KINETICS MUTUAL FUNDS INC, 485APOS, 2000-02-18

KINETICS MUTUAL FUNDS INC
485APOS, 2000-02-18

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Filed with the Securities and Exchange Commission on February 18, 2000

1933 Act Registration File No. 333-78275
1940 Act File No. 811-09303

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|

Pre-Effective Amendment No. |_|

Post-Effective Amendment No. 3 |X|

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|

Amendment No. 6 |X|

(Check appropriate box or boxes.)

KINETICS MUTUAL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)

1311 Mamaroneck Ave
WHITE PLAINS, NEW YORK 10605
(Address and Zip Code of Principal Executive Offices)

(800) 930-3828
Registrant's Telephone Number, including Area Code

Lee Schultheis
1311 Mamaroneck Ave
WHITE PLAINS, NEW YORK 10605
(Name and Address of Agent for Service)

WITH A COPY TO:
Thomas R. Westle, Esq.
Spitzer & Feldman P.C.
405 Park Avenue
New York, New York 10022

AS SOON AS PRACTICAL AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
Approximate Date of Proposed Public Offering

SHARES OF COMMON STOCK
(Title of Securities Being Registered)

It is proposed that this filing will become effective

___ immediately upon filing pursuant to paragraph (b)

___ on ___________________ pursuant to paragraph (b)

_X_ 60 days after filing pursuant to paragraph (a)(1)

___ on ___________ pursuant to paragraph (a)(1)

___ 75 days after filing pursuant to paragraph (a)(2)

___ on __________________ pursuant to paragraph (a)(2) of Rule 485.

THE INTERNET FUND
THE INTERNET INFRASTRUCTURE FUND
THE INTERNET EMERGING GROWTH FUND
THE INTERNET GLOBAL GROWTH FUND
THE INTERNET NEW PARADIGM FUND
EACH A SERIES OF KINETICS MUTUAL FUNDS, INC.

[LOGO]

PROSPECTUS

_______________, 2000

Investment Adviser
KINETICS ASSET MANAGEMENT, INC.

Minimum Initial Investment --- $1,000

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

KINETICS MUTUAL FUNDS, INC.

PROSPECTUS

____________, 2000

This combined prospectus discusses each of the following series (each a "Fund"
and collectively the "Funds") of Kinetics Mutual Funds, Inc. (the "Company").
Each Fund, 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 Portfolio" and collectively the "Portfolios") of Kinetics Portfolios Trust
(the "Trust"), a Delaware business trust (e.g., The Internet Fund invests all of
its assets in The Internet Portfolio). Each Portfolio is an open-end
non-diversified investment company with investment objectives and strategies
identical to those of each corresponding Fund. Investors should carefully
consider this investment approach. For additional information regarding this
investment structure, see "Unique Characteristics of Master/Feeder Fund
Structure" on page __.

THE INTERNET FUND (the "Internet Fund") is a no-load, non-diversified investment
company which seeks to provide investors with long-term capital growth by
investing in the Internet Portfolio, which invests primarily in the equity
securities of domestic and foreign companies engaged in the Internet and
Internet-related activities.

THE INTERNET INFRASTRUCTURE FUND (the "Infrastructure Fund") is a no-load,
non-diversified investment company which seeks to provide investors with
long-term capital growth by investing in the Internet Infrastructure Portfolio
(the "Infrastructure Portfolio"), which invests primarily in the equity
securities of domestic and foreign companies engaged in the development and
implementation of hardware, software and communications technologies that
support the growing infrastructure and activities of the Internet.

THE INTERNET EMERGING GROWTH FUND (the "Emerging Fund") is a no-load,
non-diversified investment company which seeks to provide investors with
long-term capital growth by investing in the Internet Emerging Growth Portfolio
(the "Emerging Portfolio"), which invests primarily in the equity securities of
small and medium capitalization domestic and foreign emerging companies engaged
in the Internet and Internet-related activities.

THE INTERNET GLOBAL GROWTH FUND (the "Global Fund") is a no-load,
non-diversified investment company which seeks to provide investors with
long-term capital growth by investing in the Internet Global Growth Portfolio
(the "Global Portfolio"), which invests primarily in the equity securities of
foreign and U.S. companies engaged in the Internet and Internet-related
activities.

THE INTERNET NEW PARADIGM FUND (the "New Paradigm Fund") is a no-load,
non-diversified investment company which seeks to provide investors with
long-term capital growth by investing in the Internet New Paradigm Portfolio
(the "New Paradigm Portfolio"), which invests primarily in the equity securities
of domestic and foreign companies that the investment adviser believes will
reduce their costs, extend the reach of their distribution channels and
experience significant growth in their assets or revenues as a result of
increased involvement in or growth of the Internet.

This Prospectus gives vital information about each Fund. For your own benefit
and protection, please read it before you invest, and keep it on hand for future
reference.

TABLE OF CONTENTS

Risk/Return Summary of The Internet Fund.......................................2
Risk/Return Summary of The Infrastructure Fund.................................3
Risk/Return Summary of The Emerging Fund.......................................4
Risk/Return Summary of The Global Fund.........................................6
Risk/Return Summary of The New Paradigm Fund...................................7
Who May Want To Invest.........................................................9
Performance of The Internet Fund...............................................9
Performance of The Other Funds................................................10
Fees And Expenses of The Funds................................................10
Investment Objective and Strategies of The Internet Fund......................11
Investment Objective and Strategies of The Infrastructure Fund................12
Investment Objective and Strategies of The Emerging Fund......................13
Investment Objective and Strategies of The Global Fund........................15
Investment Objective and Strategies of The New Paradigm Fund..................16
Main Risks of The Funds.......................................................17
Management of The Funds.......................................................19
Valuation of Fund Shares......................................................20
How To Purchase Shares........................................................21
How To Redeem Shares..........................................................22
Exchange Privilege............................................................24
Distribution and Taxes........................................................24
Distribution of Shares........................................................25
Unique Characteristics of Master/Feeder Fund Structure........................26
Counsel and Independent Auditors..............................................27
Financial Highlights of The Internet Fund.....................................28

RISK/RETURN SUMMARY
OF THE INTERNET FUND
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the Internet Fund is long-term growth of capital.
The Internet Fund seeks to obtain current income as a secondary objective.

PRINCIPAL INVESTMENT STRATEGIES

The Internet Fund seeks to achieve its investment objective by investing all of
its investable assets in the Internet Portfolio. The Internet Portfolio invests
primarily in common stocks, convertible securities, warrants and other equity
securities having the characteristics of common stocks, such as American
Depositary Receipts and International Depositary Receipts of domestic and
foreign companies that provide products or services designed for the Internet.

The investment adviser believes that the Internet offers unique investment
opportunities due to its ever-growing use and popularity among business and
personal users alike. The Internet is a collection of connected computers that
allows commercial and professional organizations, educational institutions,
government agencies and consumers to communicate electronically, access and
share information and conduct business around the world.

FUND STRUCTURE

The Internet Portfolio has an investment objective identical to that of the
Internet Fund. The Internet Fund may withdraw its investment from the Internet
Portfolio at any time if the Board of Directors of the Company determines that
it is in the best interests of the Internet Fund to do so. Upon any such
withdrawal, the Directors will consider what action might be taken, including
investing all of the Internet Fund's investable assets in another pooled
investment entity having substantially the same objective and strategies as the
Internet Fund or retaining an investment adviser including, the current
investment adviser, to manage the Internet Fund's assets directly.

PRINCIPAL RISKS OF INVESTMENT

Investing in common stocks has inherent risks that could cause you to lose
money. The principal risks of investing in the Internet Fund and indirectly the
Internet Portfolio are listed below and could adversely affect the net asset
value, total return and the value of the Internet Fund, Internet Portfolio and
your investment.

o STOCK MARKET RISKS: Stock mutual funds are subject to stock market
risks and significant fluctuations in value. If the stock market declines in
value, the Internet Portfolio is likely to decline in value and you could lose
money on your investment.

o STOCK SELECTION RISKS: The portfolio securities selected by the
investment adviser may decline in value or not increase in value when the stock
market in general is rising and may fail to meet the Internet Portfolio's
investment objective.

o LIQUIDITY RISKS: The investment adviser may not be able to sell
portfolio securities at an optimal time or price.

o INDUSTRY RISKS: Mutual funds that invest in a particular industry carry a
risk that a group of industry-related stocks will decline in price due to
industry specific developments. Companies in the same or similar industries may
share common characteristics and are more likely to react comparably to industry
specific market or economic developments.

o INTERNET INDUSTRY SPECIFIC RISKS: Companies that conduct business on the
Internet or derive a substantial portion of their revenues from Internet-related
activities in general are subject to a rate of change in technology and
competition which is generally higher than that of other industries.

o SMALL AND MEDIUM-SIZE COMPANY RISKS: The Internet Portfolio may invest in the
equity securities of small, medium and large-size companies. Small and
medium-size companies often have narrower markets and more limited managerial
and financial resources than do larger, more established companies. As a result,
their performance can be more volatile and they face a greater risk of business
failure, which could increase the volatility of the Internet Portfolio's assets.

o FOREIGN SECURITIES RISKS: The Internet Portfolio may invest in foreign
securities, which can carry higher returns but involve more risks than those
associated with domestic investments. Additional risks associated with
investment foreign in securities include currency fluctuations, political and
economic instability, differences in financial reporting standards and less
stringent regulation of securities markets.

o NON-DIVERSIFICATION RISKS: As a non-diversified investment
company, more of the Internet Portfolio's assets may be concentrated in the
common stock of any single issuer, which may make the value of the Internet
Portfolio's shares and therefore, the Internet Fund's shares, more susceptible
to certain risks than shares of a diversified mutual fund.

RISK/RETURN SUMMARY
OF THE INFRASTRUCTURE FUND
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the Infrastructure Fund is long-term growth of
capital.

PRINCIPAL INVESTMENT STRATEGIES

The Infrastructure Fund seeks to achieve its investment objective by investing
all of its investable assets in the Infrastructure Portfolio. The Infrastructure
Portfolio invests primarily in common stocks, convertible securities, warrants
and other equity securities having the characteristics of common stocks, such as
American Depositary Receipts and International Depositary Receipts of domestic
and foreign companies engaged in the development and implementation of hardware,
software and communications technologies that support the growing infrastructure
and activities of the Internet.

FUND STRUCTURE

The Infrastructure Portfolio has an investment objective identical to that of
the Infrastructure Fund. The Infrastructure Fund may withdraw its investment
from the Infrastructure Portfolio at any time if the Board of Directors of the
Company determines that it is in the best interests of the Infrastructure Fund
to do so. Upon any such withdrawal, the Directors will consider what action
might be taken, including investing all of the Infrastructure Fund's investable
assets in another pooled investment entity having substantially the same
objective and strategies as the Infrastructure Fund or retaining an investment
adviser including, the current investment adviser, to manage the Infrastructure
Fund's assets directly.

PRINCIPAL RISKS OF INVESTMENT

Investing in common stocks has inherent risks that could cause you to lose
money. The principal risks of investing in the Infrastructure Fund and
indirectly the Infrastructure Portfolio, are listed below and could adversely
affect the net asset value, total return and value of the Infrastructure Fund,
the Infrastructure Portfolio and your investment.

o STOCK MARKET RISKS: Stock mutual funds are subject to stock market risks
and significant fluctuations in value. If the stock market declines in value,
the Infrastructure Portfolio is likely to decline in value and you could lose
money on your investment.

o STOCK SELECTION RISKS The portfolio securities selected by the investment
adviser may decline in value or not increase in value when the stock market in
general is rising and may fail to meet the Infrastructure Portfolio's investment
objective.

o LIQUIDITY RISKS: The investment adviser may not be able to sell portfolio
securities at an optimal time or price.

o INDUSTRY RISKS: Mutual funds that invest in a particular industry carry a
risk that a group of industry-related securities will decline in price due to
industry specific developments. Companies in the same or similar industries may
share common characteristics and are more likely to react comparably to industry
specific market or economic developments.

o INTERNET INDUSTRY SPECIFIC RISKS: Companies that conduct business on the
Internet or derive a substantial portion of their revenues from
Internet-related activities in general are subject to a rate of change in
technology and competition which is generally higher than that of other
industries.

o SMALL- AND MEDIUM-SIZE COMPANY RISKS: The Infrastructure
Portfolio may invest in the equity securities of small, medium and large-size
companies. Small and medium-size companies often have narrower markets and more
limited managerial and financial resources than larger, more established
companies. As a result, their performance can be more volatile and they face a
greater risk of business failure, which could increase the volatility of the
Infrastructure Portfolio's portfolio.

o FOREIGN SECURITIES RISKS: The Infrastructure Portfolio may invest in
foreign securities, which can carry higher returns but involve more risks than
those associated with domestic investments. Additional risks associated with
investment in foreign securities include currency fluctuations, political and
economic instability, differences in financial reporting standards and less
stringent regulation of securities markets.

o NON-DIVERSIFICATION RISKS: As a non-diversified investment
company, more of the Infrastructure Portfolio's assets may be concentrated in
the common stock of any single issuer, which may make the value of the
Infrastructure Portfolio's shares and, therefore the Infrastructure Fund's
shares, more susceptible to certain risks than shares of a diversified mutual
fund.

RISK/RETURN SUMMARY
OF THE EMERGING FUND
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the Emerging Fund is long-term growth of capital.

PRINCIPAL INVESTMENT STRATEGIES

The Emerging Fund seeks to achieve its investment objective by investing all of
its investable assets in the Emerging Portfolio. The Emerging Portfolio invests
primarily in common stocks, convertible securities, warrants and other equity
securities having the characteristics of common stocks, such as American
Depositary Receipts and International Depositary Receipts of small and medium
capitalization domestic and foreign emerging companies engaged in the Internet
and Internet-related activities.

FUND STRUCTURE

The Emerging Portfolio has an investment objective identical to that of the
Emerging Fund. The Emerging Fund may withdraw its investment from the
Infrastructure Portfolio at any time if the Board of Directors of the Company
determines that it is in the best interests of the Emerging Fund to do so. Upon
any such withdrawal, the Directors will consider what action might be taken,
including investing all of the Emerging Fund's investable assets in another
pooled investment entity having substantially the same objective and strategies
as the Emerging Fund or retaining an investment adviser including, the current
investment adviser, to manage the Emerging Fund's assets directly.

PRINCIPAL RISKS OF INVESTMENT

Investing in common stocks has inherent risks that could cause you to lose
money. The principal risks of investing in the Emerging Fund and indirectly the
Emerging Portfolio are listed below and could adversely affect the net asset
value, total return and value of the Emerging Fund, Emerging Portfolio and your
investment.

o STOCK MARKET RISKS: Stock mutual funds are subject to stock market risks
and significant fluctuations in value. If the stock market declines in value,
the Emerging Portfolio is likely to decline in value and you could lose money on
your investment.

o STOCK SELECTION RISKS: The portfolio securities selected by the investment
adviser may decline in value or not increase in value when the stock market in
general is rising and may fail to meet the Emerging Portfolio's investment
objective.

o LIQUIDITY RISKS: The investment adviser may not be able to sell portfolio
securities at an optimal time or price.

o INDUSTRY RISKS: Mutual funds that
invest in a particular industry carry a risk that a group of industry-related
stocks will decline in price due to industry specific developments. Companies in
the same or similar industries may share common characteristics and are more
likely to react comparably to industry specific market or economic developments.

o EMERGING, SMALL AND MEDIUM-SIZE COMPANY RISKS: The Emerging Portfolio invests
in the equity securities of emerging, small and medium-size companies. Small and
medium-size companies generally have a market capitalization of less than $1
billion. Emerging companies are those with operating histories of less than
three years. Investing in emerging, small and medium-size companies presents
greater risks than investing in securities of larger, more established
companies. These companies may be developing or marketing new products or
services for which markets are not yet established and may never be established.
They may also lack depth or experience of management and may have difficulty
generating or obtaining funds necessary for growth and development of their
business. Due to these and other factors, these companies may suffer significant
losses.

o FOREIGN SECURITIES RISKS: The Emerging Portfolio may invest in
foreign securities, which can carry higher returns but involve more risks than
those associated with domestic investments. Additional risks associated with
investing in foreign securities include currency fluctuations, political and
economic instability, differences in financial reporting standards and less
stringent regulation of securities markets.

o NON-DIVERSIFICATION RISKS: As a non-diversified investment company, more
of the Emerging Portfolio's assets may be concentrated in the common stock of
any single issuer, which may make the value of the Emerging Portfolio's shares
and, therefore the Emerging Fund's shares more susceptible to certain risks
than shares of a diversified mutual fund.

RISK/RETURN SUMMARY
OF THE GLOBAL FUND
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the Global Fund is long-term growth of capital.

PRINCIPAL INVESTMENT STRATEGIES

The Global Fund seeks to achieve its investment objective by investing all of
its investable assets in the Global Portfolio. The Global Portfolio invests
primarily in common stocks, convertible securities, warrants and other equity
securities having the characteristics of common stocks, such as American
Depositary Receipts and International Depositary Receipts of companies located
in at least three countries which are engaged in the Internet and
Internet-related activities.

FUND STRUCTURE

The Global Portfolio has an investment objective identical to that of the Global
Fund. The Global Fund may withdraw its investment from the Global Portfolio at
any time if the Board of Directors of the Company determines that it is in the
best interests of the Global Fund to do so. Upon any such withdrawal, the
Directors will consider what action might be taken, including investing all of
the Global Fund's investable assets in another pooled investment entity having
substantially the same objective and strategies as the Global Fund or retaining
an investment adviser, including the current investment adviser, to manage the
Global Fund's assets directly.

PRINCIPAL RISKS OF INVESTMENT

Investing in common stocks has inherent risks that could cause you to lose
money. The principal risks of investing in the Global Fund and indirectly the
Global Portfolio are listed below and could adversely affect the net asset
value, total return and value of the Global Fund, Global Portfolio and your
investment.

o STOCK MARKET RISKS: Stock mutual funds are subject to stock market risks
and significant fluctuations in value. If the stock market declines in value,
the Global Portfolio is likely to decline in value and you could lose money on
your investment.

o STOCK SELECTION RISKS: The portfolio securities selected by the investment
adviser may decline in value or not increase in value when the stock market in
general is rising and may fail to meet the Global Portfolio's investment
objective.

o LIQUIDITY RISKS: The investment adviser may not be able to sell portfolio
securities at an optimal time or price.

o INDUSTRY RISKS: Mutual funds that invest in a particular industry carry a
risk that a group of industry related securities will decline in price due to
industry specific developments. Companies in the same or similar industries may
share common characteristics and are more likely to react comparably to industry
specific market or economic developments.

o INTERNET INDUSTRY SPECIFIC RISKS: Companies that conduct
business on the Internet or derive a substantial portion of their revenues from
Internet-related activities in general are subject to a rate of change in
technology and competition which is generally higher than that of other
industries.

o SMALL AND MEDIUM-SIZE COMPANY RISKS: The Global Portfolio may invest in the
equity securities of small, medium and large-size companies. Small and
medium-size companies often have narrower markets and more limited managerial
and financial resources than do larger, more established companies. As a result,
their performance can be more volatile and they face a greater risk of business
failure, which could increase the volatility of the Global Portfolio's assets.

o FOREIGN SECURITIES RISKS: The Global Portfolio may invest in foreign
securities, which can carry higher returns but involve more risks than those
associated with domestic investments. Additional risks associated with
investment in foreign securities include currency fluctuations, political and
economic instability, differences in financial reporting standards and less
stringent regulation of securities markets.

o NON-DIVERSIFICATION RISKS: As a non-diversified investment company, more
of the Global Portfolio's assets may be concentrated in the common stock of any
single issuer, which may make the value of the Global Portfolio's shares and,
therefore the Global Fund's shares more susceptible to certain risks than
shares of a diversified mutual fund.

RISK/RETURN SUMMARY
OF THE NEW PARADIGM FUND
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the New Paradigm Fund is long-term growth of
capital.

PRINCIPAL INVESTMENT STRATEGIES

The New Paradigm Fund seeks to achieve its investment objective by investing all
of its investable assets in the New Paradigm Portfolio. The New Paradigm
Portfolio invests primarily in common stocks, convertible securities, warrants
and other equity securities having the characteristics of common stocks, such as
American Depositary Receipts and International Depositary Receipts of domestic
and foreign companies. The New Paradigm Portfolio will invest in companies that
the investment adviser believes will reduce their costs, extend the reach of
their distribution channels and experience significant growth in their assets or
revenues as a result of increased involvement in, or growth of, the Internet.

FUND STRUCTURE

The New Paradigm Portfolio has an investment objective identical to that of the
New Paradigm Fund. The New Paradigm Fund may withdraw its investment from the
New Paradigm Portfolio at any time if the Board of Directors of the Company
determines that it is in the best interests of the New Paradigm Fund to do so.
Upon any such withdrawal, the Directors will consider what action might be
taken, including investing all of the New Paradigm Fund's investable assets in
another pooled investment entity having substantially the same objective and
strategies as the New Paradigm Fund or retaining an investment adviser
including, the current investment adviser, to manage the New Paradigm Fund's
assets directly.

PRINCIPAL RISKS OF INVESTMENT

Investing in common stocks has inherent risks that could cause you to lose
money. The principal risks of investing in the New Paradigm Fund and indirectly
the New Paradigm Portfolio are listed below and could adversely affect the net
asset value, total return and value of the New Paradigm Fund, New Paradigm
Portfolio and your investment.

o STOCK MARKET RISKS: Stock mutual funds are subject to stock market risks
and significant fluctuations in value. If the stock market declines in value,
the New Paradigm Portfolio is likely to decline in value and you could lose
money on your investment.

o STOCK SELECTION RISKS: The portfolio securities selected by the investment
adviser may decline in value or not increase in value when the stock market in
general is rising and may fail to meet the New Paradigm Portfolio's investment
objective.

o LIQUIDITY RISKS: The investment adviser may not be able to sell portfolio
securities at an optimal time or price.

o INDUSTRY RISKS: Mutual funds that invest in a particular industry carry a risk
that a group of industry-related securities will decline in price due to
industry specific developments. Companies in the same or similar industries may
share common characteristics and are more likely to react comparably to industry
specific market or economic developments.

o SMALL- AND MEDIUM-SIZE COMPANY RISKS: The New Paradigm Portfolio may invest in
the equity securities of small, medium and large-size companies. Small and
medium-size companies often have narrower markets and more limited managerial
and financial resources than do larger, more established companies. As a result
their performance can be more volatile and they face a greater risk of business
failure, which could increase the volatility of the New Paradigm Portfolio's
assets.

o FOREIGN SECURITIES RISKS: The New Paradigm Portfolio may invest in foreign
securities, which can carry higher returns but involve more risks than those
associated with domestic investments. Additional risks associated with
investment in foreign securities include currency fluctuations, political and
economic instability, differences in financial reporting standards and less
stringent regulation of securities markets.

o NON-DIVERSIFICATION RISKS: As a non-diversified investment company, more
of the New Paradigm Portfolio's assets may be concentrated in the common stock
of any single issuer, which may make the value of the New Paradigm Portfolio's
shares and, therefore the New Paradigm Fund's shares, more susceptible to
certain risks than shares of a diversified mutual fund.

WHO MAY WANT TO INVEST
- --------------------------------------------------------------------------------

Each Fund may be appropriate for investors who:

o wish to invest for the long term.
o want to diversify their portfolios.
o want to allocate some portion of their long-term investments to growth equity
investing.
o are willing to accept the volatility associated with equity investing.

PERFORMANCE OF THE INTERNET FUND
- --------------------------------------------------------------------------------

The bar chart and table shown below illustrate the variability of the Internet
Fund's returns. The bar chart indicates the risks of investing in the Internet
Fund by showing the changes in the Internet Fund's performance from year to year
(on a calendar year basis). The table shows how the Internet Fund's average
annual returns compare with those of the S&P 500 Index and the NASDAQ Composite
Index both of which represent broad measures of market performance. THE INTERNET
FUND'S PAST PERFORMANCE IS NOT NECESSARILY AN INDICATION OF HOW THE INTERNET
FUND OR THE INTERNET PORTFOLIO WILL PERFORM IN THE FUTURE.

The Internet Fund
Calendar Year Returns as of 12/31
1997 12.74%
1998 196.14%
1999

Total return for the nine months ended September 30, 1999 was 88.42%

- -------------------------- ------ -------- -----------
BEST QUARTER: Q1 1999 93.07%
- -------------------------- ------ -------- -----------
Worst Quarter: Q1 1997 -21.23%
- -------------------------- ------ -------- -----------

AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/98
- ----------------------------------------------- ------------ -------------------
1 YEAR SINCE INCEPTION1
- ----------------------------------------------- ------------ -------------------
The Internet Fund (WWWFX) 196.14% 68.45%
S&P 500 Index (with dividends reinvested)2 28.58% 31.42%
NASDAQ Composite Index3 39.95% 31.33%
- ----------------------------------------------- ------------ -------------------

1 The Internet Fund commenced operation on October 21, 1996 and converted
into a feeder fund of the Internet Portfolio on ___________, 2000. The
returns for the two indexes in this column have been calculated since
the Fund's Inception date.

2 The S&P 500 Index is an unmanaged index created by Standard & Poor's
Corporation that is considered to represent U.S. stock market
performance in general and is not an investment product available for
purchase. The Internet Fund's returns presented above include operating
expenses (such as management fees, transaction costs, etc.) that reduce
returns, while the return of the S&P 500 Index does not. An individual
who purchases an investment product which attempts to mimic the
performance of the S&P 500 Index will incur expenses such as management
fees, transaction costs, etc, that reduce returns.

3 The NASDAQ Composite Index is a broad-based capitalization-weighted index of
all NASDAQ stocks.

PERFORMANCE OF THE OTHER FUNDS
- --------------------------------------------------------------------------------

Because each of the Infrastructure Fund, the Emerging Fund, the Global Fund, and
the New Paradigm Fund and their corresponding portfolios have had investment
operations for less than a full fiscal year, there is no performance information
available for these Funds or Portfolios at this time.

FEES AND EXPENSES OF THE FUNDS
- --------------------------------------------------------------------------------

As an investor, you pay certain fees and expenses if you buy and hold shares of
each of the Funds. These fees and expenses are described in the table below and
are further explained in the example that follows.

FEE TABLE

<TABLE>
<CAPTION>
- ------------------------------------------- ------------- ----------------- ------------ ----------- -----------------
SHAREHOLDER TRANSACTION EXPENSES1 INTERNET INFRASTRUCTURE EMERGING GLOBAL NEW PARADIGM
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
- ------------------------------------------- ------------- ----------------- ------------ ----------- -----------------
<S> <C> <C> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on None None None None None
Purchases
(as a percentage of offering price)
Maximum Deferred Sales Charge (Load) None None None None None
(as a percentage of offering price)
Maximum Sales Charge (Load) on Reinvested None None None None None
Dividends
Redemption Fee None None None None None
(as a percentage of amount redeemed, if
applicable)
Exchange Fee2 None None None None None
Maximum Account Fee3 None None None None None
- ------------------------------------------- ------------- ----------------- ------------ ----------- -----------------
</TABLE>

<TABLE>
<CAPTION>
- ------------------------------------------ ------------- ---------------- ------------ ------------ ----------------
ESTIMATED ANNUAL OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)
- ------------------------------------------ ------------- ---------------- ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C>
Management Fees 1.25% 1.25% 1.25% 1.25% 1.25%
Distribution (Rule 12b-1) Fees None None None None None
Other Expenses 0.75% 0.75% 0.75% 0.75% 0.75%
============= ================ ============ ============ ================
Estimated Total Annual Fund Operating 2.00%4 2.00% 2.00% 2.00% 2.00%
Expenses
============= ================ ============ ============ ================
</TABLE>

1 Although no sales loads or transaction fees are charged, you will be assessed
fees for outgoing wire transfers, returned checks and exchanges executed by
telephone between a Fund and any other series of Kinetics Mutual Funds, Inc.

2 The Funds' Transfer Agent charges a $5 transaction fee to shareholder
accounts for telephone exchanges between the Funds. The Transfer Agent does not
charge a transaction fee for written exchange requests.

3 IRA accounts are assessed a $12.50 annual fee.

4 The investment adviser has voluntarily agreed to limit the total annual
operating expenses of the Internet Fund so that they do not exceed more than
2.00% of each of the Internet Portfolio's and Internet Fund's average daily net
assets on an annualized basis for the year ending December 31, 2000. This
voluntary cap may be terminated by the investment adviser after that date.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN EACH FUND
WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN EACH OF THE FUNDS FOR THE TIME
PERIODS INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THESE
PERIODS. THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RATE OF RETURN
EACH YEAR AND THAT EACH FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR
ACTUAL COSTS MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COST FOR
EACH FUND WOULD BE:

1 YEAR 3 YEARS 5 YEAR 10 YEAR
- ------ ------- ------ -------
$203 $627 $1,078 $2,327

INVESTMENT OBJECTIVE AND STRATEGIES
OF THE INTERNET FUND
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the Internet Fund is long-term growth of capital.

INVESTMENT STRATEGIES

The Internet Fund seeks to achieve its investment objective by investing all of
its investable assets in the Internet Portfolio. Under normal circumstances, the
Internet Portfolio invests at least 65% of its total assets in common stocks,
convertible securities, warrants and other equity securities having the
characteristics of common stocks, such as American Depositary Receipts ("ADRs")
and International Depositary Receipts ("IDRs"), of domestic and foreign
companies that are engaged in the Internet and Internet-related activities.

Portfolio securities will be selected by the investment adviser from companies
that are engaged in the development of hardware, software and telecommunications
solutions that enable the transaction of business on the Internet by individuals
and companies engaged in private and commercial use of the Internet as well as
companies that offer products and services primarily via the Internet.
Accordingly, the Internet Portfolio seeks to invest in the equity securities of
companies whose research and development efforts may result in higher stock
values. These companies may be large, medium or small in size if, in the
investment adviser's opinion, they meet the Internet Portfolio's investment
criteria. Such companies include, but are not limited to, the following:

o INTERNET SERVICE PROVIDERS: Companies that provide users with access to the
Internet.

o COMPUTER SOFTWARE COMPANIES: Companies that produce, manufacture and develop
tools to access the Internet, enable Internet users to enhance the speed,
integrity and storage of data on the Internet, facilitate information
distribution and gathering on the Internet, and secure Internet-based
transactions.

o COMPUTER HARDWARE COMPANIES: Companies that develop and produce computer
and network hardware such as modems, switchers and routers, and those that
develop and manufacture workstations and personal communications systems
used to access the Internet and provide Internet services.

o E-COMMERCE: Companies that derive a substantial portion of their revenue from
sales of products and services conducted via the Internet.

o CONTENT DEVELOPERS: Companies that supply proprietary information and
entertainment content, such as games, music, video, graphics, news, etc. on the
Internet.

The investment adviser selects portfolio securities by evaluating a company's
positioning and business model as well as its ability to grow and expand its
activities via the Internet or achieve a competitive advantage in
cost/profitability and brand image leveraging via use of the Internet. The
investment adviser also considers a company's fundamentals by reviewing its
balance sheets, corporate revenues, earnings and dividends. Furthermore, the
investment adviser looks at the amount of capital a company currently expends on
research and development. The investment adviser believes that dollars invested
in research and development today frequently have significant bearing on future
growth.

TEMPORARY INVESTMENTS

To respond to adverse market, economic, political or other conditions, the
Internet Portfolio may invest up to 100% of its assets in high quality U.S.
short-term debt securities and money market instruments. The Internet Portfolio
may invest up to 35% of its assets in these securities to maintain liquidity.
Some of these short-term instruments include:

o commercial paper
o certificates of deposit, demand and time deposits and banker's acceptance
o U.S. Government securities (i.e., U.S. Treasury obligations)
o repurchase agreements

To the extent that the Internet Portfolio engages in a temporary, defensive
strategy, the Internet Portfolio and therefore, the Internet Fund, may not
achieve its investment objective.

INVESTMENT OBJECTIVE AND STRATEGIES
OF THE INFRASTRUCTURE FUND
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the Infrastructure Fund is long-term growth of
capital.

INVESTMENT STRATEGIES

The Infrastructure Fund seeks to achieve its investment objective by investing
all of its investable assets in the Infrastructure Portfolio. Under normal
circumstances, the Infrastructure Portfolio invests at least 65% of its total
assets in common stocks, convertible securities, warrants and other equity
securities having the characteristics of common stocks, such as ADRs and IDRs,
of domestic and foreign companies that are engaged in the development and
implementation of hardware, software and communications technologies that
support the growing infrastructure and activities of the Internet.

Portfolio securities will be selected by the investment adviser from companies
that provide hardware, software and telecommunications solutions that enable the
transaction of business on the Internet by individuals and companies engaged in
private and commercial use of the Internet. These companies may be large, medium
or small in size if, in the investment adviser's opinion, the companies meet the
Infrastructure Portfolio's investment criteria. Such companies include, but are
not limited to the following:

o COMPUTER SOFTWARE COMPANIES: Companies that produce, manufacture and
develop tools to access the Internet, enable Internet users to enhance the
speed, integrity and storage of data on the Internet, facilitate
information distribution and gathering on the Internet, and secure
Internet-based transactions.

o TELECOMMUNICATIONS COMPANIES: Companies that are primarily engaged in the
development of the telecommunications transmission lines and software
technologies that enhance the reach and band-width technologies of Internet
users.

The investment adviser selects portfolio securities by evaluating a company's
positioning and both the current percentage and growth in percentage of
resources that it expends in the Internet infrastructure marketplace. The
investment adviser also considers a company's fundamentals by reviewing its
balance sheets, corporate revenues, earnings and dividends.

TEMPORARY INVESTMENTS

To respond to adverse market, economic, political or other conditions, the
Infrastructure Portfolio may invest up to 100% of its assets in high quality
U.S. short-term debt securities and money market instruments. The Infrastructure
Portfolio may invest up to 35% of its assets in these securities to maintain
liquidity. Some of these short-term instruments include:

o commercial paper
o certificates of deposit, demand and time deposits and banker's acceptance
o U.S. Government securities (i.e., U.S. Treasury obligations)
o repurchase agreements

To the extent that the Infrastructure Portfolio engages in a temporary,
defensive strategy, the Infrastructure Portfolio and therefore, the
Infrastructure Fund, may not achieve its investment objective.

INVESTMENT OBJECTIVE AND STRATEGIES
OF THE EMERGING FUND
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the Emerging Fund is long-term growth of capital.

INVESTMENT STRATEGIES

The Emerging Fund seeks to achieve its investment objective by investing all of
its investable assets in the Emerging Portfolio. Under normal circumstances, the
Emerging Portfolio invests at least 65% of its assets in common stocks,
convertible securities, warrants and other equity securities having the
characteristics of common stocks, such as ADRs and IDRs of small and medium
capitalization, emerging companies that are engaged in the Internet and
Internet-related activities.

Portfolio securities will be selected by the investment adviser from emerging,
small and medium-size companies that are engaged in the development of hardware,
software and telecommunications solutions that enable the transaction of
business on the Internet by individuals and companies engaged in private and
commercial use of the Internet as well as companies that offer products and
services primarily via the Internet. Accordingly, the Emerging Portfolio seeks
to invest in the equity securities of companies whose research and development
efforts may result in higher stock values. Such companies include, but are not
limited to the following:

o INTERNET SERVICE PROVIDERS: Companies that provide users with access to the
Internet.

o COMPUTER SOFTWARE COMPANIES: Companies that produce, manufacture and
develop tools to access the Internet, enable Internet users to enhance the
speed, integrity and storage of data on the Internet, facilitate
information distribution and gathering on the Internet, and secure
Internet-based transactions.

o E-COMMERCE: Companies that derive a substantial portion of their revenue from
sales of products and services conducted via the Internet.

o CONTENT DEVELOPERS: Companies that supply proprietary information and
entertainment content, such as games, music, video, graphics, news, etc. on the
Internet.

The investment adviser selects portfolio securities by evaluating a company's
positioning and business model as well as its ability to grow and expand its
activities via the Internet or achieve a greater competitive advantage in
cost/profitability and brand image leveraging via use of the Internet. The
investment adviser also considers a company's fundamentals by reviewing its
balance sheets, corporate revenues, earnings and dividends. Furthermore, the
investment adviser looks at the amount of capital a company currently expends on
research and development. The investment adviser believes that dollars invested
in research and development today frequently have significant bearing on future
growth.

TEMPORARY INVESTMENTS

To respond to adverse market, economic, political or other conditions, the
Emerging Portfolio may invest up to 100% of its assets in high quality domestic
short-term debt securities and money market instruments. The Emerging Portfolio
may invest up to 35% of its assets in these securities to maintain liquidity.
Some of these short-term instruments include:

o commercial paper
o certificates of deposit, demand and time deposits and banker's acceptance
o U.S. Government securities (i.e., U.S. Treasury obligations)
o repurchase agreements

To the extent that the Emerging Portfolio engages in a temporary, defensive
strategy, the Emerging Portfolio and therefore, the Emerging Fund, may not
achieve its investment objective.

INVESTMENT OBJECTIVE AND STRATEGIES
OF THE GLOBAL FUND
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the Global Fund is long-term growth of capital.

INVESTMENT STRATEGIES

The Global Fund seeks to achieve its investment objective by investing all of
its investable assets in the Global Portfolio. Under normal circumstances, the
Global Portfolio invests at least 65% of its total assets in common stocks,
convertible securities, warrants and other equity securities having the
characteristics of common stocks, such as ADRs and IDRs, of companies in at
least three different countries that are engaged in the Internet and
Internet-related activities.

Portfolio securities will be selected by the investment adviser from domestic
and international companies that are engaged in the development of hardware,
software and telecommunications solutions that enable the transaction of
business on the Internet by individuals and companies engaged in private and
commercial use of the Internet as well as companies that offer products and
services primarily via the Internet. These companies may be large, medium or
small in size if, in the investment adviser's opinion, the companies meet the
Global Portfolio's investment criteria. Accordingly, the Global Portfolio seeks
to invest in the equity securities of companies whose research and development
efforts may result in higher stock values. Such companies include, but are not
limited to, the following:

o INTERNET SERVICE PROVIDERS: Companies that provide users with access to the
Internet.

o E-COMMERCE: Companies that derive a substantial portion of their revenue from
sales of products and services conducted via the Internet.

o CONTENT DEVELOPERS: Companies that supply proprietary information and
entertainment content, such as games, music, video, graphics, news, etc. on the
Internet.

TEMPORARY INVESTMENTS

To respond to adverse market, economic, political or other conditions, the
Global Portfolio may invest up to 100% of its assets in high quality U.S.
short-term debt securities and money market instruments. The Global Portfolio
may invest up to 35% of its assets in these securities to maintain liquidity.
Some of these short-term instruments include:

o commercial paper
o certificates of deposit, demand and time deposits and banker's acceptance
o U.S. Government securities (i.e., U.S. Treasury obligations)
o repurchase agreements

To the extent that the Global Portfolio engages in a temporary, defensive
strategy, the Global Portfolio and therefore, the Global Fund, may not achieve
its investment objective.

INVESTMENT OBJECTIVE AND STRATEGIES
OF THE NEW PARADIGM FUND
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the New Paradigm Fund is long-term growth of
capital.

INVESTMENT STRATEGIES

The New Paradigm Fund seeks to achieve its investment objective by investing all
of its investable assets in the New Paradigm Portfolio. Under normal
circumstances, the New Pradigm Portfolio invests at least 65% of its total
assets in common stocks, convertible securities, warrants and other equity
securities having the characteristics of common stocks, such as ADRs and IDRs,
of domestic and foreign companies with business models that stand to benefit
from the utilization and growth of the Internet.

Portfolio securities will be selected by the investment adviser from companies
that are engaged in various industries where the growth of the Internet will
facilitate an increase in the growth of traditional business lines, entry into
new distribution channels, an ability to leverage brand identity, and an
improvement in the underlying cost/profitability dynamics of the business. These
companies may be large, medium or small in size if, in the investment adviser's
opinion, these companies meet the New Paradigm Portfolio's investment criteria.
Accordingly, the New Paradigm Portfolio seeks to invest in the equity securities
of companies whose research and development efforts may result in higher stock
values. Such companies include, but are not limited to, the following:

o RETAILERS: Companies that sell retail products and services via traditional
stores, catalogues, telemarketing, and web-site means.

o MEDIA COMPANIES: Companies that provide print, broadcast, cable, satellite
and web-based information and entertainment content.

o FINANCIAL SERVICE COMPANIES: Companies that engage in financial service
transactions such as banking, credit cards, investment services, etc.

The investment adviser selects portfolio securities by evaluating a company's
positioning and traditional business lines as well as its ability to expand its
activities via the Internet or achieve competitive advantage in
cost/profitability and brand image leveraging via use of the Internet. The
investment adviser also considers a company's fundamentals by reviewing its
balance sheets, corporate revenues, earnings and dividends.

TEMPORARY INVESTMENTS

To respond to adverse market, economic, political or other conditions, the New
Paradigm Portfolio may invest up to 100% of its assets in high quality U.S.
short-term debt securities and money market instruments. The New Paradigm
Portfolio may invest up to 35% of its assets in these securities to maintain
liquidity. Some of these short-term instruments include:

o commercial paper
o certificates of deposit, demand and time deposits and banker's acceptance
o U.S. Government securities (i.e., U.S. Treasury obligations)
o repurchase agreements

To the extent that the New Paradigm Portfolio engages in a temporary, defensive
strategy, the New Paradigm Portfolio and therefore, the New Paradigm Fund, may
not achieve its investment objective.

MAIN RISKS OF THE FUNDS
- --------------------------------------------------------------------------------

INVESTING IN MUTUAL FUNDS

All mutual funds carry risk which may cause you to lose money on your investment
in one or more of the Funds. In general, the risks associated with the use of
the Master/Feeder Fund Structure and the risks associated with your investment
in a Fund are substantially identical to the risks associated with the Fund's
investment in a Portfolio. The following describes the primary risks to each
Fund that invests in its corresponding Portfolio due to each Portfolio's
specific investment objective and strategies. As all investment securities are
subject to inherent market risks and fluctuations in value due to earnings,
economic and political conditions and other factors, no Fund or its
corresponding Portfolio can give any assurance that its investment objective
will be achieved. In addition, you should be aware that, with the exception of
the Internet Fund and the Internet Portfolio, none of the other Funds or
Portfolios has any operating history.

MARKET RISK

The net asset value of each Portfolio will fluctuate based on changes in the
value of its underlying portfolio. The stock market is generally susceptible to
volatile fluctuations in market price. Market prices of securities in which each
Portfolio invests may be adversely affected by an issuer's having experienced
losses or by the lack of earnings or by the issuer's failure to meet the
market's expectations with respect to new products or services, or even by
factors wholly unrelated to the value or condition of the issuer. The value of
the securities held by each Portfolio is also subject to the risk that a
specific segment of the stock market does not perform as well as the overall
market. Under any of these circumstances, the value of each Portfolio's shares
and total return will fluctuate, and your investment in the corresponding Fund
may be worth more or less than your original cost when you redeem your shares.

INTERNET INDUSTRY SPECIFIC RISKS

The value of each Portfolio's shares will be susceptible to factors affecting
the Internet, such as heightened regulatory scrutiny and impending changes in
government policies which may have a material effect on the products and
services of this industry. Furthermore, securities of companies in this industry
tend to be more volatile than securities of companies in other industries.
Competitive pressures and changing demand may have a significant effect on the
financial condition of Internet companies. These companies spend heavily on
research and development and are especially sensitive to the risk of product
obsolescence. The occurrence of any of these factors, individually or
collectively, may adversely affect the value of a Portfolio's shares and your
investment in the corresponding Fund.

OTHER SECURITIES A PORTFOLIO MIGHT PURCHASE

Under normal market conditions, each Portfolio will invest at least 65% of its
total assets in equity securities, consisting of common stocks, convertible
securities, warrants and securities having the characteristics of common stocks.
If the investment adviser believes that market conditions warrant a temporary
defensive posture, a Portfolio may invest without limitation in high quality,
short-term debt securities and money market instruments. These short-term debt
securities and money market instruments include commercial paper, certificates
of deposit, bankers' acceptances, and U.S. Government securities and repurchase
agreements. More information about these investments is disclosed in the
Statement of Additional Information ("SAI").

SECURITIES LENDING

Each Portfolio may lend its portfolio securities to broker-dealers by entering
directly into lending arrangements with such broker-dealers or indirectly
through repurchase agreements, amounting 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. These transactions involve some risk to a
Portfolio if the other party should default on its obligation and the Portfolio
is delayed or prevented from recovering the collateral. In the event that the
original seller defaults on its obligation to repurchase, a Portfolio will seek
to sell the collateral, which could involve costs or delays. To the extent
proceeds from the sale of collateral are less than the repurchase price, each
Portfolio forced to sell such collateral in this manner would suffer a loss.

NON-DIVERSIFICATION

Each Portfolio is classified as "non-diversified" under federal securities laws
which means that one-half of each Portfolio's assets may be invested in two or
more stocks while the other half is spread out among various investments not
exceeding 5% of a Portfolio's total assets. As a result of their non-diversified
status, a Portfolio's shares may be more susceptible to adverse changes in the
value of the securities of a particular company than would be the shares of a
diversified investment company.

INVESTMENT IN SMALL AND MEDIUM-SIZE COMPANIES

Each Portfolio may invest in small or medium-size companies. Accordingly, a
Portfolio may be subject to the additional risks associated with investment in
companies with small or medium-size capital structures (generally a market
capitalization of $5 billion or less). The market prices of the securities of
such companies tend to be more volatile than those of larger companies. Further,
these securities tend to trade at a lower volume than those of larger, more
established companies. If a Portfolio is heavily invested in these securities
and the value of these securities suddenly decline, the net asset value of that
Portfolio and your investment in the corresponding Fund will be more susceptible
to significant losses.

FOREIGN SECURITIES

Investing in foreign securities can carry higher returns than those generally
associated with domestic investments. However, foreign securities may be
substantially riskier than domestic investments. The economies of foreign
countries may differ from the U.S. economy in such respects as growth of gross
domestic product, rate of inflation, currency depreciation, capital
reinvestment, resource self-sufficiency, and balance of payments position.
Furthermore, the economies of developing countries generally are heavily
dependent on international trade and, accordingly, have been, and may continue
to be, adversely affected by trade barriers, exchange controls, managed
adjustments in relative currency values and other protective measures imposed or
negotiated by the countries with which they trade. These economies also have
been, and may continue to be, adversely affected by economic conditions in the
countries with which they trade. A Portfolio may be required to obtain prior
governmental approval for foreign investments in some countries under certain
circumstances. Governments may require approval to invest in certain issuers or
industries deemed sensitive to national interests, and the extent of foreign
investment in certain debt securities and domestic companies may be subject to
limitation. Individual companies may also limit foreign ownership to prevent,
among other things, violation of foreign investment limitations.

Some foreign investments may risk being subject to repatriation controls that
could render such securities illiquid. Other countries might undergo
nationalization, expropriation, political changes, governmental regulation,
social instability or diplomatic developments (including war) that could
adversely affect the economies of such countries or the value of the investments
in those countries. For this reason, funds that invest primarily in the
securities of a single country will be greatly impacted by any political,
economic or regulatory developments affecting the value of the securities.
Additional risks include currency fluctuations, political and economic
instability, differences in financial reporting standards and less stringent
regulation of securities markets.

PORTFOLIO BORROWING

Each Portfolio may leverage up to 5% of its assets to fund investment activities
or to achieve higher returns. Each Portfolio may borrow money from banks for
temporary or emergency purposes in order to meet redemption requests. To reduce
its indebtedness, a Portfolio may have to sell a portion of its investments at a
time when it may be disadvantageous to do so. In addition, interest paid by a
Portfolio on borrowed funds would decrease the net earnings of both that
Portfolio and your investment in the Fund.

MANAGEMENT OF THE FUNDS AND THE PORTFOLIOS
- --------------------------------------------------------------------------------

INVESTMENT ADVISER

Each Portfolio's investment adviser is Kinetics Asset Management, Inc.
("Kinetics" or the "investment adviser"), 1311 Mamaroneck Avenue, Suite 130,
White Plains, New York, 10605. The investment adviser conducts investment
research and supervision for each Portfolio and is responsible for the purchase
and sale of securities for each Portfolio's assets. The investment adviser
receives an annual fee from each Portfolio for its services of 1.25% of each
Portfolio's average daily net assets. The investment adviser has entered into a
Research Agreement with Horizon Asset Management, Inc. for which it is
responsible for the payment of all fees owing to Horizon.

Peter B. Doyle is the Chairman of the Board of Directors of Kinetics. He is
also the Chief Investment Strategist. Steven R. Samson is the President and
Chief Executive Officer of Kinetics. Mr. Samson has more than 24 years
experience in the mutual fund and financial services industries. Lee Schultheis
is the Managing Director and Chief Operating Officer of Kinetics. Mr.
Schultheis has more than 20 years of experience in the mutual fund and financial
services industries.

PORTFOLIO MANAGERS

PETER B. DOYLE is the Chief Investment Strategist for all of the Portfolios. Mr.
Doyle also serves as the Portfolio Manager for the New Paradigm Portfolio and is
a Co-Portfolio Manager of the Internet Portfolio. He is primarily responsible
for the day-to-day management of each of these Portfolios' assets and
securities. In early 1996, Mr. Doyle co-founded Kinetics, the investment adviser
to the Portfolios. Mr. Doyle also co-founded and has been a Managing Director of
Horizon Asset Management, Inc., a New York based investment management and
research firm, since 1994. From 1988 through late 1994, Mr. Doyle was an
Investment Officer in Bankers Trust Company's Investment Services Group, where
he was responsible for managing approximately $250 million in assets. During his
tenure at Bankers Trust Company, Mr. Doyle served on the Finance and Utility
research sub-groups. Mr. Doyle holds a Masters of Business Administration from
Fordham University and a Bachelor of Science in Economics from St. John's
University.

FRED A. FROEWISS, is the Portfolio Manager of the Infrastructure Portfolio.
Prior to joining Kinetics in 1999, Mr. Froewiss was the Vice President of
Investments at Janney Montgomery Scott, LLC from 1992 to 1999. Earlier,
Mr. Froewiss spent 10 years as a Portfolio Manager in the Private Banking
Division of Citibank. He started his career at IBM Corp. in the controller's
office. Mr. Froewiss holds a Bachelor of Science in Accounting and a
Masters of Business Administration from Pace University.

TINA LARSSON is the Portfolio Manager for the Global Portfolio. Ms. Larsson is
also an Analyst of the Spin-off Report, a research service that focuses on
spin-offs. In this position, Ms. Larsson develops, writes, and markets
institutional research for distribution and is in charge of the research staff.
Ms. Larsson holds a Bachelor of Science n Finance and a Masters of Business
Administration from Pace University.

STEVEN TUEN, CFA, is Co-Portfolio Manager of and Executive Adviser to the
Internet Portfolio. Mr. Tuen also serves as Portfolio Manager of the Emerging
Portfolio. Mr. Tuen's primary duties include research and analysis of equity
securities for investment by each of these Portfolios. From 1996 to 1999, Mr.
Tuen was an Analyst and the Director of Research of IPO Value Monitor, a
research service that focuses on initial public offerings. From 1989 to 1996,
Mr. Tuen was an Analyst at Bankers Trust Company where he became Portfolio
Manager of the Private Banking Group. Mr. Tuen holds a Bachelor of Science in
Business Administration from the City University of New York and is a Chartered
Financial Analyst.

VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------

Shares of each Fund are sold at net asset value per share ("NAV"), which is
determined by each Fund as of the close of regular trading (generally 4:00 p.m.
eastern time) on each day that the New York Stock Exchange (the "Exchange") is
open for unrestricted business. Purchase and redemption requests are priced at
the next NAV calculated after receipt and acceptance of a completed purchase or
redemption request. The NAV is determined by dividing the value of a Fund's
securities, cash and other assets, minus all expenses and liabilities, by the
number of shares outstanding (assets-liabilities/ # of shares = NAV). The NAV
takes into account the expenses and fees of each Fund, including management,
administration and shareholder servicing fees, which are accrued daily. The NAV
of each Portfolio is calculated in an identical manner as that of each
corresponding Fund.

Each Portfolio's securities are valued each day at the last quoted sales price
on the securities' principal exchange. If market quotations are not readily
available, securities will be valued at their fair market value as determined in
good faith in accordance with procedures approved by the Board of Trustees. Each
Portfolio may use independent pricing services to assist in calculating the NAV
of such Portfolio's shares.

TRADING IN FOREIGN SECURITIES

Trading in foreign securities may be completed at times when the Exchange is
closed. In computing the NAV of each Fund and each corresponding Portfolio, the
investment adviser values foreign securities held by the corresponding Portfolio
at the latest closing price on the exchange on which they are traded immediately
prior to the closing of the Exchange. Certain foreign currency exchange rates
may also be determined at the latest rate prior to the closing of the Exchange.
Prices of foreign securities quoted in foreign currencies are translated into
U.S. dollars at current rates. Occasionally, events that affect these values and
exchange rates may occur between the times at which they are determined and the
closing of the Exchange. If such events materially affect the value of a
Portfolio's securities, these securities may be valued at their fair value as
determined in good faith by the Board of Trustees of the Trust.

HOW TO PURCHASE SHARES
- --------------------------------------------------------------------------------

IN GENERAL

Shares of each Fund are sold at NAV, without a sales charge, and will be
credited to a shareholder's account at the NAV next computed after an order is
received. The minimum initial investment for both regular accounts and
individual retirement accounts is $1,000. The minimum subsequent investment for
both types of accounts is $100. Each Fund reserves the right to reject any
purchase order if, in its opinion, it is in a Fund's best interest to do so. A
service fee of $25.00 will be deducted from a shareholder's Fund account for any
purchases that do not clear due to insufficient funds.

INVESTING BY TELEPHONE

If you have completed the Telephone Purchase Authorization section of the New
Account Application Form, you may purchase additional shares by telephoning a
Fund toll free at (800) 930-3828. This option allows investors to move money
from their bank account to their Fund account upon request. Only bank accounts
held at domestic institutions that are Automated Clearing House (ACH) members
may be used for telephone transactions.

The minimum telephone purchase is $100. YOU MAY NOT USE TELEPHONE TRANSACTIONS
FOR YOUR INITIAL PURCHASE OF A FUND'S SHARES.

AUTOMATIC INVESTMENT PLAN

Once an account has been established, you may purchase shares of a Fund through
an Automatic Investment Plan ("AIP"). You can have money automatically
transferred from your checking, savings or bank money market account on a
weekly, bi-weekly, monthly, bi-monthly or quarterly basis.

To be eligible for this plan, your bank must be a domestic institution that is
an ACH member. Any Fund may modify or terminate the AIP at any time. The first
AIP purchase will take place no earlier than 15 days after the Transfer Agent
has received your request.

PURCHASE BY MAIL

To purchase a Fund's shares by mail, simply complete and sign the enclosed New
Account Application Form and mail it, along with a check or money order made
payable to [NAME OF FUND] C/O KINETICS MUTUAL FUNDS, INC., to:

REGULAR MAIL: OVERNIGHT OR EXPRESS MAIL:
- ------------- --------------------------
KINETICS MUTUAL FUNDS, INC. KINETICS MUTUAL FUNDS, INC.
[NAME OF FUND] [NAME OF FUND]
c/o Firstar Mutual Fund Services, LLC c/o Firstar Mutual Fund Services, LLC
P.O. Box 701 615 East Michigan Street, 3rd Floor
Milwaukee, WI 53201-0701 Milwaukee, WI 53202

PURCHASE BY WIRE

Before wiring any funds please call (800) 930-3828 to notify the Fund in which
you are investing that the wire is coming and to verify the proper wire
instructions so that the wire is properly applied when received. No Fund is
responsible for delays resulting from the banking or Federal Reserve wire
system. Please use the wiring instructions as follows:

o WIRE TO: Firstar Bank, N.A.
o ABA NUMBER: 0750-00022
o CREDIT: Firstar Mutual Fund Services, LLC
o ACCOUNT: 112-952-137
o FURTHER CREDIT: Kinetics Mutual Funds, Inc.
[NAME OF FUND]
(Shareholder Name/Account Registration)
(Shareholder Account Number)

Immediately send a completed New Account Application Form to the Fund at the
above address to have all accurate information recorded to your account.

SUBSEQUENT INVESTMENTS

You may add to your account at any time by purchasing shares by mail, by
telephone, or by wire (minimum $100). You must call to notify each Fund in which
you are invested at (800) 930-3828 before wiring. A remittance form, which is
attached to your individual account statement, should accompany any investments
made through the mail.

All purchase requests must include your shareholder account number.

INDIVIDUAL RETIREMENT ACCOUNTS

You may invest in any Fund by establishing a tax-sheltered individual retirement
account. Each Fund offers Traditional IRA, Roth IRA, and Educational IRA
accounts. For additional information on IRA options, please call (800) 930-3828.

INVESTING THROUGH BROKERS OR AGENTS

You may invest in each Fund through brokers or agents who have entered into
selling agreements with the Funds' distributor. The broker or agent may set
their own initial and subsequent investment minimums. You may be charged a fee
if you use a broker or agent to buy or redeem shares of a Fund.

HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------

IN GENERAL

You may redeem part or all of each Fund's shares on any business day that the
Fund calculates its NAV. To redeem shares, you must contact the Fund in which
you are invested either by mail or by phone to place a redemption order. You
should request your redemption prior to market close to obtain that day's
closing NAV. Redemption requests received after the close of the Exchange will
be treated as though received on the next business day.

Each Fund will generally mail redeemed proceeds the next business day and, in
any event, no later than seven days after the receipt of a redemption request in
"good order" (see below). Please note, however, that when a purchase order has
been made by check, or ACH purchase, a Fund will not be able to honor your
redemption request until the check or ACH purchase has cleared. This may take up
to 12 days.

Redemption requests will be sent to the address of record. If the proceeds of
redemption are requested to be sent to an address other than the address of
record, or if the address of record has been changed within 15 days of the
redemption request, the request must be in writing with your signature
guaranteed. Signature guarantees can be obtained from banks and securities
dealers, BUT NOT FROM A NOTARY PUBLIC. No Fund will be responsible for interest
lost on redemption amounts due to lost or misdirected mail.

WRITTEN REDEMPTION

You can execute most redemptions by furnishing an unconditional written request
to each Fund in which you are invested to redeem your shares at the current NAV.
Redemption requests in writing should be sent to the Transfer Agent at:

Requests for redemption in "good order" must:

o indicate the name of the Fund,
o be signed exactly as the shares are registered, including the signature of
each owner,
o specify the number of shares or dollar amount to be redeemed,
o indicate your account registration number, and
o include your social security number or tax identification number.

TELEPHONE REDEMPTION

If you are authorized to perform telephone transactions (either through your New
Account Application Form or by subsequent arrangement in writing with a Fund)
you may redeem shares in any amount, but not less than $100, by instructing the
Fund in which you are invested by phone at (800) 930-3828. A signature guarantee
is required of all shareholders in order to qualify for or to change telephone
redemption privileges.

NOTE: Neither the Funds nor any of their service providers will be liable for
any loss or expense in acting upon instructions that are reasonably believed to
be genuine. To confirm that all telephone instructions are genuine, each Fund
will use reasonable procedures, such as requesting:

o that you correctly state your Fund account number
o the name in which your account is registered
o the social security or tax identification number under which the account is
registered
o the address of the account holder, as stated in the New Account Application
Form

WIRE REDEMPTION

Wire transfers may be arranged to redeem shares. However, the transfer agent
charges a $12 fee per wire redemption against your account for this service. The
minimum wire redemption amount is $100.

SYSTEMATIC WITHDRAWAL PLAN

If you own shares with a value of $10,000 or more, you may participate in the
Systematic Withdrawal Plan. The Systematic Withdrawal Plan allows you to make
automatic withdrawals from your account at regular intervals. Money will be
transferred from your Fund account to the account you chose at the interval you
select on the New Account Application Form. If you expect to purchase additional
shares of a Fund, it may not be to your advantage to participate in the
Systematic Withdrawal Plan because of the possible adverse tax consequences of
making contemporaneous purchases and redemptions.

THE FUNDS' RIGHT TO REDEEM AN ACCOUNT

Each Fund reserves the right to redeem the shares of any shareholder whose
account balance is less than $500, other than as a result of a decline in the
NAV of a Fund or unless the shareholder is an active participant in the AIP.
Each Fund will provide shareholders with written notice 30 days prior to
redeeming the shareholder's account.

IRA REDEMPTION

If you are an IRA shareholder, you must indicate on your redemption request
whether or not to withhold federal income tax. Requests that do not indicate a
preference will be subject to withholding.

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

You can exchange your shares in any Fund for shares of any other Fund offered by
Kinetics Mutual Funds, Inc. If the exchange is requested via telephone, a $5 per
exchange transaction cost will be assessed. You should carefully read the
prospectus of a Fund before exchanging shares into that Fund. Be advised that
exercising the exchange privilege consists of two transactions: a sale of shares
in one Fund and the purchase of shares in another. Further, exchanges may have
certain tax consequences and you could realize short- or long-term capital gains
or losses. Exchanges are generally made only between identically registered
accounts unless you send written instructions with a signature guarantee
requesting otherwise. You should request your exchange prior to market close to
obtain that day's closing NAV. Exchange requests received after the close of the
Exchange will be treated as though received on the next business day.

Call (800) 930-3828 to learn more about the other Kinetics Mutual Funds and
about exercising your exchange privilege.

DISTRIBUTION AND TAXES
- --------------------------------------------------------------------------------

DISTRIBUTIONS

Distributions (whether treated for tax purposes as ordinary income or long-term
capital gains) to shareholders of each Fund are generally paid in additional
shares of the Fund in which shareholders are already invested, with no sales
charge, based on the Fund's NAV as of the close of business on the record date
for such distributions. However, you may elect on the application form to
receive distributions as follows:

OPTION 1: To receive income dividends and capital gain distributions in
additional Fund shares, or

OPTION 2: To receive all income dividends and capital gain distributions in
cash.

Each Fund intends to pay any dividends from investment company taxable income
and distributions representing capital gain at least annually, usually in
December. Each Fund will advise each shareholder annually of the amounts of
dividends from investment company taxable income and of net capital gain
distributions reinvested or paid in cash to the shareholder during the calendar
year.

If you select Option 1 or Option 2 and the U.S. Postal Service cannot deliver
your distribution checks, or if your distribution checks remain uncashed for six
months, your distribution checks will be reinvested in your account at the then
current NAV of the appropriate Fund and your election will be converted to the
purchase of additional shares.

TAXES

Each Fund intends to qualify and elect to be taxed as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). In any taxable year in which a Fund so qualifies and distributes at
least 90% of its investment company taxable income (which includes, among other
items, dividends, interest, and the excess of realized net short-term capital
gain over realized net long-term capital loss), the Fund will generally be
relieved of Federal income tax on its investment company taxable income and net
capital gain (the excess of realized net long-term capital gain over realized
net short-term capital loss) distributed to shareholders. Amounts not
distributed on a timely basis in accordance with a calendar distribution
requirement are also subject to a nondeductible 4% excise tax. To prevent
application of the excise tax, each Fund intends to make distributions in
accordance with the calendar year distribution requirement. A distribution will
be treated as though paid on December 31 of the calendar year if it is declared
by a Fund in October, November, or December of that year to shareholders of
record on a date in such a month and paid by a Fund during January of the
following calendar year. Such distributions will be taxable to shareholders in
the calendar year the distributions are declared, rather than the calendar year
in which the distributions are received.

Distributions from investment company taxable income are taxable to shareholders
as ordinary income. Distributions of net capital gains designated by a Fund as
capital gains dividends are taxable as long-term capital gains regardless of the
length of time a shareholder may have held shares of the Fund. The tax treatment
of distributions treated as ordinary income or capital gains will be the same
whether the shareholder reinvests the distributions in additional shares or
elects to receive such distributions in cash. Shareholders will be notified each
year of the amounts and nature of dividends and distributions, including the
amount (if any) for that year that has been designated as capital gains
distributions. Investors should consult their tax advisers for specific
information on the tax consequences of particular types of distributions.

An exchange is not a tax-free transaction. An exchange of shares pursuant to a
Fund's exchange privilege is treated the same as an ordinary sale and purchase
for Federal income tax purposes and you will realize a capital gain or loss.

On the New Account Application Form, you will be asked to certify that your
social security number or taxpayer identification number is correct and that you
are not subject to backup withholding for failing to report income to the IRS.
If you are subject to backup withholding or you did not certify your taxpayer
identification number, the IRS requires each Fund to withhold 31% of any
dividend and redemption or exchange proceeds. Each Fund reserves the right to
reject any application that does not include a certified social security or
taxpayer identification number.

DISTRIBUTION OF SHARES
- --------------------------------------------------------------------------------

DISTRIBUTOR

T.O. Richardson Securities, Inc., 2 Bridgewater Road, Farmington, Connecticut,
06032 is the distributor for the shares of each Fund. T.O. Richardson
Securities, Inc. is a registered broker-dealer and member of the National
Association of Securities Dealers, Inc. and serves as the distributor for
numerous registered investment companies across the United States.

SHAREHOLDER SERVICING AGENT

Kinetics is responsible for paying various shareholder servicing agents for
performing shareholder servicing functions and maintaining shareholder accounts.
These agents have written shareholder servicing agreements with Kinetics and
perform these functions on behalf of their clients who own shares of the Funds.
For this service, Kinetics receives an annual shareholder-servicing fee from
each Fund equal to 0.25% of each Fund's average daily net assets.

FUND ADMINISTRATOR

Kinetics also serves as Administrator to each Fund. Kinetics will be entitled to
receive an annual administration fee equal to __% of each Fund's average daily
net assets, out of which it 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 each Fund by Firstar.

CUSTODIAN, TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND FUND ACCOUNTANT

Firstar Bank, N.A. serves as Custodian for each Fund's cash and securities. The
Custodian does not assist in, and is not responsible for, investment decisions
involving assets of the Funds. Firstar, each Fund's Sub-Administrator, also acts
as each Fund's Transfer Agent, Dividend Disbursing Agent and Fund Accountant.

UNIQUE CHARACTERISTICS OF MASTER/FEEDER FUND STRUCTURE
- --------------------------------------------------------------------------------

Unlike other mutual funds which directly acquire and manage their own portfolio
securities, each Fund invests all of its investable assets in a corresponding
Portfolio, a separately registered investment company. The Portfolio, in turn,
invests in securities, using the strategies described in this prospectus.

In addition to selling a beneficial interest to a Fund, a Portfolio could also
sell beneficial interests to other mutual funds or institutional investors. Such
investors would invest in such Portfolio on the same terms and conditions and
would pay a proportionate share of such Portfolio's expenses. However, other
investors in a Portfolio are not required to sell their shares at the same
public offering price as a Fund, and might bear different levels of ongoing
expenses than the Fund. Shareholders of the Funds should be aware that these
differences would result in differences in returns experienced in the different
funds that invest in a Portfolio.

Such differences in return are also present in other mutual fund structures.

Smaller funds investing in a Portfolio could be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large
feeder fund were to withdraw from a Portfolio, the remaining funds might
experience higher pro rata operating expenses, thereby producing lower returns.
Additionally, the Portfolio could become less diverse, resulting in increased
portfolio risk. However, the possibility also exists for traditionally
structured funds which have large or institutional investors. Funds with a
greater pro rata ownership in a Portfolio could have effective voting control of
such Portfolio.

Certain changes in a Portfolio's objective, policies or restrictions might
require the Company to withdraw the corresponding Fund's interest in such
Portfolio. Any such withdrawal could result in a distribution in kind of
portfolio securities (as opposed to a cash distribution from such Portfolio). A
Fund could incur brokerage fees or other transaction costs in converting such
securities to cash. In addition, a distribution in kind could result in a less
diversified portfolio of investments or adversely affect the liquidity of a
Fund.

The SAI contains more information about each Fund, the Master/Feeder Fund
Structure and the types of securities in which each Fund may invest.

COUNSEL AND INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------

Legal matters in connection with the issuance of shares of common stock of each
Fund are passed upon by Spitzer & Feldman P.C., 405 Park Avenue, New York, New
York 10022. McCurdy & Associates CPA's, Inc., 27955 Clemens Road, Westlake, Ohio
44145, have been selected as independent auditors for the Funds for the year
ending December 31, 1999.

FINANCIAL HIGHLIGHTS OF THE INTERNET FUND
- --------------------------------------------------------------------------------
The financial highlights table set forth below is intended to help you
understand the Internet Fund's financial performance for its period of
operations. Most of the information reflects financial results with respect to a
single Internet Fund share. The total returns in the tables represent the rates
that an investor would have earned (or lost) on an investment in the Internet
Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by Lilling & Company LLP whose report, along with
the Internet Fund's financial statements that are included in the Internet
Fund's annual report, is available upon request.

<TABLE>
<CAPTION>
For the period October
For the year ended For the year ended For the year ended 21, 1996(1) through
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996
<S> <C> <C> <C> <C>
Net asset value beginning of period $5.31 $4.71 $5.00
Net investment income (loss) (0.08) 0.01 0.02
Net gains or losses on securities 10.50 0.59 (0.31)
----- ---- ------
(both realized and unrealized)
Total from investment operations 10.42 0.60 (0.29)
Dividends (0.01) ___ ___
(from net investment income)
Distributions (from capital gains) ___ ___ ___
Total distributions (0.01) ___ ___
Net asset value end of period $15.72 $5.31 $4.71
====== ===== =====
Total Return 196.14% 12.74% (5.80%)(2)
Net assets, end of period (000's) $22,159 $150 $113
Gross ratio of expenses to average net 3.08% 3.60% 6.73%(3)
assets (excluding waivers)
Net ratio of expenses to average net 3.08% 0.08% 0.21%(3)
assets
Gross ratio of net income (loss) to (2.92)% (3.33)% (4.51)%
average net assets (excluding waivers)
Net ratio of net income (loss) to (2.92)% 0.19% 2.01%(3)
average net assets
Portfolio turnover rate 80% 50% 0%(3)
</TABLE>

1 Commencement of Operations
2 Not Annualized
3 Annualized

Because the Infrastructure Fund, the Emerging Fund, the Global Fund and the New
Paradigm Fund have been in operation for less than a year, no financial
highlights are being reported for these Funds.

KINETICS MUTUAL FUNDS, INC.
THE INTERNET FUND
THE INTERNET INFRASTRUCTURE FUND
THE INTERNET EMERGING GROWTH FUND
THE INTERNET GLOBAL GROWTH FUND
THE INTERNET NEW PARADIGM FUND

INVESTMENT ADVISER, KINETICS ASSET MANAGEMENT, INC.
ADMINISTRATOR, AND 1311 MAMARONECK AVENUE
SHAREHOLDER SERVICING AGENT WHITE PLAINS, NY 10605

LEGAL COUNSEL SPITZER & FELDMAN P.C.
405 PARK AVENUE
NEW YORK, NY 10022

INDEPENDENT AUDITORS MCCURDY AND ASSOCIATES CPA'S, INC.
27955 CLEMENS ROAD
WESTLAKE, OH 44145

TRANSFER AGENT, FIRSTAR MUTUAL FUND SERVICES, LLC
FUND ACCOUNTANT, AND 615 EAST MICHIGAN STREET
SUB-ADMINISTRATOR MILWAUKEE, WI 53202

CUSTODIAN FIRSTAR BANK, N.A.
615 EAST MICHIGAN STREET
MILWAUKEE, WI 53202

YOU MAY OBTAIN THE FOLLOWING AND OTHER INFORMATION ON THE FUNDS FREE OF CHARGE:
STATEMENTS OF ADDITIONAL INFORMATION (SAI) DATED _____________, 2000

The SAI of each Fund provides more details about each Fund's policies and
management. Each Fund's SAI is incorporated by reference into this Prospectus.

ANNUAL AND SEMI-ANNUAL REPORT

Each Fund's annual and semi-annual reports provide the most recent financial
reports and portfolio listings. The annual report contains a discussion of the
market conditions and investment strategies that affected each Fund's
performance during the last fiscal year.

TELEPHONE: INTERNET:
(800) 930-3828 HTTP://WWW.SEC.GOV (text only version)
HTTP://WWW.KINETICSFUNDS.COM

MAIL:
KINETICS MUTUAL FUNDS, INC.
C/O FIRSTAR MUTUAL FUND SERVICES, LLC
P.O. BOX 701
MILWAUKEE, WI 53201-0701

SEC:
You may review and obtain copies of Kinetic Mutual Funds information (including
the SAIs) at the SEC Public Reference Room in Washington, D.C. Please call
1-202-942-8090 for information relating to the operation of the Public Reference
Room. Reports and other information about each Fund are available on the EDGAR
Database on the SEC's Internet site at HTTP://WWW.SEC.GOV. Copies of the
information may be obtained, after paying a duplicating fee, by electronic
request at the following E-mail address: [email protected], or by writing the
Public Reference Section, Securities and Exchange Commission, Washington, D.C.
20549-0102.

1940 Act File No. 811-09303

The MEDICAL Fund

PROSPECTUS
______________, 2000

A SERIES OF KINETICS MUTUAL FUNDS, INC.
(C) 1999, Kinetics Asset Management, Inc.

THE MEDICAL FUND
A SERIES OF KINETICS MUTUAL FUNDS, INC.

PROSPECTUS

______________, 2000

The Medical Fund (the "Fund") is a no-load, non-diversified investment company
which, 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 The Medical Portfolio (the "Portfolio"), a
series of Kinetics Portfolios Trust, a Delaware business trust. The Medical
Portfolio is a no-load non-diversified investment company which seeks to provide
investors with long-term capital growth by investing primarily in the equity
securities of domestic and foreign companies engaged in medical research,
pharmaceutical treatments and related medical technology with an emphasis
towards companies engaged in cancer research and drug development.

Investors should carefully consider this investment approach. For additional
information regarding this investment structure, see "Unique Characteristics of
Master/Feeder Fund Structure" on page __.

This Prospectus gives vital information about the Fund. For your own benefit and
protection, please read it before you invest, and keep it on hand for future
reference.

Investment Adviser

KINETICS ASSET MANAGEMENT, INC.

Minimum Initial Investment -- $1,000

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

TABLE OF CONTENTS

RISK/RETURN SUMMARY 1
WHO MAY WANT TO INVEST 2
PERFORMANCE 2
FEES AND EXPENSES OF THE FUND 2
INVESTMENT OBJECTIVE AND STRATEGIES 3
MAIN RISKS OF THE FUND 4
MANAGEMENT OF THE FUND 6
VALUATION OF FUND SHARES 6
HOW TO PURCHASE SHARES 7
HOW TO REDEEM SHARES 8
EXCHANGE PRIVILEGE 10
DISTRIBUTION AND TAXES 10
DISTRIBUTION OF SHARES 11
UNIQUE CHARACTERISTICS OF MASTER/FEEDER FUND STRUCTURE 11
COUNSEL AND INDEPENDENT AUDITORS 12
FINANCIAL HIGHLIGHTS 12

THE MEDICAL FUND

RISK/RETURN SUMMARY

INVESTMENT OBJECTIVE

The investment objective of the Fund is long-term growth of capital.

PRINCIPAL INVESTMENT STRATEGIES

The Fund seeks to achieve its investment objective by investing all of its
investable assets in the Portfolio. The Portfolio invests primarily in common
stocks, convertible securities, warrants and other equity securities having the
characteristics of common stocks, such as American Depositary Receipts and
International Depositary Receipts of domestic and foreign companies engaged in
the medical research, pharmaceutical and technology industries and related
medical technology industries, generally, with an emphasis toward companies
engaged in cancer research and drug development.

FUND STRUCTURE

The Portfolio has an investment objective identical to that of the Fund. The
Fund may withdraw its investment from the Portfolio at any time if the Board of
Directors of the Company determines that it is in the best interests of the Fund
to do so. Upon any such withdrawal, the Directors will consider what action
might be taken, including investing all of the Fund's investable assets in
another pooled investment entity having substantially the same objective and
strategies as the Fund or retaining an investment adviser including, the current
investment adviser, to manage the Fund's assets directly.

PRINCIPAL RISKS OF INVESTMENT

Investing in common stocks has inherent risks that could cause you to lose
money. The principal risks of investing in the Fund and, indirectly, the
Portfolio, are listed below and could adversely affect the net asset value,
total return and value of the Fund, the Portfolio and your investment.

o STOCK MARKET RISKS: Stock mutual funds are subject to stock market risks and
significant fluctuations in value. If the stock market declines in value, the
Portfolio is likely to decline in value and you could lose money on your
investment.

o STOCK SELECTION RISKS: The stocks selected by the investment adviser may
decline in value or not increase in value when the stock market in general is
rising and may fail to meet the Portfolio's investment objective.

o LIQUIDITY RISKS: The investment adviser may not be able to sell portfolio
securities at an optimal time or price.

o INDUSTRY RISKS: Mutual funds that invest in a particular industry carry
a risk that a group of industry-related stocks will decline in price
due to industry-specific developments. Companies in the same or similar
industries may share common characteristics and are more likely to
react to industry-specific market or economic developments.

o SPECIFIC RISKS OF THE MEDICAL INDUSTRY: Medical and
pharmaceutical-related companies in general are subject to the rate of
change in technology, which is generally higher than that of other
industries. Similarly, cancer research-related industries use many
products and services of companies engaged in the medical and
pharmaceutical related activities and are also subject to relatively
high risks of rapid obsolescence caused by progressive scientific and
technological advances. Further, the medical research and development
industry is subject to strict regulatory scrutiny and ongoing
legislative action.

o SMALL AND MEDIUM-SIZE COMPANY RISKS: The Portfolio may invest in the
stocks of small, medium and large-size companies. Small and medium-size
companies often have narrower markets and more limited managerial and
financial resources than larger, more established companies. As a
result, their performance can be more volatile and they face a greater
risk of business failure, which could increase the volatility of the
Portfolio's assets.

o FOREIGN SECURITIES RISKS: The Portfolio may invest in foreign
securities, which can carry higher returns but involve more risks than
those associated with domestic investments. Additional risks include
currency fluctuations, political and economic instability, differences
in financial reporting standards and less stringent regulation of
securities markets.

o NON-DIVERSIFICATION RISKS: As a non-diversified investment company,
more of the Portfolio's assets may be concentrated in the common stock
of any single issuer, which may make the value of the Portfolio's
shares, and, therefore, the Fund's shares, more susceptible to certain
risks than shares of a more diversified mutual fund.

WHO MAY WANT TO INVEST

This Fund may be appropriate for investors who:

o wish to invest for the long term.
o want to diversify their portfolios.
o want to allocate some portion of their long-term investments to aggressive
equity investing.
o are willing to accept a high degree of volatility.

PERFORMANCE

Because the Fund has been operating for less than one fiscal year, there is no
performance information available at this time.

FEES AND EXPENSES OF THE FUND

As an investor, you pay certain fees and expenses if you buy and hold shares of
the Fund. These fees and expenses are described in the table below and are
further explained in the example that follows.

FEE TABLE

SHAREHOLDER TRANSACTION EXPENSES1
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price) None
Maximum Sales Charge (Load) on Reinvested Dividends None
Redemption Fee
(as a percentage of amount redeemed, if applicable) None
Exchange Fee2 None
Maximum Account Fee3 None

ESTIMATED ANNUAL OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)

Management Fees 1.25%
Distribution (Rule 12b-1) Fees None
Other Expenses 0.75 %
-------
Estimated Total Annual Fund Operating Expenses 2.00%
------
=======

- --------------------------------------------------------------------------------
1 Although no sales loads or transaction fees are charged, you
will be assessed fees for outgoing wire transfers, returned
checks and exchanges executed by telephone between the Fund
and any other series of Kinetics Mutual Funds, Inc.

2 The Fund's Transfer Agent charges a transaction fee of $5 to
shareholders who exchange their shares in the Fund by
telephone for shares in any other shares of Kinetics Mutual
Funds, Inc. The Transfer Agent does not charge a transaction
fee for written exchange requests.

3 IRA Accounts are assessed a $12.50 annual fee.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE FUND
WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THESE PERIODS. THE
EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RATE OF RETURN EACH YEAR AND
THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL COSTS
MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COST WOULD BE:

1 YEAR 3 YEARS 5 YEAR 10 YEAR
- ------ ------- ------ -------
$203 $627 $1,078 $2,327

INVESTMENT OBJECTIVE AND STRATEGIES

INVESTMENT OBJECTIVE

The investment objective of the Fund is long-term growth of capital.

INVESTMENT STRATEGIES

The Fund seeks its investment objective by investing all of its investable
assets in the Portfolio. Under normal circumstances, the Portfolio invests at
least 65% of its total assets in common stocks, convertible securities, warrants
and other equity securities having the characteristics of common stocks, such as
American Depositary Receipts ("ADRs") and International Depositary Receipts
("IDRs"), of domestic and foreign companies engaged in the medical research,
pharmaceutical and technology industries and related medical technology
industries, generally, with an emphasis toward companies engaged in cancer
research and drug development.

The Portfolio's investment adviser believes that favorable investment
opportunities are available through companies that are developing technology,
products, and/or services for cancer research and treatment and related medical
activities. Accordingly, the Portfolio seeks to invest in the equity securities
of companies whose research and development efforts may result in higher stock
values.

Portfolio securities will be selected from companies that are engaged in the
medical industry generally, including companies engaged in cancer research and
treatment, biopharmaceutical research and the development of medical instruments
for therapeutic purposes. These companies may be large, medium or small in size
if in the investment adviser's opinion, the companies meet the Portfolio's
investment criteria. Such companies include, but are not limited to the
following:

o PHARMACEUTICAL DEVELOPMENT COMPANIES: Companies that develop drugs and
medications for the treatment and prevention of cancer and other disease.

o SURGICAL AND MEDICAL INSTRUMENT MANUFACTURERS AND DEVELOPERS: Companies
that produce, manufacture and develop the tools used by health care
providers in the delivery of medical care and procedures for the
treatment of cancer and other diseases.

o PHARMACEUTICAL MANUFACTURERS: Companies that primarily engage in the mass
production of existing drugs and medicines including drugs and medicines for the
treatment of cancer and other diseases.

o MEDICAL RESEARCH COMPANIES: Companies that primarily research and develop new
methods and procedures in the provision of health care related services for the
treatment of cancer and other diseases.

The investment adviser selects portfolio securities by evaluating a company's
positioning and resources that it currently expends on research and development
looking for a significant percentage, or large amount, of capital invested into
research and treatment of cancer and other diseases. The investment adviser also
considers a company's fundamentals by reviewing its balance sheets, corporate
revenues, earnings and dividends. The investment adviser believes that dollars
invested in research and development today frequently have significant bearing
on future growth.

TEMPORARY INVESTMENTS

To respond to adverse market, economic, political or other conditions, the
Portfolio may invest up to 100% of its assets in high quality U.S. short-term
debt securities and money market instruments. The Fund may invest up to 35% of
its assets in these securities to maintain liquidity. Some of these short-term
instruments include:

o commercial paper
o certificates of deposit, demand and time deposits and banker's acceptances
o U.S. Government securities (i.e., U.S. Treasury obligations)
o repurchase agreements

To the extent that the Portfolio engages in a temporary, defensive strategy, the
Portfolio and, therefore, the Fund, may not achieve its investment objective.

MAIN RISKS

INVESTING IN MUTUAL FUNDS

All mutual funds carry risk, which may cause you to lose money on your
investment. In general, the risks associated with the use of the Master/Feeder
Fund Structure and the risks associated with your investment in the Fund are
substantially identical to the risks associated with the Fund's investment in
the Portfolio. The following describes the primary risks of investing in the
Fund and the Portfolio based on the specific investment objective and strategies
shared by the Fund and the Portfolio. As all investment securities are subject
to inherent market risks and fluctuations in value due to earnings, economic and
political conditions and other factors, neither the Fund nor the Portfolio can
give any assurance that its investment objective will be achieved. In addition,
you should be aware that the Fund has no operating history.

MEDICAL RESEARCH INDUSTRY SPECIFIC RISKS

Medical and pharmaceutical-related companies in general are subject to the rate
of change in technology, which is generally higher than that of other
industries. Similarly, cancer research-related industries use many products and
services of companies engaged in medical and pharmaceutical-related activities
and are also subject to relatively high risks of rapid obsolescence caused by
progressive scientific and technological advances. Medical research and
development is also subject to strict regulatory scrutiny and ongoing
legislative action.

MARKET RISK

The net asset value of the Portfolio will fluctuate based on changes in the
value of its underlying portfolio. The stock market is generally susceptible to
volatile fluctuations in market price. Market prices of securities in which the
Portfolio invests may be adversely affected by an issuer's having experienced
losses or by the lack of earnings or by the issuer's failure to meet the
market's expectations with respect to new products or services, or even by
factors wholly unrelated to the value or condition of the issuer. The value of
the securities held by the Portfolio is also subject to the risk that a specific
segment of the stock market does not perform as well as the overall market.
Under any of these circumstances, the value of the Portfolio's shares and total
return will fluctuate, and your investment may be worth more or less than your
original cost when you redeem your shares.

OTHER SECURITIES THE PORTFOLIO MIGHT PURCHASE

Under normal market conditions, the Portfolio will invest at least 65% of its
total assets in equity securities, consisting of common stocks, convertible
securities, warrants and securities having the characteristics of common stocks.
If the investment adviser believes that market conditions warrant a temporary
defensive posture, the Portfolio may invest without limitation in high quality,
short-term debt securities and money market instruments. These short-term debt
securities and money market instruments include commercial paper, certificates
of deposit, bankers' acceptances, and U.S. Government securities and repurchase
agreements. More information about these investments is disclosed in the
Statement of Additional Information ("SAI").

SECURITIES LENDING

The Portfolio may lend its portfolio securities to broker-dealers by entering
directly into lending arrangements with such broker-dealers or indirectly
through repurchase agreements, amounting 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. These transactions involve some risk to the
Portfolio if the other party should default on its obligation and the Portfolio
is delayed or prevented from recovering the collateral. In the event that the
original seller defaults on its obligation to repurchase, the Portfolio will
seek to sell the collateral, which could involve costs or delays. To the extent
proceeds from the sale of collateral are less than the repurchase price, the
Portfolio would suffer a loss.

NON-DIVERSIFICATION

The Portfolio is classified as "non-diversified" under federal securities laws
which means that one-half of the Portfolio's assets may be invested in two or
more stocks while the other half is spread out among various investments not
exceeding 5% of the Portfolio's total assets. As a result of its non-diversified
status, the Portfolio's shares may be more susceptible to adverse changes in the
value of the securities of a particular company than would be the shares of a
diversified investment company.

INVESTMENT IN SMALL AND MEDIUM-SIZED COMPANIES

The Portfolio will invest in small and medium-size companies. Accordingly, the
Portfolio may be subject to the additional risks associated with investment in
companies with small or medium-size capital structures (generally a market
capitalization of $5 billion or less). The market prices of the securities of
such companies tend to be more volatile than those of larger, more established
companies. Further, these securities tend to trade at a lower volume than those
of larger, more established companies. If the Portfolio is heavily invested in
these securities and the value of these securities decline, the net asset value
of the Portfolio and your investment in the Fund will be more susceptible to
sudden and significant losses.

FOREIGN SECURITIES

Investing in foreign securities can carry higher returns than those generally
associated with domestic investments. However, foreign securities may be
substantially riskier than domestic investments. The economies of foreign
countries may differ from the U.S. economy in such respects as growth of gross
domestic product, rate of inflation, currency depreciation, capital
reinvestment, resource self-sufficiency, and balance of payments position.
Furthermore, the economies of developing countries generally are heavily
dependent on international trade and, accordingly, have been, and may continue
to be, adversely affected by trade barriers, exchange controls, managed
adjustments in relative currency values and other protective measures imposed or
negotiated by the countries with which they trade. These economies also have
been, and may continue to be, adversely affected by economic conditions in the
countries with which they trade. The Portfolio may be required to obtain prior
governmental approval for foreign investments in some countries under certain
circumstances. Governments may require approval to invest in certain issuers or
industries deemed sensitive to national interests, and the extent of foreign
investment in certain debt securities and domestic companies may be subject to
limitation. Individual companies may also limit foreign ownership to prevent,
among other things, violation of foreign investment limitations.

PORTFOLIO BORROWING

The Portfolio may leverage up to 5% of its assets to fund investment activities
or to achieve higher returns. The Portfolio may borrow money from banks for
temporary or emergency purposes in order to meet redemption requests. To reduce
its indebtedness, the Portfolio may have to sell a portion of its investments at
a time when it may be disadvantageous to do so. In addition, interest paid by
the Portfolio on borrowed funds would decrease the net earnings of both the
Portfolio and your investment in the Fund.

MANAGEMENT OF THE FUND

INVESTMENT ADVISER

The Portfolio's investment adviser is Kinetics Asset Management, Inc.
("Kinetics" or the "investment adviser"), 1311 Mamaroneck Avenue, Suite 130,
White Plains, New York, 10605. The investment adviser conducts investment
research and supervision for the Portfolio and is responsible for the purchase
and sale of securities for the Portfolio's assets. The investment adviser
receives an annual fee from the Portfolio for its services of 1.25% of the
Portfolio's average daily net assets. The investment adviser has entered into a
Research Agreement with Horizon Asset Management, Inc. for which it is
responsible for the payment of all fees owing to Horizon.

Peter B. Doyle is the Chairman of the Board of Directors of Kinetics. He is
also the Chief Investment Strategist. Steven R. Samson is the President and
Chief Executive Officer of Kinetics. Mr. Samson has more than
24 years experience in the mutual fund and financial services industries.
Lee Schultheis is the Managing Director and Chief Operating Officer of Kinetics.
Mr. Schultheis has more than 20 years of experience in the mutual fund and
financial services industries.

PORTFOLIO MANAGERS

BRUCE P. ABEL is Co-Portfolio Manager of the Portfolio. Mr. Abel's primary
duties include research and analysis of developing scientific technologies and
innovations in the medical, bio-technical and pharmaceutical industries specific
to cancer research and treatment. Prior to joining Kinetics in 1999, Mr. Abel
was employed with Brookhaven National Laboratory since 1989 where he worked
researching, developing and implementing technical and scientific programs and
systems in the areas of nuclear physics, computer programming, and industrial
design. During that time, Mr. Abel was also a freelance writer for Academic
Science News and Review, researching, reporting, and providing scholarly
analysis and insight on a myriad of issues and developments in the fields of
science and technology. Mr. Abel has over ten years experience in the fields of
science, chemistry, physics, and engineering. Mr. Abel holds a Masters Degree in
Mechanical Engineering with an emphasis on Nuclear Engineering, and has also
studied extensively in the areas of Applied Mathematics, Hydrodynamics,
Aerodynamics, and Physics.

PETER B. DOYLE is Co-Portfolio Manager of the Portfolio and is primarily
responsible for the day-to-day management of the Portfolio's assets and
securities. Mr. Doyle is the Chief Investment Strategist and Chairman of
the Board of Directors of Kinetics. In early 1996, Mr. Doyle co-founded
Kinetics, the investment adviser to the Portfolio. Mr. Doyle also co-founded
and has been a Managing Director of Horizon Asset Management, Inc., a New
York based investment management and research firm, since 1994. From 1988
through late 1994, Mr. Doyle was an Investment Officer in Bankers Trust
Company's Investment Services Group, where he was responsible for managing
approximately $250 million in assets. During his tenure at Bankers Trust
Company, Mr. Doyle served on the Finance and Utility research sub-groups. Mr.
Doyle holds a Masters of Business Administration from Fordham
University and a Bachelor of Science in Economics from St. John's University.

VALUATION OF FUND SHARES

Shares of the Fund are sold at net asset value per share ("NAV"), which is
determined by the Fund as of the close of regular trading (generally 4:00 p.m.
eastern time) on each day that the New York Stock Exchange (the "Exchange") is
open for unrestricted business. Purchase and redemption requests are priced at
the next NAV calculated after receipt and acceptance of a completed purchase or
redemption request. The NAV is determined by dividing the value of the Fund's
securities, cash and other assets, minus all expenses and liabilities, by the
number of shares outstanding (assets-liabilities / # of shares outstanding =
NAV). The NAV takes into account the expenses and fees of the Fund, including
management, administration and shareholder servicing fees, which are accrued
daily. The NAV of the Portfolio is calculated in an identical manner as that of
the Fund.

The Portfolio's securities are valued each day at the last quoted sales price on
the securities' principal exchange. If market quotations are not readily
available, securities will be valued at their fair market value as determined in
good faith in accordance with procedures approved by the Board of Trustees of
the Portfolio. The Portfolio may use independent pricing services to assist in
calculating its NAV.

TRADING IN FOREIGN SECURITIES

Trading in foreign securities may be completed at times when the Exchange is
closed. In computing the NAV of the Fund and the Portfolio, the investment
adviser values foreign securities held by the Portfolio at the latest closing
price on the exchange on which they are traded immediately prior to the closing
of the Exchange. Certain foreign currency exchange rates may also be determined
at the latest rate prior to the closing of the Exchange. Prices of foreign
securities quoted in foreign currencies are translated into U.S. dollars at
current rates. Occasionally, events that affect these values and exchange rates
may occur between the times at which they are determined and the closing of the
Exchange. If such events materially affect the value of the Portfolio's
securities, these securities may be valued at their fair value as determined in
good faith by the Portfolio's Board of Trustees.

HOW TO PURCHASE SHARES

IN GENERAL

Shares of the Fund are sold at NAV, without a sales charge, and will be credited
to a shareholder's account at the NAV next computed after an order is received.
The minimum initial investment for both Regular Accounts and Individual
Retirement Accounts is $1,000. The minimum subsequent investment for both types
of accounts is $100. The Fund reserves the right to reject any purchase order
if, in its opinion, it is in the Fund's best interest to do so. A service fee of
$25.00 will be deducted from your Fund account for any purchases that do not
clear due to insufficient funds.

INVESTING BY TELEPHONE

If you have completed the Telephone Purchase Authorization section of the New
Account Application Form, you may purchase additional shares by telephoning the
Fund toll free at (800) 930-3828. This option allows investors to move money
from their bank account to their Fund account upon request. Only bank accounts
held at domestic institutions that are Automated Clearing House (ACH) members
may be used for telephone transactions. The minimum telephone purchase is $100.
You may not use telephone transactions for your initial purchase of Fund shares.

AUTOMATIC INVESTMENT PLAN

Once an account has been established, you may purchase shares of the Fund
through an Automatic Investment Plan ("AIP"). You can have money automatically
transferred from your checking, savings or bank money market account on a
weekly, bi-weekly, monthly, bi-monthly or quarterly basis.

To be eligible for this plan, your bank must be a domestic institution that is
an ACH member. The Fund may modify or terminate the AIP at any time. The first
AIP purchase will take place no earlier than 15 days after the Transfer Agent
has received your request.

PURCHASE BY MAIL

To purchase Fund shares by mail, simply complete and sign the enclosed New
Account Application Form and mail it, along with a check or money order made
payable to The Medical Fund, c/o Kinetics Mutual Funds, Inc. to:

REGULAR MAIL: OVERNIGHT OR EXPRESS MAIL:
- ------------ -------------------------
Kinetics Mutual Funds, Inc. Kinetics Mutual Funds, Inc.
The Medical Fund The Medical Fund
c/o Firstar Mutual Fund Services, LLC c/o Firstar Mutual Fund Services, LLC
P.O. Box 701 615 East Michigan Street, 3rd Floor
Milwaukee, WI 53201-0701 Milwaukee, WI 53202

PURCHASE BY WIRE

Before wiring any funds please call (800) 930-3828 to notify the Fund that the
wire is coming and to verify the proper wire instructions so that the wire is
properly applied when received. The Fund is not responsible for delays resulting
from the banking or Federal Reserve wire system. Please use the wiring
instructions as follows:

o Wire to: Firstar Bank, N.A.
o ABA Number: 0750-00022
o Credit: Firstar Mutual Fund Services, LLC
o Account: 112-952-137
o Further Credit: Kinetics Mutual Funds, Inc.
The Medical Fund
(Shareholder Name/Account Registration)
(Shareholder Account Number)

Immediately send a completed New Account Application Form to the Fund at the
above address to have all accurate information recorded to your account.

SUBSEQUENT INVESTMENTS

You may add to your account at any time by purchasing shares by mail, by
telephone, or by wire (minimum $100). You must call to notify the Fund at (800)
930-3828 before wiring. A remittance form, which is attached to your individual
account statement, should accompany any investments made through the mail. All
purchase requests must include your shareholder account number.

INDIVIDUAL RETIREMENT ACCOUNTS

You may invest in the Fund by establishing a tax-sheltered individual retirement
account. The Fund offers Traditional IRA, Roth IRA, and Educational IRA
accounts. For additional information on IRA options, please call (800) 930-3828.

INVESTING THROUGH BROKERS OR AGENTS

You may invest in the Fund through brokers or agents who have entered into
selling agreements with the Fund's distributor. The broker or agent may set
their own initial and subsequent investment minimums. You may be charged a fee
if you use a broker or agent to buy or redeem shares of the Fund.

HOW TO REDEEM SHARES

IN GENERAL

You may redeem part or all of your Fund shares on any business day that the Fund
calculates its NAV. To redeem shares, you must contact the Fund either by mail
or by phone to place a redemption order. You should request your redemption
prior to market close to obtain that day's closing NAV. Redemption requests
received after the close of the Exchange (currently 4:00 pm EST) will be treated
as though received on the next business day.

The Fund will generally mail redeemed proceeds the next business day and, in any
event, no later than seven days after the receipt of a redemption request in
"good order" (see below). Please note, however, that when a purchase order has
been made by check, or ACH purchase, the Fund will not be able to honor your
redemption request until the check or ACH purchase has cleared. This may take up
to 12 days.

Redemption requests will be sent to the address of record. If the proceeds of
redemption are requested to be sent to an address other than the address of
record or if the address of record has been changed within 15 days of the
redemption request, the request must be in writing with your signature
guaranteed. Signature guarantees can be obtained from banks and securities
dealers, BUT NOT FROM A NOTARY PUBLIC. The Fund is not responsible for interest
lost on redemption amounts due to lost or misdirected mail.

WRITTEN REDEMPTION

You can execute most redemptions by furnishing an unconditional written request
to the Fund to redeem your shares at the current NAV. Redemption requests in
writing should be sent to the Transfer Agent at:

Requests for redemption in "good order" must:

TELEPHONE REDEMPTION

If you are authorized to perform telephone transactions (either through your New
Account Application Form or by subsequent arrangement in writing with the Fund)
you may redeem shares in any amount, but not less than $100 by instructing the
Fund by phone at (800) 930-3828. A signature guarantee is required of all
shareholders in order to qualify for or to change telephone redemption
privileges.

NOTE: Neither the Fund nor any of its service contractors will be liable for any
loss or expense in acting upon instructions that are reasonably believed to be
genuine. To confirm that all telephone instructions are genuine, the Fund will
use reasonable procedures, such as requesting:

o that you correctly state your Fund account number
o the name in which your account is registered
o the social security or tax identification number under which the account is
registered
o address of the account holder, as stated in the New Account Application Form

WIRE REDEMPTION

Wire transfers may be arranged to redeem shares. However, the transfer agent
charges a $12 fee per wire redemption against your account for this service. The
minimum wire redemption amount is $100.

SYSTEMATIC WITHDRAWAL PLAN

If you own shares with a value of $10,000 or more, you may participate in the
Systematic Withdrawal Plan. The Systematic Withdrawal Plan allows you to make
automatic withdrawals from your account at regular intervals. Money will be
transferred from your Fund account to the account you chose at the interval you
select on the New Account Application Form. If you expect to purchase additional
Fund shares, it may not be to your advantage to participate in the Systematic
Withdrawal Plan because of the possible adverse tax consequences of making
contemporaneous purchases and redemptions.

THE FUND'S RIGHT TO REDEEM AN ACCOUNT

The Fund reserves the right to redeem the shares of any shareholder whose
account balance is less than $500, other than as a result of a decline in the
NAV of the Fund or unless the shareholder is an active participant in the AIP.
The Fund will provide a shareholder with written notice 30 days prior to
redeeming the account.

IRA REDEMPTION

If you are an IRA shareholder, you must indicate on your redemption request
whether or not to withhold federal income tax. Requests that do not indicate a
preference will be subject to withholding.

EXCHANGE PRIVILEGE

You can exchange your shares in the Fund for shares of any other Fund offered by
Kinetics Mutual Funds, Inc. If the exchange is requested via telephone, a $5 per
exchange transaction cost will be assessed. You should carefully read the
prospectus of a fund before exchanging shares into that fund. Be advised that
exercising the exchange privilege consists of two transactions: a sale of shares
in one fund and the purchase of shares in another. Further, exchanges may have
certain tax consequences and you could realize short- or long-term capital gains
or losses. Exchanges are generally made only between identically registered
accounts unless you send written instructions with a signature guarantee
requesting otherwise. You should request your exchange prior to market close to
obtain that day's closing NAV. Exchange requests received after the close of the
Exchange will be treated as though received on the next business day.

Call (800) 930-3828 to learn more about the other Kinetics Mutual Funds and
about exercising your exchange privilege.

DISTRIBUTION AND TAXES

DISTRIBUTIONS

Distributions (whether treated for tax purposes as ordinary income or long-term
capital gains) to shareholders of the Fund are paid in additional shares of the
Fund, with no sales charge, based on the Fund's NAV as of the close of business
on the record date for such distributions. However, you may elect on the
application form to receive distributions as follows:

OPTION 1: To receive income dividends in cash and capital gain distributions in
additional Fund shares, or

OPTION 2: To receive all income dividends and capital gain distributions in
cash.

The Fund intends to pay any dividends from investment company taxable income and
distributions representing capital gain at least annually, usually in November.
The Fund will advise each shareholder annually of the amounts of dividends from
investment company taxable income and of net capital gain distributions
reinvested or paid in cash to the shareholder during the calendar year.

If you select Option 1 or Option 2 and the U.S. Postal Service cannot deliver
your distribution checks, or if your distribution checks remain uncashed for six
months, your distribution checks be will reinvested in your account at the then
current NAV and your election will be converted to the purchase of additional
shares.

TAXES

The Fund intends to continue to qualify and elect to be taxed as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). In any taxable year in which the Fund so qualifies and
distributes at least 90% of its investment company taxable income (which
includes, among other items, dividends, interest, and the excess of realized net
short-term capital gain over realized net long-term capital loss), the Fund
generally will be relieved of Federal income tax on its investment company
taxable income and net capital gain (the excess of realized net long-term
capital gain over realized net short-term capital loss) distributed to
shareholders. Amounts not distributed on a timely basis in accordance with a
calendar distribution requirement are also subject to a nondeductible 4% excise
tax. To prevent application of the excise tax, the Fund intends to make its
distributions in accordance with the calendar year distribution requirement. A
distribution will be treated as paid on December 31 of the calendar year if it
is declared by the Fund in October, November, or December of that year to
shareholders of record on a date in such a month and paid by the Fund during
January of the following calendar year. Such distributions will be taxable to
shareholders in the calendar year the distributions are declared, rather than
the calendar year in which the distributions are received.

Distributions from investment company taxable income are taxable to shareholders
as ordinary income. Distributions of net capital gains designated by the Fund as
capital gains dividends are taxable as long-term capital gains regardless of the
length of time a shareholder may have held shares of the Fund. The tax treatment
of distributions treated as ordinary income or capital gains will be the same
whether the shareholder reinvests the distributions in additional shares or
elects to receive them in cash. Shareholders will be notified each year of the
amounts and nature of dividends and distributions, including the amount (if any)
for that year that has been designated as capital gains distributions. Investors
should consult their tax advisers for specific information on the tax
consequences of particular types of distributions.

An exchange is not a tax-free transaction. An exchange of shares pursuant to the
Funds' exchange privilege is treated the same as an ordinary sale and purchase
for federal income tax purposes and you will realize a capital gain or loss.

On the account application, you will be asked to certify that your social
security number or taxpayer identification number is correct and that you are
not subject to backup withholding for failing to report income to the IRS. If
you are subject to backup withholding or you did not certify your taxpayer
identification number, the IRS requires the Fund to withhold 31% of any dividend
and redemption or exchange proceeds. The Fund reserves the right to reject any
application that does not include a certified social security or taxpayer
identification number.

DISTRIBUTION OF SHARES

DISTRIBUTOR

T.O. Richardson Securities, Inc., 2 Bridgewater Road, Farmington, Connecticut,
06032 is the distributor for the shares of the Fund. T.O. Richardson Securities,
Inc., is a registered broker-dealer and member of the National Association of
Securities Dealers, Inc. and serves as the distributor for numerous registered
investment companies across the United States.

SHAREHOLDER SERVICING AGENT

Kinetics is also responsible for paying various shareholder servicing agents for
performing shareholder servicing functions and maintaining shareholder accounts.
These agents have written shareholder servicing agreements with Kinetics and
perform these functions on behalf of their clients who own shares of the Fund.
For this service, Kinetics receives an annual shareholder servicing fee from the
Fund equal to 0.25% of the Fund's average daily net assets.

FUND ADMINISTRATOR

Kinetics also serves as Administrator to the Fund. Kinetics will be entitled to
receive an annual administration fee equal to __% of the Fund's average daily
net assets, out of which it 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 Fund by Firstar.

CUSTODIAN, TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND FUND ACCOUNTANT

Firstar Bank, N.A. serves as Custodian for the Fund's cash and securities. The
Custodian does not assist in, and is not responsible for, investment decisions
involving assets of the Fund. Firstar, the Fund's Sub-Administrator,
also acts of the Fund's Transfer Agent, Dividend Disbursing Agent and Fund
Accountant.

MASTER/FEEDER FUND STRUCTURE

In addition to selling a beneficial interest to the Fund, the Portfolio could
also sell beneficial interests to other mutual funds or institutional investors.
Such investors would invest in the Portfolio on the same terms and conditions
and would pay a proportionate share of the Portfolio's expenses. However, other
investors in the Portfolio are not required to sell their shares at the same
public offering price as the Fund, and might bear different levels of ongoing
expenses than the Fund. Shareholders of the Fund should be aware that these
differences would result in differences in returns experienced in the different
funds that invest in the Portfolio. Such differences in return are also present
in other mutual fund structures.

Smaller funds investing in the Portfolio could be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large
feeder fund were to withdraw from the Portfolio, the remaining funds might
experience higher pro rata operating expenses, thereby producing lower returns.
Additionally, the Portfolio could become less diverse, resulting in increased
portfolio risk. However, the possibility also exists for traditionally
structured funds which have large or institutional investors. Funds with a
greater pro rata ownership in the Portfolio could have effective voting control
of the Portfolio.

Certain changes in the Portfolio's objective, policies or restrictions might
require the Company to withdraw the Fund's interest in the Portfolio. Any such
withdrawal could result in a distribution in kind of portfolio securities (as
opposed to a cash distribution from the Portfolio). The Fund could incur
brokerage fees or other transaction costs in converting such securities to cash.
In addition, a distribution in kind could result in a less diversified portfolio
of investments or adversely affect the liquidity of the Fund.

The SAI contains more information about the Fund, the Master/Feeder Fund
Structure and the types of securities in which the Fund may invest.

COUNSEL AND INDEPENDENT AUDITORS

Legal matters in connection with the issuance of shares of common stock of the
Fund are passed upon by Spitzer & Feldman P.C., 405 Park Avenue, New York, New
York 10022. McCurdy & Associates, CPA's, Inc., 27955 Clemens Road, Westlake,
Ohio 44145, have been selected as independent auditors for the Fund.

FINANCIAL HIGHLIGHTS

Because the Fund has been operating for less than one fiscal year, there are no
financial highlights to report at this time.

KINETICS MUTUAL FUNDS, INC.

The Medical Fund

Investment Adviser, Kinetics Asset Management, Inc.
Administrator, 1311 Mamaroneck Avenue
Shareholder White Plains, NY 10605
Servicing Agent

Legal Counsel Spitzer & Feldman P.C.
405 Park Avenue
New York, NY 10022

Independent McCurdy and Associates CPA's, Inc.
Auditors 27955 Clemens Road
Westlake, OH 44145

Transfer Agent, Firstar Mutual Fund Services, LLC
Fund Accountant, 615 East Michigan Street
Sub-Administrator Milwaukee, WI 53202

Custodian Firstar Bank, N.A.
615 East Michigan Street
Milwaukee, WI 53202

You may obtain the following and other information

on the Fund free of charge:
Statement of Additional Information
(SAI) dated ______________, 2000

The SAI for the Fund provides more details about the Fund's policies and
management. The Fund's SAI is incorporated by reference into this Prospectus.
Annual and Semi-Annual Report Soon after the Fund has been operating for the
appropriate time, annual and semi-annual reports will be made avail-able. The
reports will provide the Fund's most recent portfolio listings. The annual
report will contain a discussion of the market conditions and investment
strategies that affect-ed the Fund's performance during the last fiscal year.
Telephone: (800) 930-3828 Mail: Kinetics Mutual Funds, Inc.

c/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701

Internet: http://www.sec.gov (text only version) SEC: You may also receive a
text only version of Fund documents upon payment of a duplicating fee, by
writing the Public Reference Room of the SEC, Washington, D.C. 20549-6009.
Information about the Fund (including the SAI) can be reviewed and copied at
the SEC's Public Reference Room in Washington, D.C. Please call the SEC at
1-800- SEC-0330 for information relating to the operation of the
Public Reference Room.

1940 Act File No. 811-09303

THE KINETICS GOVERNMENT
MONEY MARKET FUND
A SERIES OF KINETICS MUTUAL FUNDS, INC.

PROSPECTUS

_________________________, 2000

THE KINETICS GOVERNMENT MONEY MARKET FUND (the "Fund") is a no-load, diversified
investment company which, 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 The Kinetics Government
Money Market Portfolio (the "Portfolio"), a series of Kinetics Portfolios Trust,
a Delaware business trust. The Portfolio is a no-load non-diversified investment
company which seeks to provide investors with current income consistent with the
preservation of capital and maintenance of liquidity by investing primarily in
money market instruments issued or guaranteed, as to principal and interest, by
the U.S. Government, its agencies or instrumentalities.

Investors should carefully consider this investment approach. For additional
information regarding this investment structure, see "Unique Characteristics of
Master/Feeder Fund Structure" on page __.

This Prospectus gives vital information about the Fund. For your own benefit and
protection, please read it before you invest, and keep it on hand for future
reference.

Investment Adviser
KINETICS ASSET MANAGEMENT, INC.

Minimum Initial Investment -- $1,000

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED
OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THE PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

TABLE OF CONTENTS

RISK/RETURN SUMMARY 2

WHO MAY WANT TO INVEST 2

PERFORMANCE 2

FEES AND EXPENSES OF THE FUND 3

INVESTMENT OBJECTIVE AND STRATEGIES 4

MAIN RISKS 5

MANAGEMENT OF THE FUND 5

VALUATION OF FUND SHARES 5

HOW TO PURCHASE SHARES 6

HOW TO REDEEM SHARES 7

EXCHANGE PRIVILEGE 9

DISTRIBUTION AND TAXES 9

DISTRIBUTION OF SHARES 10

UNIQUE CHARACTERISTICS OF MASTER/FEEDER FUND STRUCTURE 10

COUNSEL AND INDEPENDENT AUDITORS 11

FINANCIAL HIGHLIGHTS 11

THE KINETICS GOVERNMENT MONEY MARKET FUND
RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the Fund is to provide current income consistent
with the preservation of capital and maintenance of liquidity.

PRINCIPAL INVESTMENT STRATEGIES

The Fund seeks to achieve its investment objective by investing all of its
investable assets in the Portfolio. The Portfolio invests primarily in money
market instruments issued or guaranteed, as to principal and interest, by the
U.S. Government, its agencies or instrumentalities. The Portfolio and the Fund
each seek to maintain a constant $1.00 net asset value per share.

FUND STRUCTURE

PRINCIPAL RISKS OF INVESTING IN THE FUND

The principal risks of investing in the Fund and, indirectly, the Portfolio, are
listed below and could adversely affect the net asset value, total return and
value of the Fund, the Portfolio and your investment:

o INTEREST RATE RISKS: The rate of income will vary from day to day depending
on short-term interest rates. It is possible that a major change in interest
rates could cause the value of your investment to decline.

o CREDIT RISKS: Changes in the credit quality rating or changes in an issuer's
financial condition can also affect the Portfolio. A default on a security
held, or a repurchase agreement entered into, by the Portfolio could cause
the value of your investment in the Fund to decline.

WHO MAY WANT TO INVEST
- --------------------------------------------------------------------------------

The Fund may be appropriate for people who:

o want to save money rather than "invest"

o require stability of principal

o prefer to receive income with relatively fewer risks

AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF ANY BANK AND IS NEITHER INSURED
NOR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. ALTHOUGH THE FUND AND THE PORTFOLIO EACH SEEKS TO PRESERVE
THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY
INVESTING IN THE FUND.

PERFORMANCE
- --------------------------------------------------------------------------------
Because the Fund has been operating for less than one fiscal year, there is no
performance information available at this time.

FEES AND EXPENSES OF THE FUND
- --------------------------------------------------------------------------------

FEE TABLE

SHAREHOLDER TRANSACTION EXPENSES1
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price) None
Maximum Sales Charge (Load) on Reinvested Dividends None
Redemption Fee
(as a percentage of amount redeemed, if applicable) None
Exchange Fee2 None
Maximum Account Fee3 None

ESTIMATED ANNUAL OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)
Management Fees 0.50%
Distribution (Rule 12b-1) Fees None
Other Expenses 0.75 %
-------
Estimated Total Annual Fund Operating Expenses 1.25%
------
=======

3 IRA Accounts are assessed a $12.50 annual fee.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE FUND
WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

1 YEAR 3 YEARS
$127 $397

INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the Fund is to provide current income consistent
with the preservation of capital and maintenance of liquidity.

INVESTMENT STRATEGIES

The Fund seeks to achieve its investment objective by investing all of its
investable assets in the Portfolio. The Portfolio invests substantially all of
its net assets in high quality, U.S. dollar-denominated short-term obligations
that have been determined by the investment adviser, subject to the approval of
the Portfolio's Board of Trustees, to present minimal credit risk. The Portfolio
invests exclusively in obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities and repurchase agreements that are fully
collateralized by such obligations ("U.S. Government Securities"). U.S.
Government Securities include direct obligations of the U.S. Treasury, such as
Treasury Bills, Treasury Notes and Treasury Bonds.

U.S. Government Securities are high quality instruments guaranteed as to
principal and interest and issued by the U.S. Treasury or by an agency or
instrumentality of the U.S. Government. Not all U.S. Government Securities are
backed by the full faith and credit of the United States however. Some are
backed by the right of the issuer to borrow from the U.S. Treasury; others are
backed by the discretionary authority of the U.S. Government to purchase the
agencies' obligations; while others are supported only by the credit of the
instrumentality. In the case of securities not backed by the full faith and
credit of the United States, the Portfolio must look principally to the agency
issuing or guaranteeing the obligation for ultimate repayment.

Yields on short-, intermediate- and long-term U.S. Government Securities are
dependent on a variety of factors, including the general conditions of the money
and bond markets, the size of a particular offering and the maturity of the
obligation. Debt securities with longer maturities tend to produce higher
capital appreciation and depreciation than do obligations with shorter
maturities and lower yields. The market value of U.S. Government Securities
generally varies inversely with changes in interest rates. An increase in
interest rates, therefore, generally would reduce the market value of the
Portfolio's investments in U.S. Government Securities, while a decline in
interest rates generally would increase the market value of the Portfolio's
investments in these securities.

Under a repurchase agreement, the Portfolio purchases a U.S. Government Security
and simultaneously agrees to sell the security back to the seller at a mutually
agreed-upon future price and date, normally one day or a few days later. The
resale price is greater than the purchase price, reflecting an agreed-upon
market interest rate premium during the Portfolio's holding period. While the
maturities of the underlying securities in repurchase agreement transactions may
be more than one year, the term of each repurchase agreement will always be less
than one year. The Portfolio may enter into repurchase agreements with banks
that are members of Federal Reserve System or securities dealers who are members
of a national securities exchange or are primary dealers in U.S. Government
Securities. The investment adviser monitors the creditworthiness of each firm
that is a party to a repurchase agreement with the Portfolio.

MAIN RISKS
- --------------------------------------------------------------------------------

GENERAL

In general, the risks associated with the use of the Master/Feeder Fund
Structure and the risks associated with your investment in the Fund are
substantially identical to the risks associated with the Fund's investment in
the Portfolio. The following describes the primary risks to the Fund and the
Portfolio based on the specific investment objective and strategies shared by
the Fund and the Portfolio.

REPURCHASE AGREEMENT RISKS

One of the risks of investing in repurchase agreements is that the seller may
not repurchase the securities from the Portfolio, which may result in the
Portfolio selling the security for less than the price agreed upon with the
seller. Another risk of repurchase agreements is that the seller may default or
file for bankruptcy under which circumstances the Portfolio might have to wait
through lengthy court actions before selling the securities. In the event of a
default or bankruptcy by the seller, the Portfolio will liquidate those
securities held under the repurchase agreement, which securities constitute
collateral for the seller's obligation to repurchase the securities.

INTEREST RATE RISKS

The Portfolio's securities may be affected by general changes in interest rates
resulting in increases or decreases in the values of the obligations held by the
Portfolio. The values of the obligations held by the Portfolio can be expected
to vary inversely with changes in prevailing interest rates. Although the
investment policies of the Fund and Portfolio are designed to minimize these
changes and to maintain a net asset value of $1.00 per share, there is no
assurance that these policies will be successful.

MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------

INVESTMENT ADVISER

The Portfolio's investment adviser is Kinetics Asset Management, Inc.
("Kinetics" or the "investment adviser"),1311 Mamaroneck Avenue, Suite 130,
White Plains, New York, 10605. The investment adviser conducts investment
research and supervision for the Portfolio and is responsible for the purchase
and sale of securities for the Portfolio's assets. The investment adviser
receives an annual fee from the Portfolio for its services of 0.50% of the
Portfolio's average daily net assets. The investment adviser has entered into a
Research Agreement with Horizon Asset Management, Inc. for which it is
responsible for the payment of all fees owing to Horizon.

Peter B. Doyle is the Chairman of the Board of Directors of Kinetics.
He is also the Chief Investment Strategist. Steven R. Samson is the
President and Chief Executive Officer of Kinetics. Mr. Samson has more than
24 years experience in the mutual fund and financial services industries.
Lee Schultheis is the Managing Director and Chief Operating Officer of
Kinetics. Mr. Schultheis has more than 20 years of experience in the mutual
fund and financial services industries.

VALUATION OF FUND SHARES
- --------------------------------------------------------------------------------
Shares of the Fund are sold at net asset value per share ("NAV"), which is
determined by the Fund as of 12:00 p.m. Eastern time, each day that the New York
Stock Exchange (the "Exchange") is open for unrestricted business. Purchase and
redemption requests are priced at the next NAV calculated after receipt and
acceptance of a completed purchase or redemption request. The NAV is determined
by dividing the value of the Fund's securities, cash and other assets, minus all
expenses and liabilities, by the number of shares outstanding
(assets-liabilities/ # of shares = NAV). The NAV takes into account the expenses
and fees of the Fund, including management, administration and shareholder
servicing fees, which are accrued daily. The NAV of the Portfolio is calculated
in an identical manner as that of the Fund.

The Portfolio will utilize the amortized cost method in valuing its portfolio
securities. This method involves valuing a security at its cost adjusted by a
constant amortization to maturity of any discount or premium, regardless of the
impact of fluctuating interest rates on the market value of the instrument. The
purpose of this method of calculation is to facilitate the maintenance of a
consistent net asset value per share for the Portfolio and the Fund of $1.00.
However, there is no assurance that the $1.00 net asset value per share will be
maintained.

HOW TO PURCHASE SHARES
- --------------------------------------------------------------------------------

IN GENERAL

Shares of the Fund are sold at NAV, without a sales charge, and will be credited
to a shareholder's account at the NAV next computed after an order is received.
The minimum initial investment for both regular accounts and individual
retirement accounts is $1,000. The minimum subsequent investment for both types
of accounts is $100. The Fund reserves the right to reject any purchase order
if, in its opinion, it is in the Fund's best interest to do so. A service fee of
$25.00 will be deducted from your Fund account for any purchases that do not
clear due to insufficient funds.

INVESTING BY TELEPHONE

The minimum telephone purchase is $100. YOU MAY NOT USE TELEPHONE TRANSACTIONS
FOR YOUR INITIAL PURCHASE OF THE FUND'S SHARES.

AUTOMATIC INVESTMENT PLAN

PURCHASE BY MAIL

To purchase Fund shares by mail, simply complete and sign the New Account
Application Form and mail it, along with a check or money order made payable to
THE KINETICS GOVERNMENT MONEY MARKET FUND C/O KINETICS MUTUAL FUNDS, INC. TO:

REGULAR MAIL:
KINETICS MUTUAL FUNDS, INC.
THE KINETICS GOVERNMENT MONEY MARKET FUND
c/o Firstar Mutual Fund Services, LLC
P.O. BOX 701
Milwaukee, WI 53201-0701

OVERNIGHT OR EXPRESS MAIL:
KINETICS MUTUAL FUNDS, INC.
THE KINETICS GOVERNMENT MONEY MARKET FUND
c/o Firstar Mutual Fund Services, LLC
615 East Michigan Street, 3rd Floor
Milwaukee, WI 53202

PURCHASE BY WIRE

Before wiring any funds please call (800) 930-3828 to notify the Fund that the
wire is coming and to verify the proper wire instructions so that the wire is
properly credited when received. The Fund is not responsible for delays
resulting from the banking or Federal Reserve wire system. Please use the
following wiring instructions:

o WIRE TO: Firstar Bank, N.A.
o ABA NUMBER: 0750-00022
o CREDIT: Firstar Mutual Fund Services, LLC
o ACCOUNT: 112-952-137
o FURTHER CREDIT: Kinetics Mutual Funds, Inc.
The Kinetics Government Money Market Fund
(Shareholder Name/Account Registration)
(Shareholder Account Number)

Immediately send a completed New Account Application Form to the Fund at the
above address to have all accurate information recorded to your account.

SUBSEQUENT INVESTMENTS

INDIVIDUAL RETIREMENT ACCOUNTS

INVESTING THROUGH BROKERS OR AGENTS

HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------

IN GENERAL

You may redeem part or all of the Fund's shares on any business day that the
Fund calculates its NAV. To redeem shares, you must contact the Fund either by
mail or by phone to place a redemption order. You should request your redemption
prior to market close to obtain that day's closing NAV. Redemption requests
received after the close of the Exchange will be treated as though received on
the next business day.

WRITTEN REDEMPTION

REGULAR MAIL:
KINETICS MUTUAL FUNDS, INC.
THE KINETICS GOVERNMENT MONEY MARKET FUND
c/o Firstar Mutual Fund Services, LLC
P.O. BOX 701
Milwaukee, WI 53201-0701

OVERNIGHT OR EXPRESS MAIL:
KINETICS MUTUAL FUNDS, INC.
THE KINETICS GOVERNMENT MONEY MARKET FUND
c/o Firstar Mutual Fund Services, LLC
615 East Michigan Street, 3rd Floor
Milwaukee, WI 53202

Requests for redemption in "good order" must:

TELEPHONE REDEMPTION

WIRE REDEMPTION

Wire transfers may be arranged to redeem shares. However, the transfer agent
charges a $12 fee per wire redemption against your account for this service. The
minimum wire redemption amount is $100.

CHECKWRITING

On your New Account Application Form, you may select the option to receive a
checkbook so that you can redeem shares by writing checks against your Fund
account. If you select to use the checkwriting privilege, the initial book will
be given to you at no additional charge. There will be a $5 charge for any
subsequent books. Checks may be made payable in the amount of $250 or more. Any
checks drawn on a joint account will only require one signature. There is a $25
charge for stopping payment of a check upon your request, or if the transfer
agent cannot honor a check due to insufficient funds or other valid reason.

SYSTEMATIC WITHDRAWAL PLAN

If you own shares with a value of $10,000 or more, you may participate in the
Systematic Withdrawal Plan. The Systematic Withdrawal Plan allows you to make
automatic withdrawals from your account at regular intervals (monthly,
quarterly, semi-annually or annually). Money will be transferred from your Fund
account to the account you chose at the interval you select on the New Account
Application Form. If you expect to purchase additional Fund shares, it may not
be to your advantage to participate in the Systematic Withdrawal Plan because of
the possible adverse tax consequences of making contemporaneous purchases and
redemptions. The minimum systematic withdrawal amount is $100.

THE FUND'S RIGHT TO REDEEM AN ACCOUNT

The Fund reserves the right to redeem the shares of any shareholder whose
account balance is less than $500, other than as a result of a decline in the
NAV of the Fund or unless the shareholder is an active participant in the AIP.
The Fund will provide shareholders with written notice 30 days prior to
redeeming the shareholder's account.

IRA REDEMPTION

If you are an IRA shareholder, you must indicate on your redemption request
whether or not to withhold federal income tax. Requests that do not indicate a
preference will be subject to withholding.

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

You can exchange your shares in the Fund for shares of any other Fund offered by
Kinetics Mutual Funds, Inc. If the exchange is requested via telephone, a $5 per
exchange transaction fee will be assessed. You should carefully read the
prospectus of a Fund before exchanging shares into that Fund. Be advised that
exercising the exchange privilege consists of two transactions: a sale of shares
in one Fund and the purchase of shares in another. Further, exchanges may have
certain tax consequences and you could realize short- or long-term capital gains
or losses. Exchanges are generally made only between identically registered
accounts unless you send written instructions with a signature guarantee
requesting otherwise. You should request your exchange prior to market close to
obtain that day's closing NAV. Exchange requests received after the close of the
Exchange will be treated as though received on the next business day. The Fund
reserves the right to limit the number of exchanges requested by shareholders.
The Fund may change or revoke this privilege at any time.

Call (800) 930-3828 to learn more about the other Kinetics Mutual Funds and
about exercising your exchange privilege.

DISTRIBUTION AND TAXES
- --------------------------------------------------------------------------------

DISTRIBUTIONS

Distributions to shareholders of the Fund are generally paid in additional
shares of the Fund, with no sales charge, based on the Fund's NAV as of the
close of business on the record date for such distributions. However, you may
elect on the New Account Application Form to receive all of your distributions
in cash.

The Fund will ordinarily declare dividends from net investment income on a daily
basis and distribute those dividends monthly. The Fund will advise each
shareholder annually of the amounts of dividends from investment company taxable
income reinvested or paid in cash to the shareholder during the calendar year.

If you select cash distributions and the U.S. Postal Service cannot deliver your
distribution checks, or if your distribution checks remain uncashed for six
months, your distribution checks will be reinvested in your account at the then
current NAV of the Fund and your election will be converted to the purchase of
additional shares.

TAXES

Distributions from investment company taxable income are taxable to shareholders
as ordinary income. The tax treatment of distributions treated as ordinary
income will be the same whether the shareholder reinvests the distributions in
additional shares or elects to receive them in cash. Shareholders will be
notified each year of the amounts and nature of dividends and distributions.
Investors should consult their tax advisers for specific information on the tax
consequences of particular types of distributions.

An exchange is not a tax-free transaction. An exchange of shares pursuant to the
Funds' exchange privilege is treated the same as an ordinary sale and purchase
for Federal income tax purposes and you will realize a capital gain or loss.

On the New Account Application Form, you will be asked to certify that your
social security number or taxpayer identification number is correct and that you
are not subject to backup withholding for failing to report income to the IRS.
If you are subject to backup withholding or you did not certify your taxpayer
identification number, the IRS requires each Fund to withhold 31% of any
dividend and redemption or exchange proceeds. The Fund reserves the right to
reject any application that does not include a certified social security or
taxpayer identification number.

DISTRIBUTION OF SHARES
- --------------------------------------------------------------------------------

DISTRIBUTOR

T.O. Richardson Securities, Inc., 2 Bridgewater Road, Farmington, Connecticut,
06032 is the distributor for the shares of the Fund. T.O. Richardson Securities,
Inc. is a registered broker-dealer, a member of the National Association of
Securities Dealers, Inc., and serves as the distributor for numerous registered
investment companies across the United States.

SHAREHOLDER SERVICING AGENT

FUND ADMINISTRATOR

CUSTODIAN, TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND FUND ACCOUNTANT

Firstar Bank, N.A. serves as Custodian for the Fund's cash and securities.
The Custodian does not assist in, and is not responsible for, investment
decisions involving assets of the Fund. Firstar, the Fund's Sub-Administrator,
also acts of the Fund's Transfer Agent, Dividend Disbursing Agent and Fund
Accountant.

UNIQUE CHARACTERISTICS OF MASTER/FEEDER FUND STRUCTURE
- --------------------------------------------------------------------------------

The SAI contains more information about the Fund, the Master/Feeder Fund
Structure and the types of securities in which the Fund may invest.

COUNSEL AND INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

Because the Fund has been operating for less than one fiscal year, there are no
financial highlights to report at this time.

KINETICS MUTUAL FUNDS, INC.
THE KINETICS GOVERNMENT MONEY MARKET FUND

INVESTMENT ADVISER, KINETICS ASSET MANAGEMENT, INC.
ADMINISTRATOR, AND 1311 MAMARONECK AVENUE
SHAREHOLDER WHITE PLAINS, NY 10605
SERVICING AGENT

LEGAL COUNSEL SPITZER & FELDMAN P.C.
405 PARK AVENUE
NEW YORK, NY 10022

INDEPENDENT MCCURDY AND ASSOCIATES CPA'S, INC.
AUDITORS 27955 CLEMENS ROAD
WESTLAKE, OH 44145

TRANSFER AGENT, FIRSTAR MUTUAL FUND SERVICES, LLC
FUND ACCOUNTANT, 615 EAST MICHIGAN STREET
SUB-ADMINISTRATOR MILWAUKEE, WI 53202

CUSTODIAN FIRSTAR BANK, N.A.
615 EAST MICHIGAN STREET
MILWAUKEE, WI 53202

YOU MAY OBTAIN THE FOLLOWING AND OTHER INFORMATION

ON THE FUND FREE OF CHARGE:

STATEMENTS OF ADDITIONAL INFORMATION

(SAI) DATED ______________, 2000

The SAI for the Fund provides more details about the Fund's
policies and management. The Fund's SAI is incorporated by
reference into this Prospectus.

ANNUAL AND SEMI-ANNUAL REPORT
The Fund's annual and semi-annual reports provide the most recent financial
reports and portfolio listings. The annual report contains a discussion of the
market conditions and investment strategies that affected the Fund's
performance during the previous fiscal year.

TELEPHONE: (800) 930-3828

MAIL: KINETICS MUTUAL FUNDS, INC.
C/O FIRSTAR MUTUAL FUND SERVICES, LLC
P.O. BOX 701
MILWAUKEE, WI 53201-0701

INTERNET: http://www.sec.gov (text only version)
http://www.kineticsfunds.com

SEC: You may review and obtain copies of Kinetic Mutual Funds information
(including the SAIs) at the SEC Public Reference Room in Washington, D.C. Please
call the SEC at 1-202-942-8090 for information relating to the operation of the
Public Reference Room. Reports and other information about the Fund are
available on the EDGAR Database on the SEC's Internet website at
HTTP://WWW.SEC.GOV. Copies of the information may be obtained, after paying a
duplicating fee, by electronic request at the following E-mail address:
[email protected], or by writing the Public Reference Section, Securities and
Exchange Commission, Washington, D.C. 20549-0102.

1940 Act File No. 811-09303

THE INTERNET FUND
a series of Kinetics Mutual Funds, Inc.
1311 Mamaroneck Avenue
White Plains, New York 10605
(800) 930-3828

_______________, 2000

STATEMENT OF ADDITIONAL INFORMATION

The audited financial statements of the Internet Fund (the "Fund") for the
fiscal year ended December 31, 1999 are incorporated by reference to the Fund's
1999 Annual Report.

This Statement of Additional Information ("SAI") provides general information
about the Fund and the Internet Portfolio (the "Portfolio"). The Fund is a
series of Kinetics Mutual Funds, Inc. (the "Company"), a Maryland corporation.
The Portfolio is a series of Kinetics Portfolio Trust. (the "Trust"), a Delaware
business trust. This SAI is not a prospectus and should be read in conjunction
with the Fund's current Prospectus dated _______________, 2000, as supplemented
and amended from time to time, which is incorporated hereto by reference. To
obtain a copy of the Prospectus, please write the Fund at the address set forth
above or call the telephone number shown above.

The Fund, 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 the Portfolio. The Portfolio is an
open-end non-diversified investment company with investment objectives,
strategies and policies that are substantially identical to those of the Fund.
To obtain a copy of the Statement of Additional Information dated ________, 2000
providing general information about the Portfolio, which is incorporated hereto
by reference, please write the Portfolio at the address set forth above or call
the telephone number shown above. The Statement of Additional Information of the
Trust is not a prospectus and should be read in conjunction with the Portfolio's
current Prospectus dated _______________, 2000, as supplemented and amended from
time to time, which is incorporated hereto by reference.

THE INTERNET FUND

The Fund.......................................................................3
Investment Objective, Strategies, and Risks....................................3
Investment Policies and Associated Risks.......................................3
Investment Restrictions........................................................6
Temporary Investments..........................................................7
Portfolio Turnover.............................................................7
Management of the Fund.........................................................7
Control Persons and Principal Holders of Securities...........................10
Investment Adviser............................................................11
Administrative Services.......................................................12
Custodian.....................................................................12
Capitalization................................................................13
Valuation of Shares...........................................................13
Purchasing Shares.............................................................14
Redemption of Shares..........................................................14
Brokerage.....................................................................15
Taxes.........................................................................15
Performance Information.......................................................16
Independent Auditors..........................................................18
Financial Statements..........................................................18
Appendix......................................................................19

THE FUND
- --------------------------------------------------------------------------------

The Fund is a series of Kinetics Mutual Funds, Inc., a Maryland corporation,
incorporated on March 26, 1999. The Fund's principal office is located at 1311
Mamaroneck Avenue, White Plains, New York 10605. The Fund is a non-diversified,
open-end management investment company.

INVESTMENT OBJECTIVE, STRATEGIES, AND RISKS
- --------------------------------------------------------------------------------

The Fund's primary investment objective is long-term growth of capital. The Fund
is designed for long-term investors who understand and are willing to accept the
risk of loss involved in investing in a mutual fund seeking long-term capital
growth. The Fund seeks to achieve its investment objective by investing all of
its investable assets in the Portfolio. Except during temporary defensive
periods, the Portfolio invests at least 65% of its total assets in securities of
companies that provide products or services designed for the Internet.

This Fund should not be used as a trading vehicle.

INVESTMENT POLICIES AND ASSOCIATED RISKS
- --------------------------------------------------------------------------------

The Fund's and the Portfolio's investment policies and risks are substantially
identical. The following paragraphs provide a more detailed description of the
Fund's and Portfolio's investment policies and risks identified in the
Prospectus. Unless otherwise noted, the policies described in this SAI are not
fundamental and may be changed by the Board of Directors of the Fund and the
Board of Trustees of the Trust, respectively.

COMMON AND PREFERRED STOCK

Common stocks are units of ownership of a corporation. Preferred stocks are
stocks that often pay dividends at a specific rate and have a preference over
common stocks in dividend payments and liquidation of assets. Some preference
stocks may be convertible into common stock. Convertible securities are
securities that may be converted into or exchanged for a specified amount of
common stock of the same or different issuer within a particular period of time
at a specified price or formula.

CONVERTIBLE DEBT SECURITIES

The Portfolio may invest in debt securities convertible into common stocks. Debt
purchased by the Portfolio will consist of obligations of medium-grade or
higher, having at least adequate capacity to pay interest and repay principal.
Non-convertible debt obligations will be rated BBB or higher by S&P, or Baa or
higher by Moody's. Convertible debt obligations will be rated B or higher by S&P
or B or higher by Moody's. Securities rated Baa by Moody's are considered by
Moody's to be medium-grade securities and have adequate capacity to pay
principal and interest. Bonds in the lowest investment grade category (BBB) have
speculative characteristics, with changes in the economy or other circumstances
more likely to lead to a weakened capacity of the bonds to make principal and
interest payments than would occur with bonds rated in higher categories.
Securities rated B are referred to as "high-risk" securities, generally lack
characteristics of a desirable investment, and are deemed speculative with
respect to the issuer's capacity to pay interest and repay principal over a long
period of time. See "Appendix" to this Statement of Additional Information for a
description of debt security ratings.

FIXED-INCOME SECURITIES

The fixed-income securities in which the Portfolio may invest are generally
subject to two kinds of risk: credit risk and market risk.

CREDIT RISK relates to the ability of the issuer to meet interest and principal
payments, as they come due. The ratings given a security by Moody's and S&P
provide a generally useful guide as to such credit risk. The lower the rating
given a security by such rating service, the greater the credit risk such rating
service perceives to exist with respect to such security. Increasing the amount
of Portfolio assets invested in unrated or lower-grade securities, while
intended to increase the yield produced by those assets, will also increase the
credit risk to which those assets are subject.

MARKET RISK relates to the fact that the market values of securities in which
the Portfolio may invest generally will be affected by changes in the level of
interest rates. An increase in interest rates will tend to reduce the market
values of such securities, whereas a decline in interest rates will tend to
increase their values. Medium- and lower-rated securities (Baa or BBB and lower)
and non-rated securities of comparable quality tend to be subject to wilder
fluctuations in yields and market values than higher-rated securities.
Medium-rated securities (those rated Baa or BBB) have speculative
characteristics while lower-rated securities are predominantly speculative. The
Portfolio is not required to dispose of debt securities whose ratings are
downgraded below these ratings subsequent to the Portfolio's purchase of the
securities. Relying in part on ratings assigned by credit agencies in making
investments will not protect the Portfolio from the risk that fixed-income
securities in which the Portfolio invests will decline in value, since credit
ratings represent evaluations of the safety of principal, dividend and interest
payments on preferred stocks and debt securities, not the market values of such
securities, and such ratings may not be changed on a timely basis to reflect
subsequent events.

At no time will the Portfolio have more than 5% of its total assets invested in
any fixed-income securities that are unrated or rated below investment grade
either at the time of purchase or as a result of a reduction in rating after
purchase.

DEPOSITARY RECEIPTS. The Portfolio may invest in American Depositary
Receipts ("ADRs") or other forms of depositary receipts, such as International
Depositary Receipts ("IDRs"). Depositary receipts are typically issued in
connection with a U.S. or foreign bank or trust company and evidence ownership
of underlying securities issued by a foreign corporation. Investments in these
types of securities involve certain inherent risks generally associated with
investments in foreign securities, including the following:

POLITICAL AND ECONOMIC FACTORS. Individual foreign economies of certain
countries may differ favorably or unfavorably from the United States economy in
such respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, diversification and balance of payments
position. The internal politics of certain foreign countries may not be as
stable as those of the United States. Governments in certain foreign countries
also continue to participate to a significant degree, through ownership interest
or regulation, in their respective economies. Action by these governments could
include restrictions on foreign investment, nationalization, expropriation of
goods or imposition of taxes, and could have a significant effect on market
prices of securities and payment of interest. The economies of many foreign
countries are heavily dependent upon international trade and are accordingly
affected by the trade policies and economic conditions of their trading
partners. Enactment by these trading partners of protectionist trade legislation
could have a significant adverse effect upon the securities markets of such
countries.

CURRENCY FLUCTUATIONS. A change in the value of any foreign currency
against the U.S. dollar will result in a corresponding change in the U.S. dollar
value of an ADR's underlying portfolio securities denominated in that currency.
Such changes will affect the Portfolio to the extent that the Portfolio is
invested in ADR's comprised of foreign securities.

TAXES. The interest and dividends payable on certain foreign securities
comprising an ADR may be subject to foreign withholding taxes, thus reducing the
net amount of income to be paid to the Portfolio and that may, ultimately, be
available for distribution to the Portfolio's and Fund's shareholders.

MASTER/FEEDER FUND STRUCTURE

Unlike other mutual funds which directly acquire and manage their own portfolio
securities, the Fund invests all of its investable assets in the Portfolio, a
separately registered investment company. Accordingly, a shareholder's interest
in the Portfolio's underlying investment securities is indirect. In addition to
selling a beneficial interest to the Fund, the Portfolio could also sell
beneficial interests to other mutual funds or institutional investors. Such
investors would invest in the Portfolio on the same terms and conditions and
would pay a proportionate share of the Portfolio's expenses. However, other
mutual fund or institutional investors in the Portfolio are not required to sell
their shares at the same public offering price as the Fund, and might bear
different levels of ongoing expenses than the Fund. Shareholders of the Fund
should be aware that these differences would result in differences in returns
experienced by the different mutual funds or institutional investors of the
Portfolio. Such differences in return are also present in other mutual fund
structures. In addition, a Master/Feeder Fund Structure may serve as an
alternative for large, institutional investors in the Fund who may prefer to
offer separate, proprietary investment vehicles and who otherwise might
establish such vehicles outside of the Fund's current operational structure. The
Master/Feeder Fund Structure may also allow the Fund to stabilize its expenses
and achieve certain operational efficiencies. No assurance can be given,
however, that the Master/Feeder Fund Structure will result in the Fund
stabilizing its expenses or achieving greater operational efficiencies.

The Fund's methods of operation and shareholder services are not materially
affected by its investment in the Portfolio, except that the assets of the Fund
are managed as part of a larger pool of assets. Since the Fund invests all of
its assets in the Portfolio, it holds only beneficial interests in the
Portfolio; the Portfolio invests directly in individual securities of other
issuers. The Fund otherwise continues its normal operation. The Board of
Directors retains its right to withdraw the Fund's investment from the Portfolio
at any time it determines that such withdrawal would be in the best interest of
the Fund's shareholders; the Fund would then resume investing directly in
individual securities of other issuers or invest in another portfolio of the
Trust.

Certain changes in the Portfolio's objective, policies or restrictions may
require the Company to withdraw the Fund's interest in the Portfolio. Any
withdrawal could result in a distribution in kind of portfolio securities (as
opposed to a cash distribution ) from the Portfolio. The Fund could incur
brokerage fees or other transaction costs in converting such securities to cash.
In addition, a distribution in kind may result in a less diversified portfolio
of investments or adversely affect the liquidity of the Fund.

Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws from the Portfolio , the remaining funds may experience higher pro
rata operating expenses, thereby producing lower returns. Additionally, the
Portfolio may become less diverse, resulting in increased portfolio risk.
However, this possibility also exists for traditionally structured funds which
have large or institutional investors.

Funds with a greater pro rata ownership in the Portfolio could have effective
voting control of the operations of the Portfolio. Whenever the Company is
requested to vote on matters pertaining to the Portfolio, the Company will hold
a meeting of shareholders of the Fund and will cast all of its votes in the
Portfolio in the same proportion as do the Fund's shareholders. Shares of the
Fund for which no voting instructions have been received will be voted in the
same proportion as those shares for which instructions are received.

INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------

Unless otherwise noted, the Fund and the Portfolio have adopted and are subject
to substantially identical fundamental investment restrictions. The investment
restrictions of the Fund may be changed only with the approval of the holders of
a majority of the Fund's outstanding voting securities. The investment
restrictions of the Portfolio may be changed only with the approval of the
holders of a majority of the Portfolio's outstanding voting securities.

1. The Portfolio will not act as underwriter for securities of other issuers.

2. The Portfolio will not make loans.

3. With respect to 50% of its total assets, the Portfolio will not invest in
the securities of any issuer if as a result the Portfolio holds more than
10% of the outstanding securities or more than 10% of the outstanding
voting securities of such issuer. This investment restriction shall not
apply to the Fund.

4. The Portfolio will not borrow money or pledge, mortgage, or hypothecate its
assets except to facilitate redemption requests that might otherwise
require the untimely disposition of portfolio securities and then only from
banks and in amounts not exceeding the lesser of 10% of its total assets
valued at cost or 5% of its total assets valued at market at the time of
such borrowing, pledge, mortgage, or hypothecation and except that the
Portfolio may enter into futures contracts and related options.

5. The Portfolio will not invest more than 10% of the value of its net assets
in illiquid securities, restricted securities, and other securities for
which market quotations are not readily available.

6. The Portfolio will not invest in the securities of any one industry except
the Internet and Internet-related industries, with the exception of
securities issued or guaranteed by the U.S. Government, its agencies, and
instrumentality's, if as a result, more than 20% of the Portfolio's total
assets would be invested in the securities of such industries. Except
during temporary defensive periods, at least 65% of the Portfolio's total
assets will be invested in the securities of domestic and foreign companies
that are engaged in the Internet and Internet-related activities.

7. The Portfolio will not purchase or sell commodities or commodity contracts,
or invest in oil, gas or mineral exploration or development programs or
real estate except that the Portfolio may purchase and sell securities of
companies that deal in oil, gas, or mineral exploration or development
programs or interests therein.

8. The Portfolio will not issue senior securities.

TEMPORARY INVESTMENTS
- --------------------------------------------------------------------------------

Due to the changing nature of the Internet and related companies, the national
economy and market conditions, the Fund or the Portfolio may, as a temporary
defensive measure, invest without limitation, in short-term debt securities and
money market securities with a rating of A2-P2 or higher.

In order to have funds available for redemption and investment opportunities,
the Portfolio may also hold a portion of its assets in cash or U.S. short-term
money market instruments. Certificates of deposit purchased by the Portfolio
will be those of U.S. banks having total assets at the time of purchase in
excess of $1 billion, and bankers' acceptances purchased by the Portfolio will
be guaranteed by U.S. or foreign banks having total assets at the time of
purchase in excess of $1 billion. The Portfolio anticipates that not more than
10% of its total assets will be so invested or held in cash at any given time,
except when the Portfolio is in a temporary defensive posture.

PORTFOLIO TURNOVER
- --------------------------------------------------------------------------------

In order to qualify for the beneficial tax treatment afforded regulated
investment companies, and to be relieved of Federal tax liabilities, both the
Fund and the Portfolio must distribute substantially all of their net income to
shareholders generally on an annual basis. Thus, the Portfolio may have to
dispose of portfolio securities under disadvantageous circumstances to generate
cash or borrow cash in order to satisfy the distribution requirement. The
Portfolio does not trade in securities for short-term profits but, when
circumstances warrant, securities may be sold without regard to the length of
time they have been held.

MANAGEMENT OF THE FUND AND THE PORTFOLIO
- --------------------------------------------------------------------------------

BOARD OF DIRECTORS/BOARD OF TRUSTEES

The management and affairs of the Fund and the Portfolio are supervised by the
Board of Directors and Board of Trustees of the Company and the Trust,
respectively. Each Board consists of the same eight individuals, five of whom
are not "interested persons" of the Fund or the Portfolio as that term is
defined in the Investment Company Act of 1940, as amended (the "1940 Act"). The
Directors are fiduciaries for the Fund's shareholders and are governed by the
laws of the State of Maryland in this regard. The Trustees are fiduciaries for
the Portfolio's shareholders and are governed by the laws of the State of
Delaware in this regard They establish policies for the operation of the Fund
and the Portfolio and appoint the officers who conduct the daily business of the
Fund and the Portfolio. Officers and Directors/Trustees of the Company and the
Trust are listed below with their addresses, present positions with the Company
and Trust and principal occupations over at least the last five years.

<TABLE>
<CAPTION>
- ----------------------------------- --------- ------------------------ -------------------------------------------
NAME AND ADDRESS AGE POSITION PRINCIPAL OCCUPATION
DURING THE PAST FIVE YEARS
- ----------------------------------- --------- ------------------------ -------------------------------------------
<S> <C> <C> <C>
*Steven R. Samson 45 President & Chairman President and CEO, Kinetics Asset
342 Madison Avenue of the Boards Management, Inc. (1999 to Present);
New York, NY 10173 President, The Internet Fund, Inc. (1999
to Present); Managing Director, Chase
Manhattan Bank (1993 to 1999).
- ----------------------------------- --------- ------------------------ -------------------------------------------
*Kathleen Campbell 34 Director/Trustee Attorney, Campbell and Campbell,
2 Madison Avenue Counselors-at-Law (1995 to Present).
Valhalla, NY 10595
- ----------------------------------- --------- ------------------------ -------------------------------------------
*Murray Stahl 46 Director/Trustee President, Horizon Asset Management, an
342 Madison Avenue investment adviser (1994 to Present).
New York, NY 10173
- ----------------------------------- --------- ------------------------ -------------------------------------------
Steven T. Russell 36 Independent Attorney and Counselor at Law,
146 Fairview Avenue Director/Independent Steven Russell Law Firm (1994 to
Bayport, NY 117045 Trustee Present); Professor of Business Law,
Suffolk County Community College (1997 to
Present).
- ----------------------------------- --------- ------------------------ -------------------------------------------
Douglas Cohen, C.P.A. 36 Independent Wagner, Awerma & Strinberg, LLP Certified
6 Saywood Lane Director/Independent Public Accountant (1997 to present); Leon
Stonybrook, NY 11790 Trustee D. Alpern & Co. (1985 to 1997)
- ----------------------------------- --------- ------------------------ -------------------------------------------
William J. Graham 37 Independent Attorney, Bracken & Margolin, LLP (1997
20 Franklin Boulevard Director/Independent to Present).
Long Beach, NY 11561 Trustee Gabor & Gabor (1995 to 1997)
- ----------------------------------- --------- ------------------------ -------------------------------------------
Joseph E. Breslin 45 Independent Senior Vice President, Marketing & Sales,
One State Street Director/Independent IBJ Whitehall Financial Group, a
New York, NY 10004 Trustee financial services company (1999 to
Present); formerly President, J.E. Breslin &
Co., an investment management consulting
firm (1994 to 1999).
- ----------------------------------- --------- ------------------------ -------------------------------------------
John J. Sullivan 68 Independent Retired; Senior Advisor, Long Term Credit
31 Hemlock Drive Director/Independent Bank of Japan, Ltd.; Executive Vice
Sleepy Hollow, NY 10591 Trustee President, LTCB Trust Company.
- ----------------------------------- --------- ------------------------ -------------------------------------------
Lee W. Schultheis 43 Vice President & Managing Director & COO of Kinetics Asset
342 Madison Avenue Treasurer of each of Management (1999 to Present); President &
New York, NY 10173 the Company and the Director of Business. Development, Vista
Trust Fund Distributors, Inc. (1995 to 1999);
Managing Director, Forum Financial Group,
a mutual fund services company.
- ----------------------------------- --------- ------------------------ -------------------------------------------
</TABLE>

* "Interested persons" as defined in the 1940 Act.

COMPENSATION

For their service as Directors and Trustees, the Independent
Directors/Independent Trustees receive a fee of $5000 per year and $1000 per
meeting attended, as well as reimbursement for expenses incurred in connection
with attendance at such meetings. The "interested persons" of the Fund or
Portfolio receive no compensation for their service as Directors or Trustees.
None of the executive officers receive compensation from the Fund or the
Portfolio. The following tables provide compensation information for the
Independent Directors/Independent Trustees for the year-ended December 31, 1999.

<TABLE>
<CAPTION>
KINETICS MUTUAL FUNDS, INC.
COMPENSATION TABLE
- ---------------------------- ----------------- ----------------------- ---------------------- ------------------------
NAME AND POSITION AGGREGATE PENSION OR RETIREMENT ESTIMATED ANNUAL TOTAL COMPENSATION
COMPENSATION BENEFITS ACCRUED AS BENEFITS UPON FROM FUND AND FUND
FROM FUND PART OF FUND EXPENSES RETIREMENT COMPLEX PAID TO
DIRECTORS
- ---------------------------- ----------------- ----------------------- ---------------------- ------------------------
<S> <C> <C> <C> <C>
*Steven R. Samson None None None None
Chairman and Director

*Kathleen Campbell None None None None
Director

**Murray Stahl $3,844 None None $3,844
Director

Steven T. Russell $5,500 None None $5,500
Independent Director

Douglas Cohen, CPA $6,094 None None $6,094
Independent Director

William J. Graham $5,500 None None $5,500
Independent Director

Joseph E. Breslin $4,500 None None $4,500
Independent Director

John J. Sullivan $5,500 None None $5,500
Independent Director
- ---------------------------- ----------------- ----------------------- ---------------------- ------------------------
</TABLE>

* "Interested person" as defined under the 1940 Act.

** Murray Stahl became an "interested person" of the Fund (as defined under the
1940 Act) as of December 15, 1999. Previous to becoming an interested person,
Mr. Stahl received $3844 as total compensation from the Fund and Fund complex
for being an independent director.

<TABLE>
<CAPTION>
KINETICS PORTFOLIO TRUST
COMPENSATION TABLE
- ---------------------------- ----------------- ----------------------- ---------------------- ------------------------
NAME AND POSITION AGGREGATE PENSION OR RETIREMENT ESTIMATED ANNUAL TOTAL COMPENSATION
COMPENSATION BENEFITS ACCRUED AS BENEFITS UPON FROM PORTFOLIO AND
FROM PORTFOLIO PART OF PORTFOLIO RETIREMENT PORTFOLIO COMPLEX PAID
EXPENSES TO TRUSTEES
- ---------------------------- ----------------- ----------------------- ---------------------- ------------------------
<S> <C> <C> <C> <C>
*Steven R. Samson None None None None
Chairman and Trustee

*Kathleen Campbell None None None None
Trustee

*Murray Stahl None None None None
Trustee

Steven T. Russell None None None None
Independent Trustee

Douglas Cohen, CPA None None None None
Independent Trustee

William J. Graham None None None None
Independent Trustee

Joseph E. Breslin None None None None
Independent Trustee

John J. Sullivan None None None None
Independent Trustee
- ---------------------------- ----------------- ----------------------- ---------------------- ------------------------
</TABLE>

* "Interested person" as defined under the 1940 Act.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- --------------------------------------------------------------------------------

The following table provides the name and address of any person who owns of
record or beneficially 5% or more of the outstanding shares of the Fund as of
_________________, 2000 (a "principal shareholder"). A control person is one who
owns beneficially or through controlled companies more than 25% of the voting
securities of a company or acknowledges the existence of control.

[TO BE UPDATED]

<TABLE>
<CAPTION>
- ---------------------------- -------------------------- -------------------------- --------------------------
NAME AND ADDRESS SHARES % OWNERSHIP TYPE OF OWNERSHIP
- ---------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
National Financial
Services Corp. 9,106,087.836 40.76% Record
200 Liberty Street
New York, NY 10281

National Finanical
Services Corp. 1,726,853.375 8.30% Record
55 Water Street
New York, NY 10041

DLJ/Pershing Group
One Pershing Plaza 1,189,201.848 5.71% Record
Jersey City, NJ 07399
- ---------------------------- -------------------------- -------------------------- --------------------------
</TABLE>

MANAGEMENT OWNERSHIP

[TO BE PROVIDED]

INVESTMENT ADVISER
- --------------------------------------------------------------------------------

Kinetics Asset Management, Inc. ("Kinetics" or the "Adviser") is a New York
corporation that serves as the investment adviser to the Portfolio. Peter B.
Doyle is the Chairman of the Board of Directors and Chief Investment Strategist
of Kinetics. Steven R. Samson is the President and Chief Executive Officer of
Kinetics. Mr. Samson has over 24 years experience in the mutual funds and
financial services industries. Mr. Lee Schultheis is the Managing Director and
Chief Operating Officer of Kinetics and has more than 20 years experience in the
mutual funds and financial services industries.

On _________________ the Board of the Trustees of the Trust, on behalf of the
Portfolio, approved a management and advisory contract (the "Agreement") with
Kinetics. This Agreement continues on a year-to-year basis provided that
specific approval is voted at least annually by the Board of Trustees of the
Trust or by the vote of the holders of a majority of the outstanding voting
securities of the Portfolio. In either event, it must also be approved by a
majority of the trustees of the Portfolio who are neither parties to the
Agreement nor "interested persons" as defined in the 1940 Act at a meeting
called for the purpose of voting on such approval. The Adviser's investment
decisions are made subject to the direction and supervision of the Board of
Trustees. The Agreement may be terminated at any time, without the payment of
any penalty, by the Board of Trustees or by vote of a majority of the
outstanding voting securities of the Portfolio. Ultimate decisions as to the
investment policy and as to individual purchases and sales of securities are
made by the Portfolio's officers and the Trustees.

Under the Agreement, Kinetics furnishes investment advice to the Portfolio by
continuously reviewing the portfolio and recommending to the Portfolio to what
extent, securities should be purchased or disposed. Pursuant to the Agreement,
the Adviser:

(1) renders research, statistical and advisory services to the Portfolio;
(2) makes specific recommendations based on the Portfolio's investment
requirements;
(3) pays the salaries of those of the Portfolio's employees who may be officers
or directors or employees of the investment adviser.

For these services, the Portfolio has agreed to pay to Kinetics an annual fee of
1.25% of the Portfolio's average daily net assets. All fees are computed on the
average daily closing net asset value ("NAV") of the Portfolio and are payable
monthly. The fee is higher than the fee paid by most other funds.

Kinetics has also entered into a Research Agreement with Horizon Assets
Management, Inc. ("Horizon") for which it is solely responsible for the payment
of all fees owing to Horizon.

Fees of the custodian, administrator, fund accountant and transfer agent are
paid by the Fund or by the Portfolio or by the Fund and the Portfolio jointly,
as more fully described below. The Fund pays all other expenses, including:

o fees and expenses of directors not affiliated with the Adviser;
o legal and accounting fees;
o interest, taxes, and brokerage commissions; and
o record keeping and the expense of operating its offices.

The Adviser receives a shareholder servicing fee from the Fund pursuant to a
Shareholder Servicing Agreement in an amount equal to 0.25% of the Fund's
average daily net assets. The Adviser 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 Adviser and which
perform shareholder servicing functions and maintenance of shareholder accounts
on behalf of their clients who own shares of the Fund.

ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------

Kinetics also serves as Administrator of the Fund and the Portfolio. Under an
Administrative Services Agreement with the Fund, Kinetics will be entitled to
receive an annual administration fee equal to ___% of the Fund's average daily
net assets and ___% of the Portfolio's average daily net assets of which the
Adviser 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 Portfolio by Firstar.

Firstar, located at 615 East Michigan Street, Milwaukee, Wisconsin 53202, also
serves as the Fund's accountant and transfer agent. As such, Firstar provides
certain shareholder services and record management services as well as acts as
the Portfolio's dividend disbursement agent.

Administrative services include, but are not limited to, providing office space,
equipment, telephone facilities, various personnel, including clerical and
supervisory, and computers, as is necessary or beneficial to:

o establish and maintain shareholders' accounts and records,
o process purchase and redemption transactions,
o process automatic investments of client account cash balances,
o answer routine client inquiries regarding the Portfolio,
o assist clients in changing dividend options,
o account designations, and addresses, and
o providing such other services as the Portfolio may reasonably request.

CUSTODIAN
- --------------------------------------------------------------------------------

Firstar Bank, N.A. ("Firstar Bank") is custodian for the securities and cash of
the Portfolio. Under a Custody Agreement, Firstar Bank holds the Portfolio's
assets in safekeeping and keeps all necessary records and documents relating to
its duties. Firstar Bank receives an annual fee equal to 0.010% of the
Portfolio's average daily net assets with a minimum annual fee of $3,000.

Firstar Bank has also serves as custodian of the shares of beneficial interest
of the Portfolio held by the Fund pursuant to a Sub-Custody Agreement under
which Firstar Bank is responsible for the safekeeping of the Fund's shares of
beneficial interest and all necessary records and documents relating to such
shares.

CAPITALIZATION
- --------------------------------------------------------------------------------

The authorized capitalization of the Kinetics Mutual Funds, Inc. consists of 1
billion shares of common stock of $0.001 par value per share. Each share has
equal dividend, distribution and liquidation rights. There are no conversion or
preemptive rights applicable to any shares of the Fund. All shares issued are
fully paid and non-assessable. Each holder of common stock has one vote for each
share held. Voting rights are non-cumulative.

The authorized capitalization of Kinetics Portfolio Trust consists of 1 billion
shares of beneficial interest of $0.001 par value per share. Each share has
equal dividend, distribution and liquidation rights. There are no conversion or
preemptive rights applicable to any shares of the Fund. All shares issued are
fully paid and non-assessable. Each holder of beneficial interest has one vote
for each share held. Voting rights are non-cumulative.

VALUATION OF SHARES
- --------------------------------------------------------------------------------

Shares of the Fund are sold on a continual basis at the NAV per share next
computed following acceptance of an order by the Fund. The Fund's NAV per share
for the purpose of pricing purchase and redemption orders is determined at the
close of normal trading (currently 4:00 p.m. EST) on each day the New York Stock
Exchange ("NYSE") is open for trading. The NYSE is closed on the following
holidays: New Year's Day, Martin Luther King, Jr.'s Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.

The Portfolio's investment securities are valued each day at the last quoted
sales price on the securities principal exchange. If market quotations are not
readily available, securities will be valued at their fair market value as
determined in good faith in accordance with procedures approved by the Board of
Trustees. The Portfolio may use independent pricing services to assist in
calculating the NAV of the Portfolio's shares.

The Portfolio's investment securities that are listed on a U.S. securities
exchange or NASDAQ for which market quotations are readily available are valued
at the last quoted sale price on the day the valuation is made. Price
information on listed securities is taken from the exchange where the security
is primarily traded. Options, futures, unlisted U.S. securities and listed U.S.
securities not traded on the valuation date for which market quotations are
readily available are valued at the mean of the most recent quoted bid and asked
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 if it reflects fair value. In the event that amortized cost does not
reflect market, market prices as determined above will be used. 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 Portfolio.

PURCHASING SHARES
- --------------------------------------------------------------------------------

Shares of the Fund are sold in a continuous offering and may be purchased on any
business day though authorized investment dealers or directly from the Fund.
Except for the Fund itself, only investment dealers that have an effective sales
agreement with the Fund are authorized to sell shares of the Fund.

STOCK CERTIFICATES AND CONFIRMATIONS

The Fund does not intend to issue stock certificates representing shares
purchased. Confirmations of the opening of an account and of all subsequent
transactions in the account are forwarded by the Fund to the shareholder's
address of record.

SPECIAL INCENTIVE PROGRAMS

At various times the Fund may implement programs under which a dealer's sales
force may be eligible to win nominal awards for certain sales efforts or
recognition program conforming to criteria established by the Fund, or
participate in sales programs sponsored by the Fund. In addition, the Adviser,
in its discretion may from time to time, pursuant to objective criteria
established by the Adviser, sponsor programs designed to reward selected dealers
for certain services or activities that are primarily intended to result in the
sale of shares of the Fund. These program will not change the price you pay for
your shares or the amount that the Fund will receive from such sale.

INVESTING THROUGH AUTHORIZED BROKERS OR DEALERS

The Fund may authorize one or more brokers to accept purchase orders on a
shareholder's behalf. Brokers are authorized to designate intermediaries to
accept orders on the Fund's behalf. An order is deemed to be received when an
authorized broker or agent accepts the order. Orders will be priced at the
Fund's NAV next computed after they are accepted by an authorized broker or
agent.

If any authorized dealer receives an order of at least $1,000, the dealer may
contact the Fund directly. Orders received by dealers by the close of trading on
the NYSE on a business day that are transmitted to the Fund by 4:00 p.m. EST on
that day will be effected at the NAV per share determined as of the close of
trading on the NYSE on that day. Otherwise, the orders will be effected at the
next determined NAV. It is the dealer's responsibility to transmit orders so
that they will be received by the Distributor before 4:00 p.m. EST.

REDEMPTION OF SHARES
- --------------------------------------------------------------------------------

To redeem shares, shareholders may send a written request in "good order" to:

The Internet Fund
Kinetics Mutual Funds, Inc.
c/o Firstar Mutual Fund Services
P.O. Box 701
Milwaukee, WI 53201-0701
(800) 930-3828

A written request in "good order" to redeem shares must include:

o the shareholder's name,
o the name of the Fund,
o the account number,
o the share or dollar amount to be redeemed, and
o signatures by all shareholders on the account.

The proceeds will be wired to the bank account of record or sent to the address
of record within seven days.

If shareholders request redemption proceeds be sent to an address other than
that on record with the funds or proceeds made payable other than to the
shareholder(s) of record, the written request must have signatures guaranteed
by:

o a trust company or commercial bank whose deposits are insured by the BIF,
which is administered by the FDIC;

o a member of the New York, Boston, American, Midwest, or Pacific Stock
Exchange;

o a savings bank or savings association whose deposits are insured by the
SAIF, which is administered by the FDIC; or

o any other "eligible guarantor institution" as defined in the Securities
Exchange Act of 1934.

The Fund does not accept signatures guaranteed by a notary public.

The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.

BROKERAGE
- --------------------------------------------------------------------------------

The Adviser requires all brokers to effect transactions in portfolio securities
in such a manner as to get prompt execution of the orders at the most favorable
price.

The Adviser selects brokers who, in addition to meeting primary requirements of
execution and price, may furnish statistical or other factual information and
services, which, in the opinion of the Adviser, are helpful or necessary to the
Portfolio's normal operations. Information or services may include economic
studies, industry studies, statistical analysis, corporate reports or other
forms of assistance to the Portfolio or its Adviser. No effort is made to
determine the value of these services or the amount they might have reduced
expenses of the Adviser.

Other than set forth above, the Portfolio has no fixed policy, formula, method
or criteria that it uses in allocating brokerage business to brokers furnishing
these materials and services. The Board of Trustees evaluates and reviews the
reasonableness of brokerage commissions paid semiannually.

TAXES
- --------------------------------------------------------------------------------

Under provisions of Sub-Chapter M of the Internal Revenue Code of 1986 as
amended, the Fund, by paying out substantially all of its investment income and
realized capital gains, has been and intends to continue to be relieved of
federal income tax on the amounts distributed to shareholders. In order to
qualify as a "regulated investment company" under Sub-Chapter M, at least 90% of
the Fund's income must be derived from dividends, interest and gains from
securities transactions. No more than 50% of the Fund's assets may be in
security holdings that exceed 5% of the total assets of the Fund at the time of
purchase.

Distribution of any net long-term capital gains realized by the Fund will be
taxable to the shareholder as long-term capital gains, regardless of the length
of time Fund shares have been held by the investor. All income realized by the
Fund, including short-term capital gains, will be taxable to the shareholder as
ordinary income. Dividends from net income will be made annually or more
frequently at the discretion of the Company's Board of Directors. Dividends
received shortly after purchase of shares by an investor will have the effect of
reducing the NAV of his shares by the amount of such dividends or distributions
and, although in effect a return of capital, are subject to federal income
taxes.

The Fund is required by federal law to withhold 31% of reportable payments
(which may include dividends, capital gains, distributions, and redemptions)
paid to shareholders who have not complied with IRS regulations. In order to
avoid this withholding requirement, you must certify on a W-9 tax form supplied
by the Fund that your Social Security or Taxpayer Identification Number provided
is correct and that you are not currently subject to back-up withholding, or
that you are exempt from back-up withholding.

PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

TOTAL RETURN

Average annual total return quotations used in the Fund's advertising and
promotional materials are calculated according to the following formula:

P(1+T)n = ERV

where P equals a hypothetical initial payment of $1,000; T equals average annual
total return; n equals the number of years; and ERV equals the ending redeemable
value at the end of the period of a hypothetical $1,000 payment made at the
beginning of the period.

Under the foregoing formula, the time periods used in advertising will be based
on rolling calendar quarters, updated to the last day of the most recent quarter
prior to submission of the advertising for publication. Average annual total
return, or "T" in the above formula, is computed by finding the average annual
compounded rates of return over the period that would equate the initial amount
invested to the ending redeemable value. Average annual total return assumes the
reinvestment of all dividends and distributions.

CUMULATIVE TOTAL RETURN

Cumulative total return represents the simple change in value of an investment
over a stated period and may be quoted as a percentage or as a dollar amount.
Total returns may be broken down into their components of income and capital
(including capital gains and changes in share price) in order to illustrate the
relationship between these factors and their contributions to total return.

YIELD

Annualized yield quotations used in the Fund's advertising and promotional
materials are calculated by dividing the Fund's interest income for a specified
thirty-day period, net of expenses, by the average number of shares outstanding
during the period, and expressing the result as an annualized percentage
(assuming semi-annual compounding) of the NAV per share at the end of the
period. Yield quotations are calculated according to the following formula:

YIELD = 2[(A-B + 1)6 - 1]
c-d

where "a" equals dividends and interest earned during the period; "b" equals
expenses accrued for the period, net of reimbursements; "c" equals the average
daily number of shares outstanding during the period that are entitled to
receive dividends; and "d" equals the maximum offering price per share on the
last day of the period.

For purposes of these calculations, the maturity of an obligation with one or
more call provisions is assumed to be the next date on which the obligation
reasonably can be expected to be called or, if none, the maturity date.

OTHER INFORMATION

The Fund's performance data quoted in advertising and other promotional
materials represents past performance and is not intended to predict or indicate
future results. The return and principal value of an investment in the Fund will
fluctuate, and an investor's redemption proceeds may be more or less than the
original investment amount.

If permitted by applicable law, the Fund may advertise the performance of
registered investment companies or private accounts that have investment
objectives, policies and strategies substantially similar to those of the Fund.

COMPARISON OF FUND PERFORMANCE

The performance of the Fund may be compared to data prepared by Lipper
Analytical Services, Inc., CDA Investment Technologies, Inc., Morningstar, Inc.,
the Donoghue Organization, Inc. or other independent services which monitor the
performance of investment companies, and may be quoted in advertising in terms
of its ranking in each applicable universe. In addition, the Fund may use
performance data reported in financial and industry publications, including
Barron's, Business Week, Forbes, Fortune, Investor's Daily, IBC/Donoghue's Money
Fund Report, Money Magazine, The Wall Street Journal and USA Today.

The Fund may from time to time use the following unmanaged indices for
performance comparison purposes:

o S&P 500 - The S&P 500 is a Fund of 500 stocks designed to mimic
the overall equity market's industry weightings. Most, but not
all, large capitalization stocks are in the index. There are also
some small capitalization names in the index. The list is
maintained by Standard & Poor's Corporation. It is market
capitalization weighted. There are always 500 issuers in the S&P
500. Changes are made by Standard & Poor's as needed.

o Russell 2000 - The Russell 2000 is composed of the 2,000 smallest stocks in
the Russell 3000, a market value weighted index of the 3,000 largest U.S.
publicly-traded companies.

INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------

McCurdy and Associates, CPA's, Inc., 27995 Clemens Road, Westlake, Ohio 44145,
serves as the Fund's independent auditors, whose services include examination of
the Fund's financial statements and the performance of other related audit and
tax services.

FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

The audited financial statements for the Fund are incorporated by reference to
the Fund's Annual Report, for the year ended 1999, as filed with the Securities
and Exchange Commission on February __, 2000.

APPENDIX
- --------------------------------------------------------------------------------

STANDARD & POOR'S ("S&P") CORPORATE BOND RATING DEFINITIONS

AAA-Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.

AA-Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.

A-Debt rated "A" has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.

BBB-Debt rated "BBB" is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.

BB, B, CCC, CC-Debt rated "BB", "B", "CCC", and "CC" is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "CC" the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties of major risk exposures to adverse
conditions.

CI-The rating "CI" is reversed for income bonds on which no interest is being
paid.

D-Debt rated "D" is in default, and payment of interest and/or repayment of
principal is in arrears.

MOODY'S INVESTORS SERVICE, INC. CORPORATE BOND RATING DEFINITIONS

AAA-Bonds which are rated "Aaa" are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

AA-Bonds which are rated "Aa" are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present that
make the long-term risks appear somewhat larger than in Aaa securities.

A-Bonds which are rated "A" possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the near future.

BAA-Bonds which are rated "Baa" are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.

BA-Bonds which are "Ba" are judged to have speculative elements; their future
cannot be considered well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

B-Bonds which are rated "B" generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

CAA-Bonds which are rated "Caa" are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

CA-Bonds which are "Ca" represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.

C-Bonds which are rated "C" are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

FITCH INVESTORS SERVICE, INC. BOND RATING DEFINITIONS

AAA-Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.

AA-Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated "AAA." Because bonds rated in the "AAA" and
"AA" categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated "F-1+."

A-Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered strong, but
may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

BBB-Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.

BB-Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.

B-Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.

CCC-Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.

CC-Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C-Bonds are in imminent default in payment of interest or principal.

DDD, DD, AND D-Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. "DDD"
represents the highest potential for recovery on these bonds, and "D" represents
the lowest potential for recovery.

THE INTERNET INFRASTRUCTURE FUND
a series of Kinetics Mutual Funds, Inc.
1311 Mamaroneck Avenue
White Plains, New York 10605
(800) 930-3828

_______________, 2000

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information ("SAI") provides general information
about the Internet Infrastructure Fund (the "Fund") and the Internet
Infrastructure Portfolio (the "Portfolio"). The Fund is a series of Kinetics
Mutual Funds, Inc. (the "Company"), a Maryland corporation. The Portfolio is a
series of Kinetics Portfolio Trust. (the "Trust"), a Delaware business trust.
This SAI is not a prospectus and should be read in conjunction with the Fund's
current Prospectus dated _______________, 2000, as supplemented and amended from
time to time, which is incorporated hereto by reference. To obtain a copy of the
Prospectus, please write the Fund at the address set forth above or call the
telephone number shown above.

THE INTERNET INFRASTRUCTURE FUND

The Fund.......................................................................3
Investment Objective, Strategies, and Risks....................................3
Investment Policies and Associated Risks.......................................3
Investment Restrictions........................................................6
Temporary Investments..........................................................7
Portfolio Turnover.............................................................7
Management of the Fund.........................................................7
Control Persons and Principal Holders of Securities...........................10
Investment Adviser............................................................10
Administrative Services.......................................................12
Custodian.....................................................................12
Capitalization................................................................12
Valuation of Shares...........................................................13
Purchasing Shares.............................................................13
Redemption of Shares..........................................................14
Brokerage.....................................................................15
Taxes.........................................................................15
Performance Information.......................................................16
Independent Auditors..........................................................17
Financial Statements..........................................................18
Appendix......................................................................19

THE FUND
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE, STRATEGIES, AND RISKS
- --------------------------------------------------------------------------------

This Fund should not be used as a trading vehicle.

INVESTMENT POLICIES AND ASSOCIATED RISKS
- --------------------------------------------------------------------------------

COMMON AND PREFERRED STOCK

CONVERTIBLE DEBT SECURITIES

FIXED-INCOME SECURITIES

The fixed-income securities in which the Portfolio may invest are generally
subject to two kinds of risk: credit risk and market risk.

MASTER/FEEDER FUND STRUCTURE

INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------

1. The Portfolio will not act as underwriter for securities of other issuers.

2. The Portfolio will not make loans.

8. The Portfolio will not issue senior securities.

TEMPORARY INVESTMENTS
- --------------------------------------------------------------------------------

PORTFOLIO TURNOVER
- --------------------------------------------------------------------------------

MANAGEMENT OF THE FUND AND THE PORTFOLIO
- --------------------------------------------------------------------------------

BOARD OF DIRECTORS/BOARD OF TRUSTEES

* "Interested persons" as defined in the 1940 Act.

COMPENSATION

*Kathleen Campbell None None None None
Director

*Murray Stahl None None None $3,844
Director

Steven T. Russell None None None $5,500
Independent Director

Douglas Cohen, CPA None None None $6,094
Independent Director

William J. Graham None None None $5,500
Independent Director

Joseph E. Breslin None None None $4,500
Independent Director

John J. Sullivan None None None $5,500
Independent Director
- ---------------------------- ----------------- ----------------------- ---------------------- ------------------------
</TABLE>

* "Interested person" as defined under the 1940 Act.

*Kathleen Campbell None None None None
Trustee

*Murray Stahl None None None None
Trustee

Steven T. Russell None None None None
Independent Trustee

Douglas Cohen, CPA None None None None
Independent Trustee

William J. Graham None None None None
Independent Trustee

Joseph E. Breslin None None None None
Independent Trustee

John J. Sullivan None None None None
Independent Trustee
- ---------------------------- ----------------- ----------------------- ---------------------- ------------------------
</TABLE>

* "Interested person" as defined under the 1940 Act.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- --------------------------------------------------------------------------------
The following table provides the name and address of any person who owns of
record or beneficially 5% or more of the outstanding shares of the Fund as of
______________, 2000 (a "principal shareholder"). A control person is one who
owns beneficially or through controlled companies more than 25% of the voting
securities of a company or acknowledges the existence of control.

[TO BE PROVIDED]

MANAGEMENT OWNERSHIP

[TO BE PROVIDED]

INVESTMENT ADVISER
- --------------------------------------------------------------------------------

Kinetics has also entered into a Research Agreement with Horizon Assets
Management, Inc. ("Horizon") for which it is solely responsible for the payment
of all fees owing to Horizon.

ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------

CUSTODIAN
- --------------------------------------------------------------------------------

CAPITALIZATION
- --------------------------------------------------------------------------------

VALUATION OF SHARES
- --------------------------------------------------------------------------------

PURCHASING SHARES
- --------------------------------------------------------------------------------

STOCK CERTIFICATES AND CONFIRMATIONS

SPECIAL INCENTIVE PROGRAMS

INVESTING THROUGH AUTHORIZED BROKERS OR DEALERS

REDEMPTION OF SHARES
- --------------------------------------------------------------------------------

To redeem shares, shareholders may send a written request in "good order" to:

The Internet Infrastructure Fund
Kinetics Mutual Funds, Inc.
c/o Firstar Mutual Fund Services
P.O. Box 701
Milwaukee, WI 53201-0701
(800) 930-3828