions
Total distributions....... -- --
------- -------
Net Asset Value, end of period.... $ 9.18 $ 8.92
======= =======
Total Return(2)................... (8.20)% (10.80)%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period
(000's)........................ $21,915 $ 3,102
Ratio of expenses to average net
assets:
Before expense
reimbursement(3).......... 2.78% 4.62%
After expense
reimbursement(3).......... 2.25% 2.00%
Ratio of investment income to
average net assets:
Before expense
reimbursement(3).......... 9.70% (3.12)%
After expense
reimbursement(3).......... 10.23% (0.50)%
</TABLE>
See Notes to the Financial Statements.
27
<PAGE> 29
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
THE MEDICAL FUND
SIX MONTHS
ENDED SEPTEMBER 30, 1999(1)
JUNE 30, 2000 THROUGH
(UNAUDITED) DECEMBER 31, 1999
------------- ---------------------
<S> <C> <C>
PER SHARE DATA:(5)
Net Asset Value
Beginning of period................ $ 13.35 $ 10.00
------- -------
Income from Investment Operations
Net investment loss(2)............. (0.06) (0.02)
Net realized and unrealized gain on
investments...................... 6.07 3.37
------- -------
Total gain from investment
operations.................. 6.01 3.35
------- -------
Less Distributions
Total distributions........... -- --
------- -------
Net Asset Value, end of period........ $ 19.36 $ 13.35
======= =======
Total Return(3)....................... 45.02% 33.50%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000's)..... $48,633 $ 6,944
Ratio of expenses to average net
assets:
Before expense
reimbursement(4).............. 2.53% 5.99%
After expense reimbursement(4)... 2.00% 2.00%
Ratio of investment income to
average net assets:
Before expense
reimbursement(4).............. (1.54)% (5.24)%
After expense reimbursement(4)... (1.01)% (1.25)%
Portfolio turnover rate............... N/A 1%
</TABLE>
------------------
(1) Commencement of operations.
(2) Net investment loss per share is calculated using ending balances prior to
consideration of adjustments for permanent financial reporting and tax
differences.
(3) Not annualized.
(4) Annualized.
(5) Information presented relates to a share of capital stock outstanding for
the entire period.
See Notes to the Financial Statements.
28
<PAGE> 30
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
THE
THE SMALL CAP
MIDDLE EAST OPPORTUNITIES
GROWTH FUND FUND
MARCH 10, 2000(1) MARCH 20, 2000(1)
THROUGH THROUGH
JUNE 30, 2000 JUNE 30, 2000
(UNAUDITED) (UNAUDITED)
----------------- -----------------
<S> <C> <C>
PER SHARE DATA:(5)
Net Asset Value
Beginning of period................ $ 10.00 $ 10.00
------- -------
Income from Investment Operations
Net investment income (loss)(2).... (0.02) 0.03
Net realized and unrealized gain
(loss) on investments............ (1.56) 0.20
------- -------
Total gain (loss) from
investment operations....... (1.58) 0.23
------- -------
Less Distributions
Total distributions................ -- --
------- -------
Net Asset Value, end of period........ $ 8.42 $ 10.23
======= =======
Total Return(3)....................... (15.80)% 2.30%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000's)..... $ 267 $ 204
Ratio of expenses to average net
assets:
Before expense
reimbursement(4).............. 41.59% 41.75%
After expense reimbursement(4)... 2.25% 2.00%
Ratio of investment income to
average net assets:
Before expense
reimbursement(4).............. (40.07)% (38.50)%
After expense reimbursement(4)... (0.73)% 1.25%
</TABLE>
See Notes to the Financial Statements.
29
<PAGE> 31
KINETICS MUTUAL FUNDS, INC. -- FEEDER FUNDS
FINANCIAL HIGHLIGHTS
THE KINETICS GOVERNMENT MONEY MARKET FUND
<TABLE>
<CAPTION>
FEBRUARY 3, 2000(1)
THROUGH
JUNE 30, 2000
(UNAUDITED)
-------------------
<S> <C>
PER SHARE DATA:(5)
Net Asset Value
Beginning of period............................. $ 1.00
-------
Income from Investment Operations
Net investment income(2)........................ 0.02
Net realized and unrealized gain on
investments................................... --
-------
Total gain from investment operations...... 0.02
-------
Less Distributions
From net investment income...................... (0.02)
-------
Total distributions........................ (0.02)
-------
Net Asset Value, end of period..................... $ 1.00
=======
Total Return(3).................................... 1.76%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000's).................. $11,075
Ratio of expenses to average net assets:
Before expense reimbursement(4)............... 1.75%
After expense reimbursement(4)................ 1.25%
Ratio of investment income to average net assets:
Before expense reimbursement(4)............... 4.02%
After expense reimbursement(4)................ 4.52%
</TABLE>
------------------
(1) Commencement of operations.
(2) Net investment loss per share is calculated using ending balances prior to
consideration of adjustments for permanent financial reporting and tax
differences.
(3) Not annualized.
(4) Annualized.
(5) Information presented relates to a share of capital stock outstanding for
the entire period.
See Notes to the Financial Statements.
30
<PAGE> 32
CHANGES IN INDEPENDENT ACCOUNTANT
Effective June 30, 2000, the Board of Directors selected the accounting firm of
PricewaterhouseCoopers LLP to serve as the Funds' independent certified public
accountants for the fiscal year ended December 31, 2000 to fill a vacancy in
such position in accordance with Section 32(a)(2) of the 1940 Act resulting from
McCurdy & Associates CPA's, Inc. resignation on June 30, 2000. McCurdy &
Associates CPA's Inc. had served as the Funds' independent certified public
accountants for the Funds' fiscal year ended December 31, 1999. McCurdy &
Associates CPA's Inc. report of the financial statements of the Funds for the
fiscal year ended December 31, 1999 did not contain an adverse opinion or
disclaimer of opinion or was not qualified or modified as to uncertainty, audit
scope or accounting principles. There were no disagreements with McCurdy &
Associates CPA's Inc. on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope of procedure during the fiscal
year ended December 31, 1999 or for the interim period from January 1, 2000
through the date of their resignation.
The Funds represent that they had not consulted with PricewaterhouseCoopers LLP
any time prior to their engagement with respect to the application of accounting
principles to a specified transaction, either completed or proposed; or the type
of audit opinion that might be rendered on the Funds' financial statements.
31
<PAGE> 33
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE INTERNET PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS -- 91.7%+ SHARES VALUE
-----------------------------------------------------------------------
<S> <C> <C>
ACCESS/BROADBAND -- 8.8%+
Advanced Radio Telecom Corporation*...... 895,000 $ 13,089,375
StarMedia Network, Inc.*................. 88,000 1,661,000
Teligent, Inc. -- Class A*............... 150,000 3,543,750
UnitedGlobalCom, Inc. -- Class A*........ 1,024,100 47,876,675
Winstar Communications, Inc.*............ 480,000 16,260,000
------------
82,430,800
------------
E-COMMERCE -- 3.1%+
Catalina Marketing Corporation*.......... 107,500 10,965,000
Harte-Hanks, Inc......................... 105,000 2,625,000
TMP Worldwide, Inc.*..................... 195,000 14,393,437
24/7 Media, Inc.*........................ 96,000 1,500,000
------------
29,483,437
------------
INFRASTRUCTURE -- 32.5%+
Commonwealth Telephone Enterprises,
Inc.*.................................. 785,900 36,986,418
Commonwealth Telephone Enterprises,
Inc. -- Class B*....................... 14,000 665,000
CoreComm Limited*........................ 530,000 10,335,000
Exodus Communications, Inc.*............. 448,000 20,636,000
Global Crossing Limited*................. 350,000 9,209,375
Globix Corporation*...................... 80,000 2,345,000
IDT Corporation*......................... 282,000 9,570,375
Leap Wireless International, Inc.*....... 130,000 6,110,000
Leucadia National Corporation............ 3,000 68,438
Liberty Digital, Inc.*................... 5,000 150,000
Liberty Livewire Corporation -- Class
A*..................................... 85,900 6,034,475
Lynch Interactive Corporation*........... 57,495 5,404,530
Millicom International Cellular S.A.*.... 400,000 14,000,000
NetCom AB ADR*........................... 125,000 9,218,750
Nextel Communications, Inc. -- Class
A*..................................... 70,000 4,283,125
NEXTLINK Communications, Inc. -- Class
A*..................................... 437,000 16,578,688
NTL Incorporated*........................ 450,750 26,988,656
Pacific Gateway Exchange, Inc.*.......... 100,000 340,625
</TABLE>
See Notes to the Financial Statements.
32
<PAGE> 34
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE INTERNET PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited) -- (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------------------------------------------------------
<S> <C> <C>
INFRASTRUCTURE -- 32.5%+ -- (CONTINUED)
Qwest Communications International,
Inc.*.................................. 196,000 $ 9,738,750
RCN Corporation*......................... 2,005,000 50,876,875
Rostelecom ADR*.......................... 285,000 3,883,125
SBS Broadcasting S.A.*................... 126,000 6,867,000
Sprint Corporation*...................... 74,000 4,403,000
TCI Satellite Entertainment, Inc.*....... 263,000 2,284,813
Telephone and Data Systems, Inc.......... 308,000 30,877,000
Thermo Electron Corporation*............. 130,000 2,738,126
U.S. RealTel Inc.*....................... 3,400 24,650
Vimpel-Communications ADR*............... 600,000 13,275,000
------------
303,892,794
------------
INTERNET TECHNOLOGY/SOFTWARE -- 21.4%+
BARRA, Inc.*............................. 192,100 9,520,956
Broadcom Corporation*.................... 145,000 31,745,938
Cognizant Technology Solutions
Corporation*........................... 396,000 13,142,250
ePresence, Inc.*......................... 520,000 3,770,000
Gemstar International Group Limited*..... 360,000 22,123,125
IMS Health Incorporated.................. 4,602,000 82,836,000
Inktomi Corporation*..................... 178,000 21,048,500
Intuit, Inc.*............................ 262,000 10,840,250
Macromedia, Inc.*........................ 20,000 1,933,750
MSI Holdings, Inc.*...................... 133,335 1,208,348
Pixar, Inc.*............................. 14,000 493,500
TV Guide, Inc. -- Class A*............... 66,000 2,260,500
------------
200,923,117
------------
MEDIA CONTENT -- 12.3%+
About.com, Inc.*......................... 25,000 787,500
AT&T Corp. -- Liberty Media Group --
Class A*............................... 2,925,000 70,931,250
AT&T Corp. -- Liberty Media Group --
Class B*............................... 4,000 130,000
CNET, Inc.*.............................. 40,000 982,500
</TABLE>
See Notes to the Financial Statements.
33
<PAGE> 35
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE INTERNET PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited) -- (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------------------------------------------------------
<S> <C> <C>
MEDIA CONTENT -- 12.3%+ -- (CONTINUED)
Getty Images, Inc.*...................... 98,000 $ 3,632,125
MarketWatch.com, Inc.*................... 330,200 6,211,888
Marvel Enterprises, Inc.*................ 2,000 12,500
Meredith Corporation..................... 300,000 10,125,000
NBC Internet, Inc. -- Class A*........... 90,000 1,125,000
Penton Media, Inc........................ 255,000 8,925,000
PRIMEDIA, Inc.*.......................... 6,000 136,500
The Washington Post Company -- Class B... 25,700 12,284,600
------------
115,283,863
------------
PORTALS -- 2.0%+
Lycos, Inc.*............................. 68,000 3,672,000
Yahoo!, Inc.*............................ 120,118 14,879,617
------------
18,551,617
------------
VENTURE CAPITAL -- 11.6%+
CMGI, Inc.*.............................. 270,000 12,369,375
Comdisco, Inc............................ 754,000 16,823,624
Eshed Robotec Limited*................... 81,100 486,600
Formula Systems Ltd. ADR*................ 195,000 10,335,000
London Pacific Group Limited ADR......... 1,243,800 16,169,400
Nucentrix Broadband Networks, Inc.*...... 100,000 2,550,000
Pacific Century CyberWorks Limited*...... 2,900,000 5,713,000
Safeguard Scientifics, Inc.*............. 1,234,000 39,565,125
SOFTBANK CORP.*.......................... 1,500 204,150
Tredegar Corporation..................... 210,000 3,990,000
------------
108,206,274
------------
TOTAL COMMON STOCK (cost $842,655,826)... 858,771,902
------------
</TABLE>
See Notes to the Financial Statements.
34
<PAGE> 36
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE INTERNET PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited) -- (Continued)
<TABLE>
<CAPTION>
PRINCIPAL
CORPORATE BONDS -- 0.5%+ AMOUNT VALUE
-----------------------------------------------------------------------
<S> <C> <C>
VENTURE CAPITAL -- 0.5%+
Internet Capital Group, Inc., CLB,
5.5000%, 12/21/2004
(cost $4,924,218)...................... $ 7,300,000 $ 4,772,375
------------
<CAPTION>
SHORT-TERM INVESTMENTS -- 5.1%+
-----------------------------------------------------------------------
<S> <C> <C>
INVESTMENT COMPANIES -- 5.1%+
Firstar Institutional Money Market Fund
(cost $47,473,618)..................... 47,473,618 47,473,618
------------
TOTAL INVESTMENTS -- 97.3%+
(COST $895,053,662).................... $911,017,895
============
</TABLE>
---------------
* -- Non-income producing security.
+ -- Calculated as a percentage of net assets.
ADR -- American Depository Receipts.
See Notes to the Financial Statements.
35
<PAGE> 37
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE INTERNET EMERGING GROWTH PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS -- 80.1% SHARES VALUE
-----------------------------------------------------------------------
<S> <C> <C>
ACCESS/BROADBAND -- 14.2%
Advanced Radio Telecom Corporation*.......... 24,000 $ 351,000
GoAmerica, Inc.*............................. 500 7,718
i-CABLE Communications Limited ADR*.......... 2,500 19,375
Motient Corporation*......................... 12,000 188,250
Orckit Communications, Ltd.*................. 6,500 195,813
Teligent, Inc. -- Class A*................... 11,000 259,875
Winstar Communications, Inc.*................ 14,000 474,250
-----------
1,496,281
-----------
INFRASTRUCTURE -- 23.8%
Commonwealth Telephone Enterprises, Inc.*.... 2,200 103,538
Global Light Telecommunications, Inc.*....... 34,000 371,875
IDT Corporation*............................. 10,000 339,375
Intermedia Communications, Inc.*............. 10,000 297,500
ITXC Corporation*............................ 4,500 159,328
Lynch Interactive Corporation*............... 3,000 282,000
MSI Holdings, Inc.*.......................... 16,666 151,036
Nextel Partners, Inc. -- Class A*............ 250 8,141
RADWARE, Ltd.*............................... 10,000 265,000
RCN Corporation*............................. 5,000 126,875
UTStarcom, Inc.*............................. 3,000 91,125
Vertex Interactive, Inc.*.................... 10,000 101,875
Visual Networks, Inc.*....................... 7,000 199,500
-----------
2,497,168
-----------
INTERNET TECHNOLOGY/HARDWARE -- 2.3%
Amkor Technology, Inc.*...................... 2,500 $ 88,281
Legend Holdings Limited ADR.................. 4,000 77,485
ParkerVision, Inc.*.......................... 1,500 75,656
-----------
241,422
-----------
</TABLE>
See Notes to the Financial Statements.
36
<PAGE> 38
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE INTERNET EMERGING GROWTH PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited) -- (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------------------------------------------------------
<S> <C> <C>
INTERNET TECHNOLOGY/SOFTWARE -- 8.5%
Entrust Technologies, Inc.*.................. 6,000 $ 496,500
IMS Health Incorporated...................... 5,000 90,000
National Information Consortium, Inc.*....... 15,000 170,625
Primus Knowledge Solutions, Inc.*............ 2,500 112,500
Telemate.Net Software, Inc.*................. 6,000 19,125
-----------
888,750
-----------
VENTURE CAPITAL -- 31.3%
Ampal-American Israel Corporation -- Class
A*......................................... 18,000 270,000
CMGI, Inc.*.................................. 1,000 45,813
Comdisco, Inc................................ 12,500 278,906
Data Broadcasting Corporation*............... 60,000 378,750
Eshed Robotec Limited*r (acquired 3/10/2000,
cost $497,025)............................. 45,000 270,000
Formula Systems, Ltd. ADR*................... 8,000 424,000
London Pacific Group Limited ADR............. 28,000 364,000
Nucentrix Broadband Networks, Inc.*.......... 26,000 663,000
Safeguard Scientifics, Inc.*................. 4,500 144,281
Tredegar Corporation......................... 24,000 456,000
-----------
3,294,750
-----------
TOTAL COMMON STOCK (cost $14,335,153)........ 8,418,371
-----------
<CAPTION>
PRINCIPAL
VARIABLE RATE DEMAND NOTES** -- 21.3% AMOUNT
-----------------------------------------------------------------------
<S> <C> <C>
American Family, 6.3060%..................... $412,513 412,513
Firstar Bank, NA, 6.4238%.................... 410,904 410,903
General Mills, Inc., 6.2788%................. 400,150 400,150
Sara Lee Corporation, 6.2738%................ 376,921 376,921
</TABLE>
See Notes to the Financial Statements.
37
<PAGE> 39
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE INTERNET EMERGING GROWTH PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited) -- (Continued)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-----------------------------------------------------------------------
<S> <C> <C>
Wisconsin Corporate Central Credit Union,
6.3438%.................................... $367,533 $ 367,533
Wisconsin Electric Power Company, 6.3060%.... 275,264 275,264
-----------
TOTAL VARIABLE RATE DEMAND NOTES (cost
$2,243,284)................................ 2,243,284
-----------
TOTAL INVESTMENTS -- 101.4%
(COST $16,578,437)......................... 10,661,655
LIABILITIES IN EXCESS OF OTHER ASSETS --
(1.4%)..................................... (148,598)
-----------
TOTAL NET ASSETS -- 100.0%................... $10,513,057
===========
</TABLE>
------------------
* -- 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, 2000.
ADR -- American Depository Receipts.
r -- Restricted Security. Purchased in a private placement transaction; resale
to the public may require registration or may extend only to qualified
institutional buyers.
See Notes to the Financial Statements.
38
<PAGE> 40
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE INTERNET INFRASTRUCTURE PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS -- 82.1%+ SHARES VALUE
-----------------------------------------------------------------------
<S> <C> <C>
ACCESS/BROADBAND -- 18.3%+
Advanced Radio Telecom Corporation*.......... 32,600 $ 476,775
Cablevision Systems Corporation -- Class
A*......................................... 10,000 678,750
Charter Communications, Inc. -- Class A*..... 9,075 149,170
Comcast Corporation -- Class A*.............. 1,500 58,312
Cox Communications, Inc. -- Class A*......... 1,350 61,509
Rogers Communications, Inc. -- Class B*...... 12,700 361,950
Teligent, Inc. -- Class A*................... 11,600 274,050
UnitedGlobalCom, Inc. -- Class A*............ 14,000 654,500
Winstar Communications, Inc.*................ 22,800 772,350
-----------
3,487,366
-----------
CELLULAR COMMUNICATIONS -- 3.7%+
CenturyTel, Inc. ............................ 11,000 316,250
Clearnet Communications, Inc. -- Class A*.... 7,500 208,242
Leap Wireless International, Inc.*........... 4,000 188,000
-----------
712,492
-----------
INFRASTRUCTURE -- 58.4%+
ALLTEL Corporation........................... 7,800 483,112
BellSouth Corporation........................ 8,000 341,000
Commonwealth Telephone Enterprises, Inc.*.... 35,000 1,647,188
CoreComm Limited*............................ 11,025 214,988
General Motors Corporation -- Class H*....... 7,700 675,675
Global Crossing Limited*..................... 1,800 47,363
Global Light Telecommunications, Inc.*....... 34,400 376,250
Level 3 Communications, Inc.*................ 530 46,640
Loral Space & Communications, Ltd.*.......... 1,200 8,325
Millicom International Cellular S.A.*........ 19,800 693,000
MSI Holdings, Inc.*.......................... 16,666 151,036
NetCom AB ADR*............................... 10,950 807,563
Next Level Communications, Inc.*............. 675 57,881
Nextel Communications, Inc. -- Class A*...... 8,200 501,738
Nextel Partners, Inc. -- Class A*............ 5,250 170,952
NEXTLINK Communications, Inc. -- Class A*.... 20,600 781,512
NTL Incorporated*............................ 4,000 239,500
Qwest Communications International, Inc.*.... 6,000 298,125
</TABLE>
See Notes to the Financial Statements.
39
<PAGE> 41
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE INTERNET INFRASTRUCTURE PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited) -- (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------------------------------------------------------
<S> <C> <C>
INFRASTRUCTURE -- 58.4%+ -- (CONTINUED)
RCN Corporation*............................. 45,700 $ 1,159,638
SBC Communications, Inc...................... 17,000 735,250
Sprint Corporation*.......................... 6,000 357,000
Telephone and Data Systems, Inc. ............ 7,200 721,800
U.S. West, Inc. ............................. 2,000 171,500
Vimpel-Communications ADR*................... 21,000 464,625
-----------
11,151,661
-----------
VENTURE CAPITAL -- 1.7%+
Nucentrix Broadband Networks, Inc.*.......... 13,000 331,500
-----------
TOTAL COMMON STOCK (cost $21,481,409)........ 15,683,019
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
VARIABLE RATE DEMAND NOTES** -- 16.0%+ AMOUNT
-----------------------------------------------------------------------
<S> <C> <C>
American Family, 6.3060%..................... $649,750 649,750
Firstar Bank, NA, 6.4238%.................... 563,455 563,455
General Mills, Inc., 6.2788%................. 330,071 330,071
Sara Lee Corporation, 6.2738%................ 73,669 73,669
Wisconsin Corporate Central Credit Union,
6.3438%.................................... 760,224 760,224
Wisconsin Electric Power Company, 6.3060%.... 685,776 685,776
-----------
TOTAL VARIABLE RATE DEMAND NOTES (cost
$3,062,945)................................ 3,062,945
-----------
TOTAL INVESTMENTS -- 98.1%+ (COST
$24,544,354)............................... $18,745,964
===========
</TABLE>
---------------
* -- 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, 2000.
+ -- Calculated as a percentage of net assets.
ADR -- American Depository Receipts.
See Notes to the Financial Statements.
40
<PAGE> 42
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE INTERNET GLOBAL GROWTH PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS -- 93.9% SHARES VALUE
-----------------------------------------------------------------------
<S> <C> <C>
<CAPTION>
BELGIUM -- 2.4%
-----------------------------------------------------------------------
<S> <C> <C>
INTERNET TECHNOLOGY/SOFTWARE -- 2.4%
Lernout & Hauspie Speech Products N.V.*....... 12,000 $ 528,750
-----------
Total Belgium............................... 528,750
-----------
<CAPTION>
BRAZIL -- 13.2%
-----------------------------------------------------------------------
<S> <C> <C>
ACCESS/BROADBAND -- 1.3%
Globo Cabo S.A. ADR*.......................... 21,000 291,375
-----------
CELLULAR COMMUNICATIONS -- 11.9%
Tele Celular Sul Participacoes S.A. ADR....... 7,550 341,638
Tele Centro Oeste Celular Participacoes S.A.
ADR......................................... 45,300 543,600
Tele Leste Celular Participacoes S.A. ADR..... 6,700 296,475
Tele Nordeste Celular Participacoes S.A.
ADR*........................................ 5,650 391,263
Tele Norte Celular Participacoes S.A. ADR..... 8,300 421,225
Tele Sudeste Celular Participacoes S.A. ADR... 5,900 179,950
Telemig Celular Participacoes S.A. ADR........ 1,200 85,800
Telesp Celular Participacoes S.A. ADR......... 7,500 336,563
-----------
2,596,514
-----------
Total Brazil................................ 2,887,889
-----------
<CAPTION>
CANADA -- 12.6%
-----------------------------------------------------------------------
<S> <C> <C>
ACCESS/BROADBAND -- 0.9%
Rogers Communications, Inc. -- Class B*....... 6,425 183,113
-----------
CELLULAR COMMUNICATIONS -- 4.4%
Bell Canada International, Inc.*.............. 20,000 578,750
Rogers Cantel Mobile Communications, Inc. --
Class B*.................................... 11,000 369,875
Telesystem International Wireless, Inc.*...... 1,000 18,500
-----------
967,125
-----------
</TABLE>
See Notes to the Financial Statements.
41
<PAGE> 43
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE INTERNET GLOBAL GROWTH PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited) -- (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------------------------------------------------------
<S> <C> <C>
INFRASTRUCTURE -- 1.8%
Global Light Telecommunications, Inc.*........ 36,500 $ 399,218
-----------
MEDIA CONTENT -- 0.9%
Nelvana Limited*.............................. 12,000 199,313
-----------
TELEPHONE -- INTEGRATED -- 3.4%
BCE, Inc...................................... 31,300 745,331
-----------
TELEPHONE -- SERVICES -- 1.2%
TELUS Corporation............................. 10,000 266,248
-----------
Total Canada................................ 2,760,348
-----------
<CAPTION>
FINLAND -- 3.8%
-----------------------------------------------------------------------
<S> <C> <C>
CELLULAR COMMUNICATIONS -- 3.8%
Sonera Oyj ADR................................ 18,000 828,000
-----------
Total Finland............................... 828,000
-----------
<CAPTION>
FRANCE -- 4.0%
-----------------------------------------------------------------------
<S> <C> <C>
ACCESS/BROADBAND -- 1.0%
Canal Plus ADR................................ 6,700 226,073
-----------
BROADCAST SERVICE/PROGRAM -- 2.3%
Groupe AB S.A. ADR*........................... 41,000 502,250
-----------
MEDIA CONTENT -- 0.7%
Lagardere S.C.A. ADR.......................... 2,000 153,374
-----------
Total France................................ 881,697
-----------
<CAPTION>
GERMANY -- 0.7%
-----------------------------------------------------------------------
<S> <C> <C>
CELLULAR COMMUNICATIONS -- 0.3%
Mannesmann AG ADR............................. 250 61,110
-----------
TELEPHONE -- INTEGRATED -- 0.4%
Deutsche Telekom AG ADR....................... 1,800 102,150
-----------
Total Germany............................... 163,260
-----------
</TABLE>
See Notes to the Financial Statements.
42
<PAGE> 44
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE INTERNET GLOBAL GROWTH PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited) -- (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------------------------------------------------------
<S> <C> <C>
<CAPTION>
HONG KONG -- 4.9%
-----------------------------------------------------------------------
<S> <C> <C>
ACCESS/BROADBAND -- 0.1%
i-CABLE Communications Limited ADR*........... 1,600 $ 12,400
-----------
BROADCAST SERVICE/PROGRAM -- 0.2%
Television Broadcasts Limited ADR............. 4,000 53,367
-----------
CELLULAR COMMUNICATIONS -- 2.4%
China Mobile Limited ADR*..................... 3,025 537,882
-----------
INTERNET TECHNOLOGY/HARDWARE -- 1.8%
Legend Holdings Limited ADR................... 20,000 387,426
-----------
VENTURE CAPITAL -- 0.4%
Pacific Century CyberWorks Limited*........... 40,000 78,800
-----------
Total Hong Kong............................. 1,069,875
-----------
<CAPTION>
ISRAEL -- 5.6%
-----------------------------------------------------------------------
<S> <C> <C>
VENTURE CAPITAL -- 5.6%
Eshed Robotec Limited*r (acquired 3/10/2000,
cost $497,025).............................. 45,000 270,000
Formula Systems, Ltd. ADR*.................... 18,000 954,000
-----------
Total Israel................................ 1,224,000
-----------
<CAPTION>
ITALY -- 1.6%
-----------------------------------------------------------------------
<S> <C> <C>
TELEPHONE -- INTEGRATED -- 1.6%
Telecom Italia SPA ADR*....................... 2,500 343,906
-----------
Total Italy................................. 343,906
-----------
<CAPTION>
JAPAN -- 0.9%
-----------------------------------------------------------------------
<S> <C> <C>
CELLULAR COMMUNICATIONS -- 0.3%
NTT DoCoMo, Inc. ADR.......................... 500 67,816
-----------
</TABLE>
See Notes to the Financial Statements.
43
<PAGE> 45
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE INTERNET GLOBAL GROWTH PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited) -- (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------------------------------------------------------
<S> <C> <C>
INFRASTRUCTURE -- 0.6%
Internet Initiative Japan, Inc. ADR*.......... 2,000 $ 118,500
-----------
Total Japan................................. 186,316
-----------
<CAPTION>
SOUTH KOREA -- 1.0%
-----------------------------------------------------------------------
<S> <C> <C>
CELLULAR COMMUNICATIONS -- 1.0%
SK Telecom Co., Ltd. ADR*..................... 6,000 217,875
-----------
Total South Korea........................... 217,875
-----------
<CAPTION>
LUXEMBOURG -- 7.5%
-----------------------------------------------------------------------
<S> <C> <C>
INFRASTRUCTURE -- 7.5%
Millicom International Cellular S.A.*......... 19,025 665,875
SBS Broadcasting S.A.*........................ 17,750 967,375
-----------
Total Luxembourg............................ 1,633,250
-----------
<CAPTION>
MEXICO -- 6.5%
-----------------------------------------------------------------------
<S> <C> <C>
BROADCAST SERVICE/PROGRAM -- 4.4%
Grupo Televisa S.A. GDR*...................... 14,000 965,125
-----------
CELLULAR COMMUNICATIONS -- 2.1%
Grupo Iusacell S.A. de C.V. ADR*.............. 30,000 468,750
-----------
Total Mexico................................ 1,433,875
-----------
<CAPTION>
PORTUGAL -- 0.1%
-----------------------------------------------------------------------
<S> <C> <C>
TELEPHONE -- INTEGRATED -- 0.1%
Portugal Telecom S.A. ADR..................... 2,000 22,500
-----------
Total Portugal.............................. 22,500
-----------
</TABLE>
See Notes to the Financial Statements.
44
<PAGE> 46
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE INTERNET GLOBAL GROWTH PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited) -- (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------------------------------------------------------
<S> <C> <C>
<CAPTION>
RUSSIA -- 3.1%
-----------------------------------------------------------------------
<S> <C> <C>
INFRASTRUCTURE -- 3.1%
Rostelecom ADR*............................... 12,825 $ 174,741
Vimpel-Communications ADR*.................... 23,000 508,875
-----------
Total Russia................................ 683,616
-----------
<CAPTION>
SPAIN -- 2.5%
-----------------------------------------------------------------------
<S> <C> <C>
TELEPHONE -- INTEGRATED -- 2.5%
Telefonica S.A. ADR*.......................... 8,625 552,539
-----------
Total Spain................................. 552,539
-----------
<CAPTION>
SWEDEN -- 5.6%
-----------------------------------------------------------------------
<S> <C> <C>
INFRASTRUCTURE -- 5.6%
NetCom AB ADR*................................ 16,500 1,216,875
-----------
Total Sweden................................ 1,216,875
-----------
<CAPTION>
TAIWAN -- 1.1%
-----------------------------------------------------------------------
<S> <C> <C>
INFRASTRUCTURE -- 1.1%
Taiwan Semiconductor Manufacturing Company,
Ltd. ADR*................................... 6,400 248,000
-----------
Total Taiwan................................ 248,000
-----------
<CAPTION>
UNITED KINGDOM -- 9.1%
-----------------------------------------------------------------------
<S> <C> <C>
ACCESS/BROADBAND -- 0.4%
COLT Telecom Group PLC ADR*................... 500 67,812
Telewest Communications PLC ADR*.............. 600 22,200
-----------
90,012
-----------
BROADCAST SERVICE/PROGRAM -- 0.7%
Scoot.com PLC ADR*............................ 3,500 155,313
-----------
</TABLE>
See Notes to the Financial Statements.
45
<PAGE> 47
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE INTERNET GLOBAL GROWTH PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited) -- (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------------------------------------------------------
<S> <C> <C>
CELLULAR COMMUNICATIONS -- 2.8%
Vodafone AirTouch PLC ADR..................... 15,000 $ 621,563
-----------
MEDIA CONTENT -- 0.9%
Pearson PLC ADR............................... 3,475 109,160
United News & Media PLC ADR................... 3,050 84,828
-----------
193,988
-----------
VENTURE CAPITAL -- 4.3%
London Pacific Group Limited ADR.............. 72,000 936,000
-----------
Total United Kingdom........................ 1,996,876
-----------
<CAPTION>
UNITED STATES -- 7.7%
-----------------------------------------------------------------------
<S> <C> <C>
ACCESS/BROADBAND -- 3.7%
IMPSAT Fiber Networks, Inc.*.................. 10,000 167,500
UnitedGlobalCom, Inc. -- Class A*............. 14,000 654,500
-----------
822,000
-----------
INFRASTRUCTURE -- 1.3%
NTL Incorporated*............................. 4,475 267,941
UTStarcom, Inc.*.............................. 500 15,188
-----------
283,129
-----------
VENTURE CAPITAL -- 2.7%
Ampal-American Israel Corporation -- Class
A*.......................................... 39,000 585,000
-----------
Total United States......................... 1,690,129
-----------
TOTAL COMMON STOCK (cost $28,136,078 )........ 20,569,576
-----------
</TABLE>
See Notes to the Financial Statements.
46
<PAGE> 48
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE INTERNET GLOBAL GROWTH PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited) -- (Continued)
<TABLE>
<CAPTION>
PRINCIPAL
VARIABLE RATE DEMAND NOTES** -- 7.7% AMOUNT VALUE
-----------------------------------------------------------------------
<S> <C> <C>
American Family, 6.3060%..................... $ 8,494 $ 8,494
Firstar Bank, NA, 6.4238%.................... 889,418 889,418
General Mills, Inc., 6.2788%................. 196,095 196,095
Sara Lee Corporation, 6.2738%................ 306,806 306,806
Wisconsin Corporate Central Credit Union,
6.3438%.................................... 120,353 120,353
Wisconsin Electric Power Company, 6.3060%.... 170,129 170,129
-----------
TOTAL VARIABLE RATE DEMAND NOTES (cost
$1,691,295)................................ 1,691,295
-----------
TOTAL INVESTMENTS -- 101.6% (COST
$29,827,373)............................... 22,260,871
LIABILITIES IN EXCESS OF OTHER ASSETS --
(1.6%)..................................... (346,736)
-----------
TOTAL NET ASSETS -- 100.0%................... $21,914,135
===========
</TABLE>
------------------
* -- 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, 2000.
ADR -- American Depository Receipts.
GDR -- Global Depository Receipts.
r -- Restricted Security. Purchased in a private placement transaction; resale
to the public may require registration or may extend only to qualified
institutional buyers.
See Notes to the Financial Statements.
47
<PAGE> 49
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE INTERNET NEW PARADIGM PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS -- 68.8% SHARES VALUE
-----------------------------------------------------------------------
<S> <C> <C>
ACCESS/BROADBAND -- 1.1%
Rogers Communications, Inc. -- Class B*....... 1,200 $ 34,200
----------
BUSINESS SERVICES -- MISCELLANEOUS -- 1.7%
Sotheby's Holdings, Inc. -- Class A*.......... 400 7,000
The ServiceMaster Company..................... 4,000 45,500
----------
52,500
----------
CELLULAR COMMUNICATIONS -- 2.3%
CenturyTel, Inc. ............................. 2,300 66,125
Motorola, Inc. ............................... 200 5,813
----------
71,938
----------
E-COMMERCE -- 1.1%
Valassis Communications, Inc.*................ 900 34,313
----------
FINANCIAL SERVICES -- 6.1%
Bank One Corporation.......................... 900 23,906
Federal Agricultural Mortgage Corporation --
Class C*.................................... 3,000 43,688
Fifth Third Bancorp........................... 300 18,975
Morgan Stanley Dean Witter & Co. ............. 200 16,650
The Dun & Bradstreet Corporation.............. 200 5,725
The Goldman Sachs Group, Inc. ................ 200 18,975
The John Nuveen Company -- Class A............ 1,500 62,906
----------
190,825
----------
INFRASTRUCTURE -- 2.7%
Leucadia National Corporation................. 3,600 82,125
----------
INTERNET TECHNOLOGY/SOFTWARE -- 5.8%
IMS Health Incorporated....................... 9,000 162,000
International Business Machines Corporation
(IBM)....................................... 100 10,956
Microsoft Corporation*........................ 100 8,000
----------
180,956
----------
LEISURE/TOYS -- 0.1%
Hasbro, Inc. ................................. 275 4,142
----------
</TABLE>
See Notes to the Financial Statements.
48
<PAGE> 50
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE INTERNET NEW PARADIGM PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited) -- (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------------------------------------------------------
<S> <C> <C>
MEDIA CONTENT -- 35.4%
AT&T Corp. -- Liberty Media Group -- Class
A*.......................................... 2,800 $ 67,900
Chris-Craft Industries, Inc.*................. 1,442 95,262
Dow Jones & Company, Inc. .................... 100 7,325
First Data Corporation........................ 1,200 59,550
Knight-Ridder, Inc. .......................... 300 15,956
Meredith Corporation.......................... 5,750 194,063
Pearson PLC ADR............................... 975 30,628
The E.W. Scripps Company -- Class A........... 4,000 197,000
The New York Times Company -- Class A......... 600 23,700
The News Corporation Limited ADR.............. 650 35,425
The Walt Disney Company*...................... 1,850 71,803
The Washington Post Company -- Class B........ 300 143,400
Time Warner, Inc. ............................ 200 15,200
Tribune Company............................... 525 18,375
United News and Media PLC ADR................. 975 27,117
Viacom, Inc. -- Class B*...................... 1,410 96,144
----------
1,098,848
----------
MISCELLANEOUS -- 1.4%
Kansas City Southern Industries, Inc. ........ 200 17,737
Lockheed Martin Corporation................... 400 9,925
The Boeing Company............................ 400 16,725
----------
44,387
----------
PROPERTY/CASUALTY INSURANCE -- 7.3%
Cincinnati Financial Corporation.............. 600 18,863
Fidelity National Financial, Inc. ............ 6,900 126,356
Wesco Financial Corporation................... 400 82,000
----------
227,219
----------
</TABLE>
See Notes to the Financial Statements.
49
<PAGE> 51
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE INTERNET NEW PARADIGM PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited) -- (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------------------------------------------------------
<S> <C> <C>
REAL ESTATE DEVELOPMENT -- 3.8%
Forest City Enterprises, Inc. -- Class A...... 100 $ 3,338
Newhall Land & Farming Company................ 200 5,300
Trizec Hahn Corporation....................... 1,800 32,175
Vornado Operating, Inc.*...................... 100 775
Vornado Realty Trust.......................... 2,200 76,450
----------
118,038
----------
TOTAL COMMON STOCK (cost $2,149,530).......... 2,139,491
----------
<CAPTION>
PRINCIPAL
VARIABLE RATE DEMAND NOTES** -- 29.0% AMOUNT
-----------------------------------------------------------------------
<S> <C> <C>
American Family, 6.3060%...................... $144,472 144,472
Firstar Bank, NA, 6.4238%..................... 144,135 144,135
General Mills, Inc., 6.2788%.................. 151,645 151,645
Sara Lee Corporation, 6.2738%................. 162,617 162,617
Wisconsin Corporate Central Credit Union,
6.3438%..................................... 147,038 147,038
Wisconsin Electric Power Company, 6.3060%..... 153,221 153,221
----------
TOTAL VARIABLE RATE DEMAND NOTES (cost
$903,128)................................... 903,128
----------
TOTAL INVESTMENTS -- 97.8% (COST
$3,052,658)................................. 3,042,619
OTHER ASSETS IN EXCESS OF LIABILITIES --
2.2%........................................ 69,280
----------
TOTAL NET ASSETS -- 100.0%.................... $3,111,899
==========
</TABLE>
------------------
* -- 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, 2000.
ADR -- American Depository Receipts.
See Notes to the Financial Statements.
50
<PAGE> 52
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE MEDICAL PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS -- 94.2% SHARES VALUE
-----------------------------------------------------------------------
<S> <C> <C>
BIOMEDICAL -- 38.1%
Amgen, Inc.*............................... 34,000 $ 2,388,500
AVAX Technologies, Inc.*................... 50,000 453,125
Biogen, Inc.*.............................. 23,000 1,483,500
Biomira, Inc.*............................. 31,000 284,812
Bio-Technology General Corporation*........ 29,000 382,437
Cell Genesys, Inc.*........................ 1,225 34,300
Cell Pathways, Inc.*....................... 5,000 117,500
Chiron Corporation*........................ 35,000 1,662,500
Coulter Pharmaceutical, Inc.*.............. 2,000 41,000
EntreMed, Inc.*............................ 5,000 149,687
Genentech, Inc.*........................... 12,240 2,105,280
Genzyme Corporation*....................... 34,000 2,020,875
Genzyme Molecular Oncology*................ 15,000 208,125
Human Genome Sciences, Inc.*............... 6,500 866,937
IDEC Pharmaceuticals Corporation*.......... 20,000 2,346,250
ILEX Oncology, Inc.*....................... 17,000 599,250
ImClone Systems Incorporated*.............. 825 63,061
Immunex Corporation*....................... 17,000 840,438
Lexicon Genetics Incorporated*............. 7,500 257,813
Medarex, Inc.*............................. 2,000 169,000
Millennium Pharmaceuticals, Inc.*.......... 7,148 799,683
NeoRx Corporation*......................... 27,000 509,625
Onyx Pharmaceuticals, Inc.*................ 4,500 55,688
Progenics Pharmaceuticals, Inc.*........... 1,200 17,100
Ribozyme Pharmaceuticals, Inc.*............ 3,500 90,344
SuperGen, Inc.*............................ 3,500 126,875
Targeted Genetics Corporation*............. 22,000 327,250
Transkaryotic Therapies, Inc.*............. 1,000 36,750
Tularik, Inc.*............................. 1,000 29,500
Vical Incorporated*........................ 2,500 48,125
-----------
18,515,330
-----------
</TABLE>
See Notes to the Financial Statements.
51
<PAGE> 53
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE MEDICAL PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited) -- (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------------------------------------------------------
<S> <C> <C>
MEDICAL LABS/TESTING SERVICES -- 3.0%
IMPATH, Inc.*.............................. 27,000 $ 1,464,750
-----------
PHARMACEUTICALS -- 52.8%
Abbott Laboratories........................ 30,000 1,336,875
ALZA Corporation*.......................... 50,000 2,956,250
American Home Products Corporation......... 14,000 822,500
AstraZeneca Group PLC ADR.................. 28,000 1,302,000
Aventis S.A. ADR........................... 23,000 1,668,937
BioChem Pharma, Inc.*...................... 23,000 566,375
Bristol-Myers Squibb Company............... 30,000 1,747,500
Corixa Corporation*........................ 14,000 601,125
Elan Corporation PLC ADR*.................. 13,935 674,976
Eli Lilly and Company...................... 18,000 1,797,750
Glaxo Wellcome PLC ADR..................... 9,000 520,313
Johnson & Johnson.......................... 11,000 1,120,625
MedImmune, Inc.*........................... 22,500 1,665,000
Merck & Co., Inc........................... 18,000 1,379,250
MGI Pharma, Inc.*.......................... 19,000 546,547
Novartis AG ADR............................ 20,000 800,000
Pfizer, Inc................................ 37,000 1,776,000
Pharmacia & Upjohn, Inc.................... 22,539 1,164,985
Roche Holding AG ADR....................... 10,500 1,025,417
Schering-Plough Corporation................ 33,000 1,666,500
SmithKline Beecham PLC ADR................. 8,500 554,094
-----------
25,693,019
-----------
THERAPEUTICS -- 0.3%
Theragenics Corporation*................... 14,000 119,875
-----------
TOTAL COMMON STOCK (cost $37,205,340)...... 45,792,974
-----------
</TABLE>
See Notes to the Financial Statements.
52
<PAGE> 54
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE MEDICAL PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited) -- (Continued)
<TABLE>
<CAPTION>
RIGHTS -- 0.0% SHARES VALUE
-----------------------------------------------------------------------
<S> <C> <C>
CONTINGENT VALUE RIGHTS -- 0.0%
Elan Corporation, PLC*# (cost $0).......... 31,000 $ 15,500
-----------
<CAPTION>
PRINCIPAL
VARIABLE RATE DEMAND NOTES** -- 5.5% AMOUNT
-----------------------------------------------------------------------
<S> <C> <C>
American Family, 6.3060%................... $ 394,104 394,104
Firstar Bank, NA, 6.4238%.................. 1,849,810 1,849,810
General Mills, Inc., 6.2788%............... 100,000 100,000
Sara Lee Corporation, 6.2738%.............. 304,583 304,583
Wisconsin Corporate Central Credit Union,
6.3438%.................................. 11,538 11,538
Wisconsin Electric Power Company,
6.3060%.................................. 7,504 7,504
-----------
TOTAL VARIABLE RATE DEMAND NOTES (cost
$2,667,539).............................. 2,667,539
-----------
TOTAL INVESTMENTS -- 99.7% (COST
$39,872,879)............................. 48,476,013
OTHER ASSETS IN EXCESS OF LIABILITIES --
0.3%..................................... 153,166
-----------
TOTAL NET ASSETS -- 100.0%................. $48,629,179
===========
</TABLE>
------------------
* -- 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, 2000.
ADR -- American Depository Receipts.
# Contingent value right (contingent upon profitability of company).
See Notes to the Financial Statements.
53
<PAGE> 55
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE MIDDLE EAST GROWTH PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS -- 47.2% SHARES VALUE
------------------------------------------------------------------------
<S> <C> <C>
<CAPTION>
EGYPT -- 7.0%
------------------------------------------------------------------------
<S> <C> <C>
BREWERY -- 4.2%
Al Ahram Beverages Company, S.A.E. GDR*........... 700 $ 12,023
--------
FINANCE -- INVESTMENT BANKING -- 2.8%
EFG-Hermes Holding, S.A.E. GDR.................... 2,400 7,860
--------
Total Egypt..................................... 19,883
--------
<CAPTION>
ISRAEL -- 30.9%
------------------------------------------------------------------------
<S> <C> <C>
APPAREL MANUFACTURERS -- 3.8%
Delta-Galil Industries, Ltd....................... 250 5,418
Delta-Galil Industries, Ltd. ADR.................. 250 5,429
--------
10,847
--------
CABLE TV -- 2.8%
Matav-Cable Systems Media, Ltd. ADR............... 200 8,013
--------
DIVERSIFIED OPERATIONS -- 3.3%
The Israel Land Development Company, Ltd. ADR..... 300 9,413
--------
ELECTRONIC COMPONENTS -- 1.0%
Elron Electronic Industries Limited............... 50 1,841
RADA Electronic Industries Limited*............... 600 919
--------
2,760
--------
INVESTMENT COMPANIES -- 12.2%
Clal, Ltd......................................... 400 17,506
Discount Investment Corporation................... 300 16,972
--------
34,478
--------
MEDICAL -- DRUGS -- 3.4%
Teva Pharmaceutical Industries, Ltd. ADR.......... 175 9,702
--------
SATELLITE TELECOMMUNICATIONS -- 1.9%
Gilat Satellite Networks, Ltd.*................... 75 5,203
--------
TELECOMMUNICATION EQUIPMENT -- 1.3%
Orckit Communications, Ltd.*...................... 125 3,766
--------
</TABLE>
See Notes to the Financial Statements.
54
<PAGE> 56
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE MIDDLE EAST GROWTH PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited) -- (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
------------------------------------------------------------------------
<S> <C> <C>
VENTURE CAPITAL -- 1.2%
Eshed Robotec Limited* (acquired 3/20/2000, cost
$5,953)......................................... 539 $ 3,234
--------
Total Israel.................................... 87,416
--------
<CAPTION>
LEBANON -- 4.6%
------------------------------------------------------------------------
<S> <C> <C>
REAL ESTATE DEVELOPMENT -- 4.6%
SOLIDERE -- Class B............................... 1,745 13,088
--------
Total Lebanon................................... 13,088
--------
<CAPTION>
UNITED STATES -- 4.7%
------------------------------------------------------------------------
<S> <C> <C>
BIOMEDICAL -- 4.7%
Bio-Technology General Corporation*............... 1,000 13,187
--------
Total United States............................. 13,187
--------
TOTAL COMMON STOCK (cost $149,210)................ 133,574
--------
</TABLE>
See Notes to the Financial Statements.
55
<PAGE> 57
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE MIDDLE EAST GROWTH PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited) -- (Continued)
<TABLE>
<CAPTION>
PRINCIPAL
VARIABLE RATE DEMAND NOTES** -- 13.3% AMOUNT VALUE
-------------------------------------------------------------------------
<S> <C> <C>
American Family, 6.3060%.......................... $7,075 $ 7,075
Chase Manhattan Bank, 4.1562%..................... 10 10
Firstar Bank, NA, 6.4238%......................... 2,193 2,193
General Mills, Inc., 6.2788%...................... 7,075 7,075
Sara Lee Corporation, 6.2738%..................... 7,075 7,075
Wisconsin Corporate Central Credit Union,
6.3438%......................................... 7,075 7,075
Wisconsin Electric Power Company, 6.3060%......... 7,074 7,074
--------
TOTAL VARIABLE RATE DEMAND NOTES (cost $37,577)... 37,577
--------
TOTAL INVESTMENTS -- 60.5% (COST $186,787)........ 171,151
OTHER ASSETS IN EXCESS OF LIABILITIES -- 39.5%.... 111,844
--------
TOTAL NET ASSETS -- 100.0%........................ $282,995
========
</TABLE>
------------------
* -- 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, 2000.
ADR -- American Depository Receipts.
GDR -- Global Depository Receipts.
r -- Restricted Security. Purchased in a private placement transaction; resale
to the public may require registration or may extend only to qualified
institutional buyers.
See Notes to the Financial Statements.
56
<PAGE> 58
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE SMALL CAP OPPORTUNITIES PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS -- 79.9% SHARES VALUE
------------------------------------------------------------------------
<S> <C> <C>
ACCESS/BROADBAND -- 3.2%
Radio Unica Corporation*.......................... 1,000 $ 7,000
--------
BANKS -- 11.9%
Crusader Holding Corporation*..................... 1,000 8,000
Ipswich Bancshares, Inc........................... 1,000 7,938
Richmond County Financial Corporation............. 500 9,562
--------
25,500
--------
BEVERAGES -- 5.1%
Vermont Pure Holdings, Ltd.*...................... 3,000 10,875
--------
CONSUMER PRODUCTS -- 7.5%
Cone Mills Corporation*........................... 1,000 6,188
Snap-on Incorporated.............................. 200 5,325
Velcro Industries N.V. ........................... 400 4,525
--------
16,038
--------
DIVERSIFIED OPERATIONS -- 7.1%
Mark IV Industries, Inc........................... 600 12,525
PICO Holdings, Inc.*.............................. 200 2,812
--------
15,337
--------
FINANCIAL SERVICES -- 2.2%
BKF Capital Group, Inc............................ 300 4,763
--------
FOODS -- 15.3%
Aurora Foods, Inc................................. 3,000 12,000
Flowers Industries, Inc........................... 450 8,971
Interstate Bakeries Corporation................... 400 5,600
Tasty Baking Company.............................. 500 6,406
--------
32,977
--------
</TABLE>
See Notes to the Financial Statements.
57
<PAGE> 59
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE SMALL CAP OPPORTUNITIES PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited) -- (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
------------------------------------------------------------------------
<S> <C> <C>
INFRASTRUCTURE -- 5.1%
Global Light Telecommunications, Inc.*............ 1,000 $ 10,938
--------
LEISURE/TOYS -- 2.7%
JAKKS Pacific, Inc.*.............................. 400 5,900
--------
NETWORKING PRODUCTS -- 3.9%
Stratos Lightwave, Inc.*.......................... 300 8,363
--------
RETAIL -- 11.7%
Haverty Furniture Companies, Inc.................. 1,000 8,500
SkopKo Stores, Inc................................ 400 6,150
The Pep Boys -- Manny, Moe & Jack................. 1,000 6,000
Urban Outfitters, Inc.*........................... 500 4,406
--------
25,056
--------
SUPPLY EQUIPMENT -- 4.2%
Capstone Turbine Corporation*..................... 200 9,012
--------
TOTAL COMMON STOCK (cost $165,529)................ 171,759
--------
</TABLE>
See Notes to the Financial Statements.
58
<PAGE> 60
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE SMALL CAP OPPORTUNITIES PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited) -- (Continued)
<TABLE>
<CAPTION>
PRINCIPAL
VARIABLE RATE DEMAND NOTES** -- 18.3% AMOUNT VALUE
-------------------------------------------------------------------------
<S> <C> <C>
American Family, 6.3060%.......................... $6,558 $ 6,558
Firstar Bank, NA, 6.4238%......................... 6,558 6,558
General Mills, Inc., 6.2788%...................... 6,558 6,558
Sara Lee Corporation, 6.2738%..................... 6,558 6,558
Wisconsin Corporate Central Credit Union,
6.3438%......................................... 6,558 6,558
Wisconsin Electric Power Company, 6.3060%......... 6,558 6,558
--------
TOTAL VARIABLE RATE DEMAND NOTES (cost $39,348)... 39,348
--------
TOTAL INVESTMENTS -- 98.2% (COST $204,877)........ 211,107
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.8%..... 3,862
--------
TOTAL NET ASSETS -- 100.0%........................ $214,969
========
</TABLE>
------------------
* -- 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, 2000.
See Notes to the Financial Statements.
59
<PAGE> 61
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE KINETICS GOVERNMENT MONEY MARKET PORTFOLIO
Portfolio of Investments -- June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 291.1% AMOUNT VALUE
----------------------------------------------------------------------
<S> <C> <C>
DISCOUNT NOTES -- 62.1%
Federal Home Loan Mortgage Corporation
6.5000%, 7/03/00 (cost $7,011,526)...... $ 7,014,000 $ 7,011,526
------------
INVESTMENT COMPANIES -- 0.9%
Firstar U.S. Government Money Market Fund
(cost $97,155).......................... 97,155 97,155
------------
REPURCHASE AGREEMENTS -- 228.1%
Repurchase Agreement with Firstar Bank
4.2500%, dated 6/30/00, due 7/03/00
collateralized by Government National
Mortgage Association, valued at
$40,000,000 Repurchase proceeds of
$25,740,113 (cost $25,731,000).......... 25,731,000 25,731,000
------------
TOTAL SHORT-TERM INVESTMENTS (COST
$32,839,681)............................ 32,839,681
------------
LIABILITIES IN EXCESS OF OTHER ASSETS --
(191.1%)................................ (21,559,763)
------------
TOTAL NET ASSETS -- 100.0%................ $ 11,279,918
============
</TABLE>
See Notes to the Financial Statements.
60
<PAGE> 62
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE INTERNET PORTFOLIO
Portfolio of Options Written -- June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
CONTRACTS VALUE
-----------------------------------------------------------------------
<S> <C> <C>
CALL OPTIONS WRITTEN
About.com, Inc.
Expiring July 2000 at $35.00.................... 2,000 $ 4,750
Advanced Radio Telecom Corporation
Expiring November 2000 at $17.50................ 2,000 5,500
CMGI, Inc.
Expiring July 2000 at $55.00.................... 2,000 1,750
Intuit, Inc.
Expiring July 2000 at $40.00.................... 2,000 6,250
UnitedGlobalCom, Inc.
Expiring July 2000 at $45.00.................... 2,000 8,250
-------
Total call options written (premium $40,804)...... 26,500
PUT OPTIONS WRITTEN
Catalina Marketing Corporation
Expiring November 2000 at $90.00................ 2,000 8,000
Getty Images, Inc.
Expiring October 2000 at $35.00................. 2,000 10,000
IDT Corporation
Expiring September 2000 at $30.00............... 2,000 3,625
Safeguard Scientifics, Inc.
Expiring August 2000 at $35.00.................. 2,000 10,000
TV Guide, Inc.
Expiring July 2000 at $30.00.................... 2,000 2,625
-------
Total put options written (premium $35,305)....... 34,250
TOTAL OPTIONS WRITTEN (PREMIUMS RECEIVED
$76,109)........................................ $60,750
=======
</TABLE>
See Notes to the Financial Statements.
61
<PAGE> 63
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
THE INTERNET INFRASTRUCTURE PORTFOLIO
Portfolio of Options Written -- June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
CONTRACTS VALUE
-----------------------------------------------------------------------
<S> <C> <C>
PUT OPTIONS WRITTEN
RCN Corporation
Expiring September 2000 at $25.00................ 1,000 $3,688
------
TOTAL OPTIONS WRITTEN (PREMIUMS RECEIVED $3,940)... $3,688
======
</TABLE>
See Notes to the Financial Statements.
62
<PAGE> 64
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
STATEMENT OF ASSETS & LIABILITIES
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
THE INTERNET THE INTERNET
THE INTERNET EMERGING GROWTH INFRASTRUCTURE
PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments, at value*................. $ 911,017,895 $10,661,655 $18,745,964
Short-term investments of collateral
received for securities loaned....... 241,427,320 2,766,600 3,303,395
Cash................................... 22,979,175 -- 669,421
Dividends and interest receivable...... 298,742 13,179 21,610
Receivable for investments sold........ 7,234,566 80,322 --
Other assets........................... 62,120 643 1,193
-------------- ----------- -----------
Total assets....................... 1,183,019,818 13,522,399 22,741,583
-------------- ----------- -----------
LIABILITIES:
Written options, at value**............ 60,750 -- 3,688
Payables for collateral received for
securities loaned.................... 241,427,320 2,766,600 3,303,395
Payable to Adviser..................... 974,925 11,325 20,406
Payable for investments purchased...... 4,318,221 213,507 295,039
Accrued expenses and other
liabilities.......................... 99,049 17,910 10,583
-------------- ----------- -----------
Total liabilities.................. 246,880,265 3,009,342 3,633,111
-------------- ----------- -----------
Net assets........................... $ 936,139,553 $10,513,057 $19,108,472
============== =========== ===========
* Cost of investments................... $ 895,053,662 $16,578,437 $24,544,354
============== =========== ===========
** Premiums received..................... $ 76,109 $ -- $ 3,940
============== =========== ===========
</TABLE>
See Notes to the Financial Statements.
63
<PAGE> 65
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
STATEMENT OF ASSETS & LIABILITIES
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
THE INTERNET THE INTERNET
GLOBAL GROWTH NEW PARADIGM THE MEDICAL
PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments, at value*................... $22,260,871 $3,042,619 $48,476,013
Short-term investments of collateral
received for securities loaned......... 6,905,946 284,914 13,274,860
Cash..................................... -- 117,832 192,800
Dividends and interest receivable........ 18,332 5,330 16,311
Receivable for investments sold.......... -- 30,516 --
Other assets............................. 2,798 46 1,154
----------- ---------- -----------
Total assets......................... 29,187,947 3,481,257 61,961,138
----------- ---------- -----------
LIABILITIES:
Payables for collateral received for
securities loaned...................... 6,905,946 284,914 13,274,860
Payable to Adviser....................... 23,294 3,281 44,148
Payable for investments purchased........ -- 75,782 --
Accrued expenses and other liabilities... 344,572 5,381 12,951
----------- ---------- -----------
Total liabilities.................... 7,273,812 369,358 13,331,959
----------- ---------- -----------
Net assets............................. $21,914,135 $3,111,899 $48,629,179
=========== ========== ===========
* Cost of investments..................... $29,827,373 $3,052,658 $39,872,879
=========== ========== ===========
</TABLE>
See Notes to the Financial Statements.
64
<PAGE> 66
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
STATEMENT OF ASSETS & LIABILITIES
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
THE SMALL CAP THE KINETICS
THE MIDDLE EAST OPPORTUNITIES GOVERNMENT MONEY
GROWTH PORTFOLIO PORTFOLIO MARKET PORTFOLIO
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments, at value*................. $171,151 $211,107 $32,839,681
Cash................................... 128,026 20,812 --
Dividends and interest receivable...... 196 244 3,491
Other assets........................... -- -- 8,473
Prepaid expenses....................... -- -- --
-------- -------- -----------
Total assets....................... 299,373 232,163 32,851,645
-------- -------- -----------
LIABILITIES:
Payable to Adviser..................... 275 187 16,854
Payable for investments purchased...... 8,100 9,223 21,540,066
Accrued expenses and other
liabilities.......................... 8,003 7,784 14,807
-------- -------- -----------
Total liabilities.................. 16,378 17,194 21,571,727
-------- -------- -----------
Net assets........................... $282,995 $214,969 $11,279,918
======== ======== ===========
* Cost of investments................... $186,787 $204,877 $32,839,681
======== ======== ===========
</TABLE>
See Notes to the Financial Statements.
65
<PAGE> 67
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
STATEMENT OF OPERATIONS
From April 28, 2000, (date of inception) through June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
THE INTERNET THE INTERNET
THE INTERNET EMERGING INFRASTRUCTURE
PORTFOLIO GROWTH PORTFOLIO PORTFOLIO
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends+............................ $ 134,487 $ 1,727 $ 5,494
Interest*............................. 733,409 25,700 38,604
------------- ----------- -----------
Total investment income........... 867,896 27,427 44,098
------------- ----------- -----------
EXPENSES:
Investment advisory fees.............. 1,976,415 22,733 40,854
Administration fee.................... 158,113 1,819 3,268
Audit fees............................ 26,805 2,892 2,977
Custodian fees and expenses........... 27,975 3,175 2,987
Directors' fees and expenses.......... 17,568 114 178
Fund accounting fees.................. 14,555 3,853 3,919
Legal fees............................ 17,056 132 206
------------- ----------- -----------
Net expenses...................... 2,238,487 34,718 54,389
------------- ----------- -----------
NET INVESTMENT LOSS..................... (1,370,591) (7,291) (10,291)
------------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on sale of
investments......................... 3,493,103 (62,427) (645,401)
Net change in unrealized depreciation
of investments and foreign
currency............................ (88,396,245) (823,082) (1,309,630)
Net change in unrealized appreciation
of written options.................. 15,359 -- 252
------------- ----------- -----------
Net loss on investments................. (84,887,783) (885,509) (1,954,779)
------------- ----------- -----------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $ (86,258,374) $ (892,800) $(1,965,070)
============= =========== ===========
*Interest Income Includes Security
Lending Income of:.................... $ 107,675 $ 1,115 $ 2,067
============= =========== ===========
+Net of Foreign Taxes Withheld of:...... $ 1,770 $ 18 $ --
============= =========== ===========
</TABLE>
See Notes to the Financial Statements.
66
<PAGE> 68
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
STATEMENT OF OPERATIONS
From April 28, 2000, (date of inception) through June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
THE INTERNET THE INTERNET
GLOBAL GROWTH NEW PARADIGM THE MEDICAL
PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends+................................ $ 1,055,653 $ 1,794 $ 41,744
Interest*................................. 17,167 8,598 11,896
----------- --------- ----------
Total investment income............... 1,072,820 10,392 53,640
----------- --------- ----------
EXPENSES:
Investment advisory fees.................. 46,383 6,549 84,748
Administration fee........................ 3,711 524 6,780
Audit fees................................ 3,032 2,778 3,708
Custodian fees and expenses............... 4,000 1,169 4,624
Directors' fees and expenses.............. 219 29 398
Fund accounting fees...................... 5,481 3,907 3,692
Legal fees................................ 253 34 434
----------- --------- ----------
Net expenses.......................... 63,079 14,990 104,384
----------- --------- ----------
NET INVESTMENT INCOME (LOSS)................ 1,009,741 (4,598) (50,744)
----------- --------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on sale of
investments............................. (382,551) (344,468) 32,423
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency........................ (1,875,875) 324,180 8,131,948
----------- --------- ----------
Net gain (loss) on investments.............. (2,258,426) (20,288) 8,164,371
----------- --------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................. $(1,248,685) $ (24,886) $8,113,627
=========== ========= ==========
*Interest Income Includes Security Lending
Income of:................................ $ 4,849 $ 79 $ 1,999
=========== ========= ==========
+Net of Foreign Taxes Withheld of:.......... $ 2,092 $ 29 $ 2,596
=========== ========= ==========
</TABLE>
See Notes to the Financial Statements.
67
<PAGE> 69
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
STATEMENT OF OPERATIONS
From April 28, 2000, (date of inception) through June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
THE SMALL CAP THE KINETICS
THE MIDDLE EAST OPPORTUNITIES GOVERNMENT MONEY
GROWTH PORTFOLIO PORTFOLIO MARKET PORTFOLIO
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends+............................. $ 519 $ 228 $ --
Interest*.............................. 443 508 368,266
-------- -------- --------
Total investment income............ 962 736 368,266
-------- -------- --------
EXPENSES:
Investment advisory fees............... 543 390 30,400
Administration fee..................... 44 31 6,080
Audit fees............................. 2,743 2,742 3,043
Custodian fees and expenses............ 1,342 1,063 1,063
Directors' fees and expenses........... 3 2 227
Fund accounting fees................... 3,908 3,510 7,417
Legal fees............................. 3 2 100
-------- -------- --------
Net expenses....................... 8,586 7,740 48,330
-------- -------- --------
NET INVESTMENT INCOME (LOSS)............. (7,624) (7,004) 319,936
-------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized loss on sale of
investments.......................... (22,100) (2,506) --
Net change in unrealized appreciation
of investments and foreign
currency............................. 23,830 10,657 --
-------- -------- --------
Net gain on investments.................. 1,730 8,151 --
-------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.............. $ (5,894) $ 1,147 $319,936
======== ======== ========
*Interest Income Includes Security
Lending Income of:..................... $ -- $ -- $ --
======== ======== ========
+Net of Foreign Taxes Withheld of:....... $ 177 $ -- $ --
======== ======== ========
</TABLE>
See Notes to the Financial Statements.
68
<PAGE> 70
KINETICS MUTUAL FUNDS, INC. -- MASTER INVESTMENT PORTFOLIOS
STATEMENT OF CHANGES IN NET ASSETS
From April 28, 2000, (date of inception) through June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
THE INTERNET THE INTERNET
THE INTERNET EMERGING GROWTH INFRASTRUCTURE
PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment loss.................... $ (1,370,591) $ (7,291) $ (10,291)
Net realized gain (loss) on sale of
investments.......................... 3,493,103 (62,427) (645,401)
Net change in unrealized depreciation
of investments, options and foreign
currency............................. (88,380,886) (823,082) (1,309,378)
-------------- ----------- -----------
Net decrease in net assets
resulting from operations........ (86,258,374) (892,800) (1,965,070)
-------------- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM
BENEFICIAL INTEREST TRANSACTIONS:
Proceeds from contributions............ 1,675,570,552 12,422,725 22,247,830
Fair value of withdrawals.............. (653,172,625) (1,016,868) (1,174,288)
-------------- ----------- -----------
Net increase in net assets
resulting from beneficial
interest transactions............ 1,022,397,927 11,405,857 21,073,542
-------------- ----------- -----------
Total increase in net assets........... 936,139,553 10,513,057 19,108,472
NET ASSETS:
Beginning of period.................... -- -- --
End of period.......................... $ 936,139,553 $10,513,057 $19,108,472
============== =========== ===========
</TABLE>
See Notes to the Financial Statements.
69
<PAGE> 71
KINETICS MUTUAL FUNDS, INC. -- MASTER INVESTMENT PORTFOLIOS
STATEMENT OF CHANGES IN NET ASSETS
From April 28, 2000, (date of inception) through June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
THE INTERNET THE INTERNET
GLOBAL GROWTH NEW PARADIGM THE MEDICAL
PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 1,009,741 $ (4,598) $ (50,744)
Net realized gain (loss) on sale of
investments......................... (382,551) (344,468) 32,423
Net change in unrealized appreciation
(depreciation) of investments,
options and foreign currency........ (1,875,875) 324,180 8,131,948
-------------- ----------- -----------
Net increase (decrease) in net
assets resulting from
operations...................... (1,248,685) (24,886) 8,113,627
-------------- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM BENEFICIAL INTEREST TRANSACTIONS:
Proceeds from contributions........... 25,164,987 3,370,031 46,734,396
Fair value of withdrawals............. (2,002,167) (233,246) (6,218,844)
-------------- ----------- -----------
Net increase in net assets
resulting from beneficial
interest transactions........... 23,162,820 3,136,785 40,515,552
-------------- ----------- -----------
Total increase in net assets.......... 21,914,135 3,111,899 48,629,179
NET ASSETS:
Beginning of period................... -- -- --
End of period......................... $ 21,914,135 $ 3,111,899 $48,629,179
============== =========== ===========
</TABLE>
See Notes to the Financial Statements.
70
<PAGE> 72
KINETICS MUTUAL FUNDS, INC. -- MASTER INVESTMENT PORTFOLIOS
STATEMENT OF CHANGES IN NET ASSETS
From April 28, 2000, (date of inception) through June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
THE KINETICS
THE MIDDLE EAST THE SMALL CAP GOVERNMENTAL
GROWTH OPPORTUNITIES MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ (7,624) $ (7,004) $ 319,936
Net realized loss on sale of
investments......................... (22,100) (2,506) --
Net change in unrealized appreciation
of investments, options and foreign
currency............................ 23,830 10,457 --
-------- -------- -------------
Net increase (decrease) in net
assets resulting from
operations...................... (5,894) 1,147 319,936
-------- -------- -------------
NET INCREASE IN NET ASSETS RESULTING
FROM BENEFICIAL INTEREST TRANSACTIONS:
Proceeds from contributions........... 348,564 291,696 567,849,111
Fair value of withdrawals............. (59,675) (77,874) (556,889,129)
-------- -------- -------------
Net increase in net assets
resulting from beneficial
interest transactions........... 288,889 213,822 10,959,982
-------- -------- -------------
Total increase in net assets.......... 282,995 214,969 11,279,918
NET ASSETS:
Beginning of period................... -- -- --
End of period......................... $282,995 $214,969 $ 11,279,918
======== ======== =============
</TABLE>
See Notes to the Financial Statements.
71
<PAGE> 73
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 (Unaudited)
The accompanying notes are an integral part of this financial statement.
1. ORGANIZATION
The Kinetics Portfolios Trust (the "Trust") was organized as a Delaware Business
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 Internet Infrastructure Portfolio, The Internet Global Growth Portfolio, The
Internet New Paradigm Portfolio, The Medical Portfolio, The Middle East Growth
Portfolio, The Small Cap Opportunities Portfolio, and The Kinetics Government
Money Market Portfolio (the "Master Portfolios"). Pursuant to the 1940 Act, the
Master Portfolios are "non-diversified" series of the Trust. Each of the 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 funds invested in the Master
Portfolio. By contributing assets to the Master Portfolio, the 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 funds based on the fund's 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 in equity securities engaged in a broad
range of Internet-related activities. The Internet Emerging Growth Portfolio
invests in equity securities of small and medium capitalization companies
engaged in business of the Internet and Internet-related activities. The
Internet New Paradigm Portfolio invests in equity securities engaged in the
development and implementation of hardware, software and communications
technologies that support the growing infrastructure and activities of the
Internet. The Internet Global Growth Portfolio invests in equity securities of
foreign and U.S. companies engaged in business of the Internet and Internet-
related activities. The Internet New Paradigm Portfolio invests in equity
securities of U.S. and foreign companies that the Advisor believes are well
positioned to reduce their costs, extend the research of their distribution
channels and experience significant growth in revenues as a result of
72
<PAGE> 74
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
June 30, 2000 (Unaudited)
increased involvement in, or growth of, the Internet. The Medical Portfolio
invests in equity securities engaged in medical research, pharmaceutical
treatments and related medical technology with a focus on companies engaged in
cancer research and drug development. The Middle East Growth Portfolio invests
in equity securities of foreign companies domiciled in the Middle East region of
the globe and U.S. companies engaged in significant business activities in the
Middle East. The Small Cap Opportunities Portfolio invests in equity securities
of 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 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, by the U.S. Government, its agencies or instrumentalities.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Master Portfolio securities that are listed on a U.S. securities exchange
(whether domestic or foreign) or The Nasdaq Stock Market ("NSM") for which
market quotations are readily available are valued at the last quoted sale price
as of 4:00 p.m., Eastern time on the day the valuation is made. 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 most recent bid price. 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. Fixed-income securities 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.
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
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KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
June 30, 2000 (Unaudited)
members of a national securities exchange or are primary dealers in U.S.
Government Securities. In connection with transactions in repurchase agreements,
it is the Trust's policy that the Master Portfolio receive, as collateral,
securities whose market value, including accrued interest, at all times will be
at least equal to 100% of the amount invested by the Master Portfolio in each
repurchase agreement. If the seller defaults, and the value of the collateral
declines, realization of the collateral by the Master Portfolio may be delayed
or limited.
WRITTEN OPTION ACCOUNTING
The Master Portfolios may write (sell) call or put options for trading 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 form 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, but not less than the strike price, 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 daily rates of
74
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KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
June 30, 2000 (Unaudited)
exchange, 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, the
Master Portfolios do isolate and treat as ordinary income the effect of changes
in foreign exchange rates arising from actual foreign currency transactions and
the effect or changes in foreign exchange rates arising from trade date and
settlement date differences.
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 the end of the period, The Internet
Emerging Growth Portfolio, The Internet Global Growth Portfolio and The Middle
East Growth Portfolio owned investment securities with an aggregate market value
of $270,000, $270,000 and $3,234, respectively, which are unregistered and thus
restricted as to resale. The restricted securities of The Internet Emerging
Growth Portfolio, The Internet Global Growth Portfolio and The Middle East
Growth Portfolio represent 2.6%, 1.2% and 1.1%, respectively, of the net assets
of each Master Portfolio.
WHEN-ISSUED SECURITIES
The Master Portfolios may purchase securities on a when-issued or delayed
delivery basis. Although the payments 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 reflects 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 ALLOCATION
Common expenses incurred by the Master Portfolios are allocated among the Master
Portfolios based upon (i) relative average net assets, (ii) as incurred on a
specific identification basis, or (iii) evenly among the Master Portfolios,
75
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KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
June 30, 2000 (Unaudited)
depending on the nature of the expenditure. All expenses accrued at the Master
Portfolio are allocated to the Funds based on their proportionate interest in
the Master Portfolio.
FEDERAL INCOME TAXES
Each Master Portfolio intends to qualify as a partnership for federal income tax
purposes. Therefore, the Master Portfolios believe they will not be subject to
any federal income tax on their income and net realized capital gains (if any).
However, each investor in the Master Portfolios will be taxed on its allocable
share of the Master Portfolio's income and capital gains for purposes of
determining its federal income tax liability.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities 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 ADVISOR
The Trust has an Investment Advisory Agreement (the "Agreement") with Kinetics
Asset Management, Inc. (the "Advisor"), 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 Agreement, the Master Portfolios
compensate the Advisor 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 Advisor at a rate of
0.50% of the Master Portfolio's average daily net assets.
The Advisor also serves as administrator to the Master Portfolios. Under an
Administrative Services Agreement with the Trust on behalf of the Master
Portfolios, the Advisor receives an annual administration fee equal to 0.10% of
each Master Portfolio's average daily net assets from which the Advisor will be
responsible for the payment of a portion of such fees to Firstar Mutual Fund
Services, LLC ("Firstar") for certain sub-administrative services rendered to
the Master Portfolios by Firstar. During the period from April 28, 2000
76
<PAGE> 78
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
June 30, 2000 (Unaudited)
(commencement of operations of the Master Portfolios) through June 30, 2000 The
Internet Portfolio, The Internet Emerging Growth Portfolio, The Internet
Infrastructure Portfolio, The Internet Global Growth Portfolio, The Internet New
Paradigm Portfolio, The Medical Portfolio, The Middle East Growth Portfolio, The
Small Cap Opportunities Portfolio and The Kinetics Government Money Market
Portfolio incurred expenses of $158,113, $1,819, $3,268, $3,711, $524, $6,780,
$44, $31, and $6,080, respectively, pursuant to the Administration Services
Agreement.
4. SECURITIES TRANSACTIONS
Purchases and sales of investment securities, other than short-term investments
and options, for the period from April 28, 2000 (commencement of operations of
the Master Portfolios) through June 30, 2000 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------------------ ------------------------
U.S. U.S.
GOVERNMENT OTHER GOVERNMENT OTHER
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
The Internet Portfolio....... -- $51,622,330 -- $86,197,234
The Internet Emerging Growth
Portfolio.................. -- $ 882,459 -- $ 738,232
The Internet Infrastructure
Portfolio.................. -- $ 2,138,303 -- $ 2,111,322
The Internet Global Growth
Portfolio.................. -- $ 1,534,571 -- $ 2,482,915
The Internet New Paradigm
Portfolio.................. -- $ 991,782 -- $ 1,639,962
The Medical Portfolio........ -- $ 1,074,023 -- $ 32,423
The Middle East Growth
Portfolio.................. -- $ 29,834 -- $ 28,855
The Small Cap Opportunities
Portfolio.................. -- $ 91,665 -- $ 10,200
The Kinetics Government Money
Market Portfolio........... -- -- -- --
</TABLE>
77
<PAGE> 79
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
June 30, 2000 (Unaudited)
As of June 30, 2000, unrealized appreciation (depreciation) for federal income
tax purposes was as follows:
<TABLE>
<CAPTION>
NET APPRECIATED DEPRECIATED
APPRECIATION SECURITIES SECURITIES
------------ ------------ -------------
<S> <C> <C> <C>
The Internet Portfolio........... $14,151,072 $171,395,468 $(157,244,396)
The Internet Emerging Growth
Portfolio...................... $(5,941,095) $ 287,925 $ (6,229,020)
The Internet Infrastructure
Portfolio...................... $(5,798,138) $ 300,876 $ (6,099,014)
The Internet Global Growth
Portfolio...................... $(7,566,502) $ 484,742 $ (8,051,244)
The Internet New Paradigm
Portfolio...................... $ (10,572) $ 114,006 $ (124,578)
The Medical Portfolio............ $ 8,603,134 $ 10,508,427 $ (1,905,293)
The Middle East Growth
Portfolio...................... $ (15,636) $ 5,972 $ (21,608)
The Small Cap Opportunities
Portfolio...................... $ 6,230 $ 18,465 $ (12,235)
The Kinetics Government Money
Market Portfolio............... -- -- --
</TABLE>
At June 30, 2000, the cost of investments for federal income tax purposes was
$896,806,073, $16,602,750, $24,540,414, $29,827,373, $3,053,191, $39,872,879,
$186,787, $204,877 and $32,839,681 for the Internet, Emerging, Infrastructure,
Global, New Paradigm, Medical, Middle East, Small Cap and Government,
respectively. Any differences between book and tax are due primarily to wash
losses.
At December 31, 1999, Internet had accumulated net realized capital loss
carryovers of $45,360,004 expiring in 2007. To the extent that the Fund realizes
future net capital gains, those gains will be offset by any unused capital loss
carryover.
78
<PAGE> 80
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
June 30, 2000 (Unaudited)
For the period from April 28, 2000 through June 30, 2000 The Internet Portfolio
and The Internet Infrastructure Portfolio wrote the following options:
<TABLE>
<CAPTION>
NUMBER PREMIUM
OF CONTRACTS AMOUNT
------------ -------
<S> <C> <C>
THE INTERNET PORTFOLIO
------------------------------------------
Outstanding at the Beginning of Period.... -- --
Options Written........................... 20,000 $76,109
Options Terminated........................ -- --
------ -------
Outstanding at the End of Period.......... 20,000 $76,109
THE INTERNET INFRASTRUCTURE PORTFOLIO
------------------------------------------
Outstanding at the Beginning of Period.... -- --
Options Written........................... 1,000 $ 3,940
Options Terminated........................ -- --
------ -------
Outstanding at the End of Period.......... 1,000 $ 3,940
</TABLE>
5. PORTFOLIO SECURITIES LOANED
As of June 30, 2000, 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 Advisor. 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 value of the securities on loan
and the value of the related collateral were as follows:
<TABLE>
<CAPTION>
SECURITIES COLLATERAL
------------ ------------
<S> <C> <C>
The Internet Portfolio.................... $241,427,320 $246,255,866
The Internet Emerging Growth Portfolio.... $ 2,766,600 $ 2,821,932
The Internet Infrastructure Portfolio..... $ 3,303,395 $ 3,369,463
The Internet Global Growth Portfolio...... $ 6,905,946 $ 7,044,065
The Internet New Paradigm Portfolio....... $ 284,914 $ 290,612
The Medical Portfolio..................... $ 13,274,860 $ 13,540,357
</TABLE>
79
<PAGE> 81
KINETICS PORTFOLIOS TRUST -- MASTER INVESTMENT PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
June 30, 2000 (Unaudited)
6. SELECTED FINANCIAL HIGHLIGHTS
Financial highlights for the Master Portfolios for the period from April 28,
2000, commencement of operations, to June 30, 2000 were as follows:
<TABLE>
<CAPTION>
THE INTERNET THE INTERNET
THE INTERNET EMERGING GROWTH INFRASTRUCTURE
PORTFOLIO PORTFOLIO PORTFOLIO
------------ --------------- --------------
<S> <C> <C> <C>
Ratio to average net assets:
Expenses*.......................... 1.42% 1.91% 1.66%
Net investment income*............. (0.87%) (0.40%) (0.22%)
Portfolio turnover rate.............. 9% 14% 21%
</TABLE>
-------------------
* Annualized.
<TABLE>
<CAPTION>
THE INTERNET THE INTERNET
GLOBAL GROWTH NEW PARADIGM THE MEDICAL
PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------ -----------
<S> <C> <C> <C>
Ratio to average net assets:
Expenses*.......................... 1.70% 2.86% 1.54%
Net investment income*............. 27.21% (0.88%) (0.75%)
Portfolio turnover rate.............. 12% 75% 0%
</TABLE>
-------------------
* Annualized.
<TABLE>
<CAPTION>
THE KINETICS
THE MIDDLE THE SMALL CAP GOVERNMENT
EAST GROWTH OPPORTUNITIES MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------- ------------
<S> <C> <C> <C>
Ratio to average net assets:
Expenses*.......................... 19.44% 26.31% 0.79%
Net investment income*............. (17.27%) (23.95%) 5.26%
Portfolio turnover rate.............. 34% 12% N/A
</TABLE>
-------------------
* Annualized.
80
<PAGE> 82
Kinetics Mutual
Funds, Inc.
1311 Mamaroneck Avenue
White Plains, NY 10605
INVESTMENT ADVISER,
SHAREHOLDER SERVICING AGENT
AND ADMINISTRATOR
Kinetics Asset Management, Inc.
1311 Mamaroneck Avenue
White Plains, NY 10605
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
100 East Wisconsin Avenue
Milwaukee, WI 53202
DISTRIBUTOR
T.O. Richardson Securities, Inc.
2 Bridgewater Road
Farmington, CT 06032
SUB-ADMINISTRATOR,
FUND ACCOUNTANT AND
TRANSFER AGENT
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
CUSTODIAN
Firstar Bank, N.A.
615 East Michigan Street
Milwaukee, WI 53202
THIS MATERIAL MUST BE PRECEDED OR
ACCOMPANIED BY A PROSPECTUS.
